News & Updates

News, updates and announcements from the Johnston County Building Industry Association

What Builders Should Know About Appraisals & Lumber Prices

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As builders struggle with these front-end issues, they are also experiencing additional challenges on the backend, as appraisal standards make it difficult to recognize the full impact of sharp increases in the cost of building materials. In addition, appraisers often have limited access to information to accurately assess the value of a home.

“The appraisers use market value, so if we sold a house three months ago and just completed a new build with higher material costs, they only give a market value of the house that sold three months ago,” explained James Blyth, an affordable housing spec builder in North Carolina. “In our situation the appraisal came in $10,000 lower than our asking price. Our price increase was to cover cost increases. It forced the buyers to come up with an additional $10,000 out of pocket to cover our cost increases.

“We have 10 houses under construction right now that will be ready for early spring and summer occupancy,” he added. “Normally we would start marketing once the foundation is in the ground. I will not quote a price until we have all of our costs in.”

Cost-Based Appraisals Better Reflect Rising Material Costs

In order to best address these significant increases in the price of materials, it is important to understand that appraisers can incorporate three approaches to determine the value of a property: sales comparison, cost and income methods. Under the cost approach, the appraiser estimates what it would cost to rebuild or construct an equivalent structure. Because this component of property valuation considers the costs of materials used to construct the property, it is often very helpful in analyzing the value of a newly constructed home.

It is also important that builders understand that it is acceptable — and extremely important — for a home builder to speak with an appraiser and provide all the information the appraiser needs to perform an accurate assessment of value. One item that has proven effective in assisting appraisers in considering material costs in developing new home valuations is an “appraisal binder.”

An appraisal binder — which is given to the appraiser upon his or her arrival to the property — will provide the appraiser with a cost breakdown of all materials used in the construction of the home. This information will assist the appraiser in balancing the market value of the home with what it cost the builder in materials to construct the home.

Keep in mind that the cost approach to value is always used in combination with the sales comparison approach — with greater weight or emphasis given to the sales comparison approach, per Fannie Mae and Freddie Mac guidelines. Builders should also incorporate existing home sales as comparables if there is a lack of new construction comps that can be used.

One builder in Greenville, S.C., was recently able to utilize this appraisal approach for a spec home he was building. He had been able to successfully sell the same home recently for $711,000, but when he received the invoice for the lumber package on the new spec home, it was $56,000 higher than the home he had just sold. The initial appraisal for the new spec home was $711,000 — the same as the home he had just sold, but that had been built at a lower cost. When the builder revisited the value approach with the appraisal, he was able to secure a construction loan that reflected the increase in prices.

In a recent listening session with Federal Housing Finance Agency (FHFA), NAHB suggested that more consideration be given to the cost approach to value new homes, particularly in rural areas where there may be few comps or sales to help produce a fair and accurate assessment of value.

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House Passes Apprenticeship Legislation

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On February 5th, the House approved the National Apprenticeship Act of 2021 (H.R. 447), legislation that would expand youth and adult access to instruction in the skilled trades.

NAHB welcomes a number of provisions in H.R. 447, chiefly those affording increased flexibility and options for registered apprenticeship program structuring. This would help alleviate one of the biggest challenges to running skills-based training programs in the residential construction industry and assist the efforts of the Home Builder Institute (HBI) to tailor its curriculum offerings to different populations where long-duration programs are prohibitive for small employers.

The National Apprenticeship Act also expands technical assistance to training providers and offers robust funding and grant opportunities to support the bill’s ambitious goals for programming growth under the national apprenticeship system.

NAHB would like to see additional improvements made to the bill and will work with lawmakers as the legislation moves to the Senate.

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Residential Construction: Net Job Gains Offset Losses from the Pandemic

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From NAHB:

From May through December, the number of new residential construction jobs that were created offset the total amount of jobs that were lost earlier in 2020 due to the COVID-19 pandemic.

The number of residential construction jobs rose by 22,700 in December, well above the 15,800 increase posted in November. In the past eight months, 472,500 residential construction jobs were created, offsetting all the 456,800 residential construction jobs lost in March and April due to the coronavirus outbreak.

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First Full Year Ahead

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Michael Shane Hudson, known to all as 'Shane', was born in Johnston County in 1977. Shane has been married to his wife Stephanie for 23 years and they are the very proud parents of two daughters, Michaela 22 and Kristen 20. He and his family reside in Benson NC.  Shane began his career in Building Inspections as a Code Enforcement Officer with the City of Goldsboro in March of 2000. From there, he became the Chief Building Inspector for the City of Dunn in March of 2001. In March of 2004, Johnston County hired Shane as a Code Enforcement Officer. Shane was the 145th person out of approximately 2000 Inspectors in the state of North Carolina to obtain his fifth standard level 3 certification. He did so within his first five years as a Building Inspector, obtaining all of his certificates by October of 2005. In 2006, Shane was appointed as a member of the North Carolina Department of Insurance Exam Development Review Committee for Code Officials. In addition, he obtained his International Code Council Residential Inspector Certification in the areas of Building, Mechanical, Electrical and Plumbing in 2009 and in 2010 was approved as an Instructor to teach those trades, as well as Fire, for standard and continuing education classes through the North Carolina Department of Insurance.

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Commerce Department Cuts Lumber Tariffs from 20% to 9%

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With lumber prices experiencing extreme price volatility this year and harming housing affordability, a final determination of the first administrative review by the U.S. Commerce Department to reduce duties on shipments of Canadian lumber into the United States by more than half is good news for American home builders and home buyers.

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FHA Updates New Construction Financing Requirements

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The Federal Housing Administration (FHA) today published Mortgagee Letter (ML) 2020-36, FHA New Construction Requirements. This guidance updates the requirements for new construction financing for Title II Single Family forward mortgages in alignment with the regulatory amendments announced in the 2018 final rules that streamlined inspection and warranty requirements.

Changes to HUD’s maximum financing policy for new construction include:

  • Eliminating Early Start Letter and Pre-Approval requirements;
  • Consolidating requirements regardless of loan-to-value (LTV);
  • Adding Form HUD-92544, Warranty of Completion of Construction, for all new construction;
  • Providing alternative inspections by a third party, that is a registered architect or structural engineer, in the absence of International Code Council (ICC) certified Residential Combination Inspector (RCI) or Combination Inspector (CI); and
  • Updating when Form HUD-NPMA-99-B, New Construction Subterranean Termite Service Record is required, to align it with the four acceptable termite treatment applications reflected on the related Form HUD-NPMA-99-A, Subterranean Termite Protection Builder’s Guarantee.

This guidance may be used immediately for existing cases and must be used for FHA case numbers assigned on or after Jan. 4, 2021.

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Congratulations!

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Congratulations go out to JCBIA member, Kellie Ashley for achieving her Accredited Builder designation through the North Carolina Builder Institute!!!

Kellie Ashley is the Owner of Kellie Ashley Homes as a Builder and Real Estate Agent. After 30 years behind a desk at Wachovia Securities, Merrill Lynch Wealth Management and
commercial property management, Kellie was ready for hands on work. She works onsite, side by side with subcontractors, in the rain, mud and sawdust.  Kellie grew up working at South of the Border and summers in the tobacco fields around Fairmont NC, so hard work is in her blood. She then took off to ECU where she earned a degree in Housing & Management and later a Master of Trust & Investment Management from Campbell University. Working in a male dominated field, Kellie feels education and training gives her the extra confidence she needs to meet the challenges and changes in the North Carolina residential construction industry. In 2019 Kellie became Fannie to another precious granddaughter and earlier this year, became a NC Onsite Wastewater Contractor. Kellie looks forward to tea parties, the sound of nail guns and watching backhoes dig into the Johnston County dirt.

"I have benefited from the NC Builder Institute through the diverse course offerings available. I have been able to enroll in courses that meet my individual business model. Every course has reinforced my knowledge, given me extra confidence, and provided me with information that keeps me up to date on new codes and systems."  Kellie

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Cybercriminals Target Remote Workers

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Hackers have found a new way to invade corporate computer systems through the devices of employees who are working at home because of the Coronavirus pandemic. The threat is designed to exploit vulnerabilities from the increased use of corporate virtual private networks (VPNs). The situation is so serious that the FBI and the U.S. Cybersecurity Infrastructure Security Agency (CISA) issued a Cybersecurity Advisory Alert that warns employers about the problem and offers timely advice about what are the best steps to take to prevent it from happening to them and how to deal with it when it occurs.

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Top 3 Reasons to become an Associate member

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For many JCBIA Associate members, visibility and networking are keys to a successful business. Joining a community such as JCBIA opens the doors to make those connections and increases business opportunities that service and trade professionals would otherwise not have, especially when working with home builders.

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Association Renovations Begin

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Scholarship Winners!

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After reviewing a record number of outstanding scholarship applications, we are thrilled to announce the winners of the 2020 JCBIA Scholarship. Each of these recipients has earned a scholarship based on academic achievement, exceptional community involvement, strong letters of recommendation, and are immediate family members of a Johnston County Building Industry Association member.

Join us in congratulating the following recipients:

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2020 Session Accomplishments

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Despite the lobbying challenges posed by the ongoing COVID-19 crisis, your NCHBA legislative team had an outstanding legislative session this year. CLICK the Top 10 link to read a summary of our TOP-10-2020-Legislative legislative accomplishments for the session. Each of the bills is discussed in detail where we also highlight the “key legislators” who deserve special recognition for helping us achieve the desired result.

In addition to the “key legislators” highlighted in our "Top 10 Legislative Accomplishments" above, NCHBA has many other legislative friends who consistently support our industry throughout this, and previous, sessions.

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Legislator Of The Week

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For nearly a decade, Senator Jackson has been a stanch supporter of home building industry and business interest as a member of the General Assembly. Senator Jackson serves as one of three principal chairs of the Senate Appropriations Committee and plays a large role in setting state budget priorities. Senator Jackson owns a large-scale agriculture operation Sampson County and fully understands the hardships business owners face every day. Thank you, Senator Jackson, for helping to ensure that housing remains plentiful and affordable in North Carolina.

Senator Jackson's District is #10 that covers Duplin County, Johnston County, and Sampson County

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Senate Approves House-Passed PPP Bill

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By unanimous consent, the Senate on June 3 approved legislation passed by the House last week that will liberalize rules under the Paycheck Protection Program (PPP) to give business owners more time to have the loans forgiven by the U.S. government. President Trump is expected to sign the legislation into law shortly.

Under the PPP loan program, which passed Congress earlier this spring as part of the CARES Act, small businesses with fewer than 500 employees can take out loans equal to 2.5 times their average monthly payroll from 2019 with the total capped at $10 million. For many businesses that meet key conditions on the use of these funds, the loans may be forgiven.

The legislation approved by the House and Senate, called the Paycheck Protection Program Flexibility Act, will make it easier for small businesses to utilize funds under the PPP and still qualify for loan forgiveness. Specifically, the bill will:

Increase the timeline for businesses to spend their loan money on payroll in order for it to be forgiven from the current eight-week deadline to 24 weeks;
Extend the June 30 rehiring deadline for laid-off employees to Dec. 31;
Reduce the requirement that 75% of loan money must be spent on payroll in order for the loan to be forgiven to 60%; and
Provide more leeway on loan forgiveness for employers if they show they were unable to rehire employees or reopen to business in a way that complies with safety standards.

NAHB continues to urge Congress to ensure the PPP guidelines align with congressional intent to allow more workers in the residential construction sector to access the loan program. Specifically, NAHB is urging Congress to provide a waiver from eligibility restrictions in the existing Small Business Administration 7(a) loan program to allow single-family and multifamily home builders, land developers, multifamily property owners and 501(c)(6) organizations access to the PPP.

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Timing is Everything

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Knowing when to take action can be the difference between your company’s continual growth or eventual decay.
The coronavirus pandemic has created significant challenges and uncertainty for many. While these challenges are substantial, now is not the time to simply stand idle and hope your business is lucky enough to survive.

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Embracing Technology

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More and more home builders are embracing technology..... like the use of drones to make properties more accessible. They are using local production company's to create videos that include both aerial and interior footage. The drones are able to capture a 360-degree view of the exterior of a home and fly-ins showcase the interior.

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Continuing Education

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General Statute 87-10.2 states that North Carolina licensed general contractors will be required to complete continuing education (CE) beginning with 2021 license renewals.

Courses

  • CE courses begin in May 2020.
  • 8 hours of CE must be completed in order to renew a license by at least one qualifier for licensees in the license classifications of Building, Residential and Unclassified. For the Unclassified license, it shall be the qualifier who has passed the Building examination.
  • The 8-hour course requirement includes a mandatory 2-hour course produced by the Board with information about changes in the laws and rules and other content applicable to general contracting.
  • The remaining 6 hours will be elective courses produced by outside providers, submitted to and approved by the Board.
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How to Find an Honest Contractor

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With hurricane season in full swing and other severe winter weather around the corner, home owners may find it necessary to call in professionals to help repair damage to their homes. It’s an unfortunate fact of life that after a natural or man-made disaster, there are people who will try to profit from a community’s misfortune.

 

But a fly-by-night contractor is one disaster you can prevent if you follow a few steps to ensure you hire a reputable professional.

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“A Builders Role in the American Dream”

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For most Americans, like me, home ownership is the epitome of the American dream. Even before those days prior to the writing of the United States Constitution, home ownership was revered as a luxury, held by only a select few.  Home ownership also bore the testimony of man’s ability to provide shelter to his family, protection from often feared wildlife, and a safe refuge for raising strong children. “Home sweet home” is more than just a colloquial expression in today’s world, it is reality, transcending from the days of old. In fact, “at times [the framers of the Constitution] insisted that the right to acquire and possess private property was in some ways the most important of individual rights,” says David Upham, University of Dallas.

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Best Parade of Homes Marketing Effort 2016

Best Parade of Homes Marketing Effort 2016

TOP NORTH CAROLINA HOME BUILDERS AND MARKETING
PROFESSIONALS HONORED AT STARS AWARDS

The North Carolina Home Builders Association (NCHBA) recognized the outstanding performance of home building professionals throughout the state at the annual STARS Awards Gala on Wednesday, September 14, at the Omni Charlotte Hotel.  Held in conjunction with the 21st Century Building Expo & Conference, the STARS Awards saluted builders, associates, realtors, media and advertising professionals for their excellence and contributions to the home building industry.

Best HBA Parade of Homes Marketing Effort
Small/Medium HBA:
Johnston County BIA
Executive Officer: Sherry Pinney Phillips
Local President: Ashley Lee

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