What’s Keeping Builders Up at Night?
On builders’ minds as they troll the miles of aisles of manufacturers and services bringing their latest and greatest wares to market in residential construction’s biggest annual marketplace?
For a lot of them it’s taxes.
An overhaul of tax code unlike any other in more than three decades altered–and did not simplify–rules for both individuals and businesses kicked into effect with the President’s signature, and many home builders–whose companies range in activity from construction, to real estate, to design, to contract labor, to investment, to management and marketing, to retail, to engineering, to manufacturing–are confused about how the new rules impact their business vs. individual tax status. So, if you’re out there, and haven’t been able to make it to Orlando for the International Builders Show, and you’re confused and worried about what the new Tax Cut and Jobs Act laws mean for you and your business, you’re in good company (we’ll make sure over the next few months to bring you as much clarity and insight as we can, such as this analysisfrom RCLCO managing director Gregg Logan, which does a good job of mapping the implications for individual filers for housing demand as the new rules play out).
The Internal Revenue Service hasn’t even yet begun to come out with clarifications, interpretations, and guidance on many of the grayer areas of the new law, and once it does, more confusion still is likely to ensue. Resources and experts who can help builders sort through and re-calibrate their tax accounting over the next 11months and beyond are going to be in big demand.
At the same time, with a whiff of confidence that the new rules will produce certainty–at least temporarily, as long as cuts are in effect for individuals–that many more American wage earners are going to take home more of their pay than they had been, expectations have begun to rise that two other Trump promises might also start to have a fighting chance to come to fruition.
One is development and funding of a big infrastructure program that would produce jobs and put more land into play for community development, supported by new and improved transportation. Is housing infrastructure? Of course it is. It’s just a case of the work to persuade Congressional lawmakers that it is, and provide them the tools and funding programs to address the dire need for workforce housing in most communities where those people are priced out of current options and have few expectations for improvement.
The other promise is for an aggressive initiative to cut back on Federal regulation, a mission the administration has already acted on and can be expected to continue to work to remove as many barriers from natural market forces as possible.
Perhaps as a function of efforts around de-regulation, housing finance reform is also a high priority for the government, and builders are anxious to ensure that reform that comes to pass leaves in place Americans’ access to reasonably-priced, and reasonably-termed mortgage lending to both finance their home purchases and to sell their properties when and if the moment comes that they want to do that.
In catching up for a few moments with Rob Dietz, chief economist for the National Association of Home Builders, he noted that these areas of focus rank as priorities for NAHB initiatives on Capitol Hill–GSE reform, infrastructure, and de-regulation, which he notes is going to take not just effort at a national level, but strong local home builders association work in municipal and regional jurisdictions to make progress as well.
Meanwhile, he said, the association’s focus is on trying to help builders and their partners understand and prepare for the massive effects and consequences of the new tax rules that are now the law of the land.