Nation's Building News Online: March 29, 2004

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Congressional Action Sought on Zero Downpayment Mortgage and Other Housing Imperatives

In a busy week promoting the home builders’ housing agenda on Capitol Hill, NAHB President Bobby Rayburn testified before the Congress in support of an important homeownership initiative and continued a series of meetings with top congressional leaders to advance several of the association’s legislative priorities.

Appearing on March 24 before the Housing and Community Opportunity Subcommittee of the House Financial Services Committee, Rayburn endorsed H.R. 3755, the “Zero Downpayment Act of 2004,” legislation that would authorize the Federal Housing Administration (FHA) to insure no-downpayment mortgages for single-family, first-time home buyers.

“H.R. 3755 addresses one of the greatest obstacles that prevent many families from becoming home owners — the funds necessary for the downpayment and closing costs. Introduced by Rep. Patrick Tiberi (R-OH), the legislation will help working families, particularly minority households, to achieve the American dream of owning a home by removing this financial barrier,” he said.

The bill would eliminate the statutory requirement for a minimum 3% downpayment for FHA-insured single-family loans for first-time home buyers. To mitigate risk to the FHA’s Mutual Mortgage Insurance Fund, home buyers would be required to pay a 2.25% “upfront” premium on the loan compared to the 1.5% for the FHA’s standard mortgage insurance programs, and 75 instead of 50 basis points for the first five years of the loan.

Monthly mortgage payments would be slightly higher than for a regular home and home buyer counseling would be mandatory for all borrowers who participate in the program.

To enhance the legislation to assure that it reaches as many households as possible and extends to all forms of homeownership, Rayburn urged lawmakers to amend the bill to include condominium and cooperative loans.

“In many communities around the country, single-family detached homes are far out of the price range for low- and moderate-income families,” he said. “Condos and co-ops, on the other hand, are within their financial reach and can provide the same wealth-building benefits for families and also bring stability to neighborhoods.”

The Department of Housing and Urban Development estimates that 140,000 families would be able to take advantage of this new opportunity and achieve the American dream of homeownership if this legislation is enacted.

“As NAHB president, I have made housing America’s working families — the teachers, police officers, firefighters and other moderate-income workers who represent the heartbeat of any community — a top priority. H.R. 3755 will help to close the housing affordability gap and address our nation’s ‘workforce’ housing problem,” said Rayburn.

Following up on talks held earlier this month with federal lawmakers on such key issues as regulatory restructuring of Fannie Mae and Freddie Mac, homeownership tax credit legislation and environmental reform, Rayburn last week met with House and Senate leaders to discuss action on these concerns and other legislative and regulatory issues affecting the housing industry.

Meetings were conducted with House Minority Whip Steny Hoyer D-MD), Housing and Community Opportunity Subcommittee Chairman Bob Ney (R-OH), House Financial Services Committee Ranking Member Barney Frank (D-MA), Rep. Roger Wicker (R-MS), Senate Banking Committee Ranking Member Paul Sarbanes (D-MD), Senate Minority Whip Harry Reid (D-NV), Sen. Jon Corzine (D-NJ) and Democratic Congressional Campaign Committee Chairman Robert Matsui (D-CA).

To read the zero downpayment mortgage legislation, click here and enter H.R. 3755 in the box at the upper left.

Photos by Herman Farrer

Building News Coast To Coast

A Novel Pennsylvania Program Brings New Housing to Urban Areas

The Pennsylvania Housing Finance Agency's Homeownership Choice Program revitalizes rundown neighborhoods, boosts the affordable housing stock and creates ethnically and economically diverse communities within the urban core. Unlike traditional affordable housing programs, the four-year-old initiative does not impose income limits. Developers and nonprofit community development corporations join forces, putting federal and local assistance toward lower-income housing and state funds toward the construction of market-rate dwellings. Such projects have been successful in several North Philadelphia neighborhoods, Chester City and Coatesville — so successful that a panel for the National Council of State Housing Agencies identified Homeownership Choice as the country's best program for encouraging construction. According to Virginia-based national housing consultant Steven Hornburg, who sat on that panel, the Homeownership Choice Program could serve as an "efficient, pedestrian-friendly, human-scale" model for other states to follow.
Philadelphia Inquirer (03/22/04) P. B1; Shields, Jeff: www.philly.com

Building Boom Fuels Thefts

Construction theft is becoming more common in Palm Beach County, FL, skyrocketing 84% in District 4 from 2002 to 2003. Most of the thieves are subcontractors or other workers who take off with scaffolding, air conditioners, washers and dryers, windows and tile at night or during the busiest times of the day when they are least likely to be caught. Builders are responding with 24-hour security patrols, cash rewards and "No Trespassing" signs. Others are chaining up materials before leaving the site, cutting subcontractors' hours and recording the license plates of on-site vehicles. The costs of security and insurance ultimately are passed onto home buyers, says Gold Coast Builders Association Executive Vice President Brenda Talbert. According to the NAHB, construction theft can boost home prices by 1%-2%.
Fort Lauderdale Sun-Sentinel (03/22/04) P. 1B; Pensa, Patty: www.sun-sentinel.com

Elite Few Can Retire in Luxury

Homes in WCI Communities' retirement enclaves in Naples, Bonita Springs and Fort Myers, FL, range in price from $200,000 to more than $5 million, depending on the home's features and the community's amenities. WCI generally offers golf courses, tennis courts, fitness centers, country clubs, fountains and walking paths, among other things. Buyers must also be willing to shell out thousands of dollars annually for maintenance and property taxes. The total yearly cost for a furnished $800,000 home in one of these developments — after the sale profits from the buyer's  previous residence are included — runs more than $60,000 on average. Considering that the national median price hit only $171,600 last year, according to the National Association of Realtors®, most retirees cannot afford these upscale retirement communities.
Dallas Morning News (03/21/04) P. 1D; Burns, Scott: www.dallasnews.com

Tips to Increase the Value of Your Home

New-home buyers should keep the property's resale value, as well as their personal preferences, in mind when selecting upgrades. Industry insiders say that hardwood floors, solid wood built-ins and maple cabinetry can increase foot traffic from interested buyers and, ultimately, help command a steeper sale price. Wood also is a good choice for home owners looking to minimize dust, mites and other allergens. Despite the hefty upfront costs associated with wood flooring, home owners ultimately save money because refinishing the wood is much cheaper than other materials that have to be replaced every five to 10 years. Hardwood floors are popular in all rooms, and home owners can even handle basic installations themselves. Baseboards, door trim and other wood upgrades that are both functional and aesthetically appealing also add value.
Kansas City Star (03/24/04) P. 16: www.kcstar.com

WTO: U.S. Lumber Duties Illegal

As an April 30 ruling from a NAFTA panel looms closer, the WTO has weighed in on the U.S.-Canada debate over softwood lumber. A WTO panel argues that the United States has not demonstrated that imports of softwood lumber from its northern neighbor could harm its own wood industry. Proving this competitive threat is seen as instrumental in any decision to allow punitive U.S. duties to continue.
Investor's Business Daily (03/23/04) P. A2: www.investors.com

Houses Made of Straw

Straw-bale houses were first built by Midwest pioneers in the late 19th century and are still being constructed today. They are most popular in colder climates, where they may consume 50%-90%less energy than conventional dwellings. The exteriors of these homes are covered with stucco and often boast the historic post-and-beam look common in New England or mirror the adobe structures seen all over the Southwest. As for the interior, most feature sculpted staircases, thick archways,  built-in window seats or other creative touches.
This Old House (04/04) No. 77, P. 30: www.pbs.org/wgbh/thisoldhouse

Moving Toward Zero Energy Affordable Housing

In South Chicago, Claretian Associates is constructing 25 energy-efficient homes for low- to moderate-income residents on the former site of U.S. Steel's South Works plant. The homes —priced between $123,000 and $230,000, depending on size and income — will feature solar photovoltaic (PV) systems from Spire Solar, structural insulated panels, sealed-combustion gas furnaces, Energy Star appliances and fluorescent lighting. Funding from the state and Chicago's Department of Environment (DOE) will help pay for the PV systems. The local DOE also has hired Norwalk, CT-based Steven Winter Associates to remotely monitor the amount of electricity created by each of the PV installations. Although the systems probably will meet just 25% of the households' energy needs, the DOE is looking to measure energy consumption as well as energy production. The two dwellings completed thus far are certified Energy Star Homes, and Spire Solar's Mark Burger believes they prove that quality design and construction can make solar homes as attractive as those without solar systems.
Home Energy (04/04) Vol. 21.2, P. 8; Cavallo, James: www.homeenergy.org

Condo Prices Surpass Cost of Single-Family Home

The National Association of Realtors® reports that the nationwide median price of a condominium surpassed the median cost of a single-family home in the fourth quarter of 2003, with the average condo going for $174,700 versus $171,600 for a single-family residence. At the same time, condos also appear to be appreciating at a faster rate than their single-family cousins — about double the pace. Condo demand has been fueled by the growing number of empty-nesters who are scaling down their living quarters, with many even seeking to return to urban areas to be closer to city life and all of its conveniences. At the same time, low interest rates are prompting more young people to make condos their first home purchase, and some are even bypassing the rental apartment market altogether.
Wall Street Journal (03/25/04) P. D1; Smith, Ray A.: www.wsj.com

Housing Cuts Stir Jitters

About a quarter of a million low-income families across the country could lose their Section 8 rental vouchers due to a $1.6 million shortfall in the federal housing budget.  In Dallas-Fort Worth, Texas, for example, nearly 4,500 residents stand to lose the funding.  HUD acknowledges the drop in the voucher budget from $19.2 billion this year to $18.4 billion in 2005; but rather than cut some of the assistance, the agency will let housing agencies impose new restrictions to control costs.  "It's putting them [housing agencies] in a horrible position — don't give them enough money and expect them to meet the needs of the communities," remarks Texas Tenants' Union Executive Director Sandy Rollins. However, HUD believes more flexibility in fund distribution and other reforms actually could allow housing agencies to offer more vouchers than ever before.
Dallas Morning News (03/18/04) P. 11B; Horner, Kim: www.dallasnews.com

Today's Home Buyers Illustrate Generational, Cultural Differences

Home buyers fall into a number of generational categories, each of which has a different approach to purchasing a residence. Veterans born prior to the mid-1940s, for instance, do not make their needs and preferences known, forcing real estate agents to do a little digging to find something they like. Baby boomers, meanwhile, collaborate with agents and typically want to get the most they can out of the deal. Generation Xers, or those born between 1965 and 1982, are the most savvy buyers. They obtain mortgage preapprovals, search for homes online and require less hand-holding than other buyers. It is still too soon to characterize buyers born in 1983 and after — dubbed the Millenniums — but Salisbury, MD-based consultant Gee Dunsten believes they are "more homespun, back to the basics."  In addition to generational differences, agents need to accommodate immigrants who do not speak English by understanding their cultures and acting accordingly.
Milwaukee Journal Sentinel (03/19/04) Derus, Michele: www.jsonline.com

Control Your Time

Effective time management in the workplace begins with creating a time strategy, which should be based on a brief list of time priorities, such as listing the best way to increase company profits by use of an employee's time. Focus is vital for time management, and the smaller number of priorities a person concentrates on at any given time, the more productive he will be. A slot of uninterrupted time for such tasks as planning, thinking and creating ideas should be included in a time plan. Circumventing time traps is integral to the success of any time strategy. Such traps include spending too much time in the offices were the most chatty employees are, versus where the most important issues are; spending too much time obtaining daily updates on routine events instead of waiting for a more substantial weekly report; becoming too quickly involved in routine tasks and delaying the more complicated work; not bothering to draw up a daily schedule; and overscheduling, which makes it hard to stay on track.
BusinessTown.com (03/17/04): www.businesstown.com

Clean the Clutter

A business process can be made more efficient by identifying its metrics. This entails forming a special group backed by management that verifies and documents the time, cost, volumes and people involved in a business process. Next, enhancement strategies are developed and industry best practices are collected, to which the existing process is compared. Then a cost/benefit evaluation is performed and changes are executed jointly. If technology plays a role, business requirements need to be developed for the technology parts. These steps should be implemented before problems arise to control costs, gauge the effect of process modifications and improving customer service. Process metrics serves to make business processes more streamlined and proactive in a short amount of time and with a minimal amount of investment.
Docume.nt (02/04) Vol. 12, No. 1, P. 33; DeWyer, Brian: www.dptmag.com

Draft Fannie Mae, Freddie Mac Reform Bill Would Hammer Housing, Builders Charge

Unveiled on Friday, draft legislation by the Senate Banking Committee to restructure the regulatory framework of government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Bank System contained alarming provisions for housing and brought a quick response from the nation’s home builders.

“No matter how well-intentioned the original idea was to draft legislation that would increase the financial safety and soundness of the GSEs, a goal we all supported, this discussion draft would do just the opposite,” said Jerry Howard, NAHB executive vice president and CEO. “This bill is very hostile to housing. It will radically alter investors’ perceptions of ‘government sponsorship,’ place housing mission in a backseat position, add an unnecessary capital drag and stymie new innovation of affordable loan products. An immediate impact will be upward pressure on housing costs for millions of working American families.

“There are four elements in this draft proposal that we find most divisive and harmful to housing — receivership, the structure of the new regulator, capital requirements and new activity approval. We are also disturbed by neglect of the critical affordable housing goals component,” he said.

“Inclusion of the proposed receivership provision would unnerve Wall Street, and some bond rating agencies have already publicly stated they would likely downgrade the debt of Fannie Mae and Freddie Mac if this were to occur. A downgraded credit rating would raise their borrowing costs and put upward pressure on interest rates.

“The proposed structure of the new regulator puts housing on an unequal footing by placing all the power in the hands of a single director while the advisory board has no real clout. We would have much preferred that the advisory board had voting rights, and a composition not dominated by Cabinet secretaries, to ensure that housing had a vote on matters affecting the nation’s housing needs.

“Unnecessarily raising the minimum capital requirements for Fannie Mae and Freddie Mac would have the effect of taking capital out of the housing market and making it harder for the two financial institutions to expand mortgage funding and provide consumer-friendly loans. Further, the discussion draft bill also handcuffs the GSEs to such an extent regarding new activity approval that it will hinder their ability to produce new mortgage innovations in the future or even continue to offer resourceful products already in the marketplace, such as interest-only loans, zero-downpayment mortgages and loans that allow borrowers to skip payments without being in default.

“The draft bill missed a great opportunity to establish a more challenging affordable housing goals system for the GSEs. Unfortunately it makes little reference to their housing affordability goals, and makes no attempt to intensify the focus of the GSEs on their housing mission.

“Congress originally designated these organizations as housing ‘government-sponsored’ enterprises because it determined that it was a national priority to promote homeownership. This draft legislation effectively does away with that national priority. We see no way in which the proposal can be repaired without starting from scratch.”

Housing Snapshot

With mortgage interest rates persisting at lower levels than originally anticipated for this point in the year, the Commerce Department and the National Association of Realtors reported escalating home sales last month. Mortgage rates climbed just a tad last week, according to Freddie Mac's weekly index, but remained at favorable levels for home buyers. For the most part, the week's general economic news was also good. Consumer spending and personal income were both up in February, and the University of Michigan's gauge of consumer confidence showed some improvement earlier this month. On the lumber price front, framing lumber was up again, rising $6 to $377 per 1,000 board feet, according to Random Lengths. The slow downward trend of the past few weeks continued in the costs of plywood and oriented strand board. The mill price for 15/32-inch 3-ply CDX Southern Westside plywood was $465 per 1,000 square feet, a drop of $5, and OSB was $490. That represented a decline of $20 but was still far ahead of the $172 price posted a year earlier.

Mortgage Interest Rates

30 Year Fixed Rate: 5.4\%
15 Year Fixed Rate: 4.7\%
1 Year ARM: 3.36\%

Housing Starts: Feb. 2004

Total: 1.855\%
Single Family: 1.489\%
Multi Family: 366,000\%

New Home Sales: Feb. 2004 *

1.163 million

Existing Home Sales: Feb. 2004 *

6.12 million

* Seasonally Adjusted Annual Rate

For Working Families, Affordable Housing Is in Short Supply

It 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:

• First is a strong economy. Working families do best when incomes are rising and jobs are plentiful.
• Second is financing. We need low interest rates, as well as a strong and dynamic secondary mortgage market.
• Third are sound land-use and regulatory policies. In many communities, the housing affordability problem is made worse by a shortage of buildable land. The land-supply shortage is often the product of policies such as large-lot zoning and urban growth boundaries that are established by local governments. Restrictions on multifamily housing development also contribute to the problem. And high impact fees and regulatory costs push up the price of housing. Local governments must reform these policies.
• Fourth, we need more funding for special programs that can help families buy or rent a home that meets their needs. These include a homeownership tax credit, downpayment assistance programs and tax credits that make rents more affordable. These programs make a difference for millions of families on the edge of affordability.

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.

Letters to the Editor

Steel Garage Door Pricing Is Volatile, Too

Robert G. Resnick

Concrete Is Less Expensive, More Efficient

I am grateful for your online magazine. It often brings issues to the front and center. I was reading about the issue of building materials skyrocketing, and yet I see very little about the ICF industry.

I read about wood and steel. Isn't it less expensive to build with concrete and more efficient? Plus, concrete is recyclable.

Bob Fisher
Lawrence, KS

With Mortgage Rates Down, New Home Sales Are Up Again in February

Fueled by falling mortgage rates, sales of new single-family homes climbed 5.8% in February to a seasonally adjusted annual rate of 1.163 million, the Commerce Department reported last Wednesday. This was a 24.4% increase over the pace a year earlier and 7.2% above last year’s total sales.

“The February report shows that housing demand remains very strong,” said NAHB President Bobby Rayburn, “and with mortgage rates even lower in March, we expect robust sales to continue.”

In addition to affordable housing finance, strong housing demand continues to be stoked by healthy growth in household incomes and solid house price appreciation, according to NAHB Chief Economist David Seiders.

Sales increased 28.5% in the West and 12% in the Northeast. They declined 1.2% in the South and 10.6% in the Midwest.

Although the inventory of new homes for sale in February inched up to 373,000 units, this represented a low 3.8-month supply at the current sales pace.

“The supply-demand balance in the new-home market remains very, very healthy,” Seiders said. “Less than one-fourth of the inventory is comprised of houses that are actually completed and for sale, and the rest represents units still under construction or not even started. Builders are just keeping pace with demand without overextending production.”

Reauthorization of Flood Insurance Program Urged

The nation’s home builders last Wednesday called on Congress to reauthorize the National Flood Insurance Program (NFIP) for five years and for the Federal Emergency Management Agency (FEMA) to address repetitive loss properties in order to ensure the long-term viability of the program.

Testifying on behalf of NAHB before the Senate Banking Committee's Subcommittee on Economic Policy, Steve Feldmann director of community affairs for Fischer Homes, one of the largest home builders in Kentucky, said, “The home building industry depends on a strong national flood insurance program that is annually predictable, universally available and fiscally viable.”

By guaranteeing affordable flood insurance, the NFIP helps communities to address their housing needs by making it safe, affordable and practical for consumers to purchase homes in flood-prone areas.

Unfortunately, the solvency and stability of the program is threatened by a small percentage of properties that have suffered multiple, costly flood damages. Approximately 48,000 currently insured properties have incurred two or more floods within a 10-year period. These properties, which make up only 1% of the current 4.4 million policyholders, cost the NFIP approximately $200 million annually and account for roughly 25%-30% of the claims paid by the program, he said.

Although the Congress recently extended FEMA’s statutory authority to issue flood insurance policies until June 30, a lapse in authority after that date will have severe repercussions for a vast number of landowners.

“Allowing FEMA’s authority to limp from one short-term authorization to the next does not instill confidence or consistency for policyholders, future home buyers or industries that depend on a viable national flood insurance program,” said Feldmann. “Congress should reauthorize the NFIP for a full five years in order to allow the home building industry to continue to deliver safe, decent, affordable housing to consumers in a location of their choice.”

NAHB has been a proponent of House-passed reauthorization legislation H.R. 253, the “Flood Insurance Reform Act of 2003,” and supports the provision in the bill ensuring that all properties remain eligible for flood insurance. However, Feldmann told lawmakers that the measure should be amended to narrowly define severe “repetitive loss” properties to include only those that pose the most severe flood risks.

“By narrowing the scope of targeted properties, FEMA would be directed to address the most problematic properties first, which would quickly lead to significant savings to the NFIP and ensure its long-term viability,” said Feldmann.

He added that Congress should encourage FEMA, with the participation of state and local governments, to facilitate the redevelopment of properties so that they meet local floodplain codes and regulations, as do newly constructed homes. Additionally, in cases where FEMA makes an offer to buy a property, the owner must be paid the fair market value for both the land and the structure.

Finally, Feldmann told lawmakers that any reauthorization legislation should require FEMA to notify all current policyholders of any changes to the program.

To read the full legislation, click here, and enter H.R. 253 in the box at the upper left.

Photo by Herman Farrer

Get Land for Nothing

The best small-volume builders are savvy when it comes to buying land and lots. But few have the capital to grab up land like the big, national companies. Don’t let that stop you.

In “Small-Volume Strategies for Tying Up Land and Lots,” a seminar at the 2004 International Builders’ Show in Las Vegas, attendees learned how to control land without owning it and how to find the best parcels.

The seminar was presented by Jay Grant, president of Grant Homes in Morristown, NJ, Tim Hernandez, president of New Urban Communities in Delray Beach, FL, and Barry Rutenberg, president of Barry Rutenberg & Associates in Gainesville, FL. Bill Lurz, senior editor of Professional Builder magazine was the moderator.

Here are some of the strategies they offered:

Don’t Go It Alone

Consider doing a joint venture partnership or a rolling lot option contract with the landowner. In either case, you need a seller who’s wealthy and willing to sit tight and go without money while you build and sell homes. You’ll split the proceeds after the project is complete.

To get the best land:

• Bid only on the best parcels.
• Prepare to pay 90%-100% of the asking price (if it’s reasonable).
• Schedule a meeting with the seller. “Relationships are built on mutuality of trust,” Grant said. “That’s why face-to-face meetings are so important. The seller gets to know your track record and past successes.”
• Bring photos of your homes and literature about your company, and tell the seller about awards you’ve won.
• Offer to build one or two “quick delivery” (spec) homes. “You must be financially prepared to do that,” Grant noted.

Your spec home must be well-designed and competitively priced — not to make a lot of money, but to absorb lots. The landowner wants to know that you’re a good bet to do business with. Pricing and design are good indications.

Don’t Dawdle Over Land

When Hernandez finds out about a piece of land, his goal is to sketch a site plan, prepare a pro forma and send a letter of intent within 24 hours.

“If you can do that, you won’t miss out on the opportunity,” said the builder. “You’ll at least be in the conversation. Many times, it’s the first guy in the door who gets the most attention from the seller.”

To enhance the likelihood of getting a deal approved:

• Be familiar with zoning so you can develop a pro forma and site plan to suit.
• Identify your risk. “Only issue a letter of intent if there’s little or know risk of getting hurt,” Hernandez advised.

To reduce your risk:

• Know who’s likely to buy homes on the land you’re considering.
• Know about the local regulatory environment.
• Know how long the project will take to complete.

If a national builder is eyeing the same parcel, you may have the hometown advantage. “Since you’re local, you know who to call and can probably get the information sooner,” Hernandez pointed out.

To reduce your risk further, get a financial partner to invest in the land. Your goal is to use as little of your money as possible to tie up land and get it developed.

Alternately, you can split the lots and land with another builder. “Obviously, you’d differentiate your product so you’re not going head to head with each other,” said Hernandez.

Whether or not you split a parcel with another builder, it is a good idea to differentiate your product. “If you build what everyone else has, you won’t get the land unless you’re related to the seller,” said Hernandez.

A few ways to set yourself apart from the competition are by building more density, building a product no one else in the market does or by doing a mixed-use project.

Determine What the Seller Envisions — and Deliver

“The key to this is getting into the mind of the landowner and finding out what they want,” said Rutenberg. “If you can find a common thread — whatever they want and what works for you — that’s fine. It’s a good deal.”

Successful Business Strategy Starts With Green Home Building

Green building isn’t just the morally right thing to do for the environment, but it is a good business strategy for gaining an edge in competitive markets and meeting today’s growing regulatory challenges, according to Tom Hoyt, the co-founder and CEO of McStain Neighborhoods in Boulder, CO.

Addressing NAHB’s National Green Building Conference in Austin earlier this month, Hoyt said that his company’s focus on “Building a Better World” has turned McStain into a premium brand. His homes sell for an initial premium of 10%-15% and they resell for an average of 4%-11% more than homes of comparable age and size in the same market, he said, based on research by the Genesis Group and the University of Colorado.

In addition to building “visionary communities” that are in “a sustainable partnership with the natural environment,” McStain’s success can be attributed to principles that should be the focus of every home builder’s business. Those include treating employees, clients, associates and the broader community with respect and integrity; delivering neighborhoods on time and on budget; and pursuing operational excellence through strong leadership and planning, crystal clear communication, teamwork, adaptability and more.

More than two-thirds of consumers said that if they are getting bad service, they will walk out of a store even if they have found exactly what they have been looking for, according to results of a Genesis survey of home buyers cited by Hoyt.

Hoyt recommended the Denison Culture Model for builders who are seeking to optimize business returns by concentrating on their corporate mission and operational performance.

Hoyt advised companies who want to be identified as green builders in their marketplace to position themselves somewhere in between Wal-Mart’s lowest prices in town and the vocal advocacy of Greenpeace.

“We have gained market share by taking the high ground and not playing the price game, and by pushing what we’re about,” said Hoyt. His company’s sales surged 57% in 2001-2002, far ahead of the competition, he said, and even in the tough housing market that prevailed in the Denver area in 2002-2003, McStain managed to eke out a 1% increase in sales, compared to a 13% decline among the city’s top 10 builders and a 6% drop overall.

There are many options that builders can pursue in their efforts to become green, and Hoyt advised starting out with incremental changes.

Discovery House

“You don’t have to do it all,” he said. For example, in its Discovery House, a research house McStain has been building to demonstrate the effectiveness of new design, technology and products, “we tried to control all of the glues in the house,” he said. “There are about 50 and most are pretty nasty, but it wasn’t possible, so we went to paint and carpet.”

“Learn how to talk to your partners,” Hoyt added. “Installers and contractors need to understand what we’re trying to do.”

Hoyt also said that green home builders have lessons to learn from commercial construction, which uses better engineering, building systems and quality control.

From the Discovery House, which is being developed with Building Science Corporation, a consortium member of the Department of Energy’s Building America Program, Hoyt said his company hopes to “learn what works and what doesn’t, and it is a good way for us not to get in trouble,” an especially timely concern considering today’s major liability and insurance issues in the industry.

When materials are “a little too leading edge, then you have to do your own due diligence on it,” he said, “and make sure they work.”

The Discovery House will be sold after it is completed, but testing rights will be maintained for two years. The research it is demonstrating includes:

• The house is exploring the use of livable outside spaces, including a screened porch facing north that can be used for sleeping and shaded seating in the afternoon, a shaded porch on the south and an outdoor kitchen.
• Site orientation, architecture, design and landscaping have been oriented to minimize the need for mechanical heating and cooling and artificial lighting in the daytime. The south side of the house, for example, has been oriented within 20 degrees of due south in order to maximize direct solar heat gain during the winter months when the sun is lower on the horizon. In the summer, overhangs or retractable awnings shade south-facing windows and porch doors. Exterior operable ventilating shutters have been added to the windows on the west elevations.
• Strategies have been developed to keep rainwater away from the foundation wall perimeter, to drain groundwater with sub-grade perimeter footing drains before it gets to the foundation wall and to eliminate the potential for moisture to accumulate and damage concrete slabs.
• A well-sealed and airtight exterior wall and properly installed insulation will contribute to making the house at least 50% more efficient than a typical house. The construction of the roof and exterior wall assemblies will provide for a continuous drainage plane in order to deflect water and prevent moisture penetration. A CompleteHeat® system from Lennox Industries will provide both the space heating and hot water from a single unit, which is supplemented by a three-panel solar domestic water heater on the south-facing roof.
• Ceiling fans throughout the house and two whole house fans with insulating covers will minimize the need for central air conditioning, which accounts for about one-sixth of the electricity generated in the U.S.
• The home is built to meet the American Lung Association's Health House guidelines for healthier indoor air. Rigorous standards have been set for whole house ventilation and removal of indoor pollutants, reduced use of carpet, a central vacuum system and lower-VOC (volatile organic compounds) in paints, finishes and furnishings.
• Responsible use of wood includes the use of structurally engineered lumber from faster growing plantation trees, the use of wheatboard shelving made from agricultural byproducts and the use of advanced framing techniques to reduce the amount of frame lumber in the house. It is estimated that an acre of forest — up to 44 trees — goes into the 12,500 board feet going into an average 2,000-square-foot home.
• The home’s landscaping plan includes soil analysis to determine the nutrient content of the soil and the needed soil amendment levels, a drip irrigation system, an alternative drought-tolerant turf and a WeatherTRAK ET Home Controller, which can capture locally broadcasted weather data to adjust the irrigation system flow times to match actual water needs of plants.

Hoyt was named the Green Advocate of the Year in this year’s National Green Building Awards.

'Green Building Guidelines' Available Through BuilderBooks.com

"Green Building Guidelines," available through BuilderBooks.com, is the Sustainable Buildings Industry Council's second generation of sustainable residential design guidelines created in cooperation with NAHB. Written in plain language with complimentary illustrations, case studies and check lists, the guidelines is a valuable resource for builders and even buyers interested in producing or purchasing energy- and resource-efficient homes. Each chapter reviews specific design strategies as well as offering construction and marketing tips, checklists and references to many additional resources. To view or purchase this publication, click here, or call 800-223-2665 to order.

Recycling Construction Waste Becoming Second Nature in Colorado

Starting from scratch and overcoming formidable skepticism, an environmental director and architectural designer for a Boulder, CO, builder proved that recycling construction waste is a worthwhile effort and one that has quickly become second nature to workers on the job site.

Donna Merten, who works for the James Company, a division of Tousa Homes, told NAHB’s National Green Building Conference in Austin earlier this month that since she established her company’s first recycling program in 2000, it has recycled more than 1,000 tons of construction debris and saved 25% on tipping fees.

Now company policy on all work sites, the program is successful in diverting about 65% of construction waste from the landfill.

Initially, Merten said, construction superintendent’s thought recycling would take up too much time for laborers and that subcontractors wouldn’t buy into it. Local recycling companies were also reluctant to get involved in Merten’s program because their recycling bins had been contaminated by builders in the past, they lost money trying to sort through construction trash and they had never seen a builder succeed in the effort.

Without any corporate funds, Merten set up her recycling prototype on a six-plex multifamily project involving about 20 buildings being completed at a rate of one or two per month. Bins were built out of OSB on site, with waste broken down into wood, cardboard and metal. Signs were provided in English and Spanish and supers and subs were instructed that everyone needed to follow the recycling regimen the same as any other rules on the construction site.

Virtually the same project was being built across the street, so Merten was able to document the actual cost savings. When cardboard was broken down, it soon became apparent that “a lot of the volume in the dumpsters was air,” she said. It was also found that when wood scraps were stacked, they took up considerably more volume than when they were crisscrossed.

In addition to saving money, corporate executives were excited that through the recycling process they were able to discover that large pieces of useable material were being tossed into the dumpster. As for neatness, work sites now are virtually spotless.

Since her program moved into full gear, more than 20 local builders have started recycling, Merten said, and the city of Boulder has made it mandatory.

“The majority of subs were amazed that something was finally being done about the waste,” Merten said.

Wood waste from construction sites now goes into windrows of organic compost to eventually become soil amendments and landscaping mulch. Truss cut-offs can be turned into perfectly engineered finger jointed studs, and cardboard can be made back into cardboard, she said.

Merten said that drywall is still a problem, but in some other parts of the country it is ground up with the wood for soil applications or can be ground up on site for erosion control.

A representative from Bielinski Homes in Wisconsin said that her company uses on-site recycling to grind up brick and asphalt shingles for underneath the driveway.

Home owners turn out to be the biggest violators when it comes to contaminating the waste bins, which they find a convenient place to dispose of old couches and an amazing assortment of discarded material, Merten said, so a “please help us recycle” letter now accompanies closing contracts.

Low Impact Development Reduces Storm Water Runoff and Development Costs

Proponents of low impact residential development addressed NAHB’s National Green Building Conference in Austin earlier this month to explain how new approaches to storm water management are good for the environment at the same time as they reduce development costs and increase property values.

Among the many techniques to limit runoff when building on finished lots, mitigating for soil compaction is one of the most important things builders can do, according to Marolyn Parson, who manages NAHB’s Water and Wetlands Policy Department.

“The lot is as hard as cement,” said Parson, “and if it slopes back rain will run off it just like from concrete.”

Once the original topsoil has been disturbed, builders need to restore it to its original state as much as possible so that rain water can soak into it, according to Scott Brown, a site design specialist for the Pennsylvania Housing Research/Resource Center. While hydrology varies widely by location, in Pennsylvania’s Piedmont region, 82% of the rain that falls infiltrates the soil, he said, with about a third of that amount percolating deeply into the ground water and the balance being used by plants or evaporating.

Builders “have to break up the compacted layer” of soil, he said. Otherwise, in addition to excessive runoff every time it rains, they also risk moisture problems on the site because water that can filter down into the earth can start flowing laterally. A chisel plow can be used to loosen things up, he said.

“Conservation of natural areas and maintaining topsoil are two of the best things you can do,” Brown said. “Topsoil is one of our friends” and acts as “a huge sponge” that can soak up about four inches of rain because 35%-45% of it is void space from plant root systems.

Brown suggested four approaches to replacing the natural infiltration function removed by the construction process:

• Minimize the amount of the natural site that is disturbed by the project and preserve as much natural land area as possible.
• Minimize impervious areas and use pervious materials where possible. This includes reducing road and sidewalk widths and lengths and considering multi-story buildings.
• Direct runoff over grass or other permeable surface areas, or collect water in rain barrels or cisterns that can later be used for the landscape.
• Provide an engineered infiltration facility to receive the increased surface runoff from impervious surfaces. These can include bio-retention areas, infiltration beds and infiltration trenches.

In urban areas, which represent “the systematic destruction of hydrological function,” Larry Coffman, associate director of the Prince George’s County, MD, Department of Environmental Resources, said there are hundreds of techniques that can be integrated into site design to encourage water to drain into the soil.

These low impact designs can reduce development costs by 30%-40%, he said, by eliminating curb and gutter, storm water ponds and other infrastructure.

Coffman cited case studies and resources from the NAHB Research Center showing significant benefits from low impact development.

For further information on low impact development, e-mail Marolyn Parson or call her at 800-368-5242 x8157.

Insurance: Does Subcontractor Non-Compliance Put You at Risk?

Times have changed over the past 20 years. Back then, industry-related lawsuits were less prevalent and problems and disagreements were handled out of court. Insurance was for the big companies. A small contractor could make a living on the wink-and-nod method of doing business.

No more. Consumer awareness, in general, is much more prevalent. Our customers are more astute, sophisticated and educated, and industry lawsuits are on the rise. This year it is predicted that three out of 10 contractors — 30% of contactors nationwide — will be sued for one reason or another.

In the past year, two “contractor-friendly” insurance companies have gone bankrupt — felled, at least partially, because of lawsuits against contractors related to mold and synthetic stucco problems primarily on the West Coast. By contractor-friendly, I mean these insurance companies offered low rates and required a minimum of paperwork.

I don’t have to tell you that liability and the protection of our livelihood has become almost a full time job. Insurance, and the paperwork that accompanies it now, is a way of life for most of us. What does that do to our cost of managing our insurance? Additional mailings, other administrative requirements, tracking and analyzing and maintaining the extra paperwork required all have associated costs that should be taken into account when you bid your next job. Additional paperwork is estimated at 15%-18% with each new job file.

How Subcontractor Compliance — or Non-Compliance — Can Affect You

Whether or not your trade partners or subcontractors are compliant with insurance requirements can affect your business, too. First, you need to be aware of which of them are compliant or not because that could affect your ability to continue working with them. And consider the possible cost of their non-compliance: you could be named as an additional insured and be required to increase your liability insurance minimums, your worker’s compensation and your overall umbrella.

The question remains about what to do if any of your trade partners or subcontractors are not compliant. I suggest trying to make them understand that for the good of the team they need to comply with the insurance companies requests. This is easier said then done, especially when you look back on the years of trouble-free work they performed. Retraining them on the new procedures, such as having a subcontractor agreement accompany every proposal, has become a necessary part of everyday business, but something they may resist.

What Is the Risk of Non-Compliance for You, the Contractor? 

In states where a license is required, this is a non-issue. No insurance equals no license, which means no permits and ultimately, no work.

If you are working in states with less stringent licensing requirements, your company risks everything day after day.

So the question is: what are you willing to risk? There is more than a sense of pride to crossing every “t” and dotting every “i” when filling out insurance paperwork — there is a sense of ownership.

For more information about liability insurance, read NAHB’s white paper on Risk Transfer for Trade Contractors. You can find it on the NAHB Web site under General Liability Insurance. It outlines the risks contractors are liable for and the methods available to them to manage those risks.

Daryl Kemp, CGR, CAPS, is president of the remodeling company, Blackberry Builders, Inc., based in Elburn, IL, and a classically trained cabinetmaker. For more information, contact him via e-mail.

Column Service Article Advises Home Owners on Cicada Outbreak

An article available through NAHB’s column service provides information on how home owners can deal with the 17-year emergence of billions of Brood X cicadas in late May and early June.

The article is designed for the staff and executive officers of local and state home builders associations for dissemination to their local media and can be tailored to the local market. Some parts of the country will be seeing a full-scale infestation, others only limited activity and some will experience nothing at all.

Heavily infested areas can host up to 1.5 million cicadas per acre and a one quarter-acre suburban lot can produce up to 500 pounds of the insects, according to the article.

Cicadas are considered basically safe to humans but pets can become sick from eating too many of them, and the NAHB article reports that egg-laying females can damage plants, including browning, breakage or scarring to affected tree branches. Most large, healthy trees should not be significantly harmed, but saplings can be damaged.

Home owners who are concerned about their landscaping, should delay planting smaller trees and shrubs until after the outbreak; limit or delay pruning until after cicadas have finished laying their eggs in June; and prune damaged twigs. Young trees can also be covered with a mesh cloth to fend off the insects.

For more information on the NAHB column service, click here to read the related story in this week’s issue of Nation’s Building News. Or e-mail Stacy Hope at NAHB or call her at 800-368-5242 x8132.

How to Negotiate a Job Offer

Okay. You’ve polished your resumé, contacted companies and probably have had at least two job interviews with a solid, prospective company. You are beginning to feel excited about the position and hope an offer is forthcoming.

Now is the time to sit down and carefully review what the job has to offer in terms of new opportunities to learn and advance, more challenges, new techniques, etc. Whatever has motivated you to seek a new position becomes a factor in your decision. You are much more realistic about salary, benefits, vacation, etc. if you are unemployed or facing unemployment than if you are just “shopping around” with no real urgency to make a move.

Hopefully, you are not one of those “shoppers” who interview and get offers just so you can negotiate a raise with your current employer.

How to Prepare for the Offer

The offer process differs with each company and you need to be prepared for the discussion if you are receiving the offer in person. Before you arrive for the final interview, check with other companies and find out what the salary ranges are for similar positions if you are unsure of your salary range. This will give you more confidence as you prepare to negotiate, if that is necessary. If you are working with a recruiter, the recruiter should take care of the offer process for you.

Sometimes an offer will be made at a figure you are happy with and no negotiation is necessary. More often than not, however, there are some details to iron out. This final interview, and only this interview, is when you should ask about benefits, vacations, pension plans, 401(k)s, etc., since these are a part of the overall package.

Unless an employer explains these benefits earlier in the process as a part of the overall company background, it is inappropriate to discuss them before now. Remember, the employer is interested in what you have to offer them, and up till now, you have been in a selling mode.

Now, sit back and listen carefully to what the employer says. Make notes so you can ask intelligent questions. When the employer says, “We’d like to make you an offer!” be sure to smile and respond with, “Thank you,” “I’m pleased to hear that,” or another polite remark.

What often follows is the sticky part, “What salary do you want?” or, “What salary did you have in mind?” This is NOT the time to open your mouth and name a figure!

It’s better to respond with, “Mr. Employer, I’m sure any offer you make will be a fair one. I believe with my background and skills I will be an asset to your company (also, briefly restate the reason why they should hire you) and I’m interested in the total package you offer. What figure did you have in mind?”

That said, be quiet. Do not rush in to fill a gap with conversation. The first thing they teach you in Sales 101 is that the person who speaks first loses. When the employer has named a base figure, pursue the details of the total package: medical, dental, vision, family care, education, 401(k), employer contributions, bonuses, etc. Quite often a lower salary figure is more than compensated for by a great benefits package, so do not reject a low offer out of hand.

What If the Offer Is Too Low?

If after evaluating the total package you feel the base salary is too low, prepare to discuss it, not in a demanding manner, but calmly and with the employer’s perspective in mind. “Mr. Employer, after considering all that you have to offer, I’m really very interested in working for you, but I was hoping for a slightly higher starting salary.” Then pause.

Remember that an employer may be constrained by other employees who have similar or lower salaries. However, there are ways to achieve higher compensation. If the employer says, “No can do!” to a higher salary, negotiate for a review and possible raise in three or six months. What about overtime? Car allowances? Even a signing bonus is not unusual in managerial positions.

Realistically, most people move into new jobs with a salary increase of 10%-15%. Don’t be greedy, but do be firm and courteous. If you negotiate, remember that the worst that can happen is that the offer is withdrawn or you decide not to accept it.

If a figure is unrealistically low, you are better off if you keep looking rather than take a position where you are angry and disappointed from the start. There will always be another opportunity.

Careers in Accounting: It's Not Just Numbers

The accounting function is an indispensable part of any successful business, but never more so than in the building industry where so many variables are factored into the cost of building a house.

Accounting offers an excellent career path and many women hold top financial positions with major builders. Some have moved up the ladder to division or regional presidents.

Within larger production building companies, the positions range in responsibility from chief financial officer — sometimes titled director or vice president of finance — to controller and various staff accounting positions. Positions may be held at a corporate level or within a division.

In smaller companies the total accounting function from strategic planning and cash flow management down to preparing payroll may all be rolled up into one or two positions.

The most responsible positions require an accounting degree plus a CPA and several years of experience in a related environment. Some of the software packages most widely used are J.D. Edwards, Newstar, Timberline, Master Builder, Horizon and Peachtree, depending on the size of the company.

Within small companies the accounting functions are usually handled through general ledger and monthly closing, often by an office manager/bookkeeper, with taxes and reports prepared or reviewed by an outside accountant who is a CPA.

Entry-level accounts payable/receivable positions can grow through increasing levels of responsibility, as can a payroll clerk or assistant bookkeeper position.

Following is a brief description for a controller position within a large builder company:

• Manage accounting department.
• Hire, develop and train accounting staff as needed.
• Provide direction of day-to-day accounting work. Establish department policies and procedures. Review staff work for accuracy and compliance with procedures. Monitor workloads and deadlines.
• In the building industry, review loan draws, interface with lenders on loan issues and review required reports for lenders.
• Budget reviews: review proposed land acquisitions budgets, development project budgets and pro formas. Also monitor project status and actual costs vs. budgets, as well as prepare annual operating budgets.
• Financial reporting: review monthly financial statements for multiple entities — sales journal entries, bank account reconciliations, loan statement reconciliations and related journal entries, monthly closings and financial statement review among other duties.

Earlier Articles in This Series

NAHB Helps Me Stay in Business, Improve My Profit Margin

By David Hawke, President, Hawke’s Home Improvement & Repair
This should be read by anyone having a hard time with cash flow or running his or her business.

I own a small remodeling company and have been in business just over a year. Recently, I placed an ad to hire a carpenter and helper. I received numerous calls, most for the carpenter job. Two of the callers had previously owned their own construction businesses; one was a carpenter with 25 years of experience.

This got me thinking about why people who had owned their own businesses or had that much experience were out of work. And why I was staying busy. I believe the answer is my local association, the Home Builders Association of Southern Tennessee (HBAST), its Remodelors™ Council and profit margins. And they are all tied together.

I am an active member of my association and council and see many members and visitors at meetings. Many of them attend a few times but then never return. I think many of them believethey don’t have even a few hours a month to spare in a meeting. They believe they should be working their businesses, instead.

What many of them don’t realize is all the benefits they will get by being active and involved. As a member of NAHB and the Remodelors™ Council, I have more than 600 members in the HBAST and about 50 members of the Remodelors™ Council to help me when I need it. They keep me abreast of the latest information and I can draw from their experience. Many of the members are as interested in seeing my business succeed as I am.

For instance, during HBAST meetings my so-called competitors schooled me in profit margins and what I should be charging. I was told to bid my jobs at 45%-50% — nothing lower. Why? Because that is what it takes to survive.

I was advised by my fellow members to figure in everything, including license fees, general liability, workmen’s compensation, vehicles and tool fees. Look at the successful remodelers and builders around town; they don’t bid jobs at 10%.

My recommendation to anyone who owns a construction or remodeling company is to join your local association and one of the councils — and above all be active. Membership is only worth what you make it. For me, it produced a nice profit margin.

David Hawke is president of Hawke’s Home Improvement & Repair, of Chattanooga, TN, a residential remodeling company that specializes in additions, kitchens and baths. For information, e-mail Hawk.

NAHB Working to Open Up Business Opportunities With Mexico

NAHB Immediate Past President Kent Conine brushed up on his Spanish this month for an important engagement at NAHB’s counterpart in Mexico — the Camara Nacional de la Industria de Desarrollo y Promocion de Vivienda (CANADEVI), which is also known as the National Industry Chamber for the Development and Promotion of Housing.

Meeting with CANADEVI President Hector Aguirre and discussing a letter of intent was the first official step toward the two associations working together in promoting cross-border opportunities at the 2nd International Housing Conference of the Americas, which will be held Nov. 7-10 at the Four Seasons hotel in Mexico City.

NAHB’s continued participation in this endeavor is part of the Access Mexico Project, for which the association received a $397,899 seed grant from the U.S. Department of Commerce last October.

“The goal is to help expand trade channels by providing something of a ‘one-stop shop’ for those who want to learn how Mexico’s housing market works and what it takes to get involved in it,” Conine noted.

He also personally extended an invitation for CANADEVI’s leadership to visit NAHB headquarters in Washington, D.C., and expressed interest in exploring additional areas for collaboration among the industry groups that are constituents of the NAHB membership.

“With Mexican builders planning to build more than one million new homes annually for low- and moderate-income households over the next three years and an anticipated annual growth rate of 4.5% in this market, this is a great place for NAHB members to explore their opportunities for bringing goods and services to the international forum,” Conine said. “Our partnership with CANADEVI will ensure that our constituents get the information they need to pursue such opportunities.”

For more information about NAHB’s partnership with CANADEVI, the upcoming 2nd International Housing Conference of the Americas or the Access Mexico project, e-mail Rita Feinberg or call her at 800-368-5242, x8415.

Project CRAFT Graduates First Class in Dallas

More than 200 guests attended ceremonies earlier this month at the Dallas County Youth Village (DCYV) for the 15 students in Project CRAFT's first graduation class.

A program of the Home Builders Institute (HBI), the workforce development arm of NAHB, Project CRAFT (Community Restitution Apprenticeship-Focused Training) provides adjudicated youth with construction trades training and job placement. The program currently operates in Florida, New Jersey, Tennessee and Texas.

Bob Morris, executive officer of the HBA of Greater Dallas, which is a community partner in the program, welcomed the new graduates to the residential construction industry.

“Project CRAFT has given me hope,” said one graduate speaking at the event. “This program has given me a chance and desire to work hard.”

Also at the podium, State Representative Helen Giddons lauded the students for their accomplishments and encouraged them on their new careers. And Rev. Ella MacDonald, pastor of the Jenkins Chapel AME Church, site of the graduates’ most significant and ambitious community project, praised the youths and their hard work.

HBI brought Project CRAFT to DCYV in September through its partnership with SER-Jobs for Progress, WorkSource for Dallas County and the Dallas County Department of Juvenile Justice.

For more information on Project CRAFT, e-mail John Hattery at HBI or call him at 800-795-7955 x8916.

Dream Tour Features Innovative Products and Construction Techniques

The American Dream Tour — a 13,500 square-foot traveling expo for construction professionals featuring the most innovative products and construction techniques available — is making its way across the country, with a stop in Sacramento on March 30 and 13 other cities before it finishes its journey in Atlanta in July.

Sponsored in part by Therma-Tru Doors and hosted by Hanley-Wood, the tour features demonstrations by 21 exhibitors providing builders and contractors with an opportunity to test new products, gain fresh insight into construction techniques, learn new profit-building business processes and network with other industry professionals.

Included in the tour is an interactive exhibit by Therma-Tru Doors, which is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

The exhibit is showcasing Therma Tru’s Classic-Craft® Mahogany Collection™, Rustic Collection™ and Oak Collection™; its Fiber-Classic™ line and its contemporary Smooth-Star™ line. Also on exhibit are the Slim-Line™ Sliding Patio Door System and the Fiber-Classic™ Hinged Patio Door System.

Key trends on display in the Therma-Tru exhibit include the move to taller double doors; new fiberglass graining technology; fiberglass for the patio; multi-point locking systems; and new glass designs that bring light into the home’s interior. Attendees also can learn more about co-op marketing programs, “upselling” techniques, entry system installation and technical specification.

The expo is being staged at local sports arenas, lumber dealers, convention centers, fairgrounds and recreation areas. The remaining stops on the tour are:

March 30	Sacramento, CA
April 8	San Antonio, TX
April 15	Minneapolis
April 27	Jacksonville, FL
May 4	Tampa, FL
May 12	Indianapolis
May 18	Chicago
June 2	Raleigh, NC
June 8	Memphis
June 14	Charlotte/Gastonia, NC
June 28	Washington, D.C.
July 1	Philadelphia
July 7	St. Louis
July 14	Boston
July 21	Atlanta

Therma-Tru Doors is headquartered in Maumee, OH.

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.

‘No’ — The Hardest Word?

"Travis Stanton" is one of my favorite builders. The problem is, he’s a lot of people’s favorite. He owns a small general contracting company. Recently, I asked him to do a minor remodel. After a five or 10 second pause (I thought we’d lost cell phone contact), he finally stammered, “Um, well Tim, I don’t know.”

I knew. He was too busy. “Travis,” I said, “It’s okay if you’re too busy.”

“You sure?” he politely replied. “I could probably squeeze it in somehow.”

“Naw, don’t sweat it.”

His relief was palpable.

A contractor who has enjoyed any measure of success understands the dilemma. Most small business owners would just as soon cut their arm off with a dull hacksaw than tell a client, especially a good one: “No, I’m too busy to take your job right now.”

Here is why contractors need to be comfortable with "no":

• Taking a job you don’t have time for will almost certainly not be done to your normal high standards. The customer gets mad and your reputation suffers. I bet everyone reading this can readily think of contractors (or consultants) who are perpetually guilty here. Would you use them?
• While trying to do the extra job, those already on the books will be neglected. Double jeopardy.
• Taking too much work puts additional pressure on your crew. Most good employees take their jobs personally. If they don’t have the time to do it right, they become upset and dissatisfied. Company morale suffers; and the first ones to notice are your clients.
• Too many jobs at once spreads tools, equipment, support staff and other resources too thinly. Production (and again, morale) will take a hit.

Here is what to do when confronted with this issue:

• If the client is unknown, politely tell them your current workload is too great to ensure a quality job, and you regretfully must decline.
• If the client is an old reliable, have a heart-to-heart talk. Assure him that he is at the top of your list, but if the deadline is really tight, you’ll have to pass this time. Explain that he is too valuable for you to risk doing a rushed, sloppy job for him.
• Offer alternatives: can it wait a week?…a month? Can another phase or trade go first? Can you get it started, then jump off until something else is finished, then come back? Be creative.
• Remember, all good businesspeople understand being in demand. They won’t blame you if you are. In fact, it reinforces that you are a quality contractor. Good clients appreciate "no."
• Consider hiring more employees. Be careful, however. New employees need extra guidance and oversight, which can only be supplied by existing seasoned staff — the same seasoned staff who are already overtaxed. Newbies also need tools and additional office resources. Though frequently chosen, this alternative is rarely a good one. Slow, planned growth is always better than growth by crisis.
• If you must say no, recommend someone else who is good. In fact, offer to make the phone call. This way you can establish win-win referral systems with friendly competitors, while providing a great service to your client. Counter-intuitive? Savvy clients have already decided whether you are worth coming back to or not. If you’ve built good relationships, been responsive and have done good work, as Arnold would say, “They’ll be back."

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. Reach Tim at timg@constructioncalc.com.

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.

NAHB Board Meeting in Washington April 27-May 2

OFFICIAL MEETING NOTICE OF THE NATIONAL ASSOCIATION OF HOME BUILDERS BOARD OF DIRECTORS

The following schedule of events is a partial listing provided as a notice for the upcoming NAHB Board of Directors Meeting and Legislative Conference at the Spring Board Meeting in Washington, D.C., April 27-May 2, 2004. Meetings will be held at the National Housing Center and the Marriott Wardman Park Hotel.

The spring board program will identify the exact time and place of each scheduled meeting.

Tuesday, April 27

National Vice Presidents                                                                                                                        Executive Board                                                                                                                                                State Representatives

Wednesday, April 28

Legislative Conference — Briefing, Hill Visits, Feedback Session, Grassroots Reception

Thursday, April 29

Committee Meetings

Friday, April 30

Committee Meetings

Saturday, May 1

Area Caucuses 1-15                                                                                                                                        Joint Executive Board, Budget and Resolutions Committee                                                                NAHB Board of Directors

Sunday, May 2

NAHB Board of Directors

Column Service a News Source for Home Builders Associations

Home builders associations can further establish themselves as significant sources of information about home building and home buying through the column service provided by NAHB Public Affairs.

Two columns are produced each month for association staff and executive officers to use in local newspapers, magazines and internal publications. Column service articles cover consumer issues and housing trends and news, as well as a wide variety of additional information of interest to the general public.

Articles are delivered to HBA executive officers and are posted online at www.nahb.org in a Microsoft Word format that is easy to download and customize. State and local home builders associations are encouraged to add local information and then submit the articles to local media under the president’s or executive officer’s byline.

“I supply three newspapers with content on a weekly basis,” said Rachel Daeger, director of communications at the Builders Association of Greater Indianapolis. “The column service is a great help. Typically I pay a freelance writer to interview two or three members to localize stories, and I can always use more.”

Previous column service articles covering “evergreen” housing subjects and seasonal topics — ranging from industry trends and home buying basics to the environment, landscaping and natural disasters — are archived on the Web site, where they are organized by category for easy access.

NAHB Public Affairs also produces annual promotional kits to encourage state and local HBAs to take advantage of media opportunities and outreach efforts related to events such as New Homes Month (April) and National Homeownership Month (June). These kits contain several targeted column service articles, along with press releases, op-eds, radio scripts, advertisements, proclamations and tips on leveraging the national celebrations.

“I've been writing our president's columns for seven years,” said Shelly Stengel, vice president of public affairs for the Home Builders Association of Greater St. Louis. “It's great when I can get useful information from NAHB to use because I usually submit about four columns a month.”

For more information on using the NAHB column service to promote the home building industry and specific housing issues in your area, e-mail Stacy Hope, or call her at 800-368-5242 x8132.

Share Your Knowledge and Expertise

The NAHB Public Affairs office is looking for a few good builders…and remodelers, architects, associates and more…to share their knowledge and perspective. 

The editorial staff of the association would like to draw upon the members’ wide-ranging expertise to help explain the impact of building industry policies, news and trends on day to day business. These impacts will be reported in NAHB's more than 20 electronic newsletters and other publications.

Members who wish to participate will be contacted by phone or e-mail when there is news in their areas of expertise. It's an opportunity for members to gain national exposure among their peers.

Ideal participants are members who, while they may not hold elected offices in their local or state associations, have a significant knowledge base in a specific area and are interested in sharing their experience and perspective with others.

While NAHB will continue to expand to additional areas of interest to NAHB members, the initial request is for stakeholder members who are willing to comment on one or more of the following issues: 

• Storm water management
• General liability insurance
• Impact fees
• Habitat conservation plans (HCPs)
• Active adult housing

Executive officers in state and local accociations have already begun compiling contact information about members who they believe will be enthusiastic about acting as sources for stories about critical issues for NAHB print and electronic publications.

If you are interested in participating or know of someone who would be a good resource, please contact your executive officer or NAHB Public Affairs at 800-368-5242 x8061.

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.

Sign Up for the Legislative Conference and Make Housing a Priority in Congress

Members can mark their calendars and sign up for the most important grassroots lobbying event of the year — NAHB’s 2004 Legislative Conference on Wednesday, April 28, in Washington, D.C.

The conference kicks off the NAHB Spring Board of Directors meeting and is your opportunity, along with fellow NAHB members, to:

• Meet with your senators and representatives on Capitol