Print-All Page: September 25, 2006

With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

“A cooling housing market is no longer a threat lingering somewhere in the future,” said Bob Schultz, MIRM, founder and president of New Home Specialist. “Even national builders like KB Home and Toll Brothers are starting to see the effects,” he said, and “the good news is that you can succeed in a cooling market once you have a clear understanding of how the market works in times like these.”

“Sales are off, starts are down, interest rates are rising, inventories of unsold units and existing homes on the market are up, and cancellations are on the rise,” said NAHB President David Pressly. “This presents new business challenges for NAHB members, many of whom have never witnessed anything less than a relatively robust housing market.”

About 75% to 80% of today’s NAHB members were not around to experience the last previous housing downturn in 1990-91, and they can use the materials in the new “Back to Basics” kit to adjust their company’s operations and to identify areas were they need outside expertise.

The toolkit contains some 150 articles on issues that include: construction financing, financing tools to help sell homes, measuring and benchmarking financial and business performance, improving business profitability, market research, advertising, marketing campaigns, new home sales techniques, the Internet as an innovative sales tool and diversifying your business. Also in the kit are statistics from research by NAHB economists and U.S. government agencies.

The kit also gives members a step-by-step rundown of how to evaluate their company’s position in the marketplace and the many factors affecting it, investigate options, identify those that are most appropriate and develop a strategy for putting them into action. Resources in the kit will be expanded on an ongoing basis, and a feedback form in the kit provides the opportunity for members to make suggestions and ask questions.

“I think we have a lot to learn from the guys who weathered the early 1990s,” said Pat Latessa, of the The Galileo Group, custom builders in Northern Virginia. Latessa said that he has heard the war stories in meetings with other members of the Custom Builders Council at the Northern Virginia Building Industry Association, “and if other builders need advice on how to cope with change, it’s a great argument for keeping in touch with the local HBA,” he said.

“We know that the market never drops to zero,” Schultz says in an article (“Confusion in a Cooling Market”) that is included in “Back to Basics.” “What is occurring now is a process of market corrections. The market has been unsustainably hot, fueled by low interest rates, investors and an extreme sense of urgency because of quickly rising prices….The fact that the market is cooling now doesn’t mean it is turning into a bad market. It is simply returning to normal.”

Schultz says that for people who have only recently come into the new home sales profession and have known nothing but boom times, “it will be difficult for them to make the mental shift necessary to thrive in changing conditions. There are even sales trainers who have emerged in the last five to 10 years who have only known great markets. Many of them are teaching strategies that will not cut it in these transforming conditions.”

“As the market changes,” says Schultz, “you must identify which things you can and can’t control, and then learn how to improve on the things that you can control. You can’t control interest rates, but you can control people’s perception of interest rates. You can’t control what your competition does, but you can control what you do — presentation and sales skills, Follow-Through®, appointment-setting, how your models look, etc. You can’t control what the articles in the newspaper say, but you can control what you put in the newspaper. You can’t control the weather outside of your sales office, but you can control what kind of environment people experience when they come into contact with you.”

Schultz suggests several things that builders can do to succeed in the current market:

To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.

Tucson Job Training Shores Up Local Labor Pool

With a mission to ease the construction labor shortage in Southern Arizona, provide a needed community service and raise the profile of the home building business as a great place to pursue a career, the Southern Arizona Home Builders Association's Institute of Construction (TSIC) opened its doors last October and has already garnered the success that makes it a model for builders in other parts of the country.

Roger Yohem, vice president and director of communications for the association, said that TSIC has become a valuable resource for the community while helping to fill an important member need.

“After a while, you have to stop complaining about the lack of skilled labor and do something to solve it,” said Greg Miedema, president of Dakota Builders in Tucson.

“We wanted to make people feel better about being in a trade,” Miedema said. “Not everyone needs to go to college, and for years, we’ve told our kids that you have to have a college degree to be a productive member of society. We wanted to help get rid of that condescending attitude.”

TSIC would not have been possible without the hard work of program administrator Les Wolf, who is dedicated to making sure that the students who sign up for the program complete it successfully, said Yohem.

The association launched the program with contributions from members and internal association funds, and estimates that it cost about $40,000 for the first year of students, he said. It’s free to students accepted into the program.

Members sponsor students by admitting them into a six-week training cycle for each trade, paying them minimum wage and covering their worker’s comp, Social Security and unemployment insurance, or a total of $7 per hour per employee. A plumbing company accepting two students for a six-week training cycle would pay a total of $3,360, Yohem said. The company gets a good look at the student while the student gets a better idea of what it would be like to work for the company.

The Institute of Construction has provided Shirley Howard with a year of on-the-job training and an introduction to all facets of home building, from framing and drywall to electric and plumbing. With her graduation last week, Howard is now ready to parlay that knowledge into a brand-new job.

Howard heard about TSIC from an Arizona Department of Economic Security caseworker after she moved to Tucson from Chicago and began searching for a secretarial or administrative job. The caseworker tried to convince two male job applicants to begin the training program, but they weren’t interested and Howard was.

“You’re always trying to find that niche,” she said. “I’ve always been sort of a tinkerer, I guess you could say, never really knowing what I was doing or if it was done correctly, and I found out I wasn’t. I started the classes and it was hard at first, and then I became acclimated to it and really it’s pulled me all the way in,” she said. “It was one year, but it was the fastest year I ever lived.”

Howard is ready to look for a job with her new skills, as well as the additional physical strength and coordination she gained as she became familiar with the job-site tools. “Being able to show that you can handle the tools they have given you — I admit I cried the first week, but being the person I am, I refused to be outdone by anyone. Les Wolf was in my corner, pushing me all the way — he showed me that if I wanted it bad enough I should step up and go for it. When I needed a kick in the pants, he’s the one who gave it to me. And in the end I made it, I did it, and now I want to continue it.”

Home builders associations in Texas and Florida have already expressed interest in starting similar programs, Yohem said.

To avoid excessive outside oversight, the program takes no training grant money but is self-funded by the association and participating trades. Each student takes eight six-week sessions, and the first class graduated 14. Participating companies agree not to hire any students until all eight sessions have been completed to make the applicant pool accessible to all and to ensure that students can make an informed decision when they are finished.

“The deal we make is simple,” Miedema said. “We’re going to teach you how to be successful in the work place. This is your starting point, and then you can decide.”

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

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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 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.

Don't delay, have your employees subscribe today. To subscribe, go to www.nahb.org/nbn.

Soft Market Teaches Flippers an Ever-So-Humble Lesson

Insurance brokers, doctors, bicycle mechanics and others who were investing in real estate for fast home sales and easy profits are finding that the financial incentives for speculation are fading fast. Nearly one in five flippers who sold from April to June of this year actually lost money on the deal, the highest level in 2-1/2 years, according to HomeSmartReports.com. Scoring success in flipping a couple of properties, Florida insurance broker Jeffrey Epstein has run into problems unloading a condo and a town house on which he put deposits when they were under construction in Miami in 2004. Epstein hadn’t planned on closing on the properties, but that was what he had to do in June and July in a local real estate market with a 17-month supply of condos and prices 11% below last year’s median. To sell them, he is now offering to pay the buyers’ closing costs and home owner’s association fees for a year, and plans to emerge from the deals with a small profit. According to the National Association of Realtors®, investors bought about one out of every four homes sold last year, focusing on the hottest markets such as California, Florida, Arizona and Nevada. A sharp drop in sales suggests that real estate speculators have fled the market, says Edward Leamer, director of the UCLA Anderson Forecast. Yet prices remain stubbornly high in most markets, showing that many investors are still holding onto their properties with the expectation of making a profit. (www.usatoday.com)
USA Today (9/21/06); Noelle Knox

Wells Fargo CEO Calls Housing Slowdown a Healthy Correction

Even though Wells Fargo began pulling back about a year ago in the nation’s hot housing markets by requiring lower loan-to-value ratios and higher credit criteria in its home equity lending, the bank’s CEO Dick Kovacevich told the Bank of America’s 36th annual investment conference in San Francisco that he still expects the housing market to be good, “even this year.” Kovacevich said that he views the housing slowdown as a positive development. “We were getting into bubble territory,” he said. “As everyone knows, when a bubble bursts, the smaller the bubble, the better it is.” Kovacevich added that the bank has avoided controversial mortgage products such as option ARMs, which are adjustable rate loans that give borrowers various options on how they want to pay each month. The loans can result in negative amortization, because deferred interest is added to the balance. Kovacevich also criticized the popularity of low-doc loans, which enable borrowers to qualify for mortgages with minimal documentation. (www.sanfrancisco.bizjournals.com)
San Francisco Business Times (9/22/06); Mark Calvey

It Seemed Like a Good Bet at the Time of the Loan

The Federal Reserve’s policy to increase short-term interest rates has caught many home owners in a “can’t pay, can’t sell, can’t refinance” vise in which increases in their adjustable rate mortgage payments are outpacing their income growth while their homes have not appreciated enough to cover the cost of a refinanced mortgage or to allow them to sell and walk away. While foreclosure could loom for some of these borrowers, most who bought homes with ARMs have seen house values rise sharply in recent years, providing ample room to switch to a loan with higher interest but less risk. Some borrowers whose loans are being reset are simply taking out new ARMs that carry a fixed rate for three years or less. But others are seeking to avoid further increases in the future. According to Craig Focardi, an analyst with TowerGroup of Needham, Mass., a borrower who took out a three-year, 4.6% ARM in 2003 for $300,000 was paying $1,610. When the rate rises to 6.6% this year, the buyer will be left with a monthly increase of $327. According to lenders and mortgage brokers, ARMs borrowers fall into three groups: those who aren’t concerned about higher interest rates; those who know they won’t be staying in their homes for long; and those who simply cannot afford higher monthly payments and are at the mercy of the market. Christopher Cagan, an analyst with First American Real Estate Solutions in Santa Ana, Calif., estimates that there is a risk of default in about 19% of the 7.7 million ARMs that were taken out in 2004 and 2005. (www.nytimes.com)
New York Times (9/24/06); Bob Tedeschi

Slowdown Soon for PO ARMs?

National Mortgage News reports that there are signs that demand for the controversial payment-option ARM could be slowing, even though $83.3 billion in the loans was originated during the second quarter, accounting for 9.6% of the overall market in the U.S. for residential loans. One of the four different payment options for these loans allows borrowers to keep their monthly payments lower compared to the other options by going deeper into debt with negative amortization. This summer Countrywide Home Loans revealed that 75% of its payment option borrowers chose the lowest payment option. The lender’s CEO Angelo Mozilo was so concerned about this ratio that he had letters sent to eight million customers, advising them what their reset payments would be if they had to reprice the loan. Countrywide originated $5.4 billion in POAs in August, a 48% decline from the same month a year earlier. The performance of POAs and interest-only loans is an “area of substantial uncertainty” for the market, according to NAHB Chief Economist David Seiders. “We know the dollar volume” of the POAs that have been originated, but “we don’t know the features. Is it a payment-option ARM with a piggyback loan too?” (www.nationalmortgagenews.com)
National Mortgage News (9/18/06)

Slowdown in Home Building Squeezes Vendors

With about 1,600 new homes sitting vacant in the Greensboro-Winston Salem, N.C. area and builders starting to drag their feet a bit on taking out new permits after double-digit increases in 2004 and 2005, John Thornton, of Salem Brick, says he has seen his business decline by about 10% over the past six weeks. While only a few weeks ago, he often had to wait three or four days for an independent hauler to be available to take bricks to a job site, he now has haulers calling him looking for work. Caroline Boyd, a sales manager for Mosaic Tile Co., says that builders are keeping a tighter eye on the budget as they select tiling for their homes, with more builders making selections in the lower price ranges. Richard Brenner, CEO of Amarr Garage Doors, said his customer base of garage door installation companies is reporting that builders are pressuring them to lower the price of installation. Brenner’s customers, in turn, are putting the pressure on him to reduce his prices. Edward Catalano, owner of EC Painting and Drywall Inc., says that because of a tighter market many companies such as his are bidding on projects on a cost-only basis just to keep people working. Bruce Holliday, owner of Cabinet Studio, said that his company set record sales for the last seven years. “If this year isn’t a record, I think we’ll be OK,” he said. “We’re in a position that we could ride it out for a few years.” (www.triad.bizjournals.com)
Business Journal of the Greater Triad Area (9/22/06)

Midwest Job Losses May Trigger a Sharper Housing Slowdown

While attention has been focused on how the current housing slowdown is enfolding in the hot markets of the boom such as California, Florida and Nevada, recent data from the federal government and private researchers point to areas in the Midwest that are witnessing a more dramatic slowdown in home prices and, in some cases, higher borrower defaults than the rest of the country. Home prices have remained flat in the region for the past few years because of a weaker economy than other parts of the country. Michigan, for example, has lost 300,000 jobs since 2000. An analysis by First American LoanPerformance in San Francisco found that the percentage of loans in foreclosure in the Midwest states of Michigan, Ohio, Illinois and Wisconsin reached 0.93% in June, while foreclosures across the country averaged a historically low 0.5%. According to a residential real-estate risk-scoring system maintained by analysts at Credit Suisse, which ranks the likelihood of home-price declines within a year, the most troubled metro areas are mainly in Michigan — including Detroit, Saginaw, Holland, Ann Arbor, Monroe and Jackson — and New England areas such as Boston. The least troubled metro areas are in the Northwest. (www.realestatejournal.como)
RealEstateJournal.com (9/22/06); Lingling Wei, The Wall Street Journal Online

EPA Drops Dust Standard, Saving Builders Billions

Heeding the advice of scientists and industry groups, the Environmental Protection Agency has decided to drop its proposed daily standards for coarse particulate matter. This is a major win for affordably priced housing and builders, who faced compliance costs under the new standard that could have amounted to billions of dollars per year.

NAHB members and staff submitted extensive comments, spoke at EPA-sponsored public hearings and lobbied hard with Administration officials against the proposed standard — emerging victorious on Sept. 21 when EPA Administrator Stephen Johnson announced the long-awaited decision.

While press attention was focused on the so-called soot standard for fine particulate matter, home builders were concerned about coarse particulates, or dust. The dust from construction sites is the same dust thrown up by a windstorm or a farmer’s tractor, NAHB argued, and does not need additional regulation. With the decision last week, EPA agreed.

The proposed standard would have tightened the threshold of allowed coarse particulate emissions from 150 to 70 micrograms per square meter — a reduction of more than 50%. Worse yet, EPA would have exempted the largest sources of dust emissions — agriculture and mining — leaving home builders and other members of the construction industry to bear the brunt of the rule’s ill effects.

Instead, EPA has decided to keep the daily standard at the rates that it set in 1987, and also revoked the current annual standard of 50 micrograms per cubic meter because — as NAHB asserted in comments submitted in April — there is no scientific evidence that long-term exposure to low levels of dust has any negative impact on health.

NAHB also argued that EPA’s proposal, which would have applied to only suburban and urban locations, was inconsistent with the agency’s statutory obligations to promulgate national standards. NAHB said that there was no rationale for differentiating between urban and rural areas on dust emissions, and that the proposed standard would have preempted state and local authority to devise regionally appropriate implementation plans, compliance strategies and air monitoring programs. EPA withdrew that component of the rule as well.

“The overwhelming evidence made clear that this proposal was a bad idea,” said NAHB President David Pressly. “I’m heartened that we could play such an important role in overturning this coarse particulate standard, which would have added billions of dollars in compliance costs for our nation’s builders. That would have been reflected in new home prices, with no effect on the safety or health of our citizens.”

Home builders in metropolitan Phoenix already spend between $2,500 and $5,000 per unit on dust control measures, depending on mitigation efforts and the cost of the water used to dampen the site.

“This is great news," said Carl Mulac of Engle Homes in Phoenix. "This would have been an expensive, and utterly useless standard. We built 2,400 homes last year. With a 50% decrease in the amount of dust allowed per day, I can only imagine how much it would have cost to comply.”

The proposal would have affected three of the top 10 housing markets — including Las Vegas and Los Angeles, as well as Phoenix. Based on 2004 building permit totals, it would have hiked compliance costs for 230,000 homes. Even using the lower estimates from Phoenix, it could have cost home builders $5.75 billion per year.

“The Las Vegas area home builders follow some of the strictest dust control protocols in the nation,” said Jennifer Lewis, president of the Southern Nevada Home Builders Association. “No doubt the industry’s compliance record has contributed to the Clark Country’s Department of Air Quality and Environmental Management efforts to bring the region into attainment for particulate matter standards.”

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

Wave of Retroactive Storm Water Suits Halted in Vermont

The impact of an Aug. 25 decision by the Vermont Supreme Court reversing a state regulatory ruling requiring a permit under the federal Clean Water Act for storm water discharges will prevent environmentalists from filing whole-sale lawsuits against home builders and home buyers in the state and pursuing that litigation strategy across the country.

The lawsuit had important national implications, according to Tayt Brooks, government affairs director for the Home Builders and Remodelers Association of Vermont, because it would have opened the door to Clean Water Act permitting requirements in cases where those permits have never been needed before — post-construction.

This would have meant that even storm water retention ponds maintained by home owners’ associations could have required federal permitting in addition to any state or local requirements for maintenance and repair. If HOAs didn’t apply for federal permits, they could have been sued or fined, with the money going to the complainants — in this case, the Conservation Law Foundation (CLF), a New England environmental advocacy group.

“They wanted the ability to take people to court,” Brooks said. “They wanted to take home owners to court and collect the penalty money. It’s fairly cheap for environmental groups to litigate in a small state like Vermont, and a favorable ruling would have opened up a way to take it nationwide.”

If that happened, any person or organization owning property that included impervious surfaces of more than one acre — including home owners’ association-administered developments with numerous driveways and private roads — could have found themselves subject to a lawsuit.

The case began in 2003, when the Conservation Law Foundation petitioned the Vermont Agency of Natural Resources to use its “residual designation authority” (RDA) to require storm water permits for certain discharges into five impaired bodies of water. Believing that its RDA was discretionary, not mandatory, the agency denied the petition.

The foundation then appealed to the Vermont Water Resources Board, which reversed the agency decision, and the agency then appealed to the Vermont Supreme Court.

NAHB joined the HBRA of Vermont in a friend-of-the-court brief filed with the Supreme Court. It explained that the RDA, which originates in the Clean Water Act, is not a mandatory authority and even when exercised does not oblige the permitting agency to issue permits to control all storm water discharges. Agreeing with NAHB’s position, the court reversed the decision of the Water Quality Board and sent the matter back to the Agency of Natural Resources.

The irony of the case is that Vermont already had one of the strictest storm water management permitting processes in the country, requiring builders and developers to demonstrate “net-zero” discharges into the state’s rivers and streams, said Ernie Pomerleau of Pomerleau Real Estate in Burlington, one of three partners to the original lawsuit.

Vermont’s heavy emphasis on mitigating the environmental impact on already damaged waterways convinced business groups — including home builders and resort developers — to work with environmental advocates and unanimously pass stringent storm water permitting legislation. Without the new safeguards, “we realized that it would have shut down development in Vermont,” Pomerleau said.

The net-zero requirement was “a process that was very difficult for developers to swallow, but at least you had a shot at a permit” if an effective storm water management system could be achieved, Pomerleau said. “Despite that, CLF wanted a federal permit, so it brought that appeal to the Water Resources Board."

“What was upsetting to us was that we had worked in tandem, businesses and environmental groups, to create the highest storm water standards in the country, only to have the board make the decision without public review,” he said. “What most people didn’t understand was the fact that this was simply a staging ground to use Vermont — to spill over the borders on this storm water issue. It could have been huge. If you were a 20-year-old project that had never required a storm water permit, you would have been instantly trapped in the web. You could have had a $35,000 fine per incident going back — well, we can’t figure out how long.”

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

SLGA Awards: Nominate Those Who Stand Up for Housing

Applications are being accepted for the 16th annual State & Local Government Affairs Recognition Awards program honoring public officials and home builders associations that have advanced the needs and principles of the building industry.

The program honors elected or public officials who have gone to bat for the home building industry; home builders associations that have undertaken innovative or successful government affairs initiatives for a stronger industry; and those who have made a special effort to fulfill NAHB’s smart growth principles.

Honorees will be recognized at an awards breakfast during the International Builders' Show in Orlando, Fla. in February. Honorees will receive an engraved award and be cited in NAHB's Nation's Building News and State & Local Reporter.

For more information, e-mail Alex Strong at NAHB, or call him 800-368-5242 x8279.

Interactive 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 at the Sheraton New Orleans.

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.

To register or for more information, click here.

Housing Starts Lose More Ground in August

Total housing starts dropped 6.0% in August to a seasonally adjusted annual rate of 1.665 million units, the Commerce Department reported last Tuesday, leaving home construction down 19.8% below the pace of a year earlier.

Single-family home construction fell 5.9% during the month to 1.360 million units, which was 20.6% below a year earlier. Multifamily housing construction was down 6.7% for the month to a seasonally adjusted annual rate of 305,000 units, 15.7 percent lower than the pace of August 2005.

“Builders have been reporting weakening demand for some time and appropriately are cutting back on new supply in order to meet current market conditions and control their inventories,” said NAHB President David Pressly. “Many builders also are offering substantial incentives to bolster sales and limit cancellations, and with mortgage rates still very favorable, now is a good time to buy.”

“We are in the midst of an inevitable adjustment following the housing boom of 2004 to 2005 when housing market activity soared to unsustainable levels,” said NAHB Chief Economist David Seiders. “The downward adjustment to housing production should run its course by mid-2007. The market that emerges from this correction will display good balance between supply and demand and move to a healthy and sustainable trend based on solid underlying fundamentals.”

“Home buying conditions actually are quite favorable at this time,” Seiders added. “There are a lot of homes on the market, mortgage rates are at historically low levels, house prices are softening in some areas and household income growth is proceeding. These developments are improving the affordability of home buying.”

August housing starts declined 5.5% in the West, 6.1% in the South and 12.2% in the Midwest. They were up 5.4% in the Northeast, following a 12.5% decline during the prior month.

Total building permits last month were issued at a seasonally adjusted annual rate of 1.722 million, a 2.3% decline from July and a 21.9% drop from a year earlier. Single-family permits were down 3.5% to 1.279 million units, while multifamily permits rose 1.1% to 443,000 units.

Don't miss NAHB's fall Construction Forecast Conference for the latest economic news about the housing industry. Join NAHB on Oct. 25 for the Construction Forecast Conference — Fall 2006 in Washington, D.C.

HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.

Slump in Builder Confidence Continues for Eighth Month

Reflecting increasing builder concerns about conditions in the market for new single-family homes, the NAHB/Wells Fargo Housing Market Index (HMI) declined for an eighth consecutive month to a level of 30 this month, a three-point drop from an upwardly revised 33 in August and the lowest level on the index since February 1991.

“Builders are adopting an increasingly cautious attitude in their near-term outlook for new-home sales,” said NAHB Chief Economist David Seiders. “They’re experiencing falling sales, rising sales cancellations and increasing inventories of unsold units. And although many builders are offering substantial incentives to bolster sales and limit cancellations, many potential buyers now are waiting on the sidelines to see how the market shakes out before proceeding with a home purchase.

“We are in the midst of an anticipated adjustment period as the housing market subsides from the record-breaking and unsustainable highs of the past few years,” Seiders noted. “Our forecast projects the numbers flattening out around the middle of next year and gradually moving back up towards trend in 2008."

“That said, long-term housing fundamentals will be very favorable,” he added. “In fact, the housing market that emerges from this correction will have a better balance between supply and demand and will be able to ride on excellent underlying fundamentals for years to come.”

Derived from a monthly survey that NAHB has been conducting for 21 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Two of the three component indexes declined in August. Current single-family sales declined five points to 32 and expected sales in the next six months fell four points to 37. The component gauging traffic of prospective buyers remained even from last month, at 22.

The HMI dropped six points to 28 in the Northeast, five points to 38 in the West and three points to 38 in the South. The index held steady at 16 in the Midwest, where fundamentally weak economic conditions continue to weigh on the market.

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.

Housing Downswing to Bottom Out Next Year, Congress Told

The current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year and gradually move back up toward trend by late 2008, NAHB Chief Economist David Seiders told Congress recently.

Testifying before the Senate Economic Policy and Housing and Transportation Subcommittees on Sept. 13, Seiders said that while the housing downswing still has some distance to go, “various economic and financial market fundamentals figure to be supportive of housing demand for the foreseeable future.”

Seiders also told lawmakers that there are several downside risks to the housing and economic outlook he presented. These include the possibility of spikes in interest rates or energy prices, a large resale of homes back onto the market by investors/speculators and uncertainties regarding the size of the inventory overhang in the market for new homes.

There also are considerable uncertainties about the impacts on consumer spending from a fading housing wealth effect as well as from the impacts of “payment shock” on home owners facing upward adjustments to monthly payments on “exotic” types of adjustable-rate mortgages (ARMs).

The record housing starts and sales of the past two years were well above levels supportable by demographics and other fundamental demand factors, and were fueled to a great extent by investors and speculators seeking to make a quick profit and through the surge of unconventional ARMs, Seiders said.

“In retrospect, it was the finance- and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,” he said.

After posting double-digit gains during the past two years, national home price appreciation is expected to remain relatively flat for the foreseeable future. “Indeed, some decline is a distinct possibility, and the rate of price appreciation should remain below trend for some time,” said Seiders.

NAHB’s forecast has a cumulative shortfall of housing starts of roughly 400,000 units from the middle of this year through the end of 2008, in line with the estimated excess supply generated during the recent boom period.

And while the current downswing in home sales and housing production will continue to detract from overall economic growth through mid-2007, Seiders said that much of this negative impact should be offset by strengthening activity in other sectors of the U.S. economy, including spending on capital equipment and software, nonresidential structures and exports.

NAHB Works to Soften the Blow of New Lumber Pact

Five days after U.S. Trade Representative Susan Schwab and Canadian Trade Minister David Emerson signed a softwood lumber accord establishing a complex system of quotas and new tariffs artificially boosting prices during periods of normal or weak demand for the building material, NAHB formally instituted new policy to help builders once the pact goes into effect.

On Sept. 17, the NAHB Board of Directors approved a resolution during its fall meeting in Salt Lake City that calls on the association to “work with the U.S. government, governments of other countries and industry to promote additional opportunities for NAHB members to obtain access to high-quality, stable and affordable supplies of lumber and other key building materials.”

The resolution also calls on the U.S. Congress and the Bush Administration to eliminate all artificial economic trade barriers that discourage the use of imported or alternative building materials in the marketplace and urges NAHB to investigate how it can help builders access new technologies, innovations in home construction and alternative building materials that will provide consumers with more affordable housing.

“Canadian import duties on lumber raise costs that harm my business and my buyers,” said Buddy Hughes, president of Hughes Construction Co. in Lexington, N.C. and a past president of the North Carolina HBA. “As a result, I’ve been working with the Research Center over the years and have been able to find alternative wall systems and steel floor systems. It’s good to see that NAHB is continuing to address this issue.”

To implement the new policy, NAHB is working to increase imports from Europe. Next month, NAHB Immediate Past President David Wilson and Executive Vice President Jerry Howard will travel to Russia to meet with industry representatives, establish contacts with producers and identify any policy barriers to increasing the volume of imports from their current level. A similar trade mission is planned later this fall to Sweden.

In addition, the NAHB Research Center is promoting the use of steel, cement, engineered wood products and other alternative building materials wherever practical.

The new seven-year lumber pact, which is expected to be ratified by the Canadian parliament shortly and take effect as early as next month, includes a six-month clause enabling the U.S. or Canada to terminate the agreement after it has been in force for 18 months, and would cap Canadian lumber imports at 34% of the U.S. market.

The bilateral agreement would require both countries to end all litigation efforts and would eliminate current duties now totaling about 11% on softwood lumber shipments to the U.S. It also calls for the U.S. to return $4 billion in duties to Canada and retain $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 paying duties of 15% — the maximum stipulated — because current prices are well below the $315 per 1,000 board feet threshold that is part of the complicated system of export taxes and quotas based on market prices.

Under the pact, softwood lumber shipped into the U.S. will be traded freely as long as the price remains above $355 per 1,000 board feet. When prices fall below that threshold, Canadian imports will be subject to a combination of export taxes ranging from 5%-15% and volume limits.

Eye on the Economy: The Housing Outlook Has Darkened

Incoming economic data indicate that economic growth for the second half of this year is likely to be somewhat slower than we have been expecting, reflecting a weaker housing market and mildly disappointing performances by a few other sectors. Despite these downward revisions, we expect overall GDP growth to average about 2.5% in the second half and to move up to a trend-like pace (around 3%) in 2007.

The below-trend run of GDP growth that emerged in the second quarter of this year is taking some toll on labor market conditions, reflected in a slowdown in payroll job growth and a recent uptick in the unemployment rate.

Our revised forecasts for overall economic growth point toward maintenance of modestly below-trend employment growth and a slight further upward adjustment to the unemployment rate over the balance of this year and into 2007.

The above-trend run of growth in GDP and employment that we experienced in recent years has been generating upward pressures on labor costs and core inflation (excluding food and energy). The recent and impending slowdowns in these measures of the “real” economy certainly will diffuse some of the inflation pressures, heading off potentially damaging “overheating” of the U.S. economy and paving the way for additional years of solid economic expansion.

The recent news on core inflation has been reasonably good, considering the upward momentum that’s been developing for some time. The core Producer Price Index for finished goods actually fell in August for the second consecutive month and the year-over-year pace receded to less than 1%.

Of even more importance, the core Consumer Price Index (CPI) registered a 2.9% annual rate in August, the same as in July and below the pace seen in the March-June period. Although the recent rates still exceed the upward bound of the Federal Reserve’s implicit comfort zone for the core CPI, the deceleration bodes well for inflation down the line.

As we expected, the Federal Reserve held short-term interest rates steady at the Sept. 20 meeting of the Federal Open Market Committee (FOMC), maintaining the 5.25 target for the federal funds rate. The FOMC statement highlighted the ongoing “moderation” in economic growth, the ongoing “cooling” of the housing market and the likely moderation of inflation pressures over time.

The way things are going, stable monetary policy is the best bet for the balance of this year and the early part of 2007.

The current monetary policy stance, the prospects for stable policy for some time, the slowdown in economic growth and the reassuring news on core inflation have combined to generate a decent bond market rally. Yields on long-term Treasury securities and home mortgages have come down significantly from their mid-year highs, and we’re projecting a reasonably stable interest rate structure for some time into the future.

Data received in recent weeks clearly show that the downswing in housing market activity still is underway. Housing starts for August were down by 6% from a downwardly revised reading for July and stood 20% below a year earlier. Building permit issuance was down by 2.3% in August and stood 22% below the previous year. Indeed, single-family permits are now down by 25% on a year-over-year basis.

NAHB’s single-family Housing Market Index declined by three more points in September to a level of 30. This compares to a cyclical high of 72 in June of last year, and the current HMI is the lowest since February 1991 (within the 1990-1991 economic recession).

On a brighter note, the weekly index of applications for mortgages to buy homes (Mortgage Bankers Association series) perked up a bit during the first half of September, however this measure remained about 21% below a year earlier (four-week moving average basis) and doesn’t signal a fundamental turn-around in the housing market.

The downward momentum in key measures of housing market activity has prompted some downward revisions to NAHB’s forecasts of home sales, housing starts and house price appreciation for the balance of this year and in 2007.

We’re now showing year-over-year declines in total housing starts of roughly 12% for both 2006 and 2007, and some decline in national average home prices has become a real possibility.

The evolving housing downswing must be viewed in the context of the unsustainable housing boom of 2004-2005. The single-family and condo markets got grossly overheated in many areas and an extended “cooling” process (to use the Fed’s terminology) became inevitable. The markets are now saddled with heavy inventory overhangs, investors/speculators are in retreat and housing affordability measures still are depressed.

I recently testified in the Senate on “The Housing Bubble and Its Implications for the Economy.” I sketched out a likely pattern of “payback” for the 2004-2005 excesses as well as a healthy sustainable trend that housing would approach by late-2008. Stay tuned.

On Sept. 19, the Federal Reserve released its estimates of the household sector balance sheet at the middle of this year. In a nutshell, the estimates show ongoing growth in household assets as well as net worth (assets less liabilities), although at a slower pace than earlier in the economic expansion.

With respect to housing, the Fed’s estimates show a year-over-year gain of 10.5% in the market value of homes owned by households, a 12.6% rise in home mortgage debt and an 8.7% gain in owner’s equity.

The ratio of mortgage debt to the market value of homes moved up to 45.9%, compared with 45.1% at the middle of last year, although neither the change nor the level is alarming at this point.

The “holding gains” on household real estate from mid-2005 to mid-2006 came to nearly $1.7 trillion, although the quarter-to-quarter changes decelerated during this period. A further slowdown is inevitable in coming quarters as house prices continue to slow and possibly even decline to some degree, and the lower production levels now in train will also take some growth out of household real estate holdings.

As a result, the powerful housing wealth effect on consumer spending will be losing some strength over time, although the weakening process should be gradual and spread over an extended period of time.

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 Sept. 20 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: A Time Saver for Installing Closet Shelf Cleats

Whenever I’m installing cleats for closet shelves, I cut down the amount of ladder time with the little trick shown in the accompanying illustration.

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.

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.

OSHA Crane Standard a Bad Fit for Small Home Builders

Reflecting a poor understanding of the home building industry, a proposed Occupational Safety and Health Administration (OSHA) standard for cranes will increase construction costs without providing a corresponding increase in safety, according to comments from NAHB filed with the agency earlier this month.

Wichita, Kan. builder Carl Harris of Carl Harris Company, Inc. represented NAHB and other small businesses in the home building industry on a panel studying the impact of the proposed rule, which covers cranes weighing more than 2,000 pounds. OSHA will consider NAHB’s comments, along with those from other trade groups, in a report due this week.

The problem with the rule, said Harris in a Sept. 8 letter to OSHA, is that it treats all construction activity the same, without taking into account the unique nature of home building, especially when small or custom builders are involved.

Small companies usually rent machines to perform specific tasks such as setting roof trusses or precast concrete, and they rely on the rental company to supply the crane operator along with the crane.

“Most small builders don’t hire operators; the operators come with the crane. Therefore, we don’t train them,” Harris wrote. “We do not have the expertise to hire operators. We expect the crane rental company to have that expertise and to supply expert operators.”

The OSHA proposal includes new setup rules to help ensure that cranes don’t tip over or come too close to power lines. It also adds new third-party certification, inspection and training requirements for cranes and crane operators. Under OSHA’s multi-employer work-site regulations, the home builder could be liable for ensuring that these requirements are met.

Assessing job-site conditions for safe crane operation, a requirement in the proposal, also exceeds the expertise of small builders and should be left to the owner of the crane, Harris said. “The operator needs to ask if the ground is soft, or if there are collapsible underground lines, or if there is enough space for outriggers, or whatever else that crane needs for safe operation,” he wrote.

Also under the proposal, forklifts used to move materials are not covered, but they are covered when they are used like cranes. This is confusing, Harris said, because it is unclear whether the regulations would require a forklift operator to be trained in crane safety if a boom and winch are attached to the machine. “Construction sites are now populated with multi-purpose or hybrid machines that can do many tasks,” he added.

Construction costs are another concern. OSHA’s official estimate of the costs of the safety procedures that would be required, including training, would be about $400 per company. However, in California, where the state OSHA has already implemented the standard, compliance is adding $12 to $15 an hour to crane rental costs. “With my 2,500 hours of crane usage per year, that would come to an extra $30,000 to $37,500,” Harris said.

Trade groups representing suppliers, such as the brick and drywall industries, say that the new training requirements also would be reflected in the costs of these materials, Harris pointed out.

Harris said that the rule would make more sense if it applied to cranes with capacities of 60 to 70 tons or more. “I believe OSHA’s own records will show that most of the catastrophes that occur are for gigantic cranes on huge job sites. They have not shown us that there is a significant danger in those smaller cranes,” he said.

“If OSHA developed a training program that was appropriate for the kinds of machinery and the kinds of working conditions and job-site conditions that prevail in single-family and light commercial construction, that could enhance safety at such job sites,” he said. “However, OSHA has proposed a training program designed for the construction of dams, highway interchanges, skyscrapers and other enormous projects. Rules to govern the practices of one industry are not going to be helpful in the other, because the practices are so different.”

The rule would be easy to fix if OSHA understood how home builders operate, Harris said. “If you really boil this down, I think that if we could convince OSHA, we should be able to self-certify with the smaller cranes that we use in residential and multifamily and light commercial construction, just like we do with the powered industrial truck forklift standards.”

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

Jobsite Safety Video, available through BuilderBooks.com, is the first-ever job-site 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.

Safety Award Deadline Extended to Oct. 6

Awards applications are available at www.nahb.org/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.

“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.

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.

How to Effectively Deal With the Demanding Boomer Customer

Boomer real estate customers can be demanding. They want answers now, when they need them.

Consequently, you may have to readjust your response techniques in order to effectively market active adult communities and real estate to them.

Long before they walk into your welcome center or sales office, boomer customers will have searched for information online. After that, they may call your office for more details.

This all happens before they decide to visit, of course. And if you don’t respond to their call quickly enough, you and your community can, and most likely will, be taken off their radar screens.

As a boomer and real estate marketing strategist, I tell my clients to follow the basic “R and R” approach ― response and rapport building — so that they can better relate to this demanding customer.

Most importantly, respond to boomers’ requests quickly — the same day if possible.

Internet requests for information also require a quick response. If someone’s online message requests that you call, you need to call.

Boomers want information ― now. Get that brochure package out the same day, or no later than the following day. And don’t forget to follow up with them to make sure they received it.

Also, you and staff should be prepared to work evenings, weekends and long holiday weekends — the peak request time for boomers.

You should begin building a rapport with your boomer customers the moment they call your sales office.

Don’t call them by their first names unless they ask to be addressed that way. Use Mr. or Ms. instead.

Whet their appetites by telling them about sales, if houses are occupied and the number of people now living in the community. Also, find out if they have a timetable. They may say they’re not ready to buy for several years, but don’t be dismayed, they can, and often do, change their timeframes.

Be enthusiastic. Let them know that you’re thrilled they found your community on the Internet. Ask if they would like to give you their e-mail address so you can send them periodic community updates. (Remember to include them in your update list if they do.) E-mail updates are an easy and effective way to stay in touch.

In addition to response and rapport building, review your community Web site carefully to maximize its effectiveness.

You may think boomers are motivated by early registration lists, sales inducements and fly-by incentives, but what they really want and need is as much factual information as they can gather. I frequently spend the weekends researching Internet community Web sites and am often surprised at the lack of salient information on most sites.

Web sites for active adult communities need to peak boomers' interests. Your site should show site plans, floor plans, renderings, pictures of actual homes (if available), amenities and a location map to city services.

Boomers may be looking to relocate from another city and need more information about the surrounding area. It’s important to give boomers information about your location and city. The more links you can include that provide an overview of your location the better.

Be sure to include information about schools for continuing education; potential employers for new career opportunities; airports and what airlines service the airport; and churches, synagogues, recreational and social opportunities.

Many community Web sites don’t post lot size or price ranges. Boomers aren’t interested in playing games or wasting time. It is worthwhile to include introductory price ranges on your Web site. This will help potential buyers determine if this is a community they can afford. They’ll want to know club association fees or other amenities charges, too.

Also, planned communities need to be clear about how the product is sold — whether the community sells home sites with homes, only home sites or homes separate from lots. How communities are sold differs in different parts of the country. Don’t assume your customer understands, especially if your customer base is geographically diverse.

Quick responses and rapport building, along with an informative, user-friendly community Web site, are key tools in meeting and exceeding the needs of the demanding boomer real estate customer.

Janis Ehlers is the founder and president of The Ehlers Group, Inc., a Fort Lauderdale, Fla.-based marketing and communications company that specializes in real estate development and active adult communities throughout the country. For more information, she can be reached via e-mail, at 954-726-9228 or 703-934-0165, or visit The Ehlers Group Web site.

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

Multifamily Stocks at Record High on NAHB Index

The stocks of publicly traded companies whose primary business is multifamily housing outpaced the market as a whole in August, pushing the NAHB Multifamily Stock Index (MFSI) to its highest reading ever.

"I think the confidence in the market reflects the strong fundamentals for the rental side of the multifamily industry right now," said Leonard Wood, director of Wood Partners, LLC and chairman of NAHB's Multifamily Leadership Board. "In many markets across the country, the supply of new rental units has not kept up with demand and that is pushing up occupancy rates, rents and profits."

The index tracks the total returns (including capital gains and dividends) of 24 publicly traded firms principally involved in the ownership and management of apartments. During the month of August, the MFSI reached a record 3,328, almost 30% higher than it was a year ago. In comparison, the S&P 500 index with dividends reinvested gained 2.4% in August, about 9% higher than it was a year ago.

The latest increase in the MFSI dramatically widened the performance gap — or percentage difference — between the two indexes, with the MFSI outperforming the S&P 500 with dividends by 178%. In the 46 months since it reached its low point in late 2002, the S&P 500 has increased by 72%. During the same period, the MFSI rose 134%.

In addition, the MFSI has dramatically outperformed the S&P 500 over even longer time periods. Since December 1998, the MFSI has risen by 232% compared to only a 19.6% gain by the S&P.

"Many of these companies were able to take advantage of the condo boom over the last several years, and now that the for-sale market is cooling, they can expect a strong performance from their rental apartment operations," said Elliot Eisenberg, a housing policy economist at NAHB and creator of the index. "In addition, the Real Estate Investment Trusts, or REITs, which make up the majority of the companies tracked by the index, are well-capitalized and have increasingly strong bottom lines."

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

Enter Pillars to Be 'Best of the Best' in Multifamily

Its style and luxuriously high-end features earned The Setai Resort and Spa in the historic Art Deco district of Miami Beach, Fla. top honors in the mixed-use category of the 2006 Pillars of the Industry Awards as well as the Freddie Mac Multifamily Community of the Year Award.

The application deadline for NAHB Multifamily’s 2007 Pillars of the Industry Awards program — which honors excellence in multifamily design, development, marketing and management — is Nov. 30.

A showcase of innovation and future trends, Pillars is considered to be the most prestigious national awards competition in the multifamily housing industry.

“The Pillars awards represent a perfect opportunity to promote the benefits of apartmetn and condo living, and for multifamily professionals to be recognized for their commitment to proving superior housing choices, both rental and for sale, for today's consumer," said Leonard Wood, director of Wood Partners, LLC and chairman of NAHB's Multifamily Leadership Board.

The winners will be honored at a gala ceremony held in conjunction with NAHB Multifamily’s Pillars of the Industry Conference coming to New Orleans on April 11-13.

For more information about the awards and to apply, visit www.nahb.org/pillarsawards, or e-mail Laura Zaner at NAHB, or call her at 800-368-5242 x8563.

Top Remodelers to Lead Free Forums at Remodeling Show

Several of the remodeling industry’s top professionals will discuss how to operate a successful remodeling company during free forum discussions at the upcoming 2006 Remodeling Show in Chicago, Oct. 19-20.

The experts will discuss topics ranging from scheduling, marketing and benchmarking success to change orders and more.

Thursday, Oct. 19

12:30-1:30 p.m.

Research Center

1:45-2:45 p.m.

Vince Butler: Remodeling Roundtable

3:00-4:00 p.m.

Brindley Byrd: Marketing Designations

4:00-5:00 p.m.

Alan Hanbury: Benchmarking

Friday, Oct. 20

11:30 a.m.-12:30 p.m.

Bill Owens: Aging in Place

1:30-2:30 p.m.

Tom Swartz: Marketing Plans, etc.

2:45-3:45 p.m.

Vince Butler: Long Range Business Plans and Strategic Planning

4:00-5:00 p.m.

Bob Hanbury: Lead Exposure

The “Remodelers’ Cost of Doing Business Study,” available through BuilderBooks.com, is a comprehensive assessment of the growth and viability of the remodeling industry that enables remodelers to see how their businesses stack up against the competition.

Conducted by the NAHB Economics Group and the Remodelors™ Council, the study provides a statistically accurate analysis of the remodeling industry in terms of size, profitability, time in the business, business organization and staffing.

The study allows remodelers to compare key business statistics, such as gross and net profit margins, against results from the most successful remodelers.

To order the “Remodelers’ Cost of Doing Business Study” online, click here, or call 800-223-2665.

Design, Trends, Codes Are Hot Topics at BSC SHOWCASE

Balancing modern, popular home designs with the structural properties necessary to meet state and local codes is a challenge for even the most experienced engineers and architects.


	SHOWCASE 2006 will be held Nov. 5-8 at the Doral Golf Resort & Spa in Miami, Fla.

Breakout sessions at the Building Systems Councils' SHOWCASE conference and trade show in Miami, Fla. on Nov. 5-8 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:

Two additional SHOWCASE breakout sessions address the changing needs of today’s home buyers:

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.

Keystone Green Building Program Follows NAHB Model

The association is inaugurating the program on Sept. 26 with a media tour of its first green-certified home and a keynote address by Carl Seville, a longtime green builder in Atlanta and winner of the 2006 NAHB Green Remodeler of the Year award.

Pennsylvania’s Keystone Green Building Initiative is being started up with marketing and administrative assistance from the Green Building Initiative. The GBI is helping to launch programs based on the NAHB guidelines in a number of markets around the country.

Pennsylvania’s green building program was more than two years in the planning, said architect David Hartke of Stampfl Hartke Associates LLC, co-chair of the HBA’s Keystone Green Building Initiative.

“We started looking at a couple different green building programs,” including Earthcraft in Atlanta and early versions of the United States Green Building Council’s LEED-H program, which members decided was not oriented toward production homes, key to bringing green into the mainstream, Hartke said.

“I knew we had to be realistic, and to be realistic, it had to be market-based,” he said. Then in 2005, “NAHB came out with the Model Green Home Building Guidelines,” and the GBI helped the Pennsylvania builders get the program off the ground.

While engineers and architects tend to be more familiar with green concepts, builders and subcontractors may find “it’s not in their vocabularies right now,” Hartke said, but they are catching on quickly.

The tour house is Hartke’s own, and includes green features such as Optimum Value Engineering framing, which is 24 inches on center and then stacked and filled with spray foam insulation. The home also includes high-efficiency windows, a geothermal heat pump and solar panels on the roof. The green features added about 8.5% to the construction costs because of the expense of the geothermal and photovoltaic features; Hartke estimates that the costs would have been perhaps 4% more than a conventionally built home without those additions.

Future components of the HBA program will include more education for builders and vendors, Hartke said.

The NAHB University of Housing will be offering a two-day “Green Building for Building Professionals” course during the 2007 NAHB Green Building Conference. Seville will be the instructor for the course.

Entries 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.

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.

Members are invited to submit a completed application package by Dec. 29, 2006. 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.

For more information, e-mail Emily English at NAHB, or call her at 800-368-5242 x8366.

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.

Green Building: Catch the Wave or Watch It

It is 1975.You are the CEO of General Motors or Ford. Yes, gas prices have shot up and gas shortages occasionally rear their ugly head, but that’s nothing to be alarmed about.

Let the Japanese offer fuel efficiency. For that matter, let the Swedes offer safety. Why go to the risk and expense of implementing new technologies and re-training your trades? After all, you offer car models that have the style, sex appeal and size that Americans want — and buy.

Now, fast-forward to 2006. Ignoring the early warning signs and your competition’s advancements three decades ago has been costly, and your company hasn’t been the same since. You’ve spent billions in retooling and restructuring ― essentially, playing catch-up. Even so, your share of the market is much smaller, and it continues to shrink.

Green builders are on the cutting edge of the industry, but those who concentrate only on fuel and home efficiency are missing a tremendous opportunity.

Performance, reliability and durability are as integral to green building as efficiency — and all blend together to bolster resale value. Builders who can prove to prospective home buyers that their homes deliver these benefits will:

Consumers won’t buy anything they don’t understand. Capture their attention and make a connection with something they can easily grasp ― like comparison charts. And make sure your charts share one common message.

A Green Home Saves You Money
	Traditional Home	21st Century High Performance
Utility Costs
Electricity	$1,200	$960
Natural gas	$2,094	$1,674
Water and sewer	$1,200	$960
Tax Credits
Federal	$0	$1,500
State	$0	$750
Total Savings	$0	$3,150
Sales Price of Home	$225,000	$230,000
Overall Cost to Own — First Year	$229,494	$226,850

The chart above shows potential buyers that the higher cost of your quality home will be more than offset by the green benefits listed. If you have trouble compiling the costs and cost savings, get your local utility companies and lenders to help you.

GM and Ford are learning the hard way that having the right product is the only way to build brand image and increase sales. But they can show consumers that they are learning because car buyers can test drive their products and measure performance.

You can show potential buyers the quality, innovation and value you build in your homes by letting them test drive them, too. How? Through performance testing.

There are many tools available today — blower doors, duct blasters, infrared photography, etc. ― that demonstrate and measure the performance of your green building techniques and yield results that consumers can understand. Blower doors, for instance, are calibrated fans temporarily mounted in a house door to measure the "leakiness" — or, in your case, the absence of leakiness ― of your house. A duct blaster is a similar tool that measures the integrity of ductwork.

Testing each home you build with tools such as these also provides the opportunity to improve your standards and enable you to benchmark and measure success.

A lot of the success of your green building program will hinge on your trade partners. Getting them on board and motivated may be easier than you think.

Because your trades are on the job, they know what works, what doesn’t work and why. However, they are often frustrated because they are never asked — or heard. So ask, listen and make them part of the process.

Including them is the most powerful way you can tell them that they are important, and that the quality of their work really matters to you and to the families who will live in the homes they build.

Another way to motivate them is to let them know how they contribute. For instance, let them know how many trees they are saving and how much they are reducing building costs through your recycling program. You might also consider offering them green bonuses that are directly tied to waste reduction or another goal. Show them the duct blaster test results ― with and without properly sealed ductwork — so that they, like your home owners, can see the quality of their workmanship.

Then show them the results of home owner surveys in which new owners express their gratitude for their home’s green quality standards.

These motivating principles actually are applicable to all members of your team — supervisors, subcontractors and company employees — and will go a long way to instill pride in their work and help you become the best builder in town.

Create a Meaningful Green Label

Part of the goal of well-built green homes is that they don’t “look green” on the outside, but inside, they offer superior performance. An intrinsic challenge to green builders is how best to communicate the home’s value to all future home buyers.

One effective way is to create and prominently place a green designer label or logo in each home. The Home Builders Association of Central New Mexico created an effective logo that combines locally appealing architecture with a touch of nature that adds an organic quality.

Like the HBA logo, your green label should be alive, meaningful ― and attractive enough so that your home owners will value it and want it displayed prominently. It also should reinforce their smart choice to buy green and serve as a subtle reminder, too. When it does, they probably will tell friends and associates how they are helping the planet. They’ll also delight in bragging about you.

This consumer buzz will increase referral sales and directly contribute to the higher resale value that is commanded by your measurable green builder performance standards.

Don’t just leave it up to home owners to understand, however. Ensure that appraisers, lenders, energy raters and real estate agents have received necessary green training and understand the superior value of your homes, too.

As a green builder, the facts are on your side. But you do have to make sure they are understood.

Sara Lamia is president of Home Building Coach, Inc. in Fort Collins, Colo. She helps to create home buyer demand with her green marketing strategies, the “Your 21st Century High Perfomance Home" DVC and the “Housebirth" workbook. For more information, visit www.buildingcoach.com.

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.

Members are invited to submit a completed application package by Dec. 29, 2006. 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.

For more information, e-mail Emily English at NAHB, or call her at 800-368-5242 x8366.

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.

Entries Sought for Sustainable Building Awards

The Sustainable Buildings Industry Council (SBIC) is seeking submissions for its annual awards program to recognize building industry professionals in the Best Sustainable Practice and Exemplary Sustainable Building categories. Commercial, institutional and residential buildings are all eligible.

For the call for entries, submission guidelines and applications, click here. Winners will be announced on Dec. 6 at the SBIC Awards Reception at the Washington, D.C. Convention Center, the culmination of the council’s day-long “Super Thursday” events, held in conjunction with the Ecobuild Federal conference.

To be considered for the Exemplary Sustainable Building category, projects must have been built within the last five years, occupied for at least one year, and either built within the United States, or built on foreign soil with funding from U.S. companies or government agencies.

Entries will be evaluated on the following criteria: whole building design objectives, unity, building benefits and innovation. Winning projects will be published as case studies on the SBIC Web site (www.sbicouncil.org) and possibly on the Whole Building Design Guide Web site (www.WBDG.org).

To be considered for the Best Sustainable Practice category, entrants must be SBIC members. Non-members are encouraged to first consider joining SBIC (visit www.sbicouncil.org for membership details). The judging for this category will consider sustainable policy/program initiatives; sustainable research, development, construction process and demonstration activities; educational initiatives; and stimulating demand through increased consumer awareness.

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.

Members are invited to submit a completed application package by Dec. 29, 2006. 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.

For more information, e-mail Emily English at NAHB, or call her at 800-368-5242 x8366.

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.

Growth Boundaries, Permit Caps Pushing Up Home Costs

A recent study from the Brookings Institution suggests that growth controls and restrictive regulations are driving up home prices and rents.

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Entries Sought for Sustainable Building Awards

Growth Boundaries, Permit Caps Pushing Up Home Costs