Print-All Page: August 28, 2006

Resulting from in-depth analysis by NAHB, builders and remodelers in suburban locations can now provide their customers with a fairly precise estimate of how much bathrooms add to the value of their homes.

Based on data from the American Housing Survey (AHS) and updated several times over the years, the NAHB model used to estimate the price effects of bathrooms “has consistently shown that an added bathroom has one of the strongest impacts of any home feature on single-family detached home values,” said NAHB economist Paul Emrath.

Looking at recently released data from last year’s AHS, the bottom-line results of the NAHB study reveal that a half-bath adds approximately 10.5% to a suburban home’s value and a full bath adds about 20%.

Conducted every other year by the U.S. Census Bureau and funded by the Department of Housing and Urban Development, the AHS surveys about 60,000 nationally representative housing units. The survey is used because it provides more detailed information on housing characteristics than any other national source, Emrath said.

“Having information on a variety of housing features is important when trying to control for other influences on house price and isolate the effects of a specific feature such as a bathroom,” he said. “As Nancy Wallace of the University of California at Berkeley, among others, has pointed out, a statistical model can only provide accurate estimates of the prices of various features if the model incorporates all the important features of a home.”

According to the AHS, a full bathroom has a flush toilet, either a bathtub or shower, a sink, and hot and cold running water. A half bath by definition has running water and only a toilet, bath or shower.

Emrath said the NAHB model suggests that home buyers tend to prefer a rough balance between the number of bedrooms and the number of bathrooms. Adding an extra bathroom increases the home’s value by a higher percentage when there are more bedrooms than baths.

“When the number of bathrooms is approximately equal to the number of bedrooms, an additional half bath adds about 10% to the home’s value, and converting the half bath to a full bath adds another, 9%, so one additional bath adds about 19% to the value,” Emrath said. When the home contains fewer bathrooms than bedrooms, “the percentage gains associated with an added bathroom can be somewhat larger.”

In a home that has only one bathroom, an additional half bath will increase the value of a standard two-bedroom home by 11.5%, a three-bedroom home by 12.0% and a four-bedroom by 12.5%. “The greater the disparity between beds and baths, the more there is to gain, in percentage terms, by adding an additional bath,” he said. “One way to interpret this is that when there is an excess of bedrooms over bathrooms, an additional bathroom makes the bedroom more valuable.”

Because the AHS doesn’t collect information on such features as whirlpool baths or multiple sinks, the extent to which the estimated value of an additional bathroom would in part include the value of these extra amenities has to involve speculation, he said.

For information that home owners can use to compare the actual cost of a bathroom addition to how much it will add to the dollar value of their home, click here. The data is broken down regionally — with California being separated from the rest of the West because its home prices are much higher — and by the square footage of the home and the number of bedrooms.

To access the NAHB House Price Estimator interactively online and experiment with various combinations of amenities to see how they change the value of a home, click here.

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

For in-depth analyses of demographics, industry structure and the effects interest rate changes have on house prices, go to HousingEconomics.com, the subscription-based economic resource for the housing industry.

Also, housing forecasts are available including the latest state and metro forecasts for 2007. (See free previews.)

Get the economic information you need. For more informaion, or to subscribe, go to www.HousingEconomics.com.

Sustainable TND Community, Daybreak, on Tour at Fall Board

Daybreak, a Traditional Neighborhood Design (TND) master planned community near Salt Lake City that has gained national recognition for its innovation and sustainability, will be featured during the National Sales and Marketing Council's 2006 Fall Housing Tour, on Saturday, Sept. 16 at the upcoming NAHB Fall Board of Directors Meeting.

Daybreak, developed by Kennecott Land, part of the Rio Tinto international mining company, is being developed on 4,126 acres near the Oquirrh (pronounced “oh-ker”) Mountains on the west side of the Salt Lake Valley. The community’s build-out is expected to take about 15 years.

When completed, Daybreak will include 13,000 town houses, single-family homes, custom homes and condominiums; 2.4 million square feet of retail; 5.2 million square feet of offices; and 1.5 million square feet of industrial space.

More than a quarter of the community, 1,200 acres, is being set aside for parks and open space, including hiking and biking trails, meadows, sports fields and a community garden. In addition, 100,000 trees will be planted.

“The vision for Daybreak is to provide a place for people to live during every stage of life,” said Vicki Varela, vice president of public policy at Kennecott. “We have homes in a range of prices so you can move into a town home when you’re first starting out, move up as you raise a family and then be an empty-nester.”

A variety of home styles and traditions, borrowing from Salt Lake City's historic neighborhoods, will be offered at Daybreak.

While based on the TND concept, Daybreak goes a step further by incorporating elements found in many of Salt Lake City’s historic neighborhoods. “We borrowed from the traditions of Salt Lake’s great architecture,” said Varela. “We went into neighborhoods like Harvard-Yale, Sugarhouse and The Avenues and borrowed a lot of their unique elements. It created a beautiful street scene.”

Homes will be offered in a wide variety of styles ― Arts and Crafts, Colonial Revival, Victorian, English Romantic and Tudor. “It’s a wide range of styles, but at the same time, really custom-fit to the Salt Lake market,” said Varela.

Oquirrh Lake is a key amenity at Daybreak.

Sustainability is at the forefront of the Daybreak vision. Daybreak is one of the nation’s first communities in which the developer has committed to making every home Energy Star®-rated. Daybreak is also designed to capture 100% of its storm water runoff.

To get residents and workers to and from Daybreak, new light rail service and expanded roadway access are planned. Kennecott Land partnered with neighboring cities to accelerate construction of a light-rail line that will bring service to the community as early as 2010. In addition, the developer is working with neighboring communities and the Utah Department of Transportation to plan a new major highway, the Mountain View Corridor, which will provide access to Daybreak’s commercial center.

The NSMC Fall Housing Tour is from 8 a.m. to noon on Saturday, Sept. 16. A bus will depart from the Little America Hotel at 8:00 a.m. The tour begins at the Daybreak Information Pavilion and includes two Daybreak villages, Founders Park and Eastlake. To register for the tour, click here.

NAHB Economist Calls Inclusionary Zoning a Bad Idea

As a solution to a shortage of affordably priced housing in many parts of the country, inclusionary zoning is “just a plain bad idea” and “it should be dumped in the trash bin,” NAHB economist Elliot Eisenberg told the news media during the Southeast Coast Builders Conference earlier this month in Orlando, Fla.

Sky-high housing prices in such markets as Los Angeles; Miami, Fla.; the Washington, D.C. area’s Montgomery County, Md.; and Seattle are to a great extent the result of overly restrictive zoning and regulation, he said, and government attempts to correct the situation by requiring builders to set aside a certain percentage of their homes for households with lower incomes only add another layer of regulation, further distorting housing and land prices.

“The government has gotten involved in the process and made it worse,” said Eisenberg. “Every time you regulate, you raise the cost of housing.”

“Builders don’t just want to build expensive houses,” he said. They realize that housing demand is heavily concentrated between $175,000 and $400,000, the range in which some 40 million households can afford to buy a home, “but there’s not a lot of homes being built at these prices,” particularly in areas where the government is artificially constraining the supply.

“People don’t think about the unintended economic consequences of regulation,” he said. “Do we make GM give cars to the poor? Do we force teachers to teach extra students? Do local governments require Wal-Mart to sell stuff to the needy at reduced prices? Do we require grocery stores to provide food to the needy at a discount? Why is workforce housing different? Inclusionary zoning typically raises the cost of housing production, and there is no debate on that among economists.”

Inclusionary zoning is likely to increase new house prices, decrease the housing supply, increase existing house prices, decrease land prices and push building outside the area zoned as inclusionary, he said.

For example, in 45 California jurisdictions, housing production averaged more than 210 units annually before inclusionary zoning was imposed and below 150 after, Eisenberg said. The yearly growth rate of the housing stock in Bolder, Colo. is 12.5% where there is inclusionary zoning, but 26.7% in the surrounding metro area. In Burlington, Vt., those percentages are 5.9% versus 31.5% and in Montgomery County, 13.2% compared to 24.8%.

Touted as a model for inclusionary zoning, Burlington’s program has managed to deliver only 180 affordable units over its 15-year history, he said.

What’s worse, in an attempt to hold the inclusionary zoning units in the area’s stock of affordable housing, the benefits of homeownership are delayed or denied entirely. In Montgomery County, deed restrictions prevent the subsidized unit from being sold for a lengthy period of time. The county has gradually raised the restrictive period from five, to 10, to 20 and now 30 years, but inevitably, when that period is up, the owners “ditch the home and it’s no longer in the affordable housing supply when it’s sold for full price,” Eisenberg said.

Furthermore, “units are distributed unfairly, often by lottery, and the poorest are rarely helped,” he said. The zoning encourages construction to move outside the regulated area, increasing sprawl, and racial integration is limited.

On the supply side, Eisenberg suggested several affordable housing solutions: governments should expedite development reviews; waive impact fees; pursue negotiated instead of mandatory ordinances; increase density bonuses; reform building codes, such as allowing a front-door knocker instead of requiring a door bell; relax design standards, such as allowing a smaller yard; eliminate exclusionary zoning, such as large-lot requirements; and entitle a sufficient number of lots. “But best of all, use market forces,” he said.

For more information, e-mail Elliot Eisenberg at NAHB, or call him at 800-368-5242 x8398.

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Sweetening the Deal to Sell a Home

Mark Zandi, the chief economist of Moody’s Economy.com, estimated that sales incentives might now be equal to as much as 3% of the effective prices of houses across the country on average, but there is simply no way to know for certain. “Sellers are pretty picky,” said Todd Sinai, an associate professor of real estate at the Wharton School of the University of Pennsylvania. “They are not willing to lower prices enough in downturns; they don’t do it very quickly;” and their reluctance delays sales, contributes to rising inventories and allows prices on the remaining transactions to show an annual increase. Incentives are more common in the new-home market, where builders are under financial pressure to sell empty homes and, as large businesses, have the ability to absorb the financial hit. Executives at some of the biggest building companies say the giveaways can equal 3% to 8% of a home’s sale price. Price reductions this high could wipe out the year-over-year price gains in many markets. In the existing market, many sellers are providing subsidies. Frank Borges Llosa, who owns Frankly Realty in northern Virginia, analyzed records for condos in one Virginia ZIP code and found that the use of subsidies had soared since last year, when they were nonexistent. In Arlington, 14 condos had sold for $350,000 to $550,000 since June 1, and 10 of them included a subsidy from the seller to the buyer averaging more than $7,000. Zandi said he believed that the use of perks was now approaching its peak and that sellers would soon be forced to cut list prices more heavily. (www.nytimes.com)
New York Times (8/25/06); Vikas Bajaj and David Leonhardt

Consumers Curb Upscale Buying as Gasoline Prices, Housing Bite

In addition to high gasoline prices, economists say that consumers likely are being hit by a slowdown in the housing market that is making it more difficult to obtain cash extracted from the equity in their homes. Since home owners often put this money back into their homes, higher-end home-furnishing retailers such as Williams-Sonoma and Pottery Barn could be vulnerable. Wendy Liebmann, president of consulting firm WSL Strategic Retail in New York, finds evidence in a recent survey of 1,500 consumers of a broader shift in spending behavior after almost a decade in which most were “trading up” to high-end items. Many are now cutting back, she says, with low-income households becoming more likely to stick to dollar stores and supercenters and middle-income families visiting more mass merchants and grocery stores than specialty outlets. Liebmann says that households earning as much as $75,000 a year are changing their spending habits, judging from responses from this group that are more similar to those of low-income households than those of wealthy families. Fashion accessories, clothing, home décor, electronics and entertainment are the types of spending most likely to be chopped, she says. A drop-off in consumer spending, which accounted for three-quarters of U.S. economic growth last year, could herald the broader slowdown sought by the Federal Reserve and its two-year campaign to raise short-term interest rates. (www.wsj.com)
Wall Street Journal (8/21/06); Justin Lahart and Amy Merrick

House, Lawsuit Rising; Builder Contends 2nd Builder’s Home Infringes on a Copyrighted Design

With two builders in the Akron, Ohio area embroiled in a lawsuit over home plans, Carmine Torio, executive director of the Home Builders Association of Portage & Summit Counties, notes that copyright infringement disputes have become increasingly common in the housing industry. Many home builders are unaware of the Architectural Copyright Protection Act of 1990, under which owners who copyright plans receive exclusive right to use the plans and must be paid a fee for their use. Anyone who uses another’s copyrighted design to build a home without permission can be sued for infringement. Using modified plans can still be infringement. A “substantial similarity” in the two designs will be the deciding factor. David Crump, director of legal research for NAHB, said that most people aren’t aware of copyright issues. “They see the picture of a home in a magazine, and they take it to the architect or the builder” and ask them to design a home along the same lines, Crump said. “The consumer has to understand that they have to have permission to use another’s copyrighted work.” Crump said that his own house is based on a model he saw in Southern Living magazine. He contacted the copyright holder for permission and for about $300 “I received a one-use license for the use of that plan, and I was able to make modifications and use it.” Permission is often not that hard to obtain, he said. “A lot of designs are published simply for the purpose of informing people that these are available designs.” (www.thebeaconjournal.com)
Akron Beacon Journal (8/20/06); Gloria Irwin

Developers United to Pay $15M Tab for Road Widening

KB Home, along with a group of 13 builders and developers building 17 new projects in Orange County, Fla. ponied up $15 million to widen a county road that didn’t have the capacity to handle the traffic projected to result from their residential and commercial plans. The county had stopped offering a pay-as-you-go alternative for the road and had "no plans to improve the road or to otherwise resolve the development moratorium caused by the lack of traffic concurrency,” said Cara Kane, Florida public relations regional director for KB Home. Jim Harrison, director of growth management for Orange County, said the road was at least 15 years away from being widened because of funding issues. George Glance, president of KB Home Orlando, said his company “is just responding to demand for new homes and trying to be a good steward to the community.” His company is putting up roughly 40% of the $15 million because it has roughly 2,100 of about 4,000 lots in the area. Alan Bradley, an associate with Orlando-based The Huber Group LLC, a real estate development firm that has two residential developments with a combined 700 homes coming online in the area, said there was no choice but to fix the road. “Our projects would be stalled indefinitely,” Bradley said. “Now we are fixing it for free so we can build here.” Impact fees for single-family homes in the county are currently $3,500 and are set to rise to $3,605 in July 2007. (www.orlando.bizjournals.com)
Orlando Business Journal (8/21/06); Kurt Schultheis

The New House on the Block — As Rates, Inventories Rise, Developers Try Auctions

Overall residential auction sales are up, according to the National Auctioneers Association, growing 4.4% for the first half of 2006, compared with 4% for the same period in 2005. The group projects that home auctions will account for $255.4 billion in revenue in 2006, compared to $240.2 billion last year. NAHB says interest in home auctions is up as builders experience an increase in contract cancellations — 30% this summer, compared with 15% last summer. Large numbers of new homes went under the gavel in the late 1980s and early '90s when many of the houses being built on speculation wound up in foreclosure when the market turned down. That’s much less likely to occur in the current market, according to industry observers, in large part because big developers, who build 68% of all houses in the country, are waiting for signed deals before they break ground. Companies such as Pulte Homes, Centex and Toll Brothers all say that they haven’t auctioned their homes and don’t plan on doing so anytime soon. To register for an auction, a buyer must put down a deposit, usually 8% to 10% of the home’s estimated value. (www.wsj.com)
Wall Street Journal (8/25/06); June Fletcher

High Costs Plague Gulf Rebuilding Effort

Shortages of raw materials, in combination with record fuel prices, are causing price increases for residential contractor supplies and construction delays for the Gulf Coast as it attempts to recover from last year’s hurricane season. “Construction and labor supplies have been tight for several years, with material costs increasing much faster than overall inflation,” says NAHB economist Michael Carliner. In the aftermath of Katrina, there was a spike in demand for certain repair materials. But Carliner explains that “the 2005 hurricanes actually reduced demand in the short term. The long-term rebuilding effort will mean additional demand, and shortages are therefore likely to continue for several more years.” On the labor front, Don Sampson, president of the Louisiana Home Builders Association, explains: “Our labor force mostly consisted of hourly workers that needed a paycheck each Friday, and when there wasn’t one, they left. The people who stayed here are charging a premium. We are building more houses because of the storm. And that will last a couple more years. But it’s taking about 30% longer on average to build a home due to workforce availability. It has taken a lot of the home buyers out of the market. Low interest rates were great, but high material costs are taking a lot of families out of the picture.” (www.archrecord.construction.com)
Architectural Record (8/25/06); Tony Illia

Letters to the Editor: Learn How the Codes Work

First, the code development process has never taken anything away from local officials. They are free to adopt the code as published or re-write any or all of it, as they so desire. The code development process is open to anyone who wants to take the time to participate, at both the national and local level.

Second, nothing in the published code “reduces or eliminates the ability of professionals to develop design standards for specific projects.” Mr. Rumley should review 2003 International Building Code section 104.11, “Alternative materials, designs and methods of construction and equipment,” as well as the International Code Council’s “2003 Performance Code for Buildings & Facilities.”

Mr. Rumley’s statement that “Code officials like tighter controls,” is not entirely true. Yes, we code officials do have our own opinions, but code officials are required to follow the laws put in place by the elected officials, not their own opinions.

And contrary to the statement that most construction professionals “are threatened and intimidated as a result of poorly drafted codes,” most of the construction professionals I know are afraid of escalating materials prices, not codes. They can take classes or seminars to learn codes, but material prices are way beyond their control.

Lastly, if someone is not happy with the code development process, they need to jump in and help change it. Here’s the ICC Web link where they can find out how it works: www.iccsafe.org/cs/codes/

Pact Sets Builders Searching for New Lumber Sources

Expressing disappointment that the Canadian government is doing what’s politically expedient instead of the right thing in accepting a controversial U.S. lumber deal that will push up prices, NAHB Executive Vice President and CEO Jerry Howard said that the nation’s home builders will be looking to widen their supply of lumber once the pact goes into effect.

“Legal victories achieved by Canada in the NAFTA process, at the World Trade Organization and in the U.S. Court of International Trade were close to eliminating the current duties,” said Howard. “This deal not only undermines NAFTA itself, it fails to address housing affordability concerns. It’s unfortunate that Ottawa pressured its lumber industry into giving grudging support in order to ink a deal with the U.S.”

Canadian Prime Minister Stephen Harper announced last week that his government will give parliament legislation to implement the agreement next month and seek to have the accord ratified by early October.

Far from promoting free trade, the settlement would establish a complex system of quotas and new tariffs that artificially boost prices during periods of normal or weak demand.

“With quotas being set month-to-month, mills won’t know whether they will be able to meet supply contracts without exceeding their quotas, and if they are unable to ship due to transportation bottlenecks, this could create even more uncertainty in the marketplace,” said Howard.

In addition, the lumber accord provides no incentive or means for Canadian softwood lumber companies to withdraw from the terms of the managed trade agreement, which Howard said would likely keep prices high and increase housing costs.

To mitigate any damaging effects of the pact, NAHB is working to ensure that builders will be able to purchase lumber at a consistent and reasonable price.

“First, we are seeking to facilitate increased imports from Europe,” said Howard. “We have delegations planning to visit Sweden and Russia this fall. We will meet with the lumber industry representatives there, establish contacts with producers and identify any policy barriers to raising the volume of imports from the current 5% level. And we are also promoting the use of steel and other alternative building materials wherever practical.”

The seven-year pact, which includes a six-month termination clause after the agreement has been in force for 18 months, would cap Canadian lumber imports at 34%.

The treaty would require both countries to end all litigation efforts and would eliminate current duties now totaling about 11% on softwood lumber shipments into the U.S. It also calls for the U.S. to return $4 billion in duties to Canada and keep about $1 billion, half of which would go to the domestic lumber firms that originally brought suit against their Canadian competitors.

If the pact were in effect today, Canadian lumber producers would be forced to pay duties of 15% because current prices for framing lumber are well below a $315 per 1,000 board foot threshold that is included in a complicated system of export taxes and quotas based on market prices.

The decision by the Canadian government to proceed with the accord is perplexing, in light of several recent legal victories.

Earlier this month, the World Trade Organization ruled that the current tariffs violate international trade rules. This was the third ruling in Canada’s favor since July 1, when that country indicated it would agree to the deal with the U.S.

Last month, the U.S. Court of International Trade essentially ruled that softwood lumber duties are illegal and that the Byrd Amendment, which allows U.S. firms to receive duties from foreign rivals, violates the terms of NAFTA.

“Finishing the litigation would allow Canada to obtain a complete refund of duties with interest,” said Howard. “It would also establish important precedents and make it much more difficult for the U.S. lumber coalition to successfully petition for new duties.”

While some Canadian government officials are trumpeting the agreement as a way to end the long-running cross border lumber conflict and litigation, Howard said that is just wishful thinking.

“Because the accord wipes out many of Canada’s legal victories and dispenses half a billion dollars to the U.S. lumber coalition, it will actually encourage future trade disputes during and after the agreement,” he said.

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

Survey Finds NIMBYs on the Rise in Both U.S. and Britain

Ongoing survey research in the U.S. and United Kingdom by Saint Consulting Group finds that rising opposition to real estate development “will make it tougher — on both sides of the Atlantic — for developers and also politicians who run for election on pro-growth land-use issues,” according to Michael Saint, CEO of the consulting firm.

U.S. builders have an advantage over their U.K. counterparts because only 13% of the 1,000 Americans who were polled oppose new housing, compared to 33% of the same number of Britains. In fact, 75% of the Americans said they would support single-family housing in their communities, the highest amount of support for any kind of development.

One in five home owners in both countries appears willing to fight to protect the character of their communities and the value of their investment in their homes. Fox called this “an eye-opening discovery, even for me.” In the U.K., 19% of those surveyed reported opposing a planning application, compared to 21% in the U.S. survey.

“The development industry clearly has not paid enough heed to finding community support for its proposals,” said Nick Keable, Saint Consulting’s vice president of U.K. operations.

“In the U.K., residential development pressure is intense. Only 12% of Britain has actually ever been developed,” he said. “The rest is either undevelopable or protected. While this proportion gives the U.K. a special character, the dearth exacerbates the situation and creates incredibly high land values. That’s why residential development is such an issue and the government’s theoretically pro-development stance is seriously unpopular.”

Less encouraging news for American home builders, U.S. survey respondents turn out to be more cynical about the process and politics of development, with 70% believing that the relationships between elected officials and developers make the approval process unfair, compared to 50% of those surveyed in Great Britain.

Going into last May 4th’s local elections, 72% of British respondents felt that a candidate’s position on growth and development was “critical” to how they would cast their vote. Facing elections on Nov. 7, 93% of the Americans felt similarly.

“Candidates for office are forewarned,” said Fox, a veteran political campaign advisor. “All land use has become highly politicized and adversarial. And it is going to get worse.”

New Single-Family Home Sales Down, Inventory Up in July

The pace of new single-family home sales dipped 4.3% in July to a seasonally adjusted annual rate of 1.072 million units, the U.S. Commerce Department reported last Thursday, 21.6% below the record monthly high set last July and leaving sales for this year’s first seven months 14.2% below where they were for the same period of 2005.

“The slowdown in demand has been on our builders’ radar screens since the middle of last year,” said NAHB President David Pressly. “Builders have been offering sales incentives and slowing their production as demand cools and inventories rise, and our surveys suggest that the downward correction in sales from last year’s record pace still is underway.”

“The current downswing in home sales reflects both falling affordability and a pullout by investors/speculators that were a major factor behind the unsustainable pace of new home sales last year,” said NAHB Chief Economist David Seiders. “We’ve seen an inevitable mid-cycle correction of housing market activity from the records posted last year.”

Sales for July were down 21.3% in the Midwest and 8.0% in the South but up 1.8% in the Northeast and 11.7% in the West. On a year-to-date basis, however, all four regions were substantially below sales rates last year.

The inventory of new homes for sale rose to 568,000 units at the end of July, a 6.5-months supply at the current sales pace.

Completed homes for sale represented 24% of the inventory; those still under construction accounted for a 57% share of the inventory; and permitted units not yet started were 18%. Completed homes for sale were on the market for a median 3.8 months in July, up slightly from 3.7 months a year earlier.

“With respect to the housing market outlook, we’re counting on solid demographic foundations, forward economic momentum, a favorable interest-rate structure and aggressive builder sales incentives to limit the depth and duration of the current downswing in new homes sales,” Seiders said. “We expect the market to bottom out during the first half of next year and then move to a solid, sustainable trend.”

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

Mortgage Rates Nudge Down Housing Affordability

Despite no change in the median price of all homes sold, housing became a bit less affordable during this year’s second quarter because of a slight uptick in the average mortgage interest rate, according to the latest NAHB/Wells Fargo Housing Opportunity Index (HOI), which was released on Aug. 23.

Meanwhile, the index showed that Indianapolis has been the most affordable major U.S. housing market for four quarters running.

“The second-quarter HOI reading indicates that 40.6% of new and existing homes that were sold during the second quarter were affordable to families earning the national median income of $59,600,” said NAHB President David Pressly. “This is just below 41.3% in the first quarter and the decline in affordability was caused by the somewhat higher mortgage rates that prevailed in the April to June period.”

The national weighted interest rate on fixed-rate and adjustable-rate mortgages — a key component in calculating the HOI — was 6.65% in the second quarter, up from 6.39% in the first three months of the year.

In Indianapolis, 87.4% of homes sold in the second quarter were affordable to families earning the area’s median household income of $65,100. The median sales price of all homes sold in Indianapolis during that time was $120,000, which was up from $113,000 in the previous quarter, but was the same as the sales price for the final quarter of 2005.

Following Indianapolis, the most affordable major metros were: Detroit-Livonia-Dearborn, Mich.; Grand Rapids-Wyoming, Mich.; Buffalo-Niagara Falls, N.Y.; and Youngstown-Warren-Boardman, Ohio-Pa., in that order.

The five most affordable smaller metro markets during the second quarter were: Springfield, Ohio and four Michigan locations: Bay City, Lansing-East Lansing, Saginaw-Saginaw Township North and Battle Creek.

In Los Angeles-Long Beach-Glendale, Calif. — the nation’s least-affordable major housing market for the seventh consecutive quarter — just under 2% of the homes sold during the second quarter were affordable to those earning the area’s median family income of $56,200. The median sales price of the homes sold was $521,000.

The next least affordable major metros were: Santa Ana-Anaheim-Irvine, Calif.; San Diego-Carlsbad-San Marcos, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and Stockton, Calif., in that order.

The five least affordable metro areas with populations below 500,000 were all located in California: Salinas, Merced, Modesto, Santa Cruz-Watsonville and Santa Barbara-Santa Maria.

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.

Eye on the Economy: Housing Will Not Drag Economy Into Recession

The “advance” GDP report for the second quarter of this year showed a convincing downshift in economic growth, to a below-trend 2.5% pace. That estimate is likely to be revised upward to some degree when the “preliminary” estimate is released on Aug. 30, although the second-quarter performance still will qualify as sub par.

Furthermore, GDP growth is likely to remain below trend in the second half of the year, largely because of absolute declines in the housing production component of the economy.

The slowdown in GDP growth naturally has provoked a slowdown in payroll employment growth and an uptick in the unemployment rate (data through July), and weekly data on unemployment insurance claims point toward rather sluggish job growth in August as well. Residential construction employment actually has been falling in absolute terms since a cyclical peak in February, and further declines are inevitable in the months ahead.

Although growth of economic output and employment has slowed from above-trend rates recorded earlier in the expansion, forward momentum still seems solid and outright declines in GDP or employment are distant prospects. Indeed, the current slowdown process is essential to maintaining solid economic growth with low inflation down the line.

Core Inflation Still Is on the High Side, But Some Improvement Should Be in the Cards

Core price inflation has remained on the high side despite the evolving slowdown in the economy. The core consumer price index (CPI) posted a one-month annualized gain of 2.4% in July, slower than during the four previous months, although the year-over-year gain edged up to 2.7%.

The housing component once again put substantial upward pressure on the core CPI, driven largely by the imputed “owners’ equivalent rent” calculation that added about 0.4% to the core inflation rate. Everything considered, the July reading on core CPI inflation was reassuring to both the Federal Reserve and financial markets.

The evolving slowdowns in growth of GDP and employment should take some strength out of core inflation down the line, particularly as generation of slack in labor markets takes some strength out of unit labor costs. Furthermore, the impact of record-high energy costs on core inflation will wane as long as the energy prices don’t keep ratcheting upward.

NAHB’s forecast shows some deceleration of core inflation later this year and in 2007, consistent with the mid-July projections by members of the Federal Open Market Committee (FOMC) that were contained in the Fed’s mid-July semiannual Monetary Policy Report to the Congress.

The Fed’s Policy Decision on Aug. 8 Looks Quite Prescient, at Least for Now

Fed Chairman Ben Bernanke’s mid-July monetary policy testimony before Congress noted an obvious slowdown in economic growth during the second quarter and suggested that below-trend GDP growth was in prospect for both the second half of this year and in 2007.

Indeed, the central tendency of the economic projections by members of the FOMC painted such a picture. Bernanke’s testimony, and the FOMC’s mid-July economic projections, also projected some slow-down of core inflation from the elevated rates of mid-2006.

The Fed’s decision to hold short-term interest rates steady at the Aug. 8 FOMC meeting was based on the conviction that the economic slowdown still has some distance to run and that core inflation is likely to recede in the process. Economic data released since then are broadly consistent with those themes.

If these patterns continue, as we expect, monetary policy will be held steady for some time into the future ― including the Sept. 20 FOMC meeting.

The obvious economic slowdown, the convincing nature of Bernanke’s mid-July testimony, the FOMC’s policy decision and statement on Aug. 8 and the recent good news on core inflation have provoked a stunning rally in the fixed-income markets. As a result, longer-term Treasury yields have fallen substantially from their recent highs at mid-year, and those declines have provoked similar declines in long-term mortgage rates.

The bond market rally has produced another significant inversion of the Treasury yield curve (out to 10 years), and that may not be a sustainable relationship.

NAHB’s forecast currently shows a modest firming up of long-term yields (and a flattening of the yield curve) by later this year, with a modest decline in the entire yield structure by late next year. Stay tuned.

The recent slowdowns in economic growth and job formation and the (net) increase in mortgage rates during the past year certainly are negatives for the housing sector, although the economic/financial picture still looks reasonably bright. But we’re also coming off a virtual frenzy in housing markets last year, an episode that involved extraordinarily heavy buying by investors/speculators that drove sales, production and price appreciation into unsustainable territory.

The highs in home sales and price appreciation were hit around mid-2005, and substantial declines have been recorded since then (through July). Housing starts and building permit issuance have come down substantially in the process, particularly in single-family and condo markets. (Rental housing is firming up at this time.)

The biggest declines in market volume have been occurring in areas that were the hottest last year — California, Florida, Arizona, Nevada, Hawaii, Virginia, Maryland and Washington, D.C. — and we’re also seeing sizeable declines in Michigan where fundamental economic conditions are in serious decline.

So far, the metro areas showing year-over-year price erosion are heavily concentrated in the weak Great Lakes area of the Midwest region, not in the formerly overheated markets where sales volume is coming down the most.

The persistent erosion of housing market activity has already converted housing from a powerful engine of economic growth into a significant drag on the U.S. economy. In fact, memories of past housing downswings have prompted some analysts to conclude that housing will be dragging the overall economy into recession by next year.

We continue to view the ongoing housing downswing as an inevitable mid-cycle correction from unsustainable levels of activity in both 2004 and 2005, and we expect the housing downswing to bottom-out by early next year.

Our forecast shows contraction in the housing production component of GDP (residential fixed investment) from the final quarter of 2005 through the first quarter of 2007.

The housing downswing is a major factor in our projection of below-trend growth of GDP and employment through the first half of 2007, and that slowdown helps contain those critical core inflation numbers (aside from the perverse impulse from the imputed “owners’ equivalent rent” component that promises to move upward with market rents). But the housing downswing is part-and-parcel of a mid-cycle sectoral rotation that also includes upswings in other parts of the economy — particularly in nonresidential fixed investment (capital equipment and software as well as structures) and exports.

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 Aug. 23 edition. To subcribe to “Eye on the Economy,” click here.

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.

Builder's Tip: Using Wall-Sheathing as Insulation Stops

I switched to blown-in cellulose insulation in the attics of new homes a few years ago.

But while watching the installers prepping one job, I saw all the trouble that they had to go to — stapling cardboard insulation stops between the rafters or trusses above the exterior-wall plates ― just to keep the insulation from falling down into the soffit.

So I came up with the idea to make the job easier and just as effective. As you can see in the accompanying drawing, I let the exterior-wall sheathing extend above the top plate and become an integral insulation stop. Here’s what I do:

The slots have an added benefit for truss installation: They quickly position each truss and allow me to float the walls beneath until they can be tweaked straight. Then I nail down the trusses.

I use expanding spray foam to seal any gaps between the truss and the wall sheathing so that no insulation can slip by.

All in all, the extra work saves me more than it costs me in time because the insulators don’t have to charge for crawling on their bellies to staple up cardboard stops. Plus, I think it’s a better detail.

To request a reprint of this feature, e-mail Christina Glennon 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.

Explore the latest housing industry news and information on www.nahb.org — the official public and members-only Web site of NAHB.

Explore the latest housing industry news and information on — 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.

Working With Subcontractors: Pros, Cons…and Cautions

Before you hire a subcontractor, weigh all the advantages and disadvantages it will bring to your job and business. Then, if you do hire a subcontractor, take the necessary steps to ensure that the relationship works for both of you.

One obvious advantage to hiring a subcontractor is cost containment. If you know what the subcontractor cost is when you put together your bid or job, you will have a better chance of controlling your profits for that job.

There will be times when you will want to do the job yourself because you want to reap higher profits. Before making that decision, however, ask yourself if sacrificing a little profit will pay off in the long run. Keep in mind that using subs can make it possible for you to do more work, and as long as the profit is acceptable, you will benefit.

Another advantage to using the right subcontractor is that, through your subcontractor’s project leadership skills, you will have help managing your jobs. The more responsibility you can delegate to your subcontractor teams, the more it will free you up to take on additional jobs.

But just like anything else, dealing with subcontractors also has its pitfalls. The most obvious may be that because subcontractors are not employees, there will be times when your favorite subcontractor team is not available.

Although your agreement and the responsibilities of each party should be clear, your expectations still can be misinterpreted. The best way to handle this is to make your agreements as precise as possible. If necessary, lay out all the elements of the job responsibilities and be sure that your sub agrees to them.

Also, make sure your subcontractors follow the same policies and procedures as your in-house crews — and include that in your agreement. If there are rules that you expect your crew to follow and you don’t demand the same from your subs, you will inadvertently generate hostilities between what will eventually become the two factions on the job site.

This, unfortunately, will end up costing you ― in lost productivity from your crews and in sloppiness from your subs. If you plan on having your subs and crew work together on your jobs, designate who will be in charge on the job site, and make it very clear to everyone who that person is.

Although regulations vary from state to state and even town to town, there are basic legal and insurance guidelines that you should follow. For instance, it is important that your subcontractors are qualified for the job and have all the necessary licenses and insurances. You should know that before you sign agreements with them. You don’t want to find out that something is missing somewhere in the middle of the job or, worse, at the end of the job.

You may not be writing the checks for subcontractor licenses and insurance, but you are in fact paying for them. That is why it seems like you pay more to sub out your work. So, as long as you are absorbing the cost for licensing and insurance, make sure your subs have them. Create and maintain a checklist of the basics subcontractors must have in place for you to hire them and continue working with you.

Besides the legal basics, you also need to establish day-to-day and week-to-week business procedures with your subcontractors. One important item you should iron out very early is payment.

Even though your sub may want to get paid instantly, that probably is not practical for you. Instead, establish procedures for submitting invoices — with proper verification — and adhere to payment schedules. If you don’t do this, you will have “bill collectors” hounding you on a regular basis and waste too much time dealing with hungry subs.

Remember, a good subcontractor company should be able to invoice you. That is one of the benefits you are paying for when you don’t use your own crew.

Negotiating with subcontractors often can be quite a challenge. The negotiations can be a win for all involved, or they can be aggravating and hostile. Although it is natural for you to want to get the best pricing possible, remember that your subs have to make a profit, too.

I have seen contractors squeeze their subs to such an extent that they have lost their extra labor pool. Remember, too, that if you squeeze too much, your subs have to cut corners to make it work. And that, unfortunately, hurts everyone.

Lorraine Hart is president of Ideal Consulting Services, Inc., a business management consulting firm based in Seaford, N.Y. For more information, e-mail Hart, call her at 516-826-6725, or visit the Ideal Consulting Web site at www.idealconsulting.net.

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’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’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.

Base Pay of California Builders Up 6.8% in 2005

The average base pay of employees at 48 home building companies in California increased 6.8% between 2005 and 2006, according to a recently completed employee compensation survey conducted by the California Building Industry Association (CBIA).

The 2006 survey was conducted by CBIA for the third consecutive year in partnership with Strategic HR, a Newport Beach-based human resources consulting firm that provides a wide range of human-resources services to the association, and G.F. Wajda Associates, a Fallbrook, Calif.-based compensation firm specializing in the home building industry.

The survey includes comprehensive compensation data on 13,285 full-time home builder employees — both exempt and non-exempt — representing 72 different job positions in the categories of general management, finance, operations, property management, design center and sales and marketing.

Survey participants range from small regional builders to large national firms. The report is broken down geographically into Southern California, Northern/Central California, San Francisco Bay Area and the entire state.

Jerry Wajda, of G.F. Wajda Associates, pointed out that the CBIA survey report also provides detailed information on short-term incentives, or bonuses, paid to home builder employees as part of their total compensation.

“Short-term incentives have always been important in the home building industry, and the size of awards and the high employee participation set the industry apart from industry in general,” he explained. “For example, in 2006 home builder executive bonus awards averaged 136% of base pay as compared to 40% for other industries, while bonuses for non-exempt employees averaged 11% compared to 5% for general industry.”

He noted that home builder executive bonus awards were down somewhat from 167% of base pay in 2005, while bonus awards at the non-exempt level increased from 8% in 2005.

Wajda also noted that the CBIA survey showed that home builder benefits practices stabilized in 2006 with no major changes from 2005.

Condo Market Retreating From 2005’s Record Sales

Builder confidence in the condominium housing market weakened significantly in this year’s second quarter as sales continued to retreat from the record-high levels of 2005, according to NAHB’s new Multifamily Condo Market Index (MCMI), which was formerly part of the association’s Multifamily Market Index (MMI).

The MMI has been split into two indexes tracking industry assessments of for-sale and rental properties separately.

“Investors and speculators had been a big factor driving sales and production at the height of the condo boom and they have been pulling out of the market,” said NAHB Chief Economist David Seiders, “What we are currently seeing is a level of condo production that is probably more sustainable in the long run, although builders are worried that affordability has also become a factor for buyers, now that the overall economy appears to be slowing.”

In a quarterly survey of multifamily builders and property owners from across the country, the MCMI gauges industry perceptions of current condo supply conditions and expectations for the market over the next six months.

Current supply conditions fell to 32.0 on the index for the second quarter, down sharply from 61.3 for the same period a year earlier. This is only the third time that this component has gone below 50. A rating of 50 generally indicates that the number of positive responses is about the same as the number of negative responses.

The MCMI component measuring expectations for condo production over the next six month was also down, dropping to 34.

To gain insights into market demand, those participating in the survey for the index were also asked their views on the current traffic volume of prospective buyers and condo prices. The former was rated 26.8, an indication that a majority of the respondents saw declining traffic from the previous quarter, and the latter was 46.3, indicating that prices were softening to some extent.

Responding to a set of special questions, 82% of condo developers said they had noticed buyer resistance to current prices and, of those, more than one-fourth reported that they have reduced prices. The average price cut was 9%.

About three-fourths of the respondents reported that they are using non-price incentives to boost sales and limit cancellations. Two-thirds of those who said they were using incentives were including optional items at no cost, a third were absorbing financing points and two-thirds were paying closing costs. Half the developers were using agents or brokers to bolster sales, up from about 20% a year ago.

For more information, e-mail Ann Marie Moriarty, or call her at 800-368-5242 x8350.

Attend the Multifamily Pillars of the Industry Conference, the premier industry event for the multifamily industry, on April 11-13 in New Orleans.

If you're associated with the low-income housing tax credit profession, be sure to register for the HCG Issues Forum on Wednedsay, Sept. 13 in Salt Lake City. This forum will examine ways of surviving the high cost squeeze.

Approved Guide for Installing Tile Roofing Now Available

The July 2006 ICC-ES-approved "Concrete and Clay Time Installation Manual for Moderate Climate Regions" is now available from the Tile Roofing Institute.

The recently approved manual for concrete and clay tile installation, the July 2006 ICC-ES-approved "Concrete and Clay Tile Installation Manual for Moderate Climate Regions," is now available from the Tile Roofing Institute (TRI). The manual was approved by ICC Evaluation Services, Inc., the country’s leader in evaluating building products for code compliance.

The formal evaluation report, ICC-ESR 2015, can be viewed online from the TRI Web site (www.tileroofing.org), the WSRCA Web site or directly from ICC-ES.

The printed version of the manual is available for purchase from TRI. A Spanish version of the manual is in development and will be available in the fall.

“TRI is committed to improving product quality and establishing best practices by putting resources toward our installation guides and training programs,” said Rick Olson, technical director for TRI. “TRI and its members work closely and proactively with organizations such as ICC-ES and the Western States Roofing Contractors Association to continuously improve the performance and safety of tile roofing.”

In an effort to expand best practices for the installation of tile roofing systems, TRI launched an installer training and certification program in early 2006 based on the Moderate Climate Installation Manual. The training is currently available in California.

The day-and-a-half training program is designed to expand contractor knowledge of the best installation practices and raise awareness of the lifetime durability of tile roofing among builders across the country.

The training is for residential or commercial installers of roofing systems, including company principals, job superintendents, installers, forepersons and supervisors, crew leaders and tile manufacturers.

The course provides industry guidelines, practices and advances in tile roofing. How-to topics presented will include: material specification, estimating, planning, roof preparation, tile installation and conditions that require special attention.

Participants completing the training will earn a “Certified Tile Roofing Installer” title and be authorized to use the TRI certification logo to boost marketing efforts.

Training programs in California are currently scheduled for Aug. 29-30 in San Diego and for Nov. 1-2 in Sacramento.

Registration is open for the Building Systems Council SHOWCASE, which will be held Nov. 5-8 at the Doral Golf Resort & Spa in Miami, Fla. Save $100 by registering by Sept. 15.

SHOWCASE features education sessions, an awards event and exhibits geared to the building systems segment of the home building industry.

Want to Know More About Designations? Ask an Expert

"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.

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

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

The 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.

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

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.

To take full advantage of the exclusive NAHB members-only resources on www.nahb.org, however, you must log in.

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.

Dallas the Latest to Hop on the Green Building Bandwagon

The Home Builders Association of Greater Dallas launched its new Green Building Program Aug. 12 in conjunction with the grand opening of the “high-performance green” Nevada Court subdivision in Denton, where consumers got an opportunity to tour a green-built home.

Bob Morris, the association’s executive vice president, said that the new program “will serve as a platform for builders to meet both consumer needs and the needs of the region on issues such as energy usage, air quality and water use restrictions.”

The local effort will maintain a database of green builders and green-built homes in the Dallas area, and with support from the Green Building Initiative and NAHB, will provide local builders with resources and technical support.

“The future of building is looking greener as more home builders and home owners focus on energy-efficient and resource-efficient homes,” said Dan Fette, chairman of the HBA’s Green Building Program. “In fact, according to the U.S. Department of Energy, the average home or business can save as much as 50% on their utility costs” using green building practices, he said. “But beyond energy efficiency, the program will explore strategies that can be used at every phase of the construction and operation of buildings, including indoor air quality, water usage and waste reduction.”

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

The report provides the results of market research conducted by McGraw-Hill Construction and NAHB about green building in home construction.

Mark your calendar for March 25-27 for the National Green Building Conference. Visit www.nahb.org/greenbuilding for more information.

Lowe’s to Sell Expandable Katrina Cottage Kits

Coming this fall, Lowe's Companies, Inc. will begin offering plans and materials to build Katrina Cottages in Mississippi and Louisiana.

Following in the footsteps of the Sears Roebuck Modern Home, Lowe’s Companies, Inc. has finalized an agreement with designer Marianne Cusato to be the exclusive retailer of housing plans and associated building materials needed to construct Katrina Cottages. Four designs of the cottages will be initially available in Lowe’s stores throughout Mississippi and Louisiana.

Katrina Cottages, developed by Cusato and a team of architects and first introduced at the 2006 International Builders’ Show in Orlando, Fla., are designed to be hurricane-proof and meet 2003 International Residential Code requirements.

The first four plans to be offered range from 544 to 936 square feet. Some of the plans can be extended to as large as 1,200 square feet, though a limited number of additional designs for up to 1,340 square feet are in the works.

“The cottage remains the same or grows structurally with the home owner as time and funds allow,” said Larry D. Stone, senior executive vice president of merchandising and marketing at Lowe’s in an Aug. 23 press release announcing the cottage plan sales.

The materials include rot- and termite-resistant siding, durable 25-year warranted metal roofing, moisture- and mold-resistant drywall, framing, insulation, fixtures, electrical, plumbing and even appliances, according to company press materials. The cottages are designed to be stick-built onsite.

The packages will cost from $45 to $55 per square foot. Lowe’s has received inquiries from developers who want to build communities from the Katrina Cottage kits, said Chris Ahearn, the retailer’s vice president of public relations.

Plans should be available beginning this fall. For information about the original Katrina Cottage, go to www.cusatocottages.com.

For more information about NAHB’s involvement in Katrina recovery efforts, e-mail Calli Schmidt, or call her at 800-368-5242 x8132.

NAHB Weighs in on Two Pending Wetlands Cases

NAHB has submitted two supplemental “friend of the court” briefs in wetlands cases in the wake of June’s Supreme Court Rapanos and Carabel decisions.

In United States v. Johnson, NAHB wants the First Circuit U.S. Court of Appeals to vacate its decision upholding the government’s jurisdictional claim over wetlands adjacent to non-navigable waters that eventually lead to Massachusetts’ Weweantic River and get the case dismissed.

In San Francisco Baykeeper v. Cargill, NAHB wants the Ninth Circuit to strike federal jurisdiction over a pond that collects seasonal rainwater but is never navigable, quoting Supreme Court Justice Anthony M. Kennedy’s opinion that non-navigable, isolated intrastate waters are not to be considered “waters of the United States.”

In the decision prompting the two supplemental briefs, the Supreme Court remanded the combined Rapanos v. United States and Carabell v. U.S. Army Corps of Engineers cases back to the U.S. Sixth Circuit Court, saying that the Corps’ jurisdiction should be limited. However, the justice’s diverging opinions in the decision set no clear boundaries for the Corps, leaving that for future court cases and new Corps regulations to decide.

“It is unfortunate that no opinion commands a majority of the court on precisely how to read Congress’ limits on the reach of the Clean Water Act,” Chief Justice John Roberts said of the decision “Lower courts and regulated entities will now have to feel their way on a case-by-case basis.”

On July 5, the Corps sent a letter to its regional offices, advising them to continue business as usual where jurisdictional issues were quite clear, but to await further guidance to help decide more controversial cases. Guidance was promised within three weeks, but as of Aug. 29, it had not yet arrived.

“The average applicant for an individual permit spends 788 days and $271,596 in completing the process, and the average applicant for a nationwide permit spends 313 days and $28,915 — not counting costs of mitigation or design changes,” Chief Justice John Roberts wrote in the plurality opinion on behalf of Justices Clarence Thomas and Samuel Alito and Chief Justice Roberts.

“The burden of federal regulation on those who would deposit fill material in locations denominated ‘waters of the United States’ is not trivial,” he added.

Scalia’s sometimes scathing comments — in which he referred to the Corps as an “enlightened despot” that has “stretched the term ‘waters of the United States’ beyond parody” ― centered on the growing amount of wetlands regulation with which home builders have to contend.

“The enforcement proceedings against Mr. Rapanos are a small part of the immense expansion of federal regulation of land use that has occurred under the Clean Water Act — without any change in the governing statute — during the past five presidential administrations,” Scalia said.

For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.

Paradise Village in Nuevo Vallarta, Mexico has tapped into the growing high-end, resort vacation and retirement home market in Mexico that is attracting buyers from the U.S. and Europe.

The market for resort and high-end, resort vacation and retirement homes in Mexico is growing and attracting U.S. and European buyers — particularly in the areas of Puerto Vallarta, Nayarit, Puerto Penasco, Los Cabos and San Felipe along Mexico’s Pacific Coast. It is also offering growing opportunities for U.S.-based home building companies.

To learn more about this market, NAHB International is organizing a trade mission for U.S. builders and others in the industry to Puerto Vallarta/Nayarit and development sites in the Banderas Bay area on Nov. 12-14.

Developers, builders, suppliers and other industry professionals will be able to explore business opportunities and meet with private developers, public officials and other industry players. The trade mission will also include site visits.

The trade mission will include private briefings with government and industry experts from FONATUR (Mexico’s Trust for Tourism Development), FIBBA, (Fideicomiso Bahia de Banderas), the Export-Import Bank of the U.S., the Overseas Private Investment Corporation and Stewart Title Guaranty de Mexico.

Participants also can schedule "one-on-one" meetings with builder/developer members of Mexico’s Construction Industry Chamber (CMIC).

To register, download and complete the registration form and e-mail it to Michael Boyce at NAHB (mboyce@nahb.com), or fax it to his attention at 202-266-8120.

Apply for 2006 Workforce Housing Awards

NAHB is now accepting entries for the Innovations in Workforce Housing Awards (IWHA) recognizing outstanding examples of workforce housing communities across the nation that provide decent and affordable homes for nurses, police officers, schoolteachers, retail workers and the like near areas in which they work.

The awards also serve to increase awareness of the workforce housing challenge and the ground-breaking solutions implemented by the housing industry, while encouraging builders, developers and related professionals to incorporate such innovative solutions into their own projects.

“These awards bring national attention to the workforce housing problem and to the creative ways in which builders and developers are increasing the supply of housing that is affordable to working families,” said NAHB President David Pressly.

IWHA is open to builders, architects, designers, developers and land planners nationwide. Communities that have been completed, or in which the first model has been opened or the first unit has been occupied between Jan. 1, 2004 and Oct. 27, 2006, are eligible to enter.

Winning entries will be selected by a panel of builders, multifamily and land development experts and other industry professionals. Winners will be announced at the 2007 International Builders’ Show in Orlando, Fla. in February.

For more information on the awards, click here; or e-mail Blake Smith at NAHB, or call him at 800-368-5242 x8583.

Beazer Internships Put Hispanics on the Fast Track

Melissa Grisales, one of 16 interns in the Team Builders program, during her internship with Beazer Homes in Tampa, Fla.

With the fall semester fast approaching, an inaugural group of Team Builders completed its 10-week internship program with Beazer Homes and is preparing to return to school.

Beazer Homes was Team Builders’ first sponsor, welcoming 16 students for internships. After a brief introductory period, students were placed at job sites and in offices across the country, according to their area of study.

Melissa Grisales, a third-year architecture student at the University of Notre Dame, traveled to Tampa, Fla. for her Team Builders internship. She handled a variety of responsibilities, which included assisting clients in model homes and functioning as an interpreter to Spanish-speaking workers on building sites.

“The highlight of my experience was being able to come here and fit in as part of the team,” said Grisales. “As time went on, my responsibilities increased and I really began to do significant work.”

Grisales enjoyed the experience so much that she is now strongly considering pursuing a career in home building. “I never realized how many career opportunities were available in this industry,” she said. “This internship really opened my eyes to options that have never been presented to me before.” Grisales will spend the upcoming school year studying architecture in Rome, Italy.

Another Team Builders participant was Saady Palma-Corea, a third-year civil and infrastructure engineering student at George Mason University, who stayed close to home, working at Beazer’s Chantilly, Va. office.

Participating in Beazer’s land development department, by the end of the summer Palma-Corea was completing tasks generally assigned to entry-level college graduate engineers.

His supervisors were so pleased with his job performance that they invited him to stay through the school year. Palma-Corea re-arranged his class schedule and will continue working at Beazer on a part-time basis.

Ignacio Sanchez, a fourth-year business management major at the University of California, Santa Cruz, interned at Beazer’s Sacramento office, where the predominantly Hispanic workers were excited to see a Latino on the administrative side of the operation.

“This has been a very positive experience and Beazer is dedicated to helping Team Builders grow,” said Jim Sanders, an area vice president for human resources from Beazer’s corporate office in Atlanta. “It was great having such talented students with an interest in careers in home building come work for us. We are looking forward to participating again next year,” he added.

HHF will continue supporting current Team Builders students throughout the year, and HBI will recognize them at a ceremony during the 2007 International Builders’ Show in Orlando, Fla.

For more information on Team Builders, e-mail Page Browning at HBI, or call her at 800-795-7955 x8918.

David Weekley Homes Names Trane Supplier of Choice

In recognition of both its product quality and customer service, Trane Residential Systems for the second year in a row has received the prestigious “Partners of Choice Award” from David Weekley Homes, the third largest privately owned home builder in the country.

The award is based on David Weekley’s quarterly National Trading Partners Survey, in which about 1,000 employees of the company rate more than 150 suppliers, which at the end of the rating process are graded from A to F. Survey participants include builders, project managers, design center staff, warranty service personnel, administrative teams and executives.

Based on the survey, Trane is only one of nine companies receiving A’s for both quality and service for the last 12 months and one of only five vendors to receive the award for two subsequent years.

“It is difficult for a supplier to earn an A rating in either quality or service for any given quarter, and much harder to an entire year,” said Bill Justus, vice president, Supply Chain Services for David Weekley Homes. “However, for Trane to achieve an A rating in both quality and service, and maintain that level of excellence for two consecutive years is an outstanding accomplishment. Trane has demonstrated through their actions that they are among the best of the best.”

Justus created David Weekley’s unique supplier rating system in order to achieve channel alignment of all parties within the supply chain. “It is critical to our business, because if we have an effective supply chain, then we can provide an outstanding experience for our customers — new home buyers.”

“This is a tremendous honor for Trane, recognizing the successful team effort that includes our distributors and dealers,” said Don Wood, manager, National Builder Accounts, Trane Residential Systems. “At Trane, we stress quality and service throughout our own supply chain, because we also want to provide an outstanding experience to our customers.”

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

NAHB-Produced Programs on HGTV & DIY This Week

The NAHB Production Group produces four weekly television shows on HGTV and DIY for consumers. The following is this week's lineup:

HGTV is seeking developers, builders and architects to create the 2008 and 2009 dream homes for the network’s Dream Home Sweepstakes. To learn more, click here.

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

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

Explore the latest housing industry news and information on www.nahb.org — the official public and members-only Web site of NAHB.

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.

Endowment Scholar Trades in Swatches for Home Building


	Collette Dawson, endowment scholar at Brigham Young University.

Collette Uriarte Dawson, a senior at Brigham Young University majoring in construction management, originally wanted to pursue a career in interior design. But she changed her mind in high school shortly after working on the interior design of a house her construction class was building. She traded in her swatches and room layouts for a hammer and construction know-how.

Dawson, a recipient of the Lee S. Evans/National Housing Endowment Scholarship, is one of a growing number of young women entering the home building industry.

“I have always wanted to learn the skills I am learning in my program and to make a good impact on the home building industry as a whole,” Dawson said. “Eventually I plan to own my own custom or turnkey residential home building business with my husband Craig, who is also a construction management student at BYU.”

Dawson maintains a 3.3 grade point average overall (4.0 in her major) and has been very active in the university’s NAHB student chapter serving as president, service leader and historian. She also participates in the NAHB Student Chapter Competition and in Habitat for Humanity.

“I have helped build three houses, mostly doing labor. I have also finished a few basements and done some remodeling work,” Dawson said. “I excel in interior finishes and scheduling. Upon graduation I plan to seek a position with a good residential home builder as a scheduler, warranty specialist or superintendent.”

Dawson credits the National Housing Endowment, the philanthropic arm of NAHB, with advancing her education in residential construction.

“I am deeply grateful to the National Housing Endowment and Lee Evans. Without the Lee S. Evans Scholarship, I would have not been able to continue with my education,” Dawson explained. “With this scholarship I will have a chance at making a difference in this world by offering people a piece of the American Dream ― owning a home.”

The endowment administers 12 scholarship programs and awards more than $300,000 each year to students pursuing careers in residential construction and related fields.

New NAHB Video Shows How to Communicate With Media

NAHB has created a short video and tip sheet for HBAs and members, “Communicating Effectively with the Media,” on how to effectively communicate with the media and educate the public about the real issues facing housing today, now that the housing market is experiencing a cooling period. The video is available free to members and HBAs.

This quick, seven-minute video provides an excellent summary of what everyone needs to remember prior to an interview, while providing a superb refresher to NAHB’s spokesperson training program.

“Communicating Effectively with the Media” covers how to prepare for an interview, avoid common mistakes people make when conducting an interview and deal with aggressive reporters.

To access the new media relations video and tip sheet, visit the Members Only side of the NAHB Web site at www.nahb.org/mediaguide.

In addition to the media relations video, NAHB offers a host of other public relations resources tools, including a PR Toolkit, spokesperson training and talking points on relevant issues. All of these resources can be found on the NAHB Web site by clicking here.

For more information, e-mail Paul Lopez at NAHB, or call him at 800-368-5242 x8409.

'Associate Appreciation Month' Is Almost Here

September is Associate Member Appreciation Month and an opportunity for local and state association staffs and builder members to recognize the myriad contributions that associate members make.

September is the month to brag about our associate members and all that they do for our association and our businesses.

So next month, be sure to thank and celebrate our associate members in a way that will really mean something to them ― do business with them.

GM $500 Exclusive Offer for NAHB Members

During 2006, qualifying NAHB members are eligible for a $500 offer on most GM vehicles.

Throughout 2006, qualifying NAHB members are eligible for a $500 exclusive offer on most GM passenger cars, light-duty trucks, vans and SUVs.

GM NAHB Affinity Cards and details on this offer were mailed directly to NAHB members from GM, and members should use the affinity card when purchasing a qualifying vehicle.

Members who have misplaced or otherwise do not have a GM NAHB Affinity Card may print out their own replacement cards in order to show member verification to a GM dealer. Note: Members must be logged in to www.nahb.org in order to print their replacement card.

Members with a www.nahb.org login should go to www.nahb.org/MA and click on the “GM Exclusive Offer.” This will take members to a Web page with program details and instructions for printing a replacement card.

There are also instructions for members who do not have a login (they will be sent to www.nahb.com/loginGM and returned to the page to get a replacement card).

For more information, e-mail Tiffany Smith at NAHB, or call her at 800-368-5242 x8273.

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to www.nahb.org/MA.

Explore the latest housing industry news and information on www.nahb.org — the official public and members-only Web site of NAHB.

Securely Collect Payments on-the-Go With Solveras

NAHB’s new credit card processing program through Solveras Payment Systems provides a fast, cost-effective and secure solution for members who need to collect payments in the field.

The new technology — Solveras Mobile — makes it possible for you to use your cell phone to swipe credit card sales anywhere you do business.

Instead of manually entering credit card transactions when you get back to the office and paying a higher key-entered processing rate, you can swipe them at the customer's location just like a regular terminal-based, face-to-face transaction and receive a significantly lower processing rate.

Solveras Mobile dramatically reduces costs and time by eliminating the need to manually key in all credit card numbers. The technology is available two ways:

Either way, simply swipe the customer's card and receive authorization in seconds.

This technology comes with a 100% money-back guarantee and NAHB-negotiated discounts on credit card processing services. Visit Solveras on the NAHB Web site for details.

UPS Offers Up to 30% Discount to NAHB Members on Shipping

NAHB and UPS, the world’s largest package delivery company, have joined forces to offer NAHB members discounts of up to 30% on shipping.

The NAHB shipping discounts include domestic air and ground, international export and international import.

Association members can also take advantage of hassle-free on-line shipping, 24/7 access and advanced package tracking at your fingertips.

NAHB members are eligible for discounts up to 30% to help manage costs with no catch — and no minimums.

The shipping discounts — which increase the more packages or letters the user sends — will be applied once enrollment is complete.

The enrollment process is fast and easy and is available to NAHB members through the Web site: www.savewithups.com/nahb.

For more information on UPS savings and the complete Member Advantage program, visit www.nahb.org/MA.

Explore the latest housing industry news and information on www.nahb.org — the official public and members-only Web site of NAHB.

Find Key Employees Through the NAHB Online Career Center

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

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

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

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

Fall Board Meets Sept. 13-17 in Salt Lake City

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

The following schedule of events is a partial listing provided as a notice for the upcoming NAHB Fall Board of Directors Meeting, which will be held in Salt Lake City on Sept. 13-17, 2006. Meetings will be held at the Grand America and Little America hotels. The fall board program will identify the exact time and place of each scheduled meeting.

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

Thursday, Sept. 14

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

Friday, Sept. 15

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

Saturday, Sept. 16

Area Caucuses 1-15
Joint Executive Board, Budget & Resolutions Committee Meeting
Board of Directors

Sunday, Sept. 17

Board of Directors Meeting

For more information, e-mail Cynthia McKinley Brown at NAHB, or call her at 800-368-5242 x8346.

Calendar of Events

To take full advantage of the exclusive NAHB members-only resources on www.nahb.org, however, you must log in.

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.

Nation's Building News Online: August 28, 2006

NAHB Study Shows How Much Bathrooms Are Really Worth

Sustainable TND Community, Daybreak, on Tour at Fall Board

NAHB Economist Calls Inclusionary Zoning a Bad Idea

Share Nation's Building News With Your Staff. It's Free.

Sweetening the Deal to Sell a Home

Consumers Curb Upscale Buying as Gasoline Prices, Housing Bite

House, Lawsuit Rising; Builder Contends 2nd Builder’s Home Infringes on a Copyrighted Design

Developers United to Pay $15M Tab for Road Widening

The New House on the Block — As Rates, Inventories Rise, Developers Try Auctions

High Costs Plague Gulf Rebuilding Effort

Letters to the Editor: Learn How the Codes Work

Pact Sets Builders Searching for New Lumber Sources

Survey Finds NIMBYs on the Rise in Both U.S. and Britain

New Single-Family Home Sales Down, Inventory Up in July

Mortgage Rates Nudge Down Housing Affordability

Eye on the Economy: Housing Will Not Drag Economy Into Recession

Builder's Tip: Using Wall-Sheathing as Insulation Stops

Working With Subcontractors: Pros, Cons…and Cautions

Base Pay of California Builders Up 6.8% in 2005

Condo Market Retreating From 2005’s Record Sales

Approved Guide for Installing Tile Roofing Now Available

Want to Know More About Designations? Ask an Expert

Education Calendar

Dallas the Latest to Hop on the Green Building Bandwagon

Lowe’s to Sell Expandable Katrina Cottage Kits

NAHB Weighs in on Two Pending Wetlands Cases

Sign Up for Trade Mission to Puerto Vallarta, Mexico

Apply for 2006 Workforce Housing Awards

Beazer Internships Put Hispanics on the Fast Track

David Weekley Homes Names Trane Supplier of Choice

NAHB-Produced Programs on HGTV & DIY This Week

Endowment Scholar Trades in Swatches for Home Building

New NAHB Video Shows How to Communicate With Media

'Associate Appreciation Month' Is Almost Here

GM $500 Exclusive Offer for NAHB Members

Securely Collect Payments on-the-Go With Solveras

UPS Offers Up to 30% Discount to NAHB Members on Shipping

Find Key Employees Through the NAHB Online Career Center

Fall Board Meets Sept. 13-17 in Salt Lake City

Calendar of Events