Nation's Building News Online: June 21, 2004Print All Articles Text Version |
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NAHB, Treasury, HUD Extol Local, National Economic Benefits of New HousingTreasury Secretary John Snow and HUD Secretary Alphonso Jackson joined NAHB President Bobby Rayburn at a Las Vegas housing site on June 18 to extol the benefits of housing to the local and national economy. Treasury Secretary John Snow and HUD Secretary Alphonso Jackson joined NAHB President Bobby Rayburn at a Las Vegas housing site on June 18 to extol the benefits of housing to the local and national economy. Appearing at The Verandas at the Peaks, a new single-family housing community under development by Astoria Homes, Rayburn said, “One might wonder what would compel two powerful cabinet members to travel more than 2,000 miles from Washington to stand with us here in the desert heat. I believe I have the answer. “Secretaries Snow and Jackson understand that housing is a major and thriving component of the national economy, accounting for about 14% of the Gross Domestic Product. They know that housing has played an even more essential role in the economic recovery over the last two years — creating new jobs and serving as an engine of economic growth.” Surveying the bustling new home development, Rayburn observed that similar new neighborhoods under construction across the country are generating substantial economic benefits for local communities in terms of local jobs, wages and tax revenues. “Consider this,” he said. “In a typical community, building 100 single-family homes generates about $41 million in local income and $6.6 million in local tax revenues over 10 years.” While housing has led the economic recovery in recent years, Secretary Snow said that other sectors of the economy — including manufacturing, retail and telecom — are also reporting positive prospects for sustained growth and job creation. Snow credited the economic resurgence to the Administration’s tax policy reforms, which he said will result in lower income tax bills this year for 845,000 Nevada taxpayers. “As a home builder, I can tell you that solid economic and job growth are important for housing,” said Rayburn. “It will ensure that we will continue to have strong demand for new housing into the future.” Rayburn also commended Secretaries Snow and Jackson for working with the nation’s home builders to urge the Congress to pass homeownership tax credit legislation and a Federal Housing Administration zero downpayment mortgage insurance program. These two important housing initiatives would help ensure that low- and moderate-income households get a chance to achieve the American dream of homeownership. The homeownership tax credit, which has strong bipartisan support and is currently pending in both chambers of Congress, would help working Americans currently priced out of the market to buy their first home. The credit would stimulate construction of 50,000 new or rehabilitated homes each year and create 120,000 new jobs annually. The FHA zero downpayment program directly addresses what is widely viewed as the greatest obstacle faced by potential first-time home buyers — the ability to assemble enough funds for a downpayment. Legislation (H.R. 3755) to implement this program was introduced in the House earlier this year by Reps. Patrick Tiberi (R-OH) and David Scott (D-GA). Companion legislation has yet to be introduced in the Senate. HUD estimates that 140,000 families would be able to become home owners if this proposal is enacted into law. Building News Coast To CoastGlidehouse Is a Prefab That's Sleek, ModernMarin County, CA-based architect Michelle Kaufmann designed the prefabricated Glidehouse in response to the state's affordable-housing crisis. The factory-built modular home aims to merge the indoors and outdoors with a wall of glass, and several eco-friendly features allow owners to cut energy costs. These features include gliding sunshade panels, which give the home its name; durable bamboo floors; and a proprietary insulation system that recycles 30% of the energy used by the home owners. Buyers will shell out about $120 per square foot for the Glidehouse, which ranges in size from one to four bedrooms. Kaufmann is currently working on models that encompass two or three stories in an attempt to meet the needs of the urban market. The Glidehouse is nearly 90% complete when it arrives at the construction site, and the buyers must ensure that the land and foundation, utility connections and kitchen appliances are waiting. "This is the first real example of a new breed of house which really marries an architect design solution with all the benefits of factory production," remarks Fabprefab.com editor Michael Sylvester. "It's subtle, it's accessible and it's affordable." The New Housing Market — And How to Make the Most of ItThough most experts do not foresee a housing-market crash over the next five or 10 years, buyers are expected to encounter higher interest rates and weaker price gains. Interest rates will rise from historical lows, although they are not forecast to reach the double-digit levels of the 1980s. More and more buyers are opting for riskier adjustable-rate mortgages to cushion the blow, but many still will be priced out of the market. Some observers believe housing could take a hit from the rental market as a growing number of buyers put homeownership on hold and instead take advantage of deals offered by landlords, many of whom experienced hard times in recent years as renters turned to homeownership. Price gains, meanwhile, are expected to weaken and fall more in line with income growth. As for the aging population, experts anticipate stronger second-home sales in the near future — especially in the traditional retirement havens of Florida, Texas and Arizona — but sellers could find it difficult to unload McMansions as baby boomers scale down to more modest dwellings. Immigrants and minorities are expected to drive the housing market, and many will have access to homeownership if lenders continue to ease underwriting guidelines and provide innovative loan products. Furthermore, housing inventory continues to be constrained by the lack of developable land and environmental regulations; and while price gains remains strongest in areas with a limited supply of homes for sale, these markets will likely be hardest hit during a downturn. Noise Limits for Builders PostponedEarlier this week, a group of nearly 100 home builders convinced a majority of Port St. Lucie, FL, council members to postpone action that would restrict construction hours within city limits. The builders cited the fact that they have initiated a public information campaign to help ensure workers are not disruptive to the neighborhoods in which they are building in as the reason for the delay. Under the proposed law, no commercial or residential construction would be allowed to occur on Sundays or legal holidays. Residents making home repairs and city employees working on projects would be exempt. Councilman Christopher Cooper was dismayed by the decision to postpone. One of the ordinance's most vocal supporters, Cooper responded, "This ordinance isn't designed to take food off anyone's table. It still gives you 63 hours a week to work." A compromise that would restrict all noisy work to 7 a.m. to 7 p.m. weekdays and 7 a.m. to 4 p.m. Saturdays is possible; current laws allow such work to proceed seven days a week from 7 a.m. to sundown, with builders arguing in favor of this status quo. Panels Gain Favor in ConstructionStructural insulated panels (SIPs) are being used in more and more commercial and residential construction. The panels resemble large wooden sandwiches and consist of polystyrene foam insulation stuffed between two panels of oriented strand board. SIPs can be manufactured in a wide array of shapes and sizes to fit design and building needs. The panels can then be linked together, kind of like toy Lego building blocks, to form everything from walls to floors to ceilings. Due to the fact that they fit together so tightly, less energy is required to heat or cool a home or building. Cabaniss Construction founder Larry Cabaniss remarks, "It's an Igloo cooler. In a SIPs house, you can go up in the attic in the summer and go to sleep." Another advantage is the fact that SIP structures can be constructed faster and with less labor than traditional building methods. Industry Questions State-Run Storm Water InspectionsThe New Mexico Environment Department (NMED) will shell out over $1 million per year — $550,000 of which will come from the state and the remainder from federal grants — to run the National Pollution Discharge Elimination System program. The money will pay for state inspectors to ensure that builders comply with federal storm water runoff limits. Permits from the U.S. Environmental Protection Agency for commercial or residential development on more than one acre are presently free, but contractors are concerned that permit fees will be imposed to cover costs when the state assumes responsibility for the program. Once in control, NMED hopes to manage water quality on its own and alter the program to fit state needs. According to Golden Associates' Bob Goodman, "A storm water plan for one acre could cost anywhere from $1,200 to $4,000 and that would be passed onto the home buyer." The Rio Grande Chapter of the Associated Builders and Contractors is launching an educational campaign regarding upcoming changes in the permit program. More Than Empty-Nesters Flock to Carriage, Patio HomesEmpty nesters often flock to carriage homes — also called patio homes or villas — because they offer an open floor plan and the convenience of having plum amenities on a single level. At the Adams Crossing development in Adams, PA, 60 carriage homes are clustered in groups of four and feature lofty ceilings, gourmet kitchens, breakfast bars, a laundry area and master-bedroom suite on the first floor and a great room complete with a fireplace and loft. The 2,500-square-foot dwellings are priced at $285,000 or more. Though one-level homes are usually geared toward retirees, they are attracting more and more young couples and singles without children. "It's amazing how many people in their 30s and 40s feel they're buying their last home and are preparing to live in them forever," remarks Pat Self, a Pennsylvania realty professional. Many are drawn to carriage homes for their maintenance-free lifestyles, as snow removal and landscaping tasks are handled by the home owners association for a monthly fee. Builders Fight Bush Plan on Low-Cost HousingSince the failure of legislation that would have beefed up oversight of Fannie Mae and Freddie Mac, HUD has proposed a rule that would gradually boost the number of low-income mortgages that must be bought by the firms each year from 50% of their total purchases today to 57% by 2008. The National Association of Home Builders, the National Association of Realtors® and the Mortgage Bankers Association are among the industry groups that oppose the regulation and are planning to submit a comment letter to HUD and several key lawmakers. They believe the rule inadvertently could hike costs for middle-income borrowers if the government-sponsored enterprises are forced to cut their purchases of middle-income loans in order to meet the new low-income threshold. In addition to imposing stricter terms on mortgage lenders that sell loans to the GSEs, the rule could jeopardize the Federal Housing Administration program if the GSEs limit their purchases to lower-income borrowers with more favorable credit ratings, leaving the FHA with the weakest performers. Homes for Sale: Wooded Lots, Great Views, Logging OptionalTimber companies in Washington state, Northwest Florida and other areas of the country are promoting "forest reserve" communities where buyers can purchase a small tree farm, build their dream home on it and either preserve the timber or sell it for profit. For example, Weyerhaeuser Co.'s McKenna Forest Reserve in Pierce County, WA, offers 20-acre lots for $140,000 to $250,000, 80% of which already have been sold. The land retains its forestry zoning designation when it changes hands, so buyers need to obtain residential permits from the county and install septic systems, water wells and other essential infrastructure. However, the contract prevents buyers from developing more than one acre of each lot. Similar farmsteads are being marketed by St. Joe Co. in Leon, Wakulla and Gadsden counties in the Florida Panhandle, ranging from five to 15 acres each. Some tree farmers and environmentalists oppose these communities, insisting that they cast a deceptively favorable light on logging practices and encourage development in forested areas. Anti-Mold Industry Grows With Debate About DamageHome owners worried about mold can spend anywhere from $10 to $2,000 on testing, ranging from visual inspections and air sampling to do-it-yourself kits and mold-sniffing canines. Supporters of mold testing believe early detection can reduce remediation costs, which surpass $100,000 in the most serious cases. Others attribute the testing frenzy to class-action lawsuits with hefty payouts. Most mold infestations can be blamed on leaky pipes or sudden bursts, but shoddy construction that leads to moisture buildup also can be the culprit. Though the fungus has been linked to asthma, allergies and other respiratory illnesses, recent research by the Institute of Medicine failed to find a connection to cancer, memory loss, fatigue and other health problems. However, some experts do not believe the results of the study will put an end to home owners' concerns. VoIP Reduces Costs, Boost ProductivitySmall businesses can benefit from Voice-over Internet Protocol (VoIP) technology in terms of productivity gains and cost-savings. However, owners of small companies are hesitant to embrace the technology because their existing phones still work, and they do not want to deal with the hassles that oftentimes accompany new systems. Many VoIP systems can be integrated with the e-mail, customer relationship management (CRM) and accounting applications already in place, and vendors can make the transition easier by implementing them in phases. Avaya IP Office-Small Office Edition is one such product geared toward small businesses, which works with analog, digital and IP-based phones. The $1,900 system easily integrates with content-management and e-mail systems, as well as various software applications, and even permits incoming calls to open applications and retrieve customer information. Reusable Paper: It's Here!With Secap's Re-Writeable medium, users can print, erase and reuse the same sheet over 1,000 times. The paper-like material needs no inks or toners, and its accompanying desktop printer simultaneously erases and re-images documents. The Re-Writeable medium — which is both waterproof and dust-free — should help companies cut down on paper usage and eliminate the need to shred confidential papers. Pilot studies are presently underway in Philadelphia, Fort Lauderdale, Miami and the District of Columbia. Builders Urge Democratic Party to Adopt Housing Policy AgendaThe nation’s home builders urged the Democratic Platform Drafting Committee to adopt a national policy agenda to address America’s housing challenges during a hearing before the panel on June 18 in Santa Fe, NM. Testifying on behalf of NAHB, Bill Killmer, executive vice president in charge of the association’s advocacy agenda, urged the Democratic panel to incorporate NAHB’s housing policy statement in its party platform to help fulfill the promises enunciated in the landmark Housing Act of 1949 of providing a decent home and suitable living environment for every American family. Specifically, Killmer called on the panel to give both affordable and workforce housing appropriate weight in the Democratic platform. Workforce housing, a central issue for NAHB, is housing that is affordable for teachers, police officers, firefighters and other public servants, as well as millions of Americans in the service and retail industries. Millions of the nation’s working families — people who teach our children, keep our streets safe and provide the services we depend on — simply cannot afford to live in the communities in which they work. “A community suffers when the people who provide its essential services go home to a different zip code at the end of the workday,” said Killmer. To help solve America’s housing challenges, NAHB outlined four policy recommendations to extend homeownership opportunities to those segments of our population who have not yet shared in the dream of owning their own home and to help working Americans to obtain decent, affordable rental housing: The first is a strong economy with low interest rates. This will raise real incomes, create new jobs and increase the purchasing power of working Americans so they can afford to rent and buy decent shelter. The second is reliable financing, and for this NAHB insists that the nation maintains its strong and dynamic secondary housing finance market. “We must make sure that efforts to reform the regulatory structure of the housing government sponsored enterprises do not impede the ability of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to do what they do best — which is providing lenders with new mortgage products and ensuring a constant and even flow of credit for home mortgages,” Killmer told the panel. The third element is federal government support for special programs and tax incentives that can help families buy or rent the kind of home that meets their needs. NAHB called on the Democratic Platform Drafting Committee to endorse homeownership tax credit legislation pending in both chambers of Congress that would bridge the gap between what it costs to build a high-quality home in an underserved market and what a moderate- or lower-income family can afford to pay. The government should also provide tax credits that make rents more affordable, as well as appropriate funding for the Low Income Housing Tax Credit (currently the only significant federal incentive for expanding the stock of affordable rental housing for low-income families). NAHB noted that other government tax incentives, including deductibility of mortgage interest and exemption of capital gains on the sale of a principal residence, are also essential components of federal support for housing and homeownership. The fourth and final element is sound land-use and regulatory policies at the local and state levels. In almost all communities where there’s a housing affordability problem, the cause is tied to a shortage of buildable land. This land-supply shortage is often directly attributable to unwise, and even conflicting, policies established by local governments, including large-lot zoning and urban growth boundaries. High impact fees and restrictions on higher-density housing such as apartments rule out more affordable housing options and force development further out in order to meet housing demand. “These regulatory barriers to affordable housing must be reformed by local governments in order to ensure an adequate housing supply, which will keep home prices more affordable and preserve housing choice,” said Killmer. The Democratic Party Platform will be unveiled in late July at the Democratic National Convention in Boston. Housing SnapshotMore segments of the economy began to pitch in and add strength to the recovery, according the Federal Reserve "Beige Book" report released last week. Big industry production surged 1.1% in May, with factory production the biggest slice of activity — a good sign that manufacturing is on a firm recovery path and the national recovery is gaining momentum. Overall hiring picked up "at a faster pace," and while producer prices rose 0.8% for the month, the Fed doesn't appear to view inflation as a "serious concern in the period ahead" as Fed officials signaled they intend to increase the benchmark overnight interest rate at a "measured," or gradual, pace starting as early as their next policymaking meeting later this month. Given the current economic environment, Frank Nothaft, Freddie Mac vice president and chief economist, anticipated that mortgage rates would remain "at or near their current consumer-friendly levels for the remainder of the year." Lumber prices, while still much higher than a year ago, began to decline last week. The price of framing lumber dropped $7 to $419 per 1,000 board feet, according to Random Lengths. Last year, the price was $309. The price of 15/32-inch 3-ply CDX southern west-east plywood declined $43 to $355 per 1,000 square-feet, and oriented strand board dropped $60 to $340, more than countering the $40 increase two weeks ago. Mortgage Interest Rates30 Year Fixed Rate: 6.32\% Housing Starts: May 2004Total: 1.97 million\% New Home Sales: Apr. 2004 *1.093 million Existing Home Sales: Apr. 2004 *6.64 million * Seasonally Adjusted Annual Rate You Can Help Solve the General Liability Insurance ProblemCosts for insurance are skyrocketing, and in some markets, builders can’t get coverage at any cost. In response, NAHB has formed a partnership with Marsh, the global risk management consulting firm. In a plan endorsed by the NAHB Board of Directors, our association and Marsh are gathering data from builder, remodeler and trade contractor members to create a comprehensive profile of the home building industry’s risk management needs. Marsh will then use that profile to develop effective new general liability insurance (GLI) products for NAHB members. The first and most important step is to understand the actual loss experiences of the residential construction industry. Marsh is surveying thousands of NAHB members to learn more about their businesses and their insurance needs. Members will also need to provide Marsh with a letter addressed to their insurance carrier giving the carrier consent to share loss information with Marsh. Over the next 60 days, NAHB and Marsh will be contacting builder, remodeler and trade contractor members and asking them to complete the survey, put the consent letter on their letterhead and send those materials to: Marsh, c/o Jessica Hatch, 1166 Avenue of the Americas, New York, NY 10036. Marsh will use the information gathered from builders, remodelers and trade contractors to develop a sophisticated profile of the residential construction GLI market. This broad understanding of the market will enable Marsh to develop risk-management strategies that improve the coverage, cost and availability of GLI for the home building industry. We need your help. If you are a builder, remodeler or trade contractor, then we need you to fill out the survey, put the consent letter on your letterhead and send these materials to Marsh. If you are one of the 44,000 members who receives the GLI mailing, then please complete the survey and consent letter and send these materials to Marsh as soon as possible. If you do not receive these materials in the mail, then I strongly encourage you to go to www.nahb.org/gli. There you will find all the materials from the mail piece. We need as many builders, remodelers and trade contractors as possible to participate in this effort. Please note that your insurance agent can be an important resource in finding this insurance information. I want to stress two points: 1) All information in the database will be kept in strict confidence; and 2) Your current insurance agent will have the opportunity to sell new products developed through this initiative. This is about your business profits. This is about the long-term health of our industry. Taking a few minutes to gather your insurance information and send it to Marsh could be the first step in solving one of our industry’s toughest challenges — and in saving you thousands of dollars in insurance premiums. Please do your part. Prospective Home Buyers Hoping for Decline in Prices Could Be Out of Luck, Report SuggestsMortgage interest rates continue to rise as the strength of the nation’s economy intensifies, and according to current projections from economists at NAHB, the cost of long-term, fixed-rate financing is expected to hit the mid-7% range by the end of next year. But a recent report from the Joint Center for Housing Studies of Harvard University suggests that housing prices are likely to present more of a struggle than interest rates for families trying to establish themselves as home owners. “If long-term interest rates rise,” says the Harvard report, “many home buyers would choose a hybrid adjustable-rate mortgage with a five- or seven-year fixed term instead of a 30-year fixed-rate mortgage. This could blunt some of the impact of higher rates and keep buyers in the market.” On the price side, according to “The State of the Nation’s Housing 2004” study, the expected gradual upward drift in home financing costs could bring some good news for existing home owners who are worried about housing price bubbles and the erosion of home values and somewhat sobering news for prospective buyers. “Higher rates would, however, likely reduce the number of homes on the market because owners would think twice before selling and giving up the current low fixed-rate mortgages,” observe housing researchers at Harvard. “This reduction in supply would help stabilize house prices.” As with new housing, the overall availability of existing homes on the market has already been tighter than usual, contributing to strong upward price appreciation. With household growth and demand for housing continuing to run strong, Harvard analysts don’t expect sales to drop off enough to alleviate lean housing inventories. “During past cycles, new construction activity did not retreat until the months’ supply had reached at least eight months,” the report says. “For current inventory to exceed even a six-month level, though, new home sales would have to drop by more than a third — a magnitude of decline not seen since interest rates skyrocketed in at least some markets. This makes a sharp inventory correction unlikely.” In the past, excessively high inventories have been the problem for the industry, and that worked to the benefit of consumers looking for favorable prices. In April, the most recent month for which home sales figures are available, there was a 4.3-month supply of new homes for sale and a 4.6-month supply for re-sales, both on the lean side. In order for current housing prices to tumble, even in metropolitan areas where they have been proceeding at a “blistering pace,” Harvard says, there will need to be concentrated job losses. “In the event of such an employment drop, homes for sale often flood the market at a time when few are in a position to buy.” But the pace of new job creation has recently improved to a furious pace, as employers added almost one million workers to the payroll in just the last three months. “With a resumption of job growth,” the report says, “overheated housing markets may well see only modest house price corrections.” Home Price Increases Slow to More Sustainable Rate in First QuarterWith mortgage interest rates on the rise, housing price increases in the first quarter of this year moderated to more sustainable levels, according to the latest quarterly House Price Index from the Office of Federal Housing Enterprise Oversight (OFHEO). Home price appreciation for the first three months of 2004 was 0.96%, or an annualized rate of 3.84%, according to the index. This was the first quarterly appreciation rate below 1% since the second quarter of 1998. Average U.S. home prices were up 7.71% in the first quarter of this year over the same period of 2003. By comparison, the price of non-housing goods and services tracked in the Consumer Price Index increased 1.59% during that time. “This moderation in the growth of house prices is welcome because continued price jumps like those of the fourth quarter last year would raise the potential for declines later on,” said Patrick Lawler, chief economist at OFHEO. The biggest quarter-to-quarter price increases occurred in Hawaii (15.16%), Nevada (15.08%), Rhode Island (14.8%), the District of Columbia (14.33%) and California (13.94%). Housing price increases also exceeded the national average in 13 other states. The smallest increases were in Utah (1.95%), Texas (2.34%), Indiana (2.8%), Colorado (2.85%) and Alabama (3.18%). During this year’s first quarter, six states experienced negative price growth — Vermont, Alaska, North Dakota, South Dakota, Iowa and Nebraska. Regionally, prices moved up most aggressively in the Pacific states of California, Oregon, Washington, Hawaii and Alaska, where the average gain was 12.21% for the 12-month period. The West South Central states of Arkansas, Louisiana, Texas and Oklahoma experienced the slowest price increases, which averaged 3.22%. Prices declined in 39 of 220 Metropolitan Statistical Areas in the first quarter, compared to three in last year’s fourth quarter and four in the second quarter. Fresno was the metro area with the fastest 12-month home price gains; they were up 21.38%. Rounding out the top five metro areas for price gains were Riverside-San Bernardino, CA; Fort Pierce-Port St. Lucie, FL; Ventura, CA; and Los Angeles-Long Beach. In eighth place, fast-growing Las Vegas, whose housing stock has been relatively affordable, saw price appreciation averaging 16.37%. “Last year’s rise in borrowing rates may have stimulated fears of further rate increases, causing some prospective purchasers to move more quickly to buy than they might have otherwise last fall,” said Lawler. “That sense of urgency apparently diminished last quarter after rates stabilized,” he said. “It will be interesting to see what the effects of more recent interest rate increases are in the future.” Senate Approves Greenspan for Fifth Term as Fed ChairmanThe Senate on June 17 confirmed Alan Greenspan to a fifth, four-year term as chairman of the Federal Reserve Board of Governors. At his Senate confirmation hearing on June 15, Greenspan presented an upbeat economic outlook, downplayed inflation fears and said that he sees few obstacles to continued job growth. “Our best judgment is that the economy is growing in a solid fashion. Inflationary pressures are not likely to be a serious concern in the period ahead,” Greenspan told members of the Senate Banking Committee. He added that the Fed’s actions were “very likely to be measured over the quarters ahead.” Asked whether the economy will continue to add a significant number of new jobs each month, continuing a trend that began earlier this year, Greenspan said, “We see nothing in the immediate outlook to suggest any major change in the path of employment growth going forward.” In another area of note to the nation’s home builders, the Fed chairman said that if higher interest rates were to slow the U.S. housing market, it would have little effect on the health of Fannie Mae and Freddie Mac, two of the nation’s largest mortgage financiers that have come under increasing congressional scrutiny in recent months. “I have no problem with the way they manage their structure of both their portfolio and the securitization parts of their business. I think it is rather well-done. They do a fairly impressive job,” he said. Greenspan did reiterate his concern regarding the size and scope of the GSEs, but acknowledged that "they have slowed their rate of growth recently, and I trust that's the beginning of a conscious trend." Greenspan, 78, has been Fed chairman since being appointed to the position in 1987 by President Ronald Reagan. He will preside over the Federal Open Market Committee, which sets interest rates, when the panel convenes its next meeting on June 29-30. May Housing Starts Virtually Unchanged From AprilThe nation’s housing market continues to fire on all cylinders, according to May housing starts figures reported by the Commerce Department last week. Housing starts hit a seasonally adjusted annual pace of 1.97 million units, which was down less than 1% from April’s upwardly revised 1.98 million-unit pace. “While the overall starts number was essentially flat, both single-family starts and building permits chalked up significant gains last month,” said NAHB President Bobby Rayburn. Single-family housing starts rose 1.4% in the month to a historically healthy seasonally adjusted annual rate of 1.64 million units. Building permits were up 3.5% overall to a 30-year high of 2.08 million units in May, with single-family permits rising 3.0% to their highest rate on record — 1.59 million units. NAHB Chief Economist David Seiders noted that average new-home production for the second quarter this year was “running at or above par with the very solid first quarter” and saw no signs of any systematic weakening. “As anticipated, the effects of the strengthening economy and job market, along with attractive increases in house values, evidently are overriding the higher interest-rate structure as an influence on home buyers,” Seiders said. Multifamily starts recorded a nearly 10% dip to a 327,000-unit rate, but strong permit issuance in that sector indicates an impending bounce-back. Permit issuance for multifamily units was up for the third consecutive month in May to a seasonally adjusted annual rate of 487,000 units. Regionally, three of four regions reported declines in housing starts. The West reported a substantial gain, two regions reported increased building permits and two reported declines in permit issuance. April-May averages revealed significant strength across the board. For the first two months of the second quarter, the pace of housing starts surpassed the first-quarter pace in the Northeast and West and equaled the pace set in the Midwest and South. In terms of building permits, the April-May average surpassed the first-quarter pace in every region. “Given the solid fundamentals of this marketplace, including relatively thin inventories of unsold units, great house-price performance — for both single-family homes and condos — and excellent demographic projections, we are currently forecasting 1.9 million starts for all of 2004, up about 5% from last year,” said Seiders. Eye on the EconomyBy David F. Seiders, NAHB Chief Economist Above-trend growth in economic output (real Gross Domestic Product) continues to generate strong growth in payroll employment, despite strong growth in labor productivity (output per hour). Payroll employment rose by 248,000 in May, and the gains for March and April were revised upward. The cumulative increase in payroll employment since the cyclical low last August now stands at 1.4 million jobs. The May level was still 1.3 million below the pre-recession peak in early 2001, but maintenance of strong job growth in coming months conceivably could eliminate that gap by the November elections. ‘Offshoring’ apparently is not a major quantitative issue, though human costs are sobering … A new government report on “offshoring” of U.S. jobs provided another labor-market plus for the Bush Administration. On June 10, the U.S. Department of Labor made its first attempt to count the number of U.S. workers are fired when their jobs are transferred overseas. The results for the first quarter of this year suggest that offshoring is not nearly as pervasive a phenomenon as many analysts and politicians have suggested. Furthermore, the results support judgments by both the President’s Council of Economic Advisers and Fed Chairman Alan Greenspan that offshoring is a natural part of an open and flexible world economy that should not be thwarted by “protectionist” measures. Both camps view education and job training as the appropriate ways to deal with the inevitable human costs of an open and competitive labor market. The Labor Department report indicated that the number of jobs transferred overseas came to less than 2% of the private nonfarm workers who lost their jobs in the first quarter. Incidentally, nearly two-thirds of those jobs were transferred to an overseas location of the same firm rather than to another company abroad. Furthermore, the report said job relocations accounted for only about 7% of total job losses, and only two-fifths of total relocations were offshore relocations — rather than shifts to other locations within the U.S. Core inflation definitely has picked up this year, but recent readings have receded a bit … The deflation threat of late-2003 has moved farther and farther behind us, and that’s really good news. On the other hand, we’re now faced with a problem typical of past economic expansions — a pickup of core inflation (excluding food and energy prices). Rising inflation eventually would take a real toll on the U.S. economy, and our central bank is committed to keeping the inflation process under close control. Both inflation and Fed actions to fight it entail upward pressure on the interest rate structure. The core Consumer Price Index (CPI) is the most closely watched measure of core inflation, and this series accelerated markedly during the early months of the year — from a year-over-year pace of 1.1% in January to 1.8% in April. This pace of acceleration appeared ready to break through the 2% mark that various Fed spokespersons had suggested was an acceptable upper bound. More recent indicators of core inflation have been less alarming. The core price index for personal consumption expenditures, a favorite of the Greenspan Fed, increased at a relatively benign 1.4% pace in April. And the core CPI slowed down a bit in May, increasing at a 1.7% rate (year-over-year). Even so, the year-to-date annual rate was 2.9% and the annual rate for the past three months was an outsized 3.3%. Bond markets are being whipsawed by shifting news on inflation … Inflation is an unmitigated evil for the fixed-income markets, particularly for long-maturity bonds and mortgage-backed securities. The rapidly deteriorating inflation picture drove long-term rates up substantially from their recent lows in March, pushing the 10-year Treasury yield up by more than a percentage point to 4.85% by mid-June. The long-term home mortgage rate rose by nearly as much, reaching 6.35%. The slight slowdown in the core CPI for May provoked a stunning bond market rally following the morning release of the data on June 15. Indeed, the 10-year Treasury yield was around 4.7% by the end of the day. The rally apparently was aided by market-friendly remarks by Alan Greenspan during his renomination hearing before the Senate Banking Committee the same day. Inflation situation is serious enough to kick off the Fed’s march back toward monetary neutrality … The relatively benign core CPI for May sidelined market fears of a 50 basis point hike in the federal funds rate at the Federal Open Market Committee meeting on June 30, but a 25 basis point hike still is a virtual certainty. And although the Fed has continued to talk about a “measured” pace of increase beyond that point, Greenspan has made it quite clear that the Fed will do whatever it takes to keep the inflation situation under control. NAHB’s forecast continues to assume that the federal funds rate target will rise from the current 1% to 1.75% by the end of 2004 and to 3.75% by the end of 2005. But everything is contingent on the course of the economy and the job market as well as on the path of core inflation. Monetary neutrality entails a real (inflation-adjusted) funds rate of about 2%. The real rate currently is in the negative zone, and the nominal rate may need to move from 1% to 4% in rather short order. Fortunately, the bond markets already have largely anticipated such a move in short-term yields. NAHB’s forecast envisions another percentage-point increase in long-term rates as the Fed moves the funds rate up by 3 points (or more). The housing market continues to ride high in the midst of financial market turmoil … Home sales and housing production have been remarkably high and stable despite volatility in both bond and stock markets, and house prices have shown ongoing strength as well. Housing starts for May totaled 1.97 units (annual rate) and single-family starts rose to 1.64 million. Furthermore, issuance of residential building permits climbed to 2.1 million in May, the highest in more than 30 years, and the single-family component hit an all-time high of 1.59 million. NAHB’s Housing Market Index (based on surveys of single-family builders) edged down in June (from 69 to 67) but still threw off powerful positive signals regarding buyer demand and builder expectations. Weekly surveys of lenders regarding applications for mortgages to buy homes (MBA series) displayed considerable strength through the second week of June. It appears that second-quarter home sales and housing starts may very well exceed the robust first-quarter numbers despite the rise in mortgage rates from their March lows. And it also seems highly likely that home sales and single-family starts for 2004 will exceed the record-breaking pace of last year. The multifamily sector figures to be about flat on a year-over year basis, with stable production of subsidized rental units and with a strong condo market offsetting some weakness in production of market-rate rental units. NAHB Chief Economist David Seiders analyzes the economy from the point of view of the housing market every other week in the free e-newsletter, “Eye on the Economy.” The preceding is a reissue of his June 16 edition. To subcribe to “Eye on the Economy,” click here.
Want more economic information? Find it in our publications. Find more in-depth information in our three economics publications, Home Builders Forecast, Housing Market Statistics and Housing Economics. All are available by subscription.
To learn more or to order any of these three NAHB economic publications, visit the Economics Publications Information section of the NAHB Web site or call 800-223-2665. Mark Your Calendar for NAHB's Fall Construction Forecast Conference Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry at NAHB's Fall Construction Forecast Conference at the National Housing Center in Washington, D.C. on Oct. 27. Click here for more information. Voters Face Bigger Decision Than Bush vs. Kerry in 2004 ElectionsWhile a hotly contested presidential race will bring voters to the polls this November, Americans will also be asked to determine the face of their state legislatures, where a Senate seat here or a House seat there could tip the political balance in half of the country’s state capitals. The Christian Science Monitor reported on March 30 that 25 states have legislative chambers that could change majorities by picking up or losing three seats or less. This has huge implications because a change in a majority redistributes power through committee assignments and leadership positions. As government affairs professionals know all too well, leadership has the power to decide which legislation gets heard and which is virtually dead on arrival. Experts say that the contest for party control over state legislatures is more intense than at any point in recent history. In North Carolina, for example, the House is split 60-60, with a unique power-sharing arrangement that allows for both a Republican and Democratic speaker of the House. Paul Wilms, director of government affairs for the North Carolina Home Builders Association, says that the 2004 election could easily result in another House tie. However, this means less for the building industry in his state, he said, because his group works closely with both parties and most legislators in his state are “pro-business.” The story also reports:
Tighten Up Your Focus Groups for Better Quality FeedbackWhen it comes to market research, “focus groups” is a term that’s often touted by industry professionals. Unfortunately, builders rarely use focus groups as effectively as possible. However, there are some simple steps you can take to improve the quality of your feedback. Focus groups are a qualitative research method, one of many, that validates opinions. The feedback they provide can support the expertise of the professionals involved with your projects and help bring about successful outcomes. For instance, many boomers today feel that their needs are not being considered when it comes to the design, development or marketing of new communities. Focus groups provide potential prospects with a venue for expressing their needs while giving you a better understanding about what your specific market finds desirable. Focus groups should be used:
For an existing community, a focus group with an unbiased moderator rather than a company employee can:
Inviting a group of people to a luncheon or similar social event and soliciting their ideas is not a true focus group. It’s just an informal information gathering. Although information from such a gathering does have value, it is less reliable because guests are generally reluctant to offer direct comments or to criticize their hosts. How to Get the Most Out of Your Focus Group It doesn’t matter what segment of the active adult housing market you are involved in — small subdivisions, infill, rental or large community developments. By following these simple focus group guidelines, you can transform your sessions so they will provide you with rich, useful customer feedback:
Focus groups are the coming wave in qualitative research. Embracing this tool now will help active adult communities compete and establish themselves on the cutting edge with their customers and prospects. Janis Ehlers is the founder and president of The Ehlers Group, Inc., a Fort Lauderdale, FL-based marketing and communications company that specializes in seniors housing communities and real estate development. Ehlers also is author of the book “Marketing Seniors Housing,” available at BuilderBooks.com, and an active member of the NAHB Seniors Housing Council. She can be reached via e-mail, at 954-726-9228 or visit The Ehlers Group Web site.
'Analyzing Seniors' Housing Markets' Available at BuilderBooks.com "Analyzing Seniors' Housing Markets," available at BuilderBooks.com, examines the complexities of seniors' housing markets and explains what developers, investors and other professionals need to know to understand and operate in these specialized niches. The publication familiarizes readers with the various product types and how they relate to the needs of seniors. It also explains market analysis, consumer research, market segmentation, financial analysis, market maturation versus market saturation and gauging performance of seniors' housing. Three case studies of regional markets comparing the development trends of both independent and assisted living within each market are also included. To view or purchase this publication online, click here, or call 800-223-2665 to order. Mark Your Calendar for NAHB's Seniors Housing Symposium 2005 "Building for Boomers & Beyond": NAHB Seniors Housing Symposium 2005 is scheduled for May 16-18, 2005, in Chantilly, VA. Mark your calendars. Learn More About Seniors Housing Through the Seniors Housing Council To learn more about seniors housing, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, e-mail Jeff Jenkins or call him at 800-368-5242 x8292. Inside Design: Smaller Rooms, More Creativity, Flex SpaceThe second of three parts — this focuses on interior design. NAHB’s Design Committee members and other NAHB design professionals gather annually for a roundtable discussion about upcoming trends in architectural design, community design, interior design and general housing. The following are some of their observations about interior design: ‘Design Savvy’ • Home buyers are inundated with design ideas. Television, cable shows, catalogs (think Pottery Barn), etc. are elevating their design knowledge and making them more “design savvy.” Floor plans: Smaller Rooms, More Creativity, Flex Space • 75% of all households do not have children under the age of 18, a statistic that is having a huge influence on home design.
• Flex spaces are important options or design features no matter where they’re located in the home. • In multifamily rentals, flex space is called “surf” rooms. The ‘Blue Decade' • This first decade of the new century is being referred to as “The Blue Decade.” The blues in residential and interior design are softer and graying out. • “Nature” colors are gaining popularity and include everything from kiwi and sage to “oxygen.” • Very bright colors are evident in retail and can be used in residential…but be cautious and judicious when using them. Bright pinks and greens appear to be making a comeback, but be advised to use them very carefully. Durability Rules • Durability is the watchword in interior design. Texture and natural materials are in — wallpaper and faux painting are dead. • Buyers no longer want to deal with cleaning and fixing wallpaper. • More color: Instead of wallpaper, designers are seeing homes with as much as 17 different paint colors on walls, trim, accents, finishing options and cabinetry. Upgrading to Match Home Owner's Style • Buyers are willing to spend more money on making their homes individualistic. • Granite kitchen countertops are a popular upgrade. Not Just for Walls Anymore • Flooring materials are being used on walls and ceilings as an option or upgrade.
To read, "Design Trends to Watch: 'Friends' Entries, More Courtyards," Part 1 of this series, published on June 14, click here. For more information about the NAHB Design Committee, click here, or e-mail Michelle Persinger Matuga.
Best in American Living Awards Entries Due in JulyEntry applications and fees for the 2004 Best in American Living Awards (BALA), the most prestigious new home design competition in the home building industry, are due in July.
Co-sponsored by Professional Builder magazine and NAHB, BALA is open to builders, architects, designers, developers, land planners and interior designers. Now in its 21st year, BALA has grown to 41 categories, ranging from single-family attached and detached homes in a variety of sizes, to custom homes, rental developments, best community and one-of-a-kind spec homes. The competition also includes the Best Affordable Home category, the U.S. Department of Housing and Urban Development Secretary’s Award for Excellence and the Best Smart Growth Community award. Additional design categories include best kitchen, best bath, best specialty room and best detail. Entries are judged on: exterior design/curb appeal, interior architecture and interior design, sales success of the product, construction quality and cost efficiency, and the site plan. Entrants are advised to submit good photographs along with their entry notebook so that the judges can evaluate architectural elements of the project. Floor plans are evaluated for their livability; considered are such elements as accessibility of the kitchen from the garage, traffic flow through the home, the relationship of formal to informal space and how adult areas relate to those for guests or children. Entrants are also asked to identify their market; judges consider the plan within the context of the identified market to ensure it makes sense for the region and has market acceptance. Winners will be announced at the International Builders' Show in Orlando, FL. Winning entries will also be displayed on the Professional Builder Web site, HousingZone.com, for up to one year. For information, eligibility requirements and application forms, click here, or contact Professional Builders' Judy Brociek (630-288-8184) or Colleen Paez (630-288-8168) or Michelle Persinger of NAHB at 800-368-5242 x 8343. Opportunities Abound to Improve Mexico's Housing Delivery System, Harvard Study FindsWith Mexico reaching a crossroads in its efforts to improve its inadequate housing delivery system, a new report by the Harvard Joint Center for Housing Studies suggests that major changes will be needed to make housing the vehicle for economic vitality and household wealth creation it has become in the United States. “Housing finance is available almost exclusively for new construction and directed mostly to formal private sector and public sector workers with modest wages,” according to the report on "The State of Mexico's Housing 2004." “As a result, the majority of the population must rely on self-financing strategies to build or consolidate self-built housing, to purchase developer-built housing or to purchase existing housing. The Harvard report finds that at least 50% of all new homes are self-built by low-income households and a significant share of these are built on land without clear title and often without basic infrastructure and services. The report also notes that the current housing finance system will be hard to reform without better information on a wide range of issues, including the value and legal status of the current housing stock, the payment history of its citizens, the performance of the current financing system, the supply and demand for housing and the cost of providing infrastructure. Among other findings of the report:
The study does note that Mexico is currently engaged in a process of reforming its housing system, which should expand the housing finance system, lead to more sources of capital (particularly private capital), more conduits through which capital can flow and a more diverse range of housing products. “By legally selling their current home and realizing capital gains on the asset, households could obtain a downpayment on a larger, newer or otherwise preferable house (or alternately, use the liquid gains to finance current consumption),” says the report. “Currently, without the ability to assess the value of existing housing, to borrow against it or to resell it, housing wealth cannot be fully realized and households are limited in their upward and geographic mobility.” The report was prepard for CIDOC and CONAFOVI.
Opportunities in Mexico Explored During International Housing Conference of the Americas The 2nd International Housing Conference of the Americas will enable U.S. and Mexican companies interested in building relationships and expanding their business, to meet, learn and explore future housing opportunities in Mexico. Sponsored by NAHB and CANADEVI (Mexico’s National Industry Chamber for the Development and Promotion of Housing), the conference is scheduled for Nov. 7-10 in Mexico City. The conference will feature educational panels, housing tours, table top exhibits, one-on-one meetings, networking lunches and breakfasts and insight from key industry leaders and government officials. For more information or to register, click here. What Do Customers Say About Your Service?About once a week, I am lucky enough to have lunch with my wife. This past week, we were talking about her Volvo and she told me how much she liked the Volvo service program. When she brings her car in to get an oil change or some other service, they greet her by name, have a loaner car ready and waiting, and she is on her way — all in about two minutes. Do I think Volvo charges a premium for the work they perform? Yes. Do we pay it? Yes. Why? Because my wife really likes the service. Volvo owners pay more for their cars and the work the dealerships perform because Volvo treats their customers extremely well. (Hmm, that sounds like what my company tries to do). Can you read the preceding paragraph again, this time taking out the word “Volvo” and inserting your company's name in it’s place? I know I could. What is Customer Service? While a tough question to answer, customer service boils down to everything you do relating to your customer. Do you really go that extra step for the customer (or are you just trying to convince yourself that you do)? Customer service starts with the initial telephone call the customer makes to you. How do you handle that call and, more importantly, when do you return that call? Remember, you set your customer's expectation with the first contact that customer has with you. That expectation doesn't go away after the initial calls are made and the work is scheduled, either. It continues throughout the entire project and is part of every interaction you have with the customer. Customer service is also intertwined with the professionalism you exhibit. When you arrive on time for appointments or scheduled work, you not only exude professionalism, you show respect for you customers' time constraints. They appreciate that. How Do You Stack Up? To determine whether you and your company do go that extra step, analyze every interaction you and your employees have with customers. How can you make that interaction more enjoyable for the customer? Look at your systems to make sure you do what the customer expects — as well as do the good things the customer doesn’t expect. Recently we built a $200,000 addition for a customer. After the project was completed, the customer asked our superintendent, Ronnie Colston, to help put together one of those fancy gas grills he recently purchased. Ronnie took the grill home and put it together. Then, on his way back to deliver the assembled grill, Ronnie bought some grilling utensils and put them inside the grill unbeknownst to the customer. Did the customer notice? Sure. He actually called Ronnie to say he didn’t think the utensils where included when he bought the grill. We didn’t charge for any of this extra service, of course. It is just part of how we do business. We may have done $200,000 worth of work, but you can bet the customer will tell his neighbors about the grill and what Ronnie did. And how that reflects on us will go a long way. In a nutshell, that is how we define customer service. It doesn’t come just from a company’s owners; it comes from every employee, too. Customer service is one of the most important aspects of a company and can easily set you apart from your competition.
Erik Anderson, GMB, CAPS, CGB, is vice president of sales and marketing for Anderson-Moore Builders, Inc. in Winston-Salem, NC. He currently serves as first vice president of the Home Builders Association of Winston-Salem. For more information, send him an e-mail.
'Customer Relations Handbook for Builders' Available at BuilderBooks.com The "Customer Relations Handbook for Builders", available at BuilderBooks.com, is a comprehensive, two-binder handbook that covers every aspect of customer relations and how it relates to your business. Topics include company philosophy, staffing, service procedures and reports, quality management, buyer expectations, product presentation, use of a homeowner manual, financing, selections, change orders, site visits, home owner orientation, warranty service, trade contractor service, communication skills, customer feedback and more. More than 100 forms, checklists and figures drawn from both volumes of the Customer Relations Handbook are provided on diskette so you immediately can begin to customize and apply the materials your own building business. To view or purchase this publication online, click here, or call 800-223-2665 to order. University of Housing Offers Courses on Customer Service and Business Management The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. To seach for current offerings, click here. Nominate the Best of the Best for Remodelor™ of the Year Applications for the Remodelors™ Council’s most prestigious awards program, the Remodelor™ of the Year Award, are now available online at www.nahb.org/remodelors under the Awards section. The Remodelor™ of the Year Award recognizes exemplary NAHB involvement at any level, superior business management and an outstanding contribution to the remodeling industry. Councils should nominate individual remodelers, but the nominee must write his or her own entry essay. The winner will be announced at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago (Oct. 8). Local Councils Honored With CADRE Awards The Council Awards for Demonstrating Remodeling Excellence (CADRE) is awarded to local Remodelors™ Councils for superior member service in the categories of:
For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. Who Will Be Inducted to National Remodeling Hall of Fame? The Remodelors™ Council is searching for the best of the best for induction into the America’s Best National Remodeling Hall of Fame. This award honors those individuals who have made a significant and lasting impact on the remodeling industry on a state or national basis. Induction into America’s Best National Remodeling Hall of Fame is open to individuals in any public or private sector entity or institution. Areas of contribution may include industry image, governmental affairs, education, business management or any other contribution that has helped advance the remodeling profession. Please nominate individuals who have made a positive impact on the remodeling industry. Self nominations are not permitted. Completed applications must be received by Monday, July 12. The induction ceremony will take place at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago (Oct. 8). Click here to download an application or contact Barbara Drobins at 800-368-5242 x8217 for more information. State Legislatures Keeping Irrational Mold Fears AliveWhile a less hysterical assessment of the true health effects of exposure to mold are beginning to emerge and builders are finding common-sense approaches to tackle this problem, some state legislation is based on erroneous assumptions about mold. As of June 1, three states have passed mold legislation this year and 19 states are considering bills addressing this issue. While the state initiatives vary widely, some of them erroneously characterize mold as “toxic” and attempt to link mold exposure to serious illnesses. So far, state action on mold this year includes:
NAHB members can stay up-to-date on pending mold legislation and access other resources on this issue — including legal information, consumer resources and talking points — from NAHB’s Web site. Go to www.nahb.org/mold. Another valuable resource from NAHB is the “Scientific Literature Review of Mold,” which offers an expert panel’s review of existing scientific mold literature. The panel reported that mold can cause allergic reactions in sensitized individuals, but there is scant evidence that mold is linked to many other health problems. A similar conclusion was reached in a recent report by the National Academy of Sciences’ Institute of Medicine. To order NAHB’s 160-page report, “Scientific Literature Review of Mold — A Report on the Health Effects of Indoor Mold,” from BuilderBooks.com, click here; to download it for free, association members can click here. For more information on mold issues and resources available to members, contact NAHB's David Jaffe at 800-368-5242 x8317. Tucson Builder Lauded for Achievement in Residential Energy EfficiencyIn recognition of the homes in the Armory Park del Sol Development — the most energy-efficient production homes within the greater Tucson, AZ, area — The John Wesley Miller Companies has received the City of Tucson Home Energy Efficiency Award for 2003. The award was presented by Tuscon Mayor Bob Walkup at a special breakfast sponsored by the Southern Arizona Home Builders Association. To determine the award winner, the city considered the construction, insulation, solar energy technology and energy consumption of housing developments within the metropolitan area. Located in a historic neighborhood in downtown Tucson, Armory Park del Sol homes include photovoltaic electric power generating systems and solar water heaters with on-demand water heater backup systems. Other energy features include:
John Wesley Miller was named the 2003 “Builder of the Year” by the Southern Arizona association in January for those building less than 100 homes. The award for residential energy efficiency was sponsored by the Tucson/Pine County Metropolitan Energy Commission, the Arizona Department of Commerce Energy Office, the U.S. Department of Energy and the City of Tucson Energy Office, General Services Department. Green Building Featured in Grand Rapids Parade of HomesDemonstration homes incorporating green building techniques and products are popping up with increasing frequency in Parades of Homes that are held by home builders association around the country. Five green-built homes were included in the Parade of Homes held earlier this month by the Home and Building Association of Greater Grand Rapids, MI, including the highest rated green built home in western Michigan. The home was a project of Green Built, Inc., a non-profit corporation created by the association to promote sustainable building practices in the Grand Rapids area. Among the items distinguishing the home were:
Arn McIntyre, of McIntyre Builders, Inc.; and Mike Holcomb, of The Home Inspector General, Inc.; worked with the home’s builder — Lee Kitson, of Lee Kitson Home — to select materials and equipment for the prototype house. Free Construction Safety Seminars at Various Locations This SummerA seminar for home builders and trade contractors focusing on the development and effective implementation of a company safety and health program is being held at a dozen home builders associations around the country from July through September. The seminar is free, but some associations may charge a nominal fee for any food or beverages that are provided. The four-hour seminar, “Develop and Implement a Home Builder Safety and Health Management Program,” has been developed by the NAHB Research Center and NAHB through a training grant funded by the Occupational Safety and Health Administration. Training materials focus on the importance of a safety and health program and are designed to help participants write a clear and easy-to-understand program and successfully put it into operation. Each participant will receive a student manual and CD-ROM that includes a how-to guide that is easy to customize and adapt to meet the safety needs of individual businesses. Participants also receive a training completion card and valuable materials on worker safety and health. The seminar will be held at the following associations, which can be contacted for registration information:
For more information, click here, or e-mail George Middleton or call him at 800-368-5242 x8590. How to Make Your Business Presentable So You Can Sell It
When it comes to selling your business, that all-important question, “How much can I get for my business?” is influenced heavily by how you prepare for the sale. The following five-step plan will help you with one of the biggest decisions a business owner can make.
Jennifer H. Elder is a CPA and certified management accountant (CMA). She is currently the CFO for Nohl Crest Homes, a semi-custom builder in Tampa, FL.
'PRO Builder: Business Planning' Available at BuilderBooks.com “PRO Builder: Business Planning,” available through BuilderBooks.com, spells out the benefits of preparing business plans and provides proven methods for establishing goals, developing strategies, setting priorities and evaluating results. The publication includes step-by-step exercises and an electronic spreadsheet to help you develop a customized plan for your business. To view or purchase this publication online, click here, or call 800-223-2665 to order. BuilderBooks.com also offers a variety of other publications about business planning and business management. To view or purchase these publications online, click here. Run Your Business Better and More Profitably With NAHB Business Management Tools Click Business Management Tools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section. Home building is a competitive business — go to Business Management Tools and gain your edge today. The NAHB 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. 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. Build Your Knowledge at the Custom Builder SymposiumCustom home clients continually raise the bar on what they expect from their builders and their finished home. The 2004 Custom Builder Symposium gives custom builders the opportunity to expand their knowledge base, deliver on their clients’ expectations and ensure profitability. The symposium will be held Nov. 12-14 at the Renaissance Esmeralda Resort and Spa in Indian Wells, CA. The theme this year is “Beyond the Tool Belt.” New this year:
The resort has a full-service spa and fitness center, there are opportunities to explore Palm Springs via horseback tours of nearby Indian Canyons or by hot air balloon over the Santa Rosa and San Jacinto Mountains, and to view the area’s most innovative custom homes along the Andersen Home Tour. Register today and save up to $50. Go to www.nahb.org/custom to register online or for more information, e-mail The NAHB University of Housing registrar or call 800-368-5242 x8338. Enter the Systems-Built Marketing and Design Competition
NAHB's Building Systems Councils are calling for entries to the annual BSC Excellence in Marketing & Home Design Awards. Categories for systems-built housing manufacturers and associates are only open to current BSC members, however builder categories are open to any NAHB builder member using building systems. The Building Systems Councils represents the interests of the concrete, log, modular, and panelized home building industries. New categories have been added this year. For more information, go to the BSC Excellence Awards Web site. Members of the Concrete Home Building Council can enter homes constructed with concrete during the last 12 months in the home design category. While the home design category is open to any home constructed with building systems, manufacturers and builders can enter their model homes into the Outstanding Model Merchandising categories. Entries must be received by Friday, Sept. 10. Winners will be recognized during a special ceremony at the Building Systems Councils SHOWCASE trade show and education event, Oct. 31 – Nov. 3 at The Hilton Austin, Austin, TX. Competition Opens for EnergyValue Housing AwardsThe NAHB Research Center is now accepting applications for the 2005 EnergyValue Housing Awards (EVHA), which recognize builders who voluntarily integrate energy efficiency into the design, construction and marketing of their new homes. More than 35,000 homes have been sold by winners of the award over the program’s nine-year history. Carrie Gehlbach, former vice president of sales and marketing for Medallion Homes, of San Antonio, said that winning the award was not only good for marketing but it pushed her company to raise its standards. “We have been able to network with a community of building scientists and industry leaders who have helped us learn new and better ways to deliver the best possible home,” she said. The awards, which will be presented during the 2005 International Builders’ Show in Orlando, FL, will be presented in affordable, custom/demonstration, factory-built, production and multifamily categories for hot, moderate and cold climates. Applicants will be evaluated on their homes’ energy value, design, construction methods and processes; marketing and customer relations efforts; and participation in voluntary energy programs. The panel of judges will be comprised of experts on energy efficiency representing the engineering, construction, design and marketing fields. AN EVHA Builder of the Year will be selected from the gold award winning companies. All award applicants will receive a detailed evaluation of their entries, complimentary tickets to the awards dinner ceremony and a free copy of the “EVHA Guide: How to Build and Profit With Energy Efficiency in New Home Construction.” EVHA winners are featured on the NAHB Research Center’s Web site; can market themselves as EVHA winners in advertisements and press releases; can be featured in publications; and can share their success stories at workshops, educational programs or conferences. All professionals in the U.S. whose primary occupation is constructing or developing real estate are eligible. The homes must have been completed after January 2002 and before the application is submitted. Entries must be postmarked by Aug. 9; there is a discounted application fee for those submitted by July 12. The awards are coordinated by the NAHB Research Center in partnership with the U.S. Department of Energy’s National Renewable Energy Laboratory and NAHB. For an application, the rules for the competition and other information, click here, or send an e-mail. Fiberglass Gains Entry Door Market ShareFiberglass is being used in a growing share of the entry door market as it continues to gain in popularity among distributors, builders and remodelers, according to Therma-Tru Doors. Headquartered in Maumee, OH, Therma-Tru Doors is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. Therma-Tru says that it created the fiberglass door in 1983 and saw the product’s market share climb to 10% by 2000 and 14% today, basing most of its gains on a shift away from wood and steel. By 2007, it projects that its product will capture a full 30% of the market. Recent research by Therma-Tru has identified a number of factors behind the growing use of its fiberglass doors:
Professionals in the residential construction business, says Therma-Tru, are finding that fiberglass doors reduce callbacks and improve customer satisfaction.
Bob Eldridge, of Younger Brothers in Phoenix, said that interest in the manufacturer’s Smooth-Star door was strong when a Therma-Tru salesman provided a sample. “The Smooth-Star was an immediate success on the job site,” said Eldridge, who counts on high-production builders for 80% of his business. “There were no dents and it weathered a lot better than metal or wood. There’s just no comparison in stamina to other materials. It’s a much better option for new construction, where you can dent up the doors while you’re finishing the interior.” “Pros want products that are designed to last through the construction process, and perform for decades after the job is done,” said John Kufner, market manager, residential entry systems, for Therma-Tru Doors. “They resist dings, dents and warping during the project, and Therma-Tru’s best-in-class warranties ensure home owners can install these door systems with confidence.” “It’s a little more expensive than steel, but it’s worth it,” said Eldridge. “My customers never question the price once they understand the benefits of fiberglass. You don’t have to allow for waste, so your cost of merchandise and maintenance go down. It’s a cost-effective solution.” As steel prices have rises, fiberglass doors have become an increasingly viable alternative, he added. For more information on Therma-Tru doors, click here, or call 800-537-8827. This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.Spreadsheets RockManny Bucks came to my office the other day wanting to know how the budget was going on a construction project of his I am managing. Without thinking, I turned to my computer, opened a blank spreadsheet and began pecking in numbers. After about 20 seconds Manny asked me, “Tim, why are you wasting time with that computer? I just need a quick, ballpark answer.” “That is precisely why I’m using this computer,” I answered. “See, I’m almost done…there. Your finished costs will be approximately $750,000.” “Whoa!” he exclaimed. “I thought this was a $500,000 project. You sure that thing is adding right?” During that sentence I had pressed “Print” and now had a sheet of paper to hand him, showing the tally of costs. “Quite sure. Here is where your budget took a hit,” I said. “Check the line items for steel and permitting — they’re high. Also, did your original estimate include tax and engineering?” “Hmmm, I see,” he said. “What if we don’t use steel and use wood instead? And do we really need to include all this landscaping?” “Those items will make a difference,” I replied, tapping in a few new numbers. “You just saved $55,000 including tax.” Our “what if” conversation continued for about 10 more minutes. As quickly as we thought of alternatives, I revised the costs. By the conversation’s end, we had the cost down to $600,000 — a doable project. As Manny left, I saved the spreadsheet. I knew he would be back with new ideas. But I would be ready, ready to revise the estimate and produce new costs instantly. Spreadsheets Are Powerful Tools, Take Advantage of Their Capabilities Spreadsheets are awesome, powerful things. It is my experience, however, that few builders understand or take advantage of them. Pity, because what makes them so powerful is that they are easy to use and easy to learn. When I started using Microsoft Excel 12 years ago, I was in the general contracting business. Our company did all their cost estimates on spreadsheets, which forced me to learn them. Coming from an engineering background, very quickly I came to appreciate the awesome power of Excel. Today, I own a company, ConstructionCalc.com, that produces and sells Microsoft Excel spreadsheet templates, and now that I’ve gotten good with spreadsheets, I almost never use my calculator. If I’m doing a calculation I may repeat in the future, I do it the first time on a spreadsheet. It takes nearly the same time as using a calculator, but when I’m done I can save it to be used for another day. Plus, it is so easy to modify a number here or there, I can look at lots of “what-ifs” and get revised answers instantly. So how do you learn spreadsheets? In my case, my office partner showed me a few (very few) concepts, then using Excel’s Help feature, I was off and running. Another great way is to get a copy of someone else’s spreadsheet and look at what they’ve done. Once you understand that an equation always starts with an equals sign (‘=’ in Excel; other brands use other means of denoting an equation), and you build equations just like you punch numbers into a calculator, you’ve got it whipped. There are a few critical commands you’ll need too, like Copy, Paste, Insert and Fill. These will save you many hours of laborious typing; they are the commands that exemplify Excel’s real power. My rule of thumb is if you’re struggling with something in a spreadsheet, there is a better, faster way; you just need to figure it out. Be careful, however, once you start using spreadsheets, you may wind up like me, hooked. Who knows, you too may one day become so proficient that you’ll be able to sell your templates. Tim K. Garrison P.E. of ConstructionCalc.com has authored books and short courses and lectures on topics relevant to builders. Got a technical or management issue? E-mail buildersengineer@constructioncalc.com. Tim reads every one. This column cannot be reprinted without permission from the author. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article. National Housing Endowment Provides Support for Symposium on Housing Needs of Mentally IllThe National Housing Endowment, the philanthropic arm of NAHB, has announced that it is a platinum-level sponsor of the 2004 Zarrow Mental Health Symposium, “A Place to Call Home: Exploring Innovative Approaches to Housing for People with Mental Illness.” “The National Housing Endowment supports efforts aimed at providing safe, decent and affordable housing for all Americans,” said Dale Stuard, chairman of the National Housing Endowment and a past president of NAHB. “The home builders and developers participating in the 2004 Zarrow Symposium will provide a significant contribution in the battle to find housing solutions for people with mental illness.” A gift of $15,000 from the endowment will help support the attendance of representatives from the housing industry at the conference. The national conference, which will be held Sept. 29-Oct. 1 in Tulsa, OK, is designed to help eliminate homelessness and substandard housing for people with mental illness. Some 400-500 are expected to attend the symposium, including mental health advocates, mental health service providers, housing planners and developers, people with mental illness and their family members and financial developers. The symposium is hosted annually by the Mental Health Association in Tulsa to provide the latest research and practical information about current issues related to mental health and mental illness. This year’s conference is being organized into six tracks:
To register for the conference, click here. For information on the National Housing Endowment, e-mail Julie Wheeler or call her at 800-368-5242 x8483. Only YOU Can Help Solve the GLI Crisis!More than 50,000 NAHB members have received a “call to action” to fill out a survey about their general liability insurance (GLI). The survey is part of a GLI initiative to get an accurate national picture of the loss experiences of the residential construction industry and to develop new GLI products exclusively for the NAHB membership. “NAHB members who receive the mailing should sit down and complete the survey and provide the materials needed to make this project a success,” said NAHB President Bobby Rayburn. “With insurance costs rising and exemptions making coverage less effective, it’s in everyone’s interest to participate in this effort.” NAHB is partnering with Marsh, a global insurance and consulting firm, to develop new GLI products that will meet members’ needs. Marsh and NAHB are working on a timetable that would bring new GLI products to the market by January 2005. Elements of the mailing, which are available online at www.nahb.org/gli, include insurance surveys plus a model consent letter authorizing insurance providers to supply crucial background information for this effort. For more information, contact Clayton Traylor at 800-368-5242 x8490 or Blake Smith, x8583. Sign Up for 2005 Committees and Councils by July 9NAHB is looking for members who would like to serve on any of the association’s various committees and councils for the 2005 term. Members will be able to provide leadership, expertise and experience on the issues and challenges facing the industry. The term begins immediately following the 2005 International Builders’ Show (IBS) in Orlando and continues through the completion of the 2006 IBS. The deadline for applying for an appointment is July 9. Members are limited to serving on no more than two standing committees or councils. Members can apply online by filling out the 2005 appointment sign-up form, indicating their interests. The form can be accessed on the NAHB Web site by clicking www.nahb.org/2005appointmentform, then return the completed form by e-mail, fax or mail to NAHB as indicated. Forms also can be found within the individual sections for the various committees and councils on the “members only" side of the NAHB Web site. Final appointments will be made following the fall NAHB board of directors meeting and members will be notified by mail. For more information, e-mail Cynthia McKinley or call her at 800-368-5242 x8346. Awards Programs Deadlines
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Calendar of Events
To view more meetings & events information on the NAHB Web site, click here.
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. |