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Focus on Construction: News from the National Association of Home Builders Mid-Year Board Meeting

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RubinBrown recently attended the mid-year board meeting of the National Association of Home Builders in Washington, D.C. as a member of the Business Management and Information Technology Committee.
June 22, 2017

RubinBrown recently attended the mid-year board meeting of the National Association of Home Builders in Washington, D.C. as a member of the Business Management and Information Technology Committee.

The following are the highlights:

The Economy

  • NAHB's economists continue to predict a strong 2017 through at least 2020. No downturn is projected for the foreseeable future.
  • Single family starts are projected to eclipse 800,000 in 2017 and surpass 1,000,000 by 2019. The economy is operating at 68% of normal (1995-2005 average) and is expected to reach 100% by late 2019.
  • Multi-family starts are expected to flatten out in the next few years.
  • The first set of millennials are finally starting to enter the housing market, about 10 years behind previous generations.

Labor

  • Everybody everywhere is complaining about the labor shortages. Some interesting info:
    • Overall 82% of the builders are reporting labor shortages. The number increased to 90% for builders with sales over $10 million.
  • NAHB is pushing to increase the work visa program allowed in the U.S. Currently the industry employs 80,000 through visas which NAHB predicts needs to be 250,000 by 2020.
  • In an extensive survey recently conducted by NAHB, it was determined less than 3% of 18-25 year olds are interested in a career in the home builders industry. Despite the opportunity for an above average wage, the physical challenges of the work being too difficult were cited as the reason for a lack of interest.

The New Administration, Deregulation and Tax Reform

  • Under the new administration, NAHB through its staff and lobbyists, have had unparalleled access to the White House.
  • In the first six months, there has been a systematic repeal of deemed overregulation with various federal agencies of several directives initiated in recent years. Much more action is likely to come.
  • Despite all the issues in front of it, there still appears to be strong bi-partisan support for some kind of Tax Reform in 2017 or 2018. Led personally by Representative Paul Ryan, the White House is looking for some kind of significant change.
    • NAHB is getting and soliciting a lot of feedback regarding the current proposal being floated by the House. In particular, there seems to be a lot of concerns about the 100% expensing (except land) provision and the elimination of the deduction for business interest. The deferral/timing of the expensing deduction will not offset the elimination of the business expense. There is some compromise that may allow a small business exemption for companies under $15 million in sales.
    • There are also numerous concerns about transition and how multifamily properties will be treated.
    • Tying the debt ceiling and budget into tax reform is seen as a possibility to get a bi-partisan deal done.
Stay Tuned as RubinBrown is closely monitoring this process.

Other Items

  • Some home builders around the country have been hit with trademark infringement law suits related to playing music in a common area under the "entertainment" laws.

     

    Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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