Nation's Building News Online: November 22, 2004

Print All Articles Text Version

Sponsored by Countrywide Home Loans National Builder Division

Changing Leadership of 109th Congress Likely to Renew Impetus for Housing Initiatives

As they reconvened last week to wrap up work on an omnibus government funding package for FY 2005, lawmakers from both parties in the lame-duck 108th Congress elected new leadership for the incoming 109th Congress, which will be working with the second-term Bush Administration on a long list of initiatives of interest to the home building community.

Following is a list of who will be filling key leadership positions in the House and Senate come January:

Senate Leadership — Republican Party expands majority to 55 seats

Senate President — Vice President Dick Cheney
Majority Leader — Bill Frist (R-TN)
Majority Whip — Mitch McConnell (R-KY)
Conference Chairman — Rick Santorum (R-PA)
Policy Committee Chairman — Jon Kyl (R-AZ)
National Republican Senatorial Campaign Committee Chair — Elizabeth Dole (R-NC)

Senate Leadership — Democratic minority

Minority Leader — Harry Reid (D-NV)
Minority Whip — Richard Durbin (D-IL)
Democratic Conference Chair — Debbie Stabenow (D-MI)
Policy Committee Chairman — Byron Dorgan (D-ND)
Democratic Senatorial Campaign Committee Chair — Charles Schumer (D-NY)

House Leadership — Republican Party gains at least three seats

Speaker — Dennis Hastert (R-IL)
Majority Leader — Tom DeLay (R-TX)
Majority Whip — Roy Blunt (R-MO)
Conference Chair — Deborah Pryce (R-OH)
Policy Committee Chair — Chris Cox (R-CA)
Republican Congressional Committee Chair — Tom Reynolds (R-NY)

House Leadership — Democratic minority

Minority Leader — Nancy Pelosi (D-CA)
Minority Whip — Steny Hoyer (D-MD)
Caucus Chairman — Robert Menendez (D-NJ)
Democratic Congressional Committee Chair — Rep. Pelosi has asked Bob Matsui (D-CA), the current chairman, to serve another term. If he decides not to, possible contenders include Rahm Emanuel (D-IL), Joe Crowley (D-NY) and Mike Thompson (D-CA).

Changes also await several committees in the Congress dealing with key housing matters:

House Financial Services Committee and Senate Banking Committee

These committees have jurisdiction over federal housing programs and mortgage finance and financial services providers, including the Government Sponsored Enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Rep. Michael Oxley (R-OH) will be returning as chairman of the House Financial Services Committee, along with ranking member Barney Frank (D-MA).

Sen. Richard Shelby (R-AL) will remain at the helm of the Senate Banking Committee and Sen. Paul Sarbanes (D-MD) will return as the lead Democrat on the panel.

The committees will take the lead on any GSE regulatory reform measures introduced in the 109th Congress. NAHB will work with lawmakers to ensure that any restructuring of the two secondary mortgage giants does not impede the flow of capital to housing or increase its cost.

Federal housing programs also fall under the auspices of the Housing and Community Opportunity Subcommittee of the House Financial Services Committee. Subcommittee Chairman Bob Ney (R-OH) and ranking member Maxine Waters (D-CA) are expected to deal with several housing issues in the new Congress, including Federal Housing Administration mortgage insurance, Section 8 housing choice voucher programs and HUD reform efforts.

Tax Writing Committees

The Senate Finance Committee and the House Ways and Means Committee have jurisdiction over tax issues, health care, Social Security, trade and revenue measures.

Sen. Charles Grassley (R-IA), who easily won his re-election bid on Nov. 2, will remain the chairman of the Senate Finance Committee. He supports several of NAHB’s tax priorities, including the Low Income Housing Tax Credit, private activity bond cap increases and repeal of the estate tax.

At the end of the 108th Congress, Grassley sponsored a bipartisan bill that included a compromise version of the homeownership tax credit, which would increase housing opportunities for working families by helping to bridge the gap between what it costs to build homes in lower-income neighborhoods and the price that buyers in those neighborhoods can afford to pay. Grassley is expected to advance this legislation in the 109th Congress as well.

Sen. Max Baucus (D-MT), the committee’s ranking member, has a long history of effective bipartisan leadership and he was an important co-sponsor of the Grassley bill containing the homeownership tax credit initiative.

Both Grassley and Baucus supported NAHB efforts to include home energy efficiency tax credits in the Senate-passed version of the energy bill in the 108th Congress.

In the House, Rep. Bill Thomas (R-CA) will once again wield the gavel as chair of the Ways and Means Committee, and Rep. Charles Rangel (D-NY) will return as the committee’s ranking member.

In the past, Thomas has supported many of NAHB’s tax priorities, including reducing capital gains rates for real estate, accelerating depreciation for real estate, repealing the estate tax and raising the private activity bond cap rate.

Both Thomas and Rangel have been supportive of NAHB efforts to include energy efficiency tax credits for housing in a final energy bill in the 108th Congress.

President Bush has indicated that he wants to tackle major tax issues in his second term, including tax simplification and overhauling Social Security to add private savings accounts. The House Ways and Means Committee and Senate Finance Committee would be chiefly responsible for addressing these issues.

Judiciary Committees

The Senate and House Judiciary Committees have jurisdiction over private property rights, tort reform and immigration issues. Further, all federal judicial appointments must go through the Senate Judiciary Committee for confirmation, a potentially contentious process. In general, controversial issues have been decided along partisan lines.

Under GOP Senate rules, Sen. Orrin Hatch (R-UT) is limited from serving another term as chairman of the Senate Judiciary Committee next year. Beginning his fifth term in January, Sen. Arlen Specter (R-PA) is in line to take over, but he has angered social conservatives by remarking on the day after the elections that President Bush could have a tough time winning confirmation for Supreme Court nominees who oppose abortion rights.

Since then, in an effort to quell the controversy, Specter has issued numerous statements that he will support Bush’s nominees to the high court. He has also met with Senate GOP leaders to plead his case and received the endorsement of several of his Republican colleagues on the Judiciary Committee. This should pave the way for Specter to assume the chairmanship of the committee when the 109th Congress convenes in January.

Specter has not been enthusiastic about NAHB's property rights and judicial reform legislation in the past.

Sen. Patrick Leahy (D-VT) will return as the ranking member of the committee.

Rep. James Sensenbrenner (R-WI) — who will return for his fifth year as chairman of the House Judiciary Committee — is expected to advance a host of bills to reshape the nation’s tort system and he is likely to revive an NAHB-supported proposal to make it easier for class action lawsuits to be transferred to federal court. The House has passed this bill several times, but it has faced significant opposition in the Senate.

Rep. John Conyers (D-MI) will return as the ranking member of the House Judiciary Committee.

Senate Energy and Natural Resources Committee

This committee has jurisdiction over national energy policy and domestic timber supply.

Retaining the gavel over this committee in the 109th Congress, Chairman Pete Domenici (R-NM)has supported NAHB policy on timber and forest issues. Sen. Jeff Bingaman (D-NM), who returns as the ranking member, has been supportive of NAHB’s push for home energy efficiency tax credits as part of a comprehensive energy bill.

House Energy and Commerce Committee

This committee has jurisdiction over brownfields, mold, the Clean Air Act component of TEA-21 reauthorization and energy policy. Rep. Joe Barton (R-TX) will chair the panel and Rep. John Dingell (D-MI) will remain the committee’s ranking member.

Senate Commerce, Science and Transportation Committee

The committee has jurisdiction over the Magnuson-Stevens Fisheries Act (MSFA)/essential fish habitat (EFH) and, to some extent, TEA-21 reauthorization of the national transportation bill.

Due to term limits on chairmanships, Sen. Ted Stevens (R-AK) will be vacating the chairmanship of the Senate Appropriations Committee and will take over leadership of the Senate Commerce Committee. Sen. John McCain (R-AZ) is likely to move to the chairmanship of the Senate Indian Affairs Committee. Stevens was the original sponsor of the Magnuson-Stevens Act and is supportive of NAHB’s environmental policy.

Sen. Daniel Inouye (D-HI) will be stepping up to fill the seat of ranking member following the retirement of Sen. Fritz Hollings (D-SC).

House Resources Committee

The committee has jurisdiction over the Endangered Species Act (ESA), the Magnuson-Stevens Fisheries Act (MFSA), domestic timber supply issues, federal land designations and water supply issues.

After two years as House Resources Committee chairman, Richard Pombo (R-CA) has indicated that he will make reform of the Endangered Species Act (ESA) a top priority for the 109th Congress. He worked closely with the nation’s home builders on this issue during the 108th Congress, when the committee passed two NAHB-supported ESA reform bills, H.R. 2933, the “Critical Habitat Reform Act” sponsored by Rep. Dennis Cardoza (D-CA), and H.R. 1662, the “Sound Science for Endangered Species Act Planning Act,” sponsored by Rep. Greg Walden (R-OR).

Senate Environment and Public Works

The committee has jurisdiction over TEA-21 reauthorization, the Clean Air Act, the Clean Water Act, the Endangered Species Act (ESA) and brownfields. Additionally, this committee has taken a lead in federal smart growth measures. NAHB anticipates that TEA-21 reauthorization will take center stage on the committee’s calendar in the 109th Congress.

Sen. Jim Inhofe (R-OK) — a conservative who believes in local control of land use issues — will remain the chairman of the committee.

Sen. James Jeffords (I-VT) — who has championed environmental causes — will remain ranking member of the full committee.

House Transportation and Infrastructure Committee

This committee has jurisdiction over all modes of transportation, water quality and infrastructure and brownfields. Reps. Don Young (R-AK) and James Oberstar (D-MN) return as chairman and ranking member of this committee respectively.

House Education and the Workforce Committee/ Senate Health, Education, Labor and Pensions Committee

These committees have jurisdiction over measures governing labor and education, including, but not limited, to workforce incentive programs, vocational rehabilitation, wages and hours of labor, and labor standards and statistics.

The House Education and Workforce Committee shepherded several key NAHB legislative priorities through the 108th Congress, including association health plan and OSHA reform legislation. Chairman John Boehner (R-OH) will once again lead this panel in the 109th Congress.

On the Democratic side, Rep. George Miller (D-CA) should remain the ranking member of the full committee.

It is still unclear who will take command of the Senate Health, Education, Labor and Pensions Committee in the 109th Congress. If Sen. Judd Gregg (R-NH), the committee’s current chair, decides to step down and seek the chairmanship of the Senate Budget Committee, then Sen. Mike Enzi (R-WY) is widely viewed as his most likely successor.

On the Democratic side, Sen. Edward Kennedy (D-MA) will likely maintain his position as ranking member. He has been a major opponent of association health plan legislation.

Building News Coast To Coast

Homeownership Tops Bush Housing Agenda

President Bush says that increasing homeownership will be a top priority during his second term, as he pushes for tax credits for affordable-housing developers and zero-down loans backed by the Federal Housing Administration. He believes his tax cuts helped boost the national homeownership rate to 69% currently from 67.5% in 2001, although Democrats insist that low interest rates were the key driver. The President also will work on reforming the Section 8 rental voucher program. Rather than giving local housing authorities a certain number of vouchers each year, Bush wants to give them money so they can design their programs to meet local needs. He also would offer incentives to promote efficient use of the money.
PhillyBurbs.com (11/19/04) Armas, Genaro C.: www.phillyburbs.com

First-Time Home Buyers Kept Housing Boom Going This Year

A new study by the National Association of Realtors® finds that first-time buyers accounted for 40% of home purchases, or 3.23 million sale transactions, in this year's booming residential market. At the same time, money flowing into the market from these first-time buyers helped equip existing home owners with the capital needed to purchase new residences. "It's all due to entry-level buyers," confirms NAR spokesman Walter Molony. "Without the liquidity that first-time buyers are providing to the marketplace, we wouldn't be having record sales." The trend is expected to continue in the next 10 years or so as offspring from the baby boom generation age into their prime years for buying real estate and as more minorities and immigrants become better positioned to enter the purchase market.
Wall Street Journal (11/18/04) P. D7; Flandez, Raymund: online.wsj.com

Landscaped Roofs Have Chicago Mayor Seeing Green

After a trip to Europe, during which he saw many garden-like commercial and residential rooftops, Chicago Mayor Richard Daley initiated a citywide green roof initiative. Roofs with park-like scenery and greenery have long provided European landlords and tenants with a number of environmental, economic and aesthetic benefits. Daley adds, "I thought, with all the flat roofs in Chicago, you could reclaim thousands of acres for the environment and also help buildings with heating and cooling and controlling rainwater going into the sewer system." Most green roofs are made up of low-maintenance, drought-resistant plants such as sedum. The covering is less than four inches thick and can either be planted by property managers or laid down as pre-vegetated mats. One of the main benefits of green roofs is better water management, as they can absorb as much as 60% of the rainwater that falls on them. Other benefits include energy savings and durability. One drawback, however, is that the cost of a green roof can be as much as double that of a conventional roof — although proponents say the investment is well worth it in the long term.
National Geographic News (11/15/04) Handwerk, Brian: news.nationalgeographic.com

Apartment Developers Have Lofty Plans

Apartment developers and property owners are using loft-style features such as open-floor plans and kitchen islands to appeal to today's tight market for renters. The open-floor plans of new loft buildings give tenants the freedom to decide if they want separate rooms at all. Intrigued by the idea, some national developers are even hiring architects to deliver such designs in their new construction. Archstone-Smith, for example, recently opened a high-end apartment property in Northern Virginia in which all rental units feature kitchen islands that "blow open the space," in the words of chief development officer Al Neely. AvalonBay Communities Inc.'s new Avalon at Glen Cove in New York, meanwhile, is an upscale loft community with open-floor plans or so-called "great rooms." Morgan Stanley analyst Robert Stevenson says that as popular as lofts are, it is still a mostly niche market. He adds, "You're not going to market lofts to B-quality renters, the renters by necessity."
Wall Street Journal (11/17/04) P. B4; Smith, Ray A.: online.wsj.com

City's Granny Units a National Success

The city of Santa Cruz, CA, was one of five winners honored by the Environmental Protection Agency for smart development. About 100 communities from across the country submitted entries demonstrating how their initiatives are environmentally friendly while simultaneously creating economic opportunity. Santa Cruz won in the Polices and Regulations category for its Accessory Dwelling Unit program, which allows home owners to build a smaller residence — commonly called a granny flat — on their property, as long as it meshes with a city-approved design. "What we like about it are the principles of smart growth that it supports — additional housing choices, realm of affordability, increased housing in neighborhoods without dramatically changing the character," commented EPA policy analyst Tim Torma. The Santa Cruz program, which includes a how-to manual that covers everything from construction to the responsibilities of being a landlord, was launched two years ago. Since then, nearly 100 cities in California have requested copies of the handbook and unit plans, according to Santa Cruz housing and community development manager Carol Berg. "This kicks it up to a national level," she said of the EPA award.
Santa Cruz Sentinel Online (11/18/04) Bookwalter, Genevieve: www.santacruzsentinel.com

Forget Florida — West Is New Retiree Hot Spot

Migrating retirees increasingly are flocking to small, Western cities to escape the cold and take advantage of rural surroundings and the opportunity for outdoor activities. Currently, Nevada has the fastest-growing senior population in the United States; the number of residents there aged 65 and older nearly doubled from 1990 to 2003. The top 10 states for senior population growth also include such Western designations as Arizona, New Mexico, Utah, Colorado and Idaho. In the next 20 years, the Census Bureau predicts that the senior populations of Western states like Utah, Washington, Idaho, Wyoming, Oregon, Alaska and Colorado will at least double. The influx of elderly residents is putting these markets on notice to examine their resources and draft plans for improving health care, affordable housing, employment opportunities and other services for retirees. For example, states are taking into consideration the trend toward home care rather than nursing homes for ailing seniors. Western state and local officials also are working to devise affordable housing plans, as the influx of wealthy newcomers drives up the cost of housing for existing residents in many areas.
Deseret Morning News (UT) Online (11/14/04) Wagner, Angie: deseretnews.com

Design Goal: Spaces for Those of All Abilities

The concept of universal design is being pushed to the forefront, mainly because longer life expectancies will increase the number of people who are defined as disabled. Universal design aims to make buildings and communities accessible to everyone; build on the Americans with Disabilities Act; and eliminate the stigmas associated with disabilities. In Washington state, for example, the Northwest Housing Guild hopes to employ universal design in the two-story homes planned for construction near Rainier Beach. The moderately priced dwellings will boast elevators, wide hallways, door levels and countertops at staggered heights. Many home owners are undertaking universal design projects themselves, having roll-in showers, stair-less entryways and other accessible features included in their newly built dwellings.
Seattle Times (11/13/04) P. B1; King, Marsha: seattletimes.nwsource.com

Floors With a Past

Builders and home owners increasingly are drawn to reclaimed woods because these materials are attractive, eliminate the need to cut down trees and give homes a sense of history. Reclaimed woods are taken from old factories, barns, mills, bridges, wineries, breweries, distilleries and the like. Longleaf Southern yellow pine, oak, chestnut, hemlock and cypress are the most popular recycled woods. Given that the restoration process takes a lot of time and manpower, home owners will spend more for reclaimed woods. They can expect to shell out anywhere from $4.50-$20 or more per square foot, depending on the type of reclaimed wood, compared to just $3-$5 per sq. ft. for new hardwood. Reclaimed-wood sellers are not regulated, so experts urge home owners to work with reputable companies that guarantee and verify their products.
Pittsburgh Post-Gazette (11/13/04) P. B1; McKay, Gretchen: www.pittsburghpostgazette.com

Building Demolition Often a Recycling Effort

According to the Florida-based Deconstruction Institute, the demolition of buildings accounts for about 124 million tons of debris each year in the United States, but a movement is afoot to reuse building material even if it means slower demolition. "Rather than knocking it down and carting it off to a landfill, if you deconstruct a building and reuse its parts elsewhere, you're saving labor, materials," says U.S. Green Building Council founding member Alan Traugott. "You are trying to avoid going for new, virgin materials and all the embodied energy and associated environmental impact that reflects." PNC Financial Services, as an example, plans to recycle more than 70% of Pittsburgh's former Public Safety Building as it converts the site into a park. Officials estimate that demolition of the building will produce 11,000 tons of waste, 8,000 of which will be recyclable.
Seattle Times Online (11/02/04) Yates, Jennifer C.: seattletimes.nwsource.com

Commerce: Leading the 'Bullish' Forecasts

The U.S. Commerce Department has issued what is one of the more optimistic outlooks for the 2005 construction market, based on its belief that the housing sector will stand up even under the pressure of slightly higher interest rates. The agency is calling for a 5.8% gain in total building activity on the heels of 2004's impressive jump of 9.2%. The residential market, which is cast to rally 14% this year, is expected to plug ahead another 7.5% in 2005, according to the outlook. Commerce economist Patrick MacAuley notes that other sectors — such as water and sewer construction — will feed off the strength of the housing market. He additionally predicts growth in other public works markets as well as in most non-residential areas, with healthcare weighing in as the fastest-growing category. The only market where Commerce predicts a decline is mass transportation, which it warns will slide by 3%.
ENR Online (11/15/04): www.construction.com

Construction Tops Trillion Dollar Annual Pace

U.S. construction activity in September totaled about $1.014 trillion, an 8.9% increase over the pace of construction in 2003, according to seasonally adjusted figures from the U.S. Department of Commerce. The September report marks the third consecutive month in which the pace of U.S. construction activity topped out above the trillion-dollar mark. The Commerce Department valued total construction for the year as of September at $741 million, 9.4% more than the first nine months of 2003. Kenneth Simonson, chief economist for the Associated General Contractors of America, notes that despite the increase in activity, contractors have been faced with continuing price hikes for materials such as steel, diesel fuel, asphalt and insulation. However, he says the "outlook remains moderately positive" for both public and private non-residential construction.
ENR (11/15/04) Vol. 253, No. 19, P. 23: www.enr.com

Building Material Shortages Persist, But Don’t Appear to Be Getting Any Worse

Although building materials remain in short supply, the devastating hurricane season that inflicted massive damage on Florida in late summer and early fall appears not to have made the situation any worse, according to a recent NAHB survey.

A nationwide survey conducted by the association last month found that builders continue to report shortages of cement, gypsum wall board, oriented strand board (OSB), steel framing and insulation materials, although conditions appear to have been stable since July.

Cement continued to top the list of concerns of survey respondents, with 38% citing shortages of the material, down slightly from 41% in a similar survey conducted in July but still a substantial hike from 11% in May.

Cement prices have jumped nearly 10% in the past year, and John Mothersole, a senior member of Global Insight's Industry Practice, reported at last month’s NAHB Construction Forecast Conference that prices are expected to peak in the spring of 2005 as the Sunshine State’s post-hurricane reconstruction efforts ramp up.

Meanwhile the Portland Cement Association notes in its latest forecast that 35 states are now experiencing cement shortages, up from 29 in its previous survey. PCA cites a strong housing sector and a shortage of ships to transport imported cement as the chief factors why cement remains in short supply.

The U.S. imports more than 20% of its cement to meet domestic needs and Florida relies on imports for about 40% of the cement it uses annually.

For months, NAHB has been calling on the Commerce Department to roll back punitive tariffs on Mexican cement in order to help resolve the scarcity of cement, which is driving up prices and affecting construction projects around the country.

“It takes about 45 days for cement shipments to arrive at U.S. ports from Asia and Europe, compared to an average delivery time of only four days from Mexico. With global shipping capacity already severely strained, Washington should move swiftly to eliminate the costly anti-dumping duties on Mexican cement imports that have forced American builders to look overseas to meet their needs,” said NAHB President Bobby Rayburn.

Twenty-six percent of those surveyed reported experiencing a shortage of gypsum wall board in October, nearly identical to the 25% who cited a shortage of this material in July.

One-quarter of those polled said there is a scarcity of rebar (steel reinforcing bars), up modestly from the 18% who reported rebar shortages in the July survey.

There was little change in shortages of insulation materials, which were reported by 21% of those responding in the latest survey, compared to 20% in July.

Just over one-third (34%) of those surveyed said they are experiencing shortages of oriented strand board, compared to 30% in the July survey. OSB prices are very volatile but have been down sharply over the past several.

Housing Snapshot

Mortgage interest rates remained virtually unchanged last week, with long-term rates down just a tad and adjustable rate financing up slightly. Freddie Mac Chief Economist Frank Nothaft said that housing starts are currently exceeding expectations because long-term mortgage interest rates remain below the peak levels reached in May, and he sees no dramatic rise in those rates on the horizon as further job creation helps buoy housing demand. The Conference Board's Index of Leading Economic Indicators released last week was down for the fifth straight month in October, suggesting that growth may be losing some steam but is in no danger of ending. Inflation continued to drift higher in October, with a 0.6% increase in the consumer price index, led largely by energy and food prices. And Federal Reserve Chairman Alan Greenspan gave a slight chill to the financial markets through his remarks at a conference in Germany that he is increasingly concerned about the magnitude of the U.S. trade deficit. On the lumber front, prices headed up last week, although not decisively. Framing lumber prices climbed to $357 per 1,000 board feet, up from $348 the prior week, according to Random Lengths. That group's structural panel composite price, including oriented strand board, was also up, rising from $321 to $334 for 1,000 square feet, compared to $519 a year earlier.

Mortgage Interest Rates

30 Year Fixed Rate: 5.74\%
15 Year Fixed Rate: 5.15\%
1 Year ARM: 4.17\%

Housing Starts: Oct. 2004

Total: 2.027 million\%
Single Family: 1.645 million\%
Multi Family: 382,000\%

New Home Sales: Sep. 2004 *

1.206 million

Existing Home Sales: Sep. 2004 *

6.75 million

* Seasonally Adjusted Annual Rate

The Elections Provide a New Foundation for Achievement in Housing

Housing was clearly in the winner’s column after the votes were counted in the Nov. 2 elections. That is no small tribute to the grassroots members of NAHB — along with their colleagues, their employees, their families and friends and their customers — who mobilized as never before in support of the candidates who share our concern about expanding housing opportunity in America. We worked extra hard across this country to register voters and get them to vote, and by a wide margin they chose the candidates who understand that housing is foremost among the concerns of this nation.

During the campaign, we heard from both presidential candidates. We asked them what they planned to do to strengthen our national priority for housing. We questioned them on their positions on housing’s role in the economy, tax policy, our housing finance system, the need for affordably priced housing for working families, overregulation and more. Both President George W. Bush and Senator John Kerry were forthright and encouraging in their responses. In the forum provided in Nation’s Building News for sharing their views with our membership, it was very clear that housing was one issue that had garnered strong bipartisan support in the race to the White House. In a contest that was characterized by some sharp differences on major issues, housing was one area where both of the presidential contenders stood in agreement.

In a memorable speech before the NAHB Board of Directors at our fall meeting in Columbus, OH, President Bush continued his discussion of housing. He acknowledged the role of housing in leading the economy back to health and described the initiatives of his Administration designed to increase homeownership opportunities overall, and for underrepresented minorities in particular, and to help builders deliver housing that families at the lower end and middle of the income range can afford. He also stated positions on tax policy, regulatory relief and health insurance for small business that we share. The President has established a good foundation for housing, and in his second term in office we will be working with the Administration to ensure that he is able to build upon it.

From the congressional races, we will see some familiar faces and some new faces in the 109th Congress that convenes next year, but the good news is that there are few who are not familiar with the needs of our industry. Through a sophisticated communications and outreach program, the nation’s home builders conducted a voter mobilization campaign targeted at one key Senate race and nine competitive House races. Thanks to the dedication and hard work of our members, we won all of them. BUILDPAC, our political action committee, has been a growing source of strength and pride for our association, and the results of the elections show that NAHB has become a powerful force on Capitol Hill on behalf of championing housing and the American dream. (To read more in NBN about the outcome of the elections, click here.)

In the weeks ahead, NAHB will be working to sharpen its position on the housing issues that will arise in the new Congress and the new Administration. On the policies that matter the most, we are ready to engage our nation’s leaders in an effort to achieve legislation that will make a decisive difference for the men and women who build America’s housing and the households who live in the homes that lend vitality to our economy, our neighborhoods and our society.

Workforce housing is very much on our agenda, and we will be gathering at the National Housing Center next month to voice our ongoing commitment to providing housing for our country’s working families in or near the communities they serve. Along with Fannie Mae, NAHB will be holding “Close to Home: A Symposium on Workforce Housing” on Dec. 8. The symposium will consider new research on the housing needs of working families and will include panels that will define the problem, identify strategies for overcoming barriers and consider approaches and partnerships that have worked and can succeed to solve this problem.

As we have seen in the elections, the concern for housing is an issue that bridges political differences like no other. Our hopes and our spirits are high, and our determination is strong, to accomplish great things for housing and work with out newly elected leaders to reaffirm policies that will fulfill our commitment to housing like never before.

Congress Responds to Housing Concerns Before Passing Highlands Conservation Act

Congress last week approved H.R. 1964, an improved version of legislation to establish a “highlands conservation area” in parts of Connecticut, New Jersey, New York and Pennsylvania. President Bush is expected to sign the bill into law shortly.

The version of “Highlands Conservation Act” originally introduced in the spring of 2003 would have placed extreme land preservation and development restrictions on more than 2 million acres in the four-state region.

NAHB worked with Rep. Rodney Frelinghuysen (R-NJ), the House sponsor of the bill, to include compromise language designed to mitigate adverse impacts the measure might have had on housing affordability and availability in the highlands region.

The original bill would have created a new Office of Highlands Stewardship and Highlands Working Group, which would have had the authority to approve and dispense land preservation grants for the region.

In the legislative language that was negotiated with Frelinghuysen and approved by the House last year, those groups were abolished. Also, the bill now limits land preservation efforts to the most appropriate areas within the region, preserves local land use authority, reduces annual funding authorization for land acquisition from $25 million to $10 million over the next decade and protects the rights of private property owners by allowing them to opt out of any land conservation project.

Last month, just prior to recessing for the election, the Senate passed an amended version of H.R. 1964 that left intact all of the changes that had been negotiated between NAHB and Frelinghuysen.

The Senate's bill was also favorable to NAHB's position. It required a study of the Highlands region in Connecticut and Pennslyvania and also used a U.S. Forest Service map to establish the highlands region rather than relying on the less clearly defined geographical boundary in the House version.

On Nov. 17, the House agreed to the Senate’s changes.

To read the legislation, click here and enter H.R. 1964 in the box at the upper left.

For more information, e-mail J.P. Delmore at NAHB, or call him at 800-368-5242 x8412.

October Housing Starts Galloping Toward a Rousing Finish for 2004

The nation’s home builders wasted little time getting back to work last month on projects that were put on hold because of inclement weather, according to figures on U.S. housing starts released by the Commerce Department last week.

The government reported that starts rose 6.4% in October to a seasonally adjusted annual rate of nearly 2.03 million units, more than offsetting a dip during the previous month related to an unusually harsh hurricane season in the Southeast and Northeast regions of the country.

“This expected rebound virtually ensures that home builders will set a new record for single-family home production in 2004, and is an excellent sign of continued momentum in the overall housing market,” said NAHB President Bobby Rayburn.

Starts rose across the board in October, with substantial gains registered in both the single- and multifamily sectors as well as in every region of the country. Single-family starts climbed 5.7% to a seasonally adjusted annual rate of almost 1.65 million units, faster than the record pace of almost 1.5 million units for all of last year.

Multifamily starts last month bounced up 9.5% to a seasonally adjusted annual rate of 382,000, their strongest pace since last December of 2003.

“Excellent financing conditions are still the key to solid housing market performance, including much of the strength on the condo side of the multifamily market,” said NAHB Chief Economist David Seiders. “Improving economic conditions, particularly job and income growth, are additional factors in housing’s favor heading forward — and solid increases in house values continue to buoy demand.”

Regionally, starts gained 20% in the Northeast, 8.6% in the Midwest, 5% in the West and 4% in the South.

Issuance of building permits, which can be an indicator of future building activity, was virtually unchanged in October with a decline of less than 1% to a seasonally adjusted annual rate of 1.98 million units. Single-family permits declined 2.2% and multifamily permits rose 4.6%.

“This is a very positive report for housing and shows why builders are as optimistic as our latest surveys have indicated,” said Seiders. “The nation’s housing market is healthy, stable and headed for a strong finish in 2004.”

Builder Confidence Holding Strong and Steady in November

The continuation of low mortgage rates and improving economic conditions are helping maintain a solid level of builder confidence in the market for new single-family homes, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).

The November HMI registered no discernible change in builder attitudes following an impressive four-point jump that lifted the index to its highest level of the year — 71 — in October.

“While rates on long-term mortgages have edged up marginally in the last few weeks, the average 30-year loan remains below 6%,” said NAHB President Bobby Rayburn. “That’s a key factor driving buyer demand right now.”

“The basic story hasn’t changed,” agreed NAHB Chief Economist David Seiders. “As of the end of October, the average interest rate on a 30-year mortgage was 5.64%. That moved up slightly to 5.76% as of mid-November — still an exceptionally attractive rate. The result is builders’ continued confidence in the momentum of this housing market.”

The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years.

Each month, builders rate current sales of single-family homes, prospects for sales in the next six months and the traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor.

The component index on single-family sales rose two points this month, to 79. The indexes gauging coming sales and traffic each edged down by two points, to 80 and 50, respectively.

“Builders are sending a message of optimism heading into the final month of 2004,” said Seiders.

High Housing Prices Putting Californians on the Move, Survey Finds

A significant number of Californians recently polled by the Public Policy Institute of California (PPIC) say they may have to pack their bags to escape seemingly relentless increases in the state’s housing costs.

One quarter (24%) of those polled say they are seriously considering moving to a less costly part of the state or away from California altogether, according to the survey, which was conducted in collaboration with the William and Flora Hewlett, James Irvine and David and Lucille Packard Foundations.

Residents of coastal areas, where housing prices are by far the highest in the state, are already moving inland, according to another PPIC survey, fueling much of the population boom in the Central Valley.

Almost everyone in the poll (94%) reported that home prices have been increasing in their region, and 84% said they have been climbing a lot. While most residents (82%) said that the skyrocketing housing prices have contributed to the state’s economic vitality, 49% said that the boom has been a bad thing for their families.

Three in four adults (77%) expressed concern that their children will not be able to afford to buy housing in their area and 31% said that high housing costs are putting a strain on their household finances.

A majority of the Californians who were polled (55%) view the availability of affordable housing as a major problem in their region today, with only traffic congestion, cited by 59%, a bigger concern.

Of the home owners who were surveyed, only 23% said it was very likely and 30% that it was somewhat likely that they would be able to find a home they could afford and would want to buy in their part of California today. Of those who indicated that their homes had increased a lot, only 23% think they could find a home to buy in their area.

Although 86% of the renters in the poll said they were holding onto the hope of being able to buy a home someday, only 18% believe it is very likely they will be able to find one they can afford, and 49% say it is at least somewhat likely.

Other findings in the survey:

• Two in three residents (66%) said their neighborhoods have a sense of community, a perception that increases with age and length of residence and is higher among home owners.
• Three in four employed residents (77%) say they are very satisfied (44%) or somewhat satisfied (33%) with their commute to work. But only 52% are satisfied with available public transit options; 32% are dissatisfied.
• Seventy percent said they would prefer to live in a single-family detached home, even if it meant they had to drive to work and to travel locally. However, a majority (53%) also said they would choose to live in a small home with a small backyard if it meant a shorter commute to work.
• Forty-eight percent said they preferred to live in a more urban mixed-use neighborhood, while an almost equal number (49%) chose a more suburban resident-only neighborhoods.

Eye on the Economy

By David F. Seiders, NAHB Chief Economist
Economic growth remains healthy despite record-high oil prices …

The mid-year economic “soft patch” is now a distant memory and growth of U.S. economic output is proceeding at a solid, above-trend pace that should continue to generate systematic improvements in the nation’s labor market.

Incoming data support the Commerce Department’s “advance” estimate of third-quarter growth in real Gross Domestic Product (3.7%) and point toward similar growth in the final quarter of the year. Solid forward momentum is evident in October readings for retail sales, housing starts, industrial production and payroll employment. Furthermore, available survey data for November show positive attitudes for both consumers and builders.

Forward economic momentum has been maintained despite world-class spikes in global oil prices as well as in gasoline prices at the pump. Part of this resilience relates to reduced dependence of the U.S. economy on petroleum, compared with earlier times. The resilience also suggests that many businesses and consumers expect elevated oil and gasoline prices to be temporary and have not adjusted their behavior to the higher prices. This situation clearly poses a key risk to the economy in 2005 (see more below).

The labor market continues to improve despite some mixed signals in October …

The employment report for October substantially altered the labor market picture. Payroll employment was revised up significantly for the August-September period and job growth for October was a resounding 337,000. It’s clear that hurricane effects held down September (even after revision) and then boosted October, but the trend in job growth now looks much better than before the elections.

On a year-over-year basis, payroll employment was up by 1.6% in October, with an average monthly gain of 173,000 jobs. The index of aggregate hours worked in the nonfarm business sector climbed by 2.4% over the same period and average hourly earnings climbed by 2.6%. All these measures suggest systematic improvement in the nation’s labor market during the past year.

The unemployment rate edged up in October (to 5.5%), but even this change has its favorable features. Employment growth as measured by the household survey was strong (298,000) but the labor force rose by a greater amount — resulting in a higher number of people counted as unemployed. The entry of people into the labor force actually bodes well for employment and GDP growth down the line.

Inflation alarms are ringing, and oil is not the issue at this point …

Strong GDP growth can put upward pressures on inflation, particularly when increases in hourly labor compensation and decreases in productivity growth result in rising labor costs per unit of output. Indeed, unit labor costs are always on the Fed’s radar screen, and there’s no question that a bit of trouble has just cropped up on that front.

The Fed ultimately is concerned with core inflation (excluding prices of food and energy), and a variety of factors can put upward pressure on the core — including rising unit labor costs, rising commodity prices and rising prices for non-oil imports. These factors have been conspiring to raise core inflation from the rock-bottom levels a year ago, and recent readings undoubtedly have given our central bank a bit of heartburn.

The core Producer Price Index (PPI) for finished goods rose at an annualized rate of 4% in October, and the October reading was up 1.8% from a year earlier. While rising inflation at the producer level need not translate directly into core consumer prices (the Fed’s major focus), the PPI does show that U.S. producers have regained some pricing power.

The Consumer Price Index (CPI) for October confirms the evolving upward pressure on core inflation in the U.S. The core CPI rose at a 2.5% annualized rate and the October reading was 2% above a year earlier. The chain-core CPI (incorporating floating weights) was up 1.7% on a year-over-year basis, still within our estimate of the Fed’s “tolerance range” but more than double the pace a year earlier.

The Fed hikes short-term rates again and another adjustment is likely in December …

As expected, the Fed enacted another quarter-point increase in its federal funds rate target at the Nov. 10 meeting of the Federal Open Market Committee (FOMC). This was the fourth consecutive increase since June 30, taking the funds rate to 2% and the bank prime rate to 5%.

The Nov. 10 FOMC statement contained assessments of risks to the short-term economic outlook that were identical to the assessments made at the Sept. 21 meeting, and the statement continued to talk about a “measured” pace of future rate hikes — as the Fed continues to remove monetary policy “accommodation” from the financial system. But the Fed’s Nov. 10 reading of current economic conditions showed more positive assessments of economic growth and labor market conditions as well as a less sanguine view of inflation and longer-term inflation expectations.

Data received since Nov. 10, including the surprisingly high readings on core PPI and CPI inflation, are in alignment with the Fed’s assessment of current and evolving economic conditions. As a result, there’s now a high probability of another quarter-point hike in the federal funds rate at the Dec. 14 FOMC meeting, and NAHB’s forecast now incorporates this adjustment. We’re still projecting a funds rate of 3.5% by the end of next year.

Long-term rates are firming up and further increases are in the cards …

Long-term interest rates gravitated downward during the July-October period, despite the process of monetary tightening launched by the Fed on June 30. During this period, bond prices rose and long rates fell as market participants questioned the strength of the economic expansion, downplayed both inflation pressures and the future course of Fed policy and labored under pre-election uncertainties.

Long-term rates have moved up to some degree as the political scene has been clarified and the economic scene has displayed stronger performance and more inflation pressure. NAHB’s forecast still shows percentage-point increases in long-term interest rates over the next year, taking the fixed-rate mortgage yield to 6.75% by the fourth quarter of 2005.

The housing market remains quite strong, but further growth will be difficult to achieve …

As expected, housing starts rebounded in October from the weather-depressed September pace while issuance of building permits edged downward. On a trend basis, the housing markets have been on a high plateau since late last year, with single-family activity hovering around record highs and multifamily production holding in a highly respectable range of 325,000-375,000 units. The resilience of the overall multifamily market reflects strong growth in the condo (for sale) component along with some retreat in production of market-rate rental units.

The housing outlook is quite good for the balance of this year and in 2005, as ongoing improvements in employment and household income fortify housing demand in the face of a rising interest rate structure. It will be difficult to surpass 2004’s record-breaking performances in the economic and financial market environment projected for next year, but any softening in housing markets should be quite limited. NAHB’s forecast currently shows declines of roughly 5% for home sales and housing starts in 2005.

Oil prices stack up as the biggest risk in the economic and housing outlook …

NAHB’s forecast depicts systematic declines in global oil prices from recent record highs. But what if oil prices remain stubbornly high or even surge to new records in 2005?

The Fed can serve as a balance wheel if high oil prices weaken GDP growth and job formation, but we may not be able to count on our central bank to save the day. So far, the Fed has noted that high oil prices have had little impact on the real economy as spending by businesses and consumers has been well maintained. Nor has the oil price surge fed into core inflation to a significant degree, since that process takes a more extended period of time to develop.

What if oil prices hang high — or rise further; consumers and businesses come to view the increases as more than temporary; and weaker spending patterns jeopardize the economic expansion? And what if, by then, high oil prices are feeding into the core inflation rates? The Fed would most likely greet emergence of such a “stagflation” problem with an emphasis on price stability, going ahead with its march toward monetary neutrality despite flagging economic activity.

This combination of events would spell big trouble for housing. Perhaps recent declines in oil prices will continue on our projected path, taking the unpleasant stagflation scenario off the radar screen. 

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 Nov. 17 edition. To subcribe to “Eye on the Economy,” click here.

‘HousingEconomics Online’ Provides In-Depth Analysis of Housing Market

"HousingEconomics Online" is a new online publication from the NAHB Economics Group that provides the latest housing economic data, trends and key events shaping the economy. NAHB’s leading economists analyze and synthesize the housing and economic information to provide in-depth analyses of the niches and nuances of the home building market.

Available 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:

• Home Builders Forecast
• The Desktop Analyst
• Access to NAHB’s Staff of Economists
• Seiders' Report
• NAHB’s Economic & Housing Forecast
• Housing Activity
• Housing Policy Focus
• Multifamily Housing Quarterly
• State & Metro Focus
• Housing Market Statistics

For more details, go to www.housingeconomics.com.

NAHB Task Force on Housing Finance Reform Seeking Input from Association Members

An NAHB task force that is in the process of evaluating the association’s policy on the housing finance system is looking for input from NAHB members to gain their views on the availability of credit for home buyers and home builders and the role of the housing government-sponsored enterprises.

The task force was recently convened by NAHB President Bobby Rayburn and President-elect David Wilson to ensure that the association continues to represent the true needs of its membership at a time when the entire secondary housing finance market has come under intense scrutiny because of accusations of improper accounting practices at Fannie Mae and Freddie Mac.

Chaired by Gary Garczynski, who was the president of NAHB in 2002, the task force is comprised of NAHB members and supported by a team of NAHB staff from the legislative, regulatory and housing finance policy areas. The task force is receiving formal advice and input from mortgage market experts, policy analysts and representatives of the various factions in this issue. It will present its formal recommendations during the International Builders’ Show in Orlando in January.

With the White House, some lawmakers and other government officials calling for sweeping changes in how Fannie Mae and Freddie Mac are operated and supervised, NAHB this year has been instrumental in blocking some initiatives that would have had a negative impact on the cost and availability of housing credit.

The new Congress is expected to give a high priority to this issue, and the White House is looking for more immediate ways to strengthen the authority of the government agencies that currently regulate the GSEs. Everything is on the table in the minds of reform advocates: the mission of the GSEs, the activities they can perform, restrictions on their borrowing abilities and reserves, and the policing power of their regulators. There have also been proposals to transform the GSEs into completely private corporations.

As advocates of reform intensify their efforts, the NAHB task force is investigating methods for delivering capital to the housing sector and it wants to identify the process that would provide the most reliable and least costly supply of housing credit. The task force is also assessing the appropriate involvement of the federal government in the housing credit system.

The task force is looking for feedback from NAHB members on questions such as these:

• Should the federal government be playing a role in the housing finance system and, if so, should that role be in its current form of ultimate guarantor and backstop, or should the role be more explicit, such as a provider of direct subsidies?
• What would happen if Fannie Mae, Freddie Mac and the Federal Home Loan Banks were required to limit their activities to affordable housing instead of the entire range of home purchases? Is their presence critical or just convenient?
• What would be the impact on home buyers and builders if mortgage interest rates increased by half a percentage point as a result of reform efforts?
• Are there gaps or unmet needs in the current housing finance system?

Any thoughts or concerns on these and other topics related to GSE reform should be e-mailed to David Crowe, senior staff vice president in NAHB’s Federal Regulatory and Housing Policy Department, or call him at 800-368-5242 x8383.

Comments from NAHB members will be presented to the task force and must be received by Dec. 15.

These ABCs Help Lead to Model Home Merchandising Success

S Is for Sophistication

When it comes to merchandising models for entry-level and first move-up product, experience matters.

Not the builder’s or merchandiser’s experience, although both are obviously important. What drives design for this market today is the increasingly sophisticated and experienced new home buyer.

Data from "VISION 2002: The New Home Buyers Survey," which was conduted by Color Design Art, Eliant Research and The Meyers and completed in May 2002, revealed that 62% of the respondents from the Western states who had purchased homes priced under $250,000 had previously owned at least one home and 30% had owned two or more. In other words, “entry-level” buyers are bringing more knowledge and higher expectations to the purchasing process than ever before.

Even true first home buyers are more experienced about design, thanks to catalog shopping, the Internet and stores like Crate & Barrel and Pottery Barn, where good design is both available and affordable. Even shoppers at Target can find everything from woven wood window coverings to coffee tables designed by Michael Graves.

U Is for Unique

How do you win over these style-savvy new-home buyers? Determined to appeal to the retail-oriented, entry-level buyer, the John Laing Homes South Coast Division decided to hire a major furnishings retailer to bring a youthful, upscale look to its new models at St. Mays Road, an entry-level attached product in the master planned community of Ladera Ranch in Orange County, CA.

St. Mays Road is a unique community of three-plex buildings, each with two two-story townhomes and one carriage-unit flat. The architectural design of these buildings allows each home to have its own separate entrance and private garage, even the stacked carriage unit. This innovative design gives these attached homes a sense of privacy typically associated with single-family detached homes.

With such distinctive architecture to work with, it was the builder’s goal to use the partnership with a major retailer to give the project a unique marketing position. The thinking was to have the retailers furnish the models with furniture and accessories the buyers could then walk into the store and duplicate — a win-win situation for both builder and retailer, right?

Well, maybe. Local store representatives were enthusiastic about furnishing the model homes, but as team meetings progressed, the realities of what would be involved proved to be overwhelming. Designing three models aimed at a specific target buyer, each with a distinctive and memorable look and under the time constraints given was more than the retailer was willing to bear. The retailer’s corporate office didn’t see the endeavor as valuable to the company in the same way the local staff did. Ultimately, what looked like a winning strategy for this project proved too cumbersome and difficult to execute for the retailer. Unfortunately for John Laing Homes, the retailer abandoned the effort with only four weeks left to the grand opening! A new strategy had to be pulled together quickly.

C Is for Challenge

Fortunately; another strategy was already partly in place. Anticipating that the retail designers would be unfamiliar with model home design, including production needs, finish specifications and optional upgrades, John Laing Homes asked Don Anderson, president of Color Design Art (CDA), to act as a consultant to guide the process. With little more than a month to go before opening, Susan Drews, CDA senior vice president and her team took up the challenge. The key was to create models that would appeal to young single professionals and couples as well as move-down empty-nester couples and young families with one or two small children. They set out to create look sophisticated enough to capture the hearts of these buyers, yet the atmosphere needed to be accessible.

C Is for Customize

CDA created three different “looks” to customize the homes to the distinctively different life stages of the prospective buyers with each “look” using achievable furniture and addressing each home with “wall-to-wall” design.

Where possible, furnishings were included from the original retail source. For example, in the two-bedroom carriage unit aimed at a young, single professional man, the home office featured freestanding bookcases rather than a custom built-in, a very contemporary (and cool) metal desk on wheels and artwork and accessories from the retailer.

Next CDA specified finishes showing a range of materials that would enhance the perceived value of the homes and still be affordable to buyers in this market. Each home featured different countertop treatments: A stone-look porcelain tile in the Plan 1 kitchen; a decorative tile in Plan 2; and a solid surface in Plan 3.

Hard-surface flooring demonstrating value-priced materials was used to create the sophisticated look expected by this market as well as to direct traffic flow. Accent paint was used to highlight walls, establish ambiance and demonstrate an effective yet inexpensive way for these buyers to customize their new homes.

E Is for Enhancing Architecture

Finally, to underscore the unique privacy aspect of these attached homes, the interior stairways were treated as an important space, rather than just a traffic conduit. The stairway for Plan 1 was actually the entry to the upstairs carriage unit. It was painted with warm earthtone accents and then highlighted with colorful, oversized contemporary poster art. The stairway became an art gallery visually inviting buyers to climb the stairs to see the rest of the home.

In the Plan 2 townhome, the stairs featured architectural pot shelves that were highlighted with accessories and art. More importantly, CDA converted the original bedroom at the top of the stairs to an optional loft that would open this interior staircase and bring in more light. Since this was an empty nester home, it provided a wonderful home office space, made the stairs friendlier and still left the third bedroom to be merchandised as a guest room. The strategy demonstrated all of the home’s usable square footage.

S Is for Success

While the original strategy for using a national retail firm for the design and merchandising of the homes at St. Mays Road didn’t succeed, the restrategizing did. According to Marianne Browne, vice president of sales and marketing for John Laing’s South Coast division, “The merchandising for these models hit our diverse market more accurately than any we’ve ever done before. The design reflects their lives and lifestyles in a way that the retail store never could have achieved. That is confirmed by the fact that each floor plan is selling equally well.”

S Is for Strategy (and a Back-Up Strategy!)

The lessons learned from this experience are really two-fold. First, if you are going to try an innovation such as partnering with a retailer to furnish your models, do your homework early. Make sure your potential partner understands your market, can respond to your production needs and has the same ultimate goals and understanding you do. In other words, make sure your partner is a team player.

Second, always have a back-up strategy in place if your first strategy doesn’t work out. Remember that designing for the entry-level buyer is getting more demanding and challenging. The right merchandising strategy can make all the difference.

How to Implement Controls That Will Help Protect You From Fraud

The next in a continuing series about preventing fraud from affecting your business.

If your business has assets, you’re at risk for having them stolen. As we discussed in the previous article, “Get Smart — Initiate Controls to Protect Yourself From Fraud," you need a series of controls (systems and procedures) to protect your assets and prevent fraud from occurring.

Here’s how to create effective controls and put them in place in your company:

Design the Controls

Small businesses typically operate using intuitive, informal controls. For example they:

• Plan to hire a new field supervisor or salesperson
• Organize operations by delegating certain duties to specific employees
• Direct employees to perform activities in a specific way
• Control access to assets by locking the door upon departure or checking references before hiring a new employee

This seems fairly routine. So why does this pose a problem?

Because it’s not a comprehensive, risk-based, documented or carefully planned control system. Few builders would run a project for their clients with only a few planned procedures — and then hope they got the rest right. When it comes to running your office and protecting your own assets and business, you owe yourself at least the same level of detail you give your clients.

In larger companies, management is supposed to design and implement the control systems. Their Certified Internal Auditors and CPAs then analyze the systems for adequacy. They also test the controls to make sure they work as planned.

If you decide to tackle the design of a control system on your own as a small business owner, be prepared to spend some intensive time. You will also need some skills and abilities including (but not limited to):

• Office operations experience
• Business knowledge
• Financial proficiency
• People skills
• Risk analysis methodologies
• Expertise (or access to information) regarding common fraudulent schemes

You also may want to ask your accountant for guidance or help.

Balancing Risk and Controls, Costs and Complexity

You already know that unprotected assets can practically walk away by themselves. If that happens too many times, you’ll be out of business. Consider the following equation:

Too many uncontrolled risks = too much potential for loss + reduced control over operations

However, there is such a thing as having too many controls. Going overboard can negatively impact your profits and productivity and gives new meaning to the phrase “control freak.” Here’s another equation:

Too many controls = too much cost + complexity + loss of productivity

Because it’s impossible to create a control system that ensures a completely risk-free business environment, you continually must make choices to balance risk against the cost and complexity of control systems.

Prioritize Your Risks and Determine Appropriate Control Levels

One of the primary benefits of performing the risk assessment is that the process helps you prioritize your risks and potential weak spots. You then can determine the appropriate control levels for different areas of your business.

For example, you would certainly want to put more stringent controls on purchasing and paying for materials and subcontractor services — which involve high levels of cash flow and performance risk — than you would on your $200 petty cash fund.

Or, if you had to choose between tracking down the employee who just lost his fourth shovel in two weeks vs. staying in the office on a Friday afternoon to guarantee that your computer system gets backed up because your office manager is on vacation, you would stay in the office with your computer system. You can track down the employee and his missing shovel on Monday.

Formalize the design of your control system by taking the time to list your assets and then prioritizing your risks in relationship to your capacity for loss. Once completed, you should be able to make informed decisions about the controls you truly need. This could be one of the most important things that you ever do for the ongoing health of your business.

Implement and Document Your Control Systems

The next stage of implementing an effective system of controls is integrating the new procedures into your daily operations. The new procedures must be:

• Clear
• Specific
• Mandatory (i.e., everyone in the organization must follow them; no exceptions)
• Matter-of-course (i.e., logical and easy for your team members and employees to understand and use).

Put the new policies and procedures in writing. Doing so helps you clarify your understanding of the situation. Written controls also help you anticipate various questions, issues, problems and consequences so that you can come up with a game plan to deal with them if they occur. Lastly, written controls are a reference tool for your team members and employees; they may need clarification on the new processes until they are used to them.

Your documented controls needn’t be long or formal; simpler is better. For example, you could include a page titled “Negotiable Instruments” in your office procedures manual that reads something like this:

Notes on the Preceding Sample

• The preceding is an abbreviated sample and should not be construed as a complete document.
• The “Failure” sections shown above are strongly worded. Soften them if you feel they could be offensive to some employees. However, keep in mind that:
  • Responsible, law-abiding employees typically understand that a loss to the company is a direct threat to them and to their families. They may very well appreciate what you are doing to protect them.
  • Some employees entrusted with safeguarding company assets do not fully realize or understand the magnitude of responsibility they have been granted; a strongly worded policy can help make the point.
  • Even if your current employees are exemplary, employees change over time. Your policies and procedures clearly state what may be missed during the training process or what you may be reluctant to directly tell an employee on your own.
  • Many employees start committing fraud by stealing/borrowing “just a little.” They don’t consider the consequences or don’t believe anyone would actually prosecute them. A strong, clearly-worded policy acts as a reality-check and reminder just in case they were thinking about “crossing over the line.” It can also act as a warning to fraudulently-inclined individuals that they should look elsewhere for a target.
  • If you discover fraud in your organization, you will have already decided how to proceed. Employees will respect you for having clearly stated the rules and for following through with the consequences.
  • Any documents regarding dismissal policies should be approved by your attorney.

Diane C.O. Gilson, CPA, CIA, is a Certified QuickBooks ProAdvisor and MasterBuilder ProAdvisor, author, trainer and construction accounting coach, as well as a frequent speaker at The International Builders’ Show and The Remodeling Show. Her firm, Info Plus Accounting PC/CPA, offers bookkeeping and support services to help construction companies do more accurate and timely job costing and run better management reports. Contact Gilson via e-mail, or call her at 734-544-7620.

Earlier Articles in This Series

• To read, “Protecting Yourself From Fraud: An Introduction,” Part 1 of this series, published Dec. 15, click here.
• To read, "Are You at Risk? Protecting Yourself From Fraud," Part 2 of this series, published Jan. 26, click here.
• To read, "Good Self-Defense Strategies Will Help Protect Your Business From Fraud," Part 3 of this series, published Feb. 9, click here. 
• To read, "Lifestyles Can Be Red Flags: Know the Warning Signs of Fraud," Part 4 of this series published  March 1, click here.
• To read, "Strange Behavior May Be Tip-Off to Possible Fraud ," Part 5 of this series published April 5, click here.
• To read, "Review Your Accounting Reports to Protect Yourself From Fraud," Part 6 of this series published May 10, click here.
• To read, "Do Your Financial Statements Add Up? If Not, Be Alert to Fraud," Part 7 of this series published June 7, click here.
• To read, "Protecting Yourself From Fraud: Watch for Warnings Signs From Others," Part 8 of this series published July 5, click here.
• To read, "Get Smart — Initiate Controls to Protect Yourself From Fraud," Part 9 of this series published Aug. 16, click here. 

Team and Performance Matter When Selling to the 55+ Market

Putting the right team together matters more in the 55+ market than in any other market segment of the industry today.

Today’s active adult buyers are savvy. They know what they want and ask a large number of questions even before they visit an active adult community.

Consequently, a developer and his or her sales team can make a big impression with the very first phone call from the prospect, which is why our builder clients know voicemail is not the best mode of communication with these prospects.

Mystery Shop Your Sales Team to Gauge Their Effectiveness 

We recently mystery shopped 100 communities (both age-qualified and age-targeted to 55+ buyers) throughout New England to gauge the effectiveness of their respective sales teams.

We conducted our mystery shopping by phone, scripting and replicating a typical call by a potential active adult buyer. Each call began with, “Hello, I’d like to learn more about XYZ community.” Then, we let the sales agent take over.

We used a weighted scoring point system, with the highest attainable score being 100 points. The calls were made over a two-day period, on a Monday and Tuesday, between the hours of 10 a.m. and 4 p.m.

Mystery Shopping Revealed a Lack of Training, Resources and Follow-Through

While the builders had a combined inventory of $1.7 billion and total of 7,564 units for sale, they didn’t invest the same resources in training their sales staffs.

Mystery shopping their communities revealed that their sales training, resources and follow-through were surprisingly weak.

Of the 100 phone calls made, here are the results:

• 75 answered the phone on the first attempt. We left 25 messages.
• Of the 25 messages left, 11 calls were returned.
• Only seven salespeople asked when the caller planned to move.
• Only 28 asked who the purchase was for.
• Only 12 asked how the prospect learned about the community.
• 32 failed to offer to send the caller a community brochure.
• Of the 68 brochures that were promised, only 48 brochures were actually received.
• Only three follow-up calls were made after the brochures were sent to find out if they were received.
• Only 12 salespeople asked the caller to visit the community or set up an appointment.
• Only eight referred the caller to the community’s Web site to learn more.

In addition, the salespeople seldom asked prospects about their preferences and desires or what community and home features they considered most important. Most of the sales professionals were more interested in sending out brochures to the prospects than they were about getting to know or pre-qualify them.

The quality of the material sent also varied greatly. Several brochures were of award-winning quality and depicted exciting lifestyles. Many of these were sent personally addressed to the intended recipient, but some were sent haphazardly. Other brochures were much less inviting. They were prepared or copied sloppily and didn’t contain enough information to pique the prospects’ interests.

The Best Time to Staff Your Sales Office

In addition to mystery shopping, we also analyzed our clients’ peak calling days and times to determine when they should be staffing their sales offices. We used an independent, national tracking service to log the dates, time and duration of all inbound calls to our clients’ sales centers. A total of 4,790 inbound calls made between Nov. 1, 2003, and Nov. 1, 2004 were analyzed. Here are the results:

Analysis indicated that weekdays were the peak days for inbound calls. We instructed our clients to staff their sales offices accordingly. If you are not staffed during these times, you are missing revenue opportunity.

Analysis of peak calling hours revealed that most inbound calls were made between 9 a.m. and 4 p.m. Many of our clients indicated that they did not staff their offices until 10 a.m. or 11 a.m., which meant that some of our clients were missing as much as 21% of the calls by not staffing their offices one or two hours earlier.

We also determined that the average duration of each call was about 2-1/2 minutes, generally not long enough to build a relationship with the prospects or get enough valuable sales information from them. That makes following up with your active adult prospects even more critical.

The important lesson from these analyses is to spend the time and resources to train your sales staff and pay attention to how — and when —you communicate with your active adult prospects. Active adults demand a quality product, but they also require professionalism in your sales and marketing approach.

Jane Marie O’Connor is the president of 55+ Marketing and publisher of Mature Living Choices in New England, a full-color, digest-sized quarterly resource guide for active adults. Based in Hawley, MA, O'Connor provides coaching and training services about the 55+ market for developers, builders and real estate agencies. O’Connor also is an active member of the 50+ New England Housing Council and the NAHB Seniors Housing Council. She can be reached at 800-782-1722, via e-mail at jane@55PlusMarketing.com, or visit her Web site, 55+ Marketing, for more details.

Technology — Can't Live With It, Can't Live Without It

If “necessity is the mother of invention,” then I am here to tell you that failure is its father. No one has had more failures trying to go high-tech than our company.

During our 14 years in business, we have endured five hard drive failures, several lighting strikes that have burned up our printers and telephones, PDA crashes and yes, two cell phone crashes in the last two years — no, neither was dropped off a roof or run over by a company truck, they just crashed — highly unusual, we were told.

The hard drives crashed both with and without backups. Each time, none of the data was salvageable, although we were consoled in learning that this too was highly unusual. Of the PDA crashes, one crashed out of the country at the same time the computer in the office with its backup data crashed.

Yet, like the carpenter who jambs a nail gun while framing a wall, we have a job to do and can’t pack up our bags and give up. We have choices. The frustrated carpenter can buy a better framing gun or go back to hand driving 16-penny nails. He knows, though, that over time he will be more efficient using the latest nail gun technology.

And like the carpenter, we as business owners also know that our investment in technology will pay off if we persist. So, enough talk about our technology failures. Let’s talk about our successes.

A Fully Equipped, High-Speed Wireless Office

Everyone in our office has a computer. That may not sound like much, but I know there are many of you out there resisting the investment. Don’t.

The computers in our office are for our administrative and sales staff as well as our two production managers. Each location has a high-speed DSL connection to the Web and each has a color printer (marginally more expensive than black and white printers but infinitely better print capabilities). Three of the computers are laptops for use by those who take their work on the road. And everything is wireless.

That’s our hardware setup. Here’s how we use it.

Technology Makes Us More Efficient, Professional and Profitable

All our proposals and bookkeeping are kept on the computers. This makes our paperwork look more professional, easier to store and more accessible than handwritten alternatives.

We use QuickBooks Pro for Contractors for our accounting. QuickBooks Pro makes our job costing and balancing our checkbook each month quicker and more accurate. There is no program easier to learn or more reasonably priced than this.

We use homemade Excel spreadsheets for all our scheduling. While there are numerous scheduling products on the market, we like to keep it simple, and using Excel gives us exactly what we need.

And our Web site? Take a look: www.BrothersStrong.com. Yes, it is a marketing tool, but is also management tool we use to streamline the selections process (through our password-protected “Preferred Partners” section).

So, while we are back to using paper calendars again and often resent the notion that we need to use more technology in our workplace, we know deep that down inside, like you, at the end of the day the odds will pay off.

Using technology on our terms enables us to build a stronger, more efficient and more profitable business for our employees, our business partners and our customers to enjoy.

Michael Strong, CGR, is vice president of Brothers Strong, Inc. in Houston. The company was voted as the 2003 Houston and Texas Remodeler of the Year. For more information, contact Strong via e-mail.

NAHB Has More Than 160 Resources to Help You Run Your Business More Profitably

Go to NAHB's Business Management Tools Web pages for instant access to more than 160 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more. 

Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources.

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.

 Who Will Be the Next Remodelor of the Month?

The Remodelor of the Month (this link is accessible to Remodelors™ Council members only) award program is underway. Don't miss your opportunity to be named the Remodelor™ of the Month. 
 
The program groups local councils from different states into designated months. There will be two “wild card” months that will allow the council’s members-at-large to participate in the program. A winner will be chosen each month and that winner will then be automatically included in the nominations for the Remodelor™ of the Year award.
    
This is a great opportunity for local councils and members to get involved and submit their “best of the best” members to compete with other councils. The national Remodelors™ Council will send out press releases and highlight each winner in ReNews, the Remodelors™ Council e-newsletter.

tecHOMExpo™ Will Help You Get Your Tech Together

Full house automation. Bidding and estimating software. Home networks. Business scheduling software. Home theaters. Structured wiring. So much technology. So hard to choose.

tecHOMExpo™, the technology trade show that is part of the 2005 International Builders’ Show (IBS) on Jan. 13-16 in Orlando, FL, lets industry professionals get a closer look at all the technology available for every facet of the building industry — from what to put in homes to how to make businesses run more smoothly and efficiently. Registration to tecHOMExpo™ is included with the IBS registration.

Now in its fifth year, tecHOMExpo™ will feature more than 100 exhibitors who will demonstrate their technologies and enable attendees to compare and contrast solutions for their businesses and new homes. Plus, tecHOMExpo™ is offering specific technology-oriented education courses that will help attendees put the new technologies to their best use.

Among the technologies to see:

For new homes

• Air conditioning, heating and ventilating equipment (HVAC) — 20 companies
• Audio/visual
• Building materials and specialties — 28 companies
• Energy saving products — 43 companies
• Home automation — 25 companies
• Home networks
• Indoor air quality — 23 companies
• Internet services
• Lighting controls
• Security systems
• Structured wiring systems — 18 companies

For business

• Accounting systems
• Architectural design software — 20 companies
• Bidding/estimating software — 20 companies
• Business-to-business Internet applications
• Business-to-consumer Internet applications
• Computer software — 51 companies
• Construction management — 21 companies
• Marketing services — 23 companies
• Project management software — 20 companies
• Scheduling software/systems — 20 companies

Perot to Discuss Increasing Profits Through Technology

Ross Perot, Jr., the president and CEO of Perot Systems, will give the keynote address at tecHOMExpo™. He will discuss how to effectively use new technology in home building.

In his keynote address, Perot will discuss how to use technology-based, customized business processes to increase efficiencies, improve quality, build market strength and increase margins. The keynote address will be at 11 a.m. on Friday, Jan. 14, in the West Hall of the convention center.

Tech Educational Courses Offered

tecHOMExpo also offers a wide range of educational courses specifically tailored to technology. The tecHOMExpo specific educational track and other technology-related courses at IBS will give attendees an opportunity to leverage technology to improve productivity, customer satisfaction and profits.

To register for the builders’ show/tecHOMExpo™ online, visit http://www.BuildersShow.com/register. Online registration is available until Dec. 17. After that, registration must be conducted on-site beginning Jan. 10.

Entries Sought for National Green Building Awards

Entries for NAHB’s 2005 National Green Building Awards are now being accepted from home builders, remodelers, developers, nonprofit organizations, the academic community, industry experts and others involved in green building efforts.

The awards recognize individuals, companies and organizations that demonstrate a commitment to the ideals of green home building. Winners will be announced at the 2005 National Green Building Conference in Atlanta, March 13-15.

“The industry’s best and the brightest will have a chance to show how their green home building efforts have true market value for consumers and a positive impact on the environment,” said Eric S. Borsting, chairman of the 2005 NAHB National Green Building Conference and the NAHB Energy Subcommittee. “Winners of these awards are an inspiration to those in the growing green building movement, which has constructed more than 40,000 resource-efficient, environmentally sensitive homes since the 1970s.”

Award applications are being accepted for these six categories:

• Green Advocate of the Year, which recognizes leaders (builders, groups and individuals) whose efforts represent significant achievement in the field of resource-efficient new home construction over the past year
• Green Program of the Year, which acknowledges home builders associations, municipal governments and other institutions for new (less than three years old) and existing (more than three years old) green building programs
• Green Project of the Year — Single-Family, in recognition of green design and construction methods in attached, detached (affordable and production) and custom-built/luxury homes
• Green Project of the Year — Multifamily, honoring affordable housing and luxury condos and apartments for their green design and construction practices;
• Green Project of the Year — Remodeling, acknowledging modifications and improvements to existing homes (projects valued at more and less than $100,000) using water conservation methods, ventilation systems, energy efficient products and other green techniques
• Outstanding Green Marketing Award, recognizing the sales and marketing campaigns of a product and a housing development that best advance the ideals of environmentally friendly, resource-efficient residential construction.

Past award recipients have included Tom Hoyt, McStain Neighborhoods, who has built more than 8,000 green homes in the last 35 years; Southface Energy Institute, a non-profit association that has certified more than 1,000 green homes through its EarthCraft House Program; and Pardee Homes, a production home builder committed to Energy Star requirements as a minimum energy-efficiency standard for all its new homes.

For information about the awards and applications, click here.

Entries must be received by Dec. 15. A $250 fee is required for entries in all categories except Green Advocate of the Year and Green Program of the Year (new program).

All winners will be featured in NAHB publications and will receive complimentary admission to the 2006 National Green Building Conference.

Home Building Students Hear From Leaders in the Industry

NAHB President Bobby Rayburn visited the University of Southern Mississippi (USM) in Hattiesburg last week to support NAHB Student Chapters and participate in the presentation of scholarship awards from the Home Builders Association of Mississippi and the Greater Hattiesburg Home Builders Association to students in the schools’s College of Science and Technology.

The event was sponsored by the NAHB Student Chapter at the university, which was founded in 1979 with Rayburn’s help. The home and apartment builder from nearby Jackson was welcomed back as an honored guest and alumnus to share his insights on the nation’s eighth largest industry with the next generation of builders and contractors.

Also on hand for the evening’s festivities were Arthur Rosier, president of the Student Chapter; Burt Williamson, president of the Greater Hattiesburg HBA; and Jervis Mims, an honorary lifetime member of the association.

NAHB Student Chapters members from the Mississippi Job Corps Center and Hinds Community College also attended the event, along with students and faculty from HBI’s Job Corps classes at the Gulfport Job Corps Center and Project CRAFT training program in Jackson.

On Oct. 27, members of the NAHB Student Chapter at Arizona State University's Del E. Webb School of Construction heard a keynote address from Bill Pulte, founder and CEO of Pulte Homes, at the 17th Annual Construction Recognition Banquet. Students from local high schools and community colleges attended the event, which kicked off the schools’ recruitment efforts, and many were presented with grants toward their tuition if they attend the school.

Managed by the Home Builders Institute, the NAHB Student Chapters program works to enrich the educational experiencse of students enrolled in construction-related studies and training. More than 3,000 student members at 151 high schools, technical schools, colleges, universities and, most recently, Job Corps centers, enjoy the benefits of membership in NAHB through participation in competitions, professional networks, conferences and industry exhibits.

For information the NAHB Student Chapters program, e-mail Page Browning at HBI, or call her at 800-795-7955 x8918.

Wood Composite Doors Leading New Trend in Garages

New designs for garage doors are helping home owners add style to the one area of the home that desperately needs it, according to Jeld-Wen, the world’s largest manufacturer of windows and doors.

Based in Klamath Falls, OR, Jeld-Wen is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

Jeld-Wen’s new Estate Series of garage doors gives home owners fashionable choices for a Mediterranean or castle-like look, according to the manufacturer. The doors come with decorative hardware options — including clavos, straps and knocker handles — and offer an old-fashioned appeal with multi-plank, grooved designs and a realistic wood grain appearance.

New designs mimic the look of swing-style doors, but operate just like any other lift-style garage door.

Home owners used to be able to only find these types of options with solid wood garage doors, which can be cost-prohibitive, heavy and high-maintenance, according to Dave Hill, the company’s garage door product manager.

“Home owners have always wanted to improve the appearance of their garages,” he said, “but unlike other products in the building industry, there simply haven’t been a lot of innovations or new options available. As a result, garages have been either ignored, disguised or treated as an afterthought. We’re now seeing a complete reversal of that trend.”

Unlike standard steel garage doors that may be covered in plastic or wood, Jeld-Wen says that its wood composite doors are made from the same durable material throughout — from the trim to the face of the door. No joints mean they perform exceptionally well, with no cracking, sagging, separating or shrinking — even in extreme temperatures.

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.

Do Consultants Cost You Money?

Whatever consultant you want to talk about — engineer, architect, accountant, you name it — their number-one job should be to save you money. But consultants don’t work for free, so how can they actually save money? Allow me to illustrate.

A client of mine, we’ll call him Mister Eggplant, is building a large, lakefront home. His architect, Mrs. Radish, designed the most inefficient, expensive stained concrete deck imaginable. The elaborate structural system consisted of plywood, torch-down membrane, wood I-joists, beams, posts and footings. When it came to me for engineering, I immediately asked why we couldn’t simply use a composite metal deck. There was no good answer, so that is precisely what I designed, saving Mister Eggplant thousands.

Now, I could have easily put on my blinders and analyzed the original deck. My fee would have been about the same either way. But, I am by nature a cheapskate, so I try to save money whenever I can. And I don’t care whose money it is: mine, yours, Red Robin’s (I constantly hound my kids to use only as many paper towels as they really need.)

Let’s examine the bigger picture. What exactly is a consultant anyway? Isn’t it someone with specialized knowledge or experience who performs tasks someone else doesn’t have the time for? In general, most of us are smart enough to do most things in the construction industry if we’re given enough time to learn them. I don’t view consultants as smarter than anyone else, they’re just specialized in a particular area. I’m sure lots of builders could also be engineers or architects or accountants if they really wanted to. In fact, many would be superior at these occupations because they actually understand the real world — where the rubber meets the road.

It is amazing how much money a bad consultant can cost you. Here are a few examples:

• It is a consultant’s job to stay current with the latest industry trends in their area of expertise. A consultant still rooted in the '70s or '80s will probably cost you money by recommending antiquated methods or materials.
• Bad consultants are often too slow or too fast. Too slow causes ripples of delay up and down the project chain. Too fast is only a problem if it’s also too sloppy or not thorough, in which case re-do’s will occur, again, causing delays. Delays anger clients, costing you future business. Also, if borrowed money is being used, delays cost real dollars burning interest.
• Bad consultants don’t really get it. Sure, they may be book-smart, but if they don’t really understand the nuts and bolts of what you do and how you do it, they won’t likely get it right. Mistakes cost by a factor of three: doing, undoing and redoing.
• Bad consultants don’t keep up with current laws and ordinances. There really is no excuse for not knowing the rules. I understand that even the rule enforcers don’t always know their own rules, but a good consultant will not only know the most current rules, but also how the local jurisdiction interprets and enforces them.

If you haven’t guessed where this is leading, here it is: Builders, too, are consultants. It just happens that their occupation involves a lot more field work than their white-collar counterparts.

The upshot is this. First, if you are a builder, don’t use bad consultants. They’ll cost you time and money and cause knuckle-pounding frustration. Second, keep in mind that you, yourself, are a consultant. Make sure to provide your clients the best value possible. When they ask for bone-headed things, politely point out something more cost-effective. After all, isn't it truly a consultant's job to save money?

 Tim K. Garrison P.E. of ConstructionCalc.com has authored books and short courses and lectures on topics relevant to builders. Got a technical or management issue? E-mail buildersengineer@constructioncalc.com. Tim reads every one.

This column cannot be reprinted without permission from the author.

The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article.

Anchorage Builders Share the Holidays With Needy Children

In their annual holiday drive, the members of the Anchorage Home Builders Association are working to touch the lives of Alaskan children who are homeless, living in shelters and financially destitute.

This year’s goal of the association is to provide 300 children with a Christmas shoebox – backpacks that contain a warm hat, a pair of gloves and some basic personal hygiene items.

The children have been identified as “in need” by the Anchorage School District.

The association is seeking donations of $50, which is the cost of purchasing and assembling a backpack for a sponsored child, and its members will be working to decorate and fill the gifts.

The deadline for contributions is Dec. 7 and additional information is available by e-mailing Paul Rieland, or call him at 907-522-3605

NAHB Winter Board Meeting Schedule Announced

OFFICIAL MEETING NOTICE OF
THE NATIONAL ASSOCIATION OF HOME BUILDERS
BOARD OF DIRECTORS

The following schedule of events is a partial listing provided as a notice for the upcoming NAHB Board of Directors Meetings, which will be held at the International Builders’ Show in Orlando, FL on Jan. 10-16, 2005. The board meeting will be held at the JW Marriott Hotel. The International Builders’ Show program will identify the exact time and place of each scheduled meeting.

Monday, Jan. 10
Subcommittees, Task Forces and Working Groups
2004 National Vice Presidents
2004 Executive Board Meeting

Tuesday, Jan. 11
Committees and Councils Meetings
2004 State Representatives Networking Session
Past Presidents’ Council
National Housing Center Board of Governors
2004/2005 National Vice Presidents

Wednesday, Jan. 12

Committees and Councils Meetings
Budget & Finance Committee
Resolutions Committee
2005 Leadership Team Meeting/Orientation

Thursday, Jan. 13

Opening Ceremonies
Area Caucuses

Friday, Jan. 14

Joint 2004 Executive Board, Budget & Resolutions Committee
Special Luncheon
2004 Board of Directors Meeting/Annual Meeting of the Members
Spike Party & Directors Reception

Saturday, Jan. 15

2004 Board of Directors Meeting
Installation Reception

Sunday, Jan. 16

Educational Programs
Exhibits

Save 50% on NEBS Holiday Cards, Calendars and More

NAHB members can save 50% on building-related holiday cards, calendars and more from NEBS, which has been providing personalized business and computer forms, checks and promotional products to small businesses since 1952.

• NEBS offers a selection of cards for builders and remodelers, contractors, landscapers and many more NAHB member professions.
• Choose from the classy to the whimsical, from the patriotic to those created specifically for the building industry.
• NAHB members can save 50% on cards and calendars by ordering by Nov. 20.

To view and order NEBS products online, click here, or call 800-225-6380. When ordering online or by phone, use mail code #11047 to receive your NEBS/NAHB discount.

Earn NAHB WorldPoints^sm Platinum Plus® MasterCard® Credit Card

NAHB members are invited to apply for the only credit card that supports NAHB each time a purchase is made and rewards cardholders with points for travel, cash, brand-name merchandise and more.

Click here to learn more about the rates, fees, other costs and benefits associated with the use of the NAHB WorldPoints credit card from MBNA America Bank. Use the online application today.

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to http://memberadvantage.nahb.org. Or visit www.nahb.org to explore the full range of benefits associated with membership in your local, state and national home builders associations.

Make Your Connection With www.nahb.org

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

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

Awards Programs Deadlines

Awards Program	Entries Due
National Green Building Awards	Dec. 15
NAHB/NOD Disability Initiative Recognition Awards	Dec. 15

 Make Your Connection With www.nahb.org

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

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