Nation's Building News Online: February 19, 2007

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Housing Expected to Improve as the Year Progresses

It’s only a matter of time before housing begins to recover from its first major downturn in about 15 years, industry economists said two weeks ago at the International Builders’ Show in Orlando, Fla., and fundamental improvements in the marketplace could already be taking hold by this year’s second quarter.

“We knew we were in a correction process a year ago, and it was an inevitable occurrence” following the unsustainable boom years of 2004 and 2005 when stimulative financing conditions and speculation from escalating home prices resulted in a “grossly overheating market,” said NAHB Chief Economist David Seiders. Indeed, “the downward movements in sales and starts were even deeper in 2006 than expected.”

Total housing starts dropped 12.3% last year, to 1.819 million units, and single-family production was down 14% to 1.478 million homes. Even though Seiders said that he expects starts to begin a “gradual recovery” following further erosion during this year’s first quarter, total housing production for 2007 is projected to slip a further 14.2% to 1.560 million and single-family starts for the year are expected to decline 15% to 1.256 million.

“We lopped the top off the mountain,” he said, and housing starts for 2007 will be back to the levels seen early this decade.

New single-family home sales were down 16.4% in 2006 but apparently stabilized by the end of the year. Sales are projected by NAHB to decline only 1.3% in 2007 as activity rises gradually during the year.

Supporting an upward turn in new home sales, Seiders said, is today’s “Goldilocks economy,” which appears poised to sustain healthy levels of growth in Gross Domestic Product, jobs and income while core inflation recedes from levels that have been worrisome for the Federal Reserve Board. “The interest rate structure should be supportive of housing throughout this year,” he said.

While housing should be moving up before long, Seiders cautioned that it will be a couple of years before the industry reaches the 2 million annual construction pace (including 150,000 manufactured homes) that is sustainable over the long haul, the result of serious overbuilding during 2004 to 2005.

Agreeing that the housing market probably has seen the worst of the current slump in starts and sales, David Berson, chief economist of Fannie Mae, and Frank Nothaft, chief economist of Freddie Mac, said that they don’t expect to see the beginning of an upturn materialize until a quarter or two behind Seiders’ forecast, with gradual improvement likely in this year’s second half.

Investors Expected to Retreat Further

The housing affordability woes that reduced housing demand last year now seem to be bottoming out as incomes rise, home prices moderate and mortgage interest rates remain at favorable levels, said Berson, and he further noted that housing demand won’t be a negative for the industry this year, and could be a small positive.

However, how quickly conditions stabilize will depend on how quickly investors pull out of the market, he said. Although investor demand for housing peaked in early 2006, “it didn’t fall that much last year and is still relatively high.” The housing decline will be centered on those areas where investor activity was high, he added.

Berson calculated that the market was overbuilt by 600,000 to 650,000 units over the three-year duration of the boom, and the current inventory overhang of unsold homes — higher than actually reported because cancelled sales are not included in those numbers — is causing price weakness.

Housing prices were down in last year’s fourth quarter, though still up for the entire year but not by the double digits that were typical during the boom, Berson said. Price declines have started showing up in a growing number of places, including Boston, California and Northern Virginia, he said, and he predicted that the OFHEO Home Price Index is likely to show a decline in housing prices in 2007 for the first time in its 32-year history. He said that a decline of about 1% for the year was possible.

When adjusted for inflation, housing price gains will likely be on the negative side for the next couple of years, he forecast.

“We have to run through the inventory for prices to stabilize,” he said. In December, “it was not good news that starts were up and we need a period of time of sales exceeding starts.”

A Bit of a Rocky Road Ahead

“There is still a bit of a rocky road and bumps ahead of us,” said Nothaft, but builders “are seeing some light at the end of the tunnel.” High housing prices have become the decisive factor behind the slowdown, he said, and “it will take time for affordability to improve.”

Nothaft added that national data have obscured local trends and there are some markets where home sales and price appreciation are “holding up well,” particularly in much of the South. On the other hand, some markets — such as California, Florida and Massachusetts — have seen their business erode by 30%.

While single-family activity will improve as the year progresses and into 2008, “we won’t see a recovery in areas where the local economy is in recession,” Nothaft said, such as Detroit and parts of the Midwest.

In the multifamily sector, he said, condo sales are “way down,” but the apartment rental market is doing well, with rents on the rise and vacancy levels tightening.

One area to be watched, Nothaft indicated, is the rising number of mortgages entering foreclosure, driven largely by sub-prime loans. Half of the loans going into foreclosure in the fourth quarter of 2006 were sub-prime, which account for only 14% of all loans outstanding.

While sub-prime loans play a constructive role in “providing credit to consumers who wouldn’t be able to be home owners otherwise,” said Nothaft, the “underwriting of sub-prime loans may have deteriorated, raising concerns for the coming year.”

There were 200,000 loans entering foreclosure during the third quarter of 2006, he said, although research by Freddie Mac has shown that only 30% of their prime loans in foreclosure actually go all the way back to the bank.

Nothaft predicted that the 30-year, fixed-rate mortgage would average 6.4% for the year, and the housing analysts expect the Fed to hold its federal funds rate at the current 5.25% for some time, with the chance of a move to ease slightly toward year’s end.

For background materials on the presentations by the three housing economists, click here.

Grants Available to Local HBAs for ‘Buy-Now’ Campaigns

In an effort to bolster home sales in markets hit hard by the current housing downturn, NAHB has launched a multi-million dollar grant program to assist local home builders associations in conducting “buy now” advertising campaigns.

“This represents a major effort by NAHB to reach out and help our local HBAs that are struggling to rebuild consumer confidence in markets where home sales and production have dropped significantly over the past year,” said NAHB President Brian Catalde.

Approved during NAHB’s recent board of directors meeting in Orlando, Fla., the “buy now” ad assistance program will provide grants to qualifying HBAs in three different categories:

• HBAs conducting ad campaigns in the top 10 media markets would receive assistance equaling up to one-third of the total cost of the campaign, with a maximum NAHB contribution of $75,000. In other words, an HBA conducting a campaign costing a total of $225,000 could receive a $75,000 contribution from NAHB and cover the remaining $150,000.
  
  
• HBAs with more than 250 members operating in areas outside of the top 10 major media markets would qualify for matching grants up to a maximum of $40,000 and be required to pay for at least half the cost of the campaign.
  
  
• HBAs with 250 or fewer members would qualify for grants of up to $5,000.

To qualify for grants, the ads must deliver a “buy now” message, be placed in 2007 and conducted in markets that have experienced a major decline in home sales and housing production.

A total of $3 million was approved by the NAHB board. NAHB will evaluate the effectiveness of the program after the first $1 million in grants is put to work by local associations. If it is determined that the local ad campaigns have been successful, then the remaining $2 million will be made available in grants to qualifying HBAs.

To learn more about the program and the ground-rules for applying for grants, click here (nahb.org/buynowapplication), or call Niki Clark at 800-368-5242 x806l.

Big Builders Prepare for an Acquisition ‘Feeding Frenzy’

The current housing slump has brought consolidation in the residential construction industry to a screeching halt, but the top 10 public builders in the nation are preparing themselves now for the next round of mergers and acquisitions, maybe even a “feeding frenzy,” when the markets return to normal over the next couple of years, according to housing analysts at the recent International Builders’ Show in Orlando, Fla.

“The buyers are looking at candidates this year,” said Jody Kahn Klein of Michael Kahn & Associates in Pointe Vedra Beach, Fla. At the present time, however, they are “putting out fires and liquidating so that they will be in a good position to get those companies and better-priced land.”

Buyers are going back to a popular paradigm of the mid-1990s to structure their deals, said Michael Kahn, recapitalizing the company and allowing the seller to grow the business over a typical five-year period.

The seller receives a share of the profits that drops each year, starting out at perhaps 20% to 25% in the first year and declining to 5% in the final year of the deal, he said, but the actual dollar amount of the compensation can be the highest towards the end if the business has grown substantially.

Companies that have been building in the range of 800 to 1,000 homes a year “will see a lot of suitors,” said Klein. And big builders will be “paying attention to markets that are somewhat hurting” in an attempt to find opportunities for “contrarian moves.” For example, “Lennar uses down cycles to buy up lots,” she said. “That’s how they entered Texas and California.”

Buyers don’t have much interest in builders below the 200 to 300 unit annual production range, she said, and are looking for companies with a three-year inventory of lots and land.

Klein suggested that there are a number of things builders can do to make themselves attractive candidates for acquisition:

• “Do benchmarking,” she said, to determine how your company stacks up with other builders, especially in the area of profitability. Pre-tax profits of 10% to 12% represent a solid return on home building, although buyers will consider a range of performance, starting as low as 4%. “A company earning 15% to 16” is doing everything a little better,” she said.
  
  
• Builders should be able to provide a description of their management systems and procedures on a few sheets of paper.
  
  
• Candidates should benchmark their scheduling for homes that are similar to those they are building.
  
  
• A business plan should provide a narrative of where the company has been, where it is now and where it is going, including information on capitalization, growth opportunities, the competition, strengths and weaknesses, market research, an evaluation of the business team and a five-year financial projection.
  
  
• "Prepare for due diligence.” Use an annual operating budget, organize files, take a look to see if land contracts are assignable and look at signed contracts with subcontractors and suppliers.
  
  
• Prepare complete files on any litigation the company is involved with.

Although the nation’s overall housing market will continue to be composed of a large number of small companies, “the market share of the top 10 builders will continue to grow,” said Gopal Ahluwalia, NAHB’s senior vice president for research.

In 2005, three big builders had at least a 3% share of the market in terms of closings, he said: D.R. Horton, Pulte Homes and Lennar Corporation. In 1992, the nation’s top builder produced only 1% of the nation’s homes.

Here Comes the Mega-Builder?

The combined market share of the top 10 builders exceeded 20% in 2005, and the share of the top 100 builders was about 40%. From 1995 to 2005, the top 10 builders increased their closings by more than 333%.

A merger or two among the top five builders could even create a mega-builder with the capacity to build 100,000 units a year, he said.

However, growth prospects don’t look that favorable for the next tier of builders who are ranked from 21 to 100, he said. Their market share has not been growing.

Ahluwalila noted that the big builders are diversifying geographically to insulate themselves from regional industry declines and also diversifying their product, which originally was concentrated on the market for first-time buyers.

California Is Where the Profits Are

California has been the most profitable state for the big builders, said Ahluwalia, based on numbers from Credit Suisse showing a comparison of the percentage of units they delivered in that state with the state’s contribution to their after-tax profits. For example, D.R. Horton in 2005 delivered 16% of its homes in California, but sales on those homes accounted for 37% of the company’s profits. Texas, by comparison, accounted for only 9% of profits even though one-fourth of the company’s homes were built there.

With the exception of NVR Inc., which didn’t build in California and counted on Virginia for more than half of its profits on 30% of its deliveries, the ratio of units delivered to profits in the Golden State was similar for the rest of the top 10 builders: 13% vs. 26% for Pulte; 23% vs. 43% for Lennar; 14% vs. 35% at Centex; 21% vs. 48% for KB Home; 14% vs. 28% for Beazer Homes; 25% vs. 38% for Hovnanian; 10% vs. 22% for Ryland; and 14% vs. 22% for MDC Holdings.

The big builders are having an impact on the distribution of building materials, Ahluwalia added, as they increasingly buy directly from producers. Some are storing these materials in regional warehouses so that they can be supplied quickly, cutting their cycle time. Some are also assembling framing and components. “Their long-run objective is to buy in volume and warehouse it,” he said.

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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.

Wanted: Home Builders for the Moon

Two months ago, NASA announced the broad outlines of its plan for an eventual lunar outpost on the moon built on the rim of a crater near one of the moon’s poles where there would be sunlight and Earth could be seen year-round. The outpost would serve as a base for lunar research and Mars exploration, and some envision an eventual platform for luxury hotels, astronomical observatories and helium-3 mining operations. NASA and its corporate partners are already building prototypes to test some unorthodox ideas, such as inflatable habitats. The metal-hulled modules used on the international space station typically weigh 30,000 pounds, which would be too heavy for moonships that are currently being planned to have a maximum payload capacity of only 13,000 pounds. Inflatable modules could get around that limitation. David Cadogan, research director at ILC Dover, said the modules would be compressed to fit a smaller space on NASA’s smaller spaceships, dropped off on the moon, and only then filled with air, equipment and all the comforts of a lunar home. Bigelow Aerospace already has lofted one inflatable test module into orbit and is gearing up to launch another one in April. Prototypes will be tested in Antarctica and other extreme environments on Earth. Twin giants of America’s space industry, The Boeing Co. and Lockheed Martin, are involved in planning efforts to start building a permanent moon base in 2010, but less conventional players include Illinois-based Caterpillar and allied companies that have been advising NASA on the dynamics of dirt and the challenges of moving heavy equipment over the lunar surface. (www.msnbc.com)
MSNBC.com (2/1/07); Alan Boyle

Beyond Moscow, Dachas Make Way for Suburbia

A wave of homesteaders is transforming the forested environs outside Moscow’s city limits into the beginnings of suburbia, with billboards across the city advertising developments with names such as Navaho, Monaco, Chelsea, Sherwood and Barvika Hills. The super-rich who trekked out of the city first are now being followed by members of a rising middle class seeking cheaper housing in a cleaner environment. Helping fuel the trend is a real-estate boom that is driving up prices in the city by about 30% a year. New but bare and unpainted apartments in Moscow now start at about $250 a square foot, compared to about $100 in the suburbs. Detached single-family homes outside Moscow range from $500,000 to the tens of millions of dollars in the most exclusive neighborhoods, but to cater to the middle class, more modest townhouse developments have begun to appear in the past couple of years, with starting prices of around $300,000. Mortgage lending has grown to $6 billion annually, up from about $1 billion when Russian banks first started offering mortgages three years ago, according to government figures. The government has been pushing banks to lower mortgage interest rates, which currently stand at 11%. (www.washingtonpost.com)
Washington Post (2/14/07); Peter Finn

The Incredible Shrinking Downpayment

From mid-2005 to mid-2006, according to a statistical sampling of a representative group of 7,548 home purchasers, nearly half of all first-time buyers financed the entire transaction, obtaining mortgages in the full amount of the home price. Another 30% put down 10% or less, and 20% put down 5% or less. The research was conducted by the National Association of Realtors®, using information on home transactions supplied by Experian, a major credit and realty data firm. The median downpayment of first-time buyers, according to the study, was just 2%. The highest loan-to-value ratios for first-time buyers were in the South, where the median mortgage amount was 100% of the sale price, followed by 99% in the West, 98% in the Midwest and 96% in the Northeast. A typical repeat home buyer nationwide invested a median 16% as a downpayment to purchase a replacement home, usually from the proceeds of a prior sale, and financed the remaining 84%. Besides high prices, a key reason for the relatively high levels of leverage being used by both first-time and repeat buyers has been the explosion of low-downpayment options by mortgage lenders and insurers in recent years. The unknown about minimal downpayment loans is how they perform in flat or depreciating market conditions. (www.washingtonpost.com)
Washington Post (2/10/07); Kenneth R. Harney

Home Shoppers Do Their Hunting Online

About 80% of home buyers use the Internet to find a home, according to the National Association of Realtors®, and unless the nation’s 900 regional multiple listing services become more open, unified and technologically sophisticated, they risk being replaced by a Web search engine. In just the past few months, the Internet has been leveling the playing field and prodding the industry to adapt faster. Zillow.com, which created a stir last year by posting its estimated values of millions of homes across the country, has started showing homes for sale. In the past two months, nearly 32,000 people have listed their homes for sale. Trulia.com is asking real estate agents to post homes for sale and has introduced “heat maps,” showing the price and popularity of sales by state, county and neighborhood. Google.com is trolling for real estate agent listings for its classified-ads system, Google Base, and the Houston Association of Realtors® announced in December it would put all of its listings on Google. By the end of the month, from the national database of apartments.com, customers with cellphones with GPS technology can see a list of the 70 closest apartments from where they are standing. (www.usatoday.com)
USA Today (2/9/07); Noelle Knox

Ten Home Products That Are Turning Heads in 2007

Advanced technology and everyday practicality played a role in many of the eye-catching home products on display in the exhibition halls at the International Builders’ Show in Orlando. A swipe of a finger opens the Kwikset biometric scanning deadbolt displayed at the show. The fingerprints of 50 users can be stored in the device that operates on four double-A batteries and will sell for about $200. TurboChef displayed a $7,495 Speedcook oven that will cook a 12-pound turkey in 42 minutes instead of four hours, and will shave an hour off the time it takes to bake an apple-cranberry pie. Taking instructions over the Internet, the Connect IO Intelligent Oven from TMIO is so smart it can keep your roast cool all morning and then cook it to perfection once you tell it to start from work or wherever. Kohler’s DTV Custom Showering Experience allows home owners to personalize their shower through a panel that resembles an iPod mounted on the bathroom wall. Home owners can angle numerous shower heads and adjust the temperature to their liking, and then save the scheme for future showers. Two new clothes washers from Amana feature antimicrobial component protection that resists mold, mildew and odor-causing bacteria. (www.downjones.com)
Dow Jones Business News (2/16/07); Amy Hoak

A Streamlined Approach: New Products Aim to Save Space, Sanity

Going beyond the closet organization systems popularized in recent years, the 2007 International Builders’ Show found some manufacturers reexamining the toilet, the microwave and even the fireplace for ways to make them less bulky, more hidden and more pleasing to the eye. Learning that 80% of people have no designated place to perform basic laundry tasks, Whirlpool has created the Laundry 123 tower, a vertical metal box that can be placed beside or between the washer and dryer. It contains two oversize drawers for detergent and bleach and a shallow supply tray for holding dryer sheets and other small items. In some models, a retractable 10-inch rod pops out above the tray for hanging clothes. Inspired by the plasma TV, the Radium by Lennox is a ventless gas fireplace enclosed in a floating glass surface that hangs against a wall. The unit protrudes roughly 7 inches from the wall and is about 35 inches wide and 27 inches tall. Instead of a chimney venting to the outside, it uses a catalytic converter to clean the hot air as it leaves the top of the fireplace from the combustion chamber. Kohler’s C3 (cleanliness, comfort and convenience) toilet seats are being offered with built-in bidets that pulsate water in three temperature and pressure settings. A soft blue light illuminates the bowl at night. In some models, the settings are chosen via remote control or a panel on the side of the seat. Kohler’s Transitions seat allows adults and toddlers to use the same toilet without the hassle of adding or removing a separate “child-friendly” insert with each use. The seat fits elongated bowls. The smaller children’s ring is nestled into the regular adult ring. An adult can just lift the children’s ring and the lid lifts with it. (www.washingtponpost.com)
Washington Post (2/17/07); Dina ElBoghdady

Dodd Supports Work Opportunity for Immigrants

Sen. Christopher Dodd (D-Conn.) told the NAHB leadership on Feb. 9 that he hopes the Senate will approve a comprehensive immigration package by the end of the summer.

Speaking before the NAHB Board of Directors at its winter meeting in Orlando, Fla., Dodd said that Congress needs to enact a strong immigration policy that will provide an opportunity for immigrants to legally enter the country to work and also institute border security reforms.

“This is a big issue that we need to address,” said Dodd, who recently announced that he is a Democratic candidate for the 2008 presidential election.

Stating that it is critically important for the nation to have a vibrant housing market and homeownership rate, Dodd outlined four areas he wants to focus on as chairman of the Senate Banking Committee.

First, the senator said he wants more Americans to have access to capital in order to help local communities to grow and thrive.

“Ten million citizens have never stepped into a bank or thrift,” he said.

Providing an opportunity to bring more people into the mainstream to deal with their financial needs will help to plow money back into communities, he added.

“I want to provide incentives for those who wish to invest in local communities,” said Dodd. “Nothing does more for a family than providing a decent job.”

Predatory lending is another area that will draw the attention of the Senate Banking Committee during the 110th Congress.

“Sub-prime lending is a good thing and I don’t want to confuse that with predatory lending,” said Dodd. “There’s a big difference.”

Acknowledging that he has no quick answer to solve the problem, Dodd said that he is hopeful that federal regulators will set guidelines for brokers who market these financial products.

The senator also told board members that he will be seeking a renewed commitment for several housing programs, including Hope VI, elderly housing and community development block grants.

Finally, he said that he will seek to introduce legislation that will rebuild the nation’s infrastructure in order to help the economy to continue to grow.

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

Jackson Says President Committed to Increasing Homeownership

Declaring a positive outlook for the housing sector, HUD Secretary Alphonso Jackson on Feb. 8 told NAHB board members in Orlando, Fla. that the “housing market is undergoing a correction and will return to its healthy level.”

Jackson said that the housing sector is still fundamentally strong, noting that income levels are growing, job growth is solid and mortgage interest rates remain near historical lows.

Commenting on housing starts, sales and permits, Jackson said that 2006 still ranks among the six best years in the history of the nation.

Stating that the nation’s home builders have “the full support of President Bush and myself,” Jackson said that the $35.2 billion fiscal 2008 budget for HUD released by the Administration this month reaffirms the “President’s commitment to increase homeownership, particularly among minorities.”

The budget request represents a $1.6 billion, or 4.5% increase, over the Administration’s request for fiscal 2007.

Among the initiatives Jackson highlighted in the budget:

• A $50 million increase in the HOME Investment Partnership program. Jackson said that approximately $2 billion would be provided to state and local grantees to assist home buyers and renters by helping to finance the costs of land acquisition and new construction rehabilitation.
  
  
• $45 million for HUD’s Housing Counseling Grant program, which the department says will “help hundreds of thousands of families manage their finances and improve their credit ratings in order to become home owners”
  
  
• $39 million to boost homeownership through HUD’s Self-Help Homeownership Opportunity Program, which requires home owners to contribute “sweat equity” hours to construct their homes
  
  
• Modernizing the Federal Housing Administration (FHA)

Further elaborating, Jackson said that the FHA has helped more than 34 million Americans to buy a home since its inception in 1930. “Modernizing the FHA would give HUD the tools it needs to offer hard-working, credit-worthy borrowers the opportunity to obtain financing at a cost they can afford,” he said. “American home buyers need FHA. Legislation to modernize it is critical.”

Proclaiming that home builders help lift families into the middle class, Jackson concluded his remarks by saying that he “looks forward to continuing our partnership. You are the builders of the American dream. If you lose the dream you lose everything. Please help me keep the dream alive for all Americans.”

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

Builders Focusing on Energy Efficiency, Congress Told

Alaska home builder Jack Hebert told Congress on Feb. 13 that the housing industry is committed to implementing green building techniques that reduce energy consumption in both new and existing homes, improve indoor and outdoor air quality and conserve water and natural resources.

“Energy efficiency is the primary focus for many builders and home buyers,” Hebert, president and CEO of Cold Climate Housing Research Center based in Fairbanks, Alaska, told members of the Senate Subcommittee on Energy.

Hebert, who serves as an NAHB national representative, said that the nation’s home builders support green building and energy efficiency legislation that is voluntary, market-driven and cost-effective for builders and consumers.

Recognizing that approaches to green building need to distinguish among the regional differences around the U.S., NAHB in 2005 launched its Model Green Home Building Guidelines as an alternative to green building mandates. The guidelines were developed with input from more than 60 industry stakeholders — including builders, researchers, manufacturers, environmentalists and government agencies.

“The guidelines embody the flexibility that builders need to achieve efficiency and conservation goals without meeting costly national or statewide mandates,” said Hebert.

Local adoption of the guidelines allows builders to better address regional and local environmental concerns, to assess life-cycle costs based on local building codes and climate zones, and to encourage innovation to meet higher and broader energy efficiency objectives.

“Simply, there is no one size fits all green building standard,” said Hebert. “Alaska, North Dakota, Florida and Maine all have different efficiency needs and requirements based on their climate. Solar panels don’t work in Fairbanks like they do in Miami. Only flexible, locally grown green building programs can adequately take local issues, architecture, weather and geographic differences into account.”

Stating that the U.S. Green Building Council’s "Leadership in Energy Efficient Design" certification pilot program for single-family homes (LEED-H) would have a drastic effect on the affordability of housing, Hebert noted that this program is “costly, requires many unnecessary mandatory provisions, offers little flexibility and contains extensive implementation fees that could cost a builder, and ultimately the home buyer, from $12,000 to $15,000 extra per home.”

NAHB has submitted its guidelines to the American National Standards Institute's development process, with the goal of offering local jurisdictions an “off-the-shelf” green building program that is consensus-based and truly green, but flexible, he said.

Extending and expanding the tax incentives in the Energy Policy Act of 2005 would also help encourage energy efficiency in housing, he said.

“Unlike spending programs or one-size-fits-all rules, tax provisions allow market participants — builders, home owners and home buyers — to marry the energy incentives with market-determined supply and demand,” said Hebert.

For more information, e-mail Elizabeth Odina at NAHB, or call her at 800-368-5242 x8570.

With Unsold Homes to Sell, Builders Slow January Starts

Housing starts slipped 14.3% in January to a seasonally adjusted annual rate of 1.408 million units, the Commerce Department reported on Friday, which was 37.8% below the pace of a year earlier as builders continued to focus on working down their inventories of unsold homes.

"Builders are doing what they should be doing in the market today," said NAHB President Brian Catalde. "NAHB's surveys of single-family builders have been showing a steady increase in confidence regarding the demand side of the market since last fall, and with sales for new homes stabilizing, builders are working to control their inventories and position themselves for the upcoming spring buying season."

"Home sales apparently stabilized late last year, but the overhang of unsold housing inventory still is quite heavy," said NAHB Chief Economist David Seiders. "Builders have been cutting back on starts of new units to bring supply and demand back into balance."

"We expect housing starts to bottom out in the first quarter of this year before embarking on a gradual recovery path," Seiders said.

Single-family housing starts decreased 11.2% to a seasonally adjusted annual rate of 1.108 million units in January, 38.9% below their year-earlier rate.

Following a 34.4% surge in December, multifamily housing construction fell 24.1% in January to a seasonally adjusted annual rate of 300,000 units.

Permits slowed 2.8% in January to an annual rate of 1.568 million units, which was down 28.6% from a year earlier. Single-family permits were off by 4.0% at a yearly pace of 1.21 million, down 32.6% from January 2006; and multifamily permits were down 0.4% to a 447,000 annual rate, 15.8% below a year earlier.

January’s housing starts decreased 28.5% in the West, 15.2% in the Midwest and 11.8% in the South. They were up 9.9% in the Northeast, with a boost from unseasonably warm winter weather. All four regions, however, reported a construction pace well below a year earlier.

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 the 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.

Builders Gain Confidence in Prospects for Home Sales

Builder confidence in the housing marketplace has continued to rise this month, according to the NAHB/Wells Fargo Housing Market Index (HMI), which registered 40 for February, up from 35 in January and a low of 30 last September. The index now stands at its highest level since June 2006.

"Builders are still cautious as they continue to manage their inventory, but their view of the demand side of the single-family market is improving," said NAHB President Brian Catalde. "Every component of the February HMI — present home sales, sales expectations for the next six months and buyer traffic — showed a significant positive uptick in February."

"The HMI results are consistent with Federal Reserve Chairman Ben Bernanke's comment to Congress this week that there are signs of stabilization on the demand side of the housing market," said NAHB Chief Economist David Seiders.

Lower energy prices, favorable mortgage rates and solid growth in employment and household income have all contributed to the recent stabilization of home buyer demand, Seiders added. "In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand."

The HMI is derived from a monthly survey that NAHB has been conducting for 20 years. Any index number over 50 indicates that more builders view sales conditions as good than poor.

On this month’s HMI, the component gauging single-family home sales rose six points to 42; traffic of prospective buyers increased five points to 31; and sales expectations for the next six months climbed seven points to 55. This is the first time that sales expectations have gone beyond the 50 threshold since last June.

"Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead," said Seiders.

February’s HMI rose in all four regions of the country, with the Northeast gaining the most ground with an eight-point increase to 46. Five-point gains were registered in the Midwest and South, to 29 and 46, respectively, while the West moved up two points to 35.

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 the 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.

Hard-Line Critics Would Damage GSEs, Says Freddie Mac CEO

Tighter oversight of the nation’s government-sponsored enterprises is needed, but critics of Fannie Mae and Freddie Mac are going too far in their proposals to increase the capital requirements of those institutions and limit their ability to respond to the growing need for financing residential mortgage debt, Richard Syron, chairman and chief executive officer of Freddie Mac, told NAHB leaders in remarks in Orlando, Fla. on Feb. 8.

With the amount of the nation’s outstanding residential debt expected to double over the next decade as an additional $13 trillion is needed to finance housing, the solutions proposed by some of the “most hard-line critics” of the GSEs would become “tomorrow’s problems,” Syron said.

“The loudest voices in the debate have been those demanding not only to tighten oversight of the GSEs — which we agree with — but to diminish our tools and shrink the box within which the GSEs can operate,” he told a joint meeting of NAHB’s Executive Board and Budget and Resolutions committees.

At the same time as the future demands on housing finance become “greater than ever,” Syron said that a number of private financial institutions will “face strong pressure to pull back from mortgages.”

“There is another big economic change underway that will make the GSEs all the more necessary,” he said. “For more than a decade, the private-label mortgage market has been a very attractive and relatively easy business to be in — partly because the risk premiums demanded by investors have been at historic lows,” he said. “Yet there are mouting concerns that this situation cannot last, and that when this change comes, it will not be pretty.”

“What all this means is that the GSEs will be more important than ever. For the mortgage business will become harder as investors become more wary of risk and pricing for perfection comes to an end. And this, in turn, will only increase the need for mission-responsive institutions in housing finance,” he said.

“Our charters specify that we must be a continual presence in the mortgage market, providing affordability, liquidity and stability,” he added. “All of which begs the question, Why overly hamper us just when you’re going to need us most?”

Discussing specific regulatory changes that would make the GSEs “less competitive, less profitable and less relevant,” Syron said:

• A dramatic rise in capital requirements not tied to inherent risk would “put a big squeeze on the GSEs’ securitization business — the one area where there is the least controversy over what the GSEs do.”
  
  
• New program restrictions would force the GSEs to wait for regulatory approval before purchasing any innovative new product or undertaking any new activity and this would be especially harmful at a time when demographic changes in the marketplace require more innovation and agility than ever before.
  
  
• Higher loan limits need to be established in high-cost states because “assuming a uniform cost of living across the United States simply does not make sense.”
  
  
• A healthy, robust and profitable retained portfolio is needed so that the GSEs can spring into action when they need to respond to market realities. “If something bad befalls the GSEs, the first line of defense is not the taxpayer, it’s roughly $100 billion in private shareholder capital. But shareholders demand an adequate return on their investment; and if that return falls too low, the model simply won’t work.”

Syron said that “appropriate” GSE legislation “strengthens our oversight but also enables us to meet our expanding mission. The truth is, we are talking about the fundamental shape of the housing finance system in this country. And that has implications for the health of the home builders, the entire housing sector and our nation’s economy.”

“We need legislation,” he said, “but we need to get it right.”

For more information, e-mail Chellie Hamecs at NAHB, or call her at 800-368-5242 x8425.

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 the 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: The Inventory Overhang Is Heavier Than It Looks

Growth of U.S. economic output (real Gross Domestic Product) has slowed from the above-trend rates recorded earlier in the expansion, although overall GDP growth has held up reasonably well in recent quarters even as the housing production component (residential fixed investment) has contracted substantially.

Furthermore, the contraction in housing market activity and the slowdown in house price appreciation have not generated serious “spillover” effects in other sectors of the economy (including personal consumption expenditures), and strengthening activity in some sectors (including nonresidential construction) has helped offset the negatives from housing production.

As a result, the economy did not skate close to recession in 2006 and the probability of an economic downturn is not high during the 2007-2008 period.

Economic resilience also is evident in the labor market. The housing downswing caused job losses in residential construction during most of 2006 and into January of this year, and further losses in construction are inevitable during coming months.

However, overall job growth was reasonably well maintained in 2006 and we’re expecting a solid performance in 2007 as well. The unemployment rate ticked up in January to 4.6% and is likely to gravitate upward somewhat further. However, we do not expect the unemployment rate to rise above 5% during the 2007-2008 period.

Core Inflation Has Begun to Recede

Key measures of core consumer price inflation (excluding prices of food and energy) firmed up during much of 2006, moving well above the upper bounds of the Federal Reserve’s apparent “tolerance zones.”

This inflation pattern naturally raised concerns at our central bank about potential economic “overheating” and prompted many financial market participants to anticipate some tightening of monetary policy in the near term.

As 2006 drew to a close, core inflation rates began to recede, at least on a year-over-year basis. The core Consumer Price Index slowed systematically during the fourth quarter, receding to a pace only slightly above the upper bound of the Fed’s apparent tolerance zone for this measure. Even more important, the core price index for Personal Consumption Expenditures — the Fed’s favorite inflation gauge — displayed the same type of pattern.

The evolving slowdown in core inflation had been projected by the Federal Reserve, and this pattern is an integral part of NAHB’s forecast for 2007 and 2008. The recent and projected improvements on the inflation front reflect modest slowdowns in growth of real GDP and employment as well as dissipation of some special factors that elevated core inflation last year.

On the latter point, the “owners’ equivalent rent” component of the core price measures has slowed to some degree and figures to contribute to the projected slowdown in core inflation in 2007-2008.

The Fed Is Anchoring the Interest Rate Structure

The Federal Reserve held monetary policy steady at the Jan. 30-31 meeting of the Federal Open Market Committee (FOMC). Indeed, the Fed has held its target for the federal funds rate at 5.25% since mid-2006, a level that’s around a “neutral” monetary policy stance in the prevailing inflation environment.

We expect the Fed to maintain this funds rate target until the late-June FOMC meeting, and we still anticipate a quarter-point rate cut at that time — in order to keep the “real” funds rate from rising as core inflation recedes.

Long-term interest rates firmed up to some degree in late January and early February as incoming data on the economy were surprisingly strong, but long rates have receded more recently. The long-term home mortgage rate is hanging around 6.25%, the same as a year earlier and half a percentage point below the mid-2006 level.

The Treasury yield curve still is inverted across much of its range, a pattern that may not be sustainable for much longer. NAHB’s forecast shows an essentially flat Treasury yield curve by late this year, at least out to the 10-year mark, as short rates recede a bit and long rates move up modestly from current levels.

In this regard, we do not expect the long-term mortgage rate to move above 6.5% this year.

Housing Demand Has Stabilized Following an Abrupt Downward Correction

A healthy job market, good growth in household income, a favorable interest rate environment and receding energy costs provided support to housing demand in the latter part of 2006. Furthermore, widespread cuts in house prices and deepening nonprice sales incentives (documented by NAHB surveys) gave further support to demand as last year drew to a close and 2007 got underway.

Despite formidable seasonal adjustment issues, housing demand apparently stabilized in fundamental terms toward the end of 2006, and some improvement now seems to be underway.

Indeed, the Jan. 31 FOMC statement cited “some tentative signs of stabilization” in the housing market — in sharp contrast to the reference to “substantial cooling of the housing market” in the Dec. 12 FOMC statement — and Fed Chairman Ben Bernanke repeated that assessment in his Feb. 14-15 testimony that conveyed the central bank’s semiannual Monetary Policy Report to the Congress.

The fourth-quarter averages for sales of both new and existing single-family homes were up a bit from their third-quarter averages. Furthermore, NAHB’s single-family Housing Market Index (HMI) — incorporating survey readings for current and expected home sales as well as for traffic of prospective buyers has continued to move upward (the February HMI came to 40, up from a low of 30 last September).

The weekly series on applications for mortgages to buy homes by the Mortgage Bankers Association, available through early February, also supports the proposition that housing demand has stabilized, despite well-known seasonal adjustment issues with this series. And as Bernanke told Congress this week, measures of home buyer sentiment recently have been on the rise.

NAHB’s proprietary monthly survey of 30 large home builders — accounting for about one-fourth of the total for-sale new home market — also provides some reassuring signals on the demand side of the single-family market during the final months of 2006 and into January of this year. These data (seasonally adjusted by NAHB) show a distinct falloff in cancellations and stabilization of net sales since the middle of last year.

The Inventory Overhang Is Heavier Than It Looks

Stabilization of housing demand (net sales) is the essential first step toward completion of the dramatic housing “correction” that has followed the unsustainable housing boom of 2004 to 2005.

The second step is to work down an excessive inventory overhang in markets for both new and existing housing, and the final step is to bring housing starts and residential construction activity back up to sustainable trend levels.

The inventory overhang in the markets for new and existing single-family homes came down a bit in the final months of 2006, at least according to the standard measures. However, inclusion of homes left with builders through sales cancellations, along with consideration of an elevated level of vacant for-sale homes in the existing housing stock, show that the inventory overhang is heavier than it appears at first glance.

The current overhang of vacant homes for sale (new plus existing) may not be the end of that story. The single-family rental vacancy rate recently climbed to a record level, presumably reflecting difficulties being encountered by investors that are biding their time before putting single-family homes back on the market.

It’s hard to estimate the numbers of single-family rental units that will become for-sale units, or the time frames involved, but builders should listen for this shoe to drop. There’s also the issue of competition from the multifamily condo market, where the number of vacant for-sale units (new and existing) has climbed even more dramatically (in percentage terms) than in the single-family market.

Housing Finance Excesses Are Coming Home to Roost

The relaxation of mortgage lending standards that helped fuel the unsustainable housing boom of 2004 to 2005 has been coming home to roost in the form of rising delinquency and default rates, particularly in the subprime market.

So far, the reflow of foreclosed homes back onto the for-sale market has been quite limited in most areas, and we’re not expecting this factor to seriously aggravate the overall supply-demand balance in single-family or condo markets over the course of the next two years.

The well-publicized problems in the subprime mortgage market and related mortgage-backed securities markets, the supervisory guidance recently issued by federal and state regulators of depository institutions regarding “nontraditional” adjustable-rate mortgage products, and an expanding focus by the Congress on “predatory” lending practices and home foreclosures are combining to cause a swing back to firmer home mortgage lending standards than had prevailed during the boom period.

While significant, we do not expect this shift to forestall the improvements in home sales and housing starts shown in our forecasts for 2007-2008.

The Projected Upswing in Housing Production Is Fighting Some Strong Headwinds

NAHB’s baseline (most probable) forecast anticipates an upturn in national housing starts by the second quarter of this year and a turnaround in residential fixed investment (in the GDP accounts) by the third quarter.

The forecast also depicts a gradual recovery in national housing production through 2008 as housing starts approach our estimate of sustainable trend — about 1.85 million units per year.

NAHB’s baseline housing starts forecast stands somewhat above the February Blue Chip consensus forecast, particularly for 2008 — 1.71 million units vs. 1.60 million units — and it’s fair to say that there’s considerable downside risk to our forecast. Indeed, Bernanke just told the Congress that, from the Fed’s perspective, “the ultimate extent of the housing market correction is difficult to forecast and may prove greater than we anticipate.”

We’re all struggling to assess the aftermath of the unique investor-driven housing boom, the uncertain dimensions of the inventory overhang (including the vacant unit issue) and the degree of backlash in the housing finance system following the earlier relaxation of lending standards. We’ll be constantly reassessing the various “headwinds” encountered by the incipient housing recovery as we move ahead. Stay tuned.

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 Feb. 14 edition. To subscribe to “Eye on the Economy,” click here.

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 the 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 Trends

The 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.

• U.S. Census Bureau Construction Price Indexes
  
  
• NAHB's Housing Forecast
  Housing starts, sales and interest rate projections through 2007.
  
  
• Latest Home Mortgage Interest Rates
  Contains current and historical data on fixed and adjustable mortgage rates. Updated weekly.
  
  
• Historical Facts, Figures and Trends
  Includes new home starts and sales, average and median home prices, homeownership rates, characteristics of new homes and more.
  
  
• Characteristics of New Housing
  Highlights the latest data on new-home characteristics released by the U.S. Census Department. Includes links to the complete Census report and other trends researched by NAHB.
  
  Additional breakouts of this data and other trends researched by NAHB are available at www.nahb.org/constructionstats under “Selected Characteristics of New Housing” (dated 6/13/2006).
  
  
• Housing Starts
  Updated monthly and based on a seasonally adjusted annual rate.
  
  
• New and Existing Home Sales
  Updated monthly and based on a seasonally adjusted annual rate.
  
  
• New and Existing Single-Family Median Home Prices
  Updated monthly.
  
  
• Home Price Index
  The index measures average home appreciation in more than 250 metropolitan markets. Updated quarterly.
  
  

• Metro Home Building Permits
  Local and state data on housing construction rates. Updated monthly.
  
  
• Employment Trends for Metro/State Markets
  Provides metro and state employment data nationwide. Updated monthly.
  
  
• Local Economic Impact of Housing
  Shows how building 100 homes benefits a typical metropolitan area.
  
  
• Home Building’s Direct Impact on the Economy
  
  
• Housing’s Contribution to Gross State Product
  Measures how much housing contributes to the economic output of each state.
  
  
• Housing Market Statistics from HousingEconomics.com
  Full array of statistical categories available to NAHB members, a limited number available to non-members.
  
  
• In-Depth Analysis from HousingEconomics.com
  Full array of analysis of factors affecting housing and the impact on the industry available to NAHB members, a limited number available to non-members.

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.

Builders’ Tip: How to Make Invisible Drywall Butt Joints

	Click for larger image.

During my 40 years in the trades, I’ve had a number of high-end drywall jobs that required dead-flat ceilings — no telltale bulges allowed where the ends of the drywall sheets abut one another.

The method shown in the accompanying drawing is my solution to the problem.

I’ve inspected some jobs that we did 25 years ago using this method, and you still can’t see where the butt joints occur.

This drywall trick starts with a sheet of plywood. The plywood should be the same thickness as the drywall.

• First, trim an inch off the width of the sheet, and then crosscut it into 10 equal strips. They will be 9-1⁄4 inches wide by 47 inches long.
  
  
• As shown in the drawing, we next staple strips of 1⁄16-inch thick poster board to the long edges of the plywood strip.
  
  
• Before raising a drywall panel for installation, we screw one of the plywood strips to the end of the panel. The poster-board strip goes between the plywood and the drywall.
  
  
• As the drywall goes up, the butt ends are arranged to fall between the ceiling joists. When the adjacent drywall panel is screwed to the plywood strip, a shallow dip is created where the drywall bends over the poster board. This shallow dip creates a hollow for the tape.
  
  
• We tape our joints in the usual manner, beginning with the butt joints.
  
  
• Once that joint compound has dried, we tape the long edges.

Incidentally, a 20-inch long piece of 1-1/2-inch aluminum angle is a handy tool for leveling the finish coats of joint compound over the butt ends.

Using this technique, we never had a joint show up on a punch list at the completion of a job.

— Tim Hanson, Indianapolis, Ind.

Tips & Techniques provided by Fine Homebuilding.
©2005 The Taunton Press

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 the 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.

Smaller Homes, Outdoors Spaces: Hot Stuff in 2007

Smaller homes and the abundant use of outdoor rooms are among the hot design trends for 2007, according to architects and interior designers who judged the latest Best in American Living Awards (BALA).

Other hot trends, as seen in the BALA entries and outlined during a panel discussion at the recent International Builders’ Show in Orlando, include:

• The re-emergence of contemporary design, particularly in interior furnishings and design, but also in exterior design
  
  
• Vertical living where land is scare
  
  
• Green building and sustainable development
  
  
• Urban revitalization and redevelopment
  
  
• Specialty spaces and features, including rotundas and stair towers

Participating panelists Victor Mirontschuck, of EDI Architecture, a global architecture, interior design and planning firm; Kathy Browning, of Design Consultants, a model home merchandising and interior design company in Virginia Beach, Va.; and Barry Glantz, of Glantz and Associates Architecture, a full service residential architectural and consulting firm based in St. Louis, discussed the “hot” design trends they see coming to the fore in 2007 during a recent press conference at the builders’ show.

All three panelists defined “hot trends” as those trends that were prominently featured in an abundance of the entries in this year’s BALA competition.

Smaller Homes, Higher Level of Finishes

“Small doesn’t mean less appealing,” said Browning, while noting that the smaller homes entered in BALA featured high levels of quality and finish.

The smaller homes entered in BALA were as small as 1,500 square feet. A few of the smaller homes had as much as 3,500 or more square feet of living space, but were considered small because they “had a small feel to them,” Glantz said.

“There was a higher level of finishes in smaller homes in this year’s entries,” added Glantz. The homes featured interior items such as wrought iron, built-ins and furniture-grade cabinetry. “They were all cozy, warm and very, very livable."

Smaller homes are gaining appeal because of higher energy costs, Mirontschuck said.

Another reason, Browning added, is because more people are downsizing their lives and “shedding stuff.”  

Outdoor Spaces Have Year-Round Appeal

Browning said the use of outdoor rooms and spaces is no longer popular in just warm climates. She said they are being created in homes in more moderate climates for three-season use, and even in some colder climates. 

Contemporary Makes Initial Inroads Inside Homes

All three panelists said that contemporary design was primarily appearing in interior design trends, rather than exterior designs.

Contemporary design was also making its way into homes through retail outlets like Target and home furnishing stores, Browning added. “Contemporary design is coming into homes little by little,” she said. “It can be found in second homes” where many people are simplifying their lifestyles. “It’s not all across the country. It’s almost like a lifestyle change.”

Glantz said the contemporary push in design is not universal. It is primarily popular among the younger market segment of young singles and couples and young executives.

“More interiors are featuring playful geometry, the strong ― bold ― use of color,” said   EDI’s Mirontschuck. Contemporary design can also be found in the variety of materials used, such as concrete floors that are stained or polished, and exposed ductwork, he added. “The kitchen seems to be the pivot point for contemporary design.”

“Contemporary lines today are very simple,” said Browning. “They are clean lines, less bothersome. There is less of the Old World,” she added. “There is more of the modern feel from the 1970s, but not the hard feel from the ‘70s.”

Toilet Tank Aquarium Brings New Bathroom Twist

With the Fish-n-Flush aquarium toilet tank, home builders can bring a new decorative twist to the bathroom, turning it into one of the most talked about rooms in the house.

The Fish-n-Flush is a clear two-piece toilet tank that replaces a standard toilet tank and contains a fully functioning aquarium inside. The insert can be filled with water for fish or left dry and used as a terrarium for a pet reptile or plants.

“We wanted to develop a product that had a dual purpose — to serve as a proper, fully functional toilet and also as a source of entertainment and conversation,” said Richard Quintana, CEO of AquaOne Technologies, Inc., the toilet’s inventor. “Fish-n-Flush is definitely an attention-getter.”

The patented aquarium fits most toilets and operates as a conventional interior tank, which is manufactured of clear PETG to ensure a strong and durable reservoir. The aquarium will accept fresh water, as well as salt, warm and tropical water. In addition, the 2.2-gallon aquarium piece can be easily removed for cleaning without obstructing the toilet from working. The toilet tank itself holds 2.5 gallons, which provides sufficient head pressure for proper flushing.

AquaOne worked with a marine biologist to develop the technology and produce a certified working aquarium. Fish-n-Flush comes with gravel, two plastic nine-inch plants, a dual filter system, LED lighting, a built-in feeder, fill valve, overflow tube, flapper, suction pump and two screws. The power level is set at a safe 12 volts.

“One of the key attractions to Fish-n-Flush is that we see the toilet serving as a great way to help toilet train young children as well as a fashion statement for the home owner who wants to have something unique,” Quintana added.

Aiming for Satisfied Customers Is Not Good Enough

If the goal of every home builder company is to have satisfied customers, then they are aiming too low.

That blunt assessment was delivered by industry experts tasked with increasing customer satisfaction and loyalty for top national companies who shared their secrets during a Feb. 8 seminar at the International Builders’ Show in Orlando, Fla.

“Too many firms aim for satisfaction. Satisfaction better not be your goal. You have to get your customer to say ‘wow.’ This is what people are looking for,” said Paul Cardis, CEO of NRS Corporation in Madison, Wis.

Keeping customers happy adds to the bottom line by lowering the cost of sales by increasing referrals, improving margin potential through better relationships with home buyers and strengthening the builder’s brand, said Cardis.

Happy home owners are an outstanding source of referrals, he added.

Conversely, it only takes one disgruntled home owner to ruin a builder’s reputation.

Getting Attention With 10,000 Lemons

Cardis cited a horror story in which one irate home owner dumped 10,000 lemons in his front yard, which drew the attention of the local media.

“If you are not focused on customer delight, you are missing the boat in the home building industry,” he said.

To keep their customers happy, Cardis said that builders need to set realistic expectations, show genuine caring and be honest.

For example, he said if builders find that there are any delays in the construction process, rather than attempting to hide or conceal it, they should immediately let the customer know what the problem is and what they are doing to correct the situation.

Joe Donahoe, quality assurance manager for the Illinois division of Centex Homes, says builders must always do what they say.

“If you don’t set expectations with your buyers, they will set their own. And that spells trouble,” he said.

Exceeding Buyer Expectations

To increase customer satisfaction, Centex employs a system known as the Buyer Education Seminar and Timeline, or B.E.S.T. seminars, for its workers.

Donahoe says the program is designed to align departments and employees to make sure everyone in the organization knows what the other person is doing.

The system is designed to exceed what the buyer expects, reduce buyer anxiety and ultimately to boost customer satisfaction, he said.

Pulte’s Tracking System

To deliver a complete house, defect-free, on-time and with all options installed, Pulte Homes has instituted a quality assurance program that tracks all the major items that go into a home.

“In effect, this program acts as a super punch list,” said Scott Himelhoch, director of customer relations for Pulte Homes Corp.

The home superintendent generates a punch list for the trades, which Himelhoch said helps the superintendent and trades see the house through the eyes of the customer.

Using an Excel spreadsheet, Himelhoch characterized the program as a “low-tech solution with high impact results. What you measure improves,” he said.

Prior to any home-closing, the superintendent checks off each component on the quality assurance tracker to make sure that all major parts and items are installed and working.

The tracker list includes the following:

• A/C Start Up/HVAC complete
• Appliances installed
• Batch pack complete
• Blinds installed
• Block wall complete
• Cabinet punch complete
• Drywall punch complete
• Elect trim complete
• Flooring complete
• Final clean complete
• Final grade complete
• Final rake complete
• Final termite-proofing complete
• Garage door installed
• Gas meter installed
• Insulation complete
• Landscape installed
• Low voltage complete
• Options complete
• Paint final complete
• Power
• Roof complete
• Stucco punch complete
• Tops installed
• Trim carpentry complete
• Windows/screens complete

Based on more than 2,200 closings using this system in 2006, Himelhoch said that warranty costs were 12% under budget.

As for customer satisfaction, 91% rated the condition of their home at closing as outstanding, 90% said they would buy another home from Pulte and 91% would recommend a Pulte home to a friend or relative.

Builders Advised to Rev Up Competitiveness in Down Market

Convention-goers attending an International Builders’ Show seminar in Orlando, Fla. were told they need to take stock of their product and develop innovative marketing strategies in order to survive the current housing market slowdown and stand out from the competition.

“The first step is to conduct an internal review of your company’s product,” said John Schleimer, MIRM, president of Market Perspectives, a national real estate research and consulting firm based in Roseville, Calif. “Do you have the right standard features? What do your prospective buyers think? What is the curb appeal of your front elevations? What value-engineering changes can you make?”

The three key rooms to focus design dollars on are the kitchen, family room and master suite, said Schleimer. “The master bath is a sanctuary. You can never have enough closets in the master suite.”

“And don’t forget the Suburban in the garage,” he added. “Adding three feet to the depth of the garage will get an extra sale per month.”

Stating that it is absolutely vital to make a good first impression, Schleimer said that builders need to ensure they maintain a clean and appealing job site.

“Is your off-site and on-site signage effective? Do you control construction debris within your projects? Are your information centers appealing? Does your model merchandising ‘turn on’ your prospects? Are your spec homes clean?” These are all questions that need to be addressed, he said.

To further get a leg up on the competition, Schleimer suggested that builders see what their competitors are up to.

“Review the design quality of their plans compared to yours,” he said. “Compare their standard and option features to yours and their marketing and merchandising to yours and then make the necessary competitive adjustments.”

Cutting the Ad Budget a Bad Decision

Observing that the Internet is a “great equalizer” in today’s marketplace, Richard Elkman, MIRM, president of Group Two Advertising in Philadelphia, said that it pays to invest in a good Web site.

“In 2006, 15% of all real estate spending was online. That figure will jump to 32% by 2010,” he said. “Most Web sites today are pathetic. You have to have a budget for Web site marketing.”

Noting that minorities prefer to buy new homes at twice the rate of white buyers, Elkman noted that blacks, Hispanics and Asians have distinct cultures and you have to learn how to reach them.”

When planning an ad campaign, Elkman said the goal is to “develop promotions that set you apart from the rest,” to create billboards and signage that “catch the eye” and to be innovative with media placement.

“Ads in the real estate section stink,” he said, noting that they tend to be crammed together and fail to stand out.

Though it may seem counterintuitive, Elkman also cautioned that cutting an ad budget in a down market is “almost always a bad decision.”

“You can’t keep your listing a secret and expect to sell,” he said. “And when the competition reduces its advertising, your strong marketing effort will make you more visible than ever.”

Understand What’s Under Your Control

Declaring that a cooling market is a confused market, Bob Schultz, MIRM, CSP, and president of New Home Specialists, Inc., a management consulting and sales education and training firm based in Boca Raton, Fla., said that “perception is reality.”

“When you sell homes, it’s not about the house, it’s about the experience,” he said.

Schultz said that builders need to understand what they can and cannot control.

“You can’t control interest rates. You can’t control rising construction costs. You can’t control what the competition does. You can’t control what the articles in the newspaper say. You can’t control the weather outside of your office.

“However, you can control how you influence customers’ perception of interest rates. You can control how you influence customers’ perception of construction costs. You can control what you do — through attitude, appearance, your presentation and sales skills. You can control what you put in the newspaper and you can control the environment customers experience when they come into contact with you.”

Survive Changing Markets

Bill Webb, MIRM, shows you how in “Sweet Success in New Home Sales,” available through BuilderBooks.com.

This book provides powerful techniques for selling more homes and making more money in leaner times. "Sweet Success in New Home Sales" lays out the proven approaches for crafting and delivering sales excellence.

To view or purchase this publication online, click here, or call 800-223-2665.

Best in Sales and Marketing Honored at The Nationals at IBS

The year's most outstanding work in residential real estate sales, marketing and design was honored Feb. 7 at The National Sales and Marketing Awards gala during the International Builders’ Show in Orlando. The awards are presented by NAHB’s National Sales and Marketing Council (NSMC).

"The Nationals are the most prestigious awards of their kind, setting the benchmark for innovations in new home design, marketing and sales," said Dan Levitan, chairman of the 2007 Nationals. "NAHB's commitment to recognizing originality, imagination and success has been exemplified by its award winners since the competition's inception."

A diverse panel of industry professionals from across the country selected gold, silver and regional award winners from nearly 1,400 entries.

Several top award winners are highlighted below. For a complete list of category winners and additional details about their entries and for a history of The Nationals, visit www.thenationals.com.

Community of the Year Gold Awards

• Attached Community: Sky Terrace, Denver.
  Builder: Infinity Home Collection; Marketing Director: David Steinke
  
  
• Detached Community: Encantada, Ladera Ranch, Calif.
  Builder: Pardee Homes; Marketing Director: Jessica Fabricant
  
  
• Masterplanned Community: Seabridge, Oxnard, Calif.
  Builder/Developer: D.R. Horton; Marketing Director: Mark Higgins

Individual Achievement Honors

• Marketing Director of the Year: Peggy Sullivan, Pathway Communities, Atlanta
  
  
• Sales Manager of the Year: Richard Rudnicki, CSP, Winchester Homes, Bethesda, Md.
  
  
• Salesperson of the Year: Sheena M. Guido, The Marketing Directors, Inc., A Ryness Company, New York
  
  
• Rookie Sales Person of the Year: Kyle Krecklow, Ryland Homes, Twin Cities Eden Prairie, Minn.
  
  
• Sales Team of the Year (Tie)
  Theresa Maisen, CSP, James I. Park, CSP and Lindsay Wilson, CSP; The Ryness Company, Newport Beach, Calif.
  
  Paul Cinciripini, Gus Garcia, Johnny Hackett, Michelle Lo, Quyen Eduardo Pena, Maria Sirgo, Sarah Ta, Robert Taylor and Lisa Tran; Royce Builders, Houston

Legends of Residential Marketing Award

The Legends of Residential Marketing Award, begun in 1992, honors builders and consultants who stand apart as leaders in the new-home marketing field. Award winners are selected for their professional commitment to the industry and new home community marketing innovations.

• Gary Ryness, The Ryness Company, Danville, Calif.
• Ken Agid, The Marketing Department, Coto de Caza, Calif.

Sales and Marketing Council of the Year

• Under 250 Members: Horry-Georgetown SMC, Conway, S.C.
• 250 to 500 Members: Atlanta Sales & Marketing Council of the Greater Atlanta Home Builders Association, Tucker, Ga.
• More Than 500 Members: Inland Sales and Marketing Council, Huntington Beach, Calif.

For more information, visit www.thenationals.com.

Utah Developer Tippets Named 50+ Housing Council Chair

	Robert Tippets

Robert Tippets, a builder/developer of active adult communities from Midvale, Utah, was named chairman of the NAHB 50+ Housing Council Board of Trustees at the International Builders’ Show in Orlando, Fla. earlier this month.

The council provides resources, education, exclusive research and networking opportunities for its members and represents NAHB within the growing 50+ housing industry.

Tippets, an owner/partner of Village Carefree Communities, which builds active adult communities in northern Utah, has more than 34 years of experience in the industry. Village Communities was named Builder of the Year for the Greater Salt Lake Area in 2003 and was the recipient of a 2005 Best of 50+ Housing Gold Award for best small active adult community under 150 homes.

“Bob’s longtime dedication to NAHB and to the 50+ Housing Council, as well as his commitment to industry innovation and quality home building, make us very proud to have him as our chairman,” said Michael Copp, assistant staff vice president of the 50+ Housing Council at NAHB. “We’re very excited about the year ahead.”

Tippets holds an MBA from the University of Utah and a bachelor’s degree in Economics from Brigham Young University.

A member of NAHB for more than 10 years, Tippets serves on the NAHB Board of Directors and was the 2002 president of the Salt Lake Home Builders Association.

He is an active member of several committees and is a frequent speaker at the International Builders’ Show.

Seventeen Winners Fuel Up on Education at IBS

Seventeen lucky attendees of the recent 2007 International Builders’ Show in Orlando walked away winners in The NAHB University of Housing “Fuel Up on Education” giveaway contest.

Four $100 Visa gas cards were given away at NAHB’s education booth each day during the four days of the show. On the final day of the show, Sharon Capan of Shamot Construction in Coraopolis, Pa. won the grand prize giveaway — a $2,500 gas card.

“I can’t believe it,” said Capan. “I never win anything.”

The contest drew many attendees to the booth for a chance to win and to learn more about NAHB’s education programs.

“I hadn’t stopped by the booth before,” said Victoria Laney, of Ocoee, Fla., a $100 card winner. “But the contest got my attention. Once I got the literature, I realized what a wonderful education program NAHB offers. I’ve already recommended courses to several local contractors I know.”

Another $100 card winner, Lenny Tillery of Benson, Ariz., knows the education program inside and out. He is both a student and the chairperson of the National Designation and Training Committee.

Tillery has already completed two courses towards his Certified Graduate Associate (CGA) designation. His goal is to get more educational programs offered locally.

“I have to drive to Dallas to take a class now,” he said.

An NAHB education task force is currently exploring which programs local HBA members are most interested in seeing hosted. “I know we have a long way to go,” he said. “But we are on our way.”

Grand Prize Winner

• Sharon Capan, Shamot Construction, Coraopolis, Pa. 

Feb. 7 Winners

• Barbara Carpenter, NY State Builders’ Association Rep, Albany, N.Y.
• Robert Gajewski, Lafayette Development, Frederick, Md.
• Beverly Graybeal, McDonald Construction, Bridgeport, W.V.
• Rex Walker, Realty Builders, Inc, Newport News, Va.

Feb. 8 Winners

• Dianne Beaton, Secondwind Water Systems, Manchester, N.H.
• Bob Blanchette, LWR Communities, Bradenton, Fla.
• Miriam Land, Taunton Truss, Tallahassee Fla.
• Lanny Tillery, Whirlpool Corporation, Benson, Ariz.

Feb. 9 Winners

• Diana Lucero, New Mexico Bank & Trust, Albuquerque, N.M.
• Rich Madron, RDM & Co, Red Bluff, Calif.
• Abigail Taunton, Taunton Truss, Wewahitchka, Fla.
• Debbie Williamson, Wayne Homes, Longwood, Fla.

Feb. 10 Winners

• Carol Gardina, Air Source, Loxahatchee, Fla.
• Judy Kuzma, Glenmoor Manor Development, Holt, Mich.
• Victoria Laney, West Orange Times, Ocoee, Fla.
• Kate Murr, Smart Designs, Springfield, Mo.

For more information about The NAHB University of Housing, visit www.nahb.org/education.

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 the 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.

Education Calendar

March 11-13	2007 Log Homes Council President's Tour	Knoxville, Tenn.
March 25-27	National Green Building Conference	St. Louis, Mo.
April 11-13	2007 NAHB Multifamily Pillars of the Industry Conference & Awards Gala	Hollywood, Fla.
April 26	Construction Forecast Conference — Spring 2007	Washington, D.C.
May 20-22	2007 Building Systems Councils Plant Tour	Roanoke, Va.
May 30-June 1	Building for Boomers & Beyond: 50+ Housing Symposium	Denver, Colo.
June 25-27	NAHB/BALA Design Institute for Builders	Bellvue, Wash.
Oct. 26-28	2007 Custom Builders Symposium	Naples, Fla.

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 the 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.

Green Building Standard to Be Based on NAHB Guidelines

In an effort to bring uniformity to sustainable building practices, the International Code Council and NAHB have announced an agreement to develop and publish a residential green building standard.

The announcement was made during a press conference at the International Builders’ Show in Orlando, Fla. with NAHB Green Building Subcommittee Chairman Ray Tonjes, ICC President Wally Bailey and Rick Weiland, the council’s CEO.

The standard will be based on NAHB’s Model Green Home Building Guidelines and should be completed sometime in 2008.

“Today, we are proud to declare that NAHB and the code council are collaborating to bring uniformity to sustainable building,” said Tonjes, a custom builder in Austin, Texas. “It’s time for a standard for green building. But it needs to reflect the architecture, the geography and the weather and temperature patterns of the place where the home will be built. It needs to recognize the wide divergence of consumer tastes, preferences and local conditions. And it needs to avoid costly mandated practices that can cause housing to fly out of the reach of potential home buyers.”

The collaboration is another example of ICC’s commitment to green building, said Bailey. “Strong, durable homes that are safe and affordable have a smaller impact on the world's limited resources,” he said. “ICC is committed to educating our members on green building and participating in activities with other organizations that will assure green building practices are sustainable, safe and affordable.”

NAHB’s Model Green Home Building Guidelines now form the basis of more than 15 state and local green building programs around the country, Tonjes said. “The guidelines create green building programs that work and that are truly green. We are confident that this standard will become common green building practice because of the success of the voluntary programs that have started all over the country.”

“NAHB members have proven that a voluntary, region-specific, flexible program can be both truly green and also allow for innovation,” Tonjes continued. “We believe in the Model Green Home Building Guidelines, we believe in the standards process and we believe that the end result will be a better document for the home building community.”

The NAHB Research Center, which oversaw the development of the guidelines as the American National Standards Institute-accredited standards developer, will serve as the secretariat for the new standard.

“I’m delighted to announce our commitment to work with the Code Council to help advance green building practices for our industry,” Tonjes said. “We surveyed our members a year ago and 92% of them said they would move to green building because ‘it’s the right thing to do.’ That’s true of the standards process as well. It’s the right thing to do.”

NAHB and the Code Council are now seeking applicants for membership in the consensus committee for the development of the ANSI green home building standard. Applications can be submitted at www.nahbrc.org/gbstandard and must be received by March 10, 2007 to be considered.

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

Participants Sought for Green Building Standard Committee

To support a new effort of NAHB and the International Code Council (ICC) to create a voluntary green building standard, the NAHB Research Center is seeking participants to join the ANSI consensus committee for the standard development process.

The Research Center is an ANSI-accredited Standards Developer for American National Standards (ANS) and will serve as secretariat for these development activities, which will follow rules and procedures in accordance with ANSI’s requirements for openness, balance, consensus and due process.

NAHB and ICC have announced their agreement to develop and publish a residential green building standard based on the NAHB Model Green Home Building Guidelines. This standard will provide a common benchmark for recognizing and rewarding green residential design, development and construction practices in a manner that is transparent, verifiable and meaningful to builders, product manufacturers and consumers.

Members of the consensus committee will play a pivotal role in the creation of this standard which, when completed, can be adopted by local green home builidng programs or local building departments as a conformance guide.

Applications for consensus committee membership are now being accepted by the NAHB Research Center, and must be received by Saturday, March 10 in order to be considered. The initial meeting of the consensus committee will tentatively take place in late April.

Visit www.nahbrc.org/GBStandard for information related to the development process or to download an application for committee membership. The entire process, from the formation of the consensus committee to public review and final ANSI approval, is expected to be completed by the end of 2008.

For more information on the standard development process or the NAHB Research Center’s other standards-related activities, call 800-638-8556, or e-mail standards@nahbrc.org.

Free NAHB Environmental Stewardship Brochure Available

“Stewardship: The NAHB Environmental Issues Committee at Work” is a free, new brochure available from NAHB that outlines the environmental issues the committee — working with NAHB’s environmental, regulatory and legal staff — has faced and what the committee did to help preserve needed environmental balance.

The committee’s work is central to the NAHB mission as federal, state and local agencies enact myriad rules and regulations that erode housing affordability while providing dubious benefit.

By developing, implementing and completing research strategies, NAHB has created and reinforced its role of advising and directing regulators’ activities and pursuing reform.

Bulk copies of the brochure are available free to environmental committees and others interested in learning more about the home building industry's environmental stewardship efforts.

Click here to view the brochure. To order free copies, e-mail Delecia Jenkins at NAHB, or call her at 800-368-5242 x8163.

Save the Date for 2007 National Green Building Conference

Mark your calendar for March 25-27 for the National Green Building Conference.

Click here for conference information, or visit www.nahb.org/greenbuilding on the NAHB Web site to learn more about green building.

Green Building Seminar Looks at ‘Building With Trees’

Editor's Note: The National Arbor Day Foundation has cancelled the “Building With Trees” pre-conference seminar that was planned for the NAHB National Green Building Conference in St. Louis on March 24. The seminar was cancelled after this issue of Nation's Building News was published and initially distributed.

Representatives from the foundation will attend the conference and be available to answer questions about their programs.

For information about future Building With Trees seminars, visit the conferences and seminars section of the National Arbor Day Foundation Web site by clicking here.

NAHB and the National Arbor Day Foundation are working together to educate builders and developers on saving trees while building new homes. The foundation’s “Building With Trees” seminar will be featured at the National Green Building Conference in St. Louis as a pre-conference course on Saturday, March 24.

The seminar, offered by noted arborist Charles Stewart of Urban Forest Management Inc., teaches participants how to determine which trees to protect — and then how to make sure they remain healthy during each phase of the development and construction process.

The “Building With Trees” partnership between the foundation and NAHB also provides recognition of industry efforts to preserve trees. Since 1998, builders and developers have been honored for exemplary projects during the annual Awards of Excellence at the Lied Lodge & Conference Center in Nebraska City, near the foundation's headquarters in Lincoln, Neb. This year’s award winners will be recognized at the NAHB Green Building Conference at a special press event.

Last year, the Langston Development Company in Westfield, Ind. was honored for incorporating 900 mature trees into the design of its Brookside community. The Grande Dunes Development Company, LLC of Myrtle Beach, S.C. won for a transplantation and maintenance program developed for its new coastal community. And Woodlands Edge, developed by Rocket Properties, LLC of Little Rock, Ark., was honored for being able to keep 95% of its 460 acres forested.

The “Building With Trees” seminar also can be offered by home building associations for their members or by individual companies for their employees and subcontractors — a one-stop shopping educational opportunity for environmentally sensitive development.

The Arbor Day Foundation provides the instructor, a workbook and snacks — for a set per-person fee. The HBA provides the students, and can charge participants or get a sponsor to pay for the seminar.

The seminars and the awards program provide an excellent public relations tool for builders and HBAs because they demonstrate the industry's commitment to the community and environmental stewardship, says Debra Bassert, NAHB's assistant staff vice president for land use policy. "Builders want to protect existing trees during the construction process because they add value to the finished development. The ‘Building With Trees’ program provides both education and recognition when they accomplish that goal," she said.

The seminar also is a good forum to bring HBA members together with local building officials and elected leaders, Bassert said. "Good development takes good planning, and good planning takes a positive relationship between the public and private sectors. ‘Building With Trees’ helps promote that relationship."

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

Free NAHB Environmental Stewardship Brochure Available

“Stewardship: The NAHB Environmental Issues Committee at Work” is a free, new brochure available from NAHB that outlines the environmental issues the committee — working with NAHB’s environmental, regulatory and legal staff — has faced and what the committee did to help preserve needed environmental balance.

The committee’s work is central to the NAHB mission as federal, state and local agencies enact myriad rules and regulations that erode housing affordability while providing dubious benefit.

By developing, implementing and completing research strategies, NAHB has created and reinforced its role of advising and directing regulators’ activities and pursuing reform.

Bulk copies of the brochure are available free to environmental committees and others interested in learning more about the home building industry's environmental stewardship efforts.

Click here to view the brochure. To order free copies, e-mail Delecia Jenkins at NAHB, or call her at 800-368-5242 x8163.

Save the Date for 2007 National Green Building Conference

Mark your calendar for March 25-27 for the National Green Building Conference.

Click here for conference information, or visit www.nahb.org/greenbuilding on the NAHB Web site to learn more about green building.

Weak Levees, Updated Flood Maps Bad News for Builders

An announcement by the U.S. Army Corps of Engineers earlier this month that 122 levees have unacceptable maintenance ratings is potentially bad news for developers working on projects in the areas that those levees were intended to protect, Michael DePue, an engineer at PBS&J in Little Rock, Ark., said at the International Builders’ Show earlier this month in Orlando, Fla.

The Corps announcement coincides with a $1 billion, multi-year effort by the Federal Emergency Management Administration to update the nation’s flood maps.

The updates will make the maps easier to access and read, but they are also changing the size and location of designated flood plains and flood hazard areas, where development is restricted and flood insurance is mandatory. Adding the property that had been protected by the 122 levees in question — which FEMA requires — means that a significant amount of developable acreage is now subject to additional regulation and higher insurance fees.

“It’s going to mean big changes for many communities,” DePue said. “Flood zones may get bigger or they may get smaller,” but they usually get bigger, he said. And development increases the likelihood of changes. “If everything is built according to regulations, over time, the flood elevations can be expected to rise 1 foot,” DePue said.

Homes in flood hazard areas require special permits and must be built so that the lowest floor is at or above the identified flood elevation. In inland floodplains, developers have the option of raising the homes by filling in the land, but on coastal floodplains the homes must be built on stilts or pilings.

The rules also apply to homes in which more than 50% of the square footage is being remodeled. As a result, in the case of one community, tornado-ravaged homes were required to conform to more stringent floodplain construction standards when they were being rebuilt, he said, even though they were not damaged by flooding.

Instead of waiting for the additional expenses that can result from changing map elevations, and subjecting their customers to as much as a four-fold increase in flood insurance fees, there are steps that builders and developers can take, DePue said:

• Carefully review existing maps. Many current floodplain maps are online at www.msc.fema.gov. Gather information about projects built since the flood maps were created, especially projects that included a lot of fill or where culverts were constructed.
  
  
• Remind home owners to make sure their flood insurance is current. Under a “continuous coverage” exemption, existing policy holders can be grandfathered in when the flood map changes if they can demonstrate proof of existing coverage. Under another rule, if the home was built in compliance with existing regulations at the time of construction, the rates are allowed to remain the same. Flood insurance policyholders are eligible for an add-on policy that supplies up to $30,000 to bring a home into compliance — as long as they have the policy before the map changes.
  
  Get to know the local flood plan manager. In smaller communities, it may be the fire chief or mayor. Make sure you are aware of any planned public meetings to review changes.
  
  
• When FEMA makes preliminary maps available, study them carefully. DePue worked with one Fort Myers, Fla. developer who found 61 errors on the new flood map — for instance, with floodways that were too wide. That’s another good reason to keep records of property improvements, like detention ponds, as-built grading plans and culvert plans, he