Nation's Building News Online: September 27, 2004Print All Articles Text Version |
||||||||||||||||||||||||||||||||||
Sponsored by Countrywide Home Loans National Builder Division |
||||||||||||||||||||||||||||||||||
Bipartisan Panel Wants to Interject Housing Issues Into Presidential Debates and Congressional RacesEliminating regulatory barriers to the production of affordably priced housing for workers is among a dozen policy recommendations of a four-man panel making a bipartisan pitch to interject an honest discussion of providing housing opportunity into the presidential debates. Housing is an issue that can “bring some civility to the debate in this country between the right and the left,” said Jack Kemp, former secretary of the Department of Housing and Urban Development during the George H. Bush Administration and co-director of Empower America, a public policy and advocacy organization he co-founded in 1993. Kemp was joined at a press conference in Washington, D.C. on Sept. 23 by Henry Cisneros, former HUD secretary during the first Clinton Administration and chairman of American CityVista; Kent Colton, the former CEO of NAHB and a senior scholar at Harvard University’s Joint Center for Housing Studies; and Nicolas Retsinas, former assistant secretary for housing at HUD and director of the Harvard Joint Center. With support from Kimball Hill Homes and the National Housing Endowment, the four housing leaders have been working on a book, “Opportunity and Progress — A Bipartisan Platform for National Housing Policy” — in which they reassert housing as a national priority and ask the federal government to assume its place at the table as a partner with states, localities and public and private sector organizations to address housing concerns. A special preview edition of the publication was released last week in time for housing to be included as an issue in this fall’s political campaigns and so that its policy recommendations will be waiting for the new Congress and Administration. Cisneros said that he hoped the book would serve as a guide for the White House in the transition period starting in January “on where housing should be.” The panel’s recommendations focus on “a continuum” of housing issues, Cisneros said, starting with solving the problem of homelessness to meeting the needs of middle-class, move-up home buyers. Colton noted that wiping out homelessness has been a priority of the Bush Administration. The U.S. Interagency Council on Homelessness, which has been charged with meeting this challenge, estimates that there are approximately 150,000 chronically homeless people in the country who need permanent supportive housing. For the past several years, the panel reports, 30% of McKinney-Vento Homeless Assistance funding has been set aside for supportive housing in the annual HUD appropriations bill. Making this funding permanent could provide up to 15,000 new units for the homeless annually over the next 10 years, the panel says. Colton headed up a presidential commission under HUD Secretary Kemp that was assigned to tackle the issue of removing regulatory barriers to affordable housing, and several of the commission’s recommendations have been embraced by the bipartisan panel. Calling housing “the most regulated industry in the U.S.,” Kemp said the panel wants to use funding and tax incentives, not penalties, to encourage communities to eliminate regulations that are cutting off substantial numbers of households from the economic and social benefits derived from affordably priced housing. The panel proposes providing bonus funding within transportation programs and the HOME and Community Development Block Grant programs to states whose land-use planning required localities to consider current and future workforce housing and transportation needs. All of these plans should be required to include a barrier-removal strategy. At the local level, the panel said there are several approaches to facilitate barrier removal, including modifying zoning codes to increase densities and streamlining the building approval process. The panel also recommended charging HUD with leading an interagency barrier-removal initiative that would identify federal regulations that add directly or indirectly to housing costs and convening a public-private initiative to develop model state-enabling legislation and model local codes, and promote the adoptions of those codes at the state and local levels. To confront the Not-in-My-Backyard (NIMBY) syndrome head-on, Kemp said that the government needed to take a harder look at the Endangered Species Act, wetlands regulations and other barriers to ensure that they don’t take an unnecessary toll on housing at the same time as they continue to provide the environmental safeguards for which they were established. Among the panel’s other recommendations:
Retsinas said that the panel also supports vigorous enforcement of the nation’s fair housing laws and instituting university-based programs to train professionals in housing and community development. The panel also recommended continued funding for HOPE VI, which is needed to demolish or replace at least 47,000 distressed public housing units. Building News Coast To CoastThe Future Is Now for 'Smart' HomesHome owners already have access to sophisticated in-home theaters, whole-house audio and security systems that can be monitored from remote locations via the Internet. New technology expected to grow in the coming years additionally will allow them to control heating, lighting, security and video systems with a remote control or their laptops. They can even eliminate certain chores with the help of robotic lawn mowers and vacuums. Refrigerators equipped with bar-code systems that keep track of their contents and send e-mail reminders when certain items run out; super-fast dishwashers; and talking washers that let home owners know the correct setting also are in the works. Maintenance-free, single-family dwellings also are on the horizon as researchers look to replace wood with polyvinyl and polyurethane products as well planks comprised of cement fiber. Panhandle Paying for Code ExemptionThe Florida Building Code was passed by state lawmakers four years ago in response to the destruction caused by Hurricane Andrew in 1992. It mandates impact-resistant glass and wind-resistant shutters on all new homes so the structures can survive 130 mile-per-hour winds. However, not all areas of the state are subject to the code. Lawmakers and builders in the panhandle won an exemption on the grounds that the region is not prone to strong hurricanes — an argument that has lost its effectiveness since Hurricane Ivan ravaged that part of the state last week. Sen. Durrell Peaden (R-Crestview) and Rep. Dave Murzin (R-Pensacola) want the panhandle to follow the new code as well. According to Florida Insurance Council's Sam Miller, the new code has been deemed effective because newer dwellings held up well during the recent hurricanes. Meanwhile, Florida Home Builders Association President Mike Hickman believes lawmakers need to re-evaluate hurricane evaluation policies due to rapid population expansion and distinguish between safe and unsafe construction. New Home Construction May Be Impeded by Materials Demand in Wake of IvanHome builders in Arizona and other parts of the country are bracing for a slowdown in construction activity as building materials, already in short supply, are diverted to Florida, Alabama and Louisiana for post-Hurricane Ivan rebuilding projects. Mesa-based Great Western Homes President Scott Smith is not anticipating as much of a strain as there was after Hurricane Andrew, but an existing materials shortage will exacerbate the problem. East Valley housing analyst R.L. Brown believes the shortages and subsequent slowdown will boost home prices. The shortages are being attributed to transportation inefficiencies, as railroads do not have enough tracks and cars to meet demand. Houses That Defy HurricanesHomes without the appropriate safeguards can be easily destroyed by hurricane-force winds, which either rip the dwellings apart or inflate them and blow off the roof and walls. Poorly attached roof sheathing was a major problem when Hurricane Andrew hit Florida more than a decade ago, but Institute for Business and Home Safety's Tim Reinhold believes home owners now need to be concerned about the ways in which vinyl stripping is attached to the space where the roof and walls meet. Some of the problems can be attributed to the booming housing market, as builders rush to keep up with demand. Experts say hurricane strapping, shutters and embedded roof tiles can be installed to minimize storm damage, but such safety features will not become standard unless home buyers demand them. Dome homes designed by San Francisco-based architect Jonathan Zimmerman, however, have proven to withstand hurricane-force winds. These dwellings are comprised of an insulated concrete shell; and while they weigh significantly more than traditional stick-built homes — 850 tons versus 30 tons — they are similarly priced. Meanwhile, federal lawmakers may earmark $60 million for a wind-hazard mitigation program, which would mirror the national earthquake hazards program. All in the FamilyBuilders across the country are turning their attention to multigenerational communities that allow mingling among retirees and young families, but Ample Realty and ICI Homes have gone one step further. The companies have joined forces to build 74 estate homes in Orlando, FL, priced between $300,000 and $400,000. The homes in Lake Price Estates will feature a 600-square-foot multi-generational addition to house the home owner's adult children or parents. Multigenerational housing has been pushed to the forefront due to longer life spans, soaring home prices and the exorbitant costs associated with independent- and assisted-living facilities. In fact, the National Association of Realtors® reports a 24% boost in Orlando's median price from $137,700 to $170,100 during the past year. Growth Shifts Broward Ethnic, Racial MakeupRecent research reveals that African-Americans and Hispanics will soon outnumber whites in Broward County, FL, where the population will explode to 2.4 million by 2025. The study finds that housing will be hard to come by when the county reaches buildout between 2010 and 2015. High-density redevelopment is expected to lure newcomers to Hollywood and Fort Lauderdale, but Hollywood Mayor Mara Giulianti resists any efforts to create "an almost entirely vertical city." Hollywood should welcome over 76,000 new residents by 2025; at the same time Fort Lauderdale's population is expected to near the 300,000 mark. Just as people continue to flock to California in spite of traffic, bad air quality, earthquakes and water shortages, Broward County planner Bill Leonard says hurricanes, transportation inefficiencies and soaring home prices have not curtailed growth. Fill 'Er Up!South Florida developers are finding creative ways to free up land for new commercial, industrial and residential projects, including filling in rock pits once used for road construction. Miami-based developer Antonio Cabrera says it costs about $7-$10 per square foot to fill rock pits, which is equivalent to industrial land prices. While some builders are willing to pay this premium for prime locations, others believe such projects are cost-prohibitive. Developers are reclaiming a total of 18 rock pits in Broward County and six in Miami-Dade County. Residential builders even seek permission to fill in lakes, ponds and canals to secure land for new building projects. Storms Dash Dreams of Florida HomeThe succession of damage caused by hurricanes Charley, Frances and Ivan this season have some retirees, prospective buyers and even long-time Florida residents re-thinking their dreams of owning a home in the state. While the occurrence of three hurricanes in a row seems unusual, the National Oceanic and Atmospheric Administration warns that changing weather patterns could make destructive storms a lasting trend in the region. Florida is still the top destination for U.S. retirees moving across state lines, but dry states like Arizona and Texas have recently grown more popular; and Wake Forest University sociology professor Charles Longino says more and more Americans are opting to "retire in place" rather than relocate to a new destination. In addition to this shifting trend, home and condominium prices have been soaring in some parts of Florida, even before the hurricane damage drove up insurance premiums and building costs. Record-low mortgage rates and a hot housing market led property prices to increase by as much as 20% in some areas of the state last year. While some realty insiders say these factors — combined with the nasty hurricane season — have caused several deals to fall through, others say many buyers are not being deterred and that the market will likely rebound in the long term. Talk of Housing Bubble Has Fears Rising, But in Reality It's a Lot of Hot AirThough some observers believe soaring home prices, a jump in mortgage debt from $5.6 trillion to $8 trillion over the last four years and a recent slowdown in sales mean a housing bubble is poised to burst, most experts believe the market will remain hot for years to come. Strong economic growth, demand from immigrants and the population explosion will continue to fuel the market. In fact, research from Harvard University's Joint Center for Housing Studies reveals that a 10% yearly boost in the nation's housing inventory is necessary over the next 11 years to keep up with household formation. Nationwide supply remains at record lows due to growth restrictions and cautious builders looking to avoid speculative development, both of which have driven up home prices. As for expanding household debt loads, record-low mortgage rates have slashed mortgage debt from 30% of household income in the late 1980s to just 18% today. Construction Materials Costs Are Soaring, Due to Various Market FactorsHome builders and contractors across the country have watched the cost of concrete, steel, plywood, insulation, asphalt, vinyl siding and other materials soar by upwards of 50% in the last year. Experts blame the higher prices on shortages stemming from rebuilding in Iraq and China's building boom, and many are bracing for even tighter supplies as a result of the recent hurricanes. Others point to suppliers that quickly hiked prices in response to the surge in demand created by record-low interest rates. "We've seen this kind of price increase happen to products before, but this is across the board," remarks NAHB economist Michael Carliner. "This may be more broad-based that we've ever seen." Some anticipate price declines once higher interest rates put a damper on demand, but others are skeptical after expectations of a drop in sheet-rock costs in recent years failed to materialize. While custom-home builders have been able to pass the higher prices onto buyers, those building lower-priced dwellings have had to eat much of the costs to avoid losing business. Sales Booming in Luxury HomesIn Ohio's Summit County, the Akron Area Board of Realtors® reports a 65% jump in home sales in the $500,000-plus segment from 45 between January and August 2003 to 75 during the same eight-month period this year. Despite substantial job losses, Stark County has seen its high-end sales rise 5% since the end of September. The market's stellar performance can be attributed to low interest rates, heightened consumer confidence, mortgage downpayment programs and the popularity of interest-only loans, among other things. Local real-estate agents say many sellers of luxury homes are empty nesters looking to downsize, while buyers include local small-business owners, out-of-state professionals and affluent baby boomers. Inspiration: Powder Room PizazzDesigners note that home owners can turn cramped, little-used powder rooms into fun spaces. Home owners often incorporate antique fixtures, custom mosaic floor tiles, hand-blown glass sinks and other upscale finishes in their powder rooms. Some design the space to complement the rest of the home, but others prefer to create a unique environment. Stone tile, nickel or bronze faucets; floors made of pebbles or river stones; and concrete counters in a myriad of colors are popular at the moment. To create a powder room that leaves an impression, home owners are urged to be creative; splurge on higher-end finishes, since the space is so small; install soft lighting; choose unusual mirrors; and include artwork that complements the color scheme or decorative theme of the room. A Tasting Room of One's OwnThe growing interest in wine drinking among Americans, particularly baby boomers, has led to increased demand for wine-tasting rooms in personal residences. Home owners who want to show off their wine collections and keep their guests comfortable and entertained at the same time are remodeling their traditional wine cellars and adding adjacent tasting rooms with furniture, music and a view of nearby wine racks through windows or glass walls. Builders and designers say that while few American home owners have eat-in wine cellars, the demand for such rooms is rising. Tasting rooms are usually about 200-600 square feet in size and can range in cost from about $25,000 for the most basic models to $250,000 for more elaborate designs. Temperature control is one of the biggest issues, since wine is usually stored at a chilly 50-55 degrees. Files Can Burden BuildersAccording to a new report from the National Institute of Standards and Technology, a lack of up-to-date data exchange and management technology may have cost the U.S. building and construction industry $15.8 billion in 2002. This calculation was based on analyzing the cost of design, engineering, facilities management, business software systems and redundant paper records management across the phases of a building's life, and comparing this to what the costs would be with more integrated electronic data exchange, management and access. A spokesman for North Carolina-based RTI International, which conducted the research along with the Virginia-based Logistics Management Institute, said that construction projects involve many companies working together but keeping records differently. Companies could save time by converting to a central data source, which would enable them to more easily seek records from one another during the phases of a project. Avoiding Having Your E-Mail Being Flagged as SpamThe increasingly aggressive anti-spam measures employed by Internet providers are not only blocking annoying junk mail messages from the inboxes of individuals and businesses, but are also causing problems for some legitimate enterprises by blocking non-spam messages as well. Small businesses and individuals are particularly at risk for being "blacklisted" as spammers, either because their servers allow messages to be sent anonymously, a practice called "open relay," or because they do not have a reverse DNS entry. In addition to making sure their servers do not have these characteristics, businesses should also be aware of certain key words, phrases and punctuation patterns that often lead e-mails to be flagged as spam. Finally, users may not always know that their messages are being rejected as spam; therefore, it helps to check online spam blacklists or to send a test message to a trusted person who can check if it went through as regular mail. 'You've Got Mail' — and a Lot More Office Work Every Day"Seventy-four percent of workers check their business e-mail outside of their working hours because they are inundated with too many messages. Not only does e-mail cost employers in productivity, but workers claim that their e-mail boxes are cutting into their personal time as well. According to author Christina Cavanagh, workers receive about 54 e-mails daily, and 41% of those e-mails are what workers consider "nonessential." Workers are under the false impression that checking their e-mail can take five minutes per day, but the reality is that workers can spend hours reading and replying to their messages on a daily basis. Moreover, since workers are spending time outside of work answering their e-mails, many clients are beginning to expect quick responses, even when workers are on vacation. Cavanagh suggests that firms install e-mail policies requiring workers only to respond and read e-mails during working hours, or if they check messages at home or on the go, not to respond to them until they are in the office. Structured Wiring Among Technological Advances Transforming the American HomeThis is the third in a series of three articles recognizing the National Council of the Housing Industry’s 40th anniversary and the myriad contributions of its product manufacturers and suppliers. Today’s new homes are definitely “wired” for high-speed connectivity to the Internet and beyond, but for most families 40 years ago, outside communications was limited to a rotary-dial telephone and perhaps an intercom at the front door. Manufacturing members of the National Council of the Housing Industry have witnessed the revolution from no-tech to hi-tech in the American home, and they stand in the vanguard of rapid advancement in residential goods and services — from MP3s today to who knows what just around the corner. Technology has moved rapidly in recent years, and cutting-edge products rooted in the latest research and development are catching on almost as quickly. Fourteen million households now have high-definition televisions. Digital cameras, camera phones and PDAs loaded up with an ever-increasing number of features have become standard-issue, and home owners are clamoring for more. In one of the fastest growing trends in home technology, consumers are looking for built-in speakers in just about every room of the house, and it’s not only audiophiles who want them. With a toe-hold in the media room, new audio applications are spreading into kitchens and bathrooms, and home owners can follow a trail of music just about anywhere throughout the house. NCHI members are seeing technology hasten the development of more sophisticated products for the living environment, and in addition to entertainment, these innovations are transforming how Americans live in their homes, along with the systems that they use to operate and maintain them. Emerging products range from Smart thermostats that provide efficient regulation of temperatures, to touchscreen Internet access in the shower, to structured wiring and closed circuit security capabilities. Research and development for the space age has also led to an influx of home automation and lighting-control innovations. Users can control home lighting, air, heating and blinds all from a remote location, and new approaches to circuitry are already producing impressive energy saving prototypes for these systems that will further stretch the performance of the American home — to almost unrecognizable lengths. Copper wire has been an essential component of the revolution in residential technology. According to the Copper Development Association, a single-family home in 2004 contains approximately 195 pounds of copper wire. Copper, which conducts electricity better than any metal other than silver, accounts for 93% of the building-wire market in the U.S. today — at a time when electricity usage is 400 times higher than it was in the 1950s, according to the U.S. Department of Energy. Thanks to its strength and durability, copper tubing has been used to supply homes with water for bathing, drinking and cooking for more than 75 years; today it provides underground access to geothermal heating and cooling technology. And, copper is now used for everything from faucets and tubs to fireplace trim to lighting sconces. For more information about the National Council of the Housing Industry, e-mail Barbara McMurray, or call her at 800-368-5242 x8243.
Housing SnapshotWhile the Federal Reserve continues on the path of slowly driving up interest rates, mortgage rates have remained in a narrow band around the 6% range and last week continued to decline slightly. While the Fed and others are seeing growing signs that the economy is rallying from the lethargic months of the summer, the news on the state of the economy has been mixed. The Conference Board Composite Index of Leading Economic Indicators was down for the third month in a row in August. And oil has been drawing increasingly closer to the $50 a barrel mark, largely because of the temporary interruption of production from the Gulf of Mexico by Hurricane Ivan. The lumber price front provided the housing industry with relatively good news last week, according to reports from Random Lengths. While still on the high side, the cost of framing lumber continued its recent decline and was down $24 to $407 per 1,000 board feet. The price of 15/32-inch 3-ply sheathing was down $10 to $435 per 1,000 square feet, and oriented strand board was down precipitously, falling $80 to $310, as mills held an abundant amount of the product ready for shipment. Mortgage Interest Rates30 Year Fixed Rate: 5.70\% Housing Starts: Aug. 2004Total: 2.0 million\% New Home Sales: Aug. 2004 *1.184 million Existing Home Sales: Aug. 2004 *6.54 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. Housing Starts at a Gallop in August, Returning to the Fastest Pace of the YearIn what is turning out to be another very good year for the nation’s home building industry, housing starts in August rose to an annual pace of 2.0 million units, the U.S. Commerce Department reported last week. Last month’s home building matched the pace set in March, which was the highest level of the year, and was 0.6% higher than July’s upwardly revised rate of 1.988 million. There were 10.4% more housing starts during the first eight months of this year than for the same period of 2003. “Builders remain confident about the market and are keeping up with strong demand for single-family homes and condominiums,” said NAHB President Bobby Rayburn. “However, builders are managing their production schedules carefully and cutting back slightly on the number of new building permits.” Issuance of total building permits decreased 5.5% from the upwardly revised July pace to a seasonably adjusted rate of 1.952 million units. However, permits were up 10% on a year-to-date basis. “The housing market recently has been buoyed by a healthy combination of strong demographics, improving employment and income growth and a downshift in long-term interest rates,” said NAHB Chief Economist David Seiders. “Naysayers talking about a housing bubble should look at the fundamentals that are in place and see that the national housing market is extremely sound.” August’s housing starts were widely viewed as another encouraging sign that economic growth is returning to more vigorous levels following a slowdown this summer that the Federal Reserve has largely attributed to high oil prices. Single-family housing starts in August increased 0.4% to a pace of 1.667 million, which was 11.6% higher than the same month a year earlier. Multifamily housing starts increased to a seasonally adjusted rate of 333,000 units, 1.5% above the July pace, but 2.3% below a year earlier. “Starts are likely to slip a bit in the fourth quarter as interest rates firm up, but it’s now clear that single-family home production will hit a new annual record in 2004,” Seiders added. Construction of new homes and apartments in August increased across all regions but the West, where they declined 4.7% following a strong surge during the previous month. Starts were up 6.5% in the Northeast, 4.8% in the Midwest and 1.0% in the South. Single-family permit issuance last month decreased by 3.0% and multifamily permits were down 13.8% from the July pace.
Register Today 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 and to register. Coming Oct. 1: HousingEconomics Online HousingEconomics Online is the new online publication from the leading economists at NAHB. Available Oct. 1 at BuilderBooks.com, HousingEconomics Online combines unique scientific research with practical applications providing insights that are original, useful and written in terms that builders, manufacturers and housing finance professionals can understand and apply to their own businesses. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
For more details, go to HousingEconomics Online at BuilderBooks.com. With 9.4% Increase in August, New Home Sales Barreling Towards Another Record YearContinuing at a fast clip, sales of new single-family homes increased 9.4% in August to a seasonally adjusted annual rate of 1.184 million units, the U.S. Commerce Department reported. “Single-family home sales continue to remain strong well into the third quarter of the year,” said NAHB President Bobby Rayburn. “Builders across the country remain upbeat about the housing market.” “The fundamentals supporting the new-home market still are quite strong,” said NAHB Chief Economist David Seiders. “Long-term mortgage rates are running below 6%, one-year adjustable-rate loans are around 4% and both job and income growth have strengthened. Under these conditions, new-home sales are definitely heading toward another record in 2004.” The pace of new home sales in August was running a slight 0.4% below the level of a year earlier, but so far this year sales are up 10.8%. The inventory of unsold new homes increased slightly to 404,000 units in August, but the month’s supply was 4.2, down slightly from the month before. Existing Sales Down 2.7% in August Sales of existing single-family homes slipped 2.7% in August to 6.54 million, the National Association of Realtors® reported, but they were at the sixth highest level ever. The association’s chief economist, David Lereah, said that he expected to see further declines later this year and that total resales in 2004 should be roughly the level reached last month.
Register Today 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 and to register. Coming Oct. 1: HousingEconomics Online HousingEconomics Online is the new online publication from the leading economists at NAHB. Available Oct. 1 at BuilderBooks.com, HousingEconomics Online combines unique scientific research with practical applications providing insights that are original, useful and written in terms that builders, manufacturers and housing finance professionals can understand and apply to their own businesses. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
For more details, go to HousingEconomics Online at BuilderBooks.com. Housing Market Index for September Finds Builder Confidence Down, But Not OutFollowing a strong upward bump in August, builder confidence in the market for new single-family homes has edged down this month but remains in the high range that has persisted for the past year, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The seasonally adjusted monthly gauge of builder sentiment registered a 68 for September, down three points from the previous month, when the index climbed four points. “This is exactly on par with where the index stood a year ago, and shows that, even in the midst of a particularly devastating hurricane season, builder confidence has remained essentially unshaken,” said NAHB President Bobby Rayburn. “Favorable financing conditions, sound house-price performance and reviving consumer confidence continue to propel the single-family market,” agreed NAHB Chief Economist David Seiders. “Builders are still reporting healthy demand for new homes across most markets, and that bodes well for sales in coming months.” The NAHB/Wells Fargo HMI is derived from a monthly survey of builders that NAHB has been conducting for almost 20 years. Home builders are asked to rate current sales of single-family homes, the traffic of prospective buyers and their expectations for sales over the next six months. The first two of those component indexes dropped four points this month, to 73 and 52, respectively. Sales expectations were at 73, a three-point decline from August. All three were within close range of their standings in September of 2003. Any number over 50 indicates that more builders view sales conditions as good than poor. Register Today 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 and to register. Coming Oct. 1: HousingEconomics Online HousingEconomics Online is the new online publication from the leading economists at NAHB. Available Oct. 1 at BuilderBooks.com, HousingEconomics Online combines unique scientific research with practical applications providing insights that are original, useful and written in terms that builders, manufacturers and housing finance professionals can understand and apply to their own businesses. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
For more details, go to HousingEconomics Online at BuilderBooks.com. Eye on the EconomyBy David F. Seiders, NAHB Chief Economist The current economic expansion began around the end of 2001. The early stages were quite weak, characterized by tepid economic growth, net job losses and declining inflation. The expansion looked better by late 2003 as growth picked up, the job market responded and inflation stabilized above zero (avoiding outright deflation). But the economic patterns took several turns for the worse during the first half of 2004 as inflation accelerated too much, economic growth slowed abruptly and the job market faltered. Indeed, a mid-year economic “soft patch” involved slippage of output growth into the red zone (June) and a virtual stall-out of payroll employment growth (June and July). Recent data suggest that the economy has found its legs, and the near-term outlook has brightened considerably. Economic growth bounced back in July, and growth of real Gross Domestic Product (GDP) apparently rebounded to about 4% in the third quarter. Job formation rose nicely in August to 144,000, and weekly data on claims for unemployment insurance suggest a similar pace in September. On the price front, key measures of core inflation (excluding food and energy) have slowed down from the elevated pace earlier in the year. The economy now seems to be in a self-sustaining growth mode, despite a drag from high energy prices and fading stimulus from both monetary and fiscal policy. The long-awaited recovery in the manufacturing sector now is supporting economic growth, and falling unemployment rates and rising capacity utilization rates show that slack in labor and capital markets is being sopped up. These patterns should be maintained for some time. The Fed tightens again and continues to talk about a ‘measured pace’ of future rate hikes … As widely anticipated, the Fed hiked its target for the federal funds rate by 25 basis points at the conclusion of the Sept. 21 Federal Open Market Committee (FOMC) meeting. This was the third consecutive quarter-point increase since June 30, bringing the funds rate up to 1.75%. The Fed’s press release painted a picture of the economy that’s brighter than the previous FOMC assessment on Aug. 10. At that time, the Fed talked about slowing economic growth, a stagnating labor market and an elevated pace of inflation. However, the Fed also suggested that the economy appeared “poised to resume a stronger pace of expansion going forward” and that “a portion of the rise in prices seems to reflect transitory factors.” The Fed’s assessment on Sept. 21 showed that those expectations were on target and the Fed now says that output growth has “regained some traction,” that labor market conditions have “improved modestly” and that inflation and inflation expectations have “eased” in recent months. That’s all very good news, but it doesn’t mean the Fed will now stand pat on monetary policy. The Fed stressed that policy still is “accommodative” and described the upside and downside risks to both sustainable economic growth and price stability as “roughly equal” for the next few quarters. In that kind of environment, the Fed wants to move policy toward a more neutral position and that definitely means further rate hikes. Fortunately, the Fed continued to say that “policy accommodation can be removed at a pace that is likely to be measured.” Unfortunately, we don’t know the Fed’s definition of a neutral federal funds rate or the path from here to there. At this point, we’re assuming one more quarter-point hike this year at the Nov. 10 FOMC meeting and a series of increases during 2005 that will take the funds rate to 4% by year-end. That should be close to neutral as long as inflation stays close to 2% next year. Long-term interest rates have gone down, rather than up, as the Fed has raised short rates … Long-term rates generally rise to some degree as the Fed tightens monetary policy, particularly when it’s clear that the Fed is embarked on an extended tightening process. This time, however, long rates have moved downward as the shorts have risen. Between June 29 and Sept. 22, the 10-year Treasury yield declined by 65 basis points while the federal funds rate rose by 75 basis points. The fall in long-term rates has been related to several key factors: first, evidence of the mid-year “soft patch” in real economic growth; second, the slowing in core inflation from the surprising acceleration earlier in the year; and third, lower probabilities of aggressive tightening by the Fed down the line. The “soft patch” in real growth apparently is moving behind us, and the transitory factors that boosted core inflation earlier in the year apparently have unwound. If those assessments are on target, it’s reasonable to expect long-term rates to begin moving up soon — as the economic expansion proceeds, the job market tightens, unit labor costs move up and the Fed continues to raise short-term rates at a measured pace. NAHB’s forecast shows about a half-point increase in bond and mortgage rates by the end of this year and an additional percentage point rise during 2005. The housing market gets yet another boost from long-term interest rates and the ARM market … The surprising decline in long-term rates since mid-year has stimulated housing demand once again. Financing obviously is the life-blood of the single-family housing market. The fall in fixed-rate mortgage yields certainly has buoyed housing demand and housing production in recent times. Furthermore, there’s been a strong shift toward usage of adjustable-rate mortgages (ARMs), particularly in the new-home market, despite historically low levels of long-term mortgage yields. Indeed, the ARM share of loans made for the purchase of new homes was up to 45% by July (national average) compared with only 15% a year earlier. It seems clear that ARM usage has risen to help maintain affordability as house prices have climbed aggressively. Indeed, the ARM share is particularly high in high-priced metro areas, especially in California. There’s currently a spread of nearly two percentage points between 30-year fixed-rate mortgages and one-year (Treasury indexed) adjustable-rate mortgages, and that’s obviously enough to encourage many buyers to take on the interest-rate risk associated with the ARMs. The ARM rate advantage figures to shrink to some degree as the Fed continues to raise short-term rates, although ARM lenders may elect to discount the starting rates in order to maintain volume. That’s a practice we’ve seen several times in the past. The single-family housing market still is running hot, although some cooling off is on the horizon … The single-family housing market has expanded rapidly for several years as home sales and the production of new units both have surged to higher and higher levels and house prices have grown aggressively in the process. Indeed, there’s little doubt that sales and starts will post records in 2004. There’s some evidence that single-family housing market activity is in the process of topping out. Sales and starts have changed little, on balance, since late 2003. The same pattern is shown by NAHB’s Housing Market Index (based on monthly surveys of single-family builders), and applications for mortgages to buy homes (MBA series) have been rather flat during 2004 as well. It’s likely that the numbers of homes sold and produced will come off their recent records as the Fed continues to tighten and long-term rates rise from current levels. To be sure, ongoing growth in employment and household income will be providing support to housing demand at the same time, but history suggests that the net impacts of all these factors will be modestly negative. That means 2005 stacks up as the second-best year on record for single-family sales and starts and that house price appreciation is likely to recede to about 5% from recent rates of about 9%. Considering where we’ve been, that’s an excellent outlook. The rest of the housing sector still is a mixed bag … The multifamily housing market has been a mixed bag for some time, displaying a strong condo component, a stable market for federally subsidized rental housing and a market-rate rental component beset by high vacancy rates and sub-par absorptions. Multifamily starts, in total, have been essentially flat since 1997, hovering around the 340,000 mark, and NAHB’s most recent Multifamily Market Index was reasonably reassuring. We expect some erosion in coming quarters, although multifamily starts for 2005 should not be far off the recent annual averages. The residential remodeling market still is going great guns, with activity highly concentrated in the owner-occupied housing component, and NAHB’s Remodeling Market Index points toward solid real growth down the line. Record levels of housing equity will continue to provide solid support to this sector, and a higher volume of home equity loans will fill in for reduced cash-out refinancings of first mortgages as home owners tap their accumulated equity to finance remodeling activity. The manufactured home (HUD-code) market has been the weakest component of the housing sector for years, and it appears that shipment volume finally is bottoming out. NAHB’s forecast shows modest recovery in 2005-2006, contingent on the availability of reasonable financing. 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 Sept. 22 edition. To subcribe to “Eye on the Economy,” click here.
Register Today 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 and to register. Coming Oct. 1: HousingEconomics Online HousingEconomics Online is the new online publication from the leading economists at NAHB. Available Oct. 1 at BuilderBooks.com, HousingEconomics Online combines unique scientific research with practical applications providing insights that are original, useful and written in terms that builders, manufacturers and housing finance professionals can understand and apply to their own businesses. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
For more details, go to HousingEconomics Online at BuilderBooks.com. My Key Employees Want Stock: What Should I Do?By William G. Hill, FMI Corporation This scenario, or something similar, occurs in closely held, private organizations all too frequently. Often, owners react rashly, doing something that they regret down the road. This is why FMI Corporation counsels owners to examine their long-term strategic plans before taking any action. Key Reasons to Consider Anything you do now will likely have far-reaching consequences. For example, once you offer an employee stock, you have the potential to turn the organization’s reward system upside down. Employees want to know how they can become shareholders and an owner should be able to objectively answer the question. The following are some questions to consider:
Depending on the situation, you may find these questions difficult to answer. Also, you and your key employee may be reluctant to discuss this in an open and honest manner. If this is the case, you may want to consider hiring an outside consultant who can view the situation objectively. Your Employee Might Want More ‘Say’ in the Company Once a dialog has begun, do not be surprised if one of the key reasons the employee wants stock is because he wants more “say” in the business. This frequently occurs in privately held, owner-managed companies because the distinction between ownership and management is not always clear. Simply put, the employee may think that in order to have any influence in the direction of the business, he or she must have a share in ownership. Owner and Manager Roles Should Differ This is an erroneous conclusion, however. In properly run organizations, the role of an owner should be quite distinct from that of a manager. For example, I have an “ownership” share in Ford Motor Company but I cannot sit in Ford’s executive offices and tell the company how to manufacture their trucks. A construction organization should be no different. To further clarify this point, look at the various functions that fall under the roles of an owner and a manager: Owner functions:
Manager functions:
In reality, the “say” power in a business should exist in the management role. By teaching employees this simple and appropriate distinction, they already have a “say” in the business. Your Employee Might Want a Share in the Rewards Some employees are interested in stock ownership because they would like to share in the company’s long-term financial rewards. This is a good scenario for three reasons:
How and When Do You Want to Leave Your Company? Another key question owners must answer is when and how they want to eventually exit their businesses. If you are within 15 years of your projected retirement date, it is not too early to start considering whether to seek an external sale or make an internal transfer of ownership to management or family. On average, it takes seven to 12 years to sell 100% of the stock in a closely held construction company, assuming it is normally capitalized and has average industry profitability. Therefore, the planning horizon for internal transition needs to be long. If your goal is to exit the business via an external sale, you should be especially cautious about extending stock ownership. Down the road you may not want to inform your key employees that you are in discussions to sell the company, but if they are shareholders, you might not have that choice. Furthermore, your fellow shareholders may not want to sell the company, which could further complicate matters. How Much Stock Do You Want to Extend? Finally, if you decide to extend stock, you need to consider how much stock you want to extend. There are no steadfast rules here. However, it is important that the amount of stock be “meaningful.” For example, extending 1% ownership in a company with shareholders’ equity of $1 million means that the employee has the equivalent of $10,000 of ownership value. This may not be a powerful motivator in the long run. Conversely, if you extend 25% ownership in the same $1 million equity company, you may not be able to afford it. You also need to make sure that you have sufficient “extra” stock if you decide to extend it to other employees in the future. Employees Should Pay a Portion of the Stock You also need to consider how you want to extend the stock to employees. You can use a variety of methods, including issuing new stock as a stock bonus, selling some of your shares or using stock options. The most important aspect is that employees must pay for at least a portion of the stock out of their own resources. Simply “giving” stock without some sacrifice in return will diminish the implied value of ownership and consequently the stock may lose some effectiveness as a retention tool. Once you have examined these questions and issues you should be able to determine whether or not you want to extend ownership. William G. Hill is a senior associate with the FMI Mergers and Acquisitions Group. FMI Corporation provides strategic planning, organizational development, market research and other business consulting services to the construction industry. For more information, e-mail Hill or call him at 303-398-7237. © 2004 FMI Corporation. This article originally appeared in the Winter 2004 edition of FMI’s Mergers and Acquisitions Advisor. Used by permission of FMI Corporation.
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 on Business Management The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Search keywords: “Introduction to Business Management.” 'Managing Your Employees' Available at BuilderBooks.com "Managing Your Employees," available at BuilderBooks.com, is designed to help builders manage the “people paperwork” of their businesses easily and productively and covers three key areas for creating a successful HR program:
To view or purchase this publication online, click here, or call 800-223-2665 to order. Marketing and Designing Homes for Reluctant Active Adult BuyersNot long ago, I proudly could claim I was too old to be a boomer but too young to live in an age-qualified community. Although I can never become a boomer, I am all too qualified to live in an active adult community and can’t — and won’t — deny it any longer. My wife, Kathie, and I now are the target market for the active empty-nester communities that my firm, Mithun Architects + Designers + Planners, has been designing for years. The epiphany Kathie and I have experienced helps me personally identify with the 55+ marketplace — and better understand the reluctance of many older Americans to take the plunge and purchase a new home. Most Older Americans Will Take Time to Decide AARP informs us that 85% of older Americans remain in their family homes and don’t move until they are physically unable to care for themselves. According to research from the NAHB Seniors Housing Council, active adults will visit a new home site between 11 and 17 times before making a purchase. A New Marketing Approach Was Needed This information has driven an interesting shift in the type, location and marketing approach of active adult housing. Let me share some of the insights Kathie and I have had into the mind of the active adult buyer and how these have an impact on design, location, lifestyle choices and community amenities. Issue #1: We don’t need to move; in fact, we don’t even want to move. All of our memories are in our present home. My wife dreads sorting through years of “stuff” and having to discard erstwhile “treasures.” Our kids beg us not to move and uproot their memories. Quite simply, we are reluctant to change our comfortable life patterns. Insight: Create product that enhances the lifestyle while eliminating the negatives of “staying put.” Emphasize what many older existing homes don’t have. Design dream kitchens, fabulous great rooms and master suites with all of the luxuries. Storage! Storage! Storage! Include ample wall space for family portrait galleries. Incorporate generous space for entertaining, crafts and hobbies. Particularly appealing is the flexibility to change room uses to match the empty-nester’s lifestyle. In its new Trilogy at Redmond Ridge, a 1,500-home community in Redmond, WA, Shea Homes for Active Adults has created a series of plans with rooms that can be redefined to reflect changing lifestyles. This is accomplished by planning flexible spaces that can open up to busy areas or close down for quiet uses, based upon the room’s location. This is great for marketing purposes, allowing the sales person to “define” the room for a prospect based upon the lifestyle expressed during the buyer’s pre-qualifying conversation in the sales center. Remember the three hot buttons for empty nesters:
They can be provided most efficiently in a new home and community. When the new neighborhood, home design and amenity package are conceived in concert and include a strong lifestyle focus, the resulting community is bound to have strong market appeal. Issue #2: Our roots are here. My job is here, and with the current market conditions, I may be forced to work longer than I had anticipated. Our family also is here, along with our church, health club, dentist, doctor, bridge club… Insight: Build where the market wants to be — close to home. Let residents keep close to their affiliations. Market the closeness of the familiar. If your market also includes people from outside of the area, make it easy for them to see how close the “new comforts” are to your community. Graphically depict the closeness of the clubs, places of worship, health care facilities, etc., in relation to the project site. If these are not close, you may have difficulty convincing your prospects why they should buy. Large, master-planned empty-nester communities have the volume to provide for golf courses, clubhouses and luxury recreation facilities. Even a moderately sized new community can have a pool or other amenity, which can be a sure-fire magnet for grandkids to come and visit — my wife really likes this concept. Ensure that your buyers don’t resist the additional cost of the monthly maintenance fee. Sometimes, the convenience of existing community amenities, such as shopping, a library, parks and recreation make it unnecessary to provide new amenities. The cottages at Poulsbo Place, a 300-home master-planned community in Kitsap County, WA, are on an infill site immediately adjacent to a historic rural (now suburban) small town. The developer knew this convenience would appeal to buyers more than on-site amenities and that they no community monthly maintenance fees would be needed or required. Issue #3: We have nothing to gain by moving. Our home is paid for and I like my rose garden. Insight: Prospects don’t have to move, they get to move. They can take part of the value of the old home and invest it for future security. For the escalated value of the previous home, they can have the kitchen, master suite and whatever the home lacked. Additionally, they can move in without having to remodel. There is no reason not to unload that big lot and relax in the smaller yard, where they can still raise award-winning roses without spending extra time weeding, mowing or painting. Issue #4: We’ve always had our own home. We don’t want to lose our identity in some huge condo or cookie-cutter seniors development filled with people just like us. Insight: Certainly mega-communities or urban-stacked condos can appear nondescript. But large master-planned communities and more moderate infill communities can have a more intimate scale and can be designed with a charm, intimacy and character that emphasize a special identity. Buyers are drawn to existing communities that reflect individuality. New infill homes wrapped in the historic style of the neighborhood can have a tremendous advantage over new homes in the “burbs.” A variety of architectural styles and appropriate colors can create identity and character and sell homes of all sizes in a development. In addition, the well-planned and thoughtfully designed small-lot community features welcoming front porches, generous sidewalks and garages that don’t dominate the streetscape, lending a pedestrian-friendly atmosphere and a strong sense of community. Many 55-plus buyers prefer to live in homogenous communities with people their own age and homes with design continuity, lending a feeling of stability and security. However, a market exists for “blended adult” neighborhoods. Single professionals and young couples without children share the same market preferences as 55-plus buyers. These include no-maintenance homes with a focus on active, social living. These lifestyle markets can be blended successfully in the same community to diversify the market and speed up sales. At Canyon Creek Meadows in Wilsonville, OR, a 12-unit-per-acre community by Don Morissette Homes, the cottages facing the neighborhood parks were quickly snapped up by grandparents who saw the benefits of entertaining grandchildren with a park right across the street. Meanwhile, single women and working professionals opted for larger homes on protected natural open space. Critical to success is the elimination of the traditional “sequential” nature of project design. In that scheme, the land is first platted, homes are designed, models are furnished, and finally, the sales team comes in to sell the project. A fully integrated team working in concert from the outset creates the most successful empty-nester communities. Issue 5: New housing costs are high. I can’t afford to move. Insight: Yes, new is not inexpensive, but when you consider the delight of living in a thoughtfully planned, lifestyle-focused community, a maintenance-free lifestyle and the idea of possibly downsizing to a home that actually fits your real needs, it makes good sense. Downsizing also can free up money for retirement lifestyle or security. The efficiencies and savings of building a community of new homes means buyers can get far more value for the dollar than with the equivalently priced custom home. With an emerging trend toward development in “exurbia” — small towns beyond suburbia — the appeal of a pleasant small-town life is enhanced by the lower land costs outside of the urban centers. Poulsbo Place, for example, markets new homes for up to $100,000 less than the same homes on a close-in suburban site. Emphasize the Allure of Relocating in Your Planning, Building and Marketing As a whole, the benefits of relocating (notice I didn’t say “moving”) to a thoughtfully planned active adult or blended adult neighborhood have tremendous allure. With the focus on our emerging empty-nester lifestyle and soon-to-be status as grandparents (we’re expecting our first this year), Kathie and I are ready to take the plunge. Now, if you’ll pass me that earnest money agreement, I have a pen around here someplace … William H. Kreager, FAIA, MIRM is the principal of Seattle-based Mithun Architects + Designers + Planners. Kreager has achieved recognition for environmentally sensitive master site planning and innovative architectural design. His market-oriented work includes projects from small infill communities to new towns of 6,000 acres. His company won a silver award for small active adult community in the 2004 Best of Seniors Housing Design Awards for their work on Reunion Village in South Jordan, UT. For more information, e-mail Kreager or call him at 206-623-3344. This article appeared in the Winter 2004 issue of Seniors’ Housing News, a quarterly magazine published by the NAHB Seniors Housing Council.
Attend the 2005 Seniors Housing Symposium in Metro Washington, D.C. Area Learn more about the fastest-growing segment of the housing market. Plan to attend Building for Boomers & Beyond: Seniors Housing Symposium 2005, the premier educational and networking event for industry professionals serving the burgeoning 50+ market. For more information, click here. NAHB Challenges HUD Report on Accessibility Safe HarborNAHB is taking the lead to challenge concerns by the Department of Housing and Urban Development that have made the agency reluctant to endorse the 2003 International Building Code as a safe harbor code for compliance with Fair Housing accessibility requirements. In formal comments submitted to HUD, NAHB has said those concerns are unfounded and it is urging the agency to move forward with the safe harbor endorsement without delay. In the event that the agency remains unpersuaded, NAHB has also submitted 13 code change proposals for amending the IBC in accordance with HUD’s report. In addition, in resolving this matter NAHB will take advantage of its formal accord with HUD in addressing Fair Housing accessibility compliance, including safe harbor endorsements of building codes. NAHB is the only organization representing multifamily builders to have such an agreement with HUD, in recognition of the leading role the association plays in assisting multifamily builders in their efforts to comply with Fair Housing Act requirements. Comments to HUD were submitted on Sept. 7, and NAHB met with HUD to discuss the report on Sept. 9. For additional information, e-mail Jeff Inks at NAHB, or call him at 800-368-5242 x8547. 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. Designations, Resources Add Value to MembershipWhat have you done for me lately? The above is not a question asked of me by my wife. Rather, it’s a sentiment gleaned from a meeting earlier this year of the Michigan Association of Home Builders (MAHB) Remodelors™ Council. At the MAHB summer convention, the MAHB Remodelors™ Council gathered to discuss general industry issues from around the state and to hold our regular council business meeting. Also attending was NAHB Remodelors™ Council Board of Trustees Vice Chairman Don Novak, CAPS, CGR, CBG, CKD, of Novak Construction Co. in Cedar Rapids, IA. We discussed three main issues: local member involvement, value of membership and continued professional development — all recurring themes that warranted further examination within the context of answering the question, “What has the Remodelors™ Council done for me lately?” The Challenge: How to Increase Member Involvement How to increase member involvement at a local level is a challenge facing all local associations. This issue was thoroughly discussed at the roundtable with no solution offered. There is no silver bullet for remedying this challenge. Some good suggestions included:
One Solution: Continually Promote the Benefits of Membership One of the most effective ways to increase member involvement is to continuously promote the benefits of membership in NAHB. With so much offered at the local, state and national levels, it is only a matter of time before a member finds something important enough to become more involved. We also discussed the ever-present issue of building value in membership. While it is understood that the majority of members have most of their contact with the NAHB through their local association, this is as it should be. However, the activities at the state and national level should be at least of moderate interest to the local member. By receiving newsletters produced by the state and national Remodelors™ Council, members at the local level can connect and feel part of the entire federation. The national Remodelors™ Council e-newsletter is ReNews, a monthly publication available free to Remodelors™ Council members. To begin receiving it, e-mail Melanie Hinton. State Remodelors™ Council newsletters are member driven publications — a means by which members can share information and learn about issues facing fellow remodelers in their particular states. If you have an interest in submitting an article or point of information, contact your local or state HBA. Don’t Forget the Value of Continuing Education and Professional Development You may be able to tell from the four accreditations that Don Novak has earned that he strongly believes in continuing education and professional develop programs. He is one of the most accredited members of NAHB. When he assumes the leadership of the NAHB Remodelors™ Council next year, he will put the many NAHB professional designation programs on the top of his agenda. Such programs offer the opportunity to get local members more involved in the association and bring value to their membership. Two remodeler specific designations — Certified Aging In-Place Specialist (CAPS) and the Certified Graduate Remodelor (CGR) — include courses that cover all aspects of being successful in the remodeling industry. These courses are typically offered at the International Builders' Show and The Remodeling Show. However, courses can be held at your local association. Contact your local association for more information on how to offer CGR and CAPS courses. So, when looking for answers about how to increase member involvement, build value in membership and expand your members' professional development, it appears that the Remodelors™ Councils at the local, state and national levels are doing quite a lot for us lately. There is certainly no lack of opportunity to become more involved or to receive value. It is merely a question of priority. Brindley Byrd, CAPS, CGR, is president, Qx2 Contracting, Inc., Lansing, MI. Byrd founded Qx2 Contracting in 1994 with the goal of helping to provide quality, affordable housing. Since then, the scope of the company has expanded to include housing advocacy, professional industry training and business-to-business consulting. For more information, e-mail Bird.
The NAHB University of Housing Offers Designation Programs and Other Courses The NAHB University of Housing offers CAPS, CGR, CGB and a variety of other professional designation programs and business management courses that set builders and remodelers apart from the competition. To learn more about NAHB’s designation programs, visit www.nahb.org/designations. For a complete list of all current education offerings, click here. OSHA Web Site Helps English-Speaking Builders Communicate With Hispanic Workers About SafetyA new bilingual Web site from the Occupational Safety and Health Administration (OSHA) is geared to helping English-speaking employers access safety compliance assistance resources that have been translated into Spanish. The 17.5 million Hispanics in the U.S. workforce have been a particular focus of OSHA because they have accounted for a disproportionate number of job-related deaths, injuries and illnesses in recent years. For the first time in seven years, those numbers started coming down in 2002, but the government still considers them too high. Construction is one of the industries in which Hispanic workers are most concentrated. The site contains links to OSHA en Espanől, as well as Spanish-language dictionaries, online compliance assistance tools, fact sheets, posters, publications, public service announcements, toll-free telephone assistance, training grant information and training videos. Links also provide information in Spanish on Hispanic/English-as-a-second-language coordinators, employer and employee rights and responsibilities and OSHA cooperative programs. Additionally, OSHA has developed a Spanish language eTool, which is an interactive Web-based training tool that addresses the "big-four" hazards on construction sites — electrical incidents (e.g., overhead power lines, power tools and cords, outlets, temporary wiring); falls (floors, platforms, roofs); struck-by (falling objects, vehicles); and trenching and excavatioin (caught-in/between). These hazards cause 90% of the injuries and fatalities in the construction industry. OSHA has documented successes in the construction industry from outreach programs that provide bi-lingual communication and safety training for Hispanic workers. Torcon, Inc., a general building contractor in New Jersey, was able to decrease injuries at its job sites by stepping up its efforts to communicate with its Spanish-speaking workers, OSHA reports. On job sites where there are Hispanic workers, Torcon requires contractor supervisors to be bi-lingual, eliminating the need for interpreters. Site safety orientation is conducted in both English and Spanish, reports OSHA, and the written orientation materials are in both languages. English and Spanish versions of health and safety posters and emergency evacuation procedures are also provided under the Torcon program. Safety training videos are produced in both languages, and the company requires its contractors to conduct weekly bilingual tool box safety talks with workers. NAHB has worked with OSHA to provide its members and others in the residential construction industry with information, training opportunities and guidance that will help them protect the health and safety of their employees. To learn more about this comprehensive alliance, click here. For information on the many OSHA standards that apply to the residential construction industry, hazards in home building and their solutions, and developing and implementing a safety program, click here. For further information, e-mail Rob Matuga at NAHB, or call him at 800-368-5242 x8507. Effective Risk Management Can Help Builders Weather the General Liability Insurance CrisisBuying affordable general liability insurance coverage is getting harder all the time, but there is plenty that builders can do to address this problem by managing risk in their business and making themselves a more attractive customer to insurance companies, according to the Sept. 15 issue of We-Connect e-Source, which is distributed to members of the NAHB Women’s Council. Bruce Harrell, CEO of HBW Insurance Services, which provides warranty insurance to the home building industry, says that effective risk management comes down to a few critical steps:
The NAHB Research Center announced recently that home builders who are involved in its National Housing Quality certification program can receive discounted general liability insurance. To read that story, which appeared in the Sept. 20. issue of Nation’s Building News Online, click here.
The NAHB University of Housing Offers Risk Management Course The NAHB University of Housing offers a Risk Management and Insurance for Building Professionals course designed to help builders and developers avoid risks, minimize risks, transfer risks and, were possible, buy insurance and make insurance claims. To find offerings of this course in your area, click here. Florida Builders Continue to Leads Hurricane Recovery EffortsAs the Federal Emergency Management Agency (FEMA) was still making initial assessments of damage from Hurricane Ivan — the third successive hurricane to hit Florida — builders in that state remained immersed in relief efforts for local residents affected by Hurricane Charley, the storm that initiated this season’s seemingly endless cycle of destruction. In a collaborative effort on Sept. 19 between the Florida Home Builders Association and the Charlotte Builders and Contractors Association, nearly 1,000 residents of Port Charlotte received critical information from builders and governmental agencies on rebuilding their homes and lives. On hand for the one-day “OPERATION REBUILD: Building Florida Back Better” construction fair were local building officials, FEMA, the Florida Department of Business and Professional Regulation, Florida Department of Financial Services, the Institute for Business and Home Safety, FLASH and representatives from home builders associations. Local citizens received model contracts, licensure information, lists of available contractors, building code information and much more at the free event. Helping to make the fair a success were the Collier Building Industry Association, Lee BIA, the Home Builders Association of Manatee County and the HBA of Sarasota County. “All day long, we were able to take that dazed, confused, sometimes angry home owner and send them off with head and hands full of information, and a new found optimism that things will get better,” said Mike Hickman, president of the state home builders association. Hickman said that OPERATION BUILD will next be held in Polk County and then travel to the state’s east coast and panhandle. The state association is a partner in the Disaster Contractors Network, which is a key information resource for contractors and home owners involved in hurricane clean-up activities. Initial FEMA reports of the damage from Hurricane Ivan estimated that 50%-75% of the structures along the coastline in Florida’s Escambia County were severely damaged or destroyed, leaving roughly 20,000 residents at least temporarily homeless. Disaster declarations for federal assistance were issued for 32 counties in Alabama, 23 counties in Mississippi and 13 parishes in Louisiana. Ivan’s path of destruction extended northward, bringing high winds, heavy rains and tornadoes. Disaster areas were also declared in Georgia, North Carolina, Pennsylvania, Ohio and West Virginia. Floridians were only beginning to assess damage from a fourth storm to make landfall — Huricane Jeanne — as this issue of NBN went to press. Properties May Become Underinsured as Costs Of Building Materials RiseMany commerical and residential properties around the country may have become underinsured because of significant increases in the costs of building materials such as cement and steel, as well as other commodities used in the construction process, the NAHB Commercial Builders Council recently advised its members. This can have significant implications for insurance policies that are subject to coinsurance or margin clause provisions, according to an article appearing in the council's Sept. 14 e-newsletter. With a more than 10% increase in the cost of building materials over the past 12 months, building owners who simply renew a policy from the previous year without reviewing their coverage for replacement costs could find themselves under-insured in the case of a loss. "The recent rise in materials costs should serve as a wake-up call to property owners to review not only their insurance coverage, but also how coverage amounts were calculated," says At Risk, an online publication of Marsh Risk Consulting. An Aug. 19 report from Marsh — "At Risk: Rise in Building Materials Costs Means Properties May Be Under-Insured" — looks at strategies that will help property owners keep their policies up-to-date and ensure that they have sufficient coverage in light of the current run-up in building costs. In addition to reviewing property replacement values in the current environment, businesses should also ensure they have the appropriate amount of business interruption insurance. "You should obtain detailed location-specific estimates that take into account rental values, ordinary payroll, pure extra expense and the time necessary to repalce the property," the article tells business executives. Top Ten Reasons to Attend the State & Local Government Affairs ConferenceNAHB members and their staff who have an interest in state and local legislative, political and regulatory issues should make plans to attend the 2004 State & Local Government Affairs Conference. Based on responses from those who attended last year’s conference, here's a list of the top 10 reasons to reserve a seat at the conference, which will be held Nov. 4-6, 2004 in Biloxi, MS: 10. “The educational program had great topics.” This year, the conference will address affordable housing, growth management tools, financing your public policy program, ways to combat construction defect litigation and more. 9. “Large attendance and new faces.” We're on pace to make this conference the most well-attended in the event's 21-year history. What's better is that we'll have even more new faces and perspectives in 2004. With lots of staff additions in HBAs around the country, you'll be sure to learn from someone new. 8. “We learned about some of the resources that NAHB offers to each state and local association.” NAHB's Advocacy Group has more than 100 staff members and countless programs designed to make your work easier. The SLGA Conference is a great chance to meet some of the people and learn about some of the programs.
7. “I liked the CD-ROM with the information on it.” Each attendee will receive a great conference souvenir: a CD-ROM with resource materials and presentations for each breakout session. 6. “As a first-time attendee, I had the opportunity to meet HBA staff from other locations.” First-timers this year can look forward to special networking opportunities. 5. “Hearing about successful programs.” Last year we heard legislative and political success stories from around the country. This year, we'll learn about some major legal victories. 4. “No lag time!” The conference schedule is intense — two full days of meetings and two evening networking events are fit into this two-and-a-half day event. 3. “The conference did an outstanding job of tying the lunch programs into the educational seminars.” Expect more of the same this year. 2. “The topics were timely.” Breakout session topics are culled from State & Local Lobbyist Listserv discussions, Critical Issues Survey results and direct input from past attendees. Sessions this year will look at familiar topics like storm water and impact fees, but will also cover some important new ones, including working with OSHA, PACs and effective volunteer management. 1. “Hearing problems faced around the country helps us prepare for the battles in our own backyard.” This conference offers the right blend of theory and war stories. Both will help you do your job and run your business more effectively. For more information, click here or contact Marie Zenner Yarroll at NAHB at 800-368-5242 x8279. HBI Youth Training Programs Receive Congressional Recognition During Appropriations ProcessHome Builders Institute, the workforce development arm of NAHB, received congressional recognition for its youth training efforts, as appropriations for those programs in FY 2005 continued to move through the process. The House on Sept. 9 passed H.R. 5006, the funding bill for the Departments of Labor, Health and Human Services and Education, and the full Senate Appropriations Committee approved its version of the bill, S. 2810, on Sept. 15. With close ties to the housing industry and a continued record of success, Job Corps has fared well, receiving $1.54 billion from the House, just shy of the Administration’s request for $1.55 billion. The program received a slight boost in the Senate bill, however, which allocated $1.57 billion. Congressional language submitted by House Subcommittee member Rep. Anne Northup (R-KY) recognized HBI’s role as a National Training Contractor (NTC) “in training Job Corps youth for careers in this high-growth industry. The Committee commends HBI on its 30 years of proven results in building our nation’s workforce by providing at-risk youth with the skills training and employment opportunities they need to succeed.” HBI offers training in carpentry and facilities maintenance at the Whitney Young Job Corps Center, which is located in Northrup’s congressional district. The House eliminated funding for the Responsible Reintegration of Youthful Offenders Program and the President’s proposed prisoner reentry initiative, but Senate appropriators provided $50 million and $40 million respectively for those programs. HBI’s Project CRAFT (Community Restitution Apprenticeship-Focused Training) program in Nashville, a national model in training court-involved youth for industry jobs, was renewed through 2005 by the Youthful Offenders initiative. In language submitted to the Senate Appropriations Committee by Sen. Kay Bailey Hutchison (R-TX), a member of the committee, Project CRAFT was recognized as “a modern intervention technique in the rehabilitation and reduced recidivism of adjudicated youth.” The committee language encouraged the Department of Labor “to replicate Project CRAFT to bring its outcomes-oriented approach to adjudicated juveniles throughout the country in order to help them become members of this industry's workforce and spur the Nation's economy.” Project CRAFT has garnered strong community and industry support for its training at the Dallas County Village, which began last year. Mike Mishler, vice president/secretary of the Home Builders Association of Greater Dallas, spoke at this summer’s graduation ceremonies for the Texas program, accompanied by Bob Morris, the executive vice president, and HBI trustee Steve Nellis, of Centex Homes. To read the legislation, click here and enter the bill number in the box at the upper left. For information on HBI programs, e-mail Maria McIntyre, or call her at 800-795-7955 x8912. For information on the Labor appropriations package, e-mail Jenna Morgan at NAHB or call her at 800-368-5242 x8407. Skilled Building Trades Hit Home Runs at Busch and PNC StadiumsIowa builder James A. Sattler, chairman of the Board of the Home Builders Institute (HBI), the workforce development arm of NAHB, threw the first pitch to St. Louis Cardinal pitcher Mike Lincoln in pre-game ceremonies celebrating Sept. 18 as Skilled Trades Day at Busch Stadium. Brett Hardesty, president of the Home Builders Association of Greater St. Louis, also participated in the in-field activities, accompanied by Emily Stover DeRocco, the assistant secretary for the Employment and Training Administration. Patrick Sullivan, the executive director of the St. Louis association, helped coordinate the event, which included a tent in the parking lot filled with educational materials on careers in the residential construction industry. Following a ceremony with the Pirates on Labor Day at Pittsburgh’s PNC park, this was the second Major League baseball game this month to recognize “Skills to Build America’s Future,” an outreach effort sponsored by the U.S. Department of Labor to educate young people and workers in transition on the career opportunities in the skilled trades. NAHB is a principal partner in this initiative, along with the Construction Industry Round Table and the National Heavy & Highway Alliance and its seven international unions. Home builders returned to Pittsburgh on Sept. 24 for Fireworks Night and a “Skilled Trades Day at the Park,” which was also sponsored by the Department of Labor with Skilled Trades Coalition members. John Auciello, executive director of the Builders Association of Metro Pittsburgh, helped coordinate local industry participation. Representing the home building industry in pre-game activities on the field was builder Dion McMullen of Londonbury Homes, who is secretary/treasurer of the Pittsburgh association and is active in its Workforce Development Committee and Student Chapters program. Throwing the first pitch was Anthony Swoope, administrator of the Office of Apprenticeship Training and Employer Services at the Department of Labor. HBI offers training in seven skilled trades to students enrolled in the Department of Labor’s Job Corps, and through its Craft Skills pre-apprenticeship and apprenticeship training programs, such as Project CRAFT. The institute has also developed state-of-the-art instructional materials in five skilled trades in partnership with Thomson Delmar Learning. For more information on “Skills to Build America’s Future” or HBI programs and resources, e-mail Maria McIntyre or call her at 800-795-7955, x8912. Women’s Councils Involved in Community Outreach ProgramsWomen’s councils at home builders associations around the country continue to participate in a range of efforts geared to helping the community. Supporting Shelters for Battered Women and Children In an annual basket luncheon to support shelters for battered women and children, the Building Industry Association of Greater Los Angeles, Ventura Chapter Women’s Council this spring raised more than $2,000, a record, for Haven Hills, Restore-A Renew Center for Women, Coalition to End Family Violence, La Posada New Economics for Women and With Love, Grandma, Inc. Families come to these shelters in desperation to flee unsafe domestic situations, leaving their personal belongings behind. The more than 75 guests who attended this year’s event also donated baskets filled with toys, infant clothing, baby bottles, women’s hygiene products, blankets, clothes, socks, sweaters, school supplies and other items. The “baskets” included playpens, strollers, wading pools, infant car seats and toy wagons. Griffin Industries of Calabasas, CA, won Best Basket for a corporate donation and Darlene Silverman of DRS Design won Best Basket for an individual donation. Encouraging Exceptional Students Carrying on a 14-year-old tradition of honoring exceptional students at the Career Center of the Winston-Salem/Forsyth, NC, County Schools, the Home Builders Association of Winston-Salem presented merit awards and letters of credit to help pay for tools and other course expenses related to furthering education in the construction industry. Home builders also presented the center’s carpentry classes with a $400 tool. A student who was selected for the most outstanding work in carpentry classes received a $500 scholarship presented in honor of past association member Lewis Wilson. Helping Women Get Back to Work Partnering with Gilbert Stuart Middle School's Parents Center in Providence, RI, the Rhode Island Builders Association Women’s Council gathered clothing donations for “Dress for Success,” a program that provides professional clothing for disadvantaged women as they make the transition from welfare to the workplace. “Helping parents transition from home to work also helps their children, who may be at risk for accidents, mental illness, sexual abuse, physical abuse, teenage pregnancy, school failure and dropping out of school,” said Mary Giordano, the council’s president. For more information on the NAHB Women’s Council, e-mail Amy Larrabee, or call her at 800-368-5242 x8455. Log Home Manufacturer Recognized for Commitment to Native American EducationSusan Oster-Conrad, the president and CEO of Air-Lock Log Homes, received an award earlier this year honoring her company’s commitment to higher education for American Native youth. Oster-Conrad is a member of the Women’s Council of the Building Industry Association of Southern California. In partnership with several philanthropic foundations, Oster-Conrad, a long-time supporter of Indian causes, donated a specially customized, two-story version of her company’s popular 44-foot-diameter, two-story hogan as the first building on the new Institute of American Indian Arts (IAIA) Santa Fe campus. It now serves as a cultural center. “Air-Lock Log Homes’ commitment to, and support of, higher education for America’s Native youth has made the dream of IAIA’s campus a reality and has instilled hope within those who dream of pursuing a college degree,” said Della Warrior, the school’s president. “For that, we are forever grateful.” Air-Lock Log Homes subsequently completed more hogan structures on four other American Indian Higher Education Consortium campuses in Arizona, New Mexico and Montana. Air-Lock Log Homes is a log home manufacturer and designer; it uses ponderosa pine logs that are harvested using quality controlled and environmentally correct practices. For information on the NAHB Women's Council, e-mail Amy Larrabee, or call her at 800-368-5242 x8455. Windows Withstand Penetration by Airborne DebrisJust in time for an unusually persistent and destructive hurricane season, Loewen, a Canadian luxury wood window and door manufacturer, has entered the market with a new StormForce Series of products designed to resist penetration by airborne debris and withstand a storm’s full force. Headquartered in Steinbach, Manitoba, the location of its 567,000-square-foot plant, Loewen is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. Available in three gradations, StormForce DP, IP and MP fills the needs of home owners — and the requirements of stringent building codes — in a large range of market zones prone to inclement weather, says the manufacturer. The StormForce technology is available for a large selection of the windows and doors offered by the Douglas fir window maker. “Along with the exceptional performance provided by Loewen’s StormForce Series of products, the clean aesthetics of our products are maintained,” said Ray van Boven, the company’s product sales manager. “Where others have had to add visible exposed brackets and retainers to provide the required performance, Loewen has maintained the look of our products that the market has come to expect,” he said. “There are no visible brackets or retainers when Loewen products are closed.” 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.Counting Beans Can Drive You NutsManny Bucks waited for me at our favorite lunch haunt. His chin was in his hands as I approached.
“What’s up,” I asked, trying to sound chipper. “Beans,” he replied blankly. “My beans are out of whack, totally out of control. I’m in heck.” “Do tell.” He launched into a sorry tale of woe. One that I have experienced myself, as has anyone who’s ever owned a business. “When I started my construction company,” he began, “I thought all I’d have to do is keep work in front of my crew, supervise them a little and play golf on Fridays. It has not turned out that way — not even close. It kills me, all the junk I have to do — stuff totally unrelated to construction. Right now, for example, my books show a $150,000 bust on a job I thought was going great. I asked my bookkeeper about it and she gave me the doe-in-the-headlights look. You know, the one that says, ‘I did my best, boss, and this is it. This problem is yours, not mine’.” “And of course, she’s right,” I said. “You are the owner, the problem is solely yours.” “Yes, I know,” Manny said gloomily. “Every problem is mine — that’s the problem. I’m not a business owner, I’m a fireman. I spend all my time rushing around dousing everyone else’s flames. I’m supposed to be negoti |