Nation's Building News Online: April 19, 2004

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Builders and Consumers Feeling the Sting of Soaring Materials Prices

With the spring building season entering into full swing, soaring material prices — particularly for oriented strand board (OSB), plywood, framing lumber and metals — are cutting deeply into the profit margins of many builders, contractors and remodelers, forcing them to pay the difference or pass on the costs to consumers.

Collectively, the increases in wholesale wood and metal prices over the past year could add about $5,000-$7,000 to the cost of building an average-sized home, according to data compiled by NAHB economists.

Random Lengths, a trade publication based in Eugene, OR, reports that prices of both OSB and plywood hit an all-time high for the week ending April 16. A 4x8 sheet of 7/16-inch OSB board cost $16.58 and a 4x8 sheet of 15/32-inch 3-ply southern westside plywood sold for $16.80. OSB and plywood prices have each skyrocketed more than 100% since a year ago.

Meanwhile, Random Lengths reports that framing lumber prices are at their highest level since July of 1999, and now stand at $439 per 1,000 board feet.

A survey of builders last month found few, if any, cases of outright shortages. But more builders reported higher costs for more materials than in similar NAHB surveys conducted in recent years.

“Our OSB and plywood costs are up more than 100% since last year. Add in increases in concrete, metal and framing materials and the average cost of a home constructed through our company has increased by about $7,000 since the beginning of the year,” said Jason Betsill, vice president of Jeff Betsill Homes Inc., which builds 2,400-2,600 square foot single-family homes in Fayette County and Coweta County, GA, that are priced in the $240,000 range.

Betsill reports that his firm has absorbed some of the cost increases and has passed part of them on to consumers. “Fortunately, demand is still strong, but if interest rates go up and lumber prices remain high, we could see a slowdown,” he said.

“We have had to eat substantial sums of money to honor contracts,” says Dave Wrocklage, sales manager for Epoch Corp., a custom modular builder based in Pembroke, NH. “Everything we use in all our houses is going up — lumber, fasteners, sheet rock, steel. Nothing I know of is remaining static. Everything is rising rapidly.”

Epoch Corp. produces about 200 modular homes per year ranging in size from 2,000-3,000 square feet and priced in the $100,000-$200,000 range.

Wrocklage estimates his firm’s building materials costs have risen about 3% in the first quarter of 2004. “We do a quarterly review of our pricing and raise prices as necessary. Lumber prices change day-to-day. We can’t stockpile, we are at the mercy of our suppliers.”

A basic imbalance between supply and demand is fueling the surge in wood panel prices, and inadequate capacity to meet home building demand could worsen the situation as housing construction moves into its peak season.

Ninety percent of OSB demand comes from residential construction, including remodeling. OSB has increasingly displaced plywood in home building, but there were only slight increases in OSB capacity in 2002-2003, and only one new plant is scheduled to open this year.

Capacity in North America will increase by about 4% by year-end, but several plywood plants have closed, offsetting most of the new OSB capacity.

The wholesale price for a basic 4x8 sheet of OSB rose from about $6 at the beginning of April 2003 to more than $16 today. If an average home uses 300 sheets, that translates into $3,000, before accounting for increases in sales taxes, financing and other costs that rise in proportion to the cost of materials.

For plywood and lumber, residential construction represents about 70% of demand. Lumber prices have risen less than panel prices, and the increases have generally not been caused by a shortage of mill capacity. The tariff on imports from Canada affects the price, but the tariff rate has not increased since May 2002.

Over the past year, the average mill price of framing lumber increased from $282 per 1,000 board feet to $439. With an average of 16,000 board feet per house, that represents $2,500 before adjusting for any add-on costs.

Prices for products made from steel, copper and other metals have increased sharply, with much of the price hikes attributed to purchases by China. Steel and other metals generally account for a smaller share of new home costs than wood products, but metals are used in many components, such as trusses, windows, exterior doors, wire and HVAC equipment.

NAHB estimates that the overall increases for metals, if passed on to builders, could approach $2,000 per house.

NAHB has taken several actions in an effort to mitigate the effects of higher materials prices.

The NAHB Research Center has provided information about alternative materials such as non-structural sheathing, fiberboard and cementitious board that builders can use in their homes. For this information, click here.

NAHB lawyers have prepared contract language for escalation clauses in home sales to help protect builders from the adverse consequences of price spikes for building materials.

The adaptable escalation clause has drawn interest from scores of members. “We plan on incorporating this into our next contracts,” said Nathan Graben, president of Graben Construction Inc., a custom home builder based in Panama City Beach, FL.

To download the escalation clause, NAHB members can click here.

For further information about contracts, e-mail David Crump, NAHB’s director of legal research, or call him at 800-368-5242 x8491; or e-mail David Jaffe, NAHB’s staff vice president for construction liability and legal research, or call him at x8317.

NAHB opposes trade barriers such as anti-dumping and countervailing duties imposed on Canadian lumber, and the anti-dumping duties on Mexican cement. NAHB has lobbied the Congress and the Administration, as well as undertaken efforts to inform builders and the public about the adverse impact of trade barriers. NAHB is continuing its campaign for the elimination of tariffs and against the imposition of quotas on lumber imports from Canada.

NAHB has also contacted OSB producers and raised concerns about the impact of price increases on builders and consumers, calling on them to increase supply and create additional capacity.

To read a companion article in Nation's Building News Online about how some builders are beginning to use insulated concrete forms (ICFs) as a lumber alternative, click here.

Building News Coast To Coast

Builders Pack 'Wow' in Master Bedrooms

Both builders and realty agents are reporting an increasing interest among home buyers in large master bedrooms equipped with such luxurious new amenities as sitting areas, coffee or juice bars and spa-like master bathrooms. Industry professionals say the interest may be attributed in part to the post-Sept. 11 "nesting" phenomenon, as more people are inclined to stay at home to relax rather than travel. Gopal Ahluwalia, vice president of research for NAHB, notes that the master bedroom is now close behind the kitchen and bathroom as the most important room scrutinized by buyers. Many new homes are being built with larger bedrooms to accommodate a separate sitting area. These areas also may be used to accommodate a coffee bar, entertainment unit, exercise area or home office. Realtors® and builders are recognizing the importance of these upscale amenities, as a new study by the National Center for Real Estate Research shows that the inclusion of a sitting area increases the sales value of a house by 8%. In addition to the bedroom space itself, master bathrooms and walk-in closets are also growing in size as more bathrooms are equipped with whirlpool tubs and large windows and as closets include extra storage and space for dressing. The more luxurious homes may even feature a fireplace or outside balcony as part of the master suite.
Washington Times (04/09/04) P. F1; Chappell, Carisa: www.washtimes.com

The Next Trend for Homes Could Be Universal Design

Though many experts tout the benefits of universal design to the aging population, the idea has yet to catch on with home buyers and builders. Universal design allows home owners to stay put as they age with the help of wider doorways, stairless entries, low light switches, graded levels and door levers instead of knobs. Experts are calling for a campaign to educate the public about universal design, particularly how the features can blend in with the home and benefit people of all ages and physical conditions. For instance, low sinks make it easier for children to reach the faucets and wider doorways can accommodate both strollers and wheelchairs. "Take away the stigma and what you've got is convenience," remarks Diane Miller, executive director of Welcome, House of Modification Examples Inc. Since builders cater to demand, Leslie Marks of NAHB's Seniors Housing Council says that public education is crucial to the movement's success.

Milwaukee Journal Sentinel (04/09/04) Derus, Michele: www.jsonline.com

Plots & Ploys: Shrinking the Divide

More and more states are petitioning affordable-housing developers who seek tax-exempt bond financing and tax credits for their projects to provide high-speed Internet access to residents of these new developments. This year, for instance, California is awarding extra points to builders in the low-income housing tax-credit application process that have pledged to provide free Web access to residents. Separately, the nonprofit One Economy Corp. has been lobbying for states to provide incentives for developers to include high-speed Internet access in their affordable-housing projects. To date, a dozen states have adopted such measures
Wall Street Journal (04/14/04) P. B4; Muto, Sheila: www.wsj.com

Active Older Americans Finding That College-Linked Communities Stimulate Their Minds

Developers have built retirement communities near the University of Florida, the University of Michigan, Cornell, Dartmouth, Duke and Stanford as a way of giving retirees access to educational activities, allowing them to relive their college days and nurturing a sense of community. Oak Hammock near Gainesville, FL, for instance, features apartments or homes with entrance fees between $102,000 and $477,000 plus the cost of meal and maid service, access to assisted-living or skilled-nursing care if necessary. These fees also give them access to a banking center, a convenience store, massage therapy, a computer lab and courses and campus amenities at the University of Florida. There are an estimated five dozen retirement communities that have been developed near colleges or universities in recent years; however, not all of them provide health care or grant complete access to campus services.
Associated Press (04/12/04) Word, Ron: www.ap.org

NY Builders to Form Own Liability Insurer

New York home builders are planning to supply their own insurance coverage under the new Reciprocal Liability Insurance Company, which should begin offering plans to builders and remodelers within the next two months. The New York State Builders Association will run the company, which Executive Vice President Phil LaRocque says was created as a last resort after other major insurance providers, such as North American Casualty and Great American, recently pulled their coverage from the state. Before leaving the state altogether, insurers had been increasing their premiums in New York, complaining that the state's "strict liability" standard for builders makes them particularly susceptible to litigation over worker injuries. However, the state assembly has not been interested in changing the law, saying it has helped New York retain one of the highest construction safety records in the country. LaRocque notes that the lack of available policies has driven up the cost of insurance for the state's home builders even further and has substantially raised the average new home price for New York families. The state's insurance department, along with Sen. Nancy Larrain Hoffmann, has worked with the builders association to set up the new company.
Insurance Journal (04/12/04): www.insurancejournal.com/news/east/2004/04/12/41129.htm

Baby Buildings: Model Makers Create Condos in Miniature

A number of architects double as model builders, creating miniature structures used by developers to market high-rises and other projects even before groundbreaking. These models often feature the building's exterior and landscaping; but some go as far as showcasing individual units complete with spas, wine cellars and other amenities. Developers could shell out anywhere from $10,000 to more than $100,000, depending on the size and level of detail. Although most model builders use computers and laser printers to get the design right before creating the model out of plastics and acrylics; some still use pencils, knives and glue to make their replicas. Others go to the opposite extreme, offering three-dimensional computer models, virtual renderings and walk-through animations.
Miami Herald (04/11/04) P. 1H; Werne, Jo: www.miami.com

Steel Crisis Hinders Local Companies

Due to significantly higher steel prices and decreasing supplies, many small construction companies are trying to implement a survival plan. Prices for steel products, such as structural steel beams, nails, sprinkler pipes, metal wall studs, girders, cables and guardrails, have increased about 60% since January 2004, mainly due to a lift in U.S. tariff restrictions that allowed China to purchase 30% of all scrap steel. Construction companies often work for months to establish a deal with a client, but because of unpredictable steel prices and long delivery delays, many deals are being revised or renegotiated or simply terminated. Associated Builders and Contractors warns that there is no end in sight to the problems.
Tampa Bay Business Journal (04/09/04) Meinhardt, Jane: www.tampabay.bcentral.com

Split Personality

Split-level homes were popular from the 1950s to the 1970s, offering three levels separated by half-flights of stairs and more square footage than ranches at a lower price. Despite locations in mature neighborhoods near transportation and town centers, many of today's home buyers would rather avoid split-levels because of the smallish proportions of their kitchens, bedrooms and bathrooms; their limited storage space; and their uninspired façades. For some, however, limited housing choices have forced them to consider these dwellings. Those who lack the funds necessary to replace aging split-levels with brand-new homes are forced to remodel. Owners can put an addition on the back of the home, install energy-efficient windows and more sophisticated heating and cooling systems, jazz up the exterior with vinyl siding or bricks, modernize the kitchen and bathroom and replace the shag carpeting. Plumbing and electrical upgrades are also necessary if the home owner hopes to add a wet bar or computer station in the family room. Many other owners simply eliminate the walls that divide the kitchen, living room and dining area.
Chicago Tribune (04/09/04) P. 1; Mann, Leslie: www.chicagotribune.com

Home Builders Still in a Sweet Spot

Lennar Corp., Centex, DR Horton and other leading home builders experienced double-digit declines in their stock prices in the last week due to reports of unexpectedly strong retail sales and robust job growth in March as well as signs of rising inflation. These variables could prompt the Federal Reserve to boost interest rates; and because borrowing costs make residences less affordable, investors responded by unloading their home building stocks. However, Morningstar analyst Arthur Oduma does not expect the housing market to weaken unless interest rates jump significantly — especially since the entrance of echo boomers into the market and demand from other segments will continue to fuel sales. Oduma also notes that larger builders will benefit from industry consolidation, and their size gives them a competitive edge when it comes to land purchases and price negotiations with materials suppliers.
CNNMoney (04/14/04) Bhatnagar, Parija: www.cnn.com

Inner Strength

Jim Manuel, operator of a steel-fabricating business, is building a new house that has a frame made out of steel instead of wood — an idea the steel industry has tried to promote from time to time. Steel is often used in commercial construction, but is not as common in homes, though its resistance to termites is increasing its popularity. In Hawaii in particular, steel is a favored choice, with about 72% of new-home construction there consisting of steel-frame houses, according to Steel Framing Alliance President Larry Williams. The national average is about 2%, with the averages slightly higher in Florida and California, and Williams adds that the idea is becoming more popular in the Southeast. Steel is stronger than wood and lighter, making it less likely to be damaged by high winds or earthquakes, and it is not vulnerable to organisms. It permits larger open areas, does not shift like wood does and can be made from recycled metal, but it also conducts temperature more efficiently than wood and can be more labor-intensive to assemble. Some builders use both wood and steel in the same frame, and price may be a factor in steel's popularity.
Winston-Salem Journal (04/10/04) P. D1; Underwood, Kim: www.journalnow.com

Large Firms Band Together

The 13 home builders that comprise the Public Home Builders Council of America want investors to know that larger builders are not vulnerable to boom-and-bust cycles like smaller players. Consolidation in the last five years, supporters maintain, has helped these players grow and achieve the strength necessary to survive rising interest rates and anticipated drops in housing starts of 2% in 2004 and 5% in 2005. Moreover, large builders are financed through the capital markets, while smaller companies are forced to consult local lenders. Last year, one out of five new-home sales was made by the 13 members of the recently-formed consortium. Still, Fred Abbo of Hollywood, FL-based Prime Homebuilders believes it will be hard for builders to convince investors that housing is no longer a cyclical business.
Miami Herald (04/14/04) P. 3C; Hanks III, Douglas: www.miami.com

Hope for Those Who Want Homes of Quality

Florida Sen. Lee Constantine (R-Altamonte Springs) and Rep. Sandy Adams (R-Orlando) have proposed legislation that would force the Florida Building Commission to formulate strategies for constructing better quality housing. The bills follow a study of 406 new homes in Central Florida by the Orlando Sentinel and WESH-NewsChannel 2 that found major defects in eight out of 10 dwellings. Quality is on the minds of many in the industry, resulting in programs nationwide that aim to educate builders and subcontractors about proper techniques and establish standards for certain processes. Building Standards Institute CEO David MacLellan, for instance, has seen fewer disagreements between builders and home owners who read his books outlining the responsibilities of each party in terms of repairs and maintenance. Meanwhile, NAHB is rolling out a plan that makes classroom training, the creation of quality assurance manuals, random site evaluations and yearly audits mandatory for all builders. Dean Potter, working on behalf of NAHB, believes pictures that show the difference between good and bad jobs can help construction supervisors interact with immigrant workers. Potter also urges workers to take note of their mistakes so they can be avoided in the future. Most such programs are emerging in California and the the Southwest; and until they reach Central Florida and other locales, buyers must carefully gauge construction quality themselves.
Orlando Sentinel (04/11/04) P. J1; Tracy, Dan: www.orlandosentinel.com

Moving Files to a New PC

There are a number of free services available to PC users who need to move their e-mail address books and bookmarked Web site links to new devices. A primer for transferring e-mail contact lists is available at About.com, and another for copying Web site addresses and passwords is offered by BackRex Software. At Xdrive.com, users upload files that are later downloaded onto their new computers. Users should also consider hard-drive scrubbers from File Shredder and Necro File to erase any sensitive data on their old PCs.
Wall Street Journal Online (04/13/04) Mount, Ian: www.wsj.com

What to Do Before Disaster Strikes Your Small Business

Small businesses need to be just as prepared as large companies for natural or man-made disasters, viruses and other security threats and equipment failures. Drive imaging and tape back-up technologies helps businesses safeguard and easily recover important data. There are several products on the market that save images to portable hard drives, where files are stored and ready for retrieval. However, tape remains the most effective way to retain data for long periods of time, though the method is more costly because the tapes must be rotated and kept at another location. Once the technology is selected, businesses must implement back-up and service schedules and obtain a document from the service provider that explains how to restore key systems and applications in the event of a disaster. Businesses should store license codes, installation CDs, support information and other important items off-site as well. To maintain data and equipment access, small businesses should also install antivirus software and firewalls.
Smallbiz Pipeline (04/06/04) Ohlhorst, Frank J.: www.smallbizpipeline.com

Got It Handled?

When businesses link Avaya's IP Office — Small Office Edition to their local area network (LAN), they can handle 16 phone extensions; permit four-digit dialing and toll-free calls to branch offices or employee homes; and transfer incoming calls to cell phones, home phones or voice mail. The easy-to-install device requires little storage space and needs only to be connected to the wall jack and a phone to make calls. However, LAN integration is more complex and should be undertaken by the reseller. Once the installation is complete, businesses can run and reconfigure the phone system without professional assistance.
Entrepreneur (04/04) P. 56; Hogan, Mike: www.entrepreneur.com

Supreme Court Refuses to Review Wetlands Decisions

On April 5, the U.S. Supreme Court decided not to review three cases concerning the regulation of ditches by the Environmental Protection Agency (EPA) and the Army Corps of Engineers.

Rejected were a petition by NAHB in the case of Deaton v. United States and two other cases in which the association had submitted amicus briefs for the defendant in federal district court — Newdunn Associates v. United States and Rapanos v. United States.

“The Supreme Court’s refusal to review these cases is a disappointment to home builders nationwide,” said NAHB President Bobby Rayburn. “The Court clearly missed an opportunity to correct the failure of the EPA and the Corps of Engineers to consistently and predictably regulate wetlands under the Clean Water Act.”

In U.S. v. Deaton, the U.S. Court of Appeals for the Fourth Circuit ruled that a shallow drainage ditch in Maryland eight miles from a navigable body of water was subject to regulation under the Clean Water Act. This was inconsistent with the 2001 case of Solid Waste Agency of Northern Cook County (SWANCC) v. Army Corps of  Engineers, in which the Supreme Court ruled that the Corps did not have jurisdiction over isolated wetlands.

All three cases pointed to significant inconsistencies in wetlands regulation among the Army Corps districts and differences of opinion by the federal district courts.

“By not reviewing these cases, the Court has created serious consequences for any group seeking clarity in wetlands regulation,” said Rayburn.

The EPA and the Corps have a failing track record for providing regulatory guidance on the legal extent of their jurisdiction over navigable waters. As a result, it has become increasingly difficult for property owners to determine which portions of their land are federally regulated and which are not.

NAHB will continue to monitor all court cases related to this issue and press federal regulators for more definitive wetlands regulation.

For more information about these cases, e-mail Duane Desiderio or call him at 800-368-5242 x8146

Housing Snapshot

Mortgage interest rates increased for the third consecutive week as the financial markets watched further strengthening in the economy with expectations that the Federal Reserve at some point in the foreseeable future will be increasing its unsustainably low federal funds rate. A rise of 0.5% in the consumer price index in March fanned speculation that the Fed would be moving sooner rather than later, although inflation for the 12 months ending last month was only 1.7%. The Conference Board's Composite Index of Leading Economic Indicators moved up for the seventh consecutive month in March, adding to the perception that the economy is fast regaining its full strength. On the timber front, conditions worsened again last week and there is no indication that the markets have yet seen the worst of the price run-up as the peak home building season gets underway. Framing lumber climbed to $439 per 1,000 board feet from $420 during the previous week, Random Lengths reported, as plywood and oriented strand board continued to set new records. The mill price for 15/32-inch 3-ply CDX Southern Westside plywood was $525 per 1,000 square feet and OSB was $518.

Mortgage Interest Rates

30 Year Fixed Rate: 5.89\%
15 Year Fixed Rate: 5.23\%
1 Year ARM: 3.69\%

Housing Starts: Mar. 2004

Total: 2.007 million\%
Single Family: 1.599 million\%
Multi Family: 408,000\%

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

Kudos for Working to Keep Housing Prices Affordable

As the executive director of Habitat for Humanity of Martin County, Inc., in Stuart, FL, I applaud the association for finding ways to keep house pricing down.

To quote NAHB President Bobby Rayburn, "Providing affordable housing for America's working families is already a national crisis."

And we share his commitment to "ensuring that all Americans have a safe, decent and affordable place to live." It's a Habitat quote.

There is a lot of conversation about affordable housing, but not much is being done about it. Thanks for your help.

Karen A. Kerwin, Executive Director
Habitat for Humanity of Martin County, Inc.
Stuart, FL

Green Building Coverage Was Balanced

This last issue (Nation's Buiding News Online, April 12) was an excellent resource on the pros and cons of green building. I want to build green but not foolishly, so I appreciate your realistic approach.

Charlotte Wolter

Housing Starts Advance in March

Housing starts increased to a seasonably adjusted annual rate of 2.007 million units in March, the Commerce Department reported last week. The pace was 6.4% above February’s upwardly revised rate of 1.887 million units and 15.2% above the March 2003 pace.

Report Studies Housing Affordability Issues in Florida

While low mortgage interest rates and rising household incomes made home buying more affordable in Florida towards the end of the last decade, that trend appears to be slowing down as unemployment has climbed at the same time as house prices have appreciated at a record clip, according to a recent report by the University of Florida’s Shimberg Center for Affordable Housing.

“Median incomes generally increased faster than median house prices over the 1990s time period,” says “The State of Florida’s Housing 2003,” which was revised in February. However, unemployment in Florida increased from 3.6% in January 2000 to 5.3% in January 2003,” resulting in a “bare increase” in per capita personal income from $28,366 in 2000 to $29,596 in 2002.

Over the last five years, the report says, house prices have increased by almost 4% over the rate of inflation, which is “higher than during any other five-year period we’ve recorded, including the high appreciation period of the 1970s.” (The report relies on a more elaborate method of determining price appreciation than calculating annual changes in median sales prices.)

According to preliminary estimates, house prices in Florida have increased 8% annually since 2000, the report says, at a time when general inflation averaged 1.97% annually.

In the meantime, housing affordability has worsened significantly among the state’s low-income renters.

In 2002, the report estimates that 809,000 of the state’s 1.9 million renter households — or 41.6% — paid more than 30% of their income for housing, and 361,000 of those — or almost 45% — paid more than half of their income on rent. Most of those paying more than 50% had incomes below 50% of their area’s median income.

Renters who were paying more than 30% of their incomes on rent were concentrated in Miami-Dade, Broward and Palm Beach Counties and the Tampa Bay metropolitan area. Together, they accounted for 53% of what the report considers “cost-burdened” renters.

Don’t Miss NAHB’s Spring Construction Forecast Conference

See what's on the horizon for the housing industry at the NAHB Spring Construction Forecast Conference on Wednesday, April 21, featuring the country's premier economists and finance experts including David Wyss, of Standard & Poor’s, and James Glassman, of J. P. Morgan Chase. 

Get the latest forecasts on housing starts, project budgets and other economic bellwethers. The conference will be from 8:30 a.m.- 4 p.m. at the National Housing Center in Washington, D.C. A reception will be held immediately following the conference.

Visit the NAHB Web site for more information. For a tentative agenda, click here. Register online, get a faxable registration form by clicking here,  e-mail the registrar, or call 800-368-5242 x8338 for details.

Builders Turn to Concrete as Alternative to Volatile Lumber Prices

Faced with soaring and fluctuating building material prices and a shortage of skilled craftsmen to finish his new homes, Buddy Hughes, principal of Hughes Construction, a Lexington, NC-based residential and light commercial builder, found that absorbing the cost increases and weathering the storm was just about all that he could do.

But that was nearly 10 years ago, and since then he reports that he has found a long-term solution.

After some experimentation, he switched from stick building to building with Insulated Concrete Forms (ICFs) in 1996 and hasn’t looked back. “It was a very easy conversion that I absolutely recommend other builders consider in their business,” Hughes said. “Concrete prices aren’t volatile and as a builder, it allowed for time savings and reduced cycle times.”

Hughes cited the relative stability of concrete prices as a primary reason for using the material in his new home construction. Information from the Bureau of Labor Statistics indicates that while steel and lumber prices have fluctuated wildly in the past four years, concrete prices have experienced relatively little movement — within 10% — and since November 2001 have barely registered any movement at all.

Hughes’ decision reflects a growing trend across the country. Many residential builders have discovered that using concrete in residential construction makes the building process more efficient and cost-effective.

Eight years ago, when Hughes first converted to ICF construction, 7% of all homes featured above-grade concrete walls. By 2002, that figure doubled to 14% and is expected to hit 22% by 2006.

“The price of concrete is very stable and lately, any variance is almost negligible,” said Bronford, CT-builder James Eggert. “As an owner, it’s an advantage to our budgets and forecasts.” In 1997, Eggert built his personal home using ICFs. His home continues to serve as a show home for his construction company.

Eggert and Hughes are members of the Building Systems Councils’ Systems Builders Council (SBC), which represents the interests of builders specializing in concrete, log, modular and panelized homes.

SBC members interested in concrete home building will work closely with the concrete manufacturers in NAHB’s new Concrete Home Building Council to promote the benefits of residential concrete construction to colleagues and consumers. Membership in the SBC is open to any NAHB member interested in learning more about building systems.

For more information about the Systems Builders Council and the Concrete Home Building Council, visit the council Web pages or call 800-368-5242 x8576.

Builder Donates Log Home to Habitat for Humanity

NAHB Log Homes Council member Southland Log Homes of Irmo, SC, donated the first Habitat for Humanity log home, which is being built by Central South Carolina Habitat for Humanity. This is the first of two Habitat log homes being sponsored by the Log Homes Council.

Groundbreaking on the one-acre lot in Pelion, SC, occurred last weekend. Made of 6x8-inch round pine logs, the walls are expected to be raised on Saturday, May 8. Habitat for Humanity is building the four-bedroom, two-bath, 1,238-square-foot home for Ray and Sara Brogle and their three children.

“This is an important project for the Log Homes Council,” said Joe Taylor, Jr., president of Southland Log Homes. “Planning and building this home is a true team effort, and we thank Habitat for Humanity, the Brogle family and everyone who has had a hand in donating this peaceful, durable, efficient and beautiful log home to a deserving family.”

“We are pleased to be a part of this unique effort,” said Rich Horn of Northeastern Log Homes, Kenduskeag, ME, and president of the NAHB Log Homes Council. “To see this project come to fruition and benefit a young family will be very satisfying, and we are excited about the opportunity to expand the range of housing options Habitat for Humanity can offer those in need.”

Central South Carolina Executive Director Roy Kramer will supervise a coalition of Lexington County Lutheran Churches in constructing the log walls, with assistance from Southland Log Homes.

“Each Habitat home is unique in its own way,” said Kramer. “It is always a good feeling to fulfill a family’s need, and we welcome the assistance of the Log Homes Council in this worthwhile endeavor.”

The Log Homes Council is a member of NAHB’s Building Systems Councils. For more information about the council or log homes, visit www.loghomes.org or call 800-368-5242 x8576.

Customer Satisfaction Surveys Make Good Business Sense

As a home builder, you measure everything in the building process, so why not measure your customers’ satisfaction with the home buying experience? You’ll get to know your customers better. You’ll also gain valuable insight that can benefit your business.

Currently, 25% of the nation’s home builders regularly survey their buyers. These builders have lower sales and marketing costs and fewer warranty callbacks. They get more referrals, too.

Measuring customer satisfaction while juggling everyday tasks can seem daunting, but it is business as usual if you’re focused on constant improvement. “I was hesitant to survey my home buyers at first,” said Rocky Rhodes, president of Acuff-Rhodes Construction in Overland Park, KS. “I figured asking about their satisfaction would bring ‘nitpickers’ out of the woodwork. I’ve learned quite the contrary. It’s given me priceless feedback that is useful in my own improvement.”

Ask the Right Questions

To get the most useful customer feedback, you’ll want to tailor your survey to suit your company and its products and services. Here is some basic information to gather from home owners and prospects:

• Demographic info. If you don’t already have this information in your client records, ask survey participants to supply their age, gender, household makeup, profession, income level, etc.
  
  

• Why did (or didn’t) you buy from our company?

• What do you value most in you new home?

• What can our company do better to improve the home buying and building experience?

• Will you refer our company to others? Why or why not?

Understanding this information is only the first step toward greater profitability. Changing the way you do business is the big step.

Act on the Feedback

If a survey reveals that the only reason why a customer wouldn’t recommend your company to their friends is because the home or project wasn’t finished on time, you can set different expectation levels or create an incentive plan for superintendents and trade contractors to stay on schedule.

Likewise, if you discover your buyers gradually are seeking age-specific features and are moving from a specific area, you can revise your product line, target your marketing and even refine your land acquisition strategy.

Here are some more feedback-driven case scenarios and strategies to fine-tune your business:

• If survey responses show that a portion of your buyers want two master suites instead of one — you could refine your product mix to include a plan that appeals to this market segment. This also will differentiate your company as a leader in customer responsiveness. If you’re building homes in the $300,000 range, just three more contracts a year means nearly $1 million in additional revenue.
  
  
• If you determine that your sales team is spending time on prospects less likely to buy — you could re-direct your marketing campaign to a more appropriate buyer profile. If you saved $25,000 in printing and mailing costs alone you could increase your annual profitability by 3%-4%. That’s money right to your “bottom line.”
  
  
• If your survey reveals that 90% of your respondents were pleased with their building experience and would recommend you to their friends — figure that qualified referrals cost you about $500 apiece in marketing expense and you received 30 leads in a year as a result of your survey. You saved $15,000 in direct expenses. Now let’s assume 20%, or six of those 30 referrals, built a home with you. At $300,000 per home, you just boosted your annual revenue by $1.8 million.

Still not convinced that home owner surveys are worth the investment? Last year your company probably incurred 0.5% in expenses due to human error, jobsite theft, late payment penalties or various otherwise avoidable wastes. If your annual revenues are $5-$7 million, you’re needlessly expending more than $25,000. You could survey your home owners for a fraction of that amount and gain information that could give your business a “shot in the arm.”

Paul Clem is national sales director for Enlight Research, Inc., an Overland, KS-based full-service market research company specializing in Web-based customer satisfaction surveys. For information, e-mail Clem or call him at 913-469-0070 x14.

See How You Measure Up With ‘Cost of Doing Business Study’

Find out how your home building business measures up against the competition with NAHB's "Cost of Doing Business Study (2004 Edition)." Available from BuilderBooks.com, the study gives home builders a rare glimpse at other builders’ books by providing data about profitability, cost of sales and expenses from hundreds of home builders across the country.

The latest edition of the study provides an opportunity to see how your financial performance stacks up against the industry as a whole — survey respondents grossed 18.9% on average — and against your goals for your business.

The report analyzes several categories, including:

• Volume
• Operation type
• Land costs vs. no land costs

Categories are broken down further by:

• Average performance
• The 25% most profitable home builders
• The 25% least profitable home builders

The data provided can help you fine-tune comparisons between study results and your company. With gross profit margins of 26.6% and net profits of 15.7%, the study indicates that small-volume builders with land costs were the most profitable survey respondents.

Recognizing that financial performance is not the only measure of a company’s success, the 2004 “Cost of Doing Business Study” also offers supplemental information on developing cost control systems and cutting cycle time. In addition, the study includes historic “Cost of Doing Business Study” data, financing information, material usage and features in new homes, new-home cost components and trade contracting trends to provide a complete picture of the state of the home building industry.

The “Cost of Doing Business Study (2004 Edition)” is available to NAHB members for $79.95 and to non-members for $249.95. To view or purchase this publication online, click here or call 800-223-2655 to order.

'Business Basics for Builders: Accounting' Available from BuilderBooks.com

"Business Basics for Builders: Accounting," available from BuilderBooks.com, presents a successful accounting system that is easy to use, efficient and effective. It contains the information you need to set up a system that is specific to the residential building industry. Learn how to communicate with your accountant, manage internal control measures and streamline complex methods for recording accounts receivable, job cost entries and inventory items.

To view or purchase this publication click here or call 800-223-2665 to order.

More Business Management Publications Available at BuilderBooks.com

BuilderBooks.com also offers a variety of other publications about business management. To view or purchase these publications, click here.

Want More Information About Effectively Managing Your Business?

NAHB’s Business Management Department offers a variety of online resources to help you run your business better and more profitably. Click Business Management Tools for articles about human resources, financial management, sales, production, technology, customer service and other business-related topics.

Subscribe to NAHB’s Business of Building e/Source

NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, click here on the members only side of www.nahb.org.

University of Housing Offers Courses on Business Management

The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Search keywords: “Introduction to Business Management.”

In a Win for NAHB's Multifamily Members, FHA Improves Mortgage Insurance Program

NAHB’s long campaign to improve and modernize the FHA multifamily mortgage insurance programs came to a successful conclusion on April 2, when the final rule on new FHA multifamily mortgage loan limits published by HUD contained provisions allowing the HUD secretary to increase the limits in areas where they are too low.

Limits can now be increased by up to 140% of the statutory base limits and by as much as 170% in HUD-designated "high-cost" areas. Previouysly, those increases were 110% and 140%, respectively. In areas not designated as high cost, builders can request as much as a 140% increase over the base limit on a case-by-case basis.

NAHB staff provided guidance during HUD’s deliberations on the methodology for determining high cost areas. Under the final rule advocated by the association, developers now can more easily build rental housing in the nation’s costliest markets — areas that tend to be among those most in need of such housing.

NAHB’s efforts to improve the FHA multifamily insurance program began by helping to modify the model HUD used to set premiums, which were unreasonably high. In  meetings with HUD, NAHB economists suggested solutions that have been incorporated into the model and that have produced more accurate results and lowered premiums.

That was followed in fall 2001 by a successful NAHB effort to persuade Congress to raise the FHA multifamily mortgage insurance program’s base loan limits by 25%. Those limits had not been raised since 1992. Last year, Congress agreed to index those limits to inflation, effective Jan. 1, 2004.

But there is still some work to be done. NAHB fears that the FHA — which has been doing a record amount of multifamily mortgage insurance business since these improvements were implemented — will not have sufficient commitment authority in FY 2004 to meet the demand for FHA-insured multifamily loans.

With a commitment authority level of $25 billion (only $2 billion more than provided in FY 2003), it is likely that FHA will have to shut down the program before the end of the fiscal year. The FHA multifamily programs were temporarily shut down twice in 2003 and again in early 2004 because HUD’s authority to issue commitments for new loans ran out.

The Dangers of Raising Your Prices

Raising margins is generally considered a good thing, I am usually one to trumpet price increases. But sometimes gross profit margins in percentage terms do not end up as net profit dollars — the real end game.

Raise prices and lose money? How can that be? All the industry consultants tell us to raise our prices.

The problem is that the demand for remodeling and construction services is inelastic — an economics term that means that as prices rise, demand tends to fall. That is okay until the demand is for you.

In many cases, remodelers can rasie prices quickly. That’s okay when they start very low, at say a 25% markup for a 20% margin. A 10% price increase leads to a 37.5% markup or 27.27% margin, a significant price increase — but you only go from being the bargain contractor to one in the middle of the pack. To go all the way to a 50% remodeling markup and 33.3% margin, you are raising your prices 20%.

Most of us would balk at paying that much of an increase for gas, a favorite restaurant, even golf! The bottom line is, if the markup results in 16.67% less target volume, you make less money than originally planned.

I know several companies in the post-2001 period that held their margins at 40% and lost 40% of their business volume, presumably not jobs for repeat clients and good referrals. Those that dropped their margins 5% actually did the same amount of work as planned, reducing their profit target 5% for the year. That zeroed out the net profit, but covered all overhead.

Those that kept their margins or raised them fell short of breakeven volume and lost money, lots of money. We should always price for a 10% net profit target, providing some wiggle room for slippage and inelasticity.

Give Your Clients Solid Reasons to Choose You

Your old clients and their referrals need a reason to choose your firm as you raise your prices to sustainable profit levels. Be sure you offer them a clear reason, other than price, to use you. Some ideas include:

• Extended warranty
• Free maintenance
• Design or selection services
• Awareness and use of higher quality materials and techniques

Acknowledge referrers with gifts certificates, cards, flowers, etc.

Know When to Fold Them …

When times are bad — closing ratios are slipping, leads are decreasing, fewer clients are willing to be references — you need to add a dose of reality. Reduce your prices, but only to advertising source leads, when you notice call volume falling and you feel that price is the only way out short-term. Begin raising prices to reach profitability when your leads are seasonally strong, your niche is solid and less competitive and you have developed a unique selling proposition, etc.

Know When to Hold Them …

Hold prices when the competition is no different than you are, your clients are not raving cheerleaders for the quality of your work and you aren’t experiencing an increase in the quality and number of leads.

The following simple tips should help you navigate your course of action:

• Never give “discounts” — instead pull items out of a contract.
• Always get top dollar from your returning clients; you have earned their business and they are happy with your value proposition.
• Try to sell value — emotional benefits — not price.
• Do things other contractors are not doing, or not doing well.
• Take sales training; it is not a dirty word.

Alan Hanbury, CGR, CAPS, treasurer of the House of Hanbury, Newington, CT, immediate past chairman of the NAHB Education Board and past chairman of the National Remodelors™ Council, has given many presentations at local, region and national home/remodeling shows on controlling overhead, planning for profit, cash flow and advanced financial analysis. For more information, contact Hanbury via e-mail.

Publicize May as National Remodeling Month in Your Market

Fact: one in every eight people in the United States is considered an “older” American, according to government statistics. 

Fact: more than 35 million people have indicated that they want to remain in their homes — age in place — as they get older.

Fact: May is Older Americans Month.

Online Lectures Advocate High Density Housing

Advocates of higher density housing should check out an online lecture series explaining the value of compact housing and correcting some of the myths that often underlie NIMBY responses to affordable housing developments.

Developed with support from the Fannie Mae Foundation, “Demystifying Density” is a new module in the Affordable Housing Design Advisor. Ten short lectures by Tom Jones, a former executive director of the California Futures Network and the current dean of the College of Architecture and Environmental Design at California State Polytechnic University, can be watched on a computer in streaming video presentations, and they are accompanied by powerpoint slides that can be used in presentations.

The lectures address three key questions:

• What is density?
• What does density look like?
• How can I use good design to create compact, high density housing developments that are attractive, high quality and affordable places to live?

The lectures point out that compact development saves open space, can reduce car trips by 20%-40%, improves air quality, reduces traffic and pedestrian fatalities and supports local stores and businesses in the community.

Among problems identified in the lectures:

• “Many infill lots that could become housing are zoned commercial to attract more sales tax uses.”
• “The jobs and housing imbalance worsens. More people are driving longer commutes to find affordable homes.”
• “Development and road patterns discourage walking or bicycling. Car use for non-work destinations now accounts for 73% of all trips.”

The Affordable Housing Design Advisor was developed by the Department of Housing and Urban Development with assistance from the American Institute of Architects, the Enterprise Foundation, the Federal Home Loan Bank of Boston, the Local Initiatives Support Corporation, the National Congress for Community Economic Development and the Neighborhood Reinvestment Corporation.

Land Conservation Conference Examines Pedestrian-Friendly Community

More than 200 land conservation experts from Pennsylvania met for the 2004 Pennsylvania Land Conservation Conference in Lancaster County, PA, earlier this month. The conference, presented by The Pennsylvania Land Trust Association, serves as Pennsylvania's annual training and networking event for those involved with private and public land conservation efforts throughout the state.

The conference featured a walking tour of Millcreek, the first Smart Growth neighborhood in Lancaster County. Built by Charter Homes, Millcreek utilizes Smart Growth principles to create a strong sense of neighborhood and preserve valuable land resources, including the creek after which it was named, which runs through the community.

Millcreek is a pedestrian-friendly neighborhood with a general store that reduces the need to drive and it features behind-the-home garages, sidewalks, walking trails, homes with front porches and acres of usable open space. In addition, single-family detached homes and townhouses are located on the same streets. The community includes carriage homes.

Rob Bowman, president of Charter Homes, provided the home builder’s perspective on designing, gaining approval for and selling a Smart Growth community in a conference panel discussion, “Growing Smarter: Guide Development, Conserve Land and Build Strong Communities.”

The Pennsylvania Land Trust Association promotes voluntary land conservation by supporting the missions of land trusts and building a positive climate for conservation in the state.

Mold Legislation Introduced in 21 States

While mold hysteria in the public and the media has subsided, the issue is far from forgotten at state legislatures. Twenty-one states have introduced some form of mold legislation in 2004, including bills that mislabel mold as “toxic” and attempt to link mold exposure to adverse health conditions.

NAHB’s common-sense mold policy holds that residential mold legislation and regulations must be based on sound science and research. The association offers a wealth of resources for builders and staffers to use in advocating this policy.

At the top of the list is the "Scientific Literature Review of Mold," which offers an expert panel's review of existing scientific mold literature.  In short, the panel reported that mold can cause allergic reactions in sensitized individuals but there is scant evidence that it is linked to many other health problems.

The panel was convened by NAHB to help association members sort through the complex and often conflicting information on the health effects of mold. Hard copy results of their study are available for purchase or NAHB members can download the report online.

Other mold resources are available on NAHB's Web site, including a list of pending mold legislation, legal information, consumer resources and talking points. Association members and staff can access this information online from the NAHB Web site.

To learn more about mold issues and resources available to members, e-mail NAHB's David Jaffe or call him at 800-368-5242 x8317.

'Get the Facts on Mold' Booklets Available from BuilderBooks.com

A 15-page booklet, "Get the Facts on Mold," available from BuilderBooks.com, is an essential resource for home buyers, home owners, tenants and the general public on water intrusion and mold issues. Help your prospects and buyers understand: what mold is, how it can grow in a home, routine maintenance procedures that can prevent mold problems and methods of removing mold.

To view or purchase this publication, click here or call 800-223-2665 to order.

San Diego Voters Reject Growth Control Measure

For the second time in five years, voters in San Diego County shot down a measure to contain growth. A March ballot initiative to downzone agricultural land and establish a de facto urban growth boundary was defeated by a margin of 35% “yes” to 65% “no.”

Known as the Rural Lands Initiative, or Proposition A, the measure would have created minimum parcel sizes of 40 acres, 80 acres and 160 acres on nearly 700,000 acres of land in the unincorporated region of San Diego County.

Duncan McFetridge, a local no-growth activist, led the movement, with support from labor and environmental groups.

The Building Industry Association of San Diego estimated a loss of 35,000 homes if the proposal were to pass and teamed up with the county's Farm Bureau and Realtors association to defeat it.

Extensive campaigning on both sides included direct mail, media buys and educating community groups. Spending totaled $2.2 million.

Grand Rapids Builders Respond to Land Use Report

Home builders in Grand Rapids, MI, last month provided policy makers with their responses to a final report that was prepared last year by the Governor’s Land Use Leadership Council.

The report contains more than 100 recommendations on issues such as regional and multi-jurisdictional planning, increased densities, purchase/transfer of development rights, taxpayer-funded transit systems and the environment.

While the Home and Building Association of Greater Grand Rapids said that it agreed with much of the report, there were some parts that raised concerns.

“Our members recognize the need for increased density and creative zoning, and are open to other perspectives,” said Judy Barnes, the association’s executive vice president and CEO. “That’s why we’ve issued our position on the recommendations. Our public officials will soon see draft legislation that will impact how our state will grow, so we appreciate that they have asked for our imput.”

“This report uses words like ‘land use’ and ‘multi-jurisdictional planning,’ so it can be a little overwhelming to the average person,” said Brian Bosgraaf of Cottage Homes, Inc., who is president of the association.

“But if these recommendations become law,” he said, “it could change where and how we live in Michigan. Michigan is growing and we should grow the right way. Builders respond to the needs of the market, so we must be involved in the process.”

Mick McGraw, of Eastbrook Homes, who is a two-time past president of the association and a member of the governor’s council, participated in the review of the report.

Among the local builders’ positive responses to the report:

• Alternative wastewater disposal systems received strong support because “they are healthier for our environment and provide for a wider range of land use.” It was noted that “the approval process should be fast and efficient."
• A proposed state and local government review of regulatory barriers to the production of affordably priced housing was strongly supported.
• A proposal for minimum allowable densities of four single-family houses per acre and 10 multifamily units was supported because “this is the best and most cost-effective way to improve housing affordability, reduce consumption of land and curb urban sprawl.
• New standards for narrower residential roads and rights-of-way were strongly supported.

The builders noted their opposition to purchase of development rights and transfer of development rights programs advocated in the report; shoreline protection efforts that could compromise private property rights and raise concerns over exclusionary zoning and government takings; and bonds for farmland preservation.

Participants Sought for Home Builder Research Panel

As part of its mission to improve America's housing, the NAHB Research Center invites you to join its online Home Builder Research Panel. Your participation is vital in helping the center keep up-to-date on changes in the new home building industry. 

To join the Home Builder Research Panel, visit www.nahbrc.org/researchpanel and complete the short questionnaire*.

Members of the panel receive periodic e-mails inviting them to participate in research studies on topics such as:

• The effectiveness of existing building products
• Suggestions for improvements
• How they deal with current industry issues

After participating in three online questionnaires, members receive a token of appreciation valued at approximately $20.

* Privacy Pledge: Any information you provide is kept strictly confidential. Your e-mail address will never be sold, rented or given to another party. You may request to be removed from the Home Builder Research Panel at any time by e-mailing jmcalpin@nahbrc.org.

Inventor Turns Grounded Airplanes Into For-Sale Houses

By Jessica Swesey, Inman News
Nothing bugs veteran airline pilot Tom Bennington more than having to tear apart an airplane. That's why he's transforming Boeing 727s into practical living spaces. Yes, that's right — living spaces, as in homes.

Go to www.inman.com for more real estate news.

Ask the Lawyer — About Down-Zoning

Q:  The county where I planned to build townhomes and garden apartments proposed a new ordinance that would “down-zone” my property. As a result, the new ordinance will not accommodate higher-density projects like mine. In fact, there is already a lack of affordable housing in the community. How can I persuade the county not to adopt its proposed down-zoning?

A:  You should consider raising arguments under the federal Fair Housing Act (FHA) to dissuade the county from enacting its down-zoning ordinance. Among other things, the FHA seeks to ensure that certain classes of people, including minorities, are not the victims of housing discrimination. The U.S. Supreme Court has declared that the FHA’s goals to prevent discriminatory housing practices are “of the highest priority.” Accordingly, since the 1970s the federal courts have considered a series of cases concerning racial discrimination in housing, brokerage and other real estate transactions.

In several of these cases, local government have been found to be in violation of  the FHA for a variety of land use and zoning actions. These include denying construction permits for affordable housing projects, adopting ordinances that prevent such projects from being built or re-zoning particular parcels to block affordable housing projects where minorities would reside.

Counties (and other zoning bodies) should understand that they may violate the FHA even when they do not intend to discriminate against minorities. They are violating the act when the effect of their action denies housing to minorities.

For example, consider a situation where a county enacts a regulation to increase minimum lot sizes. That regulation consequently drives-up housing costs and unintentionally prevents classes of minorities from buying homes. The county most likely did not intend to discriminate racially when it passed its minimum lot size requirement. However, in most judicial circuits, that defense would not be successful insofar as the FHA is concerned — because it is the effect of government action that matters.

It is important to understand that the FHA is not an affordable housing statute. Congress passed the FHA with a specific purpose: to eliminate housing practices that discriminate against minorities and other groups. Nonetheless, the FHA should make government bodies think carefully when they raise barriers to multifamily and other high-density projects. Where statistics, demographics and other evidence show that government actions have created racially segregated housing patterns — or have effectively denied minorities access to affordable housing — the FHA should cause land use regulators to take a second look at the consequences of their actions.

House Bill Would Index VA Loan Guaranty

A bill (H.R. 4065) recently introduced in the U.S. House of Representatives by Rep. Ginny Brown-Waite (R-FL) would index the VA loan guaranty to 22.5% of the Fannie Mae-Freddie Mac conforming loan limit.

If that law were in effect today, the maximum no-downpayment VA-guaranteed loan would be $300,330 and that amount would be adjusted upward without further action by Congress as the conforming loan limit is adjusted.

The NAHB Board of Directors adopted policy in support of indexing the VA guaranty in this manner at its fall meeting in Boston last year.

Currently, the amount of the VA guaranty is fixed by Congress at 25% of the total loan amount but no higher than $60,000, which limits the maximum no-downpayment loan an eligible veteran, active duty servicemember or reservist can receive to $240,000. The low amount of the guaranty relative to FHA and other low-downpayment loan programs prevents the VA program from being used to purchase homes in many of the nation's high-cost areas.

To read the legislation, click here, and enter H.R. 4065 in the box at the upper left.

For more information about the bill or NAHB’s policy on this issue, e-mail Bill Renner or call him at 800-368-5242 x8597.

Job Corps Tour Makes Stops at Home Builder Shows

Representatives of the Home Builders Institute (HBI), the workforce development arm of NAHB, have been on a whirlwind tour of various home builders association shows to promote HBI’s Job Corps programs to the membership.

HBI began its outreach effort in February at the Northeast Construction Expo in Worcester, MA, where home builders from Connecticut to Maine had the chance to learn about HBI’s training in Job Corps, courtesy of the Rhode Island Builders Association.

The next stop was Builder Mart ’04 in Timonium, MD, where HBI delegates mingled with more than 8,000 building industry professionals. The show’s sponsor, the Home Builders Association of Maryland (HBAM), connects its members with potential employees through a “Job Postings” section on its Web page that exclusively lists HBI Job Corps graduates.

HBI also visited the 25th Annual Building Industry Association of Northeastern Pennsylvania’s Home Show. Among those visiting the HBI exhibit was Leonard R. Sendelsky, who has been newly elected to the National Housing Hall of Fame.

Every year, HBI trains and places more than 2,000 Job Corps students in industry-related jobs, helping address the needs of the NAHB membership for qualified workers. At the same time, it provides at-risk youths with job training and the chance to pursue rewarding careers in the construction industry.

HBI has programs in seven trades — carpentry, facilities maintenance, electrical wiring, painting, plumbing, brick masonry and landscaping — on 66 Job Corps campuses in 39 states and the District of Columbia.

For more information on HBI training programs in Job Corps, e-mail Maria McIntyre or call her at 800-795-7955 x 8912.

Online Tools Help Architects and Builders With Coastal Projects

The Andersen® Design Pressure Estimator and Coastal Product Finder are proprietary Web-based programs designed to help architects and builders find the right fenestration products for coastal applications. Based on information provided by the user, they estimate design pressure requirements, recommend the Andersen® products that will meet them and provide certified documentation and test reports. The estimates need to be confirmed by a qualified architect or structural engineer.

The program is the first of its kind in the window and door industry.

Headquartered in Bayport, MN, Andersen Windows is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

The software was developed in cooperation with Standards Design Group (SDG) a Lubbock, TX, company that works closely with the Wind Science and Engineering Research Center at Texas Tech University. SDG participated in writing the 2000 IBC/ASTM Referenced Standards — the building codes now enforced in many coastal areas of the United States.

The Andersen Design Pressure Estimator is available to registered users at www.andersenwindows.com/stormwatch.

How It Works

Users register at the Web site, then enter basic site and building information, including ASCE year, wind speed, exposure, building category and mean roof height.

Builders can get more detailed information after entering window or door width and heights, and the wall zone or roof zone location. The program then estimates the overall DP rating for the structure’s windows and patio doors. A product finder identifies Andersen® products with Stormwatch™ protection — featuring impact-resistant glass — that meet or exceed the DP ratings estimated by the program. At that point, third party certified test report documentation for the products selected can be printed. Data for multiple projects can also be saved for access at a later time.

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.

Help Build This Year’s Family Build Home for a Mother of Three

Volunteers are needed to help build this year’s Family Build home for a mother of three who works as a school security officer in Washington, D.C.  Family Build, in conjunction with DC Habitat for Humanity, will be conducted from April 24-29 during the NAHB Spring Board of Directors meeting, and members and theirs spouses are encouraged to help for as many days as they can.

This is the second year that NAHB has conducted Family Build. Last year, the Seniors Officers’ wives, several area members and their spouses, a past NAHB CEO and Home Builders Institute Job Corps students helped build four homes in the Washington D.C. suburb of Forest Glen, including a home for the Ovalles family, who helped build their own home.

Transportation will be provided to and from the job site. Lunch and t-shirts will also be provided. No building experience is required. There will be tasks for all job levels, building skills and abilities.

For more information or to volunteer, click here or contact Shari Smith at 800-368-5242 x8308.

Recruit Three Members, Get a Membership Day Jean Jacket

Members who recruit three or more new members throughout April as part of the NAHB Membership Day campaign will receive a 2004 NAHB jean jacket. NAHB National Membership Day is April 26.

This year, Membership Day prizes also include: 

• Double Spike Credits: All recruiters will receive double spike recruitment credits for their April recruits. Double Spike retention credits will also be issued for the retention of new 2003 members.
• Rookie Recruiter Award: This award is presented to first-year members who recruit the most new members during April within their group size.

New this year, NAHB will Web-cast Membership Day activities and information, including tips from top Spikes, new member mentoring ideas, creative Membership Day activities from HBAs around the country and more.

For information, e-mail the Membership Hotline at membership@nahb.com, call 800-368-5242 x8440, or visit www.nahb.org/membershipday.{{TOPAD}}

Make Your Connection With www.nahb.org

Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB.

Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started.

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.

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.