Baby Boomers, Still Buying
At a time when housing has slowed in many markets, one out of four baby boomers between the ages of 50 and 60 consider it very likely or somewhat likely that they will purchase some form of additional real estate within the next 12 months, according to a new study conducted by market researchers at Harris Interactive for the National Association of Realtors®. Among boomer households with incomes of $100,000 or more, the percentage jumps to 37%. Two out of three who said that they are likely to buy will be looking for a new primary residence, another 26% expect to buy land and 19% plan to acquire a rental property. Baby boomer households in the 42 to 60 age range reported having accumulated a median $100,000 in equity in their homes. Among 50- to 60-year-olds, 36% said that their home equity accounted for anywhere from 51% to 100% of their household net worth. Even so, three-quarters of the boomers who were surveyed said that they did not feel financially prepared to retire, and many expect to keep working, health permitting, after they hit the traditional retirement age of 60. Growing numbers of the boomers also said that housing is getting too expensive, and 67% of those who are 50 to 60 worry that housing costs could spiral out of hand in the future, making housing affordability in an extended retirement an increasingly tough problem. (www.washingtonpost.com)
Washington Post (10/21/06); Kenneth R. Harney
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High Prices Still Mark Concrete Industry, Despite Cement Surplus
Even though there are now surpluses of concrete in New Mexico instead of a shortage, the average price of concrete is about $130 per cubic yard, about the same as the price of cement in August 2005 after the shortage first hit. Before the crisis, cement was selling for roughly $45 per cubic yard. Builders say the price for cement is more a reflection of what the market will sustain, ensuring that shortages don’t re-occur in the near future. The costs of all raw materials have been increasing because of high gas prices and an overall increase in services across all industries, according to Dennis Roberts, director of industry relations for the Associated General Contractors of New Mexico. Between June 2005 and June 2006, he says, the prices of asphalt increased by 71.4%, copper and brass by 81.5%, iron ore by 73.7%, plastic by 19.2% and gypsum by 23.3%. Greater economic growth in foreign countries, including China and Japan, have led to competition to secure raw materials and that has kept prices high despite the lack of shortages. And while the pace of residential construction has slowed, there has been a spurt in commercial development. At the height of New Mexico’s cement shortage, there was a five- to six-week wait for concrete, at best. Last September, Jim Folkman, executive vice president of the Home Builders Association of Central New Mexico, predicted that private real estate developments would be harmed the most by the shortage. “Future home buyers can be sure the price of houses will go up because of the shortage of cement,” Folkman said. “One hundred percent of the price increase is falling on New Mexico contractors and buyers. The only ones profiting are the cement producers.” The median price of a new home in Albuquerque is $225,750, up from $176,999 in October of 2005, says David Murphy, publisher of SalesTraq of New Mexico. (www.albuquerque.bizjournals.com)
New Mexico Business Weekly (10/23/06); Jason Trenkle
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U.S. Copper Premiums Soften as Demand Drops Off
Responding to a slowdown in the nation’s housing industry and the substitution of alternative products for copper, U.S. copper premiums have edged down and have now fallen to a range of 6 to 6.45 cents a pound, delivered to most U.S. destinations, from a previous range of 6.15 to 7 cents a pound. “Everything has been progressively slowing since August,” said one trader. “The housing bubble has burst. There are some serious issues surrounding substitution and scrap is cheaper. There are no serious buyers out there right now and things are unlikely to improve through the fourth quarter as everyone tries to keep stocks at a minimum.” Copper is based in many building supplies, such as plumbing products and electrical wiring. With copper prices more than doubling this year, more end-users such as home builders and air conditioning manufacturers have been turning to less expensive alternatives such as aluminum and plastic. (www.metalbulletin.com)
Metal Bulletin (10/19/06); Sean Barry
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Finally, the Contractor Will Take Your Calls
In a departure from the booming real-estate market of the past several years when people often found themselves waiting for months for contractors to take on their remodeling jobs, home owners are now more likely to find a quick response and sometimes even a lower price. “Rather than saying ‘call me next spring,’ they’ll be more likely to say 'I’ll be over this week to talk about the project,’” says Kermit Baker, a senior research fellow at the Harvard Joint Center for Housing Studies. Custom and speculative builders are also starting to take on renovation jobs, picking up work they may have passed over a year ago. Tucson, Ariz. builder Richard Fink, who used to do a few remodeling jobs as favors to former clients, has now seen remodeling grow to half his business. High-end custom builder Samm Jernigan in Wilmington, N.C. said earlier this year that he started “aggressively pursuing” remodeling projects for the first time, and Philadelphia-area builder John Diament says that two months ago he started asking architects to send big remodeling jobs his way. “It’s good news for the consumer if you’ve got a lot more people seeking projects,” says Gopal Ahluwalia, NAHB’s staff vice president of research. Recently taking on more remodeling projects, Scott Sevon, a custom builder and remodeler in Chicago, says he has instructed his staff that remodeling “is a lot more time and hand-holding and a lot of good communication skills.” So that they can demonstrate their responsiveness, he gave all of his staff Blackberry e-mail devices that enable clients to get in touch with them at any time. (www.wsj.com)
Wall Street Journal (10/12/06); Sara Schaefer Munoz
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All Business Is Local at Incubator
Washington, D.C. laws requiring that 35% of the work on city-funded or subsidized projects be performed by local, small and minority businesses and that all city-funded projects have a 20% minority equity investment have yielded mixed results and have brought complaints from builders and developers that the pool of qualified and capable contractors is too shallow to do all the work. But developer Jim Abdo, borrowing an incubator idea from the technology industry, has quietly turned an old warehouse in the city into a contractor’s campus that’s home to a drywall expert, electrician, roofer and iron worker. For the perfect craftsmanship he needs to convert a 130-year-old Children’s Museum into $700-a-square-foot condominiums, he has turned to Jose Flores, a drywall contractor he knows and whose work he considers “flawless.” Flores moved his 45-person operation, J’s Drywall, from Virginia to the warehouse Aldo owns. He pays $1,000 a month for the space, a third of market rate, and in turn has agreed to register with the city’s Local, Small, Disadvantaged Business Enterprise program, which certifies D.C.-based businesses for preferences on city contracts. (www.washington.bizjournals.com)
Washington Business Journal (10/20/06); Sean Madigan
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Vandals Hit Logging Site
The letters E-L-F, an acronym for the Earth Liberation Front environmental terrorist group, were written in dust on heavy equipment vandalized recently near a rural logging site in Siskiyou County, Calif., but investigators aren’t ready to blame the radical group and say that disgruntled employees, deer hunters or teenagers could be responsible. At least nine bulldozers, grazers, front-end loaders and other machines belonging to Hilltop Logging Inc. were devastated in the attack, which may close the 20-employee company until at least next year. Dirt and other debris were put into fuel and oil lines, belts and fuel lines were cut, computer systems were destroyed and gear linkages were sawed in half, according to the sheriff’s department. In 2002, the FBI estimated that ELF and its sister group, the Animal Liberation Front, committed more than 600 criminal acts in the U.S. since 1996, causing more than $34 million in damage. But those numbers would be higher now, and the organization is believed to be responsible for several crimes in Northern California in recent years, including arson at a barn on Bureau of Land Management land near Susanville in 2001 and firebombs placed at construction sites in Placer County in 2005, according to a spokesperson for the FBI. (www.redding.com)
Redding Record Searchlight (10/4/06); Ryan Sabalow and the Associated Press
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