Nation's Building News Online: July 31, 2006Print All Articles Text Version |
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More Fed Rate Hikes Would Worsen Home Sale CooldownReports last week from the U.S. Commerce Department and the National Association of Realtors® showed that a significant slowdown in sales of new and existing homes is underway and could help convince the Federal Reserve Board to hold the line on interest rates when its Federal Open Market Committee meets on Aug. 8. Sales of new single-family homes were down 3% in June to a seasonally adjusted annual rate of 1.131 million units, following a downward revision to the sales rate for May, according to figures released last Thursday by the Commerce Department. Actual new home sales for the first half of the year were down 11.9% from the same period of a record-setting 2005. “The government numbers are finally reflecting what builders have been reporting from the field for several months,” said NAHB President David Pressly. “Builders see this as an orderly slowdown and have been slowing their production as market conditions and demand cool down." “The slowdown for June, coupled with the downward revisions of the previous two months, indicates that we are well into the predicted cooling down process,” said NAHB economist Michael Carliner. “We expect this to continue as the impact of recent increases in interest rates is fully reflected in sales.” Further Monetary Tightening Would Be a Negative “NAHB’s current forecast shows about a 12% decline in new-home sales for 2006 as a whole,” Carliner added. “However,” he warned, “any further monetary tightening by the Federal Reserve would have a more severe negative impact on sales.” Mortgage interest rates dropped slightly in Freddie Mac's Primary Mortgage Survey for the week ending July 27 “on indications that economic growth is moderating, inflation remains under control and the Fed just may pause raising rates for awhile,” said Frank Nothaft, Freddie Mac's chief economist. Released on July 26, the Fed’s Beige Book report on economic conditions in the 12 Federal Reserve Districts noted “numerous individual reports pointing to evidence that the pace of growth has slowed.” That observation was confirmed by the end of the week when the government showed GDP growth declining to a rate of 2.5% in the second quarter, down sharply from 5.6% for the first three months of the year. Based on information collected on or before July 17, the Beige Book was prepared at the Federal Reserve Bank of San Francisco. The report summarizes comments received from businesses and other contacts outside the Fed. Consumer inflation in the second quarter was running at a 4.1% pace. In the Fed’s report, it was noted that although manufacturers and retailers are finding it easier to pass on cost increases in the prices they charge, more generally “vigorous competition held price increases down, and some contacts noted reliance on productivity increases to maintain profit margins in the face of rising input costs.” A Declining Home Sales Pace As for the housing markets, the Fed report said: “For new and existing homes, available reports indicated that the pace of sales declined and that the inventory of available homes and time on the market rose in most major metropolitan areas nationwide. Slower sales activity has translated into more limited price gains, and residential construction activity has fallen in most Districts as well.” The notable exceptions for slowing housing activity were the St. Louis District, where “the pace of home sales was largely unchanged or up slightly compared with a year earlier, although residential construction slowed there;” and the Dallas District, where “despite signs of cooling, ‘home demand remains strong’ and residential building activity has been ‘robust.’” The Beige Book summary also observed that there have been scattered reports indicating “a strengthening in demand for rental units” as “home demand has slipped more generally.” As NAHB has brought to the Fed’s attention, rising rents in response to rising mortgage rates are perversely working their way into the measures of core inflation that the central bank is watching closely to determine its monetary policies (click here for a related story on Chairman Ben Bernanke’s testimony to Congress). The Fed report also says that “Builders in some areas faced moderate constraints on construction activity. High construction costs reportedly were a restraining factor that delayed or caused the cancellation of some building projects in the Cleveland, Chicago and San Francisco Districts. Moreover, Atlanta reported that some commercial building projects along the Gulf Coast have been put on hold until late fall, after the current hurricane season is over.” Demand for commercial space has helped offset declining residential construction, with commercial construction activity reported to be at high levels and increasing in the Dallas, Atlanta and Richmond, Va. districts; slowing in Chicago; and mostly flat in Kansas City. Inventories on the Rise On the sales of new homes in June, the Commerce Department reported declines in three of the country’s four regions: 11.3% in the Northeast, 7.9% in the Midwest and 6.0% in the South. The annual sales rate was up 8.2% in the West. The inventory of new homes for sale rose to 566,000 units at the end of June, a 6.1-month supply at the current sales pace. Almost all of the increase was in for-sale units that were permitted but not yet started; they represented nearly 20% of the inventory level. Units still under construction comprised almost 57% of the inventory, and completed homes for sale were 23% of the total — about the same as a year earlier. Completed homes sold in June were on the market for a median of 3.8 months, compared with 4.0 months a year earlier. Total existing-home sales — including single-family, town homes, condominiums and co-ops — declined a modest 1.3% in June to a seasonally adjusted annual rate of 6.62 million units, from an upwardly revised level of 6.71 million in May, according to the Realtors®. Sales for the month were 8.9% below the 7.27 million-unit pace in June 2005. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projections, which tells us that the market is stabilizing,” said David Lereah, chief economist for the Realtors®. “At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.” Total housing inventory levels rose 3.8% at the end of June to 3.73 million existing homes for sale, which represents a 6.8-month supply at the current sales pace. The inventory was a tight 4.4-month supply one year earlier. Financial analysts appeared to be split fairly evenly over whether the Fed will decide to move up the federal funds rate by another quarter of a percentage point, to 5.5%, next Tuesday. Want to Know Your State's Starts Forecast for 2007?
To learn more, visit www.housingeconomics.com. Builders Can Help End Obesity Trend in ChildrenGenerating some controversy a couple of years ago by suggesting that new housing developments are contributing to the nation’s obesity problem by discouraging walking, Richard Jackson, M.D., made an appearance at last month’s PCBC in San Francisco to tell builders that they can make a difference in improving the health of their residents, especially children. Dr. Jackson, a professor of environmental health at the University of California, Berkeley's School of Public Health and Gov. Arnold Schwarzenegger's former state health director, said that new communities can be designed to help encourage children to spend more time outdoors in physical activities and less time in front of the television set eating junk food. One in four American children today is obese and at risk of related health problems, according to the Centers for Disease Control and Prevention's (CDC) Guide to Community Preventive Services, and Jackson said this problem can be tackled just as lead poisoning was addressed when it was the biggest environmental health threat facing children up through the 1990s. Today, those efforts stand as one of the major success stories of pediatric medicine in recent times. By getting rid of lead in paint and gasoline, he said, “the child’s brain is better forever and every child has five or six added IQ points as a result,” with each additional point worth an economic value of $14,500. The national weight problem, of course, isn’t just limited to children. In 2004, for example, the average Californian had picked up 10 pounds from just 10 years earlier. And the solution to the problem isn’t just limited to exercise but is also closely related to the food people are eating. But “the implications for housing are huge” and because they are a force in helping to shape their communities, raising the awareness of builders on this issue can only help promote strategies to help people become more physically active. For instance, Community Preventive Services cites findings from six studies showing that signs by elevators and escalators encouraging people to use nearby stairs for health benefits or weight loss can increase stair use by 54%. “The intervention was shown to be effective in a variety of settings including train, subway and bus stations, shopping malls and university libraries and in a variety of population subgroups including men and women, both obese and not obese.”
Jackson presented the PCBC audience of housing professionals with a litany of statistics suggesting real cause for concern about the growing obesity epidemic in the U.S.:
More closely related to development, Jackson said that incidental exercise has been removed from the environment, and many children no longer have much opportunity to walk. Some communities are even sawing off the bottom limbs of trees because of the fear that children will climb them. “The removal of green contact from children’s lives is a big issue,” he said. (For those interested in learning more about this topic, Richard Louv's “Last Child in the Woods: Saving Our Children From Nature-Deficit Disoder” is recommended reading.) Today’s average eight year old has 8% less autonomous space than in the 1950s, he said. Walking or biking to school is “quality time” that has been virtually lost to children today, Jackson said, largely because of the ongoing trend to replace small local schools with larger centralized facilities. In 1974, 66% of children walked or biked to school; in 2000, it was down to 13%. Reversing this trend holds the potential for reducing California’s $1 billion annual school bus budget and the country’s surge in Ritalin prescriptions to address hyperactivity in children. Jackson said that architects should be encouraged to incorporate stairs into their plans. Climbing one flight of stairs a day can yield the loss of one pound in a year, he said, “and architects love designing stairs.” The doctor is also an advocate of the “10,000 Steps a Day” program, which originated from the Japanese “Manpo-Kei.” When 3,234 people who were pre-diabetic used this program to walk or exercise five times a week for 30 minutes, they lost 5%-7% of their body weight and reduced their risk of diabetes by 58%, he said. Trails through the community will help facilitate walking the 10,000 steps, the equivalent of five miles, but they should lead to destinations, he said. As for what’s in children’s diets, Jackson advocates cooking without trans and saturated fats, banishing soft drinks from the schools and getting “kids to eat California fruits and vegetables, not corn." ‘Building Community’ Available at BuilderBooks.com “Building Community: Live, Gather, Play,” available through BuilderBooks.com, shows you how to design a community that is sensitive to the environment, respects the neighbors, is financially successful and has the elements necessary to last generations. “Building Community” is an indispensable core text for the study of community planning, residential and commercial architecture and landscape architecture. To view or purchase this publication online, click here, or call 800-223-2665. Share Nation's Building News With Your Staff. It's Free.Make your business click. Subscribe your employees and trade partners to Nation's Building News — the free, online e-newspaper of NAHB. Each issue is filled with valuable news and information on every aspect of the home building industry — business and builders tips; the latest materials prices and mortgage and interest rates; new technologies; cutting-edge design; state and federal regulations and how they affect the industy; and more. Information your entire company needs to stay ahead of your competitors. Forward this issue to your employees and trade partners and ask them to subscribe. Nation's Building News, it's free to them — invaluable to you. Don't delay, have your employees subscribe today. To subscribe, go to www.nahb.org/nbn. Nation's Building News Will Not Be Published Aug. 7Nation's Building News will not be published on Aug. 7. Publication of NAHB's official online e-newspaper will return to its regular weekly schedule with the Aug. 14 issue. Home Sellers Sweeten DealsTo attract buyers, 75% of builders are now offering some kind of incentive, up from 50% last year, according to NAHB. “These builder-developers understand the solution to the slowdown to the market is to quickly liquidate their inventory,” says Ron Peltier, CEO of HomeServices of America. Builders prefer free upgrades over cutting prices, which can hurt resale values for their customers who bought in the same communities, and they are offering everything from free swimming pools to granite kitchen counters to vacations. Promotions are the highest they have been in seven years. In Las Vegas, builders are offering commissions to buyers’ agents far above the typical 3%. And home owners are finding that they have to follow suit, offering commissions of 4% and even 5%. A couple in Woodbridge, Va. is trying to move their home, which has been listed since March for $449,000, by sprucing up the interior and landscaping, shaving $10,000 off the sales price and parking a 2006 Corolla in the driveway that is included in the deal. (www.usatoday.com)
Building Industry Cutting WorkersStill finishing residences ordered last year, home builders in Southwest Florida are bracing themselves for a cooling marketplace by trimming their workforces through attrition and, in some cases, actual layoffs. “I think probably what you are seeing is a little retrenchment,” said Lawrence Anderson, executive vice president of the Home Builders Association of Sarasota County. WCI Communities, a major builder active in Sarasota and Manatee counties, has confirmed that it is laying off an unspecified number of workers “to be more consistent with the current business environment.” A company spokesperson reports that new orders in the first part of the year have been much lower than those experienced in previous years. Lee Wetherington, whose company builds homes priced at $500,000 and up in Sarasota County, says that he is resorting to a hiring freeze. “We have 12 positions that we are not going to fill, and probably by the end of the year we will lose another six through attrition, and we are just not hiring.” “The market is definitely slowing down,” said NAHB economist Michael Carliner. “I think the outlook is for declining employment by sometime next year, perhaps before then.” (www.heraldtribune.com)
How U.S. Homes Are Hurt by Rising Energy PricesAnalyzing Bloomberg data going back to 2004, Chicago columnist John Wasik has discovered an inverse link between rising gas prices and single-family home sales. Home sales perked up slightly during the first two months of this year when gas prices dropped slightly and then housing declined through April, correlating with another jump in fuel costs. “Those who are furthest from their jobs are most vulnerable to energy-cost run-ups,” he writes. “As home prices rose in the frothiest areas, home buyers mainly have done two things to augment housing affordability: They financed with risky, interest-only loans to ensure the lowest-possible payments and moved farther out from employment centers, where prices are lower.” If gasoline prices remain at or above $3 a gallon, Wasik predicts, properties in outlying counties in Los Angeles, San Diego, Silicon Valley or Orange County, Calif., will become less attractive. Daily commutes from southern New Jersey into New York will also be more discouraging. Buyer reluctance will also emerge in far-flung collar counties of Atlanta; Orlando, Tampa and Miami-Fort Lauderdale in Florida; San Francisco and Denver. (www.bloomberg.com)
Naked AmbitionIn-town enthusiasts, inspired by the carefree hedonism of beach showering — also known as being naked outside — have discovered that there is more to an outdoor shower than keeping grit off the floors. Designer and builder Ethan Fierro, author of a new book, “The Outdoor Shower,” says that showers outside the house “get us in touch with a deeper and more primordial sense of ourselves and life. Bathing outside — whether in the open or in an enclosed space — allows us to feel sensual, vibrant and alive.” Kai Tong, director of the architecture department of Hopkins & Porter in Potomac, Md., has designed outdoor showers for several clients and says that the primary challenge is finding a spot convenient to the main house that also offers seclusion and garden views. But in a dense urban or suburban setting, bathers must consider more than their own privacy. The view and sounds of the shower that the neighbors will be sharing require finesse as well. On a purely practical note, the location needs good drainage. Plumbing and local codes will help determine whether the water drains into the indoor plumbing system or an outdoor storm drain, and some local codes prohibit having a shower emptying into a gutter. (www.washingtonpost.com)
A Growing Force in Home Buying; Singles Seek Amenities as They Select HousingAfter renting for three years, 25-year-old Deb Fox, of Chicago, decided to become a home owner and her criteria were: a condo that was in a new building, close to her job, within her budget and with lots of storage space. She did not need extra bedrooms, a parking space or a view of the lake. "Fox is typical of the single buyers who are flooding the new-home market,” said Gopal Ahluwalia, vice president of research at NAHB. “They know what they want,” he said. Fox’s want list is typical, he said, but singles with children also cite quality schools as a priority. In the last 10 years, the number of single home buyers has increased by 50%, said Ahluwalia, and unlike their parents, many young people are deciding to establish themselves as home owners before they marry. Despite the growing number of single buyers, not all developers take them seriously. “A lot of [developers’] salespeople treated me like I was 10,” reported Fox. “When my mother went with me, they talked to her instead of me, even though she told the salespeople I was buying, not her.” To these developers, Ahluwalia said, “It’s a new world. These buyers are professionals and they qualify for loans. They know what they’re doing.” (www.chicagotribune.com)
Despite a City’s Hopes, an Uneven RepopulationAcross New Orleans this summer, hundreds of former residents have returned with their children to jump-start the city’s recovery from last year’s Hurricane Katrina, despite great uncertainty about the future. But the renaissance is uneven from neighborhood to neighborhood, or even block to block, and the summer that was supposed to be a bellwether for recovery has led to only patches of hope, raising just as many doubts. Since the hurricane, the city has granted more than 28,000 building permits for residential and commercial construction projects worth more than an estimated $1.8 billion. More than 60% of the permits have been issued since March, in anticipation of a summer spent working on repairs. Yet it is hard to know how many people have returned to work on those projects, and it is clear that many have not despite the city’s estimate of a population of 225,000, about half its pre-Katrina size. People who have flood insurance or savings are in the best position to recover quickly, but many people who have the resources are still waiting, uncertain that the levees will hold in this year’s hurricane season or that schools will reopen. Some home owners are still anticipating the arrival of billions of dollars in federal aid, which is expected to begin flowing in late August or early September. (www.nytimes.com)
Letters to the Editor: Housing Inflation and Interest RatesDear Editor: Regarding your July 24 story, “NAHB Interest Rate Concerns Arise in Bernanke Testimony,” we in the building industry can’t have it both ways: after enjoying the under-calculation of inflation during a period in which low interest rates helped weaken the rental industry by converting renters to owners, even as house prices soared, it makes the industry look bad to now spin the numbers the other way. What is really happening here is that inflation is having a one-two punch. With interest rates rising as the artificially created, world-wide capital glut is finally dried up by the various responsible central banks, we have true, and significant, housing cost inflation. Yes, it costs more to own a home, as builders and home owners try to hold to the inflated prices they’ve become accustomed to now that interest rates are trending higher. Yes, this lets fewer people out of apartments and into homeownership. Yes, this gives the rental industry the ability to raise rents now that their customer base is growing again. But the inflation indicator is rising because of real increases in housing costs. Obviously, rents would not be climbing if equivalent houses could be owned for an equal or lower cost, would they? The party is over, and this is only one indicator of the relative mess left behind for Federal Reserve Chairman Bernanke by his predecessor. Under Alan Greenspan, we had a world-wide capital glut and resulting asset-price inflation, instead of more traditional wage and consumer-goods inflation, which was kept in check by the impact of China, WalMart and others on wages and the pricing of consumer-goods. Houses, bonds, diamonds, gold, high-end automobiles, art, commercial real estate, investment assets of every stripe — the territory of those with assets to allocate — all inflated terribly but were not adequately reflected in Consumer Price Index calculations. Regardless of the Fed’s actions at this point, asset prices are going to correct as interest rates return to something reflecting normality — 2% or 3% over reasonably expected inflation for Treasuries, with reasonable premiums to reflect the risk of all alternative investments. Mortgage-backed securities containing home and commercial real estate loans will likely see 150 to 250 basis point premiums over similar-maturity Treasuries. If inflation is 2%, expect home loans about where they are, but if inflation goes to 4%, expect 8% home loans. For those of us in commercial real estate, including apartments, cap rates will revert to 7% to 9% for average, non-trophy properties. The industry should get ready, because this isn’t going to be especially pretty, even though everyone could see it coming at least two or three years ago. Since it will be the free-market system actually making the adjustments, Washington, D.C. and the Fed will have little ability to moderate, unless they decide to push it off until tomorrow by providing further artificial liquidity, which in the long run will only make matters even worse. Gary C. Simons, CEO
Dear Editor: How do we get across to this Administration and to the Fed that the 17 consecutive increases in interest rates are the single most inflationary factor in the economy? Energy costs are up, and they are certainly inflationary, but they pale compared to interest rate increases, which have a direct impact on new home buyers and businesses. By comparison, Japan has raised its prime rate to just below 1%, thereby maintaining a more competitive position in the world market. John Boyle
Receiving Stolen Goods Dear Editor: On your July 24 article, “Builders Step Up Response to Job Site Theft,” I would like to see more laws for prosecution on the receiving end of the stolen property. We are commercial plumbers, and after we had 850 pounds of copper cut out of a building, a person who was not a plumber was carting it into a recycling center every single Monday. Hello, big alarm, nothing was done to the recycling center. The thief got a slap on the wrist and was released from jail. He was a carpenter! Laura Thackeray House Votes to Revitalize FHA Single-Family InsuranceWith the full support of the nation’s home builders, the U.S. House of Representatives on July 25 voted overwhelmingly to approve broad-based measures that would revitalize and reform the Federal Housing Administration's single-family mortgage insurance programs. H.R. 5121, the Expanding American Homeownership Act of 2006, includes several provisions supported by NAHB. Prior to the vote, NAHB sent a letter to the full House urging lawmakers to approve the legislation and also contacted every member of the Republican Study Committee to urge support for the bill and explain the importance of an invigorated FHA. The bill, which was subsequently approved by a 415-7 vote, would:
Housing and Community Opportunity Subcommittee Chairman Bob Ney (R-Ohio), who sponsored the bill, said in a statement that “modernizing FHA will improve competition in the prime home loan mortgage industry and effectively assist the industry in combating abusive and discriminatory lending practices. This bill helps further increase the country’s homeownership rate, especially among low- and moderate-income and minority families.” NAHB will now urge the Senate to approve companion legislation S. 3535. To read legislation, click here and enter the bill number in the box at the center of the page. For more information, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144. Bill Would Lift Multifamily Loan Limits in High-Cost AreasThe House Financial Services Committee on July 26 approved legislation that would address housing cost discrepancies across the nation by empowering the secretary of Housing and Urban Development to increase the Federal Housing Administration's multifamily loan limit in high-cost areas by up to 170%. Sponsored by Rep. Gary Miller (R-Calif.), H.R. 5503, the FHA Multifamily Loan Limit Adjustment Act of 2006, would allow the HUD secretary to raise the loan limit up to 215% on a project-by-project basis. To ensure a strong committee vote, NAHB spearheaded a letter of support signed by seven housing industry groups. The measure would allow major urban markets — such as San Francisco, New York, Chicago and Boston — which had previously been unable to take advantage of the FHA multifamily mortgage insurance programs, to now be able to provide much-needed new multifamily housing. “In many areas of the country, the demand for affordable rental housing has dramatically outpaced the supply,” said Rep. Miller. “Developers are simply unable to provide affordable housing units in those areas because the current statutory limits for FHA mortgage insurance are unrealistically low. H.R. 5503 will help to ensure that builders can utilize FHA mortgage insurance so that hard-working Americans have access to decent, affordable rental housing.” NAHB will urge the Senate to introduce companion legislation. To read the legislation, click here and enter the bill number in the box at the center of the page. For more information, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144. Housing Short-Handed Without Immigrant WorkersBy Hugh Morton To gain a true understanding of this issue, one must first recognize that there is a serious shortage of labor in many of the basic industries of our economy — particularly in the construction trades. When I started my home building business in 1992, I found it was easier to sell houses than it was to build them. I discovered early on that there was a significant shortage of labor in the home building industry, especially in the more arduous sweat trades. Moreover, coming from a career in finance, I was perplexed not only at the shortage but at the quality of labor in the industry. The expanding housing market of the mid-1990s only made this shortage more acute. To fill this labor void, in true supply-and-demand fashion many Hispanic workers began to cross the border. This was especially true in the construction industries, where most work is accomplished through the use of trade subcontractors. This scenario provided a fertile opportunity for legal immigrant trade contractors to offer their services to builders and other general contractors while employing workers from their families and villages back in Mexico, most of whom had come here illegally. Builders who were struggling to find quality roofers, concrete finishers, bricklayers, drywall hangers, framers, stucco applicators, etc., found the immigrant trade contractors a godsend. Desperate to meet deadlines and quotas, field subcontractors simply ignored the fact that many of the employees of their new immigrant subcontractors were here illegally. For the most part, the work ethic of the Hispanic workers was excellent and they worked hard to send money back to their poverty-stricken families in Mexico and elsewhere. While these workers were technically illegal, there just didn’t seem to be victims in the scenario. Moreover, the Immigration and Naturalization Service (INS) seemed to look the other way — presumably because they understood how badly immigrant labor was needed in our industry. As the housing market boomed over the next decade, so did the influx of illegal Hispanic workers. Contrary to common belief, illegal immigrants have actually replaced few qualified American workers. In most cases, they supplemented American workers and provided the labor for an expanding housing market, particularly in the growing Sunbelt states. Indeed, without the presence of immigrant labor, the housing boom of the past decade would not have happened — certainly not to the degree and manner in which it occurred. The Myth of Lower Wages Unfortunately, many Americans seem to have the mistaken belief that illegal immigrant workers have become a large part of the construction work force because they are a cheaper source of labor, thereby enhancing builders’ profits. The truth is that such workers have actually saved builders very little money. When Mexican roofing contractors, for example, started showing up in the mid 1990s, we were paying $18 to $20 per square (10 ft. x 10 ft.) to install roofing shingles. Since we were begging for roofers, we gladly paid the immigrant contractors the same rate. We were paying 85-cents per square foot in that era for labor to finish concrete slabs. Since we were also begging for competent concrete work, we readily paid the Mexican contractors the same rate. The only case where we deviated from our standard pay rates was for bricklaying. We were paying $250 per 1,000 bricks, but the Mexican bricklaying contractor wanted $270. After looking at the quality of his work, we agreed to pay his rate. The cost of their labor really wasn’t the issue. They provided the availability and quality of labor that was sorely needed in the industry. It is true, though, that while immigrant workers haven’t actually reduced our labor costs, they have, through their sheer numbers, acted to moderate wage inflation in the construction fields during the past decade. Whether this is good or bad depends on one’s perspective. For the new home buyer, it has been highly beneficial. To a Federal Reserve attempting to control inflation, it can also be considered a positive. Labor unions and certain employees, however, might have a contrary opinion. Immigrants Are Main Source of Labor Over the course of 10 years, immigrants became the dominant source of labor for the construction trades. At the same time, construction became an increasingly lower career preference for most young Americans. Indeed, in a recent survey of high school seniors, construction ranked next to last out of 232 career options. Many Americans still want to deny, though, that there is a labor shortage in our economy. In fact, the main factor preventing a resolution of the illegal immigration issue appears to be the refusal by many in the media and in Congress to accept the premise that there is a serious shortage of labor in many of the undesirable hard labor industries of the American economy. It is not clear whether they don’t actually understand this shortage or whether they deliberately choose to ignore it because it undermines the logic of many of their arguments for sending all the illegals home, or alternately, for attacking those who employ them. The send-them-home crowd is of the mistaken opinion that if contractors simply paid higher wages, Americans would flock in droves to fill manual labor jobs in our industry like nailing on roofing shingles or hanging drywall. If this is true, where were those workers in the mid-1990s when we were begging for them? Furthermore, why are all the Americans currently employed in food service and retail sales passing up jobs in construction where they could increase their wages significantly? Looking at the issue from a macroeconomic perspective, it is estimated that there are 7 to 8 million illegal immigrants currently employed in this country in fields such as construction, agriculture, poultry processing, textiles, hospitality and food service. In an economy nearing full employment, where will we find workers to replace all of them should they be successfully sent back to Mexico? The replacement workers aren’t just standing in soup lines. They will of necessity have to come from other industries. Assume, hypothetically, that trade contractors are able to raise their prices to enable them to pay hourly wage rates in the range of, say, $25 to $30 per hour from the current $10 to $20 range. Assume further that this rate attracts American workers from banking, computer fields, Internet-related industries, telecom industries and more. Wouldn’t the current employers of these trained workers then have to bid up their wages to keep them on board? Wouldn’t this bidding war set off rounds of wage-induced, cost-push inflation and the dislocation of labor resources? And wouldn’t low-preference industries like construction still lose out in the long run? The Current Strategy The current strategy of the anti-immigration group is: (1) to secure the borders; (2) go after the employers of illegal immigrants; and (3) then talk about a guest worker program. The border, indeed, needs to be secured. Too many non-workers have come here seeking welfare and other benefits not available in their own countries. But attacking employers before setting up a guest worker visa program is not only backwards and illogical, but it is a recipe for economic disaster. Attempting to remove all illegal workers before establishing a legal means for them to stay here would have disastrous consequences for many of our basic industries. Housing — the nation’s largest single industry whose activity accounts for a full 17% of GDP — would be severely crippled, especially so in Atlanta and other active Sunbelt markets. The possible economic consequences to our national economy are far more serious than most Americans seem to understand. New York Mayor Michael Bloomberg was right on target when he said our economy would be a shell of itself without immigrant workers. Our industry’s labor shortage is actually worse now than 10 years ago because even fewer young Americans have the will or skills to work in construction. To successfully remove all illegal immigrant workers from the construction industries would have catastrophic consequences. It seems rather foolish to bankrupt hundreds of thousands of American businesses by eliminating their labor resources and then leisurely decide how best to replace their laborers. It would be much wiser to secure the border, establish a workable guest worker program and then, if employers don’t follow the rules, go after them. The Current Proposal Has Flaws Many who are opposed to a temporary guest worker program say it won’t work. They say immigrant workers won’t go home at the end of a three-year period as proposed in the recent Senate bill. On that point they are probably correct. The immigrant workers will not want to leave at the end of three years and their employers will not want them to leave. It would be far better to issue a two-year visa and renew it at the end of two years if the immigrant is still employed, has obeyed our laws and has paid his income taxes. At the end of another two years, renew the visa again if the same conditions are met. A plan like this would gain the support of the business community, which is an essential ingredient to the success of any guest worker plan. Many critics say, though, that this will in a sense make the workers permanent guests. So what if it does? If we need 8 million workers, what difference does it really make if they have been here three years or six years? We will still have 8 million Hispanic workers. Where is the significance of their faces changing every three years? Where is the wisdom of sending home workers at the end of three years who have become proficient in their jobs, who have begun to learn our language and who have proven to be acceptable guest residents and then replacing them with new unproven workers who must start all over. Consider also the administrative burdens of processing 2 to 3 million workers coming and 2 to 3 million workers returning each year — assuming they voluntarily agree to leave. Many Americans cringe at this suggestion, saying that it amounts to a semi-permanent form of amnesty. They say we can’t reward this past behavior. They say it sends the wrong message to other potential immigrants. But if we are going to secure the border and begin controlling worker presence here, why do we care what message it might send across the border? The message they need to receive is that the border is secure and if they are going to come here they need to do it through the proper channels of the worker program. The Construction Industry Needs a Worker Program The construction industry needs a viable, intelligently designed work visa program that will provide a legal basis for immigrant workers to be in this country. We don’t need to complicate it with a permanent amnesty provision or a path to citizenship. We don’t need to provide them with welfare or unemployment benefits. If they are no longer employed or decide to retire, they should be sent home. If they commit any felonies, we should also send them back. It is not unreasonable to also require that any new applicants for the worker program have bona fide American employers to sponsor them before they are permitted to cross the border. Placement services would love this opportunity. Most importantly, this would match the flow of immigrants to the level of labor that is actually needed. It would certainly be acceptable to require publication of job offerings for Americans to consider, but please don’t let the labor unions try to set wage levels. It is best to rely on the free market. By making the immigrants legal, they will be even better able to negotiate their own wage rates. If we had done this 10 years ago, we wouldn’t now have so many illegal immigrants among us. We don’t need to put this off any longer. ©2006. All Rights Reserved. Hugh Morton is a past president of the Metro South Chapter of the Greater Atlanta Home Builders Association and the founder and president of Peachtree Homes and PTH Development Corp., which build homes and develop subdivisions on Atlanta’s Southside. Peachtree Villages, the company’s first town home community, was one of the five winners of NAHB’s 2005 Innovation in Workforce Housing Awards, which recognize outstanding examples of communities that provide decent and affordable homes for nurses, police officers, school teachers, retail workers and the like near areas where they work.
States Clamping Down on Illegal Immigrant WorkersRecent efforts by Congress to enact immigration reform at the federal level have overshadowed many legislative proposals being debated in statehouses across the country. According to the National Conference of State Legislatures, 30 states have been considering legislation that in one form or another would place new restrictions on the hiring of undocumented immigrants. Georgia’s recently enacted “Security and Immigration Compliance Act” requires all public employers to verify the legal status of their workers, and starting in 2008, it limits certain business expense deductions for all employers unless their employees have been authorized to work in the U.S. Pennsylvania and Tennessee also recently approved restrictions on state contractors who employ undocumented workers. Additionally, the Georgia law increases penalties for human trafficking, which is similar to new laws adopted in Colorado, Florida, Iowa, Maine, Michigan, Mississippi and Virginia. During a contentious special session, Colorado legislators passed a bill requiring employers to attest that they have verified the legal status of their employees. Under the bill, which is waiting approval by the governor, the state would have to prove that the employer recklessly disregarded the law before it could impose a fine. Taking yet another approach, some legislators are requiring applicants to prove their legal status in order to be eligible for state health services and other benefits, including unemployment insurance and in-state tuition discounts. Lawmakers in Kansas, Nebraska and Missouri have enacted legislation with these types of provisions. State legislators aren’t the only ones turning the spotlight on immigration. The Hazelton (Pa.) City Council adopted ordinances this month that would deny licenses to businesses employing undocumented workers and fine landlords who rent to those who illegally entered the country. Opponents of the new law plan to sue the city, arguing that the federal government has jurisdiction over immigration-related matters. Similar measures have been debated in cities and towns in Florida and California. Trial lawyers have also jumped into the fray, including a California attorney who has developed a Web site, www.illegalemployers.org, with the intent of suing businesses that hire illegal immigrants under state unfair competition laws. As reported in the Christian Science Monitor, the attorney plans to file five lawsuits a month against employers who “exploit alien workers and take business from their honest competitors.” For more information about state immigration legislation, click here. Register for SLGA Conference by Friday, Aug. 4 and Save $50Interactive skills-building sessions, hot issues and prime networking opportunities will be featured at NAHB's State and Local Government Affairs Conference in New Orleans on Nov. 9-11. Register by Friday, Aug. 4, the early bird deadline, and save $50. Plus, stay for an afternoon after the conference and help with a scheduled Katrina cleanup. The conference is for association staff members and leaders who work with their local or state governments on regulatory and other state and local government issues. Conference basics: When: On-site registration begins at noon, Thursday, Nov. 9, and the conference will continue through 1:30 p.m. Saturday, Nov. 11. Where: The Sheraton New Orleans, in the heart of the Crescent City. Cleanup: There will be a voluntary community service project on Saturday afternoon, Nov. 9 to help with the Hurricane Katrina clean-up. Conference Fees: Early bird registration — available until Aug. 4 ― is $275 for NAHB members and HBA staff. Beginning Aug. 5, the fee is $325. (Fees for non-members are $325 and $375, respectively.) Spouses or guests can join you at meals and social functions for $125. Register online, download the registration form and fax it to 202-266-8501, or call 800-368-5242 x8338 to register. For more information, visit the NAHB Web site at www.nahb.org/slgaconference, e-mail Alex Strong at NAHB, or call him at 800-368-5242 x8279. Major Housing Markets in the West in for a Tough YearIn the wrong place at the wrong time, many new residential communities in the West are going to have a tough time weathering the current housing downturn, John Burns, of John Burns Real Estate Consulting, told a PCBC audience in San Francisco last month. Looking at the fundamentals for housing demand, “there’s nothing wrong with the national economy, and that’s some good underlying news,” Burns said. Even so, prices are down 15% from their peak and sales are down 70% from a year earlier in some California communities, he said, affordability is the worst since 1982 and large builders have been announcing layoffs. Noting that land prices are down 30% from October, he said that “any deals since last year are not worth what you negotiated.” The developments most likely to suffer are those that have been built on the outskirts and too far away from jobs, he said. What makes the situation worse is that they have tended to be built in clusters, because they are in locations where land has been available and comparatively affordable, so that there is plenty of competition around. The Best and the Worst Prone to falling prices and oversupply problems, Las Vegas, Central California and the state’s Inland Empire are the worst markets to be in, Burns said. Coastal California; Portland, Ore.; and Seattle, on the other hand, are most prone to affordability problems because land shortages and government regulation in these spots have made it tough for builders to keep up with demand. Phoenix; Tucson, Ariz.; and Salt Lake City need to start worrying about a supply glut. And then there are places like Buffalo, N.Y., where there is virtually no worry about a housing bubble because “nobody wants to live there.” Annual building permits rose from 15,000 a year in 1990 to 70,000 last year in Phoenix and from 15,000 in 1991 to more than 40,000 in Las Vegas in 2005, he said. “Phoenix is the ultimate example of rising resale competition,” he said. “There are 100,000 more people employed in Phoenix than a year ago,” but median resale prices shot up 36% in that market in 2005, reaching $260,000 in October, and that was driven largely by speculation. More than half of the homes sold in Phoenix last year were purchased by people who don’t live there full time, he said. But “a lot of the price appreciation in Phoenix is permanent because of good paying jobs.” The affordability equation is working similarly in Las Vegas. Both prices and sales volume peaked in Phoenix in October, with listings of about 25,000, he said. By April, listings exceeded 40,000. The market’s resale listings are higher on the outskirts of town, and those are the same places where new construction has been concentrated. People moving into the area are coming largely from California and they don’t want to live that far away from their jobs, Burns said. Homes in outlying locations are showing similar vulnerability in Riverside-San Bernardino, Calif., he said, where communities close to the job center in Orange County are doing well and those in points south are softening, and in Sacramento, where there are nine communities to the north of the city “where not everyone wants to live.” The Desperate Seller “The desperate seller in the market today is the guy who has to sell four homes a month and there are 10 other (competing) communities within a mile,” Burns said. He also observed that it is becoming evident that “job proximity is better than a lower price in a competitive submarket.” In Central California, permit activity reached a peak of 36,000 last year, Burns said, but unfortunately, “you can’t drive from Modesto to a job in the Bay Area.” In stark contrast, there were only 25,000 units last year for metropolitan Los Angeles and its population of 10 million. L.A. sales have been “trickling down,” he said, compared to a rapid sales decline in the San Francisco area. On the job front, Los Angeles has been booming, he said, with 90,000 jobs created on the San Fernando side of town, while the rest of the economies in Southern California have been sagging a bit. The Seattle and Bay Area tech markets have rebounded strongly, contributing to job growth of 60,000 and 40,000, respectively, and Sacramento is solid with the annual addition of 27,000 jobs. San Diego is 22 months into a sales decline, Burns said, and in a market where condos can easily cost $800,000 there is a short supply of affordably priced housing. However, research in this market shows that “affordability is much better if you are a home owner than if you are a renter. Only about 10% of area residents can afford to buy the median-priced resale home, he said, but 50% of those in the market who have owned their home for seven years can afford it. Comeback potential looks “great” in San Francisco and Sacramento, he said, but for the year ahead their outlooks are only modest to poor. The long-term outlook is good in Seattle; Portland, Las Vegas and Phoenix, but it is modest in Tucson. In Southern California, the Low Desert area of the Inland Empire is “the worst market in the U.S.,” he said, with 8,200 permits. Its potential outlook is modest, compared to great potential for North Los Angeles, Orange County and the High Desert. Bakersfield, Calif. and San Diego look poor for the year ahead, but good longer out. Surviving the Downturn To survive the downturn, Burns advised builders to monitor market conditions closely. “Your sales people better know everything going on in this market,” he said. To see what he’s talking about, he said “Go to Denver and Austin; they’re hungry and know their market.” Although new housing constitutes only 15% of the market, home builders can capitalize on their advantage over resales by targeting their product to buyers who can’t find what they want in the existing market. Incentives to buyers are working, Burns said, but “get away from other builders,” especially master-planned communities that are “full of large builders who have to get sales." “Most important,” he said, “look at your company with a clean state” and ask yourself if “you have the right team, assets, etc. for the next five years. Imagine you were brought in to take over the company today.” Want to Know Your State's Starts Forecast for 2007?
Find out in HousingEconomics.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state. To learn more, visit www.housingeconomics.com. Tentative Agreement Would Destabilize U.S. Lumber MarketA managed trade agreement to end the dispute between Canada and the U.S. over lumber duties that was initialed by both sides in Geneva earlier this month raises serious concerns for the nation’s home builders, Barry Rutenberg, a member of the NAHB Executive Board and a builder from Gainesville, Fla., told the International Trade Committee of Canada’s House of Commons on July 31. Following up on testimony he provided on June 19, Rutenberg indicated that the shortcomings of the politically-driven agreement have only become more apparent in recent weeks. Rather than producing stability and predictability, he said, the agreement “would disrupt the market” by imposing border taxes and quotas designed to constrain Canadian lumber imports into the U.S. “Under the agreement, the most severe penalties would apply whenever prices are below $315” per 1,000 board feet, Rutenberg said. The price of framing lumber reported by Random Lengths last Friday was $302, and if the agreement were in force today it would be exerting upward pressure on lumber prices at a time when the market is pushing them down. Rutenberg also indicated that the agreement was a matter of bad timing, with Ottawa nearing a satisfactory resolution to its quest for free lumber trade through the North American Free Trade Agreement process, the World Trade Organization and the U.S. Court of International Trade, an effort that has brought Canada a series of judicial victories. “With regard to the litigation, the suspension of the Extraordinary Challenge has blocked the near-certain confirmation of the NAFTA rulings against the subsidy allegations,” he said. “But two key decisions by the U.S. Court of International Trade have placed ultimate victory within reach. Any legal claim by the U.S. lumber coalition to the duties has been eliminated, and a three-judge panel has unanimously found that the ploy used by the U.S. government to avoid implementing the NAFTA decision on injury was illegal.” The recent rulings against the U.S. also “provide valuable support for the efforts of NAHB and other lumber consumers to discredit unfounded allegations that Canadian lumber is unfairly traded, and to build support in the U.S. Congress for free trade in lumber,” Rutenberg said. “Those efforts are devastated, however, by an agreement that looks like a confession of Canadian wrong-doing.” With the last-minute insertion of a provision allowing the U.S. to terminate the agreement after 23 months, Rutenberg said that “the only predictable thing about conditions under the agreement is that the U.S. lumber coalition will seize every opportunity to undermine market forces and harass Canadian producers and Canadian governments.” It has become even more difficult for the U.S. lumber coalition to make a credible case for injury or subsidy, which is the justification for current duties of 11%, Rutenberg said, because a surge in European imports reduced Canadian lumber to 33.4% of U.S. consumption in 2005, the smallest market share in more than a decade, and because provincial timber sales, especially in British Columbia, “have become more transparently based on market value.” The tentative Geneva managed agreement calls for the U.S. to return $4 billion in duties to Canada and would allow it to keep about $1 billion, half of which would go to the domestic lumber firms that originally brought suit against their Canadian competitors. In order for the agreement to be enacted, at least 95% of the Canadian companies that currently have duties on deposit with the U.S. Customs Service must agree to end their litigation claims, forfeit a portion of their duties to the U.S. and abide by the terms of the accord. For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Builder's Tip: Using Sandbags as Concrete-Form Anchors
As shown in the accompanying drawings, a combination of sandbags and struts can often be a suitable substitute for conventional anchorages when applied in certain applications — like rocky soil or winter conditions when driving stakes into the ground just won’t work. Strut-braced forms also have the advantage of not obstructing the mouth of the form, and they don’t require the loss of valuable anchorage materials, such as threaded rods, inside the cast concrete. Please note that I’ve deliberately not given any dimensions to these configurations. They would depend entirely on the specific size and shape of the form being used. To use this method:
I am typically working with post pedestals in the 1-cu. ft. to 2-cu. ft. range, and it’s easy to pile on more than enough bags to deal with these loads. My rule of thumb is to use enough bags so that when I shove the form hard, there is no appreciable movement. I also keep plenty of bags on hand should I need more bracing. The critical thing to keep in mind is that concrete is heavy, surprisingly plastic and prefers to assume the general shape of a cow pie — rather than the shape you have in mind. It never hurts to overbuild or over-brace forms more than you think necessary. By the way, 25-lb. and 50-lb. woven poly-fiber seed and feed bags are excellent for sandbags. They are likely to be available for free from your landscape subs and local livestock farms. — Christopher T. Gale, Fallston, Md. 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 Offers More Than 250 Books That Help You Build Your Business BuilderBooks.com is your source for training and education products for the building industry. The official bookstore for NAHB, BuilderBooks.com offers award-winning publications, software, brochures and more available in both English and Spanish. To view these publications online, click here, or call 800-223-2665. Log In and Explore www.nahb.org
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. Builders Could Reap Up to 9% Tax Deduction in Years AheadHome builders may now qualify for an additional 3% tax deduction under the Department of the Treasury’s recently published final regulations for the Section 199 domestic production activities tax deduction (part of the American Jobs Creation Act of 2004). The domestic production activities deduction is for businesses that manufacture goods or construct property in the United States. That includes the home building industry. Under the final regulations, the deduction for tax year 2006 is equal to 3% of a business’ qualified production activities income (QPAI). That percentage will rise from 3% to 6% for tax years 2007, 2008 and 2009. It will then increase to 9% for tax years 2010 and beyond. QPAI is equal to the excess of qualified domestic production gross receipts (DPGR) over the sum of business expenses associated with these receipts. Thus, the greater the receipts that are included in DPGR, the greater the tax benefit to the builder. DPGR is the taxpayer’s gross receipts derived from any lease, rental, license, sale, exchange or other disposition of qualifying property that was manufactured, produced, grown or extracted within the country. Of particular interest to builders, DPGR includes construction, engineering and architectural services performed for domestic construction projects. The deduction is limited to 50% of wages paid by the taxpayer for qualified Section 199 activities. Preliminary federal guidance for the Section 199 deduction (IRS Notice 2005-13 and draft regulations REG-105-847-05), published last year, had presented obstacles for builders. In response, NAHB and several coalitions of home builders submitted comments to the Treasury. This resulted in significant improvements to the final regulations. For more information about running your home building or related business, visit www.nahb.org/biztools on the NAHB Web site (available to NAHB members only) and subscribe to NAHB’s Business of Building e/Source. 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 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 HBA's Web site the place to go for the information and guidance that members need to succeed. NAHB Technology Solutions Directory Now Online
NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find 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. Register for Custom Builder Symposium in Las Vegas
Register now for the 2006 Custom Builder Symposium so you don't miss the Aug. 18 early bird registration deadline. The symposium will be held Oct. 27-29 in the Lake Las Vegas Resort, Nev. Featuring world-class education, plenty of networking opportunities and a practical take-home workbook packed with tips on marketing, management and customer service, the Custom Builder Symposium is a can't-miss opportunity for custom builders to learn from peers who build high-end homes for demanding customers. In addition, the symposium's Andersen Home Tour will feature homes in all phases of construction created by leading Las Vegas custom home builders. Learn From Peers and Other Industry Experts in Concurrent Sessions The Custom Builder Symposium will feature education programs tailored to the needs of builders whose specialty is the discerning, high-end home client. The following are just a few of the sessions offered:
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 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 HBA's Web site the place to go for the information and guidance that members need to succeed. Subscribe to NAHB’s Business of Building e/Source NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, visit www.nahb.org/BoB on the Members Only side of the NAHB Web site. NAHB Technology Solutions Directory Now Online NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find 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. Half of All Households Will Be 55+ or Older by 2011
Half of all households will be headed by people age 55 or older in five years. These households have 57% of the net worth and hold 58% of the residential equity in the country. By the year 2014, the number of 55+ households in the U.S. is expected to grow to 51.6%, or 65.8 million households. The report, “Profile of the 50+ Housing Market,” analyzes U.S. Census Bureau data, provides demographic information and forecasts housing characteristics, mobility, neighborhood attributes and other key factors that will help NAHB members working in the 50+ market better assess effective demand for 50+ housing. The research and analysis was conducted by NAHB’s economics department. The report is only available to 50+ Housing Council members and can be downloaded from the NAHB Web site at www.nahb.org/50plusresearch. The first two chapters of the report — “50+ Demographics” and “50+ Income and Wealth” — are currently available. According to the analysis, the largest number of households ― 25.1 million ― will be headed by people in the 55-64 age group. Those 65-74 will head 20.7 million households, and those 45-54 will head 23.3 million households, an indication that the 50+ market will be a significant portion of the housing market for several decades. The following are some additional observations and forecasts available in the report:
Only the first two chapters of the profile analyzing 50+ demographics and income and wealth are currently available online to 50+ Housing Council members. Additional chapters, which will be available soon, include:
Mark May 30-June 1, 2007 on your calendars to attend the 50+ Housing Symposium. The seniors housing symposium is the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. Visit www.nahb.org/build4boomers for more information. Find Out What Boomers Want
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. Free ICC Matrix Compares Accessibility GuidelinesThe International Code Council has published a new free reference tool to give developers and architects who are working on multifamily housing more information on accessibility standards and the International Building Code (IBC). The 2006 IBC/ADAAG Comparison lines up three resources: the 2004 Americans with Disabilities Act (ADA) — Architectural Barriers Act (ABA) Guidelines for Buildings and Facilities, the 1990 Americans with Disabilities Act Accessibility Guidelines (ADAAG) and the 2006 IBC. The building code references the ICC/ANSI A117.1 Accessible and Usable Buildings and Facilities-2003. "This is a great tool for the accessibility community and the construction industry," said Kim Paarlberg, the ICC’s senior staff architect and resident accessibility expert. "The 2006 IBC/ADAAG Comparison saves time and reduces confusion, because section by section, the accessibility requirements are put together for you." Earlier this year, a similar matrix was made available by the United States Access Board referencing the 2003 IBC with 2004 Supplement. The ICC comparison, updated to the 2006 IBC, will serve a wider audience because more jurisdictions adopt the 2006 International Codes and federal agencies implement the new ADA-ABA Guidelines. Places of public accommodation are required to meet federal accessibility guidelines under the Americans with Disabilities Act. The IBC’s comparison puts all of the information in one place, making it easy to see how the codes and standards relate. For a copy of the IBC comparison, click here. To download a copy of the 2003 matrix and learn more about accessibility and building codes, click here. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.
Save the Date for the 2007 Multifamily Pillars of the Industry Conference This conference and awards meeting for the multifamily industry will be held April 11-13 in New Orleans. For more information, visit www.nahb.org/pillars. CAPS Makes Home Accessible for Paralyzed Soldier
Today, the 22-year-old lives in Manassas Park, Va. and relies on a ventilator, his parents’ care, and — since April — free accessibility modifications provided by Rebuilding Together — a national nonprofit based in Washington, D.C. that rehabilitates the homes of low-income households — and NAHB Remodelors™ Council Chairman Vince Butler, CGR, CAPS, GMB and president of Butler Brothers Corporation in Clifton, Va. Butler first learned of Briseno, his family and their plight through the Rebuilding Together program “Serving Those Who Serve,” which provides cost-free home modifications to severely injured veterans returning from Iraq and Afghanistan. Briseno’s father, Joseph, quit work after his son was wounded so he and his wife, Eva, could care for him. Joseph recently had to go back to work to help pay for his son’s medical expenses, but the family could not afford the modifications needed for their home to provide Jay with a safer, more accessible environment. “We had heard about the family in Manassas Park,” says Patricia Johnson, president and CEO of Rebuilding Together. “When they contacted us, we knew we would be able to provide modifications that could help.” Volunteers Ready and Willing Rebuilding Together organized a team of 40 volunteers, including Butler, to remodel the home. The organization also provided the funding to pay for skilled labor and some of the materials. Most of the time and materials, however, were donated. “All of the suppliers and subs were 100% ‘what can we do?’” said Butler. “They didn’t look for compensation and just assumed this was something we were going to do. [Rebuilding Together] had a budget and was expecting to pay, and nobody wanted to be paid.” Bringing Critical Expertise to the Effort Butler brought his CAPS training to the project to help provide accessibility modifications that included a curbless shower, widened bathroom doorway, gas-powered generator with double electrical circuits for emergency power and a screened-in porch so the family can enjoy spending time safely outside. Butler met with the local Rebuilding Together coordinator a week before the work began to evaluate the family’s needs and provide some upfront planning. After that, he and his company spent three days onsite helping with the modifications. “In one way, the job took less effort than a typical job,” said Butler. “I’ve never had so much cooperation. Everyone was falling over themselves to help. There were some red eyes. People were feeling pretty good about it and they saw how much it meant to the family." A ‘Thank You’ Like No Other “No other job that we’ve done has been as rewarding, particularly because we were able to bring something else to the job nobody else could do,” Butler added. “Our son, Jay, has not taken a bath in three years,” said Joseph Briseno during a press conference earlier this year when the modifications were nearing completion. “In a few days we will be able to take Jay into the shower and bathe him.” “With a normal job people say, ‘Thanks,’ but that doesn’t compare to a job like this,” Butler said, while adding that others in the industry should participate in similar programs as often as they can. “I would tell anyone to move on it. Don’t hesitate.” How to Help Rebuilding Together hopes to complete one project a month across the country as part of its “Serving Those Who Serve Program.” For more information, or to participate, visit www.servingthosewhoserve.org or call 202-483-908. Rebuilding Together is also seeking skilled labor to volunteer to help rebuild the Gulf Coast. The nonprofit organizes week-long rebuilding trips and provides lodging, transportation to and from the job site, and three meals a day to volunteers during the work week. Volunteers must arrange their own transportation to the Gulf Coast. To learn more, click here. To volunteer, click here, or call 877-294-3572. Through June, Rebuilding Together has repaired or rebuilt more than 100 homes in the Gulf Coast damaged or destroyed by Hurricanes Katrina and Rita. SAFE Award Applications Now AvailableAwards applications are now available at www.nahb.org/SAFE for the Safety Award For Excellence (SAFE). In support of NAHB’s efforts to promote the use of best practices in the housing industry, Fannie Mae is sponsoring the new awards program, which recognizes home builders who develop outstanding worksite safety programs. “This new national awards program has been established to recognize the achievements of builders and trade contractors who excel at safety performance and have developed and implemented high-quality construction safety programs,” said NAHB President David Pressly. “NAHB is a national leader in construction safety, and this award emphasizes our commitment to a safe work environment.” SAFE will also honor government officials and NAHB-affiliated associations for unique and important contributions in advancing safety in the home building industry. The SAFE program is open to all NAHB member companies in good standing that build residential homes or town homes using light construction methods. Specialty trade contractors, remodelers, and light commercial and multifamily builders, as well as NAHB-affiliated associations and federal or state plan Occupational Safety and Health Administration (OSHA) officials who have been nominated by an NAHB member or association, are all welcome to apply. Awards will be made in a variety of categories; for a detailed listing of them, click here. All applications must be received no later than Sept. 22. “The SAFE program will closely examine each candidate’s commitment to construction safety and health in the home building industry,” said Vernon Pottenger, chair of the NAHB Construction Safety and Health Committee and a builder from Beaufort, S.C. “We believe this award will foster a culture of injury prevention in the home building industry and promote safe working conditions.” Award winners will be recognized during the 2007 International Builders’ Show in Orlando, Fla. Winners will receive an engraved award, as well as coverage in NAHB’s Nation’s Building News Online. For more information, click here; or e-mail Delicia Jenkins at NAHB, or call her at 800-368-5242 x8163. Make Jobsite Safety a Priority Jobsite Safety Video, available through BuilderBooks.com, is the first-ever jobsite safety video for home builders. The video provides an overview of the key safety issues residential builders and workers need to focus on to reduce accidents and injuries. Based on the "NAHB-OSHA Jobsite Safety Handbook," this DVD is intended to be used as part of an essential residential construction safety-training program. It includes two 20-minute videos on one DVD. To view or purchase this DVD online, click here, or call 800-223-2665. Code and Consumer Design Hot Topics at BSC SHOWCASE
Breakout sessions at the Building Systems Councils SHOWCASE conference and trade show in Miami, Fla. in November will highlight the dual sides of design — designing for codes and designing for consumers ― to help builders better achieve that balance. Two SHOWCASE breakout sessions will give attendees a crash course on building code evolution and how products are tested to meet and exceed those codes, even in the most stringent jurisdictions:
Learn More Before NAHB's Fall Board Meeting
Are you currently working on a designation or needing to take some continuing education courses to retain your designation? Now, you have the opportunity to take a course — or two — before you start your meetings at this year’s NAHB Fall Board of Directors Meeting in Salt Lake City. The courses being offered include: Learn how to incorporate a market plan, locate prospective customers and satisfy their wants and needs, and track and improve sales results. Elective Credit: CMP, Master CSP, MIRM
This course is designed for building industry professionals who want to teach The NAHB University of Housing curriculum. Participants will learn how to prepare and present adult education sessions and enhance their presentation skills. The course is limited to the first 10 registrants. Continuing Education Credit: CAPS, CGA, CGB, CGR, GMB, CSP, Master CSP, CMP, MIRM By the year 2010 there will be 77 million active adults age 50 and older living in the U.S. This one-day course provides an overview of design considerations to take into account when planning single-family and multifamily housing for active adults. Continuing Education Credit: CAPS, CGA, CGB, CGR, GMB, CSP, Master CSP, CMP, MIRM Learn how to research the marketplace; choose the optimal location, product and price;, generate buyers through effective promotion; and close the maximum number of sales. Designation Credit: CGA, CGB, Master CSP
Register today and see how you can learn more and earn more with The NAHB University of Housing. For more information about designations or courses, call the NAHB Professional Designation Help Line at 800-368-5242 x8154. Want to Know More About Designations? Ask an ExpertThe NAHB University of Housing recently implemented “Ask an Expert,” a new service on the NAHB Web site for members seeking or earning designations. "Ask an Expert" allows members to e-mail designation program graduates with questions that will help then earn their CSP, Master CSP, CMP or MIRM designations. The graduates will field questions and concerns ranging from course content, to the designation process, to how the designation has benefited them. So, if you're thinking about enrolling in the CSP, Master CSP, CMP or MIRM designation programs or have already started the necessary course work and have questions or concerns, visit “Ask an Expert” on the NAHB Web site. A variety of designation holders will provide you with guidance and help you navigate the ins and outs of the program.
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. 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. 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. 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. Green Building Awards OpenEntries are now being sought for NAHB’s National Green Building Awards, which recognize individuals, companies and organizations for helping to move green into the mainstream of the housing industry through their designs and construction practices. New this year is a green land development award, which honors resource-efficient site design and development practices, including onsite recycling, preservation of trees and innovative storm water retentiion features. The annual awards will be presented during ceremonies at the association’s National Green Building Conference, which will be held in St. Louis on March 25 to 27. The awards honor achievements in seven categories:
For project awards, construction must have been started by June 2005 and substantially completed by December 2006. To enter by mail, send a hard copy and a disk of the completed application. For an application form and instructions on how to send logos, project photos and other artwork, click here. Winners will be notified by Feb. 15, 2007. For additional information, e-mail Emily English at NAHB, or call her at 800-368-5242 x8366. Get Green Building Intelligence Today at BuilderBooks.com “Residential Green Building SmartMarket Report,” available through BuilderBooks.com, addresses the growing trends and opportunities in green home building. The report provides the results of market research conducted by McGraw-Hill Construction and NAHB about green building in home construction. To view or purchase this publication online, click here, or call 800-223-2665. Save the Date for 2007 National Green Building Conference Mark your calendar for March 25-27 for the National Green Building Conference. Visit www.nahb.org/greenbuilding for more information. Buyers Want More Home Tech Than Builders Offer
Home builders are missing out on an opportunity to differentiate themselves from the competition and increase their profits by introducing to increasingly receptive buyers such products as structured wiring, home theaters, energy management, monitored security, multi-room audio, lighting controls and home automation, according to recent survey research by the Consumer Electronics Association (CEA). Word of mouth among family and friends is currently the most important source of information about consumer electronics, Joe Bates, director of market research for CEA, told a PCBC audience in San Francisco last month. In a poll in late May of 998 recent or likely near-term home buyers, that was followed by professional installers, especially for follow-up information, and builders were a fairly distant third. As an initial source of information on home theaters, builders were cited by only 6% of the consumers surveyed, their lowest showing for a range of products, and by 14% for structured wiring, their highest. “You need to educate consumers,” Bates said. “You need to be sure your home buyer is educated about these technologies. Consumers want to hear more about these from builders. People have been doing their own research, but don’t want to have to do it as much in the future.” In the association’s 4th Annual State of the Builder Tech Market Study conducted online among 379 builders in November by the NAHB Research Center, Bates said there is evidence of a clear upward trend in the revenue implications of home tech. Thirty-three percent of the builders participating in the survey said that their revenue from home technology products had increased in 2005, up from 24% during the prior year. In 2004, 83% of builders were offering structured wiring to their buyers and that dropped to 82% one year later, with half of them offering it as a standard feature and the other half as an option. From 2004 to 2005, the survey found that the share of builders offering other electronic consumer items, all as options, had increased significantly: monitored security, rising from 74% to 80%; multi-room audio, from 65% to 74%; home theaters, from 58% to 69%; lighting controls, from 38% to 45%; home automation, from 38% to 42%; and energy management, from 36% to 46%. With the exception of structured wiring, which was installed by 49% of the surveyed builders in 2005, down from 61% in 2004, because of advances in wireless technology, installation of these electronic products was on the increase last year, Bates said, and they were “growing very fast”: monitored security, up from 28% to 29%; multi-room audio, from 12% to 15%; home theater, from 8% to 11%; lighting controls, from 2% to 7%; home automation, from 2% to 6%; and energy management, from 5% to 11%. The surveys showed that there were far higher percentages of consumers and especially short-term prospective buyers indicating interest in installing these products in their homes than there were builders actually installing them, indicating an opportunity to boost their sales, Bates said. For instance, 38% of recent home buyers and 61% of those planning to buy indicated that they were in the market for monitored security, but only 29% of the builders were offering that option. Many buyers, he said, have installed this product after the home was built. Among recent home buyers, 32% of those polled, representing one-half million consumers when extrapolated for the actual number of new homes sold, said they wished they had purchased an energy management system; 23% said they wished their home had come with multi-room audio and a home theater and 22% said they wished they had lighting controls. To a significant degree, home buyers said that they did not buy specific products because they were not offered by the builder. This was the leading reason they said they didn’t buy structured wiring (32%) and energy management (37%). It was cited second most often as the reason for not buying automated lighting controls (29%) and home automation (27%). Bates advised home builders to find good installers in their area and view them as potential business partners. Few builders install home tech products themselves, and the majority (67%) said they use an electrical contractor. Only 43% of home theaters were installed during construction, and only 7% of the theaters were installed by builders. For more information from CEA on home technology, click here. Trade Contractors Should Be Quality and Safety PartnersTo add value to the constru |