Print-All Page: July 25, 2005

Delivering good news for an area of the country where residential development has been constrained by a controversial 1977 Endangered Species Act listing of the pygmy owl, a recent court decision has helped to remove a regulatory barrier to development in Tucson, Ariz., in the process bolstering NAHB’s ongoing efforts to promote solid science as the basis for the federal listing of threatened or endangered species.

This favorable ruling builds on past decisions on the pygmy owl, which have vacated the bird’s critical habitat designation and have found that the federal government violated its own policies by listing the owls living in Arizona as a “distinct population segment” (DPS) under the Endangered Species Act.

Successful litigation, combined with ongoing regulatory efforts, has strengthened NAHB’s position that the U.S. Fish and Wildlife Service should delist the pygmy owl.

In its July 12 ruling in the case of Defenders of Wildlife v. Flowers, the United States Court of Appeals for the Ninth Circuit ruled that the U.S. Army Corps of Engineers had acted lawfully in issuing Section 404 permits for an NAHB member’s housing project that, it found, will have no effect on the pygmy owl.

The court also indicated that its decision “puts in doubt the status of the Arizona pygmy-owl” and would seem to require its delisting.

Environmental plaintiffs argued that the permits should have been subject to costly and time-consuming consultation with the Fish and Wildlife Service because the development had the potential for affecting pygmy owl habitat or the owls themselves.

In a friend-of-the-court brief, NAHB said that there was no need for consultation in an area where the species is not present.

In a 2-1 ruling, the court found that the Corps was not “arbitrary or capricious” in determining that the development would not affect the pygmy owl.

For more information, e-mail Tom Ward at NAHB, or call him at 800-368-5242 x8230.

Floor Plans: Curves, Curves Everywhere

It’s All in the Walls: Contemporary look. Architectural flair. Sustainability and energy efficiency. Dennis Lee, of Barry R. Barcus Architects, Inc. in Phoenix, not only achieved all he set out to accomplish when designing his private residence in Phoenix, but he did it by using simple, geometric stucco forms.

Lee used curved textured walls both on the exterior and interior of his home to enhance architectural interest. Outside, curved courtyard walls lead to the entrance of the house. The textured masonry wall is carried inside at the entry, where it serves to divide the foyer from the kitchen, which opens to, and is part of, the great room. This interior curve stops short of the 9-foot, 6-inch ceiling and is further articulated with an 8-inch slot.

An exterior, curved textured wall extends inside and serves as a divider between the kitchen and the foyer.

A Home for Entertaining: The great room and kitchen are the heart of his home. A wide screen television and video equipment are completely recessed and, when not in use, can be hidden behind custom European maple cabinetry. In fact, custom maple cabinetry is used throughout the home as part of its contemporary design. In addition, the media wall — as well as several other interior walls — has lighted niches for artwork. Low voltage pendant and tract lighting is used both for effect and energy savings.

Rooms With a View: Full-height sliding patio doors in the great room, master bedroom and bedroom/office provide views of South Mountain on one side of the home and of Phoenix on the other, while also extending the living space to the patios. A gazebo provides additional outdoor living space and shade.

The office, located near the front of the house, opens to the front courtyard and is partially hidden by a curved wall. The three-car garage is located on the side of the house. Existing natural desert landscaping has been preserved where possible.

Sustainability and Efficiency: Lee chose Insulated Concrete Forms (ICFs) from Reward Wall Systems for their thermal mass and high R-value. The ICFs were one of the primary green building features he was able to incorporate in order to achieve his goal of sustainability and high energy efficiency. Lee has also incorporated passive solar design, a high efficiency heat pump, low-e windows and a highly insulated (R-35 blown-in fiberglass) ceiling and roof.

Lee conservatively estimates that he has averaged a 30% savings on his heating bills since he moved into the house in December.

Features & Specs

Lee Residence

Custom Home Designed by Owner, Architect Dennis Lee
Total Square Footage: 3,500
Living Space: 2,500
Single Story Home With Courtyard and Patio
Curved Interior and Exterior Walls
Stucco Exterior Finish

Two Bedrooms With Third Bedroom/Office
Great Room With Fully-Recessed Media Wall
Two Baths

Three-Car Garage
Full-Height Sliding Patio Doors to Provide Greater Views
Passive Solar Design
11-inch iForm Exterior Walls for Sustainability and Energy Efficiency
Flat Room With Two Inches of Urethane Foam
Energy Efficient Four-Ton HVAC and Heat Pump With Two-Stage Compressor
30% Savings on Heating Bills

— Ultraspec Homes, Peoria, Ariz.
— Barry R. Barcus Architects, Inc., Phoenix

Wells Fargo Supporting NAHB Initiatives

NAHB and Wells Fargo & Company announced last week that they are embarking upon an unprecedented three-year relationship that includes Wells Fargo’s sponsorship of NAHB events, extensive advertising and title sponsorship of NAHB’s Housing Market Index and Housing Opportunity Index.

“The nation’s pre-eminent home building federation and the leading lender to new home buyers are a perfect match,” said NAHB President David Wilson. “Wells Fargo’s commitment to the housing industry is a source of strength for our association and it will help our members provide their home buying customers with a wealth of innovative mortgage resources.”

“Working with NAHB and its 220,000 members will allow us to do an even better job, especially in the important area of new construction for working families,” said Stuart Tyrie, vice president of Wells Fargo Home Mortgage’s National Builder Division. “Our home building loan specialists work every day with builders across America. We are happy to expand our working arrangement in order to support builders’ goals.”

The new relationship extends and expands an initial sponsorship package that began last year with title sponsorship of the economic indexes. Among the highlights of the cooperative relationship:

“Given Wells Fargo’s commitment to builders, we welcome the chance to deepen the cooperation with each of our builder councils, from those who focus on single-family homes to multifamily housing to housing for senior citizens,” said Wilson. “Wells Fargo has been one of the most involved members when it comes to promoting NAHB initiatives and sponsoring association activities, and our industry needs that kind of cooperation.”

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End of Boom Need Not Be Dire

Peaking in 2004 after more than two years of annual price appreciation of 15% or more, Australia appears to be succeeding in ending its housing boom without widespread economic distress or a sudden crash in home prices. The nation’s central bank started raising its key overnight lending rate in May 2002, and it now stands at 5.5%, compared to 3.25% in the U.S., and is among the highest in the developed world. In early 2003, Reserve Bank of Australia Gov. Ian Macfarlane said that scaling back household borrowing and property development would be in “the longer term interest of the Australian economy.” In a move to discourage speculators from buying and flipping properties for quick profits, the state of New South Wales, which includes Sydney, instituted a 2.25% tax on the sale of investment properties. Recent data suggest that Australia’s home prices haven’t changed over the last year and have fallen slightly in the country’s two biggest cities, Sydney and Melbourne. Australia hasn’t experienced widespread job losses, and a likely scenario is that its overall economy will keep growing as home prices stagnate. (www.realestatejournal.com)
RealEstateJournal (7/15/05); Patrick Barta, Wall Street Journal

European Housing Sizzles

Housing price appreciation looks almost calm in the U.S. marketplace compared to some other countries that are a part of today’s global housing boom. Since 1997, prices in France have climbed 87%, compared to 73% in the U.S. Over the same period, real estate prices are up 154% in Britain, 145% in Spain and 192% in Ireland. Driving the boom in Europe are low short-term interest rates. They are at 2%, compared to 3.25% in the U.S., and expected to decline in coming months. Also, more European banks have started offering more flexible-interest and interest-only loans, as well as mortgages with 35-year amortization schedules. Banks “had to make it easier for people to buy homes because prices were rising so quickly,” says Patrice Brunet, director of Talleyrand, a small real estate company near the Eiffel Tower in Paris. A retired health care consultant from Louisville, Ky. looking for a two-bedroom apartment in a fashionable quarter of the French capital thought she could find something for about $1.2 million, but discovered that she had underestimated the price by about $500,000. A nurse in London says he is considering changing professions, even driving a taxi, so he at least can afford to buy a studio apartment, which would cost almost $300,000. (www.usatoday.com)
USA Today (7/21/05); Noelle Knox, Eric J. Lyman and Lisa Abend

Encouraging Home Ownership Actually Helps Apartment Owners

Rent-to-buy programs that enable residents to eventually purchase their homes could represent the best strategy for apartment communities to compete with the allure of homeownership and ease turnover problems, according to a new white paper by SatisFacts Research for RE/MAX Heading Home. The paper finds that offering renters a program that provides assistance in buying a home can increase occupancy rates, increase resident retention, delay or reduce turnover costs, reduce marketing and leasing costs, provide a competitive marketing advantage, and increase net operating income and goodwill. About 20% of residents say they are not renewing their leases in order to buy a home, which is the leading reason for moving out of an apartment. (www.rismedia.com)
RISMedia (7/20/05); Beth Bresnahan

Texas Eminent Domain Bill Appears Dead for Now

Legislation to protect property owners from government land seizures in the wake of a recent Supreme Court ruling allowing eminent domain powers to be used for private economic development failed in a special session of the Texas legislature when the House and Senate were unable to reconcile their differences before adjourning. A major sticking point was a House provision that would have required governments to pay replacement value instead of fair market value when property is seized. “That’s just a litigation nightmare,” said Sen. Kyle Janek, who was the author of the bill in the upper chamber. Gov. Rick Perry had added the issue to the agenda for the special session, after lawmakers were flooded with phone calls from worried property owners. Lawmakers are likely to return to the legislative effort if another special session is called. (www.chron.com)
Houston Chronicle (7/20/05); Polly Ross Hughes

Condos Proposed at the Fairmont

A proposal to turn a 23-story tower annexed to San Francisco’s landmark 100-year-old Fairmont Hotel in 1961 into condominiums has caused a furor among the city’s leaders, prompting one supervisor to pursue a measure that would prohibit tourist hotels with more than 50 rooms from converting lodging space into condos or other housing units. The project would convert 226 rooms in the 591-room hotel into 60 housing units, according to the owners, and would generate $1 million to $1.5 million in annual taxes and revenues and create about 300 union jobs during the conversion, they say. Last year, New York City Mayor Michael Bloomberg helped negotiate a compromise that preserved nearly half of the rooms at the Plaza Hotel from a proposal to convert the entire building into stores and apartments. (www.sfgate.com)
San Francisco Chronicle (7/19/05); Cecilia M. Vega

New York City Seeing a Homebuilding Frenzy

From the northern Bronx and eastern Queens to western Brooklyn and southern Staten Island, builders in New York are squeezing extra homes and apartments onto lots where a single house once stood. Developers are using lax zoning laws that were last updated in 1961, and the mismatch between the housing that exists and what the zoning allows wasn’t an issue in the 1970s when people were fleeing the city for the suburbs and in the 1980s when developers wouldn’t go near neighborhoods that had become crime-ridden. Local groups, community boards and city officials are fighting back by downzoning to allow builders only to put up homes that match the existing neighborhood character. “Where are people going to live?” asked Allen Cappelli, who represents the Building Industry Association of New York City. “When you look at the city’s housing crisis, you can’t have this kind of blind downzoning.” (www.nydailynews.com)
New York Daily News (7/13/05); Elizabeth Hays, Warren Woodberry Jr. and Adam Lisberg

Are Antsy Consumers Browsing for Housing or ‘Bubble’ Information?

Although visits to real estate Web sites are up almost 20% from a year ago, anxiety about the possibility of a crash in residential real estate values could be the factor that is driving a growing portion of the traffic. According to Hitwise, a New York City-based company that tracks Internet use, in the last 12 months searches on such major search engines as Google, Yahoo!, Search and MSN Search were up 311% for “real estate bubble” and 174% for “housing bubble.” Earlier this year, four in 10 of those surveyed for an Experian-Gallup Personal Credit Index said there’s a likelihood that the housing bubble will burst within the next three years. “Recent Internet search activity suggests that some activity in the category is being driven by curiosity of rising property values and the possibility of a bursting bubble,” said Bill Tancer, vice president of research at Hitwise. “Should we undergo a market decline, it will be interesting to see how site traffic and search activity correspond.” (www.realtytimes.com)
RealtyTimes (7/20/05); Broderick Perkins

A House That Turns Into an Ark Might Save Lives

After watching people on television cleaning up flood damage to their homes, Thomas Meere, a 65-year-old builder based in Hampstead, northwest of London, developed a scale model of a floating house that will rise with the water. A seven-foot-thick block of polystyrene is fastened to the underside of a reinforced concrete slab on which the walls of the house are based. When water pours into a 10-foot deep basement below the slab, the polystyrene has enough buoyancy to lift a one-and-a-half story house. When there is the threat of a flood, the home’s owners open the basement windows to allow the water to pour in. Rails on each corner of the foundation extending to the roof ensure that the house will not tip over. Meere said that the extra work and materials needed to build the house would raise its costs by about 25%. (www.mailonsunday.co.uk)
Financial Mail on Sunday, London (7/18/05); Donald MacGillivray

Endangered Species Act Needs a Rehab

The nation’s home builders called on Congress on July 13 to update and modernize the Endangered Species Act (ESA) in order to protect the environment and enable local communities to grow and thrive.

Testifying on behalf of NAHB, Campos called on the Senate panel to expand landowner incentives under the ESA, and provide certainty to landowners that Habitat Conservation Plans (HCPs) and other voluntary species management programs will be excluded from critical habitat designations.

“Congress can help to further promote HCPs and other voluntary conservation measures by exempting these plans from the duplicative regulations of critical habitat designations. Any incentive to enter into an HCP is lost if the area at issue is also subject to regulation under critical habitat,” said Campos.

Habitat Conservation Plans are voluntary agreements between landowners and the federal government that seek to minimize and mitigate impacts to species and their habitats while allowing otherwise legal land development activities to proceed.

While NAHB supports these efforts and believes such plans have become integral components of species conservation efforts nationwide, Campos said that Congress must also codify the “no surprises” rule in order “to give private property owners, state and local governments and community organizations the necessary certainty to continue and even expand their species conservation efforts.”

By providing regulatory certainty, “property owners, builders and developers can undertake long-range planning and development operations confident that the time, money and effort devoted to creating and implementing Habitat Conservation Plans will not be lost because a federal agency changes its mind about what a species may need for recovery,” said Campos.

“Unfortunately, the no surprises rule has been subject to litigation in the past, leaving public and private landowners fearful that the federal government can require never-ending regulatory and conservation requirements from a permit holder. That is why Congress needs to codify it as part of the ESA,” he added.

For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.

House Passes OSHA Reform Package

With the support of the nation’s home builders, the House on July 12 passed four bills introduced by Rep. Charlie Norwood (R-Ga.) that would enhance worker safety, advance housing affordability and improve the enforcement of the Occupational Safety and Health Administration's (OSHA) many rules and regulations among small business owners.

“The legislative package approved by the House will make regulatory compliance more cost-effective and make OSHA more user friendly for small businesses, while improving housing affordability and continuing to protect the safety of workers in the home building industry,” said NAHB President David Wilson.

Of particular note to home builders are H.R. 739, the “Occupational Safety and Health Small Business Day in Court Act,” and H.R. 742, the “Occupational Safety and Health Small Employer Access to Justice Act.” The first bill would allow OSHA to give businesses more than 15 days to respond to a citation; the second would make it easier for companies to recover attorneys’ fees when they successfully defend themselves against a citation.

H.R. 740, the “Occupational Safety and Health Review Commission Efficiency Act,” would add two more administrative law judges to the three-panel Occupational Safety and Health Review Commission (OSHRC), which hears appeals of violations. At its current size, the commission frequently has to delay hearings because it lacks a quorum. The bill is intended to remedy this situation.

H.R. 741, the “Occupational Safety and Health Independent Review of OSHA Citations Act,” would require judges to defer to the OSHRC when OSHA cases are appealed to the courts.

While NAHB supports all four bills, in a letter to all House members prior to consideration of the OSHA reform package, the association identified H.R. 739 and H.R. 742 as “key votes” because of their impact to the housing industry.

“These two measures in particular represent common-sense improvements that would remove some of the most frequently cited obstacles to our members’ ability to respond to OSHA following a citation,” said Wilson.

“The overall legislative package will advance job safety while helping our small business employers who are so often intimidated and confused by the OSHA inspection and citation process,” he added.

Sens. Johnny Isakson (R-Ga.) and Mike Enzi (R-Wyo.) have committed to introducing companion reform measures in the Senate later this year.

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.

Campaign Schools Foster Pro-Housing Candidates

Campaign schools typically involve 15-30 targeted candidates and staff members. The curriculum includes instruction and information to help candidates develop a personalized campaign plan and budget, organize fundraising efforts, identify and target voters, develop messages and voter contact strategies and recruit volunteers. In addition to helping candidates to be better prepared for the challenges of running for office, hosting candidate schools can also be extremely beneficial for sponsoring HBAs.

With the help of NAHB’s Political Operations team, the Wichita Area BA has implemented a highly successful candidate education program that has sponsored more than 10 training sessions.

“The decisions that affect us most are the decisions made right here at home”, said Wichita Executive Officer Wess Galyon. “The key to our industry being successful politically and locally are political outreach programs like NAHB’s candidate training schools. These schools and their effectiveness at giving local candidates a winning edge have opened doors for us,” he said.

Overall, an overwhelming majority of the newly trained candidates from the HBA schools came out on top to win their respective elections.

Hosting a candidate school for the first time, Greater Kansas City’s executive officer, Tim Underwood, said that, “It was a great start to a political program we look forward to continuing for years to come.”

For more information on local political outreach programs or to find out more about hosting a candidate training school, contact Ashley Feaster at 800-368-5242 x8126 or Dan Quinonez at x8585 in NAHB’s State & Local Political Operations department.

2005 SLGA Conference Schedule Now Available

Sweating out an uphill battle with impact fees? Learn some of the ways to even the playing field, fight back and whittle them down. This session provides comprehensive approaches to addressing infrastructure constraints — from strategies to combat impact fees to alternative infrastructure solutions. Recent related court cases will also be discussed.

Home builders associations across the country have begun to question a recent escalation in the development review and inspection fees being charged by municipalities. Because these fees are not a tax, many states have little or no legislative language regulating how they can be levied or raised.

Are governments using a statutory loophole to fatten their budgets at the expense of builders? This session will discuss the issue as well as model legislative language drafted by NAHB to help HBAs close this loophole nationwide. Learn whether your state has existing legislation that restricts this type of policy and what specific activities review fees can and cannot be used for.

To get full details about the conference and a quickly expanding schedule, visit www.nahb.org/slgaconference. Early Bird registration ends Sept. 9.

Full and partial scholarships are now available for executive officers of state and local home builders associations to attend the State & Local Government Affairs Conference in Phoenix.

Download an application and return it to the Executive Officers Council by Wednesday, Aug. 17, for consideration. All executive officers are eligible to apply.

The EOC and the State & Local Government Affairs department encourage those executive officers who are not scheduled to attend SLGA to apply for scholarships and make this conference a priority. The SLGA conference is the largest gathering of government affairs professionals in the industry and is an excellent opportunity to stay current on today’s hottest housing issues.

For more information on the EOC Education Fund Scholarship Program, including a complete program description and application, visit www.nahb.org/eocscholarship or contact the EOC at 800-368-5242 x8176.

For more information on the State & Local Government Affairs Conference, e-mail Alex Strong, or call him at x8279.

New-Home Starts Stay Robust in June

The pace of new home construction remained strong in June, closing out the quarter at a seasonally adjusted annual rate above 2 million housing starts for the second quarter in a row, according to U.S. Commerce Department figures released on July 19.

For the month, the pace of housing starts remained unchanged from revised May figures at a seasonally adjusted annual rate of 2.004 million units, which was 9.7% above the pace of a year ago.

Single-family home construction slowed 2.5% to a pace of 1.667 million units in June but was still 9.2% ahead of the starts rate a year earlier.

“Builders continue to build to meet very strong demand,” said NAHB President Dave Wilson. “Mortgage rates, though they have risen slightly in recent weeks, are still very favorable and our surveys show that builders are confident that the market will stay strong in the months ahead.”

“Demand, fueled by favorable mortgage rates, as well as strong household income and job growth in most regions, continues to drive the housing market,” said NAHB Chief Economist David Seiders. “High lot prices and land-use controls in many areas do constrain supply and are a concern for many builders.”

While housing starts last month held up to May’s level of activity for the nation as a whole, the different regions of the country continued to display volatility, with the exception of the Northeast, where construction of new homes and apartments was off a scant 0.5%.

The Midwest was down 12.1% following a 16.9% surge in May; the West dropped 10.4% after a 9.4% increase during the previous month; and the South jumped 11.4% in June on the heels of an 11.9% slump in May.

Multifamily housing starts climbed 14.2% in June to a seasonally adjusted rate of 337,000 units, which was 12% better than their year-earlier pace.

Issuance of total building permits rose 2.4% to a seasonably adjusted rate of 2.111 million units for the month, with permits for single-family activity up 1.3% to a rate of 1.649 million units and multifamily permits up 6.5%.

“Many of the permits authorized are for homes that have not been started, and the backlog of unused single-family permits has risen to a historically high level,” Seiders said.

“Builders are facing very strong demand for homes, and the drawn-out regulatory process in many local jurisdictions has encouraged builders to accumulate an unusually large supply of unused permits to be able to meet future housing demand,” Seiders added.

See what's on the horizon for the housing industry at the semi-annual gathering of the country's premier economists and finance experts. Get the latest forecasts on housing starts, project budgets and other economic bellwethers at the Spring Construction Forecast Conference on Oct. 19 at the National Housing Center in Washington, D.C. Visit www.nahb.org/conference for more information.

HousingEconomics Online, the online publication from the NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. In-depth analysis and detailed Excel tables and overviews are available for all the state forecasts. To learn more or subscribe to HousingEconomics Online, visit www.housingeconomics.com.

Single-Family Builders Remain Upbeat in July

Builder confidence in the new single-family home market has held up this month to a level matching the strong average for the year as a whole, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released last week.

“Builders have every reason to remain confident in the single-family marketplace,” said NAHB President Dave Wilson. “While mortgage rates have risen slightly in recent weeks, financing conditions remain very favorable for families considering homeownership, and demand still outpaces the supply of new homes in many markets.”

July’s HMI reading of 70 was down two points from an upwardly revised reading in June.

“Upbeat builder attitudes point toward continuation of strong sales and starts of single-family homes in the months ahead,” said NAHB Chief Economist David Seiders. “Builders are, however, concerned about lot shortages and the high cost of land for development, especially in parts of the Northeast and West. Meanwhile, the relatively weak job market situation in the Midwest has had an impact on builder confidence in that part of the country.”

Derived from a monthly survey that NAHB has been conducting for approximately 20 years, the HMI index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers.

Any index score over 50 indicates that more builders view sales conditions as good than poor.

HMI readings in July show a modest decline in the current sales rating from 77 to 75 and a similar drop in sales expectations from 80 to 77. Builders’ assessment of traffic of prospective buyers remained unchanged from the previous month’s reading of 55.

Regionally, builder confidence dropped one point to 88 in the West and two points to readings of 69 in the Northeast and 75 in the South. A more significant decline was registered in the Midwest, where confidence fell six points to a relatively weak reading of 46.

Pricing Data Raise Unfounded Concerns on Sub-Prime Loans

The misinterpretation of Federal Reserve Board data on mortgage originations could reduce homeownership opportunities for households that are being served by the sub-prime mortgage market, according to a recent report by Professor Michael Staten of the Credit Research Center at Georgetown University.

In his paper, “The New HMDA Pricing Data: What Can They Tell Us About Pricing Fairness,” Staten notes that the creation of a sub-prime mortgage market over the last 10 years for borrowers who wouldn’t be able to qualify for a conventional or government-subsidized loan because of a blemished credit history, insufficient assets for a downpayment, unstable income or job history, or a heavy amount of debt has helped boost homeownership rates among the nation’s minority households.

However, the higher pricing of subprime loans and the high market share of subprime lenders in low-income and minority neighborhoods have elevated concerns among consumer activist groups and regulators over abusive lending tactics and excessive pricing, Staten writes.

These allegations, Staten says, rely heavily on studies that inappropriately use data on mortgage loan originations required under the Home Mortgage Disclosure Act.

The data are good at indicating the geographic and racial and ethnic patterns of mortgage loan activity, which was their original purpose, “but do not contain sufficient detail to explain why some applications are accepted and others are rejected,” according to Staten.

From studying the HMDA data it is not possible to determine if the pricing of a mortgage is based on discrimination or on the actual risks involved, he says, because there is little information on the characteristics of the loan, such as its loan-to-value ratio; whether it is fixed-rate, adjustable-rate or a hybrid; or the term of the loan.

Although the HMDA data do include information on incomes, they do not provide information on the borrower’s total indebtedness, assets, credit score or specific delinquency history — all of which are significant in assessing the risk associated with the loan and how it is priced.

In remarks in March, Fed Chairman Alan Greenspan suggested how the data should be used: “The pricing data will assist us as a screening tool to facilitate self-monitoring and enforcement activities. If screening suggests that there might be a fairness issue, additional information will need to be collected from banks’ loan files or other sources.”

Staten writes that subprime mortgage originations have increased at an annual rate of 25% from 1994 to 2003, “helping to propel homeownership rates in the United States from 64% to nearly 69%, an increase of over 9 million households.”

Last year, subprime loan originations totaled $530 billion, accounting for 19% of all home mortgage loan originations in the U.S.

In a speech last month at the American Bankers Association Regulatory Compliance Conference, the association’s director of grassroots and community outreach, said that, “Risk-based pricing and flexible loan contracts have created more access to credit, but limiting these programs would damage the very borrowers that fair-lending statues were intended to help.”

In his paper, Staten cites Federal Reserve Board Governor Susan Schmidt Bies on the danger of jumping to unsound conclusions based on HMDA data. Unwarranted accusations against a lender for discriminatory loan pricing, she wrote, “could reduce the willingness of that lender or another to remain in, or enter, certain higher-priced segments of the market. That discouragement, in turn, could potentially reduce competition in those segments and curtail availability of credit to higher-risk borrowers.”

For more information on this issue, e-mail Michael Carrier at NAHB, or call him at 800-368-5242 x8529.

Builders’ Tip: Keeping Mud Off a House Under Construction

If you are putting siding on a new building in an area where it frequently rains, you may find your newly-sided lower walls spattered with mud after every shower. The problem is worse on walls below eaves that have yet to receive their gutters.

After much brushing, washing and repainting of mud-stained walls, I decided to roll out a 3-foot-wide strip of landscaping fabric on the ground along the wall. It works like magic.

Splashing is just about eliminated. The water hits and passes through. There is no puddling and the fabric doesn’t become slippery the way scraps of sheathing do when used for this purpose.

The fabric also keeps your shoes cleaner, which keeps ladder steps, your hands and, ultimately, the siding cleaner, and it makes nails and small tools easy to recover when dropped.

When you’re done installing the siding, lay down straw for interim splash protection until final grading and seeding are in place.

BuilderBooks.com Offers More Than 250 Books that Help You Build Your Business

BuilderBooks.com is your source for training and education products for the building industry. The official bookstore for NAHB, BuilderBooks.com offers award-winning publications, software, brochures and more available in both English and Spanish. To view these publications online, click here, or call 800-223-2665.

The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, visit www.nahb.org/designations.

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Remodeling Posts Biggest Gain in a Decade

Americans spent $198.6 billion on remodeling projects last year, according to the U.S. Census Bureau. This was a 12.3% increase — the largest in more than a decade — from the $176.9 billion Americans spent in 2003.

“A combination of increased home sales, more owner equity and low refinance rates all contributed to the tremendous growth last year,” said Remodelors™ Council Chairman Don Novak, CGR, CAPS, a remodeler from Cedar Rapids, Iowa.

In addition, the NAHB Remodelors™ Council forecasts continued growth throughout 2005 to $209 billion — but at a less torrid increase of 6.3%.

Owner-occupied properties saw a major increase in remodeling spending to $143.4 billion in 2004 from $119.9 billion in 2003. At the same time, spending on renter-occupied properties decreased slightly last year from $57 billion to $55.1 billion.

“Because of rising home prices, home owners are more willing than ever to invest in their homes,” said NAHB Chief Economist Dave Seiders. “We see this as a continuing trend for several years to come.”

The aging housing stock — with homes an average 32 years old and rising — also contributes significantly to remodeling demand, creating ongoing opportunities for maintenance, repairs and improvements.

The Difference Between Cash Flow and Profits

By Jordan B. Zimbelman
Balancing your company’s books is not like balancing your company’s checkbook.

You balance your checkbook using the cash-basis accounting method, which is simply totaling all the deposits, subtracting the payments, and — voilà! — that’s how much money you have in the checking account.

But you can’t report company books balanced that way (which measures cash flow) to either your bank or the IRS. According to generally accepted accounting principles (GAAP), you get a truer picture of your profit with the accrual accounting method.

As a manager, you must understand why profit doesn’t equal cash flow. Both measures, while very different, are important to your financial health.

There are a couple problems with using cash flow to measure your company’s financial performance. Both have to do with the timing of economic events. Consider the following:

Cash flow is, by nature, very volatile. The goal of accrual accounting is to remove some of that volatility so that your financial performance doesn’t depend on when you look at your books.

For example, when a trade contractor finishes his work he mails you an invoice. At that point in time you owe him money. The cash-basis accounting method inaccurately claims that you haven’t incurred an expense because you haven’t paid him yet.

As another example, some builders require deposits from their customers upfront before construction begins. Under the cash-basis method, if you examined your books just after receiving this deposit, it would appear that you’ve turned a huge profit (because you’ve recorded the revenue without any accompanying expenses).

In the home building business, this means waiting to record revenue and expenses until construction is finished and the home is sold. Expenses that cannot be matched to a specific home, such as advertising, are recorded as soon as they are incurred.

When you turn a profit, it adds to the equity portion of your balance sheet. Equity is the amount of investment you have in the business. But profit isn’t always cash. To keep your books balanced, the accrual method adds several accounts to your balance sheet:

The goal of your business is to earn you cash. The best measure of this goal is profit because profit takes into account the cash that belongs to you and the cash that belongs to someone else.

For example, part of your profit consists of accounts receivable. Although accounts receivable aren’t cash, they increase your wealth because you have gained the legal right to receive cash in the future.

Moreover, using only cash flow to measure financial performance is inaccurate because it doesn’t take into account investment. Investing your cash in fixed assets doesn’t decrease your wealth, because those assets can be sold for cash in the future.

For example, construction costs and expenses don’t decrease your wealth. Assuming you haven’t made a poor business decision, they should be fully recouped when the house closes. Accrual accounting correctly recognizes these costs and expenses as an investment in inventory.

The profit of your business is not the same as your compensation. When you compensate yourself, you take money out of the business and put it in your pocket. That money in your pocket doesn’t bring you any return.

Remember that equity (whether it’s cash, receivables, inventory or something else) is your investment in the business. An investment is putting cash away today for profit in the future. When you compensate yourself, you reduce your equity and are trading larger profits in the future for profits today.

Determining how much to compensate yourself depends on your personal financial situation. Unless you have other, more lucrative business opportunities, you should leave excess cash in the business where it will bring you a return.

Although profit is a better measure of financial performance, it’s still very important to monitor cash flow. When your bills come due, you won’t be able to pay for them with accounts receivable or inventory.

The size of your cash reserves determines the risk level of your business. Fixed expenses like loan interest must be paid or you’ll go bankrupt. Maintaining adequate liquidity is one of the most important aspects of financial management.

It’s often tempting to let your cash reserves get too low, because fixed assets offer a higher return on investment. Under accrual accounting, investments are capitalized and therefore show no effect on your bottom line. But profit means nothing if you go out of business to obtain it.

Jordan B. Zimbelman is a graduate student in finance at Kansas State University. He is working with NAHB’s Business Management Department as an intern throughout this summer. For more information, e-mail Zimbelman, or call him at 800-368-5242 x8498.

Three-Car Garages a Growing Trend

Back in the 1950s, the one-car garage was standard in the 41% of homes having any garage at all. More than half a century later, almost two-thirds of all new homes have two-car garages and 19% have garages that can accommodate three cars or more.

“The home building industry is definitely seeing a growing trend toward the three-car garage,” said Jerry Howard, executive vice president and CEO of NAHB.

“Especially in areas where houses do not traditionally have basements, the three-car garage is becoming a must-have in new homes,” said Howard. “But it’s not just limited to those areas. Three-car garages are becoming more common in markets across the country.”

Census Bureau statistics confirm the trend toward three-car garages in all four Census areas, although the Midwest and the West are definitely in the lead.

When the bureau first started tracking three-car and larger garages in 1992, they could be found in 20% of the new homes in the West. Last year, they were in 31% of the new homes built in the region. The share of new homes with big garages in the Midwest climbed from 16% in 1992 to 32% in 2004.

The share has grown steadily from 4% in 1992 to 9% in 2004 in the South and 4% to 10% in the Northeast, and anecdotal reports from builders indicate that the number of consumers looking for three-car garages in these regions is growing by the day, especially in upscale houses.

For most buyers, the primary appeal of the three-car garage is that it provides more storage space, which consistently ranks high in NAHB surveys of consumer preferences for new home features and amenities.

In addition to vehicles, large garages are being used to store yard and garden equipment, seasonal recreational equipment and much more, including items that would be difficult to retrieve from a basement or attic.

Additionally, builders are finding that consumers increasingly prefer 8-foot by 10-foot garage doors to the more standard 7-foot by 9-foot doors so that their SUVs can be accommodated.

As they’ve gotten larger, garages have also become more sophisticated, said Howard. “Consumers find elaborate and extensive built-in storage and shelving systems, work areas, utility sinks and many other amenities very appealing,” he added. “They are also tending to view the garage as more of an extension of the house, and some buyers are even heating and cooling the space for comfort and year-round use.”

Three-car garages also allow builders to offer a second floor “bonus room” that can be used for a multitude of purposes. “These bonus rooms are a growing trend in upscale homes and provide a very flexible space that can be put to any number of uses,” Howard said. “From a playroom for the kids to a home office, exercise room, loft, extra bedroom, an in-law or nanny suite, quarters for a boomerang child and even extra storage, the uses are almost endless.”

“With extra space, extra amenities and plenty of flexible customization options, the three-car garage is definitely a trend that consumers are embracing,” he said.

Howard added that today’s three-car garage, with the addition of an upstairs bonus area, actually rivals the size of a typical new home of the 1950s, which averaged about 1,000 square feet.

Ironically, at a time when the size of new home lots is trending down, the three-car garage requires a slightly larger lot. Placement of three-car garages is challenging for builders, who typically site them at the side of the home rather than the front to reduce their prominence in the streetscape.

Colin Powell Keynote Speaker at Builders' Show

Colin Powell

General Colin L. Powell, USA (Ret.) will be the keynote speaker at the grand opening ceremonies of the 2006 International Builders’ Show (IBS) in Orlando, Fla.

“We are very honored to have Colin Powell as the keynote speaker for the 2006 International Builders’ Show,” said NAHB President Dave Wilson. “General Powell is a great leader and a great American, and NAHB’s members are eagerly looking forward to his presentation during the grand opening ceremonies of the IBS.”

A noted statesman and highly respected soldier, Powell became the nation’s 65th secretary of state in January 2001. Previously, he had served in the United States Army for 35 years, rising to the rank of four-star general and serving as chairman of the Joint Chiefs of Staff from 1989 to 1993.

The recipient of numerous military and civilian honors including two presidential Medals of Freedom, General Powell also was the founding chairman of America’s Promise — The Alliance for Youth. Established at the Presidents’ Summit for America’s Future in 1997, and endorsed by every living U.S. President, America’s Promise aims to ensure that all children in America have access to the fundamental resources needed to become responsible, productive adults.

The International Builders’ Show, the nation’s premier event for the housing industry, will be held from Jan. 11-14 at the Orange County Convention Center and is expected to attract 100,000 attendees.

The builders’ show features almost 200 educational sessions on a wide range of housing issues and about 1,600 exhibitors showcasing their products and services in more than 1.5 million square feet of space. It also provides members of the home building industry with an unparalleled opportunity to examine and select the products that will set their new homes apart from the competition.

Online registration and housing for the 2006 International Builders’ Show are open, with the best housing options for the show just a few clicks away. To register and make your hotel reservations online, go to the IBS Web site: www.BuildersShow.com.

By registering and making your hotel reservations now, you will be able to find the hotel and block of rooms you want for your fellow members from your state.

Just about everyone involved in the industry will benefit by coming to IBS. “Our entire company, 10 people, came,” said Stacy Thomas, a designer with Environs Development, which specializes in the design and construction of classic single-family homes and townhomes in Chicago. The International Builders’ Show is the one place we can see everything — and get our hands on everything. We need that.”

More than 100,000 industry professionals — single-family home builders, multifamily builders and developers, commercial builders, remodelers, architects, engineers, Realtors®, subcontractors, land developers and more — attended IBS last year.

First-time attendees who are NAHB members can register for the deeply discounted first-time attendee rate of $100.

Returning NAHB members who sign up for full registration before Oct. 14 ― which includes access to the educational sessions and exhibits for all four days of the show — will get a $25 early-bird discount.

And spouses have the best deal of all. Registration for them is free when traveling to IBS with their spouse.

Paul and Cynthia Peaveyhouse, of Peavyhouse Construction Services based in Erwin, Tenn., were first-time attendees at IBS last year and plan to go back again. “I understand why people say that this is the place to see all the new products, innovations and ideas,” Peavyhouse said. “After the show, we were eager to go back to our local distributors and tell them about what we’ve found that we think is really exciting. We’ll definitely be back again.”

For more information or to register and secure your hotel rooms, go to www.BuildersShow.com.

Registration Now Open for Sunbelt Builders' Show

Registration is now open for the annual Sunbelt Builders Show (SBS), which draws builders and industry suppliers from across the country to see what’s new in this region’s booming housing market.

The 2005 Sunbelt Builders Show will be held Oct. 12-15 at the Gaylord Texan Resort and Convention Center in Grapevine, Texas. The Convention Center is six miles from the Dallas-Fort Worth International Airport and features a variety of facilities ― seven restaurants, an onsite spa, golf at the adjacent Cowboys Golf Course and more ― to ensure every guest enjoys their stay.

More than 300 exhibitors are expected to attend. The show also will feature a variety of NAHB designation courses, including:

Some of the special events planned at SBS include an EPA/OSHA conclave in which attendees can talk with OSHA and EPA representatives from Region 6, the Excellence in Leadership Dinner, a Star Awards recognition ceremony and a two-hour Delaney Vineyard wine tour.

The show will again feature a Harley Davidson giveaway to one lucky attendee. Attendees can fill out as many entry forms for the motorcycle as they like. The winner will be chosen after the exhibit floor closes on Saturday, Oct. 15.

For more information or to register online, visit www.SunbeltBuildersShow.com. Sign up today and receive a $50 Early Bird registration discount.

The Sunbelt Builders Show is produced and managed by NAHB, which owns and manages the largest annual home building event, the International Builders’ Show.

Seniors Design and Marketing Entries Sought

Entries are now open for the 2006 Best of Seniors Housing Awards. The entry deadline is Sept. 23.

The NAHB Seniors Housing Council has announced a call for entries for its 2006 Best of Seniors Housing Awards — the premier design and marketing competition for the 50-plus seniors housing industry. Industry professionals have until Sept. 30 to enter their best community designs, on-the-board plans and advertising and marketing efforts.

“The Best of Seniors Housing Awards is the premier competition for the active adult and seniors housing markets, which are the fastest-growing segments of the housing industry today,” said Randolph Rinehart, CAPS, CGB, a custom builder from Charlottesville, Va., and chairman of the Seniors Housing Council. “By rewarding excellence in design and marketing, the awards program seeks to elevate the quality of housing and help builders better meet the needs of mature consumers.”

The awards program includes more than 50 categories covering all aspects of the seniors housing industry. Active adult categories include overall community, clubhouse design, condominium unit design and model home merchandising. Other design categories include aging in place, assisted living residences, congregate living community, continuing care retirement communities, mixed-use, multifamily housing, renovated seniors housing and special needs housing.

The marketing categories were added last year to enable builders and sales and marketing professionals to compete against the industry’s best. Individual marketing categories include logo, community brochure, direct mail piece/campaign, Web site, black-and-white and color print advertisement, radio and television commercial, sales center and special promotion.

“The 50-plus market is extremely diverse and demands a different type of product and marketing approach than the mainstream,” said Richard Rosen, a Silver Spring, Md.-based architect and chairman of Best of Seniors Housing Awards Committee. “The Best of Seniors Housing Awards recognize builders and other industry professionals for their innovation and for raising the bar for the industry.”

Entry forms and contest rules are available online at the NAHB Seniors Housing Council Web site at www.nahb.org/SeniorsHousingAwards. Or call 800-368-5242 x8220 for more information or to have entry forms mailed to you.

Entries Open for Pillars Design, Marketing Awards

Apartment owners and developers, property managers, architects, interior designers and others involved in the multifamily housing industry are invited to enter. The application deadline is Nov. 1.

Now in its 15th year, the Pillars of the Industry Awards program is the largest and most prestigious of its kind, and both housing professionals and the media look to the awards as a showcase of future trends and innovation.

“The Pillars Awards represent the perfect opportunity for NAHB to promote the benefits of apartment living and for multifamily professionals to be recognized for their commitment to providing superior housing choices, both rental and for sale, for today’s consumer,” said Ron Terwilliger, chairman of NAHB’s Multifamily Leadership Board and CEO of Trammell Crow Residential.

The awards recognize superior achievement in three areas: building, marketing and individual excellence, including “Multifamily Development Firm of the Year” and “Best Multifamily Community of the Year.”

Many of the Pillars Awards categories honor excellence among rental communities, but in the last three years, more categories have been added to recognize condominium properties — a growing and popular segment of the multifamily market.

Award recipients will be honored at a gala ceremony during NAHB Multifamily’s Pillars of the Industry Conference, which will be held at the Hyatt Regency at Gainey Ranch in Scottsdale, Ariz., April 2-5, 2006. The conference is the premier educational and networking event for multifamily developers, owners, managers and lenders.

For complete details, including eligibility requirements and application forms, go to www.nahb.org/pillars.

How Much Does Incorporation Protect You?

Many builders incorporate, in part, because of the limited liability a corporation affords, and because of its tax attributes. However, incorporating your business is no guaranty of avoiding personal liability.

In certain situations a court will disregard the corporate entity and hold the individuals personally liable for corporate acts. This is referred to as “piercing the corporate veil.”

I pop an imaginary water balloon at periodic meetings with clients who own close corporations. Those in attendance almost always get the point ― if a court pierces the corporate veil, there is going to be a mess.

This year, the focus of businesspeople and their attorneys is certain to shift from public companies and the Sarbanes-Oxley Act to private companies, as courts continue to hold individual shareholders responsible for corporate acts. While courts generally support the corporate/limited liability company form, judges will be increasingly vigilant at piercing the corporate veil when the formalities are ignored or when there are supportable allegations of fraud.

To avoid problems, I tell my clients to issue stock, elect directors and maintain corporate records, and to do all of this annually. I tell them to keep separate funds and to deal with related entities at arms' length. I also tell them that sharing office space, addresses and telephone numbers is also a big no-no, unless treated with proper formalities.

Despite how easy maintaining a separate identity can be, private corporate executives continue to disregard the guidelines. I think the key is strong business counseling and industry awareness.

Private business owners maintain the advantage because judges are reluctant to penetrate the holy shroud that surrounds business entities. That said, in a 2004 decision that set the stage for more focus on the issue this year, a federal judge in the Southern District of New York, in JSC Foreign Economic Ass'n Technostroyexport v. Int'l Development and Trade Services Inc., reiterated that if some or all of the following factors exist, shareholders had better start worrying:

If one or two of the above issues creep up, there may not be a cause for concern, but if more than that pops up, clients need to take steps to rectify things. If there is a practice of sloppy bookkeeping or mixing things up between entities or with their personal finances, lawyers should bring a filled water balloon to their next client meeting.

How difficult is it to have separate bank accounts, minute books, records and addresses? Frankly, if it is too difficult for clients, lawyers should consider advising them to consolidate their businesses, because they will eventually be skewered.

Interestingly, while a limited liability company (LLC) is often viewed as a hybrid between a corporation and a partnership, many of the same rules governing corporate veils that apply to corporations apply to LLCs.

Unlike C-corporation shareholders, LLC members can report expenses and income on their personal tax return for pass-through taxation purposes. They can also deduct health and life insurance benefits.

But, like a corporation, an LLC has documentary formalities, e.g., operating agreements and articles of organization, that must be executed. The veil that exists in corporations and the rules for piercing that veil would seem to be the same for LLCs and, probably, limited partnerships, but in each case all of the rules have to be followed.

While private companies remain outside the purview of the Securities and Exchange Commission and free from most federal corporate governance restrictions, their executives need to engage in serious and honest operations with all formalities observed.

If the law is too confusing, I tell people to use basic common sense because perceptions count — sometimes as much as substance. If that doesn't work for you in 2005, I have some extra water balloons.

BuilderBooks.com Offers More Than 250 Books that Help You Build Your Business

Education Calendar

Whether you’re new to the industry, hope to make your next career move or want to improve your company’s bottom line, The NAHB University of Housing can assist you in your education pursuits.

Visit www.nahb.org/education for a comprehensive listing of courses throughout the country. Be sure to visit often in order to view the most up-to-date information in your area.

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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.

Skills Training Helps Rehabilitate Inmates

The Sheridan Correctional Center in Illinois — the facility that hosts the Home Builders Institute's (HBI) Project TRADE (Training, Restitution, Apprenticeship, Development and Education) program — has received national attention for its work in reducing recidivism and reintegrating adult offenders back into society, most recently in the June 26 edition of The New York Times.

Recognizing that drug addiction is a major reason that offenders are ending up behind bars, Sheridan shifted the focus of its treatment to substance abuse, with an emphasis on rehabilitating its prisoners. An expansion of the facility is underway, and with 1,300 beds serving 1,700 prisoners annually, Sheridan will become the largest prison dedicated to drug treatment in the country.

To make its transition from a typical prison to an exclusive drug treatment facility, Sheridan needed to introduce programs designed to rehabilitate substance abusers. Because the lack of employment opportunities for offenders remains a major reason why many do not leave the justice system, Sheridan partnered with HBI, the workforce development arm of NAHB, to provide its population with the opportunity to learn home building skills.

The collaborative efforts between Sheridan and HBI go back a few years to the time when its warden, Michael Rothwell, working as a deputy administrator for Idaho’s Department of Correction, discussed prisoner reentry initiatives, ballooning recidivism rates and the industry’s labor shortages with Jim Woodyard, a prominent builder in the state and an HBI trustee.

From Woodyard, Rothwell learned about HBI’s vocational training programs and how they reduce recidivism rates by preparing participants to enter the construction industry, where skilled workers are in great demand. Impressed with what he heard, Rothwell contacted HBI when he relocated to Illinois.

The initial call from Rothwell came in the spring of last year and by October, HBI and Sheridan had signed a five-year contract to offer Project TRADE at the facility. HBI is training 180 Sheridan students annually in building and apartment maintenance, carpentry and electrical skills.

“Sheridan is selective and the state decides who will be sent here,” says Rothwell. In fact, candidates must be serving six to 24 months and volunteer for the program. “Those with mental illness or violent offenders are not accepted, and those that do make it to the program must spend time in group therapy, drug counseling and classes or job training, such as HBI’s Project TRADE,” he added.

Project TRADE expects its first graduates later this summer, and will continue to operate at Sheridan through 2009.

For more information on Project TRADE, e-mail John Hattery at HBI, or call him at 800-795-7955 x8916.

Home Theatre Can Increase Builder Profits

Joseph M. Piccirilli
The real estate market is booming, the population seems to be in a “nesting” phase and consumers are pouring money into their homes to make them as functional, comfortable and user-friendly as possible. With all of the home entertainment and technology features available today, this would appear to be an easy task. So why do studies show that out of the estimated 1.6 million recent new housing starts, only 10% were pre-wired for integrated home technology, especially home theater? Are builders offering it?

Certainly, builders are not reluctant to maximize their profits by offering these products. Most professional builders recognize the added value that a home theater and other high-tech entertainment features can contribute to the profit margin on a home. But builders may not be able to meet the demand for automated homes without easy access to the best brands all in one place and to qualified, reliable Electronic Systems Contractors (ESCs) who can design, install and standardize these products in new homes.

Ask 20 people this question and you’ll get 20 different answers. To some it might mean a moderate-sized TV and surround sound system in a corner of the family room, while others might think of a dedicated front projection theater room that is theme-decorated and equipped with everything from lighting control to a popcorn machine. So how does a builder wade through the thousands of possible configurations of products for any given home theater?

You start by gaining access to all of the best brands all in one place and, using those brands, you create standardized packages with easy upgrades matched to the psychographics and demographics of your target home owner market. Standardization is the first step on the road to success; and repeatability, reliability and ease of use are the three key elements a builder should look for when selecting a pre-designed packaged system.

These packages should include flat screen TV options. Flat screen has pretty much redefined home entertainment in the past decade, and the significance of this revolution cannot be underestimated. Flat screens bring outstanding picture quality to home theater and have even had an impact on the design and construction of new homes. As the demand for this technology increases, it only makes sense for a builder to partner with an Electronic Systems Contractor who has flat screen integration expertise.

Working with an ESC is a true partnership, and to guarantee success in this relationship it’s best to choose a partner who can do it all — from the initial installation to any optional system upgrades. The consumer electronics industry is dynamic. Products change constantly as technology improves and a builder needs an ESC who keeps pace with these technologies through constant training and certification.

Look for an ESC who understands the fundamentals of doing business with builders — a person who understands accounting disciplines, licensing, permits, insurance and more. Also, look for ESCs who have CEDIA Professional Certification. CEDIA is the Custom Electronic Design & Installation Association, an international trade association of companies that specialize in designing and installing electronic systems for the home.

ESCs that can provide a “one-stop shop” — from design to installation to servicing the products — are your best bet, but where do you find them? One reliable resource is CEDIA. Another is an ESC/dealer-builder program that connects builders from around the country with qualified, reliable ESCs in their area. An ESC who can do the job right the first time, every time, is an invaluable tool for keeping your customers satisfied and growing your business exponentially.

Many home buyers will have extensively researched their home entertainment needs before they even come to you; others will need much more guidance. To help those home owners narrow their choices, you and your ESC should ask the following questions.

These questions will lead to other, more technical questions and this is where the ESC will be a great help. If your client wants a projector, the ESC will have to calculate the throw distance of the projector, the size of the screen, the mounting and the locations for the electrical outlets. For the flat screen TV option, questions such as positioning, ventilation, visibility and electrical outlets must be considered. Other questions will undoubtedly arise that only a qualified professional will be able to answer, so partner with someone who is extremely competent.

It’s undeniable that home theater systems are in high demand and home buyers are expecting to see HDTV and cable connections along with pre-wiring options incorporated into their new homes. Consumer research consistently ranks technology as one of the top 10 attributes of an ideal home. One key to growing your business is to keep your finger on the pulse of consumers’ wants and needs. The second key is to deliver them the best brands via no-hassle, user-friendly, pre-designed package systems. The third key is to have those systems installed by highly competent, certified and reliable ESCs who are dedicated to providing the best customer service possible.

Statistics show that home owners are willing to pay top dollar for the latest technology in their new homes, and home theater systems are an easy sell. If you are not taking advantage of this, then you are giving money away to those who are. Smart builders get the big picture and so do their clients.

Joe Piccirilli has been in the consumer electronics and systems integration industry for more than 30 years. Serving as a retailer for 15 years and as a consultant to manufacturers and retailers for 10 years, he is currently the managing director of AVAD, a nationwide value-added distributor of premium home technology. AVAD is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. For more information, e-mail Joe Piccirilli.

NAHB-Produced Shows on HGTV & DIY — This Week

The NAHB Production Group is a full-service, self-contained, media production unit creating programming for cable television, broadcast television, non-profit, museum and corporate clients. Productions range from magazine format shows for general audiences to museum-installation videos for specialized use.

The production group includes award winning journalists, writers and photographers with experience in broadcast, documentary and corporate television.

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.

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.

Additional Association Partnership Grants Available

Because of the continuing success of the Challenge/Build/Grow Initiative, the National Housing Endowment Board of Trustees has allocated an additional $20,000 in grants for 2005. This brings the endowment’s total commitment for this initiative this year to $40,000.

Open to organizations within the NAHB federation, the Challenge/Build/Grow program offers up to $5,000 in matching funds to state and local home builders associations for projects targeting issues of importance to the housing industry ― job training and workforce development, land use, image building, education, etc.

The National Housing Endowment, the philanthropic arm of NAHB, created the Challenge/Build/Grow Grant Initiative in 2001 to encourage HBAs to develop partnerships that would advance one of these issues in their communities. Since then, the endowment has awarded more than $82,500 to state and local associations across the country.

State and location associations can download initiative applications from the National Housing Endowment Web site at www.nationalhousingendowment.org. Applications must be received by Oct. 3.

Those requesting grants are encouraged to seek advice from endowment staff well in advance of the deadline. E-mail endowment staff at nhe@nahb.org.

Grant recipients will be announced following the 2006 International Builders; Show.

Grant applications and funding are reviewed by the William Carr Scholarship Committee of the Executive Officers Council, which then makes its recommendations to the board of trustees.

Community Service Award to Honor Builders ― Enter Now

NAHB invites builders to submit entries for a new community service award that will recognize members for their generous philanthropic work. The National Housing Endowment Builder Achievement Award for Outstanding Community Service will honor builders who demonstrate an exceptional commitment to bettering their communities and promoting the spirit of giving so prevalent in the home building industry.

The award, to be presented annually beginning with the 2006 International Builders’ Show in Orlando, Fla., will honor eight winners, including Gold, Silver, Bronze and five honorable mentions. Winners will receive a donation to the charity of their choice: $10,000 for Gold; $5,000 for Silver; $2,500 for Bronze; and $1,000 each to the honorable mentions.

To be considered for the award, the community service project should be completed before Nov. 18. In addition, the project:

The complete award description and entry form is available on the NAHB Web site by clicking here.

Indiana Chief Executive Officer to Step Down

After 42 years at the helm of the Indiana Builders Association, Bill Carson has announced that he will be stepping down from his post of chief executive officer at the end of this year.

Under Carson’s stewardship, the state association grew from 12 locals in 1963 to 33 today.

Carson is the longest tenured state executive officer in the nation and the second longest tenured among all of the EOs of NAHB’s state and local affiliates. With 54 years of service, Irv Yackness, CEO of the Building Industry Association of Southeastern Michigan, is the dean. Both have spent their entire careers with the same organization.

Carson received the Seldon Hale Award in 2000, NAHB’s highest recognition for lifetime achievement and management.

Over the course of his career, he has worked on affordable housing laws with eight different Indiana governors, hundreds of state legislators and dozens of members of Congress.

Boasting a homeownership rate of almost 77%, Indiana currently ranks among the most affordable housing states in the nation.

Carson oversaw the passage of several unique state laws, including the nation’s first statewide single-family building code, which was enacted in 1973.

Among other major initiatives he helped enact were: a state sales tax exemption for land developers, a delay in the reassessment of subdivided lots until they are sold or built upon, an impact fee statute, a statutory warranty law and a right to cure law.

Under Carson’s leadership, Indiana is the only state in the nation ever to have passed a law exempting all speculative home builders from the state sales tax. The exemption remained in force for an eight year period from 1965 to 1973.

Carson wrote a best-selling pamphlet, “Diary of a Mad Home Builder,” and a book on the industry, “High Pitches and Other Tall Tales.”

Carson received Indiana’s highest citizen award, the “Sagamore of the Wabash,” from four governors, and he was the recipient of the highest Indiana housing honor, the John C. Hart Presidential Award.

Upon his retirement, Carson will become chairman emeritus of his association’s board and will provide consultation services to the organization.

NAHB Fall Board Meeting in Reno Sept. 7-11

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

The following schedule of events is a partial listing provided as a notice for the upcoming NAHB Fall Board of Directors Meeting, which will be held in Reno, Nev. on Sept. 7–11, 2005.

Meetings will be held at the Hilton Reno Resort and Casino. The fall board program will identify the exact time and place of each scheduled meeting.

Wednesday, September 7

Subcommittees, Task Forces, Working Groups Meetings
National Vice Presidents
State Representatives
Executive Board Meeting

Thursday, September 8

Committees, Subcommittees and Councils Meetings
Past Presidents' Council
National Housing Center Board of Governors
2006 Leadership Meeting (TBC)

Friday, September 9

Committees, Subcommittees and Councils Meetings
2006 Presidential Advisor Meeting
Budget & Finance Committee
Nominations Committee
National Housing Endowment
Resolutions Committee

Saturday, September 10<

Nation's Building News Online: July 25, 2005

New Ruling Strengthens Case for Delisting Pygmy Owl

Floor Plans: Curves, Curves Everywhere

Wells Fargo Supporting NAHB Initiatives

Subscribe Your Employees — You Could Win a Digital Camera

End of Boom Need Not Be Dire

European Housing Sizzles

Encouraging Home Ownership Actually Helps Apartment Owners

Texas Eminent Domain Bill Appears Dead for Now

Condos Proposed at the Fairmont

New York City Seeing a Homebuilding Frenzy

Are Antsy Consumers Browsing for Housing or ‘Bubble’ Information?

A House That Turns Into an Ark Might Save Lives

Endangered Species Act Needs a Rehab

House Passes OSHA Reform Package

Campaign Schools Foster Pro-Housing Candidates

2005 SLGA Conference Schedule Now Available

New-Home Starts Stay Robust in June

Single-Family Builders Remain Upbeat in July

Pricing Data Raise Unfounded Concerns on Sub-Prime Loans

Builders’ Tip: Keeping Mud Off a House Under Construction

Remodeling Posts Biggest Gain in a Decade

The Difference Between Cash Flow and Profits

Three-Car Garages a Growing Trend

Colin Powell Keynote Speaker at Builders' Show

Registration Now Open for Sunbelt Builders' Show

Seniors Design and Marketing Entries Sought

Entries Open for Pillars Design, Marketing Awards

How Much Does Incorporation Protect You?

Education Calendar

Skills Training Helps Rehabilitate Inmates

Home Theatre Can Increase Builder Profits

NAHB-Produced Shows on HGTV & DIY — This Week

Additional Association Partnership Grants Available

Community Service Award to Honor Builders ― Enter Now

Indiana Chief Executive Officer to Step Down

NAHB Fall Board Meeting in Reno Sept. 7-11