Nation's Building News Online: April 21, 2003
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Zero Energy Home Celebrates Earth Day
John Wesley Miller is celebrating Earth Day by opening the doors of his new Zero Energy Home to the public.
Developed by The John Wesley Miller Companies in the in-town neighborhood of Armory Park del Sol in Tucson in partnership with the NAHB Research Center and Tucson Electric Power, the home is designed to produce as much energy as it consumes.
The home combines state-of-the-art, energy-efficient construction and appliances with commercially available renewable energy systems. It makes extensive use of active and passive solar systems, and Tucson Electric Power has agreed to run the home’s meter backward and credit home owners when the home’s renewable energy systems put power back into the grid.
“We want to see that meter spin backwards,” said Miller in a presentation at the recent National Green Building Conference in Baltimore.
Designed by Devereaux and Associates, the home is part of a national demonstration program funded by the U.S. Department of Energy through the National Renewable Energy Laboratory. The program’s goal is to introduce the zero-energy concept into new single-family home construction.
Miller said his green-built homes “feel like part of the old neighborhood” in which they are being built and they demonstrate that “you can make green building the norm.”
The home’s features include: energy-saving fluorescent lighting, solar-powered tankless water heating, EnergyStar-rated appliances, low-flow plumbing fixtures, a very high-efficiency air conditioning system, radiant barrier roof decking, windows that minimize solar heat gain, air admittance plumbing vents and PEX piping.
Project sponsors are: Carrier Corporation, Kohler Co., Microtherm, SEISCO, Milgard Windows, Nora Lighting, Osram Sylvania, Panasonic, Sioux Chief Manufacturing Company, Studor, Sun Lighting, TechShield and Whirlpool Corporation.
NAHB Research Center staff will monitor energy use and other vital information to prepare an evaluation of the home. Once documented, these results will be made available to the public.
Building News Coast To Coast
Growing Scarcity of Land Alters Home Economics
The expanding population, immigration and readily available credit have sparked record demand for homes; but builders are facing a critical shortage of developable land. Land costs have soared to excessive heights as builders engage in bidding wars and local governments preserve land for conservation, lengthen the permit approval process and impose moratoriums on residential development to minimize the impact of rapid growth. As a result, families are paying more for shelter, cities are getting denser and more expensive as living spaces shrink, and large suburban homes are appealing only to wealthy buyers or those willing to commute long distances to the city. In fact, Fisher Center for Real Estate and Urban Economics Chairman Kenneth Rosen says the median home price in California jumped 20% last year; and three-fourths of that increase can be attributed to land-use regulations. There is cause for concern, considering that falling home prices generally follow declines in land supply, notes New York-based housing analyst Barbara Allen. Home buyers have been forced to shoulder much of the costs associated with land constraints that have been passed on by builders during the housing boom, but Las Vegas-based home-building consultant Dennis Smith predicts they will be willing to do so only for as long as interest rates remain low. The land crisis has prompted 71 Las Vegas builders to close or sell to KB Home, Centex Corp. and other national builders over the past seven years.
Cities Making New Pitches to Reverse Decades of Population Loss
While many of the older industrial cities in the U.S. Northeast and Midwest registered population declines in the second half of the 1900s, as some residents relocated to the suburbs and others headed South and West in search of employment, most recovered when an immigration boom flooded the nation with Hispanics and Asians. In some places, however, the influx of new residents was not enough to offset the loss of people; now, those cities still struggling to turn around population drops are launching new campaigns to bring people back. Philadelphia, for instance, has kicked off a $295 million effort to rehabilitate blighted communities, attract new residents and construct new housing; Baltimore is using a Hispanic liaison in an attempt to draw Hispanics to the city; the District of Columbia is hoping to add 100,000 more people by building more affordable housing, improving schools and expanding job training opportunities; and Schenectady, NY, is courting the Guyanese population of New York City to move there and fix up abandoned properties. Schenectady's plan underscores the fact that even poorer new residents are welcome since they generate tax revenue by occupying vacant homes and reversing neighborhood blight and since a growing city is more apt to attract new investment than one that is shrinking.
Property Tax Tops List of Least Favorite Taxes
While a 1994 Gallup Poll showed that the U.S. public equally despised property taxes and federal income taxes nearly a decade ago, the latest survey finds the former pulling ahead of the latter as the country's 'least fair' levy. The share of poll participants who named local property taxes as the most-hated hit 38%, with federal income taxes coming in a distant second with 21% of the responses. All income brackets cited property taxes as the worst, but the dislike was especially high among households making $75,000 or more per year as well as among those living in the eastern United States. Larry Naake, executive director of the National Association of Counties, speculates that the survey's results may reflect the trend of rising property taxes throughout the states. Local governments have hiked the taxes, he noted, as state and federal governments have required more without simultaneously increasing assistance. Census data confirms that the typical U.S. home owner paid $885 in property taxes in 2000 — twice the average 15 years earlier. Moreover, the financial pressure on local governments is unlikely to ease up in the foreseeable future.
Retaining Generation Y: Housing Policies Could Run Group Off
Growth controls in Richmond, VA, could ultimately force young workers to live elsewhere by limiting new development and driving up costs, warns Richmond Association of Realtors® President Ned Massie. However, Virginia Municipal League legal services director Mark Flynn believes development must be controlled to eliminate sprawl. Flynn notes that "the market drives the cost of housing much more than any costs resulting from local land-use control." Meanwhile, Massie views higher-density development as a better alternative to curb sprawl and provide plenty of homes for the younger population. In fact, Massie visited two such developments in Florida and South Carolina. The projects feature as many as nine houses per acre in the "neo-traditional" style, homes and businesses within walking distance, and open space.
Zero Inflation in March After Excluding Energy
The Labor Department reports that inflation held steady in March — failing to ratchet up for the first time since February 1999 — which analysts believe will keep interest rates at record lows and fuel the housing market until the overall economy rebounds. Commerzbank Securities global head of fixed income research Bob Gay, who formerly served as an economist at the Federal Reserve, believes zero inflation will drive up real incomes and make it less costly for consumers to purchase new homes. "Anybody who ever wanted to buy a home is looking at whether they can finance one right now," Gay notes. Though recent reports reveal a drop in housing permits, Gay does not anticipate a major slowdown in the market.
Including Women in the Mix
Research shows that women play a significant role in how money is spent, and more single women than men are home owners. In response, builders are looking for ways to influence female buyers. Gainesville, GA-based consultant Charles Clark, who has worked with most of the top residential builders in the country, formulated four behavioral categories to describe people: assertive and non-emotional bulls, assertive and emotional tigers, non-assertive and non-emotional owls, and non-assertive and emotional lambs. In general, Clark says bulls make quick decisions, take risks and look for the lowest prices; owls want all the answers before proceeding and are highly organized; tigers are impulsive buyers; and lambs usually consider the opinions of others and tend to suffer from buyers' remorse. As for preferences, Clark says bulls want "striking, impressive" homes, while owls look for efficient dwellings with separate kitchens and dining rooms. Lambs put comfort first and prefer fireplaces; while tigers want unique, exciting homes with master baths. According to Orlando-based designer Kay Green, other features that may draw female home buyers include granite countertops with slate backsplashes, "pasta" faucets next to the stove to minimize spills, spas, wet bars, bathroom islands, warming drawers in the kitchen and bathrooms and drying closets for handwashed clothes.
Condo Comeback in Sacramento
In Sacramento, CA, rising home and land prices have sparked a shift among developers from single-family homes to condominiums, a strategy that allows them to offer lower-cost housing because of the higher-density nature of the projects. The Gregory Group reports that the median single-family home price in the Sacramento area jumped 15.3% from January to March to an all-time high of $339,900. The 1,700 or so units in the eight condo projects in the works in West Sacramento, North Natomas, Elk Grove, Roseville and Folsom, meanwhile, are expected to fetch $200,000 or less. According to Gregory Group President Greg Paquin, a number of builders have submitted rezoning requests in a quest to acquire developable land. Though condo construction surged 47% from 2001 to almost 8,000 units last year, defect lawsuits have made it difficult for builders to obtain the insurance necessary to build attached dwellings. However, a new state law is expected to minimize litigation and cut the cost of liability coverage by allowing builders to repair flaws before a lawsuit can be filed and also by requiring mediation before litigation.
Home Improvers to Spend More, But Follow Budget
According to the 2003 American Express Home Improvement Index, U.S. households are projected to spend a record amount on residential upgrades this spring; however, they will be more budget-conscious than in previous years about how that work is accomplished. The index, which polled heads of households planning improvement work in 2003, forecasts that remodeling budgets will increase to an average of $3,796 this year. Nearly 90% of the respondents planning home improvements expect the end result of such projects to be an increase in their property's value, with about 80% expecting to recoup the cost when they eventually sell the residence. Today's home owners, though, are more and more concerned with price and convenience, with 75% of those queried stating that they will scout around and compare prices to stay within budget.
Lenders Invited to Think Outside the Box
California real estate consultant John Burns believes a "transferable" mortgage would prop up the housing market if interest rates rose substantially in the future, allowing home owners to keep their low rates when moving into a more costly residence. Higher interest rates might make buyers think twice about new, more expensive dwellings, says Burns, but home builders could entice them into the move-up market if their low-rate mortgages went with them. In addition, transferable mortgages would reduce the paperwork involved in the transaction because the only requirements would be requalification, an inspection and an appraisal; and lenders additionally would benefit from transfer fees and lower prepayment risks. However, Burns says that mortgage brokers will oppose portable home loans because their livelihood depends on the points and fees associated with new mortgages; and the industry is not likely to adopt such loans unless Fannie Mae and Freddie Mac agree to purchase them.
Small Businesses Can Dial Into Call-Center Technology
Interactive voice recognition (IVR) is one of the newer technologies small businesses can use to expand their customer service capabilities. IVR strives to take advantage of the telephone for driving sales, answering common questions and receiving orders by voice instead of through touch-tone commands, and Doug Shore of Time ICR says many customers are responsive to it. In fact, he notes, people take more time to consider options within IVR systems because they do not feel as if they are imposing on a person's time. Though IVR systems can greatly benefit small businesses, these enterprises need to consider scalability, upgrade potential and manageability when choosing. Additionally, the cost of an IVR system may be prohibitive to a business that does not receive many phone calls.
SpamKiller for Small Businesses
McAfee Security's soon-to-be-released SpamKiller for Microsoft Exchange Small Business will protect as many as 250 mailboxes per server from unwanted e-mail through content filtering, which blocks spam based on a list of words and phrases; heuristics, which scans mail for characteristics of spam; integrity analysis, which tracks headers and layouts; black lists and white lists; and self-tuning, which factors in the users' preferences. The technology sparks productivity gains by reducing the time employees spend sifting through spam. Network Management Group President Steve Harper says anti-spam technology can cut the number of unwanted messages by as much as half. McAfee SpamKiller will cost small businesses $20.38 every two years for between 101 and 250 nodes.
Wireless Data Capabilities May Bring a Major Change in the Way Businesses Use PCs
Personal computers have seen few changes in form factor in the past two decades, but chipmakers and computer manufacturers are pouring money into research, development and marketing to persuade business people to adopt new types of machines that let them work in new ways. For example, Intel's prototype Newport — which combines the functions of a notebook computer, PDA, cell phone and tablet PC, with radio technologies for reaching company networks and attractive styling — includes a leather flap that holds together the detachable screen and keyboard. However, though vendors are spending a great deal of money on such ideas, tight IT budgets mean that companies are paying attention to return on investment and business cases rather than simply looking at new technology. Companies are still spending a great deal of money on PCs, and they continue to buy new PCs for the purposes of upgrading to Windows XP, optimize business processes and improve productivity, but the important question for vendors is whether new technologies will allow people to change how they work. Intel is betting that built-in wireless connections for portable computers will change business computing as surely as LANs and the Internet changed business computing in the 1990s — "Laptops are more than a convenience for businesses; they're a way for companies to squeeze more productivity out of their employees," according to Anand Chandrasekher, VP and co-general manager of the mobile platforms group at Intel. Dell, Gateway, Hewlett-Packard (HP) and IBM are all using Centrino technology to cut down on power use in laptops and improve their wireless connectivity and processor performance, but sales are likely to be held down by high prices. The law firm Drinker Biddle & Reath says laptops make its attorneys more productive, and it has been leasing its notebooks and PCs this year, switching between Dell, HP and IBM machines whenever the leases run out. It has given its business to HP this time because HP was more responsive to the pricing demands and more flexible in meeting the law firm's technology needs.
Congress Delays Decision on Tax-Cut Stimulus
In an unprecedented compromise, the House and Senate on April 11 resolved the differences between their respective budget resolutions in a conference. The House approved the budget resolution by a margin of 216-to-211; it narrowly passed in the Senate by a 51-to-50 vote, with Vice President Dick Cheney casting the tie breaker.
The final resolution permits House lawmakers to enact a tax cut bill of up to $550 billion. The Senate can craft a tax cut package of up to $350 billion, which will be allowed to pass by a simple majority instead of the 60-vote margin that is required outside of the budget reconciliation process.
A final tax cut package of up to $550 billion is still possible. If a House-Senate conference agrees to that amount, the bill would be approved on the Senate floor with as few as 50 votes.
This action postpones a decision on the size and substance of an economic stimulus package until late spring or early summer, giving President Bush more time to persuade lawmakers to approve his tax cut agenda. The White House had proposed a $726 billion tax cut plan, but last week the President indicated that he would accept a smaller tax reduction, saying he wanted “tax relief totaling at least $550 billion to make sure our economy grows.”
With the political situation highly fluid, what the final tax package will contain and what it will cost remain uncertain. Senate Finance Committee Chairman Charles Grassley (R-IA) has pledged that the final Senate tax cut package will not exceed $350 billion, but House leaders continue to push for the $550 billion figure, nevertheless.
NAHB sent a letter to the full House and Senate on April 10 asking members of Congress to pass a reconciled tax plan that sticks as close as possible to the President’s stimulus package.
Mortgage interest rates declined slightly last week, and remain about half a percentage point lower than they were in 2002; they have remained consistently below 6% since the beginning of this year. A smart March recovery in housing starts from winter doldrums and war angst in February suggested that the residential sector is still a bright spot for the economy. On the manufacturing front, the use of industrial capacity fell to 72.2%, the lowest level in 20 years. Production is up only 1% since December of 2001, making this the most sluggish manufacturing recovery on record.
Mortgage Interest Rates
30 Year Fixed Rate: 5.82\%
Housing Starts: Mar. 2003
Total: 1.78 million\%
New Home Sales: Feb. 2003 *
Existing Home Sales: Feb. 2003 *
* Seasonally Adjusted Annual Rate
Green Building Is on the Rise
It’s still a long way from being a common household name, but “green building” is a trend that is on the march.
Taking their cue from the marketplace and the rising number of home buyers who want their homes to conserve resources and to be kind to the environment, the NAHB Research Center and builders in the vanguard are doing some exciting new things. What they are doing bears watching by every member of this industry, because these are the things that we will all be doing in the not too distant future.
Green building involves a number of practices:
While nobody can argue that these aren’t the right things to do, local building officials will still need to be convinced about the soundness of pursuing unfamiliar development proposals or building techniques. That educational process is happening now.
Our federal legislators are also starting to get behind the green building movement. A bill that passed the House of Representatives recently would provide a tax credit to build new energy-efficient housing. It would also give households a tax credit for remodeling projects that boost the energy efficiency of their existing homes. You will be hearing more about this important piece of legislation as it continues to make its way through the Congress.
Here are the keys to more widespread acceptance of green building practices:
In the meantime, green building is on the rise, taking hold in increments. We are staying far ahead of the regulators and actually finding the path to enable housing to help answer our nation’s environmental concerns. We are harnessing the latest technology. We are sharing new ideas. We are demonstrating that ours is an industry as dynamic as the families who rely upon us to respond to their changing wants and needs in the homes in which they live.
Housing Starts Show Resilience in March
A substantial increase in new home construction last month provided reassurance that housing activity will proceed at a healthy level this year.
Figures released by the U.S. Commerce Department on April 16 showed that new homes were started at a seasonally adjusted annual rate of 1.78 million in March, an increase of 8.3% from February’s pace of 1.64 million units.
“In an economy that continues to display overall weakness, housing remains a remarkably resilient source of strength,” said NAHB President Kent Conine, “and we are confident that the industry will experience a very good year in 2003.”
NAHB Chief Economist David Seiders said that the report for March made it clear that, in this year’s first quarter, housing once again had provided “a solid contribution” to growth in the nation’s Gross Domestic Product.
Single-family starts in March climbed 7.7% to an annual rate of 1.41 million and the rate of multifamily construction during the month quickened to a pace of 366,000, a 10.6% gain.
The March resurgence in home starts, said Seiders, indicates that “it was indeed harsh winter weather that was largely to blame for the big decline in February,” and not an erosion of consumer confidence in housing or deteriorating market fundamentals. Worries over impending war in Iraq and a possible terrorist backlash also were negative factors for housing in February.
“The strength of March’s housing numbers suggests that very low interest rates have really helped and that we have excellent momentum going into the second quarter,” he said. Noting that “falling mortgage interest rates have been holding the housing affordability equation together,” Seiders said he expects “a long-term interest rise only gradually over the balance of the year, by about a half a percentage point, as the economy improves in the wake of success in the war effort. The Federal Reserve is likely to hold monetary policy steady until late in the year before gradually raising short-term rates.”
While the seasonally adjusted annual rate of housing permits dropped 7% in March, Seiders said that the decline was concentrated in the multifamily sector following a surge in those permits the month before. Single-family permits were down by 1%.
Regionally, housing starts climbed 9.8% to a rate of 157,000 in the Northeast; 25.4% to 355,000 units in the Midwest; and 9.4% to 827,000 units in the South. Starts registered a 4.5% decline in the West, to an annual rate of 441,000, but still remained above the pace a year earlier.
Market Expectations of Builders Climb in April
A survey of home builders in early April indicates that the industry seems to be regaining a surer footing following a couple of unsettled months when consumers were worried over war and the economy and found themselves having to dig out of unusually heavy snowfalls.
NAHB’s Housing Market Index (HMI), a monthly gauge of builder sentiment, remained unchanged in April at a level of 52.
But a key component of the index asking builders to make a prognosis for their market over the next six months rose an impressive six points, to a score of 62.
The component gauging current home sales slipped one point to 58 in early April, and the component measuring the traffic of prospective home buyers remained unchanged from a March reading of 35.
Home builders surveyed for the HMI are asked to rate current sales of single-family homes and sales expectations for the coming six months as “good,” “fair” or “poor.” They are also asked to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”
Any number over 50 indicates that more builders view sales conditions as good than poor.
House Approves Legislation to Aid Small Businesses
By an overwhelming vote of 417-to-4, the House on April 8 passed H.R. 205, the “National Small Business Regulatory Assistance Act of 2003.” Introduced in early January by Rep. John Sweeney (R-NY), H.R. 205 would authorize free, confidential services to help small businesses comply with state and federal regulations.
Under the legislation, the Small Business Administration would be required to enter into agreements with participating Small Business Development Centers to provide the services to small companies.
Supporters of the legislation noted that many small businesses pay a bigger share of their income to comply with regulations than large firms, and that they are often concerned about asking for advice because they fear it will trigger an enforcement action.
The bill would alleviate those concerns. It would also require the SBA to submit periodic reports on the number of small businesses it has assisted, as well as a list of regulations that the agency feels are too onerous for small businesses.
The legislation has been sent to the Senate for consideration.
To view the House bill, click here, and type in H.R. 205 in the upper left hand corner.
Affordable Housing Funds Under Attack in Florida
Home builders in Florida are hoping to stop proposals in the state legislature to divert money earmarked for affordable housing programs into a general revenue fund, reports Michael Bonts, communications director for the Northeast Florida Builders Association.
Since 1992, home builders have contributed documentary stamp fees into Affordable Housing Trust Funds that have helped more than 135,000 working families buy or rent affordable housing. The money is disbursed by the state to both state and local housing programs, and is leveraged by local governments.
The non-profit Florida Housing Coalition estimates that housing programs in Southwest Florida communities would take big hits under the various budget proposals being considered for the next fiscal year. The coalition says State Housing Initiative Partnership funds — which are used to help low-income people repair their homes or buy new ones — could be trimmed by $590,000 in Charlotte, $1.1 million in Manatee and $1.4 million in Sarasota.
The Florida Home Builders Association and local associations have joined the battle to preserve the housing trust funds during a tight budget year. According to the Florida Housing Coalition, every $1 million of state money spent on housing programs generates more than $8 million in economic activity and more than 160 jobs.
“At a time when state and national leaders are looking for ways to stimulate the economy, it’s shortsighted to slash a program that not only helps its target audience but benefits Florida’s bottom line,” said Northeast Florida BA Association President Denise Wallace.
Workers' Comp Costs Going Haywire Again in Florida
Fired up over the sky-high cost of workers' compensation insurance, about 200 members of the Northeast Florida Builders Association (NEFBA) and the Florida Home Builders Association rallied for legislative reform earlier this month in the courtyard of the state capitol in Tallahassee.
“Some contractors, many in business for decades,” are being forced to shut down because they can’t find affordable workers' compensation insurance, said NEFBA President Denise Wallace.
Workers' compensation insurance covers medical costs for employees injured on the job, and it is required to do construction in Florida.
Coverage for a carpenter costs an employer about $41 for every $100 paid in salaries, according to trade groups. For a roofer, the premium costs about $51 for every $100 in salaries.
Three years ago a study found that Florida was the most expensive state in the nation for workers' compensation premiums, by a margin of at least 21%, reports Michael Bonts, communications director for the NEFBA.
A panel appointed by Governor Jeb Bush has been studying the issue and developing a reform proposal. In his State of the State address last month, the governor urged lawmakers to enact the panel’s reforms. Those include:
Prompted by a 21% hike in premiums in 1992, Florida legislators last overhauled the state’s workers' compensation system in a special session the following year. Lawmakers cut benefits and attorney fees, and premiums fell in the mid-1990s as a result. Now, insurers say, those costs are once again spiraling out of control.
After the latest rate hike kicks in, Florida employers will be spending more than $3 billion a year on workers' comp premiums, second only to California’s $8.5 billion. It is estimated that as much as $10,000 of the price of a $100,000 new home goes to pay workers' comp coverage for the contractors and subcontractors who build the house.
Contractors Corner — Be Prepared for Hard Times
Silence is Deafening!!
When your incoming lead calls are slow, chances are your hammers aren’t hammering much either. The silence coming from the phone line for new leads is deafening. Trouble is, over the past half dozen years leads and sales were pretty easy and we were taking orders more than selling. Good times can seem like they’re going to last forever, but guess what? One of the things many remodelers forget to do is to make plans for when that phone doesn’t ring often enough and to make plans to help finance promotion when the market recovers.
For a remodeler or builder who has spent the last decade scrambling to fit prospective customers into a hectic schedule, today’s soft marketplace feels all the more like hard times. The good news is that some rays of economic sunshine should start breaking through today’s cloudy skies soon. Our industry is showing signs of improvement. It would be a real crime if we emerged from this “dog market” without learning some important lessons for the next time our callers get laryngitis and the hammers stop hammering.
Meanwhile, while we’re working through this recovery, this is a good time to configure a sound survival strategy for the next time the economy turns south. Here are some things that you can do:
Believe it or not, it’s just as easy to go broke in good times as in bad times. Many companies have “hit the wall” right after having a great year on paper, paying out a lot of profits and then waking up to find the gate open and the horse gone.
The best management practices are those that control costs when you have good volume. They increase profits and provide the wherewithal for reserves. Stay on top of what’s going on in the industry, whether you remodel part of the time or all of the time.
The NAHB Remodelors™ Council is a great source of information on good management practices, and a place you can find peer comments and assistance, contractor to contractor. This is the one place where you can find all of the tools you need to help keep the phones and the hammers making the noises they’re supposed to.
For more information, e-mail Therese Crahan or call her at 800-368-5242 x8211.
Portland, OR, Remodelors™ Council Helps Disabled Sheriff
The home of Clackamas County Sheriff Sergeant Damon Coates in West Linn, OR, last week was in the final stages of being made accessible for the disabled with the assistance of the Remodelors™ Council of the Home Builders Association of Metropolitan Portland. Sergeant Coates was shot in the head while on duty responding to an emergency call in Milwaukie on Jan. 9.
The council has been working this month with John Ruppert of Denali Construction. Ruppert, a long-time friend of Coates, has been leading the project.
The local Remodelors™ council became involved in the project after learning from one of its members that while the sergeant’s medical costs were being covered, he still needed help with work on his home.
“The response to our requests by the members of the HBA has been absolutely overwhelming,” said Tracy Hankins of Hankins Construction, chairman of the Portland Remodelors™ council.
Contributions of materials and remodeling work included: 1,200-1,300 square feet of drywall that was hung, taped and textured; exterior and interior paint; 350 feet of 2.25 colonial casing and base; tile work involved in making the bathroom accessible; 200 square feet of red oak flooring installed and stained to match existing hardwood in the kitchen and dining area; and new windows throughout the house.
In addition, extensive dry-rot repair was completed and a wheelchair ramp was installed.
Green Construction Needs a Push
Saving the environment is a popular cause these days, but it is only beginning to be felt in the housing industry, where green building is more commonly a pursuit of custom than production builders and a source of some confusion among prospective home buyers.
In a scattershot presentation at the recent National Green Building Conference in Baltimore, Dave Potter, first vice president for the National Builder Division of Countrywide Home Loans, made a number of points about what the industry needs to do to move green building into the mainstream of the housing market.
Here are some of his insights on the problem:
Closer's Corner Mystery New Home Shoppers Report From the Trenches
Melinda Brody, MIRM
The tribe has spoken. The road warriors are reporting. The shoppers have been visiting, schlepping and driving to hundreds of model centers, trailers and golf course communities. We talk daily to this weary group, listen to their tapes, read their reports and watch their videos. Here’s the scoop from the road:
First, let’s start with the positives:
Well those are our latest findings from the trenches. I hope there's something there to help you increase your sales.
Melinda Brody, MIRM, has evaluated more than 10,000 salespeople over the past two decades. Her latest service, video mystery shopping, provides a close-up view of what is happening on the site and gives sales professionals an opportunity to view and critique their performance. For more information, visit www.melindabrody.com or call 407-294-7614.
“Closer's Corner” is a regular feature in Sales & Marketing Ideas magazine.
For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales and Marketing Ideas magazine. Call 800-368-5242 x8192 or click here to subscribe or order a copy. Click here to learn about membership benefits of the Nationals Sales and Marketing Council and the Institute of Residential Marketing.
San Francisco Condos Most Expensive in U.S.
A recent analysis of 2000 Census statistics by housing policy economists at NAHB shows that the number of condominiums and coops in buildings with five or more units increased roughly 30% from 1990, to just under 2 million units.
For-sale units account for roughly 20% of the multifamily units started in the U.S., according to the Census Bureau's Current Construction Reports.
Alabama Builder Named To HUD Multifamily Post
Stillman D. Knight, Jr., a home builder from Daphne, AL, has been appointed as the Department of Housing and Urban Development’s new deputy assistant secretary for multifamily in the Office of Federal Housing Administration.
In making the announcement on April 21, HUD Secretary Mel Martinez cited Knight’s “vast experience in the multifamily housing industry” and said he “will be a tremendous asset to the Bush Administration’s continuing efforts to expand homeownership, create affordable housing opportunities and strengthen communities.”
Formerly chairman of the board and chief executive officer of The Knight Company, Inc., Knight was recognized as the National Council of Multi Housing Industry’s “Builder-Developer of the Year” in 1986.
He was selected as one of the nation’s “Top 50 Apartment Developers” in 1992 and one of the “Top 100 Apartment Developers” in 1995.
Knight founded the Alabama Apartment Council in 1997 and received an NAHB Pillars of the Industry award in 2001. He is a native of Mobile and a life director of NAHB.
In his new position, Knight will be responsible for the overall management, development, direction and administration of HUD’s multifamily housing programs. These include FHA multifamily mortgage insurance, project-based rental subsidy programs, housing for the elderly and persons with disabilities, and community-based initiatives.
AARP Confirms NAHB Studies of Boomer Buyers
Baby boomers are not relocating to the Sun Belt, like many in the generations before them did. Instead, they are staying closer to family, friends and their hometowns.
With boomers numbering close to 78 million, that means plenty of opportunities for the building industry in practically every state, a point mentioned by NAHB on numerous occasions and confirmed recently in a publication by AARP.
“Once again, baby boomers are breaking the rules,” said AARP The Magazine Editor-in-Chief Director Hugh Delehanty. “This time, they have bumped traditional ‘retirement communities,’ and are looking for something different.”
The article reiterates what NAHB research about the current seniors housing market has indicated — boomers prefer to retire in their own hometowns, near friends, their social networks, and, most importantly, their grandchildren and children.
This generation also is wealthier than any other, and its members put a premium on the lifestyle they want to lead. For builders this means that, with the right approach, markets can flourish even in places not considered ripe for age-targeted or age-qualified developments.
The towns cited in the AARP article as the most livable for seniors were judged on criteria such as:
Loveland/Fort Collins, CO, a suburb of Denver, was ranked No.1. Located near Rocky Mountain National Park, the neighboring cities were noted for their proximity to leisure activities such as skiing, hiking and fishing. Fort Collins also is home to Colorado State University, while Loveland hosts one of the region’s most vibrant art scenes.
Bellingham, WA, located on the Pacific coast between Seattle and Vancouver, was ranked No. 2. The city was recognized for its charming, affordable neighborhoods and recreational opportunities such as kayaking, sailing and snowboarding.
Raleigh/Durham/Chapel Hill, NC, was No. 3, followed by Sarasota, FL and Fayetteville, AR.
Rounding out the top 15 are, in order, Charleston, SC; Asheville, NC; San Diego; San Antonio; Santa Fe; Gainesville; Iowa City; Portsmouth, NH; Spokane; and Ashland, OR.
The article also noted several trends regarding where aging boomers move:
For descriptions of the top 15 dream cities, review the AARP press release.
For more information on NAHB’s market research on boomers or to become an NAHB Seniors Housing Council member, contact Jeff Jenkins at 800-368-5242 x8292.
Strategic Planning Software Can Help Focus Your Business Model
The second in a series of tech talks for builders
Many builders use spreadsheets to establish business plans and budget models. There’s nothing wrong with that as long as the spreadsheet represents your business plan and isn’t a copy of someone else’s from a different market or industry. Spreadsheets are popular tools, but they aren’t the only option.
There’s a wealth of business planning and modeling resources out there. These include technology options like shareware you can obtain on the Web and sophisticated tools like Cognos CPM for Finance and CheckMATE Strategic Planning software. In addition, the home building industry offers tools and publications like those from BuilderBooks.com; NAHB’s Business Management Department and the NAHB Research Center, which produce various books and articles, and maintain online information databases; and professional articles in Builder and Professional Builder magazines, to name a few. Consultants are a good bet, too. Accounting firms can provide builders with business planning tools and resources.
Bone Up on Basic Planning, Know Your Market Niche
Despite their variety and range of applications, strategic planning tools won’t do the work for you. You need to bone up on the basics of strategic planning before you undertake it. Whether you use a planning template from your accountant or a community college, or you base your plan on the NAHB Chart of Accounts, you must understand each item you set up as a budget item. You should also have a good idea of the variables associated with each of those items. The plan must be your own.
Some software products allow a builder to set up multiple business planning and modeling scenarios on both a corporate and project basis. If you go this route, it’s particularly important to look at best case/worst case pro forma. Market research is also more important than ever. Market indices from the Meyers Group and residential surveys from Metro/Study are two resources for builders who need demographic studies and market potential.
Strategic planning should take into account how far and wide you plan to work with the market. Does your planning encompass land approval to property management, or will you confine yourself to vertical construction? How diverse a market can you handle? Some builders do very well in geographically confined areas but build to wide market shares.
In the old days, technology needs were much simpler. Most builders generally purchased computers with just enough disk space and memory to run the handful of applications they used. Today, we demand networking platforms that allow single- and multi-user applications to run simultaneously. We tap into these systems from internal intranets and the Internet, office workstations, personal digital assistants, home computers and even our vehicles. Although their versatility is attractive, such “open ended” systems require lots of technological know-how, maintenance and surveillance to keep them working properly and to protect sensitive information from hackers.
Choose Planning Software That Meets Your Needs
Stand-alone software products are some of the most flexible and easiest options to use for strategic planning. Aforementioned spreadsheets head the list, partly because there’s no restrictive standard template tied to the application. However, a spreadsheet’s integrity is only as good as its design, and the data is only as good as the person entering it. Integrated software products are safer because they tend to be more restrictive and proprietary. They guard the integrity of live financial data and ensure tie-ins between different reports.
No matter which strategic planning tool(s) you use, make sure they are flexible enough for your company’s needs and aren’t cumbersome to operate. Test-drive systems before you buy and ask others what they think of them.
Be sure to spell out your needs before you look for a solution. That’s as vital for strategic planning as it is for land development and project planning, which I’ll discuss in the next tech talk article.
Earlier Articles in This Series
To read, “Know Your Technology Needs Before You Invest,” Part 1 of this series, published April 14, click here.
Next: project planning
Bill Allen is president of W.A. Allen Consulting and a member of NAHB’s Business Management & Information Technology Committee. His company, headquartered in Redmond, WA, provides information technology consulting services and process management assistance to the home building industry. Allen can be reached at 425-885-4489 or via e-mail. Or isit the W.A. Allen Consulting Web site.
Want more information about using technology in your business? Check out the online resources available from NAHB’s Business Management Department: Tools for Running Your Business. There are also articles about human resources, financial management, sales, production, customer service and other business-related topics. In addition, visit the NAHB Software Users Network Discussion Forum (SUN) to ask technology consultants and other builders what they think of various software packages and applications.
NAHB Members Find Job Seekers Online
Finding qualified workers to fill craft, technical and professional job vacancies in residential construction is not always an easy task, but NAHB members can get the help they need over the Internet.
The Building Careers Job Bank went online during last January’s International Builders’ Show in Las Vegas. Spearheaded by the NAHB Student Chapters program, the site links job seekers with employment opportunities throughout the NAHB federation.
The job bank received more than 200 new resumes during the Building Careers Job Fair held during the convention. Since going online, more than 700 companies have registered on the site.
Beazer Homes, one of the nation’s top 10 builders, has recruited workers at the job fair for the past six years, and they began to post positions at the job bank this winter.
“We thought we’d give it a try,” said Ed Snider, the company’s vice president of training in Addison, TX. “We got some great applicants and will use it again this spring as building continues and graduates start looking for jobs.”
The National Council of the Housing Industry — the Supplier 100 of NAHB — has been working with the Home Builders Institute to carry advertising from its members on the site.
Job seekers can use the site cost-free. A minimal fee is charged for job postings, based on a 30-day run. Special-rate packages are available to member companies posting more than one position.
For more information on the NAHB Students Chapters program, or to form a student chapter, e-mail Page Browning or call her at 800-795-7955 x8918.
Save 15% on Payroll Processing with Paychex®
NAHB members save 15% on payroll processing charges and 401(k) and Sec. 125 set-up fees with Paychex. In addition to employee payroll checks and statements, Paychex produces accounting records and management reports, tax payment notices and payroll tax returns.
Call 800-729-2439 for complete details. Identify yourself as an NAHB member and use Member Advantage code 5685.
To order online and for details on more than a dozen other money-saving Member Advantage discount programs click here, or send a blank e-mail to firstname.lastname@example.org. Go to www.nahb.org to explore the numerous advantages associated with membership in your local, state and national home builders association.
Software Helps Builders Stay on Top of Their Business
Timberline Office software is today helping nearly 5,000 custom, production and multifamily builders to produce fast, accurate budgets and estimates, manage subcontracts, track costs, forecast cash flow, set pricing, analyze profits and more.
The fully integrated financial and operations software is produced by Timberline Software Corporation. Founded in 1971 and headquartered in Beaverton, OR, Timberline is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.
The software’s modular design enables it to be easily adapted to the unique needs of specific users. It is backed up by client services that include training, consulting and support by telephone or over the Web.
The software connects these key business functions: accounting, estimating, procurement, production management, property management, and reporting and other tools.
Timberline was the first software provider of its kind to earn Support Center Practices Certification for excellence in providing technical support services to its clients.
A Message from the Candidate
Gary Garczynski, NAHB immediate past president and 2003 Nominations Committee chairman, has announced that Brian Catalde has been certified by the Nominations Committee to seek the office of NAHB Vice President and Secretary for the year 2004.
Following is Catalde's message to the NAHB membership:
Message from the Candidate
The question asked most often is, “Why do you want to be a candidate and commit five years of your life to the national association?” The answer for me is easy.
Just as in your business, in leading NAHB — Experience counts! The highlights of my experience in the local, state and national associations are as follows:
Being a watchdog over the federal government and its related agencies is one of the most valuable services our association provides its members. I will always advocate for NAHB and its members to be proactive in implementing legislation and writing regulations that support our goal of providing Quality Housing for All Americans.
In the next nine months I will be seeking your support and your vote for Secretary of the National Association of Home Builders. Please let me hear from you about how I can do the best job in representing those issues that are most important to you.
Regional Builders Shows Set for San Francisco and Dallas
Two regional shows for home builders have made announcements in recent weeks.
PCBC® The Premier Building Show reported that J. Walker Smith, of Yankelovich Partners, will speak at an all-new “Visions of Home Breakfast” where he will be sharing the results of the firm’s exclusive look at consumer trends.
More than 600 exhibitors will be at this year’s show, and there will be more than 65 educational programs. Among the highlights of this year’s show:
PCBC® will be held June 17-20 in San Francisco.
The organizers of the Sunbelt Builders Show 2003 announced that they are looking for NAHB members and building industry experts who would like to make presentations at the show, which will be held at the Dallas Convention Center from Oct. 16-18.
Presentations will include the areas of sales and marketing, management, production and technology. Most sessions will be 90 minutes long.
To submit suggestions, e-mail Todd Davis or call him at 972-402-0094 x201. The deadline for proposals from speakers is May 16.
The show is sponsored by the Texas Association of Builders.