Nation's Building News Online: May 21, 2007Print All Articles Text Version |
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Builders Call for Major Overhaul of Immigration BillAs the Senate prepared to debate legislation to reform U.S. immigration laws, the nation’s home builders on May 21 announced their opposition to the bill. While noting that the nation’s home builders have championed comprehensive immigration reform, NAHB Executive Vice President and CEO Jerry Howard said that the problems with the Senate overhaul bill “are so grave and extensive that we believe this legislation cannot be fixed without making major revisions.” If the bill were to be enacted in its current form, Howard said, it “would do irreparable harm to America’s small businesses, which have generated the lion’s share of new job growth in the economy.” Senate negotiators last week reached a behind-the-scenes agreement on the immigration law and planned to put the legislation on a fast track to the Senate floor. In his message to Congress, Howard said that NAHB has “no choice but to oppose the legislation in its present form. We call on lawmakers to go back to the table, start from scratch and bring in representatives from the small business community, including the construction sector, to help craft a reasonable bill that would benefit all Americans.” Of particular concern for NAHB members are employment verification provisions in the Senate bill that would give the government latitude to prosecute an employer who hires an illegal alien without knowledge that the person is unauthorized to work, and inadequate safe harbor protections that require complete adherence to all immigration regulations no matter how obscure. In addition, legislative language would give the secretary of the Department of Homeland Security a wide berth to enact rules that would make general contractors responsible for the legal status of all of their subcontractors’ employees. In a full-page advertisement that ran in Roll Call and The Politico on May 17, NAHB criticized a legislative proposal then under consideration that would have explicitly required home builders and other businesses to be responsible for verifying the legal status of employees hired by subcontractors. The subcontractor and employer liability issues are just two among many other troubling provisions in the massive immigration bill, which runs several hundred pages long. NAHB also believes that the program to provide a future flow of immigrant workers for the construction industry is unwieldy and unworkable. Additionally, the legislation would increase opportunities for frivolous lawsuits against employers, and it is still unclear whether the new, mandated employer verification system contained in the law would be workable, efficient and fair. NAHB will be meeting this week with members of the Senate and their staffs to air its concerns and call for major changes in the bill to address the issues of the small business and housing community. To read the legislation, click here and enter S. 1348 in the box at the center of the page. For more information, e-mail Jenna Hamilton at NAHB, or call her at 800-368-5242 x8407 Floor Plans: A Lease With a Commanding View, Chicago-Style
Developer:
Think “Chicago-style,” and deep-dish pizza, “Da Bears” or the rough and raucous days of Al Capone and the Untouchables come to mind. In the hands of Cleveland-based developer Forest City Residential and its Sky55 project, however, Chicago-style conjures up a whole different image — one of architecture inspired by modern city life, of curved glass, floor-to-ceiling windows and sweeping, panoramic views as high as 40 stories above Chicago’s Lake Michigan shoreline.
The Chicago twist is that the views and services don’t command a premium, they come with a lease.
The outdoor terrace and fireplace. The Sky55 rental market is skewed towards the 18 to 24 and the 55+ age “bookends” — those transitioning into new stages of life, either into the workforce or out of the workforce — while wanting to enjoy city living, most for the first time.
Gourmet kitchen with stainless steel appliances and granite counterop. Living on the Edge of the Action The paradox is that while these “bookends” want to be in the mix and hubbub of city life, they also want to be able to retreat to a safe haven above the fray. Sky55 was created to give its residents the comfortable buffer they seek while also providing them ready access to the city’s excitement.
Sky55 earned the Best High-Rise Apartment (nine-plus stories) in NAHB’s Pillars of the Industry design competition.
FHA Reform Would Help Head Off Subprime ForeclosuresModernization of the Federal Housing Administration is needed promptly to help address the subprime mortgage problem that continues to unfold across the country, Alphonso Jackson, secretary of the Department of Housing and Urban Development, told a May 14 Homeownership Summit in Washington, D.C. on preventing borrowers from losing their homes through foreclosure. “The President and I have been strongly encouraging Congress to pass legislation that modernizes the FHA,” Jackson said. “We need this reform now. Every day of delay places more and more home owners at unnecessary risk.” FHA loans are providing an increasingly popular alternative for home owners who are confronting monthly payments they can’t afford after the interest rates on their adjustable rate mortgages are adjusted upward, he indicated. However, he said, “With expanded authority to set insurance premiums commensurate with risk, FHA could potentially assist tens of thousands more borrowers who need an exit strategy from their sub-prime mortgages. Unfortunately, under today’s restricted premium limits and maximum loan amounts, FHA simply cannot reach all the borrowers who need the ‘safety net’ that FHA can provide.” Conceding that “exotic loans are a serious challenge for us,” Jackson nevertheless said that most subprime loans remain “viable” and that subprime lending remains an important alternative for households who can not qualify for a mortgage from a prime lender — provided that it is “legal, fiscally responsible and ethical.” Of the adjustable-rate subprime loans taken out in 2005 and 2006 and just now beginning to experience increased payments, he said that in 80% of the cases borrowers will be able to pay the loans at the new interest rates, will refinance their loans into less expensive prime-rate loans or will sell their homes. “We remain concerned about the other roughly 20% of these subprime loans,” Jackson added. “Even borrowers with subprime loans taken out in earlier years may still experience some problems with rate and payment resets. For many, large reset rates have just kicked in. Some people are having, or will have, trouble affording the new payments. These are the loans that we must follow carefully over the next few months.” Jackson said that housing counseling and financial education is important in the process, and cited an article by Washington Post columnist Michelle Singletary, a moderator at the housing summit, reporting that half of home owners who went into foreclose didn’t even pick up the phone to contact the lender. The Administration has increased the budget for counseling from $13 million when it took office to $41 million now, and has requested $50 million for housing counseling grants in the coming fiscal year, he said. In the majority of the cases, panelists at the summit said, foreclosure on subprime loans can be prevented if the home owners get in touch with their lender at the earliest sign that they expect to fall behind on their payments. (For stories in this issue on that discussion, click here and here.) Jackson said that the exotic loan problem needs to be addressed now through FHA reform so that mechanisms will be in place to prevent foreclosures once the market returns to full strength. Although credit for home mortgages has tightened, the housing market has not been “strangled,” he said, and a growing population and rising incomes suggest that “we can expect a future boom in housing.” NAHB last month testified on behalf of H.R. 1852, the Expanding American Homeownership Act of 2007, which would give the FHA greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and provide a viable alternative to the volatile sub-prime market. The legislation is scheduled to go to the House floor in the coming weeks. To read a previous NBN story on the legislation, click here. To read the bill, click here and enter H.R. 1852 in the box at the center of the page. For more information on the legislation, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144. National Membership Day: More Prizes Than Ever BeforeNAHB members participating in National Membership Day on Tuesday, May 22 will have a chance to win more prizes than ever before — including Whirlpool appliances, NASCAR tickets, a Harley Davidson jacket and more. Whirlpool, NAHB’s exclusive membership sponsor, will be awarding top prizes to the day’s most successful recruiters. In addition, several NAHB Member Advantage companies will be giving prizes to winners of the Biker Alley Trivia contest broadcast throughout the National Membership Day Webcast. The “Leaders of the Pack” membership day Webcast will be broadcast from the National Housing Center in Washington, D.C. from 2:00 p.m. to 5:00 p.m. To register for and view the Webcast, click here. About two-thirds of all the local HBAs — 515 — are registered to participate in NAHB’s annual membership drive, which is expected to sign up more than 10,000 new members during the day. Trivia Contest Prizes Trivia contest prizes for viewers of the Webcast include:
Members of participating local home builders associations are eligible to win a Chill and Grill Travel Cooler, receive double Spike credits during the month of May and become eligible to rank in national membership competitions for recruitment, retention and participation. The Chillerator — the only Energy Star®-rated refrigerator designed to handle the temperature extremes of the garage environment — is the top recruiter prize. New this year, all members who earn six retention credits in May will be automatically entered into a drawing for one of two KitchenAid Stand Mixers. Prizes Available
The Chillerator, from Whirlpool, is the top recruiter prize for National Membership Day.
Live Webcast Interviews In addition to the trivia contest, the Webcast will feature interviews with members, membership planners and experts, and NAHB leaders. They include:
For more information, visit www.nahb.org/membershipday, or call 800-368-5242 x8440. To view the Webcast, click here. $2 Million Just Released: Apply Now for ‘Buy Now’ Ad GrantsThe NAHB Executive Board recently approved the release of the remaining $2 million of the NAHB “Buy Now” Advertising Assistance Program. Launched in February, the program provides $3 million to assist local associations in an effort to bolster home sales in markets hit hard by the current housing downturn. The initial $1 million was quickly disbursed in grants to 51 HBAs. Following the release, NAHB immediately began processing 35 additional applications — worth more than $600,000 — that had been approved and were awaiting funds from the program’s second phase. In total, 86 local associations in 29 states have now applied for and have received, or been approved to receive, nearly $1.7 million in advertising assistance. Including the matching funds that the HBAs contributed, the total value of their advertising campaigns is $5.3 million. To see a list of the HBAs and the grant levels, click here. With $1.3 million in funds still available, NAHB encourages HBAs that have not yet applied for advertising assistance to apply today. The NAHB “Buy Now” Advertising Assistance Program provides grants to qualifying HBAs in three categories:
HBAs that applied and were eligible for the first phase, but did not receive grants from the initial $1 million, are currently being contacted by NAHB regarding their application and eligibility for the second phase. Associations that have already received matching grant money are not eligible for the second phase. NAHB is encouraging associations that have received grants to promote their grant to their membership through HBA publications and newsletters and on their Web sites. 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. Bright Spots: Why Some Homes Are Able to Inspire Bidding Wars in a Slow MarketSome real estate agents in Washington, D.C. say that, despite key statistics that show the slowest housing market in years, they are seeing cases of multiple bids and rising prices as sellers adjust prices to reflect a more reasonable market than the upward price spiral of previous years. “I think the market is soft if you don’t price it right,” said Jane Fairweather of Coldwell Banker. “You’re now seeing probably 10% to 15% of the sellers out there who are going to see multiple contracts,” down from 40% to 50% of the market two years ago and 60% the year before that. Peter Morici, an economist and business professor at the University of Maryland, sees a sign of a healthier market. “It indicates while we don’t have a high-volume market, we have a market that has some stability. Fundamentally [prices] are not a lot lower than they were at the peak,” he said. But Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said that he thinks the market is still weak and that real estate agents are often setting prices low to get the asking price or more.” Expecting a third child in Alexandria, Va., Jim and Shane Fagan wanted a bigger home and a yard, so they recently put their three-bedroom townhouse up for sale for $599,900. They paid $325,000 six years ago. They got $616,000. Around the same time, they bought a four-bedroom house a mile away for $879,000, about $40,000 under the asking price. “We were definitely pleased with how it turned out,” Shane Fagan said. (www.washingtonpost.com)
Greenspan Speaks in AtlantaFormer Federal Reserve chief Alan Greenspan told metro Atlanta executives that the economy now faces an unprecedented challenge: the decline of the residential real estate market, which had been a critical component of growth during the past decade. The number of unsold homes has increased dramatically in the past year, he noted. “We are going to get a significant weakness in new home construction for a while.” Addressing the subject of the housing market at about the same time, Ben Bernanke, Greenspan’s successor at the Fed, said that despite its troubles, housing is not enough to yank the economy off the rails. For his part, Greenspan declined the chance to make a prediction. “I can’t say how it will come out because we have never been through anything like this before,” he said. “So I’m going to pass on the short-term forecast.” Asked about the near-term direction of the economy, Greenspan said it is easer to see the distance. “You can forecast far better 20 years out than you can 20 months out.” (www.ajc.com)
Mortgage Fraud Is Up, But Not in Their BackyardsFor the first time since 2002, Georgia fell from being the top state in the country for mortgage fraud to the fourth, according to a report by the Mortgage Asset Research Institute, and community-based efforts are credited with making a difference. As the housing market cools and lenders, particularly those that made loans to people with riskier, or subprime, credit scores, take a much closer look at the mortgages they underwrote, evidence of mortgage fraud is growing nationwide. Warning that it might take three to five years to uncover the full extent of fraud that occurred in loans made last year, the institute said reports of mortgage fraud rose 30% for loans made in 2006 compared with those made in 2005. Also, the number of fraud cases reported to the FBI soared to 35,000 last year, from 7,000 in 2003. From coast to coast, the fraud often involves buyers gaining control of properties at a low price and then selling them quickly at a big profit, rigging the game every step of the way by procuring bogus property appraisals and using false or stolen identities to obtain mortgages. While the scam artists profit in these flipping schemes, the lenders are ultimately the losers, left holding the bag when the loan on the home ultimately defaults. Mortgage fraud can have a similar impact on a poor and a wealthy neighborhood, inflating appraisals and causing tax assessments to skyrocket and at the same time leaving many houses vacant and in disrepair and causing property values to plunge. (www.nytimes.com)
76-Story Condo Tower Planned for Downtown L.A.Park Fifth, a planned $1-billion 76-story condominium complex overlooking Pershing Square park in downtown Los Angeles, would be the tallest residential building in the country west of Chicago, and construction could start as early as 2008. A burst of residential development in recent years has added thousands of apartments and condominiums downtown, and billions of dollars worth of entertainment, shopping and hotel construction is underway or scheduled to start this year. After decades of blacklisting the area, lenders are again making loans for downtown developments. But adding downtown housing is a risk, market observers said. “There is a huge supply that far exceeds demand” at the moment, said real estate broker Stephen May of Downtown Residential Real Estate, who estimates that more than 400 units are for sale. Prices are holding level, he said, but may come down in future months as more units hit the market and create competition. “People wonder if this is the right time” to announce a large housing development, said economist Jack Kyser of the Los Angeles County Economic Development Corp. “Downtown is overbuilt and some other projects are grinding to a halt.” But the housing market could be thriving again by 2010, he said. Park Fifth would produce 732 condo units and 218 hotel rooms. (www.latimes.com)
Eyes on a New Age; Builders Are Taking a Second Look at Buyers in Their 20s and 30sBecause aging baby boomers are not moving as much anymore, builders are starting to shift their attention to young buyers in their 20s and 30s — members of Generation X born between 1966 and 1976 and Generation Y born between 1977 and 1994. “This age group will accept higher density housing in mixed-use developments,” said Steve Hovany, president of Strategy Planning Associates, a firm that tracks housing in the Chicago area. “They are more socially interactive and don’t want to go to the edge of the Earth to live,” he said. While the boomers are financially able to buy bigger homes, “young people don’t have the desire or money for bigger. This whole population is happy to live in 1,400 square feet,” Hovany said. “They prefer a more gritty, urban location. They are buying condos in suburban downtowns near train stations.” As the result of the attitudes of such young buyers, the size of the average house may start to decline, he predicted, and smaller lot sizes will result. Technology is a way of life for these young buyers, according to Helen Velas, owner of Eleni Interiors. “They’re comfortable with it and expect it. They want wireless, iPods, X-Box gadgets. There must be a place in the family room for the plasma TV. They’re always on the computer or cell phone. Everything is about multitasking.” At the same time, she said, “they don’t want to waste time on maintenance. Their time is more valuable. They’ll pay to have it done. So an easy-to-clean, low-maintenance, one-piece plastic tub and shower is fine with them.” (www.chicagotribune.com)
Animal House Meets the Empty NestIn Nashville, Tenn., Bristol Development Group is pitching its Velocity project to 20- and 30-something professionals willing to trade space (as little as 535 square feet) for affordability (as low as $165,000) and a chance to live in a hot urban neighborhood. Developers all across the U.S. are appealing to young buyers — many of them single, almost all without children — with buildings that promise not just an affordable home but also a great social life with amenities like video game lounges and outdoor fire pits, rooftop soaking tubs, on-site bars and poolside drinks. But it’s not so easy to control demographics in the open market, and some of the buildings are drawing unexpected buyers: people old enough to be the parents of the kids down the hall. In Denver, about half of the units in the recently completed Glass House sold to empty-nesters, despite youth-oriented amenities. In New York, even a hot tub above the lobby and a provocative marketing campaign couldn’t keep boomers away from William Beaver House, slated to open next year. And when Viridian opened last October, along with young buyers looking for a chance to live downtown, it also attracted people like Julie Lammel, a speech pathologist in her early 50s who moved from a suburb where most of her neighbors were in her own age group. Lammel says the atmosphere at Viridian has been largely cordial, but cliques have formed and there have been some tensions; she describes the pool scene as an “animal house.” To combat the 20-somethings monopolizing the pool she and some of her cohorts have planned a covered-dish pool party. “Anyone is welcome,” she says in a Southern drawl, “but we’ll see who shows up.” (www.wsj.com)
April Housing Permits at Slowest Pace in a DecadeHousing starts moved up slightly in April while new building permits dropped to their slowest pace since June 1997, according to figures released by the Commerce Department on May 16. Housing starts rose 2.5% in April to a seasonally adjusted annual rate of 1.528 million units, following downward Commerce Department revisions for the two previous months. Starts were down 16.1% from a year earlier. Building permits, a more reliable indicator than starts of the current trend in housing construction activity, dropped 8.9% in April to a seasonally adjusted annual pace of 1.429 million units. Permits were down 28.1% from a year earlier. “Builders are adjusting to the adverse impacts of tighter lending standards on home sales and cancellations by cutting back on the number of new permits and working down their backlog of unused permits,” said NAHB President Brian Catalde. “NAHB’s single-family Housing Market Index has been declining since February and builders are bracing for the challenges ahead.” “The pattern of building permits clearly shows that the dramatic downward correction in housing production still is underway,” said NAHB Chief Economist David Seiders. “Home buyer demand has been sent into another down leg by the abrupt tightening of mortgage lending standards, and there is an increasingly heavy supply of vacant housing units on the market. Under these conditions, builders are cutting back on new construction and intensifying their efforts to bolster sales and limit cancellations.” Starts of new single-family homes were up 1.6% in April to a seasonally adjusted annual rate of 1.225 million units. The pace was 18.9% below a year earlier. Multifamily housing construction increased 6.3% to a seasonally adjusted annual rate of 303,000 units for the month, a 2.6% decrease from April 2006. Regionally, new home and apartment starts in the Northeast and West were up by 31.3% and 7.8%, respectively. Housing starts fell 0.1% in the South and 14.2% in the Midwest. All four regions reported a construction pace well below a year earlier. April’s single-family permit issuance was down 6.0% to an annual rate of 1.063 million units for the month, which was 28.8% below a year earlier. The pace of multifamily permit issuance dropped 16.4% to 366,000 units during the month, off 26.1% from a year earlier.
Discussions From 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 the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. 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. Subprime Mortgage Concerns Undermine Builder ConfidenceBuilder confidence slipped further this month over ongoing concerns about the subprime mortgage market, pushing the NAHB/Wells Fargo Housing Market Index (HMI) down three points to a reading of 30. The index appeared to be hitting the bottom of the current down cycle in September, when it also dipped to 30, and it improved slowly but steadily through February before relapsing as the negative implications of subprime loan problems became evident. "Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said NAHB President Brian Catalde. "The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added NAHB Chief Economist David Seiders. "We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish," he said. “There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market." Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor. All three component indexes declined in May. The index gauging current single-family sales slipped two points to 31, sales expectations for the next six months fell three points to 41 and prospective buyer traffic skidded four points to 23. Three out of four regions posted declines in the May HMI. The Northeast posted a six-point decline to 32, the South was down four points to 33 and the West fell three points to 32. The Midwest eked out a single point gain, to a lowly reading of 23. Discussions From 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 the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. 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. Bernanke Sees Limited Spillover From Subprime WoesIn a May 17 address to a Chicago Federal Reserve Bank conference, Fed Chairman Ben S. Bernanke said that curbs on sub-prime residential mortgage lending in response to rising delinquencies and foreclosures are likely to restrain home buying and residential investment in coming business quarters, but suggested that the damage to housing and the nation’s economy will be limited. “Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the sub-prime sector will likely be limited and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,” Bernanke said. The focus of Bernanke’s remarks was on how the Federal Reserve, other regulators and the Congress should respond to the current sub-prime problem. “We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers,” he said. “At the same time, we must be careful not to inadvertently suppress responsible lending or eliminate refinancing opportunities for subprime borrowers.” While mortgage credit in general has been “very solid” in recent years, he said, subprime mortgages with adjustable interest rates in foreclosure or with payments overdue by 90 days or more were up sharply last year and recently stood at 11%, about double their recent low in mid-2005. In the final quarter of last year, subprime mortgages accounted for more than half of the 310,000 foreclosure proceedings that were initiated. For the two preceding years, the average quarterly rate was roughly 230,000. Adjustable-rate subprime mortgages currently account for about two-thirds of subprime first lien mortgages and about 9% of all first-lien mortgages outstanding. “As the problems in the subprime mortgage market have become manifest, we have seen some signs of self-correction in the market,” Bernanke said. “Investors are scrutinizing subprime loans more carefully and, in turn, lenders have tightened underwriting standards. Credit spreads on new subprime securitizations have risen, and the volume of mortgage-backed securities issued indicates that sub-prime originations have slowed. According to the Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices in April, a large majority of respondents indicated that standards on prime residential mortgages had remained basically unchanged over the past three months, with 14% reporting somewhat tighter standards. Of the 44 domestic institutions that originated nontraditional residential mortgages, 45% noted a tightening of standards on those loans. Of the 16 institutions indicating that they had originated supprime residential mortgages, more than half of the respondents, on net, reported that they had tightened standards on those loans. “Tighter standards on subprime and nontraditional mortgage loans generally were not associated with a move toward more-stringent lending policies for prime mortgages,” the report found. “Indeed, of the nine institutions that reported having tightened standards on subprime residential mortgages, only one indicated that it had also tightened standards on prime residential mortgages. Five of the 20 institutions that reported tightening standards on nontraditional mortgages also tightened standards on prime mortgages,” the report said. Bernanke said that although the supply of credit to the subprime market has been reduced, “credit has by no means evaporated.” “Some subprime originators have gone out of business as their lenders have cancelled credit lines, but others have been purchased by large financial institutions and remain in operation,” he said. “Importantly, we see no serious broader spillover to banks or thrift institutions from the problems in the subprime market; the troubled lenders, for the most part, have not been institutions with federally insured deposits.” Looking at the nation’s housing market, Bernanke described “a further stepdown in the first quarter” of this year after a leveling-off of sales toward the end of 2006 suggested some stabilization of housing demand. “Sales of new homes moved down to an appreciably lower level in February and March,” he said, “and sales of existing homes have also come down on net since the beginning of this year.” Discussions From 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 the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. 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. Non-Profits Sending Delinquent Home Owners to the LenderHome owners who are falling behind on payments on their subprime mortgages and heading toward default need a crash course on protecting their investment and credit-worthiness, according to representatives from the nonprofit and mortgage sectors addressing a May 14 Homeownership Summit in Washington, D.C. conducted by the Department of Housing and Urban Development. The first thing that home owners who run into financial trouble need to learn, they said, is to get in touch with their lender as quickly as possible to avoid foreclosure by working out a new loan agreement or, if that’s not possible, selling the home before it falls into the hands of the bank. Unfortunately, most home owners heading toward foreclosure would rather avoid their mortgage lender for a variety of reasons, including embarrassment and a misperception that what the lender really wants is to gain possession of their home. Foreclosure Not the Only Option Freddie Mac is interested in outreach initiatives for borrowers, said Robin Stout Magala, the company’s senior delinquency resolution manager, to spread the message that “foreclosure is not the only option.” Following up on research indicating that more than 50% of mortgage borrowers in default and in danger of foreclosure never contact their lender for help, Magala said that Freddie Mac commissioned a study two years ago to find out why. Freddie Mac’s survey research found that 61% of the 1,000 delinquent borrowers and 73% of the 1,000 current home owners who were polled thought that foreclosure was the only option under the circumstances. Twenty-eight percent of the home owners said they could handle the situation on their own, and 17% said there was no reason to call because they didn’t have the money to make the payment. Colleen Hernandez, president and executive director of the Homeownership Preservation Foundation, reported that her organization’s 888-995-HOPE hotline for home owners suddenly finding themselves in danger of losing their homes has been ringing off the hook in recent months and has been making significant progress in heading off foreclosures. In partnership with mortgage lenders, nonprofit organizations and city government agencies, the 24-hours-a-day, seven-days-a-week telephone service puts home owners in touch with free advice and counseling from HUD-certified counseling centers. The hotline received more than 14,000 calls during this year’s first quarter, a 30% increase from a year earlier. Roughly 47% of the calls result in counseling, which costs about $100 per case, Hernandez said, but considering that each foreclosure represents a loss for the lender of at least $30,000, successful counseling with 128 households a day is averaging $3.84 million in savings. One “silver bullet” for persuading delinquent families to seek counseling, she said, is the simple assurance that “I guarantee I’ve seen worse.” When they hear that, “people feel relieved and are ready to take action.” Ad Campaign Set for June 25 Ken Wade, chief executive officer of Neighborworks America, told the HUD summit that his organization has been working with the Ad Council on a wide-ranging media campaign to advise consumers that they can reach out and work with someone who will help solve their foreclosure problem. The campaign will be launched on June 25. Panelists at the HUD summit agreed that the homeownership education effort needs to begin long before a household encounters problems making their payments and should be required for subprime borrowers even before they consider purchasing a home. “Even a person with a 700 credit score may need a class on closing and settlement,” said Marcia Griffin, founder and president of HomeFree-USA, which has established a “Save a Family” foreclosure prevention fund to help families keep their homes. Pre-purchase education is critical, she said, and “of value to all home buyers.” Unfortunately, Griffin said, home owners who are having problems with their mortgage payments are unaware that support is available through nonprofit agencies such as hers. “People need to know that there are organizations that can help them out,” she said. “They’re scared to death. They just don’t know what to do.” Lender Sensitivity Training May Be Needed Complicating legitimate efforts of nonprofits, home owners with problem loans can also be vulnerable to calls from scam artists who are seeking to take advantage of their problem. Hernandez advises her clients that there are three red flags that could signal that the offer is not on the up-and-up: “Are they calling you, or are you calling them? Is the service free or are they charging? And are they telling you to hurry up and sign something?” Participants in the homeownership summit also said that when home owners in trouble call their lender they often encounter someone who is more interested in collecting the money that is owed than in loss mitigation. Many lenders also won’t start the renegotiation process until the borrower is at least 90 days delinquent, they said, when they should be taking action at the earliest sign of a problem. Also, when households are having problems with their mortgage payments they are also likely to be juggling bills, “and credit card companies can give mortgage companies a real run for the money,” said Magala. Hernandez said that a major part of the home owner counseling is helping them to work out a budget, and they are told that “Visa can’t take the house away,” she said. Roughly 25% of delinquent borrowers don’t have the financial means to solve the problem, said Magalas, and they need to understand that they can avoid foreclosure by selling their home through a short sale to an investor. “We need to get them to understand why they need to sell the home as quickly as possible,” said Griffin. “And it’s a lot easier to hear from a non-profit organization than the lender.” Following up on the meeting in Washington, HUD will be conducting 10 regional Homeownership Summits across the country to discuss strategies for assisting vulnerable home owners and home buyers to avoid predatory lending practices and assess tools, techniques and methods for successful loss mitigation. The summits will take place in: Philadelphia and Seattle on June 20, Los Angeles on June 25, Denver on June 26, St. Louis on June 27 and Houston on June 28. Dates have yet to be determined for Atlanta; Cleveland; Hartford, Conn.; and Newark, N.J. Loss Mitigation Helping to Limit Subprime Loan ForeclosuresAdvances over the last decade in loss mitigation and refinancing programs are showing success in helping home owners who have defaulted on their mortgages avoid foreclosure, according to panelists participating in a May 14 Homeownership Summit in Washington conducted by the Department of Housing and Urban Development. Syndicated Washington Post columnist Ken Harney called loss mitigation “one of the most important consumer advances for housing in the past 50 years.” In the days when he bought his first home, he said, “loss mitigation didn’t exist” and there wasn’t “a whole lot of outreach or sympathy” for people behind on their mortgage payments. Today, lenders are able to work out a loan with 70% of the delinquent buyers they are able to get in touch with, said John Anderson, senior vice president of First Madison Services. About 15% to 20% of the workouts “do fall apart,” he conceded, “but we spend a lot of time upfront to ensure they don’t.” At a workshop for home owners earlier this month in Atlanta, William Longbrake, vice chair of Washington Mutual, Inc. and senior advisor to the Housing Policy Council of the Financial Services Roundtable, said that his company was able to provide workout packages for all 50 of the borrowers with whom it had set up appointments. Because of the costs involved “no responsible lender is interested in foreclosing,” Longbrake said. “We are interested in any other solution possible.” “No two cases are the same,” he added, and that requires taking a case-by-case approach and assuming some risks. Foremost in the process is looking at the borrower’s ability to repay the mortgage, but “there is never any absolute certainty” about the outcome, he said. The principle challenge for the lender, Longbrake said, is getting in touch with the borrower, and that effort is being made easier by working with non-profits who are helping to get the word out that there are opportunities to avoid foreclosure. If the loan is close to being current and the family is in good shape financially, he said, a lender may be able to substitute a fixed-rate mortgage at 50 basis points below the going rate for an adjustable-rate loan that will cause payment problems when it resets at a higher interest rate. In a case where illness is the problem but the home owner has good prospects for returning to full earning power, a forbearance agreement may be the answer, with the period of missed payments being tacked onto the loan amount. Modifications include extending the repayment period from 30 to 40 years, he said. Another option is to extend for an additional two years the current payments on an adjustable rate mortgage that is ready to be reset at the end of a two-year period, recasting the loan and then having it return to its original terms. Also, the interest rate on the loan can be reduced to as low as 5%, and then stepped up afterwards by no more than 1% a year. In cases where the borrower doesn’t have the ability to repay, a short-sale to an investor enables the buyer to walk away with no remaining obligation, Longbrake said. Douglas Garver, executive director of the Ohio Housing Finance Agency, said that the state is selling taxable mortgage revenue bonds to fund its Opportunity Loan Refinance Program, which provides affordable 30-year, fixed-rate financing to borrowers who feel that their current loan does not fit their financial circumstances. Eligible buyers can have no more than 125% of area median income, and are typically grappling with payments they can’t afford from an adjusting ARM or interest-only loan or having an employment problem, he said. Opportunity Loan borrowers can also obtain a 20-year fixed-rate second mortgage for up to 4% of the appraised value of the home at an interest rate that is two percentage points higher than the first mortgage. The second mortgage can be used for financing charges such as paying off the first mortgage, including late fees or attorney fees. “Keeping doors open in Ohio is increasingly important,” Garver noted, at a time of weakness in the state economy. There were 80,000 foreclosures in Ohio last year, up 25% from 2005, and this year foreclosures have been running 15% to 16% higher over 2006. Garver added that his agency is unable to use non-taxable revenue bonds to support the program because federal requirements prevent refinancing programs from using them. George Miller, executive director of the American Securitization Forum, noted that there remains a significant amount of flexibility to restructure mortgage loans that have been securitized, but contractual terms and other conditions designed to protect the interests of investors in those loans can impose certain limitations, such as restrictions on the dollar volume or number of modifications that can be made. Discussions From 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 the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. 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 TrendsThe following are links to useful information from government agencies and NAHB that will enable you to monitor the housing market. To access the latest information available, simply click the links.
Discussions From 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 the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. 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: Fast and Accurate Countertop Scribing
As a kitchen-cabinet installer, I have scribed hundreds of countertops to fit irregular walls. For most jobs, I only have to remove a little of the countertop material, but for some jobs, I have to carve away as much as 1⁄2 inch of material — which can be a long, dirty job with a belt sander. Now, I use a new technique that leaves the old way in the dust. Instead of a belt sander, I use a router.
— Steven Morris, Sarnia, Ontario, Canada Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Christina Glennon at Fine Homebuilding.
BuilderBooks.com Offers More Than 250 Books That Help You Build Your Business BuilderBooks.com is your source for training and education products for the building industry. The official bookstore for NAHB, BuilderBooks.com offers award-winning publications, software, brochures and more available in both English and Spanish. To view these publications online, click here, or call 800-223-2665.
Free NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market With the current cooling of the nation’s housing market expected to persist 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. Toolbox Talk: Hammer Home Nail Gun SafetyPneumatic nail guns are fast and easy to use and have commonly replaced hammers as the tool of choice on residential construction job sites, but they have also created new safety hazards. According to the Centers for Disease Control and Prevention, hospital emergency departments treated 26,900 workers for nail gun-related injuries in 2005. Eighty-seven percent of worker emergency room nail gun injuries are puncture wounds or open wounds with an embedded object. Workers can get hit by the nail or fastener, one of the tool’s attachments, or by flying wood or concrete chips. It is also common for a nail to go through the construction material into the injured person. Nail gun accidents are easily prevented, however, if employers and workers learn and practice proper nail gun use. Most injuries occur because of how the tool is used, not the tool itself. Discussion with workers of the following quick tips for using nail guns safely can help reduce the risk of certain nail gun injuries:
For more information, e-mail Robert Matuga at NAHB, or call him at 800-368-5242 x8507. NAHB Toolbox Safety Talks are designed to supplement employee safety training programs and help identify areas where additional employee safety training may need to be developed. Each individual talk is intended to provide a brief job-site training session of approximately 15 minutes. Each talk should include questions that encourage employees to share their experiences, which can make the reality of injuries more vivid and provide a clearer safety message.
‘Toolbox Safety Talks’ Available at BuilderBooks.com “Toolbox Safety Talks, English-Spanish,” available through BuilderBooks.com, includes 52 safety talks — one for each week of the year — in both English and Spanish on topics including electrical, scaffold safety, fall protection, proper excavation/trenching and more. To view or purchase this publication online, click here, or call 800-223-2665. Futurist Sees Old and Young Straining the Middle-AgedStarting in 2008 and 2009 and hitting its peak in 2016, the U.S. population will be heading into an hourglass pattern in which the numbers of older and younger people will be at top levels and those who are middle-aged will be at their low-point, exerting some new pressures on American households, according to Andrew Zolli. A consultant who analyzes critical cultural, technological and global trends, Zolli will be the keynote speaker at Building for Boomers & Beyond: 50+ Housing Symposium 2007, which takes place May 30 to June 1 in Denver. The keynote speech is being presented in association with National Geographic Live. Zolli was recently named one of the fellows of the National Geographic Society, where he is leading development of a global initiative to envision new scenarios for life in 2040 to 2050. In a recent telephone interview, the futurist indicated that the nation is heading for substantial changes in the home and family structure as middle-aged people who represent a disproportionately small share of the population find their children and their aging parents counting on them for various kinds of support. “Women born in 1972 or later are statistically all but guaranteed to take care of their mothers longer then their mothers took care of them,” Zolli said. The growing size of the elderly population will also help reinforce the growing trend for green home building, according to Zolli, because the older you are, the greener you are. “People over 55 are three times as likely to read the environmental impact statement of the companies they invest in,” Zolli said. Boomers share this concern for the environment with the young “millennials” who were born between 1982 and 2000. “Generational affinities skip a generation,” he explained. Because the boomers and the millennials constitute such large numbers of the population right now, Zolli said that he expects their “green” attitudes to create a shift in environmental values. Zolli also predicted that the house will start providing a service platform for the delivery of medical services. Health care technology has been changing so rapidly that “the person who will live to be 130 is probably alive right now,” he said. This increase in longevity is going to “drive a change in embedded health care technologies in the home,” he said, “and we’ll start to see branded health care services in the home.” Zolli said he will be elaborating on these trends in his presentation at the 50+ Housing Symposium, and will also include more discussion of demographics and what he calls “the overabundance and complexity of consumer choice.” Although advance registration for Building for Boomers & Beyond: 50+ Housing Symposium 2007 is closed, attendees can register on site. For more information, click here (www.nahb.org/build4boomers).
Zolli’s firm, Z + Partners, helps global companies and institutions see, understand and respond to complex change. He is also the curator of the annual PopTech conference, an elite annual gathering that explores the social impact of technology and the shape of things to come. Zolli has served as futurist-in-residence at both Popular Science and American Demographics magazines, as well as American Public Medea's Marketplace. Millennium Homes: Color Helps Buyers Zero in on Home
The latest 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.
One of the biggest marketing challenges facing New Millennium Homes in its master planned, upscale community, The Oaks of Calabasas, in Calabasas, Calif., was how to keep from overwhelming prospects. New Millennium Homes was building its exquisite luxury homes in four neighborhoods within the 550-home community. What’s more, the builder had 13 model homes to choose from — all on one cul-de-sac. To help buyers zero in on the home that was right for them, New Millennium Homes used a color-coordinated system that corresponded to each neighborhood, says Jon Schneider, president of Barracuda Marketing. Rolling kiosks with color-coded banners were used in the community’s indoor/outdoor sales pavilion to educate visitors about the features of each home collection. The colors for each home collection and their features were carried through to the homes’ neighborhood signage and collateral material as well. The highest-end home, The Reserve, Residence 2 — a gold winner in The Nationals, the largest and most prestigious competition for new-home sales and marketing professionals and communities — used, quite appropriately, a gold color scheme to guide prospects to its home and through its features.
The Mediterranean-style architecture and elegance of The Reserve, Residence 2, dictated that the merchandisers feature a classic look that would appeal to L.A.-area buyers — without being trendy, says Julie Stark of Creative Design Consultants. So, they chose a sleek, modern look featuring a base color scheme of black and white with color accents and sophisticated furniture. The home’s spacious office/library is one of its selling features.
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. Subscribe to Sales + Marketing Ideas Magazine for Cutting-Edge Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine (www.smimagazine.com). Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. Rental Households Surge, Rents Near Record HighNew household formations helped spur rental apartment demand during this year’s first quarter, while rents hovered near record highs, according to an NAHB analysis of recently released U.S. Census Bureau data. Although the number of total households declined slightly by about 200,000 during the first quarter, the downward shift was due mainly to a falloff of 800,000 in the number of home owning households. In sharp contrast, the number of renting households increased dramatically by about 600,000, NAHB economists said. The jump takes the total number of renters in the U.S. up to 34.7 million households — higher than at any time since the fourth quarter of 1999 and within 1 million households of the all-time renter high of 35.7 million set in 1994. The general growth in households over the past several years helps explain the first sustained increase in renter households since more than 10 years ago, according to NAHB, because newly formed households tend to be renters rather than owners. This recent spike suggests that the rate of multifamily household formation may be on the rise again after a number of years of essentially treading water. The low interest rates, fast-appreciating home prices and availability of non-traditional mortgages during the recent housing boom helped siphon off demand that in more typical times would have gone into renting instead of homeownership. Median asking rents reached $1,013 for rental units completed during the first quarter of 2006. Although that figure is lower than the record asking price of $1,025 set during the second quarter of 2004, it is the second-highest reading ever recorded. Regionally, the Northeast and the West continue to have the highest median asking rents, reported at more than $1,150 in both regions. These are followed by the South, with a median asking rent of $953 and the Midwest, at $750. Although rents are clearly highest on both coasts, NAHB economists said, median asking rent in the Midwest is near its all-time high, and the median asking rent in the South is within $13 of its highest quarterly reading ever. Apartments Growing in Size Because data on the asking rents of new apartments are volatile from quarter to quarter and can change direction quickly, NAHB has constructed a four-quarter moving average to more easily see trends. The calculated rents based on the moving averages show that current rents are within $14 of their all-time high. Although some of the increase is due to local economic conditions, some may be attributed to changes in the characteristics of the multifamily rental units being produced. New units completed in 2005 were slightly larger than their 2004 counterparts. Median square footage rose from the then record level of 1,105 square feet in 2004 to 1,143 square feet in 2005 and 1,171 square feet in 2006. Similarly, the share of new units completed in 2005 with two or more bedrooms rose by four percentage points, to 67%, and the share with two or more bathrooms also edged up, from 49% to 54%. For information on multifamily resources available from NAHB, e-mail Ann Marie Moriarty, or call her at 800-368-5242 x8350. Condo Market Shows Some Signs of Bottoming OutDespite a large oversupply of new condominium and co-op units in some of the hottest housing markets of the 2003 to 2005 boom and continued production of those units at a historically high rate during last year’s final quarter, NAHB economists see signs in recent data from the U.S. Bureau of the Census that this market sector may be finding the bottom of its current downturn. Over the past several years, condominium production increased dramatically. There were 71,000 multifamily condos and co-ops started in 2001 and 2002. By 2006, that number had doubled to more than 150,000 units. “A closer look at the numbers shows that, despite the slowdown in the for-sale housing market, condo production at year’s end 2006 remained significantly high by historical standards, coming in at an annualized rate of 136,000 units,” NAHB economists said. “Given the relative weakness in condo prices and the strength in rents, it is hard to know whether supply is being constrained enough for the market to have actually bottomed out.” On a national basis, the three-month absorption rate for new condominiums was 69% in the first quarter of this year, up slightly from 68% in the fourth quarter of 2006, but down from 75% during the first quarter of 2005. Absorption rates of new condos and co-ops have tended to be higher than the absorption rates for rental units since 1999, with the exception of the fourth quarter of 2004. Regionally, the South had the highest new condo absorption rate during the first three months of this year, at 86%, followed by 79% in the West, 39% in the Northeast and just 21% in the Northeast. “While 21% is very low, it is important to remember that quarterly absorption numbers are volatile and that the completion of just one large project can dramatically alter the results,” according to NAHB. However, economists said they will be watching the Northeast over the next several quarters “to see whether the recent decline is the start of a trend or simply a cyclical event. The absorption rate in the Northeast during the first quarter of 2005 was just 28%.” The worst of the decline may just about be over for existing condo sales, as well. Existing sales fell 10% in 2006 to 801,000, and sales were at an average annual rate of about 800,000 during February and March of this year. NAHB economists also said that rates of resale price appreciation provide some evidence of a possible rebound in demand for condos. Median condo resale prices began to decline last year after three years of price increases. However, during the first three months of 2007 those prices rose from a low of $222,600 in January and February to $228,000 in March, well above the recent monthly cyclical low of $213,100 in October 2006. For information on multifamily resources from NAHB, e-mail Ann Marie Moriarty, or call her at 800-368-5242 x8350. Bathroom Improvements Can Save Water and EnergyIn celebration of May as Remodeling Month, NAHB Remodelers is providing consumers with information on how they can make smart choices for their next bathroom improvement project to help improve their home’s energy efficiency and reduce water usage. "Home owners can easily transform their bathrooms with these simple energy- and water-efficient upgrades," said NAHB Remodelers Chair Mike Nagel, CGR, CAPS, a remodeler from Chicago. "Whether it's simply swapping out a shower head or completely gutting the room, it makes a lot of sense to go green when remodeling a bathroom." For a start, energy-efficient tankless water heaters are good replacements for traditional water heaters, which have an average life span of 10 to 11 years. Heating water can account for about 15% of a home's energy bill, and an efficient heater can save $40 to $100 in energy costs annually. Following are the life spans and energy-saving opportunities of the most common fixtures in the bathroom:
‘Design Ideas for Bathrooms” Available at BuilderBooks.com “Design Ideas for Bathrooms,” available through BuilderBooks.com, features more than 500 photographs of professionally-designed bathrooms. This book also includes “Smart Tips” and sidebars that provide information at a glance. To view or purchase this publication online, click here, or call 800-223-2665.
Concrete Technologies Tour Highlights Industry Trends
Attendees of the 2007 NAHB Concrete Technologies Tour in Minneapolis earlier this month came away with a different perspective of the concrete industry. Highlights of the tour included:
For more information on the tour, visit: www.nahb.org/concretetour. The 2008 Concrete Technologies Tour will be held in Charlotte, N.C.
Register for Custom Builder Symposium in Naples, Fla.Register for the 2007 Custom Builder Symposium, NAHB's premier educational and networking event for custom builders. The symposium will be held Oct. 26 to 28 at the Naples Grande Resort & Club in Naples, Fla. Discover Hidden Treasures This year's program, "Discover Hidden Treasures," is filled with hidden treasures and opportunities that will enable participants to improve their businesses. Tours, Golf, Education and More The symposium will include:
To Register Online registration is now open. For more information and to register, go to www.nahb.org/custom.
Are Project Manuals Necessary for Small Projects?By Nina M. Giglio, CSI, CCSI, Assoc. AIA, SCIP Should design professionals provide project manuals for small projects, or are spec sheets more than adequate — even if something goes wrong? Product specification drawings indicate design intent, while written documentation generally provides qualitative support of the design intent. The size or complexity of the project does not necessarily dictate whether a project manual is needed. Nor is a project manual a tool to safeguard against construction litigation. Determine the Needs of the Project’s Documentation To determine whether a manual is needed for a small project, design professionals should first answer the following questions:
The answers to the above questions will enable design professionals to determine which specification method — project manual or spec sheets — is appropriate for their small project. But what happens when something goes wrong and the attorneys arrive? Actually, construction litigation, which is growing at an alarming rate, is not about how the information is presented. Rather, it is about the information itself. So, the best way the design professional can minimize exposure is to provide adequate information. But adequate information is a nebulous term. What may be adequate for the design professional may not be adequate for the builder or owner. As each party attempts to minimize exposure to litigation, the onus is placed elsewhere. For example, the design professional may indicate within the documentation that a manufacturer’s installation recommendations, or that a reference standard, dictate installation procedures. Properly Organizing Specifications for Small Projects No matter how construction information is conveyed or presented, it needs to be organized so that it is not lost The U.S. National CAD Standard (NCS) — a joint publication of the American Institute of Architects (AIA), the Construction Specifications Institute (CSI) and the National Institute of Building Sciences (NIBS) — provides recommendations for the organization of drawings. CSI and Construction Specifications Canada (CSC) have jointly addressed the organization of written construction information through MasterFormat™ and SectionFormat™.
Conclusion Small projects require written documentation to support and protect the design intent. This documentation may be in the form of a project manual or it may be included as part of the graphic documentation — including notes, sheet specs and schedules. The design professional needs to address the user audience and use the most appropriate information delivery method to meet their needs. Ultimately the design professional needs to clearly express the design intent while avoiding duplicating information, which only creates the potential for confusion and conflict. When “something” goes wrong on a construction project regardless of its size, it is unlikely that the number of words used will determine if the information is adequate. If abbreviated text is used, it should be just as clear, complete, correct and concise as if the amount of text required is lengthier. Specifications content should be coordinated with the graphic documentation to ensure clarity of design intent. Specifications for small projects can adequately be conveyed and presented in a variety of forms. It is up to the design professional to determine the best method for conveying both written and graphic construction information based on the demands of the project and the design intent that he or she is trying to convey. Nina M. Giglio, CSI, CCSI, Assoc. AIA, SCIP, is the director of specifications for Hall Architects, based in Charlotte, N.C., and a member of the Construction Specifications Institute. She is a member of SectionFormat/PageFormat Update Task Team (SPUTT) and the national secretary for Specifications Consultants in Independent Practice (SCIP). For more information, e-mail Giglio at Hall Architects. NCBC 2008 Awards of Excellence Open for EntriesThe National Commercial Builders Council (NCBC) is accepting applications for its 2008 Awards of Excellence program, which recognizes achievements in the national commercial building industry for design (remodeling and new construction), market appeal, energy efficiency, challenges faced during building and overall success of projects that are either built or renovated. The deadline for entries is Aug. 1. The National Commercial Builders Council sponsors the Awards of Excellence program to bring recognition to commercial building projects that range from less than 5,000 to more than 100,000 square feet. Projects must have been completed after Dec. 31, 2004 and may be entered in commercial, industrial, institutional, medical, mixed-use commercial/retail, recreational, retail and — new for 2008 — green building. One or several projects can be entered in this competition. Projects may be submitted by the builder, developer, architect or contractor of the project. The six divisions in which a project can be entered include:
Winners will be notified by mail no later than Nov. 1. A public announcement will follow at NAHB’s International Builders’ Show, Feb. 13 to 16, 2008, in Orlando, Fla. Recognition includes a desk obelisk; a photo of your project on display with the other winners at the International Builders’ Show; acknowledgment in Commercial Builder magazine; and the opportunity to participate in educational sessions at the Builders Show. In addition, some winners may be featured in future issues of Commercial Builder magazine. For more details on eligibility and entrance requirements, click here; or e-mail Nick Lashinsky at NAHB. New Resource for Suppliers, Manufacturers, Contractors“Selling to Builders, Second Edition,” available through BuilderBooks.com, provides building suppliers, manufacturers, trade contractors, real estate brokers and others who sell products and services to home builders with information and business forms that will help them improve their skills and increase their business when working with builders of all sizes. The publication includes a companion CD with exercises that help sales and service personnel evaluate their current business practices and become even more successful salespeople. To view or purchase this publication, click here. Education Calendar
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