Nation's Building News Online: April 30, 2007

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Housing Correction May Soon Run Its Course

Difficulties in the subprime mortgage market have prolonged the current housing downturn and have raised some uncertainties for the future, but economists participating in the NAHB Spring Construction Forecast Conference in Washington, D.C. on April 26 said they expect the industry to start turning around, as early as the second half of this year.

Looking at the broader picture, they said that the housing downturn, though steep, is unlikely to push the nation’s economy into a recession and that job, income and population growth will help support ongoing improvement in demand for housing.

Before it became evident how extensive the problems in the subprime market were and their adverse impact on the demand for housing was recognized, David Seiders, NAHB’s chief economist, said that he was expecting the housing correction to be winding down by this time.

However, “the scene has changed in the past few months,” Seiders said. Housing activity and builder sentiment both looked like they were stabilizing toward the end of last year, but both receded in March and April to levels only marginally above cyclical lows.

“We are in another down leg and don’t know how long it’s going to run,” he said. Cancellations of sales contracts have turned up again, the trend in home sales has turned down and “we will see where it goes over time.”

Responding to market adjustments related primarily to developments in the subprime market, Seiders said that he has cut his housing forecast for this year by an additional 7% and projections for 2008 by 8%.

NAHB is now forecasting 1.455 million housing starts for 2007, a 19.9% decline from last year, and 1.528 million in 2008, a 5% increase. Single-family starts, Seiders said, are expected to show a 35% decline from their peak in the first quarter of 2006 to a trough in this year’s second quarter.

Seiders said that he expects single-family home sales to move up later this year based on economic fundamentals and a modest quarter-point decline in the Federal Reserve’s federal funds interest rate, perhaps in August.

Vacancies of completed homes, both for-sale and rental, have risen to an all-time high, he added, an indication of the excess supply of housing that was driven largely by the binge of speculative activity during the 2003 to 2005 boom.

Seiders calculated that there could be 1.3 to 1.4 million excess housing units in the inventory at this point, but noted that “markets can turn around when there is still inventory. You don’t have to work off every vacant unit in the country” before production turns around.

While that turnaround should materialize in the second half of the year, Seiders cautioned that it will take a couple more years before production reaches the 1.95 million homes, including manufactured units, that is the long-term sustainable trend for the industry.

In the meantime, he said, there are concerns over how many homes will be returned to the market from subprime borrowers who are unable to make their payments. Another unknown is the extent to which credit tightening for subprime borrowers will spread to the prime market. “A lot of tightening has already occurred, and we will get more but it may not be that big a deal,” he said. Subprime lending was mostly in ARMs, and those now account for only an 11% share of mortgages, down from 40% a couple of years ago.

The chief risk for a relatively optimistic scenario for the coming year is that housing will worsen and drag down economic growth, but panelists said that the preponderance of evidence suggests that it is more likely for housing to begin regaining its health from a strengthening U.S. economy.

Although he believes that housing’s decline will extend into 2008, Nariman Behravesh, chief economist for Global Insight, said that “there has not been much of a spillover effect on the rest of the economy, and we expect that benign effect to continue.”

“There is no question that housing is in a deep recession,” he added, “but it hasn’t had a big effect on consumer spending.”

The U.S. economy has been in a slow-growth period, Behravesh said, but this year’s first quarter will probably turn out to be the weakest point of the cycle, with the gross domestic product growing at 1.3%. Growth is now moving into the 2% range, he said, and should be back to trend of about 3% by the end of this year or in early 2008, he forecast.

“All you have to have is housing stop declining for a positive impact on the economy,” Behravesh said. He expects a housing rebound to begin by mid- or late-2008.

And while the “subprime mess” is a serious problem, he said, subprime ARMs account for 8% of total outstanding mortgages. “Roughly 7% of home owners have negative equity, while 60% have equity of 30% or more,” he said. “So far, there has been very little impact on the prime mortgage market.”

Furthermore, banks are in “great shape,” Behravesh said, and the financial system will be able to deal with the subprime situation and, to some extent, “it already has.”

Behravesh predicted that home prices will fall for two consecutive years, with declines in the single digits, something that has not occurred in the U.S. since the Great Depression. However, this will help boost housing affordability, as will real wages, which are starting to rise again, exceeding inflation.

“By Christmas we will probably see most of this nightmare over with what’s happening in the new home building business,” said Jim Glassman, senior economist for JP Morgan Chase.

Glassman said that the severity of the housing downturn is worse than he imagined it would be, but fears of out-of-control housing prices precipitating a bust with damage to the household sector and a sharp slowdown in consumer spending “hasn’t been what’s going on.” Instead, he said, prices are correcting as the result of mis-pricing in the new subprime market.

“Subprime was an important vehicle for new construction,” he said, so the current situation is “hitting builders more severely than real estate overall.”

With consumer spending “doing fine,” corporate profits at record highs and U.S. exports gaining strength from a surge in economic growth around the world, Glassman said that “we don’t have the right chemistry for” a recession.

Also, inflation has remained “broadly stable,” despite an explosion in oil prices.

Glassman predicted that home prices would fall 1% to 5% this year and next. “The West is most worrisome,” he said, because it is most out of line with national prices, and the region could experience “a few years of weakness” as a result.

With new home sales running at an annual rate of about 1 million, a starts rate of 1.5 million is “sufficient to slowly absorb excess capacity” in the housing market by this fall, he said.

Photos by Morris Semiatin

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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.

New Homes Less to Blame for Gas Emissions Than Older Housing

A new study on residential greenhouse gas emissions shows why consumer education and more efficient power plants are crucial to reducing energy consumption and carbon dioxide emissions.

The U.S. government has estimated that homes are responsible for 21% to 22% of both energy consumption and greenhouse gas emissions, but more than half that amount results from the inefficient generation and transmission of energy, according to the report by NAHB economists.

Further, “household behavior, such as how long lights are left on, may have as great an impact on residential electricity consumption as the number of built-in appliances or other amenities provided by home builders,” the report says.

In February, the NAHB Board of Directors adopted policy to study climate change issues and determine an appropriate response from the home building industry. One result of that resolution has been an acceleration of the development of the first-ever residential green building standard, based on NAHB’s nationally recognized Model Green Home Building Guidelines.

“Our commitment to green building is real, and it’s growing,” said NAHB Executive Vice President Jerry Howard. “This report reaffirms the data that shows how homes are becoming increasingly energy-efficient, every year. We now have sound science showing that our builders’ hard work is paying off — but that all of us need to redouble our efforts regarding consumer education.”

Per square foot, new homes consume less than two-thirds the energy of older homes on heating and air conditioning systems, which are usually installed by home builders rather than chosen by home owners, according to the report. The problem lies with older homes with antiquated electrical systems and appliances, drafty windows and insufficient insulation.

Further, builders can’t control the use of other appliances and devices — everything from light bulbs and computers to washing machines and hot tubs, Howard pointed out. “That’s where consumer education comes in. We need to understand that electricity isn’t cheap, even if we can afford the monthly bill.”

The electric power sector was responsible for about 40% of total carbon dioxide emissions in 2005, but apportions that responsibility to the end users — like residential and commercial customers — based on electricity sales. “This is quite significant and an important point to keep in mind,” the report says. “Without a share of the electric power industry’s emissions, the residential sector would account for about 10% of carbon dioxide emissions, rather than 21%.”

Government surveys show that homes built between 1991 and 2001 account for only 2.52% of total energy consumption. “Even if each of the new homes built over the 1991 to 2001 period consumed zero energy, it would only have reduced total consumption in the U.S. by 2.52%. The same result could be achieved by improving the average efficiency of the pre-1991 homes by 14.7%,” the report says.

However, the report warns that more stringent energy conservation requirements for new homes could raise prices and encourage people to remain in their older, less energy-efficient homes.

Consumers can learn how to reduce their energy use at Take Action at Home, an Environmental Protection Agency Web page.

To read the NAHB study, "Residential Greenhouse Gas Emissions," click here.

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

$2 Million in NAHB ‘Buy Now’ Advertising Grants Now Available

The first phase of NAHB’s “Buy Now” Advertising Assistance Program was a huge success, and the program will continue with an infusion of $2 million in additional funding. The program has received enthusiastic and immediate support from home builders associations across the country since its launch in mid-February.

After reviewing survey results and feedback from the $1 million first phase of the program, the NAHB Senior Officers approved the remaining $2 million in funding at last week’s executive board meeting in Las Vegas.

In late March, NAHB Public Affairs began surveying members whose campaigns were well underway in order to evaluate the success of the initial $1 million. The survey results were overwhelmingly positive. More than three-quarters of respondents rated their association’s “buy now” campaign “effective.” An equally high number — 78% — said that their campaign delivered a credible “buy now” message. The majority responded that the campaign had started to help change home buyer attitudes in their marketplace. Seventy-eight percent reported that members of their industry and community viewed the campaign positively.

NAHB launched the grant program to assist local HBAs in an effort to bolster home sales in markets hit hard by the current housing downturn and help offset the cost of local ad campaigns.

Fifty-one local associations have applied for and received $997,443 in advertising assistance as part of the first phase of the program. Including the matching funds that HBAs contributed, the total cost of their campaigns is $3.5 million. 

The NAHB “Buy Now” Advertising Assistance Program provides grants to qualifying HBAs in three different categories:

• HBAs conducting ad campaigns in the top 10 media markets can 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 can 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 can 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.

HBAs that applied and were eligible for the first phase, but did not receive grants from the initial $1 million, will be contacted by NAHB soon regarding their application and eligibility for the second phase. Associations that have already received matching grant money are not eligible for the second phase.

To learn more about the program, eligibility considerations and requirements, click here (www.nahb.org/buynowapplication), or call Niki Clark at 800-368-5242 x806l.

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‘Liar Loans’ Taking Toll in Housing Downturn

Established in the 1980s mainly for the self-employed and non-U.S. citizens whose pay was difficult to verify, loans that require little or no documentation of income soared to $276 billion, or 46% of all subprime mortgages last year, up from $30 billion in 2001, according to Credit Suisse Group. First American Loan Performance says that home buyers with those loans defaulted at a 12.6% rate in February, compared with 1.5% of fully documented prime mortgages. Almost 60% of stated income loans were exaggerated by at least 50%, according to the Mortgage Asset Research Institute. Cheating on mortgage applications is so widespread and so seldom punished that it’s fueling an increase in foreclosures that will prolong the housing slump, says one expert. Borrowers and brokers commit fraud when they exaggerate the applicant’s income, qualifying the borrower for a home that would be otherwise unaffordable. Such fraud robbed lenders of an estimated $1 billion last year, according to data collected by the Mortgage Bankers Association and the FBI. “Misstatements about employment and income are being made every day,” said Robert W. Russell, counsel to the director of the Office of Thrift Supervision. “The brokers are just putting down on paper what the underwriters would require. There are borrowers providing false information as well.” (www.dailystar.com)
Arizona Daily Star (4/29/07); Bob Ivry, Bloomberg News

Flippers Flop as Housing Market Cools

Having seen his house in an upscale part of suburban Henderson, Nev. jump $200,000 in value in 18 months, Sam Schwartz spent the night in the parking lot with a hundred other people waiting for a Pulte Homes sales office to open. He intended to buy a new home and then quickly sell it within the year — for a huge profit. Schwartz and his wife put down $5,000 on a home that would end up costing $560,000 with upgrades. While they were able to cancel before closing on a property that suddenly was worth only $490,000 — and recoup their deposit on a legal technicality — others were less fortunate. More than other states hit by the mortgage lending crunch, the high foreclosure rate in Nevada, California and Florida was driven by speculation, said Rick Sharga, vice president of marketing for Realty Trac. In March, the number of resale listings for single-family homes, condos and townhouses in the Las Vegas valley grew 30% from a year earlier to 27,282, according to the Greater Las Vegas Association of Realtors®. Sales and the value of homes sold were both down 38% from a year ago. About half the homes available have been on the market for more than two months. “Two years ago, you’d set a price that looked right and you’d get offers that were $20,000, $30,000, $40,000 over your list price. You have to be more realistic today,” said Devin Reiss, president of the Realtors® association. With Nevada’s fast-growing population and an estimated 8,000 new residents coming to the city every month, experts predict that the glut of housing will be cleared in six months to more than a year. (www.spokesmanreview.com)
Spokesman-Review (4/29/07); Ryan Nakashima, AP

The Housing Glut of 1764

St. Augustine, Fla. can probably claim the dubious achievement of being one of the earliest thoroughly glutted housing markets in North American history. From April 1763 to February 1764 when all but a handful of the city’s 3,100 residents departed for Cuba or Mexico after Florida had been transferred from Spain to Great Britain, almost all of its private properties were up for sale. British subjects moving in to replace the Spanish found a buyer’s market, and emigrants from St. Augustine, who needed the money from the sale of their homes, found no buyer or had to settle for a bottom price. Many of the evacuees never saw a peso. When Great Britain transferred its Florida colony back to Spain in 1784, some of the exiled Spanish families came back to reclaim their homes and lands, asserting that as far as they were concerned, there had been no sale. And as the British departed, once again the local housing market saw a glut of available properties and consequent low prices. (www.staugustine.com)
St. Augustine Record (4/29/07); Susan Parker

Conroe Housing Market Going Through the Roof

Conroe, Texas, a sleepy, semi-rural town 40 miles north of Houston, has become a hotbed for new home construction for the past three years, with a 96.5% increase in residential building permits between 2003 and 2006. And it looks like the numbers will keep pace in 2007, with 229 permits issued during the first quarter, according to city records. Home starts also have soared by 220% over the same period, according to Metrostudy, a Houston-based consulting firm. Conroe has benefited from an influx of new residents, many of whom are migrating from the crowded Houston area to enjoy pastoral living. Its population grew 33% between 1990 and 2000, and by 28% over the past five years, jumping to 47,042 residents in 2005. About five years ago, Conroe jump-started a sluggish housing market by reimbursing developers $1,500 per rooftop for the cost of extending water and sewer lines to homes. The incentives disappeared once housing development blossomed. City leaders also have been amenable to letting developers create municipal utility districts and public service districts within the city and its extraterritorial jurisdiction, or future boundaries. This enables developers to recoup infrastructure costs through a tax or assessment. Housing developers are buying every piece of available land, paying $20,000 an acre and more. In the area’s first master-planned community, which will eventually include 750 homes, four builders have offered houses ranging from $180,000 to $400,000. (www.chron.com)
Houston Chronicle (4/29/07); Renée C. Lee

Fluorescent Bulbs Are Known to Zap Domestic Tranquility

Experts on energy consumption say that fluorescent bulbs seem to be flunking the “wife test” in most American homes. The current market share of CFL bulbs in the U.S. is about 6%, up from less than 1% before 2001, but well below rates in other countries such as Japan (80%), Germany (50%) and the United Kingdom (20%). Australia has announced a phaseout of incandescent bulbs by 2009, and the Canadian province of Ontario has decided to ban them by 2012. ”I have heard time and again that a husband goes out and puts the bulb into the house, thinking he is doing a good thing,” said Wendy Reed, director of the federal government’s Energy Star program. “Then, the CFL bulb is changed back out by the women. It seems that women are much more concerned about how things look. We are the nesters.” Compared to the bulky, expensive, flickering fluorescent lights that people remember from 20 years ago, today’s bulbs are smaller and much cheaper — often selling for as little as $1.50. Most bulbs pay for themselves in reduced power consumption within six months. They last seven to 10 times longer than incandescent bulbs, and the hum and flicker are long gone; many bulbs are designed to mimic the soothing, yellowish warmth of incandescent bulbs. A new Washington Post-ABC News poll showed that while women are more likely than men to say they are “very willing” to change behavior to help the environment, they are less likely to have CFL bulbs at home. Wal-Mart company research shows a similar “disconnect” between the pro-environmental attitudes of women shoppers and their in-store purchases of CFL bulbs. (www.washingtonpost.com)
Washington Post (4/30/07); Blaine Harden

‘Either-Or’ Apartment Projects

With the glut of unsold condominiums on the market, and the four- or five-year period it takes to win approvals and develop multifamily projects, more and more builders are waiting until the last possible moment to declare their properties a rental or a condo. In most places, it’s legal to go through the approval process without informing the zoning board which way the property will go. As long as the local authorities know the size and number of the units, it usually makes little difference to them, according to Ronald Terwilliger of Trammel Crow Residential. To give itself flexibility, Trammel Crow tries to stay within a certain footprint that appeals to both buyers and renters. For example, unit sizes will range from 850 to 1,150 square feet, and the mix is usually one-third one-bedroom units and two-thirds two bedrooms. Post Properties in Atlanta is another major apartment developer that is delaying the rent or sell decision. “We will switch depending on the market,” said the company’s executive vice president, Thomas Senkbeil. Post doesn’t ever intend to abandon the for-sale sector. But with the huge inventory of unsold condos hanging over the market, Senkbeil said he doesn’t think condos will ever again represent more than 25% of his company’s offerings. (www.realtytimes.com)
Realty Times (4/25/07): Lew Sichelman

OSHA Bill Would Increase Safety Violation Penalties

In conjunction with Workers Memorial Day observations on April 28 to commemorate workers who have been killed on the job and to encourage making workplaces safer, Congress last week held two hearings related to the Occupational Safety and Health Administration, one in the House and one in the Senate, and introduced broad OSHA reform.

There are expected to be many more OSHA-related hearings to come.

In an effort to decrease the number of American workers killed or injured on the job each year, U.S. Reps. Lynn Woolsey (D-Calif.) and Phil Hare (D-Ill.) introduced H.R. 2049, the Protecting America’s Workers Act. In the Senate, Sens. Edward Kennedy (D-Mass.) and Patty Murray (D-Wash.) unveiled an identical bill, S. 1244.

The legislation would expand the scope of the Occupational Safety and Health Act, imposing burdensome penalties and personal protective equipment requirements on the building community.

Specifically, the legislation would:

• Increase employer penalties for repeated and willful violations of the law, including possible felony charges when this leads to a worker’s death
  
  
• Make clear that employers must provide the necessary safety equipment to their workers, such as goggles, gloves, respirators or other personal protective equipment
  
  
• Protect workers who blow the whistle on unsafe workplace conditions
  
  
• Enhance the public's right to know about safety violations
  
  
• Apply federal safety standards to workers who are not currently covered, including federal, state and local employees, and some private-sector employees

To read the legislation, click here and enter the bill number in the box at the center of the page.

For more information, e-mail Erin Tario at NAHB, or call her at 800-368-5242 x8413.

Protect Your Job Site Against OSHA Violations

Delays in construction due to poor safety procedures will cost you money. To protect your job site against OSHA violations go to www.builderbooks.com/Safety to see all the BuilderBooks.com resources you need to create a safety program that protects your workers and your profits.

Bulk prices are available.

To view these safety publications online, click here, or call 800-223-2665.

New Program Links Builders With Members of Congress

BuilderLink, an updated national grassroots program that will provide opportunities for NAHB members to connect more frequently with their members of Congress, is set to be launched on Wednesday, June 6 at the 2007 Legislative Conference in Washington, D.C.

By developing local grassroots activities that bring NAHB members and their members of Congress together throughout the year, BuilderLink will build on the momentum generated by the annual NAHB conference, which is expected to draw more than 1,000 builders to Capitol Hill to share their concerns on housing-related issues with their representatives and senators.

BuilderLink will pinpoint members of Congress who have the most influence over priority housing issues and link them to the NAHB members living in the areas they represent. As constituents, NAHB members are in a unique position to directly communicate with their federal lawmakers on the impact of their decisions on housing.

Whether conducting a local visit, writing a letter or making a phone call to a member of Congress, BuilderLink will provide the resources NAHB members need to advocate a pro-housing message.

“Members of Congress need to hear from the men and women in the building industry — their constituents — about the impact federal policies have on their livelihood,” said Michael Sivage, chairman of the NAHB Federal Government Affairs Committee. “BuilderLink gives NAHB members the tools they need to develop relationships with federal lawmakers and make their voices heard.”

For more information on BuilderLink, click here, or e-mail Molly Murray at NAHB, or call her at 800-368-5242 x8470.

Mark Your Calendar for the 2007 NAHB Legislative Conference

The 2007 NAHB Legislative Conference provides a unique opportunity for builders to speak directly with their members of Congress and to take a stand on the issues that affect their businesses and bottom line.

The day-long conference on Wednesday, June 6 coincides with the NAHB spring board meeting in Washington, D.C.

Attending the 2007 Legislative Conference offers NAHB members an unparalleled opportunity to:

• Lobby members of Congress to protect your business
• Establish lasting relationships with your elected federal officials
• Share builder concerns in a national forum in Washington, D.C.
• Learn the latest policy developments on the key issues affecting your business
• Demonstrate your industry’s commitment to responsible policies, pragmatic reforms, effective programs and providing the resources necessary to meet our nation’s ongoing housing needs
• Network and share business strategies with your peers
• Learn how to be an effective advocate for your business and your industry
• Make your views known on Capitol Hill
• Do your part to ensure that NAHB’s issues are heard by Washington policymakers
• Galvanize a united front on Capitol Hill

For more information or to register, click here.

Bill Addresses HUD Rule on Clearing Program Participants

The House last week approved H.R. 1675, the Preservation Approval Process Improvement Act of 2007. The legislation is designed to make it easier to invest in affordable housing by easing overly burdensome filing requirements to participate in U.S. Department of Housing and Urban Development programs.

To ensure that they are reputable and will honor their legal, financial and contractual obligations, participants in HUD programs, including FHA mortgage insurance, are required to submit information on their previous business with the department through an electronic reporting system.

Introduced by Rep. Melissa Bean (D-Ill.), H.R. 1675 would suspend this mandatory process until HUD makes changes to draft regulations it has proposed for the 2530 Previous Participation filing requirements.

HUD’s proposal contains onerous filing requirements for passive investor participants and establishes additional conditions under which participants can be prevented from taking part in its programs.

NAHB, along with a large coalition of housing industry groups, opposes many of the provisions in the proposed regulations. HUD has been asked to revise its proposed rules, but it has not done so.

Members of Congress have asked HUD not to publish the proposed regulations, and they have not been published. However, having no assurances that the regulations will not be put into effect eventually, the housing groups have sought legislation to stop them from being published.

On the same day that H.R. 1675 was passed in committee, HUD published new guidance revising filing requirements for passive investors. However, it is uncertain whether the new guidance will be left in place, and there remains confusion as to how it would actually be applied if legislation is signed into law.

H.R. 1675 now heads to the Senate, where Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd (D-Conn.) is expected to consider it in committee in the near future.

NAHB advocacy staff members will continue to support the legislation and work with HUD to improve the proposed participation clearance process.

To read the legislation, click here and enter H.R. 1675 in the box at the center of the page.

For more information, e-mail Claudia Kedda or Scott Meyer at NAHB, or call them at 800-368-5242 x8352 and x8144.

Mark Your Calendar for the 2007 NAHB Legislative Conference

The 2007 NAHB Legislative Conference provides a unique opportunity for builders to speak directly with their members of Congress and to take a stand on the issues that affect their businesses and bottom line.

The day-long conference is on Wednesday, June 6 and coincides with the NAHB spring board meeting in Washington, D.C.

Attending the 2007 Legislative Conference offers NAHB members an unparalleled opportunity to:

• Lobby members of Congress to protect your business
• Establish lasting relationships with your elected federal officials
• Share builder concerns in a national forum in Washington, D.C.
• Learn the latest policy developments on the key issues affecting your business
• Demonstrate your industry’s commitment to responsible policies, pragmatic reforms, effective programs and providing the resources necessary to meet our nation’s ongoing housing needs
• Network and share business strategies with your peers
• Learn how to be an effective advocate for your business and your industry
• Make your views known on Capitol Hill
• Do your part to ensure that NAHB’s issues are heard by Washington policymakers
• Galvanize a united front on Capitol Hill

For more information or to register, click here.

Small Businesses Still Waiting for Health Insurance Reform

The Senate on March 23 unanimously approved a bipartisan amendment to budget bill S. Con. Res. 21 that lays the financial groundwork for market-based pooling to be allowed in future health insurance proposals.

Passage of the amendment, cosponsored by Sens. Mike Enzi (R-Wyo.) Ben Nelson (D-Neb.), Ted Kennedy (D-Mass.), Max Baucus (D-Mont.), Chuck Grassley (R-Iowa) and Ken Salazar (D-Colo.), is the first step toward paving the way for a health insurance reform bill that would take aim at reducing the rolls of the uninsured — estimated to number as many as 45 million today.

Enzi, who serves as ranking member of the Senate Health, Education, Labor and Pensions Committee and is a member of the Senate Budget Committee, offered the amendment to the budget bill to create a deficit-neutral reserve fund to be used in the event that the Senate comes up with a bill to allow market-based, small business health care pooling plans.

To highlight America's health care crisis, Congress designated the week of April 23 as "Cover the Uninsured Week."  For more information on this event, click here.

In conjunction with last week’s event, many members of the building community contacted their lawmakers and emphasized the need to enact small business health care reform.

To enable small businesses to access greater health insurance options and lower premiums, builders called on Congress to:

• Enact market-based reforms to expand competition and choice in the market to purchase private health insurance
  
  
• Provide the ability to create pooling arrangements across state lines
  
  
• Offer tax incentives to help with the purchase of health insurance
  
  
• Grant federal relief from state health insurance mandates

For more information, e-mail Erin Tario at NAHB or call her at 800-368-5242 x8413.

Mark Your Calendar for the 2007 NAHB Legislative Conference

The 2007 NAHB Legislative Conference provides a unique opportunity for builders to speak directly with their members of Congress and to take a stand on the issues that affect their businesses and bottom line.

The day-long conference is on Wednesday, June 6 and coincides with the NAHB spring board meeting in Washington, D.C.

Attending the 2007 Legislative Conference offers NAHB members an unparalleled opportunity to:

• Lobby members of Congress to protect your business
• Establish lasting relationships with your elected federal officials
• Share builder concerns in a national forum in Washington, D.C.
• Learn the latest policy developments on the key issues affecting your business
• Demonstrate your industry’s commitment to responsible policies, pragmatic reforms, effective programs and providing the resources necessary to meet our nation’s ongoing housing needs
• Network and share business strategies with your peers
• Learn how to be an effective advocate for your business and your industry
• Make your views known on Capitol Hill
• Do your part to ensure that NAHB’s issues are heard by Washington policymakers
• Galvanize a united front on Capitol Hill

For more information or to register, click here.

Florida Builders Rally for Property Tax Reform

More than 500 Florida builders, contractors and home building professionals marched to the state capitol in Tallahassee on April 24 in support of fair property tax reform and to urge state lawmakers not to tax housing out of existence.

“The future of Florida’s housing industry rests with meaningful property tax reform,” said John Wiseman, president of the Florida Home Builders Association (FHBA) and a builder from Sarasota. “Florida’s construction industry is in jeopardy of being taxed out of existence. When this happens, the American dream of homeownership will disappear for thousands of Floridians.”

The Florida home building industry is concerned that local governments will look to new residential construction to make up for the amount of revenue that they lose through property tax reform.

Impact fees on new home construction have already risen higher than $30,000 per single-family home in some locations in the state. Those costs are passed from home builders to home buyers, reducing the ability of Floridians to qualify to purchase a home.

“For every $1,000 increase in the price of a home, more than 25,000 Florida families will be priced out of qualifying to purchase that home,” said NAHB economist Elliot Eisenberg. “This economic trend is limiting home sales, diminishing new housing starts and significantly reducing vital revenue on which the state relies for its budget.”

“Fair property tax reform must include a firewall of protection that doesn’t shift the tax burden to new home buyers,” Wiseman said. “Without impact fee caps, there won’t be meaningful property tax reform.”

The Florida Home Builders Association supports impact fee caps to make housing affordable. Specifically, FHBA recommends the total amount of impact fees assessed on construction should be limited to no more than 5% of the value of the home. Currently, impact fees are the same for all homes regardless of the home price. This disproportionately impacts Floridians buying affordably priced workforce housing.

Furthermore, new home construction prices are the benchmark for existing home prices. When new home prices increase because of rising impact fees, existing home prices increase and raise property taxes for everyone.

Save the Date for the State and Local Government Affairs Conference

Mark you calendar for the State and Local Government Affairs Conference, which will be held Nov. 8-10 at the Hyatt Regency Austin in Austin, Texas.

March New Home Sales Up Some as Credit Tightens

Sales of new single-family homes rose a slight 2.6% in March to a seasonally adjusted annual rate of 858,000 units, following sharp declines in both January and February, according to figures released by the U.S. Commerce Department on April 25. The March sales pace was 23.5% below a year earlier.

"The increase in home sales for March was quite disappointing, considering the weather-related weakness recorded earlier this year," said David Seiders, NAHB’s chief economist. "Weather conditions were fundamentally good in March but we gained back only a small fraction of the January to February loss."

"The weakness in home sales squares with the results of the recent NAHB survey of single-family home builders," Seiders said. "Our Housing Market Index lost ground in both March and April, and reports from large companies show not only erosion of sales activity, but also an increase in sales cancellations."

Seiders noted that the recent dampening of activity was related to the problems of the subprime mortgage sector and related tightening of lending standards in other segments of the mortgage market.

"Builders are reporting direct impacts on both sales and cancellations as prospective buyers are unable to get mortgage credit or are unable to sell their existing homes because of credit tightening," he said.

The inventory of new homes for sale edged up in March to 545,000 units, equivalent to a 7.8 months' supply at the March sales pace. Completed homes for sale were 33% of the inventory, while units still under construction comprised 50% and units for-sale that were permitted but not yet started represented almost 17%. The median length of time that completed homes were on the market was 5.6 months in March, up from 5.2 months in February.

Regionally, new-home sales rebounded 50% in the Northeast and 9.8% in the Midwest in March, following severe winter weather the month before. Sales were down 2.7% in the South and 0.9% in the West.

"The sudden tightening of mortgage conditions has had a profound impact on the housing market, and it is hard to know how far the credit pendulum will swing," Seiders said. "NAHB's forecast still shows improvements in home sales and housing production by the second half of this year, although these forecasts are subject to an unusually wide range of risks."

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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.

Hot Markets Bearing the Brunt of Housing Downturn

The current shakeout in the subprime mortgage market is adding to an already excessive overhang in the unsold housing inventory and will prevent the housing correction from coming to an end in the near term, according to Mark Zandi, chief economist at Moody’s Economy.com.

“The housing correction is now almost two years old and still has a long way to run,” Zandi said at last week’s NAHB forecast conference.

Areas of the country that benefited the most during the 2003 to 2005 housing boom — the Northeast, the West, Florida, Arizona, Nevada and parts of California — will bear the brunt of the downturn in the next year, he said.

Zandi predicted that home sales will bottom out in the second or third quarter of this year and that the trough for housing starts will occur in the third or fourth quarter, with new home construction falling to an annual pace of about 1.4 million units.

Home prices, he said, won’t hit bottom until the spring of 2008.

“We are half way done in terms of price decline,” said Zandi. “Prices are down about 4% and I expect another 4% to 6% drop-off. Home prices in early 2008 will be back to where they were in 2005.”

Too much inventory and the recent erosion in mortgage credit quality are the two biggest problems facing the housing sector, he said.

Zandi estimated there are 700,000 excess vacant existing homes for sale, and he characterized the pace of mortgage delinquencies as “shocking.”

“The delinquency rate is 2.9%, a new high,” he said, noting that the situation is particularly acute in California, Las Vegas, Florida, Washington, D.C. and the Gulf Coast.

Zandi said that there are a number of reasons to expect further erosion in the mortgage market:

• Aggressive lending has “juiced up the housing market,” including prime loans that are interest-only or option ARMs.
  
  
• Payment resets on adjustable-rate mortgages originated in 2005 and 2006 will face their first resets in 2007 and 2008.
  
  
• Mortgage lenders have reacted by moving aggressively to tighten underwriting standards at the same time that subprime and Alt-A borrowers, those with mid-level credit scores that fall between prime and subprime, are seeking to refinance.

As a result, he said, first mortgage loan defaults will rise to 1.2 million this year from 900,000 in 2006 and climb to a peak of 1.3 million in 2008.

“This means less demand and more supply,” he said.

Providing a more sanguine outlook while conceding harder times for the nation’s most troubled housing markets, Bernard Markstein, NAHB’s director of forecasting, said that positive demographic trends will help ease the housing correction now underway.

“Demographics is how we work off excess inventory,” said Markstein, noting that nearly every state experienced population growth last year.

“Employment growth also looks good,” he added, with jobs becoming more plentiful in 2006 in every state across the nation, with the exception of Louisiana and Michigan.

Markstein also stressed the importance of home sellers taking a realistic perspective in today’s buyer’s market. For example, a home owner in the Washington, D.C. metropolitan area listed his home for $600,000 but was only able to sell it for just under $400,000.

The transaction suggests a significant loss, he said, but “he bought his house in 2002 for $260,000. That comes out to a gain of about 11% per year.”

“Demand for housing continues,” he said. “People are getting jobs and forming households. Once we work through excess inventories, builders will reduce their incentives. So you will see prices rise moderately in the future.”

Photos by Morris Semiatin

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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.

Starts Need to Slow Further to Stabilize Housing Market

The slowdown in housing production that began in early 2006 is only just beginning to make a dent in the large inventory of unsold homes, and total starts will need to drop at least another 15% before the market starts to stabilize, Eric Belsky, executive director of the Joint Center for Housing Studies at Harvard University, said at NAHB’s Spring Construction Forecast Conference in Washington, D.C. last week.

Belsky stated that even if the rate at which homes are being built does not slow further, total housing starts will fall to 1.51 million units this year, with single-family construction posting a 19% drop to 1.2 million. New home sales will decline 12% to 925,000 and existing home sales will slip below 6.5 million.

“The near-term risks are weighted to further slowing from tightening credit standards and a large inventory overhang that is still not worked off,” he said.

Belsky based his predictions on an estimated overhang from the 2003 to 2005 housing boom of about 500,000 units. If the inventory turns out to be higher, he said, production activity in the near term will have to be proportionately lower.

He said to look to Phoenix, where the job market is strong, to see the impact of slower housing production on the excess inventory. Additional bellwether markets worth watching are Las Vegas and Washington, D.C.

All types of non-prime lending surged from just over 20% of the total market share in 2003 to more than 45% in 2005, Belsky said. The share of originations of “affordable” mortgage products, including interest-only and negative amortization loans, spiked from about 10% to well over 30% during this period, he said.

At the same time, mortgages in foreclosure or delinquent for 60 days or more have shot up sharply, from about 350,000 in 2003 to 800,000 by the end of last year.

“While troubled prime loans are holding steady, troubled subprime loans are increasing,” he said, resulting in more homes returning to an already glutted market.

“Single-family overbuilding is now the key threat to house prices and starts,” said Belsky.

As builders work to reduce inventories by cutting prices and offering other sales incentives in the near-term, Belsky sees housing production bouncing back to a solid, sustainable level down the road as immigrants and their families add dramatically to housing demand.

With the baby boom generation continuing to mature, Belsky predicted that demand for second homes will jump by about 750,000 units from 2005 to 2015.

“Total production should average about 1.95 million units per year during this 10-year period, or perhaps a bit less as the inventory must be worked off,” he said.

Remodeling Slowdown Slowly Emerging

Belsky also warned of an emerging slowdown in remodeling. “Remodeling generally lags behind changes in home building,” he said.

He pointed to the drop in NAHB’s Remodeling Market Index, a survey of remodelers’ activities and future expectations, as well as the drop in quarterly retail sails of building materials and existing home sales as reasons for the slowdown.

He also warned of possible house price declines, which would adversely affect remodeling activity.

“House price appreciation is strongly associated with remodeling spending,” Belsky said. “The more a home appreciates, the more people are willing to spend on their homes. The reverse is also true.”

Photo by Morris Semiatin

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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.

Big Builders Look Good to Wall Street Analyst

Acknowledging that it may be a “contrarian view,” Stephen Kim, managing director at Citigroup Investment Research, told the NAHB forecast conference in Washington on April 26 that his firm has a “decidedly bullish” outlook for the stock prices of large, publicly-traded home builders.

Cushioned by higher operating margins relative to previous market downturns and built-in competitive advantages over smaller rivals in the area of land acquisition, these firms are well situated to ride out the current market correction and can expect to see healthy annualized operating margins in the 10% to 11% range in the years ahead, Kim said.

The 15%-plus operating margins recorded by the top building companies in 2005 were driven by a wave of speculative buyers aggressively bidding up home prices, he said. But “margins in 2003 had already risen to 11% before speculators came into the market, and without unusually strong pricing,” Kim said, “and we see no reason why normalized margins in the home building group will not settle back into the 10% to 11% range.”

The land supply constraints that emerged in the mid-1990s just as the industry began to see major consolidation put public builders at an advantage over the competition, Kim said, and with strong financial backing, large builders continue to sit in the driver’s seat  because they:

• Have superior access to capital at lower cost
• Develop much of their own land
• Get a “first look” at lots that are made available by third-party developers
• Hold negotiating leverage by virtue of their experience with thousands of projects representing a wide range of product types, terrain and entitlement hurdles
• Enjoy lower production costs through market share consolidation

By contrast, small builders seldom have enough cash to develop their own land, often must choose from “leftover” lots that are overpriced or in difficult terrain and have a tough time finding people with strong acquisition skills, who tend to become land specialists or work for large builders.

“Our view is that the building industry has become supply-constrained,” Kim said. “The salient consideration for investors is not where demand is. The long-term dynamics is supply. Generally, the industry is more supply constrained.”

For most industries, market consolidation takes place during down cycles, but just the opposite has occurred in housing, he said, with the top-10 builders doubling their national market share to 15% of housing starts from 1998 to 2005.

“This suggests that prior to the late 1990s, there were no barriers to entry into the industry,” said Kim. “It comes down to money and land. If small builders can’t get access to land or capital, they lose market share. That’s why we think the large firms are under-valued.”

Today’s public home building firms are considerably larger, more geographically diversified, less leveraged and substantially more profitable than in prior downturns, Kim said, and they are positioned for sustained double-digit growth in their market share.

He expects major builders to see orders rise in the third quarter of this year, as cancellation rates and backlogs begin to shrink in the most troubled markets.

“People cancel when markets get weaker,” Kim said. “If markets stop getting worse, cancellation rates come down. This year, net orders will be up because the cancellation rate will come down. The bottom line: this moves stocks.”

During the next two to three months, he said that publicly-traded home building firms will be trading in “choppy waters,” but a significant re-valuation is anticipated in the next 12 to 18 months.

“Now is the time to buy at bargain basement prices,” he said.

Photo by Morris Semiatin

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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.

Credit Tightening to Cut Housing Demand in 2007

Current credit tightening in reaction to the “abysmal” performance of mortgages recently made in the subprime market will cut effective housing demand by around 10% this year and make further cuts in housing production a virtual certainty, Thomas Lawler, of Lawler Economic and Housing Consulting LLC, told the NAHB forecast conference in Washington on April 26.

At the height of the boom when the subprime market was at full swing, FICO scores became the leading underwriting tool and traditional measures of loan risk such as debt-to-income and loan-to-value ratios were thrown out the window, he said.

Last year, according to figures from LoanPerformance, more than half of the purchase loans in the subprime market had piggyback financing and only 50% had full documentation; more than 90% of them were ARMs.

He attributed the lax lending standards to a surge in “speculative demand” that drove home prices up sharply in many areas of the country, leading to a decline in mortgage credit losses that in turn led to more aggressive underwriting and looser credit standards, and to a surge in the use of “non-traditional” mortgage products.

Unfortunately, he said, “if you’re looking at performance data in good times, traditional things won’t be important,” but now that housing is in a downturn, many of those subprime loans, especially those with no or a low downpayment and no documentation of income are experiencing “soaring” delinquencies despite declining unemployment.

While it is “admirable” for Fannie Mae, Freddie Mac and others to provide liquidity to enable credit-worthy borrowers to refinance and remain in their homes when they confront monthly mortgage payments they can’t afford, Lawler said that lenders may find that the incomes behind many of the subprime loans originated over the past few years were misrepresented. “These are bad loans that shouldn’t have been made,” he said.

Looking at loans that were made in the subprime market, Lawler estimated that as little as  20% of subprime borrowers who took out purchase loans last year would qualify if they were moved over to the prime or FHA market.

As a result of the subprime market, inventories of vacant homes, now at a record, won’t be falling significantly until the latter part of this year, he said, and downward pressure on home prices will intensify, with some regions likely to experience sizable declines.

Looking at annualized growth in the S&P/Case-Shiller Home Price Index in 20 markets for the last six months of 2006, composite home prices were down 4.3% — with Boston, San Diego and Washington, D.C. at the top of the list with declines of 10.41%, 9.32% and 9.27%, respectively, and Seattle, Charlotte, N.C. and Miami at the bottom with increases of 4.45%, 2.31% and 0.78%.

An S&P/Case-Schiller, CME look at future prices for 2007 projects a composite 6.1% decline for 10 cities, including a 6.1% decline in Miami.

The inventory situation is “unbelievable” in Florida, Lawler added. Inventories of unsold homes have tripled in parts of South Florida over the last two years, and the overall “months supply” of inventory in the state is more than double the national average.

Lawler is forecasting 995,000 single-family home starts this year, significantly lower than NAHB’s forecast of 1.163 million, but he said that his prediction could be too low because “a lot of builders would rather cut prices” and keep on building in communities they have already started. In that case, more starts “could make the price outlook a bit worse.”

Looking at home purchase transactions only in the Office of Federal Housing Enterprise Oversight’s quarterly House Price Index, Patrick Lawler, OFHEO’s chief economist, noted that “the market turned very sharply” last year, with house price appreciation down from the previous year in every state except Texas.

The same data show that house appreciation for the year as a whole was down to 4.1%, Patrick Lawler said.

He joined in a discussion of the differences between the OFHEO index and the S&P Index. The OFHEO index is based only on single-family homes with loans purchased by Fannie Mae and Freddie Mac and it underrepresents properties financed with subprime loans, but it has broader geographic coverage.

Because the OFHEO index does not include loans over the conforming loan limit, it undersamples housing in expensive markets such as San Francisco, he said.

The standard House Price Index also includes refinancings, which recently have tended to overstate home price gains. Accordingly, Lawler indicated that his agency has been focusing more attention on its purchase transactions only index, which excludes refinancings.

Photos by Morris Semiatin

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

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

For assistance, call the NAHB Member Service Center at 800-368-5242.

Eye on the Economy: Home Buyer Demand Weakens — Again

A variety of indicators strongly suggested that the demand for single-family homes had stabilized late last year following a substantial downward correction from the record sales pace (gross and net) recorded during the second half of 2005. However, more recent signals point toward renewed downward pressure on home sales and renewed upward pressure on sales cancellations.

The NAHB/Wells Fargo Single-Family Housing Market Index (HMI) slipped in April following a similar setback in March, and the HMI now is only marginally above the apparent cyclical low last September.

The March to April slippage was broad-based by geographic region, and all three component indexes (buyer traffic, current sales and expected sales) registered consecutive monthly declines.

NAHB’s proprietary survey of 30 large home builders — accounting for about one-fourth of total for-sale housing in the U.S. — showed a sizable decline in seasonally adjusted gross home sales in March, and seasonally adjusted cancellation volume spiked upward following a series of monthly declines from the peak last fall.

As a result, seasonally adjusted net sales dropped abruptly in March following an essentially stable pattern that had prevailed since mid-2006.

The government’s data on new home sales (gross) for March is consistent with the weakening process signaled by NAHB’s survey measures. Sales volume ticked up in March, under good weather conditions, but recovered little of the substantial and weather-related setbacks in January and February. Furthermore, the first-quarter average was down by 14% from the final quarter of 2006, constituting an additional down leg following the sharp downward correction during 2006.

The Subprime-Related Tightening of Mortgage Lending Standards Is Behind the Demand Shift

The recent problems of the subprime mortgage market, along with associated tightening of lending standards in other components of the U.S. mortgage market, definitely lie behind the renewed downward pressure on home buyer demand. Indeed, this phenomenon is documented by surveys of builders conducted by NAHB in the early part of April.

Forty-five percent of all builders surveyed in April said tighter mortgage lending standards had adversely affected their home sales so far this year, and roughly three-fourths of larger companies (those starting more than 100 units per year) reported adverse effects on sales volume. For those reporting negative impacts, the median sales reduction was on the order of 10%.

More than one-fourth of the builders surveyed in April said that sales cancellations were up because prospective buyers were unable to qualify for mortgages in the current environment. Those reporting this problem said that about 10% of their backlog of signed sales contracts had been cancelled in the process.

Heavy Inventories of Vacant Housing Units Are Weighing on the Markets

Conventional measures of new and existing homes for sale show a heavy inventory overhang at this time. However, that’s only part of the story. Measures of vacant (unoccupied) for-sale and for-rent units in both the single-family and multifamily sectors portray an extraordinarily large volume of vacant housing units on the market — a weight that should hold down new housing production for some time even when housing demand is in a recovery mode.

In absolute terms, there were a record 5.9 million vacant year-round housing units on the market at the end of 2006, and these units accounted for a record 4.66% of all housing units.

Assuming that a “normal” vacancy rate is about a percentage point lower, there’s an excess of about 1.3 million vacant units on the market — largely a legacy of the investor/speculator buying binge during the boom period.

The for-rent component of the vacant housing inventory on the market is hanging around the record high attained three years ago, despite a substantial decline in multifamily rental vacancies since then, as the single-family component has trended upward.

The for-sale component has moved up aggressively since early 2004, reflecting major upswings in both single-family and multifamily (condo) components.

The Supply-Demand Imbalance Is Exerting Downward Pressure on Home Prices

Home prices soared during the housing boom of 2003 to 2005, ultimately destroying affordability and precipitating the downward correction in home sales and housing production that so far has run through 2006 and early 2007.

Rates of house price appreciation slowed dramatically during 2006, and the evolving supply-demand imbalance — aggravated on both sides by the subprime-related problems in the mortgage market — recently has been pushing house prices into the red zone.

The year-over-year change in the median price of existing homes sold has been in the negative range so far this year. However, this series is extremely volatile on a month-to-month basis, making sequential analysis quite difficult — even on a seasonally adjusted basis. Furthermore, movements in this measure reflect compositional shifts in homes sold as well as true price changes.

The relatively new S&P/Case-Shiller Home Price Index uses a repeat-sales methodology (minimizing compositional effects), and the 20-City Composite measure now is available through February. This series (seasonally adjusted by NAHB) shows a series of declines that began last July, and the evolving supply-demand pressures are bound to generate further declines as 2007 rolls along.

The Short-Term Outlook for Housing Production Has Weakened

NAHB’s current forecast for housing production in 2007 to 2008 is considerably weaker than the forecast put in place earlier this year, primarily because of the unexpected problems of the subprime mortgage sector and tightening standards in other parts of the U.S. mortgage market.

The mortgage market problems are not only taking a toll on effective housing demand, they also are adding to the already heavy inventory overhang as low-quality loans made during the boom go into default and foreclosures mount. Furthermore, the downward home price pressures figure to take some toll on residential remodeling over the balance of this year and in 2008.

NAHB’s forecast now shows double-digit declines in the housing production component of GDP (Residential Fixed Investment) in both the first and second quarters of this year — a factor that will keep overall economic growth in a decidedly slow-growth mode.

We expect RFI to flatten in the third quarter before embarking on a gradual recovery over the balance of the 2007 to 2008 forecast horizon, although the level of production at the end of this period still will be well below our estimate of the demographically based trend.

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 April 25 edition. To subscribe to “Eye on the Economy,” click here.

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

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

For assistance, call the NAHB Member Service Center at 800-368-5242.

Useful Links to Monitor Economic and Housing 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.

Construction Forecast Conference Now Available on the Internet

The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.

Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.

Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.

To Purchase the Webcast

To purchase the Webcast, visit www.nahb.org/cfcwebcast.

Want to Know Your State’s Starts Forecast for 2008?

Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

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 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: A Light-Duty Outfeed Table for Ripping Trim

	Click for larger image.

While ripping some trim recently on my portable table saw, I realized that an outfeed table with an extended fence — along with a couple of featherboards — would lessen the chance of an accident and make for cleaner, chatter-free cuts.

I was just about to consult my supplier’s catalog when it occurred to me that a simple modification could solve my problem.

• As shown in the accompanying drawing, I made a flag-shaped combination fence extension/outfeed table out of a 2x4 and an 18-inch square piece of melamine. The 2x4 is straight, kiln-dried and knot-free.
  
  
• It’s secured to the original fence by way of a couple of bolts through wood blocks.
  
  
• The melamine square is screwed and glued to the underside of the 2x4.

While this setup is no substitute for a stand-alone, roller-equipped outfeed table, it does help with ripping light pieces of unwieldy stock such as trim.

As noted on the drawing, I rounded the leading edge of the melamine to keep rippings from hanging up on it.

— Norman Nemec, Manhasset, N. Y.

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 next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

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

For assistance, call the NAHB Member Service Center at 800-368-5242.

The Boomer ‘Agequake’ Is Coming, Marketer Says

	Brent Green

Brent Green, the author of “Marketing to Leading-Edge Baby Boomers,” will speak at the Building for Boomers & Beyond: 50+ Housing Symposium 2007 in Denver next month about how the boomer generation transformed business and marketing at every life stage. His session, “From Youthquake to Agequake: The Transformative Future of the Baby Boom Generation,” will be on Friday, June 1.

Nation’s Building News recently spoke with Green about his symposium presentation and the factors that will drive 50+ housing as the companies adapt to meet their needs.

What are some of the ways that boomers have "transformed business and marketing?"

Boomers dramatically changed marketing and built huge business opportunities for companies at every life stage.

When they were in junior high and high school, they created a "youthquake" that helped propel the fast food industry by fueling the growth of companies like McDonalds. This continued as they grew a little older, started families and had children.

Nike is another company whose growth was fueled by boomers when they started a strong fitness fad that continues to this day. It’s the same with Starbucks. Gourmet coffee was a niche business. Now it’s a mega empire — with a heavy reliance on boomers.

Boomers will continue to transform industries. What they choose to do will dramatically impact the housing industry. Their preferences are leading to a reinvention of what constitutes an active adult community.

In my session, I’m going to talk about who the boomers are, what makes them unique and why they can be reached as a generation through a marketing perspective.

I’ll present plenty of insights into what the near and not-so-near future is going to look like.

The “agequake” they will generate, like an earthquake, will have a jarring impact. Some industries stand to lose, some will gain.

What are the values that motivate the boomer generation?

One is a pronounced sense of individuality. Their parents were a dutiful, team-oriented generation. The boomers are the opposite.

They were brought up to maximize their unique potential. And, as a generation, they have a strong work ethic.

At this stage in their lives, most don’t picture themselves as having or enjoying a traditional retirement. Builders already understand that boomers want home offices for the work and second careers they’ll pursue after their first career is done.

Being anti-authority and fighting against “received” authority is nothing new to boomers. They’ve been that way since the 1960s. Of course, now, they are the ones in power, particularly if you look at how heavily they are represented in Congress, and of course, the White House. This has implications for their being able to accommodate CCRCs (continuing care retirement communities) where there’s a lot of regimentation.

Boomers also are very adaptable to change. Their lives have been about adapting to changes in technology, the economy and more, so boomers will continue to reinvest themselves in change.

What will their values affect the most in the housing industry?

Builders will have to focus on mass customization.

Boomers will demand more housing choices. I also believe they’ll influence niche communities built around lifestyle interests — like the first gay, lesbian, bisexual and transgender community under development in Santa Fe now. There is a community in New York for women who spent their careers in the arts.

Essentially, you’re going to see a movement towards gathering around lifestyle interests, rather than just stage-of-life.

Brent Green’s session, “From Youthquake to Agequake: The Transformative Future of the Baby Boom Generation,” will be on Friday, June 1 from 12:30 p.m. to 2:00 p.m. at Building for Boomers & Beyond: 50+ Housing Symposium 2007 at the Hyatt Regency Denver.

His book, “Marketing to Leading Edge Boomers,” is available at www.builderbooks.com. NAHB members receive a discount on all Builder Books titles.

To Register for the Symposium

Advance registration for the 50+ housing symposium is available online until Friday, May 11. After that date, attendees must register onsite.

To register, or for more information, visit www.nahb.org/build4boomers.

For more from Brent Green, visit his blog at http://boomers.typepad.com.

‘Marketing to Leading-Edge Baby Boomers’ Available at BuilderBooks.com

“Marketing to Leading-Edge Baby Boomers,” available through BuilderBooks.com, delivers all the insights and strategies you need to achieve extraordinary business success as you determine what uniquely motivates boomers and how to communicate with them in meaningful and mutually beneficial ways.

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

Register Online for the 50+ Symposium by Friday, May 11

Builders and other housing industry professionals will explore the latest active adult and seniors housing design trends, innovations and the state of the market at the Building for Boomers & Beyond: 50+ Housing Symposium at the Hyatt Regency Denver at the Colorado Convention Center.

Hosted by the NAHB 50+ Housing Council, the symposium, considered the premier education and networking event for housing professionals serving the 50+ market, will be held May 30 to June 1.

Advanced registration is available online through Friday, May 11.

Innovative Design and Marketing

	The Glass House, by East-West Partners, is on the transit-oriented development tour at the 50+ housing symposium.

New to the symposium this year will be the Best of 50+ Housing Awards gala, held on May 31, honoring the winners of the prestigious design and marketing awards program showcasing the latest trends and most innovative design.

The symposium’s popular housing tours have been expanded this year to showcase different market segments of the 50+ housing industry — active adult communities, service-enriched communities and transit-oriented development (TOD). Seats are still available for the active adult and service-enriched tours. Separate fees apply to the awards gala and housing tours.

Green Building 

The symposium will also feature a press conference on green building and the 50+ home buyer on Thursday, May 31. Colorado builder John Kurowski, of the Kurowski Development Co., and Baltimore-based architect Ed Hord, AIA, of Hord Coplan Macht, will discuss the surging demand among boomers for green building and how builders and architects are responding.

“With the addition of the Best of 50+ Housing Awards gala and our expanded schedule of housing tours, this year’s 50+ Housing Symposium has even more to offer to attendees,” said Bob Tippets, 2007 chairman of the NAHB 50+ Housing Council. “And housing professionals can take post-conference courses to get credit toward the new Certified Active Adult Specialist in Housing (CAASH) designation.”

Education

The educational programs, which include for-credit post-conference courses, will explore such topics as:

• Higher-Density Housing that Appeals to Boomers
• Kitchens and Master Suites: Two Keys to the Hearts of Boomers
• How 50+ Consumers Buy and Sell Homes
• Beyond Sun City: Exciting New 50+ Designs for Home and Community 

Of Note

• Trends: Keynote speaker Andrew Zolli, a noted foresight and global trends consultant, will examine the ways in which increased longevity will touch every part of life, from work to career to health care and financial planning.
  
  
• Not So Big: In addition, best-selling author Sarah Susanka will talk about how the "Not So Big" movement is influencing the way boomers inhabit their lives.
  
  
• Long-Term Opportunities: Real estate advisor Tim Sullivan, president of Sullivan Group Real Estate Advisors, will assess the long-term opportunities and challenges facing building professionals today.

To Register

To register, or for more information, visit www.nahb.org/build4boomers. Advance registration ends Friday, May 11. After that, attendees may register on site.

Find Out What the 55+ Market Wants

“Boomers on the Horizon: Housing Preferences of the 55+ Market,” available through BuilderBooks.com, can help you better build and market homes to this age group.

Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences.

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

Builders, CEDIA Partner on Home Technology Demand

NAHB and the Custom Electronic Design and Installation Association (CEDIA), an international trade association of companies that specialize in designing and installing electronic systems for the home, have formed a partnership to meet the growing consumer demand for home technology — from home theaters and electronic gaming to home security and home health care.

Home technology installations are expected to reach $9.6 billion this year.

The Home Technology Alliance partnership will tap CEDIA’s expertise in applications and NAHB members’ knowledge of the new home and remodeling markets to offer consumers new choices in home automation that can improve their quality of life.

The alliance, housed at NAHB, will provide education, resources, tools and product and service information to builders in the areas of electronic systems integration and home technology. CEDIA is headquartered in Indianapolis.

“Builders need to be continually educated about this ever-evolving technology so they can keep up-to-date with the latest advances,” said Alex Hannigan, chair of NAHB’s Custom Home Builders Committee, which will oversee the alliance. “We are delighted to have CEDIA as the founding sponsor of this forward-looking initiative.”

The Home Technology Alliance will provide home builders and remodelers with options for integrating home automation into both new and existing homes.

“The Home Technology Alliance is the next logical step in bridging the gap between increasing consumer demand for technology-driven amenities and the residential building industry,” said Utz Baldwin, vice president of CEDIA. “This new alliance is designed to engage NAHB and CEDIA members, and deliver programs to demystify the fastest changing segment of the home building industry.”

“Electronic systems contractors are emerging as not only a primary trade, but also a core component of the building design team,” Baldwin said. “NAHB and CEDIA are logically positioned to capture their expertise and offer builders, architects and designers a new resource to learn about the features, benefits, best practices and design considerations associated with emerging home technologies.”

Concrete Tour to Mix Plant Visits, Latest Trends

The latest advances in concrete construction, production, materials and design will be showcased at the 2007 Concrete Home Building Council Concrete Technologies Tour in Minneapolis.

The tour will be held on Sunday through Tuesday, May 6-8.

The tour will feature educational programs, networking and behind-the-scenes tours of six cement-based building materials and manufacturing facilities. 

Plants on Tour

The plants on the tour include:

• Molin Concrete Products Company
  Molin, with more than 100 years in the prestressed/precast concrete industry, provides design, manufacturing and installation services for such products as hollow core planks, precast foundation walls and precast/prestressed beams, columns, structural wall panels and stadia.
  
  
• Schwing America, Inc.
  Schwing manufactures a broad line of truck- and trailer-mounted concrete pumps that allows its customers to grow with the company. Schwing also provides an array of innovative products for ready-mix producers.
  
  
• Becker Architectural Concrete
  Becker Architectural Concrete brings together the disciplines of quality concrete construction with the limitless possibilities of color, texture and form to give designers and builders the creativity and strength of concrete.
  
  
• Holcim (U.S.) Inc.
  Holcim (U.S.) is one of the largest suppliers of Portland and blended cements and related mineral components in the country. The company offers an extensive line of cements and related construction materials, as well as technical support.
  
  
• Anchor Block Company
  Anchor Block Company manufactures concrete blocks, autoclave-cured decorative masonry units, pavers and retaining walls in a vast array of textures and colors.
  
  
• Cemstone
  Cemstone, a family-owned and operated business founded in 1927, delivers quality concrete for everything from residential driveways, to walls in homes built with Insulating Concrete Forms technology to high profile commercial projects. The company supports concrete batch plants, contractor supply stores, state-of-the-art concrete pumping trucks, a concrete block plant and 18 aggregate mines.

The three-day event also includes an optional golf tournament and several receptions.

Onsite Registration Is Available

Onsite registration is available. For more information about the tour, visit www.nahb.org/concretetour.

‘Concrete Ideas for Living’ Available at BuilderBooks.com

“Concrete Ideas for Living,” with more than 200 photographs of unique residences — including close-ups of some of the most innovative and contemporary designed concrete kitchens, floors, bathrooms, facades and patios — and available through BuilderBooks.com, demonstrates the limitless potential and flexibility of concrete as an artistic medium.

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

Attend the Modular and Panel Plant Tour May 20-22

The 2007 Modular and Panel Plant Tour, a behind-the-scenes look at modular and panelized home building industries, will be held May 20-22 in Roanoke, Va.

The tour, by NAHB's Bulding Systems Council, will feature educational programs, networking and tours of eight plants.

Plants on Tour

The plants on the tour include:

• West Window Corporation
• Nationwide Custom Homes
• Mod-U-Kraf Homes
• Timber Truss Housing
• Metwood Building Solutions
• American Standard Building Systems, Inc.

Also on the tour is Martinsville Speedway, a half-mile racetrack with 800-foot straights and 12-degree banking that is home to NASCAR Nextel Cup racing.

To Register

For more information, or to register, visit www.nahb.org/PlantTour.

PAC Lofts: Mixing New With the Old Adds Up to Fabulous

	Concrete ceilings and exposed pipe reminiscent of the building's origins as an adding maching factory add an eclectic touch for young professionals.

The first in a series on the secrets of The Nationals model home merchandising winners.

By Jan Mitchell

The Gold model home winners in the 2006 Nationals Awards have secrets to share about the different aspects of model home merchandising. Whether it’s use of materials or colors, the scale of the project or just breaking the rules, all of them reveal hot trends that are emerging today.

Among the winners are two condominium communities, one low-maintenance villa, a vacation home and an executive home in a gated community near open space. Whether today’s buyers are looking for city conveniences, low maintenance, luxury or recreation, builders are offering choices like never before — as The Nationals winners clearly demonstrate.

	Quirky contemporary furniture, along with place settings that suggest a casual dinner party, appeal to professionals in their 20s and 30s.

Community: PAC Lofts
Award: Best Model Merchandising Under $250,000
Builder: The Bond Companies
Merchandiser: Riha Design Group
Location: Chicago

Built in 1908 as an adding machine factory, the 96-unit PAC Lofts is located in what has become one of the hippest areas of Chicago. Modern touches of granite countertops and European plumbing fixtures are juxtaposed nicely with yesterday’s exposed brick walls and 12- to 14-foot concrete ceilings.

The developer, The Bond Companies, created this urban reuse project after building a mixed-use development in Los Angeles at the intersection of Hollywood and Vine.

Prospects can tour two models at PAC Lofts, a standard model and one fully loaded. The fully-loaded model, replete with luxurious upgrades, is the one that impressed the 2006 Nationals judges, according to Laura Basich, senior designer at Riha Design Group.

Basich used greens, large black-and-white patterns and eclectic furniture to appeal to the sophisticated, young professionals in their 20s and 30s that the developer sought at this location close to the city’s elevated mass transit system. She chose furniture with clean lines, contemporary sofas, ornate dining chairs and a flat-screen TV to lure young buyers. An Asian-inspired dinner in progress completed the look.

The model was not only a hit with the judges, the lofts are at least 75% sold out.

Jan Mitchell is the senior editor of NAHB’s Sales + Marketing Ideas magazine. She also writes about model merchandising, interior design, architecture and consumer trends for other industry and consumer publications, including Professional Builder magazine and its online counterpart, Housingzone.com. Her bestselling book, “Sales and Marketing Checklists for Profit-Driven Builders,” is available through BuilderBooks.com. She has served as a judge for regional and national builder marketing competitions and is a member of the National Association of Real Estate Editors. For more information, e-mail Mitchell at mitchell.jan@comcast.net.

	Designer Laura Basich paired a bold, modern green with black-and-white graphics in this sophisticated bedroom.

Realtors Chief Economist Joins Move, Inc. as EVP

Move.com, the official home site of NAHB, announced on April 30 that David Lereah has joined the company as an executive vice president.

Lereah, who was has been the chief economist for the National Association of Realtors® (NAR) for seven years, will serve as chairman and partner with Allan Dalton, who will be the president and CEO of a new business entity for consumers and real estate professionals that will be launched later this year.

“With the addition of David’s unique qualification and expertise as an economist, Move will continue to be recognized and sought out as the leading online real estate destination with the most comprehensive information available to real estate professionals and consumers,” said Move CEO Mike Long.

“After serving as the spokesperson for the NAR for many years, David brings vast real estate savvy and knowledge to the company,” Long said. “He will help guide us in our next phase of growth and expansion with new ventures as well as serving as the company’s spokesman on economic and real estate issues.”

Prior to joining NAR, Lereah was chief economist for the Mortgage Bankers Association (MBA) of America. He also served as president and CEO of Lender Technologies Corporation — a wholly owned subsidiary of the MBA that specializes in technology and information solutions for the mortgage lending industry.

Read The Education Insider to Maximize HBA Education

Education is high on the list when members are asked why they joined their local home builders association. Now that the industry is facing a challenging correction, education is more important than ever and continuing education can help home building professionals distinguish themselves from their competition and favorably impress their clients.

To support local HBAs as they begin or continue their educational programs, The NAHB University of Housing offers The Education Insider, a quarterly e-newsletter featuring articles about education news, course updates, trends in education, tips for minimizing costs and maximizing revenue, and other important issues.

To receive a copy of the latest edition of The Education Insider, e-mail Drew Williams at NAHB, or call him 800-368-5242