Nation's Building News Online: January 30, 2006Print All Articles Text Version |
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Local Regs Hammer Affordable Housing, Study Finds
Local government regulations can add as much as 30% to the cost of a new home, according to a recent study of development regulations in 187 cities and towns in eastern Massachusetts. The study found that for each instance that communities increase minimum lot sizes by one-quarter of an acre, about 10% fewer homes are permitted. Fourteen municipalities in eastern Massachusetts zone more than 90% of their land area for two-acre lot sizes. Half of the municipalities zone at least one-acre lot sizes on more than half of their land area. Two Massachusetts research organizations, the Pioneer Institute for Public Policy Research and Harvard’s Rappaport Institute for Greater Boston, jointly conducted the study and the results of the research are reported in “Regulation and the Rise of Housing Prices in Greater Boston.” James Stergios, executive director of the Pioneer Institute, explained the research findings during a Jan. 12 press conference at the International Builders’ Show in Orlando, Fla. He was joined by Jeff Rhuda, business development manager for Symes Associates, Inc., a Massachusetts development company, and Layne Marceau, president of the Northern California Division of Shea Homes and chairman of the California Building Industry Association. Marceau offered the perspective of builders and developers in California, one of the most heavily regulated states in the country. “It has gotten to the point that more than 20% of the cost of new housing is regulatory costs,” Marceau said. “Some of these are hidden regulatory costs and some are very direct costs.” Marceau pointed to an example of NIMBY-ism and ill-conceived land-use regulation in Livermore, Calif., where impact fees and regulatory costs now add $120,000 to the cost of every new home built. A proposed, moderate-density residential community in an area of Livermore that had been slated for development was put to a vote and rejected by the city’s citizens, 72% to 28%. Instead, the developer must now subdivide the property into 20-acre lots, Marceau said, and, incredibly, still meet Livermore’s inclusionary housing requirement to make 30% of the housing affordable. That is difficult to do, Marceau pointed out, when the cost of each 20-acre lot is over $1 million. Rhuda, speaking about the Massachusetts experience, said the high cost of housing is making it difficult for Massachusetts companies to attract and retain top employees. “Massachusetts is one of the few states that have lost population the last two years in a row,” Rhuda said. “Businesses are saying that housing and healthcare costs are their two biggest concerns.” Among the findings from the Pioneer/Rappaport report:
This research model could be used to assess the impact of local regulations across the country, Stergios said. In addition to this analysis, researchers at the Pioneer Institute and Rappaport Institute assembled and coded a database on zoning codes, subdivision requirements and environmental regulations that as of 2004 governed land use in the 187 communities within 50 miles of Boston. The database is an online catalogue that enables its users to view and compare regulations throughout the sample communities and is available to the public online. For more information, e-mail Blake Smith at NAHB, or call him at 800-368-5242 x8583.
Tidy Katrina Cottage One Approach to Rebuilding Effort
As the Mississippi home building industry works to help Gulf Coast residents displaced by the devastating effects of Hurricane Katrina, its members continue to appreciate signs of progress — like a bright new design for temporary housing unveiled at the International Builders’ Show earlier this month in Orlando, Fla. The outpouring of help from the fellow home builders and product suppliers of NAHB has been overwhelming, Home Builders Association of Mississippi Executive Officer J. Martin Milstead said at a Jan. 11 press conference during the show. And after weeks of moving rubble, some home builders are now able to turn to the work of constructing homes. That’s a good thing, Milstead said. “It’s nice to stop tearing stuff down and to start rebuilding.” Milstead and representatives from the state Governor’s Commission on Recovery, Rebuilding and Renewal told attendees about the week-long discussions last October among distinguished architects, designers, engineers and land planners on how to rebuild the 11 Mississippi communities that stretch along 110 miles of the coast. The experts contributed ideas for rebuilding retail centers, transportation networks and other infrastructure using “smart growth” tenets that will help avoid sprawl and conserve resources. Planners also offered ideas for replacing destroyed housing stock, one of which was exhibited at the Builders’ Show: the Katrina Cottage, a tidy 300-square-foot Gulf Coast-style home with room for a family of four. The house was constructed in less than a week at a cost of about $25,000 in Mississippi and trucked over to the Orange County Convention Center parking lot so builders attending the show could take a tour of it. Inexpensive and easy to build, the Katrina Cottage was constructed from one of more than a dozen plans that commission members are recommending in lieu of traditional temporary housing. “It’s a delightful little place that actually feels huge,” said architect Andrés Duany, who also spoke at the press conference. The cottage has a wide front porch and, depending on how it is sited, can become permanent housing. If built in the front of the lot, it can become a traditional “shotgun” house with new sections added to its rear. It can become a wing to a larger house if built on the side of the lot. If built in the back of the lot as temporary housing while work on a permanent house is completed, the cottage can become a guest house or studio. Duany called on home builders, urban planners and engineers to continue volunteering to assist members of the Mississippi home building industry as they rebuild. The Gulf Coast, he pointed out, is fragile, but it’s also beautiful, and longtime residents want to move back as soon as they can. “We need to rebuild so it’s safer and stronger,” he said at the press conference. NAHB Designations Give Members a Competitive EdgeLast year, more than 1,700 members completed their professional designation course work during NAHB’s National Designation Month in February. The designations they earned enabled them to stay well ahead of the curve and have given them an edge over their competition. Beginning this week and throughout February, The NAHB University of Housing is again sponsoring National Designation Month so members can hone their business skills and convey to their clients the superior training, practical experience and in-depth knowledge that come with earning an NAHB designation. "The chief thing that a designation does is give you a huge boost in self-confidence," said Mike Weiss, CGR, CGB, GMB, CAPS, of Weiss RCMI, who with his four designations, speaks from experience. "It's an emblem that signifies that you have completed an element of study and puts you a cut above — not just because of what you have learned, but because you have taken the initiative to improve yourself." Scott Stephani, CGB, CAPS,CMP, MIRM, of William Thomas Homes in Crystal Lake, Ill., agrees. "NAHB professional designations are important because they give you the opportunity to show your customers that you've done something that other builders in the marketplace have not — continued your education and learned how to be a better builder," he said. Dallas and Houston Champion National Designation Month The Dallas and Houston home builders associations are planning events in February to celebrate National Designation Month. The Home Builders Association of Greater Dallas will have a reception honoring local designees on Wednesday, Feb. 1, at its offices in Plano. Jack Haynes, executive vice president of the National Builder Division for Countrywide Home Loans, will be the event's keynote speaker. The Greater Houston Builders Association will feature a cover story about NAHB designations in the latest issue of its monthly publication, Houston Builder. The association is also offering its members discounts on 11 designation courses throughout February. In addition, local associations around the country are also planning courses, events and guidance to help members obtain their designations and advance their professionalism and business knowledge. Lean More About NAHB Designation Courses NAHB offers more than a dozen professional designations covering industry basics such as business management and marketing, as well as specialized classes, including aging-in-place programs, property management and more. For information about designations, go to www.nahb.org/designations. For information about participating in or promoting National Designation Month, visit www.nahb.org/NDMTools or National Designation Month on the NAHB Web site.
‘Residential Property Management’ Available at BuilderBooks.com “Residential Property Management,” available through BuilderBooks.com, is the savvy property management guide to success. This comprehensive reference tool is the core text of the Registered Apartment Manager (RAM) program. To view or purchase this publication online, click here, or call 800-223-2665. 11 Indicted in ‘Eco Terrorism’ Case
Eminent Domain Will Get Airing in 2006 Legislative SessionFollowing up on the Kelo decision by the U.S. Supreme Court last year allowing governments to take property under eminent domain for the purpose of economic development, members of the Minnesota legislature are lining up reform bills that will be debated in the session that begins in St. Paul on March 1. A proposal by the Democratic-Farmer-Labor Party would prohibit eminent domain from being used as a vehicle to transfer private residential property to another private entity. “If you do your part to keep your house or cabin in good repair, the government will not have the power to take your property merely to hand it over to another private property owner,” said state Rep. Nora Slawik. In his majority opinion in the Kelo case, Justice John Paul Stevens said that states could limit eminent domain if they wanted. The League of Minnesota Cities said that it is opposed to reform measures because state law on eminent domain has enabled affordable housing and environmental cleanup projects to be completed. In a poll of its members, it found that only 100 cities in the state had used eminent domain since the start of 1999; and of those, only 34 used it for redevelopment, removal of a hazardous building or economic development purposes in which the land was turned over to a private owner. (www.knowledgeplex.org)
Preservation Row
D.C.-Area Landlord’s Bets Ride on Metro-Stop Properties
Extreme Home Selling
Higher Ceilings a Hit With Home Buyers
Credit Unions Hold Opportunities for BuildersThis is why I feel there is a special kinship between NAHB and the National Association of Federal Credit Unions. Our organization is constantly striving to empower people of modest means by advocating for the federal credit unions that serve them. These federal credit unions enable moderate- and low-income Americans to achieve financial goals that otherwise may not be obtainable. Through federal credit unions, consumers have access to a multitude of low-cost financial services, such as first-time home buyer programs, welfare-to-work, used auto loans, financial counseling and more. The Unique Nature of Credit Unions Of course, it wasn’t always easy for people of modest means to gain access to financial services. During the Great Depression, commercial banks often closed their doors to everyday Americans with limited resources. Credit unions came about so that all Americans –– not just the wealthy –– could have a financial institution dedicated to meeting their specific needs. When Congress passed the Federal Credit Union Act in 1934, these institutions could be chartered anywhere in the U.S. Since that time, credit unions have continued to grow and expand, yet always remained true to their original purpose. From the very beginning, credit unions have been not-for-profit organizations that are owned by the same people they serve: their members. This unique structure has allowed each credit union to be controlled democratically and has enabled them to typically offer lower rates on loans, higher rates on savings and fewer fees and service charges on the same services offered by banks and other types of financial institutions. All of these characteristics help underscore the unique nature of credit unions and the importance of their existence. Now, more than ever, consumers need the kind of low-cost financial services that credit unions provide. With wages unable to keep up with the rising cost of homeownership, it is no wonder that the National Association of Realtors® recently reported there were fewer first-time home buyers in 2005 than there were in 2004. The good news is that home builders and credit unions are in a unique position to assist more people with becoming home owners. AD&C Lending Services Though it is clear that home builders and credit unions have much to gain by working together, the sad reality is that, most of the time, they don’t. When NAHB asked its members in a recent quarterly survey where they go to obtain land acquisition, development and construction loans, more than 90% said they work with commercial banks and thrifts. (80% alone said they obtained loans from commercial banks.) When I first came across this data, I wondered how many builders know that many credit unions offer AD&C lending services, and that the rates on these services tend to be better than what banks offer. I also wondered how many builders were using banks merely out of habit –– could it be that the idea of working with a different kind of financial institution had never occurred to them? Not only are there many credit unions that offer AD&C loans, but there are some that have established special partnerships with builders in their community. For example, Air Academy Federal Credit Union in Colorado Springs, Colo. offers a special cross-promotional service for builders called the Prime Partner program. Through this program, members of Air Academy FCU who have a lot loan and are planning to build a house are given the names of builders who are Prime Partners. In exchange, these builders tell their clients about financing opportunities through Air Academy FCU. The partnership has resulted in several builders using the credit union for all of their member-financing needs. Utah Community Credit Union in Provo, Utah also has a special arrangement with builders. It offers discounts off origination fees and other costs for builders who take out a long-term construction loan. The credit union has been so successful in attracting local builders that some small community banks are now offering similar deals. Options for Smaller Credit Unions Some builders may wonder if credit unions –– particularly smaller ones –– would be capable of handling an increased demand for housing production financing if more builders were to become credit union members. While the continued growth and expansion of many credit unions that offer AD&C loans indicates that these cooperatives are well-suited for new business opportunities, there are options for smaller credit unions that may need assistance with processing large numbers of construction loans. For example, some credit unions have partnered with The Construction Loan Company, Inc., a full-service mortgage and construction loan lender, to expand their product offerings and ease the loan writing process. CLC, based in Howell, Mich., does business in Michigan, Colorado, Florida and North Carolina, and offers a specialized, “hands-on” approach to construction lending. This enables the credit unions they work with to offer builders a comprehensive financing program that includes an understanding of how construction draws need to be disbursed from a builder’s perspective. Construction-to-Permanent Loans CLC’s construction-to-permanent loan program has become increasingly popular with builders over the past few years. Through this program, builders can offer a complete home package (lot and house) to their clients as a single product with only one set of closing costs. Typically, three separate sets of closing costs would be required when a client needs a lot loan, construction loan and mortgage loan. Aside from convenience, the main advantage of this type of loan is price. Not only is there one set of closing costs instead of three, but the interest rate on the mortgage locks in on the day of the close, before construction begins. On other types of construction/mortgage loans, the interest rate does not lock in until 60 to 90 days before the home is completed and there are no guarantees as to what those rates will be during the time it takes to build the home. While some banks also offer construction-to-permanent loan programs, the CLC loan is unique in that builders who are selling lots they already own do not have to wait until the home is built to get their money back. CLC pays builders upfront at the closing, thereby enabling builders to have financial flexibility to purchase supplies and to hire staff to start construction. Also, banks often require 20% equity or a downpayment equal to that on a small- to medium-size construction loan, which forces many builders to sell homes in order to obtain the necessary capital to start building new homes for their clients. Credit unions that partner with CLC do not require this. Instead, they offer several low- to zero-downpayment options to prospective borrowers, which makes financing terms much easier for the builder and the client. Joining a Credit Union There’s no question in my mind that credit unions are ideally suited to serve home builders, especially considering that most NAHB members are small businesses. Over the last few years, more and more credit unions are offering small business loans through the Small Business Administration's 7(a) lending program. Now that credit unions of any charter type are eligible for SBA lending, they can offer builders an even greater array of low-cost lending products to choose from. With all the benefits that come to those who are credit union members, you may be wondering how builders can join a credit union. While membership is not open to the general public, it is open to individuals who share a common bond as defined by law and regulation. A common bond may include a person’s place of work; the community in which he or she resides, works or worships; or a family tie to a credit union member. For example, builders in Utah are eligible to join Utah Community Credit Union if they live or work in Wasatch, Juab, Sanpete or Utah county, or are related to someone who is a member of the credit union. Once builders identify a credit union they are eligible to join, an application must be filled out and submitted, and the builder must be willing to purchase at least one share (typically $5) of the institution. Once approved, the new member has full voting rights and is an owner of the credit union. With more than 9,000 credit unions in the U.S., it is simple for builders to take advantage of the products and services that a credit union membership provides. But ultimately, credit unions and builders offer more than just improved business prospects for one another. They offer opportunities to improve the quality of life for those in their communities. By working together, credit unions and home builders can foster an environment where all people –– including those of moderate means –– can witness their dreams coming true. It is my sincere hope that NAFCU and NAHB will be bold in seizing this wonderful opportunity of creating better economic opportunities for the people we serve. Key Housing Issues Await Congressional ActionKey legislative issues this year include:
For more information on the association’s legislative agenda for this year, e-mail Michael Strauss, or call him at 800-368-5242 x8252. 2005 Another Banner Year for New-Home SalesNew home sales ended the year with a 2.9% increase in December, rising to a seasonally adjusted annual rate of 1.269 million units, though still 6.6% below October’s pace. “There is no denying that 2005 was a tremendous year for the housing industry,” said NAHB President David Pressly. “Very favorable interest rates and strong buyer demand spurred another year of record sales. However, builders are quite realistic about the future and expect to see an easing of sales this year.” “While new-home sales were quite strong throughout 2005, we see a cooling of the market to a healthy and more sustainable pace in the months ahead, as substantiated by recent surveys of our builders,” said NAHB Chief Economist David Seiders. “For 2006, we expect to see a 6%-7% drop in sales, which is certainly no cause for alarm. This would make 2006 the second or third best year in housing history.” Regionally, new home sales for the year were mixed. Sales were up 13.3% in the South and 3.4% in the West, but they were down 2.4% in the Northeast and 2.9% in the Midwest. There was a 516,000-unit inventory of new single-family homes for sale at the end of 2005, a 4.9 months’ supply at the December sales pace. Of that total, 21% were for-sale units that had not yet been started, 57% were units still under construction and 22% were completed. Seiders noted that builders have continued to maintain a healthy balance between supply and demand. Want to Know the Housing Starts Through 2014? Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com.
Give your economic perspective on NAHB's new economics blog, “Seiders on Housing,” an informal Internet-based discussion forum dealing with topical economic issues, housing trends, survey research and other topics affecting the housing sector of the economy. Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses.
Attend the Spring Construction Forecast Conference in April Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth look at the economic outlook for the housing industry. Existing Home Sales Head Down at Record Year’s EndThe year ended on a downward note, with sales in December dropping 5.7% to a seasonally adjusted annual rate of 6.60 million, down from an upwardly revised 7.00 million in November, and leaving sales 3.1% slower than the pace recorded one year earlier. The result of fast rising home prices and more slowly rising mortgage interest rates, the slowdown to more sustainable levels had long been anticipated, but a recent unexpected decline in mortgage rates may have complicated the picture a bit, even though housing activity is still expected to trend gradually downward. “This is part of the market adjustment we’ve been discussing, with a soft landing in sight for the housing sector,” said David Lereah, the association’s chief economist. “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead,” he said. “Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last year’s record.” Noting that if lower mortgage rates are sustained, Lereah said that “the housing market could see some unexpected lift.” The national median existing home price for all housing types was $211,000 in December, up 10.5% from the same month a year earlier. The median existing condo price was $228,100 in December, higher than the median price of a single-family home, which was $209,300. Condominium and coop sales increased 1.6% last month to a seasonally adjusted annual rate of 877,000, 4.5% higher than a year earlier. Single-family sales, by comparison, dropped 5.72% to a rate of 6.14 million and were 4.2% lower than in December 2004. Regionally, resales were unchanged in December in the Northeast at a pace of 1.09 million. Sales declined 2.6% in the Midwest to 1.52 million, 7.2% in the South to 2.58 million and 11.4% in the West to 1.40 million.
Give Your Perspective on the New NAHB Economics Blog Give your economic perspective on NAHB's new economics blog, “Seiders on Housing,” an informal Internet-based discussion forum dealing with topical economic issues, housing trends, survey research and other topics affecting the housing sector of the economy. Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses.
Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth look at the economic outlook for the housing industry. Data Will Show Risks of Commercial Vs. Residential Loans“This action will allow federal banking regulatory agencies to differentiate the disparate risks posed by residential versus commercial lending activities,” said NAHB President David Pressly. “Providing data on one-to-four family residential construction is an important step in developing a secondary market for single-family housing production.” As a result of the regulatory changes, large banks and banks with a high volume of residential production loans on their books will be required to break out their one-to-four family housing production data in their quarterly Bank Call Report effective on March 31, 2007. All other banks will begin reporting the breakdown of their construction loans as of March 31, 2008. “The bottom line is that more residential-specific data will be reported on loan volume and loan performance, which will invite market analysts and investors to treat housing production loans more favorably. This information will help build a secondary market for construction financing,” said Pressly. For more information, e-mail Michael Carrier at NAHB, or call him at 800-368-5242 x8529. Elderly Tend to Pay Off Mortgages, 2001 Survey FindsConducted every decade since the 1950 Census, the “Residential Finance Survey” uniquely covers all residential properties, including those that are vacant, and all sources of mortgage financing, using information from both property owners and the holders of mortgages or installment loans. The study found that home owners tend to pay off their mortgages as they mature and that most go into retirement without owing on their mortgage. The survey found that the typical mortgage was fixed-rate, although new “hybrid” mortgages, which have recently become a significant factor in the housing market, particularly in high-priced areas, were already on the rise in 2001. Among the results of the survey:
To purchase a printed copy, call 800-245-2691 or 301-763-4636. Zero Down Common Among Entry-Level Home BuyersForty percent of the 7,800 consumers who responded to a questionnaire for the “2005 National Association of Realtors® Profile of Home Buyers and Sellers” were first-time buyers; their median age was 32 and their median household income was $57,200. The median home price for the entry-level group of buyers was $150,000, the Realtors® reported on Jan. 17, and the median downpayment was 2%. The typical repeat buyer was 46 years old and had a median household income of $83,200, the study found. They placed a downpayment of 21% on a home costing $235,000; 11% of these buyers paid cash for their home. In all, 94% of the buyers and sellers who were surveyed said that they believed their home purchase was a good financial investment. “To underscore the value of housing as an investment, all you have to do is look at the difference in how repeat buyers purchase their next home,” said Paul Bishop, the association’s senior economist. “The wealth effect of homeownership provides the greatest source for their downpayment, which is significantly larger. Other findings of the survey:
Only 13% of sellers conducted transactions without the assistance of a real estate professional in 2005, the study found, and 39% of those transactions were “closely held” between parties who knew each other in advance. Eye on the EconomyEconomic Growth Slows Down, But Only Temporarily Growth of U.S. economic output slowed down significantly in the final quarter of 2005. Furthermore, output growth in the fourth quarter was dominated by inventory investment in the nonfarm business sector while final sales of domestic product were quite weak — a compositional shift that ordinarily has negative implications for ensuing GDP growth. Several factors conspired to pull down economic growth in the final quarter of 2005 — lower federal defense spending; downward pressure on construction activity from unusually bad weather in December; a post-hurricane drag from lost energy and other production in the Gulf region; the impact of the energy price shock on consumer discretionary income and spending; and a large decline in motor vehicle production as sales fell sharply once the automakers’ generous incentive programs came to an end. The decline in auto sales was so sharp that inventories of motor vehicles and parts surged in the fourth quarter (despite the substantial downshift in production), providing a partially offsetting positive punch to GDP growth. GDP growth should firm up in the first quarter of this year as energy production recovers from hurricane-related shutdowns, weather effects swing from negative to positive, auto sales pick up and production stabilizes, and federal defense spending moves back into the positive growth range. Indeed, we expect solid contributions to first-quarter GDP growth from consumer spending, nonresidential fixed investment (including structures) and the government sector (federal, state and local). We’re projecting trend-like GDP growth for 2006 as a whole with a modest slowdown late in the year as temporary hurricane-induced positives provide less support to the economy. The Labor Market Is Still in Gear The employment report for December was somewhat disappointing, but the labor market remains fundamentally healthy. Growth of payroll employment was unexpectedly weak (108,000), but the gain for November was revised up substantially and the fourth-quarter average was right on target. Payroll employment grew by 2.02 million over the course of 2005, essentially the same as in 2004, and we’re projecting similar growth in 2006. The unemployment rate edged down to 4.9% in December — equivalent to the cyclical low hit several times during the second half of 2005. The December decline reflected trend-like growth of civilian employment and a slight decline in the civilian labor force. We’re looking for good growth in both employment and the labor force this year, holding the unemployment rate around 5.0% — a level that approximates “full employment” but that should not generate inflationary increases in unit labor costs (assuming maintenance of solid productivity growth). ‘Core’ Inflation Still Is Very Much Under Control Key measures of core producer and consumer price inflation (excluding prices of food and energy) remain very much under control despite potential upward pressures on business cost structures from tightening labor markets and the pass-through of high energy prices. Core producer price inflation was only 1.7% in both November and December of 2005 (year-over-year basis), well below the pace earlier in the year. The core consumer price index (CPI) picked up a bit of steam late in the year, rising to a 2.2% pace in December (year-over-year), and this report raised a few eyebrows in financial markets. However, the technically superior chain-core CPI (allowing for substitutions by consumers away from higher-priced goods and services) held at an historically low 1.7% pace. The Greenspan Fed Will Hand Over Neutral Policy to Ben Bernanke The Fed hiked its federal funds rate target to 4.25% at the conclusion of the Dec. 13 meeting of the Federal Open Market Committee (FOMC), and minutes from that meeting suggest that the central bank is nearing the end of the systematic rate-hike cycle that began in June 2004. Our forecast continues to assume another quarter-point increase at the Jan. 31 FOMC meeting, the last one under Alan Greenspan. The Senate presumably will approve the President’s nomination of Ben Bernanke as the new Fed chairman by Feb. 1, and Bernanke’s first FOMC meeting will take place on March 28. Bernanke may want to establish his own inflation-fighting credentials with a quarter-point rate hike at that meeting, despite some obvious questions about the vitality of the economy and plenty of good news on core inflation. But our forecast still shows steady Fed policy during the early stages of the Bernanke Fed, under the assumption that a 4.5% federal funds rate is essentially “neutral” with respect to the impact of monetary policy on the economy. Long-Term Interest Rates Recede From Late-2005 Levels The obvious slowdown in economic growth, the benign core inflation environment and the prospects for near-term stability of monetary policy have had soothing effects in bond and mortgage markets. The Treasury yield curve now is essentially flat, and the anticipated quarter-point hike in short-term rates by the Fed on Jan. 31 is likely to provoke a mild inversion. This development will neither deter the Fed nor lead to recession, contrary to some speculation in financial markets and the forecasting community. But where will long-term rates go? We continue to believe that a flat (or inverted) yield curve is unsustainable, that the Fed will not drop short rates to “cure” the situation, and that long rates will have to gravitate upward before long. Having said that, we’ve been compelled to cut our estimates of first-quarter long-term rates and reevaluate the patterns for the balance of the 2006-2007 forecast horizon. Stay tuned. Housing Markets Are ‘Simmering Down’ in Various Parts of the Country The accumulation of rapid house price gains has been taking a toll on affordability conditions in many markets for some time, and the upshift in the interest rate structure during the latter part of 2005 certainly made home buying more difficult in most places. As a result, most housing market indicators “rolled over” by the fourth quarter of last year and the long-awaited “cooling” process apparently extended into the early part of 2006. Patterns of home sales, housing starts and building permits are consistent with the hypothesized cooling process, although it’s fair to say that seasonal adjustment difficulties during the winter months make identifying the underlying trends and cycles difficult. NAHB’s surveys of single-family builders provide the most compelling signs of a housing slowdown, although our Housing Market Index stabilized in January following systematic deterioration during the second half of 2005. Everything considered, it’s fair to say that housing has come off the late-2005 peaks but that levels of activity remain quite high by historical standards. This view is consistent with the summary assessment contained in the Federal Reserve’s Jan. 18 “Beige Book” — the commentary on current economic conditions developed by the 12 Federal Reserve District Banks. The Degree of Housing Decline Will Depend Heavily on Long-Term Rates The forecasting community (including yours truly) underestimated the strength of the single-family and condo markets in both 2004 and 2005, primarily because long-term interest rates turned out to be much lower than projected. Furthermore, highly aggressive lending practices in adjustable-rate mortgage markets encouraged investors/speculators and added heat to the housing markets in many areas. Our housing forecasts for 2006-2007 are based on the premise that home sales in 2005 contained an unsustainable element that amounted to as much as 7% of home sales and single-family/condo production. We’re confident that actions by financial regulators and rating agencies will cause a pullback in “exotic” forms of adjustable-rate loans (a Greenspan term) and discourage some investors/speculators in the process. But we’ve also been projecting significant increases in long-term mortgage rates in 2006, and the movement has been in the opposite direction. We’ll just have to keep an open mind as financial and housing market data continue to pour in… 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 Jan. 25 edition. To subcribe to “Eye on the Economy,” click here.
Anticipate the trends, make better decisions and improve your bottom line. "HousingEconomics.com," the online publication from 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 and metro forecasts. “HousingEconomics.com” combines unique scientific research with practical applications providing insights that are original and useful. This interactive Web site at the executive level provides critical data and information quickly, easily and frequently and includes the following features:
Give Your Perspective on the New NAHB Economics Blog Give your economic perspective on NAHB's new economics blog, “Seiders on Housing.” "Seiders on Housing" is an informal Internet-based discussion forum dealing with topical economic issues, housing trends, survey research and other topics affecting the housing sector of the economy. Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economis David Seiders' expert opinions, projections and responses. Then let him know what you think. Builders’ Tip: Coping With Mini-Grinders
Instead of using the backing pad, I put a pair of sanding disks back-to-back so I can cope the whole profile of a molding without turning over the grinder. I can cut to the left or right and the dust keeps heading away from me.
Another use for the top disk is removing extra material from the bottoms of casings so that flooring will slide under. — Gregg Roos, San Francisco Tips & Techniques provided by Fine Homebuilding.
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. How to Grow in a Slowing MarketA region that’s heavily reliant on the troubled auto industry. Six straight years of employment declines. Building permit activity at a five-year low. Not exactly the place you’d pick to grow a successful home building business. But Michael Bosgraaf, of Bosgraaf Homes in Western Michigan, sees it differently. His company, which builds single-family homes and condominium townhouses, ranchers and villas, is not only increasing its local volume and market share in the region, he’s also expanding his business model into warmer climes. Bosgraaf took his experience to the International Builders’ Show in Orlando, Fla. earlier this month, where he offered advice on how to survive — and thrive — in a slowing market. Bosgraaf spoke during an education session sponsored by the Business Management & Information Technology Committee. First, he told builders to take several basic steps that would be needed to create, manage and sell a better product than the competition and set the stage for company growth:
“In a down market, there is nothing more important than customer service or customer focus,” Bosgraaf said. “If you run things well, there’s just as much opportunity in a slow as there is in a stable or growing market.” The key is to run things well. “In other words, do everything right, or die,” Bosgraaf stressed. Running things well, he said, doesn’t just mean keeping costs down, although that has certainly been an important part of Bosgraaf Homes’ formula for success. For Bosgraaf, running things well also means keeping up with changes, streamlining and staying ahead of the curve. For example, Bosgraaf Homes pays on purchase orders, automatically re-bids when notified of a price increase (usually the proposed increase is retracted) and belongs to a builders buying group. The company also manages its trades through a subcontractor rating program in which subcontractors help determine the scopes of their work and how they will be rated. In addition to price, the rating system includes performance and other factors. Pretty vs. Cheap? There’s a Price to Pay for Both Bosgraaf builds three styles of single-family product lines; the Traditional Series, an affordable home with classic styling; the Classic Series, a more flexible home with estate-like appointments; and the Millennium Series, homes in the new traditional urban design style. He also offers three styles of condominium communities — townhome condominiums, ranch condominiums and villas. “In a slowing market, you’ve got to be pretty, or you’ve got to be cheap,” Bosgraaf pointed out. “Cheap has horrible margins.” So Bosgraaf Homes focuses on the “pretty” — in all its marketing, home designs, exteriors and community plans. Pretty does have its costs. While Bosgraaf found out that he could vastly improve the elevations of one of his 2,200-square-foot homes for about $3 a square-foot — pulling back garages, adding roof lines and making other aesthetic improvements — it allowed him to raise the home’s base price without sacrificing market share. It also cost him $25,000 to develop the new plans. “It’s expensive,” Bosgraaf conceded. “What’s even more expensive is a plan that doesn’t sell.” Offering More Than Just Attractive Homes Eight out of 10 homes sold in Bosgraaf’s market are resales. His competition has cut back or abandoned community amenities as the market slowed, but Bosgraaf said he has taken his company in the opposite direction. He has added streetscapes, clubhouses, pools, even a “cruise director” to orchestrate neighborhood activities. “A lot of it goes contrary to what people were telling us,” Bosgraaf said. But the sense of community helped him sell in a weak market. Branching Out or Out on a Limb? Bosgraaf also suggested that builders in slow markets consider diversifying into new geographic markets. Builders can branch out into new markets by community, school district or state, he said, but he cautioned, “As you’re jumping markets, you’re only as good as Google makes you look.” When Bosgraaf first started to expand into Mississippi — a market demographically similar to his market in Michigan — he was confronted by local community members, builders and a local newspaper that had found one of his older house plans on the Internet and charged that he was going to lower property values with “cookie cutter” homes. Bosgraaf eventually overcame his opposition, but he also learned from the experience. When first building in a new market, he said, do not leave open an information void about your company that could be filled with damaging misinformation. Instead, he said, improve communication by having a local face to negotiate for land purchases and local staff in the new market for every customer interaction. Branching out into new markets is expensive, Bosgraaf said. A builder can expect to spend “twice as much as you thought” to finance the expansion. His company went an entire year without revenue, he said. “Once you’re in, you’re in for five years; there’s no takedown strategy.” 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. NAHB Technology Solutions Directory Now Online NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find the information on software and IT solutions and services for their businesses — is now online. The directory is sponsored by the Business Management & Information Technology Committee. Software and technology solutions providers interested in being listed can sign up for:
The Technology Solutions Directory is solely for educational and informational purposes. Nothing in the directory should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the listed software, IT service or the software/IT vendor. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained in this directory. Smaller Builders Can Compete Against the Giants“Goliath is not the most efficient. It’s a case of the supertanker vs. the speedboat,” said Charles Shinn, president of the Lee Evans Group. Shinn said that the giant home builder firms tend to be bureaucratic instead of entrepreneurial, are more risk averse, must maintain large land inventories and often look toward short-term results to satisfy the quarterly earnings demanded by Wall Street. “While Goliath sells undifferentiated product to numerous segments, David can be satisfied with small market segments, be much more customer focused and design products and services for its target customers,” said Shinn. Citing specific examples of putting this philosophy into action, Richard Elkman, president of Group Two Advertising in Philadelphia, explained how Atlanta’s Damascus Homes established a branding position that enabled it to stand out from its competitors. “The owners sell in a deeply faith-based community and close their operations on Sunday because they believe people should be in church,” said Elkman. “They sell single-family homes priced between $110,000 and $170,000 and their company tag line is ‘Grounded on Faith. Built on Excellence.’” Elkman created an advertising and marketing strategy consistent with the firm’s beliefs. The stylized ads, headlined “Heaven knows you’ve been looking for the perfect home” and “Your prayers have been answered,” attracted attention. To help sell homes, Elkman also advises builders to send e-mail blasts to Realtors®. “The key is to outsmart your competition, not outspend them,” he said. While the cost of capital for large builders may be less and they are often able to purchase large land parcels, that does not mean the small builder must be at a competitive disadvantage, Shinn said. “Large builders have to feed the beast and many can be found sitting on an inventory of 7-10 years. If the market slows, they will be forced to get rid of the land, which may present an opportunity for small builders. It’s up to the small builders to utilize better inside information on their home markets, and establish relationships with land owners.” A Leg Up With the Planning Commission In dealing with municipalities, city councils and planning commissions, local builders can also get a leg up on their larger competitors, according to Shinn. “Goliath has a hard time adapting to local requirements and often attempts to use strong-arm tactics to get its way,” he said. “City council planners don’t like that. David, on the other hand, has local knowledge, knows the political landscape and is perceived as part of the community.” Stating that the purchasing power advantage of large builders is a “myth,” Shinn said that small builders can utilize such effective counter-strategies as developing buying cooperatives, purchasing volume discounts and maintaining strong and loyal relationships with vendors and trades. And in the important area of quality control, Shinn said the small builder can more easily utilize the personal touch with their customers, oversee quality inspections during construction and build the home right the first time. “Goliaths tend to be more impersonal. David has been doing a better job in this area,” he said. Finally, Shinn said that David need not be worried about being acquired by Goliath. Citing U.S. Census statistics, he said that there are 79,100 builders nationwide and that those who build less than 100 single-family homes annually comprise 98.5% of the market. “Most of the increase in market share of the top 100 builders is concentrated in the top 10 builders,” said Shinn. And they are only looking to acquire firms who build 100 or more homes annually. This market consists of 1,200 builders.”
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. Subscribe to NAHB’s Business of Building e/Source
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.
NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find the information on software and IT solutions and services for their businesses — is now online. The directory is sponsored by the Business Management & Information Technology Committee. Software and technology solutions providers interested in being listed can sign up for:
The Technology Solutions Directory is solely for educational and informational purposes. Nothing in the directory should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the listed software, IT service or the software/IT vendor. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained in this directory. 'Living Large' Is Key in Latest Kitchen DesignDesigners must begin at the conceptual stage, taking into consideration the relationship of the space to adjacent rooms and traffic flow, and the locations and sizes of doors, windows and partial and full walls, according to Mary Jo Peterson, president of Mary Jo Peterson, Inc., a Connecticut-based design firm that focuses on residential projects. Peterson recommended 42-inch-wide work islands for a single cook and a 48-inch width for two cooks. The landing areas on the primary sink should be at least 18 inches on one side and two feet on the other. Dishwashers should be placed next to the sink. “Never place a range under a window. This creates a fire hazard,” she noted. The latest look for cabinetry is moving to darker, richer and medium tones, said Connie Edwards, who has been involved in the cabinet industry for more than 25 years and serves as the director of design for Timberlake Cabinet Company. “Maple and cherry are the dominant wood species,” said Edwards. “Decorative hardware helps to set a theme in the kitchen. Full overlay and frameless cabinetry require it for function as well as design impact.” To make a kitchen visually appealing, Edwards offered the following tips: vary the depth and height of cabinets, both at the wall and the base; utilize decorative door inserts; incorporate open shelving; apply decorative moldings and accessories; and apply unique cabinet arrangements. As for countertops, the choice is “anything that is solid,” according to Mary Jo Camp, an award-winning designer and 29-year veteran of the kitchen and bath industry who is currently the vice president of Marketing for Standards of Excellence, a premier appliance source for the construction industry located in Rohnert Park, Calif. “Natural stone is still king,” Camp added, but concrete and ceramic are also very popular. Natural Floor Materials Rule There are several fashionable flooring materials, including hardwood, tile, engineered wood or vinyl. “When considering floors, natural materials rule,” Camp said. “Consider green sources and seek to strategically expand or delineate the space.” As for design trends, Peterson said that the key is living large. “The latest innovations include open plans even in smaller homes, multiple work stations, higher ceilings and more windows.” Work zones in the kitchen are growing in size and number. “We are moving from a single work triangle to multiple triangles,” said Peterson. “Some kitchens may have separate and multiple zones, sometimes including sinks, appliances and storage.” And the newest kitchens are incorporating larger pantries, including walk-in, cabinet style and butlers that sometimes combine with a laundry or mud room. One of the least expensive things that can be done to improve a room is to successfully use color, said Edwards. “Color can entice the buyer, enhance the architecture, give a sense of comfort and punctuate a focal point,” she said. She added that this can largely be done with accessories. Sticking with neutral floors and cabinets and adding colorful backdrops such as chairs, bar stools and other furniture can dramatize a space, Edwards said. ‘Design Ideas for Kitchens’ Available at BuilderBooks.com “Design Ideas for Kitchens,” available through BuilderBooks.com, contains more than 500 color photographs of professionally-designed kitchens and is an unrivaled resource. Floor plans are included for kitchens of all shapes and sizes. This book also contains a complete reference for choosing sinks and faucets, flooring and countertop treatments. To view or purchase this publication online, click here, or call 800-223-2665.
Register for the Design Institute in Charlotte
Builders Must Post 2005 Job-Related Injuries and IllnessesIt’s once again the time of year when home builders and other employers with more than 10 employees are being reminded by the Occupational Safety and Health Administration (OSHA) that they must post a summary of the total number of job-related injuries and illnesses that occurred last year. Employers are required to post OSHA Form 300A — not the OSHA 300 Log — from Feb. 1 to April 30 in a common area where notices to employees are usually posted. Employers must make a copy of the summary available to employees who move from work site to work site, such as construction workers, or who do not report to any fixed place on a regular basis. The summary must list the total number of job-related injuries and illnesses that occurred in 2005 and that were logged on the OSHA 300 form. Employment information about the annual average number of employees and total hours worked during the calendar year is also required for the calculation of incidence rates. Companies that recorded no injuries or illnesses last year must still post the form, with zeroes on the total line. The summaries must be certified by a company executive. A list of industries in the retail, services, finance and real estate sectors that are exempt from this posting requirement are available on OSHA’s Web site. All employers who are covered by OSHA are required to report verbally within eight hours to the nearest OSHA office all accidents that result in a fatality or in the hospitalization of three or more employees. For copies of OSHA Forms 300, 300A and 301, which are available on the OSHA Recordkeeping Web page, click here. Several states that operate their own state OSHA programs may have adopted recordkeeping requirements that are different from those presented here. If you live in a state with its own State Occupational Safety and Health Plan, you should contact your local program administrator for further information on the recordkeeping regulations applicable in your state. For more information, e-mail George Middleton at NAHB, or call him at 800-368-5242 x8590. Protect Your Workers and Your Profits The “Jobsite Safety Video,” available through BuilderBooks.com, provides an overview of the key safety issues residential builders and workers need to focus on to reduce accidents and injuries. Based on the “NAHB-OSHA Jobsite Safety Handbook,” this DVD is intended to be used as part of an essential residential construction safety-training program and includes two 20-minute videos. To view or purchase this DVD online, click here, or call 800-223-2665. Precautions Needed for Working in the ColdProlonged exposure to freezing or cold temperatures can cause serious health problems such as trench foot, frostbite and hypothermia. In extreme cases, such as when a worker is immersed in cold water, the exposure can even lead to death. Danger signals that a worker is suffering from overexposure and needs emergency help include uncontrolled shivering, slurred speech, clumsy movements, fatigue and confused behavior. Available in English and Spanish, OSHA’s laminated, fold-up Cold Stress Card provides a reference guide and recommendations to combat and prevent many illnesses and injuries. The tips include:
For more information on construction safety issues, e-mail Rob Matuga at NAHB, or call him at 800-368-5242 x8507. Best in Sales and Marketing Honored at The Nationals at IBSThe year’s most outstanding work in residential real estate sales, marketing and design was honored Jan. 12 at the National Sales and Marketing Awards gala at the International Builders’ Show in Orlando, Fla. The awards are presented by NAHB’s National Sales and Marketing Council (NSMC). "Now in its 25th anniversary year, 'The Nationals' sets the benchmark for excellence," said outgoing NSMC Chair Beth Williams, a Richmond Hill, Ga.-based builder. "From architectural design and interior merchandising to Web site design and sales leadership, our 2006 winners presented the most original, imaginative and successful tactics used in new-home sales today.” A diverse panel of industry professionals from across the country selected gold, silver and regional award winners from more than 1,400 entries. Several top award winners are listed below. For a complete list of category winners and additional details about their entries, visit www.thenationals.com. Community of the Year Gold Awards
Individual Achievement Honors
Legends of Residential Marketing Award The Legends of Residential Marketing Award, begun in 1992, honors builders and consultants who stand apart as leaders in the new home marketing field. Award winners are selected for their professional commitment to the industry and new home community marketing innovations.
Sales and Marketing Council of the Year
For more information, visit www.thenationals.com.
For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine (www.smimagazine.com). Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing.
The Institute of Residential Marketing Offers Courses and Designation Programs for Sales & Marketing Professionals The Institute of Residential Marketing (IRM) offers four designation programs for sales and marketing professionals:
For more information on these designation programs, click here. Strengthen Your Selling Game
Remodeling Growth Entering a SlowdownHarvard’s Remodeling Market Indicator showed that home owners spent $149.5 billion on residential improvements last year, a 4.3% increase over 2004, Baker reported. During the first quarter of 2005, growth was 20.4% ahead of the same period of 2004, he said, before moving sharply downward to a range of 4.3%-4.4% in the second half. In his projections for remodeling activity, Baker said he expected to see “a trajectory of easing moving forward” as consumers rein in their optimism about the housing industry to some degree because of rising mortgage interest rates and a slower pace of home price appreciation. However, remodeling should fare better this year than overall housing activity, which is expected to decline by 4%-5%, he said. Tracking remodeling contractors who are not in the specialty trades and who do have employees, Baker cited payroll statistics gathered by the Department of Labor showing annual payroll growth moving down into an estimated 2.5%-3% range in the fourth quarter of 2005, down from job growth exceeding 5% in the first half of the year. In third-quarter 2005 findings from the Home Design Survey of the American Institute of Architects, where Baker is the chief economist, the 600 architects who were asked to evaluate the remodeling market identified additions and alterations; kitchen and baths; and townhouses and condominiums as the healthiest parts of the home remodeling market. Demand from first-time buyers and in affordable housing registered the lowest on the list, with a negative response. Total remodeling volume, including maintenance, amounted to an estimated $275 billion in 2005, he indicated, with $220 billion spent on owner-occupied units, and the balance of $35 billion going for rental units. This represents almost a doubling of remodeling activity over the past decade, and shows that remodeling activity is responsible for about a 40% share of the entire U.S. residential market. While Baker cited research showing that there is little danger of consolidation squeezing out smaller remodelers anytime in the foreseeable future, an issue that is of greater concern to medium-sized home builders, larger firms in the current slowdown are in a good position to exceed the average growth rates for the industry overall. Larger Companies Will Grow Faster “The remodeling market remains fragmented,” Baker said, with the top 500 contractors accounting for 3.9% of the market in 2003. However, according to Census Bureau statistics, the largest 3.2% of the nation’s remodeling general contractors with payrolls, with annual billings of $2.5 million or more, accounted for 32.7% of total firm billings in 2002. In 2004, according to Qualified Remodeler magazine, 47% of the country’s top 100 remodeling firms engaged in specialty jobs; 12% were design/build contractors; and 21% engaged in other operations such as restoration or insurance repair. Only 20% of these firms were full-service remodelers, Baker said, an indication that these companies typically focus their business in an effort to remain more competitive and efficient. From 1999-2004, according to Joint Center analysis of Qualified Remodeler surveys, the top 10 remodelers out of the top 100 registered median annual growth rates in revenue of 7.7%, compared to 2.2% for the middle 41-50 companies and 1.3% for the 91-100 biggest. The analysis also found that median annual growth of the top 10 firms was highest over the five-year period for the full-service companies, with 10.9% growth; followed by 7.6% for those classified as specialty remodelers, 5.1% for design/build and 6.6% for other work. Because large firms are able to sub out more work and achieve significant efficiencies, they are able to attain far higher levels of worker productivity — measured as net revenue per employee — than smaller remodelers, Baker reported. With some 35 million homes sold over the past five years and home owners holding $10 trillion in equity on properties worth $17 trillion, Gopal Ahluwalia, NAHB’s staff vice president for research, said he expected the remodeling market to remain healthy over the long-run, growing 2%-3% annually on average, adjusted for inflation, through 2013. Ahluwalia was not too concerned about the upward drift in interest rates, pointing out that 50% of remodeling activity isn't usually significantly affected by the rates. "When you have a leak in the roof, you can't wait for interest rates to come down or the economy to improve." For information on remodeling issues, e-mail Jim Lapides at NAHB, or call him at 800-368-5242 x8451. Growing Commercial Council Takes Vision, Relevancy
”I want participation and input from all involved,” Mostow says. “I like my group to tell me what they think, so I may lead them more effectively down the path or help them get to where we are trying to go.” Where that path leads will be decided by an ambitious agenda put forth at NAHB’s recent 2006 leadership meeting. Not surprisingly, the council’s top goal will be to continue improving membership recruitment. A CPA for more than 40 years, Mostow went to work right out of college for an accounting firm that managed numerous real estate transactions. He was responsible for handling the planning of construction projects as well as doing the tax work. He later passed his CPA exam while attending a real estate Master’s degree program at American University. Although he did not complete the program, he was voted its outstanding student. Everything he has done since then has involved working in support of the real estate industry. “Almost everything that I do and a major part of what the Reznick Group does revolves around all phases of real estate,” notes Mostow. For years one of the nation’s major CPA firms serving the real estate industry, the Reznick Group has specialized in commercial, multifamily and single-family real estate, as well as real estate investment trusts (REITs), affordable housing and tax credit consulting. With more than 900 employees and six offices nationwide in Baltimore; Washington; Charlotte, N.C.; Atlanta; Sacramento, Calif.; and Chicago, the firm is very active in NAHB activities. From Principal Accountant to Association Leader In the early 1980s, a client active in the local home builders association suggested that Mostow become a member. Mostow took that advice and has been active ever since, even earning his RAM (resident apartment manager) designation. Long before joining the commercial builders council, Mostow was an active participant in NAHB’s Business Management Committee and the Multifamily Housing Council and worked in support of several other NAHB committees. Over the years, Mostow has brought a number of other Reznick Group staff into NAHB and they have become increasingly active in the tax credit group, multifamily housing and other areas. Currently, Mostow is a life director of his local association and a state associate vice president of the Maryland Builders Association; he was recently named an NAHB life director during the International Builders’ Show in Orlando, Fla. earlier this month. Making the Most of His Work-Life Balance In addition to working with his team at the Reznick Group and participating in his local, state and national association activities, Mostow serves on the Maryland State Board of Public Accountancy. He was appointed to that position by the state’s current governor and by his predecessor. Locally, Mostow serves on the board of the American Red Cross for the Washington, D.C. area. He also assists with fundraising for the Muscular Dystrophy Association and volunteers for the Annual Heartsongs Gala. Looking Ahead As incoming chair of NCBC, Mostow looks forward to a good year and hopes that the council is able to continue expanding. “Since I became involved with NCBC, we have been trying to spread the word about the council and the benefits of membership. That will be a major focus for us this year.” Communicating those benefits effectively will be the biggest challenge for the council. “We just have to get out there and tell everybody what the council can do for them, which will hopefully expand NCBC’s membership base,” Mostow says. He also shared several critical goals of the council this year and into the future:
To stay relevant professionally, Mostow acknowledges the importance of continuing to learn every day. “As an accountant, I have to stay on top of new issues that arise and changes in accounting laws. And, of course, continuing education is a requirement for every Certified Public Accountant,” he notes. For someone with his drive, identifying the qualities that make a great leader is easy: “Be a good listener, be flexible and be willing to adapt,” Mostow states. Builder, Mom Nicole Goolsby Heads Women’s CouncilBy Genilee Swope Parente
But Nicole Goolsby, the council’s 2006 chairperson, sees the council as providing another very valuable and pointed purpose, one that has sustained her during difficult and challenging times. “One huge advantage to council involvement is that you gain perspective on balancing your life. You learn how be a mother — which never takes second fiddle — and a business woman at the same time,” Goolsby says. As the single mother of three whose children range in age from seven to 16, Goolsby says there is no better source for learning how to balance motherhood and succeed in the building industry than other women doing the same thing. Her goal as chair of the Women’s Council, now celebrating its 50th year, is to push the other side of the coin — to help women learn to be top-notch builders and industry leaders. “I’ve never wanted to be ‘one of the guys,’ just a woman getting the job done right,” Goolsby says, while noting that she believes that sentiment is shared by many, if not most, of the members of the Women’s Council. “The main focus during this year will be on defining — through marketing and branding — the benefits of being a council member. We’ve made huge strides in the last few years,” Goolsby notes. “To build on that success, we will be drilling down to specific tasks to get the council known and to increase the value of membership.” Goolsby as Businesswoman Goolsby founded Rion Homes in the Lake Norman, N.C. area near Charlotte in 2000 after first gaining experience in real estate and as a construction manager for a local developer. By 2002, she was building about three custom and spec homes a year in the $250,000-$300,000 range. Today, she builds five homes a year ranging in price from $300,000 to $750,000, many of them larger, prime waterfront homes along Lake Norman. She also has branched out into remodeling. The remodeling business enabled her to take a significant step forward last September, when she hired her first full-time employee. “I put off hiring someone full time for a long time because I didn’t need to be a large company,” Goolsby says. “Life is full of the unexpected, though, and it’s at the point where we’ve grown enough that I need someone to help me keep it organized and become more efficient.” Because remodeling jobs are smaller but more frequent, the move into remodeling gave her the assurance that she’d have the cash flow “to pay someone every month,” she says. But with remodeling came a new and different set of challenges. “With residential construction, there is some flexibility in who does what and when. But with remodeling, you sometimes don’t know what you need until you get behind the walls. Then things need to happen in a certain order. If a subcontractor doesn’t show up on a particular day, it can mess up the entire schedule for the project,” Goolsby explains. That challenge, however, is why she likes the business. “I love the intensive focus you have to have — of getting the right people in there when they are needed,” Goolsby says. The key to success is to develop ongoing relationships with good subcontractors. She has been able to do exactly that, she says, because she has been active in her local home builders association. “The best place to find people is the regular monthly meeting of my associations. I’m always meeting new people and filing their names away. Especially with remodeling, you have to have different crews available for different situations,” she explains. Goolsby as Mom As her enthusiasm about her new assistant illustrates, Goolsby is feeling optimistic that life is about to get a bit easier — both for herself and for her family. The best lesson she’s learned about being a mom and business woman? “It’s a given that it will always be a juggling act. You have to learn to take moments to focus on the big picture and really honestly critique the balance you have in your life,” Goolsby points out. Goolsby as Leader When asked about her mentors, Goolsby will not point to any one person — or even to one gender. She says that there have been many teachers in her life. Some come from her mother’s generation, those rare women of that era who had to hold families together and work, to overcome obstacles such as divorce or the loss of a loved one. Some of her mentors include several of the people who hired her and helped her progress in her career — including her last employer, a developer who encouraged her to take the initiative and absorb as much of the construction business as she could. And as with many aspects of her career, Goolsby has found inspiration and guidance through her involvement in women’s councils and home builders associations. These days, however, she also makes a point of serving as a mentor to others seeking help, guidance and knowledge. “It’s great to be able to give back to the industry, your association and your peers, because you learn more from those relationships than you ever can sitting in a class,” Goolsby says. Her passion for the home building industry and her desire to grow within it stem as far back as her childhood. When she was 10, she recalls, she loved sitting in the rafters of a house being built — she loved the scent of construction. That enthusiasm has only grown. “I still love being there when a house is being framed,” Goolsby says. “I love looking at the skeleton and imagining what is coming next.” This article was excerpted from Building Women magazine. Genilee Swope Parente is a freelance writer and editor based in Dumfries, Va. and a regular contributor to Building Women magazine. For more information, contact Parente by e-mail. IRM Welcomes 157 New Sales Designees to the FoldMore than 150 new home sales professionals were inducted into the Institute for Residential Marketing (IRM) Class of 2006 during a commencement breakfast at the International Builders’ Show in Orlando, Fla. earlier this month. The graduation class included:
The inductees were honored during a breakfast at the builders’ show on Jan. 11. Several awards were also presented during the breakfast. Long-time MIRM, Dan Levitan, of Levitan and Associates, Inc. in Ft. Lauderdale, Fla., was given the IRM President’s Award. Levitan has been involved in the IRM education program since its inception 33 years ago. IRM is “a phenomenal educational opportunity and a phenomenal networking opportunity,” Levitan said. Another long-time MIRM, Kay Green, of Kay Green Design, Inc. in Orlando, Fla., received the Trina Ripley Excellence in Education Award at the breakfast. Green, a commercial and interior designer, is also an instructor of NAHB IRM qualifying courses. Her son, Aaron Jennings, received his CMP designation at the breakfast. For more information about the Institute of Residential Marketing, visit www.nahb.org/designations. Learn More About The NAHB University of Housing 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 educational 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. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available 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. Education Calendar
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