Charleston, S.C. — The 2016 ProDealer Industry Summit ventured into deep waters, and some of the biggest issues facing the industry and the country during the final-day educational sessions here.
National Association of Home Builders CEO Jerry Howard led the way by describing the "L" words that pose a challenge to growth for builders: Labor, land and lending. Next, U.S. Rep. Mark Sanford, R-S.C., made the case for constructive dialog and a reduction of the massive and growing federal debt.
The morning sessions hit on a wide range of economic, industrial and legislative points:
On the national debt:
Sanford said that at the rate we're going, and if nothing is done to reverse the trend, the nation will run out of money for anything but interest and entitlements by 2026.
"The American debt is a profound problem and it's not being talked about," he said. "Not in Congress, not in the presidential race. We're walking our way into a real math problem, and we're walking our way into a financial crisis. It's going to affect this country if we don't turn it around, and it will affect your business."
The failure of softwood lumber talks between the U.S. and Canada could get costly, Howard said. Suits and counter suits between the two countries are likely to bring tariffs on Canadian lumber. One estimate suggests a 25% tariff, he said: "that's just what our builders don't need."
Howard, head of the organization that claims to contribute roughly 16% to the U.S. gross national product, said today's pace of residential construction of about 1.1 million per year should grow to a more sustainable and more reasonable 1.6 million by 2020. Three things holding the industry back, he said, are labor, land and lending.
"Those three L words are really the headwinds holding back our business and putting a cap on your business as well," he told the audience of PDIS attendees.
Howard said the NAHB is in favor of allowing people who want to come to the United States and work to do that. But he opposed the idea of requiring builders to be responsible for checking the legal status of a contractor.
"Basically what the government is saying is that if you're a homebuilder and you have a framing crew on your project, then they are your employees and have to be taxed as your employees," he said. "That shows a fundamental lack of knowledge. And if it wasn't so serious it would be laughable.
Housing finance reform:
Howard said the NAHB is fighting for housing finance reform in Washington, D.C. That includes taking a hard look at reform of Fanny Mae and Freddie Mac. "But there needs to be a government backstop for investment in housing securities," he said.
Howard described the housing industry as more heavily regulated than either the airline sector or the nuclear power sector. "Twenty five percent of the cost of the house is in regulatory costs before the first shovel breaks ground," he said.
On Trump's rise:
Sanford said the voter frustration is significant: "Many people are saying, 'If he's my ticket to change, I'll put up with about anything.'"
On the election:
"Regardless of who wins, I think the NAHB will be well positioned to work with the new administration," Howard said.