Hi! Kathe Ostrom, your Minnesota State Rep here asking, “Have you noticed the price of materials lately? What is NAHB doing about it?” The answer is NAHB is making efforts to decrease the impacts of the increase of material costs. Below is an economic summary and prediction for material prices and actions NAHB is taking.

Economic Summary and Forecast

The long drought in housing not only took its toll on home builders, but also on the network of suppliers and contractors builders rely on. And, it will take time to rebuild that infrastructure. For example, prices of oriented strand board (OSB) have doubled since April 2012, and framing lumber prices have gone up by 40% over the past six months. Producers of wood products and gypsum have pointed to productive capacity that was idled or eliminated during the housing downturn, resulting in higher production costs and higher prices.

Lumber and OSB producers have indicated that returning or replacing that capacity to production depends on whether the current recovery in housing continues. Labor, materials, and distribution channels need to be re-established.

The forecast for lumber prices is unfortunately a continued high. The U.S. housing market recovery plus strong demand from China and Asia will keep upward pressure on prices. Meanwhile, the supply of available logs will be constrained, because the logs made available due to the mountain pine beetle infestation are reaching the end of their useful life. The beetle epidemic will result in a permanent reduction in lumber production in British Columbia. The second cost factor is the forestry management regulations in eastern Canada, where Quebec has reduced timber harvesting by 30% in the last 10 years.

The outlook for OSB is similar to lumber. Strong housing demand is keeping prices elevated while a wave of new capacity in the coming months is expected to help put pressure on prices. Gypsum producers have also pointed to productive capacity that was idled or eliminated during the housing downturn.

Here is a summary of NAHB efforts and actions to lower the impact of the rise in material costs:

1. Testifying before Congress. Legislation requiring the government to implement active forest management plans would benefit rural communities and boost timber harvesting on federal lands. On April 16, NAHB sent letters to members of the Senate Energy and Natural Resources Committee and the House Natural Resources Committee in support of the Lyon County Economic Development and Conservation Act. The bill would increase the production of copper, which can add up to 4.4% to the cost of building a new home.

NAHB has met with Canadian government and U.S. Commerce Department officials on the need to ensure an adequate supply of lumber, and other building materials, and urging Cabinet officials to ensure “there are no regulatory barriers or supply-chain interruptions that would increase prices or impede availability” of building materials

2. Providing price escalation language. To help members limit the damage of unpredictable price hikes for building materials, NAHB is providing price escalation language that can be included in home sales contracts. Email David Crump at NAHB or call him at 800-368-5242 x8491 for more info.

3. State and Local Issues Fund. The deadline for submitting applications to the NAHB State and Local Issues Fund is Tuesday, May 21^st. The SLIF application is available HERE.

Hey, it’s Kathe Ostrom again – your Minnesota NAHB State Rep.

I am calling local association presidents here in Minnesota to see how they are doing, asking if there are any problems that I or NAHB can help them with and just generally chatting about the state of the industry in their corner of Minnesota.

After talking with three last Friday, I realized there was a theme running through our talks….membership is stagnant, retention is difficult and finding new members is a problem. Not a surprise, right?  So I thought I would put the question to my state rep chat line…”How do you get members to a meeting?  And, more difficult, how do you get new prospects to a meeting?”  The following are some quotes from around the country which I thought might spark an idea or two:

“The only really successful and consistent way to increase membership is to involve the most successful and influential members of the community in the recruiting process and to structure the membership drive to force competition between the real leaders of the local association. “

“Membership is largely dependent on housing starts.  Even the best recruiting effort will have limited success without a reasonably strong industry to support it.”

 “Younger members are motivated in different ways from those of the older members.  They have to be given meaningful roles from the very beginning to encourage their involvement.  “

“We had an open membership meeting last night – what I’ll call a kitchen table or living room discussion – on how this group gives my little company a much larger voice at the local, state, and national level. We spoke about how our membership dollars are spent on the local and national lobbyists as well as the legal teams that can help us get back on track with the occasional derailments of conservation or heritage.”

“The trend I see as I travel around the country is membership is growing through commercial builders.”

“The west coast and mountain states seem to be the most progressive in terms of younger generations involved and inclusive of associate members. Many of their organizations are named Building Industry Association. Not ‘Home Builders’ in the name.”

“We asked our members to bring one new business acquaintance to our meeting. We offered a discounted first-year membership and we fed them.”

“Have any of us ever tried a Family Day for recruiting?  A day at the park or something like that?  Possibly an opportunity to convince spouse (in particular) that the HBA is important, etc?”

I hope something in here rings a bell for any of you who are struggling with the same issues. NAHB has many resources to help. There is a webinar on April 16, Strategies for Overcoming the Objections and the May 9, Basic Recruitment/Retention webinar.  Here is the link:  Membership Webinars Schedule and Past Recordings.

I understand Rochester Area Builders is doing great things in retention and recruitment of the Gen X/Y groups, and Central Minnesota Builders Association in St. Cloud was recently recognized by NAHB for their accomplishments in member retention.

We have some outstanding resources right here in our state, and I’m happy to say both Bonnie Moeller the Executive Officer of CMBA and John Eischen, Executive Officer of RAB, have graciously agreed to write a blog about their success and what they’re doing right. Thank you to both local associations. I can’t wait to see what they have for us.

Please comment if you have an idea or a recruiting/retention success story to share. We’re all part of this association because we care about the success and integrity of the industry. There are many others in this business that would benefit from membership as well.

Unifying the industry and banding together is important because we’re stronger together!

Kathe Ostrom, CN Ostrom & Son
Minnesota’s NAHB State Rep

There have been lots of rumblings, tumblings, and grumblings about the NAHB committee appointment process lately.  In Minnesota, there has been concern expressed about the number of Minnesota members given committee appointments. Our research shows we have two appointed slots. Discussion has also centered on a clear and fair process for earning a committee appointment.

This issue has been a major topic on my State Rep listserv which is an online chat open to all state reps.

The following is my version of the discussion points:

There are many things you can do to be appointed to serve on an NAHB committee – emphasis on what YOU can do:

1. Attend committee of choice meetings for 2 years and ‘Sign in” at each meeting. (2 years is not a requirement, but certainly should attend regularly to show interest)
2. Volunteer to work on any subcommittee
3. Participate in BUILDPAC
4. Let the committee chair/leadership know of your interest
5. Let your State Rep and NAC know of your interest in the committee appointment
6. Complete committee application on line and on time on NAHB.org
7. Follow-up with someone in leadership, hopefully a Senior Officer, to let them know you applied and are counting on serving FOR them.

As you can see, if serving on an NAHB committee is something you’d like, there is a lot you can do to enhance your chances of winning a committee seat.  It can be as simple as regularly attending NAHB committee meetings and donating to BUILDPAC.  Don’t wait for someone to ask you.  Step out and shake hands with the committee chair, state rep (that’s me), or NAC (National Area Chairman).  If you get a chance to introduce yourself to a senior officer – DO IT!  Remember, there are over 240,000 members vying for those seats.

As Minnesota State Rep, I will do everything I can to help each of you but you have to do the groundwork.

The BAM staff and I have been doing some research on Minnesota’s current involvement at NAHB.  Currently, we have only two appointed slots, one on the Legal Action Committee and one on the Business Management and Technology Committee.  As of last week, we have three members contributing to BUILDPAC.

For those of you interested in committee appointments, take a look at that list and start taking some action.  There are still open committee seats waiting to be filled so write that BUILDPAC check today!

It’s important for Minnesota to be involved in the work NAHB is doing and the decisions being made, but it’ll take some work on our part as individuals to collectively get Minnesota back on the map.