Orlando, Fla. — Back in October at the ProDealer Industry Summit, National Association of Home Builders CEO Jerry Howard described the national political landscape under the impression of a looming Clinton administration.
That was then.
Now, as the keynote speaker for the LBM Advantage convention here in Orlando, Howard had kind words for the current president, his vice president and the speaker of the house. He also railed against what he sees as the bitter, partisan atmosphere in Washington that extends even to restaurants and bars.
His presentation here to members of LBM Advantage — a buying group energized by the recent merger and integration of ENAP and PAL — also revealed the difficulties of predicting matters of state.
"I did in the fall, like most in official Washington media and Americans, believe we were about to have our first female president," he said. "The whole world was shocked."
From a business sense, it's still too early to judge the actions or results of a Trump presidency, but Howard stood strong on the side of at least one of the ideas that are generally associated with Trump — the elimination of unfriendly business regulations. In the construction of a typical house, regulations account for 25% of the costs, he said. And that's one reason the recovery has limped, rather than galloped.
Housing starts hit 1.17 million units in 2016, and are expected to grow to 1.24 million in 2017. That's significant, but not enough to keep businesses "running on full cylinders," he said.
Other thoughts on the state of the nation of homebuilding from the NAHB chief:
- "The biggest consistent problem that I'm told about as I travel around the country is the labor shortage," he said. And as the role of education and training has been pushed down to the states, the effort to bolster the trades falls on governors and state-by-state efforts. In some cases they are making strides with veterans programs, technical schools and even prison programs, he said.
- Don't believe the idea that young people prefer apartments to houses. "The spirit of Americans to own their own homes is as strong as it ever was," he said. "That's good for you , and it's good for us."
- The CEO shared thoughts on the commander in chief. "We've been fortunate in that we met with candidate Trump twice during the campaign — meeting in Trump Tower in New York City. Despite his persona as a gruff, 30,000 foot thinker, he knew building, he knew finance issues, housing. He understands the issues. My impression of him grew, he spoke off the cuff without being acerbic."
- The wild days of lending to anyone "who could fog a mirror," have been reformed, he said, and rightfully so. But Congress has overreacted, as usual. "We gotta get it back to the middle somehow, with prudent underwriting for mortgages."
- You can expect a protracted trade skirmish over Candian lumber, which makes up about 28% of the average, newly built U.S. house. The difficulty in acquiring lumber from Canada has led, in the NAHB's estimation, to cost increases of about 17%, with builders reporting spikes that rise even higher.
- "The lumber issue is one that is extremely relevant and one that will slow down the recovery," Howard said. "Unfortunately I don't see a near term solution to it." It could take years.
- So what to do? One option pursued "aggressively" by the NAHB: Encourage American producers to export less, and make up for domestic shortfalls.
- Ask anybody, he said, and they'll tell you that tax laws are too cumbersome and unwieldy. And the mortgage interest deduction has been cited as a prime target for many who advocate simpler codes.
That's why Howard said tax reform "can be extremely hazardous" to the housing industry. But he also believes that lawmakers will find a way to use the tax codes to benefit the public, and they'll also realize that some form of incentivizing home ownership is in the best interest of the country.