Nation's Building News Online: March 1, 2004Print All Articles Text Version |
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Greenspan Plan for Fannie Mae, Freddie Mac Would Weaken Nation's Housing Finance SystemDespite paying lip service to the important role of housing in the nation’s economy and in American society, Federal Reserve Chairman Alan Greenspan last week testified before the Congress that he supports strong growth limitations on housing government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, and he downplayed the vital role these organizations play in promoting homeownership and providing home mortgage products at the lowest possible cost. “During this morning’s (Feb. 24) hearing before the Senate Banking Committee to explore the future regulatory restructuring of the GSEs, Chairman Greenspan did what we feared most: instead of constructively contributing to the debate on how to develop an effective regulatory system for Fannie Mae and Freddie Mac, he turned the forum into a referendum on the nation’s housing finance system,” said NAHB Executive Vice President and CEO Jerry Howard. Specifically, the Fed chairman sought to:
A new study released last week by William Greene, a professor of economics at New York University’s Stern School of Business, concluded that the results of the Passmore paper “may well be seriously flawed, and should be subjected to extensive scrutiny before used as a guide to the magnitude of Fannie Mae’s and Freddie Mac’s impact on conforming mortgage rates.” Noting that the GSEs ensure that Americans have a stable and reliable supply of low-cost mortgage money at all times, in all economic conditions and in all areas of the country, Howard bristled at the notion that Fannie Mae’s and Freddie Mac’s contributions to the housing market have been marginal at best. “Attempts to minimize the invaluable contributions of Fannie Mae and Freddie Mac to the nation’s housing finance system, as suggested by Chairman Greenspan and some other policy makers, is merely a red herring designed to weaken or destroy their GSE status and divert capital away from housing,” said Howard. “Obviously, the GSEs have a central role in promoting housing affordability. The true crux of this issue centers on finding a solution that preserves the vital housing mission of the GSEs while strengthening and safeguarding their financial health.” “NAHB looks forward to working with Chairman Shelby, Ranking Member Sarbanes and other members of the Senate Banking Committee to help enact meaningful regulatory restructuring of the GSEs that ensures their continued financial safety and soundness and protects their ability to carry out their federal charter to house America’s families,” added Howard. An Unsettling View of the Fixed-Rate Mortgage The day prior to his congressional appearance, in a speech to the Credit Union National Association in Washington, Greenspan questioned whether the financial certainty provided by fixed-rate mortgages was worth the cost. The activities of Fannie Mae and Freddie Mac have been centered on the fixed-rate mortgage. In his address, the Fed chairman lobbied for adjustable-rate mortgages, arguing that they could save consumers more than fixed-rate loans over the long-run. "I find it particularly unsettling and inappropriate that the Federal Reserve Chairman went beyond his role as head of the nation's banking system to tout one mortgage product over another," said Howard. "Unfortunately, one can reasonably conclude that his statement to discourage fixed-rate loans, the mainstay of the nation's mortgage system, is just a ruse to encourage the housing system to rely more heavily on banks and thrift institutions — which, unlike the GSEs, do not have a federal charter requiring them to expand homeownership and provide home mortgage products at the lowest possible cost." Greenspan Position Disputed Before Senate Banking Committee Rebutting many of Chairman Greenspan’s charges, Franklin Raines, chairman and CEO of Fannie Mae; Richard Syron, his counterpart at Freddie Mac; and Norman Rice, president and CEO of the Federal Home Loan Bank of Seattle, testified on Feb. 25 before the Senate Banking Committee.
They told lawmakers that the GSEs broadly support regulatory reform, but the leaders of Fannie Mae and Freddie Mac warned the committee that Greenspan’s call to restrain their portfolio growth would lead to higher and more volatile mortgage rates for home owners and increase the risk to taxpayers, because it would force the housing system to rely more heavily on commercial banks, which fund themselves with government-insured deposits. Senator Richard Shelby (R-AL) lent qualified support for that position, stating: "If an institution is well-capitalized, well-regulated and well-run, let 'em grow."
Building News Coast To CoastThe Search for Value and AdventureThough nearly 50% of retirees stay put in order to be near their families, Wake Forest University gerontologist Charles Longino expects more migration as baby boomers age. Of those who do relocate, most flock to Florida, Arizona, California, Texas, North Carolina, Nevada and Pennsylvania. Among the factors taken into consideration by retirees when choosing where to spend their golden years are costs, crime rates, climate and landscape. Florida-based gerontologist David Demko notes that many affluent retirees are leaving the United States for Western Europe, the Czech Republic, Mexico and Costa Rica, to name a few destinations. As for the homes themselves, AARP senior policy adviser Andrew Kochera says retirees prefer step-free entrances, levered door handles, wider hallways and well-lit spaces so they can remain independent longer. Amenities such as wellness centers, restaurants and maintenance services also are in high demand. Innovation Is Changing How We BuildBuilders need to go beyond the latest accessories and finishings if they plan on addressing the need for affordable housing at a time when land is scarce and labor and materials costs are high. The Partnership for Advanced Technology in Housing (PATH) is incorporating innovative features into its homes, many of which made HUD's recent list of the top 10 building technologies. Among them are fiber-cement siding, which is fireproof and protects homes in humid regions from excessive moisture and termites. Homes with structural insulated panels (SIPs), which are comprised of polystyrene foam attached to plywood, are earthquake- and wind-resistant and less likely to be damaged by insects and moisture. Meanwhile, frost-protected shallow foundations allows for cost savings because insulation is used to protect the home from frost heaves without having to dig below the frost line. The outside insulation used in this building technique additionally makes the home more energy-efficient. Old Real Estate Attracts Lower-Income BuyersNew Census research reveals that U.S. homes constructed pre-1920 have a median value of $98,794, slightly more than half the $183,502 median cost of properties built in 1990 and thereafter. The price affordability of the older units make them appealing to lower-income buyers; however, owners of mature housing tend to spend more on upkeep than those who own new homes. Moreover, older residences often lack the amenities of newer models — including two or more full bathrooms and central air conditioning. Most of the nation's older homes are located in the Northeast, which claims 20% of the mature housing inventory; followed by the Midwest, with just above 10%; and the West and South, with about 3% apiece. The data, culled from the 2001 American Housing Survey National Sample, is presented in the U.S. Census Bureau report, "These Old Houses: 2001." Lumber Prices Surge and May Boost Cost of Homes FurtherA decline in foreign imports, last year's forest fires, the Canadian railroad strike and strong housing demand have driven up prices for framing lumber, plywood and engineered wood panels. Given that large home builders benefit from volume discounts and secure prices far in advance, experts do not anticipate a surge in residential prices as a result. However, Pulte Homes is among those builders considering a price hike of $1,000-$1,500 per house if lumber prices do not cool in the near future. Toll Brothers, meanwhile, is not planning to pass the additional costs onto consumers because demand has already inflated property values. A Boomlet in Kid-Friendly CondosMany Manhattan couples once fled to the suburbs after having children, but more and more are opting to live in the city to avoid lengthy commutes. Developers are now catering to these families with kid-friendly condominiums, complete with noise-proof floors, stain-resistant flooring, shatter-proof glass and amenities ranging from child-care services and playrooms to libraries and movie theaters. These so-called "luxury family" units fetch between $1 million and $3 million. Demand for two- to four-bedroom units, meanwhile, has prompted many developers to completely eliminate studios and one-bedrooms. Women Expand Niche in Owning Construction FirmsFemale-headed firms are quickly gaining ground in the field of contracting and construction, according to a new report from the Center for Women's Business Research. In fact, the study shows that the number of construction companies owned by females surged 35.5% between 1997 and 2002. Moreover, of the nearly 279,000 women-owned businesses that posted revenue of $1 million or more in 2002, roughly 13.4% were construction firms. These and other "non-traditional" industries such as manufacturing and transportation, meanwhile, account for most female-owned businesses above the million-dollar threshold. "It's not just that there are more of these firms; they're more successful," insists Sharon Hadray, executive director of the center. "Previous center research show that women-owned businesses are just as financially strong and creditworthy as the average U.S. firm." Laundry Room Upstairs Makes Regular Chore ConvenientNAHB's "What 21st Century Home Buyers Want" survey reveals that laundry rooms are a priority for new-home buyers. Many want the laundry room upstairs near their bedrooms, while others prefer a laundry area on every floor. More affluent home owners even have laundry closets with stackable machines in their master suites. People Favor Solar Power — But Not in Their NeighborhoodPrivate solar-energy production in the United States has blossomed more than tenfold in the past decade and, based on industry estimates, is now sufficient to power some 300,000 homes. The trend is most prevalent in Sunbelt states, but also is gaining momentum in the Northeast and other colder markets. While many home owners profess to support the generation and use of solar power, however, many are taking a NIMBY stance when it comes to their own neighborhoods. In Florida and Arizona, for instance, dozens of home owners associations have intervened in an effort to keep residents from installing rooftop solar panels — which are aesthetically displeasing to some, with their different colors and flat, rectangular design. As many as 20 communities in California, meanwhile, have adopted legislation written specifically to deter solar-energy installations. In response to the resistance, manufacturers report that more customers are requesting panel colors that match the color of their roofs in hopes of efficiently camouflaging the solar-power systems. They also say they are selling more panels that look like actual roofing material. Public Home Builders Seek Respect on Wall StreetIn order to "raise awareness and recognition for the public builders' role as a stable and growing provider of quality and affordable housing to millions of Americans," Pulte, Beazer, Lennar, Centex, Ryland and eight other home builders have established the Public Home Builders Council of America. The firms are concerned about how the industry is perceived by Wall Street analysts and investors as cyclical. "Public builders are more professionally managed; this is not a business made up of cowboy developers anymore," insists CEO Steven Hilton of Meritage Corp., another builder participating in the council. Stable capital structures, lean land supplies, improved availability of market research, more elaborate customer service and industry consolidations, among other factors, should continue to fuel growth in the building industry. As for interest rates, Hovnanian Enterprises CEO Ara Hovnanian believes the expanding economy, job growth and willingness of home buyers to obtain adjustable-rate mortgages will prevent rate hikes from hurting builders' profits. Hovnanian also discredits concerns about an impending bust because he sees no evidence of a building boom, mainly because construction has held steady at 1.5 million-1.6 million units annually. Landscape of Tomorrow Is Here TodayMore and more Florida builders are adopting green building techniques that pave the way for energy-efficient dwellings, environmentally friendly landscaping, healthier home owners and open space conservation. Rey Homes' VillaSol in Osceola County, for instance, features 690 Energy Star homes, walking trails and other recreational amenities. Royal Palm Builders, London Bay Homes and WCI Communities are just some of the other builders incorporating rainwater-collection systems, recycled materials and other green components into their developments. The Florida Green Building Coalition's Green Development Designation Standard, meanwhile, focuses more on land than homes, basing certification on the conservation of natural resources and ecosystems as well as environmentally friendly circulation systems, utility practices, amenities, deed restrictions and educational programs. Unlike traditional developments, green developments do not hurt the surrounding environment or burden wildlife habitats. According to University of Florida Energy Extensive Service Director Pierce Jones, some green builders are actually able to turn around damaged ecosystems. Inside the Home of the FutureResearchers across the country are using wireless, cellular, broadband and computer technology to create interactive homes that make life easier for their occupants — especially baby boomers who plan to stay in place as they age. With a form of automation known as machine learning, for example, a home could monitor the occupants' habits to tell itself when to turn on the heater, the shower, interior lights and coffee makers. It also could schedule meals using built-in scales to gauge weight gain, as well as survey the contents of the refrigerator and have much-needed items ordered and delivered. University of Florida researchers have even devised a way for home owners to control the doorbell, door locks and outside lights through their cell phones. Among the other technologies being developed are sensors that measure daily activity; microwaves that read radio-frequency identification tags to automatically cook foods; mattresses with strips that monitor breathing and pulse rates; toilets that rinse and dry users to eliminate the need for toilet paper; and medicine cabinets that inform users of possibly dangerous drug interactions. Georgia Tech assistant computing professor Beth Mynatt notes, "If we can sneak these things into people's homes when they're young, for the convenience, they'll be there as we all get older and help us stay independent longer." With Computers, Shop Carefully and by NeedSmall businesses do not have many options when it comes to computing, lacking the resources to hire IT staff or outsource operations, yet more are taking advantage of the economic turnaround, increasingly powerful equipment and tax breaks to invest in technology again. But as IBM Vice President for Global Marketing for Small Businesses Judy Smolski warns, the cost of the computer is not just the price paid for the hardware, but also includes training and maintenance costs, just to name two. Experts urge small businesses to conduct a comprehensive analysis of purchases so that contracts are clearly understood. Instead of buying one super computer for each employee, specific computers and software can be tailored to individual needs. Many small businesses make the mistake of thinking that they are safe from cyber attacks since, in their opinion, they are too small to draw attention, yet to today's worms and viruses, size is not important. Another important aspect of computing is a disaster recovery plan with backup tape storage drives. Farm Out Payroll, and Don't Miss a Tax DeadlineTax time has meant the ruin for many a small business — even when little or no taxes are owed — simply by diverting precious time from urgent matters. Preventing problems need not be difficult with the implementation of inexpensive accounting software to track spending or the use of a payroll service. "The fact is that 67% of all audit disputes revolve around poor records," notes tax litigation consultant Daniel Pilla. "So, if businesses did nothing but have a comprehensive guide to what kinds of records they need to keep, they could avoid most audits." Businesses face 25% penalties each for failing to file on time and not paying their taxes on time. Experts urge businesses strapped for cash to file tax documents on time, that way avoiding having to pay at least one late fee. The largest payroll service for small businesses is Paychex, which offers a company with two workers who are paid weekly an average $14 weekly charge for payroll services and an extra $10 fee for handling tax payments. Tax attorney Harvey Shulman reminds filers that "the government doesn't have to prove that you were wrong, you have to prove that you were right," and that therefore, proper documentation is essential to avoid audits. Soft SpotInternet phone systems can help businesses slash their long distance telephone bills and improve their mobility. Any desktop PC, laptop or PDA with an Internet connection can serve as a telephone with the addition of an inbox/dialer, which can be downloaded from softphone service providers such as Vonage, TeleSym and MediaStreams USA. These companies charge installation or one-time user fees; but once the software is in place, users can make unlimited calls to any destination at no cost. The technology allows users to make phone calls over the Web when they are away from their offices, and mobility will be further enhanced once calls can be transferred between cellular and 802.11x networks. (www.entrepreneur.com). Builders, Developers Needed to Show Success of 'No Surprises' Policy for Habitat Conservation PlansAs fringe environmental advocacy groups step up their efforts to scuttle the Fish and Wildlife Service's (FWS) "No Surprises" policy that developerrs and builders rely on for legal assurances for their Habitat Conservation Plans (HCPs), NAHB’s legal and regulatory staff are looking for builders and developers who can document their successes in working under this program. HCPs enable home builders, developers and other landowners to acquire permits for construction or land development in endangered species habitats by working with the Fish & Wildlife Service or National Marine Fisheries to minimize the environmental impact of those activities. Most importantly, HCP permits provide legal assurances to the permit holder and future landowners that no future mitigation will be required of them by the federal government. These federal assurances granted by FWS are the basis for the success of the "No Surprises" policy, which was created by the Clinton Administration in 1998. As the result of a federal court ruling in December, the Fish & Wildlife Service is now further considering and opening for public comment two HCP regulations, providing environmental groups with further opportunities to press their campaign against the conservation plans. Supported by NAHB, the first of those regulations, the “No Surprises” clause, ensures that the service cannot alter the terms of an agreement with landowners for mitigation, conservation easements and other measures to preserve habitat. The second, the “Permit Revocation Rule,” would allow permits received under Habitat Conservation Plans to be revoked if it turns out that the development activity is appreciably reducing the survival and recovery of a species. “Environmental groups have blatantly misstated the facts in this case,” said Jerry Howard, executive vice president and CEO of NAHB. “Preserving this program as we know it may very well depend on NAHB’s success in gathering hard evidence from builders who are experienced with the HCP program.” FWS is expected to provide some direction on the “No Surprises” and “Permit Revocation Rule” in an announcement this spring; in the meantime, NAHB is gearing up for the debate. NAHB is asking builders and developers with approved habitat conservation plans for the following information: a description of their experience in the HCP development process, the cost of the HCP and the status of the species in their HCP. This information is urgently needed to help NAHB support its position that the program has been producing positive results for both the housing industry and the environment. To provide information on your experiences using Habitat Conservation Plans, e-mail Michael Mittelholzer or call him at 800-368-5242 x8660. Housing SnapshotMortgage interest rates last week remained at near bargain-basement levels, almost unchanged from the previous week, and Freddie Mac economists reported that applications have been up for both homes purchases and refinancings as a result. The Commerce Department said that growth of the gross domestic product was up 4.1% in last year's final quarter, slightly higher than originally estimated, and some analysts believe growth in the current quarter will climb to about 4.5%. Personal spending was up 0.4% in January, and the latest reports from businesses showed they were increasing their investment in equipment and software and building up their inventories in anticipation of a more vibrant economy. Lumber prices continued to go in the wrong direction last week, but there were signs of a slowdown in their upward momentum. Random Lengths reported that framing lumber was up $5 to $389 per 1,000 board feet. The mill price for 15/32-inch 3-ply CDX Southern Westside plywood was up $10 to $495 per 1,000 square feet, up from $240 a year earlier; and oriented strand board climbed $8 to $495, compared to $192 for the same week in 2003. Mortgage Interest Rates30 Year Fixed Rate: 5.58\% Housing Starts: Jan. 2004Total: 1.903 million\% New Home Sales: Jan. 2004 *1.106 million Existing Home Sales: Jan. 2004 *6.04 million * Seasonally Adjusted Annual Rate For Working Families, Affordable Housing Is in Short SupplyIt has been the best of times and the worst of times for housing in America. It’s been the best of times for the 68% of families — an all-time high — that have achieved the dream of homeownership and the economic benefits that come with it. And it’s been the worst of times for millions of families that struggle to find housing that meets their needs. While we can take pride in our outstanding homeownership rates, we must remain committed to meeting the housing needs of all Americans. The statistics are staggering. Millions of the nation’s working families spend more than half of their income on housing or live in seriously substandard conditions. These aren’t just statistics. This means that millions of Americans struggle to find an adequate living environment. It means that millions of mothers and fathers must worry about providing adequate shelter for their children. A recent study by the National Housing Conference (NHC) found that the median income of the nation’s elementary school teachers, police officers, licensed practical nurses, retail salespersons and janitors is well below the amount needed to qualify for a median-priced home in the United States. Even more telling, families dependent solely on the income of a janitor or retail salesperson pay more than 30% of their income — the upper limit of affordability — for a two-bedroom apartment in the nation’s 60 largest metropolitan areas. And in markets as diverse as Boston, Dallas and West Palm Beach, FL, apartment rents often require more than 30% of household income for two-income families. The statistics point to a chronic affordability problem. It is absolutely essential that our communities take the steps necessary to ensure an adequate supply of housing that is affordable to working families. Our cities and towns need housing that is affordable for teachers, police officers, firefighters and other public servants, as well people working in the service and retail industries. These are the people who teach our children, keep our streets safe and provide the services we depend on. A growing number of working Americans are forced to commute long distances, or they live in housing that simply does not meet their needs. These working people are an important part of the social fabric. A community suffers when the people who provide its essential services go home to another city or town at the end of the workday. We need four things if we are to solve this problem:
The solutions to our nation’s housing affordability crisis will not come easily. This problem demands the attention of the private sector — builders, developers, lenders, architects, citizen groups — as well as that of government at all levels. This is a problem we cannot ignore. Our nation’s families deserve real and lasting solutions. New Home Sales Cool Slightly in JanuaryNew-home sales dipped slightly in January following the torrid levels of buying activity in the final quarter of last year, but still outpaced last year’s record-setting total sales. New single-family homes were sold at an annual rate of 1.106 million units, the Commerce Department reported last week, down 1.7% from December’s upwardly-revised rate of 1.125 million units, but 9.6 percent above the rate reported a year earlier.
“Builders across the country are still very upbeat about the single-family housing market,” said NAHB President Bobby Rayburn. “Harsh weather may have affected sales in some regions of the country, but with low mortgage rates and strong house price performance continuing to fuel demand, there was hardly a dent in the totals.” “Some cooling from the world-class pace of the fourth quarter was expected, but sales are still well above the overall pace of 2003,” said NAHB Chief Economist David Seiders. “We are projecting a 3% decline in new home sales for the year as a whole, based primarily on anticipated upward movements in mortgage rates as the year progresses. However, if interest rates remain at or near current levels throughout the year, new home sales could equal or even surpass the 2003 record.” Sales declined 2.1% in the South, 3.9% in the West and 5% in the Northeast. They were up 5.6% in the Midwest. January’s inventory of new homes for sale increased slightly to 370,000 units, representing only a 4.1-month supply at the current sales pace, which is quite low by historical standards. “There was very little increase in inventories, and the supply-demand balance remains very healthy,” Seiders said. “In fact, most of the units for sale by builders are still under construction or in the permitting process and not even started.” Existing Home Sales Remain Near Record Pace Despite January DeclineSales of existing single-family homes in January were down 5.2% to a seasonally adjusted annual rate of 6.04 million units, the National Association of Realtors® reported last week, but remained close to record levels. The pace of last month’s home resales was 2% above the sales rate of January 2003, the association reported. “We have to keep in mind that the level of home-sales activity over the last six months has been the strongest on record,” said David Lereah, NAR’s chief economist. Lereah said that resales in January were the sixth highest ever and exceeded the total forecast for this year. “We can expect month-to-month ups and downs, but the long-term trend is for home sales to stay close to record territory this year,” he added. The median existing-home price was $168,700 in January, up 5.4% from a year earlier. Sales fell 13.2% in the Midwest, 12.5% in the Northeast and 5.7% in the West. They were up 2% in the South, which accounted for about 41% of all the single-family homes resold in the country in January. Eye on the EconomyDavid F. Seiders, NAHB Chief Economist The acceleration in growth of economic output that became evident in the second half of 2003 is carrying over to the first quarter of this year. Available indicators suggest that first-quarter growth of real gross domestic product (GDP) is heading toward an annual rate of about 4.5%, even better than the final quarter of 2003. The deceleration of major inflation indicators also has extended into the early part of 2004. The core consumer price index (CPI) — excluding food and energy — posted a year-over-year advance of only 1.1% in January and the readings for previous months were revised downward. The January inflation rate was about the same as in other recent months (after the revisions) but well below the pace of inflation just a year ago. Furthermore, recent declines in unit labor costs in the nonfarm business sector imply downward pressure on core inflation going forward. Thus, the U.S. economy still could be toying with potential deflation, and clear signs of stable (or higher) inflation may not be evident until mid-year or even later. The downward pressure on unit labor costs suggests that labor market conditions still are quite weak — with little net hiring and sluggish growth in labor compensation. Indeed, the labor market report for January showed only weak growth in payroll employment, and weekly data on claims for unemployment compensation for the first half of February suggest only halting improvements in the job market. And although the unemployment rate has been moving down since mid-2003, much of that decline reflects deterioration of the labor force participation rate rather than acceleration of employment. Indeed, Fed Chairman Alan Greenspan recently told the Congress that there’s still a lot of slack in the nation’s labor market despite the declines in the official unemployment rate. Consumers continue to fret about the job market, sending measures of confidence back down … Surveys of consumers continue to display deep concern about the condition of the labor market. Measures of consumer confidence (Conference Board series) and consumer sentiment (University of Michigan) both fell back substantially in February, reversing gains posted in January. Furthermore, deterioration was recorded in measures of consumer expectations for the economy as well as in assessments of the current economic situation. The Conference Board noted that consumers began the year on a relatively high note but their optimism has quickly given way to caution. “At the core of their disenchantment is the labor market. While the current expansion has generated jobs over the past several months, the pace of creation remains too tepid to generate a sustainable turnaround in consumers’ confidence.” Partisan political wrangling and Administration differences keep the public downbeat about jobs … There’s no doubt that the U.S. labor market is still not fully in gear. But it’s also likely that the public’s downbeat assessment of the job market is being fed by the constant drumbeat from Democratic presidential hopefuls about the weak performance of the labor market under President Bush. In this regard, the public is being constantly reminded of the “outsourcing” of jobs to foreign countries by an insensitive corporate America. Recent comments by the chairman of the President’s Council of Economic Advisers supporting outsourcing have opened up the Administration to charges of insensitivity as well. On another front, the President’s failure to endorse upbeat job growth projections recently produced by his own Council of Economic Advisers (CEA) has hardly buoyed public perceptions about the current and prospective condition of the job market or the credibility of the Administration on economic matters. The Economic Report of the President, released in mid-February, projected a 2.6 million increase in payroll employment for 2004 (year-over-year basis) following losses during the first three years of the Bush Administration. Not only is 2.6 million a robust expectation for payroll employment, it also looks too strong in the context of the growth rate in real GDP projected by the CEA (4.0% on fourth-quarter to fourth-quarter basis). The only way to reconcile CEA’s GDP and job projections for 2004 is to assume a sudden fall in productivity growth, and that puts a real strain on credibility. When challenged on the reasonableness of the CEA’s employment projections, the President felt compelled to distance himself from the estimates made by the “number crunchers.” No alternative projections were forthcoming, however, leaving the entire issue in limbo. Fed messages, low inflation, flagging confidence keep downward pressure on long-term rates … There is a bright side to an economy with low inflation, a weak job market and flagging consumer confidence — the interest rate structure. With respect to short-term rates, Chairman Greenspan recently reassured the Congress and the world that the U.S. central bank will be quite patient as it plots its first increase in the federal funds rate from the 1% target set last June. Furthermore, data received since the chairman’s testimony should reinforce the Fed’s inclination to remain patient. The Fed will not move before core inflation clearly has stabilized comfortably above 1% and slack in the labor market has been reduced substantially. Indeed, Greenspan recently suggested that “full employment” could mean an unemployment rate as low as 4% (the January rate was 5.6%)! In this context, we continue to believe that the Fed will hold short-term rates steady at least until the Nov. 10 Federal Open Market Committee (FOMC) meeting. The bond markets have been feasting off both the Fed’s messages and the evolving economic realities. The 10-year Treasury yield currently is hanging around 4%, down significantly since the beginning of the year and below the expectations of most analysts (including yours truly). At the same time, the fixed-rate home mortgage has gravitated down to about 5.6% and one-year adjustables are around 3.5%. These ranges appear to be sustainable, at least for now, providing a great financing environment for housing. Housing market activity recedes from unsustainable highs but remains quite robust … Home sales and housing starts soared to unsustainable heights as 2003 drew to a close, propelled by unusually good weather conditions as well as by a surge in buying activity that ensued after mortgage rates bounced off their historic lows (around 5.2%) in mid-2003. These two factors suggest that some housing demand was “borrowed” from early 2004 and that something must be paid back. Available housing data for early 2004 show that we’re coming off the late-2003 highs but that the levels of market activity still are quite robust — largely because of the recent improvements in interest rates. NAHB’s Housing Market Index, based on monthly surveys of single-family builders, moved down in both January and February but still compared favorably to readings for the first half of last year. As expected, housing starts for January were well off the peak of last December, falling by 8%, but the January pace for single-family and multifamily structures (1.9 million units) still exceeded the average for all of 2003. Sales of existing homes also were off in January (by 5.2%) while maintaining a historically high level, and weekly data on applications for mortgages to buy homes were very well maintained during the first three weeks of February. Everything considered, the housing sector is off to a very good start in 2004. NAHB’s forecast still shows modest (3%-4%) declines in home sales and housing starts for the year as a whole, and those declines imply some double-digit contractions on a fourth-quarter to fourth-quarter basis. But these forecasts also assume modest but systematic upward pressure on long-term rates as the year goes along. If those pressures fail to materialize, 2004 could equal or even surpass the record performances posted by the single-family housing market last year. 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 Feb. 25 edition. To subcribe to “Eye on the Economy,” click here.
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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.
Don’t Miss NAHB’s Spring Construction Forecast Conference See what's on the horizon for the housing industry at the semi-annual gathering of the country's premier economists and finance experts. Get the latest forecasts on housing starts, project budgets and other economic bellwethers at the Spring Construction Forecast Conference on April 21 at the National Housing Center in Washington, D.C. Visit the Web site for more information. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. For Successful Communities — Just Add Open SpaceOpen space has the power to transform developments into successful communities and neighborhoods, according to leading community planners and landscape designers. Speaking before an educational session, “Community Design: Placemaking, Open Space & Amenities,” at the International Builders’ Show in January, they said creating and utilizing open space in a community’s design adds appeal, value and sustainability and can save the developer money. “Open space gives you an unfair advantage over your competition,” said David Jensen, of the Denver-based David Jensen Associates, Inc. “It demonstrates how you use land in the community, it instills pride in your residents and it generates good referrals.” Jensen noted the growing appeal of communities containing open space among potential home buyers. According to a survey conducted within a recent 10-year span, the number of respondents who wanted to live near open space, or in a community that contained open space, increased from 16% at the beginning of the survey to 48% 10 years later. He also said that builders could expect to see a 57% increase in home prices near open space versus the price of comparable home in a community with no proximity to open space. “Builders don’t sell houses. Builders sell neighborhoods,” Jensen said. “No true neighborhood exists today without open space. Open space is the structure of the community, its unifying element.” Jensen also said that open space communities were the most resilient communities to sell during economic downturns. “They are the last to enter these economic cycles, and the first to come out.” Open Space Can Reduce Development Costs Developing communities with open space can cost less than similar communities without open space. Open space reduces the need for, and costs associated with, subsurface drainage and the amount of impervious surfaces. Open space also allows for the preservation of natural areas and promotes environmental sensitivity and “green development.” According to Jensen, open space:
“Open space can eliminate as much as 80% of the subsurface drainage and the costs that go with it,” Jensen said. “Developers can take the costs associated with underground storm drainage and put them into quality of life amenities that will appeal to buyers.” When planning or designing a community, Jensen said to: 1) put open space in the community; 2) develop a trail system; 3) drop in roads; and then 4) fill in with product. Open Space Can Add Texture Steve Gang, of The Lessard Architectural Group of Vienna, VA, noted that designing communities with open space enables the developer to provide variety and a framework for the community. Open space can be incorporated into both urban infill and suburban communities, Gang said. Within urban sites, he added, developers should incorporate the existing open space opportunities nearby. “The open space fabric is there and will add value to your community,” he said. Suburban communities are more automobile-oriented, he said. Providing opportunities to interact with neighbors will make for a more successful community. “Communities should have a pedestrian orientation with neighborhood-scaled streets and buildings close to the streets,” Gang said. He recommended that planers and community designers provide a variety of open space opportunities and “layer” the open space to meet a variety of needs and appeal. This would range from private back yards to semi-private gathering areas for small groups to neighborhood- and community-scale open space for gatherings and activities. “Every home should be within five minutes walking distance to a community center,” Gang said. “No home should be more than two blocks from open space.” He also said that communities should offer a variety of housing types — such as first-floor master bedrooms, lofts, attached wide units, etc. — as well as have a variety of housing types on the same block. Connect Residents to Open Space and Amenities Chris Moore, of DTJ Design in Boulder, CO, said prospective home buyers are seeking opportunities to connect with their community. One way to foster that is to create a community identity using open space and community amenities. “A community has to have a story,” he said, such as the community built around a pond where then President Dwight D. Eisenhower went fishing. That history added to the appeal of the community and was woven throughout the community into unique and identifiable amenities. “Draw on relics from the past,” Moore said. “History can be demonstrated in old buildings that become new places of activities for current residents.” Moore also recommended that different open space amenities be spread throughout the community so that each amenity — a pond retreat, an overlook, a cottonwood grove, etc. — can be its own destination and experience. “Most people want to take vacations,” Moore said. “Provide people with the opportunity to vacation in their own communities.” Lifestyles Can Be Red Flags: Know the Warning Signs of FraudThe fourth in a series about preventing fraud from affecting your business. When professionals investigate a fraud after the fact, they often discover that company owners or management overlooked or ignored obvious warning signs. Because fraud often is committed by trusted employees whom owners know well, it pays to look out for employee lifestyle issues that may be “red flags” indicating a fraud risk. Lifestyles of the Rich and Lavish Some embezzlers are secretive. They don’t want to get caught, so they stash stolen funds away and are very careful with their spending. But other perpetrators can’t resist spending fraudulently gained money. Typically, over time, they want to use it, enjoy it, share it and show off. They may purchase clothes, cars, property or gifts for others. They may send their children to better schools or entertain lavishly. Think of this group as the “aspiring” embezzlers. How do they explain these new spending habits? They might volunteer something like:
In many cases of fraud, perpetrators openly live beyond their means. Recommendation: Be alert to changes in employee spending patterns and lifestyles. In our society it’s considered rude, and even illegal in some instances, to pry into someone’s personal financial affairs. But you can listen closely to explanations about extra funds and subtly try to find ways to verify that money is coming from somewhere other than your company. For example, you can look up property sales, since they’re public records, or casually ask for the name of the investment that’s done so well and then investigate its performance. Don’t be afraid to dig a little. Problem Lifestyles Demand Additional Funding On the other end of the scale are people we might consider “lifestyle problem” embezzlers. Although it can be personally hard to accept, please remember that addictions are pervasive at all levels of our society. Whether you realize it or not, you probably know several people who are experiencing active addiction or are in recovery. Someone who is dependent on drugs, alcohol, gambling or other addictions typically experiences a slowly tightening noose of financial pressures. Underlying desperation can fuel monetary needs. Like drowning people who drag others down with them, people suffering from active addictions may do serious financial and emotional damage to you if they decide to “borrow” some of your funds to ease their financial dilemma. Employees with addiction problems can be tough to spot, especially if you aren’t attuned to the nature and warning signs of addictions. Many people with addictions can function at fairly high or normal levels of behavior during work hours, but over time you may notice puzzling patterns of:
Recommendation: If you suspect that you have an employee with these types of problems, immediately seek professional substance-abuse counseling assistance. Addiction problems are very serious and even life-threatening situations. By getting professional guidance, you may not only protect yourself; you may save your employee’s life and make a huge difference in the quality of life for many others (including the employee’s children) in that person’s life. After you have obtained professional assistance for yourself and the employee, you may decide to keep the person in his or her job at your company. But please err on the side of caution regarding access to your monetary assets. If the employee opts for treatment and standard long-term recovery processes, you can choose to restore financial responsibilities later when professional guidance and common sense indicate it’s safe to do so. Other Financial Pressures Nearly everyone faces a variety of common financial pressures at some time. For many reasons, some beyond their control, employees can find themselves in financially stressful situations due to:
The old problem of too much month left at the end of the money is common. Obviously, not everyone who faces these pressures commits fraud, but the higher the stress level, the more distracted and desperate an employee can become. That’s when your assets look particularly attractive. Recommendation: Although you shouldn’t take on the role of parent or financial rescuer, if you become aware that an employee is facing these kinds of pressures, you can help guide him or her towards a reputable credit or financial counseling agency. These agencies can often help financially troubled families make special arrangements with creditors and can help them take steps to restore their financial footing. You’ll end up with an employee who has higher self-esteem and is less stressed, more productive and less tempted to commit fraud. And you will have truly helped your employee and his or her family regain their pride and self-reliance. Diane C.O. Gilson, CPA, CIA, is a Certified QuickBooks ProAdvisor and MasterBuilder ProAdvisor, author, trainer and construction accounting coach, as well as a frequent speaker at The International Builders’ Show and The Remodelers’ Show. Her firm, Info Plus Accounting PC/CPA, offers bookkeeping and support services to help construction companies do more accurate and timely job costing and run better management reports. Contact Gilson via e-mail, or call her at 734-544-7620. Earlier Articles in this Series
'Accounting with QuickBooks Pro®' Available at BuilderBooks.com "Accounting with QuickBooks Pro® for Home Builders and Remodelers," including a CD-ROM with a trial version of QuickBooks Pro®, is available through BuilderBooks.com. From writing payroll checks to generating up-to-date income statements, this book will help you get the maximum benefit from your accounting system. To view or purchase it online, click here or call 800-223-2665 to order. Business management publications available at BuilderBooks.com BuilderBooks.com also offers a variety of other publications about business management. 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 www.nahb.org. University of Housing Offers Courses on Customer Service and Business Management The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Search keywords: “Introduction to Business Management.” The NAHB University of Housing offers designation programs for builders and remodelers interested in improving their productivity and profitability. Click here for a list of NAHB designation programs. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. The Cream of the Crop Sit On My Board of DirectorsGary Eichhorst I look at the friends and contacts I have made solely as a result of membership and its networking opportunities, which include Big 50 winners, Remodelor™ of the Year winners, national board members, Certified Graduate Remodelor™ (CGR) instructors and Hall of Fame members as my board of directors. Whenever I have an issue or problem in business, I know that I can pick up the phone and get a reliable, knowledgeable answer no matter what the question. I no longer need to reinvent the wheel every time something comes up. I have also found that the diversity of the members in this group is great. Whether they are “start-up” owners, small, medium or one of the “big boys,” we all experience the same issues and someone always has an answer that makes sense. Designations Put Me Ahead of the Competition The designations I have — CGR, Certified Graduate Builder (CGB), Graduate Master Builder (GMB) and Certified Aging-in-Place Specialist (CAPS) — really set me ahead of my competition. They demonstrate to my clients that I am committed not only to delivering a superior product but running an efficient, professional organization. It is hard to quantify what the designations have done for my bottom line, but I can attest to the fact that many of our more profitable projects were a result of our certifications, thus validating, perhaps, why we were the more qualified contractor choice even though we were higher priced. My take is that professionals and specialists command a higher price, because generally we bring a lot more to the table. Participation Opens Doors I have also found that membership has opened up avenues of opportunity for education and business. By being a local chairman of the Remodelors™ Council for the last two years, I have gained a lot of knowledge just by becoming involved and helping other remodelers grow their businesses. Jud Motsenbacher told me a long time ago that the best way to learn is to teach! I guess that is why he deserved to be the first inducted into the Hall of Fame. Gary Eichhorst is the president & CEO of Eichhorst & Company, of Spring Grove, IL.
Save with Airborne Express Shipping Services NAHB members get discounts on shipments across the state, the country and around the world through the Home Builder Association Member Advantage program. NAHB members can save up to 25% with Airborne Express Overnight Delivery Discounts, with on-demand pick-up from most locations, plus next-morning, next-afternoon and second-day delivery. Other great shipping deals that are available include:
Get complete details online now. For these special member rates and a FREE Airborne Express Starter Kit, call 800-636-2377 from 8 a.m.-7 p.m. EST to request your free member rate quote. Or visit www.membersales.com/nahb to learn about NAHB member savings on all these shipping services. For the full line of money-saving discounts available through NAHB's Home Builder Association Member Advantage program, click here. Conference Makes It Easier to Be GreenThe 2004 National Green Building Conference in Austin, TX, on March 14-16 will make it easier for builders, developers and others in the industry to incorporate "green" techniques or otherwise "go green." Attendees at the conference will have the opportunity to exchange green building ideas; network with green experts; participate in educational sessions ranging from green financing, green land development, green marketing and green remodeling to resource conservation and more; as well as see the latest in green building products and technologies from more than 65 exhibitors. Some 500 builders, developers, land planners, remodelers, architects, engineers, real estate professionals, government officials, students, researchers and contractors are expected to attend. In addition, because the conference is being held in the heart of the city that gave birth to the green building movement, there will also be tours to eight different technology and housing sites.The education courses offered include, for home building:
Land planning and design:
Financing:
Marketing:
Resource conservation:
Tours will be available on the first day of the conference, including visits to award-winning infill subdivisions, Austin’s first SMART housing development and:
The conference is being held at The Hilton Austin Hotel and Convention Center, which is located at 500 East 4th Street. To download a conference program and for registration information, click here, or contact . NAHB University of Housing at 800-368-5242 x8EDU. For hotel reservations, call 800-236-1592 or 512-482-8000, or click here to visit the hotel's Web site.
'Building Green in a Black and White World' Available Through BuilderBooks.com Learn how to begin building green with "Building Green in a Black and White World," available through BuilderBooks.com. With over 30 years in the building industry, author David Johnston, who has seen firsthand the changes in consumer demand for homes that reflect their values and lifestyles, shows how to build green. Learn how green substitutes can improve your bottom line and offer your home buyers greater quality and value. To view or order this publication online, click here, or call 800-223-2665 to order. 'Profit From Building Green: Award Winning Tips to Build Energy Efficient Homes' Available Through BuilderBooks.com In "Profit From Building Green: Award Winning Tips to Build Energy Efficient Homes," available through BuilderBooks.com, NAHB Research Center green building expert Jeannie Leggett Sikora has combed through hundreds of annual contest entries and talked with past award winners to develop specific examples and tried-and-true techniques to give home builders the inside track to create successful green building practices — from choosing building products through marketing energy efficient houses. To view or order this publication online, click here, or call 800-223-2665 to order. Save with Green Building Combo Get these two Green Building titles for one low price from BuilderBooks.com and save. To order this publication offer online, click here, or call 800-223-2665 to order. Circuit Court Leaves Favorable Ruling on Oregon Coho Protection in PlaceIn a favorable development for the nation’s home builders, the Ninth Circuit Court of Appeals on Feb. 25 decided it lacked jurisdiction to consider an appeal by environmental groups against a federal district court ruling that “set aside” protection of Oregon’s coho salmon population under the Endangered Species Act (ESA). Ruling in September 2001 in the case of Alsea Valley Alliance v. Department of Commerce, Federal District Court Judge Michael Hogan told the National Marine Fisheries Services (NMFS) that further consideration would need to be given to listing the salmon. Joining with the Oregon Building Industry Association in that case, NAHB argued in an amicus brief that the coho listing was “arbitrary and capricious.” Last month’s ruling ensures that no Endangered Species Act regulations can be extended to protect Oregon’s coho at this time. Also, this gives NAHB and its members the opportunity to challenge protection of other species of fish in the Pacific Northwest that are based on deficiencies similar to those found in the coho listing. NAHB will continue to monitor this case as it proceeds. For further information, e-mail Duane Desiderio or call him at 800-368-5242 x8146. Six Housing-Related Cases Receive Funding to Pursue Legal ActionAt its January meeting in Las Vegas, the NAHB Executive Board approved six applications for funding assistance from the NAHB Legal Action Fund that were recommended by the association’s Legal Action Committee. The fund supports litigation by state and local associations and builders in cases involving matters of common importance or national significance to the shelter industry. Two applications involved extensions of previous grants: first, to the Northwest Arkansas HBA, which is continuing a legal challenge to impact fees that add nearly $4,000 to the cost of a new home; and second, to a builder in Sevier County, TN, who is appealing a lower court decision in an effort to enforce an arbitration clause in a residential construction contract where the home buyers did not separately sign or initial the clause. In addition, four new cases will receive funding:
The Legal Action Committee reviews applications three times a year in conjunction with scheduled meetings of the NAHB Board of Directors. The deadline for Legal Action Fund applications for the upcoming spring board meeting in Washington, D.C. is March 22. To download applications and guidelines, NAHB members can click here. For more information on the grants, e-mail Mary Lynn Pickel, NAHB’s director of legal services, or call her at 800-368-5242 x8485. For information on funding applications, e-mail Jon Luther, staff counsel, or call him at x8329.
'Construction Nightmares' Available Through BuilderBooks.com "Construction Nightmares," available through BuilderBooks.com, not only chronicles almost everything that could possibly go wrong in a job, it provides a legal analysis and the probable outcome of the potential arbitration or lawsuit that might ensue. The analysis deals with contracts, cancellation of contracts, walking off the job, responsibility of the bonding company, mechanics liens, insurance coverage, arbitration, mediation, lawsuits, important provisions in construction contracts, responsibilities of the architect and the owner, liability for construction defects and more. To view or puchase this publication online, click here, or call 800-223-2665 to order by phone. BuilderBooks.com Offers Publications About Legal Issues BuilderBooks.com offers a variety of publications about legal issues involving the building industry. To view or puchase these publications online, click here, or call 800-223-2665 to order by phone. Ask the Lawyer — About Storm Water PermitsQ: I am building a custom home on a cleared one-third-acre lot in a 15-lot subdivision. My consultant says I need to obtain an NPDES storm water permit. To build the home, I don’t need to clear the lot any further. Do I need this permit, and what are the penalties for not getting it? A: In all but five states and the District of Columbia, the United States Environmental Protection Agency (EPA) has handed over the storm water permit program to the state. You don’t say where you are located, so I will assume you are in one of the “delegated” states. With respect to the first question, the quick answer is “yes,” you need a storm water permit before you begin work. Pursuant to the Clean Water Act (CWA), and the EPA’s NPDES implementing regulations, any person who disturbs more than one acre of property must obtain a storm water permit. And, if you are disturbing less than one acre, but are part of a larger development that will disturb more than one acre, you also need a permit. In the delegated states, there are two ways this issue is being handled. In some states, the permitting authority will require you to obtain permit coverage on your own — either by getting an individual permit or applying for coverage under the state’s “general permit.” In situations like yours, the vast majority of builders apply for coverage under the state’s general permit. Usually, this will require you to develop a Storm Water Pollution Prevention Plan (SWPPP) and file a notice of intent that you plan to use the state’s general permit. In other states, you would need to work within the original developer’s permit. You may need to submit paperwork agreeing to comply with the requirements of the developer’s permit to both the developer and the permitting authority. Your consultant needs to check with your state to determine which approach is appropriate in your state. If you are in one of the non-delegated states, EPA regulations allow you to use either of the approaches described above. As for penalties, they are steep. The CWA allows EPA to assess penalties of up to $32,500 per violation per day for unauthorized discharges and violations of permit terms. The penalties are even more severe under the criminal sections of the CWA and may include jail time. Finally, even if your state were to inspect and not assess penalties, EPA can always inspect and assess penalties as it sees fit. If you have questions for Ask the Lawyer, click here. There is no guarantee that your question will be answered in this format, so if you have a particular legal concern that requires immediate attention, contact the NAHB Legal Research Service at 800-368-5242 ext. 8491. This information is provided as a service of the NAHB Legal Action Committee and NAHB Building Products Issues Committee. The information is intended to familiarize you with the law in this area. It is not intended to be an exhaustive presentation of legal information on this particular subject, and in no way constitutes an opinion of law. Your own attorney must review this information to determine how it may apply to your particular situation. Local Remodeler Recognized for Quality AchievementsBoardwalk Builders, a $2.15 million remodeling company in Rehoboth Beach, DE, that engages in ongoing exchanges among managers, employees, trades, suppliers and customers to monitor progress against its annual business plan and three-year strategic plan, received the 2004 Silver National Housing Quality (NHQ) Award in the Remodeler division. The award, which is modeled after the Malcolm Baldrige National Quality Award, was presented at a ceremony during January’s International Builders’ Show (IBS) in Las Vegas. The NAHB Research Center and Reed Residential Group, publisher of Professional Builder and Professional Remodeler magazines, administer the annual awards program. Boardwalk’s mission is “to build high-quality remodeling projects and custom homes, offer personalized service throughout the construction process and build a business whose reputation for professionalism and customer service is unparalleled by our competition,” Patty McDaniel, the company’s president, said at an IBS educational session. Through its efforts to improve quality, Boardwalk had a zero-percent employee turnover rate in 2003, and repeat customers represent one-third of its current volume. By the end of 2003, Boardwalk had signed $2.9 million in contracts for 2004 projects. In its surveys of customer satisfaction, Boardwalk has found a 97% approval rating, McDaniel said. The company’s clients are mostly remodeling second or vacation homes, she added, and “they want us to know about what we’re doing, want to be listened to and want to have their houses treated respectfully.” McDaniel said her company focuses on several factors for customer satisfaction:
Preparing an NHQ application is an important step in every applicant's quality journey. Program participants benefit from the introspective process of preparing an application, as well as the insightful feedback received from a judging panel of industry experts. “Going through the application process really shifted my business plan,” said McDaniel. “It didn’t tie together before. Now it’s a document that is definitely connected from year to year. It’s more proactive than reactive.” Winners of the NHQ Award are featured in Professional Builder and Professional Remodeler magazine articles that highlight their company's quality management practices and serve as a model for the benefit of the housing industry. For more information on the National Housing Quality Program, click here, or send an e-mail. NAHB Women's Council Offers Student ScholarshipsThe NAHB Women’s Council provides scholarships to students pursuing an education in a building related course of study, such as construction management, construction technology, civil engineering, architecture, design or any of the trade specialties at the college or university they attend. The Women’s Council National Housing Endowment Strategies for Success Scholarship Fund will award up to $2,000 to full-time students in these housing-related fields. The scholarship award may be used to pay tuition and fees and purchase books. The scholarship fund is supported through the generosity of Women’s Council members, individuals and corporations. Eligibility requirements and applications can be obtained by contacting Petra Beane at the NAHB Women’s Council at 800-368-5242 x8433, or click here to download the forms online. All application materials for the 2004-2005 academic year must be postmarked no later than March 15. Applications received after that date will not be accepted. Applications will be reviewed and winners selected be the members of the NAHB Women’s Council Strategies for Success Scholarship Committee. Consideration will be given based on financial need, career goals, academic achievement, employment history, extra curricular activities and letters of recommendation. For information, e-mail Petra Beane, or call her at 800-368-5242 x8433. Additional Scholarships Available Through the National Housing Endowment Two other scholarships are available through the National Housing Endowment, one sponsored by Centex Homes, the other honoring lifelong industry contributor, Herman J. Smith.
Home Owners Remodel to Increase Living SpaceToday’s home owners want more space and will pay for room additions to their current home as an alternative to moving to a new home, according to survey research by the NAHB Remodelors™ Council. Prime candidates for remodeling are home owners between the ages of 34 and 54. Some of them are sending children off to college; some are preparing for children; and some finally have the time and money to put into their home — to create an exercise room, enlarge the kitchen, turn an extra bedroom into a hobby room. But all of them want their house to support and grow with their changing lifestyles and needs, according the Remodelors™ Council’s 2003 fourth quarter Remodeling Market Index (RMI). “We are returning to a time where the home is once again the family focal point,” said 2004 Remodelors™ Council Chairman Doug Sutton, Sr., of Sutton Siding & Remodeling in Springfield, IL. “The empty nesters are entertaining more now that their children are out of the house, so they need a different kind of space than before; the baby boomers finally can afford to have the home they always wanted, which includes top appliances and media and game rooms; and Generation X’ers want separate play areas for themselves and their children .” The leading reason why home owners remodel is to gain more space, according to the most recent RMI survey. The most popular room addition is the master bedroom suite, which can include amenities such as mini-bars and kitchens, reading areas, his and her bathrooms/vanities and walk-in closets. Other popular major additions include great rooms (some with home theatres), sunrooms off the kitchen and home offices complete with teleconferencing capabilities. The second most important reason people remodel is so that they can stay in their current residence. Most people like their current home and will spend time and money on remodeling rather than deal with stresses of moving. The most common remodeling jobs people undertake to improve their surroundings are kitchen and bathroom projects. Sixty-six percent of consumers say they remodel to increase the amenities in their homes. The top amenities consumers ask for include: granite countertops, multiple shower heads/steam showers, soaking/spa bathtubs, commercial grade appliances and his and hers separate baths/vanities.
'Builders Guide to Room Additions' Available Through BuilderBooks.com "Builders Guide to Room Additions," available through BuilderBooks.com, shows you how to tackle items that are unique to room additions. Man-hour charts, based on actual jobs the author has encountered in his long career, are provided for each part of the addition or conversion, to improve the accuracy of your cost estimates, so you're sure you'll make a good profit, even on work you've never tackled before. There’s a chapter on making a business plan, with advice on marketing, financing, hiring and record-keeping. To view or order this publication online, click here, or call 800-223-2665 to order. BuilderBooks.com Offers Publications for Remodelers BuilderBooks.com offers a variety of publications about remodeling. To view or puchase these publications online, click here, or call 800-223-2665 to order by phone. University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Let Simple Sayings Be a Contractor’s Guide to SuccessBy Erik Anderson
Erik Anderson, GMB, CAPS, CGB, is vice president of sales and marketing for Anderson-Moore Builders, Inc. in Winston-Salem, NC. He currently serves as first vice president of the Home Builders Association of Winston-Salem. For more information, send him an e-mail.
University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. 'Builders Guide to Room Additions' Available Through BuilderBooks.com "Builders Guide to Room Additions," available through BuilderBooks.com, shows you how to tackle items that are unique to room additions. Man-hour charts, based on actual jobs the author has encountered in his long career, are provided for each part of the addition or conversion, to improve the accuracy of your cost estimates, so you're sure you'll make a good profit, even on work you've never tackled before. There’s a chapter on making a business plan, with advice on marketing, financing, hiring, and record-keeping. To view or order this publication online, click here, or call 800-223-2665 to order. BuilderBooks.com Offers Publications for Remodelers BuilderBooks.com offers a variety of publications about remodeling. To view or puchase these publications online, click here, or call 800-223-2665 to order by phone. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Army to Hold Major Housing Privatization Forum in MarchThe Assistant Secretary of the Army for Installations and Environment is planning to conduct a Residential Communities Initiative (RCI) Forum for the FY 2005/2006 Army Installations solicitations. The forum will be held on March 11-12 at the Hyatt Hotel, 320 West Jefferson Street, Louisville, KY 40202. All together, these projects will involve the construction and management of almost 12,000 single-family homes in the Army's Southeast II Group (Forts Benning, GA; Rucker, AL; and Gordon, GA); and the Central Group (Forts Knox, KY; Leavenworth, KS; and Redstone Arsenal, AL). Federal Business Opportunities (FedBizOps) and Request for Qualifications (RFQs) announcements for the Southeast II RCI group will be released between late March and early April, followed by announcements for the Central Group in late June or early July. The forum will begin with a networking social on the evening of March 11 and continue on March 12 with a half-day session of formal presentations by senior officials, who will provide an overview of the RCI program, an outline of the RFQ procurement process, an overview of the Army's Small and Disadvantaged Business Utilization program and presentations for all Army installations in these solicitations. To participate in the forum, register at www.rci.army.mil or www.mhli.org, or complete and fax a registration form to 703-327-4005. Although advance registration is encouraged, on-site registration will be available at the Hyatt Hotel on March 11 from 6:00-8:00 p.m. and on March 12 from 7:00-7:55 am. The formal session will begin promptly at 8:00 a.m. and will end by 2:00 p.m. A confirmed site tour schedule for all participating installations in this solicitation group will be provided on the RCI Web site. The registration fee to attend the industry forum is $175, and $20 additional for each installation site visit. For more information, e-mail William Renner, NAHB’s director of single-family finance, or call him at 800-368-5242 x8597. Community Service Puts Skills to the Test in ColoradoFaced with the challenge of converting a dilapidated, graffiti-covered high school building it had received from the city into space for Head Start offices and parenting classes, the Community Partnership for Child Development (CPCD), a non-profit offering early childhood education and family development programs in the Colorado Springs area, turned to the Home Builders Institute (HBI) to help with the renovations. Students enrolled in HBI’s Project TRADE (Training, Restitution, Apprenticeship, Development and Education) program tore down and rebuilt walls and ceilings, relocated electrical wiring and put up new doors. The trainees practiced their skills while saving the CPCD an estimated $30,000- $40,000 in labor costs over the four months it took to complete the project. Project TRADE provides training and placement to adult offenders for employment in the home building industry. The program is funded by ComCor Inc, a non-profit community corrections agency providing correctional services and treatment programs to offenders who are working to make a positive change in their lives. HBI, the workforce development arm of NAHB, and ComCor joined forces with the HBA of Colorado Spring/Pikes Peak to offer Project TRADE and ensure the housing industry’s involvement in it. Since 1995, the program has trained more than 500 offenders, with a job placement rate of nearly 80%. “These community projects provide opportunities for offenders to change their lives and make positive contributions to society,” says Steve Gilmore, executive director for ComCor. “The home building industry provides the support, training and jobs needed to make the transition, while projects like CPCD’s offer a chance to put the skills to practice and give back to the community.” The relationship between HBI and CPCD began in 1998 when Project TRADE trainees built a multi-tiered deck and access ramp for a CPCD-sponsored Early Head Start program. Project TRADE was responsible for the entire process — from estimating through construction. The project was completed under budget and on time. Community service projects provide an opportunity for HBI trainees to put their skills to the test in a real work environment and gain valuable experience that increases their chances of placement following graduation from the program. One graduate was recently placed as an apprentice with a local electrical contractor at $8.50 an hour. For more information on Project TRADE e-mail Dennis Torbett at HBI, or call 800-795-7955 x8908. Log Home Council Tour Headed to BangorGeared to builders interested in log construction or the log home industry, the annual Log Homes Council President’s Tour will be held in Bangor, ME, from March 21-23. This year’s event will feature tours of council members Moosehead Cedar Log Homes and Northeastern Log Homes. In addition, attendees will get a behind-the-scenes look at Robbins Lumber’s white pine sawmill facilities and tour the University of Maine’s Advanced Engineered Wood Composites Center. University of Maine professor Robert Rice will host an education session, “Thermal Efficiency in Log Homes: What You Should and Should Not Say to Your Customers. This networking and educational event attracts council members and decision makers in the log home industry from across the country. For registration and hotel information, click here. For more information about this year’s President’s Tour, contact NAHB’s Office of the Registrar at 800-368-5242 x8338.
Research Papers Explore Thermal Mass, Air Infiltration in Solid Wood StructuresTwo new research papers on the unique properties of solid wood construction offer extensive information to builders and consumers interested in this building technique. Released by the Log Homes Council Technical Committee, the reports are available in the Log Homes Library section of www.loghomes.org. Updating a previous Log Homes Council publication, “The Energy Performance of Log Homes” defines and details the effects of thermal mass, provides comparisons of thermal mass and R-values and provides calculations for working with thermal mass properties. The publication also discusses why solid wood construction is considered a “green building” technique. Log homes are among the few structures primarily composed of natural and renewable materials; some homes are even built with timber naturally felled by wind or fire. Additionally, when a log home is demolished or deconstructed, its component parts can be recycled into lumber for other construction. To maximize the energy efficiency of wood’s thermal mass properties, log homes need to be properly sealed. “Prevention of Air and Water Infiltration — A Systems Approach” analyzes the log home as a true building system in which each component is carefully designed for maximum strength and air and water resistance. The research paper details which parts of a log home are most susceptible to infiltration, describes and defines different joint and sealant systems and touches on compatibility and durability issues. Whirlpool Director Named NCHI Member of DistinctionIn recognition of his continuing service and outstanding contributions to the National Council of the Housing Industry — the Supplier 100 of NAHB, Omer “Butch” Gaudette, director of trade relations for the Whirlpool Corporation, has been named a Member of Distinction of NCHI. The award, which is made during the International Builders’ Show at the discretion of the vice chairs and staff vice president of NCHI and the award’s previous winners, has only been presented four times during the council’s 40-year history. The award noted that Gaudette’s work has been “a unique illustration of the NCHI philosophy of working with the NAHB community to fulfill the American Dream of safe and affordable housing for all the nation’s citizens.” Over the past 18 years, Gaudette has held various positions in Whirlpool’s Contract Sales and Marketing Department. Gaudette was a nominee for the NAHB Associate of the Year in 2001-2002. He is a “Royal Spike,” with 212 Spike credits; was co-chair of NCHI in 2000; has been a member of the NAHB Executive, Conventions and Education Committees; and has served on the NAHB Virtual Association Task Force, Governance Task Force and Sales and Marketing Council Advisory Board. For the Florida Home Builders Association, he has served as a chairman of the Southeast Building Conference Exhibitors Advisory Council, as a member of the SEBC Convention Committee and as a trustee of the association’s educational foundation. Gaudettte was named the Builders Association of South Florida's Associate of the Year in 1991; he is a life director of that association and was elected into its Hall of Fame in 2001. He is a board member of the National Foundation for Environmental Education and a charter member of the Consortium for the Advancement of Residential Building (Building America Program). Fiberglass Doors Found to Be More Energy-Efficient Than Wood DoorsAt a time when home owners are increasingly turning to the high energy efficiency of fiberglass doors, ongoing research at Therma-Tru’s Advanced Technology Center in Edgerton, Ohio, has found that its fiberglass doors offer thermal efficiency that is three to seven times greater than traditional wood doors. Headquartered in Maumee, OH, for more than 40 years, Therma-Tru is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. “The structural integrity that prevents Therma-Tru fiberglass doors from rotting, ;warping or cracking is an undeniable advantage in terms of thermal transmission,” said Dan Templeton, the company’s vice president of technology. “The long-term energy and aaesthetic advantages of fiberglass far outstrip those of wood when it comes to entry doors.” Therma-Tru reports that its research has found superior thermal performance in fiberglass doors, especially when coupled with quality installation and weather stripping. By contrast, typical six-panel wood doors performed less favorably, Therma-Tru found. This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page. Leaking Basements, Part 2 — The UglyDear Tim, [In Part 1 of this article,] you described a contractor who screwed up and had leaking basement walls. In the end, what was the remedy to fix the leaks? -- Ernie B., Reno, NV Interesting case, that. The basement walls were of ICF (insulated concrete forms). We had to peel off a good portion of the polystyrene on the inside just to verify the points of leakage. Not only were there leaking problems, the contractor, through his negligence, also created significant structural problems. I’ll address leakage first. In general, leaking basement walls can be repaired from the inside with proprietary brush-on and spackle-type compounds. Kryton is a brand I’m familiar with, which has a very impressive track record. But to fix a leak from the inside, you must be able to access it. ICF clearly confounds this requirement. The alternative was to completely remove the failed subsurface drainage system on the outside and replace it with new washed drain rock and four-inch perforated drain pipe. While the dirt-side of the wall was exposed, we reapplied the ICF factory-recommended stick-on membrane system. In short, if we couldn’t make the wall waterproof, we’d keep water away from it. The most difficult section was the wall adjacent to the garage. To access and install an effective drainage system, we had to saw-cut and remove a strip of the garage slab. This was no easy matter, considering there was only about nine-foot vertical clearance from slab to roof trusses. A miniature excavator was used, which saved a bunch of hand digging. Now the structural issues. The contractor did such a poor job with the ICF, he wound up needing a heavily shimmed, triple mud sill at the top of the wall to ensure level floor joists. Anchor bolts were spaced six feet apart and did not penetrate all three mud sills. As a consequence, there was virtually no structural connection between the top of concrete wall and floor diaphragm. A little theory: there are two types of poured-concrete retaining walls: cantilever and braced (or propped). Cantilever walls do not depend on a top-of-wall connection to a horizontal (floor or roof) diaphragm to keep the top of the wall from deflecting inward due to the pressure of soil. Braced walls do. Cantilever walls typically have much larger footings and more rebar than braced, so are more expensive. Basement walls are generally designed as braced because there is nearly always a floor diaphragm handy, and they’re cheaper. The subject wall was no exception. But with the shoddy mud sills/anchor bolts, the soil’s inward thrust could not transfer to the floor diaphragm. So, in time, it is likely the top of the wall would have caved inward. The remedy was to rotohammer and epoxy custom steel brackets to the top of the wall and then bolt them to the floor joists — a difficult, expensive and time consuming process. In the bitter end, the contractor went bankrupt and the home owner wound up paying for the repairs himself. Tack on attorney and expert witness costs, and you wind up with a very ugly situation indeed. As usual, everyone would have been much better off if the contractor understood what he was doing and had done it right the first time. Tim K. Garrison, P.E., M.S.C.E., of ConstructionCalc.com, has authored a book and several short courses and lectures on topics relevant to builders. He can be reached by e-mail. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article.
Associations Demonstrate That Home Builders CareThe five runners-up for NAHB’s National Housing Endowment/Home Builders Care Project of the Year award, which was presented during the International Builders’ Show during January, epitomize the commitment of home builders across the country to making a difference in their communities:
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