Nation's Building News Online: December 18, 2006Print All Articles Text Version |
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Revving Up Existing Home Sales Crucial Step in RecoveryRecognizing that getting the trade-up housing market back into full gear is a prerequisite for a sustainable recovery from the current industry slowdown, NAHB last week provided home owners with information geared to helping them move their properties so they can use the proceeds from the sale to buy a new home. In his weekly syndicated real estate column for the Washington Post Writers Group, Ken Harney recently wrote that home owners have more discretion during today’s housing downturn because the general economy has not lapsed into the full-fledged recession that usually always accompanies a real estate slump. Many sellers who haven’t been able to obtain the price they want have simply taken their homes off the market, deciding to ride things out until the situation improves. In part, Harney said, this explains why housing prices have held firm in many parts of the country even where the sales pace has slowed markedly. In the lead story in the Dec. 14 issue of HouseKeys, NAHB’s free electronic newsletter for consumers, Harney provides his readers with the assurance that selling a home in order to move to a new one is by no means impossible even in today’s soft market. “To begin with,” Harney writes, “you’ve got to understand that while it may be a difficult time for sellers right now, it’s a great time for buyers. And you happen to be BOTH!” “What you give up on the ‘sale’ side of your transaction, you may well be more than compensated for on the ‘buy’ side,” he says. “Keep that in mind.," he adds. "You may be losing a little on one side, but gaining a lot more on the other — to say nothing of acquiring a new house with superior features and amenities.” Mortgage Interest Rates Stoke Affordability Even without advice from Harney and other experts on the housing market, home sellers have been receiving some assistance on the home financing front, where mortgage interest rates have remained at affordable levels, settling into a narrow groove somewhat below peak rates at the start of the year. For the week ending on Thursday, Dec. 14, Freddie Mac's Primary Mortgage Market Survey found rates basically flat, following five consecutive weeks of small declines. The 30-year, fixed-rate mortgage last week averaged 6.11%, up a scant 0.4% from the previous week. One-year Treasury-indexed adjustable-rate mortgages were up .02% from the prior week, to 5.45%. Frank Nothaft, Freddie Mac’s chief economist, said that long-term mortgage rates are expected to rise over the new year, but “will very likely not get up to even 7%, which will help to moderate the current weakness in the housing market.” Those in the best position to assess conditions in the existing-home sales market, the National Association of Realtors®, last week forecast that the 30-year, fixed-rate mortgage would gradually increase to 6.7% by the fourth quarter of 2007 at the same time as the overall sales pace begins to improve. Window of Opportunity for First-Time Buyers The Realtors® are expecting existing-home sales to rise gradually over the coming year from current levels, with the total for the year comparable to this year. “Roughly three-quarters of the country will experience a sluggish expansion in 2007,” said David Lereah, the association’s chief economist, “while other areas should continue to contract for at least part of the year. Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards,” he added. “Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity,” said Lereah. “These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced.” The Realtors® expect this year to end with 6.47 million resales, a decline of 8.6% from the torrid pace of 2005. A total of 6.40 million are expected in 2007, but “by the fourth quarter of 2007, existing-home sales will be 4.6% higher than the current quarter,” Lereah said. Selling in a Soft Market — Your Builder May Have the Answer “Whatever you’ve heard to the contrary, soft markets are not dead markets,” Harney tells consumers in his HouseKeys article. “People are selling houses successfully every day — nearly 6.5 million resales this year alone, the third highest annual resale total in American real estate history.” Harney offers sellers these tips:
For more information, e-mail Niki Clark at NAHB, or call her at 800-368-5242 x8061. 'Cottage Residence' Loaded With OptionsPerhaps anticipating one of today’s hottest housing trends, this “cottage residence” featured in the Sept. 1875 issue of Builder and Manufacturer magazine offered owners the option of a downstairs bedroom. Complete with a water closet and dressing closet (where the sink and optional bathtub were located) the 10x12-foot bedroom was tucked away at the rear of the house and, according to the architect, could be used “as a library, study, nursery or sewing room” if the home owner preferred to have all the bedrooms upstairs. Flex Rooms — in 1875! The fledgling flex room also could be omitted completely since the second story of the house did not extend over that space, and the second floor area reserved for a “linen room” could instead be used for a bathroom. Acording to the architect, A. S. Hait of Riverhead, N.Y., the 2,000+ square-foot house was designed for a 40x58-foot lot and was “suited to localities where land is not so much an item as convenience.” The estimated cost of building the house was $2,000 to $4,000 (roughly $33,900 to $67,800 in 2000 dollars), and the architect noted that omitting the bay windows and external ornamentation and slightly reducing the size of the living room and dining room could yield considerable savings. A Nod Toward Curb Appeal However, anticipating the value that today’s buyers place on “curb appeal,” the author noted that “ornaments are to a house what lace is to a lady’s dress — strip them off, and we are guilty of a breach of fashion. Money spent for external ornaments for a house is not, as some people think, money thrown away; on the contrary, houses tastefully ornamented give better satisfaction and find a readier market when one wishes to sell.”
Plans courtesy of:
Builders Sense Tide Is Turning for Housing DemandHeading into the holidays, builders of new single-family homes continue to believe that the worst of the downswing in home buying is behind them, according to the NAHB/Wells Fargo Housing Market Index (HMI) for December. At 32 for the present month, the overall HMI is down a single point from November but remains above the recent low of 30 in September. “This was the third consecutive month in which builder expectations for sales over the upcoming six-month period have improved, and it’s a good sign of things to come in the new year,” said NAHB President David Pressly. “The HMI has come off September’s low point, and other recent indicators confirm that buying conditions have improved and that demand is stabilizing — including improvements in measures of housing affordability, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes,” said NAHB Chief Economist David Seiders. “Builders sense that the tide is turning in terms of buyer demand for their product and are feeling somewhat better about the prospects for home sales.” Seiders noted that the recent stabilization of home buyer demand largely reflects reductions in mortgage interest rates since mid-year, the retreat of energy prices from record highs and maintenance of solid growth in employment and household income. Reductions in home prices and widespread sales incentives offered by builders also have helped to buoy buyer demand. Derived from a monthly survey that NAHB has been conducting for 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Any number on the seasonally adjusted index over 50 indicates that more builders view sales conditions as good than poor. Of the index’s three components, only the traffic of prospective buyers registered a decline this month, returning to its October level of 23 following a three-point jump in November. The component gauging current single-family home sales remained even at 33, up slightly from its recent low, while the component gauging sales expectations for the next six months rose three points to 48 — its third consecutive monthly gain. Regionally, the HMI posted the biggest gain this month in the Midwest, which posted a seven-point gain on the confidence scale after displaying the greatest weakness on the index for many months. The Northeast was unchanged at 37, the South dropped a point to 39 and the West declined four points to 31. Want to Know the Long-Term Forecast Through 2015? Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com. NAHB Kit Gives Builders Back-to-Basics Tips in Changing Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242. Nation's Building News Will Not Be Published Dec. 25, Jan. 1Nation's Building News will not be published on Dec. 25 or Jan. 1. Publication will resume on Jan. 8 with a special preview issue of the 2007 International Builders' Show. Have a happy and warm holiday season.
Read Our International Builders' Show Preview on Jan. 8Nation's Building News will be publishing a special issue on Jan. 8 that will highlight the upcoming 2007 International Builders' Show in Orlando, the largest residential and light commercial trade show in the world. The issue will feature events, courses, schedules, products and more. More than 100,000 housing professionals, including home and apartment builders, architects and product manufacturers, are expected to attend the show at the Orange County Convention Center Feb. 7-10. For more information, visit the International Builders' Show Web site at www.BuildersShow.com. Raids at Swift Raise Questions About Employers’ Ability to Check StatusFederal raids on six Swift meat-packing plants resulting in the arrests of more than 1,200 people point out the difficulty employers have in determining who is or is not a legal worker. Concerns are particularly acute in such industries as construction, agriculture and meatpacking, which depend on a large number of immigrant workers to fill physically taxing or dangerous jobs. Swift CEO Sam Rovit said that his firm was using a federal program under which employee identity documents were checked against a database, but found that the database was plagued with flaws, including the inability to detect identity theft. In testimony in June before a U.S. House subcommittee, the company made several recommendations to fix the problem, including proposing a national ID card or protection from liability for companies using the verification system. “Swift was in a position to be able to be cutting edge….Small businesses can’t afford to do this kind of thing,” said NAHB Executive Vice President Jerry Howard. Many home builders hire immigrants and check their legal status by looking at common documents such as Society Security cards or driver’s licenses, he said. But small builders don’t even have the computer savvy to tap into more high-tech systems. (www.usatoday.com)
As FEMA Housing Nears End, Some May Be in Trailer TroubleResidents of the more than 31,000 trailers still in use in South Mississippi expect their FEMA-provided post-Katrina housing to be extended by 12 months, as requested by Gov. Haley Barbour; the program is slated to end in just two months. The peak occupancy was around 43,000 units at the end of last year and the average cost per unit is between $16,000 and $17,000. The majority, 84%, are on private property. When FEMA housing is terminated, said FEMA official Eugene Brezany, trailers may be sold to tenants who have a place to put them. They also are subject to local permitting. Units not sold to occupants would be returned to a FEMA staging area in Purvis for refurbishment. Some will be returned to inventory for use following some future disaster and others will be auctioned off through the General Services Administration. “In some other disaster recovery situations, the units have been provided to disaster victims as rentals. Some have been donated to local jurisdictions. No decision has yet been made with respect to this future disposition of trailers in Mississippi,” said Brezany. Biloxi Major A.J. Holloway said that a one-year extension on FEMA-provided housing is realistic, but he urged occupants to get their affairs in order as soon as possible. “I think the important thing here for people to know is this: these trailers are temporary and transitional housing,” he said. “The bottom line is that we don’t want these temporary trailers in our city for the next three to five years.” (www.sunherald.com)
India’s Real Estate Sector Booms, But First-Time Buyers BewareIndia’s real estate market is in overdrive as developers snap up land to build malls and housing enclaves, but high prices and opaque rules make it hard for first-time buyers to land a dream home. The sector, worth $12 billion, is growing at 30% a year, according to the Federation of Indian Chamber of Commerce and Industry, and prices have risen sharply in the last five years, analysts say. In the first quarter of this year, rent and house prices soared more than 45% in New Delhi, according to real estate consultants Colliers International. About 80% of the country’s real estate development is in housing, not surprising given that the government has said that demand exceeds supply by 24 million units. Middle-class consumers who are buying a home for the first time face many hurdles as syndicates of buyers snap up properties, lured by returns as high as 100% within two years. “Seventy percent of purchases are for investment and only 30% are real property seekers,” said real estate advisor Vikas Jaggas. (www.afp.com)
'Living Loners’ Pressure UK HousingIn 20 years time, the number of single-person households will increase by 53% in the United Kingdom, as the disintegration of the nuclear family proliferates. As the traditional family with 2.4 children declines and the number of “singletons” living on their own increases, the housing market will come under even more pressure as less people fill homes together. By 2006, there will be 9.9 million “living loners,” equal to three-quarters of the total annual household growth in the same time period, according to a report from Alliance and Leicester Mortgages, and the number of married couple households is projected to fall by an average of 34,000 per year. To meet the demand from more people living by themselves, 200,000 homes will be needed annually. “We can expect to see an increase in flats and converted houses in the future due to the rise in the one-person household,” said Stephen Leonard, director of mortgages at Alliance and Leicester, “as understandably, people living on their own will be less likely to splash out on a larger property.” (http://news.assetz.co.uk)
The Expanding Latino Housing Market Must Be AddressedBetween 2000 and 2010 alone, an estimated 2 million more Latino families will be in the market for housing, making it increasingly important for builders to pay careful attention to the traditions of Latino households, according to Henry Cisneros, the former HUD secretary in the Clinton Administration and the founder and chairman of CityView, a real estate development company in San Antonio. The growing demand will require that: home builders design homes and neighborhoods that satisfy the space needs and appeal to these families; housing-finance experts tailor mortgage instruments to this group; industry markets imagine and implement new sales strategies; and the housing sector in general institutionalize practices that will better serve the nation’s burgeoning Latino population. “Builders must take care to find local themes that satisfy traditional preferences in locations as varied as South Florida, the Chicago area, New Mexico and Southern California,” he writes. “Each area has its own traditions and heritage of architecture, colors and styles.” (www.ocala.com)
High-Cost Mortgages Putting Many Home Owners at RiskA record number of home owners with high-cost mortgages have fallen behind on their payments or are facing foreclosure, according to a third-quarter survey from the Mortgage Bankers Association. About 16 times as many of these subprime loans are past due as in 1998, when the industry began tracking subprime statistics as part of its quarterly delinquency analysis. About 223,000 households with subprime loans lost their homes to foreclose in this year’s third quarter, and about 750,000 had missed payments. The survey tracked about 42.6 million mortgages, of which 5.8 million were subprime. Subprime borrowers generally pay interest rates about three percentage points higher than “prime” borrowers with good credit. The deterioration in the subprime market is likely to continue for several years, industry analysts said, noting that the growth of this sector has contributed to near-record levels of homeownership, but that it has also left some owners unable to handle the payments. About 12.5% of all subprime loans were delinquent in the third quarter, up from 11.7% in the second quarter. “It’s almost certain that the number of delinquent subprime loans is higher than it has ever been,” said Douglas Duncan, the association’s chief economist. The number of borrowers is also much larger than it has ever been, he noted. (www.washingtonpost.com)
Refocus Prospects Who Are Looking for a Fire SaleSo many builders are offering discounts and incentives today that buyers have not only come to expect them; they’ve elevated them to a position of utmost importance. Instead of focusing on what they want and looking at overall value in a home, they walk into sales offices fishing for the best discount they can find, looking to make a "deal." These customers can be tough to handle, but we have the ability to help them re-focus on what is really important. When a customer walks through the door and asks about discounts and incentives first thing, we need to diffuse the question, shelve their concern and make them experience our homes first. Purchasing a home is an emotional process, and the emotion is ultimately justified or dismissed based on some logical premise. It is especially critical now to make customers experience your homes in an emotional way, because customers come into your office in an extremely logical frame of mind. They are stuck on the thought that, since other builders are offering incentives, you should be willing to offer competitive incentives, and, if you aren’t, they can simply go somewhere else. By presenting a home to customers before you discuss pricing and incentives, you can get them to emotionally own it. Then you can use any incentives you may have to give them the logical justification they need to buy. I cannot overstress the importance of getting customers to have an emotional reaction to your homes before you give them a logical reason to include or exclude you from their buying process. Let me give you a familiar example of this principle. Anyone who has ever been on a "voluntarily imposed restricted caloric intake program" (otherwise known as a diet) knows what it’s like to go to a restaurant with a predetermination that you will not order dessert. When your server asks you at the end of the meal if you want dessert, it’s not very difficult to say no. But sometimes the server clears the plates off of your table, brings out a tray of desserts, and puts them in front of you. You see the mounds of chocolate and caramel and whipped cream and you look at the person sitting across from you and say, "Want to split one?" It’s not so easy to say no when you have the opportunity to have an emotional reaction to something. Once the server puts the dessert in front of you, you began to own it. The same thing happens when you show a customer a new home. You need to diffuse the discussion of incentives until you have gotten the customer to own the home Here’s a script you can use to accomplish that: Scenario When a customer asks, perhaps before even seeing the models, "What incentives are you giving?" or "What kind of deals do you have?" or "What’s the best interest rate you have?" Strategy To have them sort through their priorities. Incentives, lowest price or interest rates alone do not necessarily mean the best value. SST — Smart SellingSM Technique
The customer might say: "No, not the cheapest price, but we want the best price (or) the best deal." Proceed with:
The customer will probably say, "Yes." Then say:
This technique is a form of "shelving" — from here you move back into your presentation, continuing to present benefits and build value. Some customers will argue that you should be giving incentives (or bigger incentives than you’re giving) because other builders are offering them. Here’s a script you can use in that situation: Scenario Customer says, "It’s a buyer’s market and (ABC Homes) is giving discounts." Strategy To get them to see that someone else’s "deal" might not be to their advantage. SST — Smart SellingSM Technique
The customer will reply: "Well, they are doing it to sell homes." (or) "They are having a difficult time selling homes." (or) "They were overpriced to begin with."
The customer will probably respond, "Oh, no."
"I didn’t think so. You know, there are a lot of ways to cut corners when building a home to lower the price, or to offer variable incentives. I don’t know what other builders might be doing, but I can tell you about our commitment to customer satisfaction and how our homes are designed and constructed. Our value is in the total package. Please let me explain." At this point you would proceed to present the concept of "checkerboard pricing" to let the client know that it is important to you and your builder to operate in a way that is ethical and fair to buyers. Just because other builders are reacting to the cooling market by offering steep incentives doesn’t mean you have to. Offering big incentives up front is not the best way to sell. If you want to sell in this market, you must take control of the situation and get customers emotionally invested in your homes before they make a decision based on price alone. Bob Schultz, MIRM, CSP, is the author of two best selling books, “The Official Handbook for New Home Salespeople" and “Smart Selling Techniques." His company, New Home Specialist Inc., is a full-service management consulting and sales company, producing books, manuals and systems for home builders, developers and Realtors®. The company providea custom sales training programs, management seminars and strategic business planning retreats throughout North America. For information, visit www.newhomespecialist.com, or call 561-368-1151. This article was published previously by the Florida Home Builders Association. Bank Guidance Not Likely to Impede Credit Flow to HousingIn response to NAHB concerns, final guidance on commercial real estate lending (CRE) issued on Dec. 6 by the four federal banking regulators — the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) — is not likely to significantly impact the flow of capital to the housing industry. (To read a press release from the FDIC, click here; from OTS, click here.) The guidance was issued out of concern that many financial institutions do not have adequate underwriting practices, risk management systems and capital reserves to address their exposure from rapid growth in their commercial real estate portfolios. NAHB criticized the proposed guidance for failing to distinguish among the significant variations in risk from the different types of real estate loans. NAHB specifically urged the regulators to modify the guidance to reflect the positive historical credit performance of housing production (AD&C) loans and multifamily mortgages. Comment letters from NAHB included data demonstrating the lower credit risk posed by residential real estate loans as opposed to other types of real estate lending, and NAHB President-elect Brian Catalde elaborated on the housing industry’s views on the guidance in meetings with the heads of OCC and OTS as well as the Treasury’s assistant secretary for financial institutions. The final guidance issued last week imposes no new restrictions on CRE lending, but it states that the regulators will supervise more closely financial institutions with high CRE levels or rapid growth in these loans and expects them to hold higher levels of capital. The proposed guidance was widely criticized as regulatory overkill by the banking industry and others, such as NAHB, who were concerned about its impact on the availability of credit. All of the regulators noted NAHB comments that urged distinguishing among the different CRE risk classes. The final guidance states that consideration should be given to the lower-risk profiles and historically superior performance of certain types of CRE and specifically mentions pre-sold construction loans and multifamily mortgages. In addition, the guidance states that providing financing for pre-sold buildings should be viewed as a form of risk mitigation. The guidance makes clear that for purposes of bank examinations, assets will be grouped into risk categories in order to apply risk management standards and capital requirements that are appropriate to each category. The positive result is that the regulators will not paint all real estate assets with the same brush. "The availability of AD&C lending is of critical importance in our ability to respond to the growing housing needs of our community," said Kent Conine, chairman of NAHB's Housing Finance Committee AD&C Subcommittee and 2003 NAHB president. "The last thing we need is to see constraints placed on our access to that credit, and it is encouraging that NAHB has been able to share that concern with the banking regulators and remind them of the different risks involved in various real estate loans." The Fed, FDIC and OCC added the criterion of the rate of growth of an institution’s CRE portfolio as a means by which to reduce the number of institutions that will be affected by the new guidance. OTS went even further by not establishing explicit numerical thresholds to trigger more intense examinations. "While there is still some danger that the final guidance could inhibit residential real estate lending, the modifications in the final rule go a long way toward reducing that possibility," said Catalde. For more information, e-mail Chellie Hamecs at NAHB, or call her at 800-368-5242 x8425; or contact Donna Ely, x8529. Want to Know the Long-Term Forecast Through 2015? Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com. NAHB Kit Gives Builders Back-to-Basics Tips in Changing Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242. Eye on the Economy: Buyer Demand May Be StabilizingThe contraction in home sales and housing production has been taking a heavy toll on economic growth since early this year. However, good performances by other sectors have helped the economy absorb the housing downswing and steer clear of recession. The housing production component of Gross Domestic Product (Residential Fixed Investment) contracted sharply in both the second and third quarters of this year, lopping about a percentage point off overall GDP growth for this period (0.7 in the second quarter and 1.2 in the third). Available housing data (including construction put-in-place for October) point toward another serious drag on GDP for the final quarter of the year. Despite the serious drag from housing, the overall economy is performing reasonably well and is not in serious danger of slipping into recession. GDP growth has been running below trend in recent quarters and another sub-par performance is inevitable for the final quarter of this year (we’re estimating 2%). However, our projections show improving GDP growth in 2007 as the drag from housing eases off. The Job Market Is Also Faring Reasonably Well The overall job market has been doing reasonably well in the face of the housing contraction. Employment in residential construction (builders and special trade contractors) has been falling since February, following strong growth during the three previous years, and the falloff in residential construction also has cost jobs in related parts of the economy. Despite housing-related weakness, overall payroll employment growth has been reasonably well maintained and the nation’s unemployment rate has remained quite low (4.5% in November). Of course, labor market conditions lag movements in GDP to some degree, pointing to some further slowdown in overall job growth and some increase in the unemployment rate in 2007 (prior to broad-based improvement in 2008). The Fed Holds Monetary Policy Steady, Citing ‘Substantial Cooling’ of the Housing Market The Federal Reserve held monetary policy steady at the Dec. 12 meeting of the Federal Open Market Committee (FOMC), maintaining the 5.25% target for the federal funds rate — a target that’s been in place since mid-year. The FOMC’s decision also keeps the bank prime rate at 8.25%. The public statement issued at the conclusion of the Dec. 12 FOMC meeting maintained strong focus on inflation risks down the line — a virtually mandatory focus for a responsible central bank. However, the FOMC’s assessment of real economic growth was somewhat weaker than the assessment offered at the previous FOMC meeting on Oct. 25. In this regard, housing was once again singled out for special attention. Indeed, the FOMC cited a “substantial cooling” of the housing market as a key factor behind the slowing of economic growth this year. This characterization compares with “cooling” at the Oct. 25 meeting and “gradual cooling” at meetings earlier in the year. That’s quite a learning curve. The Bond Market Is Feasting on the Economic Numbers and Fed Messages The convincing slowdown in GDP growth along with reassuring signals on the inflation front — including Fed suggestions that core inflation pressures “seem likely to moderate over time” — have helped shepherd long-term interest rates to the lowest levels since early in the year. The 10-year Treasury bond yield has been dancing around 4.5% and the fixed-rate conventional home mortgage rate is hanging around 6.1%. The messages coming out of the Dec. 12 FOMC meeting — particularly the more serious characterization of the housing downswing and a less-confident judgment about the extent and timing of an expected firming up of economic growth — contributed to the bond market rally. On the other hand, unexpectedly strong numbers on retail sales for November (released Dec. 13) caused long-term rates to reverse a portion of the recent rally. NAHB’s forecast shows stable Fed policy well into 2007 and only slight upward pressure on long-term rates in 2007. These favorable financing conditions are essential to our projection of a near-term bottom for home sales as well as revival of housing production by mid-2007. Home Buyer Demand Appears to Be Stabilizing at This Time Stabilization of buyer demand is the essential first step in arresting the dramatic housing downslide that began during the second half of 2005. Fortunately, broad economic and financial market conditions are supportive of housing demand, and price cuts along with deepening non-price sales incentives by builders are helping to attract buyers. A variety of recent data suggest that stabilization of demand for single-family homes is underway. These include:
The standard measures of unsold housing inventory tell a sobering story at this time, but these measures actually provide an inadequate assessment of the true weight of the overhang. For new single-family housing, the government’s measure of the inventory of unsold homes excludes homes left with builders due to sales cancellations. As cancellations surged in 2006, the official inventory numbers fell further and further below the true number of homes for sale by builders. Inventories (listings) of existing homes have been hanging around record levels recently, and we find that an unusually large proportion of existing homes on the market now are vacant units — a legacy of the surge in buying by investors/speculators during the earlier boom period. Vacant units in the existing for-sale housing inventory are a much more serious matter than occupied units in that inventory. We’re also facing a “phantom inventory” of uncertain dimensions, consisting of homes owned by investors who are awaiting stabilization or improvement of market conditions before listing the homes for sale. Many of these homes were bought from builders during the boom and pose a threat to new production down the line. Housing Production Still Is Trending Downward The seriousness of the inventory overhang should keep new housing starts on a downward path through the early part of 2007, even if home sales are moving up by then. NAHB’s current forecast reflects this starts pattern, based partly on recent signals from home builders. In early December, we surveyed about 400 single-family builders about their plans for housing starts during the first half of 2007, relative to starts made in the second half of this year. One-third of respondents said they plan to build about the same number of units and nearly one-fourth said they plan to build more. However, the rest (44%) said they plan to start fewer units than during the second half of this year, and a relatively large proportion of larger companies fell into this camp. We also asked whether or not current production plans for the first half of 2007 reflect recent revisions. Two-fifths of respondents said they recently revised their plans downward and only about 10% said they had revised plans upward (the rest had not made recent revisions). Housing's Drag on Economic Growth and Payroll Employment Will Ease Before Long Our projected downtrend in housing starts keeps residential construction put-in-place on a downward path into the second quarter of next year, and the strength of this tide will extend the drag on GDP growth from Residential Fixed Investment (RFI) through mid-year. However, the negative growth contributions will be dwindling during the first half of next year, and RFI should begin making positive contributions to GDP growth during the second half of 2007. Employment by residential builders and specialty trade contractors lags movements in housing starts and moves closely with housing units under construction (or with construction put-in-place). Thus, employment in residential construction should erode somewhat further in the first half of 2007, although the projected losses are not as serious as during most of 2006. 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 Dec. 13 edition. To subscribe to “Eye on the Economy,” click here. Want to Know the Long-Term Forecast Through 2015? Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com. NAHB Kit Gives Builders Back-to-Basics Tips in Changing Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242. Useful Links to Monitor Economic and Housing TrendsThe following are links to useful information from government agencies and NAHB that will enable you to monitor the housing market. To access the latest information available, simply click the links.
Want to Know the Housing Starts Through 2015? Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com. NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242. A Home That Disappears and Other Unusual HomesPhoto Gallery, which follows, is a regular feature of NAHB HouseKeys, the consumer-oriented e-newsletter from NAHB. Photo Gallery showcases a portfolio of homes, with each feature focusing on a different theme. For this issue, which was originally published in NAHB HouseKeys on Dec. 12, Photo Gallery showcased unique and unsual homes.
The next Photo Gallery will showcase green homes. To submit homes for consideration, e-mail Niki Clark at NAHB. Put "Photo Gallery: Green Homes" in the subject line of the e-mail. For more information about NAHB HouseKeys, or to subscribe, visit www.nahb.org/HouseKeys.
Attend the NAHB/BALA Design Institute for Builders Mark your calendars and get the latest information on design for builders at the 2007 NAHB/BALA Design Institute for Builders, May 25-27 in Bellevue , Wash. For information, or to register, visit www.nahb.org/DesignInstitute. Builder's Tip: Shop Vac Works for Hard-to-Fill Glue Ups
While building a set of stairs recently, I noticed that a crack had developed in the bottom of one of the vertical-grain fir stringers. Because the stairs were exposed on both sides, I wanted to glue and screw the crack closed, but I had difficulty filling the crack with glue. To solve the problem, I used a co-worker’s shop vac to help fill the crack with glue. Here's what I did:
— Gregory Coffin, Loveland, Colo. Tips & Techniques provided by Fine Homebuilding.
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. To view these publications online, click here, or call 800-223-2665. Free NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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 on the NAHB Web site. For assistance, call the NAHB Member Service Center at 800-368-5242. Ten Must-Have Technology Trends for Today's HomesHome theater, home healthcare, automated lighting, security systems and gaming rooms are five of the “must-have” technologies home builders should include in their homes, according to Utz Baldwin, vice president of the Custom Electronic Design & Installation Association (CEDIA). Baldwin discussed these and five other “Top 10 Must-Have Technology Trends for Homes” during the Custom Builder Symposium this fall. The trends include:
Four educational sessions at the 2007 International Builders’ Show in Orlando in February will offer builders the details on these Top 10 technology trends, as well as what you need to know about structured wiring, how to profit from new technology and more ways to appeal to today’s connected consumer. The sessions include:
NAHB Biztools™ Has Nearly 300 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 nearly 300 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 Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive geared to providing association members with information that will help them prosper in today’s changing business environment.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. For assistance, call the NAHB Member Service Center at 800-368-5242. Subscribe to NAHB’s Business of Building e/Source NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, click here on the Members Only side of the NAHB Web site. Advice From Industry Experts: Ramp Up Sales and MarketingTom Stephani, S. Robert August and Bill Becker ― industry veterans who have been through market shifts more than once ― will discuss what changes you should make to your sales and marketing in order to thrive in today’s market during an upcoming audio conference. The hour-long teleconference, “Ramp Up Your Sales & Marketing in a Changing Market,” will begin at:
The conference will include a 40-minute presentation, followed by 20 minutes of questions and answers from participants. Think Like a Retailer Builders who haven’t made any changes to their sales and marketing approach in response to the changing market need to do so — yesterday, says Becker, MIRM, CMP, managing director and president of the William E. Becker Organization in Teaneck, N.J. He will share insights on how to develop a marketing plan that focuses on moving forward, and discuss how to re-evaluate that plan and adjust it if necessary. “We’re in the retail business. The three things that keep people coming back are: ‘new,’ ‘grand opening’ and ‘free,’” Becker says. “Retail makes money by having something new every day.” Keeping models fresh and offering new events on a consistent basis are crucial, he says. Begin Building a Strong Customer Base Now “Now is the best time to execute new sales and marketing campaigns,” says August, MIRM, CMP, Master CMP, of the S. Robert August Company, Inc., in Greenwood Village, Colo. During the conference, he will discuss how to overcome objections, build a stronger customer base and initiate unique and distinct sales and marketing programs for the business-to-consumer and business-to-business markets. “You’ll be able to adapt these concepts to a profit-building marketing campaign for your business, regardless of your size,” says August, who has weathered six adjustments since he’s been in the industry. Slight Adjustments Can Improve Your Conversion rate Moderator and veteran builder Stephani, CGB, CAPS, MIRM, CMP, of William Thomas Homes, Inc./CCC, Inc., in Crystal Lake, Ill., who also has been through numerous market shifts, says that small changes can make a big difference. “Just some slight adjustments can improve your conversion rates and help you adjust to a changing market,” he says. He also encourages builders to look for solutions that go further than incentive packages. “Incentives are just one part. Let’s be better salespeople,” he says. “Let’s make sure the soft contracts turn into hard contracts.” Finally, Stephani cautions, the worst thing builders can do is lose hope. “We have to make sure that people understand the sky is not falling; it’s just a little cloudy.” Conference Topics The 40-minute presentation will cover:
To Register For more information, or to register for the free “Changing Market” audio conference, click here, e-mail Wil Heslop at NAHB, or call him at 800-368-5242 x8472. Teleconference materials will be e-mailed to registered participants in advance. The conference is co-hosted by NAHB’s National Sales and Marketing Council and Biztools, NAHB’s business management comprehensive resource on the NAHB Web site. The Ten Tips of Marketing an Active Adult CommunityDon't pass up an opportunity to market your active adult community this holiday season. Turn the season into your chance to ring in the New Year with new, qualified prospects. Many boomers are interested in active adult communities, and many will have the time to visit yours and see what you have to offer. Not only that, home owners in your community will have visitors for the holidays, and with the right community presentation, these visitors can also become qualified prospects. So, with all this in mind, here are 10 tips for marketing your active adult community for the holidays:
Janis Ehlers is the founder and president of The Ehlers Group, Inc., a Fort Lauderdale, Fla.-based marketing and communications company that specializes 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. Save the Date for 2007 50+ Housing Symposium Mark May 30-June 1, 2007 on your calendars to attend the 50+ Housing Symposium. The seniors housing symposium is the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. Visit www.nahb.org/build4boomers for more information. “Boomers on the Horizon: Housing Preferences of the 55+ Market,” available through BuilderBooks.com, can help you better build and market homes to this age group. Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences. To view or purchase this publication online, click here, or call 800-223-2665. New 50+ Designation Coming in 2007 Coming in 2007 is a new designation from NAHB specifically for individuals in 50+ housing. The Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving this rapidly burgeoning market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to closing the sale and servicing the customer. For more information, visit www.nahb.org/CAASHinfo. NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242.
Enter the 2007 50+ Housing Design, Marketing Competition
Enter the 2007 Best of 50+ Housing Awards, the premier design and marketing competition for the 50+ housing industry. Entries are due by Feb. 23. Sponsored by the 50+ Housing Council, the award program honors the best in more than 50 categories covering all aspects of the 50+ housing industry. “Anyone who is involved with the design, marketing, building and development of 50+ housing products ought to enter,” said Bob Tippets, of Village Communities of Midvale, Utah and incoming chairman of the NAHB 50+ Housing Council. “The Best of 50+ Housing Awards offers its winners not only recognition, but a great way to promote their business.” Active Adult Active adult categories include overall community, clubhouse design, condominium unit design and model home merchandising. Design Other design categories include aging-in-place, assisted living, congregate-living community, continuing care retirement communities, mixed-use, multifamily housing, renovated housing and special-needs housing. Marketing Marketing categories include logo, community brochure, direct mail piece/campaign, Web site, black-and-white and color print advertisement, radio and television commercial, sales center and special promotion. “The 50+ housing arena is constantly evolving and changing for the better,” said Doug Van Lerberghe, chairman of the awards committee and an architect with Denver-based design and community planning firm, KEPHART. “The Best of 50+ Housing Awards is an opportunity to recognize builders and other professionals who contribute their most inspired efforts to meet the needs of this unique market.” Winners will be announced at the Best of 50+ Housing Awards gala during the Building for Boomers & Beyond: 50+ Housing Symposium 2007 in Denver from May 30-June 1. Winners will also be featured on the NAHB Web site and in “50+ Housing Magazine.” The Call for Entries, contest rules and list of categories are available online at www.nahb.org/50plusawards, or by calling 800-368-5242 x8220. Save the Date for 2007 50+ Housing Symposium Mark May 30-June 1, 2007 on your calendars to attend the 50+ Housing Symposium. The seniors housing symposium is the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. Visit www.nahb.org/build4boomers for more information. “Boomers on the Horizon: Housing Preferences of the 55+ Market,” available through BuilderBooks.com, can help you better build and market homes to this age group. Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences. To view or purchase this publication online, click here, or call 800-223-2665. NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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. For assistance, call the NAHB Member Service Center at 800-368-5242. Sign Up for Chairman’s Dinner at Builders’ ShowPlan to attend the Remodelors™ Council’s Chairman’s Dinner and awards ceremony at the 2007 International Builders’ Show in Orlando, Fla. The dinner, sponsored by the council's 2007 Platinum and Gold sponsors, begins 6:30 p.m. Thursday, Feb. 8, at the Rosen Centre Hotel. The dinner includes a review of the council’s accomplishments, the Chairman’s Awards and more. To purchase tickets, click here. Gulf Coast Modular Home Show in Mississippi Jan. 9-21The Modular Building Systems Association (MBSA), along with NAHB’s Building Systems Councils and Volunteers of America Southeast, will be conducting a modular home show in Pass Christian, Miss. from Jan. 9-21 as part of the Gulf Coast rebuilding effort following the devastating hurricanes of 2005. The Gulf Coast Home Show will feature a variety of modular homes, including models from All American Homes, Crestline Homes, Custom Building Systems, Geometric Building Systems, New Era Building Systems and others. The homes will be presented in a “scattered lot development.” The first five days of the show, Jan. 9-13, will be open to building industry professionals, government officials and the media. The show opens at 8:00 a.m. at the Espy Center on Jan. 9, followed by a bus tour of the homes from 10:00 a.m. to 5:00 p.m. that day. The show will be open to the general public from Jan. 14-21 from 9:00 a.m.-4:00 p.m. and home tours will be free. In conjunction with the home show, Pennsylvania College of Technology’s Modular Housing Training Institute (MHTI) will also be conducting a two-day, hands-on course, “Introduction to Site Management for Modular Construction,” in Pass Christian. The MHTI course curriculum includes site and foundation preparation, an overview of optimal scheduling, the complete modular home set and key issues when finishing a modular home. For more information on the home show or MHTI course, visit www.modularshow.com, or call the MBSA at 717-238-9130. Register for Log Homes Council Tour in March Plan to attend the 2007 Log Homes Council President's Tour in Knoxville, Tenn. on March 11-13. For more information and to register, visit www.nahb.org/PresidentsTour. Weber Feted for Concrete Industry Contributions
Mike Weber The magazine will name Weber one of the “Ten Most Influential People in the Concrete Industry” for 2006. He will be recognized during a private reception on Jan. 24. World of Concrete will be from Jan. 23-26. Among Weber’s accomplishments, he is being honored for creating the Concrete Home Building Council and for making concrete a significant part of The New American Home, NAHB’s official show home at the International Builders’ Show. Concrete has been integral to the show homes since 2004. Register for World of Concrete 2007 in Las Vegas Next Month More than 1,500 exhibitors, as well as seminars, demonstrations and tours, are planned for the World of Concrete, the premier trade show for concrete industry contractors, professionals and manufacturers. The show will be held from Jan. 22-26 in Las Vegas. To register online, click here. NAHB's Concrete Home Building Council will host a Train the Trainer course for industry professionals who want to teach and enhance their presentation skills in the classroom and with the media. For more information about World of Concrete, visit www.worldofconcrete.com. Marketing More Relevant Than Ever: IBS Pre-Show EducationMarketing may be more relevant than ever, and coupled with the latest in education, could spell the difference between bringing in more prospects and languishing in a sluggish market. “I often hear builders say that they don’t need marketing because their houses are selling,” says Hal Von Nessen, MIRM and instructor of “Lifestyle Merchandising, Advertising and Promotion Strategies (IRM III)” at the 2007 International Builders’ Show in Orlando, Fla. in February. “But what happens when a finished home doesn’t sell or a community stagnates?” “Every job requires a basic knowledge of the tools of its trade,” Von Nessen, of RESH Marketing Consultants in Columbia, S.C., continues. “That is as true for sales clerks as it is for builders. It’s also true of marketing.” Von Nessen has consulted with builders and developers from California to New York and encouraged IRM students to improve their knowledge of marketing and develop strategies to successfully promote their homes. Pre-show courses offer a simple and convenient way to tap the expertise and knowledge of professionals like Von Nessen. Pre-show courses include: IBS Pre-Show Course Schedule Saturday, Feb. 3
Pre-show courses at the International Builders’ Show sell out quickly, so early registration is recommended. For course descriptions and registration information*, visit www.nahb.org/preIBS, or contact The NAHB University of Hoursing Office of the Registrar at 800-368-5242 x8EDU (8338). *Note: Registration for these courses does not include registration for the International Builders’ Show. Separate registration fees apply. If you are unable to attend the International Builders' Show, but would still like to register for one of the courses listed, a separate paper registration form must be either mailed or faxed to The NAHB University of Housing. To download the registration form, click here. Education Calendar
Learn More About The NAHB University of Housing Whether you’re new to the industry, hope to make your next career move or want to improve your company’s bottom line, The NAHB University of Housing can assist you in your educational pursuits. Visit www.nahb.org/education for a comprehensive listing of courses throughout the country. Be sure to visit often in order to view the most up-to-date information in your area. NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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 on the NAHB Web site. For assistance, call the NAHB Member Service Center at 800-368-5242. General Permits Supported for Rebuilding MississippiNAHB is supporting a U.S. Army Corps of Engineers' proposal to allow general permits for construction on lots comprising five acres or less as a way to speed up rebuilding efforts along the Gulf Coast. The proposal applies to six Mississippi counties where homes were severely damaged or destroyed by Hurricanes Katrina and Wilma in 2005. There are restrictions in the proposal that bar the streamlined permitting process on lots with valuable wetlands or endangered species, on lots along tidal waters and on historic properties. However, the overall effect should be helpful, said Susan Asmus, staff vice president for regulatory and environmental affairs at NAHB. NAHB and the Home Builders Association of the Mississippi Coast both submitted comments to the Corps prior to a Dec. 10 deadline. Members of the local HBA have suffered a backlash from environmental advocates despite the many restrictions still contained in the Corps proposal. Reexamining the Wetlands Permit Process In its comments, NAHB asked the Corps to reexamine the overall wetlands permitting process, which it has jurisdiction to administer under Section 404 of the federal Clean Water Act. “Over the past several years, the Section 404 permit process, even for Nationwide Permits, has become very cumbersome, resulting in lengthy delays and increased costs,” the letter said. As a result, any process intended to streamline the wetland permitting process is of keen interest to our members. Furthermore, NAHB urges the Corps to undertake the development of similar Regional General Permits in the future in other areas whenever there is an urgent need to rebuild in the aftermath of natural disasters.” However, the proposal lacks some clarity, NAHB noted. A threshold of five acres — and not some other number — is not justified, the law’s definition of “low quality” wetlands makes clear enough, and the proposal lacks an approved rapid assessment method that has scientific validity. And while the process has been streamlined, it’s still quite burdensome, NAHB said. It’s a good start, though, NAHB told the Corps. “NAHB strongly supports the goals of the Regional General Permit and applauds the Corps for proposing a way to facilitate the rebuilding of coastal Mississippi post-Katrina.” The Corps has until the end of January to review the comments. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. Drywall, Plywood, Shingles Needed in New OrleansUnited Way for the Greater New Orleans Area has requested drywall, plywood and shingles for the rebuilding effort in the aftermath of Katrina. The agency, which served 85 agencies in the New Orleans area, is specifically seeking these by the end of this year. Donations will be processed through Gifts In Kind International with the "ship to" directly to New Orleans. Gifts In Kind serves as a donation conduit between for-profit companies and nonprofit organizations in order to benefit communities in need worldwide. To donate, complete the Product Donation Agreement and fax it to the attention of Doyle Delph, of Gifts In Kind, at 877-798-3192. For questions or more information, contact Delph at 703-836-2121 x532, or visit the Gifts In Kind International Web site at www.giftsinkind.org. Give to the Home Building Industry Disaster Relief Fund The Home Building Industry Disaster Relief Fund (HBIDRF) is accepting end-of-the-year monetary donations. NAHB created the fund to help rebuild communities that were affected by natural disasters. For more information about the programs funded through the HBIDRF, or to make a donation, visit www.NAHB.org/disasterrelief. Tickets Available for Safety Awards LuncheonIn conjunction with the upcoming International Builders’ Show, NAHB will be presenting the “First Annual Safety Awards for Excellence Luncheon” in recognition of builders who have developed excellent work site safety programs and made outstanding contributions to advancing construction safety. Fannie Mae is sponsoring the award in support of NAHB’s efforts to promote best practices in the housing industry. The awards ceremony will be hosted by Scott Morgan, of HGTV’s “Dream Builder” show. Morgan has a background in home building, including working on the construction of solar homes, and he has hosted several specials for HGTV, including “Eco-Smart Living,” “Blitz Build 2000” and “The Western Home Awards.” The luncheon will take place from 12:30-2:30 p.m. on Friday, Feb. 9 at the Peabody Orlando Hotel just across the street from the convention center. Tickets are $50 per person, or $450 for a table of 10. Award finalists are posted on www.nahb.com/SAFE, and the winners will be announced at the luncheon. To purchase tickets, click here. Advance registration is required for this event. Online tickets will be available until Thursday, Feb. 1. For more information, go to www.nahb.org/SAFETICKETS.
Jobsite Safety Video, available through BuilderBooks.com, is the first-ever jobsite safety video for home builders. The video provides an overview of the key safety issues residential builders and workers need to focus on to reduce accidents and injuries. Based on the "NAHB-OSHA Jobsite Safety Handbook," this DVD is intended to be used as part of an essential residential construction safety-training program. It includes two 20-minute videos on one DVD. To view or purchase this DVD online, click here, or call 800-223-2665. Affordability Gap for Renters Widens in 2006The cost of affordable housing climbed for the eighth consecutive year, continuing to outpace the wages of the low-wage households who need it the most, according to the National Low Income Housing Coalition (NLIHC)’s annual “Out of Reach” report, which was released last week. “Every year it is becoming more difficult for low-income families to find decent homes they can afford,” said Sheila Crowley, president of the coalition. “As we approach the holiday season, with its intense focus on consumer spending, ‘Out of Reach’ shows the difficulty that millions of low-income families face to even pay for their homes.” The hourly wage a full-time worker must earn to afford a modest, market-rate two-bedroom home rose this year to $16.31, up from $15.78 last year, the report shows. By comparison, the median hourly wage for all workers was $14 and the estimated wage for renters was $12.64. Annually, on a national basis a family would have to earn $33,925 to be reasonably assured of finding an affordable two-bedroom rental unit in today’s housing market, the report finds. “Yet, according to the most recent data available, roughly 42 million households nationwide, including 22 million with at least two people living in them, earned less than $34,000 last year,” the report says. “Roughly 11 million households earned less than $10,712, the equivalent of working 40 hours a week, 52 weeks a year at the minimum wage.” Workers earning the federal minimum wage of $5.15, which has been in effect since 1997, are unable to afford even a one-bedroom rental home anywhere in the country, according to the study, and 88% of renters in cities live in areas where the Fair Market Rent for a two-bedroom rental is not affordable even with two minimum wage jobs. Since 2000, Fair Market Rents have risen 28%, compared to a 21% increase in overall inflation and 22% average income growth, said Danilo Pelletiere, NLIHC’s research director. People who rely the most on the rental housing supply, those in the bottom 20% of the income distribution, saw their incomes grow just 15% in the last five years. Over the same period, he said, the number of renters around the country has gone up “and affordability problems have increased significantly.” The hourly wage is also calculated in the report for every state, metropolitan area and county in the country. The calculation of the wage amount assumes that 30% of income is spent on housing and is based on the Department of Housing and Urban Development’s Fair Market Rent, which provides a best estimate of what a family moving today can expect to pay for a modest rental home and utilities. Following are the 10 most expensive states in the country for a two-bedroom Fair Market Rental and the hourly wage it takes to afford it:
Crowley said that she is hopeful that there will be a more receptive response in the new Congress for an approach to the affordable housing crisis that includes actual production and not just vouchers. Participating in a media teleconference announcing the results of the latest “Out of Reach” study, Rep. Barney Frank (D-Mass.), the incoming chairman of the House Financial Services Committee, said that, “We have to get the federal government back in the business of building and preserving affordable housing.” In a preface to the report, Frank writes that the high cost of housing is a barrier to economic development in many regions of the country. “In my home state of Massachusetts, leading business people have pointed to the high cost of housing across the board as an obstacle to their ability to increase employment in our state,” he says. “A full range of housing programs, including various direct construction programs and public/private cooperation, can lead to a significant increase in badly needed affordable housing…,” he writes. High Housing Costs a Growing Challenge for CitiesA precipitous increase in housing prices in many cities over the last five years has made it increasingly difficult for municipalities to meet the housing needs of low-income working families, and city housing directors are complaining that federal and state governments aren’t doing enough to support their efforts. In the National League of Cities' State of America’s Cities Survey on Municipal Housing, which was released in October, nearly seven in 10 of the local housing directors who were polled said that lower-income working families have the most critical housing needs in their community. About 75% of those surveyed said that federal and state governments are not doing enough to help them meet local housing needs, and 55% reported that such support was fair or poor. In terms of ground-level efforts to provide housing opportunities, cities are most likely to collaborate with nonprofit organizations (85%), banks and other lending institutions (59%), churches and other faith-based institutions (51%) and other community-based organizations (52%). Other than city, state and federal funding for housing programs, the survey revealed that funding is also being provided by nongovernmental sources, such as banks (48%) and foundations and non-profits (43%). At least four in five municipal housing directors said that the value of homes (91%) and rental costs (80%) have increased at least some or a lot in the past few years. One in two (56%) said that the value of homes has increased a lot. The directors said that their biggest concerns over rising prices were that they were placing a financial strain on their residents (82%), were reducing homeownership opportunities for lower-income working families (76%) and were preventing younger generations from buying homes (63%). A large majority of the directors said that providing housing to meet the needs of residents is somewhat of a challenge (48%) or a big challenge (34%). Lower-income working families (68%) were the residents with the most critical housing needs, according to the housing directors, followed by elderly and aging residents (42%), disabled or dependent adults (33%), single-parent families (33%), middle-income working families (29%), transitional residents (abuse victims, ex-offenders) (27%), immigrant families (16%), racial and ethnic minorities (12%), higher-income working families (8%) and two-parent families (6%). Providing housing was considered a big priority by 37% of the respondents and a priority by 48%. Higher priorities included infrastructure maintenance and improvements (68%), improving local economic conditions (66%), improving local fiscal conditions (57%) and stimulating the vitality of downtown (52%). However, the respondents said that housing was connected to these other priorities, including community development and redevelopment (47%), economic development (43%), fiscal conditions (33%) and infrastructure challenges (26%). Home Depot Acquires Chinese Home Improvement ChainJoining with U.S. Commerce Secretary Carlos Gutierrez and Vice Minister Yi Xiaozhun of the Chinese Ministry of Commerce, The Home Depot last week announced that it has signed a definitive agreement to acquire The Home Way, China’s first home improvement retailer. The world’s largest home improvement retailer, The Home Depot is a member of the National Council of the Housing Industry — The Supplier 100 of NAHB. With The Home Depot pursuing opportunities to expand its business globally, The Home Way will provide the company with an immediate retail presence in China with 12 stores in six cities. China’s home improvement market is valued at nearly $50 billion today and has been growing at a compounded annual rate of 20%. Approximately 70% of home improvement spending in China is for the completion of interior space in new homes, a solid growth opportunity for The Home Depot, which has strength in merchandise and services geared to finishing out a home. “This acquisition provides us with a great point of entry in one of the world’s largest and fastest-growing improvement markets,” said Bob Nardelli, chairman, president and CEO of The Home Depot. “The Home Way is a strong brand that is already established as a value and price leader among Chinese consumers.” The Home Depot entered the Canadian market in 1994 and Mexico in 2001, and today holds the number-one position in both markets. Founded in 1996 by Du Sha, its chairman and CEO, The Home Way is headquartered in Tianjin, one of China’s largest cities and a primary development zone for the government; it is located 85 miles southeast of Beijing. The Home Way was the first “big box” home improvement retail chain in China, and its stores average 90,000 square feet of selling space. The Home Way employs some 3,000 associates in China, including Tianjin, Beijing, Xi’an, Qingdao, Shenyang and Zhengzhou. 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 WeekThe NAHB Production Group produces three weekly television shows on HGTV and DIY for consumers. The following is the latest lineup: "I Want That" on HGTV
"Rock Solid" on DIY
"Assembly Required" on DIY
HGTV Seeking ‘Dream Home’ Builder/Architect Teams 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. About the NAHB Production Group 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. NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market 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. 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 of the NAHB Web site. For assistance, call the NAHB Member Service Center at 800-368-5242. Sign Up for Estate Planning Seminar at Builders’ ShowThe National Housing Endowment, the philanthropic arm of NAHB, is sponsoring an estate planning seminar, “Estate Planning for the Closely Held Business,” at the 2007 International Builders’ Show in Orlando.
The seminar will focus on planning techniques for business owners with real estate interests and cover such topics as creating liquidity, ensuring the financial future of the owner's family and mor |