Nation's Building News Online: December 6, 2004

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Builders Meet With Fed Chairman as Market Conditions Turn Less Favorable

As the Federal Reserve continues pushing up interest rates at a “measured” pace to keep inflation under control in a more vigorously growing economy, a delegation of home builders met with Fed Chairman Alan Greenspan on Nov. 29 to keep him abreast of conditions in the industry.

On hand for an hour-long meeting at the Fed’s headquarters in Washington, D.C. were NAHB Senior Officers Bobby Rayburn, Brian Catalde, Kent Conine and Jerry Howard; CEOs from NAHB’s High Production Home Builders Council, National Council of the Housing Industry Chair Connie Edwards; and Ron Terwilliger, chair of the NAHB Multifamily Leadership Board.

Builders have met fairly regulary with the chairman since his first term started in 1987, and because of the sensitivity of his remarks, the content of the discussions has always been strictly confidential. But participants in last week’s meeting did say that Greenspan did most of the listening in response to his questions on the state of the industry.

Home builders are beginning to see some effects of the Fed’s shift away from the stimulative policies that helped to produce the lowest mortgage rates since the 1960s and banner years for new single-family home sales.

With the exception of a short three-month spurt in May through July, long-term mortgage rates have remained below the 6% threshold this year, contrary to expectations, because of some economic softening triggered primarily by rising energy prices. The low cost of home financing is pushing sales to another record in 2004, and NAHB Chief Economist David Seiders said that sales are likely to top last year’s record by almost 10%.

In his latest Eye on the Economy column, Seiders is advising builders that they will have to focus on a changing economic and financial market environment for housing in order to make the most of next year. Those conditions promise to be less favorable, he noted, and there already has been some increase in inventories of unsold homes this year as well as growing buyer resistance to high housing prices.

Seiders recommended a three-pronged approach to dealing with some weakening of home buyer demand he expects in 2005:

• Place strict controls on inventory accumulation
• Mine the adjustable-rate mortgage (ARM) market for all it’s worth
• Be prepared to roll out special sales techniques and incentives that have been successful in past periods.

NAHB is forecasting a roughly 5.2% decline in new single-family home sales in 2005 and a further 2.6% drop in 2006 in response to moderately higher but still affordable interest rates on long-term mortgages.

Photo by Herman Farrer

Building News Coast To Coast

Houses Are Engines of Economic Growth

Recent figures from the U.S. Commerce Department indicate that the real estate market is continuing to boom as interest rates remain below 6%. Sales of new homes rose 0.2% in October to the third-highest recorded level, and the new-home median and average sales price also were on the rise. The trend is expected to last as economic recovery picks up; and with every new home built and sold, the overall economy receives a boost in return. When a new home or development is built, the project provides numerous trades and industries with the opportunity for work and financial gain. In addition to the primary builder, there are subcontractors such as plumbers, electricians, painters, various installers, landscapers and utility workers who will be needed to put the finishing touches on the home. Manufacturers specializing in major appliances, bathroom items, building materials and other household amenities also benefit from new-home construction. Once the unit is complete, inspectors are called upon to give it final approval before the sales process — which involves Realtors® and title companies as well as mortgage, insurance and credit providers — can begin.
Washington Times (12/03/04) P. F3; Carr, M. Anthony: www.washtimes.com

U.S. Home Building to Remain Economic 'Stimulant' Into 2005

Fitch Ratings reports that U.S. home building statistics are likely to drop for the rest of this year and into 2005, but the sector will continue to serve as a key economic stimulant for at least the foreseeable future. Fitch's primary home building analyst, Robert Curran, observes, "While it appears quite unlikely that housing will deteriorate meaningfully during the next year or so, housing demand is unlikely to improve much over the next 12-15 months." He adds that a surge in the stock market could prompt wealthier households to upgrade to bigger and better housing. From a credit standpoint, public home builders are expected to maintain their financial ratio prudence into '05, despite fears that spikes in adjustable-rate loans and speculative housing levels could signal a decline in credit worthiness in the sector.
North Texas e-News (12/02/04): www.ntxe-news.com

Boston May Adopt Rent Control

The Boston City Council is preparing to vote on a rent control measure that would enable elderly and disabled tenants to challenge annual increases of more than 5% and other tenants of more than 10%, even though a recent survey found that the average rent for a new lease in the city is $90 a month lower than it was two years ago. Since Massachusetts voters ended rent control in 1994, multifamily housing production has risen in the city, helping to alleviate a tight supply of rental units and keeping rents in check. The average asking rent for a Boston apartment is $1,775 a month today, and one large landlord is reporting a vacancy rate of close to 5%, compared to 3% normally. There are an estimated 112,000 market-rate rental units in Boston, according to the city.
Boston Globe (12/01/04); Chris Reidy: www.boston.com

Investors Eye Properties, Areas Cultivated by Hispanic Users

With growth in the country's Hispanic population booming and the Census Bureau predicting that Hispanics will make up almost a quarter of the total U.S. population by 2050, institutional and regional private investors in Texas — in El Paso, San Antonio and the border towns along the Rio Grande Valley — are looking for apartment deals with Hispanic tenants. A similar trend has been found in Phoenix, often involving individual investors with ties to the Hispanic community; the west and northwest parts of that city are expected to sustain the fastest population growth in the next 10 years because the land is affordable and ripe for industrial and commercial expansion. Hispanic tenants in blue-collar markets tend to make good long-term tenants, according to Todd Braun, senior director with Cushman & Wakefield, Inc., because they are less likely to move into for-sale, entry-level housing.
Commercial Property News (12/01/04); J. W. Elphinstone: www.commercialpropertynews.com

It's a Little Easier Being Green

Construction companies increasingly are using environmentally friendly products to save money. Carpet manufactured from recycled plastic, for instance, costs $8-$25 per square yard versus petroleum-based nylon carpet, which is $10-$30 per square yard, and wool-based carpet, which is $20-$80 a square yard. While prices for recycled carpets stayed flat in 2004, the cost for petroleum-based products such as nylon has risen several times due to increasing oil prices. Although upfront costs for "green" buildings usually are 2% higher than traditional buildings, higher energy savings frequently offset original costs by up to 20% over a green building's lifespan, a 2003 report by the U.S. Green Council found. Grant Barnhill, a Denver developer, has utilized recycled carpet in recent projects. "Some of the green items that make a home more efficient also make (the design) more profitable," he notes.
Denver Post (11/30/04) Shanley, Will: www.denverpost.com

A Tall Order

Voters in Jacksonville Beach, FL, recently approved an amendment that caps building heights at 35 feet and rejected a separate measure that would have allowed higher structures in certain areas. Supporters of the height restrictions believe that banning high-rises will protect the community's quality of life, but critics of the amendment insist that it will not stop high-density development. Local realty professionals predict that developers will minimize open space between buildings and turn away from what Morgar Realty Inc. President Fitch King calls "architectural creativity." Others worry that the amendment will make it impossible for developers to build mixed-use communities, considering that there would not be enough room for ground-floor retail or office space. As for property values, many expect them to rise as the amendment limits the number of new units coming onto the market. Critics, however, fret that fewer units will translate into fewer retail sales as high-income buyers are forced to look elsewhere for housing.
Jacksonville Business Journal (11/29/04) Pittman, Laura Jane: jacksonville.bizjournals.com

Living Like Lincoln

More Americans are turning to log homes as a way to fulfill their desire for a rustic lifestyle; but they are building them with such features as high ceilings, at least six bedrooms, a great room for entertaining, floor-to-ceiling windows and detailed stone and marble work. The Log Home Council of NAHB reports that the number of log homes built each year has risen from about 7,000 in the mid-1980s to more than 25,000 today. Sales in the United States and Canada have more than doubled since 1998 to $1.37 billion, and they now represent 7% of the custom home building market. According to Jason Goodman, publisher of Log Homes Illustrated, the cost to build a log home ranges from $125 to more than $1,000 per square foot — depending on the type of logs, style of home and amenities. Prospective home buyers are encouraged to own land for building the home; talk to builders, contractors and other log-home owners to get a better understanding of the cost; and secure financing for the entire project before construction begins.
Time (11/29/04) P. 153; Epperson, Sharon: www.time.com

Urbane Renewal

Urban centers are on the rise among young employees, according to experts. Many downtown immigrants are seeking homes, work and entertainment at their fingertips — demand that has launched a new effort to invest in the urban landscape. Downtown areas in Baltimore, St. Louis and Pittsburgh gained in population between 1990 and 2000, although most population growth occurred in rural areas, according to the Census Bureau. Figures also show that most urbanites are in creative professions without children, immigrants and retired Americans; and as more Americans age or choose to live without children, 75% of U.S. homes will be childless by 2020. These demographic changes have been attributed to the increase in revitalization projects in American cities, and many old factories and machine shops are being converted into housing units as a result.
Worth (11/04) Vol. 13, No. 11, P. 36; Rosan, Richard M.: www.worth.com

Small-Business Survival Guide

Though small businesses often do not have enough time to devote to technology, there are several solutions on the market than can help them save money, boost efficiency and productivity, manage their finances and improve communications. Most of the applications available to small businesses are installed on desktop computers, but they are increasingly being given access to Web-based solutions like QuickBooks Online and Salesforce.com. While small businesses can save on upfront acquisition costs by paying the monthly fees charged by Web-based service providers, they should keep in mind that off-line access may be limited and moving data to a rival's site when switching providers can be difficult.

PC Magazine (11/30/04) P. 141; Clyman, John: www.pcmag.com

E-mail Filter Programs Offer Help for Costly, Wasteful Spam

Postini, a California-based firm that offers anti-spam solutions, says companies lost $23 billion in 2003 due to spam and computer viruses that resulted in productivity losses, business interruptions and damages. Small businesses with fewer than 100 users cannot purchase Postini's spam-filtering service directly, but resellers like Nashville-based Network Solutions Group (NSG) have made it available to those with fewer than 30 employees for just $150 per month. Though Postini's solution blocks most spam, NSG Project Management Director Mike Proctor says the filter sometimes misses junk mail and blocks messages from legitimate senders. Messages are sent to Postini and filtered, with approved messages moving on to the company's internal server.
Nashville Business Journal (11/29/04) Nannie, Philip: nashville.bizjournals.com

Proposed Salmon Habitat Designation Follows Cost-Benefit Approach Advocated by NAHB

Proposed federal critical habitat designations for 20 salmon and steelhead trout populations in the Pacific Northwest and California unveiled on Nov. 30 represent a cost-benefit approach to the regulation of threatened and endangered species that has long been advocated by the nation’s home builders.

The proposal comes as a direct result of a successful NAHB lawsuit that forced the NOAA Fisheries in 2002 to withdraw its original designations across all of Oregon and Washington and significant portions of California and Idaho because the agency had failed to conduct an economic impact analysis of those designations on local economies, as required by the Endangered Species Act.

While NAHB staff members are still analyzing the voluminous new proposal, it is clear that the government has implemented the cost-benefit methodology recommended by the association in which the value of specific areas to the protection of salmon is weighed against the economic cost to those areas. This methodology could have national ramifications for future decisions on federal regulations of private property.

This approach gives NOAA Fisheries a strong incentive to exclude from regulation areas that have a lower importance for the protection of a species and where those designations would take a high toll on the local economy — such as cities and their suburbs.

Here are some highlights of the latest proposed rulemaking:

• The proposed amount of designated critical habitat encompasses one-fifth of the acreage covered under the previous rules in Oregon and Washington and represents a 50% reduction in the amount of property affected in California and Idaho.
• The new designation focuses on areas that are actually occupied by endangered fish populations, and areas that are most important for those species’ survival.
• Areas with lesser biological value to the species — and areas that are already covered by Habitat Conservation Plans — are excluded from the new rules.
• The new critical habitat designations are the product of inter-agency communication among the Department of the Interior and the Commerce Department. This is a big step that should lead to more sensible and consistent rulemaking by the federal government.

The proposed rulemaking is currently open for public comment, and local and state HBAs are encouraged to supply additional data on potential economic impacts in the affected states. This input could help expand the area that is exempted from critical habitat designations.

For further information on the proposed designation — including maps of affected areas — click here.

For more information on participating in comments on this issue, e-mail Michael Mittelholzer at NAHB, or call him at 800-368-5242 x8660; or contact Christopher Galik, x8663.

Housing Snapshot

Signs of strong economic growth boosted mortgage interest rates last week, but the cost of 30-year, fixed-rate financing still remained below 6% and was slightly less than a year earlier. "Recent economic indicators came out better than had been anticipated, buoying financial markets this week, and reinvigorating confidence in financial markets that the last three months of the year will post a very positive rate of economic growth," said Frank Nothaft, chief economist of Freddie Mac. The Commerce Department reported midweek that the Gross Domestic Product was up 3.9% in the third quarter, somewhat faster than indicated earlier. Also sweet music to the financial markets were oil prices, which fell four days in a row to $43 a barrel, the lowest level in two-and-a-half months. Last week ended on a sour note for the economy, however. Retail sales grew a disappointing 1.7% in November, suggesting mixed results for this year's holiday shopping season. And the Labor Department announced that 112,000 new jobs were created in November, below the 150,000 monthly pace that economists say is needed to keep pace with the employment needs of the country's growing population. News on the lumber price front was also sobering, as unseasonably moderate weather in many parts of the country kept construction sites active and demand for building materials up at a time of the year when inventories run lean. Random Lengths reported that framing lumber rose from $361 to $373 per 1,000 board feet, compared to $342 a year earlier. Random Lengths' structural panel composite price climbed from $340 to $377 per 1,000 square feet, still well below the year-earlier price of $434. A surge in sales of oriented strand board helped spur the price hike.

Mortgage Interest Rates

30 Year Fixed Rate: 5.81\%
15 Year Fixed Rate: 5.23\%
1 Year ARM: 4.19\%

Housing Starts: Oct. 2004

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

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 Rewarding

We 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.

Eye on the Economy

By David F. Seiders NAHB Chief Economist
Economic growth up for third quarter, good momentum going ahead …

Growth of real Gross Domestic Product (GDP) for the third quarter was revised upward by the Commerce Department on Nov. 30, from 3.7% to 3.9%. The upward revision primarily reflected stronger growth in consumer spending and a smaller trade deficit. The construction sector was revised downward, as growth in residential fixed investment was trimmed from 3.1% to 1.7% and spending on nonresidential structures was revised back into the red zone.

The small GDP revision masked a favorable turn in the composition of aggregate spending. Final sales of goods and services were revised upward to a robust 4.9% annual pace while inventory investment was revised lower. This pattern bodes well for the fourth quarter of the year, and NAHB is projecting 3.7% growth for that period.

Core inflation still is within the Fed’s tolerance zone …

The inflation measures in the third-quarter GDP accounts were not revised. The chain-weighted GDP price index was up by 2.2% on a year-over-year basis and the core GDP price index (excluding food and energy) was up by 2%. While not alarming, these measures certainly are running well above the pace of late-2003 and early-2004.

The best inflation news is provided by the Fed’s favorite price gauge, the core price index for personal consumption expenditures (PCE). This measure was up by only 1.5% in the third-quarter GDP accounts, the same as the second quarter. Furthermore, the core PCE price index was up by the same year-over-year pace in October — according to a report released Wednesday by the Commerce Department.

Another rate hike by the Fed is likely on Dec. 14 …

The Fed’s assessment of economic conditions at the conclusion of the Nov. 10 meeting of the Federal Open Market Committee (FOMC) has proven to be on target. Furthermore, policy is still highly accommodative, with a real federal funds rate that’s barely positive.

These circumstances argue for another quarter-point rate hike at the next FOMC meeting on Dec. 14 as the Fed continues to tighten monetary policy at a “measured” pace. This adjustment will raise the federal funds rate target to 2.25% and take the bank prime rate to 5.25%.

Long-term rates are also on the rise …

Until recently, long-term interest rates remained stubbornly low despite good economic performance, a firming inflation picture and the series of Fed rate hikes that began on June 30. But long rates have backed up during the past month and further increases are in store for the balance of this year and in 2005. NAHB’s forecast shows about a percentage point increase in bond and mortgage rates over the coming year.

The Fed presumably wants long-term rates to rise as the central bank hikes the short end of the yield structure. Indeed, Chairman Alan Greenspan recently talked long rates up (and the dollar down) by suggesting that foreign investors (including foreign central banks) should consider the possibility of over-concentration of their portfolios in dollar-denominated assets such as Treasury securities.

Home sales hold firm and the near-term outlook remains bright …

Sales of both new and existing homes were essentially flat in October, holding at a near-record pace in both markets. It’s now perfectly obvious that home sales will post new annual records in 2004. Indeed, this year’s performance should surpass the previous record (2003) by nearly 10%.

Surveys of both single-family builders and home mortgage lenders show that the single-family market remained fully in gear during November. The NAHB/Wells Fargo Housing Market Index was flat at a historically high level, and the Mortgage Bankers Association’s series on applications for mortgages to buy homes showed essentially the same pattern.

2005 may be tougher for builders to navigate …

Home builders operated in a very favorable economic and financial market environment in 2004. But inventories of unsold homes moved up during the year, buyer resistance to high home prices is growing, and financial market conditions promise to be less favorable in 2005. Builders must focus on the changing environment to make the most of the next year.

Builders should be prepared to deal with some weakening of home buyer demand in 2005. This means, first of all, placing strict controls on inventory accumulation. Second, builders should mine the adjustable-rate mortgage (ARM) market for all it’s worth. ARMs financed nearly half of all new-home purchases in 2004, with particularly heavy usage in high-priced areas, and a similar share is likely in 2005 despite some narrowing of the initial ARM interest rate advantage.

Builders also should be prepared to roll out special sales techniques and incentives that have been successful in past periods. Indeed, a special NAHB survey conducted last November showed heavier usage of realtors/brokers as well as a rising incidence of sales incentives. At that time, 28% of builders were including optional items in homes at no charge, about one-sixth were paying closing costs or financing points, and some companies had begun to “buy down” mortgage interest rates.

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 Dec. 1 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 analysis 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.

You Can Become the Ritz-Carlton of Builders

The Ritz-Carlton’s meticulous focus on customer service is one of the major draws to the company’s luxury hotels and resorts that keeps consumers coming back — to the tune of $100,000 over a guest’s lifetime.

You can earn the Ritz-Carlton’s type of brand loyalty, too — whether you build entry-level or high-end homes.

Try the following customer service-focused business strategies described by Bruce Siegel, area director of marketing for The Ritz-Carlton Georgia properties. Siegel gave the keynote address at the 2004 Custom Builder Symposium last month in Indian Wells, CA.

To become known as the builder to call for top-notch service and a dependable product, “you have to be relentless about service commitment, you have to do it every day,” says Siegel.

Some of the Ritz-Carlton’s key success factors include:

• Uphold the motto — We are ladies and gentlemen serving ladies and gentlemen. “When people are about to spend $3-$4 million to build a home, how do you present yourself?” Siegel says.
• Select, don’t simply hire, employees. “We maximize talent in our company, because our employees are the ones who will deliver excellence,” Siegel says. To make the first cut, candidates must smile and maintain good eye contact during the interview. “If they can’t do that with an interviewer, how will they do that with our guests?” Siegel says. “We look for empathy.”
• Give guests a warm, sincere greeting. Ritz-Carlton employees are trained to use guests’ names whenever they can. Encourage your employees to do this, too.
• Anticipate and comply with guests’ needs.
• Note guests’ preferences. You can do this by making note of the types of beverages your customers like (excluding alcohol, of course) and having them available in the office. “Then they’ll know you know them,” Siegel says.
• Note and track the source of guest complaints. “Unless you do this in your company, complaints and errors will occur again and again,” Siegel points out.
• Never pass the buck on complaints or problems. At the Ritz-Carlton, whoever receives a complaint from a guest “owns” that complaint. It’s the employee’s responsibility to resolve it to the guest’s satisfaction, Siegel says — and to record the problem and the solution.
• Escort guests instead of giving them directions to another part of the hotel. “When you take your customers somewhere, that demonstrates care and concern,” Siegel explains. “If someone needs to look at freezers, take them to your appliance supplier’s showroom instead of giving them directions across town.”
• Watch your nomenclature when communicating with guests. “The term ‘no problem’ has become an insincere, meaningless phrase,” says Siegel. “When your salespeople use the term ‘no problem’ with customers, it translates into ‘no profit.’ ” As with everything else you do, train your employees to use language that sets you apart from other builders.
• Give guests a fond farewell. “Walk your customers out to the car,” Siegel suggests. “A memorable farewell when they leave your office is an extra touch that sets you apart from other builders.”
• Survey guests after their stay. The Ritz-Carlton has a 92% customer satisfaction rating and strives for 96%.

Putting its customers first is one way the Ritz-Carlton justifies its expensive room rates. “Giving more and charging more is part of our philosophy,” says Siegel. And it works. As the company has discovered, when customers are satisfied, they stay with you longer and spend more.

Mark your calendar for the 2005 Custom Builder Symposium, which will take place Nov. 11-13 in New Orleans. For more details, e-mail the NAHB Business Management Department, or call 800-368-5242 x8388.

Tech Talk: It Doesn't Hurt to Convert — If You're Prepared

The latest in a series or tech talks for builders.

Sooner or later, every residential construction company faces a computer conversion project. To increase efficiency and accuracy, you may need to automate functions like payroll, estimating, job costing, etc., that you currently do on paper or partly on paper. Or, perhaps you’re considering purchasing an integrated software system to dovetail several stand-alone, automated functions that need to talk to each other and share data. Or perhaps the time has come to convert from one integrated software system to another.

Depending on the planning and communication that goes on behind the scenes, your employees may regard a computer conversion project positively and look forward to gaining new paradigms, controls and opportunities.

Or, on the flip side, they may view the project with trepidation on the order of getting a nice, slow root canal. Because they can’t see any immediate benefits, employees may wonder why the company is undertaking a computer conversion project. Unless you explain the rationale up front, they’ll be dismayed if their workloads increase or shift to facilitate the conversion.

What Are Your Expectations?

The crucial term here is “expectations.” Everyone reacts differently to a computer conversion project and plays a different role in it.

As a business owner and the one behind the conversion, it’s important to understand how each of your employees sees the project unfold. Let’s break this down a little:

• What does everyone want from the implementation? You can start with an owner’s expectation of increased profits or market share.
• Department managers may be looking for better control or proactive decision-making capability from each part of the system.
• Staff members often want solutions to reduce hassles and task duplication and to make life easier.

Where Expectations May Differ in Your Organization

Now let’s look at some difficulties arising from those differing expectations.

Managers and others who don’t get their hands dirty working on the actual nuts and bolts of the conversion typically view the conversion tasks at a high level. They believe the results are attainable in a best-case scenario — and that may be the only scenario they consider. Vendors and staff may fuel this viewpoint by telling managers that a conversion can be completed within a certain (and unbeknownst to them, inadequate) amount of time. However, when normal circumstances throw off the project’s timing, everyone becomes frustrated and disappointed.

Psychologically, upper-management personnel tend to be big-picture. These folks generally aren’t detail-oriented.

Unfortunately, the mechanics of a computer conversion don’t allow for high-level anything. A project of this nature demands 100% uncompromising accuracy in data conversion, file setup and everything else. If you end up building a database that nobody trusts because it’s riddled with flaws and errors, you’re back at square one.

Smooth the Way With Careful Planning and Solid Communications

More software implementations fail because of an organization’s negative personal dynamics than the software’s inability to perform.

Some residential construction business owners assume that they can hire or retain miracle workers (i.e., a new manager or consultant) to perform computer conversion projects for their companies.

I have nothing against consultants; in fact, I am one. I help with many software implementations and hopefully facilitate a smooth and productive transition. But what I can’t do is fix a toxic communication process in an organization that’s forced to share information for the first time.

What's the solution? The simple answer is careful planning and communication. Use these steps to lay the groundwork for an effective, successful computer conversion project:

1. Explain to employees why you are undertaking the project. Tell them what’s in it for them and what they are likely to expect throughout the computer conversion process and after it is complete.
2. Ask them what they hope to gain from the conversion project.
3. Ask them what difficulties they foresee during the project’s implementation. Then, be sure to address and act on their concerns.
4. Allow plenty of time for the conversion. If your company is operating at redline capacity, it’s unrealistic to think you and your employees will magically find the time to convert the data, learn the system and apply new management tools. Change takes time — lots of it.
5. Don’t expect some outside party to wave a magic wand and do the project for you. It’s okay to ask for a consultant’s or vendor’s help, but remember: It’s your business and your reward for working to apply the benefits. The sooner your employees become invested in the project, the more productive the experience will be.
6. Break the project down into tasks and milestones.
7. Work with your employees to come up with a reasonable timeline for those tasks and milestones.
8. Consult your employees about who should do what tasks — and make the appropriate people responsible for their completion. Empowerment helps facilitate employee ownership of the project.
9. Write down your project plan. Fine-tune it with your employees’ help.
10. Celebrate project milestones when they are achieved. For example, when all customer records are entered in the new system, send around a congratulatory e-mail to the person who did the data entry and cc everyone in the company.
11. Think through the next steps and contingencies of your project plan before you get to them.
12. Meet with your employees regularly to review progress.
13. Don’t expect everything to go according to the project plan. There will be some variances and frustrations along the way. Plan for those, too, when you develop your project timeline.
14. Provide support and help to those employees in the trenches who are doing the conversion tasks. Don’t drag managers into thick details that they can’t constructively deal with.
15. Discuss and review the plan, again and again. There’s no such thing as too much preparation or communication.

Note: Various software products are mentioned throughout the tech talk series. The intent is not to recommend these products as being right for you, but to identify some fairly well-known players and to note a few new ones. My apologies to vendors who are not mentioned — the omission was not intentional.

Bill Allen is president of W.A. Allen Consulting and a longtime contributor to NAHB’s Business Management & Information Technology Committee. His company, headquartered in Redmond, WA, provides information technology consulting services and process management assistance to the home building industry. Allen can be reached at 425-885-4489 or via e-mail. Or visit the W.A. Allen Consulting Web site. 

Earlier Articles in This Series

• To read, “Know Your Technology Needs Before You Invest,” Part 1 of this series, published April 14, click here.
• To read, “Strategic Planning Software Can Help Focus Your Business Model,” Part 2 of this series, published April 21, click here. 
• To read, “Does Your Planning Software Match Your Project's Sophistication?” Part 3 of this series, published May 5, click here.
• To read, “Don't Put the CAD Before Your Product,” Part 4 of this series, published May 26, click here.
• To read, “Manage Prospects and Buyers More Efficiently With Technology,” Part 5 of this series, published June 9, click here.
• To read, "Automate Your Selection and Change Order Processes,” Part 6 of this series, published on June 23, click here.
• To read, “Scheduling Software Can Improve Your Cycle Time,” Part 7 of this series, published on July 7, click here.
• To read, "An Effective Purchase Order System Enhances Efficiency," Part 8 of this series, published on July 21, click here.
• To read, "Don’t Fix New Software If It Isn’t Broken," Part 9 of this series, published on November 24, click here.
• To read, "Beware Software Consultants Who Are Salespeople in Disguise," Part 10 of this series, published on December 8, click here.
• To read, "Eight Ways to Drive Internet Leads and Sales," Part 11 of this series, published on January 12, click here.
• To read, "Excessive Web Site Graphics Can Stunt Sales," Part 12 of this series, published on February 2, click here.
• To read, "Don’t Let Your Comfort Level Dictate Future Tech Changes ," Part 13 of this series, published on May 17, click here.
• To read, "Tech Talk: Process Integration Levels Your Playing Field," Part 14 of this series, published on Aug. 9, click here.
• To read, "Tech Talk: The Time Is Right for Buying a Computer," Part 15 of this series, published on Aug. 30, click here.

Run Your Business Better and More Profitably

Click www.nahb.org/biztools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources … to name just a few. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section.

The NAHB University of Housing Offers Courses on Business Management

The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Search keywords: “Introduction to Business Management.”

Affluence, Amenities and Other Active Adult Trends to Note

Today’s active adult home buyers are different from other home buyers and different than their predecessors. They are more affluent and more financially secure. They expect more amenities and services to be part of their housing choices. And unlike past retirees, they are moving to different parts of the country, not just the traditional Sun Belt states that have attracted seniors in the past.

Through Mature Living Choices magazine, which is circulated in 39 states, we have chronicled various seniors’ trends across the country. To do that, we have been surveying and collecting data from more than 100,000 active adults annually since 1996.

The following are several key observations about active adults regarding their housing choices:

Active Adult Buyers Are More Affluent and Better Educated

The boomer generation is focused on comfort — and they’re not pinching pennies to achieve it.

Economic growth has been relatively strong during the last decade and mature adults between the ages of 55 and 75 are more financially comfortable than their parents. They are better educated, more active and more inclined to move into a social environment shared by their age-group peers.

Active Adult Buyers Are No Longer Just Moving to the Sun Belt

Analysis of our readers’ moving preferences during the past six years indicates that active adults today are not only moving to the Sun Belt states, they are moving from them as well.

Connecticut, for example, is attracting active adults from across the country. Active adults primarily are moving to Connecticut from nearby New York, Massachusetts and New Jersey. However, the next three states they are leaving in favor of the “Nutmeg State” are traditional Sun Belt states — Florida, California and Arizona — followed by Pennsylvania, North Carolina and Virginia.

Like Connecticut, each state has its own distinct active adult migration pattern and feeder states. Some of the reasons active buyers move to different states and locations are corporate relocations, a desire to be closer to their adult children or college/alma mater, downsizing or simply to return to their family roots. Understanding the migration pattern of a particular state or area will help marketers target potential buyers better.

Active Adult Buyers Have Expanded Their Housing Choices

Traditionally, mature adults remained in their primary residences in their later years or moved into retirement communities in the Sun Belt. While traditional retirement communities in warm-weather states will continue to attract active adult home buyers, today's active adults now have a greater variety of choices, and many of those choices are not far from home.

They now can move into age-qualified developments built by national and local builders in their own communities — with housing ranging from villas, condominiums and cluster homes to detached single-family homes.

In its May issue, Builder magazine reported that seven of the top 10 builders in the country — including the top five — built active adult communities, several in northern states. Del Webb, the active adult brand for Pulte that first developed its Sun City communities in the Sun Belt, initially branched out into the Frost Belt in the late 1990s when it created its first northern mega-community northwest of Chicago. Today, Del Webb is building active adult communities in Connecticut, Massachusetts, New Jersey, New York and Pennsylvania.

In addition to finding age-qualified communities closer to home, many active adults are moving into them at an earlier age than their predecessors, often as they turn 55. Previous retirees typically moved into retirement communities when they turned 65 or older.

To Active Adult Buyers, Amenities Are Everything

Since many of today’s active adults are more comfortable and financially secure, they expect more amenities and services. They are seeking maintenance-free exteriors, spacious and open floor plans, luxurious clubhouses, comprehensive fitness centers, state-of-the-art security systems and more. Builders also are equipping homes with cutting-edge wiring to power the advanced technology active adult buyers want.

Take the Active Adult Bus Tour, Let Experts Review Your Plans at IBS

Learn more about the active adult and seniors housing market at the 2005 International Builders’ Show (IBS) in Orlando, FL, and attend the NAHB Seniors Housing Council’s Active Adult Community Bus Tour on Saturday, Jan. 15.

In addition, get the plans of your clubhouse, community and seniors housing models reviewed by experts during free seminars at IBS on Friday and Saturday, Jan. 14-15. The NAHB Seniors Housing Council also has scheduled free seminars about trends, marketing, design and more at the Orange County Convention Center on Jan. 14-15.

The bus tour will include visits to three communities in central Florida — Baldwin Park by the Baldwin Park Development Company in Orlando, an award-winning example of smart growth and infill development; and two communities by The St. Joe Company, Artisan Park in Celebration and Victoria Park in DeLand.

Attendees will tour models, clubhouses and community amenities. Experts from each community will discuss their design, development and marketing challenges.

The bus tour will be from 8 a.m.-4 p.m., Saturday, Jan. 15.  Pickup is at the Orange County Convention Center. The cost is $75 per person. Reservations are required. To register online or for more information, read the bus tour flyer.

Seniors Housing Seminars at IBS

Three seniors housing seminars at IBS  will give attendees an opportunity to talk with experts about the active adult market and trends and design, as well as have their seniors housing plans reviewed.

Reinvention of the Building/Housing Market: Boomers & Beyond — Free
1:30 p.m.-3 p.m. Friday, Jan. 14
Orange County Convention Center, Room 308

Mark Goldstein, of The Impact Presentations Group, one of the nation’s foremost authorities on boomers, will give a research-based multimedia presentation that will position builders to capture the burgeoning 50+ market. Goldstein will be available for questions following the presentation in the Seniors Housing Council Hospitality Suite, Room 107.

Meet the Experts — Free
11:15 a.m.-1:15 p.m. Friday, Jan. 14
11:15 a.m.-1:15 p.m. Saturday, Jan. 15
Orange County Convention Center, Room 312C

The seniors council is offering two free opportunities to talk with experts in the seniors housing market about active adult trends, design, sales/marketing, multifamily housing and more. There will be a special session showing how show small- and mid-sized builders successfully build active adult communities.

55+ Seniors Housing Architectural Plan Reviews — Free
9 a.m.-11 a.m. and 2 p.m.-4 p.m. Friday, Jan. 14
9 a.m.-11 a.m. and 3 p.m.-5 p.m. Saturday, Jan. 15
Orange County Convention Center, Room 107

Nationally recognized architects and designers in the active adult field will be on hand for four sessions to review your community, clubhouse and home plans. Slots are available both days.

For information on additional NAHB Seniors Housing Council activities at the 2005 International Builders’ Show, call 800-368-5242 x8220.

Structural Insulated Panels Stand Up to Hurricane Force in ‘So Small Showhouse’

The “So Small Showhouse” at the upcoming International Builders’ Show in Orlando, FL., is being built to withstand Category 5 hurricane winds.

The home is being presented by the Structural Insulated Panel Association to demonstrate how SIPs can be used to create structures that will hold up to punishing weather conditions such as those that battered Florida three times in this year’s unusually harsh hurricane season.

Technical support for the project is coming from Premier Building Systems, and USP Connectors — a member of the panel association — is providing a full array of specialty tie-downs, connectors and fasteners, along with a downloadable PDF handbook with clear instructions for specifying and installing the hardware.

The house was designed by architect Sarah Susanka, who is the author of  "The Not So Big House” designs.

The house is being built in the parking lot outside the Orange County Convention Center, and there will be 30-minute demonstrations twice daily during the Jan. 13-16 show of how to install wall and roof panels.

Following the demonstrations, convention-goers can take a shuttle to tour a completely finished version of the showhouse.

Insulpan, Premier Building Systems and Sure Tight Insulated Panel Corporation are providing panels for the project. Building Media Inc. is the overall sponsor.

For more information, click here.

Make Your IBS Plans Now — and Save

The deadline for final advance registration for the 2005 International Builders’ Show (IBS) is Friday, Dec. 17. Register by Dec. 17 and save $25.

IBS is the one trade event big enough and powerful enough to match the energy and strength of today's home building industry. It features more than 1,600 exhibitors on more than 1.5 million square feet of exhibit space showcasing home building products and services.

In addition, the show will have more than 200 educational seminars on all aspects of the industry.

Follow these links to:

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.

Entires must be received by Dec. 15.

Award applications are being accepted for these six categories:

• Green Advocate of the Year, which recognizes builders, groups and individuals for significant achievement in 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 and existing green building programs
• Green Project of the Year — Single-Family, in recognition of green design and construction 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
• Green Project of the Year — Remodeling, acknowledging modifications and improvements to existing homes 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.

“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.

For information about the awards and applications, click here.

A $250 fee is required for entries in all categories except Green Advocate of the Year and Green Program of the Year (new program).

Vigilance Advised as Effort Begins to Modernize Flood Insurance Rate Maps

After extensive consultation with NAHB and other organizations, the Federal Emergency Management Agency (FEMA) has set out to update and modernize its Flood Insurance Rate Maps (FIRMs).

In an attempt to tackle the Herculean task of prioritizing modernization of the country’s 92,222 FIRMS, the agency released its Multi-Year Flood Hazard Identification Plan (MHIP) on Nov. 24. The draft is open for public review and comment until Jan. 31.

Of greatest concern in the remapping effort are the effects that map modernization will have at the local level. Home builders will need to pay close attention to any changes to the mapped location of the floodplain itself, as well as their current floodplain regulations, including the models used to calculate the base flood elevation and the amount of additional freeboard that communities may require.

One particular item of concern is the inclusion of “future conditions,” or the conditions that would exist within a community once it was fully developed in accordance with current zoning maps and building code requirements. Using future conditions is precarious because the modeling is based on local zoning regulations that typically change over time.

Although federal law precludes FEMA from regulating future conditions, the agency in the past has supported localities that have based the administration and management of floodplains on these speculative development conditions.

NAHB has been successful in convincing FEMA not to regulate future conditions at the federal level. However, in the modernization effort getting underway, the focus will be shifting to the local level and each community will determine how its maps will be updated.

For that reason, builders need to be aware of FEMA’s proposed MHIP schedule and should begin a dialogue with local officials involved in this issue as soon as possible.The first point of contact for any information at a state or local level is the appropriate Floodplain Manager or Flood Insurance Administrator.

Information at the state level can be found on your state government Web site (usually at www.state.postal abbreviation.us). Other sources for this information include the Blue Pages in the center of most phone books and NAHB staff.

Local associations are also advised to assume a proactive role in any and all community outreach programs on this issue to ensure that the home building industry is adequately represented in the remapping cycle.

For further information on FEMA’s map modernization efforts, click here; or e-mail Christopher Galik at NAHB, or call him at 800-368-5242 x8663.

NAHB’s "FEMA Future Conditions Hydrology Action Kit" also provides a wealth of information on construction in a flood plain, and is a useful resource.

OSHA Clarifies Fall Protection Requirements for Working From Exterior Wall Top Plate

Construction workers are not permitted to walk on, or work from, the exterior wall top plate when installing roof trusses or erecting rafters, according to a recent letter from the Occupational Safety and Health Administration (OSHA) clarifying its residential construction fall protection requirements as stated in the OSHA directive — STD 3-0.1A, Interim Fall Protection Compliance Guidelines for Residential Construction.

STD 3-0.1A outlines alternative procedures to conventional fall protection for certain types of residential construction activities and establishes the procedures for installing roof trusses.

According to those installation procedures, the first two trusses must be set from ladders, and workers setting the trusses must then climb on the interior top plate, when it is available, to secure their peaks. The directive adds that workers remaining on the top plate must use the previously stabilized trusses or rafters as support while the other trusses or rafters are erected.

NAHB’s Construction Safety and Health Committee and association staff members are working with OSHA to explore additional alternatives for erecting roof trusses and rafters.

It should be noted that several states operate their own state OSHA programs, and they may have adopted construction standards that are different from the federal standards. Builders who live in a state that has its own State Occupational Safety and Health Plan should contact their local program administrator for further information on the construction standards applicable in their state.

For more information, e-mail Rob Matuga at NAHB or call him at 800-368-5242 x8507.

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.

Ron Terwilliger Named Chair of Multifamily Leadership Board

Ron Terwilliger, chairman and CEO of Atlanta-based Trammell Crow Residential, was reappointed as chairman of NAHB’s Multifamily Leadership Board. The leadership board represents the interests of the nation’s largest companies that own, develop and manage both market-rate and affordable apartments and condominiums.

Terwilliger has been instrumental in the expansion of NAHB’s representation among members of the multifamily industry, and in firmly establishing the Multifamily Leadership Board as a critical component of NAHB’s multifamily operations. He first served as chairman of the leadership board in September 2002.

“The trend toward urban infill construction and higher-density suburban development has created a huge demand for condominiums, as well as a market for the rental lifestyle among young professionals,” said Terwilliger. “We will continue to use NAHB’s vast resources to help advance the many important issues facing multifamily housing construction today.”

“We are delighted that someone of Ron’s stature and influence will continue to play such a visible role in our association,” said NAHB President Bobby Rayburn. “This country still has critical housing needs, and it is important to keep housing at the top of the national agenda, especially housing that is affordable to America’s working families.”

Current priorities for NAHB’s Multifamily Leadership Board include:

• Encouraging smart growth initiatives that promote higher density housing
• Debunking the negative stereotypes associated with apartments that can lead to opposition to multifamily development
• Enacting meaningful tort reform
• Protecting and enhancing the Low Income Housing Tax Credit program
• Supporting the enactment of a multifamily production program to help meet the nation’s demand for quality rental housing affordable to working families

Trammell Crow Residential, which Terwilliger has headed since 1986, is an acknowledged industry frontrunner in the development, construction and management of high-quality multifamily assets. It is the only full-service multifamily firm that has done business on a national level for more than two decades.

Terwilliger is past chairman of the Urban Land Institute, where he continues to serve on the executive committee. Additionally, he is chairman emeritus of the Wharton Real Estate Center, immediate past chairman of the Atlanta Neighborhood Development Partnership and a member of the International Board of Directors and Executive Committee of Habitat for Humanity.

Sustainability of Current Condo Boom Among Topics to Be Examined at Pillars Conference

The best multifamily minds in the business will gather in Miami on April 3-6 for the NAHB Multifamily Pillars of the Industry Conference.

One of the sessions at the conference will examine the current condo boom and include a discussion of warning signs to watch for when the market is on the verge of cooling down.

Condominium development and conversion are hot topics in today’s market, and leading developers, architects, designers, financiers and marketers will examine this issue and many other topics in 13 concurrent breakout sessions.

Pillars Conference Chairman Ron Terwilliger, chairman & CEO of Trammell Crow Residential, one of the nation’s top multifamily development companies, will kick off the conference with an opening session featuring multifamily and single-family heavy hitters, including Ara K. Hovnanian, president, CEO and director of Hovnanian Enterprises, Inc.; George M. Perez, chairman of The Related Group of Florida; and Chris D. Wheeler, CEO of Gables Residential. The high-powered group will discuss the convergence of rental and for-sale, single- and multifamily housing, and share where they think the industry is headed over the next five years.

The featured attraction of the event is the prestigious Pillars of the Industry Awards Gala, where the “best of the best” in the multifamily industry will be recognized for their contributions to the housing industry in the areas of design, management and individual achievement. For more information at the Pillars Conference Web site, click here.

Number of Women in the Construction Industry Grew 22%

The number of women in construction jobs nationwide increased 22% between 1995 and 2001 to 934,000, according to the National Association of Women in Construction. The same group reported that 8,647,000 men worked in the trades in 2001.

The number of women holding jobs in construction included those who owned their own building companies, worked as project managers or worked in the trades as roofers, framers, painters or other skilled positions.

Experts say more women are getting into the business, in part, because demand for well-paying construction jobs is high following a years-long building boom of single-family houses, active adult communities and home renovations.

Opportunities are also available because many construction firms went out of business following the real estate crash in the early 1990s.

Educational efforts in high schools and trade schools that encourage women to enter non-traditional fields such as construction are also paying off, the experts said.

Number of Women-Owned Construction Firms Grew 57%

A recent study by the Center for Women's Business Research indicated that, of the 6.7 million women-owned firms in the United States last year, nontraditional industries including contracting and construction was the fastest-growing segment.

The study showed that the number of construction firms owned by women grew by 57% between 1997 and 2004 to almost 247,000, about 9% of the overall total.

SMI Magazine Wins Folio Award

"Sales + Marketing Ideas" (SMI) magazine earned a Silver Ozzie Award from Folio Magazine for best redesign in the nonprofit/institutional category. Folio Magazine specializes in magazine management. The award competition is open to all magazines and recognizes excellence in magazine design.

“We are gratified and pleased that through the hard work and dedication of our staff, contributors and Bates Creative Group, 'Sales + Marketing Ideas' has been recognized for the first time by the Ozzie awards,” said Joseph P. McGaw, the magazine's publisher and editor-in-chief.

SMI was redesigned with the help of National Sales and Marketing Council members under the direction of McGaw. The first issue featuring the new design was unveiled at NAHB’s 2004 International Builders’ Show.

“Winning awards is exciting — getting recognition from one’s peers is gratifying,” says Jane Farthing, art director at the Bates Group. “Sales + Marketing Ideas is a publication targeting other creative problem solvers, and that makes it an especially satisfying publication to work on.”

In addition to the Ozzie, SMI has received a SNAP (Society of National Association Publications) Excel Bronze Award and four PIVA (Printing Industry of Virginia) Awards. Bates Creative Group also has won three other Silver Ozzie awards and a Silver Inkwell Award in 2004.

For more information about this award, visit http://folioshow.com/The_Awards.477.0.html.

"Sales + Marketing Ideas" magazine is a service of NAHB’s National Sales and Marketing Council, which serves more than 14,000 members and supports more than 100 local sales and marketing councils across the United States.

Adaptive Reuse Is a Profitable Alternative When Budgets Are Tight

Facing a decline in the number of zoned sites on which they can build, many developers in South Florida are deciding to breathe new life into the area’s older buildings.

While not a new architectural concept, recycling aging buildings is becoming an increasingly popular trend around the country as a viable development alternative when there are limited budget resources on hand. There are several examples of how pre-existing buildings that have outgrown their use can be transformed into new products for sale or lease; the most notable projects involve converting old warehouse buildings into trendy lofts, condos, restaurants and retail and office space.

Developers are finding that adaptive reuse can be rewarding and satisfying as they apply their knowledge, creativity and experience to dramatically turn around seemingly hopeless properties. Converting existing buildings is a wise use of resources and has become financially competitive with new construction. It is costly to use new construction to replicate the foundation, walls and roof that already exist, so coming into a project with the major structural elements in place can provide a major economic benefit — even when the roof needs to be replaced or the dimensions of the interior need to be altered.

There are many societal benefits to adaptively reusing our buildings, as well. Abandoned buildings and vacant lots drive down property values, convey a sense of economic decline and invite crime. Reusing them accomplishes just the opposite.

Adaptive reuse also provides advantages for the environment — starting with a dramatic reduction in the amount of building material waste that is generated by the demolition and reconstruction process, which is rated as one of the least energy-efficient modes of construction.

When capital funding is tight, many developers cannot afford to build from the ground up. In terms of cost trade-offs, the purchase price of a pre-owned building is considerably more cost-effective than purchasing an existing structure, tearing it down and building something new. But no matter what the budget, adaptive reuse can be an advantageous financial fit.

In assessing a building’s eligibility for adaptive reuse, developers and investors have several factors to consider — including its physical condition — and should certainly consult architectural professionals to weigh and evaluate all of the options available.

Glenn B. Giles is president of ARC Avenue, Inc. and Giles Construction Group of Hollywood, FL. Both companies have a broad base of experience in every avenue of building design and construction, including commercial, hospitality, residential, industrial and adaptive reuse. The firm has completed several adaptive reuse projects across Florida.

Student Chapter Job Fair at Builders’ Show Expected to Be the Largest Ever

More than 600 students in residential construction will be attending the NAHB Student Chapters’ Building Careers Job Fair during the upcoming International Builders’ Show in Orlando.

More than 25 companies so far have signed up for the annual recruitment event, which for a decade has been one of the highlights of the many activities conducted at the convention by the Home Builders Institute, the workforce development arm of NAHB.

Participating employers also provide exhibits on their companies, many of them rivaling the size of exhibitor booths on the main convention floor.

“Toll Brothers has hired hundreds of top notch students from the NAHB Job Fair,” said Jay R. Lehman, the company’s director of national recruiting. “Over the years, this job fair has helped Toll Brothers hire people who contribute to our reputation as the leading luxury home builder in the country.”

Toll Brothers has participated in the event since 1996, and recently came on board as an NAHB Student Chapters corporate partner.

Featured in May’s Big Builder magazine, the Building Careers Job Fair has connected many construction management students from top schools and universities with their first job, whether as a start-up internship or a full-time position.

This year’s fair will be held on Friday, Jan. 14, in the South Hall of the Orange County Convention Center starting at 2:00 p.m.

Companies interested in participating can sign up until Dec. 31, and they will receive five free job postings in the Building Careers Job Bank. For more information on registration and to view a list of participating companies, click here.

Spearheaded by the NAHB Student Chapters program, the Building Careers Job Bank is a resource that links the talents of chapter members who are looking for jobs with employment opportunities within the NAHB federation. There is no charge for job seekers, and a minimal fee is charged for job postinhgs based on a 30-day run; special rate packages are available to member companies that are posting more than one position.

For more informatiion on the Building Careers Job Fair or the NAHB Student Chapters, e-mail Page Browning at HBI, or call her at 800-795-7955 x8918.

New Technology Gives Home Builders and Buyers Easy Access to Warranty Information

A new technology-based management system that will help builders across the country manage their risk and service customers more effectively is being introduced by Home Buyers Warranty Corporation (2-10 HBW®).

Headquartered in Atlanta, 2-10 Home Buyers Warranty is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB.

At a time when builders need to be able to deal with liability, documentation, time management and customer service in order to keep up with their competition, The 2-10 HomeProfile System provides instant access to home-specific information that is needed to answer questions, resolve problems or direct issues to responsible parties. The system is available 24 hours a day, seven days a week.

The system is geared to simplifying the delivery of detailed information to home owners, which will help reduce a builder’s repair and warranty costs and streamline warranty service procedures.

2-10 HomeProfile provides the tools builders need to manage all aspects of their business, according to the warranty corporation, from job-site safety and buyer relations, to assisting with compliance of state and federal laws. The system also provides builders and home owners with easy access to documentation on warranties, appliances, building materials and home maintenance requirements.

Combined with the power of comprehensive 2-10 Warranty protection, the 2-10 HomeProfile System is the most complete business management system available in the industry, the company says. The warranty program also gives builders the advantage of an arbitration provision that can help resolve differences without costly litigation, and provides limited warranty coverage from the frame to the foundation, from interior systems to exterior finish, from the day of closing.

Over the past 25 years, 2-10 Warranty has covered more than 1.25 million new homes through more than 15,000 builders nationwide.

For more information, call 800-488-8844, or click here.

Bad News Bearers — Friend or Foe?

How do you handle bad news about your company? The answer has everything to do with how successful you are or will be.

If your company was perfect, this wouldn’t be an issue, but your company, like mine, like everyone’s, is not perfect. Our companies make mistakes daily (hopefully small ones). We learn from our mistakes. We learn, that is, if we are astute enough to notice, and if not, only if someone alerts us.

So, when someone brings a miscue to your attention, do you embrace that person and thank them? Or do you proudly deny all, and berate them for insulting you?

Case in Point No. 1. I know a businessman, Phillipe Crappe, who owns a surveying company. Neither the company, nor Crappe has ever made a mistake. Even though countless clients, peers and jurisdictions have brought errors to Crappe’s attention, it is always someone else’s fault. And how dare they accuse! Crappe simply cannot be wrong. To his way of thinking, if he were to admit a mistake, people might think he was incompetent and not hire his company again.

The reality is, as soon as Crappe’s clients learn this about him, they will not come back. I know I won’t, chiefly because Crappe is a liar. His firm does above average work, yet I will not use them, even if it means delays to my project. When things go sideways, and they will, I want a company to step up and take their due That’s how I conduct my affairs, it’s what I teach my kids, and it is what I expect of those I deal with. Anyone who is never wrong cannot be trusted.

Case in Point No. 2. A good friend of mine, we’ll call him Bobby Cheerful, owns a construction company. I’ve hired his company many times, but lately, their performance has been sub-par. I didn’t say anything the first couple of flub-ups, but when they screwed up a third time in less than a month, I knew a meeting was in order.

“Bobby,” I said to him on the phone, “we’ve got a problem I want to talk with you about.”

“Uh-oh,” he replied, his normally cheery voice edged with anxiety. “Okay, sure. But, uh, can you tell me the nature of the problem?”

“Well, your guys messed up a concrete pour. It wasn’t a big deal, but it’s not the first time. I know you haven’t been to the job site in a while and thought you ought to know what’s going on. What are you doing for lunch later in the week?”

“Tim, if we’ve got a problem, and it’s okay with you, I’d rather not wait until the end of the week. How about lunch today?”

“Well, I suppose so.”

“Great. See you at Rocket Rodney’s at noon. I’m buying.”

When we got there, Bobby had his project manager with him. After some pleasantries, I got right to the issues.

“Bobby, I don’t want you to take this the wrong way, but there have been enough problems with your company’s work lately that I would have a tough time recommending you.”

Those are words of doom to any business owner. Bobby’s perpetual grin was now gone; I had his full attention. I went into the specifics of the problems, sticking with my own factual observations. I avoided mudslinging based on he-said, she-said and hearsay. I felt it was also important for Bobby to know that I’d heard some of his other customers making similar complaints and that mine were not isolated incidents.

Bobby listened attentively, not once interrupting with excuses. When I finished, he explained what he thought were the problems and why they were happening. He and his project manager openly discussed methods already underway to correct the problems, as well as additional measures that would be taken. He was embarrassed, extremely apologetic and offered several times to make it right, whatever the cost.

Had Crappe been there instead of Bobby Cheerful, I wouldn’t have even been able to finish explaining the issues. Mid-discussion, our roles would have somehow reversed: I would have been the one lectured as to the vast and great improprieties foisted on Crappe’s staff by a world full of Evil Plotters and Incompetent Boobs (none of which could have possibly been his own) and that Crappe Surveying Inc. actually averted a major catastrophe on my behalf — how dare I complain! I should be grateful, instead, that the problems were soooo small and insignificant. Good thing this meeting never happened.

In summary, I will do business again with Bobby Cheerful because he stepped up to the plate and took ownership of his company’s problems. And more importantly, he took the necessary proactive steps to correct them. But Phillipe Crappe will never enjoy the privilege of learning how his company could do better, at least not from me.

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.

Grand Rapids Builders Lament Loss of Bill Zylstra

Michigan builder Wilber “Bill” Zylstra, a three-time president of the Home and Building Association of Greater Grand Rapids (HBAGGR) — passed away on Nov. 26 at the age of 72.

A mentor and builder to many in the home building industry, he and his brother, Roger, built hundreds of single-family homes during their 55-year partnership as W & R Builders. In the 1970s, they developed and built Princeton Estates in Kentwood, and in the last 15 years they developed Oak Crest Assisted Living facilities throughout the Grand Rapids area.

Zylstra was a senior life director on the NAHB Board of Directors. He served on many association committees; chaired the NAHB Multifamily Council; and was the NAHB liaison to Canada for many years.

At the state level, Zylstra was president of the Michigan Association of Home Builders and received the group’s highest lifetime award.

In his local association, Zylstra held numerous leadership positions and received many awards, including the coveted Builder Achievement Award for his contributions to the industry.

“Bill was a dear friend to many people in and out of the building industry, including me,” said Judy Barnes, executive vice president and CEO of HBAGGR. “He was a great thinker and problem solver. He was a man of great faith. He gave advice freely. He set the stage for the ethical and solid organization we are today with 1,250 members. He raised the bar for lifetime possibilities. He was a truly great man and will be sorely missed by all of us.”

Zylstra is survived by his wife, Joyce; and two sons and their wives and children.

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.