Nation's Building News Online: July 21, 2003

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House in New Mexico Tests Water Conservation Technologies

With funding and technical support from the national Partnership for Advancing Technology in Housing (PATH) program, builder Mike Chapman of Chapman Homes is showcasing the use of water conserving technologies and practices in one of his new homes.

Chapman’s home at Rancho San Marcos in Santa Fe receives approximately 10-12 inches of rain per year — usually during the months of June through August.

On behalf of the PATH program, engineers at the NAHB Research Center are evaluating the impact of the home’s rainwater collection and greywater re-use systems on irrigation water savings and the soil. The installation costs are also being studied.

Chapman’s relatively inexpensive system collects rainwater in gutters; downspouts then carry the water into an underground storage tank.

A small pump connected to the storage tank distributes the water to irrigation areas — lawn, trees and shrubs located around the house.

Between April and October 2001, the system collected and stored almost 14,000 gallons of water.

While drought conditions have once again spread across Santa Fe County, the Chapman home is able to sustain an on-site orchard — thanks to a greywater system that collects and filters water that is drained from bathtubs, showers and sinks.

The greywater is pumped out to the subsurface portion of a mulched garden area, so any biological contamination of the land surface is eliminated.

Chapman is so pleased with the results of the pilot rainwater collection system that he now offers it as an option in all of the new homes he builds.

For more information on the Santa Fe PATH site, click here, or go to the ToolBase Hotline at 800-898-2842.

For more information on the PATH program, click here.

Building News Coast To Coast

Digital Homes

The concept of the networked home — a living space characterized by "ambient intelligence" where digital devices intuit and respond to user needs — is growing in popularity thanks to a surge in broadband adoption, the development of more user-friendly technology and a shift to more entertainment-oriented PCs concurrent with the rollout of more PC-like consumer electronics. Networking a home extensively is an expensive proposition, and hurdles such as standards incompatibility and navigating through a mire of wires or wireless software codes still need to be overcome. Nokia, Sony, Hewlett-Packard and other companies founded the Digital Home Working Group in June to deploy guidelines to establish interoperability between networked devices. Digital home residents interviewed by BusinessWeek explained that their desire for technology depends on its ease of use and how it empowers the user. The living room is becoming the hub of the digital home: The growth of DVDs is spurring consumers to upgrade their living room technology to create a more movie theater-like experience; cable and satellite companies and content suppliers hope to make a mint by supplementing this experience with on-demand movies and games delivered via the Internet, while PC makers think that "entertainment PCs" will reenergize sales. Wi-Fi, in conjunction with mobile devices, is allowing Internet access to migrate out of the study and into the bedroom, while automated climate control currently has little appeal for modestly-budgeted consumers. Manufacturers say there has been less enthusiasm for a digital kitchen because women are less willing than men to deal with technology implementation headaches; nevertheless, Sears and other retailers see potential in enhancing kitchen appliances such as ovens and refrigerators with radio-frequency identification tags, remote diagnostic systems and other technologies. Another trend poised to affect the move toward the digital home is e-health, in which high-tech gadgets and network connections are being tested and used for assisted living: Certain e-health applications may show up in the bathroom, such as toilets that measure sugar levels in urine and transmit the data to physicians over the Net.
Business Week (07/21/03) No. 3842, P. 58 Edwards, Cliff; Weintraub, Arlene: www.businessweek.com

Hot Time in the City for Second Homes

A new survey by the National Association of Realtors® reveals that second-home buyers are focusing more on city properties and that investment is the motive behind such purchases. The NAR poll found that 66% of secondary residences purchased during the first quarter of 2003 were located in cities or suburbs, up significantly from the typical 16% of second-home purchases in such locales. While beach vacation condos or getaway cabins in mountains generally account for 56% of second-home purchases, NAR found that property in resort or recreational areas accounted for only 12% of second-home purchases during the quarter. The NAR research additionally revealed that the median price for secondary residences was a relatively low $150,000, offering further evidence that buyers were focusing on second homes in cities as rental properties.
USA Today (07/15/03) P. 1B; Fogarty, Thomas A.: www.usatoday.com

New Kids on the Block

The 25-and-under American demographic, which traditionally has underpinned the market for rental housing, has surfaced as the fastest-growing home buying segment of the population in the past 10 years, according to the National Association of Realtor®'s interpretation of Census data. Largely as a result of the lowest home-loan rates seen since before they were born and relaxed mortgage underwriting standards, the number of home owners under the age of 25 has doubled from 792,000 in 1993 to 1.5 million today, the Census numbers show. While that still adds up to a mere 2% of the overall home buying community, experts say the rapid growth could reflect emerging optimism among Generation X-ers, who have garnered a reputation as cynical and risk-averse. While people under 30 traditionally delay homeownership until they wed, many today — tired of paying rent and eager to invest their money somewhere other than the stock market — are not waiting for marriage to make the shift.
Wall Street Journal (07/18/03) P. B1; Leung, Shirley: www.wsj.com

You Must Be 55 to Apply

Contrary to popular belief, not all retirees sell their family homes for more modest dwellings in warmer locales. In fact, NAHB and Countrywide Home Loans have found that one-fourth of senior home buyers purchase more expensive retirement abodes, many of which are close to their long-time homes. Three-quarters of buyers aged 50 and up, meanwhile, want to live in low-maintenance communities with plenty of amenities. To meet this demand, builders are constructing so-called "active adult" communities in cities all over the country. The properties in these communities are being equipped with gourmet kitchens, media rooms, home offices, high-speed Internet and other upscale features. "People are seeing more of these properties and realizing they are not just for geezers," says Margaret Wylde, president of ProMatura Group, a research firm specializing in the senior market. "They attract people who want an active lifestyle."
Kiplinger's Personal Finance (07/03) Vol. 57, No. 7, P. 83; Franklin, Mary Beth: www.kiplinger.com

Douglas County Leads Nation in Percentage Housing Growth

The U.S. Census Bureau on Thursday revealed that the greatest housing growth between 2001 and 2002, in terms of percentage, occurred in Colorado's Douglas County. The area saw an 8.3% increase in the number of residential units. Like the rest of the U.S. counties in the Top 20 list, it started with less than 100,000 homes. Colorado also made the cut as the Census Bureau named the states with greatest percentage of housing growth in the past two years. Its housing inventory grew by 2.9%, outperformed only by Nevada — which gained 4%. The new Census data show that fringe markets just outside of major cities in the U.S. South and West, including Douglas County, are expanding their housing supply at a rapid clip.
Casper Star-Tribune (WY) Online (07/18/03) Tsai, Catherine: www.casperstartribune.net

Adoption of New Building, Fire Codes Caught Up in Politics

California Assemblyman John Campbell (R-Irvine) wants United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry special representative Sidney Cavanaugh and lobbyist Barry Broad removed from the governor-appointed Building Standards Commission. Campbell argues that Cavanaugh and Broad's recent votes as to which new building and fire codes should be implemented statewide highlight their loyalty to labor unions. The commission must choose between the International Code Council or the National Fire Protection Association standards, the latter of which is favored by plumbers and firefighters unions and received both Cavanaugh's and Broad's votes. Campbell insists, "Building standards codes should be set on the basis of trying to get the best safety for the lowest cost, and they shouldn't have special-interest lobbying ... or lobbyists involved." Campbell thinks the Fire Protection Association codes would cost too much money in terms of additional staff and the use of certain materials and methods. He also points to the more than $3 million in contributions Gov. Gray Davis has received from the plumbing industry in the last five years. However, Broad and Cavanaugh — who helped pen both code books — noted that their votes would be based on endorsements by the state fire marshal.
Los Angeles Times (07/16/03) P. B7; Vogel, Nancy: www.latimes.com

Reliable Source Shoots Down Predictions of Real Estate Crash

While the red-hot housing and mortgage markets have kept the U.S. economy afloat for the past few years, a bevy of prognosticators now are flooding bookstands and other media outlets with warnings of a real estate price bubble on the verge of bursting. In its three-year Macroeconomic and Housing Finance Outlook, however, the Mortgage Bankers Association of America concludes that no such bubble exists. The group's chief economist, Douglas Duncan, explains that interest rates will rise gradually next year as the economy slowly picks up steam; the anticipated increase in mortgage rates is then expected to cool home sales and mortgage activity — but not enough to hurt residential values, which are slated to slow somewhat but not to crash. MBA's outlook gains high marks for credibility, since the Atlanta Federal Reserve Bank recently singled out the industry group's forecasts as the most accurate among 70 Blue Chip Survey organizations from 1986 to 2001 that remain active.
San Antonio Express-News (07/16/03) P. 1E; Hendricks, David: www.mysanantonio.com

The Home of the Future Is 'Universal'

Universal design makes homes more accessible to seniors, disabled persons and children while creating a more spacious, secure dwelling. According to a report from the Center for Universal Design, "Accessible and universal designed housing allows families to live together in preferred places instead of facing the emotional and economic costs of moving or institutionalizing a family member." By incorporating universal design into new housing, home owners can live comfortably without having to take on costly remodeling projects down the road. No-step entrances, wider doorways and lower light switches and outlets are some of the most common elements of universal design. Many builders have already successfully implemented the principles of universal design and use them as a selling point. However, as legislation mandating these features becomes more widespread, those that have not yet already done so will be forced to follow suit.
Copley News Service (07/14/03) Woodard, James M.: www.copleynews.com

A Porch for Nearly All Seasons

Despite the continued popularity of backyard decks, because of fears over the West Nile virus, which is transported by mosquitos, more and more home owners are turning to enclosures. NAHB reports that about 50% of the dwellings built two years ago had porches, and Qualified Remodeler magazine notes that an estimated 500,000 porches are built onto existing residences each year. Many of these are three-season porches — also called sunrooms or Florida rooms — featuring insulated walls and screened windows as well as electrical outlets to give home owners a space that can be used from spring through fall. Sunrooms run between $10,000 and $15,000 or more, according to one estimate; but home owners who are simply replacing a screened-in porch could spend as little as $2,000.
Detroit Free Press (07/13/03) Shine, Dan: www.freep.com

Getting Clubby

Taxpayer-funded recreation centers have long served as the social and recreational companions of large-tract subdivisions, golf-course housing developments and retirement communities. In recent years, however, rec centers and their limited amenities increasingly have been replaced by private clubhouses that mimic the country-club experience. These multi-level community buildings include different areas for relaxation, dining and socializing as well as separate space for hobbies and fitness. Builders catering to a specific market also are fine-tuning their clubhouses to fit the needs of different buyers. A clubhouse at a retirement development, for instance, might include a convenience store and bank to minimize trips for its aged residents; while a community geared toward families with children might feature a daycare center as part of the clubhouse's amenities. Without taxpayer money, developers finance construction and maintenance of these community structures with sales profits, membership fees and a share of the home owners association dues each month. Ultimately, the responsibility of running and maintaining the clubhouse or community center is turned over to the home owners association itself.
Washington Post (07/12/03) P. F1; Dietsch, Deborah K.: www.washingtonpost.com

New City Guidelines Expected for Homes

Officials in Grand Prairie, TX, plan to issue new building standards in an attempt to create attractive communities that maintain their value. Builders will be encouraged to construct homes of a certain size, space them farther apart, place the garage in back, use more brick and stone on the outside of the dwellings and incorporate numerous styles and designs. According to chief city planner Kevin Lasher, "It's sort of an accumulation of elements we put in single-family planned developments in the past that seemed to bring about a type of environment or development that is physically attractive and which we want to achieve in the future." Though the standards are not mandatory, Home Builders Association of Greater Dallas Government Relations Director Paul Cauduro believes they could raise home prices and hurt custom builders who will be unable to use the latest energy-efficient and high-tech products that their customers prefer. Cauduro believes local governments should instead focus their efforts on providing a number of different housing types.
Dallas Morning News (07/13/03) P. 1Y; Sandoval, Stephanie: www.dallasnews.com

Online Bookkeeping

While some business owners remain wary of compromising their accounting information, others have taken advantage of more secure technology to improve the efficiency of their accounting using Web-based accounting products. Online accounting enables business owners to perform accounting functions from remote locations, and experts say the new technology includes features to keep accounting information secure. Some online accounting products, like Intuit Inc.'s QuickBooks' Online Edition, are hosted through Web sites by applications service providers, who can monitor the security of information 24-hours a day. Roberson Neal & Co. Certified Public Accountant Katherine Polk says businesses that use online accounting have fewer hardware requirements, and Wizard Business Solutions Vice President of Sales and Marketing Christopher Upson points out that online accounting software can help businesses save time and money. Peachtree Senior Product Manager Chuck Corcoran says the company's Web accounting products are not only more convenient and flexible, but can help businesses improve their quote and inventory processes, and become more productive. Despite these benefits, producers and users of online accounting products acknowledge that some business owners still have security concerns about transmitting their private accounting information via the Internet.
Business Journal of the Greater Triad Area (07/14/03) Somerville, Leigh: www.triad.bizjournals.com

Refresh or Refurb?

Faced with older computers, small businesses need to decide whether they will replace or upgrade them, since older machines often lack the computing power necessary for today's applications. Moreover, support for Windows 98/SE will cease on Jan. 16, 2004, after which Microsoft will not provide patches or fixes for flaws or vulnerabilities. Replacing computers with Windows XP computers offers several benefits for small businesses, and mid-year is the best time to do so, says Aberdeen Group analyst Peter S. Kastner. "Windows XP Pro Service Pack 1 is out in the field and working well indeed," says Kastner. Small businesses that purchase XP can take advantage of buying off-the-shelf software applications and setting it up internally, according to Microsoft's Windows division lead product manager Greg Sullivan. He says XP allows businesses "to leverage current IT trends" such as software integration via Web services, and Windows XP is also valuable when used with local- and wide-area networks and wireless networks. Nevertheless, for some firms, upgrades are enough to fulfill computing needs, which would entail the purchase of an internal hard drive or an add-on USB/Firewire external hard drive to boost storage capacity and performance. Companies many want to consult Microsoft's Web site to view the minimum CPU requirements for various operating systems.
Small Business Computing Online (07/03) Fusco, Patricia: www.sbcmag.net

Former President Bush to Open International Builders’ Show

Former President George Herbert Walker Bush will be the keynote speaker at the opening ceremonies for the International Builders’ Show (IBS) in Las Vegas on Jan. 19, NAHB President Kent Conine announced last week.

“As a fellow Texan, I am particularly honored that former President Bush will open our show next year,” said Conine.

The largest home building and light construction conference in the world, the IBS is expected to draw more than 90,000 attendees from 100 countries when it returns to the Las Vegas Convention Center on Jan. 19-22.

George H.W. Bush was the first standing President to ever appear at an NAHB convention, when he delivered an address in 1990 in Atlanta in which he announced that he was asking HUD Secretary Jack Kemp to set up a blue ribbon commission to identify and eliminate regulatory barriers to housing.

Before a flag-waving audience of more than 10,000 convention-goers, the former President again appeared at the 1995 convention in Houston, where he praised the housing industry for leading the nation's economy and promoting "family values."

While President, Bush led a coalition of 32 nations in liberating Kuwait from Iraq. His term also saw a change in world politics with the fall of the Berlin Wall and the creation of a democratic government in Russia.

The upcoming Builders’ Show will offer attendees more than 200 educational seminars targeting all segments of the residential and light commercial construction industry on topics ranging from architecture and interior design, to land development and environmental regulation, and organization and business management.

The industry’s largest showcase of new products, the IBS attracts more than 1,300 exhibitors whose exhibits occupy more than 715,000 net square feet of space.

Once again, tecHOMExpo will be co-located with the IBS. This “show within a show” will highlight the latest in cutting-edge technologies and groundbreaking products for construction, management and consumer applications. TecHOMExpo’s Discovery Day on Jan. 20 will provide educational seminars on the latest innovations in home building technology.

The IBS is not open to the general public.

To tour the Builders' Virtual Trade Show, which features virtual booths of more than 1,300 suppliers who will be exhibiting at the IBS, click here.

To register for the show, click here.

Housing Snapshot

Housing provided the brightest economic news last week, with starts rising to a seasonally adjusted annual rate of more than 1.8 million. Mortgage interest rates continued to inch up on the expectation that the economy would be growing more vigorously during the second half of this year. The National Bureau of Economic Research reported that the recession that began in March 2001 officially ended eight months later — in November — even though the economy has not been running at normal capacity since then. The Index of Leading Economic Indicators was up for the third consecutive month in June. And U.S. budget deficits have been projected at $455 billion this year and $475 billion in 2004 — raising some troubling implications for the economy once it starts operating at full steam.

Mortgage Interest Rates

30 Year Fixed Rate: 5.67\%
15 Year Fixed Rate: 5.00\%
1 Year ARM: 3.58\%

Housing Starts: Jun. 2003

Total: 1.80 million\%
Single Family: 1.46 million\%
Multi Family: 341,000\%

New Home Sales: May 2003 *

1.16 million

Existing Home Sales: May 2003 *

5.92 milliion

* Seasonally Adjusted Annual Rate

Editorials Attacking Fannie Mae and Freddie Mac Are Seriously Misguided

Nothing is more important to our nation’s system of housing finance than ensuring the health of our secondary mortgage market institutions. That’s why it is so disturbing to see irresponsible attacks on the mission of Fannie Mae and Freddie Mac appearing in recent newspaper editorials.

While the revelation of Freddie Mac’s accounting problems raises legitimate concerns about determining whether reform measures may be required, that process is only now getting underway in congressional hearings. Editorial writers who are jumping the gun and questioning whether these institutions deserve the implicit backing of the federal government are doing the public an immense disservice. First, they are focusing attention away from the real issues at hand. And second, they are suggesting proposals that risk seriously damaging a financial system that has been enormously beneficial to providing decent, affordable housing to the American people.

Maybe these writers are too young to appreciate the progress that has been made through Fannie Mae and Freddie Mac because they don’t remember the days, about three decades ago, when the nation’s home buyers had to rely on passbook savings accounts for their mortgage money. That source of financing was unreliable, to say the least, and there were some painful times in the housing cycle when home financing was largely unavailable at any price.

Or maybe these writers don’t grasp a reality that is obvious to most people in this country: Homeownership and rental housing opportunity are the glue that binds healthy neighborhoods and the means for families to get ahead and strive for achieving the good things in life that are so abundant in America. We shouldn’t lose sight of the fact that Fannie Mae and Freddie Mac, in addition to their activities on behalf of home buying, also help bring financing to multifamily housing.

A July 5 editorial in the Dallas Morning News recently noted that, “providing available and affordable housing loans is an important public mission…and no one should willingly weaken this effort.” That same article concludes: “Congress must rethink the federal government’s neither-fish-nor-fowl relationship with Fannie Mae and Freddie Mac and decide whether the federal government should remain the mortgage market’s traffic cop, or whether competition and access are better served if Fannie Mae and Freddie Mac didn’t operate from a playing field intentionally tilted in their favor.”

What is the point of suggesting that housing is an important public concern and then proposing to rob it of the national commitment that has been indispensable in creating the soundest, most effective and efficient home financing system anywhere in the world today?

The truth is that our housing finance delivery system would not be where it is today without Fannie Mae and Freddie Mac. And as we look to address the housing needs of our growing population, we will not get to where we want to be in the future if their strength is sapped. That is a current danger in Washington.

As hearings in Congress continue, lawmakers need to gather all the facts and take a cautious approach to any reform or change in the regulatory oversight of the GSEs. Otherwise, we risk damaging our national priority for housing and creating a financing system that would give the editorialists at the Dallas Morning News something to really complain about.

Builders Are Working to Develop a Brownfields Cleanup Standard

By Marty Mitchell
Across the country, we have seen inspiring examples of how cleaned-up brownfields can be turned into valuable sites for housing.

Unfortunately, those examples are likely to prove the exception rather than the rule as long as builders and developers face the possibility that they can be found liable for contamination on those sites.

In an encouraging development, NAHB and 24 other groups are grappling with this issue by participating in a Negotiated Rulemaking process under the auspices of the Environmental Protection Agency.

With the aim of fostering the redevelopment of idle or abandoned properties that are suspected of being environmentally contaminated, President Bush last year signed The Small Business Liability Relief and Brownfields Revitalization Act. This legislation relieves brownfields purchasers of liability so long as they did not cause the contamination, they take steps to stop the contamination from spreading any further and they prevent or limit any further exposure to contaminants.

Unfortunately, the new law failed to specify how thoroughly a prospective purchaser must investigate a brownfield site in order to be protected from liability for the cleanup of any environmental hazards on the property. Referred to in the bill as “all appropriate inquiry,” this issue is of central importance and yet it remains undefined. Nor does the law specify what should be included in any clean-up process.

Defining exactly what “all appropriate inquiry” means has been left to the groups involved in the rulemaking process, and they have until January to reach a consensus.

As NAHB’s representative on the committee, I can tell you that there are no easy answers. We are grappling with two very difficult questions: How restrictive and expensive do we want to make the requirements for investigating a property? And how can we ensure that the approach does not become unnecessarily onerous?

One thing is certain: An expensive and time-consuming process will discourage home builders from becoming involved in the redevelopment of abandoned sites.

The issue of establishing reasonable property investigation standards is all the more important because banks will require their borrowers to follow it.

Because the consensus that is reached will likely become the standard for all real estate transactions on these properties, I have emphasized the importance of coming up with a standard that is reasonable — even for those properties not associated with brownfields. No one disagrees that ensuring public health and safety deserves top priority in this undertaking, but if the standard is overly stringent, land developers will continue to shun these sites.

The two toughest concerns so far have been agreeing on the appropriate level of community participation in the process and deciding upon what information obtained during the clean-up investigation must be disclosed, and to whom.

As can be expected in a group that includes stakeholders from real estate, banking and community development groups, there is a range of opinion. NAHB’s interests are clear. We want to establish a standard that encourages developers to engage in brownfields transactions, which is what the law intends. And we want to ensure that the entire development community can use the standard we help to develop.

In the final analysis, working through our disagreements is well worthwhile. Returning brownfields and other discarded properties to productive use is today within the realm of possibilities. And at a time when it is becoming increasingly difficult to find available land on which to build the housing America’s growing population needs, at hand is an opportunity that the nation’s home builders do not intend to squander.

Marty Mitchell is chair of the NAHB Environmental Issues Committee.

For Every Family, A Home

(Editor's note: The following — written on June 20 in observation of National Homeownership Month — is a somewhat abridged version of an article that appears on the senator's Web site.)

With this annual tradition, America’s attention is again drawn to the importance of homeownership and the stability it can bring to families and neighborhoods.

It is often homeownership that financially anchors American families and civically anchors our communities. But I believe our focus on homeownership also returns our attention to the basic ideals of the American Dream. Ensuring access to homeownership, and through it access to the American Dream, is among the most significant ways we can empower our citizens to achieve the happy, productive, stable lifestyle everyone desires.

Having a house of one’s own that provides security and comfort to one’s family — that gives families an active, vested interest in the quality of life their community provides — is central to our collective ideas about freedom and self-determination.

Even in this country, ages ago, land ownership was a man’s key to voting and participating in our American democracy. While our voting laws have changed significantly since those days, our instincts about creating and possessing a unique space for ourselves and our families have not.

A Gap in Homeownership

In America today, homeownership is at a record high. Unfortunately, however, there remains a significant gap between minority and non-minority populations, leaving homeownership an elusive financial prospect for many.

Less than half of the nation’s African American and Hispanic American households live in their own homes, which means they are unable to enjoy all the wonderful benefits that come with homeownership. In Congress, it is our job — and this month, our focus — to ensure that the American Dream is accessible for all of our citizens.

The House and Senate have been working to lessen the tax burden on the country’s families, to spur the economy and create jobs, to develop policies so that every child receives a solid education and to make health care available for all.

In addition to bolstering these opportunities for success, we now look towards homeownership as another incredible way to empower Americans and to help them reach their goals.

Legislation to Bolster Homeownership Opportunity

To this end, I have introduced legislation over the past few years that would allow low-income Americans to save and invest their money in Individual Development Accounts (IDAs). These accounts provide families with a chance to accrue funds that can help them afford higher education, payment on a first home or capital to start a new business.

Just this spring, Sen. John Kerry (D-MA) and I drafted and sponsored the Community Development Homeownership Tax Credit Act, a bill that enjoys strong bipartisan support in the Senate and would give developers and investors an incentive to participate in the rehabilitation and construction of homes for low- and moderate-income buyers.

Additionally, I am a cosponsor of the American Dream Downpayment Act, which gives downpayment assistance to hard-working citizens who need a hand in securing the funds for their first home. Downpayments and closing costs are very often the barriers keeping the country’s families from purchasing a home.

The measures mentioned above are intended to help people pull together these resources, and they are aimed at reaching President Bush’s goal of increasing American minority homeownership by 5.5 million families, and making 5.5 million new dreams come true.

As testament to the genuine interest with which Congress approaches the topic of homeownership, both chambers passed a resolution expressing the sense of all members that everyone in our country deserves to have a decent home and that members should take part in activities, such as Habitat for Humanity, that help to make this possible.

Owning a home is an integral part of attaining the security, continuity and comfort of living the American Dream. I will continue to advocate policies, this month and every month, that help make this dream become a reality for the nation’s families.

Sen. Rick Santorum (R-PA) is now the third ranking Republican in the Senate. As conference chairman, he directs the communications operations of the Senate Republicans and is the youngest member of their leadership. He is a member of the Finance, Banking and Rules Committees.

Roadless Rule Exemption Could Increase Logging in U.S. Forests

Important legislative, regulatory and court actions last week could increase future logging from U.S. forests.

On July 15, the U.S. Forest Service unveiled a proposal to exempt the Tongass and Chugach National Forests in Alaska from the Roadless Area Conservation Rule, which would open up an additional 450,000 acres of timber for harvesting.

An amendment to the Fiscal Year 2004 Interior Appropriations bill by Rep. Jay Inslee (D-WA) would have stopped the Forest Service proposal from moving forward by preventing any funding from being used to make changes to the roadless rule.

NAHB opposed that amendment and it failed on July 17 by a House vote of 234-185.

Instituted during the Clinton Administration, the roadless rule prohibits road building in nearly 60 million acres of national forests stretching across 38 states. It also prohibits the Forest Service from allowing timber to be cut, sold or transported from roadless areas, with a few limited exceptions.

NAHB has opposed the rule because it mandates inflexible federal restrictions that illegally attempt to reverse existing federal forestry management and environmental policy laws.

The Forest Service will publish its proposed exemption in the Federal Register shortly, and public comment on this action will be accepted through mid-August, with a final ruling expected in September.

The Administration is planning amendments that would give the states' governors the discretion to waive the rule in order to protect public health and safety or to reduce the risk of wildfires. The governors would also be able to adjust boundaries to exclude areas now covered that already have roads.

In a related development, a federal district judge in Wyoming issued an injunction on July 14 barring enforcement of the roadless rule.

Judge Clarence A. Brimmer characterized the rule as a “thinly veiled attempt to designate ‘wilderness areas’ in violation of the clear and unambiguous process established by the Wilderness Act.”

The decision is being appealed, and the impact of this ruling on the nationwide implementation of the roadless rule remains unclear.

Housing Starts Remain Strong in June

The nation’s housing industry churned out more good economic news in June, when home starts climbed 3.7% to a seasonally adjusted annual rate of 1.8 million units, according to a report from the Commerce Department on July 17.

Single-family housing starts last month continued to outperform the multifamily sector, which has been experiencing modest declines as renters have been encouraged by remarkably low mortgage interest rates to seek home buying opportunities.

Single-family production in June climbed 5.3% to an annual rate of 1.46 million units, while multifamily housing declined by 2.6% from the prior month to a rate of 341,000 units.

“Housing continues to do the heavy lifting in an otherwise sluggish economy,” said NAHB President Kent Conine.

Although mortgage interest rates have begun nudging up in recent weeks, Conine noted that demand is persistently strong and the inventory of new homes for sale has reached an all-time low supply of 3.5 months.

Along with a further increase in building permits in June, those factors suggest that “the outlook for housing for the remainder of the year remains bright,” Conine said.

“People are viewing housing as a good place to put their money because of low interest rates and sold house-price performance,” said NAHB Chief Economist David Seiders.

“This pace of activity should continue throughout the summer even as interest rates begin to inch up,” he predicted.

Regionally, the Northeast posted a 9.9% increase in housing production in June, followed by gains of 8% in the West and 2.3% in the South. June housing starts declined by 0.8% in the Midwest.

Builders Remain Bullish About Home Sales

Home builders’ expectations for single-family home sales over the next six months are running at their highest level in more than two years, according to NAHB’s latest Housing Market Index (HMI), which is a key monthly barometer of builder confidence.

Released last week, the July index climbed two points to a score of 64. The component gauging sales expectations rose three points to a reading of 73.

The other two components of the index — current single-family home sales and the traffic of prospective home buyers — rose to 69 and 50, respectively.

Any number over 50 indicates that more builders view sales conditions as good than poor.

“Builders remain confident as favorably low interest rates on home mortgages and solid price performance continue to stimulate home buying,” said NAHB President Kent Conine.

While the latest survey largely reflects builder sentiment in June, when mortgage interest rates were their lowest in nearly 50 years, current mortgage interest rates “remain very attractive to home buyers” even though they have climbed slightly in recent weeks, said NAHB Chief Economist David Seiders.

“A bigger concern among builders in several regions of the country is their ability to meet demand because land availability has been reduced due to regulatory constraints and the high cost of land in their areas,” Seiders added.

The HMI is derived from a monthly survey of builders that NAHB has been conducting for 20 years.

Multifamily Builders Councils Can Expand HBA Membership

With higher-density residential development opportunities expanding from downtown Washington, D.C. into the city’s closer-in suburbs, and regulatory concerns cropping up among the area’s multifamily builders, the Maryland-National Capital Building Industries Association is seeing growing interest in its multifamily council.

Following recession years earlier in the last decade, the council was revived in the late 1990s by association members who wanted support on multifamily issues at a time when the industry was growing again.

Susan Matlick, the BIA’s executive director, suggested that other home builders associations may want to start up a multifamily council, and she provided some advice on how to do it.

“Ask the important questions,” she says. “Is there demand in your area for multifamily housing, but the opportunity to build is being blocked by density restrictions or other issues? And is there a ready amount of multifamily housing in your area?”

In Montgomery County, MD, a great deal of attention is being focused on a possible zoning requirement for multifamily developers to make a certain share of  their new housing affordably priced. An affordable housing inclusionary requirement currently applies to only single-family builders in the county.

Once demand for a multifamily council is found, Matlick recommends looking “for someone in the association with energy and an interest in diversifying into multifamily if the regulatory barriers come down.”

She notes that, “Forming a council will broaden your membership base.” And in markets where there is activity in multifamily renovation, Matlick suggests that participation from remodelers will complete the picture.

Tom Farasy, of Mid-City Financial, Silver Spring, MD — who has chaired the council since 1999 — says that it is important for the structure of the council to meet the needs of its members.

His council meets only nine times a year, for one hour tops.

Some of the meetings are site tours of high-rise, garden, luxury, affordable, condo or rental housing with an unusual feature. For example, the council recently toured Summit Grand Parc in downtown D.C., which has the country’s first fully automated parking facility.

On the tours, council members have the opportunity to ask the developer or team leader “the hard questions,” says Farasy, such as what he would have done differently and what are the concerns or objections being raised by residents or prospective residents.

Other meetings bring in outside speakers. A recent speaker from Richmond, VA, discussed creating storm water ponds on building roofs. Experts from the NAHB Research Center came to talk about mold.

“And our biggest attendance ever was for a program with an expert from a sprinkler company after the company had recalled a widely-used product,” Farasy said. “We had plenty of questions for that speaker.”

Infrastructure Studies Save Time and Money

Ed Hord, FAIA, an NAHB associate member, says that his company could have saved thousands of dollars and several months of valuable time several years ago if he had had in his hands the series of infrastructure studies that the NAHB Seniors Housing Council has recently started publishing.

During the early stages of designing a 100-bed assisted living complex in Baltimore, Hord and the project’s developer were invited to a community meeting to field questions about the facility. At that meeting, they were astounded by the intensity of emotions that the neighbors focused on one concern.

“Fearful that the new assisted living facility would add traffic to an already congested road, the community’s 150 residents responded as though we were planning to build a nuclear reactor in their backyard,” said Hord.

Those concerns were not allayed by assurances that the facility would generate a low traffic volume, so an engineer had to be commissioned to conduct a quantitative study.

At January’s International Builders’ Show, Hord said that he was “ecstatic” to find a study on traffic full of statistics validating what professionals in the seniors housing industry know anecdotally: Seniors have a minimal impact on road congestion and make fewer trips during rush hour than other drivers, no matter where they live.

Also currently available, pamphlets on schools and water and sewer services “contain equally compelling data,” says Hord.

BuilderBooks.com will be publishing five additional studies later this year. They will look at the cost of providing public safety courses, parking standards, planning for road improvements, demand on public parks and libraries and the local economic impact of active adult projects.

“Sharing these statistics with communities and land-use authorities can shave months off the approval process and reduce expenses,” noted Hord.

A case in point, says Hord, is a developer his company has been working with who used the council’s water consumption figures to negotiate lower impact fees.

“The infrastructure studies, which are available to Seniors Housing Council members, are an indispensable resource for anyone embarking on a new seniors housing project,” said Hord.

Hord is a senior principal and founder of Hord Coplan Macht, a Baltimore-based architecture and landscape firm that has designed more than 4,000 units of seniors housing, totaling $246 million in construction costs. The firm has expertise in new construction, renovation and additions for multi-housing, health care, education, corporate and municipal projects.

Hord can be reached by e-mail or at 410-837-7311.

For more information on the infrastructure studies and other Seniors Housing Council member benefits, e-mail Jeff Jenkins or call him at 800-368-5242 x8292.

To learn more about the Seniors Housing Council, click here.

Save up to 30% at U.S. Hotels

Whether you’re traveling for business or pleasure, as an NAHB member you can find the right hotel at the right price through the Member Advantage program. Refer to identification No. 20090  when calling:

An Effective Purchase Order System Enhances Efficiency

The eighth in a series of tech talks for builders

It is no secret that a builder doing any significant volume benefits from using purchase orders. They are great for controlling materials costs. They also can be used as checklists to make sure all materials have been delivered and that trade contractors have completed work before you approve their invoices.

You can speed up the payment approval process and enhance efficiency by using electronic purchase orders and handheld devises. It’s even more efficient when that responsibility is put in the hands of the person in the field, often the superintendent, who approves the work or material deliveries. That way, paperwork doesn’t have to be re-handled and there’s little chance of purchase orders getting lost.

However, if you don’t have effective purchase order management and payment approval procedures in place, you will have no control over the processes or the quality that’s tied to them. Chaos is guaranteed.

Steps to Improve Your Purchase Order Process

For most builders, the purchase order process is some form of a trade contractor agreement that spells out the scope of work to be done. Once the work is completed, the builder’s accounting department issues payment and the process is complete. As simple as this process appears to be, there is a disconnect. Both processes originate in the office, but the contractor’s work that triggers the payment is done in the field. To better integrate the work and payment processes, simply broaden the database that produces your purchase orders to include take-off information and bids along with your information from the accepted bids.

Similarly, you can produce a bill of materials for each of your plans, and then have suppliers bid on unit prices within those line items. Once you’ve accepted a bid that meets your budget, use the information to generate a purchase order.

QuickBooks and other accounting software programs allow you to produce purchase order templates in Word or Excel. Alternatively, you can use interactive software like MasterBuilder, Timberline or CDCI to build a file of contracts and prices you can use for each job.

Whatever software you use, do not send your purchase orders to vendors and trade contractors until you’ve established your internal procedures and routing. This includes determining:

• Who approves your purchase orders before they leave the office
• Who receives copies of your purchase orders
• When and how your purchase orders are sent to the field and the trade contractor or supplier
• Who approves the work done or materials delivered
• How invoices will be reconciled with completed purchase orders and then processed for payment

You also need to figure out how frequently to issue purchase orders; will you issue them in advance for the entire project, or will you issue them for each phase of construction?

As you can see, your purchase order process involves coordinating a lot of communication. Meet with everyone who will be involved (employees in sales, contract administration, estimating, production, accounting, etc.) and find out what they need from the process to make it work. It’s a good idea to get input from trade contractors and suppliers, too. Since they work with other contractors who use purchase order systems, they can offer good insight on what works — and what doesn’t.

Test Your New Purchase Order Process Before You Implement It

To get comfortable with using purchase orders, try testing the process with dummy documents (that should be clearly labeled as such). Instruct your employees to treat them as “hot potatoes” — that is, to expedite them as soon as possible so that they don’t gather dust on anyone’s desk. Write down working procedures and be prepared to amend them.

Once you’re comfortable with your purchase order system, begin by using the process on one project at a time before you implement it across the board. There’s a learning curve with all new systems and procedures; no one gets it right the first time.

Better Purchase Order Management — Electronically

If you go the electronic route, it’s best to use a single database to account for regular purchase orders, variance purchase orders (used for unplanned items and work — these typically originate from the field) and change order requisitions (those issued if the customer requests something that affects the scope of work).

Make sure that variance purchase orders do not duplicate change orders. You do not want two separate documents for the same item or scope of work. Duplication often can occur when someone sits on a document and the paperwork doesn’t keep up with the chain of events. Issue either a variance purchase order or a change order for something unplanned or for an addition to the scope of work.

Note: If you have a substantial number of variance purchase orders, your estimating process may need a tune-up.

Fine Tune Your Payment Approval Process

Decide whether you will pay trades and suppliers by the task (or delivery), by the construction phase or, perhaps, weekly or monthly. If you pay by the task or phase, make it clear to suppliers and trade contractors that they will not be paid until the job is finished or all materials are delivered. Don’t issue partial payments for partial jobs or deliveries.

Make one or two people on each job site responsible for approving work for payment. Tell your trades and suppliers who those people are so they don’t try to request payment approval from field personnel who do not have the authority to grant it. One benefit of using purchase orders is that they often include take-off lists you can use as quality control checklists.

Reconcile invoices against purchase orders as soon as you receive them, and put them through to accounts payable pronto. Besides eliminating phone calls from people looking for their money, prompt payment gives you a tremendous amount of price negotiation room with trades and suppliers.

Integrated software systems like those from NewStar, Phast and ProStar offer the advantage of document control between purchase order and accounts payable systems. Many integrated systems also offer handheld capability, which lets users zip documents back and forth from the office to the field and cut down on paperwork.

If you have a manual system for purchase orders and payment approval, you must enter prices and payment amounts separately in each system. Be sure to double check to make sure the entries match.

An effective purchase order system will benefit your business. It will drive accountability for working within a planned budget to the source of the action and enhance communication throughout your company.

Earlier Articles in This Series

• To read, “Know Your Technology Needs Before You Invest,” Part 1 of this series, published April 14, click here.
• To read, “Strategic Planning Software Can Help Focus Your Business Model,” Part 2 of this series, published April 21, click here. 
• To read, “Does Your Planning Software Match Your Project's Sophistication?” Part 3 of this series, published May 5, click here.
• To read, “Don't Put the CAD Before Your Product,” Part 4 of this series, published May 26, click here.
• To read, “Manage Prospects and Buyers More Efficiently With Technology,” Part 5 of this series, published June 9, click here.
• To read, "Automate Your Selection and Change Order Processes,” Part 6 of this series, published on June 23, click here.
• To read, “Scheduling Software Can Improve Your Cycle Time,” Part 7 of this series, published on July 7, click here.

Note: Various software products are mentioned throughout the tech talk series. The intent is not to recommend these products as being right for you, but to identify some fairly well-known players and to note a few new ones. My apologies to vendors who are not mentioned — the omission was not intentional.

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 visit the W.A. Allen Consulting Web site.

Want more information about using technology in your business?

NAHB’s Business Management Department offers a variety of online resources to help you run your business better and more profitably. Click Business Management Tools for articles about human resources, financial management, sales, production, technology, 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.

BuilderBooks.com also offers a variety of publications about computer technology. To view or purchase these publications online, click here.

Subscribe to NAHB’s Business of Building e/Source

NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, click here on the members only side of www.nahb.org.

University of Housing Offers Courses on Customer Service and Business Management

The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here.

Las Vegas Builders Lead Water Conservation Landscaping Efforts

Leading the way in demonstrating how home builders and others in the community can conserve water, the Southern Nevada Home Builders Association was recognized last week for a landscaping project that is replacing turf with water-efficient xeriscaping around its headquarters building in Las Vegas.

The Southern Nevada Water Authority gave the association and Landscape Services Inc., which designed and is installing the new xeriscape, its first-place 2003 Landscape Award in the category of landscape upgrading at a commercial building.

Irene Porter, the executive director of the association, said that the landscaping project has been eliminating turf areas in phases and it should be completed later this year.

“The new look is an enhancement to the SNHBA building, of which we’re all very proud, and it’s a significant water-saver that we urge all businesses to look into with the help of the Southern Nevada Water Authority,” Porter said.

Landscaping accounts for more than half the water used in Southern Nevada, an area that receives only about four inches of precipitation a year.

The Southern Nevada Water Authority has established a goal of increasing the area’s level of water conservation by 25% by 2010.

A recent study by the water authority found that a newly planted xeriscape requires 17 gallons of water per square foot annually compared to 79 gallons for a lawn.

For every square foot of grass that is removed, 55 gallons of water is saved, the study concluded.

The authority reported the encouraging news that residents and commercial properties removed more than 2.3 million square feet of grass and replaced it with xeriscape in 2001.

Organization Seeks to Stop Eco-Violence

Eco-terrorism is suspected of being behind the vandalism earlier this month of a newly completed $250,000 home in a rapidly growing subdivision in South Windsor, CT, according to Stop-Eco Violence!

Based in Wilsonville, OR, Stop-Eco Violence! is a grassroots organization that advocates “the advancement of legislative and law enforcement efforts to eradicate violence perpetrated in support of environmentally motivated agendas.”

“Acts of environmental terrorism committed by well-supported extremists have caused undue harm to private citizens, businesses, institutions and local communities,” the advocacy group says.

“These ‘direct actions’ have taken many different forms, ranging from personal threats of violence to the destruction of public buildings and legitimate scientific research — all in the pursuit of an agenda that seeks to gain power and control and works against principles of self-government,” the group says.

In its most recent eco-terror alert, the group is publicizing an announcement by the Michigan Arson Prevention Committee, which is offering up to a $5,000 reward for information leading to the arrests and convictions of individuals responsible for fires in March and June that destroyed four homes in the Detroit metro area.

Persons with information about these acts of arson should call 800-442-7766.

In a letter expressing support for Stop-Eco Violence!, Rep. Greg Walden (R-OR) warned that “it is only a matter of time before an innocent life is lost in a future” attack by the Earth Liberation Front (ELF) or the Animal Liberation Front (ALF).

ELF has claimed credit for a number of attacks against housing development.

Homestore Agreement With MSN Expands Consumer Reach

NAHB members who have homes listed on HomeBuilder.com™, the association’s official Web site for selling new homes, will see the audience for those listings expand significantly over the next few months.

Homestore Inc. announced on July 16 that it has agreed to provide new home and apartment content for the House and Home channel on the MSN network.

More than 6 million unique users visit the MSN House and Home site each month, making it the country's second most popular real estate site, according to comScore Media Metrix.

HomeBuilder.com listings are also available through the Real Estate channel on AOL.

“We are very supportive of Homestore’s new relationship with MSN because it puts the houses our members build in front of millions of potential new home buyers,” said NAHB President Kent Conine.

“With builders increasingly aware of the importance of online marketing, we are pleased that Homebuilder.com, the official new homes site of NAHB, will now be promoted on MSN,” Conine said.

Homestore CEO Mike Long said that Homebuilder.com and Homestore® Apartment and Rentals sites are already the most visited new home and apartment Web sites on the Internet and that the new relationship with MSM “will significantly increase the consumer audience available to our customers.”

More than 100,000 new homes are listed on Homebuilder.com and there are more than 6.5 million apartment communities on Homestore Apartments and Rentals.

Profile of Home Buyers Finds Growing Internet Use

Results of a new survey released last week by the National Association of Realtors® show that 71% of home buyers during this year’s first quarter used the Internet to help search for a home.

This was up sharply from 41% during 2001, according to the Realtors®.

“Almost every home placed on the market today can be found on the Internet,” said NAR President Cathy Whatley, owner of Buck & Buck, Inc. in Jacksonville, “and more buyers than ever are using the Web to search for a home.”

She added that 90% of prospective buyers searching on the Internet used a professional real estate agent, compared to 79% for non-Internet users.

Among the survey findings:

• Compared to non-Internet users, typical Internet users were younger (38 years old vs. 47) and had higher incomes ($70,700 vs. $56,300).
• Only 11% of those surfing the Web first learned about the home they bought on the Internet. However, this was an increase from 8% in 2001.
• Forty-one percent first learned about the home they bought from a real estate agent, while yard signs accounted for 16%. Newspapers, builders and a friend, neighbor or relative each accounted for 7%.
• Typical buyers walked through 10 homes and searched eight weeks to buy a home 10 miles from their previous residence.
• The typical seller placed a home on the market for five weeks and had lived in that home for six years.
• The median home size was 1,830 square feet, ranging from 2,000 square feet for a single-family house to 1,100 square feet for the typical condo in a larger multifamily building.
• Typical sellers bought homes that were 18% larger than their previous residences, although 29% bought smaller homes.
• Forty percent of all buyers were purchasing their first home, down slightly from 42% in 2001.
• The typical first-time buyer was 32 years old, had a household income of $54,800 and made a 6% downpayment on a home costing $136,000.
• The typical repeat buyer was 46 years old with a household income of $74,600 and placed a downpayment of 23% on a home costing $189,000.
• Thirty-seven percent of first-time buyers were single, compared to 28% of repeat buyers.
• Married couples accounted for 59% of home purchases, followed by single women (21%), single males (11%) and unmarried couples (8%).

The 2003 National Association of Realtors® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500. The cost is $50 for NAR members and $75 for non-members.

BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here.

University of Housing Offers Sales and Marketing Designations

The NAHB University of Housing offers designation programs specifically for sales and marketing professionals. For more information on these programs, click here, or call 800-368-5242 x8EDU.

A Merchandising Story Spells Success

By Ava Carberry
S Is for Sophistication

Although the experience of the builder and merchandiser both matter, what is driving design in today’s market for entry-level and first move-up product is the experience of the home buyer.

“Entry-level” buyers are bringing more knowledge and higher expectations to the purchasing process than ever before. In last year’s VISION survey of new home buyers in the West, 62% of those who had bought homes priced under $250,000 had previously owned at least one home; 30% had owned two or more.

Even first-time home buyers are more design experienced, thanks to catalog shopping, the Internet and stores like Crate and Barrel and Pottery Barn, where good design is both available and affordable. Even shoppers at Target can find everything from woven wood window coverings to coffee tables designed by Michael Graves.

U Is for Unique

The John Laing Homes South Coast Division decided to hire a major furnishings retailer to bring a youthful, upscale look to its new models in St. Mays Road, an entry-level attached product in the master planned community of Ladera Ranch in Orange County, CA.

St. Mary’s Road is a unique community of three-plex buildings, each with two two-story town homes and one carriage-unit flat. Each home has its own separate entrance and private garage, providing a sense of privacy usually associated with single-family homes.

With such distinctive architecture to work with, it was the developer’s goal to form a partnership with a major retailer to give the project a unique marketing position. The retailer would furnish the models with furniture and accessories the buyers could walk into the store and buy.

But what sounded like a win-win situation for both builder and retailer didn’t exactly work out that way. Designing three models aimed at a specific target buyer, each with a distinctive and memorable look and under time constraints, was more than the retailer’s corporate office was willing to bear.

Unfortunately for John Laing Homes, the retailer abandoned the effort with only four weeks left to the grand opening, and a new strategy had to be pulled together quickly.

C Is for Challenge

Fortunately, an alternative was already in place. Anticipating that the retail designers would be unfamiliar with model home design — including production needs, finish specifications and optional upgrades — John Laing Homes asked Don Anderson, president of Color Design Art, to guide the process.

With little more than a month to go before the opening, John Laing turned to CDA to fill the void left when the retail strategy collapsed. A team from CDA agreed to take over the merchandising and to create accessible models that would excite demanding young single professionals and couples, as well as move-down empty-nester couples and young families with one or two small children.

C Is for Customize

The approach used three different looks to customize the homes for the different life stages of the prospective buyers, using attainable furniture and wall-to-wall design. Where possible, furnishings from the original retail source were even included. In the two-bedroom carriage unit aimed at a young, single professional man, for example, freestanding bookcases, a contemporary metal desk on wheels and artwork and accessories came from the retailer.

Next was to specify affordable finishes in a range of materials that would enhance the perceived value of the homes.

Each home featured different countertop treatments: a stone-look porcelain tile in the Plan 1 kitchen, a decorative tile in Plan 2 and a solid surface in Plan 3.

Value-priced, hard-surface flooring was used to create the sophisticated look expected by this market and to direct traffic flow. Accent paint was used to highlight walls, establish ambience and demonstrate an effective, yet inexpensive way for the buyers to customize their new homes.

E Is for Enhancing Architecture

To underscore the unique privacy provided by these attached homes, the interior stairways were treated as an important space, rather than just a traffic conduit.

Actually the entryway to the upstairs carriage unit, the stairway in Plan 1 was painted with warm earth-tone accents, and then highlighted with colorful, oversized contemporary poster art. The stairway became an art gallery and a visual invitation for buyers to climb the stairs to see the rest of the home.

In the Plan 2 town home, architectural pot shelves along the stairs were highlighted with accessories and art. More importantly, it was the merchandising recommendation to convert the original bedroom at the top of the stairs to an optional loft that would open this interior staircase and bring in more light. Since this was an empty nester home, it provided a wonderful home office space, made the stairs friendlier and still left a third bedroom to be merchandised as a guest room. The strategy demonstrated all of the home’s usable square footage.

S Is for Success

The re-strategized plan was a success. According to Marianne Browne, vice president of sales and marketing for John Laing’s South Coast Division, “The merchandising for these models hit our diverse market more accurately than any we’ve ever done before. The design reflects their lives and lifestyles in a way that the retail store never could have achieved. That is confirmed by the fact that each floor plan is selling equally well.

S Is for Strategy (and Back-Up Strategy)

Two lessons can be derived from this experience.

First, if you are going to try an innovative approach such as partnering with a retailer to furnish your models, do your homework early on. Make sure they understand your market, can respond to your production needs and have the same ultimate goals and understanding you do. In other words, make sure they are team players.

Second, always have a back-up strategy in case your first plan doesn’t work. Remember that designing for the entry-level buyer is getting more demanding and challenging. The right merchandising strategy can make all the difference.

Ava Carberry, MIRM, is a principal at Color Design Art, with offices located in Pacific Palisades and Thousand Oaks, CA. Color Design Art is one of the nation’s leading model merchandising firms, emphasizing the importance of research-based, lifestyle environments for new home builders. Carberry has been a guest editor of Sales and Marketing Ideas and is a former chairperson of the NSMC publications committee. For more information call 310-459-7844.

A slightly longer version of this article waqs originally published in NAHB’s Sales & Marketing Ideas magazine. ©2003.

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 National Sales and Marketing Council and the Institute of Residential Marketing.

BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here.

University of Housing Offers Sales and Marketing Designations

The NAHB University of Housing offers designation programs specifically for sales and marketing professionals. For more information on these programs, click here, or call 800-368-5242 x8EDU.

Active Adults Want Homes They've Always Dreamed About

By Kendall Carre
Merchandising for an “active adult” community starts with identifying today's active seniors. Today’s 55-year-olds are a different breed than their counterparts of only a decade ago, and that means this market segment must be redefined. 

For example, older adults will be retiring later, often for financial reasons but also for pure enjoyment.

When attempting to define today’s “active adults,” there is one thing for certain: They are active. They eat healthier, exercise regularly, spend more time on hobbies and are living longer.

Their vision of a new home is closer to their dream home than anything they’ve previously owned, right down to the interior design.

“The interior merchandising for these homes should create a personal focus revolving around the individuals who will be living here,” says Debra Newell, founder and president of Tustin, CA-based Ambrosia Interior Design, Inc.

A good example comes from the 14 new model homes at Pulte/Del Webb's Sun City Lincoln Hills in Lincoln, CA, which Ambrosia is merchandising.

Ranging from just under 1,200 to more than 3,000 square feet, these homes are designed to appeal to boomers — in both architecture and merchandising. The homes are larger, with bigger kitchens and more space for entertaining. There is enough room for example, for a large dining table for family gatherings and there are special places for hobbies, home offices, exercise and relaxation.

Fill the Home With Their Favorite Things

A home’s personalization is key to its appeal to active adults, Newell points out.

“Buyers are looking at this home as the one they can finally do their way,” he says. “They want everything to be the nicest they’ve ever owned.”

Most buyers have owned and decorated several homes over the years. They’ve learned from their mistakes and want to fill this home with their favorite things.

“If the buyer’s passion is cooking, they will spend a large amount of their option dollars on things like granite or Cesarstone countertops, and glazed cabinets with glass doors.” adds Newell.

Buyers at Sun City Lincoln Hills are spending $50,000-$60,000 for architectural upgrades and options such as flooring and countertops.

Low Maintenance Is Another Hot Button

Although active adult home buyers desire the best in everything, they do not want a home that requires plenty of upkeep. Low maintenance and high quality are the hot buttons for these buyers, and creating a balance between the two is essential.

Newell says that the interiors of active adult homes should be lighter and brighter than what is found in a typical single-family home.

“We see 35% less light as we get older, so the rooms are painted in warmer, lighter colors and awash in at least three light sources,” he says.

At Ambrosia, designers use this lightness as a backdrop for accesories and fabrics that add color and texture throughout the home.

As in the single-family home market, active adult homes are becoming more themed.

Not Every Buyer Wants to Vacation at Home — But Most Do

“Since this is their dream home,” says Newell, “most of these buyers want it to have the relaxed feel of a vacation retreat.”

Ambrosia often incorporates the design and color palates associated with plantation, seaside cottage or Tommy Bahamas interiors to satisfy this desire.

“Of course, we still design models that include traditional, classic and more eclectic interiors, but the vacation feel is very hot right now," Newell says. “We don’t want to get so caught up (in what's hot) that we don't reach the buyer who desires a home with the builder’s more standard amenities.”

For the active adult buyers who would rather spend their money on an actual vacation than a “vacation-feel” home, "we work with the builder to show everything he includes as standard, adding special touches to make the home just as enticing,” Newell says.

Whether merchandising to include the ultimate in what the active adult buyer desires or what they can realistically afford, understanding that the active adult is an individual who continues to participate in the excitement and rigors of everyday life is essential.

Kendall Carre is the marketing director of Tustin, CA-based Ambrosia Interior Design, Inc., and a veteran of the home building industry. Carre also has served on the board of directors of the Building Industry Association’s Southern California Sales & Marketing Council for the past seven years and currently holds the office of vice president. She can be reached by e-mail or call her at 714-573-3855.

To learn more about seniors housing or boomers, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, contact Jeff Jenkins or call him at 800-368-5242 x8292 .

BuilderBooks.com offers a variety of publications about the seniors housing market. To view or purchase these publications, click here and type “seniors” in the search engine.

2004 Seniors Housing Symposium

To learn more about the seniors housing market, plan to attend the 2004 Seniors Housing Symposium, Building for Boomers & Beyond: It's All About Lifestyle in Chicago from April 14-16. The symposium will focus on the lifestyle component of 50+ seniors housing.

Three Essential Steps to Marketing Your Credentials

Putting your credentials on everything that leaves your office with your signature is the first step in marketing your certification. That includes all letters, e-mails, fax cover sheets, proposals, estimates, production schedules and, of course, all your marketing materials.

Remember that this material will be seen by more people than just your prospective clients. Your trade contractors, vendors and manufacturers' representatives should all know that when they are communicating with you, they are working with a contractor who is a head above the rest.

At Your Home Builders Association

We can't  expect to educate the public at large about the benefits of hiring a Certified Graduate Remodeler (CGR) or Graduate Master Builder (GMB),  for example, before we first make our fellow home builders association members aware of the power of NAHB designations.

Ask the staff of your local association to list credentials behind the names of their members in all print materials such as meeting minutes, agendas and the monthly magazines and newsletters they produce.

More importantly, ask your association leadership to include, or better yet, require, members to include their professional credentials when they introduce themselves to each other or when giving committee reports. Make a game out of it: Anybody who forgets to give their credentials at the start of a meeting has to buy a round of drinks or make a $20 contribution to your local building charity.

And With the Public

Once your business partners and your local home builders association understand and recognize the value of certification, it is time to move on to the public at large.

Regardless of whether your state requires licensing, but especially in states that don’t, your prospects need to understand that it is imperative for ensuring the success of their project to consider only contractors who have earned our industry’s leading credentials. Housing consumers should expect and settle for nothing less.

Certification is not required anywhere, so it says a lot about a builder who is willing to spend the time and money to earn and maintain professional credentials.

Certification lets your customers know that you have made the commitment to keep your company on the leading edge and that you have invested in educating yourself to stay on top of the latest developments in the industry.

Staying current with business practices is critical to building a company that can withstand the challenges ahead and offer a vision to its employees and years of satisfaction to its clients.

Marketing credentials is working here in Houston. It will work in your home town, as well!

Michael Strong, CGR is the president of Brother's Strong, Inc. in Houston, and he is the 2003 Texas Remodeler of the Year. He is a member of the Remodelors™ Council Board of Trustees and served as the chair of the CGR Board of Governors in 2001.

Deadline Extended for Student Chapter Awards

The deadline for awards recognizing outstanding educators and NAHB Student Chapters has been extended until Sept. 1, the Home Builders Institute (HBI), the workforce development arm of NAHB, has announced.

Sponsored by Thomson/Delmar Learning, “Outstanding Educator” at a four-year college and at a two-year college and “Outstanding Junior Faculty” awards bring national recognition to distinguished individuals who represent the highest standards in construction education.

Nominees for the awards must be affiliated with NAHB Student Chapters; be a full-time teaching member of the faculty; participate in extra-curricular activities with students; engage in activities with home builders associations and other housing organizations; engage in professional activities that include research, publications and presentations; and have experience in construction.

Educators who have at least five years teaching experience are eligible for the $1,200 award to the outstanding educators; those with less than five years of experience are eligible for the $800 junior faculty award.

Nominations are made by faculty members, students, construction professionals and local home builders associations.

Sponsored by the National Council of the Housing Industry — the Supplier 100 of NAHB, the NAHB Outstanding Student Chapter Award honors exemplary chapters at all educational levels — including high schools, vocational schools and two- and four-year colleges.

Chapters are judged by their various activities, including those on behalf of the community.

Student chapters receive prizes of $2,000 for first place, $1,250 for second place and $750 for third place.

Winners will be honored during the Student Chapters Awards Ceremony, which will take place during the International Builders’ Show in Las Vegas in January and will be attended by more than 1,000 students, faculty members and home builders association representatives.

For more information on the awards and to receive nomination forms, click on the award links above. Or e-mail Page Browning.

U.S. Gypsum Works to Address Moisture Concerns

In response to concerns that building products can support the growth of mold and mildew when they become wet, the U.S. Gypsum Company has developed a product that it says is resistant to moisture and mold.

Headquartered in Chicago, U.S. Gypsum is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

A new product line of wall panels — SHEETROCK® Brand HUMITEK™ Gypsum Panels — features a non-combustible, moisture- and mold-resistant gypsum core encased in a moisture-resistant face and back paper made from 100% recycled materials.

USG says that it manufactures a host of other products that are designed to address the moisture control issue, and this has been part of its business strategy for more than 100 years.

The company’s in-depth library of product and system literature, toll-free customer phone number for technical advice and service (800-USG-4YOU) and “The Gypsum Construction Handbook” are all designed to provide timely assistance and solutions to its customers.

U.S. Gypsum has also created a special section on its Web site that is devoted to the subject of moisture and mold as well as SHEETROCK® Brand HUMITEK™ Gypsum Panels.

This information is also available by calling the 800 telephone number above or writing to: United States Gypsum Company, 125 S. Franklin St., Chicago, IL 60606-4678.

‘Building Homes of Our Own’ Rated Highly in Spring Survey

Building Homes of Our Own — the award-winning CD-ROM that provides middle school students with an interactive education on the issues involved in building a house — received high ratings in a survey of educators conducted in May.

The survey was sent out to teachers who had indicated they would be willing to provide feedback about the effectiveness of NAHB’s educational outreach effort.

“I am so excited about this game that I have shared with about 10 other teachers,” said Joy Weikert, from New Oxford High School in Pennsylvania. “When I first ordered it, I assumed it wouldn’t be very good because it is free. The quality of this game has greatly exceeded my expectations.”

“I am addicted to this game,” said Jason B, a student from West Miskingum High School in Zanesville, OH. His teacher, Charles Saunders, added that, “Programs like Building Homes of Our Own are great. It is realistic and a fantastic teaching tool.”

Students have been raving about the CD-ROM, comparing it to the popular SIMs computer games that are flooding the market today.

To date, nearly 23,000 CD-ROMs have been delivered to teachers across the country, representing an outreach of 805,000 students, 989,000 parents and 46,000 teachers — more than 1.8 million people.

One unintended audience for the program has been building and code officials, who have asked for the program to illustrate the home building process to local officials and home owners, and to use it as a resource in training courses for inspectors.

The program has been so popular that the third pressing of CD-ROMs will probably be exhausted by October, with no funds for a fourth reprint until January.

For more information about Building Homes of Our Own, e-mail Kym Kilbourne or call her at 800-368-5242 x8447.

NAHB members and classroom educators can order one complimentary copy by clicking here.

Philadelphia Builder Makes Giving a Family Tradition

Across the country, home builders like Bernie Drueding, president of B.J. Drueding Builders in the Philadelphia suburb of Wayne, are showing that they care by providing a helping hand to the less fortunate in their communities.

In 1987, Drueding assisted the Sisters of the Holy Redeemer in establishing Drueding Center/Project Rainbow and converting a non-profit nursing home into 20 one-bedroom apartments for homeless mothers and their children.

His family established the Drueding Center in 1930 as an infirmary for former employees of the defunct Drueding Brothers Textile Manufacturing Company and donated it to the sisters in 1985.

To date, Project Rainbow has helped more than 345 women and 650 dependent children. The center offers a network of health, social, educational and vocational programs.

“The Drueding Center gave me a place to live,” one mother told Builder magazine last year. “They helped with my dependency and helped me get my education. But most important, they helped me get my kids.”

“I’ve been fortunate,” said Drueding. “Home building has provided me with a job I love. I’m relatively well paid. If you’re that lucky, it just makes sense to try to help other people who may not have had the good fortune or luck that I have had.”

NAHB members or home builders associations that have been involved in community service projects are encouraged to enter the National Housing Endowment/Home Builders Care Project of the Year award.

This is the final year the award will be presented.

The winner will be recognized at the 2004 International Builders’ Show and will receive $5,000 to be donated to the charity of his choice.

Entries must be submitted by Oct. 15.

For entry guidelines and an official entry form, click here.

For further information, e-mail Kimberly Wilbur or Kym Kilbourne or call them at 800-368-5242 x8061.

Boost Your Marketing Through These Awards Programs

Proud of your work? Show it off and give your marketing efforts a boost by entering one of these award programs:

• 2003 Best in American Living Awards — Deadlines Extended. NAHB and Professional Builder magazine are accepting entries for the 2003 Best in American Living Awards (BALA), which honor the “best of the best” in residential architecture and interior design. The competition is open to builders, developers, architects, land planners, interior designers and professionals working through cooperative public/private efforts that expand homeownership opportunities.

The extended call for entries registration deadline is now July 25 with entries due (postmarked) by July 31.  For details and to print out the registration form, click here.

For more information, contact NAHB’s Michelle Persinger Matuga at 800-368-5242 x8343, or Professional Builder magazine at 630-288-8184. 

• 2004 Awards of Excellence. NAHB’s National Commercial Builders Council sponsors the annual Awards of Excellence competition, which recognizes achievements in the commercial building industry for design (remodeling and new construction), market appeal, energy efficiency, challenges faced during building and overall success of the project. The competition is open to all architects, designers, engineers, builders, contractors, developers and building owners worldwide. The deadline for entries is July 25.

Download the competition brochure and entry form by visiting 2004 Awards of Excellence. For additional information, contact Amy Larrabee at 800-368-5242 x8455.

• 2004 Best of Seniors Housing Design Awards. Sponsored by NAHB’s Seniors Housing Council, the annual Best of Seniors Housing Design Awards program honors architectural and interior designs that bring quality, innovation and spirit to the 55+ seniors housing industry. Owners, builders, developers, remodelers, operators, architects, land planners, interior designers and marketing/advertising firms are eligible to enter the competition. The deadline for entries is Oct. 10.

Visit www.nahb.org/seniors for details about the awards and to review the call for entries. For more information, contact Jeff Jenkins at 800-368-5242 x8292.

• 2004 Pillars of the Industry Awards. NAHB’s Multifamily Council invites applications and nominations for its 2004 Pillars of the Industry Awards. Considered the most prestigious awards in the industry, the Pillars awards recognize excellence in multifamily design, development, finance, management and marketing, and showcase future trends and innovation. Applications will be accepted through November.

For an official call for entries application form, visit www.pillarsconference.com or call the Multifamily Council at 800-368-5242 x8215.