Volume 48 Issue 1 January 2018
"Like Us" on Facebook
• ConstructionIndustryProductRecalls• 2009NMEnergyCodeRequiresRimJoistInsulationand
AirBarrier• PlanNowtoJoinourAnnualRoundhouseVisit• CostofConstructingaHome
Builders Trust . . . “My Choice for Workers’
Compensation Coverage”
Contractors Belong Here! For more information call 505-345-3477 or 800-640-3369 or visit us at www.builderstrust.com
Join New Mexico Homebuilders Association's annual trek to the Roundhouse in Santa Fe. Talk to legislators encouraging them to vote for laws favoring the homebuilding industry. Be a part of the legislative session by participating and making your voice heard.
See details on page 9.
Membership Statistics Calendar
Honoring Presidents of Our Association from the Beginning
Message from the Executive Vice President and CEO - 2018 NM Legislature is Just Around the Corner
Official Publication of theNew Mexico Home Builders Association
New Mexico Home Builders Association505-344-7072, Toll Free 1-800-523-8421 FAX: 505-344-3103E-mail: [email protected] or Website: www.nmhba.org
NMHBA Office Staff
Executive VP & CEO, Jack C. Milarch, Jr. Governmental Affairs Director, Melanie LawtonBookkeeper/Bonding/Meeting Admin, Melinda Bolivar
NMHBA 2018 Senior Officers
President, Brian McCarthy Past President, Steve Hale1st VP/President-Elect, Lora VassarAssociate Vice President, Diana LuceroSecretary-Treasurer, Scott Ashcraft
2018 Local HBA Presidents
HBA of Central New Mexico, Mike FietzSouth Eastern New Mexico HBA, Mike BuechterHBA of Eastern New Mexico, Andy CordovaLas Cruces HBA, Mark HettingaLincoln County HBA, Cheryl Howell San Juan County HBA, Roger RicksSanta Fe Area HBA, Scott CherryBCA of Otero County, McChristie CurrySouthwest NM HBA, Rich Bigelow
NAHB Representatives
National Associate Director, Diana LuceroState Representative, Peter MerrillNational Director, Brian McCarthyNAHB BUILD-PAC Trustee, Skip Mead
Affiliated Organizations
Association Services Corporationdba New Mexico License BondingPhone: 505-344-7277 Fax: 505-344-3103
Builders Trust of New MexicoWorkers’ Compensation CoveragePhone: 505-345-3477 Fax: 505-344-7245CEO & Administrator, Jack C. Milarch, Jr.COO, Randy AkinChairman, Lee Rawson
New Mexico Home Builders Political Action FundNMHB PAF Chair, Rich Bigelow
Graphic Design - The Graphics Station 505-480-8687
Printing - Marketing Strategies 505-883-5400
Regular Features
On The Cover
2
3
Special FeaturesConstruction Industry Product Recalls
2009 NM Energy Code Requires Rim Joist Insulation and Air Barrier
Plan Now to Join our Annual Roundhouse Visit
Cost of Constructing a Home
4
2
6
8
9
10
2 NMHBA Housing Journal January 2018
Membership StatisticsOct
Total 2066
Central New Mexico Eastern NM
South Eastern NMHBA
Lincoln County
Las Cruces
Southwestern NMHBA
San Juan County
Santa Fe Area
Otero County
705
89
96
115
315
55
137
429
113
2018 NMHBA Calendar
January
31 Building Issues Committee Meeting @ NMHBA office31 Government Affairs Committee Meeting @ NMHBA office31 Board Meeting @ NMHBA office
February
1 Bus Trip to Roundhouse
Nov
2054
704
87
96
112
317
55
136
436
113
NMHBA Housing Journal January 2018 3
HonoringPresidentsofOurAssociationfromtheBeginning
1959
1967
1975
1983
1991
1999
2007
1963
1971
1979
1987
1995
2003
2011
2017
1960
1968
1976
1984
1992
2000
2008
1964
1972
1980
1988
1996
2004
2012
2018
1961
1969
1977
1985
1993
2001
2009
2015
1965
1973
1981
1989
1997
2005
2013
1962
1970
1978
1986
1994
2002
2010
2016
1966
1974
1982
1990
1998
2006
2014
Coda C. Roberson
Fred M. Mossman
Stuart C. Hill
William Overmier
Kevin McGinley
Ron Jones
Marc White
John J. Roach
Lewis E. Emerick
Robert L. Grandle
Ron Goodrich
Tim Hoyt
Peter Merrill
Randy Crowder
S. Elmo Henslee
Gene E. Corley
Ralph McWhirter
Doug Rutledge
Bob Broyles
George Rawson
Scott Bealhen
C.J. “Skip” Mead
Kenneth W. Mount
Carlos Blanco
H. Harper Simmons
Stuart Levy
Bill Chapman
Mario Bellestri
R. Derrick Childers
Pat Bellestri-Martinez
Charles R. Smith
Walton Chapman
Jerald McGehee
Mike Drunzer
Gene McCutcheon
Rick Davis
Mike Buechter
Steve Hale
E. Price Hampson
G. Gordon Spencer
Tommy Tomlin
L. D. “Slick” Graham
Mike Sivage
Jay Mills
Michael Richards
Brian McCarthy
Roy Moore
Ivan Tucker
Donald Martin
Harvey L. Morris
Lou Frey
David Gordon
Patrick Casey
Harold DeShurley
Eddie Binns
Michael Chapman
George Beall
Lonny Rutherford
C.J. “Skip” Mead
Ray Gee
You may notice we are missing photos for our Presidents for 1960, 1961, 1968, and 1972. If you have a photo of John J. Roach, Elmo Henslee, Lewis E. Emerick, or G. Gordon Spencer, please call Melanie at the NMHBA office so we can make arrangements to get copies to fill in our blank spots.
4 NMHBA Housing Journal January 2018
2018NMLegislatureIsJustAroundtheCornerWhether we like it or not, another year has gone by, and our Legislature is about to meet again. The upcoming Session will last 30 days instead of the 60-day version we experienced last time around. And once again, your team from New Mexico HBA will be in the Capitol on a daily basis. Why is this important to you?
The short answer is “to protect our industry’s interests.” While that is accurate, it doesn’t go very far in explaining the details of why we are there, so let’s go a little deeper into what this means.
I’ll start with a quick Civics Class refresher. We live in a thick swarm of laws and rules, with more and more coming at us constantly. Rules and regulations result from laws, and laws come from one of three levels of government. Who made that law? Was it our city council, our state legislature, or the federal congress? These three levels of government are constantly churning out new laws and amendments to existing laws, and new regulations follow closely behind all the law changes. While we don’t usually think much about the source of this stuff because it doesn’t all apply to us, and I admit this may seem irrelevant to your daily life, but it will help in explaining what New Mexico HBA does for you.
Our home builders association’s federation structure is designed to address all three of those levels of government separately. Here at New Mexico HBA our main job is to cover just one level, the state level activity. Our local and national affiliates cover the other two levels respectively. At the state level the main annual activity is the meeting of the Legislature. This is where all our state laws are created, and where much of the taxation and regulatory impact on our businesses originates.
Every year the Legislature deals with the budget and sets out the financial dealings of the state. The politics and debates regarding the plans for income and spending consume a large part of the legislators’ time and effort. All the state level agencies we deal with, such as Construction Industries Division, Taxation and Revenue Department, Department of Workforce Solutions, and the Work Comp Administration get funded -- or not -- based on the Legislature’s annual budget. But it isn’t just the budget. The Legislature creates all the state agencies including the ones I noted, and more, that we deal with on a regular basis, and then sets out the basic job of each agency. These agencies then go on to create their own rules, fees, and enforcement mechanisms, many of which impact you daily. New Mexico HBA gets involved in all of this as it pertains to our industry and our members’ businesses.
Let’s go back to how we participate in the Legislature. We sometimes promote bills that our association believes are necessary. The law allowing Tax Increment Development Districts in New Mexico, a very important tool for land development, is an example of this. Sometimes we join with others to create and help promote an idea we think is good. For example, in the mid-1980s we were very involved in promoting a bill to allow group self insurance for workers’ compensation in New Mexico. The result of that bill’s success is Builders Trust, our workers’ compensation affiliate.
But more important than proposing and passing favorable legislation is the ability to identify, and stop, legislation we know would be bad for our industry. When we identify a problem bill, we will usually try to work with the sponsoring legislator and amend it into being less harmful or in the best circumstances being good for the public but not harming our industry. Occasionally we are forced to do our best to “kill” a bill we believe cannot be fixed. The importance of being able to kill off the really bad ones cannot be overemphasized.
Jack C. Milarch, Jr.
continued on page 5
NMHBA Housing Journal January 2018 5
EVP and CEO continued from page 4
You can be a part of our interaction with the Legislature. Every year NMHBA members can receive a briefing on current events and then travel as a group to Santa Fe for a morning in the Round House. It’s a great time to visit with your own House and Senate members and let them know how various proposals under discussion would impact you and your business. Plan to join us this year! For more information visit our web site at www.nmhba.org or call Melanie Lawton at the NMHBA office.
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Board/Committee Meetingsand Lunch
January 31, 2018Where: NMHBA Office
5931 Office Blvd NE Ste 1Albuquerque NM 87109
8:15 am – 9:45 am BIC10:00 am – 11:30 am Gov’t Affairs
This year Jack will talk about what to expect for our Bus Trip during Lunch.
11:30 am – 12:45 pm Legislative Lunch1:00 p.m. – 5:00 p.m Board/Member Meeting
Please RSVP to Melinda ([email protected])
You can write on and email this form if you are planning to attend.
(If you don’t have a scanner you can take a picture with your phone and email it to: [email protected])
For more information call NMHBA at: 505-344-7072 or 800-523-8421
6 NMHBA Housing Journal January 2018
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ConstructionIndustryProductRecallsBuilders, remodelers and their clients learn about product recalls when federal officials or the producers themselves determine there may be a health or safety issue associated with it. Here are some products associated with the construction or renovation of a home that have been recalled. Check the link to the web pages that explain whether the end user should return the product for repair or seek another solution.
Bosch, Gaggenau, Kenmore Elite and Thermador Dishwashers (https://cpsc.gov/Recalls/2017/bsh-home-appliances-expands-recall-of-dishwashers)• BSH Home Appliances has recalled certain dishwashers due to fire hazards. The recall concerns power cords supplied with certain models manufactured from January 2008 through December 2013.
Philips Halogen Bulbs(www.usa.philips.com/content/B2C/en_US/support-home/recall/60w-par-16-120v-halogen-bulbs.html)• A recall has been issued for Philips 60W PAR 16 120V Halogen Bulbs. The recall notes that the bulb lens can shatter in the lamp or it can fall and shatter, posing a laceration and burn hazard.
Lota Touchless Kitchen Faucets(www.lotausa.com)• For Glacier Bay and Schӧn kitchen faucets sold exclusively at Home Depot, at issue is the battery box that is used to power the faucet’s sensor. It can short circuit, overheat and/or melt, posing fire and burn hazards to consumers.
continued on page 7
NMHBA Housing Journal January 2018 7
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Trane and American Standard Accessory Heaters(www.trane.com or www.americanstandardair.com)• The recall involves heaters installed in TAM7 and TAM8 air handlers and indicates that heaters installed with reverse polarity on one of the breakers can cause the product to overheat, posing a fire hazard.
Brewmaster Fans by Fanimation(www.fanimation.com)• A recall has been issued for Brewmaster Ceiling Fans because a fault in the hub holding the fan blades may cause the unit to fall, posing a risk to anyone nearby.
Westinghouse Glass Shade Holders (www.westinghouselighting.com/product-notification/)• Westinghouse Lighting has recalled the glass shade
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8 NMHBA Housing Journal January 2018
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2009NMEnergyCodeRequiresRimJoistInsulationandAirBarrier
What ChangedThe 2009 NM Energy Code included the new requirement for insulation and an air barrier on the rim joist between floors in residential construction. Apparently many jurisdictions are not yet inspecting for this requirement. However, neglecting to comply with this section of code could leave the builder open to a claim of code violation or construction defect.
402.4.2.2 Visual inspection option. Building envelope tightness and insulation installation shall be considered acceptable when the items listed in Table 402.4.2, applicable to the method of construction, are field verified. Where required by the code official, an approved party independent from the installer of the insulation shall inspect the air barrier and insulation.
TABLE 402.4.2AIR BARRIER AND INSULATION INSPECTION COMPONENT CRITERIA
Rim joists Rim joists are insulated and include an air barrier.
Why It ChangedLeaving the rim joist between stories of a home without insulation and an air barrier in winter allows cold air from the exterior of the building to infiltrate between the floor joists, making for cold floors on the second story. In summer, the situation could lead to higher air conditioning costs as the hot air radiates into the second story.
What It Means To MeProviding the required insulation and air barrier on the rim joists will make two-story homes more comfortable for homeowners. A happy homeowner means fewer call-backs over the inability of the HVAC system to keep up with temperature influences coming through the rim joists.
Code Update Corner
NMHBA Housing Journal January 2018 9
Plan Now to Join our Annual Roundhouse VisitContact your legislators now!
• Go as a group! That makes it more fun and easier!• Use this opportunity to encourage your legislators to vote for laws that favor the home building industry. • During the Legislative Lunch on January 31st, our CEO will brief you on what you need to know to be
comfortable talking to your legislators.
Yes, you CAN make a difference!Lunch & Briefing at NMHBA Office on January 31, 2018,
the day before the Round House visits.
Schedule for February 1, 20187:00 a.m. Meet at New Mexico Home Builders for coffee and breakfast burritos. Board the bus @
7:25 a.m.7:30 a.m. Depart Albuquerque for Santa Fe.8:30 a.m. Arrive at Roundhouse for visits with legislators.Lunch Make lunch reservations with your legislator or on your own
If you are not familiar with Santa Fe we can help you find a good place to go.2:00 p.m. Re-board bus.2:30 p.m. Depart Santa Fe for Albuquerque.3:30 p.m. Arrive back at NMHBA.
Please email this form if you are planning to attend.(If you don’t have a scanner you can take a picture with your phone and email it to [email protected])
Name: ________________________________________________________________________ Cell Phone: ________________________________________________________________________Company Name:________________________________________________________________________Email: _________________________________________________________________________
Visit https://www.nmlegis.gov/ for information regarding the legislative session.
Questions? Call Melanie @ NMHBA 505-344-7072; toll free at 1-800-523-8421
10 NMHBA Housing Journal January 2018
CostofConstructingaHomeDecember 2017 Special Study for HousingEconomics.com Over the years, NAHB has periodically conducted “construction cost surveys” to collect information from builders on the various components that go into the sales price of a typical single-family home. NAHB’s most recent Construction Cost survey (conducted in September of 2017) shows that, on average, 55.6 percent of the final sales price goes to construction costs, 21.5 percent to finished lot costs, and 10.7 percent to builder profit. Construction cost includes all the costs paid by a builder, including costs of materials, labor and subcontractors.
These results are national averages. Building practices, the cost of labor, the cost of land, and to some extent the cost of materials, can vary from place to place and depend on the nature of the particular home being built. Each cost line in Table 1 includes all the costs paid by a builder that go into a particular item, including labor costs paid directly by the general contractor, the cost of hiring subcontractors, and the cost of materials, however they are purchased.
The average single-family home size in the 2017 NAHB Construction Cost Survey is 2,776 square feet of finished floor space. Census data show a drop in the average square footage during the Great Recession (from 2,528 square feet in 2008 to 2,402 square feet in 2009), then a steady climb to a record high in 2014 (2,711 square feet).
The average lot size in the 2017 NAHB Construction Cost Survey is 11,186 square feet, or about a quarter acre. This is the smallest average lot size recorded in the survey’s history. The average lot size was in the territory of 20,000 to 22,000 square feet in 2009 and 2011, but dropped to 14,359 in 2013. It rebounded to 20,129 square feet in 2015. One reason lot sizes may be dropping is the serious problem many builders have been reporting finding available lots. In July of 2017, 64 percent of builders reported that the supply of lots in their markets was low or very low
The average single-family home sales price in the 2017 NAHB Construction Cost Survey is $427,892.
Of the 8 major stages of construction, interior finishes, at 28.6 percent, accounts for the costliest portion of the construc-tion process. The costs in the NAHB survey do not take into account the difference between respondents whose interior finishes may be high end, such as granite countertops, versus more “standard” finishes such as Formica countertops. The average cost of each component of the interior finish process do not exceed $12,000, but the total of all the components add up to nearly $68,000 of the total cost of construction.
Interior finishes are followed by framing (17.3 percent), exterior finishes (13.9 percent), major system rough-ins (13.8 percent), foundations (10.8 percent), final steps (7.0 percent), site work (6.7 percent), and other costs (2 percent).
Of the detailed items in the NAHB survey, framing and trusses remain the largest single component of construction costs. They account for just under $39,500 of 2017’s average construction costs.
The share of construction costs that goes to fees and permits (building permits, impact fees, and water/sewer fees), rose from 3.2 percent in 2015 to 4.6 percent in 2017.
There is no mention of other regulatory costs in the survey, such as watering the ground during grading to comply with air quality standards, or storm water runoff compliance costs. NAHB has previously estimated the cost of all regulatory requirements 9including impact fees) at 25% of the cost of construction.
The complete 7-page survey results are available from Melanie in the NMHBA office by emailing [email protected] or calling 505-344-7072.
NMHBA Housing Journal January 2018 11
Table 1. Single Family Price and Cost Breakdowns2017 National Results
Average Lot Size: 11,186 Average Finished Area: 2,776
I. Sale Price Breakdown Average Share of PriceA. Finished Lot Cost (including financing cost) B. Total Construction Cost C. Financing Cost D. Overhead and General Expenses E. Marketing Cost F. Sales Commission G. Profit Total Sales Price
$91,996 $237,760
$7,636 $21,835 $5,314
$17,448 $45,902
$427,892
21.5% 55.6% 1.8% 5.1% 1.2% 4.1%
10.7% 100.0%
II. Construction Cost Breakdown Average Share ofConstruction Cost
1. Site Work (sum of A to E) $15,903 6.7%A. Building Permit Fees B. Impact Fee C. Water & Sewer Fees Inspections D. Architecture, Engineering E. Other
$4,002 $2,088 $4,850 $3,288 $1,675
1.7% 0.9% 2.0% 1.4% 0.7%
2. Foundations (sum of F to G) $25,671 10.8%F. Excavation, Foundation, Concrete, Retaining walls, and Backfill G. Other
$25,390 $281
10.7% 0.1%
3. Framing (sum of H to L) $41,123 17.3%H. Framing (including roof) I. Trusses (if not included above) J. Sheathing (if not included above) K. General Metal, Steel L. Other
$35,694 $3,803
$764 $736 $126
15.0% 1.6% 0.3% 0.3% 0.1%
4. Exterior Finishes (sum M to P) $33,066 13.9%M. Exterior Wall Finish N. Roofing O. Windows and Doors (including garage door) P. Other
$15,397 $7,728 $9,197
$745
6.5% 3.3% 3.9% 0.3%
5. Major Systems Rough-ins (sum of Q to T) $32,746 13.8%Q. Plumbing (except fixtures) R. Electrical (except fixtures) S. HVAC T. Other
$11,018 $10,100 $11,189
$439
4.6% 4.2% 4.7% 0.2%
6. Interior Finishes (sum of U to AE) $67,939 28.6%U. Insulation V. Drywall W. Interior Trims, Doors, and Mirrors X. Painting Y. Lighting Z. Cabinets, Countertops AA. Appliances AB. Flooring AC. Plumbing Fixtures AD. Fireplace AE. Other
$5,236 $10,523 $10,959 $7,067 $3,091
$11,801 $3,536
$10,209 $3,207 $1,353
$958
2.2% 4.4% 4.6% 3.0% 1.3% 5.0% 1.5% 4.3% 1.3% 0.6% 0.4%
7. Final Steps (sum of AF to AJ) $16,591 7.0%AF. Landscaping AG. Outdoor Structures (deck, patio, porches) AH. Driveway AI. Clean Up AJ. Other
$5,859 $2,989 $4,405 $2,621
$718
2.5% 1.3% 1.9% 1.1% 0.3%
8. Other $4,722 2.0%Total $237,760 100.0%
12 NMHBA Housing Journal January 2018
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NMHBA Housing Journal January 2018 13
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