Nation's Building News Online: November 29, 2004Print All Articles Text Version |
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NAHB Stands Ready to Protect Any Challenges to Tax Incentives for HousingAs conjecture about possible tax changes proliferates in Washington before the start of the second Bush Administration, NAHB is working closely with the White House and Capitol Hill leaders to ensure that the interests of the housing community will be well-served as tax reforms move forward. In a press conference shortly after his re-election in November, President Bush said that tax simplification and Social Security reform would be top priorities during his second term. The President also indicated that no specific decisions had been made on proposed changes to the tax code and that he considered tax incentives for homeownership and charitable contributions to be important. The President’s remarks sparked a flurry of speculation in the media that the Administration might be considering everything from doing away with the mortgage interest deduction and state and local tax deductions to scrapping the current system in favor of a new structure based on either a flat tax or national sales tax. The fact is, no plan has yet to emerge and lawmakers and policy experts are still working to determine what is feasible. The process is expected to be slow and deliberate, and it is anticipated that early next year the White House will appoint a blue-ribbon commission to tackle this issue. In all likelihood, the panel will take six months to report its findings, and this will be followed by several months of congressional hearings, with a viable legislative proposal to follow some time in 2006. Meanwhile, on the issue of the mortgage interest deduction, President Bush provided a significant measure of assurance in his Oct. 2 address to the NAHB Board of Directors in Columbus, OH, during the final weeks of the presidential campaign. The President said: “I believe that the mortgage interest deduction enables more Americans to achieve the goal of homeownership. It is an important part of our tax code.” To further put this matter in perspective, in previous Administrations and congressional sessions, the topic of tax reform has been a prevalent issue. But due to the complexities of the tax code and the myriad competing business and consumer interests, little changes other than minor modifications around the edges have occurred. The few major changes that have been enacted took several years to put in place. For example, proposals for the Tax Reform Act of 1986 first began circulating in 1981. Just as in 2003, when NAHB worked with the Administration to implement a major tax cut package that allayed concerns over the Low Income Housing Tax Credit, NAHB stands ready once again to bring its expertise and political clout to the table to represent the interests of the housing community. As this process moves forward in the new Congress, NAHB will work to protect current tax incentives that will spur homeownership and rental housing initiatives. Building News Coast To CoastAffordable Housing Proposal Gathers SteamThe D.C. Zoning Commission soon will consider a proposal from the Center for Community Change that would force builders of 10 or more housing units in the nation's capital to set aside anywhere from 7.5%-15% of the project for lower-income residents in exchange for higher densities. Proponents of the proposal insist that realty prices have soared out of reach for police officers, firefighters, teachers and other civic workers in the District. In fact, the Metropolitan Washington Council of Governments estimates that the city's average home price has hit $452,664, soaring from $250,445 five years ago. "We're moving away from what has been a historical pattern that all the poor people live in one area, then you have a road, or a park or a river, and [on the other side] there's everybody else," remarks D.C. Councilman Jim Graham (D-Ward 1). However, the D.C. Building Industry Association opposes the proposal, insisting that it would put a damper on the city's building frenzy. Coupled with surging land and materials costs, developers say the measure would force them to boost the price of market-rate housing, avoid lower-income neighborhoods or move out of Washington altogether. They also argue that higher densities will be virtually impossible to achieve due to historic preservation laws, existing height limits and stiff resistance from community groups that want to prevent more traffic from coming onto their streets. Are You a Downsize Candidate?Although the exact number of retirees who downsize from their long-time homes is unknown, experts say the large supply of condominiums in suburban downtown areas could attract some of them with the maintenance-free lifestyle they offer. Given that many of these units are just as expensive as single-family homes, most will not downsize into them in response to financial problems. However, financial planners do urge clients to consider trading down if their home equity, savings and retirement income leave little leftover cash for maintenance and repairs. According to Case Western Reserve University professor J.B. Silvers, "If you can't maintain a house, it will start to depreciate in value, and from a financial point of view, it's clear and straightforward that [downsizing] is a good idea." Firm Reaches Wide Accord on Lead PaintThe U.S. Department of Housing and Urban Development and the Winn Residential Limited Partnership have reached an agreement in which the real estate firm will examine and remove any hazardous lead paint from more than 10,000 apartments across the nation, including 7,000 in Massachusetts. The firm had been accused of failing to notify tenants that their apartments could contain hazardous levels of lead paint. The settlement includes $3.7 million in testing and cleanup costs as well as a $105,000 fine to be paid to the government. Government officials are hopeful that the settlement will send a message to landlords that they need to clean up their apartments and keep residents informed about lead paint. Luxury Home Sales Hit Full StrideOver the past year, luxury home sales in the United States have rebounded to surpass the rate of sales for lower-priced dwellings. Sales of Manhattan residences priced over $10 million, for example, have hit 68 so far this year — double the tally for all of last year; and the end-of-the-year season is expected to boost luxury home sales there even further. While the rise in high-end home sales can be partly attributed to skyrocketing residential prices, especially in hot markets like Los Angeles and San Francisco, real estate experts say the increase also is largely an indication of wealthy Americans' consumer confidence. Luxury buyers differ from the rest of U.S. home buyers in that their purchase decisions generally are unaffected by interest rates or market dips. Residential Projects Approach ApprovalCommissioners in Plant City, FL, recently okayed three residential developments, paving the way for the construction of an estimated 2,000 dwellings. Developers plan to build 600 homes on more than 300 acres at Knights-Griffin Road and Paul Buchman Highway and as many as 647 homes on 177 acres along Charlie Taylor Road. Both projects must now be approved by the state Department of Community Affairs. Officials also approved a rezoning request from WCI Communities, which will allow the company to build as many as 700 townhomes in the Walden Woods industrial park. However, WCI has submitted plans for only 408 units. Plant City Mayor Mike Sparkman says the city must now formulate ways to handle such growth, which will increase demand for city services. South Dakota to Consider Voluntary Recycling for BuildersThe San Diego City Council will consider a measure requiring construction and demolition companies to voluntarily recycle debris from their sites in order to keep pace with state recycling standards. According to recent figures, construction waste has risen 35% in the last decade, and the council has been working closely with the construction community to develop a recycling program. Some industries and organizations in the area have already developed their own recycling programs, including the Navy. Under California law, regions had to reduce their waste by 50% in 2000, but San Diego failed to meet its goal by 2002 and was given yet another extension of two years. In 2004, the city will only be able to ask for a one-year extension, after which it will be fined $10,000 per day until recycling goals are met. Senior Living Trend: The More the MerrierCo-housing, a development niche that originates in Denmark and has been gaining ground across the United States in recent years, eventually could emerge as the preferred living arrangement for U.S. seniors. Such communities are planned and designed by the people who will live in them; and they generally include individual residences clustered around a communal building where home owners meet for shared meals several times each week. Residents rotate meal-preparation duties as well as split the expense and responsibility for maintenance, landscaping and other upkeep. The Co-Housing Association of the United States reports that there are nearly 80 existing co-housing developments in more than 30 states, with no less than 100 others in the pipeline. While older residents often settle into the role of surrogate grandparent or adviser to younger people within the intergenerational co-housing communities, many of the newer projects — in a nod to seniors' growing affinity for these developments — are designed specifically for people aged 55 and up. The trend is highlighted in a recent poll from AARP in conjunction with the MetLife Mature Market Institute, which found that 22% of survey respondents would be interested in "building a new home to share with friends that include private space and communal living areas." MetLife's Sandra Timmerman says, "People are just jumping on this idea. If you move into a group setting, you may not have lots in common. But if you form your own community, you can pick your friends and your interest areas. I think as time goes on this will be a preference for more people." Steel Demand Is Red HotThe price of scrap steel is twice what it was a year and a half ago, according to Fred Hetzler, who heads the Chattanooga, TN-based Eureka Foundry. The price increase has been attributed to China's building boom, a boost in global steel consumption and soaring fuel and raw material costs. Many companies are being forced to pass the costs onto consumers if they hope to turn a profit. Meanwhile, contractors who fail to lock in prices have experienced cost overruns. Even so, experts believe the steel industry is doing better since President Bush scrapped the tariffs on foreign steel in response to possible trade sanctions by the European Union. Multifamily Construction Pays for Itself, NAHB Economic Impact Model DemonstratesNew multifamily construction pays for itself, according to a new version of NAHB’s Local Economic Impact Model. The model has been used in more than 280 areas around the country to assess the financial benefits that multifamily housing development brings to local communities, including new jobs and tax revenues. But previous versions of the model were unable to assess the local benefits of multifamily construction — including income, jobs and government revenue — compared to its costs on local governments for education, police and fire protection, and water and sewer systems. The revised NAHB model concludes that multifamily housing typically pays for itself within a few years as ongoing benefits accumulate faster than ongoing costs. Typical apartments generate more than enough revenue to pay for current government expenses in a given year. The surplus accumulates so quickly that governments undertaking capital investment before any units are built can pay off the debt entirely by the end of the fourth year. Benefits in a Typical Metropolitan Area The one-year local economic benefits of building 100 multifamily units include:
This includes both the direct and indirect impact of the construction activity itself, and the impact of local residents who earn money from the construction activity and spend part of that income within the local economy.
These are ongoing, annual benefits resulting from the new multifamily units becoming occupied, and the occupants paying taxes and otherwise participating in the local economy year after year. More detail, including the characteristics of the multifamily units built (average value, property taxes and construction-related fees) are available in the NAHB report, "The Local Impact of Home Building in Average City, USA." With local information on average values of housing units, land values and construction-related fees, the model can be customized to a particular local area and used to analyze the impact of building on any reasonable scale, including a single project. NAHB models can also handle any combination of single-family and multifamily construction. Reports customized to particular areas often analyze the mix of housing types that most places require to accommodate residents of different income levels, different occupations and at different stages in their lives and careers. For additional information about the models, questions about applying them to a particular local area and the cost of conducting this research, e-mail or phone one of the following staff members in NAHB’s Housing Policy Department:
Housing SnapshotLast week brought good news on sales of new and existing single-family homes in October, but economists believe the market has crested and will start slowing down a bit as the Federal Reserve continues to exert upward pressure on interest rates. The cost of fixed-rate financing was largely unchanged last week, and Freddie Mac Chief Economist Frank Nothaft said that a year ago those mortgages were expected to have surpassed the 6% level by now, but have been slower to rise because of the economy's "soft patch" this spring. He predicted that further increases in mortgage rates are inevitable. They will rise, he predicted, to "a still home buyer-friendly range that will cause home sales to cool relative to their current record highs." Adjustable-rate loans were up last week, rising from 4.17% to 4.27%. In other economic news last week, the Commerce Department reported a 0.4% drop in factory orders for durable goods in October, led by a decline in new orders for automobiles and parts. The bad news, however, was partly offset by a larger increase in orders in September than initially indicated. In worrisome news for those planning their European vacations but favorable news for U.S. manufacturers, the dollar fell on Wednesday to an all-time low against the euro and may have some further distance to fall. The holiday shopping season appeared to get off to an auspicious start on the day following Thanksgiving, but before the weekend was over WalMart and some other retailers were grousing about slow sales. Retail sales are expected to be somewhat slower than last year, when they were up 5.1%, but it's the last 10 days before Christmas that analysts say really count. In a three-day rather than five-day week, Random Lengths reported somehat disappointing numbers from the lumber price front. Framing lumber rose from $357 to $361 per 1,000 board feet. Random Lengths' structural panel composite price rose from $334 to $340 per 1,000 square feet, compared to $500 a year earlier. Sales on oriented strand board were strong enough, it said, to keep upward pressure on prices. Mortgage Interest Rates30 Year Fixed Rate: 5.72\% Housing Starts: Oct. 2004Total: 2.027 million\% New Home Sales: Oct. 2004 *1.226 million Existing Home Sales: Oct. 2004 *6.75 million * Seasonally Adjusted Annual Rate Participating on the Home Builder Research Panel Is Easy and RewardingWe have been fortunate in recent years to see tremendous progress in the materials and techniques we use to build housing for the American people. Today’s homes are more energy-efficient, easier to maintain, more durable and healthier to live in thanks to the ability of the home building industry to apply new knowledge in science and technology to the great benefit of our nation’s households. There is an abundance of research and innovation available to home builders today, and members of our association can be proud that the NAHB Research Center has played, and continues to play, a central role in producing the expertise that is transforming this country’s housing. As a home builder, you have a role to play as well, and that is why I would like to invite you to become a participant in the NAHB Research Center’s Home Builder Research Panel. This is your opportunity to make a valuable contribution to your industry and I promise you that it will also be a rewarding experience. It has been estimated that it can take 10 or 20 years for a new building product to gain market acceptance. On many industry issues, that’s too long a time to wait. Your understanding of your customers’ needs and desires and your insights into actual experiences in the field are a valuable resource that can speed up the process, and that’s why I am asking you to share your knowledge through participation on the Home Builder Research Panel. By participating in the panel’s online research activities throughout the year, you will be helping to resolve industry issues and shape new product ideas. Your participation will include completing short 10-minute questionnaires and surveys for product manufacturers. Your information will be confidential, and you can unsubscribe at any time. As a member of the research panel, you will gain a unique appreciation of the Research Center and the industry it serves. You will also earn points that can be redeemed for gifts or cash. You can earn $10 just for registering by including the incentive code, “BUILDER.” I urge you to let your opinions be counted and help improve your industry. Active home builders can click here to join the NAHB Research Center’s Home Builder Research Panel and help shape the future of the American home. FHA Multifamily Loans and PATH Among Winners in 2005 Spending PackageThe House and Senate last week approved a mammoth $388.4 billion omnibus spending package that bundles nine stalled appropriations bills. The legislation, H.R. 4818, will fund federal government spending programs in FY 2005. Appropriators completed their work in a lame-duck session and funded several Administration priorities by cutting most non-defense, non-homeland security programs by an average of 0.8%. Overall, NAHB was successful in preserving monies for several programs of note to the housing industry. The total Department of Housing and Urban Development (HUD) budget was $37.3 billion, slightly below the FY 2004 level of $37.81 billion. Of particular importance to the NAHB Research Center was funding for the PATH (Partnership for Advancing Housing Technology) program, which received a $7 million appropriation. NAHB worked aggressively to ensure that the program was not cut to the Administration’s requested level of $2 million. Also important to NAHB members is the increase in the FHA Multifamily Loan Commitment Authority to $35 billion, a $10 billion increase from last year’s authorization. It is widely believed that the increase in commitment authority will help the program to avoid the shutdowns that have plagued it for the past few years. NAHB had strongly urged the appropriators to accept this increase in commitment authority. Funding levels for rural housing programs in FY '05 were a mixed bag, with the Sec. 521 rental assistance and Sec. 502 guaranteed loan programs receiving an increase, while others were cut. For the fourth consecutive year, Sec. 538 rental housing received a $100 million appropriation. Lumber and Elephant Ivory NAHB worked aggressively to eliminate a proposed rider offered by Sen. Patrick Leahy (D-VT) that would have extended provisions in the Lacy Act Amendments of 1981 to cover lumber imported into the U.S. The Lacey Act bans the importation of “illegal” items, and was originally intended to stop importation of elephant ivory. The amendment would have allowed environmental groups to block lumber coming into the U.S. by claiming it was logged “illegally.” The amendment offered no guidance on how consumers would be able to tell whether a piece of lumber was illegally obtained, and provided no clear direction on how a timber company could prove that lumber was obtained from a legal source. This provision was stripped from the omnibus legislation after pressure from NAHB and other timber-related organizations. In another victory for home builders, a provision that would have exempted the National Oceanic and Atmospheric Administration from compliance with the Data Quality Act, which sets guidelines for the collection of sound scientific data, was stripped from the bill. Sen. Fritz Hollings (D-SC) had inserted the language in the Senate version of the bill and NAHB succeeded in getting the exemption pulled from the omnibus legislation. Highlights of selected programs and their funding 2005 levels under H.R. 4818:
To read the entire bill, click here and enter H.R. 4818 in the box at the upper level. For further information, e-mail Michael Strauss or call him at 800-368-5242 x8252. Legislation Strengthens Home Loan Guarantee Program for VeteransLegislation supported by NAHB that will expand home loan programs for military veterans, active duty service members and military reservists was approved by the Congress on Nov. 17. S. 2486, the “Veterans Benefits Improvement Act of 2004,” increases the maximum loan amount for loans under the VA loan guaranty program. Currently the Department of Veterans Affairs will guarantee 25% of a qualified home loan up to $240,000. The legislation, which is expected to be signed into law shortly by President Bush, is based on the Fannie Mae and Freddie Mac conforming loan limit and will enable qualified veterans to purchase loans on homes priced up to $333,700. Prior to congressional approval, NAHB sent a letter to the House leadership and to House Committee on Veterans’ Affairs members urging swift passage of this legislation, noting that the program provides an important homeownership benefit to those men and women who have defended their country through their service in the armed forces. The legislation also indexes the maximum VA guarantee amount to the Freddie Mac limit, thereby avoiding the necessity of congressional action to keep the VA benefit current with changing home prices. VA’s guaranteed amount has been raised only once since 1995, for an increase of approximately 18%, while home prices nationally have appreciated by roughly 73%. More than 29 million veterans and service personnel are eligible for VA financing. Since the program’s inception in 1945, more than 17.5 million veteran home loans have been guaranteed. To read the legislation, click here and enter S. 2486 in the box at the upper left. For more information, e-mail Bill Renner or call him at 800-368-5242 x8597. New Single-Family Home Sales Continue at a Brisk Pace in October
Sales of new single-family homes rose 0.2% to a seasonally adjusted annual rate of 1.226 million units in October, the U.S. Commerce Department reported last week, which was 7.4% above the sales pace of a year earlier. “The momentum continues in the single-family housing market, thanks primarily to long-term interest rates that remain below 6%,” said NAHB President Bobby Rayburn. “New-home sales definitely are headed for a new record in 2004.” “Attractive interest rates coupled with an improving job market and increased household income are unquestionably the key factors that continue to drive buyer demand,” said NAHB Chief Economist David Seiders. “The most recent NAHB/Wells Fargo Housing Market Index, based on our monthly surveys of single-family builders, reflects the builders’ continued confidence and optimism in the housing market.” October’s new home sales were up 19.7% in the Northeast and 12.7% in the West; they dipped 3.6% in the Midwest and 9.1% in the South. The inventory of unsold new homes was 412,000 units in October — a 4.1-month supply at the current sales pace and slightly higher than the previous month. Existing Home Sales Lose Little Strength in OctoberSales of existing single-family homes held virtually steady in October at a seasonally adjusted annual rate of 6.75 million, which was just a 0.1% tick down from an upwardly revised level of 6.76 million in September, the National Association of Realtors® (NAR) reported last week. As with new home sales, the resale market was driven by mortgage interest rates, which have persisted at below-6% levels for longer than expected. “Of course all of the other market fundamentals remain sound,” said David Lereah, the association’s chief economist, “so we should only see a modest decline from record home sales this year if mortgage interest rates generally rise.” NAR President Al Mansell, who is CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said a growing population, an improving economy and generally favorable housing affordability suggest that “there is no end in sight to the current housing expansion. Although sales are likely to ease from record levels, they’ll remain at a high threshold in years to come and continue to supply long-term gains.” Regionally, existing home sales were up 3.7% in the South and down 1.3% in the Northeast, 2.8% in the Midwest and 3.6% in the West. Golf, Spas and Nightlife — Orlando's Got More Than Theme ParksWhile Orlando is know for its theme parks, it also offers a number of entertainment options suited for adult visitors. After meetings at the 2005 International Builders’ Show, plan to enjoy any number of the more than 95 attractions, many great restaurants, browsing the more than 1,200 retail shops or teeing off at its more than 150 golf courses. Attendees of the builders’ show will find that Orlando was virtually untouched by this year’s hurricane season. Top Spas Call Orlando Home Spouses and friends can retreat to one of the many full-service spas during the day. Or, make it a nighttime group activity — many spas offer customized experiences for couples and group parties. Here are a few notables:
Orlando Nightlife — Get Your Groove On From reggae to rock, club-hoppers can dance the night away at CityWalk Orlando at a number of venues. If comedy’s your thing, check out the SAK Comedy Lab in downtown Orlando. Among the notable restaurants are Todd English’s bluezoo in Disney’s Dolphin Hotel for a chic dining experience, Hawaiian fusion at Roy’s restaurant, Latin cuisine at the Samba Room, Italian at Antonio’s and for the ultimate cigar experience, Corona’s Cigar Bar. Discounts on the Fun Stuff Attendees to the International Builders’ Show can get special discounts to attractions and activities. Find out more at www.BuildersShow.com/Orlando. Additionally, when attendees book through the IBS Housing Block, they will receive more discounts to enjoy in Orlando available only to attendees participating in the IBS Housing Block. They will receive a brochure in the mail explaining how to take advantage of these special offers. Register for the IBS before Dec. 17 to take advantage of pre-registration prices. What Builders Should Know About BoomersMark Goldstein is president of the Impact Presentations Group in Sam Ramon, CA, and one of the nation’s foremost experts on boomers and the impact this largest generation in American history is having on various industries throughout the country. He will be a featured speaker at the 2005 International Builders’ Show in Orlando, FL, hosting the session “Reinvention of the Building/Housing Market: Boomers & Beyond,” beginning at 1:30 p.m. Friday, Jan. 14, at the Orange County Convention Center, Room 308. The NAHB Seniors Housing Council recently talked with Goldstein to glean some of his thoughts about how boomers will transform the housing industry and how builders can meet boomers' needs. The following is excerpted from that discussion: NAHB: Why should builders pay attention to the boomer generation? What’s the big deal? Mark Goldstein: First, the building industry has been paying attention to the baby boom generation for years. They have dominated the industry’s consumer base for decades. Boomers have moved through their marriage, career and parenthood life stages. During this time, they have purchased start-up homes and move-up homes. Boomers own nearly half of all the homes in America. What is required now is that the industry stay focused on boomers as they reach 50 and older. This is where the big opportunity lies. While previous generations dialed down their lives in the second half of life, boomers may very well ratchet up theirs. Boomers have redefined every stage of their lives and they have generated record business for those companies that have aligned themselves with their needs and desires. Everything from the soft drink, movie and music industries to alternative and complementary therapies in healthcare has grown exponentially as the boomers have progressed through their lifespan. They now are ready to enter a new era — the retirement life stage. Remember, this life stage begins with pre-retirement in our 50s and extends through our 60s, 70s and beyond. The boomers will redefine what it means to be “retired” in America and throughout the developed world. To begin with, even if “jobs” end for retiring boomers, research indicates that the vast majority of boomers will continue to work. This life stage transformation will extend into every aspect of retirement behavior. Just as Del Webb brilliantly predicted the lifestyle that would appeal most to the retiring Great Depression and World War II generations, the opportunity now exists for innovative builders to define this stage of life for their boomer buyers. There is no “flagship” currently defining the new route for 80 million upcoming retirees. Therein lies the jackpot for both builders and consumers. NAHB: How are boomer buyers different than buyers from other generations? Goldstein: Boomers are different buyers because they are different people. What I mean is that every generation comes of age during different times. As a result, they each have differing values. Boomers have been defined by their “generation gap” with previous generations. First and foremost, values must be considered when targeting different generations. Beyond generational values, boomers are more savvy, educated, affluent and demanding than previous generations at the same stage of life. They prefer an educational/experiential approach to marketing. Especially after the stock market crash of 2000, these consumers are averse to traditional marketing. They are looking for straight talk and informational marketing. It is also important to remember that boomers are convenience-driven consumers. They grew up in the era of fast food, ATMs and the microwave. Imagine trying to rent a car to this client without the remote check-in device that transformed the car rental business. Our research shows that the majority of boomers would prefer more time than money. Wasting these consumers’ time is worse than wasting their money. This goes hand-in-hand with boomers’ appreciation for personalized service. They enjoy doing business with companies with a high standard for customer service, and they know when it is lacking. Finally, boomers are the most litigious of all consumers. Builders who meet boomers’ quality standards will gain the big prize. Companies that “cut corners” and have poor follow-up will find themselves slapped with hefty lawsuits. NAHB: How should builders adapt their marketing approaches to reach these buyers, especially the affluent ones? What marketing strategies work best on these buyers? Goldstein: Boomers are entering a stage of life — retirement — that currently is being redefined. The previous institution is outdated and no longer relevant to the needs of retiring boomers. Its new definition is not yet in place. Savvy marketers and builders have the unique opportunity to share in this redefinition. Recent research indicates that the prime difference in baby boom retirement involves the role of work. Around 84% of boomers plan to work beyond their “retirement,” and one in three will work for other than financial reasons. This indicates that the contribution phase of life will extend beyond retirement. This is not only important to retirees, but to society as a whole. With the largest American generation entering retirement, it is critical that these people contribute as long as possible. Since the very definition of retirement has traditionally revolved around the end of work, this new approach will change every aspect of how people define their retirement. This new definition will influence all of the major industries that cater to retirees. For older adults, home and community are second only to health and financial stability. Because the building industry touches both of these worlds, you have a rare opportunity to capitalize on this reinvention of retirement. NAHB: Do boomers want a different product than other consumers? If so, what are they looking for in terms of features and amenities? Goldstein: Just as the auto industry targeted boomers with a new product (the SUV), those in the building industry can create a “boomerized” version of their product. Of course, there are certain design features and amenities that appeal to boomers. One of the most important features is specialty rooms. While not a lure with previous generations of retirees, home offices or media rooms are gaining popularity. Some boomers also will want a fitness room. Boomers also will seek more high-tech homes in the coming years. Currently, 34% of builders offer structured wiring packages as a standard or optional amenity. It also will be important for later-life homes to be able to keep up with the changing physiographic needs of its occupants. Aging in place will be the battle cry of the future. This presents a monumental challenge for marketers who must learn how to communicate these design features without implying that their customers are becoming old. This new product shouldn’t just be a house: it has to be a lifestyle that is reflected in the home and even more so in the community. When designing and marketing to an experientially-driven consumer, always showcase the experience being offered. Builders should provide plenty of opportunities for boomers to socialize with neighbors while maintaining privacy when they want solitude. Another challenge concerns the age make-up of the community. Although most boomers do not choose to live in age-qualified communities, they prefer the amenities and lifestyle that those communities offer. The challenge is to offer communities that are all-age inclusive, yet still have the ambiance of an active adult or seniors community. NAHB: In the past, most "seniors" retired to warm-weather states like Arizona and Florida. How can I get them to buy a new home in my community? Goldstein: The sun-driven seniors of the past were motivated by two key factors. First, the sun itself was an amenity that suggested recreation, health and vitality. Secondly, the Del Webb marketing campaigns of the 1960s suggested that sunshine was synonymous with the ideal retirement. Today, some perceive the sun as an enemy to aging. Boomers have had a love affair with the sun since the first Annette Funicello movies and early Beach Boys tunes. It would be a mistake to assume that the sun will not play a role in boomer retirement. However, it would be an even greater mistake to assume that the role of sunshine and warm weather will not be redefined. Most sunshine states become undesirable when the temperature exceeds the comfort zone. Moderate weather may replace the tropics and desert as best location. A sense of community may replace location as the key driver for retirement living. It will depend largely on the experience created in the community and communicated in the marketing materials. Boomers will want access to venues where they can fill their days with a sense of purpose. For example, savvy builders will combine the elements of retirement living and college or university life to have a winning formula. You must ask yourself, what “experience” does my community offer?Even an area such as Seattle, with its substantial rainfall, offers an extraordinary lifestyle and unique experience. Capture that experience and market it in line with the key drivers that boomers seek. Most sunshine states become undesirable when the temperature exceeds the comfort zone. Moderate weather may replace the tropics and desert as best location. A sense of community may replace location as the key driver for retirement living. It will depend largely on the experience created in the community and communicated in the marketing materials. NAHB: I’ve heard that boomer women play a major role in the home buying process. How can I make an impression with these buyers? Goldstein: It would be wise for the housing industry to learn from the mistakes of the auto industry. The auto industry always has had a gender bias towards males. Recent research has shown that nearly one out of every two new car buyers is a woman. The industry has not recognized that women do more than choose a car’s color. The auto industry finally has become aware of these unprecedented demographic shifts, but it still struggles to comprehend the psychographics of this new consumer. The auto industry’s first error was in not recognizing the changing demographics of the American family, no longer dominated by the “Leave It to Beaver” nuclear family of the 1950s. Actually, the number of married couples with children is down by nearly one-third since the 1970s. However, there has been a substantial rise in the number of single-person households (up by 40%) and single-parent households (up by more than 70%). America’s demographic make-up is changing before our eyes. Another mistake involves not recognizing the evolutionary role of women in today’s society. Since the 1960s, the percentage of men entering the workforce has diminished. During this same period, the percentage of working women has increased substantially. Today, women are educated, employed, empowered and independent. A recent profile of home buyers and sellers from the National Association of Realtors® (NAR) reveals that 27% of all U.S. home buyers in 1999 were single. Single women accounted for the second-largest segment of home buyers, accounting for 21% of transactions, after married couples who bought 59% of homes. NAR also estimates that 47% of condominium owners are single women. Women are responsible for most spending decisions, including home purchases. Panelists at the Urban Land Institute noted that women are choosing to live in communities that emphasize social interaction and convenience, enabling them to simultaneously nurture and multi-task. The experience of community is a key driver for women as well as the proximity to jobs and public transportation. As for home amenities, women are very focused on security. They are attracted to high-tech home security systems as well as automated home lighting systems. Women are just as busy as men and they appreciate anything that saves time. Convenience, in terms of location and saving time and effort, are a big plus with female home buyers. They also look to have amenities that play into the needs of children. Shared areas are critical to community life as well as nearby stores, parks and recreational areas. Communities centered on a single amenity (i.e., golf clubhouse) are perceived as less welcoming for women and children.NAHB: How has retirement changed? How do the majority of boomers view retirement? Goldstein: It is not so much how retirement has changed as how it will change. Perhaps the most significant change involves demographics. In seven years, boomers will retire at a rate of 10,000 per day and continue retiring at that rate for the better part of two decades. This will be an unprecedented explosion in the retirement population. All businesses that serve this market have the opportunity to produce dramatic results if they position themselves to be aligned with this trend. The number of retirees is only half of the equation. Not only will the number of retirees double over the next few decades, but the duration of the retirement life stage also will grow. Due to medical advances over the past century, people are living longer and will enjoy longer retirements. Many people will spend one-third of their lives after retirement, a departure from previous generations when people routinely died within 18 months after retirement. Even more significant than the demographics of retirement are the psychographics. The numbers indicate there will be a significant expansion of old age taking place. Actually, this is not quite correct. What is expanding is mid-life lifestyle. To put it bluntly, people are staying younger longer. Today, 50 years old is quite young and 60 is still part of mid-life for many people. We will see the retirement life stage become a part of mid-life as opposed to later life. This shift is very significant for businesses as mid-life is a much more active period than later life. Many people will begin new careers, remarry, go back to school or simply engage in active, purposeful lifestyles during their retirement years. NAHB: The boomer market is very diverse. How can builders appeal to different market segments such as affluent, affordable, ethnic, etc.? Goldstein: The boomer market segment is following a trend in the American marketplace; with each new generation, the role of diversity is magnified. The younger the generation, the more diversity becomes a key driver. Gen Xers are more diversity-driven than baby boomers. Remember, diversity extends beyond ethnicity to include all aspects of American life. This trend towards diversity in our culture is seen in the marketplace as well. Boomers had two basic kinds of tennis shoes: high-tops and low-tops. Gen Xers have 47 different kinds of sneakers to fit every one of their activities. Just as Nike has played into America’s need for options, the building industry would do well to enhance its alignment with this important driver. Obviously, a home has numerous opportunities to accommodate the buyer’s need for options and control. Every time we are able to target a product with consumer drivers, we increase the likelihood of success. Our company has been in the business of defining the numerous consumer segments and their key drivers for more than 25 years. A day doesn’t go by that we don’t run into additional data related to this topic. We have created a segmentation tool called the Life Change/Life Choice Matrix. It allows us to look at consumers in an ever-changing variety of segments. Builders should follow the same process that we have used for decades. First, determine the segment, and then determine the key drivers of that segment. Finally, target those drivers in your product design and marketing communications. NAHB: How can I capitalize on the boomer market and be successful? Goldstein: Think of the boomer generation as an 80 million-pound elephant lumbering across the lifespan. Around 90% of businesses wait for the elephant to pass and then shoot arrows at its behind. But 10% get in front of the elephant and dig a hole. The best way to capitalize on this large consumer base is to get in front of the trend and position your business to be aligned with where it is going. I cannot overemphasize the need to do your “homework.” Never skimp on the discovery phase of a new campaign. You will be greatly rewarded if you understand the boomer generation as it migrates into the later stages of life. And then make sure that you communicate this understanding throughout your organization. Every person who earns a paycheck from your company should be able to understand and communicate the company’s position. There is no better role model than Nordstrom, which targeted its customer service policies to affluent older shoppers. Nordstrom then empowered each employee to respond to customer needs and made customer satisfaction the company’s No. 1 priority. The rest is history. Many department stores have imitated Nordstrom’s customer service policy, but consumers recognize that Nordstrom has set the standard. Mark Goldstein can be reached by e-mail, or at 925-735-9120.
'Boomers on the Horizon' Available at BuilderBooks.com Capitalize on the niches, needs and opportunities of the rapidly growing 55+ market by learning their preferences in "Boomers on the Horizon: Housing Preferences of the 55+ Market", available at BuilderBooks.com. To view or purchase this publication online, click here, or call 800-223-2665 to order. Attend 'Designing for the Active Adult' and Hone Your Designs for the 55-plus Market“Designing for the Active Adult,” the first course offered as part of the NAHB Seniors Housing Council’s Professional Development Series, will give industry professionals a better understanding of the active adult market and help them design homes and communities that better meet the needs of the active adult population. The course will provide attendees with an overview of the lifestyle, community, amenities and product design preferences that influence the various market segments within the 55-plus market. The one-day course will be held at the Orange County Convention Center from 9 a.m.-5 p.m. Wednesday, Jan. 12, at the 2005 International Builders’ Show (IBS) in Orlando, FL Topics covered in the course will include:
NAHB members will be able to earn continuing education credit toward their CAPS, CGA, CGB, CGR, GMB, MIRM and CMP designations. Cost is $150 for Seniors Housing Council members, $175 for NAHB members, and $225 for non-members. In addition to the session at IBS, “Designing for the Active Adult” has been scheduled for Sunday, May 15, just prior to Building for Boomers & Beyond: Seniors Housing Symposium 2005 in the Washington, DC metropolitan area (Chantilly, VA). To register for the course at IBS, e-mail the NAHB University of Housing, Office of the Registrar, call 800-368-5242 x8338 or visit www.nahb.org/preIBS. To schedule the course at your local home builders association, e-mail Tara Occhipinti, or call her at 800-368-5242 x8153. Change Order — A Form That Will Guarantee You Make MoneyChange orders are simple to use, yet many companies do not use them. I often wonder why, especially when considering how much money has been lost because companies simply don’t use change orders. Let me begin by saying that change orders do not work on time and material projects — yet one more reason not to use time and material contracts. Change orders indicate to the customer how much their contract price will change. Conversely, time and material contracts never indicate a final amount — or even provide a complete set of specifications. Without this kind of backup, how can you expect to even tell your customers what their changes are, much less charge them appropriately? Change Orders — Where to Start First, you need to assemble a complete set of specifications for your project. Then, explain to your customer that your price is developed from these specifications. Any deviation from these specifications will result in a change order. When the customer does change the specifications, you need to write up the change order — immediately. Once a Change Order Is Written This is critical:
We took a customer’s word for it once and the customer complained about the price after we completed the work. The customer said that if he had known the cost of the change, he would not have had it done. We were both unhappy. Also, in most cases, you should collect payment for the change order on the very next invoice. Overcome Customer Resistance — Explain How Change Orders Keep Them Informed Some customers may be a little leery of “change orders.” Try to calm their fears. Explain the change order process to them. Tell them that the process lets them know about every change they want to make from the original specifications, and that these changes affect the price. They probably will feel a little more comfortable about the process once they understand it better. Issue Change Orders Even When the Price Isn’t Affected We also issue change orders when the change alters the specifications but not the price. Why? Because a change order is an extension of the contract. Change Orders Improve Your Estimating You can also use change orders to evaluate your estimating process. In the past, I noticed that our company worked on some projects in which we issued quite a few change orders. When I looked into it, I found that the problem with these projects was that the specifications weren’t finalized. Contracts were written and the projects were started even though they had too many unknowns or allowances. To counter this, I have since tried to get customers to make as many decisions during the design stage as possible. I even tell our customers I am trying to do this so we can minimize the amount of change orders we have during the project. Change orders will save you money and add credibility to your company. Call an office supply company today and get some forms. Use them and don’t give me any excuses as to why you are not. Erik Anderson, CGB, GMB, CAPS, is vice president of Anderson-Moore Builders, Inc. in Winston-Salem, NC. He also currently serves as vice president of the Home Builders Association of Winston-Salem. For more information, contact Anderson via e-mail.
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. 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. Local and state associations, link directly to www.nahb.org/biztools from your Web site and give your members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance they need to succeed. National Register Takes Aim at Construction Equipment TheftsOn a mission to aid law enforcement in the identification and recovery of stolen construction equipment, the National Equipment Register (NER) reported a number of recent thefts in its November newsletter, along with tips on preventing them. The organization reminds developers and builders that, “fencing your work site is your first line of protection.” So that thieves can be seen when they trespass on the site, the use of see-through fencing materials such as chain link is advised, and the area should be debris-free and any bushes or weeds should be kept trimmed back. “Conduct routine fence inspections and promptly repair any openings,” the NER suggests. “Do not allow site materials to be piled up on either side of a fence as it may allow a thief to climb over, compromising security.” Recent thefts and recoveries reported this month include:
The NER also provides a monthly hot list of stolen machines and a phone number (866-663-7872) for reporting their recovery. Among machines listed for October were:
The phone number for a law enforcement hotline is 866-FIND-PIN. Sell Yourself: Buyers Buy From People They TrustRight now, you are probably thinking about selling your next home. If not, you’re probably thinking about how you can obtain more qualified prospects so you can sell your next home — and the next and the next...and the next! There are many ways to merchandise your homes. Advertising, public relations and promotions are certainly three important ways. Marketing tools can include printed ads, public relations stories, local press releases, maybe even television or radio reviews. You can also merchandise your homes or community through creative promotional programs that attract people to your home sites. All of the aforementioned marketing ingredients are important, but the most important form of merchandising is for you to physically and personally merchandise yourself to your consumer audience. Be Well Groomed and Conscious of Your Appearance How do you go about doing this? You can begin by carefully grooming yourself. Be conscious of your appearance. Make sure you can answer the following questions affirmatively:
Remember, you never get a second chance to make a good first impression. Be Alert and Ready to Meet Customers Bear in mind the importance of being mentally and physically prepared to meet your public. Can you answer the following questions positively?
Hopefully, you can address all of these statements and questions with one word — yes — because when you meet the public, they are going to “buy” you first and the product you are selling second. Yes, it is important to have the best product to sell. Today, your competition is going to be as prepared as you are because more attention is being paid to research and design, pricing and branding, packaging and financing. So, you have to be one step ahead of your competition. That means you have to be personally prepared to meet and sell to today’s buyers who, incidentally, have become competitive shoppers. Be Sincere and Prepared to Answer Questions By being sincere and prepared to answer their questions, you will impress potential buyers with your knowledge. Of course, if you do not know the answer to a particular question, tell your buyers that you do not know the answer, and then tell them you’ll get back to them with the information. You will gain instant respect from your buyers for being honest. Today more than ever, buyers are searching for salespeople they can trust. Often you hear that price, value, financing and quality are important ingredients that buyers consider before making a home purchase. But did you ever consider that buyers will take those points into consideration first from the person who has presented the material to them? S. Robert August, MIRM, is president and founder of S.Robert August & Company, Inc., a national marketing and public relations firm based in Denver that specializes in providing home builders, developers, manufacturers and lenders marketing/management consultation and sales training. August is an owner of Colorado-based RealtyWorks, Inc. and is the principal owner of Adaré Homes. He is also past chairman of NAHB’s National Sales and Marketing Council. For more information, contact August by phone at 303-220-8480 or via e-mail. Subscribe to 'Sales + Marketing Ideas' Magazine for Cutting-Edges Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s "Sales + Marketing Ideas" magazine. Call 800-368-5242 x8192 or visit www.smimagazine.com to subscribe or order a copy. Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. The Institute of Residential Marketing Offers Courses and Designation Programs for Sales & Marketing Professionals The Institute of Residential Marketing (IRM) offers four designation programs for sales and marketing professionals:
For more information on these designation programs, click here. BuilderBooks.com Offers Sales and Marketing Publications Online BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here. First Marketing 20 Club to Be Launched Early Next YearThe first Marketing 20 Club will hold its inaugural meeting in March at the National Housing Center in Washington, D.C. and give members an opportunity to discuss, share and learn from each others' sales and marketing best practices. NAHB's 20 Clubs are networking and educational opportunities designed to help members maximize the benefit of NAHB membership. The clubs are comprised of similar members from non-competing markets who meet several times a year to share their wisdom and learn from each other ways to improve their operations and increase their bottom lines. The members discuss ways to improve their business operations and systems, look for trouble spots and offer each other advice on how to increase their profit ratios and improve their performance. Membership in the Marketing 20 Club gives members access to their personal "board of directors" who understand current business concerns and trends. To learn more about the Marketing 20 Club, e-mail 20clubs@nahb.com or call 800-368-5242 x8123. Subscribe to 'Sales + Marketing Ideas' Magazine for Cutting-Edges Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s "Sales + Marketing Ideas" magazine. Call 800-368-5242 x8192 or visit www.smimagazine.com to subscribe or order a copy. Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. The Institute of Residential Marketing Offers Courses and Designation Programs for Sales & Marketing Professionals The Institute of Residential Marketing (IRM) offers four designation programs for sales and marketing professionals:
For more information on these designation programs, click here. BuilderBooks.com Offers Sales and Marketing Publications Online BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here. Affordable Home in Tulsa Able to Withstand Tornado-Force WindsAn affordable, energy-efficient demonstration home in Tulsa, OK, that has been built to withstand tornadoes could serve as a model for new construction as the city seeks to replace its stock of 6,300 sub-standard houses for moderate- to low-income families, according to PATH News, a publication of the Partnership for Advancing Technology in Housing. The Millennium House was built by Don McCarthy, an 81-year-old retired engineer, with assistance from Neighbor to Neighbor, a non-profit umbrella organization. Completed this summer, the 1,200-square-foot house was built on a concrete slab and uses cutting-edge technology and structural innovations to provide shelter that is durable, inexpensive to operate and extremely healthy. Among the home’s innovative features:
To make the home more fire retardant, McCarthy chose electric over gas and used nonflammable materials that — in addition to the ICF walls — included steel studs and an ancillary steel framework. McCarthy estimated that the price tag of the finished home will be about $62,000 — some $45,000 under market value, thanks to support from non-profit funds and volunteers and also because it was built on an inexpensive lot. Researchers from the University of Tulsa and the American Lung Association have been conducting tests on the home’s performance. Home Building Industry Needs to Do a Better Job of Addressing Barriers to InnovationThe nation’s housing industry needs to be doing a better job of communicating with public decision makers and educating its workers about innovations in residential construction, according to a two-day roundtable earlier this month in Washington, D.C. that was sponsored by PATH, the Partnership for Advancing Technology in Housing. Exploring the issue of removing barriers to emerging technologies, panelists participating in the meetings — a builder, specification writer, trade/union representative, academic and evaluation and codes representative — agreed that decision makers must be convinced of the value of new products and approaches before they can become successful. Decision makers in the construction industry include production builders, developers, large-scale owners, suppliers, sub-contractors and code officials, roundtable participants found, and they need to be educated about how an innovation will solve an existing problem. Demonstrating cost- and time-savings is a good approach, they noted, but code officials will be more interested in the issue of safety. The panelists reached a consensus on several other points:
Tour of Sustainable Apartments in San Francisco to Feature PATH TechnologiesInnovations from the Technology Inventory of the Partnership for Advancing Technology in Housing (PATH) will be featured in a Dec. 8 tour of the sustainable Folson/Dore Apartments project in San Francisco. Along with PATH, affordable housing developer Citizens Housing Corporation (CHC) is hosting the event so that developers, designers and contractors can get a first-hand look at such innovations as a highly efficient HVAC system, fly-ash concrete, construction waste management, low- or no-VOL paints, cabinets free of urea-formaldehyde, fiber-cement siding, compact-fluorescent lighting and photovoltaic roof panels that provide the common space lighting for the complex. The four- and five-story apartments use about 20% less energy than under California’s Title 24 standards. The project is being built in the city’s South of Market mixed-use neighborhood and parking for its residents is being reduced by 70% because it is close to public transportation. City CarShare, a fuel-efficient vehicles service for residents and community members, will use four of the parking spaces. The development — which is expected to be finished by the early spring — will provide 98 affordable housing units for low- and very low-income residents. For more information, e-mail Bambi Tran, or call her at 202-628-6100 x206. Log Home Builder the First to Be Awarded ENERGY STAR RatingAlta Log Homes of Halcottsville, NY, is the nation’s first solid-log residential building company to be awarded the ENERGY STAR® energy efficiency rating for its new homes. With the rating, Alta Log Homes joins the ranks of more than 2,400 builders, manufacturers and retailers across the country whose products demonstrate a commitment to protecting the environment for future generations. Alta Log Homes has built eight custom ENERGY STAR homes to date and it expects to build 35 more in the coming year in the state of New York. The company largely uses northern white pine, which has superior insulation value and resists shrinkage and checking, and adheres to an exacting quality control program. It says that its log grading system is a model for other quality-conscious companies. ENERGY STAR homes are independently verified to be at least 30% more energy-efficient than homes built to the 1993 national Model Energy Code or 15% more efficient than their state’s energy code, whichever is a higher standard. “It’s great to see a member company take their business to a new level,” said David Kaufman, executive director of NAHB's Log Homes Council and the Building Systems Council. “They are demonstrating that their product means more to them than just sales.” “It’s an honor to be the first company in our industry to get this rating,” said David Mann, the company’s president. “It shows our customers how energy-efficient our homes really are, which in turn saves them a great deal of money in heating and cooling costs." Web Site Demonstrates Adaptability of Log Home DesignAs more and more people are making log homes their primary residence, Hiawatha Log Homes of Munsing, MI, is demonstrating how these homes are adaptable to a wide range of needs and can be built with the most modern amenities. A Hiawatha model home on the Web site of Jersey Log Homes in Flemington, NJ, is an example of a stock plan that can be customized and altered and also demonstrates how modern equipment and materials are enabling in-house architects to create more challenging buildings that still maintain structural integrity. The Hiawatha model was featured in the 2004 floor plans issue of Log Home Living magazine. “You can do almost anything with a log home,” says Mercedes Hayes of Jersey Log Homes, who designed her own home with her husband Rich. “A log home can be dressed up, or it can be dressed down according to your tastes. Since every log home is custom-built, this leaves an infinity of possibilities for the home owner.” Hiawatha specializes in milled, saddle-notched, kiln-dried cedar and pine logs from eight inches to 15 inches in diameter. The Jersey Log Home Web page provides in-depth information about log homes in general, Hiawatha homes in particular, and links to accessories and building and maintenance products. The Web page is designed as a resource for log home enthusiasts. As a dealer, Mercedes is familiar with questions that crop up at the beginning of the decision-making phase, and she has started up a series of newsletters providing tips, trends and suggestions about log home industry issues. “The biggest problem with building a log home,” she says, “is knowing what questions to ask. We know; we made quite a few mistakes along the way because we didn’t have anyone to hold our hands.” Hiawatha is a member of the NAHB Log Homes Council. Portland Cement Excluded From Proposed OSHA Rule on Hexavalent ChromiumA proposed rule by the Occupational Safety and Health Administration (OSHA) on hexavalent chromium does not extend to Portland cement, a building material that contains trace amounts of the chemical. The NAHB Board of Directors advocated that policy at its fall meeting in Columbus, OH, in early October, only days before the Federal Register published the rule excluding Portland cement. NAHB has urged OSHA to exclude Portland cement from any proposed rulemaking, because it has not been shown that the small trace amounts of hexavalent chromium found in wet cement cause contact dermatitis. At a meeting this year of the Advisory Committee for Construction Safety and Health (ACCSH), NAHB member Mike Thibodeaux commented that studies show there is no inhalation hazard associated with the chemical in cement and that contact dermatitis from handling cement most likely comes from the alkalinity and abrasiveness that are properties of the material. NAHB has said that OSHA’s outreach and education efforts offer a better strategy for addressing skin contact with Portland cement and wet concrete. Current OSHA regulations already require personal protective equipment for handling wet cement. OSHA was ordered by the U.S. Court of Appeals to develop a proposed rule for hexavalent chromium by Oct. 4 and it must finalize its standard by Jan. 18, 2006. Some trade unions are lobbying to have cement included in the regulation, but NAHB will remain engaged in the rulemaking process until a final standard is issued. For more information, e-mail George Middleton, or call him at 800-368-5242 x8590. NAHB Alliance With OSHA on Safety NAHB has been working with OSHA to provide its members and others in the residential construction industry with information, training opportunities and guidance that will help them protect the health and safety of their employees. To learn more about this comprehensive alliance, click here. For information on the many OSHA standards that apply to the residential construction industry, hazards in home building and their solutions, and developing and implementing a safety program, click here. For publications on safety and OSHA available from BuilderBooks.com, click here. Included among these titles is NAHB and OSHA's "Construction Safety Program Manual," which is a practical guide to designing a comprehensive safety program. For further information, e-mail Rob Matuga at NAHB, or call him at 800-368-5242 x8507. NAHB Task Force on Housing Finance Reform Seeking Input from Association MembersAn 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:
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. Appropriations Bill a Mixed Bag for Construction Training ProgramsSeveral construction training programs of interest to the Home Builders Institute, the workforce development arm of NAHB, fared well in H.R. 4818, the omnibus spending bill for FY 2005 that was passed by Congress on Nov. 20. Under the Department of Labor, Job Corps, HBI’s biggest program, received a small increase to $1,546 billion, up from $1,537 billion in FY 2004. Originally rolled into the new Prisoner Reentry Initiative in the President’s budget request, the Reintegration of Young Offenders program received level funding of $50 million for FY 2005. The Prisoner Reentry initiative received $20 million. The Young Offender program funds HBI’s Project CRAFT/Nashville (Community Restitution Apprenticeship-Focused Training) through 2005 and will also be used for an impact study on youth recidivism. Participants in the training program will shift to students who are 18 and under from those who are 18 and older. Project CRAFT/Nashville operates at the Davidson County Drug Court, the country’s only residential drug court and a recipient of Edward Byrne Discretionary Grant funding from the Department of Justice. Byrne Grants received $634 million in FY 05, a reduction of $40 million over FY 04. A proposed new Community-Based Job Training Grants or Community College Initiative was fully funded at $250 million. The program will seek to improve "partnerships between the workforce investment system and community colleges to train workers for high-growth jobs." A recent award to HBI from the Department of Labor to work with community colleges and home builders associations to develop an educational continuum in the skilled trades will help pave the way for the new program. Finally, the Youthbuild program was cut by $4 million, from $65 million in FY 2004 to $61 million. HUD recently awarded HBI a one-year grant to provide technical assistance to Youthbuild programs. To read the approriations bill, click here and enter H.R. 4818 in the box at the upper left. For further information, e-mail Maria McIntyre at HBI, or call her at 800-795-7955 x8912 or contact Jenna Morgan Hamilton in NAHB's Legislative and Political Relations, 800-8368-5242 x8407. Residential Construction Training Series Extends to HVAC and Plumbing“HVAC” and “Plumbing” have been added this fall to the subjects covered by the growing Residential Construction Academy (RCA) Series of publications that are being used to provide training in residential construction trades in technical preparatory schools, high schools and community colleges across the country. Three years in the making and the result of a partnership between the Home Builders Institute and Thomson/Delmar Learning, the RCA Series is the only comprehensive trades training system that focuses solely on the home building industry. Skill standards developed by NAHB members provide the basis for the instructional materials. Earlier titles in the series are: “Basic Principles for Construction,” “Carpentry,” “Electrical Principles” and “House Wiring.” The two new titles also include supplemental teaching tools such as videos that use graphics and animation to make concepts easy to understand; an instructor’s guide; and a CD-ROM containing pre- and post-tests and other teaching resources. Schools, training organizations and individual students utilizing the RCA Series materials are eligible to become credentialed by HBI. HBI initiated this innovative partnership in 2001 to help fill a void in quality, standard-based teaching tools in residential construction. “Schools and training organizations needed a turnkey teaching package to prepare students for the challenges of a residential construction career,” says Alison Weintraub, acquisitions editor for Thomson/Delmar Learning. “Residential Construction Academy delivers that package. We’re proud to partner with the Home Builders Institute in meeting the needs of our customers and the workforce.” To enable HBAs to take advantage of the series and to assist in the development of an educated workforce, HBI and Thomson Delmar Learning have provided the materials at a discount to home builders associations so that they can donate them to libraries and schools in their communities. For more information on the RCA Series or to order materials, click here. To review resources that are available on line and for more information on program credentialing, click here. To learn more about the RCA Series donation program, e-mail Joseph Krinock or call him at 800-795-7955 x8928. Sears Acquisition Furthers Retailer’s Leadership in Appliance BusinessSears, Roebuck and Co. is stepping up as a supplier of kitchen and bath appliances in the Southwest through the acquisition of Westar Contract Kitchen & Bath, the retailer announced earlier this month. Sears Contract Sales is a member of the National Council of the Housing Industry (NCHI) — the Supplier 100 of NAHB. Westar has served the building and remodeling industry in Arizona and Nevada since 1978 and offers appliance brands that include: Dacor, GE Monogram, Jenn-Air, KitchenAid, Maytag, Sub-Zero, Viking and Wolf. (The brands with links are manufactured by NCHI members.) The supplier also offers architectural plumbing fixtures to upscale home builders and remodelers. Westar currently has showrooms in Tempe, Tucson, Scottsdale and Peoria, AZ; and Las Vegas, offering local inventory, delivery and appliance installation services. “This is Sears’ second acquisition of this kind this year,” said Beryl J. Buley, senior vice president/general manager of home stores for Sears. “It underscores our commitment to maintaining a leadership position in the appliance business and to serving the luxury home building market. Westar truly is ‘best of class’ in this market in Arizona and Nevada and has an excellent reputation as one of the largest contract appliance dealer in some of the fastest-growing housing markets in the U.S.” Westar is being acquired by FBA Holdings Inc., a direct wholly-owned subsidiary of Sears that also operates McPhail’s Appliance, with six showrooms serving Northern California and Reno, NV; Florida Builders Appliances, with six showrooms located in Southern Florida; and Standards of Excellence, with five showrooms in the San Diego area. The transaction is expected to be closed by the end of this year. 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.Soil Settlement — The Most Common Structural Failure?In residential and light commercial construction, what do you think is the most common structural failure?
The answer is no, six times. The most common failure, I believe, is soil settlement. I didn’t conduct a survey or do research to come to this conclusion; it’s based on personal experience and observation. Anyone willing to dispute it? Consider that 99.9999% of residential and light commercial structures use soil for support (the other .00001% is built on rock). And soil, by its very nature, is compressible. So, it is virtually impossible for zero settlement to occur within a structure. Lots of times we don’t notice the settlement because it is minute, or because it happens uniformly over the entire structure. But make no mistake, it is still there. When does settlement become structural failure? When it is differential settlement, of sufficient magnitude to distress building components. In simple terms, say one corner of a house settles an inch, while the remainder settles only 1/16-inch, the difference, 15/16-inch is differential settlement, and will cause drywall to crack, siding to droop, footings to break, etc. It doesn’t matter what town you live in, you shouldn’t have to look far to see examples: sidewalks tilted, slabs cracked and uneven, posts settled, foundations cracked and broken, roads with potholes, entire houses tilted. It’s everywhere, especially in older neighborhoods. What causes differential settlement? Here are three common possibilities:
Any moron knows how to properly compact fill, right? Wrong. I recently made this moronic mistake myself. As you can see in the following sketch, my home has a basement and a covered front porch. The main wall footings are on bedrock and will not settle. The porch post footing is supported by fill. I knew this — I put the fill in and compacted it in lifts myself. Why, then, did the post footing settle three inches? There are two reasons: First, Mister Cheapskate Tim used a puny 150-lb. vibratory plate compactor — not nearly enough compactive effort for the 8-inch thick lifts (layers) used. Second, Mister Moron-Cheapskate Tim used native material for fill, which is very clayey. Tim did not pay attention to the dry, powdery nature of the fill at the time he put it in the hole. In other words, the moisture content of this soil was too dry to obtain optimum compaction. Water should have been added. The settlement showed itself with the first rain. All that dry, poorly compacted clay sucked up water, became more dense and shrank in volume. Down went the post. Great. Fortunately, the porch slab and steps were not poured yet, so it wasn’t too great a job to hog out all of the fill and replace it with granular, structural fill — what should have been used in the first place. Of course, in any structural engineering job I do professionally, I use a very stringent structural fill spec. I would never allow what I used on my own home. But, being a cheapskate, I thought I could do it myself, save a few bucks.The shoeless cobbler’s children come to mind. Lessons learned: If it can happen to me, it can happen to you. Do not cut corners when it comes to compacting fill that will or may be used to support something. Use granular material, at the right moisture content, compacted in shallow lifts with equipment heavy enough to get the job done. If in doubt, call a good geotechnical consultant for help. Fixing settling problems always costs orders of magnitude more than doing it right the first time. 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. Get WorldPointssm Rewards When You ChargeNAHB 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. Save 50% on Holiday Cards, Calendars and More From NEBSNAHB 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.
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. 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. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Awards Programs Deadlines
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Calendar of Events
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Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. |