Nation's Building News Online: April 25, 2005Print All Articles Text Version |
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Builders Testify on Housing Finance System Reform“I cannot overstate the importance of this issue to the building industry,” NAHB President Dave Wilson told members of the Senate Banking Committee. “During NAHB’s 2005 Legislative Conference and Spring Board of Directors meeting last week, I received a clear message: All other issues affecting the building industry mean nothing if American families cannot buy the homes we build or if financing for the affordable rental housing we develop dries up.” Wilson outlined NAHB’s position on five key elements of GSE reform:
To read the legislation, click here and enter the bill number in the box at the upper left. For more information, e-mail Michael Strauss or call him at 800-368-5242 x8252. Photo by Herman Farrer Floor Plans: Concrete Custom Home Conquers Unworkable Lot
Vogue Homes
Building on the Unbuildable: The lot featured a 35-foot hill and a slope that would challenge a rock climber. In addition, the city of Inver Grove Heights, Minn., for more than a decade had deemed it unbuildable. But John Vogstrom, president of Vogue Homes, conquered the slope and overcame the city’s reluctance. He built an 8,400-square-foot custom home on the hillside using Insulating Concrete Forms (IFCs). Different-Sized iForms for Different Levels: “What had seemed to be an almost impossible challenge was actually relatively easy because of the use of iForm,” Vogstrom said. He used a 15-inch iForm for the bottom two levels. The bottom level features a theater, library, workout room, kitchen and a two-story atrium that also connects with the owners’ suite on the middle level. The middle level features the owners’ suite with a huge walk-in closet and two other bedrooms.
Vogstrom then transitioned to a 13-inch iForm for the top level where a top-of-the-hill foyer great room, kitchen, screened-in porch above the atrium and a three-car garage are located. Award-Winning Strength and Beauty: The Vogue home demonstrates how ICF construction can be used on an almost unworkable lot. In addition, the house “has a number of arched windows and circle windows, and the walls support large spans above the windows," according to Jason Fritz, of Cemstone Concrete Solutions, in Mendota Heights, Minn. The house features a stucco and cultured stone exterior and 75-year roof shingles. The house won a People’s Choice Award as part of the Twin City Fall Parade of Homes last year. About 8,000 people toured the home. It also received a first place award from the area’s local ready mix association. Sophisticated Energy Efficiency: The home features geothermal heating and cooling throughout. There is a climate-controlled workroom and heated upper and lower garages. The annual heating and cooling costs are estimated at $600.
‘Concrete Masonry Handbook for Architects, Engineers and Builders, 5th Ed.’ Available at BuilderBooks.com “Concrete Masonry Handbook for Architects, Engineers and Builders,” available through BuilderBooks.com, helps building professionals design and construct fire-safe, durable and economical concrete masonry structures. To view or purchase this publication online, click here, or call 800-223-2665.
Will You Be the Next Winner of a Digital Camera?Sign up three or more of your employees for Nation's Building News and you automatically will be entered in a contest to win a Sony digital camera. There have been two winners already and you could be next. To subscribe your employees to Nation’s Building News and be entered into the "Make Your Business Click" contest, visit our contest subscription page by clicking here. Subscribe your employees and they will begin receiving valuable industry and business news at their desktops beginning with the very next issue. Nation's Building News is NAHB's free, online newspaper. Inside, you'll find the latest lumber prices, industry news, builders' tips, lumber prices, problem-solving floor plans and more. For more information or to sign up your employees, click here. Builders Make Annual Trek to Capitol HillAs part of NAHB’s annual Legislative Conference, more than 850 builders from across the country trekked to Capitol Hill on April 13 to seek support from their members of Congress for legislation that would increase the availability of affordable housing and expand rental housing and homeownership opportunities nationwide. “Through visits to Capitol Hill, our members take the message of the housing industry directly to their legislators,” said NAHB President Dave Wilson. “Such personal contact helps federal lawmakers better understand the impact of housing issues on the voters back home.” In more than 300 individual meetings with their representatives and senators, builders called for action on the following NAHB legislative priorities:
For more information, e-mail Michael Strauss, or call him at 800-368-5242 x8252.
Sen. Richard Shelby (R-Ala.), right, with builders.
California builders with Rep. Jerry Lewis (R-Calif.), center.
Sen. Kay Bailey Hutchison (R-Texas), right, at the table with Texas builders.
Photos by Herman Farrer Studies: Gentrification a Boost for Everyone
Census Figures Predicting California Will Keep Growing
Affordable Housing Effort Kicks Off
Meet the Neighbors; Clubhouse Culture No Longer for Condos Only
Home Buyers ‘Flip’
Condo Development on Miami Coast Is Hot, Hotter, Hottest
Habitat Shifts Gears as Property Values Continue to Climb
A Castle Built for Two
Soaring Worldwide Prices Not Confined to Gas
Is Green Building Building?While builders have generally focused their green building efforts in states facing energy and water storages or with extreme climates, such as California and Colorado, consumer polls are showing gathering support for design efficiency and conservation nationwide. “Historically, green building has been the domain of a relatively small number of niche builders,” said Ward Hubbell, executive director of NAHB’s Green Building Initiative. But bigger, high-production builders are finding that building green is a way to distinguish themselves from the competition, he said. “Good builders are using a lot of this already, they’re just not calling it that,” Hubbell said. “This raises the bar for the mass builder.” Green building has also received a boost on national television, according to John Loyer in NAHB’s Energy and Green Building Department. “If you watch ‘Extreme Makeover: Home Edition’ on ABC, they recently had a segment on a zero-energy house, a house that not only saves energy but sells back enough energy to the grid to have a net zero” energy bill, Loyer said. “If it’s coming up on national television in prime time, it’s getting an enormous amount of attention. It’s quickly becoming a question for our high-production guys of ‘why aren’t you green?’” (www.washingtonpost.com)
Non-Asphalt Jungles
Toads’ Habitat Sharply Reduced
Storm Water Rules Contribute to High Housing CostsThe nation’s home builders told Congress last week that the current federal storm water permitting program is in urgent need of reform, adding as much as $4,500 to the cost of every home while contributing little to water quality improvement. Testifying before a House Small Business subcommittee about inefficient regulations that unnecessarily harm housing affordability, NAHB First Vice President David Pressly described the federal storm water program as a “particularly egregious example of government regulation run amok.” The Environmental Protection Agency is responsible for establishing a storm water permitting program under the Clean Water Act that is supposed to address water runoff from residential construction projects. The EPA’s instructions for writing a Storm Water Pollution Prevention Plan are more than 40 pages long and take roughly 40 hours to complete. But following those instructions to the letter doesn’t guarantee compliance. “Home builders are committed to protecting the environment and enhancing the communities in which they build and live,” said Pressly. “However, the EPA’s aggressive storm water enforcement activities focus too much on paperwork requirements and too little on environmental impacts, while compliance costs can spin out of control. In addition, builders must often comply with state and local storm water regulations that duplicate EPA’s mission.” Many NAHB members report that storm water regulation is adding $1,500-$4,500 to the cost of a lot, eroding the affordability of housing for the nation’s working households. “Congress should re-evaluate the federal storm water program to determine its efficiency and effectiveness and analyze the costs imposed on housing affordability,” he said. Stating that the removal of regulatory barriers is a top priority of the nation’s home builders as they work to increase the supply of affordable housing for America’s working families, Pressly also urged lawmakers to address the following areas that have had a negative impact on the housing market:
Photo by Herman Farrer ‘Storm Water Permitting: A Guide for Builders and Developers’ Available at BuilderBooks.com “Storm Water Permitting: A Guide for Builders and Developers,” available through BuilderBooks.com, provides a starting point for builders and developers to use in locating and understanding storm water permitting requirements. To view or purchase this publication online, click here, or call 800-223-2665.
Homeownership Tax Credit Bills Introduced“The bill is intended to encourage the construction and rehabilitation of homes for low- and middle-income families in economically distressed areas and will help an estimated 50,000 families achieve the American dream of homeownership each year,” Reynolds said during an April 13 press conference on Capitol Hill to announce the unveiling of the innovative homeownership tax credit legislation. “In addition to spurring homeownership, this legislation will generate an estimated $2 billion of private equity investment and $6 billion of development activity — meaning hundreds of thousands of new jobs in our communities,” he added. Also participating in the media event, John Hofelich, president of the New York State Builders Association, said that the legislation is sound public policy and makes good economic sense. “The tax credit will promote the development of affordable housing in low- to moderate-income urban and rural neighborhoods across the Empire State,” he said. “Rep. Reynolds has been a close friend of the home building industry going back to his days in the New York State Assembly and our state builders look forward to working with Tom to enact this legislation into law.” NAHB Area 2 National Vice President Bruce Boncke, a long-time Reynolds constituent in western New York, also spoke at the press briefing, noting that the measure will increase homeownership opportunities for families in New York and across the country. “A wise person told me that houses are where jobs go at night,” said Boncke. “Too many working families are forced to seek housing opportunities in communities far away from their jobs. This bill will reverse this troubling trend.” There has been very little construction or rehabilitation of owner-occupied housing in many of the nation’s urban and rural areas because construction costs there are too high to be able to build housing that residents of those communities can afford. “Modeled after the successful low-income rental housing tax credit, H.R. 1549 is intended to offset that problem by allowing states to allocate federal tax credits to developers and investors who provide single-family homes for purchase by qualified buyers in qualified areas,” said Cardin. “The Renewing the Dream Tax Credit Act will bridge the gap between the cost of developing homes in economically distressed areas and the price at which such homes can be sold to low- and moderate-income buyers,” added Cardin. “Homeownership is a bipartisan, non-partisan issue,” said Portman, who championed the tax credit in the 108th Congress and was recently nominated by President Bush to become the next U.S. Trade Representative. “Liberals and conservatives feel the same way — homeownership revitalizes communities.” Thirty-four other original cosponsors also joined Reps. Reynolds, Cardin and Portman in supporting the bill, including a majority of the members of the House Ways and Means Committee, the panel with primary jurisdiction over tax issues. Sens. Rick Santorum (R-Pa.), John Kerry (D-Mass.), Gordon Smith (R-Ore.), Debbie Stabenow (D-Mich.), Wayne Allard (R-Colo.) and Paul Sarbanes (D-Md.) on April 20 introduced companion Senate bill S. 859, the “Community Development Homeownership Tax Credit Act of 2005.” The homeownership tax credit legislation has the strong support of a broad coalition of nearly 40 housing, finance and community-based organizations — including NAHB. To read the legislation, click here and enter the bill number in the box at the upper left. For more information, e-mail Michael Strauss at NAHB or call him at 800-368-5242 x8252. Photo by Morris Semiatin Pombo Pledges Meaningful Endangered Species ReformAddressing a packed auditorium of several hundred builders at the Wardman Park Marriott Hotel in Washington, D.C. shortly before they embarked to Capitol Hill to meet with their lawmakers as part of NAHB’s annual Legislative Conference, Pombo said that the current statute is not doing its job. “Listing species as endangered or threatened isn’t doing anything to recover them,” he said, noting that of the roughly 1,300 species listed under the act, “less than 10 have been removed or recovered.” “What we’re doing now isn’t working,” he said. “We need to design an act that does a better job of recovering species.” The chairman noted the difficulties experienced by builders and developers as a result of the burdensome and costly critical habitat designation process, and he indicated that improvements to that process wil be considered as part of ESA reform efforts by this Congress. “Best available science doesn’t mean good or accurate science,” said Pombo. “The ESA differs from other federal regulations and laws, which require more stringent, peer-reviewed science. We need to have science that means something. If a species listing is based on faulty data, we can’t know how to recover it. We need to raise the bar on the science used to make those decisions.” Earlier this year, Pombo and Rep. Greg Walden (R-Ore.) held a Capitol Hill news conference with Sens. Mike Crapo (R-Idaho) and Lincoln Chafee (R-R.I.), pledging to work with their Senate colleagues to seek a new, coordinated House-Senate approach to improve and update the Endangered Species Act. The nation’s home builders support this effort and are urging lawmakers to include H.R. 1299, the “Critical Habitat Enhancement Act of 2005,” in any broader Endangered Species Act reform bill that moves through the House and Senate in the 109th Congress. To read this legislation, click here and enter H.R. 1299 in the box at the upper left. For more information, e-mail Michael Strauss, or call him at 800-368-5242 x8252. Photo by Herman Farrer Bill Halts Tenant Bankruptcy AbuseThe Senate passed the same measure last month — S. 256, the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” — and President Bush signed it into law last week. “The bill contains two beneficial provisions for apartment owners and home owners,” said NAHB President Dave Wilson. “First, it will stop an abusive practice under current law in which delinquent tenants facing eviction can file for bankruptcy, triggering an automatic stay that requires the property owner to stop all eviction proceedings — even if the tenant is damaging property or involved in illegal activity. And second, it recognizes that states should have the ability to set homestead exemptions at levels they deem appropriate.” Under the old law, a tenant was able to exploit the protection of the U.S. Bankruptcy Code’s “automatic stay” provision to forestall an eviction, and could remain in a rental property for months without paying rent until a bankruptcy judge lifted the stay. “These tenants drove up housing costs for the vast majority of residents who paid their rents on time,” said Wilson. “At the same time, they also threatened the economic viability of rental properties, particularly subsidized housing properties with thin operating margins.” The new law will remedy this abusive practice. It establishes a clear procedure for the speedy resolution in federal bankruptcy court of cases in which a tenant has defaulted on the lease agreement for failure to pay and then files for bankruptcy. It also provides debtors with due process protection against unfair evictions. S. 256 further stipulates that home owners who file for bankruptcy within 40 months of buying a home will be able to protect no more than $125,000 of home equity from creditors, and after 40 months existing state homestead limits apply. “This provision represents a balanced approach. It gives each state sufficient leeway to set their own threshold and prevents a debtor from shielding assets by purchasing a home in a state with an unlimited homestead exemption,” said Wilson. To read the legislation, click here and enter S. 256 in the box at the upper left. For more information, e-mail Michael Strauss, or call him at 800-368-5242 x8252. House Acts to Permanently Repeal Estate Tax“Abolishing the death tax would eliminate one of the greatest threats to the future viability of family businesses,” said NAHB President Dave Wilson. “It means that the heirs of family-run home building companies would no longer have to worry about liquidating company assets to pay for the tax.” Introduced earlier this year by Reps. Kenny Hulshof (R-Mo.) and Robert E. “Bud” Cramer (D-Ala.), H.R. 8, the “Death Tax Repeal Permanency Act,” was approved by a broad bipartisan 272 to 162 margin. Under current law that was enacted in 2001, the estate tax is slowly being reduced and will be eliminated entirely in 2010. However, the following year it is resurrected at rates as high as 55%. While reductions in the tax are welcome, builders would prefer no death tax at all and many are saying that the scheduled cuts in the tax over this decade make planning their estates more difficult. If they don't keep up with changes in the schedule, a significant portion of their estate can be lost to federal taxes after they die. “Hard-working Americans should not have to pay the federal government more than 50% of their estate at death,” said Wilson. Noting that small, family-owned businesses generate the lion’s share of job growth in the nation’s economy, Wilson said that the death tax robs those businesses of working capital that could be used to expand and create jobs. “This issue is of particular importance to the housing industry, which is comprised largely of small businesses. NAHB is pleased to support this important measure rescinding the death tax, and we urge the Senate to act swiftly on companion legislation S. 420,” he said. To read the legislation, click here, and enter the bill number in the box at the upper left. For more information, e-mail Michael Strauss, or call him at 800-368-5242 x8252. Lawmakers Urge Bush to End Lumber TariffsStanding up for housing affordability and millions of consumers who are feeling the pinch of high lumber prices, scores of congressional lawmakers sent a letter to President Bush last week urging the Administration to eliminate duties on Canadian lumber shipments into the U.S. “The nation’s home builders applaud the 47 members of the U.S. House of Representatives who are seeking to rescind punitive tariffs of over 20% on lumber imports that have forced American home buyers to absorb billions of dollars in added costs,” said NAHB President Dave Wilson. House Republican Whip Roy Blount (R-Mo.), Minority Whip Steny Hoyer (D-Md.), Appropriations Subcommittee Chairman Jim Kolbe (R-Ariz.) and Ways and Means Committee member Richard Neal (D-Mass.) asked their colleagues to join them in sending a message to the White House that unwarranted lumber tariffs are harming housing affordability. “Imposing duties on Canadian lumber is a tax on American home buyers,” the letter stated. “Current duties can add as much as $1,000 to the price of a new home. While many may see this as a small percentage of the overall home buying cost, it eliminates hundreds of thousands of families from mortgage eligibility at current lumber prices.” The U.S. government imposed trade restraints on softwood lumber in May of 2002, charging that the Canadian industry represented a “threat” to domestic lumber producers. Canada has since filed appeals to overturn the duties before North American Free Trade Agreement and World Trade Organization panels, and has received several rulings in its favor. Most recently, a NAFTA arbitration panel comprised of three Americans and two Canadians voted unanimously last summer to end the lumber tariffs and return nearly $4 billion in duties to Canada. However, the Commerce Department, at the behest of the U.S. lumber lobby, filed an “extraordinary challenge” legal appeal that observers believe was intended to delay the final outcome, keep the tariffs in place and force the Canadians to accept a negotiated settlement that would lead to new trade barriers. “Essential to a strong housing market is the U.S. construction industry’s access to a reliable supply of softwood lumber because sufficient quantities and appropriate substitutes do not exist in the U.S. for the type of lumber manufactured in Canada,” House members noted in their correspondence to Bush. “Access to Canadian lumber supplies are currently jeopardized by anti-dumping duties and countervailing duties of more than 20%.” Lawmakers urged the President to direct the Commerce Department and the Office of the United States Trade Representative to “comply with the international agreements the U.S. has signed,” adding that the “current duties, which have been found illegal under both the WTO and NAFTA, deprive Americans of affordable housing, the first step in the American dream. The border taxes should be stopped at once, and past payments given back.” For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Association Health Plan Efforts Move ForwardWith health care costs continuing to rise disproportionately, the nation’s home builders commended the Senate for holding two hearings last week to examine how association health plans would enable small businesses to offer better and more affordable coverage for their employees. Lawmakers serving on the Senate Small Business and Entrepreneurship Committee and the Senate Health, Education, Labor and Pensions Committee heard testimony on how S. 406, the “Small Business Health Fairness Act,” would help address the rising number of the uninsured and the soaring cost of health care. “We appreciate the strong leadership that committee chairs Olympia Snowe (R-Maine) and Michael Enzi (R-Wyo.) have shown on this issue, and believe these hearings will highlight the need to enact legislation to provide small businesses with greater options to secure stable and affordable health coverage for their employees,” said NAHB President Dave Wilson. The U.S. Census Bureau estimates that there are roughly 45 million uninsured individuals in the country today, up from 41 million four years ago and 43.6 million in the past two years. More than 24 million of these workers are employed by small businesses. “The majority of our builder members are small business owners who are being crushed by skyrocketing insurance costs,” said Wilson. “Senator Snowe has offered a common-sense legislative solution — at no cost to taxpayers — that would help small businesses access greater health insurance choices and lower premiums.” S. 406, the “Small Business Health Fairness Act,” is a bipartisan measure sponsored by Snowe that would allow small businesses to band together through associations to purchase quality health care at a lower cost. Senate Majority Leader Bill Frist (R-Tenn.) recently told NAHB that he believes that “association health plans are an essential component” in addressing rising health costs to small businesses and that he will be urging the full Senate to “consider this critical legislation during the 109th Congress.” To read the legislation, click here and enter the bill number in the box at the upper left. For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Home Starts Slow in March From 32-Year HighStarts were down 17.6% to a still-solid seasonally adjusted annual rate of 1.84 million units in March. “It’s been a phenomenal first quarter for home building, marked by robust buyer demand and the best production pace in decades,” said NAHB President Dave Wilson. “The March slowdown is a good sign that builders are exercising caution to keep the market healthy and inventories at a reasonable level, and many companies are taking steps to limit sales to speculators. Meanwhile, builders remain very upbeat about their prospects in the months ahead.” “The March decline in housing starts was, to some degree, weather-related,” added NAHB Chief Economist David Seiders. “A sizeable decline in the South — the nation’s largest housing market — followed a surge that was related to rebuilding in the wake of last fall’s hurricanes, and late-winter storms apparently held back starts in other areas as well.” Seiders noted that, “Looking at today’s permit numbers, which are a better indication of the market’s current condition than starts, the picture seems much brighter. Also, if you look at the backlog of units that have been permitted but not yet started, and the latest downshift in long-term mortgage rates, the upside potential for housing starts appears good for the immediate future.” Single-family starts last month declined 14.4% to a seasonally adjusted annual rate of 1.54 million units. Multifamily starts, which tend to fluctuate more sharply from month to month, declined 31% in March, following exceptionally high activity in January and February. Three out of four regions recorded double-digit declines in housing starts in March from big numbers in the previous months. Starts declined 29.3% in the Midwest, 18% in the South, 12.7% in the West and 3.6% in the Northeast. Building permits fell a more-modest 4.0%, remaining above the two-million unit mark for the ninth consecutive month. Single-family permits were down 5.4% and multifamily permits were up 1.1%. March permit levels remained unchanged in the Northeast and dipped 1.8% in the South, 4.2% in the West and 11% in the Midwest. NAHB is forecasting 1.92 million total housing starts for 2005, which would be 1.4% below last year. “That 2005 performance could be even better if the interest rate structure moves up less than anticipated,” said Seiders. Anticipate the Trends, Make Better Decisions and Improve Your Bottom Line ― With ‘HousingEconomics Online’ “HousingEconomics Online,” the online publication from the NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. Updated regularly, “HousingEconomics Online” combines scientific research with practical applications in order to provide housing-oriented insights for builders, manufacturers and housing finance professionals and to assist in their business planning. Available at two levels — Pro and Executive — subscribers can choose the one that best meets their needs. To learn more or to subscribe to “HousingEconomics Online,” visit www.housingeconomics.com.
Builders Remain Upbeat in AprilStrong demand for new single-family homes is helping to buoy builder confidence as the market heads into the late spring selling season, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), which was released on April 18. The April HMI edged down by three points to 67 but remained within the strong 67-71 range of builder confidence that has persisted for the past 14 months. “Builders continue to express confidence in the overall housing market and expect sales to remain strong during the next six months,” said NAHB President Dave Wilson. “Favorable market conditions and the appeal of homeownership continue to fuel demand,” said NAHB Chief Economist David Seiders. “Many builders are reporting higher lot prices and some difficulty in finding available land, both symptoms of strong demand for new homes. NAHB expects both home sales and house values to remain healthy in coming months,” he added. The NAHB/Wells Fargo Housing Market Index (HMI) is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months. They also rate traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor. The component index gauging current single-family sales remained at a solid 73 this month, while sales expectations for the next six months and the traffic of prospective buyers registered 76 and 50, respectively. Anticipate the Trends, Make Better Decisions and Improve Your Bottom Line ― With ‘HousingEconomics Online’ “HousingEconomics Online,” the online publication from the NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. Updated regularly, “HousingEconomics Online” combines scientific research with practical applications in order to provide housing-oriented insights for builders, manufacturers and housing finance professionals and to assist in their business planning. Available at two levels — Pro and Executive — subscribers can choose the one that best meets their needs. To learn more or to subscribe to “HousingEconomics Online,” visit www.housingeconomics.com.
Eye on the EconomyBy David F. Seiders, NAHB Chief Economist The economic expansion in the U.S. gathered strong forward momentum in 2004, as growth of real Gross Domestic Product (GDP) accelerated to a 4.4% pace, and economic activity remained quite good in the early months of 2005. But then a series of economic indicators softened considerably in March, prompting reassessment of the state of the economy in the first half of 2005. The softening process was suggested, first of all, by surprisingly weak growth in payroll employment for March (a gain of only 110,000). Subsequent weak readings on our trade balance, retail sales, housing starts (see below) and consumer confidence/sentiment confirmed the impression that the demand for U.S. goods and services lost momentum in the latter part of the first quarter. Furthermore, a good bit of spending in the first quarter reflected inventory accumulation by U.S. businesses, hardly a signal of fundamental strength in economic activity. Serious weakness in the stock market reflected investor perceptions of the sudden economic slowdown in March and early April. The economic outlook remains positive … The incoming data have forced a downward revision to NAHB’s estimate of GDP growth for the first quarter (from 4.5% to 4.0%), and the second quarter definitely began with less forward momentum than previously estimated — prompting a downward revision in projected GDP growth from 4.2 to 3.2%. Those growth rates still are pretty good, but the pattern of deceleration certainly raises questions about the sustainability of the economic expansion going forward. We’re currently characterizing the recent slowing of economic activity as a “soft spot” that bears some resemblance to the temporary slowdown that occurred around the middle of last year. We still believe that the economy is fundamentally sound and that the recent slowdown is related largely to the oil price spike and a run-up in long-term interest rates, factors that already show some improvement. These judgments apparently are shared by the Federal Reserve, at least for now. Core inflation continues to firm up despite the economic soft spot … The March softness in economic activity apparently was not enough to relieve gathering upward pressures on core inflation (excluding prices of food and energy) in the economy. The core component of the Producer Price Index (PPI) posted a year-over-year increase of 2.6% in March, down a bit from the January-February pace but still on the high side of readings during the past year. Indeed, the core PPI posted an annualized gain of 3.7% in the first quarter, the most rapid advance of the expansion period. The core component of the Consumer Price Index (CPI) posted a year-over-year gain of 2.3% in March, and the annualized increase for the first quarter stands at 3.3%. The chain-core CPI (incorporating floating weights) showed a 1.9% increase in March (year-over-year), down a bit from the February pace but still on the high side of recent observations. It’s fair to say that core inflation is becoming more problematic for our central bank, and it seems clear that high prices of petroleum products (including gasoline) are now “leaking” into the core rates in a persistent way. Thus, the challenges for monetary policy are increasing as the economy forges ahead at an uneven pace. The Fed intends to keep tightening at a ‘measured pace’ … The recent economic “soft spot” ensures that the Fed will not accelerate the pace of upward interest rate adjustments. However, the persistent upward pressures on core inflation ensure that the Fed will continue the pattern of quarter-point rate hikes at the Federal Open Market Committee (FOMC) meetings that began at mid-2004. Statements by various Fed spokespersons show that the central bank is not about to back off, barring evidence of a really serious shortfall in economic activity. NAHB expects another quarter-point hike in the federal funds rate target (to 3.0%) at the May 3 FOMC meeting, and we’re still expecting a funds rate of 4.0% by year end. The Fed could be even more aggressive than that if core inflation continues to move up. After all, the Fed wants to move toward a funds rate that’s neutral in real terms, and higher inflation keeps raising the nominal rate needed to achieve that objective. Long-term rates fall back as growth prospects are marked down … In mid-February, Fed Chairman Alan Greenspan characterized persistently low long-term interest rates as a “conundrum,” and the Fed successfully “talked” long rates up by about half a percentage point as of late March. But the long rates have fallen back since then as evidence of the economic soft spot has accumulated, and we’re now only about 15 basis points above the mid-February lows. Fixed-rate home mortgages now are around 5.8%, and NAHB’s forecast still shows an average of 6.5% in the fourth quarter of the year. That forecast assumes a solid second-half rebound of economic growth, ongoing upward pressures on core inflation and the Fed tightening pattern described above. Only time (and more economic data) will tell. The housing market throws off mixed signals … Home sales and housing starts were quite good in January and February, but then housing starts plummeted by 17.6% in March ― much more than expected by NAHB and other forecasters. However, the March shortfall apparently does not signal a fundamental downshift in the housing market. Timing issues associated with shifting weather conditions and rebuilding in the wake of last fall’s severe hurricane season can account for much of the early-year exuberance as well as the March decline in housing starts. Furthermore, issuance of building permits was off by only 4% in March, following historically high readings in both January and February, and the permits pattern is a better reflection of market trends than the typically volatile starts series. The starts/permits patterns for March generated a sizeable increase in the backlog of unused permits, a development that bodes well for housing starts in April. The recent decline in long-term rates also will help buoy sales and production in the short term. In this regard, NAHB’s Housing Market Index for April held in a positive range, and weekly data on applications for mortgages to buy homes (Mortgage Bankers Association series) were quite solid through mid-month. The outlook depends heavily on the global oil market … Oil prices recently spiked to record levels, and NAHB’s forecasts of oil prices have been revised up substantially for both 2005 and 2006. We now expect oil to hang around $50 per barrel (WTI crude) across the forecast period, but volatility in this market defies meaningful projections. Fortunately, the Federal Reserve has the ability to adjust monetary policy in order to counter impacts of oil price fluctuations on the U.S. economy. Unfortunately, oil price spikes can damage the global economy, and the Fed would be hard-pressed to balance off that kind of damage. Furthermore, oil price increases can weaken economic growth and put upward pressures on core inflation at the same time, a disturbing pattern that’s now evident in the U.S. Given the choice, the Fed presumably would give higher priority to holding down inflation than to supporting real economic growth, and the outcome could be a demoralizing “stagflation” pattern. Greenspan certainly doesn’t want to hand over such a condition to his successor (presumably by early next year), but the Fed doesn’t have the tools to turn everything rosy. Stay tuned. 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 April 20 edition. To subcribe to “Eye on the Economy,” click here.
See what's on the horizon for the housing industry at NAHB's Spring Construction Forecast Conference on May 5 in Washington, D.C. Get the latest forecasts on housing starts, projected budgets and other economic bellwethers and developments in the housing industry from some of the country's premier economists and finance experts. To register or for more information, click here. There will also be a Webcast of the conference for those unable to attend. For more information or to register for the conference Webcast, click here.
"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. "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. To order, visit the www.housingeconomicsonline.com detail page. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
VA Secretary Urges Builders to Hire Young VeteransIn one of the fastest resolutions ever to be adopted as NAHB policy, the association’s board of directors on April 15 voted by acclamation to work closely with the Department of Veterans Affairs to assist veterans in obtaining gainful employment and to realize the dream of homeownership. Only half an hour earlier, Veterans Affairs Secretary Jim Nicholson asked the directors to go back to their local associations and encourage efforts among their members to seek out young veterans returning from service in Afghanistan and Iraq and give them a job. “They will be wonderful, wonderful employees for you,” Nicholson told the NAHB board. “I implore you to reach out to these people.” Returning veterans in the 20-24 age group are experiencing a 20% rate of unemployment, Nicholson said, twice the nation’s overall rate of joblessness. “For what these people are doing for us, we can’t thank them enough,” he said. On the homeownership front, the secretary reported changes that Congress made at the end of last year to improve the effectiveness of the VA home loan program. To read a story from NBN Online on those legislative provisions, click here. Nicholson reported to the board that since it was created in 1944 to assist veterans of World War II, the VA home loan program has provided $850 billion worth of mortgages to some 18 million veterans. Almost all of those mortgages were made without a downpayment. Last year, the program guaranteed 336,000 loans worth $44 billion, he said. Nicholson has been a home builder himself and was a member of the Home Builders Association of Metropolitan Denver. “I still think that the camaraderie and fraternity that comes about through associations is one of the most unique I know of — being a builder with a bunch of people trying to bring about the American dream,” he said. Photo by Herman Farrer Builders’ Tip: Self-Centering Router BaseI recently built and wired a gazebo. I didn’t want conduit intruding on the woodwork so I buried the electrical supply in a post. That meant cutting a groove in the post for the wire — a good job for my router and a 1⁄2-inch straight bit.
It would have been even easier if I’d had a self-centering router base. Because I didn’t have one, I put one together:
The pins’ shoulders rest on the top of the base, where I secured each one with a couple of drops of adhesive. As shown in the drawing, rotating the router so that the pins bear against the sides of the workpiece centers the bit as it plows its groove. — Edward Sprouts, Columbus, Ohio Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Mary Lou von der Lancken at Fine Homebuilding.
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Back Up Your Company Data — Before It's Too LateBy Jeff Johnson, CMIT Solutions The latest in a series of tech talks for builders. What would you do if you arrived at your office one morning and discovered that your computer system had crashed and that all of your company’s customer data, accounting files and project records were gone? Think of all that information, painstakingly entered over time, gone forever. It’s hard to imagine this disastrous scenario because computer systems usually operate so reliably. However, every computer system is susceptible to catastrophe; just ask someone who has been through it. The computer system that stores all of your mission-critical information is vulnerable to a range of problems — from viruses to theft to mechanical failure. Physical damage from natural disasters or accidental mishaps is also a possibility. Fires, earthquakes and floods present a danger to hardware and data, as do broken water pipes and heavy falling objects. The following is an explanation of the causes of data loss and the technology options available to protect data. In addition, you’ll learn some general tips for keeping your data safe. It’s a Fact: Hard Drives Fail Hard drive failure is arguably the most common cause of complete data loss. Computers are composed of mostly electronic devices. However, the hard drive — which stores all of your company information and software programs — is a mechanical part. The drive is in constant motion as it saves and retrieves data. Like any other mechanical gadget, such as a car transmission or a refrigerator motor, it has the potential to break. Many hard drives are given what’s called a “mean time between failures” rating that estimates how long they will last. At some point, due to accumulated wear and tear, though, the drive will break. When that happens, the hard drive is destroyed and all the information it contained is gone. The damaged hard drive must be replaced with a new one to get the computer system back up and running. All the files, records and other information that were on the old drive must be re-entered on the new drive (if that’s possible). In the meantime, the company that experienced the hard drive failure most likely is dead in the water. Data Backups Reduce Risk Viruses, fire, theft and other risk factors pose the same threat to wiping out mission-critical information as hard drive failure. You can avoid catastrophic data loss from any of these causes by creating backups of important data. Backing up data simply means copying information stored on the hard drive and saving that information somewhere else. That way, if a problem occurs, the information is not lost. There are a number of ways to save and protect company data. Backups can be performed automatically or manually and can be stored onsite or offsite. Automated backups are pre-programmed to occur without human intervention. Manual backups require a person to perform them. Assess Your Needs to Determine How ― and When ―to Back Up Your Data When evaluating the advantages and disadvantages of each data backup method, consider your company’s unique data situation — what kind of data you have; what records, files, etc. are absolutely crucial for doing business; and how often that crucial data should be backed up. In addition, consider the time, cost and resources each backup method requires. Be aware of the rate at which your company changes its data. For example, a company that keeps large amounts of billing information may want to do daily backups. For others, weekly may be often enough. Also, think about how many days, weeks or months of archived backups you may need. If your computer system is infected by a virus that isn’t caught immediately, data may erode slowly until you discover the damage. With an archive, the data record can be restored to the day before the virus entered the system. This allows your company to “travel back in time” and begin again with pristine data. Changes made to the data after the virus infected the system would be lost, but that’s preferable to losing everything. It’s best to store backups offsite so they aren’t vulnerable to the same dangers that might affect the primary data. One of the biggest mistakes businesses make is creating backups and then storing them in their offices. Whatever backup method you select, make sure your data is archived according to established procedures that are followed without fail. The only thing worse than not having your data backed up is thinking your company has backups — and then realizing it doesn’t. Creating and implementing a data backup plan requires time and effort. The extra planning can mean business success — or failure. A recent study from Gartner, Inc., found that 90% of companies that experience data loss go out of business within two years. It also found that 80% of company owners have not thought about how they would keep their businesses up and running if a data disaster occurs. Backup Options The primary methods for backing up large amounts of data include online backups (performed via the Internet), tape, DVD-R/RW, external hard drives and RAID servers.
Losing data essential to a company’s operation is a catastrophic event that severely affects productivity and profits. Lost data can be replaced to some extent, but recovery often is expensive and time-consuming. It’s much easier and more cost-effective to have a data backup system in place so your company never has to face this difficult situation. Jeff Johnson is co-owner of CMIT Solutions, a Sacramento, Calif.-based provider of computer and technology consulting services for small- to mid-sized businesses. For more information, contact CMIT Solutions at 916-984-6243, or by e-mail at SacCentral@cmitsolutions.com. Earlier Articles in This Series
NAHB's Business Management Tools Offers Information About Using Technology in Your Business For help using technology in your business, vist the Computer & Information Technology section of NAHB’s Business Management Tools (www.nahb.org/biztools) on the Members Only side of the NAHB Web site. Log on as a member for instant access to articles on building a Web site, using the Internet, automating your “paper” systems and much more. NAHB Has More Than 170 Resources to Help You Run Your Business More Profitably Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to more than 170 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 home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed.
NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, visit www.nahb.org/BoB on the Members Only side of the NAHB Web site.
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 24 hours a day at www.nahb.org. Just click the "Log In" button to get started. Once you log in, personalize the site to reflect your interests. Simply go to the My NAHB>My Profile page and click the “Edit Content Preferences” link. To learn more about how you can customize My NAHB — including how to customize the links that appear on the Home page ― visit the How to Use www.nahb.org section.
Subscribe Your Employees to Nation’s Building News — and Earn a Chance to Win Digital Camera Subscribe your employees to Nation’s Building News Online. It’s free, easy and NAHB members who sign up three or more employees will be entered into the "Make Your Business Click" contest to win a digital camera. To learn more or sign up your employees, click here.
Members Urged to Help Defeat Costly Code ChangesAt the center of the campaign are changes approved during the 2003/2004 code development cycle of the International Code Council (ICC) that increase the wall insulation required for wood-framed construction, forcing builders to change conventional construction practices and adding $600-$1,000 to the cost of an average new home. The changes would become part of the International Conservation Code in 2006. “NAHB fought hard to defeat this, and the Department of Energy agreed with us,” said David Pressly, first vice president of NAHB. “But we lost by one vote” during recent code hearings in Cincinnati, he said. At final ICC hearings, which will be held in Detroit in late September and early October, NAHB will be seeking support for EC-16/04-05, a proposal to roll back the requirements to more reasonable, cost-effective levels. An independent study by the Department of Energy showed that the new requirements add at least $600 to an average home but save home owners only about $15 a year in energy costs. Depending on climate, it would take consumers 40-90 years to recoup the cost of the additional insulation. An average home buyer lives in a new home for seven to 10 years, which is a more appropriate payback period for home energy efficiency improvements, according to NAHB. Builders would be required to do one of three things to meet the proposed code changes scheduled to take effect next year:
Moving from 2x4 to 2x6 walls would take an additional $1,000 worth of lumber to build an average new home, because insulation types like sprayed cellulose and expanding foams cannot achieve the overly stringent energy levels in standard 2x4 construction. High-density fiberglass insulation is not readily available in some regions, and costs twice as much as regular density insulation. And attaching insulated sheathing to the exteriors of walls adds additional costs for materials and labor, takes away a secure nailing surface and requires extra bracing and jamb extensions. NAHB is urging its members to tell their code officials why the code provision should be restored to a more sensible level, and to support NAHB’s EC-16 proposal at this fall’s final code hearing. “There’s still a chance we can keep this insulation change from being permanent,” said Pressly. “But we need our members’ help.” A variety of tools are available online to help members make the case to their local officials, including background materials, talking points and a sample letter. View them at www.nahb.org/EC16; or e-mail John Loyer, or call him at 800-368-5242 x8303.
Builders’ Show Too Big for Atlanta in 2007, 2008
“When we first made the decision to go to Atlanta in the mid-1990s, the IBS was a significantly smaller show that attracted about 65,000 guests over four days,” said NAHB President Dave Wilson. “In recent years, attendance at the IBS has soared to more than 100,000, hotels room bookings are exceeding 50,000 per show and demand for exhibit space at the convention facility has risen significantly. While our members believe Atlanta is a terrific city and have fond memories of holding the convention there in the past, it was the show’s double-digit growth over the last three years that has precipitated this very difficult decision by our board.” “Mayor Shirley Franklin, The Georgia World Congress Center and The Atlanta Convention & Visitors Bureau have been great to work with and been very gracious during this period,” Wilson said. “The NAHB board made it very clear that NAHB will meet all of its contractual commitments stipulated in the termination agreement.” “Atlanta values its 25 year partnership with the National Association of Home Builders. We understand the business decisions regarding the 2007 and 2008 IBS, and the city would welcome them back for future meetings and conventions of any size,” said Mayor Franklin. No final decision has been made on where the show will be relocated. The 2006 IBS will be held in Orlando, Fla., on January 11-14. For more information on the 2006 Show, visit www.buildersshow.com.
Subscribe your employees to Nation’s Building News Online. It’s free, easy and NAHB members who sign up three or more employees will be entered into the "Make Your Business Click" contest to win a digital camera. To learn more or sign up your employees, click here.
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 24 hours a day at www.nahb.org. Just click the "Log In" button to get started. Once you log in, personalize the site to reflect your interests. Simply go to the My NAHB>My Profile page and click the “Edit Content Preferences” link. To learn more about how you can customize My NAHB — including how to customize the links that appear on the Home page ― visit the How to Use www.nahb.org section. Sen. Corzine Wins Affordable Housing AwardU.S. Sen. Jon S. Corzine (D-NJ) is the recipient of this year’s Robert J. Corletta Award for Achievement in Affordable Housing. The award is given jointly by NAHB and the Neighborhood Development Collaborative (NDC) during NAHB’s spring board of directors meeting in Washington, D.C. to individuals who have shown extraordinary creativity and dedication in advocating advances in affordable housing. “Sen. Corzine has been especially active in efforts to expand housing opportunities for America’s working families,” said Bob Nielsen, whose company Shelter Properties, Inc. develops affordable multifamily housing in Nevada. “This award recognizes his leadership on legislation that spurs the production of both affordable rental apartments as well as for-sale housing.” Corzine was elected to the Senate in 2000, after serving as co-chairman and co-chief executive officer of the investment company Goldman Sachs. As a member of the Senate Banking Committee, he has been a strong activist on affordable housing issues in both the multifamily and single-family sectors as well as a stand-out voice on important related issues, such as the current effort to reform the regulatory oversight of the government-sponsored enterprises, Fannie Mae, Freddie Mac and the Federal Home Loan Banks. In presenting the award on April 14, NAHB and the NDC lauded Corzine for his sponsorship of legislation in the 108th Congress that enhanced the effectiveness of the Federal Housing Administration's (FHA) multifamily mortgage insurance program, which is used to encourage construction and rehabilitation of affordable rental housing. The legislation not only gave the Department of Housing and Urban Development (HUD) more flexibility to increase the maximum mortgage loan limits in high cost areas, but also indexed the loan limits to inflation. Corzine’s leadership on the bill was crucial to its passage in the Senate. The award is named in honor of Robert Corletta, long-time executive director of multifamily operations at NAHB before his death in 1998. Corletta was recognized by his peers as a visionary in the affordable housing industry, particularly for his efforts supporting congressional passage of the Community Reinvestment Act. Enacted in 1977, the legislation requires banks and other lending institutions to help meet the credit needs of the communities in which they operate, and has enabled affordable housing to be created in many low- and moderate-income neighborhoods across the country. In 1978, Corletta co-founded NDC, a non-profit corporation whose mission is to help re-build America’s communities through the creation of affordable housing and comprehensive community development. Past recipients of the award include Stillman D. Knight, deputy assistant secretary for Multifamily Housing Programs at HUD; Rep. Nancy Johnson (R-Conn.); Robert Gould, vice president of Reilly Mortgage Group; Ted Dinerstein, chief executive officer of the Dinerstein Companies; Larry Swank, president of The Sterling Group; and Judith Siegel, president of the Landex Corporation. May is National Home Remodeling MonthSpring is the most popular time to remodel. So, what better time of the year for National Home Remodeling Month? Many home owners want to try their hand at remodeling their home themselves. This May, with the help of the NAHB Remodelors™ Council's consumer campaign on "How and When to Hire a Professional Remodeler," you can help educate consumers on the importance of hiring a professional remodeler to safely make their house a home for a lifetime. Throughout the month, be sure to take advantage of the opportunities surrounding National Remodeling Month to help publicize the industry and emphasize to home owners the importance of hiring qualified, professional remodelers. Contact your local council to find out about plans for the month and join this important campaign. The NAHB Remodelors™ Council will have downloadable material to help promote National Remodeling Month, including proclamations, public service announcements, press releases and articles. Visit the Remodelors™ Council section of the NAHB Web site for more information.
"How to Find a Professional Remodeler," available at BuilderBooks.com, promotes the professionalism of your remodeling business by offering valuable advice to your customers on the process of selecting a remodeler. The brochure guides consumers from the dream to the reality of having their homes remodeled by skilled and trained professionals. Sections include what to look for in a professional remodeler, what questions to ask and signs of a professional remodeler. To view or puchase this publication online, click here, or call 800-223-2665 to order.
The NAHB University of Housing offers CAPS, CGR, CGB and a variety of other professional designation programs and business management courses that set builders and remodelers apart from the competition. To learn more about NAHB’s designation programs, visit www.nahb.org/designations. For a complete list of all current education offerings, click here.
Who Will Be the Next Remodelor™ of the Month?
The Remodelor™ of the Month (this link is accessible to Remodelors™ Council members only) award program is underway. Don't miss your opportunity to be named the Remodelor™ of the Month.
Subscribe your employees to Nation’s Building News Online. It’s free, easy and NAHB members who sign up three or more employees will be entered into the "Make Your Business Click" contest to win a digital camera. To learn more or sign up your employees, click here.
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 24 hours a day at www.nahb.org. Just click the "Log In" button to get started. Once you log in, personalize the site to reflect your interests. Simply go to the My NAHB>My Profile page and click the “Edit Content Preferences” link. To learn more about how you can customize My NAHB — including how to customize the links that appear on the Home page ― visit the How to Use www.nahb.org section. Precautions Needed for Working in Hot WeatherOSHA points out that how individual workers respond to high summer temperatures and humidity depend upon personal characteristics such as age, weight, fitness, medical condition and acclimatization to the heat. However, basic precautions can be taken to prevent most heat-related problems on the job:
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