Nation's Building News Online: August 18, 2003
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Charter School Helps Solve Growing Town’s Educational Needs
In a state where concerns over inadequate public school facilities have frequently sparked efforts to limit residential construction, the town of Oakland, FL, has found an innovative solution that fixes the problem quickly without riling local taxpayers.
The town this month is opening the doors of West Orange Charter Elementary School, a new $8.1 million K-through-5 elementary school with the capacity to educate some 700 students.
Faced with a big financing and planning challenge in meeting its growth and education crunch, Oakland first obtained a charter from the Orange County School Board. As a charter school, it is authorized to operate outside of the local school district and to be operated by an independent board.
Then — working with Chancellor Beacon Academies, which will manage the school; its bank partner, New York City’s Commerce Bank; and New Jersey-based school developer Workstage — the community purchased land and was able to complete financing over an 18-month time span that ended last December.
Tax-exempt bonds are usually considered the lowest cost option for a borrower — a local government, charter board or non-profit — looking to build a school. But charter schools have some key differences.
According to Kevin Hall, senior vice president for business development for Charter Beacon Academies, “generally, a school district is able to borrow at a lower rate than a charter school; it can pledge its tax proceeds against the bonds.
“In the case of our schools, you pay more on your borrowing but you are getting your building sooner, and we have been able to deliver a building less expensively and capacity comes on faster, so it relieves overcrowding.”
Local governments and developers face challenges in establishing a charter school. Chief among these are credit issues involved in the school’s financing. Also, charter schools are often new entities where the revenue stream to pay for operating and facility expenses comes entirely from enrollments.
Local governments and developers attempting to build a new charter school from scratch, Hall advises, should be flexible, listen to the desires of the community and be ready to provide a first-class education.
“Our approach has been a partnership,” Hall says. “You need cooperation from lots of different parties to make this work, and you need a school product that is going to be attractive — something high-quality to attract parents.”
“From the developer’s perspective, there is clearly a value to having a school ready to go,” he said, and knowing that the area’s educational needs will be met supports housing prices in the community, a good thing for home builders and buyers alike.
“Oakland’s elected leaders, home builders and education authorities have looked at their local area and said education is the most important thing in our community, so it is important to do this.”
For more information about charter schools and Chancellor Beacon Academies, click here.
Oakland’s success in building a charter school is one of the case studies described in NAHB’s new publication — “Building for Tomorrow: Innovative Infrastructure Solutions” — that identifies many of the most promising alternatives for meeting infrastructure needs.
To read the publication, which is available to NAHB members only, click here.
Building News Coast To Coast
'Adult Legos' Build a Following
Homes built with insulated concrete form (ICF) systems are stronger, more energy efficient and quieter than wood-framed dwellings, not to mention that they are fire-proof, termite-proof, bullet-proof and wind-resistant. ICF systems, which are comprised of concrete-filled foam blocks or panels that are linked together and strengthened with steel to form floors and walls, are found in fewer than 5% of homes in the United States. Sometimes called "adult Legos," they have failed to catch on because the necessary ventilation systems make them 5% more costly than conventional dwellings, and many builders are resistant to the extensive training that is involved. However, ICF homes are becoming more popular in the Washington, D.C.-area as well as in the extreme climates of the West and Midwest.
To the Beach — or Bust?
While overall home-price appreciation currently stands at 7%, prices along the coasts have posted double-digit growth. The average sales price has surged 78% to $457,000 over the last three years in North Carolina's Outer Banks, for instance; and prices have risen rapidly in San Diego, Cape Cod, South Florida and South Carolina's Hilton Head as well. Many experts are expecting a major correction in prices now that lenders are imposing stricter underwriting standards, the shift from stocks to real estate has slowed and interest rates have started to climb. While one camp warns that the vacation property market will not escape the cool-down, others predict that appreciation in beach markets will remain robust in the long term due to demand among retiring baby boomers as well as environmental and anti-growth restrictions.
Cities Consider Housing Deal
Officials in Southwest Ranches, FL, must balance the state's affordable housing requirements with the fact that many of the town's residents are opposed to low-income shelter near their mini-ranches. Earlier in the year, they reserved 30 acres for low-cost dwellings in an attempt to prevent the state from controlling the parcel's development. Now the city is looking to pay nearby North Lauderdale $25,000 annually to build 100 of the 178 affordable units required by the state. However, Southwest Ranches, which had a median home value of $320,000 in 2000, must show that its property values are too high to accommodate low-cost development. In contrast, North Lauderdale's median home value was just $82,000 three years ago. The state Department of Community Affairs must review the proposal; but regardless of the outcome, Southwest Ranches Mayor Mecca Fink has declared that apartments will never be built in the town.
Design Centers Give Builders New Insight
A number of builders have created design centers to give home buyers a larger selection of options and upgrades and learn more about buyer preferences. Low interest rates and the desire to stay closer to home since the Sept. 11 terrorist attacks have boosted spending on options and the momentum has not slowed even as interest rates began to move north. According to the NAHB, most buyers shell out $5,000 to $7,000 on upgrades, with wealthier move-up buyers spending more than budget-conscious first-timers. Design centers have allowed builders and manufacturers to monitor trends, with stainless-steel appliances, natural woods, refrigerator-ranges, closet valets and laundry rooms now in high demand. Meanwhile, lofty ceilings, taller cabinets and fireplaces have become standard offerings in the last 10 or so years in response to overwhelming consumer demand.
Traditional Companies Get Help Establishing Online Presence
Like many traditional firms, Bellamy & Sons Construction Co. Inc. of Scotia, N.Y., was slow to enter the Internet sphere but now has two domain names www.belamyandsons.com and www.bellamyconstruction.com and plans to roll out a Web site in the fall. Another traditional company in the area, Newberry Knitting Co., has been online for four years and reports $30,000 to $50,000 in annual revenue from its Web site. Marc DeNofio of the Chamber of Schenectady County, NY, says the chamber is focusing on getting older firms like these in touch with the potential benefits of a Web presence. The chamber is allowing members to use its designer, TreeTop Solutions, at a lower-than-average price for Web site development of $300. "Virtually every industry and every sector can benefit from an effective Web presence," says Howie Diamond of WebStores of America in Troy, NY. Diamon says, "Most people, whether for business for personal reasons, turn to the Internet for their primary source of information and research." The Consumer Internet Barometer finds that 17% of households report utilizing the Internet for research.
Home Buyers Take a Shine to Energy Star
Homes with the Energy Star designation, now totaling 100,000 nationwide, are 30% more efficient than other dwellings and save home owners a combined $26 million annually. These models feature efficient heating and cooling systems, water-saving appliances, high-performance windows and tighter ducts to control air flow, block sunlight and reduce the use of both water and energy. Energy-efficient efforts shaved over $7 billion from utility bills last year, conserving enough power for 15 million homes and lowering greenhouse gas emissions at a rate equal to removing 14 million cars from U.S. roadways.
The Powder Room Gains Respect
Powder rooms are no longer cramped spaces with nothing more than a basic sink and toilet. Modern home buyers want bigger versions with large vanities and storage space. In fact, some builders now are offering 6-foot-by-6-foot models instead of the 5-foot-by-3-foot norm. Residents also want finishes to match the master bedroom or kitchen, since powder rooms are now showing up in the foyer or along a corridor leading to the kitchen — instead of in the tiny space beneath the stairs or other crowded quarters. As a result, granite countertops, high-end flooring, glass sinks and showy faucets are becoming more popular. Home owners also are installing specialized lighting and sconces to create an elegant atmosphere and draw attention to the sink and other accessories.
High-End Homes a Hard Sell
Prudential Carolina Real Estate estimates that a third of the homes priced at more than $1 million in downtown Charleston, SC, have been languishing on the market for over a year, forcing some sellers to slash their asking prices. The Charleston Trident Association of Realtors®, meanwhile, reports that 91 high-end homes are currently up for sale, with more than half boasting $1.5 million-plus price tags. Many of these are historic homes; and their prices are based on their historic significance, renovations and the condition of neighboring properties. Because a number of these dwellings are more than a century old and require a great deal of maintenance, only the wealthiest buyers can afford to purchase and maintain them. However, the economic downturn, stock market losses and rising interest rates have weakened demand among affluent buyers. Still, the downtown market is holding up well, with a total of 65 sales from January through July; an average sales price of $1.03 million; and a drop in the time spent on the market from 214 days last year to about 165 days.
The Easier Efficient Mortgage
Fannie Mae hopes to make energy-efficient mortgages (EEM), which allow borrowers to take on larger loans because they will save money on their utility bills, more attractive to lenders. Traditional EEMs, which have been offered for a couple of decades, finance as much as 100% of the cost of energy-efficient home improvements with just 3% down. Fannie has now extended automated underwriting and other scaled-back paperwork requirements to EEMs. The company has also launched MyCommunityMortgage so that low- and moderate-income buyers can purchase energy-efficient homes with only a 1% downpayment. To qualify for MyCommunityMortgage, home buyers may not earn more than 100% of the median income in their area. Income limits vary in high-cost markets, however, based on HUD definitions; and there are no income requirements at all if the borrower is purchasing a home in an area labeled by HUD as underserved; in low- to moderate-income or minority census tracts; or in central cities.
Got You Covered
SmartWrap, a high-tech building envelope designed by the Philadelphia-based architectural firm Kieran Timberlake, was recently unveiled at the Cooper-Hewitt, National Design Museum in New York City. The innovation combines electrical, heating and cooling, and insulating systems on a customizable film that resembles a large circuit board. The film comes in a wide array of colors and patterns, which will allow home owners to frequently and inexpensively change the look of their interior walls. SmartWrap features polyester film, an interior air layer and aerogel pockets to provide shelter and insulation; flexible solar cells and tiny film batteries to trap and store energy; micro-capsules to regulate temperature; and organic light-emitting diodes so computer and TV images can be viewed on the wall. Moreover, the patterns can be altered to allow more privacy or light or to provide better views of the outdoors. The technology should be available within five years.
Reclaimed Treasures — Latest Trend in Building Materials
The amount of reclaimed redwood, rosewood, teak and Douglas fir sold to home owners, architects, builders and designers has skyrocketed from about 8 million board feet per year a decade ago to more than 40 million today. TerraMai is just one company that specializes in reclaimed wood, most recently crafting 100,000 board feet of lumber, decking, siding and paneling from redwood wine tanks purchased from the Sonoma, CA-based Sebastiani Vineyard. Says TerraMai co-founder Erika Carpenter, "Humans have now harvested 95% of the world's old-growth, and it is time to recycle what we have already harvested — that's what our company is all about."
Handheld Organizers Becoming More Helpful Every Day
Personal digital assistants (PDAs) are becoming increasingly sophisticated, allowing users to edit PowerPoint presentations, complete word processing tasks, create voice memos and enter data into Excel spreadsheets. These capabilities have made the PDA key to increased productivity and effectiveness. Palm's new $399 Tungsten T2, for instance, is essentially a mini computer with sufficient memory, a voice recorder, the ability to work in both sunlight and low light conditions and Bluetooth technology to facilitate wireless connections between devices.
Wireless World a Realty Reality
Real estate companies across the country are spending more money on high-tech solutions that improve agent productivity in the field. Many agents have hand-held devices with cell phone, e-mail, messaging and Internet capabilities; and some firms are installing wireless Ethernet networks so that agents can connect to the Web and access company file servers, printers and computers when away from the office. Other companies are implementing systems that send new listings to brokers as soon as they hit the Multiple Listing Service. Web-based transaction management systems that track the entire sales process and make documents available to everyone involved are popular also, as are unified messaging systems that combine e-mail, fax and voicemail.
NAHB Members Urged to Voice Support for Alaskan Timber Harvesting
Alaskan home builders and communities that depend upon timber harvesting in the Tongass and Chugach National Forests face economic devastation if they fail to prevail against significant opposition to a proposed exemption to the U.S. Forest Service’s “Roadless Rule.”
As part of a major effort by NAHB, association members are being urged to participate in a letter-writing campaign to the Forest Service, which in recent months has been inundated with letters from environmental groups urging that the forests be closed to harvesting.
For the following reasons, NAHB supports a proposal by the Forest Service to exempt the two forests in Alaska from the ban on timber roads:
“Builders in Ketchikan, near the Tongass National Forest, and members of the U.S. housing industry living and working near other national forests need forest plans that protect our natural resources and their local economies,” said NAHB Executive Vice President and CEO Jerry Howard following an Aug. 14 meeting with Forest Service officials. “For these areas, the Roadless Rule will simply do more economic harm and little environmental good.”
As of three years ago, timber from the Tongass National Forest comprised 92% of the volume processed by local mills in Southeast Alaska.
At the Aug. 14 meeting, representatives from NAHB noted that extensive environmental protections are now in place in Alaska through existing forest plans.
Federal rules prohibit timber harvesting on 95% of national forest land in the state and provide protection for old-growth forests.
Any activity in these areas, for example, must comply with the National Forest Management Act (NFMA), which requires land and resource management plans through input from local governments, tribes, states, organizations and citizens.
Under that law, the U.S. Secretary of Agriculture is also required to ensure that the economic and environmental aspects of resource management are taken into consideration when amending land and resource management plans.
Designating portions of the Tongass and Chugach forests as “roadless” violates several federal statutes, NAHB says, including the Multiple Use-Sustained Yield Act, the Wilderness Act, the National Environmental Protection Act, the Administrative Procedures Act and the Alaska National Interest Lands Conservation Act.
To download a copy of the Roadless Rule exemption from the Federal Register, click here.
For more information on the Roadless Rule and U.S. forest plans, or to obtain a copy of NAHB’s comments in support of the proposed exemption to the rule, e-mail Christopher Galik at NAHB, or call him at 800-368-5242 x8663.
Mortgage interest rates eased last week for the first time in eight weeks. With the exception of adjustable rate loans, mortgage rates were nearly the same as they were a year earlier. ARMs, which were down to 3.75% compared to 4.39% a year earlier, have started to attract more borrowers, according to Freddie Mac economists. The Federal Reserve decided to leave the federal funds rate at 1% last Tuesday, and the Consumer Price Index for July showed that inflation was running at an annual rate of 2.2% for the first seven months of the year, helping to allay fears over deflation. Home improvement retailer Lowe's reported strong profits of 28% during the second quarter.
Mortgage Interest Rates
30 Year Fixed Rate: 6.24\%
Housing Starts: Jun. 2003
Total: 1.80 million\%
New Home Sales: Jun. 2003 *
Existing Home Sales: Jun. 2003 *
* Seasonally Adjusted Annual Rate
Building for Tomorrow Starts With Accommodative Housing Policies
Even in the best of economic times, new housing has been a temptation for towns, cities, counties and states that are looking for the financial resources to pay for the infrastructure without antagonizing taxpayers. Unfortunately, this is the worst of fiscal times for our governments, and that’s why home builders have been working doubly hard to ensure that it doesn’t become open season on new home buyers.
The major contribution of housing to the strength of the nation’s economy has been hard to miss over the past couple of years. That story has been splashed across the front pages and covers of newspapers and magazines. It has been at the top of the evening news. Housing was the focus of the Bush Administration as it devised a strategy to boost the country’s economic growth to its full potential. And housing is at the very center of today’s increasingly successful effort to produce jobs and stimulate the economy.
At the local level, the economic power of housing is equally strong. Unfortunately, it’s a story that no-growthers, for various selfish reasons, don’t want to hear. Inadequate infrastructure is just one more excuse to slam the door on what communities need to do to accommodate growth, ensure economic vitality and deliver a high quality of life.
Trends over the past 50 years or so haven’t made the job any easier. People expect more from their government, but they aren’t necessarily willing to pay for it.
In states like California and some major metropolitan areas, piling impact fees and other assessments on the backs of new home buyers has taken a terrible toll on housing affordability. Increasingly, the men and women who serve these communities can’t afford to live in them, and that is a clear indictment of policies that seek to saddle new home buyers with costs that rightfully should be shared by all.
In a recent informal poll in Nation’s Building News Online, roughly three-fourths of those responding said that governments are relying too heavily on new housing to pay for infrastructure costs. But the poll also found some basis for encouragement: many communities do spread the costs fairly and a small, but growing number, are finding innovative ways to finance the infrastructure.
A new NAHB publication, “Building for Tomorrow: Innovative Infrastructure Solutions,” identifies many of the most promising alternatives for financing, building and managing infrastructure.
Here are just a few of the examples in the publication of how new approaches can help solve infrastructure needs and avoid turning a cold shoulder on housing:
This NAHB publication is full of innovative strategies, and it is available to NAHB members (click here). Not all of the ideas are suitable for every situation, and there can be challenges in implementing them. But for enterprising jurisdictions, successful application of the right infrastructure strategies can yield significant benefits for local governments and their citizens.
The bottom line: Communities that succeed in finding ways to provide good housing at the same time as they meet their infrastructure needs are where American families will want to live in the coming decades. Those that continue on the path of driving up housing prices will increasingly become places that most people would rather avoid.
Building 'Green' Starts With Tree Preservation
By Marty Mitchell One of the most visible elements of any environmentally friendly development, or "green building," is tree preservation. And next month, NAHB, the National Arbor Day Foundation and Firewise Communities will honor 10 builders and developers for making tree preservation a priority in the design, production, development and marketing of their new communities. To win the Building With Trees Awards of Excellence, builders and developers had to include a tree expert on their development team, communicate tree-preservation goals to all workers, inventory existing trees prior to construction and use that information to plan the site, plan for long-term tree care and adhere to all tree protection goals during construction. For a list of the 2003 Awards of Excellence winners, who will receive their awards at the National Arbor Day Foundation's Building for Greener Communities National Conference on Sep. 29-Oct. 1, click here. Builders, developers and environmental consultants interested in learning how to add more value to their communities through state-of-the-art land use, planning and tree preservation should sign up for the conference (click here). Land developers interested in building greener through tree preservation should follow these steps developed by the National Arbor Day Foundation: For more information on the Building With Trees program, visit the National Arbor Day Foundation (click here) or call 402-474-5655. The foundation's mailing address is 100 Arbor Avenue, Nebraska City, NE 68410. Marty Mitchell is chair of the NAHB Environmental Issues Committee. 2004 National Green Building Conference: Bringing Home the Green Mark your calendar for The 2004 National Green Building Conference: Bringing Home the Green, scheduled for March 14-16, 2004, in Austin at The Hilton Austin Hotel and Convention Center. Find more information in future issues of NBN Online.
One of the most visible elements of any environmentally friendly development, or "green building," is tree preservation. And next month, NAHB, the National Arbor Day Foundation and Firewise Communities will honor 10 builders and developers for making tree preservation a priority in the design, production, development and marketing of their new communities.
To win the Building With Trees Awards of Excellence, builders and developers had to include a tree expert on their development team, communicate tree-preservation goals to all workers, inventory existing trees prior to construction and use that information to plan the site, plan for long-term tree care and adhere to all tree protection goals during construction.
For a list of the 2003 Awards of Excellence winners, who will receive their awards at the National Arbor Day Foundation's Building for Greener Communities National Conference on Sep. 29-Oct. 1, click here.
Builders, developers and environmental consultants interested in learning how to add more value to their communities through state-of-the-art land use, planning and tree preservation should sign up for the conference (click here).
Land developers interested in building greener through tree preservation should follow these steps developed by the National Arbor Day Foundation:
For more information on the Building With Trees program, visit the National Arbor Day Foundation (click here) or call 402-474-5655. The foundation's mailing address is 100 Arbor Avenue, Nebraska City, NE 68410.
Marty Mitchell is chair of the NAHB Environmental Issues Committee.
2004 National Green Building Conference: Bringing Home the Green
Mark your calendar for The 2004 National Green Building Conference: Bringing Home the Green, scheduled for March 14-16, 2004, in Austin at The Hilton Austin Hotel and Convention Center. Find more information in future issues of NBN Online.
NAFTA Panel Rejects 19% Duties on Canadian Lumber
A bi-national North American Free Trade Agreement (NAFTA) panel has rejected 19% U.S. countervailing duties on Canadian lumber imports.
In an Aug. 13 ruling, the panel found that the U.S. acted in a manner that is “unsupported by substantial evidence and is contrary to law” when it imposed tariffs based on comparisons of timber prices in the two nations.
NAHB First Vice President Bobby Rayburn noted that the decision by NAFTA reaffirmed a ruling by the World Trade Organization (WTO) several weeks earlier finding that the U.S. Commerce Department used an incorrect method to arrive at the conclusion that Canadian producers are subsidized.
“Taken together, these rulings bring home a point that we have been making all along,” said Rayburn. “The Commerce Department’s imposition of high duties based on alleged subsidies has no merit.”
In order for a countervailing duty to be imposed, the Commerce Department must find that foreign producers receive government subsidies, and the U.S. International Trade Commission must find that U.S. producers are injured or threatened with injury.
A separate case challenging the ITC’s finding that U.S. producers are indeed threatened with injury has yet to be decided.
There are currently duties of more than 27% on Canadian lumber shipments into the U.S., including 8% anti-dumping duties.
If fully reflected in U.S. lumber prices, the combined duties could add more than $1,000 to the cost of building a new home, imposing a hidden tax on American home buyers, renters and consumers.
Rayburn said that while NAHB does not believe that current Canadian forest practices are subsidized, the association does agree it is in the best interests of all parties for Canada to work to adopt a pricing system that is more open.
NAHB is urging the Commerce Department to assess the impact of the duties on American consumers and to take all actions needed to comply with the decisions of WTO and NAFTA dispute resolution panels.
In addition, bipartisan resolutions now pending in both the House and Senate call for the WTO and NAFTA cases to proceed expeditiously; they also call for “open trade between the United States and Canada on softwood lumber free of trade restraints that harm consumers.”
Second-Quarter Home Resale Prices Show Record Gains
With mortgage interest rates at 45-year lows, prices of existing homes sold during this year’s second quarter rose in the double digits in 40 metropolitan areas and, for the first time since reporting began in 1982, were up over the same period a year earlier in all 126 areas that are surveyed, the National Association of Realtors® said last week.
The median existing-home price nationwide rose 7.4% to $168,900, the association reported.
The pace of price increases was strongest in Riverside-San Bernardino, CA, where homes sold for a median $212,600, up 23.5% from the second quarter of 2002.
Placing second was Providence, RI, at $228,900, up 23.2%. Homes rose 20.6% in Los Angeles-Long Beach, to $337,200, the third most rapidly appreciating housing market in the country.
The most expensive housing was in the San Francisco Bay area, where the median price was $560,200, followed by Anaheim-Santa Ana (Orange County, CA) at $471,700 and Boston at $409,100.
The median resale price of homes sold in Beaumont-Port Arthur, TX, was $87,300, the lowest in the country. Next to lowest was Buffalo-Niagara Falls, NY, at $90,400, followed by South Bend-Mishawaka, IN, $91,000.
The news in the second quarter was exceptional, according to David Lereah, NAR’s chief economist, but price appreciation is expected to moderate as mortgage interest rates climb from their cyclical lows.
“Normally, even in very strong sales markets, there are about a half-dozen metros somewhere in the country that for one reason or another have a temporary price decline,” said Lereah.
Home prices climbed 13.6% in the Northeast to a median $182,500, 8.6% in the West to $233, 200, 6% in the Midwest to $140,800 and 5.9% in the South to $157,400.
Spotlight on: Tucson
By Edward Taczanowsky, EO of the Southern Arizona HBA
Outlook for the remainder of 2003:
I’d say the outlook is very positive, through the end of this year and beyond. Tucson is rated as one of the top-five most livable cities in the U.S. and we have a strong draw, particularly for retired buyers. They’re about 30% of the market. This is also a great place to raise a family and do business.
Home building is a billion-dollar industry here, employing about 39,000 workers. We also have a very active and growing HBA. Right now we’re running at an average permit volume of 691 per month. If this continues, we’re on track to reach over 8,000 permits by year’s end.
Biggest source of concern for builders:
The main issue is the shrinking inventory of land available for development. We have approximately an 18-month supply of lots available to build on — that’s not a lot in a market with close to 8,000 permits pulled per year. There is also something in the works called the Sonoran Desert Conservation Plan, which would severely restrict the amount of buildable land. We’re already seeing some narrowing of supply because of public policies that are being established even before the conservation plan is voted into law.
Equally significant is a proposed critical habitat designation for the ferruginous pygmy owl, which the Fish and Wildlife Service initiated. When the proposal came out, land prices almost doubled because of the massive amount of land that would be taken out of production. If the plan goes through in its current form, it will severely restrict land availability. A recent local study has found that under the expected development restrictions, out of a total of 5.8 million acres in the Tucson metro area, there will only be 500,000 to 900,000 acres left to develop.
Also of concern is the trend toward communities financing infrastructure through impact fees, rather than sales and property taxes.
The market seems to be moving upward. The low end — new homes priced between $70,000 and $120,000 — accounted for just over 8.5% of the market in June. Homes in the $120,000 to $150,000 range accounted for 22% of sales, while homes in the $150,000 to $200,000 range made up 36% of the market. Entry-level buyers are heading toward existing homes a bit more often than before. With our strong retirement market, about 17% of homes are in age-restricted communities. There is also a healthy remodeling market here.
Eye on the Economy
David F. Seiders, NAHB Chief Economist
The government's "advance" estimate of real GDP for the second quarter showed annualized growth of 2.4%, a bit better than we expected but still not strong enough to improve the job market. Payroll employment fell and the unemployment rate rose during the quarter, and strong growth in labor productivity (output per hour) was needed to generate the growth in economic output — a pattern in evidence since the current economic “recovery” officially began in November 2001.
Strong productivity growth also has been holding down inflation in the U.S. by reducing business labor costs per unit of output. The price measures in the second-quarter GDP accounts showed historically low rates of inflation (1% for the overall GDP price index), helping to keep alive the Federal Reserve’s obvious concerns about potentially destructive price deflation in the U.S.
Despite obvious dark sides, productivity growth is fundamentally positive ...
Productivity growth looks like a key villain in the evolving economic saga, allowing businesses to expand economic output while trimming back labor input and contributing to deflationary pressures by reducing labor cost per unit of output. This is all true, but that doesn’t mean we should view productivity growth with contempt or encourage changes in fiscal policy to reduce incentives for research and development or capital investment.
Productivity growth certainly can have short-term negative implications, particularly for those unable to find or hold jobs. But there are positive short-term implications as well — for the incomes of those with jobs, for business firms striving to rebuild profit margins, for holders of corporate equities and for anyone borrowing in the credit markets. Over the long term, productivity growth is absolutely essential to strong noninflationary growth, high employment and rising standards of living for all Americans. Let’s just cheer it on.
Economic momentum is picking up further in the third quarter ...
Some components of the economy (such as defense spending) enjoyed temporary growth surges in the second-quarter GDP report, but that report still suggested some fundamental improvement in economic momentum around mid-year. That reading is consistent with the Federal Reserve’s most recent Beige Book, a regionally based analysis that said the pace of economic activity “increased a notch” during June and the first half of July.
The most reassuring feature of both the GDP report and the Beige Book relates to better signals on the beleaguered manufacturing sector and on the major components of business spending — the glaringly weak sisters of the recovery to date. The Beige Book cited “nascent signs of recovery…in the manufacturing sector,” and the second-quarter GDP report showed a solid pickup in business spending on capital equipment and software, an upturn in spending on nonresidential structures and a sizeable decline in business inventories that bodes well for restocking and production in the second half of the year.
Recent economic data are reassuring ...
Available data for July and early August are supportive of the widely anticipated third-quarter pickup in economic growth — a pickup that should lead to a better job market late in the year. Retail sales were quite good in July (an annualized increase of 18%) and the advance was broad-based, suggesting that the new tax bill already is stimulating consumer spending. Furthermore, the Institute for Supply Management's surveys of purchasing managers suggest that the manufacturing sector posted modest growth in July, the first advance since February, and that the services sector grew nicely in July for the fourth consecutive month.
For housing, NAHB’s survey of single-family builders showed a nice advance in July, and the Mortgage Bankers Association's weekly surveys of mortgage lenders show strength in applications for mortgages to buy homes through the first week of August (moving average basis). And in the labor market, weekly data on initial claims for unemployment insurance continued to trend down through early August, pointing toward stabilization of employment down the line.
The Fed holds monetary policy steady and commits to a period of low short-term rates ...
As we expected, the Federal Reserve kept its target for the federal funds rate at 1% at the Aug. 12 FOMC meeting, and the decision was unanimous. The Fed said that the evidence accumulated since the previous FOMC meeting (June 25) indicates that spending in the economy is “firming” but that labor market indicators are “mixed." With respect to the inflation/deflation issue, the Fed noted that business pricing power and increases in core consumer prices “remain muted.”
Following these market assessments, the FOMC once again presented two risk statements — one for real economic growth and one for inflation/deflation. As it did on June 25, the FOMC viewed the upside and downside risks to the attainment of sustainable growth as “roughly equal,” while saying that the risk of an unwelcome fall in inflation (heading toward deflation) exceeds that of a rise in inflation from its already low level.
The FOMC went on to weigh these two risk assessments, saying, “the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future.” Then the FOMC delivered the message that Fed Chairman Greenspan had issued in other contexts and that the markets wanted to see from a united committee: “In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.” This kind of commitment is unprecedented in Federal Reserve history.
Long-term rates still are a major issue ...
The Fed’s commitment to maintain a 1% federal funds rate for quite some time, along with the rather upbeat assessment of economic growth prospects and an apparent Fed desire to get the inflation rate up, gave an immediate boost to stock prices and also put some upward pressure on long-term Treasury rates. Indeed, the 10-year Treasury yield is now roughly 140 basis points above its historic (and unsustainable) low in mid-June, and the long-term mortgage rate is up more than a percentage point.
NAHB’s forecasts assume that long-term rates (including the 30-year mortgage rate) will remain close to current levels through the balance of the year, and that those rate levels will not prevent the healthy economic expansion or the healthy housing market we are forecasting. These, of course, are major assumptions. We believe that a combination of very low short-term rates and low (but positive) inflation rates will limit further increases in long-term rates. And it should be remembered that businesses and households can shift their borrowing to shorter-term instruments, such as adjustable-rate home mortgages, maintaining credit flows and spending patterns in the process. Home mortgage refinancing already has taken a heavy hit, of course, but home owners seeking low-cost (and tax-advantaged) access to their housing equity can use home equity loans that typically have rates tied to the bank prime rate — an immovable rate for the foreseeable future.
The cost of financing for home builders promises to remain historically low for quite a while ...
Most home builders raise money for land development and construction by borrowing from depository institutions at interest rates that are tied to the bank prime rate (prime plus one percentage point is a typical floating-rate arrangement). These days, the prime rate is set three percentage points above the federal funds rate, which, in turn, is set by the Federal Reserve. The Fed has cut the federal funds rate by 5.5 percentage points since early 2001 and, as a result, the bank prime rate has settled in at a 45-year low of 4%.
The Fed normally begins plotting increases in the funds rate as an economic expansion gains momentum, but this time really is different. The Fed became genuinely concerned about the possibility of destructive price deflation (á la Japan) back in the spring, and the central bank is committed to keeping short-term rates extremely low until it’s perfectly clear that the threat of deflation is behind us and above-trend economic growth has sopped up a lot of the considerable slack in the labor market. That means the bank prime — and the cost of builder financing — should remain quite low for many months to come, and the Fed’s “accommodative” stance ensures that there will be ample liquidity in the banking system to support loan growth.
NAHB Chief Economist David Seiders analyzes the economy from the point of view of the housing market every other week in the free e-newsletter, “Eye on the Economy.” The preceding is a reissue of his Aug. 13 e-newsletter. To subcribe to “Eye on the Economy,” click here.
Want more economic information? Find it in our publications.
Find more in-depth information in our three economics publications, Home Builders Forecast, Housing Market Statistics and Housing Economics. All are availaible by subscription.
To learn more or to order any of these three NAHB economic publications, visit the Economics Publications Information section of the NAHB Web site or call 800-223-2665.
Construction Defect Laws Scoring Success in a Growing Number of States
Efforts this year to advance “notice and opportunity to repair” legislation have scored notable success, with 11 states passing new laws and several others still considering them.
The process, which discourages lawsuits, is an important step in making general liability insurance more accessible and affordable for builders.
At mid-summer, this was how the situation shaped up:
Generally, these laws require home owners to notify builders of alleged construction defects prior to filing lawsuits, and they establish a time frame for this process.
Although the right of home owners to sue is preserved, the laws provide a process that helps solve consumer complaints and address construction defect concerns in a way that can help both the home owner and the builder avoid expensive court battles.
For more information, e-mail Sam Leyvas at firstname.lastname@example.org, or call him at 800-368-5242 x8326.
Grim Fiscal Picture of States and Localities Being Assessed
By mid-summer, with most state legislatures having adjourned, state and local government interest groups had a chance to reflect on how governing bodies were handling one of the most difficult fiscal crises in decades.
Home builders associations have been watching their state legislatures especially closely this year, fearing that new residential construction could become an especially tempting target for states and municipalities wrestling with massive budget deficits.
ALEC projected that states would rack up deficits of almost $95.2 billion for 2004 and the balance of this year.
Local Governments Spending Less and Taxing More
Local governments are beginning to feel the trickle-down effects from state governments that are attempting to pare their deficits by clamping down on the aid they provide to municipalities.
A survey of 330 cities and towns conducted this summer by the National League of Cities found that cities are trying to cope with the situation by raising fees and taxes while cutting infrastructure spending and public employees.
Among the survey’s findings:
On top of everything else, the National Association of Counties reports that 70% of counties are facing budget shortfalls.
Warning: Be Alert to Glitches That Can Ruin Your Business
There may be a few little things (or maybe more than a few, and some of them not so little) that go wrong on each of your projects, but you don’t have the time to figure out why they keep popping up. Make the time. In the short term, those glitches are merely annoying. In the long term, however, they could put you out of business.
Inadequate systems and procedures are insidious. They drain the life out of companies bit by bit. They can cause employees and customers to edge away and, over months and years, they can shrink your profits. Some disheartened owners eventually file for bankruptcy and go back to swinging a hammer for someone else.
We’ll save you that hardship. Here are key warning signs and pitfalls of faulty systems and scrambled operations. Take notice and start fixing any problems before it’s too late:
This information is excerpted from “All Systems Go: Putting Order in Your Business,” a free 32-page booklet that examines the advantages of systemization and the basics of systems development. It also provides tips for bringing a systems approach to business planning, hiring, scheduling, managing selections, shortening punch lists and handling warranty work.
To receive your free copy of “All Systems Go,” e-mail NAHB’s Business Management Department or call 800-368-5242 x8388.
Want more information about effectively managing 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 Has Books About Business Management and Customer Service
BuilderBooks.com offers a variety of publications about business management and customer service. To view or purchase the business management publications online, click here. To view or purchase the customer service 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
Residential Ventilation Standard Appealed by NAHB
A recent move toward final approval of a new residential ventilation standard by the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) is being appealed by NAHB and other groups because of substantial concerns that it is technically flawed and not cost-effective.
ASHRAE approved Standard 62.2, “Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings,” for publication at its July board of directors meeting in Kansas City, MO. The standard has been 12 years in the making.
NAHB has formally appealed this summer's decision to ASHRAE. The American Gas Association (AGA) and the Association of Home Appliance Manufacturers (AHAM) have also filed appeals.
NAHB has voiced concern that the standard:
NAHB also contends in the appeal that ASHRAE has failed to follow its own rules and procedures for standards development and has not reached a consensus of affected interests as required by the American National Standards Institute (ANSI).
NAHB believes the committee that has been developing the standard does not include a balance of interests and, in its pursuit of an overly aggressive agenda for residential ventilation, has disregarded significant concerns by NAHB, AGA, AHAM and others. These concerns have been raised and documented with the appropriate ASHRAE oversight committees to no avail, leaving NAHB no other option than to appeal.
Under ANSI requirements, ASHRAE cannot publish the standard until all appeals have been heard and decided by a special ASHRAE panel appointed by its board. A final decision could be made as early as October.
If the current appeals are denied by ASHRAE, NAHB and the other appellants will consider taking their appeals to ANSI, which could require ASHRAE to correct the many flaws in the ventilation standard before it is accredited by ANSI.
If appeals to ASHRAE and ANSI are disapproved, the standard would still need to be referenced by building codes or otherwise adopted by state and local jurisdictions before the requirements could be mandated.
NAHB believes that this will be difficult to do once the problems with the standard become apparent, when and if the standard is considered by code bodies.
For more information e-mail Dick Morris or call him at 800-368-5242 x8444.
NAHB Welcomes Opportunity to Work With EPA Nominee
Following President Bush’s nomination last week of three-term Republican Utah Governor Mike Leavitt to become the new administrator of the Environmental Protection Agency (EPA), NAHB said that it would welcome the opportunity to work with the new designate “to achieve balance in the nation’s environmental policies so that they provide protection for the environment without harming economic growth.”
One of Leavitt’s primary environmental missions in his state has been to increase cooperation among federal, state and local officials.
Adopted by the National Governor’s Association, Leavitt’s Enlibra environmental management philosophy calls for collaboration, performance measures, use of good science, the creation of market incentives and the full consideration of costs and benefits.
“In the past decade, home builders and land developers have seen a relentless increase in the level of federal environmental regulation of land use, wetlands, water quality, brownfields revitalization, energy conservation and air quality,” said Jerry Howard, executive vice president and CEO of NAHB.
“While several regulations have been nullified by the courts,” Howard said, “the regulatory and legal gridlock has increased costs for builders and led to inefficient protection of our nation’s natural resources. We can do more to achieve progress in these areas with Governor Leavitt’s leadership.”
King-Size Ideas for Small Spaces
By Tim Kane
But with family sizes shrinking and a shortage of raw land for development across the country, it may be time to ask ourselves if we really need all that square footage or if the caliber of a home should be measured by its quality rather than its quantity.
SylvanOaks is located within Ladera Ranch, a master-planned community designed to evoke a village-like environment with intimate neighborhoods situated around pocket parks, miles of trails and paths, community gardens and a town green. MBK was selected by the developer of Ladera Ranch to build SylvanOaks through a design competition to determine future developments within the premier community.
At SylvanOaks, a neighborhood of 69 homes, the minimum lot size measures 3,400 square feet, which is small, particularly in California, where the average lot is sized at 6,688 square feet, according to the California Building Industry Association. Because today’s home buyers still list more square footage as one of the things they want the most in a new home, our challenge was to design and merchandise smaller homes that still felt spacious and whose character was defined by their details and craftsmanship.
With prices beginning from the low $400,000s, SylvanOaks is comprised of three distinctive models with approximately 1,853 to 2,152 square-feet of living space, three to four bedrooms and up to two and one-half baths.
Mingling Indoors With Outdoors
One of the most effective ways to create a sense of space is to mingle indoor and outdoor spaces, and because SylvanOaks is in California, it made sense to create as much outdoor living space as possible.
Our key design solution was to employ zero lot lines on each home site. Instead of providing five feet of space on both sides of the home, we moved each home to the edge of its lot, creating 10 feet of space on one side — a large usable side yard.
With each model, we also used different architectural schemes to maximize the use of the side yard. Plan One features a dining room with wide doors leading out to the side yard, encouraging residents to throw open the doors on a warm evening, effectively mingling indoor and outdoor spaces. We have also cut out an extra four-foot notch on the side of the home, creating a 14-foot side yard with ample room for an outdoor dining/entertainment area.
The Plan Two model situates the kitchen, dining and family rooms at the back of the home. Designed as a contiguous great room with picture windows looking out to the back yard, the space effectively amplifies light and conveys a sense of spaciousness. Because the design is so effective, we were able to cut back the size of the family room by two feet and allow for a 12-foot side yard.
Plan Three features alternate elevations, both emphasizing access to the side yard. One layout situates the dining room adjacent to the side yard with wide optional French doors connecting the indoor/outdoor space. The second plan locates a large great room in the back of the home and adds a wrap-around porch to the front, providing access to the side yard from the front, back and side of the home, essentially creating a circular design that blurs the line between inside and out.
One of the most unique design elements at SylvanOaks is utilized on the corner lots. Buyers can opt to shift the front door to the side of the home, creating a dramatic 45- to 50-foot entryway, rather than the normal 30-foot front facing entrance, and eliminating any view of the garage from the front. While the living room in this configuration is not expanded, this produces an immediate sense of space and light upon entering the home.
Architecture Is Key
Because the homes are built with zero lot lines, we were sensitive to the fact that residents would be looking closely at the side of their neighbors’ homes. To give the homes a more exciting visual sense, we created a 4-D architectural experience by carrying varied architectural materials all the way around. While the sides of most production homes are generally neglected and plain, SylvanOaks sides feature siding, shingles, cut-in niches, pop outs, stone accents and stucco elements that wrap all the way around, adding exceptional detailing, depth and interest.
We also knew we would be largely marketing the SylvanOaks homes to buyers fitting a “Cultural Creatives” profile. Cultural Creatives, because they typically do not buy new homes, are an untapped pool of potential customers. They are interested in neighborhood and will not settle for what they perceive as cookie-cutter, mass-produced homes. To satisfy their desire for individuality and a sense of place, we did not theme the SylvanOaks architecture. Instead, we planned a variety of elevations to create the feel of a naturally formed, established neighborhood filled with eclectic home designs.
SylvanOaks draws its architectural styling from influences as varied as Cape Cod, classic colonial, shingle, European cottage and Spanish eclectic. Within a community of just 69 homes, each home plan has three distinctive elevations, resulting in nine different styles, coupled with 12 different paint schemes, making each home unique.
It takes a tremendous amount of planning and craftsmanship to design smaller homes to fulfill the desire for space that most buyers still seek. However, the success of SylvanOaks — where each phase has been sold out within two hours of opening and sales volume is averaging more than 10 homes per month — may mean that Americans have come to recognize that a better designed home can be more desirable than a bigger one.
Maximizing Visual Impact
Model merchandisers from Carole Eichen Interiors, Inc. (CEI), have a specific challenge when planning interiors, colors and themes for SylvanOaks: Be more memorable than the competition; appeal to the young, sophisticated market; and maximize smaller floor plans.
Says designer Sue Munro, “We carried hard surfaces on floors throughout all three plans to keep a smooth flow instead of breaking up spaces. And we used light tones throughout, like on the sofa in Plan I, but added touches of fun color through accents we knew would appeal to the market.”
Adds designer Kim Hampton, “Window treatments were kept high off the windows to emphasize the side yards that MBK Homes offered.” The side yards were an important home-siting strategy to show buyers they didn’t have to sacrifice outdoor living in a small floor plan.
Designers also paid close attention to the proper scale of furnishings in small spaces, for example, showing a 36-inch instead of 42-inch sofa, and made sure all three models were much more thematic than the competition, with fun kids’ rooms and consistent color schemes throughout each model. Kitchens were kept open, showing barstools at an eat-in counter, especially in the smallest model, Plan I, where there was no secondary eating space.
In Plan III, merchandisers showed a “super family room” for maximum visual impact, complete with a table set for dinner by a fireplace. All three plans showed prospects where their computers could go — in a tech space at the top of a landing or in a loft/optional bedroom. MBK offered buyers in one model an optional efficient built-in computer desk.
With lots of careful planning and teamwork by MBK Homes and CEI, SylvanOaks at Ladera Ranch has proven to buyers that bigger is not always better.
— Jan Mitchell
Subscribe to NAHB's Sales & Marketing Ideas Magazine
For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales & Marketing Ideas magazine. Call 800-368-5242 x8192 to subscribe or order a copy. Visit www.nahb.org, keyword: NSMC to learn about membership benefits of the Nationals Sales and Marketing Council and the Institute of Residential Marketing.
BuilderBooks.com Has Sales and Marketing Publications
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.
Ask the Lawyer — About Subdivision Covenants
Q. I am a custom home builder who purchased a lot in a residential subdivision.
The subdivision covenants call for the submission of all building plans to an architectural review committee for approval prior to construction. The committee has rejected a plan that I submitted on the grounds that it is incompatible with the architectural scheme of the subdivision.
However, my plan was very similar in style to several homes within the subdivision boundaries that were constructed by the original developer.
Can the architectural review committee reject my plans? Suppose I go ahead with construction without the committee’s approval. What might happen?
A. It is not uncommon for subdivision covenants to authorize the formation of an architectural review committee to examine proposed construction plans to ensure that they comply with building mandates and restrictions in those covenants and that they are compatible with the architectural style and appearance of other homes in the subdivision.
Attempting to build the home without the committee’s approval could result in a court action (a petition for injunction) ordering you to halt construction or even to raze any completed or partially completed structure.
Ths type of legal action can be initiated by any lot owner in the subdivision, or by the home owners’ association on behalf of the lot owners.
However, the authority of an architectural review committee does have its limits.
The committee must adhere to the standards specified in the subdivision covenants. These covenants are recognized as enforceable, but restrictions on land use are not favored by law.
Covenants are narrowly construed by the courts, and doubts about their application are generally decided in favor of the lot owner.
You should examine your subdivision covenants to find out the committee’s standards for approving a plan. If there are no standards, if the standards are vague or ambiguous or if the standards are contradicted in the disapproval of a plan, then you may be able to successfully contest the committee's decision. You can do this through an appeals process (if one is provided), or through litigation.
Statutes in some jurisdictions (but not all) allow you to recover attorney’s fees and costs for successfully challenging subdivision covenant restrictions in court.
Also, the architectural review committee cannot be overly subjective in its determination, show favoritism to certain lot owners or engage in arbitrary and capricious decision making.
The fact that there are several homes within the subdivision boundaries that are similar in style and appearance to your proposed plan could suggest that the review may have been overly subjective.
But be aware that the original developers who drafted and recorded the subdivision covenants may not have included their retained lots in the deed of subdivision dedication, or may otherwise have exempted those lots from the covenants.
In that case, the original developers' lots may not be restricted by your subdivision’s covenants, and the style or appearance of the homes built on them is not pertinent to the architectural committee’s considerations. A title examination may be necessary to determine the applicability of the covenants to the original developers' lots.
Since there are many technical considerations involved in your situation — including a review of the restrictive covenants, a title examination and an assessment of your legal position in possible litigation — you should consult with a local attorney.
If you have questions for Ask the Lawyer, click here.
There is no guarantee that your question will be answered in this format, so if you have a particular legal concern that requires immediate attention, contact the NAHB Legal Research Service at 800-368-5242 x8491.
This information is provided as a service of the NAHB Legal Action Committee and NAHB Building Products Issues Committee. The information is intended to familiarize you with the law in this area. It is not intended to be an exhaustive presentation of legal information on this particular subject, and in no way constitutes an opinion of law. Your own attorney must review this information to determine how it may apply to your particular situation.
Get Out From Under the Information Overload
At this time of year, which is our busiest, it’s tough to keep up with the tons of information arriving in the mail on topics that are important for running a business. As the recipient of about five to six pounds worth of magazines each month, here are some tips that have worked well for us over the years.
If you’re like me, you probably receive the top trade publications for contracting and remodeling. Those include Remodeling, Professional Remodeler, Qualified Remodeler (available without charge) and The Journal of Light Construction (well worth a paid subscription).
Each publication typically has four or five feature stories, several departmental articles (on business, sales, production, legal issues, techniques, tool comparisons or the industry outlook), some commentary and some advice columns. Not all of these are relevant to your business. For example, if you’re a kitchen and bath remodeler, a foundations story is not for you.
Be selective, but scan everything. Work down the “contents” page thumb nailing the feature stories and circle articles of interest. It only takes a few seconds.
Next, check out the “departments” listings and do the same thing. Just scan and circle the stories that need to be read. You may well want to read the entire magazine from cover to cover, but save that activity for rainout days. Right now, you want the meat.
Once the selections have been made, it’s time to make assignments and spread out the reading among your staff. Even if that comes down to just you and your spouse, divide up your reading material based on who has the expertise in different subjects.
This practice makes for good employee relations. It will get your employees in the habit of reading about business issues.
Ask for a book report on the article, or similar feedback, at staff meetings. If an article is a good one, make copies of it so that it can be distributed. During feedback time, just two or three minutes of questions and answers about an article can really bring out some of the hidden talents of your employees while spreading good information for your business.
On topics that provoke an especially strong or enthusiastic response, you might also want to consider a letter to the editor. I always like to read comments from an association member or business owner I know.
This is an excellent way to cover a lot of material, to keep current on issues and to generate contributions from your employees. It’s a great learning exercise and it’s a good business practice.
Mike Weiss is chairman of the NAHB Remodelors™ Council.
Six Steps Will Improve Your Occupancy
Many seniors housing communities with occupancy problems turn to consultants who have compiled lists of "dos and don'ts" to increase move-ins.
Here is a summary of tips uncovered in recent research:
Most consultant firms are staffed to conduct about 30 performance audits per year in seniors communities. They review marketing, advertising, promotion materials, inquiries, deposits, leases and a demographic analysis of residents and prospects.
Like a physical exam, the seniors housing audits help determine why marketing results are below expectations, and suggest ways to modify management systems to improve short-and long-term sales and move-ins. The fee for most audits is around $6,000 to $7,000.
Mystery shopping can be a powerful tool to increase move-ins. The consultant conducts telephone and in-person visits to spot problems and lay the groundwork for future sales training. These specialists also provide demographic data analysis and marketing-decision support services. This helps seniors housing developers manage their risks and maximize their marketing, sales and financial performance.
Community managers report that when sales people know in advance they will be shopped and evaluated, it helps overcome the feeling that someone is spying on them. This can be a non-threatening technique that provides insights on how to improve sales. The fees for most mystery shopping services are usually around $100 to $150 per call.
In summary, a good sales effort involves building rapport, asking good questions, listening, evaluating staff performance, asking for the order and following up on leads.
William J. Nowell is the president and CEO of ServiceTRAC, LLC, a Scottsdale, AZ-based firm that provides state-of-the-art systems, resources and tools to companies in the seniors housing industry. ServiceTRAC works with industry professionals to develop national benchmarks that measure performance in sales and service. Nowell has 24 years of sales, customer service and training experience, in addition to 15 years in seniors housing management. He founded ServiceTRAC in 1993 and is widely recognized as a trainer, speaker and author on seniors marketing, research and sales training. E-mail Nowell or call him at 800-951-6606.
Learn More About Seniors Housing Through the Seniors Housing Council
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, e-mail Jeff Jenkins or call him at 800-368-5242 x8292.
BuilderBooks.com Has Publications About Seniors Housing
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.
New Council Formed for Systems-Built Housing
The Systems Builders Council has been created to provide support for NAHB members who are building with systems-built housing or who are interested in learning more about this home building technology, NAHB’s Building Systems Councils announced last week.
At its first meeting, which will occur during the Building Systems Councils’ SHOWCASE in November, the new council will discuss finalizing its vision and direction.
“The primary focus of the council will be to connect builders with manufacturers and consumers to create a marketplace for systems-built housing technology,” said Joe Landers, chairman of the Building Systems Councils.
“At the same time,” he said, “the council will develop strong programs to educate NAHB members and new council members about the benefits of this type of construction.”
Members of the Systems Builders Council will receive a company listing in the BSC’s annual membership directory, numerous advertising and publicity opportunities among consumers and manufacturers and discount registration to annual events, including SHOWCASE, which is the only NAHB-sponsored trade show and conference dedicated to the systems-built industry.
The council is currently accepting yearly memberships for $65.
The new council joins individual BSC councils for the manufacturers of modular, panelized and log homes and for industry associates and suppliers.
For further information, or to request a membership brochure, call 800-368-5242 x8576.
Field Superintendent Training Draws Crowds in Orlando
More than 500 attendees at last month’s 2003 Southeast Building Conference (SEBC) in Orlando participated in superintendent training sponsored by the Home Builders Institute, (HBI) the workforce development arm of NAHB.
This was the first time that all seven courses comprising HBI’s Field Superintendent Designation were offered as a series in one place.
“This was a wonderful opportunity to showcase this training,” said Paul Mashburn, a veteran builder from Winter Park, FL, past HBI chairman, one of the training instructors and one of the creators of the designation.
“The classes hit home,” Mashburn said. “They made a positive impact on the men and women who work in the field, sometimes having to deal with multitasks and a home buyer who needs to have a million questions answered.”
The goal of the series, according to Roger Day, president of Rosewood Homes in Orange Park, FL, is to help shape a workforce that is skilled and able to meet the needs of NAHB member builders, contractors and remodelers.
Courses have been developed in three- and four-hour modules to allow for maximum flexibility. They provide training in: general project management, budget management and cost control, customer service and home owner relations, safety and security, codes and quality control, office and subcontractor relations and hiring, training and supervision.
Mashburn said that in one of his courses participants learned how to protect the job site by reviewing the essential ingredients of a safety and security program. “We also went over the most common OSHA citations and how to prepare for an OSHA inspection,” he said, as well as reviewing the safety responsibilities of superintendents and employees.
“This was quite a feather in our cap, to be the first location in the country to offer all seven classes under one roof,” said Paul Thompson, executive vice president of the Florida Home Builders Association.
Mashburn now heads for Atlanta, where the series will be conducted for the Greater Atlanta Builders Association later this month.
For more information, e-mail Steve Kramer at email@example.com or call him at 800-795-7955 x8925.
(This story was filed by Michael Bonts, who is communications director for the Northeast Florida Builders Association.)
Women Expanding Ownership of U.S. Private Businesses
Women in home building and other privately owned U.S. businesses continue to rise to the ownership ranks at an expanding rate, according to a study released this spring by the Center for Women’s Business Research.
Based on Census Bureau data, the analysis found that there are 10.1 million privately held businesses in the nation that are at least 50% owned by women. Those businesses are generating 18.2 million jobs and contributing more than $2.3 trillion in sales to the economy.
These firms represent 46% of all privately held businesses, said Myra Hart, a Harvard Business School professor and chair of the women’s research center.
Over the last five years — between 1997 and 2002 — women-owned businesses grew by 11%, which was more than 1.5 times the rate of all privately-held businesses.
One in 11 women in the U.S. is now a business owner, according to Rene Jones, president of Heller and Jones and president of the research group’s Philadelphia chapter.
“As business owners, we are an increasingly dynamic part of the economy in every city in the U.S.,” said Jones. “But most of all, this information shows that for women, the dream of entrepreneurship can be a viable reality.”
The results were the latest findings in an ongoing project entitled, “Completing the Picture.” Pitney Bowes Inc., the Philadelphia chapter of the Center for Women’s Business Research and Wells Fargo are underwriting this phase of the project.
To learn more about the NAHB Women's Council, which represents thousands of members who work in all aspects of the building industry, click here. For more details, e-mail Amy Larrabee or call her at 800-368-5242 x8455.
Acrylic Block Windows Provide Privacy and Fresh Air
Acrylic block operable windows from Hy-Lite® Products save time and labor while offering home buyers and remodelers a custom, decorative window, according to the manufacturer.
Hy-Lite® Products is headquartered in Beaumont, CA, with an East Coast facility in Eatonton, GA. Its parent company, SBR, Inc., is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.
Used in both new construction and retrofit applications where ventilation and privacy are important, the windows are available in casement, awning and basement hopper styles.
Unlike glass block windows, the acrylic block windows from Hy-Lite® Products come pre-assembled into complete units, and they are 70% lighter than glass. They are framed in fusion-welded vinyl that the manufacturer says is virtually maintenance free and that will not pit, peel, chalk, flake or crack over time.
The operable windows are made-to-order with custom feature options such as diamond block design styles and eight decorative interior finishes. They come in six- or eight-inch blocks in a variety of patterns and colors and they can allow egress to and from bathrooms and other rooms in the home.
When selecting operable casement windows, builders can specify either left or right hinges to complement a home’s design. They can also specify windows made of a variety of block options, including clear wave, frosted wave, cross rib and green wave.
The manufacturer says the windows are scratch-resistant and airtight to help prevent condensation. The window units offer similar thermal benefits to traditional, dual-glazed units.
Survey Aimed at Improving Arbitration Services
Builders who use the American Arbitration Association (AAA) can participate in a survey designed to improve the services of that organization.
At a time when arbitration is becoming an important alternative for resolving disputes, NAHB is working with the National Construction Dispute Resolution Committee (NCDRC) to encourage the use of dispute avoidance and resolution in the construction industry and to help AAA become more responsive to industry needs.
Along with NAHB, there are about 20 other construction industry organizations that are members of NCDRC. The committee is conducting the survey as part of its mission to provide comprehensive guidance to AAA.
Those who use AAA services, along with their attorneys, are strongly encouraged to complete the survey. To participate, click here.
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:
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