Slowing Home Market to Ripple Through Many Layers of Jobs

With the housing market slowing down, concerns are growing that appraisers, mortgage brokers, home construction workers and other professionals in positions related to housing may be forced out of their jobs, sending recessionary waves through the job market and the economy. Almost four out of every 10 jobs created in the past four years were in housing-related fields, and at the end of last year, a record 9.8% of U.S. workers were employed in the real estate industry, compared to 8.2% a decade earlier, according to Moody’s Economy.com. Mark Zandi, the chief economist at Moody.com, advises people with housing industry-related jobs to “prepare for no pay increase and no bonus, something they have been getting a lot of. At worst, they should be thinking they may need to change occupations.” However, NAHB Chief Economist David Seiders believes that many workers in home construction have skills that will enable them to make a successful transition to commercial building. “The commercial market now seems to be on a pretty good upswing,” he said, “and if housing loses ground, which I think is very likely, we will see some of those workers move into the non-residential side.” (www.usatoday.com)
USA Today (3/20/06); Barbara Hagenbaugh and Noelle Knox

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Interest Deduction: Safe or Not?

Although President Bush has said in public that his tax reform panel’s proposal to do away with the mortgage interest tax deduction is dead, Kurt Pfotenhauer, the chief lobbyist for the Mortgage Bankers Association, believes that it’s going to come back as the government starts looking for the money to pay for the deficit. According to the Joint Committee on Taxation, the deduction — which enables individuals to write off interest on up to $1 million in mortgage indebtedness plus interest on $100,000 in home equity loans — represents an annual revenue loss to the Treasury of $72.6 billion. Over the next five years, the panel estimates that the write off could total $434.2 billion. According to data from the IRS on tax returns, more than 60% of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000. Additionally, according to the National Association of Realtors®, about 152,000 of the 36 million returns that take the deduction show an adjusted gross income of less than $5,000. (www.realtytimes.com)
Realty Times (3/22/06); Lew Sichelman

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Brand-New Home Is Unlivable

After initially receiving a certificate of occupancy, which was subsequently revoked, the owners of a new home in upstate New York have learned that it will cost an estimated $50,000-$70,000 in repairs to bring it up to code, and that’s assuming that the foundation is not faulty. If it is faulty, according to contractor Moe Ovitt, who isn’t connected with the project, the structure may need to be torn down. On a March 7 tour of the house with a local reporter, Ovitt noted that the plans for the home didn’t match anything he actually saw during his visit. The plans indicated a support beam, for example, where there wasn’t anything but air, and duct tape was used for duct work. “Every home needs to breathe, and this home is suffocating,” he said, reaching up into the peak of the home, where the plans indicated a need for ventilation and there wasn’t any. Ovitt also questioned the placement of a 40-gallon hot water heater in the attic. An enforcement officer called the framing substandard and the insulation below code. He said that the entire structure was beginning to sag and that the foundation, plumbing and heating systems were improperly installed. (www.poststar.com)
Glens Falls Post-Star (3/17/06); Beth Bresnahan, RISMEDIA

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Reducing the Juice — Many are Resigned to 72% Rise in Rates, While Others Fear They’re Unaffordable

While Marylanders await a 72% increase in electricity prices from Baltimore Gas and Electric in a few months, experts on consumer behavior are predicting that the rise, if it’s long-lasting, could change residential habits. Home buyers might start shying away from vaulted ceilings, which are aesthetically pleasing, but waste heat. People could decide to use less expensive stoves, like those that burn pellets made of sawdust, to generate heat in place of electrical systems. Energy-efficient light bulbs could become more of a necessity than a novelty. “With energy prices, you see a lot of activity right at the time of the increase, and then if the prices drop back down again, then there’s generally less attention,” said Joe Wiehagen, a senior research engineer at the NAHB Research Center. He said that this time feels different, however. “It appears that there are a number of factors influencing prices, which would lead one to believe this is not just simply a blip that will go away,” he said. “We’re probably looking at a time when energy is at least going to be able to be discussed and there’s going to be an increase in sustained attention to it, which is really what it takes to increase focus not only for builders, but consumers in being more efficient.” (www.baltimoresun.com)
Baltimore Sun (3/19/06); Tricia Bishop and Andrea K. Walker

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Lots in Odd Shapes Are No Obstacle to Housing

After a real-estate boom that has made land in desirable neighborhoods scarce and expensive, more builders and home owners are buying up strips and scraps, squeezing high-end homes onto properties once considered uninhabitable and carving parcels out of wetlands and steep hillsides. “Builders are using every nook and cranny,” said Gopal Ahluwalia, NAHB’s vice president of research. For example, Drees Co., a builder in Ft. Mitchell, Ky., says it has halved the size of lots in 80% of its developments during the past five years so it can fit more houses along the street. In the process, it has gone from box-shaped lots to many that are long and skinny, often as small as 6,000 square feet, compared to a national average of 8,800 square feet. In cooling markets, homes on odd-shaped lots run the risk that they will be less appealing than those on conventional lots. One of the biggest challenges for developers of odd lots is how to build houses that justify their high price tag. In Orlando, Fla., Brentwood CEO Frank Pizzica is managing to build $1.2 million-$1.7 million homes ranging from 2,800-5,000 square feet on smaller lots by adding a third floor. With lot widths as low as 35 feet, he overcomes a cramped feeling by including 12-foot ceilings and balconies on each floor and orienting the family room to golf-course and lake views. He also adds finishes like five-inch-thick crown moldings, and provides pools, home theaters and wet bars. (www.chicagotribune.com)
Chicago Tribune (3/19/06); June Fletcher, The Wall Street Journal

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Nurturing the Dream of Her ‘Green’ Home

Eco-sensitive building methods are “the future of construction,” according to an NAHB spokesperson. “In 10 years, we may not be calling this green building. We may just be calling it building,” he said. Jackie O’Neil is close to completion of her “green” home in Schwenksville, Pa., which features solar panels on the roof to generate electricity and rain barrels to catch water. It is being constructed with eco-friendly fiber-cement siding instead of wood or vinyl and outfitted with low-flow faucets and showerheads and energy-efficient appliances. Including the land, fees, labor and materials, the final cost of the house will be $533,000, and it is projected that it will cost nothing to heat and cool the structure. Once laughed off as too pricey or even too politically correct, green buildings are cropping up more often, but local examples of green homes are still hard to come by. While some higher-volume home builders are starting to incorporate environmentally sensitive methods, they are still not widely used, and O’Neil decided to build her home herself. (www.philly.com)
Philadelphia Inquirer (3/24/06); Elisa Ung

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