Nation's Building News Online: July 30, 2007

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Mortgage Credit Standard Tightening May Be Near an End

The worst of the tightening of credit standards for home mortgages resulting from the emergence of problems in the subprime market early this year may be drawing to an end, NAHB Chief Economist David Seiders told reporters in a July 25 teleconference on the mid-year outlook for the housing industry.

Adjustable-rate mortgages have plummeted to about a 10% share of the loans being used to purchase homes, down from about 40% at the height of the housing boom, he said. And considering the disruption being caused by such nontraditional loans as interest-only and option ARMs, this is “a healthy long-term development” for the marketplace, he said.

After a breakdown of mortgage lending standards in recent years, “maybe the credit pendulum in home mortgage lending has swung back most of the way,” and lending standards aren’t likely to be tightened much further, Seiders said. “We’ve had one heck of a lot of credit standard tightening,” he added, and moving forward “solid” fixed-rate mortgages are likely to be the dominant vehicle for financing home purchases.

While rates on prime conventional fixed-rate mortgages have moved up to some degree over the past couple of months, they remain about where they were a year ago, he said, and are expected to average a relatively affordable 6.7% in 2008, not far from their current level. One-year prime ARMs are projected to average about 5.65%.

Lowering the Forecast

Nevertheless, he said that “tighter lending standards buyers are facing and rising waves of delinquencies, defaults and foreclosures on loans made in the second half of 2005 and in 2006” have created uncertainty about “where we are going” and have added further to the depth and duration of the current housing downswing.

Seiders is now forecasting 1.42 million housing starts for this year and a small improvement to 1.45 million for 2008, down 9% and 15%, respectively, from what he was predicting at the end of 2006.

About 25% of single-family starts are comprised of homes built on owners’ lots, and that has been a relatively stable component of overall production during the downturn, he said. Single-family starts topped out at a seasonally adjusted annual rate of 1.75 million in the first quarter of 2006 and will decline to a low of 1.1 million during this year’s fourth quarter, according to NAHB’s forecast. That would be its lowest level in 10 years and represent a decline of 37% from peak to trough.

Single-family starts have been below their sustainable pace of 1.5 million for a full year, Seiders said, and will not fully return to the level supported by job and population growth until 2010 to 2011.

He noted that, unlike those preceding it, today’s housing correction was not precipitated by major increases in interest rates and a weakening national economy, but by accumulated price increases that eventually destroyed affordability. As a result, the industry is going through a “unique experience” and faces “a fairly slow climb out of this hole” because there won’t be the “usual propellants” of a surge in job growth or a major fall in interest rates that typically occur when the economy emerges from a recession.

Feeling “profound weakness in the condo market,” multifamily production in the second half of this year is expected to fall 6% from the first half, bottoming out at an annual pace of 270,000 units. “It’s hard to know how much, but the winds are blowing” in the direction of some firming of rental production in 2008, Seiders said. The condominium share of the multifamily market is heading to 30% or even lower, down from 50% in early 2006, he said.

Proving its cyclicality and following in the footsteps of the overall housing market, residential remodeling is also losing ground, with some “modest” declines expected in the inflation-adjusted value of total activity this year and in 2008 before positive growth resumes in 2009. The real value of improvements to owner occupied housing is projected to decline by 5% to 6% this year and in 2008, he said.

Ball Still Rolling Downhill

Seiders said that his views on the state of the housing industry seem to be similar to those of Federal Reserve Chairman Ben Bernanke, who apparently expects several more quarters of contraction before things start looking somewhat better in 2008.

“The ball is still rolling downhill to some degree,” Seiders said. “Affordability conditions are still reflecting the abrupt tightening of mortgage lending standards, and there is a sizable inventory overhang, the kind of dimensions we have never had to deal with before.”

Home prices remain under downward pressure, he noted, and the S&P/ Case-Shiller® repeat sales house price index, a reliable barometer of price movements, has shown a 3% price decline from the peak in the fall of last year.

Prices could be headed down a further 5% this year, with the cumulative decline averaging as high as 10% in 2008, he said. Following “massive increases” in home prices, a process underway even before the boom began in 2003, “we will need something like that to get the markets back in better balance,” Seiders said.

The housing correction process is now “very widespread,” Seiders said. In terms of single-family housing permits from the first five months of 2005 to the first five months of this year, only Mississippi, which is still recovering from Hurricane Katrina; Wyoming and North Dakota have seen small increases. The nation as a whole has been down 31%. The worst hit states are Michigan, down 60%; Florida, down 57%; California, down 45%; Minnesota, down 45%; and Colorado, down 42%.

Next year over this year, single-family starts are forecast to rise by 2% nationwide, Seiders said, but 11 states will be flat or experience declines. Florida will see a further 12% decline in single-family production in 2008, he said, but Michigan should finally be getting back to positive growth.

Builders Abandon Business as Usual to Weather Downturn

A new study by the NAHB Research Center identifies how home builders have been changing their operations to deal with the current downturn in the housing industry and suggests ways that building product manufacturers can help them bolster sales and work down unsold inventories.

Presented on July 13 at the Southeast Building Conference in Orlando, the survey-based study found home builders doing whatever they can to weather a slowdown that because of problems with subprime mortgages began to noticeably worsen early this year just as the market was beginning to show some positive signs.

“Anything manufacturers can do to help builders sell homes is most welcome,” said Ed Hudson, director of the Research Center’s Marketing Research Division.

The custom builders who were among the 320 companies participating in the study were more likely to be looking to manufacturers for enhancing their choice of products and materials in the construction process, while help on sales was more what production builders were looking for, he said.

The results of the polling were weighted according to production volume, so that a builder building 30 homes a year would have three times as much bearing on the results as a builder building 10 homes annually.

Hudson cited Owens Corning's Builder Alliance program as an example of how manufacturers can be effective in working with builders to soften the blow of today’s buyer’s market.

The program enables builders to associate themselves with Owens Corning products and provides a promotional allowance of 2% back on purchases. It also provides additional allowances for materials used in building model homes — including roofing, siding, insulation and acoustical products — and helps prospective home buyers locate builders who are using Owens Corning products.

Owens Corning is a member of the National Council of the Housing Industry — The Supplier 100 of NAHB.

Among the findings from the Research Center:

Seventy percent of the survey respondents said that referrals from past customers were attracting buyers to their sales office. Also important in increasing sales were making the Web site a better sales tool (cited by 69%) listening more to customers (66%) and an advertising or public relations campaign (58%).
To help close sales, 44% of the builders polled said that they were allowing more modifications to their home plans and 19% are planning to do so. Forty-two percent of the builders said they were using more innovative materials to set themselves apart from the competition, and 28% are planning to do this. Thirty-seven percent said they were offering more incentives like free upgrades or larger decorating allowances, and 25% said they would be doing this. Although offering more home for the same price is viewed as a better strategy than lowering prices, which can create unhappiness and complications among prior customers, 35% said they had used lowering prices and 20% said they would. Only 22% said they had decreased the size of their homes and 16% said they were planning to adopt this strategy.
The benefits most likely to persuade builders to purchase innovative products were: better value (cited by 36%), increased curb appeal (36%), lower cost (32%), a reduction in labor costs (32%), a reduction in construction cycle time (32%) and higher quality and fewer defects (29%). Better value was of greater interest to custom builders and curb appeal was more important to production builders. Custom builders were found to be more open to selecting new products and being innovative.
Builders were likely to pursue the following in their relationships with their subcontractors: working to reduce waste and improve efficiencies (86%), negotiating for better prices (81%), improving quality and reliability (73%) and seeking better pricing (72%). The issue of improving subcontractor performance was most important to builders in the South.
The methods that builders use to evaluate new and innovative products and materials include: independent testing from the manufacturer (60%), evaluating the materials on one house first (60%), looking for good product support capabilities from the manufacturer (59%) and visiting the job site to see the product in use (57%). Production builders were found to be more thorough in their evaluation of new materials and less likely to change what they are already doing.
The trends most important to builders are: energy efficiency (70%), low-maintenance housing (61%), designing for aging in place (58%) and green building (51%). Lower on the list were: zero-energy homes (31%), panelized construction (30%) and modular construction (24%). Although builders are promoting the sustainable aspect of green building, lower energy-efficiency is the actual selling point, and this increases with the age of the home buyer. “The older you get, the more important energy efficiency becomes,” said Hudson, because these buyers have fixed incomes and are able to do less maintenance on their homes. Green building is in greatest demand in the Northeast and least attractive in the South, he said.
The aspects of green building that are of most importance in builders’ purchase decisions are: lowering energy bills (84%), making homes a safer place (66%), improving indoor air quality (65%), improving the environment (57%) and reducing water usage (51%). In the first tier of green products, Hudson said, are those offering direct, measurable benefits to the occupants over a short timeframe. In the second tier, the product benefits are less easily measured and the timeframe is uncertain. Third-tier products offer indirect benefits to home buyers, such as reducing greenhouse gases, and Hudson said that these are more likely to be accepted by custom builders.

$500,000 Still Available in ‘Buy Now’ Grant Funds, Apply Today

NAHB has more than half a million dollars in “Buy Now” advertising assistance grant money still available to local associations to bolster home sales in markets hit hard by the current housing downturn.

NAHB is encouraging HBAs that have not yet received or been approved to receive grant money to apply today.

To date, 129 HBAs in 38 states have received or been approved to receive just under $2.2 million in NAHB advertising assistance. Including the matching funds that the HBAs contributed, the total value of their advertising campaigns is approximately $6.3 million.

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

HBAs conducting ad campaigns in the top 10 media markets (Tier 1)
HBAs with more than 250 members operating in areas outside of the top 10 major media markets (Tier 2)
HBAs with 250 or fewer members (Tier 3)

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

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.

How Hard Will Tight Credit Hit?

With the era of easy money drying up for Wall Street and its dealmakers, the prospect of fewer mergers and acquisitions caused a sharp drop in the stock market last week, with the Dow Jones Industrial Average falling 585 points for the week, the largest weekly point loss in five years. Now economists are watching credit markets carefully to see if tighter lending standards for wheeler-dealers will spread to Main Street, where credit is still readily available. The reduction in merger activity could eventually have an effect on the economy, says John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C. “The main impact on Main Street will be a decreased ability to finance economic growth,” he says. “At the margin, there will be less investment in equipment and software and less ability to fund home mortgages and commercial activity.” The actual impact on the GDP may be only 0.1% or 0.2% in 2008, Silvia estimates, but softness in the housing market could continue longer than anticipated. (www.csmonitor.com)
Christian Science Monitor (7/30/07); Ron Scherer

Raging Bull; Developers Struggle to Rein in Construction Costs

Despite the decline in the single-family housing market, the prices of labor and materials to build all types of apartments keep rising faster than inflation and should continue to rise for the foreseeable future, experts say. The price of new multifamily construction rose 3.5% over the 12 months that ended in April, which is not as bad as last year’s 7.9% jump, but still above inflation as measured by the overall consumer price index. By comparison, materials and labor for single-family construction were up just 2.7% for the year ending in April. Developers of garden apartments, which need less of the copper, steel and cement that have risen most in price, are benefiting from declining prices for a few materials, such as framing lumber and gypsum wallboard. As a result of the price pressures, some developers have changed their plans to rely more on wood and less on steel and concrete, even for high-density projects. For developers who know they’ll need materials with fast-rising prices, it could pay to buy the items in advance and hold them in a warehouse. Other developers are asking their contractors to sign contracts in which the price of their services moves up or down with the cost of materials. Although that leaves the developer with the price risk, it can be much less expensive than having contractors set a fixed price. It is still difficult to find contractors, especially if they have skills that can be used in commercial work. (www.housingfinance.com/aft)
Apartment Finance Today (7/07); Bendix Anderson

Miami Condo Glut Pushes Florida’s Economy to Brink of Recession

The biggest glut of condominiums in more than 30 years will force prices down as much as 30% and help push Florida’s economy into recession as early as October, said Mark Zandi, chief economist at Moody’s Economy.com. Thirty-seven new high-rise condos and 20,000 new units are being built in Miami’s 1,040-acre downtown, where sales fell almost 50% in May, according to the Florida Association of Realtors®. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC. As much as half of those putting down deposits for Miami condos have been speculators looking to flip units, or sell them quickly for a profit without living in them, said McCabe. With sales prices falling, he expects up to 50% of them to walk away from their deposits in the next 18 months rather than complete the sales. In the 1970s, when condos were a new product, Florida developers built 500,000 units and prices fell 50%, said Brad Hunter of MetroStudy, a research firm in West Palm Beach. “The difference is, back then they were two-story condo buildings that had $50,000 units,” Hunter said. “Nowadays they are $700,000 units in 20-story buildings. Instead of building too much stuff that people could afford like we did then, this time we built too much stuff that people can’t afford.” (www.bloomberg.com)
Bloomberg (7/20/07); Bob Ivry

Buyers Want to Sleep Downstairs

More than 40% of new homes have master suites downstairs, a 15% increase over a decade ago, according to NAHB, with the demand being created by aging baby boomers. “Five or six years ago, it was rarely a question,” said Jill Flink, a broker with York Simpson Underwood in Raleigh, N.C. Not every buyer wants one, and the biggest driving force is still price, “but after that, it is on the short list of very, very many clients,” she said. Pulte Homes is building 1,200 homes with first-floor master suites at Carolina Preserve, an active-adult community under development in Cary, N.C. So far, 520 homes have been sold. Georgia-based Frank Betz Associates, one of the Southeast’s largest residential designers, offers first-floor master bedrooms in 90% of the plans it sells to builders, up from only 40% 10 years ago. Some home owners are asking for two master bedrooms — one for themselves and one for a parent or in-law. According to an NAHB survey of designers, architects and others in the industry, about 60% said the trend would be for luxury homes with more than 4,000 square feet to have two master bedroom suites. A first-floor bedroom suite that includes an adjoining bathroom and closet can add $100,000 or more to the price of a new home and even more to an existing home. (www.newsobserver.com)
News & Observer (7/26/07); Dudley Price

Living on the Edge, Home Buyers Want Only the Latest in High-Tech ‘Toys’

“In the home of the future, it’s all going to be about technology,” predicts Gopal Ahluwalia, staff vice president of research for NAHB. He stressed, though, that high-tech today is being installed mainly in high-end housing. “The buyer of an average-size house doesn’t want to spend more than 3% to 4% of the purchase price on technology,” he said. “In million-dollar homes, the cost of technology doesn’t matter.” Ahluwalia added that the size of the home is the determining factor: “In a small house, there’s no room for a separate media room with a 64-inch TV.” One reason for the increased popularity of technology in the future will be its acceptance by younger home buyers. “Those in Generation X, born from 1965 to 1977, and the following Generation Y, feel much more comfortable with technology, and they will have more use for it,” he said. The leading audio/visual hot button is prewiring for later installation of plasma TVs, according to Bob Meyn, vice president of sales and marketing for Ryland Homes, based in East Dundee, Ill. The No. 2 in technology is Category 5 wiring for high-speed Internet and all TV jacks, he added. Ahluwalia said that special lighting is the most common tech feature, and is installed in 40% of new homes. Today’s fluorescent lighting has many advantages over fluorescent lights of the past, according to Shawn Martin, director of applied technology at the NAHB Research Center. “There is no downside to fluorescent lighting,” he said. “Now the color spectrum of fluorescent lights is warmer, the same as incandescent bulbs. Fluorescent lights offer significant savings. They use far less power and can last for seven years. Though more expensive than incandescent bulbs, the price has come down substantially and they’ll pay for themselves in months. A 22-watt fluorescent bulb puts out the same light level as a 100-watt bulb,” Martin said. He added that wireless switches are catching on; they are easy to install and can be put anywhere. (www.chicagotribune.com)
Chicago Tribune (7/27/07); John Handley

As the Affluent Go Downtown, the Working Poor Are Tripling Up to Buy Homes in the ‘Burbs'

Reversing a century-long trend in Southern California in which people moved to the suburbs as they got richer, the migration of the affluent to Los Angeles’ inner city has gradually increased over the last three years. According to a study by the Downtown Center Business Improvement District, the household median income of downtown residents with at least one earner was about $99,600 a year in 2006, roughly $28,000 higher than that of Beverly Hills. Nearly half of those surveyed reported annual income of $100,000 to above $250,000. Demand for condos is so strong that virtually every older office building has been converted to condominiums. Though condo sales have recently slowed, prices have held in the $500- to $700-per-square-foot range, translating into $500,000 for a studio. Meanwhile, the population density of older, working-class suburbs is rising, especially in mostly Latino suburbs. According to 2000 Census data, the size of the average household in such suburbs has been rising since the 1980s and now approaches four people in some areas. In part, the greater density is attributable to larger families, but it is also the result of families doubling and tripling up to make the mortgage. By contrast, one to two people occupy condos downtown. (www.latimes.com)
Los Angeles Times (7/29/07); William Fulton

Just the Right to Build a House in California Can Cost $200,000

The following originally appeared in the July 20, 2007 Modesto (California) Bee.

So you want to build an "affordable" house?

Well, I know that we all hope that housing can be affordable. Whether we are in the market for a new home to live in, for our kids, or simply for the employees and customers of the various businesses in which we are involved, affordability is a big item these days.

Last month I drove from Dallas to Austin, Texas (about the same distance as between Modesto and Bakersfield), and noted numerous billboards by national builders, all advertising new homes in the neighborhood of 1,600 square feet. Prices ranged from a low of $99,999 to around $130,000. Certainly that would count as "affordable" around here.

Perhaps we can aim to keep the price below $200,000 — say $199,500; surely, we could call that an "affordable" house.

OK, we have defined our target; now, let's start building. First we need a lot, ready to build on.

Good luck in finding one. I don't know where you can get a construction-ready lot in a desirable neighborhood around here. But just for the sake of argument, let's assume you do find one.

Best-case scenario is that the lot is going to run you at least $125,000. Even if you got lucky and settled for a marginal neighborhood, you will be in for at least $100,000. (Nearly all lots are controlled by merchant builders, who acquire lots in blocks of 50 to 100; they pay the above price for lots they buy in quantity — a price you can't duplicate for a single lot.)

Now we start adding the "soft costs," which include architectural plans and engineering (which will be required before you can get a building permit), interest and loan costs (assuming you are not paying cash), construction insurance, etc. Let's figure this at $10,000, although that would be very low — it would probably be far more for an individual builder.

We found our lot; we finished our plans; our game plan is set. Now all we have to do is obtain our building permit. So we go to the counter at the city (or county) public works department, checkbook in hand. Here is where the horror story really kicks in.

The check you will write for "development impact fees" is, depending on where you are building:

Oakdale: $53,741

Modesto: $57,659

Patterson: $90,000 to $105,000 (depending on differing conditions on the specific subdivision map)

And what do you get for that? Well, you get a chance to submit your plans.

So (sigh), let's add it up. Our "affordable house" in Patterson is now up around $200,000; in Oakdale it is nearly $164,000 and in Modesto $167,659.

Wait just a minute! What is missing in this picture?

Well, what's missing is any shred of construction. Yep, what you get for the above numbers is simply the right to build. No foundation, no framed walls, no electrical or plumbing, no nails. Nothing but the "right to build."

Who are the villains in this sad scenario?

To start with, land and lot prices are very high for the simple reason that there is no supply of land available for building. The "no-growth" crowd and various local governments have pretty well assured us of that.

And the development fees are outrageous because local governments are unable to collect taxes commensurate with the services they render. Those who already have their homes get an easy ride while those who don't have one yet will pay the freight. You can thank Proposition 13 for the inequities of this situation!

Still want an "affordable house"? Well, you might want to move to Texas, or you might just want to let your city, county and school district officials know that you are, indeed, "paying your own way."

Dick Hagerty is an Oakdale, Calif. real estate developer active in community nonprofits.

Local Land Use Controls May Violate the Fair Housing Act

By Duane Desiderio
The following first appeared in the July 2007 issue of NAHB's e-newsletter for consumers, HouseKeys.

In the midst of the racial upheaval of the late 1960s and in the immediate wake of Dr. Martin Luther King, Jr.’s assassination, Congress enacted the Civil Rights Act in April 1968. Title VIII of that law, known as the Fair Housing Act (FHA), declares that U.S. policy is to provide, within constitutional limits, fair housing throughout the nation.

The FHA’s central provision makes it illegal for any person to discriminate in the sale, rental and financing of dwellings based on race, color, national origin, disability or other protected groups of citizens set forth in the statute. In the FHA’s early years, a unanimous panel of the U.S. Supreme Court declared that the act’s language is “broad and sweeping,” its text must be afforded a “generous construction” and it embodies a “policy that Congress considered to be of the highest priority.”

Forty years ago, the most pressing problems to address in the housing industry were racial steering and blockbusting by real estate brokers, and other forms of overt and intentional discrimination. However, the legislative history of Title VIII indicates that its framers meant to put an end to all forms of housing discrimination. Some of the discriminatory tactics used today are more subtle, but the FHA nonetheless prohibits them even if they are not motivated by racial animus or a purposeful intent to discriminate. Indeed, every federal appellate court that has considered the issue has held that a violation of the FHA does not require proof of intentional discrimination to deprive housing opportunities.

In the housing development context, the FHA certainly makes it illegal for a local city council or zoning board to block a residential project where the motivation is to bar African Americans, Hispanics and other minorities from living in a certain neighborhood. But the FHA is a powerful law, and prohibits more than intentional forms of housing discrimination. A variety of land use and zoning regulations employed under the guise of “smart growth” can effectively discriminate against minorities, and thereby violate the FHA. For instance, a “Not-In-My-Back-Yard” attitude pervades many communities across the nation, as local officials react to citizen sentiment and deny approvals for higher density residential projects that moderate- and lower-income families could afford.

Local governments frequently adopt ordinances establishing large minimum lot sizes, expansive setbacks and side yards, open space set-asides, tree planting requirements and aesthetic controls like brick or masonry construction, to preserve affluence in the community and protect property values. These measures, however, may simultaneously preclude housing opportunities for the economically disadvantaged who can only afford to rent apartments or own multifamily dwellings like townhouses or condominium units.

All lower-income persons feel the impact of land use controls that increase the sticker price of housing. However, if the effect of these development regulations has a greater impact on minorities in depriving them of housing opportunities, then local governments that enact such regulations may be violating the FHA — because the effect of land use regulations has a disparate impact on minorities and other persons protected by the statute. Land use policies that deprive minority families access to quality affordable housing are certainly not smart growth.

To be sure, the FHA does not prohibit economic discrimination; moderate- and lower-income individuals are not among the statute’s named, protected groups. Nor does the FHA protect certain types of affordable housing projects that are government-subsidized with grants, vouchers, tax credits, loan guarantees, bonds or some other method of financing. However, when governments adopt land use controls that effectively preclude housing opportunities for the poor or specific projects geared toward low-income residents, the FHA can be a powerful tool to ensure that homes are available for all citizens — regardless of race, wealth or ethnicity.

Duane Desiderio is staff vice president of legal affairs at the NAHB.

Pennsylvania Town's Immigration Law Overturned

A federal judge in Pennsylvania issued a permanent injunction on July 26 on a Hazleton, Pa., town ordinance aimed at penalizing businesses that hire illegal immigrants and landlords who rent to them.

The decision casts doubt on the legality of similar laws passed by some 100 municipalities attempting to restrict illegal immigration in response to failed federal reform efforts. U.S. Senators voted 46 to 53 against a procedural motion on June 28 to move toward a final vote on the immigration bill (S.1639).

U.S. District Judge James Munley ruled that Hazleton's "Illegal Immigration Relief Act" was unlawful because it tried to regulate the country's immigration policy and violated procedural due process protections under the U.S. Constitution.

“This ruling shows the need for federal lawmakers to work towards a comprehensive solution to address immigration concerns with one federal law, instead of hundreds of different state and local requirements that will create a tangle of regulatory confusion for employers,” said Jerry Howard, executive vice president and CEO of NAHB.

The Hazleton ordinance, the first passed in the country, thrust the mayor and his town onto the national stage. Mayor Louis Barletta began searching for ways to reign in illegal immigration last year after two illegal immigrants were charged in a fatal shooting. Barletta said a petition on the Internet drafted by an anti-illegal immigration activist in San Bernardino, Calif., provided a template for his ordinance.

Barletta said that he will appeal. Several legal observers predicted that the issue would be decided by the U.S. Supreme Court.

Since last year, politicians from Massachusetts to California have been drawing up laws and ordinances to limit illegal immigrants' access to jobs, housing and government services.

Arizona's Democratic Gov. Janet Napolitano signed a law early this month requiring all employers to ensure that job candidates are legal residents. The Board of Supervisors in Prince William County (Northern Virginia) voted unanimously to permit its police force to ask residents their status as immigrants. If they are found to be in the country illegally, then county police can promptly arrest them and send them on to the local Immigration and Customs Enforcement (ICE) unit to initiate deportation proceedings.

The challenge to Hazleton's ordinance was led by the American Civil Liberties Union and other civil-rights and Latino advocacy groups.

For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242.

Traffic Congestion Getting Worse on State Highways

Nearly 52% of U.S. urban Interstates are now congested, according to the Reason Foundation’s 16th Annual Report on the Performance of State Highway Systems. Released in Los Angeles last month, the report comes with an interactive map showing rankings for all 50 states and basic data for each state.

“Gridlock isn’t going away,” said David T. Hartgen, the study’s lead author. “States are going to have to prioritize and direct their transportation money to projects specifically designed to reduce congestion if we are going to reverse this troubling trend.”

The study measures the performance of state-owned roads and highways from 1984 to 2005 in 12 different categories, including traffic fatalities, congestion, pavement condition, bridge condition, highway maintenance and administrative costs to determine each state's ranking and cost-effectiveness.

Among the study’s findings:

Drivers in California, Minnesota, New Jersey and North Carolina are stuck in the worst traffic, with more than 70% of urban Interstates in those states qualifying as congested.
The 10 states with the worst highway system performance, starting with the worst, are: New Jersey, Alaska, New York., Rhode Island, Hawaii, Massachusetts, California, Alabama, Michigan and Florida.
The 10 states with the best performance are North Dakota, South Carolina, Kansas, New Mexico, Montana, Georgia, Wyoming, Oregon, Nevada and Idaho.
Traffic fatality rates rose slightly. Massachusetts reported the lowest fatality rate — 0.79 deaths per 100 million vehicle miles traveled, while Montana’s roads were the deadliest, with 2.256 fatalities per 100 million miles. The national average was 1.453, up slightly from 1,440 in 2004.
The percentage of roads in “poor condition” fell sharply for both interstate highways and major rural roads. Since 1998, the percentage of poor urban interstate mileage has been reduced by 31%. The number of deficient bridges eligible for federal repair dollars also fell slightly in 2005.

Hartgen noted that the big states scoring well in highway performance have been able to achieve needed improvements and adequate maintenance at relatively low costs.

City Mayors Pursue Climate Protection Efforts

Without much support from state and federal government, cities across the country are initiating efforts aimed at enhancing climate protection and reducing carbon emissions, according to a survey conducted in late April and May by the U.S. Conference of Mayors (USCOM) Climate Protection Center. The 134 mayors who responded represent more than 25 million people in 36 states in cities that ranged in size from Los Angeles, with a population of almost 3.7 million, to Milan, Minn. and its population of 326.

The mayors of these cities also are among the 540 cities that have signed on to the USCOM Climate Protection Agreement.

Among the key findings are:

New city government buildings are being required to be energy-efficient, healthy and environmentally sustainable by nearly nine out of 10 cities — 60% currently have this policy in place and another 28% expect to adopt it next year. Almost equal numbers are extending this requirement to include government buildings undergoing major rehabilitation.
In nearly three out of four cities, residential and commercial building codes and ordinances are being changed to encourage construction of new buildings that are energy-efficient, healthy and environmentally sustainable — 41% of the cities have already made these changes and another one-third are in the process of doing so.
Seventy-eight percent of the cities are undertaking efforts to encourage the private sector to construct buildings that are energy-efficient, healthy and use sustainable building techniques, and 88% of them are undertaking efforts to educate the public about the importance of green building.

For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242.

New Home Sales Slip in June as Demand Slackens

Sales of new single-family homes slipped 6.6% in June to a seasonally adjusted annual rate of 834,000 units as home buyer demand continued to weaken, according to figures released by the U.S. Commerce Department on July 26. The June sales pace was 22.3% below a year earlier, and down 40% from the housing market’s peak in mid-2005.

"The ongoing contraction in home sales is consistent with NAHB's surveys of single-family builders,” said NAHB President Brian Catalde. “Our Housing Market Index now is down to the lowest level since January 2001, when the national economy was in recession."

"A significant increase in prime mortgage interest rates, along with the tightening of mortgage standards in subprime and other components of housing finance, clearly weighed on home buying in June," said NAHB Chief Economist David Seiders. "Home builders continue to trim prices and offer large nonprice sales incentives, but many prospective home buyers obviously are reluctant to sign on the bottom line."

"We still expect to see signs of stabilization later this year, although downside risks appear to be mounting," said Seiders.

The inventory of new homes for sale in June was 537,000, about the same as May inventory figures, although the equivalent months' supply at the June sales pace edged up to 7.8 months from 7.4 months in May.

Completed homes for sale constituted 33% of the inventory, units still under construction represented almost 51% and units for-sale that were permitted but not yet started represented 16% — no change from the prior month. Completed homes were on the market a median 6.0 months in June, up from 5.7 months in May.

Regionally, new-home sales in June were up 7.6% in the South and down 17.1% in the Midwest, 22.5% in the West and 27.1% in the Northeast.

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.

Proposal to Lower Conforming Loan Limits Draws Fire

A proposal by the Office of Federal Housing Enterprise Oversight (OFHEO) that could lower the conforming loan limit (CLL) as early as 2009 and would establish new guidance for calculating the annual limit so that it could be reduced in the future would have adverse consequences for the nation’s home buyers, according to NAHB.

Conforming loan limit calculations establish the maximum size limit for loans that Fannie Mae and Freddie Mac are allowed to purchase and they are also used to set limits for FHA and VA loans.

The loan limit is currently $417,000. The average home purchase price on which the calculation is based declined by 0.16% last year, and under the OFHEO proposal if the price continues to decline this year and in 2008 and the cumulative decline is more than 1%, then the limit for 2009 would be adjusted downward by that amount.

However, “the proposal does not appear to be authorized under current law, which only permits increases in the loan limit,” NAHB, the Mortgage Bankers Association and the National Association of Realtors® wrote in a joint letter to House Financial Services Committee Chairman Barney Frank (D-Mass.) and Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.), chairman and ranking member of the Senate Committee on Banking, Housing and Urban Affairs. The law specifies that the annual adjustment to the limit each November for the following calendar year is made by “adding” to the amount, not subtracting from it.

In addition, the three groups noted that the proposed change would be bad public policy.

“As you are aware, the housing sector is currently undergoing a correction, and there is concern about the availability of funds for the refinancing of loans and for new loans,” the letter said. “Reductions in the conforming loan limit could impair the ability of some borrowers to refinance out of subprime mortgages, which is of particular concern for families with problematic mortgages, as well as prevent some first-time home buyers from obtaining lower-cost financing on conforming, FHA or VA loans.”

OFHEO’s general counsel sought public comments on the proposal through July 19.

In NAHB’s response, David Crowe, the association’s senior staff vice president for regulatory and housing policy, noted that the conforming loan limit remained unchanged in 1993 and 1994, years in which the home price index registered declines, because “the current law does not require a decline in the limit when the price index declines.” These declines were subsequently netted out of future increases in the limit.

Authority to increase or decrease the conforming loan limit is included in H.R. 1427, The Federal Housing Finance Reform Act of 2007, and NAHB opposes that provision, Crowe said. “Pending enactment of this authority, NAHB maintains that the loan limit can only be increased, but not decreased, under current statutory authority,” he said.

“The possibility of a reduction in the CLL would create market uncertainty and significant negative repercussions for consumers, builders and lenders,” Crowe wrote. “Housing consumers would be impacted by higher financing costs for non-conforming loans. Builders and lenders would face operational disruptions.”

For example, Crowe said, many home buyers typically arrange for financing that does not exceed the conforming loan limit in order to avoid the higher financing costs for non-conforming loans, which can be 25 basis points or higher.

If the conforming loan limit were to decline one percentage point from the present level of $417,000 to $412,800, he said, “borrowers seeking to close on a new $417,000 loan or trying to refinance an existing $417,000 loan would have to either come up with an additional $4,200 in downpayment to keep the loan at the conforming limit, or pay approximately 25 basis points more for a non-conforming mortgage since their loan amount is now above the new CLL.”

If that mortgage increased from 6.25% to 6.50% because it was non-conforming, the monthly payment would increase by about $70, or $840 a year, and the borrower would pay an additional $24,500 in interest payments over the term of a 30-year fixed-rate loan, he said.

“NAHB estimates that approximately 430,000 households would be priced out of the market, meaning that they would not be able to qualify for the higher-priced non-conforming financing and may have to postpone a new home purchase or purchase a lower-priced home,” Crowe said.

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

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

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

Study Shows New Housing Pays Its Way in California

A new in-depth study concludes that new housing construction in California produces a substantial fiscal benefit to state and local governments.

The report, funded by the California Homebuilding Foundation (formerly the California Building Industry Foundation), the research and education center for California’s home building and construction industries, is the first to analyze the overall fiscal effects of housing on a statewide basis.

The study, “The Housing Bottom Line: Fiscal Impact of New Home Construction on California Governments,” found that new median-priced homes provide a strong one-time fiscal benefit when first built and a net ongoing revenue stream as well. It also concluded that new homes provide a much bigger fiscal benefit than existing homes. At the state level, that difference totals $4,219 a year.

“Despite the well-documented economic benefits of new-home construction, the fiscal impacts of housing may well have a more significant impact on local land use decision-making,” said Matthew Newman, an expert in state and local government fiscal policies, who prepared the report along with Tim Gage, a former state finance director. Both are principals in the Blue Sky Consulting Group.

“Local elected officials certainly take into consideration the economic benefits of a proposed development project,” said Newman, “but, at bottom, the fiscal impact of the proposed development likely will have a more significant influence on decision making.”

Newman said that many consulting firms and university researchers have looked at the fiscal effects of a specific development project on one city or on one county, but “no previous study that examines the overall fiscal effects of housing at the state level or looks at multiple cities or counties has been found.”

The report concludes that new housing more than pays its way. Among the findings:

The average city in California nets $3,017 in one-time benefits, which range from $2,353 in the San Diego area to almost $6,800 in the central part of the Bay Area. County governments net an average of $1,706 in one-time benefits, and the state reaps an average windfall of $15,858 in corporate and sales tax revenue from the sale of each median-priced new home.
On an ongoing basis, new homes provide a net revenue stream of $771 to cities, ranging from $287 in Orange County to $1,107 in the Central Valley. County governments net a weighted average of $190 a year, and the state nets almost $3,500 a year for each new home.
While the net ongoing impact for new homes at the state level was $3,498, the state actually spent $631 per year more than it received from existing homes — a difference of $4,129.

Kile Morgan, chairman of Ponderosa Homes, a home building company in the Bay Area and chairman of the California Homebuilding Foundation, said that the report may help promote more new housing in a state that hasn’t kept pace with new housing demand for nearly 20 years.

“In the years leading up to this study, most local officials claimed that new residential construction did not ‘pay its own way’ when it came to its impact on the local community,” Morgan said. “For years, local governments have believed that new housing projects are a net loser to local governments. As a result, local jurisdictions seek out retail development instead because of the sales tax revenue it generates.”

The fiscal impact report, he said, “shows without a doubt that this longstanding belief simply isn’t true and will help educate state and local officials up and down the state that housing — especially new housing — does in fact pay its way.”

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

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

Useful Links to Monitor Economic and Housing Trends

The following are links to useful information from government agencies and NAHB that will enable you to monitor the housing market.

To access the latest information available, simply click the links.

U.S. Census Bureau Construction Price Indexes
NAHB's Housing Forecast
Housing starts, sales and interest rate projections through 2007.
Latest Home Mortgage Interest Rates
Contains current and historical data on fixed and adjustable mortgage rates. Updated weekly.
Historical Facts, Figures and Trends
Includes new home starts and sales, average and median home prices, homeownership rates, characteristics of new homes and more.
Characteristics of New Housing
Highlights the latest data on new-home characteristics released by the U.S. Census Department. Includes links to the complete Census report and other trends researched by NAHB.

Additional breakouts of this data and other trends researched by NAHB are available at www.nahb.org/constructionstats under “Selected Characteristics of New Housing” (dated 6/13/2006).
Housing Starts
Updated monthly and based on a seasonally adjusted annual rate.
New and Existing Home Sales
Updated monthly and based on a seasonally adjusted annual rate.
New and Existing Single-Family Median Home Prices
Updated monthly.
Home Price Index
The index measures average home appreciation in more than 250 metropolitan markets. Updated quarterly.

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

Want to Know the Housing 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

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

Builders’ Tip: A Tool to Find Circle Centers — Spot On

Click for larger image.
When it really matters how close you are to dead center on a circle, the tool in the accompanying drawing that I fabricated can help you to get spot on.

To make it:

Dado a couple of 1x3s to fashion a 90° half-lap joint.
Then glue and screw the pieces together.
Now pick one edge of the longer arm as your scribing edge, and drive two 16d nails through the short arm.
The distance of the nails, A and B, should be equidistant from the scribing edge.

To use this center-finding tool:

Set the nails against the circumference of your circular object and scribe a line down the long arm.
Now, rotate the tool a quarter-turn or so, and repeat the process.
Where the two scribed lines cross is dead center.

You can build one of these gizmos in any size that you need.

The two nails should be no less than a quarter of the diameter apart and no wider apart than three-quarters of the diameter.

I use one all the time for finding the centers of Sonotubes. Although I can’t draw a line across thin air, I can stretch a piece of string into two knife cuts on opposite sides of the tube located by the center-finder’s arm.

— T. H. Richards, Mont Tremblant, PQ, Canada

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

To request a reprint of this feature, e-mail Christina Glennon at Fine Homebuilding.

BuilderBooks.com Offers More Than 250 Books That Help You Build Your Business

BuilderBooks.com is your source for training and education products for the building industry. The official bookstore for NAHB, BuilderBooks.com offers award-winning publications, software, brochures and more available in both English and Spanish.

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

Free NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market

With the current cooling of the nation’s housing market expected to persist next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

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

Earn the CAASH Designation One of Two Ways

The CAASH designation gives housing professionals serving the rapidly growing 50+ housing market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to closing the sale and serving the customer.

There are two ways to earn the CAASH designation:

Grandfathered

To be grandfathered into the program (this option expires Dec. 1):

Submit the completed professional profile and fee to The NAHB University of Housing no later than Dec. 1.
Have a minimum of 10 years experience in the 50+ housing field.
Provide evidence of 80 elective credits.

Regular CAASH Applications

To apply for the CAASH designation (non-grandfathered candidates) applicants must:

Successfully complete three required courses in the Active Adult Professional Development Series.
Have a minimum of three years experience in the 50+ housing field.
Provide evidence of 50 elective credits.
Adhere to the CAASH Code of Ethics.

For More Information

For more information about the CAASH designation, the grandfather program and the required courses, contact: the Professional Designation Help Line at 800-368-5242 x8154, e-mail CAASHinfo@nahb.com or visit www.nahb.org/CAASHinfo.

Action Needed on Proposed Carried Interest Tax Hike

Legislation (H.R. 2834) introduced in the House and expected in the Senate would tax the return on all carried interests allocable to a partnership as ordinary income rather than capital gains. Because this includes the carried interest held by general partners in real estate investment partnerships, the legislation would have a significant negative impact on the multifamily housing industry and on the bottom lines of companies that use these partnerships.

Under present law, capital gain income generated by carried interest in a partnership is subject to a tax rate of 15%. If the proposed law were to be enacted, such carried interests would be characterized as ordinary income subject to tax rates up to 35%.

Multifamiily builders are being urged to contact their legislators and the members of the House Ways and Means Committee, which is considering this bill. A sample letter from NAHB explains why this bill will have a negative impact on the multifamily segment of the industry.

The best ways to educate legislators on this issue, in order of effectiveness, are:

If you know legislators personally — either those who represent you or those in districts in which you do business — call and discuss the issue with them. (E-mail Multifamily to provide information on who you have contacted.)
Write a letter. The gold standard for communication to legislators is a hard-copy letter, on letterhead, from a constituent or a company doing business in the member’s district. NAHB staff members have prepared a sample letter that can be printed out on letterhead and adapted to include personal comments. Please have all of your officers, directors and key associates send letters as well. (Again, let Multifamily know who you contacted.)
An electronic letter, sent through a service such as NAHB’s BuilderLink. Log onto the BuilderLink site and fill in the registration section (so that the service can identify your legislators) and click on the sample letter concerning this issue. BuilderLink automatically records your contact.

To read the leigslation, click here and enter H.R. 2834 in the box at the center of the page.

For more information on this issue, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421.

Plan to Attend the Remodeling Show in Las Vegas

NAHB Remodelers who wish to learn about the latest technical skills and business practices should plan to attend the 2007 Remodeling Show, Oct. 10-12, at the Mandalay Bay Convention Center in Las Vegas.

In 2006, the Remodeling Show featured more than 80 courses in five different educational tracks in the traditional conference program alone.

The CAPS and CGR classes below are part of the pre-course offerings at the show:

Sunday, Oct. 7
9:00 a.m-5:00 p.m.

Working With and Marketing to Older Adults*
Seventy-seven million potential customers are waiting to hire your company. Baby boomers are approaching retirement age, while their parents have retained their own homes later in life than any previous generation. As a result, communities specifically designed for older home owners constitute a growing segment of the remodeling market. Learn how your firm can identify and serve the needs of an aging population. This course gives you techniques to use when marketing to the older adult population. You’ll learn to recognize the housing needs of older adults and how to communicate the best remodeling options to them.

Monday, Oct. 8
9:00 a.m.-5:00 p.m.

Design/Build*
When well managed, a full-service building or remodeling business can increase profits and maximize customer satisfaction. If you’ve ever considered running a design/build operation, this course shows you how to assess the challenges ahead. Learn how the few and the bold have benefited from implementing a design/build strategy and how to make your own design/build business a success.

Monday, Oct. 8
9:00 a.m.-5:00 p.m.

Home Modifications*
Most older adults would prefer to remain in their own homes for the rest of their lives. You can help your customers achieve that goal. Physical limitations often force older people out of their homes when sensible remodeling could preserve a cherished way of life. This course teaches the relevant codes and standards, depicts common barriers and demonstrates how to redesign living areas for safety and comfort.

Monday, Oct. 8
9:00 a.m.-5:00 p.m.

Introduction to Project Management* (New Summer 2007)
Do you have an understanding of the project management process? Is your company’s project management process efficient and effective? What are your customers’ expectations of the management of their project? Answer these questions and more in this course. Topics include: project management duties, tools and management of trade contractors. This is a “must” for builders or remodelers who are ready to take their company to the next level. Stay ahead of the competition by serving your customers with a high-quality project management process that is a reflection of your company.

Tuesday, Oct. 9
9:00 a.m.-5:00 p.m.

Business Management for Building Professionals*
Learn the management skills that give industry leaders the edge. This course will give you a solid foundation in those best business practices so valuable to smaller businesses: planning, organizing, staffing/directing and controlling. By using case studies and sample forms, your instructors give you practical and applicable tools for management success.

Tuesday, Oct. 9
9:00 a.m.-5:00 p.m.

Construction Contracts and Law*
Protect your business against legal problems with well-written contracts. Because many construction or remodeling companies are too small to hire legal staff, it's important to understand basic contractual law. This course provides a step-by-step explanation of how contracts help keep customer and supplier relationships positive, resolve problems and lower the risk of lawsuits. You'll learn about required and optional wording, warranties and arbitration procedures. Special emphasis is given to reviewing contracts for unfavorable provisions.

Tuesday, Oct. 9
1:00 p.m.-4:30 p.m.

PREP: Your First Step to CGR*
Course Fee: $195
The PREP is the required first step in the process of becoming a Certified Graduate Remodeler (CGR). It is a three-hour, 130 multiple-choice question assessment that measures a candidate’s knowledge in five core areas of remodeling business management:

Marketing and Sales
Business Administration
Design, Estimating and Job Costing
Contracts, Liability and Risk Management
Project Management

Candidates do not pass or fail the PREP. Results determine the course of study for CGR candidates and will count as one CGR course.

Tuesday, Oct. 9
9:00 a.m.-5:00 p.m.

Sales & Marketing for Remodelers*
To survive and thrive in today’s business environment, a remodeler requires a constant supply of leads and clients. This course will help you build a positive reputation and contented customers in your community.

Friday, Oct. 12
9:00 a.m.-12:30 p.m.

PREP: Your First Step to CGR*
(See course description above for Oct. 9.)

Course Fees

NAHB member: $185
Non-NAHB members: $235, unless otherwise noted

*Note: Attendance at all pre- and post-conference courses will be limitted to 50 registrants per course, so register early.

For Information and to Register

For more information about the Remodeling Show, or to register for pre- and post-conference courses, visit www.theremodelingshow.com.

Learn How Others Build, Take PCA Builders Survey by Aug. 3

The Concrete Home Builders Council (CBHC) and the Portland Cement Association (PCA) are conducting a home builder survey to determine what types of products and systems are being used in homes currently being built so that they can develop targeted, focused programs that better serve the residential building community.

The online survey will track changing attitudes, perceptions and trends in the industry and takes about 10 minutes to complete.

To take the survey, click here.

Free Survey Results and iPod Drawing

Respondents will be entered into a drawing for one of three 4GB iPod nanos, valued at more than $189 each. Respondents will also be given a free copy of the results once they are compiled.

Respondents will be asked to fill out contact information at the end of the survey to be entered into the drawing for the iPod nano and to receive the survey results. The contact information will be used for drawing and copy-of-the-results purposes only.

The deadline for survey submissions is Friday, Aug. 3.

For more inforation about the Portland Cement Association, visit www.cement.org.

Improve Your Closing Style: Little Things Mean a Lot

As we study the steps of greeting, qualifying, demonstrating and closing that lead us to a sale, I am sure that each one of us can identify one area or another where we can improve.

With today’s market tightening up, interest rates rising and home buyers becoming more hesitant, onsite salespeople and sales managers need to review their techniques and style so that they can become better sales representatives and compete more successfully.

I am not suggesting that you abandon what works for you or that you adopt a completely different approach. Instead, I am suggesting that you keep what works — and then kick it up a notch.

Several years ago Tom Peters wrote books on management that quoted numerous executives about how excellence in everything they did helped them to create successful companies.

One of the most memorable quotes came from Jan Carlzon, former chairman of the board of Scandinavian Airlines, who, in explaining the fantastic turnaround of his company, said his company did not seek to be 100% better at any one thing. Rather, his company worked to be 1% better at a thousand things.

That’s all it takes to become more successful.

Just be a little better than your competition, offer a little more, spend a little extra time with your prospect and ask for the sale just a little harder.

Kicking It Up a Notch

Below are some steps on improving your overall sales process — one step at a time:

A Warmer Greeting — How can you do a better job with your greeting?

Do you make prospects feel welcome and comfortable when they arrive at our model home? Do you introduce yourself and then remember and use their names during your conversation?
A More Thorough Qualification — Are you afraid to ask the important little questions?

Don’t be afraid to ask prospects about their price range, downpayment expectations, the type of mortgage they would be most comfortable with, whether they need to sell another house before they buy and how soon they want to move.

If your prospects feel comfortable with you, these types of questions will never seem out of place.

Ask a few more qualifying questions than you are currently asking.
A Better Demonstration — During the demonstration phase, go beyond just showing the home.

Make sure you emphasize how the features of your homes will benefit your customers. Show your prospects what the floor plan, room sizes, closet space, countertops, appliance package, master bath, low-maintenance exterior siding and overall construction features will do for them.

For example, show them how they will be more comfortable, save time and energy costs and feel more secure with a quality-constructed new home.
A More Successful Closing — Do not be afraid to ask for the sale.

You have earned the right to ask your prospects to buy if you have successfully and effectively completed the previous steps.

Competing for the gold medal is so much more fun when you achieve victory, and it can be yours if you continue to do a thousand things 1% better.

Jack Gallagher, MIRM, is president of GMG. Inc., (Gallagher Marketing Group), a Raleigh, N.C.-based consulting firm that helps builders, lenders and Realtors® develop new business through individualized marketing strategies. He has held positions with a national mortgage company, a regional real estate firm, a builder marketing company, a downpayment assistance company, golf course community developers, a national production builder and a national home automation company. Gallagher is a former trustee of the Institute of Residential Marketing and a multi-term member of the Board of Trustees of the National Sales and Marketing Council of NAHB. For more information, e-mail Gallagher, or call him at 919-656-7276.

This article appeared in the July/August 2006 issue of Sales + Marketing Ideas magazine.

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.

Enter The Nationals Sales and Marketing Awards by Sept. 28

Enter your best in new home sales and marketing and design for 2008's The Nationals — the National Sales and Marketing awards, the largest and most prestigious competition for new-home sales and marketing professionals and communities.

Sponsored by NAHB’s National Sales and Marketing Council, The Nationals honor the best in architectural achievement, product and community design, advertising and promotion, interior merchandising, Web site design and more.

The awards are open to individual sales and marketing professionals, home builders, associates and sales and marketing councils.

All entries, including fees and exhibits, are due Friday, Sept. 28.

The Nationals recognizes innovation and excellence in 57 categories. During a three-day judging process, a panel of industry professionals from across the country selects Silver and Gold award winners from a field that typically includes more than 1,200 entries. Last year, more than 1,400 entries were submitted.

To Apply

For a list of The Nationals awards categories, click here.
For entry forms, click here.

Awards Gala at IBS on Feb. 13

Category winners will be honored during a gala event at the Rosen Shingle Creek Resort in Orlando, Fla. on Feb. 13 during the International Builders' Show.

For more information, visit www.TheNationals.com, e-mail Lisa Parrish, or call her at 800-658-2751.

Education Calendar

Learn More About The NAHB University of Housing

Whether you’re new to the industry, hope to make your next career move or want to improve your company’s bottom line, The NAHB University of Housing can assist you in your educational pursuits.

Visit www.nahb.org/education for a comprehensive listing of courses throughout the country. Be sure to visit often in order to view the most up-to-date information in your area.

NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market

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

Green Building Conference Seminar Proposals Due Aug. 10

With planning for the 10th Annual NAHB National Green Building Conference now under way, conference organizers are seeking candidates to conduct seminars and educational sessions during the three-day event. The deadline for proposal submissions is Aug. 10.

The conference will be held May 11 to 13 in New Orleans.

Almost 1,100 attended this year’s conference, which was held in St. Louis more than four months ago, and more are expected next year.

The annual NAHB event is the only national conference targeted to green home building for the mainstream residential building industry. Presenters will be addressing builders, remodelers, land developers, engineers, architects, planners, public officials and environmental activists.

Prospective speakers should describe their professional proficiency in areas such as energy efficiency, water conservation, indoor air quality, waste management, design and low-impact development. All proposals are evaluated based on relevance to green building, the timeliness of the topic and its practical application and the speaker’s qualifications.

“The breadth of the subject matter in the submissions we receive is pretty phenomenal,” said program manager Emily English, who works with the Green Building Subcommittee’s conference planning team to evaluate the proposals. “There’s just a lot of information out there, and I know that our members look to this conference to help them make sense of it all.”

To Submit Proposals

Interested candidates can click here to submit proposals.

For more information, e-mail Calli Schmidt at NAHB, call her at 800-368-5242 x8132, or visit www.nahb.org/greenbuildingconference.

Download Green Building Intelligence Today at BuilderBooks.com

"Residential Green Building SmartMarket Report ,” available through BuilderBooks.com’s Digital Delivery, addresses the growing trends and opportunities in green home building.

The report provides the results of market research conducted by McGraw-Hill Construction and NAHB about green building in home construction.

To download this publication, click here, or call 800-223-2665 for more information.

‘Safety Program’ Saves Lives, Protects the Bottom Line

The “Home Builders’ Safety Program,” a publication and companion CD available through BuilderBooks.com, is a practical guide that shows builders how to develop and implement an effective in-house safety program.

The easy-to-understand and use resource:

Provides an overview of jobsite safety and why a safety program is critical to a company’s overall success.
Shows builders how to be in compliance with the Occupational Safety & Health Act, as well as how to respond to an OSHA inspection.
Explains the components of a safety program, including a total-loss program.
Provides comprehensive safe work practices and OSHA requirements for residential contractors.
Discusses the need for ongoing safety training and provides an outline for new-hire orientation.

The companion CD presents a model safety program listing safe work practices for the most common residential construction operations. It features sample forms and checklists that can be easily customized to meet builders’ specific needs.

From fall protection to fire prevention, the “Home Builders’ Safety Program” provides builders with the knowledge to create a safety program that saves lives, enhances the company’s reputation and protects the bottom line.

To purchase the “Home Builders’ Safety Program” online, click here, or call 800-223-2665.

Protect Your Workers and Your Profits

The “Jobsite Safety Video,” available through BuilderBooks.com, provides an overview of the key safety issues residential builders and workers need to focus on to reduce accidents and injuries. Based on the “NAHB-OSHA Jobsite Safety Handbook,” this DVD is intended to be used as part of an essential residential construction safety-training program and includes two 20-minute videos.

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

Decent Housing Improves Children's Health, Education

Two new research reports released on July 26 by Enterprise Community Partners and the Center for Housing Policy document the critical impact of decent, affordable housing on the health and education of children and make a strong case for elevating housing on the national agenda.

The surveys of social science research found that families living in affordable housing are likely to have more money to spend on health care and food-related expenses, resulting in better overall health and nutrition.

One study, for example, found that children whose families receive housing assistance were approximately 50% less likely to suffer from iron deficiencies than children in low-income families that do not receive housing aid. Additionally, by alleviating crowding, affordable housing can reduce exposure to stress and infectious disease, resulting in improvements in physical and mental health.

The research also found that well-constructed and managed affordable housing developments can reduce health problems associated with poor quality housing by limiting exposure to allergens, neurotoxins and other dangers. In particular, children living in housing free from pesticides, mold and cockroach infestation are less likely to develop asthma and, as a result, to miss school.

Stable, affordable housing may also improve the health of individuals with chronic illnesses and disabilities, and the elderly, by providing a stable and efficient platform for the ongoing delivery of health care and other needed services.

According to the research analysis on housing’s impact on education, housing stability plays a key role in helping children do better in school. Children who moved frequently tended to do less well in school and also to consume a disproportionate amount of educational resources, putting other children at a disadvantage.

By helping families avoid unplanned moves, affordable housing can help them achieve greater residential and school stability, the research found.

The analysis indicates that affordable housing developments may function as a platform for educational improvements by providing opportunities for residential-based after-school programs or by anchoring the development of a community that includes new or improved schools. Affordable housing can also reduce overcrowding and other sources of housing-related stress that lead to negative developmental and educational outcomes for children. Affordable housing may also support children’s educational achievement by reducing homelessness among families.

The data also revealed that children in families receiving housing vouchers live in better neighborhoods and are less likely to move frequently and to miss school compared to children in families that do not receive vouchers. When well-located, other forms of affordable housing may have similar benefits.

Moving to a neighborhood with less poverty or a stronger school system can improve children’s educational achievements by facilitating the development of stronger social ties and access to role models and community resources, as well as reducing exposure to crime and violence, the report says. For example, one of the research studies cited found that children whose families moved from inner city public housing into suburban neighborhoods were substantially more likely than their peers in the city to complete high school, take college-prep courses, go to college and enter the workforce.

Owens Corning Tells Home Owners How to Save Energy

Owens Corning, makers of PINK insulation, and the U.S. Department of Energy (DOE) have been spreading the word this summer about simple, energy-efficient home improvements that can help home owners save money and oil.

According to a 2003 study by the Harvard School of Public Health, “approximately 60 million homes in the U.S. are estimated to be under-insulated," said Gale Tedhams, director of sustainability for Owens Corning. "By heading straight to the attic and adding insulation, those home owners can make their homes greener, save money and conserve the energy equivalent of 103 million barrels of oil annually — enough to fill 51 supertankers."

Owens Corning recommends that an attic have between 16 and 22 inches of insulation with a minimum total R-value of 49.

To learn more about R-values, reducing home energy consumption and Owens Corning’s suite of fiberglass insulation products — which contain the highest level of certified recycled content in North America and are GREENGUARD-certified to meet the strictest standards for indoor air quality — click here.

“Energy efficiency is truly the 'first fuel,'” said Tedhams. "A barrel saved is two barrels earned, which means that efficient energy is the cheapest energy anyone can buy.”

Home owners who want to reduce their home’s energy footprint should consider other energy-efficient upgrades such as:

Installing a programmable thermostat that can automatically lower or raise a home’s air temperature during the day. By regulating the temperature, home owners can save up to 10% on annual heating and cooling costs.
Closing the shades and blinds during the day can prevent the sun's rays from heating the interior of the home, particularly on windows facing the south and west where the sun shines with the greatest intensity.
Sealing the envelope of the home is the first line of defense against drafts, so it's important to caulk and weather-strip around all seams, cracks and openings, paying special attention to windows and near electrical boxes. Unwanted air leakage alone can raise energy bills by up to 10%.
Simply turning on the fan can make the air feel several degrees cooler as it is circulated, essentially creating a "wind chill" effect. Also, fans use less energy than air conditioning units and HVAC systems.
Taking a home energy audit helps home owners understand how much energy their home uses and determine what changes will save them the most energy and money.
The Home Report Card® quiz provides an easy home energy audit and tailored recommendations on improving home energy efficiency.

Headquartered in Toledo, Ohio, Owens Corning is a member of the National Council of the Housing Industry — The Supplier 100 of NAHB.

This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.

NAHB-Produced Programs on DIY, Fine Living and HGTV

The NAHB Production Group produces weekly television shows on HGTV and DIY for consumers. The following is the latest lineup:

"Rock Solid" on DIY

Episode: "Stone Patio and Walkway"

• Aug. 2, 9:30 p.m. ET/PT
• Aug. 3, 1:30 a.m. ET/PT
• Aug 3, 9:30 a.m. ET/PT
• Aug. 5, 11:30 a.m. ET/PT

The stone guys, Dean and Derek, tackle three types of flagging stonework in this project. They create a stone patio, walkway and stepping stones for a rustic cottage in Plymouth, Mass.

"Assembly Required" on DIY

Episode: "Glidehouse"

• Aug. 6, 10:30 p.m. ET/PT
• Aug. 7, 2:30 a.m. ET/PT
• Aug. 7, 10:30 a.m. ET/PT

When architect Michelle Kauffman designed her dream home, she never imagined it would become so popular. Now, she is mass-producing her Glidehouse using modular prefab design. The Minor family wants to get one of their own. However, getting the oversized modular home onto their lot on Puget Sound's Whidbey Island is no easy task. Will the crew be able to get the 16-foot wide modules up a 9-foot wide driveway and around a hairpin turn?

"I Want That" on Fine Living

Episode: "Creative Ceilings, Home Theater Speakers, Tough Windows"

• Aug. 2, 8:30 a.m. ET/PT
• Aug. 2, 6:30 a.m. ET/PT

New ceiling systems are an easy way to dress up a plain white space. The latest home theater speakers are invisible. Break-resistant windows can stand up to baseball bats, crowbars and bowling balls. An easy-to-install stainless-steel backsplash is a great way to add style to your kitchen.

Specials on HGTV

"2007 International Builders' Show"

• Aug. 19, 5:00 p.m. ET/PT
• Aug. 21, 11:00 a.m. ET/PT

HGTV is on location with NAHB at the 2007 International Builders' Show in Orlando, Fla. to give viewers an inside look at the latest innovations in building materials, techniques and styles.

"International Consumer Electronics Show 2007"

• Aug. 5, 5:00 p.m. ET/PT
• Aug. 9, 11:00 a.m. ET/PT

Get plugged in for a behind-the-scenes look at the newest, hottest electronic gadgets unveiled at this year's International Consumer Electronics Show in Las Vegas. Our hosts take you right onto the convention center floor to test drive new MP3 players, check out home entertainment systems, play musical lamps and look at enormous LCD TVs.

"Outdoor Living Expo 2007"

• Aug. 24, 11:00 a.m. ET/PT

See the latest essentials in pool, spa and backyard living as HGTV scours the annual trade show and looks through the offerings of 800 companies to bring you the neatest new ways to splash, relax, steam and grill. The show tour features something for everyone who wants to maximize their outdoor lifestyle.

HGTV Seeking ‘Dream Home’ Builder/Architect Teams

HGTV is seeking developers, builders and architects to create the 2008 and 2009 dream homes for the network’s Dream Home Sweepstakes. To learn more, click here.

About the NAHB Production Group

The NAHB Production Group is a full-service, self-contained, media production unit creating programming for cable television, broadcast television, non-profit, museum and corporate clients. Productions range from magazine format shows for general audiences to museum-installation videos for specialized use.

The production group includes award winning journalists, writers and photographers with experience in broadcast, documentary and corporate television.

NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market

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

Stuard Scholarship Fund Announces 15 Winners

The National Housing Endowment, the philanthropic arm of NAHB, recently announced the 15 winners of the Dale & Bea Stuard National Housing Endowment Educational Fund Scholarship.

This year’s winners, most who are attending schools in California, are:

Gwendy Azpeitia, Long Beach City College
Thomas Blair, Arizona State University
Jessie Blote, Cal Poly — San Luis Obispo
Kayla Chapman, Cal Poly — San Luis Obispo
Richard Delarosa, Cal Poly — San Luis Obispo
Michael Duby, Saddleback College
Brandon Gharios, Golden West Community College
Jillian Gonzalez, Fullerton College
John Gonzalez, Fullerton College
Kristen King, Drury University, Mo.
Eric Licon, Fullerton College
Jan Lim, Woodbury University
Sean Morrow, Fullerton College
Anastasia Mylonas, Cal Poly — San Luis Obispo
Leon Wood, University of Southern California

Scholarship applications were graded and ranked based on merit, economic need and student potential. The selection committee awarded a combined $26,500 in scholarships to the students.

“Bea and I are pleased to be able to help these students further their education, and are confident that they will make significant contributions to the field of residential construction,” said Dale Stuard, past chairman of the endowment and 1988 NAHB president. “We are proud to take part in the National Housing Endowment’s efforts to increase the number of professionals entering the residential construction industry.”

Established in 2000, the fund provides financial assistance to students in housing-related programs, with special emphasis given to students and programs in California. Since the program’s inception, more than $50,000 in scholarships has been awarded.

This year's selection committee included educators, industry professionals, government officials and representatives from local, non-profit organizations. They were Tom Grable, William Lyon Homes (scholarship committee chairman); Bruce Entezam, Gouvis Engineering; Corey Fox, Urban Arena; Kathy Johnson, Vital Link (Anaheim Union High School District liaison); Lawrence Jones, Building Industry Association, Orange County (BIA/OC) in Southern California; Mari Kurtz, Cal Pal Sheet Metal; Lynne Porter, North Orange County Regional Occupational Program; Bill Ramsey, KTGY Group; Gerry Robbins; Sterling Plumbing & California Professional Association of Specialty Contractors; and Paul Webster; representing state senator Mark Wyland.

Providing Support for Vocational Programs, Too

In early 2003, the Stuards worked with the Building Industry Association of Southern California Education Foundation to establish the Building Industry Technology Academy (BITA) pilot program for students studying residential construction trades at Katella High School in Anaheim.

BITA is a comprehensive four-year training program that gives students the necessary skills, training, knowledge and contact with industry professionals to pursue careers in the home building industry. Students enter the program as high school freshmen and continue through their senior year. During the program, students are exposed to every facet of residential construction, including site preparation, framing, electrical, plumbing and roofing. Upon completing the program, students have the basic skills needed to work in the industry.

Since establishing the pilot program, the Stuards have donated $5,000 a year to the Building Industry Association, Orange County in Southern California to expand the BITA program into the Western High School program.

More Endowment Scholarship Programs

The endowment administers 12 scholarships and awards more than $350,000 each year to students pursuing careers in residential construction and related fields.

For more information, visit the endowment's Web site at www.nationalhousingendowment.org.

Drive Away With a Shiny New $500 GM Offer

NAHB members purchased more than 10,000 vehicles through the GM NAHB program in 2006. The all-new 2007 Chevy Silverado is included in the exclusive GM $500 offer for 2007.

NAHB members can receive $500 towards the purchase or lease of most new GM vehicles, whether for business or personal use.

GM's extensive vehicle lineup includes the all-new 2007 Chevy Silverado and GMC Sierra, both redesigned to tow more than before and stop at the pump less.

For complete details, visit www.gmfleet.com/nahb.

Other Member Advantage Discounts

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to www.nahb.org/MA.

Free NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market

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

Special Offer for NAHB Members on the Dell ATG D620 Notebook

For the first time ever, Dell is discounting the Latitude ATG D620 notebook for NAHB members only. From Aug. 1 to Aug. 15, NAHB members can save $380 on the ATG D620.

Durable Outside, Powerful Inside — Perfect for the Construction Industry

The Latitude ATG is a tough, All Terrain Grade notebook designed for demanding work environments where dust, vibration and moisture are daily facts of life.

Fully compatible with the standard Latitude D620, the Latitude ATG boasts a range of innovative features that can protect it from some of the harshest work environments and enhance its usability in demanding conditions.

Perfect for industries like construction, manufacturing and oil and gas, as well as public organizations like police forces, the Latitude ATG is designed to put a high-performance business notebook in an incredibly durable and usable package.

Help protect your data and work securely with the All Terrain Grade notebook:

Reg. Price: $2,079 <