Nation's Building News Online: August 16, 2004Print All Articles Text Version |
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Builders Fear Materials Shortages and Rising Prices Could Unravel Housing Market BoomA shortage of cement and other key building materials looms as the biggest threat to the continuation of current record-level housing activity, according to a recent NAHB survey. In a nationwide survey last month, builders reported shortages of cement, gypsum wallboard, oriented strand board (OSB), steel framing and insulating materials. “Rising wholesale prices of building materials have added $5,000-$7,000 to the cost of building an average new home, and construction delays caused by supply shortages could translate into further cost increases,” said NAHB President Bobby Rayburn. “Left unchecked, these factors could result in serious disruptions to the housing market.” Of most immediate concern is cement, which was reported to be in short supply by 41% of those polled. This marked a huge jump from May, when 11% said they were grappling with cement shortages, and March, when it was a problem for only 3% of the builders surveyed. To relieve the shortage, Rayburn called on the Administration to eliminate the high anti-dumping duties on imports of Mexican cement. Shortages first appeared this spring in Florida, which imports about 40% of its cement, compared with just 20% on average across the nation. Supplies have subsequently tightened in many other markets, partly because strong demand in China has diverted the amount of cement available from other countries and limited the number of cargo ships that can bring the product to U.S. ports. Prohibitive duties have severely limited supplies from Mexico, which is the most logical source of supplementary imports. A delivery from that country takes only four days, compared to an average of 44 days for a cement shipment from Asia. “With global shipping capacity strained, the ability to import cement from Asia and Europe to meet this shortfall has been significantly reduced,” said Rayburn. “Therefore, it makes sense to rescind the costly anti-dumping duties on Mexican cement that are preventing a stable and reliable supply of imports to U.S. consumers.” To read more about the cement shortage elsewhere in this issue of NBN Online, click here. On another basic building material where the situation appears to be worsening, 26% of those surveyed reported shortages of gypsum wall board, up from 11% last October, 16% in March and 19% in May. Nearly one-third of respondents are experiencing shortages of oriented strand board and plywood, wood panel products used for wall sheathing, floors and roofs. While significant, this was down from a peak of 52% in last October’s survey. Panel prices remain high and have been climbing following a brief downturn earlier this summer. Another sore spot for growing numbers of builders is a short supply of insulation material, which was reported by 20% of those polled, up from 10% just four months earlier. In many regions where brick is widely used, builders have reported shortages of that material as well. While framing lumber supplies appear adequate, its price volatility continues to raise concerns. The price of 1,000 board feet of framing lumber hit a five-year high of $472 on Aug. 6, up 52% from $311 a year earlier, according to Random Lengths, a trade publication based in Eugene, OR. Shortages of building materials have also led to rising costs. During the past six months, 90% of respondents reported paying higher prices for framing lumber and oriented strand board, 88% for plywood, 86% for cement, 80% for steel, 75% for gypsum wall board and 68% for insulation. “A steady supply of building materials available at reasonable prices is important to maintaining a vibrant housing market and to meeting the growing demand for affordable housing,” said Rayburn. To help its members limit the damage of unpredictable price hikes for building materials, NAHB is providing price escalation language that can be included in home sales contracts. For more information about NAHB’s escalation clause and to download it, click here. Or e-mail David Crump or call him at 800-368-5242 x8491. Building News Coast To CoastSpreading Cement Shortages Delay Projects, Increase PricesBuilders and contractors are paying upwards of 20% more for concrete than they did last year as robust housing demand and China's building boom hinder supply. Projects in Southern California, Florida and more than two dozen other states have been delayed as a result; and the shortage eventually could put a damper on the national economy. According to Associated General Contractors of America Chief Economist Ken Simonson, "If you start seeing contractors pushed out of business because they can't get the job done, or widespread layoffs because of slowdowns in projects, there could be more of an impact on the economy." The building industry already has been hit by shortages of steel and framing lumber — the cost of the latter soaring 52% from last year — but experts expect supplies will begin to return to normal when activity slows during the colder months. Builders Dangle Cheap FinancingResidential builders of all sizes increasingly are plugging incentives to offset rising interest rates, offering such breaks as below-market rates, six-month rate locks and closing-cost assistance to buyers in sluggish markets. Research by Wholesale Access reveals that 75% of the nation's top builders have their own lenders, which are responsible for 15% of new mortgages. Because their profits are tied to home construction — not loan origination — builders can more readily offer incentives than banks can. Such incentives from builders, which also are promoting interest-only loans and hybrid adjustable-rate mortgages as a means of keeping monthly payments at affordable levels, promise to keep the housing boom alive for a little longer. Developers Jump on Old Buildings for New HousingThe high rate of vacancy among old office and industrial buildings in downtown Boston and Cambridge, coupled with the increasing demand for city housing, has given property owners the opportunity to sell their less-desirable assets to residential developers for conversion into condominiums or apartments. "So long as there is a demand for residential, developers will continue to try to find the highest and best use for buildings," says Mahmood Malihi of Legatt McCall Properties. The most recent example of this trend is One First Street in Cambridge, originally built in 1866 and formerly the home of Davenport Furniture Co. and the New England Confectionery Co. Legatt McCall recently bought the six-story, eight-building complex from Beacon Capital Partners for $14.4 million and plans to develop 199 condominium units, parking and retail facilities at the site. Trade Panel Backs U.S., But Not Its MathA World Trade Organization (WTO) panel has voiced its support for the hefty U.S. tariffs on softwood lumber imported from Canada and rejected claims from Canadian officials that the investigations conducted by the United States to determine whether the lumber was priced below production costs were illegal. However, the panel did conclude that American officials incorrectly figured the tariff amount and need to comply with WTO rules governing calculations. The new duties have yet to be determined. Granite's New LusterGranite countertops were once affordable only to affluent home owners; but low interest rates, better technology and widespread availability through Home Depot and other retailers have allowed buyers of more modest means to get in on the action. Home owners shell out $50-$100 per square foot on granite, compared to anywhere from $15-$85 per square foot for laminate, Corian and engineered stone. The granite industry in South Florida has grown twofold in the last 10 years. The emergence of new colors and patterns has also boosted the natural stone's popularity. Tim Hurless, president of Riviera Beach, FL-based Advance Marble Inc., says home owners now want a rusted-look granite and other versions that once were deemed undesirable. Sticker Shock at the LumberyardThe price of plywood and oriented strand board has soared 24% since June 2003 due to the war in Iraq, China's building boom, robust domestic demand, recent wildfires, rebuilding efforts following Hurricane Isabel, a 27% tariff on Canadian imports and the weak U.S. dollar. An error on the part of many lumberyards also contributed to a shortage, as they curtailed production in anticipation of a drop in demand due to higher interest rates. A majority of home builders have been able to absorb the increases, and those that have passed them on have heard little from buyers rushing to make their purchases while interest rates remain low. However, higher lumber prices have left many do-it-yourself remodelers with a case of sticker shock, although there are ways for them to curb their spending. Experts urge them to wait until cooler weather and higher interest rates reduce prices; buy directly from their local lumber mill; or opt for Styrofoam or medium-density fiberboard instead of plywood. NeighborWorks to Launch Center on Homeownership Education and CounselingThough research has shown that the delinquency rate of home owners who receive credit and pre-purchase counseling is about 34% lower than that of borrowers who do not, only about 15% of first-time home buyers take part in such programs. In order to improve these statistics, the NeighborWorks Training Institute — part of the nonprofit Neighborhood Reinvestment Corporation — is launching a new initiative called the NeighborWorks Center for Homeownership Education and Counseling (NCHEC). The program aims to add more than 2,000 newly trained and certified homeownership counselors by 2006 to the existing 700 counselors who were trained this year. By increasing the number of counselors, the institute hopes to reach over 2 million home owners by 2007— almost 10 times the number of those who received counseling in 2003. "The new center will help many more moderate- and low-income families not just buy a home but succeed as home owners in the long run," according to Neighborhood Reinvestment Corporation CEO Kenneth Wade. Program Offers Advantage for Smart Builders Marketing to New Home BuyersFlorida led the nation in residential construction permits in March, according to the U.S. Census. Local builders looking to get an edge on the competition can do so by constructing energy-efficient BuildSmart homes, which are inspected and certified by Florida Power & Light (FPL) Co. Dwellings built in accordance with the BuildSmart program feature high-efficiency heating and cooling systems, efficient windows and lighting, programmable thermostats and other components that help shave 10%-30% off monthly energy bills. "FPL provides sales and marketing support, and credibility, and reinforces our customers' trust that the home they are buying is built to a higher standard," says WCI environmental stewardship manager Karen Childress, whose company was named the nation's best builder of 2004 by NAHB. Realtors Group Says Home Sales on FireFor the eighth time this year, the National Association of Realtors® has boosted its outlook for 2004 home sales. Pointing to economic recovery and low mortgage rates, the trade group predicted that 6.45 million resale properties would change hands this year — up from an estimate of 6.31 million cited just a month ago. In the new-home sector, meanwhile, NAR raised its sales forecast from a previous guess of 1.16 million to a new projection of 1.2 million. If those figures come to fruition, they would be the best results on record in both segments of the industry. Fed Rate Hike Not Seen Hurting Real Estate, Home BuildersThe residential and commercial real estate markets are not likely to falter as a result of the Federal Reserve's latest hike in interest rates — the second in two months — because it has already been factored into the current prices, according to W.R. Hambrecht & Co. analyst Christopher Hartung. However, he and some other observers believe that a third boost in rates will drive up the cost of refinancing and spark an adjustment in commercial property prices. Meanwhile, Public Home Builders Council of America Senior Vice President Rick Anderson does not foresee a drop in housing demand unless mortgage rates surge 200 basis points. He notes that builders remained profitable after rates surpassed 8% in 1995 and 2000 and are well equipped to survive a period of higher rates due to solid balance sheets; limited speculative construction; geographical diversity; and substantial backlogs. Anderson predicts that higher rates could hurt first-time home buyers, however, although he hails adjustable-rate loans and other fixed-rate alternatives for making housing more affordable. Bring Down the Barriers to Enjoy a 'Home for a Lifetime'With the elderly population set to hit 40 million by 2011, Universal Design Housing Network Drector Paul Levy is pushing the idea of "aging in place" to make homes accessible to people of all ages and abilities. "True independence comes down to the freedom of living wherever a person chooses, and staying there," remarks Levy, who was himself diagnosed with multiple sclerosis as a teen. He believes the principals of Universal Home Design can help disabled people integrate into neighborhoods; keep seniors out of nursing homes or assisted-living communities; and prevent many accidental in-home deaths. Home owners can implement many of these principals themselves, including additional lighting, lever faucets and doorknobs, higher electrical outlets and shower grab bars. They can even hire contractors to remodel existing homes to accommodate wheelchairs with stairless entryways, wider doorways and hallways, and larger bathrooms and kitchens. As for new homes, Levy says designs can be modified without boosting costs. Glass Blocks LitePlastic, already used in flooring and countertops, is now being used to create faux-glass blocks. Acrylic blocks look just like their glass counterparts and are available in a multitude of sizes, colors and surface patterns. However, they are lighter than glass and therefore can be used in windows, doors and partitions without reinforcements. They also can be used to make functional windows or as inserts in doors — unlike the real thing, which is too heavy for these uses. Moreover, they come in pre-assembled panels; whereas glass blocks must be put together one at a time. Both acrylic and glass blocks can simultaneously ensure privacy and allow natural light to brighten the home. They are most commonly used as room dividers, windows, kitchen backsplashes, shower enclosures and staircase railings. Options Blossom for Mobile Internet AccessThere are a multitude of options available to consumers when it comes to high-speed wireless Internet access. Verizon Wireless and AT&T Wireless are among the cellular carriers rolling out 3G networks, and a number of telecommunications companies are unveiling broadband wireless services. Wi-Max and an innovative service from Nextel Communications, dubbed FLASH-OFDM, also provide mobile Internet access. Rather than forcing users to plug into a certain spot to gain entry to wireless networks, wireless Internet service providers are shifting their focus to portability so users can access the Internet without being tied down. Meanwhile, cellular carriers are more interested in higher data rate services. Nextel is opting for a different route with the FLASH-OFDM technology developed by Bedminster, NJ-based Flarion. The technology is not based on any standards, but users will still be able to purchase equipment from different vendors. Using FLASH-OFDM, Nextel can offer higher speeds for data downloads for less than what cellular carriers charge. Summer Months See Further Spread of Crippling Cement ShortagesShortages of cement that originally appeared in Florida and parts of the southeastern U.S. this spring are now spread over 29 states, hitting home builders in six states just in the last month, reports the NAHB Concrete Home Building Council. Arizona, Delaware, Missouri, New Jersey, Pennsylvania and Utah are the latest states to experience tight supplies of cement, the key binding ingredient for concrete, according to ongoing survey research by the Portland Cement Association. Conditions have eased somewhat in the North Central states of Iowa, Minnesota, Nebraska and North and South Dakota following the resolution of production troubles in plants in that region, and wet weather on the East Coast has brought at least temporary easing to Alabama, Georgia and South Carolina. But advisories remain for those regions of the country that have relied significantly upon foreign imports to round out their supply of cement and also are continuing to have brisk home building activity. Last year, imports provided 22.6% of the cement consumed in the U.S. Over the short-term, supplies of cement from overseas are being constrained by strong global demand, especially from China. Freighters have also been in short supply and shipping charges have been high. Stepping up the importation of cement from neighboring Mexico is probably the best short-term solution, but U.S. duties make that alternative prohibitively expensive. NAHB President Bobby Rayburn has urged Secretary of Commerce Donald Evans to suspend those tariffs and the association is also providing its members with information on using escalation clauses in home sales contracts to limit the financial damage of rising materials prices. (For more information, click here to see a related story in this issue of NBN.) Over the longer term, domestic cement companies are aggressively modernizing and expanding their productive capacity, which is expected to increase by 11% by 2008, adding nearly 10 million tons of the material annually. However, expansion of the cement industry in this country has been slow going because of zoning and other regulatory constraints that are likely to continue. For more information, e-mail Dawn Faull or call her at 800-368-5242 x8362.
Is It Cement or Is It Concrete?In conversation, "cement" and "concrete" are used interchangeably, but they are two distinct products. Concrete is made up of cement, water, sand and gravel, or crushed stone. Concrete is the substance that's seen oozing from trucks' rotating, cylindrical mixers. Cement is a mixture of limestone, calcium, silicon, aluminum, iron, gypsum and small amounts of other ingredients. So, when you are walking down the sidewalk, you are walking on concrete. Source: The Concrete Home Building Council of NAHB Housing SnapshotMortgage interest rates continued to recede slightly last week as investors worried about the health of the U.S. economy. According to Amy Crews Cutts, deputy chief economist for Freddie Mac, fixed-rate mortgage rates should stay around 6% for a while, "giving prospective home buyers another chance to get in with a low rate." The Federal Reserve and other observers of the nation's economy still expect good growth in this year's second half, despite a slowdown in June. However, the latest news on the economy was not encouraging last week: the U.S. trade deficit set another record in June and oil prices reached a new high of $46.58 a barrel, both raising concerns about prospects for growth of the Gross Domestic Product in coming months. On the lumber price front, prices continued to advance, although at a fairly slow pace. The cost of framing lumber climbed to $474, up $2 from the previous week. The price was $322 a year earlier. The price of 15/32-inch 3-ply CDX southern west-east plywood was up $5 to $405 per 1,000 feet and oriented strand board was up $10, to $385. Mortgage Interest Rates30 Year Fixed Rate: 5.85\% Housing Starts: Jun. 2004Total: 1.8 million\% New Home Sales: Jun. 2004 *1.326 million Existing Home Sales: Jun. 2004 *6.95 million * Seasonally Adjusted Annual Rate Please Take the Time to Help Us Solve the GLI CrisisFellow builders, it’s time for action. It’s time for us to fill out our general liability insurance (GLI) surveys and send in our consent letters. It’s time for each of us to do our part to help solve the home building industry’s GLI crisis. Recent surveys show that GLI is our members’ number one concern. It’s easy to see why. GLI premiums have risen 10-fold in some areas. Many policies have so many exclusions that the coverage is ineffective. And in some states, it’s almost impossible to get any GLI coverage at all. NAHB members have made it clear that they want the federation to do something to solve this GLI problem. In response, NAHB has entered into a strategic partnership with Marsh, the insurance and consulting firm, to gather loss information about the residential construction industry, to analyze that data to better understand the industry’s risk management needs and to use that analysis to develop new, cost-effective GLI products. Last month NAHB and Marsh sent an eight-page mail piece to 55,000 builder, remodeler and trade contractor members. The mailer included a survey, a model consent letter giving insurance carriers permission to share a builder’s loss information with Marsh, and information about NAHB’s GLI initiative. If you didn’t receive the mailing, you can find the survey, model consent letter and other information at www.nahb.org/gli. It seems to me that anyone who recognizes that our industry is experiencing a GLI crisis ought to take half an hour to fill out the survey and send in the consent letter. If you need help with the survey, ask your insurance agent for assistance. You can find additional information about this initiative at www.nahb.org/gli. If you want to speak to someone at NAHB, please contact Clayton Traylor at 800-368-5242 x8490 or Brett Diggs at x8453. If you need a copy of the survey and the model consent letter, you can find them on NAHB’s web site or you can call Blake Smith at x8583. If GLI costs are eating into your profits, then please participate in this effort. If you’re “flying solo” — doing business without any GLI coverage — then please participate in this effort. If you’re worried about how much your premiums will rise the next time you have to renew your coverage, then please participate in this effort. Please don’t put this off. For many builders, we’re talking about thousands of dollars per year. We’re talking about the stability of your business. We’re talking about the long-term strength of our industry. Take an hour and make a difference for your business and the home building industry. It’s time for action. Favorable Conditions for Small Business Set the Stage for Job GrowthThe outlook for the expansion of small businesses was positive at the end of last year, setting the stage for the creation of more jobs, according to a new study from the Office of Advocacy of the U.S. Small Business Administration. “The cautious atmosphere of the two previous years gave way to increased entrepreneurial risk-taking,” according to “Small Business Economic Indicators for 2003.” “Entrepreneurs launch new ideas and they propel our economy’s evolution,” said Thomas M. Sullivan, chief counsel for advocacy. “This dynamic risk-taking results in 60%-80% of the net new jobs, so when economic conditions are favorable for growth, job gains are not far behind. That is exactly what has happened.” The report found that the number of employer firms and self-employed persons grew by 0.3% and 3.7%, respectively, in 2003 and business bankruptcies declined by 9.1%. Sole proprietor incomes and corporate profits were up 6.2% and 18.3%, respectively, as compensation costs rose 4% and the cost of capital, as indicated by the prime rate, fell by 11.8%, the report said. Productivity was up by 4.5%. The cost and availability of insurance, primarily health insurance, was cited by small businesses as their largest problem last year. “A survey by the Kaiser Family Foundation and Health Research and Education Trust found that insurance rates for small firms rose 15.5% in 2003,” the report said. “In response, more small firms are no longer offering health benefits or are charging employees a higher share of the cost. The percentage of small firms providing health insurance coverage to their employees fell from 71% in 1999 to 65% in 2003.” The findings of the study are significant for the job market because small firms represent about 99% of employers, who employ about half of the private-sector workforce and generate between two-thirds and three-quarters of net new jobs. Only about 17,000 of the 5.7 million firms in the U.S. have 500 or more employees. “With proprietors’ income up, corporate profits up, interest rates low, financing available and productivity maxed out,” the report concluded that hiring increases were likely this year. “Despite a 5.7% unemployment rate at the end of 2003, a labor shortage could still potentially arise quickly,’ the study added.
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. Spotlight on: Grand Rapids, MILocal HBA: By Judy Barnes, EVP & CEO of the H&BA of Greater Grand Rapids Vital Stats:
Outlook for 2004: Our outlook for the remainder of the year is good. The market here is very healthy at this point — in fact, housing production through this June is up 9% from where it was last year in the four-county area that we represent. Our spring Parade of Homes event featured 188 homes, and the fall Parade of Homes had 99 entries — the highest number in 10 years. Both events saw high traffic of interested buyers. Biggest source of concern for builders: The biggest challenge has been the cost and availability of land for development. We have a great deal of no-growth sentiment to contend with in this area, and local communities are looking to builders for much of their income through informal “impact fees.” It’s a frustrating situation because, not long ago, we were consistently rated as one of the most affordable housing markets in this region and in the country. That was about 15 years ago. Today, we don’t even show up in the top 25, and that’s tied to the regulatory environment. Community leaders were shocked to learn recently about the degree to which we’ve fallen off the affordability scale. Market trends: We’re having some challenges finding enough small lots for building starter homes. If that wasn’t an issue, our builders could sell at the lower end of the market all day long. Another concern has been for the middle-income segment, because Michigan’s economy was hit hard in the last recession due to our large industrial base. It’s a diversified base, but this is still a challenge as some companies have pulled out of the state altogether. There’s definitely been some rebound lately, but it’s been surprising how strong the housing market has remained all along. We’ve been using the term “cautious optimism” to describe builders’ outlook — and it has been a very good and busy year for most. In fact, remodelers have probably had the greatest challenges because more people are buying new homes rather than renovating their existing ones. As for a trend that’s gaining momentum, a number of builders are getting into the “New Urbanism” concept and we’re trying to get the public to take a look at that. That entails smaller lots, narrower streets, higher densities and mixed-use plans that make a community more "walkable" and expand housing options for buyers with diverse incomes. We haven’t had much of that kind of development here, the main challenge being to get communities to accept smaller lots. They mostly just want higher-end homes (which generate higher tax revenues). We’re very interested in expanding the array of affordable housing options, but it can be (and has been) an uphill battle.
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. Eye on the EconomyDavid F. Seiders, NAHB Chief Economist A number of economic indicators for June had identified a “soft patch” in the economic expansion, a lull that appeared both minor and temporary to a wide range of observers — including Fed Chairman Alan Greenspan. However, data received during the past few weeks suggest that the mid-year slowdown has turned out to be more serious than expected by private forecasters, the Administration and the Federal Reserve. The first big shoe dropped on June 30 when the Commerce Department released the “advance” report on Gross Domestic Product (GDP) for the second quarter. This report showed annualized GDP growth of only 3.0%, well below market expectations, and revealed a major slowdown in growth of consumer spending — to only 1.0%. Furthermore, data released a few days later showed that the real value of consumer spending weakened badly during the second quarter, and actually contracted by 0.9% in June. That pattern certainly does not bode well for economic momentum moving into the third quarter of the year. The other big shoe dropped on Aug. 6 when the Department of Labor released the employment report for July. Contrary to consensus expectations, payroll employment was revised down by 61,000 for the May-June period, and the July increase was a paltry 32,000 (market consensus was around 240,000). It’s true that the household survey showed a slight reduction in the unemployment rate (from 5.6% to 5.5%) and strong growth in household employment (629,000). However, notorious volatility in the household employment estimates kept this number out of the headlines while the payroll employment numbers (based on a survey of business establishments) rightfully captured most of the attention. The falling shoes are terrible news for the Bush Administration and major complications for the Greenspan Fed. Is Greenspan’s “soft patch” just a bit softer than expected or did the economy hit some dangerous quicksand in the middle months of 2004? NAHB’s forecast still shows GDP growth around 4% for the second half of the year, but the range of risk around that forecast certainly has widened. Revisions of economic history brighten the housing star but pose complications for future growth … On July 30, the Commerce Department released the annual three-year revision of the National Income and Product Accounts in conjunction with release of the “advance” estimate of GDP for the second quarter of this year. The net impact of the revisions on the level of real GDP by the first quarter of this year was negligible even though the 2001 economic downswing now is shallower and the first year of recovery is weaker than previously estimated. Indeed, both the existence and the timing of the 2001 “recession” have been called into question by the GDP revisions, and it remains to be seen how the political parties will try to spin that revelation. The three-year GDP revision had little impact on the housing production component (residential fixed investment or RFI) in 2001 or 2002, but the strength of RFI was revised up substantially in 2003 and the first quarter of 2004 — primarily the component for new single-family homes. Indeed, RFI growth averaged 10.7% over this period, followed by 15.4% growth in the “advance” estimate for the second quarter. So, the housing star shines even more brightly than before in the economic skies. The GDP revisions revealed a few structural changes that may complicate the ability of the economy to shake off the mid-2004 slowdown and shift back to a stronger growth path. These include downward revision to business investment in capital equipment and software as well as to corporate profits — with negative implications for the capital stock as well as for the equity markets. There also was a downward revision to the personal saving rate, with negative implications for consumer spending going ahead. Finally, GDP inflation was revised up a bit and there were a few inflationary implications for the future as well, including the likelihood of stronger upward pressures on unit labor costs. Soaring energy prices contribute to the mid-year economic slowdown … Sharply rising oil prices have acted like a tax on the U.S. economy, cutting into the real value of consumer spending while raising business costs and depressing the stock market (the benefits to U.S. oil companies are only a small offset). Indeed, crude oil prices recently hit record highs, and the outlook is quite murky. In fundamental terms, upward pressures on oil and gasoline prices reflect strengthening global demand, scarce global productive capacity for crude oil, lean stockpiles and limited domestic refining capacity. But various global uncertainties are boosting prices above levels implied by fundamentals alone. These uncertainties range across political problems in Venezuela and Nigeria, financial problems threatening the huge Yukos company in Russia and a host of problems and uncertainties in the Middle East — including not only the frequent acts of sabotage in Iraq but also worries over terrorism in Saudi Arabia and the possibility of a confrontation with Iran over its nuclear program. Oil market experts say that crude oil prices should recede from recent highs of $45/barrel to about $35/barrel, implying a $10 premium associated with the set of global uncertainties. But nobody knows when the market fundamentals will take over. In this environment, we’re fortunate to have a powerful and flexible central bank with the ability to help offset adverse impacts of global oil market volatility on the domestic economy. The Fed goes ahead with a quarter-point rate hike and talks about balanced risks to the economy … The Fed went ahead with a widely anticipated quarter-point increase in its federal funds rate target (to 1.5%) at the Aug. 10 Federal Open Market Committee (FOMC) meeting, despite the obvious mid-year slowdown in economic growth and job formation. The FOMC statement noted that “output growth has moderated and the pace of improvement in labor markets has slowed” in recent months, and the FOMC pinned a lot of the blame on the rise in energy prices. The FOMC went on to say that the economy “appears poised to resume a stronger pace of expansion going forward.” The FOMC statement once again characterized the upside and downside risks to the attainment of both sustainable economic growth and price stability as “roughly equal” for the next few quarters. The statement also continued to say that “policy accommodation can be removed at a pace that is likely to be measured,” wording that was used at the two previous FOMC meetings. It’s noteworthy that the Aug. 10 rate increase simply brought the real (inflation adjusted) funds rate back up to zero, and that’s still quite accommodative. In a nutshell, the Fed recognized the mid-year slowdown in the economy but argued that the problem is temporary. The tone and content of the statement strongly suggest that the funds rate will be raised again at the Sept. 21 FOMC meeting (the last one before the November elections) as the Fed marches toward monetary neutrality. NAHB’s forecast still shows the federal funds rate at 2% by the end of this year and 4% at the end of 2005. Long-term interest rates shift down again, providing unexpected support to housing … Accumulating evidence of the June-July economic slowdown provoked a substantial downshift in long-term interest rates from the recent highs in late July, and the FOMC decision/statement on Aug. 10 provoked only a minor backup despite the FOMC’s expression of confidence in the underlying strength of the economic expansion. Indeed, 10-year Treasury yields are down about 30 basis points since July 29, and fixed-rate home mortgage yields are once again comfortably below 6%. The current yield structure obviously is quite supportive of the housing market. Home sales and housing starts should be quite good in the third quarter, although it’s going to be tough to match or exceed the robust second-quarter performance. We still expect the housing numbers to fade later this year and in 2005 as the Fed continues to tighten and the entire yield structure gravitates upward. However, 2004 is bound to be a record year for single-family housing and the falloff next year should be of minor proportions. New White House budget projections bode well for the interest rate structure and for housing … The White House Office of Management and Budget (OMB) released its annual mid-session review of the federal budget on July 30. The new projections show smaller deficits for the 2004-2009 period than had been projected back in February, particularly for the 2004-2005 time frame. The fiscal 2004 deficit now is estimated at $445 billion, still a record high but $76 billion below the February projection. The new budget projections continue to reflect the Administration’s commitment to cut the deficit by half in five years, and the projected pattern lowers the deficit/GDP ratio from 3.8% in 2004 to 1.5% in 2009. That’s quite a positive development for the interest rate outlook — and for the housing outlook — as long as the projections are realized. The economic projections involved in the Administration’s new budget projections are reasonable enough. Furthermore, the projected government revenues simply assume maintenance of the current tax structure, and projections of mandatory spending (Social Security, Medicare, etc.) are based on current program structure. But the degree of fiscal restraint assumed in the projections of discretionary federal spending may very well be too optimistic, particularly since the various Congressional “rules” and “caps” expired several years ago. The actual outcome will depend critically on spending decisions made by Congress and the White House during the years ahead. 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 Aug. 11 edition. To subcribe to “Eye on the Economy,” click here.
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. Industry Volunteers Help Build Atlanta-Area Workforce Housing CommunityVolunteers from the Greater Atlanta Home Builders Association (HBA) are working with a nonprofit organization to build a 31-home workforce housing community in suburban Atlanta. Cobb Housing, Inc. (CHI), a private, nonprofit Community Development Housing Organization (CHDO), has partnered with the Cobb Chapter of the Atlanta HBA to build the Mitchell Chase workforce housing community on 9.5 acres in Cobb County, GA, northwest of Atlanta. The homes will be approximately 1,500 square feet. Ground was broken in June and infrastructure development is now underway. Ralph Knight, president and CEO of CHI, said Mitchell Chase is being developed to provide housing that will be affordable to working families. The community is being targeted toward people employed primarily in the service sector, including police, fire fighters, nurses, teachers and retail service workers. According to a recent article in the Atlanta Journal-Constitution, the median home sales price in Cobb County in 2003 was $179,900. At the same time, the starting annual salary for teachers was $34,500; for police officers, $33,000; and for Cobb County Transit bus drivers, $20,500. A 2003 NAHB study for the Homeownership Alliance revealed that service sector workers had a less than one-in-three chance of finding a home they could afford in city cores and a three-in-10 chance of finding an affordable suburban home. Knight said CHI plans to sell the Mitchell Chase homes for “the equivalent of $120,000 to $125,000.” Products and Services From Volunteers Keep the Homes Affordable To keep the homes affordable, more than 25 building industry-related professionals from the Cobb Chapter are donating their services and products outright or providing them at reduced rates as part of the partnership. CHI was founded in 1992 to serve the housing and economic development needs of low- to moderate-income families in Cobb County. The organization generally provides about 10 infill homes a year with funding provided through HUD’s HOME Program — federal funds used to build, buy or rehabilitate affordable housing for rent or homeownership or provide direct rental assistance to low-income people. The Mitchell Chase subdivision, however, is a new effort by CHI to build a workforce housing community with assistance and donations from the building industry. Knight said money raised through the sale of the homes would then be used as seed money and a catalyst to develop future workforce housing communities — also with assistance and donations from members of the building industry. A Mechanism to Give Back Bobby Lunceford, president of Bob Lunceford Properties and the HBA’s Cobb Chapter and a CHI board member, spearheaded the effort to involve his fellow Cobb Chapter members in the Mitchell Chase project. “A lot of people in our industry who work in the community want to serve and give back to the community but just don’t know how or where,” Lunceford said. Mitchell Chase provided them with that opportunity. Cobb Chapter participants have already donated infrastructure development and land planning services, an area bank has provided a line of credit with reduced fees, and a surveyor has donated his time to get all the zoning approved. Lunceford said he modeled the volunteer effort after Builders for Christ, a volunteer organization he participated in for more than 10 years. “Builders for Christ is an organization that goes around the country building churches,” Lunceford said. “About 150 volunteers would spend about a week building a church. Some were people in the industry. Most were just lay people." “We thought we would be able to apply the same concept to Mitchell Chase, using volunteers from the housing industry,” Lunceford added. Under the federal government’s HOME Program rules, CHI is required to provide at least 20% of the homes at Mitchell Chase as workforce housing. However, because of the partnership with the Cobb Chapter, Knight said all 31 homes will be built and sold as workforce housing. Knight added that the community will be built in three phases, with the first expected to be completed in about 18 months. A Possible National Demonstration Project The Atlanta metropolitan area recently was chosen as the first of 11 national demonstration sites for the “Housing America’s Workforce Initiative,” a program in which NAHB and Fannie Mae are collaborating to find creative ways to produce affordably priced housing for wage-earning families. Mitchell Chase is being considered as the demonstration project for the initiative. CHI purchased the 9.5-acre Mitchell Chase tract several years ago using HOME funds. In addition to the subdivision now under construction, the site also contains a historic home that was built in the 1830s and served as a Civil War headquarters. The Georgia Trust for Historic Preservation will preserve the home, which will be sectioned off from the 31-unit workforce housing development. Industry Participants The following industry and Cobb Chapter members are volunteering in the Mitchell Chase workforce housing project:
For more about the affordability crisis workers in the south are facing, read "Workers in the South Singing Housing Affordability Blues" in the Aug. 8 edition of NBN Online. To read more about the "Housing America's Workforce Initiative" launched by NAHB and Fannie Mae in Atlanta last month, click here. Get Smart — Initiate Controls to Protect Yourself From Fraud
The next in a continuing series about preventing fraud from affecting your business. Remember the 1960s TV show “Get Smart?" During the credits, hapless CONTROL agent Maxwell Smart strolled through a number of automated steel doors until the last one slammed shut on his schnoz. That’s the same kind of set-up you should have for your company’s assets (not that you need to take anyone’s nose off). You need a number of doors — or controls — in case someone makes it past the first ones. If anyone else has access to or handles their financial matters, the owners of small- and medium-sized businesses generally are at a greater risk for fraud than the owners of large companies. Fraud Often Takes a Bigger Bite Out of Smaller Companies As detailed in "Are You at Risk? Protecting Yourself From Fraud," small businesses owners often:
In addition, the portion of small- and medium-sized companies' assets that are vulnerable to theft may represent a larger percentage of their total assets than those of the big companies. Small companies simply have more to lose — a “relatively” small fraud could put them out of business. Also, the owners of small companies tend to invest more of their own assets in their companies than do the owners of large companies because the latter generally can secure more financing. Do Some of What Large Companies Do to Protect Themselves Here are some measures large companies typically use to help protect their valuable assets:
These are by no means the only practices large companies use to protect their assets. Established anti-fraud techniques and procedures typically are referred to as “internal controls,” or simply “controls.” Here’s an overview of how they work. Policies, Procedures and Systems Beyond Fraud Not all controls are designed as anti-fraud measures. Anti-fraud controls are actually a large, synergistic subset of the policies, procedures and systems that support a fully-functioning business control system and ensure that “the right things happen and the wrong things don’t.” Management is responsible for establishing and maintaining an overall control system. The best controls help a company effectively and efficiently achieve its objectives and reduce its risk. Layers of Internal Control Because the overall concept of “internal controls” is rather complex, it is helpful to divide controls into the following more manageable layers:
In the next articles, we’ll get into designing and monitoring controls to safeguard — and possibly augment — your valuable assets. Diane C.O. Gilson, CPA, CIA, is a Certified QuickBooks ProAdvisor and MasterBuilder ProAdvisor, author, trainer and construction accounting coach, as well as a frequent speaker at The International Builders’ Show and The Remodeling Show. Her firm, Info Plus Accounting PC/CPA, offers bookkeeping and support services to help construction companies do more accurate and timely job costing and run better management reports. Contact Gilson via e-mail, or call her at 734-544-7620. Earlier Articles in this Series
'Accounting with QuickBooks Pro®' Available at BuilderBooks.com "Accounting with QuickBooks Pro® for Home Builders and Remodelers," including a CD-ROM with a trial version of QuickBooks Pro®, is available through BuilderBooks.com. From writing payroll checks to generating up-to-date income statements, this book will help you get the maximum benefit from your accounting system. To view or purchase it online, click here or call 800-223-2665 to order. Other Business Management Publications Available at BuilderBooks.com BuilderBooks.com also offers a variety of other publications about business management. To view or purchase these publications online, click here. Run Your Business Better and More Profitably Click www.nahb.org/biztools 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 … to name just a few. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Use a Newsletter to Stay in Touch With Prospects EffectivelyKeeping your name in front of prospects and past customers can be challenging. Continuous advertising, in just about any medium, can be expensive and has to be carefully planned and administered for the desired results. For example, even sending a holiday card once a year puts you on the same level of your paper carrier who sends out holiday cards — not the desired effect, I presume. What if I could offer you a marketing plan that does it all? A subtle advertising program that prompts past clients to act on that “next” project, turns the uncertain into prospects and touts a positive image to your targeted audience? I promise you that a newsletter — undertaken with those intentions and done well — will do that and more. Make Sure You Have a Plan We began our newsletter with the goal of “staying in touch” with all past clients, prospects and a community of associates from various segments of the business community. Essentially, ourgoal for the newsletter was to prompt referrals from those who couldn’t buy from us and remind those who could buy that we were “still here.” For our newsletter, I chose three focus areas:
Your focus may differ, but there are several points to keep in mind when creating an effective and successful newsletter:
Don’t Do It All Yourself Remember, you can approach this “project” just as you would any remodeling project. That is, you don’t have to do it all yourself. Freelance writers are almost as prolific as remodelers, and local publications can be a good place to find them. Then find a printer who can provide some basic layout and design; add a database supplier for the mailing list and data sorting of each issue (you’ll want to have them hold the addresses, with your own personal and permanent list held in house, perhaps); and have someone to mail the newsletter (database suppliers sometimes provide those services, too) with the bulk mail permit you purchased. We send out about 30,000 newsletters three times a year, and the actual personal time I spend on each issue is usually no more than four hours. The specialists do the other work required. Of course, it takes some administrative/management time on our end, too. Just remember, like a remodeling project, if you’re going to do it, do it right and at a level that makes you proud of your product. Sure, with all the computer programs and desktop publishing available, you can create your own. But only you can decide where your time is best spent — publishing or remodeling. For us, it’s remodeling, and we hire the publishing components. Once you distribute your newsletter to more than a very minimal list (which you need to do to make the quantity efficiencies work), desktop publishing just isn’t going to keep up. Besides, you don’t really want to spend a week of evenings folding and stapling, do you? Results — The Bottom Line How are we doing with our newsletter? We know we have increased our name recognition and enhanced our reputation with a quality publication. We can track jobs to specific mailings. We also know that, combined with other efforts, the newsletter is often that crowning signature of a professionally managed, quality remodeling company that makes us the choice. Also, by leaving our latest copy at each consultation, we leave behind something that impresses upon the prospect the value and performance they can expect from us. By alternating areas and area codes, we will soon have hit all the “ideal” profiles in the marketing area. Even if the newsletter doesn’t generate a call when it is sent, or the recipient doesn’t have an immediate need for our services, what do you think happens if there is a need at a later time and the recipient remembers getting our newsletter? And what do you think happens when, because of our coordinated marketing approach, someone sees our truck or our job sign and then gets our newsletter in the mail? Greg Miedema, CGR, CAPS, is president of Dakota Builders in Tucson, AZ. He is chair and founder of his local Remodelors™ Council, a member of the NAHB Remodelors™ Council Board of Trustees and currently serves as the chairman of the Remodelors™ Council Public Affairs Committee. The Southern Arizona Home Builders Association (SAHBA) has named Dakota Builders, Inc. Remodelor of the Year in 1998, 1999 and 2000. For more information, send him an e-mail.
Nominate the Best of the Best for Remodelor™ of the Year — Deadline, Sept. 3 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 deadline for applications is Sept. 3. 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:
The deadline for entries is Sept. 3. For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Attend the 2005 Custom Builder Symposium Expand your knowledge “Beyond the Tool Belt” at this year’s Custom Builder Symposium. This is the one event where custom builders can go for world-class education and exceptional networking opportunities. For more information, click here. Remodelors™ Council Unveils Consumer AdsThe Remodelors™ Council has produced a series of consumer-oriented ads to promote the hiring of NAHB Remodelors™ Council members, Certified Graduate Remodelors™ (CGRs) and Certified-Aging-in-Place Specialists (CAPS). The ads will begin appearing in selected issues of House Beautiful Home Remodeling & Decorating, House Beautiful Kitchen & Bath Planner and House Beautiful Kitchens/Baths — all consumer special interest publications. The ads were designed to complement the new “How to Find a Professional Remodeler” brochure. To preview the ads, go to the Remodelor™ Council section of the NAHB Web site, www.nahb.org/remodelors, and find the ads in the Remodelors™ Council Resources section. Local Remodelors™ Councils also are being encouraged to place the ads in their local consumer publications as part of a coordinated effort to help “brand” the Remodelors™ Councils. The branding effort will help consumers recognize the local Remodelors™ Councils as organizations to turn to when they need to find professional remodelers. Local councils will be able to customize the ads with their council’s contact information. For more information, contact Melanie Hinton, 800-368-5242 x8451.
Nominate the Best of the Best for Remodelor™ of the Year — Deadline, Sept. 3 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 deadline for applications is Sept. 3. 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:
The deadline for entries is Sept. 3. For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Attend the 2005 Custom Builder Symposium Expand your knowledge “Beyond the Tool Belt” at this year’s Custom Builder Symposium. This is the one event where custom builders can go for world-class education and exceptional networking opportunities. For more information, click here. For Certified Graduate Remodelors™, It's Already a Record YearNAHB's Certified Graduate Remodelor (CGR) designation program recently graduated its 129th remodeler this year, already surpassing the record 127 remodelers who graduated in 2003. NAHB created the CGR designation program to help identify remodelers who exemplify professionalism in the remodeling industry. The exclusive CGR professional designation was designed to emphasize business management skills as the key to a professional remodeling operation, and for graduates to gain recogition as remodeling industry leaders and differentiate themselves from the competition. The CGR designation requires that graduates meet prescribed standards of business practice, possess a minimum of five years remodeling industry experience, have a proven track record of successful project management, complete a comprehensive education curriculum and pledge to uphold the program's code of ethics. The benefits of earning a CGR designation include:
For more information, or to sign up for the CGR designation program, go to www.nahb.org/designations.
The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Nominate the Best of the Best for Remodelor™ of the Year — Deadline, Sept. 3 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 deadline for nominations is Sept. 3. 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:
The deadline for entries is Sept. 3. For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. Attend the 2005 Custom Builder Symposium Expand your knowledge “Beyond the Tool Belt” at this year’s Custom Builder Symposium. This is the one event where custom builders can go for world-class education and exceptional networking opportunities. For more information, click here. CAPS, CGR Courses Offered at Remodeling ShowThis year’s Remodeling Show, produced by Hanley-Wood and sponsored by NAHB and the Remodelors™ Council, takes place Oct. 6-9 at the McCormick Place Convention Center in Chicago. Pre-show education courses begin on Monday, Oct. 4 Classes are being offered for Certified Graduate Remodelor™ (CGR) or Certified Aging-in-Place Specialist (CAPS) designations. The Remodeling Show will have more than 87,000 square feet of exhibit space. More than 10,000 builders and remodelers are expected to attend. This year’s pre-show education courses include:
The pre-show course schedule and descriptions are available at the Remodeling Show Web site. Sign-up for the NAHB courses is available when completing the Remodeling Show registration. During the Show, Network With Peers at Remodelors™ Council Events The Remodelors™ Council is hosting a number of events during the Remodeling Show to celebrate this year's achievements and enable remodelers to network with the industry's best professionals. The events include:
Remodeling Show registration is now open. Register before Sept. 7 and save more than $40 on full conference registration. For more information, visit www.TheRemodelingShow.com or call 800-681-6970. Six Trends to Watch in Active Adult HomesToday’s active adult home buyers are very particular, especially when it comes to home design. Cookie-cutter won’t cut it with them. I have noticed six key trends in designing active adult homes and communities for the future. These include: 1. Neighborhood-Like Environments Through Clustering There’s a new trend in clustering homes to provide a more neighborhood-like environment, with more open space and security and a better-looking community where all the homes aren't lined up at the same density. 2. Hidden Garages A front-loading garage can be an eyesore. My advice: get the garage off the street. This isn’t always easy to do in some subdivisions, but the illustration below shows it can be done nicely. The garage is pulled 40 feet from the street. When people are driving through the neighborhood, the garage is concealed and the front of the house is what they see.. 3. Courtyards, Covered Entrances and Defined Foyers Create courtyards for privacy and interest. A courtyard can be in the front or the rear. In the front, a courtyard can create a striking entry and evoke a sense of lifestyle. And lifestyle is what today’s active adult home buyers are looking for. Cover front entries or create a front porch. Upon entering, a long, open view is essential. Around 80% of all home buyers have a positive or negative reaction within five seconds of entering a home. The foyer should be defined with an oval shape or with columns or other ceiling treatments such as a tray ceiling with crown molding. Long, open views are necessary to create a better impression and make the home appear bigger. 4. Tech Centers in Small Space Near Family Room We call tech centers “brain spaces.” In the past, a den or extra bedroom was used, but today’s small computers, printers, fax machines and storage can be accommodated by a small space near the family living area rather than having to use an entire room. 5. More Storage and Flexibility in the Kitchen The kitchens of tomorrow will have flexible islands that can even be moveable when they're placed on rollers. Breakfast nooks will be standard. A large pantry is necessary for storing extra supplies. A butler’s pantry will become more common between the kitchen and eating area, allowing residents to serve coffee, wine or dessert. 6. Flex Spaces: Because Buyers Want to Customize Their Homes A flex space is a standard modification to the floor plan that can be chosen by active adult home buyers if they want to customize their new home. A flex space can become a separate garage, an extra bedroom or a den. Many home builders say to their customers, “Take it this way with no changes,” but with active adult home buyers, that’s a huge mistake. They will want to make changes and buy into homes and communities that offer them flexibility. Today’s active adult home buyers recognize quality design. A few changes here and there can make a lasting impression with them. Renderings provided by Quincy Johnson Architects. Quincy R. Johnson III, AIA, MIRM, NCARB, is the principal of Boca Raton, FL-based Quincy Johnson Architects. Johnson has more than 30 years of experience in the field of architecture. An award-winning designer and futurist, he is an expert in predicting trends and has judged various design awards competitions. He is an active member in the NAHB Seniors Housing Council and has spoken at Building for Boomers & Beyond: Seniors Housing Symposium. He can be reached by e-mail or 561-997-9997.
Attend the 2005 Seniors Housing Symposium in Metro Washington, D.C. Area Do you want to learn more about the fastest-growing segment of the housing market? Make your plans to attend Building for Boomers & Beyond: Seniors Housing Symposium 2005, the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. For more information, click here. 'Approving Seniors Housing — Facts That Matter' Available at BuilderBooks.comLocation is critical when building for home buyers or renters in the active adult market. Created to help builders and developers obtain approval for 55+ housing in their jurisdictions, "Approving Seniors Housing — Facts That Matter," available at BuilderBooks.com, dispels many of the myths about active adult housing that prompt well-meaning officials and conscientious citizens to interfere with the approval process. "Approving Sniors Housing — Facts That Matter" is available in BuilderBooks.com's digital delivery format. To view or purchase this publication online, click here. 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. Presentations Sought for March Green Building Conference in AtlantaBuilding professionals in environmental consulting, sales and marketing, finance, product development, energy efficiency, water conservation, indoor air quality, waste management, design and low impact development are being invited to submit proposals to speak at the 2005 National Green Building Conference, March 13-15 in Atlanta. To download a request for proposals, those interested in making presentations at the conference can click here. Proposals must be submitted by Sept. 1. “With more than a thousand industry professionals, government officials and academic experts expected at this year’s conference, submitting a speaking proposal can be one of your most important business opportunities for 2005,” said Eric S. Borsting, chairman of the 2005 NAHB National Green Building Conference and the NAHB Energy Subcommittee. “Sessions should be challenging for attendees and encourage creative thinking about new and innovative ways to build and remodel more homes green.” Proposals will be evaluated on their relevance to green building, the timeliness of the topic, their practical application and the speaker’s qualifications. Successful respondents will be notified by Oct. 15. NAHB is hosting its seventh annual green building conference in conjunction with Greenprints, the Southeast’s premier green building event sponsored by Atlanta-based Southface Energy Institute. The collaboration between NAHB and Southface will provide an opportunity for sharing cutting-edge green building practices that are tailored to home building industry attendees. “The upcoming green building conference will highlight environmentally friendly, resource-efficient solutions for homes around the country,” said Mark Fitzgerald, executive vice president of the Greater Atlanta Home Builders Association. “The conference also will allow Atlanta to shine in the success of its own green building program.” Noting that the Atlanta metropolitan area is projected to grow by 2.5 million people over the next 25 years, Fitzgerald said that, “it is essential to conserve our area’s natural resources to accommodate this growth. Constructing more green homes in Atlanta will certainly help contribute to this effort.” For more information about making a presentation at the 2005 National Green Building Conference, e-mail John Loyer or call him at 800-362-5242 x8303.
'Green Building Guidelines' Available at BuilderBooks.com "Green Building Guidelines," available at BuilderBooks.com, provides the Sustainable Buildings Industry Council's second generation of sustainable residential design guidelines created in cooperation with NAHB. Written in plain language with complimentary illustrations, case studies and check lists, "Green Building Guidelines" is a valuable resource for builders and buyers interested in producing or purchasing energy- and resource-efficient homes. To view or purchase this publication online, click here, or call 800-223-2665 to order. Grants Available for Upgrading Energy Efficiency of Chicago BungalowsOwners of Chicago’s bungalows have a chance this summer to receive loans and grants to prepare for winter by improving the energy efficiency of their homes. The Historic Chicago Bungalow Association (HCBA) has announced that it will provide grants of up to $2,000 for bungalow owners who spend $4,000 or more on such upgrades as repairing or replacing inefficient windows or doors, buying energy-saving furnaces, adding insulation or converting to solar hot water heat. Also available to home owners, with income restrictions, is a Bungalow Rehab Tax Credit, which can be used for any type of rehabilitation loan and allows 50% of the annual interest on the loan to be deducted from the amount of federal income taxes owed. Also, owners who spend $5,000 or more on the rehab of a certified historic Chicago bungalow receive a $1,000 voucher that can be used for the purchase of an energy-efficient home appliance from Abt Appliances, Home Depot or Sears. Chicago Mayor Richard M. Daley launched the Historic Chicago Bungalow Initiative in the fall of 2000 to help provide financial and technical resources to modernize and preserve the city’s historic bungalows. The initiative has helped 5,200 households purchase and restore these homes. Built in the city's outlying neighborhoods between 1910 and 1930, bungalows account for nearly one-third of all the single-family homes in Chicago.
Mark Your Calendar for the 2005 National Green Building Conference The 2005 National Green Building Conference is scheduled for March 13-15, in Atlanta. Click here for more information or to register.
Elms Making a Comeback in New Housing CommunitiesDisease-resistant elm trees are being incorporated into a number of new Traditional Neighborhood Design (TND) communities, according to the Elm Research Institute, a non-profit organization in Keene, NH, whose mission is to restore a portion of the 100 million American elms that succumbed to Dutch elm disease in the U.S. starting in the 1930s. Since its introduction in 1983, 250,000 American Liberty Elms have been planted in more than 1,000 communities around the country in elm restoration efforts and new construction landscaping. “Now we’re seeing a new area of interest,” says the institute’s founder, John P. Hansel. “Developers are building new neighborhoods that reflect our country’s past, and they’re recognizing the American Liberty Elm as the tree that complements their themes.” The institute reported last week that the elms will be taking root in these developments:
The Elm Research Institute supplies elms from its nursery in Keen and other satellite nurseries, and can work with developers and landscape architects to grow trees for future plantings while developments are still in the planning stage. For more information, click here or call 603-358-6198. 2004 SLGA Conference: Everything You Need to Reserve Your Spot in BiloxiPreparations are well underway for the 21st annual State & Local Government Affairs Conference. We hope to see many of you in Biloxi this November. Here are the event basics: When: On-site registration begins at 4 p.m. on Thursday, Nov. 4, and the conference will end by 5 p.m. on Saturday, Nov. 6. Where: The Beau Rivage Resort and Casino in Biloxi, MS, will play host to this year's conference. This is a four-star hotel located right on the Gulf, with something for everyone — including restaurants, shopping, history and, of course, gambling. How much: Early bird registration, which is available until Oct. 20, is $275 for NAHB members and HBA staff and $375 for non members. Spouses or guests can join you at meals and social functions for $125. You can register online or download the registration form and fax it to 202-266-8135. Deluxe rooms at the Beau Rivage are available at a specially discounted rate of $139 per night, plus tax. Book online or by phone (888-383-7037) by Oct. 12 to receive the special conference rate. Questions? Go to www.nahb.org/slgaconference to learn more, or contact Marie Zenner at 800-368-5242 x8279. OSHA, NAHB Complete Safety Web Page Directed at Residential ConstructionThe U.S. Occupational Safety and Health Administration (OSHA) last week unveiled a Web page containing information and tips specifically related to safety and health in the residential construction industry. The Web site was created with assistance from NAHB. OSHA’s Residential Construction Safety and Health Web page features information about OSHA standards that apply to residential construction as well as the hazards present in residential construction and solutions available to the industry. The page was posted on the OSHA Web site on Friday Created as part of the OSHA-NAHB Alliance, the residential construction safety site contains information about:
It also provides detailed information and links to OSHA enforcement and training information including:
NAHB participated in the development of the Web site by suggesting and identifying much of the content and issues presented on the site, including all existing electronic safety products related to the home building industry; OSHA interpretations and compliance letters addressing residential construction; and applicable regulations found in the Selected Construction Regulations (SCOR). NAHB and OSHA formed an alliance in May 2003 to focus on safety and health in the residential construction industry with specific emphasis on the Spanish-speaking workforce. To visit OSHA’s Residential Construction Safety and Health Web page, go to www.osha.gov/SLTC/residential/index.html. For information, e-mail Rob Matuga or call him at 800-368-5242 x8507. Mexico Looms as the Next Big Thing for an American DeveloperCalling Mexico “the new California,” developer Jim Grogan says that in his experience it’s now easier to build there than in the areas of the Southwest in which his company has built for years. In five areas that have been designated for expanded development as tourism centers by the Mexican agency FONATUR — Cancun, Los Cabos, Ixtapa, Loreto and Hualtuco — the government has committed to providing infrastructure for resorts and housing. In addition, Mexico has changed its rules to give non-citizens who want to buy homes in the country property rights similar to those they enjoy in the U.S. or Canada. Grogan heads the Loreto Bay Company, and is part of a team that will spend the next 10-15 years developing sustainable housing in villages on 8,000 acres along three miles of beachfront on Mexico’s Baja peninsula, 700 miles south of San Diego. The villages will combine human-scale retail, with live/work apartments over stores, multifamily courtyard “casitas” with from 18 to 50 units each, and single-family homes with hotels and recreational facilities. “The Mexican government has already spent more than $200 million on infrastructure just at Loreto Bay,” says Grogan, whose company is planning to handle the production and custom home building aspects of the development. His firm is looking to partner with other companies with multifamily, retail and mixed-use expertise for the remaining components. Pre-sales of the single-family homes are brisk, with 150 agreements signed in the first five weekends of visitor events. Planning for the community tapped the talents of Duany Plater-Zybeck and Co., the architects of Seaside, FL, and William McDonough + Partners, noted for their expertise in “green” and sustainable design. The villages will be small and walkable, and no gasoline-powered vehicles will be allowed. Grogan will be a speaker at NAHB’s upcoming 2nd International Housing Conference of the Americas in Mexico City on Nov. 7-10. To learn more about the conference, click here. Conference to Focus on Using Industry Performance Standards to Improve BusinessThe upcoming Benchmark 2004 conference will include sessions hosted by the NAHB Research Center on how company culture and customer relationships based on a formal quality assurance system can help set residential construction companies apart from their competitors. Targeted to housing industry members who want to create better performing, sustainable businesses that deliver high margins and satisfied customers, Benchmark 2004 will focus on the many ways in which high-performing home builders, professional remodelers, suppliers and manufacturers can differentiate their businesses. The conference will provide opportunities for networking and creating professional relationships based on camaraderie, advice and shared goals. Discussions will focus on industry performance standards that enable individual companies to share, learn and develop their own roadmap for achieving these standards. Seth Godin, Business Week magazine’s “ultimate entrepreneur for the Information Age” and the best-selling author of “The Purple Cow,” will give a keynote address on the benefit of using creative thinking to transform business ideas and strategies. Benchmark 2004 will be held Sept. 12-14 at the Hilton Hotel Riverside in New Orleans. For more information from the NAHB Research Center on the conference and how to register, click here. HUD Proposes Changes to FHA Multifamily and Health Care Facility Regulations and Loan DocumentsNAHB is seeking comments from association members on a HUD proposal to make changes to its regulation of FHA multifamily rental projects and health care facilities related to the closing documents and forms it uses in those programs. The forms have not been significantly updated since the 1960s, and after conducting a comprehensive review, HUD is proposing changes designed to reflect modern-day terms and to include conditions that offer protection to all parties to a transaction that are consistent with current real estate and mortgage lending laws and procedures. The proposed changes incorporate comments from the industry that were received by HUD in 2000 after initial drafts of the changes were posted on the department’s Web site. Some of the changes are based on Freddie Mac’s loan documents, such as those for the Security Instrument and the Multifamily/Multistate Note. The Regulatory Document would be changed extensively, including a complete reorganization of the document by topic. For a copy of the proposed rule that appeared in the Federal Register, click here. For the entire notice, which describes the changes to the loan closing documents and contains the revised forms, click here. The proposed rule contains several regulatory changes:
Comments are due to HUD by Oct. 1. For more information, e-mail Claudia Kedda or call her at 800-368-5242 x8352. Drug Czar Visits HBI Training ProgramDrug czar John Walters, director of national drug control policy, visited the Home Builders Institute's (HBI) Project CRAFT site in Nashville last month to see how the Davidson County Drug Court (DC4), the only residential drug court in the country, is working with the institute to turn around the lives of local drug offenders. DC4’s Judge Seth Norman hosted the visit and was cited by Walters for his work and innovative approaches to rehabilitation. HBI, the workforce development arm of NAHB, offers construction and life skills training on eight sites in five states through the award-winning Project CRAFT (Community Restitution Apprenticeship-Focused Training) program. The program has scored enormous success in Nashville since it was established in 2002 thanks to a U.S. Department of Labor Youthful Offender Demonstration grant. Sixty students have graduated and been placed in construction related jobs with an average hourly starting salary of $8.30. Students in the Nashville program at DC4 are older than those enrolled in other CRAFT programs, and go through a more intensive curriculum that includes after-program mentoring and extensive case management. For more information on Project CRAFT/Nashville, e-mail Dennis Torbett at HBI or call him at 800-795-7955 x8908. Faucet Collection Aimed at Luxury MarketNoting recent research showing that the nation’s home owners and buyers are increasingly looking for upgraded products in their kitchens and bathrooms, Moen is offering a new line of faucets and accessories in cutting-edge styles designed to appeal to fashion-conscious consumers. A leading designer and manufacturer of faucets, kitchen sinks and bathroom accessories, Moen is headquartered in the Cleveland suburb of North Olmsted, OH, and is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. According to business gurus Michal J. Silverstein and Neil Fiske, in new home construction and remodeling projects, American consumers are looking to trade up. The average size of a new home has increased from 983 square feet to more than 2,200 square feet over the past 50 years, they say, and the average cost of a kitchen, in today’s dollars, has gone from about $9,000 to more than $57,000. Home owners want to feel as though the design of their kitchen is a reflection of their successful life, they say. In their research, Silverstein and Fiske found one home owner who said that, “the quality of our appliances represents us.” Moen’s new ShowHouse™ brand represents its entry into the affordable luxury market. The new brand appeals not only to the practicality of consumers, says the manufacturer, but also to their emotional desire for unique self-expression. “The brand’s products are sophisticated and compelling, yet attainable, with appeal to those who want to bring a greater sense of style and personality to their kitchens or baths,” said Margie Rowe, manager of the ShowHouse brand. For more information on Moen, click here. 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 Nation |