Nation's Building News Online: June 18, 2007Print All Articles Text Version |
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Builders Sharpen Attack on Flawed Immigration BillOn June 7, just 24 hours after more than 1,250 home builders marched on Capitol Hill to discuss legislative priorities for the housing industry and call on their senators to fix a seriously flawed immigration bill, the Senate voted to derail the controversial measure, leaving its ultimate fate unresolved. One week later on the evening of June 14, two days after President Bush made a rare visit to Capitol Hill to stump for the bill, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) announced a deal to bring the legislation back to the Senate floor as early as the end of this week. However, the situation still remains fluid and it is uncertain whether the bill will be approved by the chamber or become law. Knowing that the legislation could be resurrected before Congress adjourns for its July 4 recess, NAHB launched a major grassroots letter-writing campaign during the spring board meeting calling on its members to urge their senators to continue making every effort to pass meaningful comprehensive immigration reform. (On the link above, NAHB members can click the "Take Action" button under "Hot Topic" and after filling out a short registration form will be directed to the letter.) The legislation should provide increased border security, a new employer verification system, a program to address legal immigration into the U.S. in the future and a plan to deal with the 11 to 12 million illegal immigrants who are already here, the letter says. Builders attending the annual NAHB Legislative Conference in Washington on June 6 were able to meet with their individual senators and weigh in on the issue at the same time that debate on Senate immigration bill S. 1348 was reaching its climax. A motion to shut off debate on the bill failed when it received only 45 out of the 60 votes needed. After it was pulled from the Senate floor, Reid insisted the bill was not dead. A breakthrough came days later after Bush endorsed a plan by Sens. Jon Kyl (R-Ariz.) and Lindsey Graham (R-S.C.) to provide an additional $4.4 billion for border security and work site enforcement. Under the agreement announced by the Senate leaders on June 14, each party will likely be limited to about 10 amendments when debate resumes on the immigration bill. In the weeks leading up to the June 7 vote, NAHB remained in the forefront as the leading industry voice opposing the bill because of its negative impact on small businesses and the housing community. Acting as the industry spokesperson on the issue, NAHB Executive Vice President and CEO Jerry Howard conducted interviews with ABC World News Tonight, CNBC, NPR, Bloomberg, Forbes, USA Today, WMAL Radio, the Associated Press, the Washington Times, Congress Daily and the National Journal. Howard hammered home the message that immigration reform should strengthen the U.S. economy and protect the nation’s borders; provide a workable program to address future, legal immigration into the country; and create a fair and efficient employee verification system. Howard noted that the problems with S. 1348 were so serious and extensive that major revisions were required. In a letter to the editor published in the May 31 issue of the Wall Street Journal and entitled, “Immigration Reform Bill Threatens Small Business,” Howard laid out the concerns of the home building industry: “Specifically, the nation's home builders view the bill as counterproductive because it contains onerous provisions regarding employer liability and responsibility for subcontractors; the law could be used to unfairly prosecute an employer who unknowingly hires an illegal alien; general contractors could be held responsible for the legal status of employees hired by subcontractors; the program to provide a future flow of immigrant workers for the construction industry is unworkable; the new, mandated electronic verification system is untested; and the new record-keeping requirements are unduly burdensome, especially for small businesses.” In addition, full-page ads in Roll Call, the Politico and the National Journal, whose audience is geared toward Washington policymakers, listed NAHB’s objections to the bill and the changes needed to fix the legislation. On the legislative front, in the days leading up to the June 7 Senate vote, NAHB lobbyists worked tirelessly to urge senators to adopt amendments to improve the bill. NAHB sent a letter to the Senate leadership designating as a “key vote” an amendment proposed by Sens. Jeff Bingaman (D-N.M.) and Barack Obama (D-Ill.) that would have allowed workers to stay in the U.S. for up to six straight years instead of having to return to their home country for a full year every two years. As the chamber debated the amendment on the Senate floor, Bingaman was shown live on C-Span holding up NAHB’s letter and reading the following passage: “This system essentially makes the entire program in Title IV unworkable for the construction industry. In the residential construction industry, employers spend much time and resources training employees. To arbitrarily lose valued employees at the end of two years, as they are forced to return home for a full year, creates unnecessary amounts of instability in our workplaces, and wastes scarce employer resources.” The amendment was ultimately defeated by a 57-41 vote. With immigration reform still unresolved, NAHB launched BuilderLink, its updated national grassroots mobilization program for key federal housing issues in Congress, during the Legislative Conference. BuilderLink will do more to educate NAHB members about the issues that matter most to the housing industry, connect them to the members of Congress who oversee these issues and provide NAHB members with the materials and resources they need to convey the right message to Congress at the right time. NAHB members interested in finding out more information about BuilderLink, or who want to write their lawmakers in support of comprehensive immigration reform that takes into account the concerns of the housing and business community, should e-mail Molly Murray at NAHB, or call her at 800-368-5242 x8282. For further information on where the immigration debate stands in Congress, contact Jenna Hamilton, x8470. Builders March on Capitol Hill With Housing PrioritiesThe immigration debate took center stage as more than 1,250 builders from across the country arrived in the nation’s capital on June 6 to take part in the annual NAHB Legislative Conference and seek support from members of Congress to promote policies that will keep housing a national priority and expand rental housing and homeownership opportunities nationwide. The builders’ “March on Capitol Hill” attracted the attention of major media outlets, with Forbes running a story entitled “Builders Hit the Hill,” and CNBC, Bloomberg TV and Marketplace Radio reporting on the day’s activities. In an interview with CNBC, home builder Chuck Ellison, president of Miller and Smith at Woodcrest LLC based in McLean, Va., stressed the importance of immigrant workers to the home building industry. “About 20% of our workforce today is immigrants,” he said. “There simply is not enough native labor for us to build the homes we need and we need to build a tremendous number of homes in the next 10 years. We’re just not going to be able to do it without immigrant labor.” Also appearing in the CNBC news segment, Robert Camp, president of Camp Corporation located in Tacoma, Wash., added: “We know that housing has always been a driver of the economy and will continue to be and so they (Congress) certainly are sensitive to our issues and we are being well received.” And in a further demonstration of the political clout of builders in the political process, two Republican presidential contenders addressed the NAHB leadership during the spring board meeting — former Massachusetts Governor Mitt Romney and Tommy Thompson, a former Department of Health and Human Services Cabinet secretary and Wisconsin governor. “Builders who participated in the Legislative Conference were afforded a unique opportunity to speak directly with their members of Congress and to take a stand on the issues that affect their businesses and bottom line,” said NAHB President Brian Catalde. Builders discussed a wide range of legislative issues with an impact on housing costs and the financial health of the industry and their businesses, including environmental regulations, tax policy, housing finance and soaring health care costs. In more than 300 individual meetings with their representatives and senators, builders called for action on the following NAHB legislative priorities:
“You create jobs, you create income. You are helping to build a better America and a freer and safer world,” Romney said. Speaking before the NAHB Board of Directors on June 9, former Governor Tommy Thompson said that one of his goals if he is elected President is to reform the tax code. “The mortgage interest deduction will never change in a Thompson administration. I know how important it is to your industry and how important your industry is for our country,” said Thompson. On another issue of importance to the housing community, Thompson said that any immigration bill approved by Congress should ensure that contractors are not responsible for the legal status of their subcontractors’ employees. To read legislation, click here and enter the bill number in the box at the upper left. For more information, e-mail Michael Strauss, or call him at 800-368-5242 x8252. Photos by Herman Farrer
‘Buy Now’ Campaign Moves Fence Sitters in Upstate New York MarketThe NAHB “Buy Now” Advertising Assistance Program initiated by the Capital Region Builders & Remodelers Association (CRBRA) in Latham, N.Y. near Albany helped change the minds of many potential home buyers who were sitting on the fence waiting for prices to fall, according the HBA’s executive officer, Pam Krison. “Implementing the ‘Time to Buy/Buy Now Campaign’ at CRBRA exceeded our expectations,” Krison said. “It created positive effects on so many levels. In addition, it strengthened relationships within our association and with our media contacts.” The HBA’s ad campaign was used to specifically target the potential home buyers who were getting most of their housing news from the national media, Krison said. Her HBA members wanted to tell potential buyers that, locally, the housing slowdown was much less dramatic than what they heard and read in the national news — and that buyers shouldn’t wait for the market to slip further. NAHB’s “Don’t Believe the Headlines” print advertisement available through the grant program promoted the exact message the association wanted to get out to consumers, Krison said. The association customized the ad by using their market’s housing and economic information, which painted a brighter picture than seen in the national news. The members also advertised on television and used paid editorials to bolster their message. Not only did Krison find the campaign to be extremely effective — the HBA’s Web site traffic tripled. “The attitude of the members has been tremendous,” Krison said. “They have been very receptive to the campaign, and they love the results that they have seen.” $1.9 Million Awarded to Date To date, 103 HBAs in 32 states — including the Latham HBA — have received or been approved to receive nearly $1.9 million in NAHB advertising assistance. Including the matching funds that the HBAs contributed, the total value of their advertising campaigns is more than $5.7 million. $1 Million in Grants Still Available NAHB is encouraging HBAs that have not yet received or been approved to receive grant money to apply for NAHB “Buy Now” grants. The NAHB “Buy Now” Advertising Assistance Program provides grants to qualifying HBAs in three categories:
To Apply To learn more about the program, eligibility considerations and requirements, click here, or call Niki Clark at NAHB at 800-368-5242 x806l. To view a list of the HBAs that have received or been approved for grants, and their grant level categories, click here. Subprime Crash Squeezes Out First-Time Home BuyersSubprime mortgage lenders have tightened credit guidelines so much they’re squeezing about 500,000 first-time home buyers out of the market, according to NAHB. A decline of that magnitude would reduce sales of new homes by 4% and sales of existing homes by 7%. For instance, Josh Tullis, who in his eight years as a senior loan officer rarely felt compelled to reject a first-time home buyer’s mortgage application, is sending people away empty-handed in 2007. Tullis’ latest clients are a married couple making $70,000 a year who have been renting the same apartment for three years with no late payments. Lenders won’t approve them because they don’t have enough money in the bank, said Tullis. With mortgage companies cracking down due to rising subprime defaults, Tullis needs them to save two months of payments for the $500,000 townhouse they would like to buy. “Six months ago, these folks might have qualified, a year ago, definitely,” Tullis said. “It’s a lot, lot harder than it used to be for first-time home buyers.” The closing or sale of more than 50 mortgage companies and stricter credit rules will reduce subprime lending to $350 billion this year, a 47% drop from the $665 billion that the industry lent in 2005, according to Seattle-based Washington Mutual Inc., the largest U.S. savings and loan. “There were clearly weak underwriting standards in 2006 and the pendulum has swung pretty hard in the other direction,” said Doug Duncan, chief economist for the Mortgage Bankers Association. “It’s probably gone further than it should have gone.” (www.bloomberg.com)
Web Help for Getting a Mortgage the Criminal WayA number of Web sites are telling consumers that they can make them more attractive to lenders. The sites, for example, offer better credit scores by hitching customers to a complete stranger’s credit card or providing them pay stubs from a bogus company. One has even offered a well-stocked bank account to rent for a month or two. Industry experts say these sites, which are relatively new, played a role in fueling the rampant mortgage fraud that has caused a huge spike in loan defaults in recent months because people bought homes they could not afford. Regulators and the mortgage industry are now vowing to crack down on aggressive lending practices that have led to rising foreclosures. But that greater scrutiny, including lenders requiring more documentation than they have in the past, may actually increase demand for some of the services these Web sites offer. One site, RaiseCreditScoreNow.com, offers to add a person to four separate $20,000 credit lines with 10 years of “perfect payments” for $4,000 (although they do not have access to the actual credit line). This could increase an individual’s credit score by as much as 200 points in 90 days, the site says, and make the difference between them qualifying for a home loan or not. (www.nytimes.com)
What’s Selling in a Slow Market; Builders Add Rooms, Options, Not FootageNearly two years into the housing slowdown, builders report that their top-selling high-end homes feature less conventional floor plans and more specialty rooms than previous models, even though the overall square footage in most cases has remained the same. Many of the most popular models, designed to fit into smaller lots, feature angled walls or entryways that make interior appear bigger; game rooms, sun rooms and other special-use space; and smaller formal living rooms. The best selling La Jolla model by Drees Homes in Fort Mitchell, Ky., puts the front door off to the side of the house instead of at the center, which creates a slanted hallway to the main rooms. Bensalem, Pa.-based Orleans Homebuilders’ Bradford Grand II twists the center staircase so it opens to the side rather than the front, opening up the sightlines throughout the house. Compared with two years ago, when the housing market was at the height of the boom, one emerging theme is particularly noteworthy: the square footage of the current best sellers isn’t getting bigger. Average lot sizes shrank 7% in the 10 years ending in 2005, to about 8,847 square feet, or a little more than a fifth of an acre, according to the latest U.S. government statistics. As a result, some of the current best-selling luxury models are designed for the sorts of long, narrow lots that are increasingly the suburban norm. (www.wsj.com)
If You Build It, They Will ComplainAs backyard clubhouses and jungle gyms get bigger and more elaborate, adding rock-climbing walls and towers, neighbors in some communities are protesting, even though most municipalities don’t regulate such play facilities. However, the village of Elm Grove, Wis. has ordered Tom Eddinger to take down the backyard fort he built for his children by Aug. 31 or face daily fines of $150. Bigger than a typical playhouse, the split-level “stilt fort” is two stories, 22 feet tall to the peak of its shingled roofs and hoisted into the air on four telephone poles. It has windows and vinyl siding that match the Eddinger home and spans about 232 square feet. The playhouse, village officials say, amounts to an accessory structure like a shed that requires a permit to build. Even if a permit had been obtained, it’s too tall and large, officials said. Children’s playhouses can’t be taller than 10 feet or larger than 150 square feet, they say. In 2005, when he searched the village Web site, Eddinger said he found no rules for play structures and was told to wait because they were being drafted. He built it anyway, and the rules still aren’t finalized. (www.jsonline.com)
Trade in That Old HouseIn a bid to boost home sales, builders are looking to the auto lot for tips on how to move merchandise in a sagging market and they’re talking trade-ins. For the buyer, a trade-in eliminates juggling a new home while waiting to unload the old one during a slump. “It’s a way to move the market,” said Steve Melman, director of economic services at NAHB. “It addresses one of the main reasons that would keep you from buying a home.” With their construction expertise, builders can quickly remodel the old home for a reasonable cost and sell it for more than it would have fetched in its old condition. Many builders also have a sales staff to market the home, so they don’t have to worry about third-party broker commissions. According to the latest NAHB survey, about 10% of builders nationwide use some form of trading program. About a quarter of them said trade-ins were either somewhat or very effective, compared with 19% who said they were ineffective. (www.money.cnn.com)
View of the Blue; More Buyers Seek New Home on a Lake or RiverNAHB recently gauged the premium attached to American homes on oceans, lakes, rivers, ponds and other waterways and found it is considerable. Using a statistical model to estimate the impacts of both general location and specific neighborhood amenities, NAHB studied a standard new home built in a Midwestern suburb. Testing the effects of several attractive amenities on that home, the association found that the single greatest upward influence on a home’s price is a location on a body of water. The estimated price of the baseline home with no special location was $212,137. But moving that same house to an otherwise similar neighborhood on a waterfront elevated the price to $303,760. (www.chicagotribune.com)
Changes for Disabled Veterans Housing Program SoughtNAHB on June 7 called on Congress to simplify paperwork requirements and increase grant limits for the Specially Adapted Housing program of the U.S. Department of Veterans Affairs to help builders and remodelers better accommodate the housing needs and improve the lives of the nation's disabled veterans. Testifying before the Subcommittee on Economic Opportunity of the House Committee on Veterans' Affairs, NAHB President Brian Catalde voiced support for the Specially Adapted Housing program and offered several suggestions to expand or improve it to better serve the thousands of severely injured veterans whose homes must be modified to allow them to live independently. While the Veterans Housing Opportunity and Benefits Act of 2006 signed into law last year did much to improve the Specially Adapted Housing program, Catalde urged lawmakers to enact these improvements:
"One of NAHB Remodelers' designation programs, the Certified Aging in Place Specialist (CAPS), was created to equip remodelers with specialized skills to meet the requirements of aging home owners and those with accessibility needs," he said. "We encourage each of the VA's Specially Adapted Housing counselors to take the CAPS certification training to gain a greater understanding of the remodeling skills necessary to fully utilize these grants." For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Tax Issues in the Hopper Could Hit Home BuildersCongress in the coming weeks may address tax measures of importance to the nation’s home building industry — including the alternative minimum tax, independent contractors and carried interest — builders attending the NAHB Spring Board of Directors meeting in Washington earlier this month were told. Enacted in 1970, the alternative minimum tax, or AMT, was meant to ensure that relatively high-income individuals and corporations pay a minimum tax. While many provisions in the income tax are indexed for inflation, the AMT is not. As a result, over the past several decades, normal income inflation has subjected increasing numbers of working families to the tax each year. In recent years, Congress has enacted a series of one-year “patches” to shorten the reach of the AMT. The most recent patch expired last year and unless action is taken, the AMT could ensnare more than 23 million households in 2007, up from an estimated 4 million in 2006. NAHB supports repeal of both the individual and corporate AMT. Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Subcommittee on Select Revenues, has reportedly drafted a proposal for permanently fixing the AMT problem. While no official draft has been released, media reports indicate it would exempt anyone making less than $250,000 in taxable income from paying the AMT and set graduated rates for incomes from $250,000 to $500,000. Those earning more than $500,000 would be hit with a roughly 4% income surtax to compensate for the AMT taxes that would be lost from families earning less than $250,000. In the Senate, Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa) have introduced legislation to repeal the AMT. Baucus has not commented on the reported Ways and Means AMT legislation and other Democratic senators have indicated that they would prefer a one- or two-year fix instead of total repeal. NAHB continues to monitor the situation closely. Independent Contractors On the topic of independent contractors, NAHB supports enforcement of the current law, which determines whether a specialist is an independent contractor or employee by evaluating the facts and circumstances of the job. Businesses that violate these rules can obtain unfair advantages in the market, which hurts law-abiding businesses and individuals. The House Ways and Means Committee recently has looked into the effects of misclassifying workers as independent contractors. Lawmakers are apparently concerned that abuses are occurring and that workers and fair competition are suffering as a result. NAHB is watching the situation and has submitted a statement for the record expressing the association’s core principles that independent contractor businesses should be fostered, and that they should not be discriminated against by Internal Revenue Code regulations. Carried Interest The third issue deals with carried or promoted interest, which are income flows paid to private equity fund participants as a disproportionate share of the participant’s initial investment. While generally associated with hedge fund managers, this is also a common financing method for payments to builders for real estate joint ventures where outside partners provide gap financing. Under present law, these payments are taxed as capital gains. However, members of the Senate Finance Committee have indicated that this income should be taxed at higher rates as ordinary income because it does not represent profit that can be allocated to a capital interest. Sens. Baucus and Grassley are reportedly interested in taking a closer look at rules concerning taxation of carried and promoted interests. It is unclear if the Senate Finance Committee is considering just changes to hedge fund-carried interest income or whether a possible future proposal would also affect promoted interests as well as real estate joint ventures. NAHB is concerned that altering the law could negatively affect the cost of residential construction financing and damage useful methods of managing business risk. At a minimum the association believes that such proposals should exempt real estate development partnerships because builder carried interest represents return on equity investment and it is also a return on the risk of entrepreneurship borne by the builder. For more information on these tax issues, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421. Southern Arizona Builders See Major Impact Fee ReformWith the Southern Arizona Home Builders Association working behind the scenes, Arizona recently put a new development fees law on the books that represents the first real reform of its impact fee statutes in many years. A significant item in the complex Senate Bill 1423 that was signed into law allows development fees to be paid at closing rather than up front at the issuance of construction permits. A similar bill was vetoed by Gov. Janet Napolitano last year, but she found this year’s legislation acceptable after months of negotiations among cities, home builders, commercial developers and other stakeholders. “The cities and their lawyers were comfortable with the status quo, but we believe the housing industry needed real reform,” said SAHBA President Ed Taczanowsky. The new law also stresses accountability for impact fees imposed on builders and requires cities to:
Oregon Builders Find Alternative to Development FeesA new construction excise tax put forth by the Oregon Home Builders Association a few months ago to help school districts cover some of the costs of new schools has apparently ended a two-decade-long battle between builders and educators over development fees. Replacing development fees on new homes and apartments, the construction-excise tax can be levied by school districts on new homes, apartments, shops, industrial projects and office buildings. That spreads the burden more fairly to commercial property, which can spur jobs growth and the demand for homes, said Jon Chandler, a lobbyist for the HBA. Since the new tax is based on square footage, it also spreads the load more fairly to different income levels, he said. The larger the home, the greater the tax. The home builders also secured a provision that prevents cities and counties from levying new construction-excise taxes, despite the opposition of the League of Oregon Cities. Oregon builders recently received more good news when Governor Ted Kulongoski signed into law the nation’s first online permitting program for contractors, which allows contractors to electronically submit and manage building permits and other documents. The system authorized by House Bill 2405 will allow contractors to electronically work with 132 cities and counties across the state. They will be able to apply, pay for and receive permits; submit building plans for review and tracking; and schedule, track and receive inspection reports. It will be funded with a 4% surcharge on all building permits sold in Oregon beginning in January 2008. For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242. Reforms Give Florida a Fighting Chance Against No-Growth BidsStaring down the barrel of a “Hometown Democracy” amendment that would devastate the state’s economy by subjecting all city and county comprehensive plan changes to a voter referendum, builders in Florida are hoping that recent reforms in the petition process will help keep the potentially disastrous proposal off the ballot in the November 2008 elections. For years, Florida ’s state constitution has been one of the easiest to amend in the country, with a low 50% voter approval threshold and lax petition signature gathering standards Special protections for pregnant pigs and impractical bullet train plans not only have made it onto the ballot but have actually been passed by Florida voters. A late qualification deadline for signatures also allowed interest groups to sneak in amendments close to Election Day, putting opponents at a disadvantage in organizing and financing voter education campaigns. In 2004, a joint resolution of the Florida legislature imposed a Feb. 1 qualification deadline for amendments appearing on the November ballot, which was eventually approved by the voters. In 2006, NAHB, the Florida Home Builders Association and other interested groups developed an amendment to raise the threshold for approving an amendment from 50% to 60% to bring Florida’s amendment process closer in line with those in other states and to discourage unnecessary tampering with the constitution. The amendment made the November 2006 ballot and passed, ironically, with approval by 57.9% of the voters. With the 50% voter approval rule in force, Florida voters had approved every constitutional amendment on the ballot since 1996. Most recently, during their 2007 session, Florida legislatures tackled problems with the signature gathering process stipulated for amendment drives by passing several reforms that were a top priority for the builders association, the Florida Chamber of Commerce and others. Increasingly employed by anti-growth advocates and other special interests to bring controversial measures before the electorate, signature gathering has become a multi-million dollar business across the country. Gatherers are usually paid by the signature, opening up opportunities for fraud and deceit when the process is not closely regulated. Among the items that will help control signature gathering:
North Dakota Eases Restrictions on Marketing Out-of-State HomesWith a little help from the state’s home builders, North Dakota is catching up with modern times in the area of residential sales and marketing. On April 12, North Dakota Governor John Hoeven (R) signed into law Senate Bill 2343, which amended the North Dakota Subdivided Lands Disposition Act to remove registration requirements for marketing and sale of out-of-state housing subdivisions to North Dakota residents. The North Dakota Association of Builders and its executive director, Doreen Riedman, were instrumental in the passage of the new law, which simply allows home builders to market their products to residents of neighboring states. In the past, home builders in neighboring states could not actively market their homes to citizens of North Dakota without first registering that particular home or development with the state. S 2343 amended this antiquated law to conform with current marketing technologies such as those used on the Internet. For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242. Housing Upturn Will Be ‘Solid’ But ‘Not Rapid’Although housing conditions could start looking up by later this year, it will take several years, maybe not until 2011, for production to reach its average annual sustainable level of 1.85 million units (not counting an average 100,000 manufactured homes), NAHB Chief Economist David Seiders told the NAHB Executive Board on June 5. He made similar remarks to the full NAHB Board of Directors on June 9. The recovery will be slower than usual, he reported, because what the housing industry is experiencing “is like no other cycle we’ve ever had,” Seiders said. At this point in the downturn, “usually the Federal Reserve would be easing, but this time the economy is okay and the central bank won’t have to support housing,” he said. Coming out of the slump, housing also won’t be able to count on a major acceleration in employment growth. Employment growth this year has been good, Seiders said, but not as good as the past two years, and housing appears headed for “a solid recovery, but not a rapid one. It’s a game we haven’t been at before.” In reaction to the subprime mortgage issue, the tightening of mortgage lending standards, a deterioration on the demand side and a heavier supply of unsold inventory than expected, Seiders said he had further lowered his housing starts forecast for this year by 7% and by 10% in 2008. For-sale and vacant housing units on the market “skyrocketed” during the second half of 2006 into the beginning of this year, he said, probably reaching the 1.4 million level. The oversupply problem has become so widespread that it is also having some negative impact on the rental side of the multifamily sector, which has been forging ahead. Seiders forecast that housing production would be at the 1.6 million annual level by the end of 2008. Seiders noted that Federal Reserve Chairman Ben Bernanke had recently observed that the downward housing correction is still ongoing and the drag from housing will extend further out than had been expected. However, the Fed “is still totally preoccupied on what it regards as a dangerous situation for inflation and they don’t want to suggest they are concerned about the economy because they don’t want to fuel speculation about an interest rate cut.” While it appears that the rest of the economy has been insulated from the housing recession, “we don’t know the potential damage from the mortgage side,” Seiders said, and Bernanke could be “sugar coating a bit on the implications for consumer spending.” Seiders said that he had taken an expected quarter-percentage-point cut in the Fed’s 5.25% federal funds rate later this year out of his forecast in light of Bernanke’s latest pronouncements. NAHB leaders met with the Fed chairman during the association’s board meeting in Washington, D.C. earlier this month and reported that the state of the nation’s housing industry is “an increasingly complicated picture” but that the lion’s share of the decline appears to be over. Seiders said that the core inflation numbers watched by the Fed are receding and will continue to decline, “so there will be a de-facto tightening of policy without a rate cut.” He predicted that “if the economy doesn’t perform well, the Fed will be compelled to take action. They want to have their way on the inflation front, but they do want a decent economy.”
Spring Construction Forecast Conference Discussions 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. Builder Confidence Slides More in JuneOngoing concerns about subprime-related problems in the mortgage market and newfound concerns about rising prime mortgage rates have caused builder confidence in the demand for single-family homes to dip two more points this month on the NAHB/Wells Fargo Housing Market Index (HMI). With a reading of 28, the HMI has now reached the lowest ebb so far of the current down cycle and is at its lowest point since February 1991. “Builders continue to report serious impacts of tighter lending standards on current home sales as well as cancellations, and they continue to trim prices and offer a variety of non-price incentives to work down sizeable inventory positions,” said NAHB President Brian Catalde. “It’s clear that the crisis in the subprime sector has prompted tighter lending standards in much of the mortgage market, and interest rates on prime-quality home mortgages have moved up considerably during the past month along with long-term Treasury rates,” added NAHB Chief Economist David Seiders. “Home sales most likely will erode somewhat further in the months ahead and improvements in housing starts probably will not be recorded until early next year. As a result, we expect housing to exert a drag on economic growth during the balance of 2007.” Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. All three component indexes declined in June. The index gauging current single-family sales slipped two points to 29, sales expectations for the next six months fell two points to 39 and traffic of prospective buyers fell one point to 21. Three out of the four regions in the country posted declines in the June HMI. The Midwest slipped three points to 19, the South was down one point to 32 and the West fell five points to 27. Following a three-point slide in May, the Northeast picked up three points to register 35 on the index.
Spring Construction Forecast Conference Discussions 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. Mortgage Rate Spike May Slow Housing RecoveryThe recent upward trend in mortgage interest rates could slow ongoing efforts of builders to work down their unsold inventories of homes, said Freddie Mac in its Primary Mortgage Market Survey release last week. The Freddie Mac report showed a spike in mortgage rates for the week ending on June 14 as Treasury rates rose, leaving the 30-year fixed-rate mortgage at an average 6.74%, up from 6.53% for the previous week and 6.63% a year earlier. It reached the highest level since the week ending July 20, 2006, when it averaged 6.9%. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.37% last week, up from 6.24% the previous week and 6.23% a year earlier. One-year Treasury-indexed ARMs averaged 5.75% last week, up from 5.65% the previous week and 5.66% a year earlier. “Mortgage rates moved sharply upward this week, with rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the largest upward movement in over three years,” said Freddie Mac Chief Economist Frank Nothaft. “These moves parallel rising yields on Treasury securities, as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut,” he said. “Higher mortgage rates may weigh on the housing market’s gradual recovery,” Nothaft said. “While demand appears to have stabilized, inventories of new homes remain high, putting downward pressure on construction and home prices."
Spring Construction Forecast Conference Discussions 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. Home Price Growth Continues to Slow on OFHEO IndexOne of the most closely watched measures of U.S. home price appreciation shows positive growth during the first quarter of 2007, although housing analysts, including NAHB Chief Economist David Seiders, are expecting prices to register a decline this year nationwide. Released on May 31, the House Price Index (HPI) of the Office of Federal Housing Enterprise Oversight (OFHEO) showed that home sale and refinancing prices were up 0.5% in the first quarter over the fourth quarter of 2006. Prices in the first quarter of 2007 were 4.3% higher than they were in the same quarter of 2006, the index found. “Although some forecasters expected to see a drop in the HPI, nationwide house prices continued to rise in the first quarter of 2007, albeit at the lowest rate in 20 years,” said OFHEO Director James Lockhart. “As always, real estate prices are local, with seven states showing double-digit annual appreciation rates and seven with rates less than 2%,” he said. “Seven states, including Florida and California, also showed home price depreciation in the first quarter.” Nationally, house prices over the 12-month period ending with the first quarter grew faster than the non-housing goods and services tracked by the Consumer Price Index, which rose 1.6% for the same period. “Low interest rates and unemployment continue to prop up house prices in most markets,” said OFHEO Chief Economist Patrick Lawler. “Prices are rising slowly in most areas, however there are some exceptions. For the first time in seven years, two states — Massachusetts and Michigan — experienced four-quarter price declines.” Among the results of the OFHEO home price report:
Spring Construction Forecast Conference Discussions 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.
California Sees Buy-Now Market Ready to Wind DownBuilders and housing professionals assembling in San Francisco last month for the annual PCBC were sharpening their marketing skills not only to work down their inventories but also in preparation for an upturn, which may be almost just around the corner, while leaders of the California Building Industry Association (CBIA) were busy conveying the message to prospective customers that the state’s buyer's housing market is winding down. “Already there are indications that the slowdown that has hit different parts of the state at different times is stabilizing,” said Wes Keusder, CBIA’s chairman. In radio ads currently being aired around the state by CBIA and its affiliates, Keusder said that builders are sending out a buy-now message “that sales prices and incentives being offered today by builders won’t last forever and that the historically low interest rates, which make it more affordable to buy now, could easily go up in the future.” (To see the information that is being provided to prospective home buyers by the California builders, click here; www.cahomeownership.com.) In his midyear housing forecast for California, Alan Nevin, CBIA’s chief economist, attributed the current softness in the state’s housing markets “primarily to the continued hesitancy of potential home buyers to invest in new homes, thinking that prices will be reduced and better deals lie ahead.” But Nevin warned that the market is unlikely to get much better for buyers than it is now because “home builders have reduced their inventories of unsold homes, for the most part, and no longer have the need to exhaust those inventories. Thus, the supply will match the demand.” Nevin forecast that the single-family sector will begin to gradually accelerate throughout the summer and then plateau for the balance of the year in most parts of the state. The state’s 2007 housing starts forecast has been revised downward from 155,000 to 175,000 to between 135,000 and 155,000, Nevin said, primarily because of a larger than expected decline in production in the Inland Empire and Central Valley this year, where resale are soft and record-high gasoline prices have added significantly to the cost of lengthy commutes. He is now forecasting that there will be 90,000 to 100,000 single-family homes started in the state this year, compared to a range of 110,000 to 120,000 forecast in January. With the state’s population and job base growing at a healthy clip, lower production statewide is not especially good news for prospective home buyers struggling to buy their first home, Nevin pointed out. “We need to be building about 240,000 new homes, condos and apartments a year to meet the need for housing,” he said. “The problem is that we need new homes in all price ranges, and given the ever-rising fees and constraints on housing, it’s all but impossible to meet the need in the entry-level market, where the need’s the greatest.” Keusder said that the underlying demand for housing in California remains “incredibly strong,” but added that fees, development restrictions, growth control policies, design requirements, inclusionary zoning ordinances “and all the other things that make builders pull their hair out” have ruled out entry-level product in most parts of the state. “The biggest problem for years has been the fact that cities and NIMBYs make building difficult,” Keusder said. “Entitlements take years and even decades; zoning notoriously favors NIMBYs. As a result, the price for lots on which you can actually expect to build homes in a reasonable amount of time has skyrocketed because of the housing demand, and prices aren’t dropping much even now.” He added that, “It doesn’t take a math whiz to figure out that if the lot costs $150,000 and the fees are between $50,000 and $100,000, that you can’t really build a $200,000 house in this state anymore.” The CBIA has been supporting legislation that would require cities to reduce fees and zone more land for housing so that they could meet their housing needs for all income levels over the next five years. “By not building the housing to meet our population growth, we are constraining the opportunities for safe, affordable rental and homeownership housing for the people who are critical to the vitality of our communities — including teachers, firefighters and service-sector workers — among many others,” Keusder said.
Spring Construction Forecast Conference Discussions 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. California Markets Stabilizing, But Home Prices Raise QuestionsWith California’s economy performing well, a panel of economists from the University of Southern California's Lusk Center told a PCBC audience in San Francisco last month that the long-term outlook for the state’s housing industry looks promising and the current marketplace for the most part is showing encouraging signs of stabilizing. The crucial difference between the state’s housing downturn of the early 1990s and the situation today, panelists assured worried builders, is that major markets, such as Los Angeles, were hemorrhaging jobs then but are still adding them now. The state’s sky-high housing prices, on the other hand, raise some unique challenges and will be a deterrent to migrants in the country who are looking for new places to move. In 2000, the cost of housing was 150% higher in California than in Texas, according to Dowell Myers, professor of urban planning. Today, buying a home in California costs 355% more than in the Lone Star State, and home prices are running roughly nine times average income. As significant numbers of aging baby boomers start selling their homes, the question is who will buy them, Myers said, and that could have serious implications for trends in home prices. For instance, a major source of housing demand will be coming from young Hispanic households, he said, but they will only be able to enter the market at a buying price that is 25% lower than what older white sellers will be asking for their homes. “Latino buyers can’t quite pay the full price,” Myers said. While the West has clearly led the rest of the nation in house price appreciation, Raphael Bostic, director of the Master of Real Estate Program, pointed to some big changes afoot in the region, with Utah, Wyoming, Idaho, Washington and Oregon now the hot spots, and prices in California, the previous hot spot, now moderating. Market fundamentals for housing look promising in Oregon, Salt Lake City and Idaho, he said, with the outlooks less certain in Nevada, Denver and Arizona. Within California, the San Francisco Bay Area, Los Angeles and the Central Coast look positive, he said. After seeing its home prices double within four years, California is now experiencing price appreciation that is flat or in the single digits in all of its major cities, said Delores Conway, director of the Casden Real Estate Economics Forecast. In Los Angeles, annual home price appreciation slowed from an annual rate of 15% in March of 2006 to a rate of 7% during the same month of this year, according to sales statistics from DataQuick. In Orange County, prices declined from 10% to 1% over that same period. In the Inland Empire, where sales during this year’s first quarter were down 32% from a year earlier, the rate of price appreciation for the March to March period dropped from 9% to 2% in Riverside and from 23% to 1% in San Bernardino. In San Francisco, home sales were up 11% but down 10% in Marin and price appreciation for the entire area dropped from 10% to 1%. Sales in San Jose/Santa Clara were down 6%, and price growth slowed from 9% to 2%. More problematic markets in the state, said Conway, include Sacramento, where sales during this year’s first quarter were down 25% and the lowest in six years and median home prices dropped about 4% from March to March. Sales in San Diego were down 9% in the first quarter of 2007 compared to the same period of 2006 and the market is beginning to stabilize, she said, but median home prices were down 2.8% this March from a year earlier. With the exception of Sacramento and the Inland Empire, apartment markets have been tight, with an occupancy rate of 96% or higher and rents increasing at a yearly clip of 5% to 10%. San Francisco, San Jose, Orange County and Los Angeles County have the highest average rents in the nation, Conway said.
Spring Construction Forecast Conference Discussions 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. Eye on the Economy: Housing Upswing May Be Long Climb BackOn June 5, Federal Reserve Chairman Ben Bernanke addressed via satellite the 2007 International Monetary Conference in Cape Town, South Africa. Bernanke’s choice of topics in his address accentuates the importance of the U.S. housing market in the global economy as well as the importance of the subprime mortgage issue in global financial markets. His comments on the current condition of the U.S. housing market and the near-term housing outlook were a bit more sobering than other recent Fed statements on housing. Bernanke stressed that the downward adjustment in the housing sector “is still ongoing,” and he allowed as how the contraction in residential construction “now appears likely to remain a drag on economic growth for somewhat longer than previously expected.” Bernanke pinned large responsibility for the recent weakening of housing demand on the subprime-related turmoil in the mortgage market, and he noted that recent subprime developments “add somewhat to the usual uncertainty in forecasting housing demand.” He went on to say that the subprime-related problems “will serve to restrain housing demand, although the magnitude of these effects is difficult to quantify.” We couldn’t agree more with that assessment, although we have to go on record with our forecasts. Builders Are Facing Reluctant Home Buyers The subprime-related tightening of mortgage lending standards certainly has pushed large numbers of prospective home buyers back to the sidelines, and the timing of their return to the market is highly uncertain. There also has been widespread reluctance among consumers who have good access to credit to go ahead with home purchases at a time when affordability remains well below conditions prevailing prior to the 2004 to 2005 housing boom. There are plenty of new and existing homes to pick from and home prices are weakening in many areas. Consumer perceptions of the direction of home prices are central to the difficult market conditions now encountered by builders. Projections of rising house prices strengthened demand during the 2004 to 2005 boom, even as rising prices were taking a toll on current affordability conditions, and projections of falling house prices now are weakening demand even as falling prices are supporting current affordability conditions. Most builders have never had to deal with such a maddening reality before, and the frustration level definitely is mounting, according to our monthly surveys of single-family builders. Builders Are Pulling Out the Stops In May, NAHB conducted a nationwide survey of single-family builders to track the kinds of incentives being offered to bolster sales and limit cancellations, and we also solicited builders’ assessments of the degree of success being achieved. On the home price front, we found that 52% of builders had reduced prices during the previous month. For those cutting prices, the average reduction was 7% — similar to the magnitudes revealed by a series of surveys conducted by NAHB since mid-2006. Nearly three-fourths of builders said their price cuts were at least somewhat effective in bolstering sales or limiting cancellations. Nearly three-fourths of builders in our May survey were offering nonprice sales incentives of various types, sometimes in combination with price cuts. The most frequently offered incentives were:
A small percentage of builders also said that they had offered to match price reductions on future sales of the same models in the same communities. Despite the logical appeal of this sales incentive, only about half the builders making such an offer said it was an effective measure in dealing with reluctant prospective buyers. Housing Will Be a Drag on the Economy Throughout 2007 NAHB’s current forecast shows a slight upturn in sales of new and existing homes by the fourth quarter of this year. The forecast also shows a modest increase in total housing starts by the first quarter of 2008, following a resounding 36% decline from the cyclical peak in the first quarter of 2006. Our projections for home sales, housing starts, manufactured home shipments and residential remodeling result in stabilization of real Residential Fixed Investment (the housing production component of GDP) by the end of this year and lead to modest positive growth by the first quarter of 2008. While the projected drag on GDP from RFI now extends throughout 2007, the drag eases off considerably during the second half of this year — allowing GDP growth to approach a sustainable trend pace as 2007 draws to a close. The Housing Upswing May Be a Long Climb Back to Trend The projected beginnings of the housing recovery in the early part of 2008 represent small steps back toward our estimate of the demographically based trend of housing production — close to 2 million new housing units per year, including about 1.85 million conventional housing starts. After all, the inventory overhang will be relatively heavy for some time and the swing of the mortgage credit pendulum still will be weighing on effective demand, keeping the initial stages of recovery rather modest. It’s also worth noting that the unique nature of the current boom-bust housing cycle pretty much rules out strong forces that traditionally have lifted housing production briskly out of cyclical troughs. These forces usually have included large declines in the interest rate structure, including aggressive monetary ease by our central bank, and strong growth in payroll employment as the economy gets into an expansion mode. We’re expecting a supportive interest rate structure and decent job growth, but the absence of the traditional strong growth engines will help keep housing production below the trend level for several years beyond the trough. 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 June 7 edition. To subscribe to “Eye on the Economy,” click here. Spring Construction Forecast Conference Discussions 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.
Spring Construction Forecast Conference Discussions 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: A Temporary Extension for Table-Saw Tops
The trouble is, the saw’s top isn’t wide enough to accommodate the sheet goods. As shown in the accompanying drawing, I made a temporary saw table that extends the work surface substantially on the right side of the blade.
— Robert Conrad, Pellston, Mich. 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. NAHB to Launch Green Home Certification ProgramAt its spring meeting in Washington, D.C. earlier this month, the NAHB Board of Directors approved the creation of a national green building program to provide a template for voluntary, market-driven green building. The new program will be based on the National Green Building Standard, a model for residential construction and renovation written by builders, architects, environmentalists and product experts that will be released in early 2008. This standard is the result of a cooperative effort between NAHB and the International Code Council and is based on NAHB’s Model Green Home Building Guidelines, which provide the foundation of more than 20 green building programs created by state and local home builders associations across the country. “With a national program, home buyers can be assured that their home is truly green, whether they live in Seattle or Savannah, in a condo or a ranch house, and whether they’re renovating or buying new,” said NAHB President Brian Catalde. “It’s also the next logical step for NAHB as a leader in the green building movement,” he said. “Our members have built nearly 100,000 green homes in voluntary programs launched by home builders associations all over the country. Each of these homes is unique and responds to local geography, climate and consumer preferences. With an affordable national program, we will provide home buyers with green homes even where there is no local program in place.” Like the Model Green Home Building Guidelines and the standard, the National Green Building Program will take into account a home’s lot development, use of resources, energy and water efficiency, indoor environmental quality, durability and ease of maintenance and the builder’s efforts to educate home owners. The program will be housed at the NAHB Research Center, which is also serving as the secretariat for the residential green building standard development process. The standards process is certified by the American National Standards Institute, for which the Research Center is an accredited developer. The National Green Building Program will include an interactive, Web-based certification system as well as other tools and resources for builders and certifiers, and a national registry of green builders and green homes. Existing local programs that meet quality assurance benchmarks and performance criteria can become part of the national program — without costly additional certification fees. “When it comes to residential building and remodeling, NAHB members are leading the way to creating a new, green-built nation,” Catalde said. “With the resources and expertise of the NAHB Research Center, our new national program will help accelerate that process.” For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.
‘Profit from Green Building’ Available at BuilderBooks.com “Profit from Building Green — Award-Winning Tips to Build Energy Efficient Homes,” available through BuilderBooks.com, showcases what energy conscious award-winning builders are doing, provides innovative energy-efficient features and covers successful techniques for building this niche market. To view or purchase this publication online, click here, or call 800-223-2665.
Voluntary Programs Certify Nearly 100,000 Green HomesA new NAHB survey of local home building associations finds that more than 97,000 homes have been built and certified by voluntary, builder-supported green building programs around the country since the mid-1990s. That represents a more than 50% increase from the 61,000 green homes in the U.S. counted by the NAHB Research Center during its last survey in 2004. "This astounding number is yet another indication that market-driven programs, not mandates, are the best way to encourage the growth of green building," said NAHB President Brian Catalde. "The home building industry is leading efforts to make homes more energy- and resource-efficient." NAHB has been encouraging these efforts over the years by providing builder education, and in 2004 published Model Green Home Building Guidelines to help its local associations establish their own climate-specific, market-appropriate programs. In January, NAHB announced that, to further promote industry advances, it would create an American National Standards Institute-accredited residential green building standard, which is slated to be completed early next year. The success of voluntary green building programs around the country speaks to the industry's commitment to reducing the operating costs of homes, conserving water and energy, improving resource-efficiency and minimizing construction waste. NAHB is collaborating with the International Codes Council to develop the green building standard, which will bring uniformity to sustainable building. The standard will serve as a baseline for green building programs without abandoning the proven principle that voluntary, region-specific, flexible programs can be truly green and also allow for innovation. "The success of these regional programs is something that's very important to keep in mind as the residential green building standard comes closer to completion," Catalde said. "The new standard won't replace these programs, but it will provide builders all over the country with common ground — a green baseline that everyone can agree on." Among local success stories in the green home building movement:
Catalde also thanked the leadership of the Green Building Initiative (GBI), the Portland, Ore.-based non-profit organization that has worked in partnership with many local home builders associations as they launch NAHB guidelines-based green building programs, providing administrative and marketing support. Since 2004, this effort has produced 15 state and local green building programs based on NAHB’s model guidelines, and it has certified more than 100 homes in cities such as St. Louis, Philadelphia and Durham, N.C. "We're proud of our partnership with NAHB and their local associations, as well as the work we've done together to help accelerate the adoption of sustainable construction across the nation," said GBI President Ward Hubbell. "We've witnessed first-hand the value of market-driven solutions to sustainability and commend NAHB for their leadership in this arena." Other special projects built to the guidelines include The New American Home in Orlando, Fla., the 2007 demonstration home built in conjunction with the International Builders' Show; a student-built home by a Lancaster County, Pa., technical school program; and the Mainstream Green Home in Raleigh, N.C. "We know that green building has left the niche-market category: 97,000 certified homes in just over a decade is incredible," Catalde said. "This also demonstrates how market acceptance, rather than mandates, really benefits both the consumer and the industry." The consensus committee developing the new green home building standard is being led by NAHB and the International Code Council. The ANSI-accredited NAHB Research Center is serving as secretariat for the standard. To follow its progress, click here. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.
‘Profit from Green Building’ Available at BuilderBooks.com “Profit from Building Green — Award-Winning Tips to Build Energy Efficient Homes,” available through BuilderBooks.com, showcases what energy conscious award-winning builders are doing, provides innovative energy-efficient features and covers successful techniques for building this niche market. To view or purchase this publication online, click here, or call 800-223-2665.
MIT Team Envisions Home Made From Living MaterialsArchitects and environmental engineers at the Massachusetts Institute of Technology have conceived of a home that in the future will enable home owners to grow their houses instead of building them. Architect Mitchell Joachim of the MIT Media Lab's Smart Cities group and his colleagues — environmental engineer Lara Greden and architect Javier Arbona-Homar — call their concept the Fab Tree Hab. The basic framework of the house would be created using a gardening method known as pleaching, in which young trees are woven together into shapes such as an archway, lattice or screen and then encouraged to maintain that form over the years. As the framework matured — which might take a few years in tropical climates and several decades in more temperate locations — the home grower would weave a dense layer of protective vines onto the exterior walls. Any gaps could be filled in with solid and growing plants to create miniature gardens. On the interior walls, a mixture of clay and straw beneath a final layer of smooth clay would provide insulation and block moisture. On south-facing walls, windows made of soy-based products would absorb warmth in the winter; ground-floor windows on the shady side could draw in cool breezes during hot months. Water collected on the roof would flow through the house for use by people and plants; and wastewater would be purified in an outdoor pond with bacteria, fish and plants that consume organic waste. “The concept of a living house is really incredibly exciting when you think that people in tropical and semitropical locations have fast-growing trees available,” said Richard Reames, an Oregon-based “arborsculptor” who uses grafting techniques to grow living furniture. Joachim has been working on MATscape, a house project in California incorporating about half recycled materials and half living materials, such as grasses, plants and soils. Joachim said that he and his team hope to plan a Fab Tree Hab community someday, creating homes that don’t interrupt the surrounding ecosystem but become integrated with it. “Design intervention only guides the growth,” he said. “Nature — life — does the rest.” NAHB Lab to Help Move New Products Into Housing MarketThe NAHB Research Center, one of the nation's leading housing research institutions, on June 5 announced the grand opening of its new, state-of-the-art product testing laboratory and market research facility. Part of a major expansion effort to advance housing technology research and improve the quality and durability of homes, the specialized facility will provide home builders and building product manufacturers the industry’s broadest array of third-party product testing, quality assurance and market research services available under one roof. Since its founding in 1964 as a subsidiary of NAHB, the Research Center has been the home building industry’s leading source of technical information and analysis on housing construction and development issues and an integral component of the NAHB federation’s overall housing advocacy, education and research mission. In conjunction with the spring meeting of the NAHB Board of Directors, NAHB President Brian Catalde in a keynote address at the ribbon-cutting ceremony cited the important role of the Research Center and its new facility in a redoubled commitment to improve the quality and affordability of homes for all Americans.
Other speakers at the ceremony included Jerry Howard, NAHB executive vice president and chief executive officer; Bob Jones, NAHB vice president and secretary; Don Pratt, chairman of the NAHB Research Center Board of Directors; Gary L. Grossman, secretary and treasurer of the NAHB Research Center Board of Directors; Mike Adams, president of Gardiner & Gardiner; and Michael Luzier, NAHB Research Center president and chief executive officer. More than 500 guests attended the dedication of the new facility. Driving Innovation in Housing Technology Noting that there is a wide array of obstacles to moving new products into the housing market, Luzier said that the Research Center is working to improve the situation with its testing and market research. Constructing the new facility is an essential part of the company’s business strategy and will help to leverage its position as a research authority in the residential construction industry, he said. “This new facility will enable the NAHB Research Center to further integrate our engineering and market research expertise and provide our clients specialized and comprehensive product commercialization services to help them overcome the many barriers to innovation in the home building industry,” said Luzier. The NAHB Research Center is recognized as a test laboratory, quality assurance agency and certified product listing agency by many building and plumbing code agencies, and by national, state and local code enforcement authorities. New capabilities supported by the 42,000-square-foot lab include large-scale thermal testing, acoustic performance testing and two-story shear wall testing. Its increased size will also make it possible to simulate natural forces such as wind-driven rain and wind-blown debris on whole-house models, which was not possible in the previous facility. A unique feature of the laboratory is an integrated 1,000-square-foot market research suite and observation gallery overlooking the testing floor that will provide applied market researchers, focus groups and roundtables with real-time observation capabilities. The NAHB Research Center provides the following specialized material and structural systems testing, research and certification programs for public and private clients:
Last Chance to Get Free 'Cost of Doing Business' StudyThe deadline for submitting your “Cost of Doing Business” survey — and getting a free copy of the survey results once they are published — is Wednesday, June 20. Respondents who complete and submit the survey by June 20 will receive a complimentary copy of the published study (a $99 value to members; $299 for non-members) later this year. The “Cost of Doing Business Study” enables home builders to compare profitability, cost of sales and expenses with like-sized builders from across the county. It provides analysis of several categories of business operations, including volume, operation type and land vs. no land costs to help builders fine-tune comparisons between study results and their companies. Click here to participate in the “Cost of Doing Business Study.” Be sure to print the survey form, fill it out and fax it back using the toll-free number provided. NAHB Has More Than 300 Resources to Help You Run Your Business More Profitably Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to more than 300 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more. Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources. Local and state home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed. Help NAHB Help You With Software and Technology IssuesIn an effort to continually improve NAHB’s software and technology resources for members, The Business Management & Information Technology Committee is conducting an online software and technology survey to help determine what new resources are needed. Members who take the survey will receive a copy of the results so that they can see how other builders are using software and technology in their businesses. “We need to hear from builders about their software and technology needs,” said Steve Lewkowitz, chairman of the IT Work Group for NAHB’s Business Management & Information Technology Committee. “Once we know their needs, we can create education and resources to help builders use technology to make their businesses more efficient and profitable.” Members are encouraged to take the survey between now and July 31. Participants will receive a copy of the results via e-mail. To Take the Online Survey Click here to take the survey online. It's quick and convenient. NAHB Has More Than 300 Resources to Help You Run Your Business More Profitably Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to more than 300 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more. Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources. Local and state home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed. Best Of 50+ Housing Honored at Symposium in Denver
The best in the 50+ housing industry were honored by NAHB during the Building for Boomers & Beyond: 50+ Housing Symposium 2007 in Denver earlier this month. The NAHB 50+ Housing Council, which promotes excellence in the 50+ housing industry, presented gold and silver awards in 58 categories to current and on-the-boards projects from across the United States and as far away as Japan. Design categories covered a range of product types such as active adult, aging in place, assisted living, continued-care retirement communities, for-sale condominiums, rental apartments and renovated seniors housing. Winners were also honored for excellence in marketing strategies focusing on the mature market, and nine Jurors’ Innovation Awards were presented to projects that demonstrated extraordinary creativity and insight. Among the top award winners were: Active Adult Overall Community of the Year Gold Awards
A 12-member panel of architects, builders, designers, marketing professionals and universal design specialists judged the projects on innovative architecture, interior design, merchandising, marketing and how effectively they responded to the housing demands of the 50+ market. Marketing categories focused on brochures, advertising campaigns, sales centers and special promotions. For more information, e-mail Elizabeth Landry at NAHB, or call her at 800-368-5242 x8680. Agencies Provide Guidance on Wetlands JurisdictionNew guidance from the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers gives builders a little more clarity when it comes to deciding the places where the agencies can claim jurisdiction under the Clean Water Act. NAHB Environmental Issues Committee members and regulatory staff are studying the new guidance, which was effective immediately when it was released June 5. EPA and the Corps will take public comments until December. The guidance was spurred by the U.S. Supreme Court's decision in June 2006 when it handed down its opinion in the Rapanos and Carabell Clean Water Act cases. Justices asked the EPA to issue the document to give both their field staff and the regulated community a better idea of what the agencies consider their jurisdictions to be. The year-long wait for guidance resulted in further delays for builders seeking permits, even though the Corps’ district offices were told to continue business as usual in a July 2006 memo. Developer Bard Rozelle, of Rozelle Construction in Appleton, Wis., told NAHB he’s been waiting three years for a permit to do work on a multifamily construction site. While the Corps has cut down the number of jurisdictional determinations awaiting a final decision to 6,000, it is unknown how many permits are still pending. The guidance outlines three typical circumstances for a prospective building site and what might happen:
“At the same time, it will subject other wet spots to what could be a lengthy and onerous process to determine whether the federal agencies can regulate them, not to mention the lengthy permitting process that will follow,” the alert said. While the guidelines suggest deadlines and timelines intended to ensure that the process is efficient, time will tell whether suggested timelines alone are sufficient to meet this result.” For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. NAHB Sues Over Equipment Exhaust Air Pollution RuleNAHB has filed suit against a Central California air pollution control district challenging the legality of a rule regulating emissions from the tailpipes of construction equipment and motor vehicles involved in residential construction. The “Indirect Source Rule” (ISR) that is being disputed would add thousands of dollars to the cost of building a new home. The suit was filed in U.S. District Court for the Eastern District of California |