Fiery U.S. Home Building Industry May Bid Farewell to Junk Market
The strength of the home building industry in the midst of a sluggish economy and stagnant job market has Fitch Ratings and Moody's Investors Service pulling builders' stocks out of junk status and toward a possible credit upgrade. "This sector could become predominantly investment grade credits," speculates Fitch Ratings Senior Director Robert Curran. The industry is expected to remain strong even as interest rates rise, mainly because rates will climb more slowly and remain lower than in previous years. Moreover, builders have scaled back their speculative construction and expanded into several metropolitan areas and price ranges. KDP Investment Advisors bond analyst Matthew Wilcox also believes builders can cater to demand, eliminating rooms and accessories that might be too costly during higher-interest environments. (www.wsj.com)
Wall Street Journal (03/31/04) P. B2D; Covel, Simona
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Buildings Designed in Cool Shades of 'Green'
Environmentally friendly building is gaining popularity across the country due to demand for healthier buildings, lower-cost materials and government requirements at the local, state and federal levels. The U.S. Green Building Council has certified a total of 89 so-called "eco-friendly" or "sustainable" structures in the last three years, and 10 states and 23 municipalities require or are seeking to require public buildings to receive the Leadership in Energy and Environmental Design (LEED) certification. "Now we're seeing friendly competitions among builders and design teams and between cities and states about how green they can be," remarks Green Building Council Executive Director Christine Ervin. The strategy involves a focus on energy efficiency and water conservation, the use of recycled materials, the elimination of chemicals and other toxins and designs that take advantage of natural sunlight. In Portland, OR, developer Robert Gerding built a 123-unit condominium tower with pressed-straw doors and cabinets, dual-flush toilets, woods from sustainable forests, chemical-free carpets and paints, windows that block the sun and control indoor temperature and bike racks to discourage driving, among other features. As in other sustainable developments, The Henry's $280,000-$1.3 million units were sold out before they were finished. Though green building has earned the support of government officials, builders and consumers, experts say truly sustainable structures — which produce more energy than they consume — have yet to be built. (www.usatoday.com)
USA Today (03/31/04) P. 15A; Ritter, John
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A New Breed of Home Improvers
A recent report by RoperASW found that 60% of home owners plan to undertake improvement projects in the next couple years. For 15% of home owners and 22% of renters, this involves new furniture purchases. Home owners tend to focus on new rooms, roofs, windows, fixtures and landscaping and generally hire a professional to handle even the easiest tasks. In fact, the report reveals that only 40% of home owners opt to paint the property interior themselves. However, they do prefer to select the fixtures, paint colors and other items themselves — which explains the success of Home Depot, Lowe's and other home-improvement retailers. (www.csmonitor.com)
Christian Science Monitor (03/31/04) P. 14
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For Rent: New Apartments for Healthy, Independent Seniors
Developers are targeting seniors who are in good financial standing, still active and interested in scaling down their residences. No longer do so many people need large houses, especially those so-called "empty nesters" whose children are grown and living independently. Consequently, the American Seniors Housing Association reports that senior-apartment construction reached a total of 8,789 units in 2003, a substantial increase from the 4,566 such units that were built the previous year. These apartments typically are garden-style units, not high-rise buildings. To be sure, the growth in apartments for active seniors is being fueled by the simple fact that people are living longer. The Census Bureau adds that more than 16% of U.S. citizens will be at least 65 years old by 2020. After today's wave of seniors, developers and landlords will next look to appeal to the baby-boomer generation whose first wave will start hitting 65 in 2011. Uncertainty lies in how many older Americans will be willing to rent instead of buy similar condos in the years ahead, however — especially if interest rates remain favorable. (www.wsj.com)
Wall Street Journal (03/31/04) P. B1; Smith, Ray A.
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Construction Rebuilds Its Economic Respect
The construction sector has remained strong in recent years despite the sluggish economy, creating jobs as low interest rates sparked a nationwide housing boom. Out of all goods-producing industries, the U.S. Labor Department has pegged construction as the only one that will grow through 2012. The sector added 128,000 jobs during the year-over-year period ended in February, while the nation's industries as a whole posted net job gains of just 113,000. Even so, construction still gets little recognition as an economic contributor; and some expect the industry to weaken as interest rates rise. However, Economy.com and other analysts predict that commercial and public works projects will prop up the industry once the housing market weakens. (www.usatoday.com)
USA Today (03/31/04) P. 1B; Kirchhoff, Sue
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Mobile-Home Industry Tries to Haul Itself Out of Big Slump
The mobile-home industry is trying to rebound from a crash that has flooded the market with repossessed properties, causing the shipment of new houses to fall in 2003 to its lowest level in 41 years at 131,000 units. The sector's woes have forced Conseco to seek bankruptcy protection and prompted Fannie Mae to make $206 million of write-downs on securities backed by mobile homes, and the figure could continue to grow. Many dealers that used misleading sale practices and lenders that offered unrealistic loan terms have not been able to survive the problems in the industry, but Warren Buffet, General Motors and other parties that are more committed to improving the quality of manufactured homes and tightening lending are starting to fill the void. Many housing experts say mobile homes still represent the best shelter option for low-income households, and they believe that manufactured homes will help increase the national homeownership rate. (www.wsj.com)
Wall Street Journal (03/30/04) P. A1; Hagerty, James R.
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Conservatories Bring the Outdoors Inside
Sunrooms are gaining popularity among home owners who want to enjoy the outdoors without actually going outside. Modern versions generally are made of lightweight aluminum and vinyl, with interior wood frames and glass that minimizes glare, cleans itself, retains heat in the winter and keeps the space cool during the summer. Though many home owners use their sunrooms for relaxation time, others use them to house kitchens, dining rooms, great rooms or swimming pools. The conservatory design is the most common, according to James Ruppel of Holbrook, NY-based Four Season Sunrooms, because of its "classic elegance." (www.chicagotribune.com)
Chicago Tribune (03/26/04) Shea, Jim
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Fed to Offer Affordable Housing Incentives
HUD plans to reward state and local governments that remove excessive regulatory barriers to building affordable housing by offering them an extra point or two when it considers applicants for its competitively awarded grant programs. The new priority points would make a huge difference as state and local government compete for HUD funding. Exclusionary zoning, antiquated building codes, duplicative reviews and approval processes and excessive and unwarranted fees are the kinds of obstacles that often drive up the cost of low-income housing by tens of thousands of dollars. "We believe this initiative will facilitate a dialogue on reducing excessive regulations that have a very real impact on working families being priced out of their own communities," says A. Bryant Applegate, senior counsel and director of HUD's Affordable Communities Initiative. (www.inman.com)
Inman News Features Online (03/26/04)
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Program Analyzes What Kind of Home You Really Want
More than 70,000 real estate agents use AdWriter software to quickly pen classified ads, and the program can now be used to gauge home buyer preferences. Using collaborative filtering and the Values and Lifestyles (VALS) attitude-measurement system, AdWriter takes note of the properties viewed by online users and determines what AdWriter's Bryan Blue calls "a pattern of wants, needs, desires." The software uses this information to suggest particular homes, just like Amazon.com tracks buying patterns and recommends certain books to repeat customers. "We're helping people find homes without them telling us directly what they want," remarks AdWriter creator Hal Douthit. The program — which eventually will expand from broker databases to multiple listing services — cuts the time spent on the home search. (www.chicagotribune.com)
Chicago Tribune (03/28/04) Sichelman, Lew
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Higher Materials Prices Hit Builders
Rising prices for steel and other construction supplies are leading some firms to request government assistance or to consider job cuts as a way of defraying costs. The price increases are affecting residential, commercial and civic construction projects throughout the country. Overall building costs could rise by as much as 6% this year as a result, which would be the largest hike in a decade, according to Donald Boyken of Boyken International, a construction development and management firm. Steel prices are causing the greatest concern, as they have risen 40%-60% in the past few months, prompting major groups like the Associated General Contractors of America and the American Road & Transportation Builders to lobby for price adjustments on federal highway contracts. In addition to steel, home builders are facing price surges in lumber, strand board and copper wiring. For now, low mortgage rates are keeping residential construction afloat; but some firms may begin resorting to layoffs or even bankruptcy if the unusually high rate of inflation in steel costs continues. (www.usatoday.com)
USA Today (03/30/04) P. 6B; Kirchhoff, Sue
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The New Pioneers of Sprawl
Culture clashes are emerging as residential development expands into Larimer County, CO, a rural locale near Denver that is home to farmers and ranchers. Colorado State University research scientist David Theobald expects exurban development statewide to grow from almost 2.5 million acres in 2000 to more than 5 million acres by 2030. Though development in Larimer County is restricted to plots of 35 acres or more, Colorado State University professor and conservationist Rick Knight notes that these parcels are too small for wildlife and native plants to thrive. Meanwhile, many owners of these so-called "ranchettes" do not anticipate the hardships that accompany rural living. In response, former Larimer County Commissioner John Clarke penned the "Code of the West" to warn them of unpaved roads, the smell of manure and frequent power outages, among other rural facts of life. Many ranchers, farmers and property-rights advocates are against boosting the 35-acre limit as a means of curbing growth. As an alternative, Larimer County Rural Land Use Center Director Jim Reidhead believes ranchers and farmers should be allowed to develop unproductive parcels of fewer than 35 acres in exchange for conservation easements on the remainder of their properties. (www.csmonitor.com)
Christian Science Monitor (03/29/04) P. 1; Paulson, Amanda
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Target: Zero-Energy Homes
"Zero-energy homes" are gaining popularity among the nation's home builders. These dwellings produce more energy than needed, allowing residents to sell the excess to local utility companies. Builders are employing solar technology such as photovoltaic cells and parabolic trough systems — the latter of which use mirrors and sunlight to heat fluid inside receiver tubes to create steam, run a turbine generator and make electricity. Solid-state lighting, landscaping, high-performance windows, cellulose insulation and efficient water heaters also are important components of zero-energy homes. Incentives offered by some states make the technology more affordable, and U.S. Energy Department official David Garman says federal officials also are looking to slash the cost of photovoltaic cells and other products. Though zero-energy projects generally are undertaken by custom builders, Centex is among the production builders interested in this approach. Centex, for instance, collaborated with the Davis Energy Group on the Livermore, CA-based Los Olivos development, where a demonstration model of a zero-energy home generates electricity even when outdoor temperatures exceed 100 degrees. (www.philly.com)
Philadelphia Inquirer (03/28/04) P. K1; Heavens, Alan J.
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The Dysfunctional Family House
In a shift away from open floor plans, great rooms and shared spaces, many builders are offering his-and-her offices, Internet alcoves, master-bedroom retreats and other walled-off areas to give home owners more privacy. "We call this the ultimate home for families who don't want anything to do with one another," says Pardee Homes CEO Mike McGee about the Ultimate Family Home showcased at the recent International Builders' Show, complete with divided rooms and hidden spaces. Though home owners are paying more for a greater number of rooms and special features, they are not necessarily getting more space. According to NAHB, the living room has diminished in size to make way for other rooms. Both mass-market and upscale builders now offer private areas, a trend that University of Virginia architecture department Chairman William Sherman believes discourages strong family relationships. (www.wsj.com)
Wall Street Journal (03/26/04) P. W1; Fletcher, June
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Home Buying Is Special Challenge for the Young
Though the average first-time buyer is aged 32, the National Association of Realtors® reports that a record 345,000 homes were purchased by buyers in their late teens to mid-20s last year. According to NAR spokesman Walter Molony, "You see a greater number of young people who are mature and who understand that homeownership is the key to building wealth over time." A multitude of low- and no-downpayment programs, as well as financial assistance from relatives, have allowed young buyers to take advantage of attractive interest rates and flee the rental market. Since these buyers depend on near-perfect credit histories to secure financing, experts believe they are more disciplined than their peers when it comes to spending and saving. Mundelein, IL-based lender Kevin McGovern says buyers in their 20s tend to purchase second homes and custom-built dwellings earlier than others because they have had more time to accumulate equity. Many purchase homes at low pre-construction prices or flock to neighborhoods known for rapid appreciation to make the most of their investments. (www.chicagotribune.com)
Chicago Tribune (03/26/04) Adler, Jane
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Tablets Offer Great Promise, But Have Some Drawbacks
Tablet PCs are a great alternative to using a laptop or PDA, but Tablets' drawbacks may contribute to their slow adoption. A case study of Tablets conducted by Overall Laundry Services Director of Information Management Gary Leaf shows that Tablet-based solutions offer some advantages over other solutions. Tablets allow better note taking and observing for users over laptops, and their handwritten input can come in handy during meetings. The Tablet's full screen also offers visibility and entry advantages over the PDA. While Tablet-based solutions may be useful for workers in healthcare, warehousing and sales, the solutions do have disadvantages. The cost of adopting the operating system capable of handwriting recognition can be high, as can the cost of maintaining Tablets' battery life. Overall, however, the Tablet does present users with an option that can improve information visibility, reduce redundancies and increase productivity. (www.memphis.bizjournals.com)
Memphis Business Journal Online (03/29/04) Yudkowsky, Chaim
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The Entrepreneur's Financial-Fitness Checklist
Though many entrepreneurs are intimately involved with the products and services they plan to offer when starting a business, few have the financial background necessary to manage their businesses. Founders should have a working understanding of at least the basics so they can work intelligently with advisers and serve as the first line of defense to ward off potential headaches. The first and most important thing to recognize is the importance of cash, which necessitates a coordination between vendor and customer payments. A financial system should be in place from the get-go, one that will grow with the company and will help measure important indicators of a business' status. Creating a yearly operating and budget plan before the first day of each year is vital. Consistently paying vendors is appreciated, and when seeking payments from customers, do not be shy about asking for short-term payments. Founders should not put up personal property when financing their business and should keep in mind that if a deal sounds too good to be true, it generally is. Advisers should be chosen carefully, and taxes must be paid on time to avoid fines and even legal proceedings. (www.businessweek.com)
Business Week (03/25/04) Feld, Bradley
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Best Smartphones for Web Surfing
The ideal Web-enabled smartphone would have a large screen, Qwerty-style keyboard, sufficient memory and a long battery life, but most of the smartphones on the market lack one or more of these features. The Palm Tungsten W, for instance, boasts a large screen and Qwerty keyboard, but its processor is fairly slow. Meanwhile, text-entry is made more difficult with the Siemens SX56 because it does not have a traditional keyboard. Users of the Palm and Siemens smartphones will also encounter slow downloads, but they can surf more quickly with the Samsung SPH-i700 or Hitachi G1000 due to higher-speed networks. The absence of a Qwerty keyboard and a small display prevent significant productivity gains with the Samsung smartphone, but the Hitachi G1000 offers users a miniature keyboard, 320x240 pixel display, faster download and operational speeds, a 400MHz Intel processor, a dedicated graphics processor and a slot for additional memory. (www.wirelessnewsfactor.com)
Wireless Newsfactor (03/24/04) Long, Mark
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