Real Estate Show with Brad Bennington Builders Association

Full Video Transcript Below

[00:00:00] Alice Lema: Well, good morning, Southern Oregon. And welcome back to the real estate show. I'm Alice Lema. I'm a broker here in beautiful Southern Oregon with John L. Scott real estate. And we're talking here to you from the early part of February, and it's a little bit of everything. We've got scraping ice in the morning to turning on the AC in the afternoon.

[00:00:23] And that combination just reminds me a little of our housing market this week as we had a little bit of everything. So we are still, you know, in transition, we're trying to stabilize. We do have more properties coming on the market now. Thank goodness. Thank you, sellers thank you. And we still have a backlog of buyers, so we still have that combination of things, which is very much like our weather, but what that tells us is that we are still trying to stabilize. What's throwing cold water on the whole show is right, the interest rates. So even though the upticks are small it is starting to affect our buyers and our buyers need to stay in close contact with their lenders. Get their pre-approvals updated frequently, and also ask how that affects their closing costs.

[00:01:16] Additionally, please, sellers you need to ask the same question of the buyers you're receiving offers. Hopefully you're getting offers and you want to make sure that those buyers were recently updated with their lenders because you know what, not all buyers stay on top of that stuff. Like they should.

[00:01:33] So ask those questions. If you're a seller getting offers double-check cause you don't want any surprises, you know, after you open escrow. So speaking of surprises. What about the supply chain and material costs that we're all experiencing for those of us that are doing rehab, new construction, that sort of thing.

[00:01:53] We've got Brad Bennington today interviewing he's the executive officer of the builders association here in Southern Oregon. And he's coming along with GuyGiles and mutual Omaha mortgage. And we're going to talk about what it's like to try to build something. What it's like to get money, to build something, to do a mortgage.

[00:02:12] How do you do a loan lock for six months if your house hasn't even started yet. What if you have a house to sell? And then we're going to talk about the effect this is having on our builders and our contractors. Cause you know what, they're a part of our community. They're not actually out to gouge us, they're just having trouble absorbing the shocking inflation, the material, a shortage in hand, can't get materials.

[00:02:37] They're 2, 3, 4 times more expensive than they were. But Brad Bennington has a lot of helpful advice and good tips if you want to do new construction. So please stay tuned for that. We'll be right back after a word from our sponsors. We're brought to you by John L. Scott, Medford, Ashland ,Guy, Giles mutual of Omaha mortgage, and the Rogue Valley Association Realtors will be right.

[00:03:01] Well, welcome back everybody to the real estate show. I'm Alice Lema broker John L. Scott. And today we have one of our favorite two guests. We have Guy Giles mutual, Omaha mortgage, and Brad Bennington, the executive officer of the builder's association, Southern Oregon. Welcome guys.

[00:03:25] Happy happy weekend. So let's just jump in because you know, the, the complaints that I'm hearing from people about construction in general is it's hard to find anything. It's hard to find new construction. And when you do find it, we have builders having to change the prices kind of in the middle. So it's really getting to be a problem. Can you weigh in on that?

[00:03:50] Brad Bennington: So Alice, yeah, that's a, that's an interesting comment that you just made. I'm sure. I'm sure guy has, has got some some interesting perspective on that as well, but, but Alice, the bottom line is, is we don't when I say we, I'm talking about the construction industry in general, just, you know, I mean, across the whole country in general, our industry does not have enough of any to meet the needs of our community.

[00:04:14] So, you know, in all 50 states, we have a skilled labor shortages. We have contractors shortages and we have product interruptions because the way the government handled the COVID situation, there were you know, whole segments, whole manufacturing segments that shut down their factory because Congress wouldn't give them any liability protection for lawsuits. For, in other words, if one worker, they came COVID positive and went to work, then there then theoretically, every other employee in that plant could be exposed. And there, and there was no liability protection from Covid. So all they could do is literally shut whole factories down.

[00:04:55] And that we saw, we saw the unemployment numbers spike. And then what we saw is we saw all of those supply lines, dwindle, and eventually stop. As we got further through this thing, about a year down the road, the factories started manufacturing again, but there's a big, big backlog. So what that means is we have whole areas, whole, gigantic product line areas that are just it, the shelves are empty.

[00:05:22] We're having problems, getting all kinds of things that used to be really easy to get a hold of roofing, drywall believe it or not the products that we make concrete cement, because all of these industries just literally shutting down to protect themselves until, until all of this sorted out.

[00:05:38] And as, as encouraging as all of that sounds, it's even worse here inSouthern Oregon. Why? Because on September 8th, 2020, we lost 3,600 housing units in less than 20 hours. You're in Southern Oregon. We have an especially poignant situation that, that you might say we get, we can talk about more of us, the nuts and bolts later, if you want to, but that's sort of the 30,000 foot view is, is when it comes to our industry.

[00:06:03] Alice, Guy, there isn't enough of anything to meet the needs that our community would like to meet, with the resources that we have available right now.

[00:06:12] Alice Lema: Yeah. And, and don't you think that that's also exasperated by our land planning policies? You know, we just seem to have a shortage of not only materials and labor, but buildable land.

[00:06:25] Brad Bennington: You,, you and Guy, because you're, well-informed people, you know, that Oregon is the most land use restricted state in the United States. It's actually harder to build here than it is Hawaii. Believe it or not.

[00:06:35] Alice Lema: I did not know that.

[00:06:36] Brad Bennington: Yeah, and it takes, it takes a typical development art for developers is about three years from the time the developer buys the property until he can actually create a sellable product. If everything goes well, it's about three years. So just imagine a business where you have to put all your money on the table and borrow all your money, put it on the table to let it sit there for three years while you, while you buy all of these reports and permits and all of these other regulatory oversight items that you need to do.

[00:07:07] Then three years later, you're actually able to build a product that you hope you can sell for a profit to the public to begin recovering your investment. How does that sound for a business model?

[00:07:17] Alice Lema: Wow. So Guy, what kind of information do you have to give your clients, your buyers when they come to you and say, we'd like to try to get a mortgage for new construction? Like, how do you, how do you prepare them?

[00:07:38] Guy Giles: Mainly I just kind of prepare them for, well, when I'm qualifying them all, I'll buffer, you know, you know, put a little padding in the rate on our end. That's really what it's all about because you know, the rest of it. Once these guys are in contract, they're really not going to, you know, these builders aren't changing stream right in the middle of the contract.

[00:07:58] So we have, we have most of the variables right there. We can figure up the millage rate, basically what the taxes will be on a house. But that's the one thing we don't know is, is the rates. So I'll usually put in, you know, a quarter to three eights and make sure that they can still qualify on that. And then, you know, once we're in contract is at this point, kind of get them, get them locked in as early as possible.

[00:08:21] Even if we're doing, you know, some extended locks. I don't like, I don't like to go six months out on a lock because whether or not a company sends it, they, they ended up putting a bigger buffer in there just to kind of cover themselves in case, you know, the rates go up between then and the time that it closes.

[00:08:39] So there's always a cost to that. You can basically close for, you know, 30 to 60 days free. But when you get start getting into the long ones, you're, you're kind of hedging a little bit about where, where that might be at the end. So really we're just trying to make sure that again, there's enough room in there in case in case rates go up a little bit.

[00:08:59] And we also, you know, right now I'm encouraging people to get in and get, get their, their contract signed. Because I can't tell you how many times. Right now, right in the middle of, Hey, you know what, if you have anybody else and to raise our, raise our stuff up because of cost and materials. And, you know, it's, it's sad, but it's just one of those moving targets right now. So do the best we can. And thankfully, we haven't really had any fallout a few years.

[00:09:34] Alice Lema: Well, you know, it's interesting you should bring that up Guy because I wrote a offer on new construction just 24 hours ago. And while we were in negotiations to build or raise the prices of the subdivision.

[00:09:49] Guy Giles: Yeah. And I can't imagine any builder would want to do something like that. Unfortunately, it's just the nature of, of the environment that we're in right now. I deal with things like this daily. You know, on Wednesday of this week we had payroll, you know, the ADP payroll numbers come out and we're expecting $200,000 or 200,000 new jobs. And it was minus 700,000. I mean, could you imagine walking into the lumber store, going down to buy the materials and all of a sudden they said, you know, we don't have it, but we know somebody that does, if you want to pay double for it. And that poor contractors, you know, kind of stuck there with a bill now and a contract written. So it's, it's, it's weird times, right?

[00:10:32] Alice Lema: Yeah. And then the interest rate cause the new construction, unless the house has finished finished, it can take like I'm closing on another one in a week. And it took the full six months because they bought it basically with just the foundation. So here we are six months later and their interest rate changed a lot. How often is that happening guy?

[00:10:55] Guy Giles: Well, I mean, it's, it's definitely happened over the last, you know, since. I don't know, I guess it started in December and then really accelerated through January. We're, we're probably up a good, you know, three eights of a percent to rate in the last, in the last 30, 40 days, haven't tracked it exactly. But again, I've already kind of talked to people about that and, and I kinda my forecast, which I'll probably be dead wrong, I think they raise a little bit more and then they kind of calmed down towards the end of the year is what I really believe it's going to happen. I

[00:11:30] think we have a fed now that's in a really tough position. He came out talking about a lot of rate increases over this over this year. And then to have these ADP numbers come out this week, like they did. I don't know how you really back pedal from that. I think he lost credibility saying that it was the strongest labor market that he's ever seen. I don't envy him or think he has an easy position.

[00:11:53] They're walking a really fine line, but hopefully we can come up with a little bit of fiscal responsibility moving forward and, and maybe kind of settled down the big swings in the stuff.

[00:12:04] Alice Lema: So Brad that poses an interesting question. What are you hearing from your builders about the cost, the sudden spikes and also the interest rate changes?

[00:12:14] Brad Bennington: Alice, good question. We'll keep, keep in mind that this manifestation has been occurring in our industry pretty much ever since our, our governor made her first declaration back in March 8th, 2020. This is not new. This turbulence that Guy is talking about is real and it's, it's been happening.

[00:12:32] And really the only thing that's different is, is how, how bad is it right now? We actually Congressman Walden and Congressman Bentz actually did, did a lot of work getting us some help on price stabilization. But let me, let me just give you one quick example, Alice. Believe it or not even though we live in the softwood capital of the Northwest, one of the most robust timber areas on the entire planet, all of our OSB board, which is a product that is very commonly used in construction, comes down from Canada.

[00:13:06] So does anybody know what's going on in Canada right now? And I'll give you a hint. It has something to do with wheels that turn around. And things that carry lots of weight. Okay. I'll tell you it gets so, so the problem is, is we're in a situation where nearly all of our OSB board, it gets trucked down from Canada.

[00:13:27] And aside from the production side, now we can't get trucks underneath it to get it down here. So we literally have, we literally have a gigantic problem, right? I mean, right here, right now, as we're having this conversation, getting enough of this product for our builders to use it in construction, I know it sounds crazy, but that's where we're at.

[00:13:46] And one thing I want to mention since, and Guy kind of brought it up and you mentioned a contract that had had to be modified. We're actually encouraging anyone that's involved in a, in an ongoing construction, negotiate with your contractor for, for what we call an escalation clause in here. Here's why you might think that it's a good idea, or you might take it in your benefit ifcontractors prices go up and say, well, you know what? You just need it. You're on contract. You know, that's not my problem.

[00:14:19] If you have a situation where your contractor's costs go up beyond what his company is able to tolerate, that contractor might have to file bankruptcy and that contractorfiles bankruptcy on your product on your project, let me tell you, you have a problem the likes of you do not want to have that. Because, because of all the lien holders and everything they're involved in, so we're strongly recommending to all of our builders and any of your listeners that want to engage a contract with a reputable builder and make sure you get a reputable one.

[00:14:51] You just have to agree. You have to sit down across the coffee table from each other and agree. These are the most turbulent times we have ever experienced in our industry. And this is a team situation and you have to come up with a way that is acceptable to both sides. These costs to go up and it's not anyone's fault that they go up, costs go up. You have to decide how you're going to equitably address that in the contract, so that it doesn't have really bad unintended consequences.

[00:15:19] Alice Lema: Well, and you might as well deal with the reality as a team. We really like that advice. We're talking to Brad Bennington, the executive officer of builders association here in Southern Oregon and Guy Giles and mutual of Omaha mortgage.

[00:15:31] We're talking about construction labor. We're talking about materials, what to do if you're trying to get a house done and why you should not wait if you have your eye on some new construction. From our sponsors, John L. Scott Ashland, Medford also Guy Giles Mutual of Omaha mortgage. And the Rogue Valley Association of Realtors. We will be right.

[00:15:56] Well, here we are again folks, back at the real estate show, we're talking to Brad Bennington, the executive officer builders association, Southern Oregon, lots of interesting tips and updates going on with the supply chain and building, and then Guy Giles mutual Omaha mortgage weighing in on what it's like to try to do new construction or get mortgages in general.

[00:16:20] So Guy one of the things we wanted to link back with you was the timelines for new construction can be kind of lengthy. Just like kind of hear what you have to discuss with your buyers when they're thinking of getting a mortgage for something that can be more than 60 days long.

[00:16:40] Guy Giles: Well, you just it, it's, it's kind of funny because there's, the, you know, the stuff we kind of mentioned earlier, as far as just buffering. They're buffering their rate a little bit in case it goes up. You know, hopefully at some point we'll be surprising them with, Hey, the rate actually dropped between now and that point. But we're, we're looking at longer locks in certain situations.

[00:17:00] They just, they can tend to get a little bit costly. We kind of watch out for that, but I think there's some other, some other moving parts that are difficult when it comes to that, because you're trying to logistically sell your house. A lot of the builders want you to have your house listed before they'll accept the contract on, on this build.

[00:17:23] So yeah. What, what are you going to do at that point? You know, if your mom or dad doesn't live in town and especially if you're 85 years old and the odds go down, that that happens. So you have to just, you know, let's just figure out where you're going to be. And then, and then hope that the market is right at that point to be able to sell your house.

[00:17:42] Cause right now it's really easy to get out of the house. You know, rent backs, we're, we're allowed to do it, you know, per the guidelines where you have 60 days to occupy a house. So if you buy it January 1st, you know, you have 60 days after that to get in there. So, you know, if we're talking to six to eight months on a build and that's provided that they can get the materials that they want.

[00:18:05] I do take issue with one thing that the Brad said when he, when he said that, that it's nobody's fault. It's somebody's fault, it's not those two people sitting at the table, in my opinion. And I'll, I'll kind of leave that to your own imagination, but on on our end again, it's just about getting them in the best, in the best position and, you know kinda not really hope for the best, but just, just look at all the different contingencies that could happen and address them upfront.

[00:18:33] Alice Lema: Oh, so don't don't I remember that Guy, you have some kind of a bridging lending device product to help people when they need more than 60 days.

[00:18:44] Guy Giles: Yeah. There is, there is kind of a cross collateralization loan and a lot of my instances, it doesn't really apply because my people are moving here from out of state.

[00:18:56] A lot of times there are title issues when it, when you try to, when you try to do the cross collateralization. You know, there's, there's a couple of other programs out there that they're calling same as cash, but when you really dive deep into them I haven't found one to be real viable, viable, you know, probably the best bet is to sell your house.

[00:19:14] And, you know, get into, you know, it's just kinda tough and again, it's all we can really do is just, it's just try to time things to the best that we can.

[00:19:25] Alice Lema: Yeah. Yeah. It's hard to have because we don't have temporary housing anymore like we used to. The rental market has its own problem.

[00:19:34] Guy Giles: Oh my gosh. Yeah. I've, it's some of the things that I'm hearing as far as, as far as rents go, it's, it's, it's pretty sad. You know, I really wish that. Governor and some people, and I don't mean to keep picking on them, but I, I don't, I don't know if they actually ever get out on the streets and see that there are a lot of, you know, this doesn't hurt the really rich people.

[00:19:54] This hurts just the average guy or gal that's trying to buy their first house or trying to rent a place for that matter. Everything, everything, it seems like they're doing is just counterproductive for affordable housing. And I, I. I, I don't, I don't know how they have, they spend that at voting time and keep getting elected.

[00:20:14] But unfortunately, you know, I, I sit across from the, you know, across the desk from these people all the time. But you know, then again, there's a lot of happy endings doing my job, so I'm not going to stay focused on any negative.

[00:20:26] Alice Lema: Yeah, but that brings up a good point, Brad. When we're talking about the effects of the legislation and you mentioned that there were things put in motion just a couple of years ago. Do you want to elaborate a little bit on that and then kind of fast forward us to where we're at now and what do you hear from your builders about having the consequences of that.

[00:20:46] Brad Bennington: Yeah. Yeah. So, so Alice as you know, the builders association is not a political organization. We did not engage in political activity, but we work on policy because policy affects our communities at the end of the day.

[00:20:59] What are we all trying to do? We're all trying to serve the need of our community for that, for the housing that we need. Right. So when people, when people come to Guy, when people come to you, what are they looking for? They're looking, they're looking for the most important place anyone can have, which is their home, where they're going to live, where they're going to raise their family.

[00:21:16] And the cost of that home really affects their quality of life. You know, whatever that, whatever that house payment is to secure that home for their family, that's consuming a certain amount of money that they can't use for other things. So it's very important for our industry that we work on policy and Ellis to answer your, your question one of the things that really affects our industry, we're a highly regulated. The cost of regulatory impact last year in Southern Oregon was about 40%. So if you look at a $400,000 home, $160,000 of that $400,000 home, or simply compliance with regulatory impacts, right? Those are huge numbers. Can you get it?

[00:21:57] It is. Yeah. 40% of the cost of the new home last year was, was regulatory impact. And a lot of that is. And I'm not going to get out in, into the weeds, but we have a highly regulated industry. We have the hardest state in the union to build in because of land use regulation. And that's just the fact that $400,000 home includes $160,000 of regulatory impact.

[00:22:23] Last year, last year was the long session. Yeah. In our Oregon legislature and that legislative session because of the actions of some people I'm not going to name here added another 20 to $50,000 to the cost of every new home built in Oregon. Oh no. The short, the short session is in session right now.

[00:22:42] And there's legislation that some of these people are considering whose names I won't. Yeah. That could easily add another 30 to $40,000 to the cost of a new home. And that's outside of inflation and outsider, product availability. These are just regulatory impacts that are being legislatively mandated.

[00:23:01] And again, as contractors and builders, we have to comply with the law. We don't, we don't get to pick and choose. They tell us what we have to do and what we can't do. And so on and so forth. We have no choice, but to comply with. W what does that mean to your listeners? Well, what it, what it means to your listeners is, is, is that if they are, if they are considering either getting into a home buying a new home building and building a new home, we understand that it probably looks turbulent because it is, it's a turbulent market out there.

[00:23:33] But if they work with professionals you, all I can tell you is, is everything that I'm looking at is no matter what that price is today or whatever that price was in 2021, it's going to be higher in 2022, it's going to be higher in 2020 3, 24, 25. And we're not going to talk about inflation numbers here because I don't claim to be an economist, but all three of us that run this on this program right now, we know one thing, we're all old enough to remember what happened during the Jimmy Carter years afterwards.

[00:24:06] So if you have, if you, if your listeners have an inclination of they're inclining toward buying a home or building a home as turbulent as it might be, sit down and do the math, make sure that you can afford what you intended. But whatever you want to do, it's just going to be more expensive next year in the year after than it is right now.

[00:24:27] Alice Lema: Wow. So are there any more details about exactly what is more expensive now because of the legislature? Is it anything specific or are we just getting these raw numbers from the last legislation?

[00:24:41] Brad Bennington: Actually, actually I have I'm not gonna, not going to go over here because it would bore you all terribly. I've got, I've got her I've got her scorecard from the last legislative session. It runs 32 pages. Yeah. We started, we started the last legislative session with 4,000 bills in the gun and, and I think by the time we got, we got it down to maybe four or 500, but You know, again, this, this is the kind of thing where you, you could, you can really lose people in the weeds, but just suffice to say, this is, let me just give you one example.

[00:25:16] One of the bill, one of the bills that was signed into law by the governor was her energy bill. And part of that energy bill said this, in the state of Oregon vendors may only sell appliances that are, that are of a certain level of efficiency. And it's very, very, very high. So what that means is, is let's just say, you know, pick a product line, you know, what Westinghouse or Bosch or LG or whatever it might be.

[00:25:43] They have their entire product line, but in the state of Oregon, now they can only sell they're very upper, upper, upper crust line. That's it?And the governor signed that into law, the last legislative session. So what that's going to mean is is are you go into the appliance store and let, let's see. You might've had 20 refrigerators to choose from or 20 dishwashers to choose from or 20 ranges to choose from. Now you're going to have three and they're all going to be very, very expensive.

[00:26:11] Alice Lema: Well, that would explain a lot, you know, we all were kind of wondering. The prices of even a medium range refrigerator went from, you know, 12 or 1500 to over $3,000.

[00:26:23] Brad Bennington: Yeah. Well, again, part of that is product availability and, and what the governor did is really the impact of that, it's really coming in 2022 and after. Again, if you're interested, I'd be happy to go over review you and Guy what happened that again, in our short session, we have, we have other bills, the impact of legislation impact of regulatory oversight in our industry is growing five to six times faster than the consumer price index. That's how bad it is.

[00:26:55] Alice Lema: And our consumer price index is pretty high. It is. Wow. Wow. So, and you know, this all translates, like you said, Brad, it affects the person in the store, who's trying to get a washer cause their's just blew up. And I didn't realize that all these new regulatory demands were just placed on regular, regular appliances.

[00:27:20] And then to loop that back to the contractor and how that house-building industry is suffering, what are the individual contractors having to do to make it through this time and still make a living to feed their families and provide a basic necessity like housing.

[00:27:40] Brad Bennington: Yeah. Well, you know, the thing is Alice is that our contractors are just like any other small business person here in Southern Oregon.

[00:27:50] You know, they're, they're just out there in the marketplace, complying with all the laws that apply to our industry and, and try to make the payroll and whatnot. But the turbulence is severe and here's something that I'm going to say that, that we know is true. Some people are going to look at our industry and say, oh, you know, we see prices going up.

[00:28:10] We know those contractors there. They're just gouging. Let me tell you, let me tell you that it is the exact opposite and I'll tell you what I mean. Our contractors because of the commercial activity tax. And you know what that is because of all these regulatory oversights that have been imposed upon them, even though our contractors are having to charge more for their services, they're actually making less, their margins have actually gone down.

[00:28:38] And the, and the other thing is, is that we know historically contractors are four times more likely to fail financially from trying to manage too much work, then, if they have the right amount or not enough work. So we already have a critical shortage of contractors. We only have 25% of the residential contractors today that we had about 13 years ago.

[00:29:00] Alice Lema: Well, we're going to hold that thought right there. Brad Bennington executive officer for building association, Southern Oregon we'll be right back. Well, welcome back to the real estate show folks. Alice Lema here,broker John L. Scott interviewing Brad, Bennington in the executive officer of the builder's association southern Oregon. Guy, Giles had to jump off for a bad connection before I went to the break. Brad, we were talking about some of the impact on the contractors, the builders themselves, because basically they're small businesses.

[00:29:33] Brad Bennington: Right, right. Yeah. Well, you know, the, the majority of the contractors here in the rogue valley are small businesses. The, these companies have, you know, most of the time they've got less than five employees. So they're, they're really just small businesses. A lot of times their, their families. And the reality is, is the contractors that we have typically are very good at what they do. They're good tradesmen, you know, they're good roofers. They're good concrete finishers. They're good dry wallhangers. They're they're good landscapers and so on. But if you can imagine trying to drink out of a fire hose, that that's what these contractors are faced with trying to comply with all the regulatory oversight that's imposed upon them.

[00:30:13] I'm telling you the paperwork that our, that our builders have to do in this industry, unless someone has been through it, you, you wouldn't believe it. The building code, the planning code, all of the various, the various requirements that we have to comply would make a Philadelphia lawyer dizzy. And these guys and these, these companies, they have to do all their work during the daytime and then go home and do all their paperwork at night.

[00:30:36] It'll probably like you hardworking Realtors do. And in the meantime, the service that they're providing it, you could argue is probably one of the most critical services that there is to any community. Which is what, building homes for people to live in, you know, is there anything more important than for people to have a home to live in? And our, our people are the ones that do it. That's what we do all day, every day is build homes for people.

[00:30:59] Alice Lema: Yeah, it is super critical. And especially in Southern Oregon, cause we've had a shortage for a while and then we had the fires, as you were mentioning earlier and having a reputable builder is just so, so important. And we really need to kind of help our small businesses make it through these times.

[00:31:17] Brad Bennington: Right. That, that that's right. And, and again, it's always good to remember three things. When you go to get a contractor, number one, make sure he's a licensed contractor in the state of Oregon. That's really, really important. The second thing, making sure you get three references of people that he's worked for, that are projects similar to what you want to do.

[00:31:35] And the third thing is, is do not begin work or transmit any money until you have a clear, understandable and enforceable contract. Those three things, those three things are very important. Yeah. Yes, they really are because that's how you end up with the project, not getting done the way you wanted it.

[00:31:52] Alice Lema: And the builders want the clients to be happy. They don't want anybody upset, but clarity in writing. You can't beat that. Right.

[00:32:01] Brad Bennington: That's right. But the good news is we've got, we've got a lot of good contractors in our area, Alice, but the problem is, is that they are all stretched thin because, because they cannot, we just, literally, we don't have the material and we don't have the even, even the equipment, the machinery, all the products that we need, we're just, we're short handed all the way around.

[00:32:20] So they're doing the best that they can, kind of making bricks without straw. Here at the builders association, Southern Oregon, what we do is, is we work on education, advocacy and policy support for the building industry. Why, so that our builders can create products for our community ,that are safe, sustainable, and affordable.

[00:32:38] That's that's what we work on. So for your listeners, that that's important for them to know is, they need to know that we are their advocate when it comes to these regulatory issues with our legislators and so on. We're the ones reminding them that every one of these good ideas that they came come up with has to be paid for by your listeners. And please, please make sure that it's really necessary before you do it.

[00:33:02] Alice Lema: Yeah, that's very, very good advice. And then the builders association is also a resource. You are there to help, as you said, educate and advocate. So it's definitely a great resource that we have in our valley.

[00:33:21] Brad Bennington: It is, well we're, you know, we're, we're fortunate. We have down here in Southern Oregon, things ae so much better than other, other parts of the state. We have, you know, we definitely have our challenges down here because of all the housing that we lost that were, that we're trying to rebuild. But we have you know, our building officials here are, I would say, are as good as anywhere in the state.

[00:33:38] Our legislators here are mostly very concerned about serving our citizens. Our government here, our county government here, I think is very good. Our city governments for the most part are very interested, are very interested in helping us serve the community. But you just can't get away from the fact that we have a, an acute shortage of housing that we're not going to fix anytime soon, Alice, we just don't have the resources to build all the housing that our community needs right now. But we are, we are working very, very hard to do the best that we can.

[00:34:12] Alice Lema: So how is it going with the rebuilding in the fire area? How, how is the new construction down there?

[00:34:19] Brad Bennington: Right. So in, in Phoenix, things are going I would say pretty well perhaps in Talent or there might be some I don't know, a polite way to say it, so I'm not gonna talk about it.

[00:34:27] So the the, the rebuild is, is going in Phoenix is going very well. And Talent there's, there's some difficulties there, but the bottom line is, is our builders are doing everything that they can to help the people. And for people that are interested in again Alice your listeners and people that you work with, things that are important are costs are going up.

[00:34:48] Things are going to just gonna get more expensive. Interest rates are going to go up. So if they're interested in housing, if you can, if you can't qualify, I would never suggest anyone to do something that you can't afford. But if you know, you need a home. And if you're, if you are working with a real estate professional like you, or a finance professional like Guy and you qualify for a home, please consider the fact that the money rate right now is probably as low as it's going to be for a long time.

[00:35:16] And that costs going into the future are only going to go up. So this, as, as inconvenient as it might be, this might be, this might be the time for some of your listeners to think about buying.

[00:35:29] Alice Lema: I totally agree, even though we've had a nudge up on some of those interest rates it's still, it's still to me like free money and, and you, and I remember back you mentioned during the eighties, seventies, eighties, when we had our last hyperinflation and kind of what the outcome come of that was, you know, People were having to pay 11 to 16% interest rate back then we're not thinking that's going to happen now. But you know, three, 4%, 5% that used to be considered free money.

[00:36:05] Brad Bennington: Oh yeah. Oh yeah. Well the, and in 1980, the state of Oregon had to repeal its usury laws because the banks were charging more than the loan sharks used to.

[00:36:14] Alice Lema: Oh, my gosh. I did not know that. That's crazy.

[00:36:17] Brad Bennington: Oh yeah. Yeah. Those are, those are, those are interesting times. I wish I didn't remember them as well as I do.

[00:36:24] Alice Lema: But we only have a minute left, but there was one quick question I wanted to circle back on. You mentioned a commercial activity tax. What is that?

[00:36:33] Brad Bennington: Yeah, the commercial activity tax. They called it the school planning act, I think. And it was essentially, essentially a sales tax is what it is. You can you can Google, Google that. There were certain legislators that thought it was a great idea.

[00:36:48] Other legislators that were in the minority that said, ah, this is not a good time because this tax hit us right in the middle of the COVID thing. Right. So businesses were already up against the ropes when this commercial activity tax. Was levied and, and it's, it's, it's a big tax. So because I don't pretend to be a tax expert, I'm not going to talk about it. I'll I'll just leave that to you and your listeners to, to look it up. But the commercial activity tax was just one of many legislative actions that were taken that raised the overhead of people in our industry. And every time we raise our overhead, that overhead has to be recaptured somewhere.

[00:37:26] And of course, and of course it's always the consumer that winds up paying for all these great legislative ideas.

[00:37:32] Alice Lema: Well Brad Bennington we so appreciate you being on the show. Executive officer Builders Association, Southern Oregon. Let's have you back again soon. Thank you so much. And Southern Oregon. Have a beautiful weekend.

[00:37:44] Talk to you next time. Bye now. Bye bye.