Print-All Page: March 27, 2006

The green home building movement received a major boost on March 13 with an announcement by Cherokee Investment Partners that it is building a demonstration home under the NAHB Model Green Home Building Guidelines that will be the first of its kind in a traditional subdivision.

The acquisition firm, which is a world leader in sustainable revitalization of environmentally impaired properties, said that its Mainstream GreenHome has been designed to look and function as a traditional home and will be used to persuade conventional builders and the home buying public to embrace green building on a national level. It is being built by Corban Homes. The announcement was made in Albuquerque, N.M. in conjunction with the NAHB Green Building Conference.

"Cherokee's commitment to the environment matched with their energy for green construction make them a perfect fit for creating a mainstream green house," said NAHB President David Pressly. "They are coming into the project with their builder just as any traditional home builder would, facing the same issues anyone else would, and they are going to prove that green building isn't so radical and that those hundreds of green decisions are important to our environment and the future of home building."

“We have an opportunity to influence large-scale development and vertical construction,” said Tom Darden, CEO of Cherokee. “Starting with the tens of thousands of homes that will be built on the sites we currently own, we have launched our Green Initiative and …this seems like something we should have been doing years ago.”

The 4,000-square-foot house itself, according to Jonathan Philips, senior director of Cherokee, is being built by a builder who hasn’t built green before on a lot that is not optimal for building green. “We are trying to learn about the economics of a large-scale project,” he said, and are looking for an approach to green building “that may be effective on a subdivision basis.”

As a firm that specializes in brownfield redevelopment, Philips indicated that Cherokee is hot in pursuit of sustainability, smart growth and environmentally sensitive land planning. “We have been certified,” he said, “and we take our fiduciary responsibility to the environment very seriously.”

“Our focus is on products and techniques that appeal functionally and aesthetically to the average American home buyer,” said Brad Wood, project manager of Cherokee’s Mainstream GreenHome.

Wood described several sustainable features that are being incorporated into the home:

Whirlpool is providing all of the appliances for the home, said Butch Gaudette, the manufacturer’s director of trade relations, including Gladiator garage work products and an Energy Star-rated KitchenAid® refrigerator and Duet® laundry.

The GreenHome will be located near Cherokee’s headquarters in Raleigh, N.C. Initial grading and foundation construction have already begun, and the official groundbreaking for the home is scheduled for April 3.

Non-subdivision homes incorporating NAHB’s green guidelines have been built in State College, Pa. and Albuquerque, according to Ray Tonjes, chairman of the NAHB Green Building Subcommittee.

For more information on green home building resources at NAHB, e-mail Calli Schmidt, or call her at 800-368-5242 x8132.

Working Families With Children Locked Out of Homeownership

Despite White House efforts over the last three administrations to boost homeownership opportunities among low- and moderate-income households, especially minorities, working families with children remain underrepresented among the ranks of the nation’s home owners, according to a new study by the Center for Housing Policy, the research affiliate of the National Housing Conference.

Based on the biannual American Housing Survey, the study — “Locked Out: Keys to Homeownership Elude Many Working Families With Children” — found that the homeownership rate of working families with children was 59.6% in 2003, three percentage points lower than it was in 1978 and 8.7 points below a homeownership rate of 68.3% for all U.S. households — despite small but steady gains since 1991.

Between 1978 and 2003, the disparity between homeownership rates for white and minority working families with children widened to 26 percentage points. The number and share of children in working families increased over that period from 41% of the nation’s 60 million children to 54% of nearly 74 million, according to the study, which was sponsored by the Chicago Dwellings Association.

For purposes of the study, working families with children under 18 were defined as those earning at least the equivalent of the federal full-time minimum wage ($10,712 a year) up to 120% of area median income. They were nearly 20 million strong in 2003, constituting 19% of all U.S. households.

“Numerous studies have shown that children of home owners are more likely to do well in school, less likely to have behavioral problems and less likely to become pregnant as teenagers,” said Ann Schnare, chairman of the board of directors, Center for Housing Policy. “Indeed, at least one study has found that the benefits of homeownership on children’s educational attainment may be strongest for lower-income families. Yet is is precisely these families who appear to be lagging behind.”

Noting that it is time to reexamine existing housing policies, Schnare said that “it is white working households and white and minority upper-income households without children who are experiencing the greatest homeownership gains. Meanwhile, homeownership rates have increased the least — and affordability problems have risen the most — among low-income minority families with children.”

Among the trends behind the homeownership gap for working families with children documented in the report:

The report notes that “working families with children, in most instances, earn too much to qualify for direct housing assistance, but far too little to benefit from the favorable tax treatment available to higher income home owners.”

To keep these families from falling between the cracks of the nation’s housing support system, the report recommends targeting homeownership programs to assist low-income renter working families with children, including credit counseling; home owner education; downpayment assistance and second mortgages; and maintaining affordability through community land trusts and limited equity cooperatives, reduced regulatory barriers to development, and developing new sources of capital to reduce costs, such as housing trust funds and employer-assisted housing.

As a solution to the problem, the report also advocates a number of approaches to increase the supply of affordable for-sale and rental housing.

Find Employees Through New NAHB Online Career Center

NAHB is hosting an online building industry-oriented career center that provides members with a cost-effective recruiting solution that makes locating qualified candidates and advertising open positions faster and easier.

NAHB members using the NAHB Career Center will receive a 20% discount off of standard rates for job postings. For a complete listing of all rates, click here.

The career center was created in collaboration with ConstructionJobs.com, a leading employment resource for the construction, design and building industries.

Nation’s Building News readers can visit the site by using the NAHB Career Center tab at the bottom of the issue’s headlines, or by going to the NAHB Web site or www.nahb.org/careers.

Reader Survey: Tell Us What News Is Important to You

Because you regularly read Nation's Building News, we value your input and would like your help.

Please tell us what information in Nation's Building News is important to you — what you read and what you might like us to add — by answering our short online reader survey.

Slowing Home Market to Ripple Through Many Layers of Jobs

With the housing market slowing down, concerns are growing that appraisers, mortgage brokers, home construction workers and other professionals in positions related to housing may be forced out of their jobs, sending recessionary waves through the job market and the economy. Almost four out of every 10 jobs created in the past four years were in housing-related fields, and at the end of last year, a record 9.8% of U.S. workers were employed in the real estate industry, compared to 8.2% a decade earlier, according to Moody’s Economy.com. Mark Zandi, the chief economist at Moody.com, advises people with housing industry-related jobs to “prepare for no pay increase and no bonus, something they have been getting a lot of. At worst, they should be thinking they may need to change occupations.” However, NAHB Chief Economist David Seiders believes that many workers in home construction have skills that will enable them to make a successful transition to commercial building. “The commercial market now seems to be on a pretty good upswing,” he said, “and if housing loses ground, which I think is very likely, we will see some of those workers move into the non-residential side.” (www.usatoday.com)
USA Today (3/20/06); Barbara Hagenbaugh and Noelle Knox

Interest Deduction: Safe or Not?

Although President Bush has said in public that his tax reform panel’s proposal to do away with the mortgage interest tax deduction is dead, Kurt Pfotenhauer, the chief lobbyist for the Mortgage Bankers Association, believes that it’s going to come back as the government starts looking for the money to pay for the deficit. According to the Joint Committee on Taxation, the deduction — which enables individuals to write off interest on up to $1 million in mortgage indebtedness plus interest on $100,000 in home equity loans — represents an annual revenue loss to the Treasury of $72.6 billion. Over the next five years, the panel estimates that the write off could total $434.2 billion. According to data from the IRS on tax returns, more than 60% of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000. Additionally, according to the National Association of Realtors®, about 152,000 of the 36 million returns that take the deduction show an adjusted gross income of less than $5,000. (www.realtytimes.com)
Realty Times (3/22/06); Lew Sichelman

Brand-New Home Is Unlivable

After initially receiving a certificate of occupancy, which was subsequently revoked, the owners of a new home in upstate New York have learned that it will cost an estimated $50,000-$70,000 in repairs to bring it up to code, and that’s assuming that the foundation is not faulty. If it is faulty, according to contractor Moe Ovitt, who isn’t connected with the project, the structure may need to be torn down. On a March 7 tour of the house with a local reporter, Ovitt noted that the plans for the home didn’t match anything he actually saw during his visit. The plans indicated a support beam, for example, where there wasn’t anything but air, and duct tape was used for duct work. “Every home needs to breathe, and this home is suffocating,” he said, reaching up into the peak of the home, where the plans indicated a need for ventilation and there wasn’t any. Ovitt also questioned the placement of a 40-gallon hot water heater in the attic. An enforcement officer called the framing substandard and the insulation below code. He said that the entire structure was beginning to sag and that the foundation, plumbing and heating systems were improperly installed. (www.poststar.com)
Glens Falls Post-Star (3/17/06); Beth Bresnahan, RISMEDIA

Reducing the Juice — Many are Resigned to 72% Rise in Rates, While Others Fear They’re Unaffordable

While Marylanders await a 72% increase in electricity prices from Baltimore Gas and Electric in a few months, experts on consumer behavior are predicting that the rise, if it’s long-lasting, could change residential habits. Home buyers might start shying away from vaulted ceilings, which are aesthetically pleasing, but waste heat. People could decide to use less expensive stoves, like those that burn pellets made of sawdust, to generate heat in place of electrical systems. Energy-efficient light bulbs could become more of a necessity than a novelty. “With energy prices, you see a lot of activity right at the time of the increase, and then if the prices drop back down again, then there’s generally less attention,” said Joe Wiehagen, a senior research engineer at the NAHB Research Center. He said that this time feels different, however. “It appears that there are a number of factors influencing prices, which would lead one to believe this is not just simply a blip that will go away,” he said. “We’re probably looking at a time when energy is at least going to be able to be discussed and there’s going to be an increase in sustained attention to it, which is really what it takes to increase focus not only for builders, but consumers in being more efficient.” (www.baltimoresun.com)
Baltimore Sun (3/19/06); Tricia Bishop and Andrea K. Walker

Lots in Odd Shapes Are No Obstacle to Housing

After a real-estate boom that has made land in desirable neighborhoods scarce and expensive, more builders and home owners are buying up strips and scraps, squeezing high-end homes onto properties once considered uninhabitable and carving parcels out of wetlands and steep hillsides. “Builders are using every nook and cranny,” said Gopal Ahluwalia, NAHB’s vice president of research. For example, Drees Co., a builder in Ft. Mitchell, Ky., says it has halved the size of lots in 80% of its developments during the past five years so it can fit more houses along the street. In the process, it has gone from box-shaped lots to many that are long and skinny, often as small as 6,000 square feet, compared to a national average of 8,800 square feet. In cooling markets, homes on odd-shaped lots run the risk that they will be less appealing than those on conventional lots. One of the biggest challenges for developers of odd lots is how to build houses that justify their high price tag. In Orlando, Fla., Brentwood CEO Frank Pizzica is managing to build $1.2 million-$1.7 million homes ranging from 2,800-5,000 square feet on smaller lots by adding a third floor. With lot widths as low as 35 feet, he overcomes a cramped feeling by including 12-foot ceilings and balconies on each floor and orienting the family room to golf-course and lake views. He also adds finishes like five-inch-thick crown moldings, and provides pools, home theaters and wet bars. (www.chicagotribune.com)
Chicago Tribune (3/19/06); June Fletcher, The Wall Street Journal

Nurturing the Dream of Her ‘Green’ Home

Eco-sensitive building methods are “the future of construction,” according to an NAHB spokesperson. “In 10 years, we may not be calling this green building. We may just be calling it building,” he said. Jackie O’Neil is close to completion of her “green” home in Schwenksville, Pa., which features solar panels on the roof to generate electricity and rain barrels to catch water. It is being constructed with eco-friendly fiber-cement siding instead of wood or vinyl and outfitted with low-flow faucets and showerheads and energy-efficient appliances. Including the land, fees, labor and materials, the final cost of the house will be $533,000, and it is projected that it will cost nothing to heat and cool the structure. Once laughed off as too pricey or even too politically correct, green buildings are cropping up more often, but local examples of green homes are still hard to come by. While some higher-volume home builders are starting to incorporate environmentally sensitive methods, they are still not widely used, and O’Neil decided to build her home herself. (www.philly.com)
Philadelphia Inquirer (3/24/06); Elisa Ung

Canada Causing Builders to Find New Sources of Lumber

In a move that could have significant repercussions for the nation’s home builders and American consumers, the Canadian government has indicated that it plans to enter into negotiations with the U.S. that will likely result in new quotas or other border barriers on Canadian softwood lumber shipments.

In response, NAHB plans to help builders seek lumber sources from other countries and to assist builders who want to engage in the use of alternative building materials wherever practical.

This issue is critical because there are not enough trees available in the U.S. to produce the lumber needed for home building. Canadian lumber imports currently constitute about one-third of domestic consumption and are absolutely vital for the construction of affordable new homes and residential remodeling. Imports from other countries accounted for about 5% of the domestic supply in 2005.

Ironically, this renewed push for a negotiated settlement to the cross-border dispute comes on the heels of yet another unanimous ruling by a North American Free Trade Agreement (NAFTA) panel that Canada does not subsidize its industry.

NAFTA panels have repeatedly and unanimously ruled that U.S. lumber producers are not threatened with injury from Canadian softwood lumber shipments. The verdicts call on the U.S. to rescind costly tariffs that harm housing affordability and to refund to Canada the more than $5 billion in duties that have been collected.

With U.S. consumers and Canadian lumber producers poised to achieve a decisive legal victory, NAHB has been calling on the Canadian government to hold firm in pursuing its legal challenges and to avoid the political temptation to enter into talks merely to improve strained relationships with its largest trade partner.

“The best way to overturn the duties, achieve free and unfettered access to U.S. markets, and receive a complete refund of the billions of dollars that Canadian firms have paid to date is for Ottawa to continue to pursue its legal cases to their conclusion,” said NAHB Executive Vice President and CEO Jerry Howard.

With Canada apparently electing to abandon this route, Howard said that NAHB is prepared to act accordingly to defend the interests of the nation’s home builders and American lumber consumers.

“From a policy perspective, NAHB will work with the U.S. government to increase the supply of German and Swedish lumber, and we will consider options to import Russian softwood from Siberian forests,” he said. "In addition, we will encourage builders to explore using steel and other building materials and construction techniques.”

Currently, there is an 8.7% countervailing duty on Canadian lumber imports and anti-dumping duties averaging about 2.1%.

The U.S. government imposed countervailing and anti-dumping duties totaling 27% on softwood lumber in May of 2002, charging that Canadian imports represented a “threat” to domestic lumber producers. The percentage was subsequently reduced on two separate occasions but remains above 10%.

U.S. law permits countervailing duties to be imposed only if a foreign supplier is benefiting from subsidies and U.S. producers are being injured or threatened with injury as a result.

Several NAFTA panel decisions have unanimously determined that the Commerce Department was using flawed calculations to reach the conclusion that Canadian lumber is subsidized. And on Aug. 10, a NAFTA Extraordinary Challenge Committee upheld an earlier NAFTA ruling that found no threat of injury from Canadian imports, a decision that paves the way for the U.S. to refund the billions of dollars of duties that Canada has paid to date.

Although a NAFTA ruling carries the weight of law in Canada, the U.S. and Mexico, the Administration has failed to implement decisions that invalidate the lumber duties and return all duties paid out by Canadian firms.

Nevertheless, the U.S. is expected to exhaust all its legal challenges within the next several months, at which time it will have no alternative other than to roll back the tariffs and refund the billions of dollars in tariffs now held in escrow by the U.S. Customs Service.

NAHB continues to work with its congressional allies to urge the Administration to adhere to its international obligations under NAFTA. Unfortunately, NAHB’s argument on Capitol Hill for free trade in softwood lumber is being severely undermined by the willingness of Canada to return to the negotiating table at this time.

“By embracing the idea of new talks, Ottawa is sending a conflicting message to Capitol Hill — namely that it is somehow guilty of unfair trade despite the unanimous finding of the NAFTA panels that this is not so,” said Howard.

“We stand steadfast in support of Canada’s legal campaign,” he added, “but resolutely oppose any proposed settlement that would restrict lumber shipments into the American market.”

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

Where Are the Top 100 Metropolitan Areas for 2006?

“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, detailed Excel tables and overviews are available for all metro forecasts.

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 examination of the economic outlook for the housing industry.

Give your economic perspective on NAHB's economics blog, “Seiders on Housing,” an informal Internet-based forum dealing with 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. Then let Seiders know what you think.

Slide Out West Cuts New Home Sales in February

The U.S. Commerce Department reported on Friday that sales of new single-family homes dropped 10.5% in February, although the decline was largely attributable to a big slide in the West that may well turn out to be a one-month fluke.

“While today’s numbers are weaker than expected, they’re generally in line with what builders have been saying in our surveys,” said NAHB President David Pressly. “Demand seems to be tapering off as mortgage rates inch up and it becomes more challenging to afford to buy a home. We believe the market is transitioning to a cooler but still-healthy level.”

“When looking at these numbers, you have to step back and focus more on trends than on month-to-month shifts to see meaningful patterns,” added NAHB Chief Economist David Seiders. “This government report traditionally has lots of month-to-month volatility and is subject to substantial revision,” he said, and “it would not be unusual” to see an upward revision of the 29.4% slump reported for the West last month or some rebound in the region.

Sales of new single-family homes remained above the million-unit mark, at a seasonally adjusted annual rate of 1.08 million in February. Sales improved in both the Northeast and Midwest (by 12.7% and 5.2%, respectively), but fell 6.4% in the South.

The inventory of unsold homes rose to 548,000 units in February, which is a 6.3-month supply at the current sales pace. This was the highest months' supply number since January of 1996.

“One factor in the inventory situation is the substantial housing starts activity that took place in the January-February period as builders took advantage of unseasonably warm weather to get a jump on production schedules,” noted Seiders. “That month’s supply number will most likely come down as housing starts taper off and if the sales pace picks up — as we expect it to.”

NAHB is currently projecting a decline of approximately 8% in new-home sales this year, which would return the market to roughly the same healthy level of activity that was posted in 2004.

Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.

Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.

Rise in February Home Resales Suggests Stabilizing Market

Following five months on a slow downward trend, existing home sales in February climbed 5.2% to a seasonally adjusted annual rate of 6.91 million units, according to the National Association of Realtors®, leaving them 0.3% below their 6.93 million pace of a year earlier.

Unseasonably mild weather conditions in January were likely a factor behind higher levels of home buying activity, according to David Lereah, the association’s chief economist.

“Higher interest rates had been tapping the breaks,” he added, “notably in higher-cost housing markets since mortgage interest rates trended up last fall, but we’re seeing signs of stabilization in the market now with the sales rebound. Home sales should level out in the months ahead.”

The median existing-home price — including single-family, townhomes, condominiums and co-ops — was $209,000 in February, up 10.6% from a year earlier. However, condominiums sold for a median price of $214,300, up only 3.5% from February of 2005.

“We’re still seeing double-digit annual price gains,” said NAR President Thomas Stevens, “but we should get down to single-digit appreciation fairly soon.”

Housing inventory levels were virtually unchanged in February from the prior month, with a 5.3-month supply at the current sales pace.

Regionally, existing sales were up 19.2% in the Northeast, 11.1% in the Midwest and 5.1% in the West. They were down 2.5% in the South.

Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.

California Builders Want to Reverse the Tide on Home Prices

Legislation and court rulings have taken a serious toll on housing affordability in California since the 1960s and the state’s rate of homeownership ranks 49th in the nation, only higher than New York’s, according to a new homeownership study by Alan Nevin, chief economist for the California Building Industry Association (CBIA).

Compared to the national average of nearly 70%, only 58% of Californians own a home, and homeownership levels are significantly lower for California’s growing Latino population, the report says. Nevin cites findings from the Greenling Institute in Berkeley that Latinos have accounted for only 22% of all home loans reported by mortgage lenders even though they make up 35% of the population. The same study found that only one in 20 blacks can afford a new home in California.

Even as late as 1970, the report says, single-family home prices in California were in step with those in the rest of the country, but restraints on development started cropping up gradually since that time and today the median price of a home resold in the state is more than $548,000, compared to $215,000 for the entire nation, a difference of well over $300,000.

The good news, according to the report, is that the situation can be turned around if the state starts supporting public policy reforms that are being advocated by CBIA in its 2006 Campaign for California Homeownership.

“We must act immediately to begin closing California’s homeownership gap,” said Layne Marceau, the state association’s 2006 chairman and president of the Northern California Division of Shea Homes. “Home builders are ready to work together with state and local officials to reform public policies that have prevented too many working families from being able to afford their own home. We have offered real solutions that can help make the American Dream of homeownership a reality for more California families.”

“The state’s population is growing by some 600,000 people a year,” Marceau added. “We need to meet our needs with a wide range of solutions — building more homes and condos, and also increasing the innovative conversion of office buildings and apartments to help give Californians more choices.”

One of the key components of the association’s legislative agenda is Senate Bill 1800, which would ensure that a sufficient supply of land is zoned to meet a community’s long-term housing needs. Also on the association’s legislative agenda are construction litigation reform, infrastructure financing, flood protection, fee accountability and reform of the California Environmental Quality Act, which the CBIA says is often used as a weapon against residential development in both infill and suburban projects.

The report notes that if California’s homeownership rate were even with the national average, an additional 1.6 million families in the state would own their home today.

“California could achieve parity with the nation if it were to add 50,000 owned units each year during the next third of a century,” the report says. “More aggressively, it would require the creation of 81,000 ownership units a year over 20 years.” These figures, however, don’t include the additional housing that will be needed to accommodate population growth.

Increasing homeownership opportunities could result in more than $4 billion a year in increased property tax revenues alone, the report says.

Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.

Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.

Eye on the Economy: Rebounding From a 'Soft Patch'

Incoming data support our contention that growth of U.S. economic output (real Gross Domestic Product) is rebounding nicely from a temporary “soft patch” late last year. We’re still estimating GDP growth at 4.8% for the first quarter of this year, up from 1.6% in the final quarter of 2005.

Recent employment trends clearly show solid economic momentum following some hurricane-related weakness last fall. Payroll employment grew by 243,000 in February, and the January-February average stands at 207,000 — above the average for the past year.

Furthermore, weekly data on claims for unemployment insurance suggest that a comparable gain is in the cards for March.

The current economic expansion now is several months into its fifth consecutive year — and several years of above-trend performance have tightened resource markets and laid the groundwork for a slowdown in GDP growth toward a more sustainable pace. We expect this slowdown to begin in the second quarter and extend through 2007.

The key resource issue is the U.S. labor market. The unemployment rate fell to a cyclical low in the January-February period, the pool of available labor has been dwindling and the labor force participation rate appears to be stuck at about 66%. In addition, growth of average hourly earnings has been on the rise, symptomatic of a tightening labor market.

The early years of this economic expansion were fed not only by a large pool of available labor but also by a large supply of unutilized capital equipment that developed during the investment boom of the late 1990s. But capacity utilization rates have risen considerably since mid-2003 and now are back to pre-recession levels.

Growth of labor productivity (output per hour) has slowed in the process, making it more and more difficult to maintain above-trend GDP growth with low inflation.

The systematic reduction of slack in labor and capital markets puts upward pressure on labor cost per unit of output, and unit labor cost historically has been the key driver of core inflation in the U.S. This connection establishes limits to the amount of above-trend economic growth that our central bank will tolerate.

So far, key measures of core inflation have been remarkably well-behaved, despite the documented pickup of unit labor costs as well as historically high energy costs that have the potential to leak into the core. Indeed, the year-over-year increase in the core Producer Price Index was only 1.7% in February, well below the pace a year earlier, and the chain-core Consumer Price Index (CPI) was up by only 1.8% in February. The chain-core CPI is a key inflation signpost for the Fed, and this measure still is below the top of the Fed’s implicit “comfort zone.”

The Fed Will Continue to Hike Short-Term Rates Despite Good News on Inflation

The Fed firmly believes that upward pressures on inflation are building below the surface, and further rate increases by the central bank are likely — despite the recent benign readings on core price inflation.

Another quarter-point increase in the Fed’s target for the federal funds rate is a virtual certainly at the next Federal Open Market Committee (FOMC) meeting on March 28 (to 4.75%). The public statement issued by the FOMC at that time should give important clues regarding future monetary policy adjustments.

At this point, we’re assuming the Fed will enact yet another quarter-point increase at the May 10 FOMC meeting and then go on hold for an extended period of time.

Personal consumption expenditures grew at a robust 6.5% pace in 2005, accounting for 70% of the level of GDP and contributing a similar portion to the overall GDP growth rate. However, disposable personal income grew by only 4.3% last year, and the strength of consumer spending drove personal saving deeply into the negative zone. Negative saving was accomplished via debt-financed consumer spending, and the Federal Reserve’s household debt service ratio (debt payments to disposable personal income) was driven to a record high in the process.

These borrowing and spending patterns seem to suggest irresponsible behavior on the part of America’s households as well as an unstable situation that could deteriorate rapidly as consumers regain their senses. However, the Fed’s national balance sheets show very strong growth in household net worth during 2005 to a record $52.1 trillion, despite an 11% increase in liabilities (including a 14% increase in home mortgage debt).

Strong growth in household assets was driven by a 15% gain in the market value of real estate, and most of this gain represented holding gains on homes generated by strong price increases (the rest was net investment).

Housing equity grew by 16% during 2005 to a record $11.2 trillion and the housing debt-to-equity ratio actually came down a bit during the year.

It’s clear that strong house price appreciation fueled consumer spending and allowed negative saving in 2005 while strengthening the overall household balance sheet at the same time. Indeed, housing equity and household net worth now are so large that this force will continue to support consumer spending in 2006-2007 even if house price appreciation slows down (as we expect).

It’s also worth noting that the wealth effect is the dominant force, rather than the “realization” or “withdrawal” of capital gains on housing via borrowing (cash-out refinancings or home equity loans). Everything considered, the support to consumer spending provided by the housing wealth effect should be considerable during the 2006-2007 forecast period but not quite up to recent standards.

Recent changes to NAHB’s forecast are concentrated in the interest rate structure and the housing sector. On the rate front, we’ve added another quarter point to the Fed’s rate-hike cycle (on May 10) and bumped up most of the interest rate structure by 10 to 20 basis points.

These changes result in reductions in housing starts and home sales for 2006-2007 that are a bit deeper than in the previous forecast. These adjustments result in a slightly weaker pattern for the residential fixed investment component of GDP, but we’ve retained the overall GDP growth pattern by hiking exports and nonresidential fixed investment slightly — including investment in nonresidential structures.

The kind of sectoral rotation we’re forecasting is tricky business, of course, and housing definitely faces higher risks than earlier in the economic expansion. For one thing, an abnormally large share of national employment growth has been concentrated in housing and housing-related industries, and job losses in these areas may be hard to replace in the other sectors that we expect to take up the slack.

Another nagging concern relates to potential shifts in behavior by those investors/speculators that overheated the single-family and condo markets last year. We’re fully expecting reductions in investor purchases, and we view that as a healthy development. But we’re definitely in uncharted waters when it comes to investor behavior, and large-scale cancellations of sales, along with dumping of units owned back onto the markets, would be more trouble than we’re anticipating.

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 March 22 edition. To subcribe to “Eye on the Economy,” click here.

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:

Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.

Builder’s Tip: Sharing Compressed Air

If you’ve ever had a nice set of air-hose splitters borrowed into oblivion (now who borrowed that from me?), you may appreciate this trick.

This setup allows me to plug in at any connection, at the compressor or in the field simply by unplugging someone else’s hose, plugging mine into where theirs was and plugging theirs back into the female coupling in the T-fitting.

This arrangement saves time, and you never irritate anyone else by stealing their air connection — at least for more than five seconds or so.

Shortly after adapting my hoses this way, it dawned on me that I ran the risk of getting dirt and debris into the female coupling when it wasn’t being used. So I ran a plug into a male coupling and drilled a hole in it for a small chain that attaches to a key ring at the end of the hose. Presto. A built-in debris barrier.

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.

Two Sure Ways to Improve Profitability

Charles Shinn, Jr., president of the Lee Evans Group and Shinn Consulting based in Littleton, Colo., does not necessarily believe that hiring extra staff is the answer when your business is stressed, pressed and overworked.

Instead, Shinn recommends two sure ways to improve profitability — without adding staff:

Shinn, who led an NAHB Business Management education session during the International Builders’ Show in Orlando, Fla. earlier this year, said builders should assess their management systems before bringing on more staff. By doing so, he said, you may discover how many man hours and how much money you’re wasting by relying on poorly designed systems, outdated processes and untrained employees and subcontractors.

“Sometimes you need to improve management systems, rather than hire people,” said Shinn, who noted that it is easier to hire people than to fire them.

Shinn also stressed that it is important for builders and others in the industry to establish a minimum gross profit — and then stick to it.

While the typical builder earns 5% net profit, Shinn says the best-run home building companies net more than 25%.

“Stop giving things away,” he said, while noting that some builders who operate this way should consider calling themselves nonprofits. “At least you’d get some PR.”

Direct construction costs are the variable, he said. “Do not treat profits as a residual.”

The bottom line, Shinn said, is to make your business systems consistent, reliable, efficient and effective. In short, develop a “culture of discipline,” he said.

To read more Shinn tips on how to improve profitability, visit this new Business Management Resource in the Business Management Tools section of the NAHB Web site: www.nahb.org/biztools. (This link is available to NAHB members only.)

NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find 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.

NAHB Has More Than 250 Resources to Help You Run Your Business More Profitably

Go to NAHB's Business Management Tools Web pages (available to NAHB members only) for instant access to more than 250 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 association'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.

Former Del Webb CEO to Builders: ‘Do Your Homework’

LeRoy Hanneman, Jr.
Former Del Webb CEO and president
LeRoy C. Hanneman, Jr., one of the top experts in the 50+ housing field, has been involved in all facets of the active adult building industry. As the former CEO and president of Del Webb Corporation, now a brand of Pulte Homes, Hanneman was instrumental in making the Sun City name synonymous with active adult living.

His talk, “X’ers, Boomers, Seniors: Building with a Mindset,” will address how understanding the motivation of boomers can help the building industry make the most of this emerging market.

Below, Hanneman answers several questions about some of the changes he’s seen in 50+ housing and what he sees on the horizon for the industry.

NAHB: How has the active adult industry changed since you began at Del Webb?

Hanneman: The active adult market is far more competitive and geographically diverse than it was in the 1970s and '80s. Back then, there were just a handful of companies specializing in delivering the active adult lifestyle in typical destinations like Arizona and Florida.

Today, the active adult market is segmenting at a dramatic rate, due to the relative affluence the baby boomers enjoy versus that of the prior senior generations. They know what they want and they are willing to pay for it. A cookie-cutter approach to housing design doesn’t work anymore. My assumption is that this segmentation of the market will continue.

NAHB: How are today’s consumers different than when you first came on the scene? How are the baby boomers rewriting the rulebook?

Hanneman: Back in 1960, when the first Sun City was unveiled in Arizona, it was the talk of the country. Buyers from all over stormed into the Phoenix-area community for the chance to purchase their retirement dream home — a 950-square-foot, brick-built home with two bedrooms and one bath for $8,500.

The recreation center with its swimming pool at that first Sun City seems downright antique by today’s standards, but 46 years ago it delivered a little slice of heaven.

The old idea was to deliver a “one size fits all” home and community, and it worked very well for a long time, but those days are past us now.

Today, the active adult buyers want more sophisticated home designs and more tailored lifestyle activities. The shuffleboard courts of yesteryear have been replaced with technology labs and health/fitness spas. They also want a variety of destination choices — not everyone prefers the Sun Belt.

NAHB: How can builders meet the unique needs of today’s evolving 50+ consumers, especially their desire for upscale housing? What do today’s buyers want?

Hanneman: Today’s consumers demand a market-driven, bull's-eye design response. Enclaves are hot; mega communities are not.

Location is important, as are access to services, entertainment, education and quality medical care.

NAHB: Sun City was once the model for active adult communities. What do you think is the next big thing that will take the industry by storm?

Hanneman: The Sun City concept has evolved with time. The newer Sun Cities are often smaller than the original 8,900-acre community. And they have the lifestyle offerings that today’s buyers want.

I headed the Las Vegas operations for Del Webb for many years, bringing three Sun Cities out of the ground, including one located within the Del Webb master-planned community of Anthem, an all-ages community. I believe the idea of including active adult neighborhoods within multi-generational communities has tremendous merit and will continue to grow with demand.

I also believe that boutique communities that target a very specific customer profile, coupled with a precise execution of their product design and amenities, will do well. An example of this would be a community with a fitness/spa amenity theme where the housing product also accommodates fitness and health components, such as a personal exercise room or a gourmet-style kitchen for special dieting needs.

Of course, any community design must accommodate and provide solutions for the customer’s physical, mental and social needs.

If the amenity package budget can’t stretch far enough, those extras must be available in the surrounding area, supplementing the builder’s package.

For example, builders can entice seniors to weekday vacancies at an off-site daily-fee golf course by arranging for and offering discount pricing to their 50+ buyers. This enables builders to supplement their amenity package without adding the cost of building a golf course to their community.

NAHB: What can builders and others in the housing industry do to maintain a competitive edge? How can they compete with Pulte/Del Webb and the other large national builders?

Hanneman: Builders need to do their homework — to precisely tap the market segment they are targeting.

Make no mistake, an active adult housing purchase is purely discretionary. Active adult buyers don’t need to buy from you or anyone else.

What are you doing differently that will pull them to you? What are you delivering that makes them excited about the expanded potential of their lives?

Finally, don’t get greedy. You must execute exactness and deliver both value and quality. Integrity in the active adult industry is crucial to success.

The seniors housing symposium is the premier educational and networking event for industry professionals who serve the burgeoning 50+ market.

Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences. To view or purchase this publication online, click here, or call 800-223-2665.

To learn more about the 2006 50+ Housing Symposium, which will be held April 24-26 in Phoenix, click here.

Learn How to Market and Sell to the 50+ Home Buyer

“Building for Boomers & Beyond: 50+ Housing Symposium 2006," which will be held April 24-26 in Phoenix, offers a variety of sales and marketing-related courses focused on capturing the attention of the 50+ home buyer and will give attendees the keys to successfully tap into the growing 50+ market.

In addition to the sales and marketing program, the symposium offers courses in:

Pre-registration for the 50+ Housing Symposium ends Friday, April 7. On-site registration is $100 more. To register online, click here.

“Marketing Seniors Housing,” available through BuilderBooks.com, provides a wealth of proven techniques and nontraditional strategies for marketing to the 55+ market. This book helps you successfully enter this market niche.

Real Rents Slip in January as Energy Costs Rise

The encouraging increase in real rents that occurred at the end of last year slipped in January, according to NAHB’s real rent index.

The index, which adjusts residential rents in the Consumer Price Index (CPI) for inflation, slid from 107.5 in December to 106.9 in January, indicating that overall inflation outpaced the growth in rents.

The energy component of the CPI, which alone accounted for 70% of inflation last month, was largely to blame for the decline in real rents, according to NAHB economist Paul Emrath.

Nominal rents advanced at an annual rate of 1.6% in January, down from a 2.8% clip in both November and December. Not weighed against the overall inflation rate, rents picked up steam last October, when they were climbing at an annual rate of 4.5%.

Real rents started out 2005 at 108.0 on NAHB’s index and have yet to return to that level.

On top of lofty housing prices, rising mortgage interest rates are expected to gradually slow home buying demand this year, according to housing economists at NAHB, and that should carry some new demand over into rentals.

For more information, e-mail Paul Emrath at NAHB, or call him at 800-368-5242 x8449.

Attend Upcoming Multifamily Conference in Scottsdale, Ariz.

The NAHB Multifamily Pillars of the Industry Conference will be at the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch on April 2-4. Onsite registration is available.

The conference focuses on best practices and real-life lessons presented in case studies on the finance, design and development of rental apartments and condominiums.

Extension of Comment Period Sought for Lead Paint Rule

NAHB is urging members of the association to contact the Environmental Protection Agency and request an extension of its April 10 deadline for public comments on potentially overreaching and expensive lead paint regulations. More time is needed to effectively counter some of the erroneous assumptions upon which the EPA has based its proposed rule. (To read more about this issue, click here.)

The EPA has provided tens of thousands of pages of material to substantiate the need for the new regulation, and an extension of the deadline would provide NAHB with more time to wade through that vast amount of material.

With an extension, NAHB is also hoping to complete its research on lead exposure rates during typical remodeling activities, so that specific hazards can be addressed through appropriate cost-effective regulations rather than a one-size-fits-all approach.

Once the deadline closes, the EPA will review all the comments it has received from individuals, businesses and organizations and finalize the lead paint rule, which is estimated to result in more than $5 billion in annual compliance costs.

For more information, e-mail Jim Lapides at NAHB, or call him at 800-368-5242 x8451.

26 Design Trends for 2006

By Doris Pearlman, MIRM and Jan Mitchell
A new year is always a great time to assess your model homes and to take stock of your buyers’ latest cravings. Below are 26 trends to watch out for.

If you follow these 26 trends, you’ll be well on your way to wowing your buyers this year.

Doris Pearlman, MIRM, is the president of Possibilities for Design, Inc., a nationally recognized, award-winning interior design and merchandising firm based in Denver. She and her staff have received multiple awards from home builders across the nation. Pearlman received the “Excellence in Education Award” in 1999 from the Institute of Residential Marketing.

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 (IRM) offers four designation programs for sales and marketing professionals:

“Sales and Marketing Checklists for Profit-Driven Home Builders,” available through BuilderBooks.com, covers the major steps involved in successful new home sales. Learn the ins and outs of the comprehensive contract, the move-in, warranty service, asking for referrals and a great close. This expanded second edition includes a new chapter on utilizing technology in your marketing and a more extensive chapter on mulitcultural sales.

CAPS Credits Available at Pre-50+ Symposium Courses

Kevin Barron of Alexandria, Va., who attended the “Home Modifications” course at the International Builders’ Show in Orlando, Fla. earlier this year, was surprised by the wide range of people in the class. “Doctors, designers, remodelers and builders were all there to see the techniques and products in person,” said Barron. “Unless you see and hear real life examples, you don’t get the full scope of what’s out there for the 50 + market.”

“Business Management for Building Professionals” is a required course for many designations. In this course, students learn the components of a business plan, along with strategies for managing common challenges experienced in startup businesses.

“I would definitely recommend 'Business Management for Building Professionals' because it’s very important to help grow your business, especially if you’re a one-man show,” said Billy Doughty, Jr. of Doughty Construction, Inc. based in West Point, Miss.

To register, e-mail The NAHB University of Housing, Office of the Registrar at registrar@nahb.com, or call 800-368-5242 x8338. To learn more about NAHB designation and courses, visit www.nahb.org/designations.

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.

At the NAHB/BALA Design Institute for Builders, you'll learn the latest in residential housing design trends from the industry's top professionals, tour beautiful award-winning homes and communities that display the best in cutting-edge architectural design and learn how to profitably apply these design ideas to the homes you build.

The Design Institute will be held June 5-7 at the Westin Charlotte, Charlotte, N.C.

To register and for detailed information, visit www.nahb.org/designinstitute.

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 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.

The Design Institute will be held June 5-7 at the Westin Charlotte, Charlotte, N.C.

To register and for detailed information, visit www.nahb.org/designinstitute.

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.

Insurance Rates Are Going Down

For many businesses, insurance is a major expense item. In order to forecast premium budgets, business owners should become familiar with the current state of the insurance market and how it may affect their renewal pricing.

For the most part, rates have come down. Two years ago, average rates were increasing at an annual rate of 18%. In July 2004, they were increasing at a rate of only 5%. This year, on average, rates have been decreasing by 5%. The question now is how low will prices go?

All of the experts consulted at the time this article was written attached caveats to their projections, such as “barring any abnormal catastrophic activity in 2005,” and most of their projections were made prior to Hurricane Katrina.

The impact of what will certainly amount to the largest insured losses from a natural disaster in U.S. history remains to be seen, but outside this one event, the insurance industry has actually been quite healthy.

Net written premiums increased 4.8% in 2004. Policyholder surplus has grown more than 40% since 2001 and has reached an all-time high. In 2004, the industry’s Combined Ratio (loss payments plus expenses divided by premiums) dropped to less than 100% (to 98.1%) for the first time in decades. In other words, the industry actually earned an underwriting profit.

Each line of business is different, and each individual account is rated based on various factors. Two companies in the same industry can have dramatically different rates depending on the firms' loss histories and business and safety practices. Nevertheless, some conclusions can be drawn based on what we know.

Property, general liability, automobile and excess liability for preferred industries or businesses collectively comprise what the insurance industry calls the “standard market.” Most insurance companies are still maintaining a high degree of underwriting discipline, rewarding those firms with good loss histories as well as solid business and safety practices. It is anticipated that this market will remain competitive at least though 2006 and possibly 2007.

Developer and contractor general liability is basically split into two different areas — commercial and residential. On a composite basis, commercial contractors have seen rates come down approximately 7% over the last year. Experts expect the downward trend in rates to continue over the next 12 months, mainly because four or five quality insurance companies are now interested in insuring commercial builders.

Residential construction is entirely different. Although no sharp increases in rates have occurred, a big improvement from previous years, there have been no rate decreases either. Most underwriters are trying to retain their current rates.

At the same time, coverage restrictions continue. In addition to exclusions in the standard coverage form, it is not uncommon to see additional exclusions pertaining to prior damage, multifamily housing, subsidence, mold, silica, EIFS — the list goes on. Carefully evaluate each prospective program to understand the coverage that is being offered.

Today, it is increasingly more difficult to get additional insured status for completed operations. The current endorsements being offered by most companies are restricted to ongoing operations.

Some underwriters are starting to realize that they provide broader coverage under contractual liability provisions than they do under additional insured endorsements. As such, contractual liability is starting to be rewritten to track with additional insured endorsements.

Almost all general liability policies in the market today for developers and contractors contain multifamily housing exclusions. The only way to insure these projects is with an Owner Controlled Insurance Program (OCIP), or “wrap-up,” policy. Although the market for OCIPs has improved over the past year, these policies are still extremely expensive — in the 1.5%-2% of sales cost range for a $2 million limit — and they are subject to minimum premiums that are about half the limit offered. The minimum premium for a $2 million policy would be approximately $1 million. At a rate of 2%, business owners would need to generate $50 million in sales to hit the minimum premium.

Recently, a few new underwriters have entered the OCIP field. Some are offering lower minimum premiums on smaller projects. In addition, some underwriters are now allowing selected developers to combine several projects under one policy, which will lower the per-unit cost for the insurance.

Professional liability rates have leveled off and have started to decrease on preferred accounts. However, rates are not dropping dramatically.

Businesses that renew within the first six months of 2006 should see relatively significant rate decreases in the 15%-25% range. Clients renewing in the second half of the year also should receive rate decreases, but they will be smaller. Ultimately, the only way to accurately forecast 2006 workers compensation cost is to sit down with your broker, work though a projected 2006 experience modification and discuss what rates will be applicable for the company’s specific classifications.

Workers compensation insurance is more of a financing tool than an insurance product. Ultimately, through the use of experience modification, employers will end up paying their own claims. Because of this, the only way to control the premium in the long run is to manage the underlying cost. There are numerous strategies business owners can employ in audits, experience modification, injury prevention and injury management to effectively manage their workers compensation costs.

Currently, it’s a buyer's market for insurance. The industry is earning a profit and making a decent return on equity; it has adequate surplus; and there is ample competition. Assuming a firm has a decent loss history and is otherwise acceptable from an underwriter’s perspective, it should see flat to modestly decreasing rates on its 2006 renewal premiums (0%-10%). In the case of workers compensation, these decreases could be even greater.

Woman Builder Works Miracles for Katrina Shelter Victims

Serving as general contractor, Toni Wendel, president of Olde World Builders and Remodelers, LLC and current president of the Home Builders Association of Greater New Orleans, recently completed work on the 4,000-square-foot, 24-bed women’s shelter at the historic New Orleans Rescue Mission, which was badly damaged by Hurricane Katrina.

On behalf of HomeAid, Wendel renovated the 100-year old building with the help of her crew and several hundred volunteers — from college students, who assembled furniture, to adult volunteers from all over the country who offered everything from their hearts and hands to their carpentry skills.

The shelter is the first new facility to open for Katrina evacuees in New Orleans and fills an ongoing need for housing for women who are being vacated from FEMA-funded motels or are still living in tent communities and on cruise ships.

Wendel, who has been in the business for 15 years and grew up in a builder household, took over Olde World Remodeling when her husband passed away several years ago. The family-run business includes her daughter, who manages the office, and her son, who is in charge in the field.

“Toni, who is from the New Orleans area, saw a vision of what the shelter could be and dedicated herself to restoring it to its original splendor,” said Diane Dempcy, director of HomeAid’s Gulf Coast Rebuilding Fund.

That dedication extended to her crew, who helped her complete the shelter renovations on a really tight timeframe, noted Wendel. The project, which turned out to be much more involved than originally planned, required working on weekends to complete the job.

Calling the effort “little short of a miracle,” Wendel noted that unlike many other builders in the area, she retained all but one of her staff in the wake of Hurricane Katrina. Having a full crew on hand enabled her to complete the project while still managing her other commitments.

Expressing her dedication to the project and to her city, Wendel said that, “Nothing will deter us. In the long run, it will be a better city.” She also noted that the success of the long rebuilding effort ahead hinges on educating builders to make sure that things are done correctly and to code. “It’s important that we work with licensed builders,” she added.

Although it was not flooded, the shelter suffered damage to its roof, chimney, siding, porches and walls, both from wind and leaking water. Fortunately, the building didn’t have to be torn down to the studs, Dempcy noted. But it did have to be leveled out and the floors needed to be restored. A new utility room was added to the back of the building and a porch was added to the front. The cost of installing hurricane-proof windows was covered by Pella Windows, and James Hardie Building Products donated the exterior plank.

“Just last week, we visited the St. Bernard Parish tent city,” said Dempcy. “Looking at one of the tents with its scattered cots that contained bedding, televisions and work clothes, I was overwhelmed by the loneliness and despair of the people living there,” she said. “There was no privacy and no place to store their belongings. It was an overwhelming validation of what HomeAid is doing in New Orleans and around the Gulf Coast. Although the exact statistics are still hard to quantify, it is clear that the need for transitional housing continues to be dire.”

HomeAid is the nation's largest builder of housing for the temporary homeless and has helped more than 60,000 men, women and children. It now has locations in 17 markets within 11 states, has completed 117 housing projects nationwide and has another 55 projects currently in development. Altogether, HomeAid, which was established in 1989 as a non-profit organization by the Building Industry Association of Southern California, manages combined finance/construction assets exceeding $111 million.

For more information or to make a donation to HomeAid’s Gulf Coast Rebuilding Fund, call 949-258-0850 or visit www.homeaid.org. Contributions can also be sent to HomeAid Gulf Coast Rebuilding Fund, 3919 Westerly Place, Suite 200, Newport Beach, CA 92660.

Sacramento BIA Participates in Workforce Development Grant

Among the five recipients of the Home Builders Institute's (HBI) “Building Today’s Workforce for Tomorrow” grant, the North State Building Industry Association in Sacramento, Calif. is forging partnerships with schools, community colleges and employers to train workers for careers in housing.

Building on its existing local partnerships and adding new ones to meet the goals of its grant, the Sacramento builders association will streamline recruitment in the electric, plumbing, carpentry and HVAC trades. The association will fill 250 job slots with candidates ranging from high school students to dislocated workers.

“This is a much more efficient approach to construction training in these trades, and with better coordination we will have more students,” said John Orr, the BIA’s executive vice president. “As an association, we need to do more about workforce training so that programs are strengthened and enhanced, and to do that we need the support from builders, the trades and suppliers — our members.”

As the facilitator of the grant, the association’s responsibilities include: coordinating the inclusion of HBI’s Residential Construction Academy (RCA) educational materials into the curriculums of the participating school and community colleges; developing agreements that will enable high school students to earn college credit for craft skills training; working with its members to provide internship sites; and, most importantly, helping to sustain the program after the funding ends in two years.

“We are really excited about the interest in this effort from the community,” said Orr.

The Sacramento Job Corps Center is a key partner in the “Building Today’s Workforce for Tomorrow” grant, which will provide its students with increased opportunities to pursue careers with members of the BIA and make smooth transitions into community college programs.

The Jacksonville, Fla. and Arizona’s Fred G. Acosta Job Corps centers are also participating in the workforce grant program.

“Developing these partnerships has been great for us, it has really helped to reinforce Job Corps’ mission in the community,” said Mike Kohlbaker, an HBI carpentry instructor and NAHB Student Chapters advisor at the Sacramento JCC.

“Also, having the grant here has allowed us to strengthen the connections among young people, parents, educators, builders and business representatives.”

In addition to California, the program is underway in Arizona, Connecticut, Florida, Idaho, Kentucky, New York, Pennsylvania, South Carolina and Virginia.

Home Builders Institute, the workforce development arm of NAHB, is a non-profit organization offering craft education, training and placement programs for the residential construction industry. For more than 30 years, HBI programs have trained people in the trades, promoted the industry as a career and helped the residential construction industry and NAHB members address their workforce needs.

For more information on the “Building Today’s Workforce for Tomorrow” grant, e-mail John Shortt at HBI, or call him at 800-795-7955 x8924.

Energy Star-Rated Appliances Save Water, Cut Bills

Among facts the company has gathered to demonstrate the impact of its environmental leadership in its Energy Star-qualified home appliances:

This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.

In the Toilet, Part 2

(In Part 1, my family wrangled with toilets that plug. Now, here is the gripping conclusion.)

After living in our carriage-home-above-the-garage-with-the-bad-toilet for six years, finally the House Adjacent neared completion. It would have three toilets, which, adding the existing one makes four. To a pessimist, that’s four mutually exclusive opportunities for disaster at any given moment. Could we dip any deeper into the bowels of heck?

My gal, Cindy, wanted to be intimately involved in the selection of new commodes. For some reason she didn’t trust my judgment. So, hand in hand, we went to our plumbing contractor’s home office for a little down-and-dirty potty talk. His name was Spike and a good old boy if there ever was one.

“So, Mr. and Mrs. Garrison, what’re you looking fer in the way of a toilet?” he asked. “We’ve got any brand you want: Kohler, American, Delta, Pan Am, United or Aero Mexico. And any style: fluted, bell-horned, bongo-lipped or banjo. Not to mention we can also special order any of the following dee-luxe features: wide mouth, narrow tooth, low boy, high rise, low flow or Niagara Falls. You jes’ name it.”

Cindy shot me a glare. “What my husband means is, while we want a fashionable water closet, we also care about functionality.”

“I know zackly what you mean,” Spike said with a wink. “You’re a large-turd family trying to make something ugly look purdy. Have I got the answer for you! It’s called Power-Flush. We love this unit so much, we have one ret here in our home-office showroom. Step ret this way.”

Opening the door to the showroom, which looked to me like a slack-janitored one-holer with a heaping backlog of spare plumbing parts scattered about, I heard a growl.

“Oh, don’t worry about thet,” he chuckled. “Thet’s just the Power-Flush. It sometimes growls when people get near. But it don’t bite. Haw haw!”

Grisly thoughts of what the results of an Attack-Toilet might be tore across my brain.

The Power-Flush was a simple-looking unit. White, (well, I presume it was white at one time) plain, no fancy sculpting. Its manufacturer made no effort at trying to disguise its true identity. But it seemed to have an energy about it. I could swear it was moving slightly: vibrating, shifting, bouncing — kind of like an alcohol-fueled dragster that had just inched up to the starting line.

“Now, let’s say you drop a stank ol’ spike into this baby,” Spike said with another chuckle. “Spike, get it? Thet’s my name. Anyways, you finish up yer bidness then reach over to the handle here…”

His hand jutted forward, but instead of going for the handle he grabbed Cindy by the wrist and thrust her suddenly claw-like hand at the greasy-speckled metal handle. A revving sound emanated from somewhere.

As he said “dip,” he pushed Cindy’s hand down hard on the handle. Suddenly a thunderous roar filled the cramped space as the Power Flush surged to life. I watched in awe as the water in the bowl swirled at startling velocity precisely three-quarters of a revolution, then, whoosh, was gone. It looked like a tornado touching down on a mud puddle.

Spike puffed out his chest as if his only son had just homered in the Little League World Series. “See what I mean?” he beamed. “There ain’t a turd knowed to man thet can stand up to this little honey. In case yer wondering, what makes it work is inside the flush tank there’s a little black box with a je’et engine. Yep, that’s right, jes like a 747, but smaller. A je’et. When you press down the handle, the je’et fires off and shoots exhaust down the hole. Lemme tell you something. When you install one of these babies, you better make sure to bolt 'er down good. Heh, heh. Can you imagine the wild ride if you didn’t!”

I toiled against another grim toilet scenario. Finally, after coming to grips with the fact that it is somehow possible to get two syllables out of the word “jet,” I said, “Great! We’ll take four. What do these hummers cost, Spike?”

“Whal, they retail fer nigh on eight hunnerd. But for you good folk, I’ll sacrifice 'em fer the rock-bottom price of four-fifty.”

“Four hundred and fifty dollars!” Cindy choked. “That’s four times the cost of a regular toilet!”

“I got lotsa regular units if that’s what you’d prefer, ma’am. I can get you into a nice USA model for a measly hunnerd and twenny-nine.”

Cindy thought for a moment, then said, “We’ll take two Power-Flushes and two Eau-de-la-France, scalloped, elongated-chasm, regular units.” Then, turning to me, she whispered, “We can put a Power-Flush in the kid’s bathroom and one in the master bath. We’ll put the pretty, regular ones in the powder room and mud room — they won’t get used enough there to make any difference but will look good for company.”

Which brings me full-circle back to the starting point of Part 1 of this information-packed column. After we had been in the House Adjacent for a little over a year, Cindy found herself at wit’s end with the two pretty, regular units. For some strange reason, each acts as a laxative on her system. She can not walk past one without becoming overwhelmed by an urgent calling of nature. This wouldn’t be a problem except that the pretty, regular units don’t have the jet thruster and so they plug — every time.

For the record, and I’m not making this up, neither Power-Flush has met acquaintance with a plunger since installation. Lucky thing, for the plunger.

I hate to say I told Cindy so, but I did. Ret there in Spike’s showroom. Recall I said we wanted four Power-Flush units, but Cindy, Mrs.-Paranoia-About-What-the-Company-Might-Think-of-Too-Plain-Toilets, countermanded me and insisted on two pretty, regular units. Which, I might add, with all their fancy sculpting and extravagance, cost a good bit more than $129 each. So now, back I’ll go to Spike, hat in hand, and have him trade out the two pretty units for Power-Flushes. Which rankles me no end because there is no trade-in value on a previously-used toilet.

After Part 1 ran, I got a couple of Truly Information-Packed e-mails in response (along with a good many that could have cared less about toilets and wondered whether or not I would ever write something actually worthwhile again).

It seems that lots of testing has been done on the plugability of toilets. One e-mail came from Jeff Patchell, the publisher of an Australian family of magazines similar to our Builder magazine family. He graciously let me know of an article in Volume 1 - 2006, World Plumbing Review (WPR) in which the science of toilet testing is discussed. The article, unlike my column, is as serious as a heart attack. On page 50 is a picture of a scientist in a white lab coat with the same solemn expression one might have standing eye to eye with a police officer, roadside, at 1:00 a.m. In his latex-gloved hand is a stool. A fake stool, of course. He’s in the toilet testing business, and, as the article explains, they go to great lengths to simulate the real McCoy. To make sense of the following passage you need to know that my commentary is in [brackets], the article’s author’s in (parentheses).

“… We have made it easier to conduct performance testing by encasing the 50 gram (1-3/4 oz) test specimens in a latex skin (like a sausage) such that it can be reused. As a result, the media [fake turd] is no longer messy and the cost is no longer a problem. Each encased test specimen can typically be used 100 times or more before showing wear and tear.[Wear and tear? Apparently being flushed down a toilet 100 times can be a rasping experience.]

Mr. Koeller points out that some water authorities would like UNAR [Uniform North American Requirements] to also include a test for washing down the sides of the bowl to eliminate what is commonly know as ‘skid marks.’”

[It’s nice to know that a skid mark is a skid mark regardless of which side of the globe you’re on. You can check out WPR here: www.wpr.com.au

The other serious e-mail came from professional engineer, Thomas Kenney, at the NAHB Research Center in Upper Marlboro, Md. Here it is:

“We have done quite a bit of research on toilet performance and there are a few reliable documents that can help buyers make purchase decisions based on performance… check out these sites:

There. Now that this column has flushed out a cornucopia of Truly Hard-Hitting Factual Information, I believe something worthwhile has indeed been accomplished.

Tim Garrison of ConstructionCalc.com, is a professional engineer, author, and software produ

Nation's Building News Online: March 27, 2006

Green Home First to Use NAHB Guidelines in a Subdivision

Working Families With Children Locked Out of Homeownership

Find Employees Through New NAHB Online Career Center

Reader Survey: Tell Us What News Is Important to You

Slowing Home Market to Ripple Through Many Layers of Jobs

Interest Deduction: Safe or Not?

Brand-New Home Is Unlivable

Reducing the Juice — Many are Resigned to 72% Rise in Rates, While Others Fear They’re Unaffordable

Lots in Odd Shapes Are No Obstacle to Housing

Nurturing the Dream of Her ‘Green’ Home

Canada Causing Builders to Find New Sources of Lumber

Slide Out West Cuts New Home Sales in February

Rise in February Home Resales Suggests Stabilizing Market

California Builders Want to Reverse the Tide on Home Prices

Eye on the Economy: Rebounding From a 'Soft Patch'

Builder’s Tip: Sharing Compressed Air

Two Sure Ways to Improve Profitability

Former Del Webb CEO to Builders: ‘Do Your Homework’

Learn How to Market and Sell to the 50+ Home Buyer

Real Rents Slip in January as Energy Costs Rise

Attend Upcoming Multifamily Conference in Scottsdale, Ariz.

Extension of Comment Period Sought for Lead Paint Rule

26 Design Trends for 2006

CAPS Credits Available at Pre-50+ Symposium Courses

Education Calendar

Insurance Rates Are Going Down

Woman Builder Works Miracles for Katrina Shelter Victims

Sacramento BIA Participates in Workforce Development Grant

Energy Star-Rated Appliances Save Water, Cut Bills

In the Toilet, Part 2