Nation's Building News Online: September 17, 2007Print All Articles Text Version |
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Veteran Builders Offer Tips to Weather Tough TimesHunkering down for a housing correction that has turned out to be longer and tougher than expected because of a credit crunch in the mortgage market, veteran home builders who have suffered through economic downturns before shared their experiences with younger members of the housing industry who haven’t at a special panel discussion on Sept. 7 during NAHB’s fall board of directors meeting in Seattle. “We knew that there would be a day that this market cycled” down from the housing boom, said Albuquerque, N.M.-based builder Michael Sivage, who moderated the open discussion on what builders can do to weather the economic downturn. However, just as in the past, the industry has been “caught by surprise,” he said, largely because previous housing downturns were accompanied by a national economic recession. This time, although interest rates have inched up steadily, he noted, the economy has remained “alive and strong.” Some of the veteran builders participating in the “Weathering an Economic Downturn” presentation recalled the deep recession of the early 1980s when the housing industry had to contend with 17% mortgage rates. Others cited the downturn of the early 1990s, which was marked by a collapse of the savings and loan industry and a severe credit crunch for acquisition, development and construction loans. But all agreed that no matter what the cause of the problem, there are strategies that builders can follow to strengthen their businesses during a slowdown. “If this thing deepens, what will rise to the surface is a lot of fear and denial,” said Ken Klein, a custom home builder and high-end remodeler from Tulsa, Okla., who has been in the business for more than 30 years. “But those who survive will be the most proactive” with their customers, suppliers, subcontractors and lenders and avoid falling into a state of paralysis. “Don’t think that everybody’s going to be able to pay you, just like you can’t think that every buyer who comes through the door will be able to qualify and close,” Klein said. “Recognize what the future may hold and plan for what the future may hold.” Tom Woods, a Kansas City builder and developer who has been in the business for three decades, stressed the importance of communication and persevering even when it appears that there’s nobody buying homes and nobody visiting models. “You have to keep going out every day to sell the houses,” Woods said. “And you’ll come out of this thing bigger, not smaller.” Younger builders who haven’t been challenged with steering a business through hard times were advised to be up-front with lenders and others they are working with and to make paying them a top priority in order to keep liens off their properties. Still Standing When It’s All Over “It’s going to get better and veterans can help those who haven’t been through a downturn before,” said Bob Camp, a single-family builder and developer in Tacoma, Wash., who has been building since 1980 and up until recently had been constructing about 125 homes per year. “The name of the game is to be standing when it’s all over.” Camp said that local home builders associations should be activating their past presidents councils to line up seasoned builders who can provide practical advice and exchange ideas with newer members on how to gear their operations to a soft market. The youngest member of the panel, Steve Lawson, a third-generation builder who builds, renovates, owns and manages multifamily rental properties and constructs single-family homes in the Virginia Beach-Norfolk, Va. market, said that conditions were “miserable” when he entered the business in 1993 and his father’s advice is what saw him through the difficult times. Lawson observed that multifamily rental activity ought to be performing much better than for-sale housing, “but a lot of markets are overbuilt and time will tell if we see a vacancy rise.” Even with demand for apartment rentals pulling ahead of demand from home buyers, financing for multifamily financing has tightened and underwriting standards are stricter, he said. Cautious About Land The pipeline has also continued to add to the lot inventory in his area, Lawson said, “and we’re not turning a lot of that off.” Woods observed a similar increase in lots in Kansas City. “The plats are there, and it’s hard to stop,” he said. The mentality of developers in the last few years was that it was “cheaper to put the lots on the ground and pay the interest than pay for inflation in building materials." Banks are becoming cautions about the land situation, Lawson said, and his lenders want him to hold off on developing land near a flood plain that took him 18 months to get through the permit process. “If we start again, it might take three to four years to get the product on the ground once the market recovers,” he said. Camp said he had paid $135,000 for lots in one community and can now buy them across the street for $85,000. “Exercise options, if you can,” he suggested. On the home building side of the equation, “the inventory is growing tremendously, so now we are seeing builders who won’t make it through 2009.” “When you’re building 20 houses a month,” he added, “it’s hard to recognize when you’re 60 days past where you should have stopped.” Even in markets that didn’t turn red hot during the housing boom and weren’t as susceptible to a big downward correction — such as Tulsa, Kansas City and Seattle — sales momentum recently has been softening and consumers need a big boost in their confidence, panelists noted. Other advice provided by the panelists in Seattle:
Another panel discussion will be scheduled for the International Builders’ Show in Orlando in February. Concerted Effort Urged to End Housing Credit CrunchIn its centerpiece resolution adopted at the recent fall board of directors meeting in Seattle, NAHB urged the national leadership in Washington to recognize the seriousness of the housing credit crunch and to take steps to calm and stabilize financial markets and to restore confidence and liquidity to the nation’s mortgage markets. The NAHB board also called on Congress, the Administration and financial institution regulators to work with the housing and lending communities to develop solutions to subprime foreclosure problems without unduly restricting credit to the boarder housing market. “To put it bluntly, this credit crunch has pushed us into the midst of the deepest, broadest and most serious housing crisis since the 1980s,” NAHB President Brian Catalde told board members.” In its resolution, the board also called on:
“The Fed, Congress, the Administration and financial institution regulators need to work with the housing and lending communities to help subprime borrowers who are looking to refinance in order to avoid foreclosure,” said Catalde. “It is also important to shore up the jumbo loan market, where the availability of these loans is limited and very expensive, creating serious problems for high-cost housing markets such as California, the Northeast and many large metropolitan areas." Spiraling Out of Control “In 2008, we are facing a potential 2 million foreclosures,” Catalde said, and those units would come back into the inventory at reduced prices on top of the current inventory overhang. “At the same time, lenders have been tightening their lending standards,” he said. “In fact, they are overreacting and overtightening. A combination of a lack of confidence by consumers, lending institutions and investors has resulted in this serious mortgage credit crunch where money for loans is in short supply and inventory is rising." “Ladies and gentlemen, this situation has now spiraled out of control,” he said. “We cannot — and we will not — allow this situation to continue unchecked.” With the housing recession “still deepening” as the industry deals with “unique problems in the housing finance system,” forecasting housing activity in the year ahead has grown difficult and “there are troublesome signs” about the economy’s expansion process, which is now in its sixth consecutive year,” NAHB Chief Economist David Seiders told the board. On Sept. 7, the day just prior to the board meeting, the government reported small net job losses for August, the first decline since 2003. If another decline is reported for September, Seiders said, “the Federal Reserve will pull out all the stops,” because two consecutive downward months for employment would signal the onset of recession. “The Fed has a lot of room to move on the downside if the economy gets into trouble,” he said. NAHB ‘Buy Now’ Program Yields $8.3 Million in AdvertisingNAHB’s $3 million “Buy Now” Advertising Assistance Program, launched at the 2007 International Builders' Show last February, was leveraged into HBA advertising campaigns valued at more than $8.3 million. NAHB created the advertising assistance program to help local home builders associations bolster home sales in down housing markets. The program provided grants ranging from $5,000 to $75,000 to 168 associationss in 42 states. To view a list of the HBAs that received grants, and their grant level categories, click here. Many of the funds went to areas hardest hit by the downturn, including markets in California, Florida, the Northeast and upper Midwest. Four grants were awarded in the top 10 major media markets. In medium-sized markets, 89 HBAs received grants, and among HBAs with less than 250 members, 75 grants were distributed. Many locals associations used creative and innovative advertising campaigns to reach potential buyers — including partnering with business and community groups. The Barrow County Builders Association in Winder, Ga. used the grant money to create a marketing partnership with its chamber of commerce, school system and county government to bolster home sales, according to executive officer Amy Hurst. The partnership created a “Buy Now” Web site and produced signs featuring the “Buy Now” message for all the new subdivisions in the county, Hurst said. In addition, working with the school system, the HBA created orientation material encouraging new teachers to buy homes in the county. For more information, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447. Finding Bright Spots Among the Dark CloudsAmong mortgages made to borrowers with good credit, 97.4% are continuing to be paid on time, according to the latest delinquency and foreclosure numbers released by the Mortgage Bankers Association. In some states, delinquencies among prime borrowers are far lower — just 1.35% in Oregon, 1.39% in Washington state, 1.89% in Virginia and 1.9% in California. Prime-credit borrowers who took out fixed-rate loans in most states are performing even better than prime borrowers as a whole — just over 2% on average nationally and barely more than 1% in California, Oregon, Hawaii and Washington are paying late. However, among borrowers with subprime mortgages, 14.5% nationwide are behind on their payments by at least 30 days. That’s more than five times the rate of delinquency among prime borrowers, but it also means that 85.5% of subprime borrowers are still paying on time each month. The numbers get worse when you look at the performance of subprime borrowers who took out adjustable-rate loans, such as the notorious “2/28” mortgages that allow low monthly payments for the first two years but then reset upward with a big jolt at the beginning of the third. In West Virginia, 26% of owners with subprime adjustables are past due; in Mississippi, it’s almost 27%. The bottom line is that the scary foreclosure and delinquency rates are highly concentrated — among loan types and local and regional economies, and they are expecially prevalent among investors in formerly high-flying markets. (www.washingtonpost.com)
Greenspan Says U.S. Not Headed for Recession: ReportOn a book tour to publicize the release of his memoir, former Federal Reserve Chairman Alan Greenspan said on NBC’s “Today” show that the U.S. economy appears set to weather the housing downturn without falling into a recession. He also said that he expects more mortgage delinquencies and home foreclosures in the U.S. and global housing markets. “I think we’re going to have to go through this adjustment, as indeed all the other countries are in the process of going through it,” he said. “There are going to be a lot of people who will have very tragic stories.” In a separate interview with CNBC Television, he warned that the Fed has to be careful to avoid stoking inflation with any future policy moves. “It’s very clear that the trade-offs between inflation and growth have altered,” he said. “The Fed has to be more careful about inflation now than it did when I was chairman." In an interview in the Dutch newspaper NRC Handelsblad, he warned that inflation will rise to about 5% in Europe and the United States. (www.washingtonpost.com)
The New Money Pit; It Started With Subprime MortgagesBetween November 2001 and April 2005, housing and housing-related industries created 788,300 jobs, or 40% of the total created in the U.S., according to Asha Bangalore, an economist at Northern Trust in Chicago. But since August 2006, employment in housing-related industries has declined 119,400, and the collateral damage is spreading. Because home sales and moves stimulate purchases of appliances, electronics and furniture, the giant chains that catered to house flippers and renovators have reported recession-like results. In the second quarter, same-stores sales were down 5.2% at Home Depot and 4.3% at Sears. Americans who were living high by taking out home-equity loans during the boom have watched their equity drop, and are now faint of heart when it comes to big-ticket discretionary items. The National Marine Manufacturers Association said it expects pleasure-boat sales, down 6% in 2006, to fall 10% more in 2007, largely due to the housing woes. The nation’s biggest retailing sector — automobiles — is likewise feeling the effects. In July, auto sales were down 12% from the year before. When CNW Research asked consumers who were putting off plans to buy new cars why they were doing so, 17.6% cited housing issues like falling home equity or rising mortgage payments. (www.newsweek.com)
Fading American Dream Fuels RentalsThe turmoil in the mortgage market, on top of a shortfall in apartment construction, means that the market for renters could become tighter over the next three to five years than it’s been since 2000, says Hessam Nadji of Marcus & Millichap Real Estate Investment Services. During the real estate boom, a record number of renters bought homes as interest rates fell and lenders eased their standards. If the homeownership rate falls over the next two years from 68.2% back to its 2002 level of 67.9%, Nadji estimates it will translate into 2.3 million households entering or re-entering the rental market. Renters will suffer less in some markets than in others. Apartments should be widely available, for example, in parts of Florida, where the explosion of condos swamped demand. Many of those units are becoming rentals, which tend to be pricey. The vacancy rate in Tampa Bay is up to 10% from 6% a few years ago, and some landlords are offering a month or two of free rent, says Marc Rosenwasser of Meadow Wood Property. Over the next five years, the demand for apartments is expected to swell to 430,000 units a years because of job growth, immigration and children of baby boomers moving away from home. That projection exceeds the expected construction of 250,000 new apartment and condo units a year, according to Marchus & Millichap. (www.usatoday.com)
Home Builders Fight Back: New Ads Will Say Market Isn’t as Bad as PortrayedBlaming growing inventories and reluctant buyers on a relentless tide of bad news about home sales and prices in national and local media, metro Atlanta home builders have launched a media blitz to counteract what they say is a false impression of the area’s market. Steve Palmer, chief financial officer for campaign participant Bowen Homes, said the million-dollar campaign will remind consumers that now is the best time in years to buy a house and reassure them about the long-term stability of Atlanta home prices. “I think the media is doing home buyers a disservice by pounding people with all this negative news,” Palmer said. David Ellis, executive vice president of the Greater Atlanta Home Builders Association, said the real estate boom years of 2005 and 2006 created unrealistic goals for home sales, making Atlanta’s current slow-but-steady numbers appear gloomier than they really are. “We’ve slowed down. There’s absolutely no doubt about that,” Ellis said. “But we’ve slowed down to where we were in, say, 2000, and that was a record year.” The campaign — under the slogan “Get Home Atlanta!” — will employ a variety of techniques to steer attention to its Web site. In addition to offering prizes for visitors such as a week’s resort vacation and skybox seats at the Georgia Dome, the site will spell out 10 reasons a house is a good investment and now is a good time to buy. “Now’s the time to act if you’re looking to take advantage of this buyer’s market,” Ellis said. (www.ajc.com)
Study Shows High Sea Rise Danger for U.S. Coastal CitiesA sea level rise of 1 meter could have catastrophic impact along the 12,000 miles of U.S. coastline, where 53% of Americans live, according to scientific analysis by the environmental nonprofit group Architecture 2030. Such cities as Miami Beach and Hollywood, Fla.; New Orleans; Hampton, Va.; and Point Pleasant, N.J. would have major areas under water with a sea rise of 1 meter. By a 1.5-meter rise, Miami and other Florida communities, along with East Boston, Mass.; Galveston, Texas; and Atlantic City, N.J. are in deep trouble. By 3 meters, San Francisco, New York, Boston, San Diego and Savannah, Ga. suffer severe damage. The new study, based on satellite imagery, tidal patterns and on-location measurements of likely coastal city “breach points,” analyzes the sea level shifts that global warming could trigger at much smaller increments than earlier government and private reports. Images of the potential city-by-city flood impact findings, integrated into Google Earth city images, are available at www.architecture2030.org. (www.postwritersgroup.com)
Flurry of Bills Aimed at Mortgage Credit CrunchThough federal lawmakers adjourned early last week to attend the funeral of Rep. Paul Gillmor (R-Ohio) and mark the observance of Rosh Hashana, the Jewish New Year, legislative proposals were floated in both chambers to do more to fight the mortgage credit crunch. Sen. Charles Schumer (D-N.Y.) on Sept. 10 introduced legislation that would temporarily lift the portfolio caps and loan limits for Fannie Mae and Freddie Mac to allow the two financial institutions to provide liquidity to the jumbo mortgage market and to help subprime borrowers refinance mortgages that could become burdensome when the interest rate is reset and monthly payments increase significantly. S. 2036, the Protecting Access to Safe Mortgages Act, would allow the two housing government-sponsored enterprises (GSEs) to increase their mortgage portfolios by 10% and to raise their conforming loan limits by up to 50% in high-cost areas. The temporary increase in the portfolio caps and loan limits would last one year. Schumer says the cap increase would free up $145 billion for the purchase of new jumbo mortgages in metropolitan areas where the median single-family home price is above the GSEs’ current conforming loan limit of $417,000. In a press release announcing the bill, the senator said that half of this amount would “go specifically towards refinanced mortgages for borrowers whose existing adjustable rate loans were scheduled for an interest-rate reset between June 2005 and Dec. 2009.” “This common-sense measure will deliver a shot in the arm that could make refinancings possible for tens of thousands of Americans trapped in the subprime mess,” Schumer said. “Together with nonprofits, lenders and loan servicers, Fannie and Freddie are the missing ingredient to stem the rising tide of foreclosures that is about to hit the economy. The bottom line is that we should be deploying Fannie and Freddie to do the job they were designed to do.” Separately, House Financial Services Committee Chairman Barney Frank (D-Mass.) on Sept. 7 sent a letter to Federal Reserve Chairman Ben Bernanke arguing that the Fed and the Administration need to do more to allow Fannie Mae and Freddie Mac to address the problems in the mortgage markets. Frank suggested that Bernanke’s opposition to raising the portfolio caps of Fannie Mae and Freddie Mac is “ideological, not driven by safety and soundness.” Frank concluded his letter by asserting that Fannie and Freddie should be allowed to increase their mortgage portfolios and the conforming loan limit to help alleviate current problems in the subprime and jumbo mortgage markets. Frank subsequently said on Sept. 11 that he plans to offer an amendment this week to Federal Housing Administration reform bill H.R. 1852 to allow Fannie Mae and Freddie Mac to purchase mortgages of up to $500,000. Frank said that his amendment would not only raise the conforming loan limit to $500,000, but also give the HUD secretary the ability to raise the limit when that action is warranted by market conditions. The full House is expected to consider the bill later this week. In an effort to help subprime borrowers who are in default on their mortgages, legislation recently introduced in the House and Senate would ensure that home owners would not be required to pay any income tax on mortgage debt that is forgiven during the foreclosure process. H.R. 1876, the Mortgage Cancellation Tax Relief Act, was introduced in the House by Reps. Rob Andrews (D-N.J.) and Ron Lewis (R-Ky.). Sen. Debbie Stabenow (D-Mich.) has a similar bill, S. 1394, pending in the Senate. To read the legislation, click here and enter the bill number in the box at the center of the page. For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Aid for Subprime Borrowers Included in HUD 2008 FundingTo help subprime mortgage borrowers, the Senate last week voted to include up to $200 million for Department of Housing and Urban Developemt counseling programs as part of its fiscal 2008 Transportation, Housing and Urban Development spending bill. Sens. Charles Schumer (D-N.Y.), Sherrod Brown (D-Ohio) and Bob Casey (D-Pa.) proposed that $100 million be used for non-profit agencies to work individually with subprime borrowers who have fallen behind on their mortgage payments. Their proposal and an amendment by Sens. Christopher Dodd (D-Conn.) and Kit Bond (R-Mo.) to include an additional $100 million for this effort were both approved by a voice vote. “The current situation in the subprime mortgage market is untenable,” said Schumer. “The more we do to help solve it, the fewer families will be faced with losing their homes because of bad loans and dubious mortgage brokers.” Casey noted that the counseling programs have a proven track record to help owners navigate the complicated process of contacting lenders, banks and legal services to modify their mortgage loans and ultimately save their homes from foreclosure. “Home owners are being battered by the rising tide of foreclosures,” said Dodd. “This measure can act as a lifeline to help keep them in their homes.” “This is a good step forward to help stem the tide of foreclosures without bailing out risky lenders and speculators from the market,” added Bond. The spending bill, which must be reconciled with its House counterpart, contains funding levels for several key housing programs of interest to NAHB members:
During floor debate, Sen. Robert Menendez (D-N.J.) offered an amendment that was accepted by a voice vote to provide $380,000 in additional funding for the HUD secretary to implement guidance on assisting persons with limited English proficiency. Also, an amendment offered by Sen. Mel Martinez (R-Fla.) and approved by the chamber adds $25 million back into the American Dream Downpayment Act, which received zero funding from the Senate Appropriations Committee. The entire appropriations process remains in flux because President Bush has threatened to veto any spending bills, including the HUD bill, that exceed limits suggested by the Administration. In addition, none of the appropriations bills are expected to be completed by Sept. 30, the end of the current fiscal year. Next week, Congress is expected to approve a six-week continuing resolution to keep the government funded and running through Nov. 9. If the President follows through on his veto threats over the FY2008 spending bills, Congress may subsequently decide to wrap all the bills into one giant omnibus spending package, effectively daring the President to veto the entire federal budget. For more information, e-mail Jenna Hamilton at NAHB, or call her at 800-368-5242 x8407. State Legislators Respond to Subprime Lending ProblemsPursuing a range of approaches in response to the mortgage lending excesses that became apparent in the subprime market earlier this year and looking to reduce foreclosures, legislators in more than 30 states had introduced close to 100 bills by the start of this month — some more effective than others. Most recently, North Carolina Gov. Michael Easley received national attention when he signed legislation that will limit the ability of mortgage brokers to charge customers above-market rates and prepayment penalties. The law also shields subprime borrowers from certain adjustable-rate mortgages that are highly risky. Other states have been pursuing a range of options in response to the recent spike in subprime borrowers who find they cannot afford to make their monthly housing payments once their loans are reset at a higher interest rate. Among them:
For more information, e-mail Beth Ambrose at NAHB, or call her at 800-368-5242 x8253. Mayors Press Fed to Act on Subprime MortgagesDuring its annual meeting in Los Angeles on June 22 to 26, the United States Conference of Mayors called on the Federal Reserve Board to use its authority under the Home Ownership and Equity Protection Act (HOEPA) to protect home owners from abusive practices that can result in mortgage foreclosures. The mayors are asking the Fed to:
The U.S. Conference of Mayors is the official nonpartisan organization of cities with populations of 30,000 or more. There are 1,139 such cities in the country today. For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242. New York Builder Elected State Assemblyman
Amedore gained local fame when his company built a home for the ABC television program "Extreme Makeover: Home Edition." However, it takes more than celebrity to secure a vote and Amedore worked hard during the special election to bring attention to his proven business skills and political platform. Upon victory, the 38-year-old Amedore was quoted in the Albany Times Union saying, “What I plan on doing is to roll up my sleeves, get my hands dirty and serve the people.” As a home builder, Amedore will take his work ethic and practical knowledge to Albany and as an assemblyman will work for increased job creation, real property tax relief, safe neighborhoods and lower health care costs. For more information on the campaign and George Amedore, click here. Whether you are a builder, supplier, contractor or banker, the time to make a difference in your community is now. Elected officials at the state and local level have the greatest impact on your business and family. As a proud home builder and lawmaker, you can shape the future of your town, county or state. For more information, e-mail Karl Eckhart at NAHB, or call him at 800-368-5242 x8126. Eye on the Economy: The Fed Is Poised to Act DecisivelyU.S. economic output (real Gross Domestic Product) grew at a robust 4.0% annual rate in the second quarter, a nice rebound from the anemic 0.6% pace registered in the first quarter of the year. Even so, second-quarter growth came to only 2.0% on a year-over-year basis — a substantial downshift from the growth registered during the three previous years. The housing production component of GDP (Residential Fixed Investment) was a major economic growth engine during the 2003 to 2005 period, and the abrupt downshift in RFI since early last year has weighed heavily on GDP growth ever since. Contractions in industries closely related to housing production, such as mortgage banking, have added to the downward pressure on overall economic growth. The housing downswing still is underway and several other sectors apparently are losing momentum in the third quarter. We’re currently expecting GDP growth to recede to a 2.4% annual rate this quarter, and we’ve cut our fourth-quarter forecast to 2.0%. We currently peg the probability of recession within the next 12 months at 33%, up from 20% several months ago. The Job Market Is Throwing Off Troublesome Signals Until recently, the job market was holding up remarkably well in the face of the pronounced slowdown in GDP growth, and this pattern was particularly striking in the housing sector — implying sizeable downshifts in growth of labor productivity (output per hour). But now the labor market also is weakening, suggesting that the earlier disconnect simply reflected time lags between slowdowns in growth of output and employment. The employment report for August actually showed a small decline in payroll employment of 4,000 jobs for that month, the first setback in four years, and the employment numbers were revised downward for both June and July. Indeed, total payroll job growth averaged only 44,000 for the June to August period, down from 147,000 for the first five months of the year. And although the unemployment rate held at a comfortably low 4.6% level in August, this stability masked large declines in both household employment and the civilian labor force — both troublesome signs on their own. NAHB’s forecast shows a gradually increasing unemployment rate and subpar growth of less than 1% in payroll employment during the balance of this year and the first half of 2008 as GDP growth proceeds at a below-trend pace. We expect to see better labor market performance during the second half of next year and in 2009 as the drag from housing eases off and GDP growth picks up. Financial Market Turmoil Is Taking a Toll on Housing Activity The progressive meltdown in various components of the home mortgage market since early this year has been delivering serious hits to both gross and net home sales, provoking the serious 2007 downleg in housing starts and Residential Fixed Investment. The problems began in the subprime sector, quickly moved through the Alt-A market and most recently infected the jumbo market — loans above the $417,000 conforming loan limit. A special NAHB survey of single-family home builders, conducted in the latter part of August, showed serious negative impacts on home sales as well as renewed upward pressure on sales cancellations. Indeed, the reported impacts of tightening mortgage lending conditions were even more serious than we had found earlier in the year. The most serious problems were reported by the large companies that start more than 100 units per year and by companies in the West — presumably reflecting the freeze-up of the jumbo mortgage market in August. Mortgage Problems Are Infecting Other Financial Markets This year’s financial market turmoil is based heavily on deep credit problems in the U.S. subprime mortgage market, and large losses are being taken on mortgage-related securities around the globe. These experiences have reminded the investment community of credit risks in other parts of the financial markets, kicking off a broad-based flight to quality. Some credit markets have virtually shut down in the process — the asset-backed commercial paper market is a good example — and quality spreads have opened up in most markets, including the corporate bond market. Fortunately, the flight to quality also has driven down the entire Treasury yield curve. This has kept rates on prime conventional conforming mortgages and high-grade corporate bonds close to levels prevailing before the most recent round of turmoil, despite considerable widening of spreads to comparable maturity Treasuries. But most other rates have risen in absolute terms — including rates on subprime, Alt-A and jumbo mortgages as well as rates on lower-rated corporates. These changes definitely are cutting into housing market activity and overall economic growth. The Fed Is Poised to Act Decisively So far, the Federal Reserve has reacted to the financial market upheaval primarily by keeping the federal funds rate on or below target (5.25%), by cutting the penalty rate at the discount window by 50 basis points and by amending the Federal Open Market Committee (FOMC) statement to accentuate downside risks to the real economy while downplaying earlier concerns about upward inflation pressures. The Fed almost certainly will cut its target for the federal funds rate at the FOMC meeting on Sept. 18, and our central bank stands ready to make further adjustments down the line if the economy seems to be slipping toward recession. NAHB’s current forecast assumes quarter-point rate cuts at the next three FOMC meetings — putting the federal funds rate at 4.5% by year-end. This will put the real (inflation-adjusted) funds rate at about 2.6%, a modestly stimulative position, and the Fed still would have leeway to deliver more monetary stimulus should the situation demand further action. The Housing Forecast Takes Another Hit The seriousness of the recent turmoil in mortgage markets, and growing evidence of erosion of house values in more and more housing markets, apparently have combined to send many prospective home buyers to the sidelines. And Fed Chairman Ben Bernanke recently pointed out that an easing of monetary policy is no quick fix for the U.S. housing market in today’s financial market environment. These realities have provoked yet another cut to NAHB’s housing forecast. We now expect total housing starts to be down by 23% in 2007 and an additional 10% in 2008. Residential Fixed Investment now declines by 17% in 2007 and 12% in 2008. We’re still viewing 2009 as a solid recovery year — with housing starts up by 12% and RFI posting a 6% year-over-year gain — but considerable uncertainties still surround our baseline (most probable) forecasts. 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 Sept. 12 edition. To subscribe to “Eye on the Economy,” click here. Attend the Fall Construction Forecast Conference in October Plan to attend NAHB's Construction Forecast Conference on Oct. 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc. 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. What's Next for Housing? Attend Construction Forecast ConferenceThe past months have been unpredictable for the housing industry. Get the information you need to make solid business decisions at the NAHB Fall Construction Forecast Conference and Webcast on Wednesday, Oct. 24 at the Housing Center in Washington, D.C. This year’s topic — “Will Housing Lift Off in 2008?” — addresses key concern of industry professionals. A distinguished assembly of housing economics experts will explore such important questions, including:
Conference Also Available Online Can’t attend the conference in person? The conference will also be broadcast live on the Web. To register, visit www.nahb.org/cfc. 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.
Attend the Fall Construction Forecast Conference in October Plan to attend NAHB's Construction Forecast Conference on Oct. 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc. 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: Coping Crown Molding With a Grinder
I use a variety of tools to shape the cuts, and one of my favorites is my little Makita grinder. With an 80-grit wheel, I can back-cut a piece of crown with speed and accuracy. This is especially important when sculpting the belly, or the big central curve, as shown in the accompanying drawing. I also use my grinder for fine scribe cuts on cabinets, doors and trim. It’s the perfect tool for a situation where I don’t have good control with my belt sander. — Chris Solberg, Corte Madera, Calif. Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Christina Glennon at Fine Homebuilding.
Builders Can Grow Profits in a Down MarketNot only can buiders survive a dip in the housing cycle, they can grow their profits when the market is soft. Just don’t, in today’s market or any market, give up gross margin to grow top-line revenue. In fact, the single biggest mistake any builder can make — you may already have learned this lesson the hard way — is to sell more homes than you can build. “Can you really afford to sell a house today that you’re not going to deliver for 14 months? Just think of the mess that’s going to create,” says Bob Whitten, of SMA Consulting, which provides financial and operational management consulting services to the construction industry. Whitten offered several tips on growing your company and profitability, even in a down market, at the 2007 International Builders’ Show in Orlando. They included:
The following are sample benchmarks:
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. Enter The Nationals Sales and Marketing Awards by Sept. 28Enter 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
Awards Gala at IBS on Feb. 13 Category winners will be honored during a gala event at the Rosen Shingle Creek Resort in Orlando 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. Free NAHB Toolkit Gives Tips to Boost Sales, MarketingNAHB has developed a series of free sales and marketing resources in its Sales and Marketing Toolkit to help members strengthen their sales and marketing proficiency during this downturn. The toolkit is available exclusively to NAHB members and includes a free, introductory booklet as well as online resources available on the NAHB Web site, www.nahb.org. The booklet includes easy-to-read articles, tips and an overview of online resources. Articles include tips for builders on how to:
Members must log in to the NAHB Web site to access this information. For login help, call the Member Service Center at 800-368-5242.
Get Powerful Technique for Selling More Homes Bill Webb, MIRM, in “Sweet Success in New Home Sales,” available through BuilderBooks.com, provides you with the most powerful techniques ever devised for selling more homes and making more money in lean times. This instructive guide lays out the proven approaches for crafting and delivering sales excellence. To view or purchase this publication online, click here, or call 800-223-2665. Pennsylvania Court Upholds Fire Sprinkler DecisionThe Pennsylvania Builders Association (PBA) praised a Sept. 6 ruling by the Commonwealth Court to uphold a lower court decision disapproving a local fire sprinkler ordinance. The ordinance, enacted by Schuylkill Township in Chester County, would have required the installation of fire sprinklers in all new construction and in all structural alterations of 1,000 square feet or more. It was disapproved by the Chester County Court of Common Pleas in a ruling filed Aug. 29, 2006. “Consumers are the big winners because this ruling helps hold down the cost of new homes by preventing a government mandate requiring fire sprinklers in new residential construction,” said PBA President Steve Black. Consumers still have the option to install fire sprinklers if they so choose, he pointed out. The ruling also bolsters Pennsylvania’s Uniform Construction Code, Black said, adding weight to the requirement that clear and convincing local conditions be proven for a local government to exceed building requirements in the UCC. Some local governments were claiming local conditions that, in fact, were conditions common across the state, he said. To justify requiring residential fire sprinklers, Schuylkill Township officials had argued that it needed them more than other parts of the state because of the area’s traffic congestion, steep roadways along neighboring Valley Forge Mountain and a decline in the ranks of local volunteer fire fighters. But the Court of Common Pleas disagreed. “In passing the [Pennsylvania Construction Code] Act, the legislature chose not to mandate the use of automatic sprinkler systems in buildings across the commonwealth,” the decision said. “If general or widespread conditions are sufficient to justify an exemption to the act, then the legislature would have mandated the use of automatic sprinkler systems and not made their use subject to a finding of a need for exemption.” The Commonwealth Court upheld this decision in its Sept. 6 ruling. “The code ensures the quality and safety of new home construction in Pennsylvania. If needless variances to the code are granted to various localities, the advantages of having a single building code for everyone will be lost. Plus, public tax dollars are wasted when local governments expend time and resources to develop unnecessary local building ordinances,” Black said. “We want the public to understand that we are not opposed to the installation of fire sprinklers in homes. We do, however, oppose a government mandate requiring sprinklers. Since sprinklers would add to a home's cost, we strongly feel this decision should be left as an option for consumers.” For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. Home Fire Sprinklers Found Far Costlier Than Advocates ClaimThe installation of residential fire sprinklers may bring down the cost of home owner insurance premiums, but not enough to pay for the sprinklers themselves, according to a study released this month by NAHB Housing Economics. Further, home builders surveyed for the study report fire sprinkler installation costs are about twice as high as the costs touted by the manufacturers and installers of residential sprinkler systems, strengthening NAHB’s position that residential fire sprinkler mandates have a negative effect on housing affordability. The study debunks attempts by residential fire sprinkler manufacturers and their advocates to downplay the added cost of installing the devices by pointing to the insurance savings realized. “The issues would be somewhat simplified if we could show that monetary savings existed to offset, or almost offset the added upfront costs of installing fire sprinklers,” said economist Lanlan Xu in “Fire Sprinklers and Home Owner Insurance.” “Builders in that case would be able to install sprinkler systems in most new homes and market the sprinklers effectively to prospective buyers as an added safety feature that pays for itself,” the study pointed out. “From the insurer’s point of view, sprinklers may generate savings, but also additional costs….if sprinklers discharge accidentally and cause unnecessary water damage,” the study said. “Most insurers do offer meaningful discounts for residential sprinkler systems,” but not high enough in any state to offset the added upfront cost buyers pay for sprinklers. In fact, the study showed, “Using the average insurance payment as a crude proxy for the basic premium, the most an average new home buyer in a particular state can expect to save on home owner insurance appears to be about $95 a year.” Insurance companies usually cap the discounts for safety devices like deadbolt locks, burglar alarms and smoke detectors, in addition to fire sprinklers, and the cap is usually 20%. “This means that, given a large enough number of other safety features, the marginal impact of a sprinkler system on the insurance payment could be very small or zero.” The advocacy group Home Fire Sprinkler Coalition says that residential fire sprinklers add about 1% to 1.5% to the cost of a home. For the $246,500 median price of a new home in 2006, the sprinklers would result in a $2,465 to $3,698 price increase. However, a nationwide survey conducted last year by the NAHB Research Center and completed by 102 builders who built 5,527 homes with fire sprinklers in 2006 showed that the median cost of installing fire sprinklers was about $5,573. The median size of the surveyed homes was 2,271 square feet, the study said. “The extra costs the NAHB Research Center survey was careful to include are the costs of increased permit, tap and inspection fees, as well as any costs of redesigning the home to accommodate the sprinklers. It’s important to include these items, as costs are not limited strictly to the material and labor used in installing the sprinkler system itself,” the study pointed out. And when fees from financing, the broker commission and profit margins are added, average costs to the home owner are probably closer to $6,677, the study said. Using Freddie Mac’s 30-year fixed-rate mortgage rate of 6.70% in July 2007, that translates into a $522 increase in an annual mortgage payment, the study found. “Even under the lowest of the above cost estimates ($2,465), the annual mortgage payment would increase by $193, roughly double the upper bound on the average insurance savings,” the study concluded. For sprinklers to not affect affordability, the cost of financing them over the life of the mortgage should at least be equal to the insurance savings achieved. In the example above, that would mean that the fire sprinklers could cost the home owner no more than $1,200, the study calculated. “If achieved, it would allow the market to provide sprinkler systems in most new homes without adversely affecting affordability. Local governments could make a contribution toward achieving this by not increasing permit, tap or other fees on homes with sprinkler systems,” the study said. Apply for NAHB Safety Award for Excellence by Oct. 5Applications are being accepted for the 2007 NAHB Safety Award For Excellence (SAFE), which provides recognition for home builders who develop outstanding work-site safety programs. For information, requirements and an online application, click here (nahb.org/SAFE). The award honors the achievements of builders and trade contractors who have developed and implemented high-quality construction safety programs, as well as those government officials and NAHB-affiliated associations who have made successful efforts to advance safety in the home building industry. In last year’s inaugural awards program, 19 winners in 16 categories were cited for their safety achievements. Read about them here. “NAHB is a national leader in residential construction safety, and this award program both honors exemplary safety behaviors practiced by home builders and encourages others to adopt similar programs in their work sites,” said NAHB President Brian Catalde. NAHB member companies in good standing that build residential homes or town homes using light construction methods can apply for a SAFE award. Specialty trade contractors, remodelers and light commercial and multifamily builders, as well as NAHB-affiliated associations and federal or state Occupational Safety and Health Administration (OSHA) officials who have been nominated by an NAHB member or association, are also welcome to apply. Awards will be made in a variety of categories; for a detailed listing, click here. Applications must be received no later than Oct. 5. “Last years’ winners were a testament to how seriously NAHB members take the safety of their employees, from developing unique safety programs to creating educational materials to conducting weekly training,” said Andy Anderson, NAHB Construction Safety and Health Committee chairman and a builder from Pinopolis, S.C. “We know there are many more examples of safety best practices in the industry and look forward to recognizing them in the 2007 awards.” Award winners will be recognized during a breakfast ceremony at the 2008 International Builders’ Show in Orlando in February. Winners will receive an award and coverage in this publication. NAHB provides members and others in the residential construction industry — including non-English and limited English-speaking employees and trade contractors — with information, guidance and access to training resources to help them protect employees' health and safety. A variety of safety resources and guidebooks, including the NAHB-OSHA Jobsite Safety Handbook: English-Spanish Edition, are available for purchase through www.builderbooks.com. For more information on the SAFE Awards Program, click here; or e-mail Lindsay Cather at NAHB, or call her at 800-368-5242 x8163. How to Maximize Community Support at Public HearingsYour local council, commission or board is holding a public hearing tonight to decide the fate of your development proposal. Opponents are planning to pack the chamber to try to stop the project, but a few supporters have agreed to show up and testify in favor of your plan. You can simply cross your fingers and hope that everything works out, or you can actively manage the hearing process to maximize the impact your community supporters will have on the decision. The following are 12 points to follow in order to manage the process and maximize your supporters’ impact:
Debra Stein is the president of the San Francisco-based public affairs firm, GCA Strategies. She is the author of several books on NIMBYism and her firm specializes in controversial land use projects across the nation. For more information, e-mail Stein, call her at 415-391-4100 or visit the GCA Strategies Web site at www.gcastrategies.com. Enter Pillars of Industry Marketing, Design Awards
Entries are open for the 2008 Pillars of the Industry Awards competition honoring excellence in apartment and condominium design and development — including the best mixed-use community — as well as leadership in marketing and property management. Apartment owners and developers, property managers, architects, interior designers and others involved in the multifamily housing industry are invited to enter. The application deadline is Nov. 30. Entry notebooks are due Dec. 7. The Pillars of the Industry Awards program is the largest and most prestigious of its kind, and both housing professionals and the media look to the awards as a showcase of future trends and innovation. The awards recognize superior achievement in three areas: building, marketing and individual excellence, including “Multifamily Development Firm of the Year” and “Best Multifamily Community of the Year.”
For complete details, including eligibility requirements and application forms, go to www.nahb.org/pillarsawards, e-mail multifamily@nahb.com, or call 800-368-5242 x8215. To see a list of last year's winners, available on the NAHB Web site, click here. Building Product Expert Joins NAHB Research CenterJohn B. Peavey, a seasoned product research and development expert, is the NAHB Research Center's new director of applied technology. Peavey’s broad experience will help advance the Research Center’s mission of promoting innovation in housing technology to improve the durability, affordability and environmental performance of homes and home building products. “I am pleased to welcome John to our management team,” said Michael Luzier, president of the NAHB Research Center. “His distinguished background and experience in the product manufacturing sector provides a unique perspective and valuable knowledge base that will contribute greatly to the Research Center’s growth as a full-service product commercialization company.” With more than 13 years of experience leading and managing product development, research, testing programs and capital expansion projects for product manufacturers, Peavey will be responsible for managing the activities of the engineers working on the Partnership for Advancing Technology in Housing (PATH) field evaluations, overseeing the ToolBase Services information dissemination program and developing manufacturer services that focus on the individual product development needs of Research Center clients. Prior to joining the Research Center, Peavey managed research and development projects for LP, Masco Corporation and CertainTeed. As both project manager and product engineer for these companies, he developed fiberglass-reinforced composite fencing and decking, designed and tested bath and shower products, commercialized innovative fascia board and railing products, and participated in the development of test protocols for deck and railing products. Other professional experience includes mechanical engineering work focused on laboratory and plant expansion projects for 3M. Peavey received a Bachelor of Science degree in building technology art and design and a master’s degree in mechanical engineering from the Massachusetts Institute of Technology. PATH Provides Tool to Evaluate Installation of Panel Systems
The criteria, available free on the PATH Web site (pathnet.org), compare and contrast the dimensional tolerance levels when making panel connections during site assembly of concrete systems, metal systems, structural insulated panels (SIP) and wood open-wall systems. The criteria enable builders to determine the skill level needed to install the particular systems. For instance, the tolerance level for most concrete systems is 1/2-inch, compared to metal or wood panel systems that are generally in the 1/8-inch to 1/4-inch tolerance range. Consequently, a builder with a workforce with a very low skill level might decide to use concrete wall systems over metal or wood systems that require closer tolerances to install them. Or, a builder who is subject to more onsite inspections by local building officials may choose a wood open-wall system over a closed-wall SIP. Other Performance Criteria at the Connection Evaluated The report also indicates performance criteria for other types of performance at the connection, including: connection fire resistance, energy performance, moisture resistance, acoustical separation/insulation, air infiltration, connection durability and insect and vermin resistance. “Making the Connections” also sets performance criteria for panel system compatibility with other panel connection systems and other house subsystems as well as conformance with applicable building codes. Creating the Criteria Panelized housing construction now accounts for 45% of the building systems activity in the U.S., according to Automated Builder magazine. PATH collected and analyzed performance information on 12 different panelized wall systems in the four categories of systems to develop the criteria. The criteria cite performance standards based upon current codes as benchmarks for connections and system performance. The report findings are organized into reference tables — making it easy for builders to quickly compare different systems and for codes inspectors to know what to look for on site visits. SIPs were recently adopted into the International Residential Code (IRC) and are currently the only panelized system adopted into the code. PATH developed the performance criteria because many projects using other panelized systems must show equivalency to the locally-adopted building codes on a case-by-case basis and adding another step — and more expense — to using them on smaller jobs. In addition, the guidelines for connections in the PATH report will help building professionals who are developing new panelized wall systems. Architects writing performance specifications will find the PATH performance criteria useful when comparing how different panel systems conform to relevant codes and other performance measures. NAHB’s Buildings Systems Councils (BSC) has supported the PATH study and the development of the performance standard criteria for panelized wall systems. Attend SHOWCASE 2007 on Oct. 28-31 in Hilton Head, S.C Read “Making the Connections” prior to attending the Building Systems Councils SHOWCASE 2007, the premier systems-built industry education and networking event, at the Marriott Hilton Head Golf and Resort in South Carolina on Oct. 28-31. The conference will address how panelized systems can be used in multi-family housing projects and how they can provide builders with an “in” to the green market. Concrete Offers Strength, Beauty and EfficiencyMany owners of companies involved in light commercial building and commercial remodeling started out by diversifying from single- or two-family home construction. As a result, they are often most familiar with one aspect of concrete — its use in foundations and basements. But there’s actually far more to this area of construction than some commercial builders realize — including a great deal of new technologies and materials. Even though concrete is the most widely used construction material on earth (and has been used to build structures that still stand after more than 2,000 years), the industry continues to evolve to meet the demands of builders. At the same time, as I’ve learned through my service on NAHB's Concrete Home Building Council, many builders face a full-time job just keeping up with current projects and have little or no time to learn about new technologies and building systems. That’s where I, and my fellow council members, hope to help. A New World of Possiblities In response to industry demand, concrete and cement manufacturers have developed new materials, processes and systems to reduce the cost of doing business, speed up construction and increase profits. What’s more, concrete technology can be essential for architects and builders seeking green building certifications for their projects, as well as a variety of antiterrorism, force protection and security applications. Moving from smaller commercial construction to larger projects can require knowledge about a range of issues regarding concrete construction. To name only a few examples, one may need to learn about new types of drawings, calculations, engineering specifications and permitting processes. There are also new work site processes to incorporate, including preplanning, forming techniques, staging areas and shoring systems required for multiple levels under construction at the same time. The Portland Cement Association (PCA) has taken a proactive approach to serving NAHB members by participating on both the Commercial Builders Council and sponsoring the Concrete Home Building Council. My role in these two groups is to serve as a resource for members seeking expertise on concrete technologies and systems, and to point the way to resources available at my organization and elsewhere. Concrete Is Everywhere, and It Is Versatile, Too In every big city, there are a few very tall, highly recognizable buildings — nearly all the rest are significantly smaller. In fact, less than 1% of all buildings exceed 15 stories and the vast majority of all commercial construction is in one-, two- and three-story buildings. Unlike the concrete foundations poured for the typical home, nearly all of these structures feature engineered solutions involving concrete. Even if you’ve never worked with engineered concrete, you’re probably familiar with the “old school” approach of using rebar to reinforce a slab of concrete. Today’s choices in engineered concrete offer a different and wider array of capabilities and benefits that require additional areas of expertise. One of the remarkable things about concrete is its versatility — not only in the forms it can create (which include virtually any form that an architect can devise), but also in the benefits it provides to the project and the quality of the structure. For example, concrete’s thermal mass slows a structure’s temperature swings and often lowers the peak energy load. This, in turn, can reduce the building’s energy usage as well as the size of the HVAC equipment required. At the same time, concrete can provide aesthetic and security benefits. Case in Point: The Power of ICF To appreciate the potential of new concrete technology, consider insulating concrete form construction, or ICF. This established and approved technology delivers huge benefits — including superior acoustics and resistance to mold and mildew, vibration and even hurricanes and earthquakes. This builder-friendly wall system has found its way into new construction projects in every region and price range. Two basic types of forming systems are available. One uses hollow, interlocking polystyrene blocks, while the other uses panels or planks held apart by a series of plastic ties. After using the forms to construct a hollow wall with vertical and horizontal reinforcements, contractors pump concrete into the cavity to create a solid structural wall with insulation on both sides. Later, electricians and plumbers cut channels into the insulation for cables, wiring and water lines. The process results in super-efficient insulated walls — from R-20 to R-56 — in a fraction of the time required with wood or steel framing. What’s more, the insulation provided by the forms gives builders the ability to successfully place concrete even under extreme weather conditions. Very few weather conditions affect a pour because the form insulates the concrete — allowing it to cure almost regardless of ambient temperature or humidity. What’s New in Concrete? The cement and concrete industries offer a broad range of materials and systems. The following are a few of the newest and most popular applications.
Successfully incorporating appropriate concrete materials and systems into projects results in a win-win situation for builders, owners and tenants. Whether it’s a 50-story building, a smaller office building or a custom home, concrete delivers a high quality product, with wide flexibility in features and benefits. As with any building process, the key is knowing the right approach to use for your particular end results and understanding which types of professionals and subcontractors you need to accomplish your vision. Where to Learn More For builders of every size and market focus, NAHB offers a range of courses and seminars that touch on various aspects of concrete construction. In addition, NAHB has incorporated material from PCA and other expert sources in a variety of brochures and literature that address specific areas of concrete construction. For more immediate insights, visit the online resource PCA developed at www.concretethinker.com. This is a one-stop resource that helps design and construction professionals make sustainable design a reality using the durability, versatility and energy performance of concrete. Members can also tap the resources and members of the Commercial Builders Council and the Concrete Home Building Council for more information. Ed Alsamsam, PhD, PE, SE, LEED AP, is the general manager of buildings and special structures for the Portland Cement Association based in Skokie, Ill. His team develops publications, designs software, conducts seminars, provides technical support, performs feasibility studies and manages research and development projects. Alsamsam is an active member of NAHB, the American Concrete Institute, the American Society of Civil Engineers and the Structural Engineers Association of Illinois, and serves on various technical committees. He has authored, published and presented numerous papers and reports in the field of structural engineering. For more information, e-mail Alsamsam at PCA, or call him at 847-972-9080. Market Trends, Successful Selling Hot Topics at ShowcaseHow to increase market share and profit margins is one of the hot topics at SHOWCASE 2007, the premier systems-built industry education and networking event, at the Marriott Hilton Head Golf and Resort in South Carolina on Oct. 28-31. Bill Webb, the author of “Sweet Success in New Home Sales,” available through BuilderBooks.com, will lead an education session about how to boost your sales in a changing market. In addition, NAHB Chief Economist David Seiders will discuss trends in the market and the immediate and long-term effects on the systems-built housing community. SHOWCASE 2007, by NAHB’s Building Systems Councils, features educational sessions, trade show exhibits, award ceremonies and networking opportunities tailored to manufacturers, builders, dealers, suppliers and associates in the concrete, log, modular and panelized home building industries. SHOWCASE 2007 attendees will have the opportunity to see cutting-edge technology and the most advanced supplies and products and to learn about the latest trends from experts in green building, marketing, human resources and from the NAHB Research Center. Among this year's breakout sessions are:
For more information and to register, visit www.nahb.org/showcase. Register early. Discounted "Early Bird" registration ends Sept. 7.
Learn About Home Technology at Custom Builder SymposiumHow to sell technology to home buyers, the “top 10” residential technology trends and how custom builders can increase their comfort level with technology will be the featured home technology education sessions at the upcoming 2007 Custom Builder Symposium in Naples, Fla. NAHB’s premier educational and networking event for custom builders will be held at the Naples Grande Resort & Club on Oct. 26-28. According to the Consumer Electronics Association, the consumer electronics market is expected to grow 6.5%, or $155 billion, this year; structured wiring is the most popular home technology installed in new homes; and 84% of builders said that home technologies played a role in their new home marketing. Home technology sessions at the symposium include:
The technology-oriented educational programs are part of NAHB’s commitment to raise industry knowledge about technology trends and opportunities through the Home Technology Alliance (HTA), a partnership between NAHB and the Custom Electronic Design Installation Association (CEDIA), an international trade association of companies that specialize in designing and installing electronic systems for the home. HTA was created to position the housing industry to effectively meet the growing consumer demand for home technology — from home theaters and electronic gaming to home security and home health care — and to provide maximum return on investment in home building and remodeling. The alliance, housed at NAHB, provides education, resources, tools and product and service information to builders in the areas of electronic systems integration and home technology. CEDIA is headquartered in Indianapolis. To Register for the Symposium Online registration is open. For information and to register, go to www.nahb.org/custom.
Remodelers Add Five Councils; Designations Top 1,800Five local remodelers councils were formed this year, and the number of Certified Aging-in-Place Specialist (CAPS) and Certified Graduate Remodelor (CGR) designations among active remodelers now tops 1,800, the NAHB Remodelers reported at NAHB's fall board of directors meeting in Seattle earlier this month. The new councils were formed with the Northern Illinois Home Builders Association, the Olympia Master Builders in Washington, the Home Builders Association of Hickory & Catawba Valley in North Carolina, the Home Builders Association of Greater Terre Haute, Ind. and the Home Builders Association of Burlington-Alamance County in North Carolina. To boost membership and provide training, the remodelers council of the Home Builders Association of Greater Cleveland will host a road show in October and the Home Builders and Remodelers Association of New Hampshire will host a show in November. The road show concept, created during NAHB Remodelers strategic planning sessions last year, feature nationally-known speakers who show participants how to make their businesses more profitable. CAPS, CGR Designations NAHB Remodelers reported 1,141 active CAPS and 732 active CGRs. In November, local home builders associations will offer a 50% discount on CAPS and CGR designation classes. Specially Adaptive Housing Grant, Green Standards Discussed Judith Caden, director at the U.S. Department of Veterans Affairs (VA) Loan Guaranty Service, discussed the specially adaptive housing grant and loan program available to disabled veterans seeking to remodel their homes. Donnie Mack, a remodeler from Texas, has remodeled the homes of several disabled veterans and indicated that the VA program was beneficial. The NAHB Remodelers also helped develop the remodelers’ portion of the working draft of the National Green Building Standard now available for public comment on the NAHB Research Center Web site. The green building standard is based on NAHB's Model Green Home Building Guidelines. Upcoming Pre-conference training will be available prior to the Remodeling Show in Las Vegas on Oct. 7-12. The remodelers will also conduct a strategic planning session for 2008. Updated CAPS Classes Debut at 2007 Remodeling Show
Two updated Certified Aging-in-Place (CAPS) courses will debut prior to the 2007 Remodeling Show, Oct. 10-12, at the Mandalay Bay Convention Center in Las Vegas. The courses — “Marketing and Communication Strategies for Aging and Accessibility (CAPS I)” and “Design/Build Solutions for Aging and Accessibility (CAPS II)” — have been upgraded to include recent statistics and trends about the older adult community, as well as improved graphics and activities to make the courses even more comprehensive. “As our medical technology and care techniques provide for longer and more comfortable independent lives and lifestyles, the building industry — remodeling in particular — needs to be, and indeed should be, on the leading edge,” said Greg Miedema, CGR, CGB, CAPS, president of Dakota Builders, a remodeler from Tucson, Ariz. Miedema worked closely with the NAHB University of Housing as a content provider for the CAPS I course. “Marketing and Communication Strategies for Aging and Accessibility (CAPS I)” replaces “Working With and Marketing to Older Adults.” When completed, students who took the course will be able to describe the different aging-in-place markets, better promote new aging-in-place products and services and better understand and sell to older adults. “Design/Build Solutions for Aging and Accessibility (CAPS II)” replaces “Home Modifications.” The course will allow students to assess the needs of aging-in-place clients, better understand the design and accessibility needs of clients, and understand contractual and legal issues surrounding aging in place, among other valuable considerations. The courses being offered include: |