Nation's Building News Online: September 29, 2003

Print All Articles Text Version

Sponsored by Countrywide Home Loans National Builder Division
and 2-10 Home Buyers Warranty

Congress Told White House Plan Raises Grave Concerns for Nation’s Housing Finance System

NAHB told lawmakers last week that the ability of the Department of Housing and Urban Development (HUD) to improve housing opportunities for America’s working families would be severely undermined if Congress were to agree to a Bush Administration plan to transfer the current program oversight of Fannie Mae and Freddie Mac from HUD to the Treasury Department.

Such a change raises grave concerns about the future of the nation’s housing finance system, NAHB President Kent Conine told the House Financial Service Committee on Sept. 25.

“Moving program approval authority for Fannie Mae and Freddie Mac to the Treasury constitutes an attack on the mission of HUD by disrupting the capacity of the two giant mortgage lenders to provide the liquidity and stability needed to keep mortgage credit available at the lowest possible cost to home owners and rental housing providers,” Conine said.

The Administration’s plan would create a new federal agency within the Treasury Department to regulate and supervise the financial activities of Fannie Mae and Freddie Mac, housing-related government-sponsored enterprises (GSEs).

The new agency would have general regulatory, supervisory and enforcement powers for GSE oversight, including the authority to establish, enforce and revise capital standards.

In addition, oversight of existing GSE activities and approval of new activities would be shifted from HUD to the new Treasury agency. HUD would be left with minimal regulatory authority, limited to oversight of annual affordable housing goals and a consultative role in program oversight.

In assessing the future regulatory framework for Fannie Mae and Freddie Mac, Conine cautioned lawmakers that it would be a tremendous mistake to turn discussion on GSE regulation into a referendum on the nation’s highly successful housing finance system.

The two major mortgage market intermediaries have made significant strides in expanding homeownership opportunities and increasing the supply of affordable rental housing in underserved areas, he said, by reducing interest rates, creating a reliable and stable flow of mortgage credit, eliminating regional disparities in interest rates and bringing standardization and innovation to the mortgage markets.

To ensure that the regulatory framework for the GSEs is credible and effective, and to help them continue to advance successful programs to address the nation’s housing needs, Conine called on Congress to take the following actions:

  • Retain HUD’s current status as the mission regulator for Fannie Mae and Freddie Mac, including its responsibility for approving new programs and establishing annual goals for affordable housing. HUD is the only Cabinet agency with a thorough understanding of, and extensive involvement in, housing-related issues. It makes no sense, Conine noted, to transfer mission oversight of Fannie and Freddie to the Treasury, an agency that has virtually no experience in evaluating the effectiveness and appropriateness of housing policies, especially those pertaining to housing for working families.
  • Maintain the current system of minimum and risk-based capital requirements for Fannie Mae and Freddie Mac. NAHB recommends against any immediate changes to the capital standards. While the regulator in the longer-term should have the flexibility to adjust risk-based capital standards as necessary, these standards are the product of years of careful analysis and effort, and should not be discarded before they have been tested.
  • Transfer safety and soundness oversight of Fannie Mae and Freddie Mac from the Office of Federal Housing Enterprise Oversight (OFHEO), an independent agency within HUD, to an independent office within the Treasury Department. The Treasury is the premier financial institution regulator because of its expertise and experience with financial issues. However, the safety and soundness regulator must be completely independent and statutorily protected from the Treasury’s politically appointed policy makers. NAHB believes it is imperative for the new Treasury office to focus exclusively on safety and soundness and not on mission regulation, specifically program oversight and housing goals.
  • Ensure that HUD remains the regulator responsible for developing and enforcing housing goals for Fannie Mae and Freddie Mac. NAHB agrees with HUD Secretary Mel Martinez, who described his agency’s institutional mission as one “devoted to furthering the goal of affordable housing and homeownership” and who noted that “HUD has the most expertise in this area.”
  • Support the Administration’s proposal to maintain the long-standing mission, charter and status of the GSEs. Any efforts to privatize or withdraw any of their federal privileges and legal exemptions would diminish their ability to provide housing financing at the lowest possible cost, said Conine.
  • Oppose any efforts to bring the Federal Home Loan Banks — another housing GSE — under a new regulatory framework. Because the structure of the Federal Home Loan Bank System is unique and substantially different from that of Fannie Mae and Freddie Mac, it should continue to have its own independent regulator, which currently is the Federal Housing Finance Board.

At its meeting in Boston on Sept. 20, the NAHB Board of Directors passed a resolution raising similar concerns over the Administration’s proposal. To read that story in this issue of NBN, click here.

For further information, e-mail Michael Strauss or call him at 800-368-5242 x8252.

Photo by Herman Farrer

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Building News Coast To Coast

New 'Cities' Springing Up Around Many U.S. Airports

Rather than simply using airports to lure development, planners across the country are now viewing them as urban hubs similar to a city's central business district. John Kasarda, director of the Kenan Institute of Private Enterprise at The University of North Carolina-Chapel Hill, predicts that the new "aerotropolis" will influence business location and urban development in the 21st century much in the way that highways, railroads and seaports did in the previous three. Airports attract businesses, and new homes pop up nearby as jobs are created. Now, many are becoming central business districts complete with restaurants, shopping malls, conference centers, art galleries and museums. Some even offer wineries and tasting rooms, rocking chairs and live music to give residents and travelers a piece of the downtown lifestyle. "I wouldn't say that an airport is a city," observes sociologist and "Life in the Air: Surviving the New Culture of Air Travel" author Mark Gottdiener, "but airports have taken over some of the important functions of historic downtowns as new urban centers." Denver International, Washington Dulles International, Fort Worth Alliance, Dallas-Fort Worth International, Albuquerque International Sunport and Detroit Metro are among the newer airports that have sparked development.
USA Today (09/25/03) P. 1A; El Nasser, Haya:

The Luxury of Space

Affluent home owners — many of whom are using money generated during the stock market boom of the 1990s — are building bigger homes to accommodate media rooms, indoor basketball courts and pools, spacious master suites and bathrooms for every bedroom. Today's luxury homes range in size from 6,000 to 10,000-plus square feet, and the typical 3,000-square-foot dwelling is no longer for the upper middle class. Regardless of the residence's size, most families continue to gather in the kitchen or family room. The added space in today's houses is not a necessity, according to experts, but it gives home owners privacy and plenty of room to relax.
New York Newsday (09/25/03) P. B10; Polsky, Carol:

Many Buying Second Home in Cities as Investment

According to the National Association of Realtors®, 66% of second homes purchased during the first quarter of the year were in cities, rather than resort, recreation or rural locales. "There appears to be a seasonal trend in the location of second-home purchases, with winter favoring investment properties in metropolitan areas," observes NAR Chief Economist David Lereah. Though 78% of second homes were intended for recreational use, the NAR study also found a jump in the percentage used for investment purposes from 20% in 1999 to 37% last year. NAR spokesman Walter Moloney notes that only 1% of the second homes purchased in urban areas of the Northeast were for vacation retreats. Others believe many second-home buyers are flocking to the city to live closer to their jobs.
Milwaukee Journal Sentinel (09/21/03) P. 1F; Heavens, Alan J.:

New Homes Aim for Neighborly Feel

Pulte Home Corp.'s proposed development for Wesley Chapel, FL, features front porches, rear alleys and detached garages — a residential design that is gaining momentum in the area and elsewhere. The new neighborhood, which aims to encourage resident interaction and walking, would be built on part of the 5,000-acre Wiregrass Ranch. A short distance away, Pulte hopes to add an active-adult golf course community with a mix of duplexes, attached villas and houses. Together, the two projects would create 1,999 new housing units. Separately, the Porter family, which owns Wiregrass, has reached an agreement with the Goodman Co. to develop shopping centers locally. The first of these retail venues will boast between 250,000 and 500,000 square feet of new stores and will be known as Wiregrass Commons. The first tenants are expected to begin occupying space there in the fourth quarter of next year, with Wal-Mart rumored to be one of the first to sign a lease.
St. Petersburg Times (FL) (09/19/03) P. 7; Thorner, James:

Homeownership More Attainable to More Families

Reasonably low interest rates and funding from the nation's leading lenders and church-related community development corporations are helping an increasing number of working-class, minority and immigrant families achieve homeownership. "It's the starter-home market that is just exceptionally strong, while the high-end market is less so," remarks National Association of Realtors® Senior Economist Lawrence Yun. J.P. Morgan Chase and Washington Mutual are among those making billion-dollar investments to boost homeownership rates in underserved communities. Chase, for instance, has pledged $500 billion in assistance by 2010 as part of its Chase DreaMaker Commitment, while Washington Mutual will make $375 billion in loans over the same period through its Access Home Loans initiative.
Chicago Tribune (09/21/03) P. 17; Sit-DuVall, Mary:

Universal Design Makes Living Easy

Universal design is a building technique that aims to make life easier for people of all ages, sizes and abilities. Moreover, it is intended to accomplish this through the installation of features that are attractive and blend well with the home's overall design. Universal design encompasses everything from better lighting, lever-style doorknobs and faucets, counters of varying heights and lower light switches to well-placed appliances and no-step entries. These features are being marketed to baby boomers across the country as a means to stay in their homes longer and save money on health care.
Inman News Features Online (09/17/03) Kelly, Tom:

Building Better Reputations

A new J.D. Power and Associates study underscores American consumers' growing contentment with the home building community. The company ranked nearly 270 builders in 21 markets, based on nine criteria — including quality of work, price and value and design. According to the survey results, the overall level of customer satisfaction has improved 8% since last year. "Home builders are starting to recognize that strong customer satisfaction can be vital to success in a highly competitive market," stated Paula Sonkin, senior director of the real estate industries practice at J.D. Power. "Builders can't expect to stay competitive," she added, "if they ignore what their customers say." Making an especially strong showing in the 2003 study were Pulte Homes, Centex, KB Home, Lennar and Standard Pacific. These and other large publicly traded builders with national operations have led smaller competitors in the campaign to please home buyers. They have done so by leveraging their access to capital, which not only positions them to borrow at a lower cost than private builders but also to let consumers easily review the financial state of their businesses. Additionally, big builders are better serving customers through the efficiency afforded by economies of scale; the ability to guarantee work for subcontractors and to pay them regularly and in a timely fashion; and the discounts they receive when ordering supplies in large volumes, among other advantages. (09/18/03) Kerch, Steve:

Pampering Guests Is a Cottage Industry

In a trend that stretches from upscale home owners down to households operating on a budget, building separate quarters for guests is becoming increasingly popular. Architects say these detached cottages not only offer privacy but also can create more space, which can be adapted as needed, for the property owners to use when not entertaining guests. They can be designed to blend in with the style of the home — or not — and they double as a hangout for the kids, an exercise room, an arts-and-crafts area or an in-law suite, among other uses.
USA Today (09/19/03) P. 6D; Temple, Linda:

Brownfields May Be Seeing Green

The New York State Senate voted 51-9 in favor of legislation that will set ground rules for developing abandoned or underused properties where contaminants have kept construction projects on those sites from getting off the ground. The measure includes a $135 million package of tax credits for developers of these so-called brownfields and shields them from future liability as long as they comply with cleanup standards. Officials from the state Department of Environmental Conservation are charged with spelling out the standards and also for deciding whether a site will be used for commercial buildings or for new housing. While the actual remediation costs could be greater under the new legislation, the expense will be known upfront; moreover, with liability removed, banks may be open to financing brownfield redevelopments — which, in turn, would boost the value of these properties.
New York Newsday (09/17/03) P. A5; Wax, Alan J.:

Smart-House Technology: No One Will Be Locked Out

Industry insiders credit the Internet, easy access to wireless networking systems and the emergence of pre-wired homes for making smart home technology available to all home owners and operational from any location. The basic home-automation kit comes with a controller to send signals to the networked systems and appliances; device controllers to which the systems and appliances are connected; a transmission system that sends the signals from the controller to the devices; and the protocol, or language, necessary for the devices to communicate. Such technology allows home owners to control lights, operate security cameras and turn on appliances, among other tasks, from anywhere.
Orlando Sentinel (09/14/03) P. J29; Romano, Jay:

Aging Baby Boomers Spark Explosion in Condo Market

Condominiums and townhomes were once seen as cheaper alternatives to single-family homes and a means for first-time buyers to become home owners. Now, they are popular among working professionals, empty-nesters, seniors, singles, young families and real estate investors. In fact, the National Association of Realtors® reports that condos have appreciated in value faster than single-family homes over the last year — 15% versus 7.4%. Buyers are flocking to condos because they offer a downtown lifestyle; an end to tedious maintenance tasks; upscale amenities like tennis courts, exercise rooms and hi-tech computer rooms; and lucrative resale potential.
Copley News Service (09/15/03) Woodard, James M.:

Are Builders Trying to Save Trees During Construction?

While many builders support the preservation of trees on construction sites, such efforts are time-consuming and costly. Zoning rules, planning ordinances, utilities regulations and other laws, as well as the fact that the company that builds the homes is often not the same one that cleared the land, also make conservation difficult. However, a number of municipalities nationwide have implemented tree ordinances that require developers to preserve public trees, save those on the construction site or replace trees that are downed. In addition, the Washington-based nonprofit American Forests and NAHB have joined forces to promote tree conservation because it minimizes pollution, controls building temperature, boosts property values and makes pricey storm water management systems unnecessary. According to experts, trees can increase market values by $2,000 to $5,000 or as much as 7%.
Miami Herald (09/14/03) P. 15H; Fleishman, Sandra:

Glowing, Talking Walls Will Do Your Bidding

Researchers at the Sept. 10 British Association science festival said that houses could be radically transformed by advances in nanotechnology and mobile devices. Experiments with light emitting diodes and other small devices have led scientists such as Jim Feast of the University of Durham to speculate that televisions could be embedded into the walls, which could be programmed to display images or change color and intensity according to home owners' wishes. "Maybe curtains will become things of the past and we'll just switch from transparent structures — maybe glass, maybe plastic — to an image of our choice; maybe light bulbs will disappear and we will be able to select the level and color of illumination from our glowing walls," Feast suggested. He also predicted that mobile communications technology will shrink to the point where such devices could be weaved into apparel; the initial applications would primarily serve the military and airline pilots, while civilian applications will emerge later. Orange Communications' Stephen Hope saw potential in an automated house that can care for infirm residents. Meanwhile, Nigel Linde of the University of Salford told conference attendees that his team is collaborating with the Greater Manchester police on Crimespot, a project in which law enforcement can be kept apprised of an object's whereabouts thanks to installed location-aware devices, thus making theft easier to detect. This raises a number of important issues, such as whether all devices should be equipped with mobile technology, whether home owners should pay for it at the point of purchase or through home insurance and whether the police or a third party should monitor the devices. The security implications of mobile devices that always know a user's location and activities should also be addressed, Linde said.
Guardian Unlimited (UK) (09/11/03) Radford, Tim:

Home Builders Pony Up With Incentives for Home Buyers

A growing number of entry-level and even higher-end home buyers expect bonuses from builders, ranging from closing cost assistance to new appliances and other upgrades. Martha Fondren, vice president of Memphis-based Reeves-Williams LLC, says bonuses are becoming more common as home buyers' savings shrink. "It helps people get into the home for little or no money down, and it does sell houses," notes Crye Leike broker John Criswell. However, some builders do not offer incentive programs; and others provide only minimal bonuses to avoid hiking up the home price.
Memphis Business Journal Online (09/08/03) Morton, Kate Miller:

Custom Homes Lead Way in Tech Advances

Custom home builders are better able than volume builders to introduce the latest and most sophisticated technology because of their focus on unique construction. According to Gaithersburg, MD-based A/V Visions President Timothy Iafolla, custom home buyers are asked about their plans for computer networking and audio systems once the basic wiring is in place. Iafolla says many buyers have never heard of digital music servers that allow them to store music from the Internet and CDs in a central location and control the system from anywhere in the house via built-in or wireless keypads. Many builders plan for such upgrades before construction, but some home owners approach their builder after the groundbreaking. Upgrading to smart wiring or telephone and security systems while a project already is in progress, however, can boost the project's cost significantly.
Washington Times (09/05/03) P. F29; Bliss, R. Marion:

Net-Linked Appliances Have Their Place

Dan Gillmor learned the hard way that a more intelligent, networked home has its benefits. Upon coming home after a prolonged trip only to discover that the food in his fridge had gone bad because of a malfunctioning electrical circuit, Gillmor realized that, "We need to increase the information flow from our homes in a variety of ways." Among the conveniences that a smarter home must provide is a way for frequent travelers to be notified of power circuit or appliance failures; a setup that allows appliance manufacturers to remotely diagnose the condition of their products in consumers' homes; and the reduction of the need for highly expensive peak generating capacity for air conditioners and water heaters by enabling power companies to remotely shut off these devices for brief periods on a rotating basis. SmartHome's Matt Dean says appliance manufacturers are starting to consider the addition of Internet connectivity to their products, and Gillmor notes that SmartHome's "SmartHomeLive" system, which integrates hardware, software and services so that users can operate cameras, lights and other equipment via a Web browser, is a step in the right direction. Gillmor writes that the best solution would be "a new generation of boxes to which we'd connect a variety of devices and systems embedded with Internet communications and sensors." He reports that such an innovation is an area of concentration for the power, technology, electronics and appliance industries. One project of interest involves remote residential electricity management, whose installation and operational costs could be offset by the potential money to be saved. Gillmor argues that these systems should be open to forestall monopolization, while strong privacy protection should be included by design. (09/21/03) Gillmor, Dan:

High-Tech on Display

Cisco Systems unveiled new wireless hand-held equipment at the recent Cisco Network Power in Motion Roadshow in Canada that will enable sales personnel in the healthcare, financial and retail sectors to check inventory, order products and satisfy customers while on the road. Rather than offer participants a Power Point presentation, spectators were able to view the devices in action. The devices allow users to wirelessly check e-mail and voicemail messages, take customer calls and process orders, among other tasks. Cisco contends that the devices will connect users to all the resources available to them in the office via a single infrastructure, translating into cost savings and productivity gains. Cisco enterprise account manager Rick Kraus thinks smaller financial services and accounting firms will find the devices an asset to the billing process and other business practices.
Regina Leader-Post (CAN) (09/23/03) P. B4; Johnstone, Bruce:

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

There's Still Time to Win the Sears American Dream-Maker Award

But you'll need to act fast. Sears needs to receive your essay by 5:00 p.m. (EST) on Oct. 1. Click here for details.

Hurricane Isabel Compounds Problem of Rising Prices for OSB and Plywood

Two major lumber companies have announced that they have taken steps to help ease the impact of Hurricane Isabel on oriented strand board (OSB) and other lumber products, but that alone has not kept prices from continuing to rise.

"We are experiencing a major price run-up in a fundamental building product," said NAHB President-elect Bobby Rayburn, "and one of our top missions is to work with the producers, the government and others to restore some balance to these prices before they take a major toll on housing affordability."

Hurricane Isabel Compounds Problem of Rising Prices for OSB and Plywood

Two major lumber companies have announced that they have taken steps to help ease the impact of Hurricane Isabel on oriented strand board (OSB) and other lumber products, but that alone has not kept prices from continuing to rise, and NAHB is stepping up efforts to address this problem.

"We are experiencing a major price run-up in a fundamental building product," said NAHB President-elect Bobby Rayburn, "and one of our top missions is to work with the producers, the government and others to restore some balance to these prices before they take a major toll on housing affordability."

In addition, said Rayburn, the NAHB Research Center is providing information about alternative construction materials that can be of benefit to builders (see below), and lawyers at NAHB are in the process of drafting contract language that can be used to help mitigate against spurts in the prices of lumber products.

Random Lengths, a Eugene, OR, firm that tracks lumber prices, reported that OSB prices went from $445 per thousand square feet on Sept. 12 to $465 on Sept. 26, one week following the hurricane. Plywood over the same period rose from $535 to $545.

By comparison, OSB was $165 a year earlier and plywood was $265.  However, the price run-up has slowed considerably in recent weeks; at the end of July, the prices were $348 for OSB and $429 for plywood.

At a meeting of NAHB’s Building Product Issues Committee during the association’s fall board of directors meeting in Boston last week, Louisiana-Pacific Corporation (LP) announced that it was holding prices for OSB at the Sept. 12 level, despite increased demand and upward pressure on prices in the wake of the hurricane.

LP accounts for about one-quarter of the U.S. supply of OSB.

Georgia-Pacific has announced that it has frozen prices for structural panels and lumber at pre-storm levels in locations that have been declared disaster areas by President Bush.

Prices for OSB and plywood panels rose steadily throughout the summer and have now reached levels that are more than double what they were a year ago.

“Temporary price spikes are not unusual for wood products, but this is the biggest increase we have ever seen for panels,” said NAHB economist Michael Carliner.

Hurricane Isabel is the latest to join a combination of factors that has led to the rapid escalation of wood panel prices, he said. Those factors include: strong demand from single-family builders, a number of plywood mill closings, limited OSB production capacity, log shortages from summertime fires in the West and rain in the Southeast and low inventories.

Requisitions by the U.S. military headed for Iraq, though small, have had a disproportionately damaging effect on market psychology, he added.

“Prices should recede within a few months,” Carliner said, “but in the interim it could be a bumpy ride for builders.”

With no quick solution to the problem in sight, builders are being advised by the NAHB Research Center to consider alternative materials for residential construction. (To read a story in this issue of NBN on those alternatives, click here.)

However, while alternative approaches can pare costs significantly, the Research Center points out that there is no one panacea for the current spurt in prices. Alternatives can work for some applications, but not others, and in many cases there may be no practical alternatives.

Such issues as the structural limitations of materials and material characteristics that can have a bearing on thermal and moisture performance also need to be considered, the Research Center says.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Housing Snapshot

A second consecutive monthly increase in consumer spending in August suggests that the economy may be on the right track to a full-fledged, job-producing recovery. Spending was up 0.8%, following an increase of 0.9% in July, as consumers found more money in their paychecks thanks to the Bush Administration's generous tax cuts. With consumer spending accounting for two-thirds of the nation's economic activity, more crowded mall parking lots could be a harbinger of 4%-5% annual growth during this year's second half. Growth in the second quarter was adjusted upward from an annual rate of 3.1% to 3.3%. Last week was fairly dismal on Wall Street, with stock market levels at their lowest in about a month. A 6% loss on the Nasdaq was the biggest weekly decline in 17 months. The Dow's 3.4% decline was the sharpest in six months. New and existing home sales in August again produced some dazzling numbers and mortgage interest rates continued to nudge down, virtually ensuring that 2003 will go into the record books as another banner year for housing.

Mortgage Interest Rates

30 Year Fixed Rate: 5.98\%
15 Year Fixed Rate: 5.30\%
1 Year ARM: 3.77\%

Housing Starts: Aug. 2003

Total: 1.82 million\%
Single Family: 1.48 million\%
Multi Family: 344,000\%

New Home Sales: Aug. 2003 *

1.15 million

Existing Home Sales: Aug. 2003 *

6.47 million

* Seasonally Adjusted Annual Rate

The White House Has Sent Congress a Dangerous Proposal

America’s consumers are well aware that these have been good times for housing. What they probably don’t know is that those good times are in danger if the Congress gives the green light to a proposal by the Bush Administration to hobble the Department of Housing and Urban Development (HUD) in its oversight of new programs for Fannie Mae and Freddie Mac.

Under the White House plan, new program oversight of Fannie Mae and Freddie Mac would be shifted from HUD to the Treasury Department. While the Treasury is well suited to oversee the financial safety and soundness of these housing government-sponsored enterprises, it is also an agency that has just about no experience in housing policy and one that traditionally has demonstrated a bias against programs that enhance the flow of capital into housing.

In testimony before a congressional committee on Sept. 10, Treasury Secretary John Snow said that the two core objectives of the Administration’s new plan are “a sound and resilient financial system, and increased homeownership opportunities for less advantaged Americans.” Yet it is difficult to see how a plan that would undermine the effectiveness of HUD as the one agency that truly represents housing at the Cabinet level can come anywhere close to meeting these goals.

Many in the housing industry view the Bush proposal as a calculated attempt to divert capital from housing to other sectors of the economy. Certainly, it sends the unsettling message that for this Administration, housing is no longer a national priority.

The Administration wants the Congress to act quickly on legislation that will turn its proposal into a reality. Hearings on Capitol Hill are already well underway, and a vote in Congress could be only weeks away. At stake could be the innovation and creativity in mortgage programs that provide housing opportunity in this country.

If that sounds far-fetched, then consider where working families would be today if decisions about housing finance programs had been in the hands of the Treasury, an agency that is more concerned about bank reserves and how much income taxes people pay.

Fannie Mae and Freddie Mac have created an American success story: a finance system for housing that has contributed to the availability and affordability of housing credit and expanded affordable housing programs and products. These two indispensable secondary market institutions have reduced mortgage interest rates, linked mortgage finance to the national and international capital markets, eliminated regional disparities in interest rates, cushioned local economic downturns, expanded homeownership and rental housing opportunities and brought standardization and innovation to the mortgage markets.

Fannie Mae and Freddie Mac have provided support to primary market lenders for the development of hybrid mortgages that combine the benefits of adjustable and fixed-rate loans; lower downpayment requirements; and new mortgage products for borrowers with tarnished credit histories. And they have been at the forefront of technological innovations to streamline the mortgage process to reduce the time and cost involved in obtaining a mortgage.

At a time when the nation faces further challenges to provide affordably priced housing for its working families, this Administration ought to be encouraging HUD to build upon its foundation of achievement in its oversight of Fannie Mae and Freddie Mac. At a time when housing has bolstered consumer spending and propped up a fragile economy, this Congress should be doing everything it can to ensure that the housing industry remains strong.

Subverting a system that has worked so well and that holds such great promise for the future could have catastrophic consequences for housing and the economy. The Bush Administration has sent Congress a prescription for disaster. It is now incumbent upon our legislators to reject this proposal and seek a regulatory solution for the oversight of housing’s government sponsored enterprises that will reaffirm our national commitment to housing.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Board Adamantly Supports HUD Oversight Over Fannie Mae, Freddie Mac Programs

At its Sept. 20 meeting in Boston, the NAHB Board of Directors voiced strong opposition to a proposal by the Bush Administration to strip the Department of Housing and Urban Development of its oversight of Fannie Mae and Freddie Mac programs.

The 1,500-member board, which represents 835 state and local home builders associations in the NAHB federation, unanimously passed a policy resolution against a White House effort to move program supervision of the two government sponsored enterprises (GSEs) to a new office within the Treasury Department.

That plan, the board charged, would subvert HUD’s role as the nation’s primary housing advocate and undermine the vibrant housing market that has sustained the economy in recent years.

“The Administration’s proposal would irreparably harm HUD’s ability to focus the efforts of the two giant mortgage lenders on supporting homeownership opportunities for low- and moderate-income and minority families,” said NAHB President Kent Conine. (To read a story in this week’s issue of NBN on Conine’s testimony to Congress, click here.)

Conine said that HUD is the only Cabinet agency extensively involved in housing issues and that it makes no sense to entrust the Treasury — an agency with virtually no experience in housing matters — with the responsibility of evaluating the effectiveness of housing policies, especially those affecting working families.

Under the leadership of 1967 NAHB President Leon Weiner, who died last year, NAHB fought in the 1960s to establish a Cabinet-level agency for housing, acknowledging its importance to the American way of life, said Conine.

Stripping HUD of its mission oversight of the two major mortgage lenders would constitute a “castrophe for housing,” he said, by forcing the agency to abdicate its responsibility as the voice for housing at the Cabinet level.

“Our board members involved in housing finance feel that the Administration is making a brazen attempt to divert capital from housing to others sectors of the economy,” he said.

“Without a strong housing market, the nation’s economy would be foundering,” he said. “If capital flows away from housing, it might help Wall Street, but it would kill Main Street. We’re not sure Congress realizes just how dangerous this plan is.” (To read the President’s Message, click here.)

The NAHB board called for the continuation of HUD’s approval of new Fannie Mae and Freddie Mac programs and its enforcement of affordable housing goals.

NAHB policy does support the Administration’s proposal to maintain the current charter of the GSEs, noting that any efforts to privatize or withdraw any of their federal privileges and legal exemptions would diminish their ability to provide housing financing at the lowest possible cost.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

August New Home Sales Pile on the Good Housing News

Sales of new single-family homes in August continued to add to the housing industry’s pile of good economic news with a 3.4% rise to a seasonally adjusted annual rate of 1.15 million units, the second-fastest monthly pace on record, the Commerce Department reported last Thursday.

The summer’s demand for housing kept builders busy keeping up with demand, said NAHB President Kent Conine.

And home sales during this year’s third quarter now look poised to outscore strong sales activity in the second quarter, Conine said, despite somewhat higher mortgage interest rates.

David Seiders, NAHB’s chief economist, said that it was hard to find any negative news in the government’s latest report on home sales.

“Looking forward, the general tone of the market is excellent, the slim inventory situation indicates it’s in good balance, home prices are still moving up at a solid pace and mortgage rates have receded from their early-September highs,” said Seiders.

“We’re now looking at new-home sales surpassing the million-unit mark for the first year on record in 2003,” he added.

NAHB is forecasting 1.05 million new-home sales this year, which excludes custom homes built on an owner’s lot.

Regionally, sales rose 12.9% in the Midwest, 12.5% in the Northeast and 2.4% in the West. They slipped by 1.1% in the South, where the sales pace nevertheless outpaced the average sales rate in the second quarter.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

August Home Resales as Good as They’re Likely to Get

Existing single-family home sales set a second consecutive monthly record in August, rising 5.5% to a seasonally adjusted annual rate of 6.47 million units, the National Association of Realtors® announced last week.

Sales activity in August was 21.8% above the level recorded during the same month of 2002.

Existing home sales have probably now peaked out, however, according to David Lereah, chief economist for the Realtors®.

“Some of the home sales closed in August were negotiated in June when mortgage interest rates hit record lows,” he said. “Much of the remaining portion of sales reflect quick decisions to make offers in July when interest rates began to rise sharply.”

Cathy Whatley, the association’s president, said that homes sales are expected to moderate “but remain historically strong in coming months.”

The median sales price in August was $177,500, up 9.8% from a price of $161,700 a year earlier.

Home resales in August were up 8% in the West, 6.5% in the South, 3% in the Midwest and 1.4% in the Northeast.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Home Starts Recede in August From 17-Year Peak

From a 17-year peak in July, housing starts declined 3.8% in August to a seasonally adjusted annual rate of 1.82 million units, the Commerce Department reported on Sept. 17.

NAHB President Kent Conine said the report indicated that, “there’s plenty of momentum for housing heading toward the end of the year.”

Building permits surged 4.8% in August to a rate of 1.89 million units, its highest level of the year.

Based on starts activity this summer, NAHB Chief Economist David Seiders predicted that housing in this year’s third quarter would once again contribute strongly to growth of the nation’s Gross Domestic Product.

Single-family housing starts declined 4.0% in August to an annual rate of 1.48 million units and multifamily production dropped 3.1% to a 344,000-unit pace.

Starts increased 1% in the Midwest, but declined 23.3% in the Northeast, 2.7% in the South and 1.9% in the West.

NAHB has raised its forecast for housing starts this year to 1.76 million units, which would up about 3% from last year’s healthy level of production, Seiders said.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Home Buyers Take a Breather From Rising Mortgage Rates

Home buyers have had a three-week respite from rising mortgage interest rates, and the average rate on a 30-year fixed-rate home loan fell to 5.98% last week, according to Freddie Mac, the first time it has dropped below 6% in eight weeks.

According to Amy Crews-Cutts, Freddie Mac’s deputy chief economist, the recent stability in mortgage rates is an indication that investors in the bond markets have been calmed by reassurances that the Federal Reserve won’t be increasing its federal funds rate for the balance of this year.

“The housing market is still very hot due to still-low interest rates,” said Crews-Cutts. “Recent home sales and housing starts numbers are off the charts and will set another big record in 2003.”

In remarks to the NAHB Board of Directors in Boston earlier this month, NAHB Chief Economist David Seiders noted that rising mortgage interest rates since mid-June had taken a toll on the refinancing boom, “but the impacts on home buying apparently have been quite limited to date.”

“Recent rate developments in the Treasury market have been encouraging,” he added, “showing some retreat in long-term yields from the highs of early September” and generating a significant decline in long-term mortgage interest rates.

Fixed-rate mortgage rates as of last Thursday had receded to where they were at the end of July and they were at almost exactly the same level as a year earlier.

Home buying activity has remained “unfazed by market chatter that the end of the housing boom is near,” said Freddie Mac Chief Economist Frank Nothaft.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Builders Confident of Healthy Six-Month Outlook for Home Sales

The confidence of home builders in the single-family housing market slipped slightly earlier this month while mortgage interest rates were still slowly climbing, but expectations for housing activity over the next six months remain at healthy levels, according to NAHB’s Housing Market Index (HMI), which was released on Sept. 16.

In terms of housing demand, “builders have had one of the hottest summers ever,” said NAHB President Kent Conine, with mortgage rates bottoming out around mid-year at their lowest levels in more than four decades.

Now that mortgage rates have moved up, builders are adjusting their expectations accordingly, said Conine.

“Even so, there is a strong current of optimism throughout our industry that today’s very healthy activity is sustainable through at least the end of this year,” he said.

Even with somewhat higher interest rates, NAHB Chief Economist David Seiders is predicting that the accelerating pace of economic growth will help spur home sales in the period ahead.

The Housing Market Index declined to 68 from last month’s reading of 71. This month’s reading was still the second highest since February of 2000, when the index was at 69.

The component of the HMI measuring builder expectations for the next six months was unchanged from the previous month at a very healthy reading of 78.

The component of the index gauging current sales conditions fell four points to 73 and the index measuring builders’ assessments of the traffic of prospective buyers fell five points to a reading of 50.

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

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Eye on the Economy

David F. Seiders, NAHB Chief Economist

Economic growth is accelerating but there are dark sides to the picture …

Incoming data (including housing data) confirm the acceleration in growth of economic output that we have been forecasting for the second half of 2003. Indeed, we’ve recently upgraded our estimate of third quarter Gross Domestic Product (GDP) growth to 5.0% and jacked up the next three quarters as well (to an average of 4.1%).

The heavily front-loaded tax package that went into effect on July 1 clearly is stimulating consumer and business spending, heavy federal spending on defense and security is in train, and the Federal Reserve is supporting the economy with a highly stimulative monetary policy stance.

The problem is, growth in economic output has been generated by growth in labor productivity (output per hour) during the 22 months of economic recovery that we have under our belts, while payroll employment has been shrinking during this entire period. Furthermore, the productivity surge has been reducing labor cost per unit of output, putting downward pressure on prices in an environment where individual companies can exert little, if any, pricing power. If you’re worried about Japanese-style deflation in the U.S. (as is the Fed), this edge of the productivity sword is quite troublesome.

The economic recovery will not qualify as a bona fide expansion until job growth turns positive (and accelerates) and the threat of deflation is behind us. The key is growth in spending and economic output that is strong enough to virtually force the business community to increase hiring to meet the demand. NAHB’s forecast assumes that the hiring process will begin in earnest during the fourth quarter and move ahead nicely in 2004-2005. But it’s fair to say that productivity growth is a mysterious process that sometimes has unforeseen consequences.

The Fed holds the line on rates and frets about jobs and disinflation …

As we expected, the Federal Reserve held its federal funds rate target at 1% at the September 16 FOMC meeting, and the decision was unanimous. The FOMC noted that spending in the economy had been “firming” since the previous (August 12) meeting, that the labor market had been “weakening,” and that business pricing policy as well as increases in core consumer prices had remained “muted.” This, of course, is the conundrum discussed above.

The public statement issued by the FOMC retained the three-part risk assessment that was introduced at the May 6 FOMC meeting. The FOMC now gives separate risk statements regarding real economic growth and inflation prospects, and then gives an overall assessment that presumably tells us something about monetary policy “ leanings” for the future.

In this case, the FOMC said that the upside and downside risks to sustainable economic growth were “roughly equal” but that the probability of an unwelcome fall in inflation from its already low level “exceeds that of a rise in inflation.” Indeed, the FOMC said that the risk of inflation becoming undesirably low (i.e., threatening outright deflation) “remains the predominant concern for the foreseeable future.”

The weight of the disinflation/deflation concern led the FOMC to conclude that “policy accommodation can be maintained for a considerable period.” NAHB’s forecast shows a stable federal funds rate until mid-2004, followed by gradual increases toward monetary neutrality over the following two years. The financial markets seem to share this general assessment, as the futures market for federal funds shows only minor probabilities for a policy change prior to mid-2004.

The bond market now believes the Fed is on the right track …

It’s clear that the Fed got the bond market overly excited in May and early June when messages from the central bank seemed to suggest aggressive near-term monetary easing as well as imminent use of unconventional policy tools to drive long-term rates down. But then the Fed backed away from the unconventional policy concepts and disappointed the markets with a meager quarter-point cut in the federal funds rate at the June 25 FOMC meeting. This sequence of events drove long-term rates down to historic lows in mid-June (5.2% for the fixed-rate mortgage) and then provoked a sharp rebound that sent those rates upward into early September (the mortgage rate approached 6.5%).

Bond and mortgage market conditions have settled down quite a bit since early September, largely because of reduced uncertainty regarding Fed plans and intentions. In the process, the 10-year Treasury yield has gravitated toward 4.2% while the fixed-rate mortgage has moved just below 6% — about equal to the averages for the third quarter. While long-term rates may gravitate higher as economic growth strengthens, Fed stability and a very low inflation environment should contain long rates for at least several more quarters.

The housing sector is constructing a very strong third quarter and forward momentum still is substantial …

Housing starts recently were revised upward for both June and July and, despite a 3.8% decline, starts for August hit a robust seasonally adjusted annual rate of 1.82 million units. Furthermore, issuance of building permits soared to a 1.89 million rate, including an all-time high for the single-family sector (1.48 million) and a robust 411,000 pace for multifamily. As a result, the number of housing units authorized by permit but not yet started (so-called “backlogged starts”) rose to 179,000 at the end of August, boding well for starts activity in September.

Available survey data for September also are positive. NAHB’s Housing Market Index (based on surveys of single-family builders) edged off in September following a powerful rise in August, but the component for builder sales expectations held at an elevated level (78). The weekly survey of mortgage lenders conducted by the Mortgage Bankers Association showed solid readings for home purchase applications for the first three weeks of the month, and the recent decline in mortgage rates has even revived the refinancing market to some degree following a massive plunge from the June records.

It now appears that housing starts will surge to more than 1.8 million units for the third quarter, paced by a single-family market that will approach 1.5 million. This kind of performance is likely to push growth of the housing production component of GDP (residential fixed investment) toward an annual rate of 10%. While this performance will be hard to maintain, the fourth quarter promises to remain strong and we now expect housing starts to reach 1.76 million units in 2003, about 3% above the strong performance of 2002.

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 Sept. 24 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. 

  • Home Builders Forecast includes analysis of single-family and multifamily residential activities, residential remodeling and the full range of nonresidential construction as well as the macroeconomic factors such as GDP, employment and interest rates that drive construction. If your business depends on reliable estimates of housing starts, construction spending and remodeling activity, Home Builders Forecast is designed to meet your needs.
  • Housing Market Statistics contains an overview of important developments and trends that serves as an executive summary of the current industry situation. It also contains annotated charts depicting movements in key indicators and tables providing monthly, quarterly and annual data for more than 250 variables.
  • Housing Economics provides a rigorous monthly overview of the economy, along with monthly data for more than 100 local markets and in-depth analyses of the niches and nuances of home building markets. Available online or in print, it is written in terms that builders, manufacturers and housing finance professionals can understand and apply to their own businesses.

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.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Index Finds Rentals Weak But Improving and Condos Stronger

After several quarters of deteriorating market conditions, the number of multifamily developers who are optimistic about an improvement in the demand for apartments over the next six months has surged, according to NAHB's Multifamily Market Index (MMI), which was released on Sept. 26.

The MMI, which gauges builder sentiment about current and future market conditions, registered gains of almost eight points for market-rate apartments and six points for affordable apartments over the next six months.

Nevertheless, in the view of builders the apartment market remains weak. Any number below 50 indicates that more apartment builders view conditions as poor than good, and most of the scores in the latest survey were below that mark: the index of current conditions was 38.1 for market-rate apartments and 42.8 for affordable units and expectations for the coming six months were 45.9 and 48.9, respectively.

"The rental apartment business has felt the impact of both the jobless recovery that has slowed household formation, and strong home sales driven by extraordinarily low interest rates," said Ron Terwilliger, managing partner of Trammell Crow Residential and chair of NAHB's Multifamily Leadership Board.

"Despite the current slow demand, however, multifamily properties continue to provide acceptable returns relative to other real estate investments," he said, "and we expect to see healthier conditions returning by the latter half of 2004."

The volume of calls from prospective renters has been steadily rising, up from an index value of 36.6 in the fourth quarter of  2002 to 49.3 in the current MMI. Effective rents have inched up as well, from 44.4 to 48.0 over the same period.

High-end, Class A apartments remain in lowest demand, at a score of 39.5, with the market somewhat stronger for Class B and C apartments, which were rated 43.3 and 45.5, respectively. Overall, respondents reported that only two-thirds of new apartments were rented within 90 days. The overall vacancy rate was reported at 7.9%, compared to 6.3% in the fourth quarter of last year.

Market-rate multifamily apartments were 38.1 in the latest index, compared to 41.0 in the final three months of last year. Lower-rent apartments dropped to 42.9, down from 51.3, over the same time frame.

Condominium production, however, gained ground, climbing from a score of 51.1 in the final quarter of 2002 to 53.4 in the latest index.

Low interest rates appear to have contributed to the strong consumer interest in for-sale condominiums, the one segment of the multifamily market that has shown strength on the demand side over the past several quarters. According to the MMI, apartment developers expect that strength to continue over the next six months. In fact, more than 10% of MMI survey respondents indicated that they are planning to convert some existing rental units to condos in the future.

"The condo/for-sale component of the market for new multifamily units continues to perform relatively well," noted NAHB Chief Economist David Seiders. "Furthermore, multifamily producers and managers foresee stronger rental market conditions six months down the line, based largely on expectations for higher home mortgage rates and a stronger job market. "

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Workers Face Housing Affordability Woes in Rhode Island

A report on housing opportunity in Rhode Island released in March finds grim prospects for the state’s moderate-income workers who are aspiring to become home owners in the suburbs.

Moderate-income families, defined as those earning 80% or less of the state’s median income, can generally afford a three-bedroom home costing no more than $150,000, according to “The Geography of Housing Opportunity in Rhode Island.”

Prepared by William Landry, a partner in the Providence law firm of Blish & Cavanagh LLP, the report is posted on the Web site of the Rhode Island Builders Association. To read the entire report, click here.

“However, an exhaustive search of all single-family homes listed for sale in Rhode Island as of March 1, 2003, disclosed virtually no availability of three-bedroom homes at prices less than $150,000 anywhere in Rhode Island,” except for some urban core communities.

For a family of four, moderate income would be $44,950; for a two-person household it is $35,950.

The minimum wholesale cost of a residential lot is well beyond $50,000 in all suburban areas, the report says, and in the range of $75,000-$100,000 in most, suggesting little opportunity for building houses below $225,000. The median price of a single-family home is $188,150 state-wide and $240,000 in the suburbs, the report says.

Average annual incomes for various professions in the state suggest that the victims of the current crisis in housing are “people that are the very fabric of Rhode Island.”

Pre-school teachers in the state earn $22,650 on average; nurses, $38,552; police officers, $43,359; office clerks, $22,454; and carpenters, $39,501, according to the report.

At the same time, the study says, housing construction in Rhode Island is not keeping up with population growth. The state’s households grew by 30,447 from 1990-2000, compared to only 25,265 new homes. And 40% of the state’s housing stock is more than 50 years old and about 30,000 units are sub-standard.

Housing is also increasingly inadequate to support new job growth, which is expected by the State’s Department of Labor and Training to average 10,000 jobs annually through 2007. Using a U.S. Commerce Department estimate that seven new housing units are required to support every 10 new jobs created in a local economy, Rhode Island is in the process of increasing its housing shortage by 22,500 units.

“The overarching cause of the deepening affordable housing crisis is the prevalence of exclusionary land use regulation at the local level,” the report finds.

“Some zoning ordinances provide no zone in which any residence other than a single-family home can be built. Others provide for token higher density zones — but do so by having such zones consist entirely of confined areas where such housing already exists — providing no room for the creation of new units,” the study says.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Builders May Be Entitled to CIAC Refunds From Utilities

Builders who have paid contributions in aid of construction (CIAC) to gas or electric companies may be entitled to get some of their money back as a result of benefits to utilities contained in the Bush Administration’s tax bill. These changes do not apply to water or sewer service.

Also, builders may find that they have to pay utilities a smaller amount for CIAC through the end of next year.

Because this spring’s tax cut accelerated the depreciation schedules for utilities, reducing their taxes, builders may not have to pay as much to cover the utility’s income taxes due to CIAC.

The acceleration provision is retroactive to Sept. 11, 2001, so builders who have paid CIAC since that date may be entitled to a partial refund from the utility, but not from the Internal Revenue Service.

Several factors will determine whether a builder is entitled to a refund from a local utility, the most important of which is the builder’s contract with the company.

Builders are advised to check with their tax professionals to see if the refund is worth pursuing.

In the meantime, builders should be aware that under the changed tax rules they may not need to be paying as much to the CIAC until the end of next year, when many provisions of the 2003 tax act expire.

For further information, e-mail Andrew Holliday at NAHB or call him at 800-368-5242 x8488.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Maximize Your Marketing With Press Releases

Want to increase your company’s visibility? Try using press releases. Many contractors use these free marketing tools because they get results.

“In the home building market, people need to see your company’s name six times before it clicks,” says Erika Geiser, vice president of marketing for Christopher Homes in Las Vegas. Press releases subtly help them make that connection.

“We get some calls from prospects [after a press release runs], but the main impact is, 'Oh, we’ve heard of you,’ or ‘We saw you in some magazine or newspaper,’ ” says remodeler Greg Miedema, president of Dakota Builders, in Tucson.

Got News?

Press releases are newsworthy statements about a company and its products or services. They’re designed for publication in newspapers or magazines and are pitched to media editors or reporters, although the information ultimately is intended for consumers. Press releases sometimes appear on company Web sites, too.

“I want someone to read what I’m saying, be excited about it and then take action,” says Chris Stebnitz, marketing and advertising manager for Stebnitz Builders in Delavan, WI. “If one of these things doesn’t happen, the rest won’t. When all three things happen, people are more likely to tell their friends about what they’ve read. If they read it and are excited about it but don’t take action, the impact dies down.”

“When we feel we can justify some attention, we send them out,” says Miedema. Here are some significant items and events contractors publicize with press releases:

  • Educational certification
  • Appointments to boards and committees
  • Awards
  • New models, communities, divisions, brands, product lines, partnerships and services
  • Special programs
  • Participation in home parades and tours, charity projects and other events

Got Style?

You can’t write any old thing and call it a press release. Follow an established journalistic format for your press release, or editors may not read it. Here’s how to do it right:


    • Keep the length to two pages or less. If you use a second page, include a header that repeats the headline and includes the words, “page 2.”
    • Print the press release on company letterhead.
    • Put contact info at the top: Your point person’s name, phone number and e-mail address. (Decide ahead of time who that person on staff will be to handle inquiries about your company’s news.)
    • Use a short, attention-getting headline. It should relate why the item, service or event is noteworthy. For example, “Joe Smith Receives Any Town’s First CAPS Certification,” or “XYZ Builders’ Parade Home Draws 1,000 Visitors.”
    • Double-space the body text.
    • Start the first paragraph with a dateline: The city and state where the event or news takes place. Add the date, including the year, and then a dash (two hyphens run together are fine).

What to Write:

    • First paragraph — Introduce your news in one or two short sentences that describe what it is, where and when it will take place, who will benefit from it and why it’s pertinent.

If it’s a product or service intended for your customers, mention how it will save them time or money, make their lives easier, enhance their safety or give them more quality for their money — since those are the folks you’re marketing to. “The more interested they are, the further they’ll read,” says Stebnitz. (Editors are much more interested in a release if their readers can see a benefit than if it is just news about your company, too.)

    • Second paragraph — Explain the news in more detail, but don’t overdo it. Less is better when it comes to press releases. Include a quote in the second paragraph to give your news human interest. “A quote can add a perspective a reporter or editor hadn’t thought of before,” says Paul Lopez, NAHB’s director of media relations.

    • Third paragraph — Summarize the news and add a sentence or two that inspires readers to act on it. Invite them to come see your parade home, visit your company’s Web site, drop by your office, call about an estimate or see your new showroom. Be sure to repeat the contact information from the top of the press release.

Include a carrot for media editors, too — let them know you’ve got photos to send them, more information and company background material if they need it, a company Web site, etc. “While in some instances people might want to run your release as is, you want them to call your president and learn more about the event and your company,” says Kym Kilbourne, director of public relations for NAHB.

Sign Off

    • Center three pound signs (###) a few lines below the last line of text. That’s press release shorthand for “the end.” You don’t need to spell out those words.

Press Release Pointers

Here are some additional tips from industry pros:

  • Introduce yourself to the media. Contact newspapers and magazines to find out which editors receive press releases, what topics they cover and how they prefer to receive your information. Most want electronic press releases, but some may want them snail-mailed. “Know your audience,” Kilbourne advises.

In addition, ask about the publication’s lead time (how far ahead of publication the editor would like to receive the press release) and ask for a copy of the publication's editorial calendar, if it has one. The editorial calendar lists a special focus or topic that the publication will be highlighting for a particular issue or time of year.

  • Update your media list regularly. People come and go at publications and press releases may not reach a new editor if they’re sent to that person’s predecessor. About once a year, call your contacts to make sure they’re still working their particular beat and to ask about themes for upcoming issues.

  • Respect lead times. It takes time to get something into print, even in a daily newspaper. If your local paper is planning a special supplement on home repair, send them a press release about your new handyman division at least three or four months before the publication date.

  • Work your connections. “The best success for placement comes from editors we know,” says David Bryan, president of Blackdog Builders in Salem, NH. It sometimes helps to send press releases to the publication’s salespeople (especially if you know them and have placed an ad with them), and ask them to pass them along to the editor.

  • Keep online newsrooms current. If you post press releases on your Web site, do it regularly. Reporters may not return to your Web site if they see press releases that are several months old. “As soon as you send out a press release, post it in your newsroom,” says Kilbourne.

  • Don’t think of press releases as ads. Yes, you are using them to market your company, but do it subtly. Don’t get too pushy or promotional. Stay away from ad lingo like “for a limited time,” “act now,” etc. Publications know it turns off readers and won’t be likely to run press releases full of hype.

“Make the message like that of a public service announcement,” Bryan suggests. “Something like, ‘Here’s something that’s good to know,’ but it’s not necessarily all about your company.”

  • Don’t act like a telemarketer. Send press releases only when you have something truly newsworthy and spectacular to relate...and don’t call to follow up on them. If the publication needs more information to run your release or write an article from it, an editor will contact you.

  • Don’t come up short. A press release’s message must be consistent with the company’s focus and direction. “If I tell someone that we’ll exceed their expectations and it doesn’t come true, then I’ve oversold and under-delivered,” says Stebnitz.

  • Don’t get too fancy. Use a common, easy-to-read font like Arial, Times or Times Roman. Reading more than a few lines of flowery script or a loud, circus-style typeface is hard on the eyes. Plus, it steals thunder from what you’re trying to say.

  • Don’t embed digital photos in an electronic press release. They can bog down the document’s download speed and the recipient may cancel the transmission. Instead, be sure to point out in the third paragraph that you have digital photos available to send and/or mention where they’re stored on your Web site.

“A press release is a basic tool,” says Kilbourne. “Your event is the snazzy part.” Offers 'The Best of Sales and Marketing Ideas'

Compiled from the most popular articles in Sales & Marketing Ideas magazine, "The Best of Sales and Marketing Ideas" offers tips, techniques and advice from successful home builders and prominent new-home marketing pros. To view or purchase this publication online, click here, or call 800-223-2665 to order. also offers a variety of other publications about sales and marketing. To view or purchase these publications online, click here.

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.

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

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.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Use ‘Administrative’ E-mail Addresses When Posting on Web Sites

Use ‘administrative’ or function-based e-mail addresses such as info@…, membership@ … or your company’s or association’s name@… when posting contact information on Web sites to avoid increased spamming of your personal or individual business e-mail addresses.

NAHB has uncovered several instances in which enterprising companies have been mining Web sites for contact e-mail addresses and then using that information to solicit new business.

NAHB also has found that, after these companies have collected the e-mail addresses off Web sites, they have been marketing themselves by indicating they received these e-mail addresses from NAHB, local associations or other companies or organizations as a way to open the door for new business from local and state associations. NAHB does not sell or trade e-mail addresses to third parties, a policy formally established at the NAHB Spring Board of Directors meeting in May 2003.

Whenever NAHB has discovered this misrepresentation, it has contacted the companies by phone, through the issuance of cease and desist letters or both and, thus far, all of the companies that have been contacted have stopped the practice of misrepresenting themselves.

Not all companies have stopped collecting e-mail addresses this way, and companies with the resources will continue this practice.

How to Protect the Integrity of Your E-mail Address

The simplest way to protect the integrity of your personal or individual e-mail address is to avoid posting it on Web sites, including your own.

Instead, create an administrative, function-based or “catch-all” e-mail address for your association or business that can be monitored by someone on staff. Using this type of e-mail address will enable you to maintain a valuable marketing and contact presence while redirecting, and possibly reducing, spamming away from your personal or individual e-mail address.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Liability Insurance Top Housing Industry Concern

Liability insurance issues remain at the top of housing industry concerns for the second consecutive year, according to NAHB’s annual Critical Issues Survey, which is conducted among the executive officers of state and local home builders associations across the country.

On a scale of one to five, with five indicating “very critical,” the cost of liability insurance was rated the top industry issue for the period of July 2002-July 2003, with an average score of 4.48.

Running a close second was the availability of liability insurance, which received a rating of 4.28. Liability insurance deductible amounts moved up to fourth place in the survey, from an eleventh place ranking in the prior year; they received an average rating of 4.12.

The development approval process was the third biggest emerging or existing concern, with a rating of 4.18, the survey found.

Workers' compensation, development costs, impact fees/development exactions, product liability/construction defect laws, costs of lots and growth/no-growth attitudes were in the fifth to tenth places in this year's survey of critical issues.

Concerns over mold issues have eased significantly over the past year, moving down from the fourth most to the eleventh most critical housing issue.

With unemployment rising, concerns over labor issues have dropped out of the top 10 most critical issue list this year; a shortage of skilled labor was the leading concern of builders from 1998-2001, the survey showed.

To review more detailed survey results, NAHB members can click here.

Association members can receive the complete Critical Issues Survey results by e-mailing Marie Zenner or calling her at 800-368-5242 x8279.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

NAHB Promotes Infrastructure Finance Alternatives Among Public Officials

With state and local governments facing a fiscal crisis, NAHB has been actively working this summer with prominent groups that represent public officials to encourage them to seek alternative financing alternatives for infrastructure.

NAHB has attended the annual meetings of the American Legislative Exchange Council (ALEC), the National Association of Counties (NaCO) and the National Conference of State Legislatures (NCSL).

Addressing the general session of NaCo in the early summer, NAHB President Kent Conine provided real world examples of alternative methods that have enabled governments to finance infrastructure despite revenue shortfalls.

NAHB made a similar presentation to ALEC’s Commerce and Economic Development Task Force, focusing on public/private partnerships to address infrastructure needs and emphasizing the importance of finding alternatives to impact fees, which have been eroding the affordability of housing.

Within these groups, NAHB has also been promoting its recently completed “Building for Tomorrow: Innovative Infrastructure Solutions” report.

For further information on NAHB’s involvement with public official groups, e-mail Alastair Macauley or call him at 800-368-5242 x8584.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

NAHB Prepares for Ventilation Standard Appeal Hearing

A panel of the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) on Oct. 4 will hear appeals by NAHB and others opposed to a decision by ASHRAE’s board of directors to publish its new residential ventilation standard 62.2.

The board’s decision, which was reached in July, is also being appealed by an ASHRAE Fellow and long-time NAHB member from Texas and three groups: the Gas Appliance Manufacturers Association (GAMA), the American Gas Association (AGA) and the Association of Home Appliance Manufacturers (AHAM).

ASHRAE has denied voting membership to those groups even though the standard strongly impacts their products.

If NAHB loses its appeal this Saturday, it can further appeal the decision to ANSI, the American National Standards Institute.

NAHB’s appeal is based on technical flaws in the standards and on procedural grounds — that the committee did not follow ANSI-approved ASHRAE rules for the development of consensus standards.

The technical flaws cited by NAHB include:

  • Whole-House Mechanical Ventilation — The standard permits continuous exhaust ventilation in hot, humid climates and supply ventilation in cold climates — as much as 150 cfm continuously in a 2,000 square-foot house — which may cause mold and structural damage and which the ASHRAE Handbook of Fundamentals advises against.
  • Kitchen Ventilation — Kitchen ventilation rates and a requirement for the exhaust fan to be in a range hood are based on air changes per hour that cannot be determined for kitchens that are open to other rooms.
  • Sone Ratings — Fans are required to meet maximum sone ratings, but the standard does not define “sone” or state how to calculate it. Definitions from other sources conflict. ASHRAE and ANSI procedures require that, “All terms shall be defined when they deviate from an ordinarily accepted meaning or dictionary definition” in standards intended to be referenced by building codes.
  • Gas and Oil Fuel Appliance Backdrafting Testing — Research has determined that short-term tests that induce backdrafting by closing up the house and turning on all its exhaust systems are unreliable in predicting backdrafting under normal conditions.
  • Solid Fuel-Burning Appliance Backdrafting Testing — The standard is not specific about which tests are required, and it allows laboratory tests, which do not even test backdrafting, to be performed in the field.

The procedural violations cited by NAHB include:

  • Improper classification of members — Two general members were classified as producers, throwing the committee out of balance.
  • Designating substantive comments as editorial — The committee:

— Changed the definition of “Air Change Per Hour” without public review; and

— Deleted a portion of the NFPA 54 Annex H backdrafting test from Appendix A Section A2 without public review.

  • Conflicting Overlapping Standards — Standards 90.2 (residential energy), 62.2001 (ventilation) and NFPA 501 (manufactured housing) all contain conflicting ventilation requirements. ANSI requires harmonization of its standards. The committee never even discussed the requirements in two of the standards.
  • Non-Responsiveness — The committee provided no reason in writing for its disposition of NAHB’s comment on solid fuel backdrafting testing.
  • Using Informative Language in a Mandatory Appendix — The standard uses informative (non-mandatory) language in a normative (mandatory) appendix in violation of ASHRAE rules.

If ASHRAE denies the appeals, NAHB and the other appellants will consider taking their appeals to ANSI, which could require ASHRAE to address procedural violations and seek new public approvals before ANSI would approve 62.2 as an ANSI standard.

Should all appeals fail, the standard would still not be mandatory until building codes reference it and state and local jurisdictions adopt and enforce the code.

For more information e-mail Dick Morris or call him at 800-368-5242 x8444.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Sheathing Alternatives to OSB and Plywood May Be Worth Considering

As home builders confront sky-high prices for oriented strand board (OSB) and plywood and an uncertain supply of these mainstay construction materials, Toolbase Technotes from the NAHB Research Center are advising the industry that this could be a good time to consider alternative sheathing products.

The alternatives include:

  • Imported OSB and Plywood. Other than Canada, U.S. plywood imports come primarily from Brazil and Chile. Some products are distributed from Poland, Germany and France, but their prices may mirror domestic panel prices when shipping costs are added. These products include Radiata pine and Kronopoly OSB, Triply OSB and Masisa OSB. They should have appropriate grade stamps or structural certifications if they are intended as structural sheathing.
  • Fiberboard. Known commonly as blackboard, grayboard or buffaloboard, this is constructed of wood compressed with other materials and is used primarily for wall sheathing and floor underlayment. It can be made of recycled fiber, has a higher R-value than most wood-based sheathings, has sound attenuating properties and is less expensive than other wood-based sheathings. Products include Stedi-R and Stedi-R Structural from Georgia-Pacific, Buildrite Structural Sheathing by International Buildrite, Temple Fiber Brace by Temple Inland and Celotex Premium Insulating Sheathing by Knight-Celotex.

  • Cementitious Board. Consisting of Portland cement reinforced with fiberglass mesh, this is typically used as a backboard for ceramic tile installations and has been used as exterior sheathing under a stucco cladding. Not structural in nature, buildings sheathed with cement board must have corner bracing. Producs include Durock by USG and WonderBoard by Custom Building Products.
  • Fiber Cement. A mix of wood fiber and cement, panels come textured or untextured in various siding configurations. Flat panels can be used under stucco, and textured panels can be used as sheathing and cladding. Corner bracing can be required by building codes. Products are marketed under the Hardi-panel or Cemplank brands by James Hardi and WeatherBoard by CertainTeed Corporation.
  • Gypsum. Products come in a variety of configurations, including exterior-fated gypsum core with paper faces; gypsum core with glass mat faces; and a core of gypsum, cellulose and perlite with water-resistive faces. Gypsum panels are used under brick veneer and stucco finishes, and they can be used to obtain a fire-rated wall assembly. However, they must be handled carefully. Manufacturers include USG (Fiberock), Georgia-Pacific Corporation (Densglass Gold) and National Gypsum Company (Gold Bond).
  • Foil or Paper Faced Insulative Board. This thin sheathing product can be applied in large sheets (up to 80 inches by 16 feet.) These products are structural in nature and less expensive than other sheathing options. Products include EnergyBrace and Thermo-Ply by Ludlow Coated Products and Thermo-Ply by Simplex Products.
  • Foam Sheathing. This includes extruded polystyrene, expanded polystyrene and polyisocyanurate; provides the most insulation of all sheathing options; and is not structural in nature.

Whether or not builders find these alternatives a suitable substitute for OSB and plywood can depend upon a number of issues related to their application, their structural limitations and their material characteristics, which can have an impact on thermal and moisture performance, the Research Center says.

Many of the options are applicable only for wall sheathing and many are non-structural in nature, requiring measures to resist shear in walls. Also, non-wood sheathing options do not act as a nail base.


Environmentalists Charge Court Officials With ‘Voodoo’ Science

Fighting a decision by Maryland officials to cull a mute swan population accused of harming the eco-system of the Chesapeake Bay, environmentalists are using arguments similar to those that NAHB has been advancing for some time against over-reaching federal regulations.

The Fund for Animals, an animal rights group with 200,000 members, took state authorities to court in an effort to stop hunters from decimating a population of an estimated 3,600 swans, contending that faulty science provided the basis for the decision to declare an open season on the birds.

The crux of the government bureaucrats’ argument against the marauding swans rested "on the fact that they think swans might cause problems in the future,” said Michael Markarian, president of the animal defense organization.

But “managing wildlife by trying to predict the future is not scientific,” he said in a radio interview earlier this month on National Public Radio. “It’s voodoo management, and it doesn’t make sense.”

Animal rights advocates say that although the swans, originally from Asia, are not native to the region, they represent a relatively small threat to the bay’s ecology compared to the real problem, which is pollution from poultry farming and sewage treatment plants.

The environmentalists claim a more rational approach to reducing the swan population would be to initiate birth control measures similar to those taken against Canada geese.

Jonathan McKnight of the Maryland Department of Natural Resources defended the scientific basis for the anti-swan campaign. He told radio listeners that the current controversy is “a war for the hearts and minds of Marylanders where we, in the conservation community, are after their minds and the animal rights folks are after their hearts.”

“And what we need to do is to make folks understand the complexity of the situation to show them how much science we’ve dedicated to this, how hard we have looked for alternatives and let that override their gut reaction to the idea of killing a storybook creature,” the official said.

A federal court delayed the state’s swan shooting spree, and was set to decide who had the most convincing scientific arguments on their side. However, on Sept. 17, the U.S. Fish and Wildlife Service, which had approved the Maryland plan, announced that it was withdrawing all permits to kill mute swans nationwide.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

More Anti-Housing Arson Attacks Reported in San Diego

Arson attacks in San Diego earlier this month that caused at least $450,000 worth of damage to homes under construction in Shea Homes' Avalon Point and Pardee Homes' Bordeaux communities are being blamed on environmental terrorists, presumably the Earth Liberation Front (ELF).

Authorities described the Sept. 19 destruction of four homes and damage to two others as “clearly an act of domestic terrorism in our city.”

A banner left at one of the arson sites read: “Development destruction. Stop raping nature. The ELFs are angry.”

ELF has been stepping up its attacks in recent months, including the destruction of a five-story residential development in San Diego in August that resulted in $50 million in damages.

NAHB is once again urging its members nationwide to take precautions they feel are necessary to ensure the security of job sites, especially after hours.

This can include meeting with security companies, local law enforcement officials, fire departments and insurance providers to learn how to better protect their construction sites from arson. Other precautionary measures can include the installation of security video cameras and signage stating that the job site is monitored and protected by security cameras.

According to the FBI, ELF is one of the nation’s most active and destructive domestic terror groups, responsible for more than $43 million in damage in more than 600 attacks since 1996 against corporations, individuals and government agencies.

For more information, e-mail Neil Gaffney at NAHB, or call him at 800-368-5242 x8495.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Model Legislation Targets Ecological Terrorists

Model legislation creating penalties for persons who encourage, finance, assist or engage in acts of animal and ecological terrorism has been prepared by the American Legislative Exchange Council (ALEC).

The Animal and Ecological Terrorism Act is detailed in a new publication, “Animal and Ecological Terrorism in America,” which has been published by ALEC’s Homeland Security Working Group.

“Most states make no legal distinction between a disgruntled youth vandalizing a public park and an organized eco-terrorist torching a family’s home,” said Sandy Liddy Bourne, an advisor to ALEC.

The model bill, Bourne said, would give states the ability to enter asset forfeiture proceedings against those who commit terrorist acts, which is not possible under current vandalism, trespassing and destruction of property laws.

The Earth Liberation Front (ELF) and the Animal Liberation Front (ALF) are the two groups to which acts of domestic terrorism have been largely attributed by the FBI.

“This legislation takes more than a bite out of crime, it jails and penalizes animal and eco-terrorists and their sympathetic financial agents for what they are — domestic terrorists,” said Bourne.

In its report on terrorism, ALEC says that, “the threat posed by ELF is, without doubt, on a rapid increase.”

It is feared that some ELF members might splinter off from the group and start escalating the violence of their attacks.

“If their voice isn’t heard by burning buildings, perhaps it may be heard by cutting throats,” said ALEC. “This fear has caused many in the law enforcement and corporate communities to endorse new legislation that could effectively rout out these dubious structures of terror.”

ALEC reports that a splinter group — ARISSA — has emerged, led by two former ELF spokesmen who have said “that more direct, strategic action need[s] to be taken against the political structure itself in the United States” and that “until such time as a revolution occurs, the U.S. political structure will continue to inflict widespread atrocities on a domestic and international level.”

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Don't Make Accounting a Foreign Language

If you don’t speak or understand the language, you can miss out on a tremendous opportunity if, say, you're trying to conduct business in Brazil or Thailand in a situation where no English is spoken.

But what about the conversations that take place between you and your accountant? Do you understand what each other is saying?

Most contractors, whether home builders or remodelers, probably don’t speak enough accounting to make the professional fees they pay worthwhile. At the same time, many accounting firms make few distinctions between home builders and remodelers and treat the two similarly. Calling a remodeler a home builder is about as useful as saying a toothpick manufacturer is in the lumber business.

As a businessperson, you should be able to react intelligently to the advice for which you are paying. Otherwise, don’t buy the advice.

How would you react if your accountant told you, “We really should do something about your current ratio, it’s way too high and it’s costing you money?” Would that statement send you into a moderate panic: “Good Lord, how much time do I have, will I make it?" Or would you take it as a message that the company is holding too much cash and it should be invested or paid out as a bonus.

It’s not unusual for a small contractor and builder’s financial statements and tax returns to use the completed contract method, which doesn't recognize the profit on a particular job until the job is completed and closed. But for someone who builds five houses a year, this can easily create a 50% swing in a sales statement: one week sales can be $1.6 million, but two weeks later, for the same amount of business, the number can jump to $2.4 million.

For a remodeler who bills for work as it is completed, using the completed contract method is cumbersome and ineffective. He should be using the percentage of completion method, which recognizes costs and profits as they are earned.

There are advantages to both methods, but you need to understand the differences.

Your accountant needs to understand the workings of your company: how jobs come about, how you track job costs and where you charge warranty costs (many remodelers charge them to marketing, if you can believe that). This exposure to the real business will help the bean counters provide you with recommendations that are specifically targeted to your operations and avoid treating you like a home builder just because you nail things together.

You have an obligation to learn common accounting and financial management terms. When you speak the language, your company planning sessions will be more meaningful to you.

This is easier than it sounds. Ask your accountant for a glossary of terms, study them and then ask for a demonstration of how they are used.

Know the difference between a balance sheet and a statement of condition. (There is no difference). Be able to determine whether an operating statement is better than a P&L. (They're the same thing.). Be able to recognize that source and use does not refer to a job cost report on the framing portion of the Jones job.

When you understand accounting terms almost as well as the specs on a roofing job or the site work on a lot, your accountant will become a valued ally and advisor. And, at the same time, insist that your CPA become conversant in your operations and the way you do business.

Only when both of you speak the same language can you have a meaningful dialogue about your business and its finances.

If you aren't willing to do that, then you better practice saying, “It’s All Greek to Me!”

M M (Mike) Weiss, CGR, GMB, CAPS is 2003 chairman of the NAHB Remodelors™ Council. Offers Remodeling Publications offers a varity of publications about remodeling. To view or purchase these publications online, click here.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

A New Concept in Retirement Housing Gains Favor

The “real” independent living community is the new kid on the block, and so far the signs are that this new concept may have a bright future.

Excluding active adult housing, market-rate seniors housing has consisted mainly of two service-enriched products: congregate housing and continuing care retirement communities. They often position themselves as independent living communities, but they usually are more “semi-independent” by offering meals, housekeeping, transportation and access to a variety of supportive services that often include assisted living and skilled nursing care on site. Total monthly fees in these communities are often more than double the rents in conventional apartments with no services.

The new independent living prototype does not provide supportive services and is closer in concept to an active adult community. But unlike active adult communities — which are usually very large, for-sale properties that target couples and are anchored by an extensive recreation amenity package — these new, independent communities are usually smaller, infill rental properties whose market is predominately older singles rather than couples.

In fact, in terms of appearance and design, these communities tend to be tax-credit clones, which is not surprising since the developers and owners have tended to be tax-credit developers.

These new, market-rate, tax-credit clones have met with success in initial lease-up and marketing for two reasons: price and value.

If independent, senior living properties can be positioned in the market so that their rents are no higher than 10% above rents on new conventional multifamily buildings, then you have a real winner.

There are plenty of middle-income seniors who want to downsize and who like the idea of living in a secure building and being part of a community of seniors. But they have been put off by supportive service options, because they do not want to pay for something they do not believe they need.

Sales and marketing professionals hear the familiar “I’m not ready yet” refrain from potential customers all the time. They may hear a different response if they provide those customers with the opportunity to move into a new seniors community at the same price as a new conventional apartment.

Many elderly want to move into a seniors building with its own community room, fitness center and activity and program areas. And experience to date indicates there is pent-up demand for this new independent living product from a specific, but largely untapped, segment of the seniors market.

The key to success is making the product price-competitive with comparable conventional apartments, not with service-enriched seniors housing. There may be a small premium associated with this new product, but seniors will be reluctant to move into units that are significantly more expensive than conventional new rental housing.

These new communities have become feasible in market areas where rents for new, conventional apartments are now high enough that the numbers work for the new seniors independent living product.

If you can get control of a good site in a market where this is true, you may want to consider this exciting, new housing option.

Michael Kivov is the director of feasibility and strategic services for PMD Advisory Services, LLC, a Silver Spring, MD-based company that provides a range of consulting services and data products to the retirement and affordable housing industry. Kivov’s department specializes in market and financial feasibility, strategic planning and positioning, asset and portfolio assessment and related services. Kivov is an active member of the NAHB Seniors Housing Council and a speaker at Building for Boomers & Beyond: Seniors Housing Symposium in 2003. He can be reached at 301-565-5983 or by e-mail.

For more information about seniors housing, visit or e-mail Jeff Jenkins or call him at 800-368-5242 x8292.

Enter Your Design in Seniors Housing Awards Competition

If you have an innovative design for active adult and seniors communities, enter the 2004 Best of Seniors Housing Design Awards competition. Click here to view the call for entries brochure, or e-mail Eucklan Matthews or call 800-368-5242 x8220. The deadline for entries is Nov. 13.

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. Has Publications About Seniors Housing 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, 2004. The symposium will focus on the lifestyle component of 50+ seniors housing.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Congress Revives Stalled FHA Multifamily Insurance Programs

Congress last Thursday passed a supplemental appropriation of $2 billion for the Department of Housing and Urban Development to put an end to a temporary suspension of FHA multifamily insurance after the commitment authority to insure loans during the current fiscal year ran out on Sept. 16.

The emergency legislation was badly needed to prevent major disruptions in the program, and NAHB worked with HUD and other industry groups to arrive at a solution.

Without an infusion of money, the queue of projects waiting for firm commitments could have become substantial, creating additional problems for the program at the start of the new fiscal year this Wednesday.

As of the end of last week, the Congress had not passed most of the appropriations bills for fiscal 2004, including money for the FHA’s insurance fund. However, the House and Senate passed a continuing resolution that includes up to $3.8 billion in commitment authority for FHA insurance.

The stopgap measure should ensure that FHA multifamily insurance programs are able to operate without interruption until an appropriation bill is passed.

Continuing resolutions are typically disruptive because the funding is pro-rated and allocated for only short periods of time, creating a stop-and-go process that is very costly to developers.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

More ARMs in the Future as Mortgage Rates Rise

Although mortgage interest rates have been vacillating since mid-summer, economists at NAHB believe they have most likely hit their cyclical lows and will be heading up over the next couple of years, making adjustable rate financing a more important alternative for home buyers who are strained by the higher cost of fixed-rate loans.

NAHB Chief Economist David Seiders told the board of directors at its recent meeting in Boston that he expects mortgage interest rates to experience only slight increases until the latter part of next year.

While it is impossible to predict the exact course of interest rates over any extended period of time, NAHB is assuming that fixed-rate mortgages will rise from an average 5.9% this year to 6.4% in 2004 and 6.9% in 2005.

Economists at the association are currently assuming that adjustable-rate mortgages (ARMs) will rise from an average 3.8% this year to 4.3% next year and 5.8% in 2005.

The prime rate is projected to increase from an average 4.1% in 2003 to 4.3% in 2004 and 6.0% in 2005, and the federal funds rate, 1% today, could hit an average of 3% two years from now.

ARMs, which accounted for only 13% of conventional mortgage originations in June and July, are now accounting for more than 20% of the market, and could command a 25% market share on average next year, according to Frank Nothaft, chief economist for Freddie Mac.

From the end of June through the end of the third week in September, Nothaft said, interest rates on fixed-rate mortgages had climbed about 1.25 percentage points, compared to only 0.50 percentage points on one-year ARMs, making the latter product a more attractive alternative for consumers.

The ARMs share hit a record 69% in October of 1987 and more recently was a high of 59% in January of 1995.

Nothaft’s research finds that ARMs account for a higher share of jumbo mortgages. At a fixed rate, those loans typically cost about half a percentage point higher than a conventional loan, but there is not much difference between jumbo and conventional loan rates for adjustable rate financing.

ARMs accounted for 52% of jumbo home-purchase originations last year, compared to 14% of the conventional market, Nothaft reported.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

HBAs Use NAHB e-Resources to Communicate With Members

State and local association staffers know that putting together member publications can often involve last minute scrambles for meaningful information.

NAHB has a wealth of valuable information online that associations can access quickly for their member publications and communications .

“We use articles from several NAHB sources — including Nation’s Building News, Monday Morning Briefing, the EO mailing and articles from,” says Cheri Grunewald, administrative assistant for the Suburban Northwest Builders Association in Elk River, MN. “Since neither one of us in the office considers ourselves to be writers, the articles make it a lot easier to come up with material for Plumbline, our monthly publication.”

Julie Mancl, executive officer of the Central Wisconsin Home Builders Association in Wisconsin Rapids, WI, has been running Tech Talk articles in The Blueprint, her monthly newsletter for members. Written by technology consultant Bill Allen, the Tech Talk series is published by NAHB’s Business Management Department as part its Building Business Briefs (BBB) series for home builders and remodelers.

These business management articles appear monthly in the EO mailing and periodically in Business of Building e/Source, an electronic newsletter for NAHB members. They are also reprinted in Nation's Building News Online. Mancl likes the fact that the articles are posted online, too. “Having them at your fingertips is awesome,” she says. “They make us look good.”

Building Business Briefs are organized in eight categories within a special, members-only section of NAHB’s Web site called Business Management Tools:

The articles are designated with the NAHB logo and the words “Web Page,” and are easy to insert in newsletters, magazines and other member publications. “They are extremely useful and are well received by our membership,” says Arlene Kerner, executive vice president of the York County Builders Association in York, PA.

Be sure to check out the HBA Resources section of NAHB’s Web site, which contains a variety of communication tools. You’ll find HBA alerts, ready-to-use articles and other resources to help you get the word out to your members.

Get a 5% Discount with AT&T Wireless Services

NAHB members can take advantage of a 5% discount on monthly cellular services available in all AT&T Wireless markets. Qualifying for discounts are: one-time charges for Wireless Service activation, conversion and rate plan changes, monthly wireless access, home wireless airtime charges, roaming airtime charges incurred in AT&T Wireless markets, charges for billing detail and charges for additional features such as voice mail. To learn more, click here.

For information on activating new AT&T Wireless Services call 888-444-4410; be sure to mention code 50001515 and your NAHB membership. If you have existing AT&T Wireless Services and would like to start receiving the 5% discount, call 800-459-6524, mention code 50001515 and mention your NAHB membership. Or visit the AT&T Wireless Web site by clicking here.

To order online and for details on more than a dozen other money-saving Member Advantage discount programs click here, or send a blank e-mail to

Go to and look under “Join NAHB” to explore the numerous advantages associated with membership in your local, state and national home builders association.

Field Superintendent Courses Tailor-Made for California

Working in partnership with the California Building Industry Foundation (CBIF), the Home Builders Institute (HBI) is tailoring the training it provides through its Field Superintendent Designation series to meeting California’s unique building standards and regulations.

This is the first time that the training will be adapted to state or local regulations.

Offered under HBI’s Residential Construction Academy (RCA) to provide instruction for both new and experienced field superintendents, courses in the series are offered by local home builders associations and at major regional housing shows.

More than 900 workers have received training in the program this year.

THE CBIF, which is the educational and research arm of the California Building Industry Association, will offer two of the eight courses in the training series — “Safety and Security” and “Customer Service and Home Owner Relations” — on Oct. 1 in conjunction with the San Diego BIA.

Taught by Joe Turner, president of Joe Turner Customer Service Consulting, and Mike Sibley, president and CEO of Courage Safety Systems, the courses have been adapted to reflect California’s SB 800 and OSHA regulatory requirements.

More courses will be offered statewide next year.

On Oct. 15, two courses will be offered in conjunction with the Building Industry Association of Southern California's Building Industry Show in Anaheim — “Office and Subcontractor Relations” and “Budget Management and Cost Control.”

Bill Simon, president of Custom Design and Construction, will be teaching the courses.

For more information on Field Superintendent Designation course offerings in California and to register, e-mail Margaret Smith, or call her at 916-340-3340.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Implementing Best Practices Can Reduce Cycle Time

By Glen West
It's no secret that reducing cycle time is one of the most effective ways for home builders to increase their profit. But that can be easier said than done, especially if it seems you've already shaved every possible day from the schedule.

Implementing "best practices" for your production process can help identify new opportunities for reducing wasted time on the job site and improving the efficiency of your entire building operation. Work phases can be completed more quickly, and reliably, as your business achieves new levels of quality and profitability.

Consider adopting these best practices:

  • Assess the value. Determine how every phase of the building process adds direct value to the customer. Eliminate or reduce stages that do not, or combine them with other activities to reduce the time it takes to do them.

  • Make it easy. Stage materials, tools and equipment so that they will be where crews need them when they need them, reducing time wasted handling them.

  • Panelize. Speed up on-site assembly and installation by using factory-built or other pre-cut, panelized components — from plated trusses to pre-hung doors.

  • Standardize paperwork. Standardize progress reporting, materials delivery and change orders to provide reliable, accurate and timely information to the right people — staff, subs, vendors and customers.

  • Automate paperwork. With standards in place, work toward an electronic reporting system that eliminates the need for re-entering information. This reduces errors and pushes information through the process faster.

  • Start right. Review and adjust the schedule with subs, vendors, labor and supply sources before each phase of work and before the entire project.

  • Train right. Provide subs and crews with thorough training, including installation and assembly instructions for each product or system. Establish procedures for using equipment and tools safely and ensuring safety on the job site to reduce on-the-job training and instruction. Make sure the tools and equipment you provide are in peak working order, and that materials and products are free of defects.

  • Troubleshoot in process. Work toward a system for finding, reporting and eliminating defects during, instead of at the end of, the building process so that they don't affect the quality and timing of remaining phases.

  • Smooth transitions. Review hand-offs between phases and subs (e.g. framing to rough electrical) to identify where activities might be shared, reduced, eliminated or approached differently.

  • Get feedback. After each phase of work and after the house is finished, debrief superintendents, key subs, crews, vendors and suppliers to refine your process. Even an hour per phase will shave a day or more from the overall schedule and help you achieve optimal efficiency.

Glen West is vice president of accounting solutions for Timberline Software Corporation. Headquartered in Beaverton, OR, Timberline is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

Timberline's financial and operations software for construction and real estate professionals includes production management, procurement and property management solutions. Integrated Timberline® Office products built around the company's widely used accounting and estimating applications provide streamlined control of job cost, production, contracts, bidding, scheduling, sales, service dispatch and more.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Showcase 2003 a Time to Learn and a Time to Play

This year’s Building Systems Councils' Showcase 2003 is being held in an ideal setting — not only for the education, exhibition and networking opportunities that have become synonymous with the show, but for relaxation and recreation at one of the finest resorts and international destinations in the country.

Showcase will be held Nov. 2-5 at the renowned Homestead in Hot Springs, VA.

Spouses and guests of Showcase attendees will be able to enjoy programs in fine cuisine and wine tasting during the day’s educational sessions. All Homestead guests can enjoy the resort’s spa and recreational amenities, including its famed hot springs and five different types of massage.

Golfers can play three world-class courses, including the legendary “Old Course,” where Sam Snead first caddied in the early 1900s. Tennis, hiking, biking, canoeing, skeet shotting and lessons in falconry are also available at the resort.

The only NAHB-sponsored event specifically for the systems-built housing industry, Showcase has become the hallmark event for anyone interested in modular, panelized or log homes.

For registration information, click here.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Mexico Is Focus of International Housing Conference

Builders and building product suppliers looking to tap the lucrative and growing Mexican housing market will gain practical advice and make valuable business connections at NAHB’s upcoming International Housing Conference of the Americas. Taking place in Mexico City, Oct. 16 - 18, the conference is expected to attract key players from both sides of the U.S.-Mexico border.

Mexico currently confronts pent-up demand for 6 million homes. The market is expected to grow at 4.5% per year, with an estimated value of US$6.7 billion by the end of 2005. Mexican builders plan to build more than a million new low- and middle-income homes a year for the next three years. Mexico President Vicente Fox has set a goal of meeting the housing needs of 45 million new households by 2030.

“NAHB’s 1st International Housing Conference of the Americas can help U.S. and Mexican companies identify opportunities to help reach Mexico’s housing goal,” says NAHB President Kent Conine. NAHB is now accepting online registrations for the event. Click here to register and find more information.

“Now is the time for members of the home building industry to learn about the Mexican market,” Conine says. “With one-on-one meetings, education sessions and ample networking opportunities, NAHB hopes the conference will pave the way for collaboration between builders and suppliers from both nations.”

Conference sessions will feature industry experts leading discussions on the latest building concepts, housing and design trends, building efficiencies and technologies, green building, building codes and work-site safety, marketing strategies, Mexico's emerging mortgage finance system and more.

The conference is designed to appeal to a broad range of participants, including U.S. and Mexican builders, manufacturers, suppliers, financial representatives, architects and designers. Attendees will gain valuable information, insights and contacts in the Mexican housing market. To read the agenda, click here; to download a brochure, click here

NAHB has co-located the conference with EXPO CIHAC, Mexico’s largest housing and construction-industry trade show, which features over 500 exhibitors, including more than 70 U.S. companies — and typically attracts over 60,000 visitors.

For additional information, e-mail Matt Monjan or call him at 800-368-5242 x8419. at EXPO CIHAC, Has Publications in Spanish will be participating in EXPO CIHAC. also offers a variety of Spanish language publications. To view or purchase these publications, click here.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Sears Recognizes Builders for Furthering the American Dream

The Sears American Dream-Maker Awards are providing home builders and contractors with an opportunity to receive recognition for their charitable efforts to turn the American dream of homeownership and maintenance into a reality for low- and moderate-income families.

Sears, Roebuck and Co. will award a total of $50,000 to the winners, whose donations of time, talent, funding and services from Oct. 1, 2002 through Sept. 30, 2003 helped increase homeownership in their communities.

Entrants in the competition can nominate themselves or be nominated by another person. Nominations must include an original essay no longer than 1,000 words describing the nominee’s dedication and charitable efforts and one testimonial from an upstanding member of the community confirming the impact of the builder’s efforts.

Entries can be submitted via mail or e-mail and must be received by 5 p.m. (EST) on Oct. 1. All essays and testimonials must be typewritten and submitted to: Sears American Dream-Maker Awards, c/o Hunter Public Relations, 41 Madison Avenue, Suite 500, New York, NY 10010 or via e-mail to:

For official rules and more information, click here.

Winners in five categories will receive a donation of $10,000 each made in their name to the housing-related organization of their choice, subject to approval by Sears, and a certificate of accomplishment.

Sears may also publicize the achievements of the winners at the 2004 International Builders’ Show and elsewhere.

Sears will also designate two honorable mention winners in each of the five categories.

The entry categories are:

  • Builders with revenues over $1 billion
  • Builders with revenues between $400 million and $999 million
  • Builders with revenues between $100 million and $399 million
  • Builders with revenues under $100 million
  • Professonal contractors/builders of a minority-owned business

Sears, Roebuck and Co. created the Sears American Dream Campaign in August 2002 in response to a HUD study finding that the nation’s minority homeownership rate was 18% lower than the national average, with less than 50% of African-Americans and Hispanics owning homes.

The company’s $100 million community commitment is helping to make homeownership and continued home maintenance a reality for all Americans.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

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 National Sales and Marketing Council (NSMC) Awards. “The Nationals” pays tribute to superior new home sales and marketing achievements by individual sales and marketing professionals, home builders and associates and is sponsored by the National Sales and Marketing Council. Entries, including fees and exhibits, are due by Oct 3.

To download entry materials, click here.  “The Nationals” will be presented at the Bellagio Hotel in Las Vegas during the International Builders’ Show on Jan. 19, 2004. For more information, call 800-658-2751 or 909-987-2758.

To sponsor the awards, click here, or e-mail Steve Bunce or call him at 800-368-5242 x8690.

  • 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 has been extended to Nov. 13.

Click here for details about the awards and to review the call for entries. To download a brochure with entries specifications and an application, click here. For more information, e-mail Jeff Jenkins or call him 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, click here, or call the Multifamily Council at 800-368-5242 x8215.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.

Calendar of Events




Oct. 13-15, 2003

NAHB/BALA Design Institute

Newport Beach, CA 

Oct. 16-18, 2003 

1st International Housing Conference of the Americas in Mexico

Mexico City, Mexico

Oct. 22, 2003

Construction Forecast Conference — Fall

Washington, DC 

Oct. 23-25, 2003 

Remodelers' Show

Baltimore, MD 

Nov. 2-5, 2003

Building Systems Councils' Showcase 2003

Hot Springs, VA 

Nov. 14-16, 2003 

Custom Builder Symposium 

Orlando, FL 

Nov. 6, 2003

State & Local Government Affairs Conference

Wichita, KS

Nov. 8-9, 2003

National Conference on Membership

Phoenix, AZ

Jan. 19-22, 2004

The International Builders' Show

Las Vegas, NV 

To view more meetings & events information on the NAHB Web site, click here.

We Want to Hear From You

Let us know what you think about NBN Online. Please click here to fill out the NBN Online Readers' Survey. Thank you.