Nation's Building News Online: April 10, 2006Print All Articles Text Version |
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Multifamily Builders Snapping Up Land to Offset CostsTo counteract the rising land costs prevalent in most active housing markets these days, multifamily builders and developers have begun acquiring larger tracts than they need and selling off the excess land to other builders. As a solution to escalating construction costs, some builders, developers and equity partners addressing NAHB’s Pillars of the Industry multifamily conference in Scottsdale, Ariz. last week also suggested buying building materials in the commodities markets. Other cost-deflecting suggestions offered at the April 3-5 conference included phasing projects, anticipating price spikes and finding alternative sources for materials. Constance Moore, president and CEO of California-based BRE Properties, Inc., which builds and manages apartments in California, Arizona, Colorado, Washington and Texas, said her company has begun “acquiring much larger sites” and then selling off pieces of them to reduce the cost of land for their apartment projects. “Land is a huge component of the total cost of our projects,” Moore said, noting that her company tries to hold land to a less than 20% share of total project costs. She cited several projects in California where BRE used the sale of excess land to reduce the land costs for its apartment projects. At Emerald Pointe in Anaheim, Moore said BRE developed only four of the site's 13 acres and sold the rest. “The sales price on the back half of the site brought our land value down to zero and allowed us to build a pipeline for our future needs,” Moore said. Similarly, she said that to reduce land costs for an apartment complex in Santa Clara, Calif., the company is building on about three acres of an eight-acre site. The remaining land has been sold to a townhouse builder who is building and selling 1,800-square-foot townhomes in the $700,000-$800,000 range. Moore said BRE often develops the land before selling it to other builders. “BRE has the capacity and time to do the entitlements,” Moore said. “We have more patient money than the ‘for sale’ guys who want to get in and get out quickly.” Controlling Costs Through Phased Development Another way to cut construction costs, phasing projects gives the builder/developer the flexibility to change the design as needed, according to Paul Doocy, chief investment officer for Real Estate Capital Partners, a New York investment firm. As an example, Doocy cited a townhouse development in the Rocky Mountains that benefited from phasing when the local market softened several years ago. “We had a lot of flexibility. We could get rid of the vaulted ceilings upstairs and add more bedrooms” to meet buyer demand, he said. “We didn’t build all the homes at once and we didn’t lock in prices.” Doocy said he wished he had had that flexibility with a 115 unit, mid-rise, twin tower he began in Denver in 2001-2002, just “about the time Denver tanked in terms of employment.” Forward Hedging Can Offset Materials Costs Thomas Leppert, chairman & CEO, Turner Construction, a nationwide builder headquartered in New York, said builders need to anticipate price spikes, find alternative sources for materials and manage their expectations effectively in order to better control land and materials costs. “We have utilized the strength of our buying power to frame agreements. We have been able to lock in prices with the option to reduce prices if prices go down,” Leppert said. Forward hedging, buying the equivalent value of a particular material needed for a project or projects in the commodities market, is one way to control costs, or at least survive price spikes, Leppert added. “Forward hedging is not restricted to large organizations,” he said. Leppert used forward hedging when building his own home in a Florida resort area. “I went into the commodity market and bought the equivalent value of a forward contract on lumber for my home to make sure I didn’t get hurt on lumber,” he said. Time and Expertise Matter “Managing construction costs is a lot about managing our time,” said Blake Thompson, manager, AIG Global Investment Group, which has more than $300 million equity invested in residential real estate, of which 85% is in condominium conversions. In addition, Thompson stressed that builders should work with contractors who have the expertise to deal with a project’s complexity. “The key is to have experience in specific product types,” he said, while noting that contractors who have expertise in conventional wood frame and are transitioning to high-end multifamily projects “have a tremendous learning curve.” Leppert said working with less costly subcontractors in this situation could be a “recipe for disaster.” “It’s important to look at the price of the subcontractor, but also to sit down with them and understand what their workflow will be in the next couple of years.” FHA Reforms Needed to Spur Homeownership OpportunitiesTo help spur housing opportunities for America’s working families, the nation’s home builders on April 5 called on Congress to support the Bush Administration’s efforts to reform and revitalize the Federal Housing Administration's single-family mortgage insurance programs. Testifying before the House Financial Services Committee's Housing and Community Opportunity Subcommittee, Jerry Howard, NAHB’s executive vice president and CEO, said that statutory and regulatory constraints have limited the FHA’s ability to respond to the needs of borrowers. “All too often, the differences between the FHA’s requirements and those for conventional mortgages have been viewed by lenders, appraisers and others as a disincentive to use FHA programs,” said Howard. “And FHA’s unique and often burdensome requirements have caused many home builders to avoid using its programs to build homes that otherwise would have been well-suited to borrowers who planned to use FHA-insured mortgage loans.” Howard added that important strides have been made to revitalize the FHA under the stewardship of FHA Commissioner Brian Montgomery, who assumed his office last June. “Acting with the support of HUD Secretary Alphonso Jackson, Commissioner Montgomery’s efforts are already being realized as the FHA has aligned its appraisal requirements by eliminating needless paperwork requirements,” Howard said. “Other steps that have made the program more user-friendly are the FHA’s new policies that increase the allowable loan-to-value ratio for cash-out refinancing transactions and revisions to the 203(k) rehabilitation program.” Despite these positive changes, Howard told lawmakers that FHA’s loan structure and downpayment requirements, which are established by Congress, seriously limit its ability to deliver the range of mortgage products that are needed to fulfill its housing mission. “To meet the needs of unserved and underserved families who desire to purchase a home, NAHB believes that Congress should grant the FHA broader authority outlined in the Administration’s fiscal 2007 budget proposal and detailed in draft authorizing legislation,” said Howard. Specifically, NAHB is urging Congress to take the following actions:
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Are Our Kitchens Making Us Fat?It’s possible that today’s oversized kitchens have something to do with the fact that, according to the Centers for Disease Control and Prevention, nearly one in every three Americans is obese and nearly two in three are overweight. The use of the spacious, open-plan kitchen as secondary living space could be encouraging people to spend more time around food than is good for them. Half a century ago, when the average American kitchen measured about 80 square feet and the average American man weighed about 166 pounds, the kitchen was mostly closed off, food was served in the dining room and the kitchen light was turned off after the dishes were cleaned. Today’s 225-square-foot kitchen is a place for dads, weighing on average about 191 pounds, to hang out with the rest of the family who can be using the space to play board games, pay bills, watch television or prepare pancakes. Central islands, identified as among the most requested features for a newly built kitchen in an American Institute of Architects survey, open up the temptation to serve buffet-style dinner, and that’s “a disaster waiting to happen,” says Dawn Jackson Blatner, a registered dietitian and spokeswoman for the American Dietetic Association. “I see about a hundred patients a month for weight-management issues. One of the first things we suggest is that people stop eating ‘family style,’ where they keep the food out on the island and tell people to help themselves. Rather, we really want people to put one serving on a plate, take it out of the kitchen and eat it in a dining room. If food is in our sight, it will most likely end up in our mouth.” (www.washingtonpost.com)
Immigration Reform Could Create Construction Worker ShortageIf immigration reform doesn’t include a guest worker program and a program to address illegal immigrant issues, the home building industry could be in danger of losing a significant portion of its labor force, according to Michael Strauss of NAHB. An estimated 20% of the current residential construction workforce nationwide is composed of foreign-born workers, according to NAHB, and Gary Roden, immediate past chairman of Associated Builders and Contractors, estimated that undocumented immigrants constitute a “sizable” share of both residential and commercial construction, though it is not as much as 50% of the workforce. “They (immigrants) are productive workers and they are needed in our industry,” Strauss said. “An efficient and effective guest worker program should be created in order to stop the incentive for illegal immigration into the U.S. NAHB believes Congress should allow non-U.S. citizens to apply for the right to work legally for a certain time, and possibly allow opportunities for permanent residency or citizenship. Obviously, these workers should be required to pay all taxes and other fees; in short, they should be held to the same standards as U.S. workers.” (www.inman.com)
Should Kids Have Their Own Space? Psychologists Say Siblings Fare Better When They ShareWith NAHB research showing that 40% of new homes are being built with at least four bedrooms, new home buyers typically have enough space to give their children their own separate bedrooms, but Ken Beuchamp, a psychology professor at University of the Pacific, believes that siblings who share rooms are stronger socially than those who don’t. “Parents want one kid in one room and do it without a whole lot of thought about it,” he said. However, “the privacy might be good for the parent but maybe not so good for the kid.” Sharing a room teaches siblings how to negotiate, how to live together and how to deal with another person, he said, and it better prepares them for living in a college dormitory. “Benefits of single rooms? Nothing comes to mind. There are positive benefits in a shared room, but in terms of being independent, there isn’t anything of value, any skill development that I can see.” Beauchamp does concede, however, that age differences of more than a couple of years may make sharing a room not such a good idea. “There’s a big difference between a 12-year-old and a 16-year-old,” he said. “If you have the space to do it, it’s best to give them their own rooms.” (www.recordnet.com)
The Quality Goes in Before These Names Go OnIn a good marketing move, K. Hovnanian Homes has joined in a partnership with Good Housekeeping to promote products in its houses that carry the magazine’s seal and a two-year limited warranty. Less widely known, but another seal that prospective new-home buyers should recognize, is certification from the NAHB Research Center, an indication that the product meets or exceeds recognized industry standards. After products are certified in the Research Center’s labs in Upper Marlboro, Md., manufacturers undergo periodic audits of their quality-control systems, and products are selected randomly and re-tested to ensure compliance. During a thermal shock test to make sure tubs and showers won’t crack, samples are put through 250 hot- and cold-water cycles. First, they are hit with 150-degree Fahrenheit water for 90 seconds. Next, they are drained for 30 seconds and filled with 50-degree water. Finally, they are drained again, and the cycle starts anew. Sinks go through 500 cycles of alternating 190- and 70-degree water, with no draining time, and if cracks develop in any of the units, says project manager Chuck Arnold, “we do an analysis to try to figure out what caused the failure and relay that information back to the manufacturer.” A frying pan is dropped from exactly 12 inches above kitchen sinks to see whether the plastic will crack. (www.chicagotribune.com)
Should Risk Beget Rules?Federal financial regulators want to impose new creditworthiness restrictions and disclosure requirements on “payment option,” interest-only and piggyback loans, but banks and mortgage companies say the clamp-down isn’t needed and could stifle innovations that have helped consumers deal with high housing prices. In a March 29 letter to regulators, the Mortgage Bankers Association said its research indicates that its members restrict these “exotic” loans to borrowers with higher credit scores and larger downpayments. The regulators are concerned that unsophisticated borrowers could get stuck with hefty increases in their monthly payments that they aren’t able to handle. For example, negative amortization options in a mortgage can add as much as 12%-15% onto a home buyer’s debt in the early years of the loan and lead to monthly pay increases of 100% or more after the loan is reset at market rates and a fully amortizing loan payment schedule. If interest rates have been rising steadily during the early years of the loan, the monthly payment increase could turn out to be well over 150%. Monthly payments on interest-only loans can jump by 30% or more. (www.washingtonpost.com)
Housing Construction and Sales Continue Unabated, But Builders Are SqueezedRising land and materials costs are shrinking profit margins in Houston’s booming housing market, where competition is limiting price increases. As a result a couple of builders, including Richmond American Homes and Armadillo Homes of San Antonio, have left or are leaving. “In Houston, Texas generally builders don’t make as much money as in other markets,” said Mike Inselmann, president of Metrostudy, who estimates that builder margins in the area range from 5%-8%. Builders are using a variety of techniques to turn a profit in Houston’s tough market. With most of the new construction concentrated in the entry-level market, Trendmaker, for example, is building higher-end houses. Other builders rein in costs by tightly controlling the number of homes they build. Builders also have opened more of their own design centers, which allows them to build basic houses and give their buyers the option to pick and choose what they want, adding profitable extras. (www.chron.com)
Letter to the Editor: My Love-Hate Affair With MoneyTim: I always enjoy reading your columns. This one (Builder's Engineer, "My Love-Hate Affair With Money;" 4/3/2006) hits home. My husband and I are just getting started. We have been married for four years. Our first goal as husband and wife was to build a house, then buy a new car, then go on a vacation, then have "x" dollars in the bank and make "x" dollars a year. It's always something. When you reach your goal, you always want more. More, more, more. Then, five months ago, we had a little girl. Now I realize there is more to life than having more. There's something to be said for simply being content and being thankful for what you have. Like you, I also didn't grow up with much money. But I had everything I needed and I wouldn't take it back for anything. I really wish more people in this world would realize the things you stated in you column. I look forward to the next one so I can learn about how to avoid being owed money. — Sarah, Jackson County Builders Association, Ga. Congress Still Wrestling With Fate of Immigrant WorkersAfter a bipartisan group of senators announced a major compromise last Thursday on a reform measure that would benefit an estimated 11 million illegal immigrants in the U.S., procedural and partisan wrangling shelved the measure, at least through the two-week congressional spring recess, and perhaps indefinitely. An unnumbered Senate Judiciary Committee bill crafted by Sens. Edward Kennedy (D-Mass.) and Arlen Specter (R-Pa.) would have created both a temporary guest worker program and provided a path to citizenship for nearly all the illegal immigrants in the U.S. When it became apparent that this measure was opposed by several conservative Republican senators and didn’t have enough votes to get passed, Sens. Chuck Hagel (R-Neb.) and Mel Martinez (R-Fla.) drafted a compromise bill that would create a tiered system for the nation’s illegal immigrants, dividing them into three categories:
Senate Democrats refused to allow several amendments to be offered on the Senate floor, fearful that they would significantly alter the nature of the bill and concerned about putting Senate Democrats who are up for re-electiion this year in the position of having to take roll call votes on some tough border security issues. Angered by the Democrats’ efforts to stop consideration of the amendments, the Republicans voted on April 7 against invoking cloture on the bill, preventing it from moving forward. The 60-38 vote fell closely along party lines. After the vote on the compromise bill, an alternative introduced by Majority Leader Bill Frist (R-Tenn.) was also shelved, by a vote of 62-36. The Frist bill, S. 2454, contained provisions that only addressed border security, interior enforcement and employer provisions. Sen. Frist and Judiciary Chairman Specter have both indicated that they would like to pass an immigration reform bill this year that tightens border security and establishes a guest worker program. Specter has indicated that he will introduce the Hagel-Martinez plan as a stand-alone bill after the Senate returns from its spring recess and will urge Frist to allow time for a floor vote prior to the July 4 recess. The House on Dec. 16 passed a strict immigration bill (H.R. 4437, the "Border Protection, Antiterrorism and Illegal Immigration Control Act") that is opposed by NAHB and would focus on border security and punitive enforcement penalties for employers. It fails to include a guest worker program that would help meet the workforce needs of NAHB members nationwide. To read legislation, click here and enter the bill number in the box at the center of the page. For more information, e-mail Jenna Morgan Hamilton at NAHB, or call her at 800-368-5242 x8407. Second Home Buyers Account for 40% of 2005 ResalesVacation and investment homes accounted for a full 40% of the homes that were resold last year, with sales of both setting records, according to a report released by the National Association of Realtors® (NAR) on April 5. Based on the results of two surveys, 27.7% of existing homes sold in 2005 were purchased as investments, according to the Realtors®. Sales to investors rose 15.7% to a record 2.32 million. Another 12.2% of the homes resold last year were bought as vacation properties. Those sales rose 16.9% to a record 1.02 million. While baby boomers, now at the peak of their careers, are the force driving the second home market, and historically low interest rates have helped provide them with the wherewithal to buy more housing, NAR Chief Economist David Lereah noted that there are significant differences in what makes investment and vacation home buyers tick. “Vacation home buyers are making lifestyle choices and purchasing primarily for their own enjoyment,” Lereah said. “Investment home buyers are seeking rental income and portfolio diversification, although vacation home buyers also mentioned diversification.” Asked for the reason they bought their second home, 41% of vacation home buyers said to use it for vacations, 31% to use it as a family retreat and 28% to diversify their investments. Among investment buyers, 55% cited rental income as their primary purpose in making the transaction and 35% said they wanted to diversify their investments. The median price of a vacation home last year was $204,100, up 7.4% from the previous year, compared to $183,500 for the typical investment property, 24.0% more expensive than in 2004. Typical vacation home buyers in 2005 were 52 years old, earned $82,800 and purchased a property that was a median of 197 miles from their primary residence. Forty-seven percent of vacation homes were less than 100 miles away and 43% were at a distance of 500 miles or more. Investment buyers had a median age of 49, an income of $81,400 and bought homes that were a median of 15 miles from their primary residence. More than three-fourths of vacation home buyers said they had no interest in renting their property, and 21% intended to make it their primary residence once they retire, compared with only 2% of investment buyers. Fourteen percent of investment buyers and 6% of vacation home buyers reported purchasing a property that their children could occupy while in school. Purchasers of second homes valued their proximity to:
The South led investment buying with a 38% share, followed by the Midwest and West, each with 24%; and the Northeast, 15%. One-third of vacation home buyers and 36% of investment buyers said that it was very likely that they would purchase another home, in addition to the properties they already own, within the next two years. Lereah predicted that vacation home sales would remain strong for the foreseeable future, but he said that sales to investors were likely to decline this year in response to rising mortgage interest rates. “There are fewer incentives to speculate in the market with price appreciation cooling in much of the country,” he added, “and more oversight is being encouraged in the mortgage market. It’s hard to say how much speculation there may be in housing, but it’s probably a single-digit percentage of total home sales.” The Realtors® are working on a more extensive survey profiling second home owners that is expected to be released late this spring.
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. 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 examination of the economic outlook for the housing industry. For more information, visit www.nahb.org/cfc.
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. Eye on the Economy: Fed Policy Shifting Out of NeutralDespite some quarter-to-quarter ebbing and flowing, the U.S. economy has been on a solid growth path for some time and the near-term outlook remains favorable. Indeed, average growth of economic output (real Gross Domestic Product) has been modestly “above trend” for the past few years, and this performance has generated solid growth in employment and reductions in the unemployment rate despite maintenance of healthy gains in labor productivity (output per hour). The economic expansion has yet to generate serious inflation problems, despite tightening labor markets and historically high energy costs. In fact, key measures of core inflation (excluding prices of food and energy) were well behaved through February, remaining below the upper end of the Fed’s apparent “tolerance zone.” Even so, we’ve probably reached the point where further above-trend GDP growth and associated declines in the unemployment rate would begin to put upward pressure on core inflation and threaten the longevity of the economic expansion. The Fed Hikes Rates Again and Hints About Further Tightening As expected, the Federal Reserve enacted another quarter-point increase in short-term interest rates at the March 28 meeting of the Federal Open Market Committee (FOMC). This adjustment raised the federal funds rate target to 4.75% and took the bank prime rate to 7.75% — 3.75 percentage points above the cyclical lows that prevailed from mid-2003 to mid-2004. This was the first FOMC meeting chaired by Ben Bernanke, and the FOMC’s public statement bore a lot of similarities to the final statement in the Greenspan era (Jan. 31). In particular, the statement revealed preoccupation with inflation issues, stressing that “possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.” The statement went on to say that “some further policy firming may be needed,” the same hint issued at the conclusion of the previous meeting. It’s pretty clear that the Fed wants to slow down economic growth and keep the unemployment rate from falling much (if any) further. Thus, it’s highly likely that the FOMC will enact another quarter-point rate hike at the next meeting on May 10 — a move that’s incorporated in NAHB’s forecast. This adjustment most likely will edge monetary policy slightly beyond the “neutral” position that the Fed has been pursuing since mid-2004, making policy slightly restrictive for the first time in this economic expansion. The Entire Interest Rate Structure Is Shifting Upward The tone of the March 28 FOMC statement seemed to catch the financial markets a bit by surprise, and interest rates gravitated upward across the maturity spectrum in the wake of the meeting. Upward rate adjustments by some foreign central banks (particularly the European Central Bank) also appeared to put upward pressure on our longer-term rates, as questions were raised about the durability of huge inflows of foreign capital into U.S. fixed-income markets. In any case, the entire Treasury yield curve has moved upward, and the 10-year Treasury yield now stands at about 4.85%, the highest since mid-2002 and quite close to NAHB’s forecast for the second quarter of the year (4.9%). Interest rates on home mortgages have moved upward with Treasury rates. The average rate on the 30-year, fixed-rate conventional mortgage (FRM) climbed to 6.35% in the final week of March and the 15-year rate moved up to 6.0%. The going rate on Treasury indexed one-year, adjustable-rate mortgages (ARMs) climbed to 5.51% despite initial rate discounts by lenders in excess of two percentage points. NAHB’s forecast shows modest further increases in the mortgage rate structure over the balance of 2006. Housing Demand Continues to Weaken as Affordability Moves Downward The demand for single-family homes and condo units peaked during the second half of last year and has moved downward since then. This change of direction has occurred as record-high house prices and rising mortgage rates have taken a heavy toll on affordability. Eroding expectations of future house price appreciation may also be contributing to the erosion of demand, particularly among investors/speculators. While the change in market direction (from up to down) is convincing, it’s fair to say that housing indicators have been a mixed bag in recent times. NAHB's single-family Housing Market Index has come down substantially and systematically from the cyclical peak in June 2005; indeed, the March reading was 24% below that peak. Sales of new homes have rattled down irregularly since July of last year and stood 21% below that peak in February. Sales of existing single-family homes and condo units (based on closings) hit cyclical peaks last June and were down by 5% (combined) by February — despite a 5% rebound in February that flew in the face of a systematic trailing down of “pending” sales (based on contracts signed) through that month. Finally, the index of applications for mortgages to buy homes (Mortgage Bankers Association series) fell by 18% between its mid-2004 high and the final week of March (fiour-week moving average basis), despite increases in the second half of that month. Housing demand clearly is down from the highs of last year, but recent momentum is not as clear. That’s partly due to seasonal adjustment problems this time of year. Furthermore, demand may be enjoying temporary support from acceleration of mortgage applications and home purchases at a time when expectations of future mortgage rates are being marked up. Everything considered, it’s reasonable to conclude that, fundamentally, demand still is eroding and will move down somewhat further as 2006 rolls along. New-Home Production Is Still Growing and Unsold Inventories Are On the Rise Total housing starts averaged 2.21 million units (annual rate) for the January-February period, higher than any quarterly average for the entire expansion period, and the same can be said for the single-family component, which averaged 1.82 million for the first two months of this year. The strong forward momentum of housing starts kept residential construction put-in-place on a strong upward trend through February, particularly for new single-family units. Indeed, single-family construction in February was 14% above a year earlier in nominal terms and showed increases during every month of that period. Maintenance of strong production in the face of eroding final demand for homes has resulted in record levels of unsold new-home inventories and a large increase in the months’ supply — from 4.1 last July to 6.3 in February. Furthermore, these inventories don’t include homes handed back to builders when sales contracts are cancelled! A 'Soft Landing' for Housing Still Is the Best Bet The supply-demand balance in housing markets obviously has changed dramatically since mid-2005, and further increases in mortgage interest rates are bound to take an additional toll on housing demand. We’re also looking for a modest slowdown in job and income growth later this year and in 2007 as the Fed guides the economy onto a more sustainable growth path. The recent inventory buildup poses a real threat to the new-home market, but we believe that a lot of that buildup represents temporary weather-related factors. Thus, we’re still projecting a “soft landing” for housing, with housing starts and home sales off 7%-8% for 2006 as a whole. The condo market figures to weaken the most, while the rental component of the multifamily sector may well post an increase following years of erosion. NAHB Chief Economist David Seiders analyzes the economy from the point of view of the housing market every other week in the free e-newsletter, “Eye on the Economy.” The preceding is a reissue of his April 5 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:
For more details, visit www.housingeconomics.com.
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 examination of the economic outlook for the housing industry. For more information, visit www.nahb.org/cfc.
Give Us Your Perspective on the NAHB Economics Blog 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. Builder's Tip: Self-Made, Low-Cost Crown-Molding Clamps
In my cabinetmaking business, I am faced with a fair number of crown-molding installations. While searching for ways to ease the job of pulling tight the moldings on outside corners, I considered buying some spring miter clamps — the kind that use a C-shaped spring with pointed ends to draw parts together — but blanched at the price. Instead, I looked at the tools I already had and wondered how they might solve this problem. The accompanying drawing illustrates my solution.
Using the clamps is easy.
I’ve modified a dozen such clamps so that I can finish an entire job without needing to recycle clamps before the glue sets up. If you don’t have enough clamps to do the job, use a pin nailer to secure a clamped joint while the glue dries. Incidentally, these clamps are equally useful for picture frames. — Mike Hathaway, Huntington Beach, Calif. Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Mary Lou von der Lancken at Fine Homebuilding.
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.
Explore the latest housing industry news and information on www.nahb.org — the official public and members-only Web site of NAHB. With an expansive "For Consumers" section, www.nahb.org provides a credible source of information on home building and remodeling for your customers. The Web site also provides a wealth of member discount programs and business resources developed for you. Plus, to make it easy to get what you need, the Web site has built in time-saving features like My NAHB to customize the site to your interests, My Favorites so you can select specific links to appear on your www.nahb.org Home page and online Staff Directories so you can find NAHB housing industry experts quickly and easily. Use www.nahb.org to stay on top of the latest housing industry news, access your council and committee materials, register for courses and events and stay abreast of NAHB’s efforts to promote housing. Log in today to start taking advantage of this free NAHB member benefit. Don’t Be Hard-Headed About Investing in Software You NeedYou may have started your home building business 20 years ago by taking your dad’s Skil® saw, tossing it into the back of your El Camino and going out to frame garages. But growing a home building business into a sophisticated enterprise, or inheriting a business from your family that you intend to grow, can present serious challenges even to the most seasoned business professional. Potential problems that can result from growth normally fall into three categories: retaining key employees, managing capital and margins, and IT infrastructure and software. Let’s focus on IT, since, for a $330 billion industry, home builders spend a notoriously small fraction of their revenue on software, IT infrastructure and training. Builders are sometimes reticent about purchasing new software, even though good software can:
What’s Standing in the Way Let’s look at why software purchases are regarded as costs, rather than the investments that they really are. First, builders may believe that software systems are too difficult to implement and that the process will distract them from making money building homes. This is the equivalent of saying, “I’ll stick with this canoe paddle because if I stop paddling long enough to shop for an outboard engine, I might fall behind.” Builders are scrappy; they endure wild swings in markets; they build in all kinds of weather; and they’re subject to unpredictable changes in commodity pricing. But rather than dive into the admittedly hard work of properly implementing a software system that’s ready for the future and that will put a business on a critical path, they’d rather gut it out, because that’s what worked for them in every other aspect of their business. Second, builders often are already running software that has worked fine in the past, and they don’t want to sacrifice capital to upgrade. But while an off-the-shelf accounting program may suffice for a business with one or two builds a year, a larger business or one that is looking to grow needs systems designed for a larger enterprise, as well as a team of qualified people who know how to use systems to improve business practices. Finally, builders think they can grow their way out of any financial problem. Booming markets and high margins have poured cash into their coffers these last few years, making software just seem incidental. Ironically, software sales tend to spike during a market downturn. As markets tighten, builders realize that with margins on the line, there is little room for error. They have to tighten up their processes and identify wasteful practices if they want to be ready for the next cyclical boom. Are You Ready for Prime Time? Following are a few indicators your business is not quite ready for prime time, and examples of how a good software system can help you get your systems humming:
Tom Gebes is president of BuilderMT and has 25 years experience serving home builders’ workflow management needs. Contact Gebes through www.BuilderMT.com. “Growth: ‘A High Class Problem’ or the Biggest Challenge of Your Career?” is provided as part of “Managing Your Workflow,” a series of articles produced jointly by Sage Software’s Sage Timberline Office and BuilderMT. The series offers home builders, their employees and managers a step-by-step guide to implementing best practices throughout a home building organization. Topics in the series include marketing, estimating, accounting, customer and warranty service, purchasing, sales and organizational development. Rumors of Termite-Infected Mulch UntrueThere is no truth to rumors that termite-infested trees downed by Hurricane Katrina are being mulched and shipped to home centers around the country, according to John Metaxas in an article posted online in the April 7 issue of This Old House. However, “it is true that bite by tiny little bite, Formosan termites are dismantling much of the Gulf Coast, all the while shrugging off pest-control measures,” Metaxas writes. Just after the hurricane, state authorities imposed a quarantine on the termite to strictly regulate the movement of all wood materials coming from the 12 New Orleans parishes with the worst damage, he said. And Home Depot and Lowe’s say they have strict standards for materials that might contain pests and don’t even buy mulch from vendors in southern Louisiana. The Formosan termite is a warm-weather bug that has reached nine southern states: Louisiana, Texas, Mississippi, Alabama and Florida, with smaller concentrations in Georgia, Tennessee and the Carolinas. Both Southern California and Hawaii also have to contend with the insects, which form larger colonies and are more resistant to pesticides than domestic subterranean termites. Termites cause an estimated $2.5 billion in damage to homes in the U.S. each year. Accompanying the article is information on early detection of a termite home invasion and advice on keeping mice, rats, squirrels, skunks, bats, raccoons, snakes and opossums out of the house. Experts to Tell All at Building for Boomers & BeyondIf you have questions about the active adult market, don’t miss “Meet the Experts” at “Building for Boomers & Beyond: 50+ Housing Symposium 2006.” Interact with active adult experts who can guide you and help you make the right business decisions to capitalize on this growing market. Join others in an interactive presentation with a panel of experts covering many active adult housing topics. “Meet the Experts” on: Tuesday, April 25
Wednesday, April 26
Onsite registration is available beginning April 24.
50+ Housing Publication Set Available at BuilderBooks.com Save 15% when you purchase “The 50+ Housing Publication Set” through BuilderBooks.com. The set includes one copy of "Boomers on the Horizon: Housing Preferences of the 55+ Market," "Marketing Seniors Housing" and "The Best of Seniors’ Housing News." This publication set is a must for anyone serving the 50+ market. To view or purchase this publication set online, click here, or call 800-223-2665. Condo-Hotel, National Condo Developer Earn Top Honors
The Pillars of the Industry Awards were presented in conjunction with the NAHB Multifamily Council's annual educational conference held in Scottsdale, Ariz. on April 3-5. Considered the most prestigious national awards in the industry, the Pillars honor excellence in apartment and condo design, development, marketing and management, and showcase future trends and innovation in multifamily housing. NAHB recognized the winners in three areas: building, marketing and management. The Setai Resort and Condominiums, a condo-hotel, took top honors as Best Multifamily Community of the Year, an award selected from among all the winning entries in the builder award categories. The Setai also won this year’s Best Mixed-Use Community award. Crescent Heights, a New York City firm specializing in condo conversions, was one of two firms that received the Freddie Mac Development Firm of the Year award. The company, headed by Bruce Menin, has created a system for handling the conversion process, from acquisition to final sale, that gives every buyer individual attention. This was the first time that this award was given to a condominium developer. Freddie Mac and NAHB also honored the Minneapolis-based Lander Group, an urban infill developer, with the Development Firm of the Year award. The Lander Group¸ headed by Michael Lander, focuses on smaller-scale urban infill development using green building technology. “In what has been an exceptional year for multifamily housing, condo construction and conversion activity have shown impressive growth, and that’s reflected in the number of exemplary award-winners and finalists in for-sale categories of the Pillars competition,” said Jerry Howard, NAHB's executive vice president and CEO. While the large number of condos and condo hotels entered in the competition was no surprise, Howard said he was impressed that the number of entries in the affordable housing category increased by a third over last year’s record number of affordable entries. “As land prices increased, the cost of renting and buying rose as well, pricing many out of a market-rate apartment or condo,” Howard said. “It is heartening to see how many developers have been working with great creativity and skill to address the needs of working people who need access to high-quality affordable housing.” Mike May, vice president of multifamily sourcing for Freddie Mac, praised this year’s outstanding group of winners and finalists. “It is really inspiring to see the innovative ways that multifamily developers have found to house America’s families and build communities that meet such a variety of needs and desires,” he said.
The 2006 Pillars of the Industry Award
OSHA Focusing on Home Builders in Many LocationsUnder its Local Emphasis Programs (LEPs), the Occupational Safety and Health Administration is focusing on the residential construction industry in several areas across the country. Implemented by OSHA’s regional or area offices, the LEPs are aimed at addressing hazards of industries posing particular risk to workers. The LEPs are often accompanied by an outreach effort intended to make employers in the area aware of the program, as well as the hazards that it is designed to reduce or eliminate. This outreach can be in the form of informational mailings, training at local tradeshows or speeches at meetings of industry groups. "It is of the utmost importance for builders to understand OSHA's requirements," advised Rob Matuga, director of NAHB's Labor, Safety and Health Department. "Your focus should be on key safety issues such as fall protection, scaffolding, ladders, trenching operations, electrical and housekeeping," he said, "and the right time to take proactive steps in these areas is well before OSHA shows up." In place since last July, the LEPs are currently looking at home builders in the following locations:
For information on "Recognizing the 'Big Four' Safety Hazards for the Home Building Industry," a course being offered by the NAHB University of Housing, click here. For information on NAHB resources related to construction safety and health, e-mail Rob Matuga, or call him at 800-368-5242 x8507. Protect Your Job Site Against OSHA Violations Delays in construction due to poor safety procedures will cost you money. To protect your job site against OSHA violations, go to www.builderbooks.com/Safety. BuilderBooks.com has the resources you need to create a safety program that protects your workers and your profits. Bulk prices are available. To view these publications online click here, or call 800-223-2665. Modular the Way to Build on Remote Sites, Brochure ShowsModular housing is a cost-effective alternative for home buyers who want to live in a remote or sparsely populated location, according to “Modular Homes: The New Face of Home Building.” Just published by the Building Systems Councils (BSC) of NAHB to provide builders and consumers with information about the benefits of modular homes, the full-color, 16-page brochure includes articles with tips on selecting a manufacturer, customization, financing and additions. “More than 42,000 new modular homes were built last year alone and the number continues to grow,” said David Endy, of modular manufacturer Stratford Homes in Stratford, Wis. and chairman of the BSC. “This brochure is an excellent guide for anyone interested in learning more about the advantages of building or buying this type of home.” The brochure includes portions of a story that appeared in Building Systems magazine describing how modular housing came to the rescue of Bill Holztrager, who wanted to build his vacation home on Bald Head Island off the coast of North Carolina, the permanent residence of only 120 people. The obstacles of building on a site reachable only by ferry or private boat were formidable. “You’d have to ferry both men and materials out and back; shipping materials out, bringing scrap and waste back,” said Holztrager. “You’re paying freight on that both ways, as well as travel time for your building crews — when you can find them. And if you run out of something, you can’t just run out to the local lumber yard.” Other logistical challenges included architectural covenants and complex engineering requirements to help the home withstand high winds and rain churned up by storms in the Atlantic. Modular construction provided Holztrager with a way out, and four modular sections and a crane were ferried to the island on a 14-foot-wide barge. “This was my first time using modulars and I can say it is pretty much easy street from a traditional builder’s point of view,” said Holztrager’s home builder. “The on-site execution went flawlessly. We had good weather conditions. And the set crews really knew what they were doing. It went together perfectly.”
The Building Systems Councils’ free publication explains how modular homes are constructed in a climate-controlled manufacturing facility by skilled craftsmen using state-of-the-art machinery. Once the completed “modules” are constructed in the factory — complete with attached walls, floor, ceiling, wiring, plumbing and interior fixtures — they are transported to a home site where they are assembled and finished. The modular construction process can significantly reduce construction time while producing a beautiful, code-compliant home. Home buyers benefit from a cost-effective home that can be built in a fraction of the time of a site-built home. Due to the controlled construction process, modular homes are also considered to offer better energy efficiency, resulting in lower heating and cooling bills for the owner. The brochure is available by contacting the Building Systems Councils at 800-368-5242 x8576, or online at www.nahb.org/modular.
“The Modular Home,” available through BuilderBooks.com, shows you how going modular can expand choices, save time, save money and prove to be more durable than a conventionally built house. “The Modular Home” is fully illustrated with a 16-page full-color insert, plus renderings and floor plans. To view or purchase this publication online, click here, or call 800-223-2665.
The Building Systems Councils' Modular and Panel Plant Tour will be held May 21-23 in Appleton, Wis. Tour stops will include Stratford Homes, Vetter Windows and Doors, Wausau Homes, Wisconsin Homes and Automated Building Components. To register online, go to www.nahb.org/PlantTour.
There will be an introduction to concrete, followed by two days of tours, including visits to plants and job sites. You'll also have an opportunity for a post-tour education session on "Concrete Mix Designs, Construction Guidelines and Troubleshooting." For more information and to register online, visit www.nahb.org/ConcreteTour. Listen to Your Moms — Your Primary CustomersEveryone says it: “Know your customer.” But how well do you know them? Of the 105 million women over 18 in this country, 82 million are moms — and 32 million of us have kids at home. Even with the industry’s increase in sales to singles and couples, chances are excellent that mom is your customer. Selling to her requires the ability to see the house and house-buying process as she sees it. In order to do that, you have to listen to mom. Understand How Mom Thinks and Makes Decisions You need to understand that she makes her big decision based on many little decisions. She has a huge need to be efficient with her time and money, so she will do her research upfront, before she comes to your models. Her research may include information on the seller, the builder, the community and the city. Mom notices everything in those first encounters, including any inconsistencies in your branded message. So, don’t tell her about how green you are if you don’t recycle your garbage. She’ll notice. Of course, the first thing she and her mate will do before buying a home is come up with an objective “must have” list — number of bedrooms and baths, size of the yard, family room or office, schools — all the usual. But mom will also be dealing with a lot of subjective wants, which are harder to assess and can be much harder to address. Mom Reacts to Smells, Lighting and Sound Women, in general, process sensory information better than men, so mom will be reacting to smells, lighting and sounds, along with what she sees. Ultimately, the house has to sing to her. You have to figure out what kind of music she likes. Mom Looks at Space in Terms of Potential Mom is more likely to see her new space in terms of its potential. Even if the house is still a blueprint, she’s looking ahead. In her mind, she’s willing to trade off a few things she’s not crazy about now for a lot of things she thinks are perfect. For example, she can easily turn what you call the library into the garden room by replacing the back wall with French doors later on. To her, your configuration is not really a deal breaker because your kitchen/dining area works so well. Her mind games may include fitting in her grandmother’s sideboard, her husband’s favorite chair, beds for two Irish wolfhounds or space for a rock-climbing wall. She’s writing the story of her family and your job is to provide the setting. The hard sell won’t work with her. Forget the Hard Sell — Emphasize Safety and Security Mom will likely imagine her children (or grandchildren) growing up in this new house. She will be focused on safety and security — of the interior of the house, the yard, the neighborhood and the community. A mom with young children needs to be able to see them at play. Good sight lines in the backyard may be a great selling point. Be able to answer her safety questions honestly. Mom Wants Value — But Let Her Define What It Is She’s looking for value, but it’s important to let her define what value is for herself. Don’t define it for her. The same woman who loves shopping at Costco for bargains on toilet paper and cleaning supplies can also find value in spending $8,000 for a spa tub in the master bath. The fact that you have sold the house next door to a family with children near the ages of hers may be of more value to her than any option in your package. Mom Wants to Be Able to Make Her Home Her Own Regardless of where she’s moving, mom really does want her home to be “customized.” You may call it personalization, options or add-ons. But what she is looking for is a sense of individuality — little touches that set her home off from the surrounding homes. No two women want to arrive at a party in the same dress. Mom doesn’t relish living three doors down from a duplicate of her home. She’s also likely to be highly motivated to add options that make her life better, easier or more efficient. Mom Is Technologically Savvy Finally, don’t underestimate mom. She is not technologically challenged. In fact, she’s quite the opposite. She’s the one doing the Internet research on your product. If your Web site doesn’t respond with the kind of information she’s after, her husband or buying partner will never even see your online virtual tour. Bottom Line — Know What Mom Wants Mom loves a bargain — but is more than willing to pay for things she values. You must listen to find out what those things are. She loves a good story, too. But in this case, she’s the playwright. You are only part of the stage crew. You have to take note and respond to her needs, her wants and most importantly, her dreams. Treat her like the woman she is and she may reward you — not only with a sale, but also with the kind of word-of-mouth marketing that makes your dreams come true. Nora Lee is the catalyst/principal of Nora Lee Et Al, an Altadena, Calif.-based consulting firm that teaches the business world about the “economic power of mom.” Lee is the author of “The Mom Factor: What Really Drives Where We Shop, Eat and Play” (Urban Land Institute, 2005.) For more information, visit her Web site, www.momfactor.com; or e-mail Lee, or call her 626-797-3372.
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:
For more information on these designation programs, click here. Ask an Expert You also can ask designation holders questions about obtaining a designation, specific courses, case studies and more. "Ask An Expert" is available on the NAHB Web site by clicking here.
“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. To view or purchase this publication online, click here, or call 800-223-2665. Education Calendar
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.
Register Now for the Design Institute 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.
Log In and Discover www.nahb.org The NAHB Web site, www.nahb.org, gives you access to nearly 5,000 pages of housing industry information and exclusive members-only resources 24 hours a day, seven days a week. Access is fast, easy and free to NAHB members. To take full advantage of the exclusive NAHB members-only resources on www.nahb.org, however, you must log in. To create your login:
By logging onto the NAHB Web site, you will have access to twice as much information as non-members — information that will help you stay ahead of your competition. You will be able to view and read entire sections of content developed just for members, and you will be able to personalize the site to your specific interests. To learn more, log in and visit the "How to Use" www.nahb.org section in My NAHB. For questions or help logging in, call 800-368-5242 x0; or e-mail your name, company name, state and phone number to login@nahb.org. Production Home Builders Ready to Build GreenHome buyers are increasingly looking at “green” features when choosing new homes, and NAHB is making sure that builders can meet that demand, according to NAHB President David Pressly. Pressly was in Raleigh on April 3 to participate in a groundbreaking ceremony for a new green-built home being constructed in a subdivision of the North Carolina capital. “This is an exciting time for the building industry,” said Pressly. “Builders say more customers want green homes, and we are ready for that challenge.” Cherokee Investment Partners, a developer specializing in the development of former industrial and commercial sites, or brownfields, is building the green home near its company headquarters to demonstrate green building — environmentally sensitive land development, resource conservation and energy efficiency — in a typical suburban residential setting. The house is being constructed using NAHB’s Model Green Home Building Guidelines, a tool for home builders ready to build green and for local home builder associations interested in developing their own voluntary green building certification programs. Pressly was joined at the groundbreaking by Raleigh mayor Charles Meeker and state Sen. Janet Cowell. Also attending were leaders from the Home Builders Association of Raleigh-Wake County and from the Home Builders Association of Durham, Orange & Chatham Counties, which is launching its own green building certification program with a green home tour later this spring. Architect and designer William McDonough called the house “an essay of clues about the future” and “a very important stake in the ground,” and congratulated Cherokee for setting an example for local builders that they, too, can imagine building. “This home fits right into its neighborhood,” Pressly said. “It is a mainstream home. Seventy percent of the new homes that Americans buy every year are built by large home building companies that have been seeking ways to incorporate more green-built features into their products. This home offers solutions.” For more information on NAHB’s green building resources, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. ‘Profit from Green Building’ Available at BuilderBooks.com “Profit from Building Green — Award-Winning Tips to Build Energy Efficient Homes,” available through BuilderBooks.com, provides specific examples and tried-and-true techniques to create successful green building practices. To view or purchase this publication online, click here, or call 800-223-2665. Texas Builder Sees Baby Boomers Turning to Green BuildingWhen it comes to consumer interest in green building, Fort Worth builder Don Ferrier of Ferrier Custom Homes says that a “paradigm shift” is already under way. Ferrier attributes the new attitudes to the 800-pound gorillas of home building trends: the baby boomers. With retirement looming, this post-World War II generation already is influencing the design and construction of vacation homes and “active-adult” communities, two huge markets for home builders in the first decade of the 21st century. Now, they are turning to green building, Ferrier says.
“These customers are saying, ‘this will be the last house we ever expect to build. Building it to a high performance level is the best investment we can make for our future,’ ” Ferrier said. And they are unafraid to pay a premium for green, because, Ferrier says, “They know it is worth it.” But green building is also beginning to appeal to buyers who don’t have boomer budgets. Ferrier was putting finishing touches this spring on his 2,000-square-foot Heather’s Home, which was built to be affordable and environmentally friendly and to use next to no energy. With a monthly heating and cooling bill of $15, it will land within the top 1% for efficiency among Energy Star®–rated homes. With its quirky glass-block design and contemporary styling, Heather’s Home might not fit into most traditional neighborhoods. But with a construction cost per square foot of about $117, the home is considerably less expensive than the average custom home, long the provenance of most green construction.
After being featured in the Greater Fort Worth Spring Tour of New Homes, the house will be occupied by Heather Ferrier, Ferrier’s daughter and the company’s office manager. In addition to its fresh design, three green features stand out in Heather’s Home, Ferrier said:
With its emphasis on affordability and efficiency and old-fashioned passive solar combined with cutting-edge technology, Heather’s Home straddles the narrowing gap between green and traditional building. And it’s not a moment too soon, Ferrier said. “It’s a whole paradigm shifting thing that we are seeing with the general public,” he said, with potential customers with green building inquiries coming in at 10 times the rate that they did even three years ago. “It’s the huge wave of building that’s coming. “I don’t think there’s anything more satisfying than helping people achieve their dreams of building a home and to do it so it’s green, efficient, healthy and durable. It’s a great investment,” he said. For more information about NAHB’s green building resources, e-mail Calli Schmidt, or call her at 800-368-5242 x8132. Public Ready for Zero Energy Homes as Early as 2012Released in February, a new study by the NAHB Research Center predicts that zero energy homes could be moving into the mainstream of the nation’s housing market as early as 2012 and hold the potential for reducing the energy consumption of all single-family homes by 19% by 2050 even as more than a million new homes are added annually. “Zero energy homes are technically feasible today,” according to the study, “The Potential Impact of ZEH.” “If cost trends continue and research milestones are accomplished in solar energy and efficiency technologies, ZEH will eventually become economically competitive with conventional construction when utility costs are included in the cost of homeownership.” With the cost of solar electric systems on the decline and photovoltaic production increasing nearly 30% a year, the market penetration of these highly efficient homes has already begun and will continue in selected markets, says the study, which was conducted collaboratively with the U.S. Department of Energy and the National Renewable Energy Laboratory. The zero energy home will get a further push from new, low-cost solar water heating designs now under development, the report concludes. “At the same time, a portfolio of energy-efficiency improvements in appliances, building envelopes, windows and mechanical systems is moving into the market.” Zero energy homes, which are connected to the utility grid, combine highly energy-efficient design and technology with solar electric and thermal systems to produce as much energy as they use on an annual basis, resulting in net zero energy consumption. The first zero energy home in the U.S. was built by John Wesley Miller in Armory Park del Sol in Tucson, Ariz. in 2003. Following that, Bill Asdal completed the first zero energy remodel, transforming a circa-1900 farm house in Califon in the northwest corner of New Jersey. An increase in the popularity of the Environmental Protection Agency’s Energy Star® homes provides a good indication that home buyers are beginning to embrace many of the concepts behind the zero energy home, the report says. From zero in 1995, there were 130,000 Energy Star homes built in 2004, with up to 40% penetration in some markets. The study demonstrates that research and development supporting the ZEH concept in conjunction with state and federal tax incentives will help to accelerate and improve the energy performance of the nation’s residential sector. Web Site Adds Resources on Social Services for RentersWith a $750,000 grant from Freddie Mac, Enterprise Community Partners is providing informational resources on its Web site related to support services for people living in affordable rental housing. “Enterprise knows that fit, affordable housing, although very important, is just the first step in the path out of poverty into the mainstream of American life,” said Bart Harvey, chairman and CEO of Enterprise Community Partners. “However, housing — together with resident services that result in more education for adults, after school programs for children, job readiness and employment, better financial management and good health — empowers low-income families to achieve stability and economic success.” “Making home possible is at the heart of Freddie Mac’s work,” said Ralph F. Boyd, Jr., Freddie Mac’s executive vice president for community relations, who participated in a teleconference with community development practitioners announcing the new resources. “Helping families stay in their homes is also important to us. That’s why we have teamed up with Enterprise to ensure that resident services become a standard tool to help struggling families thrive.” Resident services programs typically connect residents to child and youth programs such as after-school tutoring, increased school readiness and summer employment and to adult programs offering training in financial literacy, job-readiness, computer skills and leadership development. An on-site resident service coordinator is available to link tenants with service providers in the community. The following new resources are now available on the Enterprise Web site:
Trustees Visit Construction Training Programs in TucsonMembers of the Board of Trustees of the Home Builders Institute (HBI), the workforce development arm of NAHB, traveled to Tucson, Ariz. last week for their annual planning meeting. Included on their itinerary was a visit to HBI’s training programs at the top-rated Fred G. Acosta Job Corps Center, where HBI provides training in facilities maintenance, plumbing and electrical wiring. The center is also an active partner in the Department of Labor’s “Building Today’s Workforce for Tomorrow” grant to HBI, and home to one of nine Job Corps NAHB Student Chapters. HBI instructors work closely with the center’s director, Joe Altamirano, to ensure that students receive quality trades training and have significant opportunities to utilize their skills in work-like situations. HBI has developed a unique program with Pratte Building Systems, an exclusive subcontractor to Pulte Homes, that enables students to intern as “superintendents-in-training” as a step to a permanent entry-level assistant superintendent position. One student was hired last year and six are currently enrolled in internships. On their tour, the trustees got a first-hand look at the positive influence of dedicated HBI instructors, center staff and other local grant partners such as the Southern Arizona Home Builders Association (SAHBA), Pima County Schools and Pima Community College. “The involvement by industry, educators and county leaders offers graduates a seamless transition to school or a career” said Michael Sivage, HBI chairman and a builder/developer from Albuquerque, N.M. “While in Job Corps, the students see what we are seeing today, a vivid image of an industry that needs them and a community that cares.” As a partner in HBI’s grant under the President’s High Growth Job Training Initiative, SAHBA is one of 10 builders asociations in as many states to spearhead “Building Today’s Workforce for Tomorrow” for the home building industry. Trustees also had a chance to meet several members of the program’s new advisory board, including Dr. Linda Arzoumanian, superintendent, Pima County Schools; Dr. Johnson Bia, president, Pima County Community College District; John McCaleb, with McCaleb Construction and SAHBA president; Gregory Miedema, with Dakota Builders; and the group’s chairman, Brian Forstall, director of the Tucson Unified School District's Career and Technical Education.
“It’s very encouraging to see this type of partnership and collaboration,” said Sivage. “HBI and Job Corps established their partnership decades ago and we constantly look to expand the scope of the programs we offer.” The grant calls for HBAs to work with local public school districts, community colleges and the workforce investment community to offer students the chance to gain craft skills training and earn an associate’s degree. For more information on HBI’s Job Corps programs, e-mail Keith Albright, or call him at 800-795-7955 x8911. For information on “Building Today’s Workforce for Tomorrow” contact John Shortt, x 8924. Natural Disaster Survival Helped by Renewable EnergyRenewable technologies can help communities survive and recover from natural disasters, providing electric power, hot water and heating and cooling, according to the National Renewable Energy Laboratory. Under the U.S. Department of Energy, the laboratory’s mission is to provide environmentally and economically sustainable solutions to meet the nation’s future energy needs, and it is a member of the National Council of the Housing Industry — The Supplier 100 of NAHB. Losses from power disruptions following a natural disaster can account for as much as 40% of the total insured loss for businesses, according to a report by the Lawrence Berkeley Laboratory, and electricity-producing technologies such as photovoltaics and wind can help reduce the impact. A survey by the University of Southern California to assess the impact of the 1994 Northridge Earthquake, found that the loss of utility services was the fourth-ranked cause of the disruption of businesses, following the inability of employees to get to work, employees dealing with personal matters and damage to the workplace. A second study by the University of Delaware’s Disaster Research Center found that businesses considered electricity as the most critical “lifeline” service, more essential than telephones, natural gas or water. The laboratory has gathered numerous examples of how renewable technologies have helped communities deal with natural disasters.
Getting PaidWhen I moved seven years ago to the mountainside acreage that is now my family’s home, the first order of business was to have a well drilled. I called my favorite driller and soon the lumbering equipment was on site hammering away. At 200 feet deep the “well” was producing about a quart an hour — not enough for a toad in a mud puddle, let alone a family of four. With hard rock drilling, like at my place, generally the deeper you go, the less probability you have of hitting a water-bearing fracture. Also, in my neck of the woods, the deeper rock formations are old marine deposits and commonly contain salt water, which isn’t good for you, cakes up your pipes and tastes like anchovies. So, rather than continue spending $30 per foot on my new Sahara-Desert-in-a-Hole, I sucked up my losses and had the drillers pull out. My 10-year-old son, who was looking on with great interest, came charging up and croaked, “Dad, I’m thirsty.” Not being in a very good mood, I seized the opportunity to bark at my forlorn wife and two small children, who were now gathered around me with drooping eyes and sunken cheeks, that they would just have to learn to do without water. We were going on a water-weaning program. After a few minutes of crying, blubbering and good old-fashioned wailing, I forced a smile and admitted that, of course, I was joshing. I went on to explain that I didn’t want to connect to the public water main at the beginning of our driveway but now would have to. To add a little more insult, on his way out, Hank, the chief driller, handed me an invoice for $6,498. I was stunned. How was this possible? You can’t possibly calculate and print an invoice — on company letterhead no less — within five minutes of the work being done! I was chagrined to discover that he had a laptop computer and a cigarette-lighter-powered-printer right there in the cab of his rig. “Any chance you can pay this now?” Hank asked firmly. “Ehm… no,” I stammered. “I don’t have my checkbook with me.” “We like getting paid right away,” Hank said. “Any chance you could drop a check by our office tomorrow?” “I’ll see what I can do.” At 8:01 the next morning my phone rang. “Is this Mister Garrison?” the gal’s voice inquired in a tone not too unlike that of a drill sergeant. “Yes?” “Mister Garrison, sir, this is Mergatroid Crowbar from Hank’s drilling. Would you, sir, be able to pay our invoice today? I could swing by and pick up the check if you were unable to drive by our office.” “Um, sure,” I faltered, completely taken off guard. “You folks certainly are aggressive when it comes to money, heh, heh.” “Yes we are, sir. I’ll be over in approximately 21 minutes, if that’s okay with you, sir.” “Unh, yeah… yeah, that’ll be fine. I sure hope you’ve had some breakfast, though, Mergatroid,” I joked, “wouldn’t want to lose any fingers when I hand over the check. Haw haw.” “Yes, I’ve eaten my breakfast, sir. You are a funny man. See you in 20 minutes.” And so I shelled out big bucks for my brand new, 200-foot posthole. They may not be good at finding water, but Hank’s Drilling is very good at collecting payment. Here’s how they do it: Hank personally goes over the scope of work and the costs beforehand. When I initially called Hank, he personally came to my site and walked it with me, explaining in detail the basics of hard rock drilling. He discussed the probability of hitting water, emphasizing that there was a good chance they would not get any. He meticulously discussed every aspect of his costs: mobilization, drilling, well casing, grouting, etc. In short, he made sure I knew what I was signing up for and that it wouldn’t be cheap. You’ll notice Hank didn’t send an underling. Discussion of scope of work and cost is the boss’s job. Hank immediately backs it up in writing. Within two days of our initial meeting, I received a written contract in the mail. The contract spelled out the same things Hank told me during the site visit and included a bottom-line cost. I didn’t wait a week or a month to receive the contract — it happened immediately. This sets a tone — an unmistakable, though unspoken message that Hank is all business. He is a professional and expects to be treated like one. Hank doesn’t schedule work until a signed contract is in place. The cover letter attached to Hank’s contract was short and sweet. It accomplished three important things: A) It thanked me for considering Hank’s Drilling; B) It stated that they would schedule the work upon receipt of the signed contract; and C) It alerted me to the lien provision in the contract. Again, Hank was setting an “all business” tone. Hank does top-notch work. Hank’s equipment was well-maintained and clean. His employees were professionals: well groomed, they hustled and they didn’t make mistakes. In short, Hank afforded no latitude for a customer’s gripes. There is zero delay in invoicing. Handing me an invoice before leaving the site sent the clear message that Hank was serious about getting paid. Contrast this to other contractors I’ve used who didn’t send an invoice for weeks or even months. If they’re not concerned about sending invoices, they must not be that concerned about getting paid. They squeak immediately and keep on squeaking until the check is in hand. Every company needs a Mergatroid Crowbar. She is the reason that Hank’s Drilling is the business I used as an example for this column. Other companies I’ve worked with are roughly equal to Hank’s in preparing the customer for payment, but nobody, and I mean nobody has a Mergatroid equal to Hank’s. She is worth her weight in payment checks. Of particular note is that Mergatroid was on the phone to me the very next day. Had I told her that I couldn’t pay for a week because I needed to make a bank draw, here is what she probably would have said: “That would be fine, Mr. Garrison. We can allow postponement for one week. One week from today would be next Tuesday, the 23rd, correct, sir? I’ll mark that on my calendar and will call you if we haven’t received the check by then.” To summarize, any company that wants to get paid must become deadly serious about making it happen. Think of it this way: most customers do not have enough money to pay for their overly ambitious construction projects. Someone’s going to get stiffed. Your company is competing, then, for its fair share. That means you have to be better at harvesting money than all the rest of the consultants and subs on the job. And harvesting money includes ALL of the following: tilling the soil, planting the seeds, keeping weeds out, picking the crop, taking the crop to market and finally collecting the cabbage. Tim Garrison of ConstructionCalc.com, is a professional engineer, author, and software producer for the building industry. Check out his new book, "Cracks, Sags, and Dimwits — Lessons To Build On," available at www.lulu.com, Amazon and Barnes and Noble. Send e-mail to buildersengineer@constructioncalc.com. Tim reads every one. This column cannot be reprinted without permission from the author. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article. NAHB-Produced Programs on HGTV & DIY This WeekThe NAHB Production Group produces four weekly television shows on HGTV and DIY for consumers. The following is this week's lineup: "I Want That" on HGTV
"Dream Builders" on HGTV
"Rock Solid" on DIY
"Assembly Required" on DIY
Episode: "Modular Homes (Part 2)" |