Nation's Building News Online: October 1, 2007Print All Articles Text Version |
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Sustaining Economic Growth Key for Housing TurnaroundContinued growth in the nation’s economy is the best guarantee of a revival in demand for new and existing homes, NAHB Chief Economist David Seiders said in his latest “Eye on the Economy” column, and the heartening news is that the Federal Reserve appears ready to help foster the ongoing economic expansion however it can. Beset by mortgage market woes, eroding house values in a growing number of areas and “a hefty shove from the media,” housing is continuing to lose momentum, Seiders said. “But these negatives do not mean that housing will continue downward forever,” he said. “As long as the overall economy continues to expand, with the Fed’s help, throwing off decent growth in employment and household income, ongoing population growth will generate decent growth in the number of households, and that’s the key.” Despite the current mortgage credit crunch, which is most pronounced in subprime borrowing, Seiders noted that there remains significant favorable financial support for prospective home buyers, particularly in the FHA/VA and prime conventional conforming mortgage markets. With the greatest implications for home buyers in high-priced housing markets in California and along the East Coast, Seiders added that the jumbo mortgage market should “regain its footing before long” following its rapid deterioration in August. “If these conditions come together, and if builders focus heavily on incentives to move inventory, it’s reasonable to expect home sales to stabilize by early next year,” he said. Jumbo Loan Market Is Coming Back Talking points prepared by NAHB for the association’s leadership and posted for members in a new significantly expanded version of the “Back to Basics” Toolkit emphasize that the jumbo loan market is staging a return. “After going through a tough spell earlier, there are encouraging developments in the jumbo loan market,” according to NAHB. “Recently, this market has shown signs of stabilization. The Federal Reserve’s latest moves to cut interest rates have increased liquidity, which is an important step in easing the situation and restoring investor confidence.” The availability of money for jumbo loans has improved for credit-worthy borrowers, the association notes, although interest rates on these loans have been roughly one percentage point above conforming loan rates and downpayment requirements are higher. “Still, jumbo loans remain very affordable by historical standards,” NAHB says. “Unfortunately, because of the dire housing headlines, many consumers continue to mistakenly lump the jumbo market with the subprime woes. The biggest problem is simply getting the word out that mortgage money in the jumbo market is available at very attractive rates for credit-worthy borrowers. This is vital to boosting confidence and traffic of prospective customers.” More Interest Rate Cuts Expected Seiders said that the Sept. 18 interest rate cuts by the Fed have had some positive impact on the financial markets, primarily by stimulating the stock market and relieving liquidity problems in short-term credit markets. Unfortunately, while those cuts are helping to bolster the economy and providing a healthy foundation for housing, they cannot immediately stabilize mortgage and housing markets, Seiders said, a point that was stressed by Fed Chairman Ben Bernanke in a recent address. However, although the Federal Open Market Committee made no commitment on the future course of monetary policy, Seiders said he expects more good news from the interest-rate front, with additional quarter-point cuts at each of committee’s two remaining meetings in 2007. In the meantime, average rates on 30-year fixed-rate mortgages have drifted up for the past three weeks, for the week ending on Sept. 27 returning close to their levels at the start of the month, according to Freddie Mac's Primary Mortgage Market Survey. They averaged 6.42% last week, up from 6.34% in the prior week and 6.31% a year earlier. Freddie Mac Chief Economist Frank Nothaft said that rates on fixed-rate mortgages have been following the direction of rates on 10-year Treasury securities. “Also tracking short-term Treasury notes, average rates on one-year adjustable-rate mortgages dropped by five-hundredths of a percent” last week, Nothaft said. “Though it is the fourth consecutive week rates on ARMs have declined, the share of mortgage applications for ARMs has been trending down, and last week reached its lowest level since March 2003, according to the Mortgage Bankers Association,” he said. One-year ARMs averaged 5.60% last week, down from 5.65% the previous week but up from 5.47% a year earlier. Weathering Economic Downturn Discussion Available OnlineAt a special panel discussion on Sept. 7 during the NAHB Fall Board of Directors Meeting in Seattle, veteran builders offered tips on how to weather today's tough times. Video highlights of that presentation are now available online. To view them, NAHB members can click here on the NAHB Web site. Housing Slump Snags Spending on Home ImprovementsThe current housing downturn is starting to take a noticeable toll on remodeling expenditures for home improvements, according to the latest forecast for the industry from economists at NAHB, although the weakness will be offset to some extent by the growing demand for projects to patch and spruce up homes so that they are more attractive to potential buyers in a slow market. “While residential remodeling expenditures remained relatively strong through 2006, the ongoing housing market contraction, coupled with the sharp deceleration in house price appreciation, will curb growth in 2007 and 2008, before expenditures recover in 2009,” according to the NAHB forecast. Overall residential remodeling expenditures will fall below 1% both this year and next, the forecasters say, which represents a decline of 2% in this sector when adjusted for inflation. The industry is expected to return to more robust growth in 2009. An important factor in the remodeling slowdown is the ongoing housing correction. “The housing boom that included record peaks in housing starts and sales of new and existing homes in 2005 led to a substantial correction in 2006 that has continued into 2007,” the economists say. “It is unlikely that the residential remodeling sector will be completely immune to this slowdown.” Although total housing activity was a drag on the U.S. economy last year, shaving a quarter of a percentage point from real growth in the gross domestic product, home remodeling improvements contributed nearly one-tenth of a percentage point to growth. That won’t occur in 2007 and 2008, the forecasters find, with government statistics already indicating weakness in this year’s first quarter. Census Bureau statistics on residential improvements and repairs for the opening quarter of 2007 showed a 6% decline from the same period of 2006 in aggregate remodeling expenditures. NAHB is forecasting declines in improvement expenditures in both 2007 and 2008 of roughly 3% for owner occupants. Spending on improvements in the rental sector will be low or positive, at 3% or less, following several years of decline. With home sales slumping, the industry is seeing less demand from “buyers who undertake remodeling projects as they customize their newly purchased homes to their tastes and preferences,” according to NAHB. But some counter-cyclical forces are coming into play in the demand for maintenance and repair spending as “sellers invest in remodeling projects in order to maximize the price their sale will command,” the economists say. “As the housing market slows, buyers gain negotiating power, which puts pressure on sellers to address any maintenance or repair issues that may exist.” “Expenditures for maintenance and repairs will pick up for both owner occupants and rental owners in a counter-cyclical response to the current housing market,” NAHB says. Spending by owner occupants on maintenance and repair is projected to increase by roughly 9% this year and next. “Expenditures by rental owners will increase by slightly more through 2007 and 2008 as vacancy rates come down, generating cash, and landlords move to maintain rental value and make up for earlier spending cutbacks,” the economists say. Borrowers Are Feeling Some Heat But It’s Not a ‘Mortgage Meltdown’Although the term “mortgage meltdown” has become so common on TV, in the headlines and in casual conversation that it might be assumed that this is a tough time to get a mortgage, mortgage money is plentiful; the majority of mortgage products remain relatively unaffected by troubles in the subprime market; and interest rates for 30-year, fixed-rate loans remain in the low 6% range for people with reasonably good — not necessarily perfect — credit. Even interest rates on jumbo loans for more than $417,000 have fallen after spiking this summer. The main change over the past several months is that “the products and underwriting that allowed people to buy houses they couldn’t afford have disappeared,” said Ted Grosse, president of 1st Mortgage Advisors in Los Angeles. Kit Crowne, a loan officer with Right Trac Financial Group in Manchester, Conn., said even sophisticated home owners with high incomes are under the impression that the entire mortgage market is in crisis. Recently handling a relocation financing for a professional couple moving from New Jersey to Connecticut, one spouse said that they weren’t really sure they would be able to even qualify for a mortgage because of their graduate and dental school loan debt. Crowne checked the couple’s credit and verified assets and put them into a cream-puff fixed-rate first mortgage at 6.25% for 30 years. (www.washingtonpost.com)
Public Not That Worried About Mortgage Crisis Affecting Own FinancesIn a Gallup Panel survey conducted Aug. 23-26, about seven in 10 Americans say they are following the news about the home mortgage-lending industry closely, including 28% who are following it very closely. In the same poll, 45% of Americans say they are following the news about problems with Chinese products very closely. Americans appear to be far more apprehensive about the impact of the subprime mortgage crisis on the national economy than on their own financial situations. Seventy percent of Americans say they are worried that the problems in the home mortgage-lending industry will have a negative impact on the U.S. economy, with 21% of respondents saying they are worried and 49% who are somewhat worried. When considering their own financial situations, about one-third (35%) say they worry about the impact the subprime lending crisis will have on their day-to-day finances — half as many as worry about the effect on the national economy. That is the same level of concern expressed about the impact of the subprime crisis on their ability to borrow money and that renters express about their rent. Americans are slightly more concerned that the crisis could have a negative impact on their investments (42%), with stock investors more likely to express concern (51%). Forty percent of home owners are worried about the impact on their investments (42%), with stock investors more likely to express concern (51%). Forty percent of home owners are worried about the impact on the value of their homes. (www.knowledgeplex.org)
Housing: Diverse Game Plan Helping Builders Ride Out SlumpDiversity is the game plan for success during the housing slump in the Kansas City area. “The developers who are having big problems right now are the ones building cookie-cutter subdivisions the way they did five years ago,” said David Gale, president and owner of Gale Communities in Lee’s Summit. “Consumers are different than they were even five years ago. The key to housing is choice, and consumers have a huge array of choices compared to 20 or 30 years ago.” Gale’s company has three developments under way; each is significantly different, “and that is key to success in this marketplace,” he said. Diversity also works for Kevin Stucker, president of Stucker Construction in Blue Springs. Stucker has found a profitable niche as a leading builder of town homes. “There is excess inventory throughout the city,” he said. “All of the builders can attest to that, but we are doing our best to suck in our gut and ride it out. The main thing we are trying to do is have the right product in the right location. It may sound like empty rhetoric, but that’s what it’s all about. We have been able to do that with successful town home projects in places such as Kansas City, Harrisonville and Belton.” Kansas City Homes in Grain Valley has carved a successful niche by building affordable housing for first-time buyers. “About 70% of our projects are in the 140s, and the other 30% are in the 160-to-280 range,” said Brian Colson, a partner in the business. “Starter homes are affordable for people tired of living in apartments. They can get in for about $900 a month, which may not be much more than they pay for rent.” Business is as good as can be expected in the current economy, he said. “It’s been a different market in 2007,” Colson said. “Our sales are off about 20%, but we currently have 118 duplexes and single-family homes under construction. We look for 2008 to be a good year.” (www.kansascity.com)
Facing an Unstable Housing Market, Some Developers Are Retooling Plans for New HomesThe faltering housing market is having a powerful effect on some of the most anticipated projects in California’s Inland Empire, with local housing starts down 45% for the first eight months of the year compared to the same period in 2006 and several large housing developments either going by the wayside or slowing their pace. One housing segment is thriving despite the slowing market, however. In dense, urban areas stretching from Los Angeles to Ontario, mixed-use developments centered around mass transportation are taking off, said Jeff Simonetti, vice president for government affairs and chief economist at the Baldy View Chapter of the Building Industry Association of Southern California. “As an area gets built out, I think it makes it a riper opportunity for mixed-use,” he said. Mixed-use developments often have condos or apartments above offices or retail. Three mixed-use projects in Ontario are moving ahead as planned, said Greg Devereaux, the city manager. In downtown Redlands, the city’s latest analysis shows demand for 1,200 to 1,300 housing units downtown, Community Development Director Jeff Shaw said. Chicago-based General Growth Properties is planning 230 condos above retail as part of Redlands Village, a mixed-use project that will attract people who don’t want to drive all the time and who want a more urban lifestyle, said Redlands City Councilman Mick Gallagher. (www.dailybulletin.com)
No End in Sight for Idaho’s GrowthWith all due respect to Phoenix, Las Vegas and Orlando, Idaho is the state with the nation’s fastest-growing economy. Home building in the state hasn’t crashed as it has across much of the USA, and a two-decade run of prosperity continues. Idaho’s population grew 13.3% from 2000 to 2006 to 1.466 million. That’s twice the national growth rate, although the average of about 30,000 new residents a year is small compared with Arizona or Florida. For Idaho, however, it’s like adding a major city every year. In 1990, only Boise, Idaho Falls and Pocatello had more than 30,000 people. Today, nine cities are that big. Developer Doug Fowler believes he has a way to let Idaho grow and keep its identity. He’s turning one of the state’s most valuable pieces of real estate — the 1,297-acre Harris Ranch, within Boise’s city limits — into an upscale, eco-friendly community. His development will have 2,800 homes clustered on 358 acres. The rest will be left untouched, or even improved by the restoration of native prairie grass. The scenic foothills will not be developed. Bald eagle habitat will be preserved. The river that runs through the ranch will remain pristine. The developer even plans to keep a few head of cattle grazing on the land for symbolic reasons. Fowler believes he can make more money giving people the Idaho experience — rivers, fishing, open space — than carving land into cul-de-sacs and quarter-acre lots. The first lots, among the biggest and most expensive, will cost about $300,000. (www.usatoday.com)
Montgomery Home Prices a Seven-Figure ShockIn a trend officials in Montgomery County, Md. called shocking, the median price for a newly constructed single-family detached home in the county rocketed to a record high of $1.13 million in the first quarter for this year, according to government data, up from $881,600 last year. The county’s new-construction home prices are soaring, county officials said, because developers are responding to the downturn in the housing market by focusing on building large, high-end homes for affluent buyers. “What we see when we look at the data, though, is not so much that all the houses are becoming more expensive, but that in the current market, builders stopped building middle-of-the-market houses,” said Karl Moritz, research chief of the Montgomery County Planning Board. Experts said the county has several factors that insulate it from the decline in median home prices in many areas over the past two years, such as a strong job market, proximity to downtown Washington, D.C., strong schools and a generally well-run government. Meanwhile, median prices for townhouses as well as existing single-family detached homes remained stagnant this year, at $505,462 and $540,000, respectively. The median price for existing townhouses increased slightly, to $364,000. (www.washingtonpost.com) Washington Post (9/27/07); Philip Rucker and Nancy Trejos Panel Acts to End Tax on Forgiven Mortgage DebtLegislation approved by the House Ways and Means Committee on Sept. 26 to help American families avoid foreclosure and stay in their homes, H.R. 3648, would eliminate any taxes home owners might face from banks renegotiating the terms of a home loan and forgive a portion of the outstanding mortgage. The change in the tax law would apply only to principal residences. "With the whirlwind of problems in the mortgage finance system, H.R. 3648 can help stabilize families, their neighborhoods, the surrounding community and the economy as a whole,” NAHB said in a letter sent prior to the vote to all members of the committee. The legislation also follows one of the policy provisions approved at NAHB’s board of directors meeting last month in Seattle to address the mortgage credit crunch. “Families dealing with the pain of a foreclosure should not have the double whammy of a large tax bill for terminating their mortgage through no fault of their own,” said Ways and Means Committee Chairman Charles Rangel (D-N.Y.). “I am pleased the committee joined together to unanimously pass this critical legislation and I look forward to bringing this measure before the full House.” H.R. 3648 also includes an NAHB-supported provision that extends the deductibility of mortgage insurance. Mortgage insurance is especially critical for low- and moderate-income first-time home buyers, many of whom may not qualify for a market-rate mortgage. By enabling mortgage insurance premium payments to be deducted, NAHB said in its letter, "homeownership is made more affordable for thousands of families who would now be able to buy a home without having to resort to more costly subprime or predatory alternatives." The current deduction, which is set to expire on Dec. 31, would be extended through 2014 under the House bill. A similar bill addressing the tax consequences of mortgage debt forgiveness, S. 1394, is 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 Greg Brown at NAHB or call him at 800-368-5242 x8421. Mortgage Interest Tax Deduction Limit on ‘Big’ Homes OpposedNAHB has come out in strong opposition to a recent proposal by Rep. John Dingell (D-Mich.) to eliminate or curtail the mortgage interest deduction for a significant number of home owners based upon the size of their property. Under the proposal, taxpayers owning homes larger than 3,000 square feet would lose at least a portion of their mortgage interest deduction, and those with residences larger than 4,200 square feet would lose the deduction entirely. The plan is ostensibly intended to fight “sprawl” and encourage energy efficiency, but the revenue raised through limiting the mortgage interest deduction would be used to expand the Earned Income Tax Credit. According to an analysis by NAHB, Dingell’s proposal would result in a massive tax increase of more than $13 billion annually for more than 6 million families, eroding the aggregate value of the mortgage interest deduction by more than 16%. All home owners would see downward pressure on home prices, which would be especially acute for the nearly 10 million households living in homes exceeding 3,000 square feet. The proposal fails as an effective method of achieving the laudable goal of energy conservation, NAHB said, because new housing is far more energy-efficient than older homes and a tax-related mandate for home size would only serve to slow the replacement of the older, less-energy efficient housing stock. New housing is also less “sprawling,” NAHB said, citing Census Bureau data showing a 10% decline in the average lot size of new homes from 1992 to 2006. Based on NAHB research, there is no direct relationship between the energy consumed by a home and its size. The behavior of the occupants and their use of appliances is a better indicator of energy consumption. NAHB supports increasing energy efficiency in home construction, specifically through incentives like the new home energy efficiency tax credit (Section 45L of the tax code), and it has led efforts to increase this tax incentive and make it permanent. Further, the energy portion of the comprehensive national green building standard NAHB and the International Code Council have been readying for publication in early 2008 will reduce energy usage in new homes, thereby reducing carbon emissions. To voice their concerns to Rep. Dingell over his tax proposal, NAHB members can click here. For more information on this issue, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421, or contact Elizabeth Odina, x8570. Flood Insurance Reform Adds Coverage for Wind DamageThe House on Sept. 27 approved NAHB-supported legislation that would reform the National Flood Insurance Program (NFIP), and, for the first time, include coverage for wind in addition to water damage. H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007, was approved by a vote of 263 to 146. It includes a provision championed by Rep. Gene Taylor (D-Miss.), who lost his home in Hurricane Katrina, that would expand the NFIP to provide property insurance coverage for wind-related damage to help residents who live in coastal areas. The day before the vote, NAHB sent a letter to every House member in support of the bill and urged lawmakers to approve a needed amendment to the legislation to expand the availability and affordability of property insurance in high hazard areas. The amendment, which was approved by the chamber, calls on Congress to direct the Federal Emergency Management Agency to use the wind provisions of the model building codes published by the International Code Council and prevents FEMA from defining or establishing windstorm zones and any additional federal land use controls. These provisions were also included as part of a resolution approved by the NAHB Board of Directors in Seattle last month that supports the expansion of the NFIP to include wind damage. NAHB is also urging Congress to limit the amount of the program's fiscal exposure to ensure its financial sustainability and to require premiums for the new multiple-peril coverage to be risk-based and actuarially sound. Of note to home builders, the bill does not expand the Special Flood Hazard Area to encompass the 500-year floodplain or include mandatory purchase requirements for properties sited behind flood protection structures. NAHB defeated several attempts to include these provisions in previous Congresses and neither is included in H.R. 3121. The legislation would also:
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 Scott Meyer at NAHB, or call him at 800-368-5242 x8144. Housing Affordability Issue Prompts City Council Run in Albuquerque
Currently, Martinez resides in the Vista Del Norte neighborhood in the North Valley, and serves on such entities as ARCA, the City of Albuquerque Affordable Housing Subcommittee and the city's Green Ribbon Task Force, which promotes the Albuquerque Green initiative. Her experience at the home builders association has proved to be an invaluable asset in understanding and being an advocate on one the city’s top issues — housing affordability. “In my tenure at CNMHBA I have learned the importance of carefully reviewing local legislation to help protect housing affordability for all home buyers,” Martinez says. “Unfortunately, this is not something the current council considers in Albuquerque and has played a big part in my throwing my hat in for city councilor. It’s time our local governing body stops being so divisive and exclusionary to the building and business community and works collaboratively with the people that possess the resources and expertise to help our city grow the right way.” Martinez graduated summa cum laude from Richmond College, the American International University in London, with a BA in international relations. Her interest in international relations stems from a childhood spent in Saudi Arabia. Martinez assumed her position as government affairs liaison with the HBA of CNM in February 2006. She manages government affairs and community education in an effort to maintain a more proactive role for the association within the regional governments and the surrounding communities. Oct. 2 is election day. For more information about the campaign, click here. Mortgage Finance Turmoil Hits August New Home SalesHit by turmoil in the mortgage finance system, sales of new single-family homes slipped 8.3% in August to a seasonally adjusted annual rate of 795,000 units, 21.2% under the pace of a year earlier, the U.S. Commerce Department reported on Sept. 27. “As our surveys have been showing, the credit crunch continues to take a heavy toll on consumers and builders alike,” said NAHB President Brian Catalde. “The August report shows that the supply-demand imbalance in the single-family housing market still is quite serious, and the imbalance clearly is putting downward pressure on home prices,” said NAHB Chief Economist David Seiders. “NAHB’s forecast shows a trough for home sales in the early part of 2008, assuming that the Fed keeps overall employment and income growth going and that order is restored to key parts of the housing finance system.” “We also expect builders to strengthen price and non-price incentives to bolster sales and limit cancellations,” Seiders said. The median price of new homes sold in August was $225,700, 7.5% below a year earlier, the Commerce Department reported. The inventory of new homes for sale edged down 1.5% to 529,000 in August as builders slowed construction and concentrated on selling off their inventory. But the equivalent months’ supply at the slower August sales pace increased to 8.2 months, up from 7.6 months in July. Completed homes for sale comprised 34% of the inventory, while units still under construction represented almost 50% and permitted but not yet started for-sale units were 16%. The median length of time that completed homes remained on the market was 5.9 months in August, down slightly from 6.0 months in July. Regionally, new-home sales in August were up 42.3% in the Northeast and 20.5% in the Midwest. Sales were down by 14.7% in the South and 20.8% in the West. All four regions reported a far slower sales pace than a year earlier. For more housing statistical information, click here (housingeconomics.com). 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. Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. 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. California Slump Leading to Thin Supply of New HousingHousing starts in California declined further in August as builders continued to work down their existing inventories, the California Building Industry Association (CBIA) reported last week, and once the industry does begin to recovery, for-sale housing will likely be in short supply. The state’s total housing starts, as measured by building permits issued, were down 19% in August compared to the same month a year earlier, according to data supplied by the Construction Industry Research Board. The decline occurred entirely in single-family homes, with the 5,220 permits pulled showing a 34.6% decline from August 2006, while the 5,605 permits obtained for condos and apartments represented a 4% increase from a year earlier and an almost 60% surge from the prior month. The jump in multifamily production was due to large projects getting underway in Southern California — in Orange County, Los Angeles County and the Inland Empire. During the first eight months of the year, production began on 84,492 homes and apartments in the state, down 30% from the same period of last year. Single-family housing permits for the year are down 35% and multifamily starts are down 19%. Nearly half of the decline in single-family home production this year has occurred in the Riverside-San Bernardino market, noted CBIA Chief Economist Alan Nevin, while production in other parts of the state was down just over 25%. Nevin said that the number of completed unsold homes in the state has continued to decline because builders are holding off construction on new homes until they are confident the homes will sell. Builders have learned that it’s far less expensive to pay the interest on a lot than the interest on a completed unsold home, he noted, and the decision to delay production will allow home builders to remain more economically solvent until the market recovers. California’s downturn in the multifamily sector this year, Nevin said, has been concentrated in vertical construction as both builders and lenders have withdrawn from high-density condo projects, leaving apartment rentals to make up the bulk of the multifamily production. “It is unfortunate that higher density condominium construction has almost stopped,” he said, “because once the market turns around, it generally still takes two to three years to complete a new project. Therefore, there will inevitably be a supply/demand imbalance.” CBIA President and CEO Robert Rivinius added that home builders need to continue building homes to avoid an imbalance between supply and demand that will make homes less affordable in the future, especially for entry-level home buyers. “With a steadily growing population, we need to make sure that we are meeting the demand and supplying enough homes, which ultimately helps affordability,” Rivinius said. “Ever-growing fees and increasing restrictions will only make it more difficult for first-time buyers to afford a home,” he said. “We still need to enact new policies and legislation that will ease regulations on new home construction and stimulate production.” In the meantime, Rivinius said, good deals are available for buyers as builders continue to sell off existing inventory. 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. Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar. For assistance, call the NAHB Member Service Center at 800-368-5242. Eye on the Economy: Fed Cuts No Quick Fix for Mortgage MarketEconomic growth slowed down in the third quarter, an even weaker performance is likely in the final quarter of the year and the probability that the U.S. economy will slip into recession during the next several quarters has risen during the past month. We still believe that recession will be averted, however, and we’re looking for decent economic growth in both 2008 and 2009. The evolving slowdown in GDP growth now is showing up in the U.S. labor market. Payroll employment growth actually contracted slightly in August and the trend of job growth definitely has weakened since the spring of this year. We expect positive but relatively slow growth in employment during the next few quarters and the unemployment rate should gravitate upward in the near term. Firming GDP growth should improve labor markets beyond mid-2008. Financial Market Turbulence Forces the Fed’s Hand Current weakness in the economy primarily reflects the deepening housing market correction. And financial market turbulence touched off by glaring credit quality problems in the subprime mortgage market has engulfed not only residential mortgage markets but also other major parts of U.S. and international financial systems. The global flight to quality has forced down Treasury rates, constricted credit availability in some markets and widened quality spreads in virtually all private credit markets. Financial market turbulence in August and early September prompted a series of moves by the Federal Reserve to restore order to money markets and protect the real economy. On Sept. 18, the Fed enacted half-point cuts in both the federal funds rate and the discount rate, citing the recent tightening of credit conditions that “has the potential to intensify the housing correction and to restrain economic growth more generally.” Fed Rate Cuts Are No Quick Fix for the Mortgage Market The Sept. 18 rate cuts by the Fed have had some positive effects in financial markets — primarily by stimulating the stock market and relieving liquidity problems in short-term credit markets. Although the Federal Open Market Committee (FOMC) statement made no commitment regarding the future course of monetary policy, we expect additional quarter-point cuts at each of the two remaining FOMC meetings in 2007. Unfortunately, rate cuts by the Fed cannot immediately stabilize mortgage and housing markets, a point recently stressed by Federal Reserve Chairman Ben Bernanke in an address entitled, “Housing, Housing Finance and Monetary Policy.” The financial markets still are focused heavily on credit quality, and only those components of mortgage markets having explicit or implied government backing are functioning well. The subprime and Alt-A adjustable-rate mortgage (ARM) markets have shrunken dramatically, the prime jumbo market has not yet thawed out and yield spreads have widened out even in the prime conventional conforming market — loan sizes up to $417,000. The Housing Downswing Still Is Underway Recent NAHB surveys of single-family home builders show serious adverse impacts on gross and net home sales from the abrupt tightening of mortgage lending conditions that occurred in August and extended into September. Our proprietary survey of large companies showed serious setbacks in new orders and serious increases in sales cancellations in August. Furthermore, our broad-based Housing Market Index fell to a record low in early September as builder confidence continued to contract. Not surprisingly, single-family housing starts and permit issuance both contracted sharply in August — by 7% and 8%, respectively. Furthermore, sales of existing homes continued to decline, particularly in the condo market, and inventories of unsold homes continued to rise. In addition, a serious supply-demand imbalance is putting downward pressure on house prices in many parts of the country, according to the S&P/Case-Shiller® measure through July. We’re Still Projecting Upturns in 2008 There’s clearly downward momentum in housing markets at this time. Furthermore, difficult problems in mortgage markets, along with growing evidence of eroding house values in more and more markets, have combined to send many prospective home buyers to the sidelines — with a hefty shove from the media. And when housing demand revives, there still will be large overhangs of vacant housing units in the markets for both new and existing homes. These negatives do not mean that housing will continue downward forever. As long as the overall economy continues to expand (with the Fed’s help), throwing off decent growth in employment and household income, ongoing population growth will generate decent growth in the number of households. That’s the key. In our forecast, this dynamic process is supported by favorable financing conditions in FHA/VA as well as in prime conventional conforming mortgage markets, and we’re assuming that the jumbo mortgage market regains footing before long. If these conditions come together, and if builders focus heavily on incentives to move inventory, it’s reasonable to expect home sales to stabilize by early next year. History suggests that housing starts should turn up within a quarter or two of the turn in sales and residential fixed investment should follow closely behind starts — relieving the serious drag on GDP that’s been exerted by contracting housing production since early last year. We currently expect RFI growth to turn positive in the final quarter of 2008. 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. 26 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.
Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. 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. NAHB's HousingEconomics.com Has New Look, New FeaturesHousingEconomics.com, the online subscription source for the latest housing data and information on trends, in-depth analysis from NAHB’s economics department and key events that shape the industry and the economy, has been redesigned with a new look and features that intuitively respond to users’ needs for housing and related data. This redesign organizes information in quickly accessible tables and packages. New features include:
To subscribe, click here. For more information, visit Housing Economics.com. Attend the Fall Construction Forecast Conference on Oct. 24 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. Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar. For assistance, call the NAHB Member Service Center at 800-368-5242 Useful Links to Monitor Economic and Housing TrendsThe following are links to useful information from government agencies and NAHB that will enable you to monitor the housing market. To access the latest information available, simply click the links.
Attend the Fall Construction Forecast Conference on Oct. 24 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.
Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. 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: Prime End Cuts to Extend Life of Exterior Trim
If they are primed and caulked together, end-grain splices will last over the long haul. Without priming, end-grain cuts will quickly soak up moisture and begin to rot. The problem with priming them is that end-grain cuts can’t be painted until they are cut and fitted by the carpenters. Since priming boards can be a potential headache for carpenters, I devised a simple system to make the process go as smoothly as possible:
The carpenters billed me for only a couple of extra hours of work because it barely made a dent in their speed. — Byron Papa, Durham, N.C. Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Christina Glennon at Fine Homebuilding. BuilderBooks.com Offers More Than 250 Books That Help You Build Your Business BuilderBooks.com is your source for training and education products for the building industry. The official bookstore for NAHB, BuilderBooks.com offers award-winning publications, software, brochures and more available in both English and Spanish. To view these publications online, click here, or call 800-223-2665. Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. 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. Five Builders Win National Quality AwardsFive Silver winners of the 2008 National Housing Quality (NHQ) Awards were announced last week by the NAHB Research Center and Reed Business Information, publishers of Professional Builder and Professional Remodeler magazines. Presented at Professional Builder’s Benchmark Conference, this year’s winners are:
Now in their 15th year, the awards are open to all U.S. residential construction and independent contractor companies. Entries are judged by a panel of experts who evaluate the importance of quality in the company’s construction, strategic planning, leadership and performance management, trade relationships, customer satisfaction, human resources and business results. In order to win the award, candidates have to implement and document sophisticated operating processes to improve performance. The award “is the hardest award to win in home building,” said Paul Deffenbaugh, editorial director of Professional Builder. “It requires dedication and purpose throughout a home building company, and only the best can achieve this distinction.” As a result of going through the process, NHQ Award winners “significantly improve the performance of their companies,” he said, “making them more consistent and more reliable. Home buyers have found these companies execute the best quality homes and deliver the highest quality satisfaction.” The application process for the awards is designed to provide participants with beneficial insights into how their companies perform and feedback from the judges, many of whom are past award winners. NHQ Award winners are featured in Professional Builder articles that highlight their quality management practices as models for the housing industry. Award winners also participate in an educational session at the Benchmark Conference focused on best practices in business-critical areas, such as customer satisfaction, leadership, human resources, strategic planning, performance management, construction quality, supplier partnerships and business results. For more information on the National Housing Quality Program, click here (nahbrc.org/quality), or e-mail quality@nahbrc.org.
Set Yourself Apart With CGB Designation Join the ranks of the nation’s top building industry professionals with the Certified Graduate Builder (CGB) designation. The “Builder Assessment Review” (BAR) is your first step towards obtaining the CGB. This comprehensive assessment measures your expertise in the four key areas of the building industry: building technology, business and finance, project management and sales and marketing. Your results will show the areas where your knowledge is strongest and weakest and will help determine the courses required for you to obtain your CGB. To learn where the next BAR will be held, visit NAHB’s education listings, or call the Professional Designation Help Line at 800-368-5242 x8154. Increase Efficiency With ChecklistsBy Jennifer Elder, Tiffany Construction and Development Corp. With pennies hard to come by these days, every step you take to improve your productivity can add dollars to your bottom line. A simple way to increase your efficiency is to use checklists. Checklists ensure that tasks get done the same way every time, in the shortest amount of time possible, and with a minimum of errors. They can help keep different departments on the same page. Checklists can even be used as a training tool for new employees. The benefits of completeness, consistency and timeliness can be felt immediately. When a Task Becomes Second Nature, We Can Get Complacent, Forgetful It is easy to fall into the trap of saying, “I’m an expert. I don’t need a list to remind me what to do.” Unfortunately, that’s when you need a checklist most. When a task becomes second nature to us, we can get complacent and forgetful. How many times have you gone to the grocery store without a list and forgotten the most important item you needed? Missing one thing won’t kill you, but it takes a lot more time when you have to go back to the store a second time. A checklist should not be viewed as a crutch. It should be considered a useful tool that improves efficiency. Production Schedule Is One Type of Checklist Many builders already use one form of a checklist — a production schedule. A production schedule ensures that all steps are completed in the right order and in a timely manner. And it has the added benefit of letting everyone know where you are in the job. If you see the benefits of using this form of checklist, why not apply it to other areas of your business? Sample Checklist for Payment Processing Checklists can enhance both simple and complicated jobs. In your accounting department, you can use a checklist for processing accounts payable. It might look like this:
On the more complicated side, you can use a checklist for starting a new project. It might begin like this:
To begin using checklists in your business, start with a complex task, or one for which steps are frequently forgotten. Ask those familiar with the task to write down the steps for doing it. Have several people review the list — one familiar with the task and one who is not. The person familiar with the task will help fill in missing steps. The person unfamiliar with the task will help clarify steps. If multiple departments are involved, have each department create their portion of the checklist. Then get everyone in the same room to consolidate into one master list. Organize Lists to Suit Specific Tasks A checklist should be organized to suit the task, often in chronological order. A production schedule wouldn’t make sense if it was in alphabetical order. The new project checklist might make more sense if it were divided up by the departments involved; for example, estimating, finance and marketing. A checklist should be all-encompassing, whether or not you perform each step every time. It is easier to cross off an unneeded step than to try to remember to add it. Jennifer Elder is a CPA, certified management accountant (CMA) and the chief financial officer for Tiffany Construction and Development Corp. in Melbourne, Fla. For more information, e-mail Elder, or call her at 321-259-5001 x110. 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. Home Builder Contracts and Management Forms Available at BuilderBooks.com “Home Builder Contracts & Construction Management Forms, 2nd Edition,” available through BuilderBooks.com, provides help for developing contracts with the trades. The publication includes a CD of 95 of the most useful business forms and contracts — including trade contractor specifications and checklists, sales and marketing forms, contacts and agreements and more — that can be easily adapted for your business. To view or purchase this publication online, click here, or call 800-223-2665. Retirees Heading South to Florida, Texas, GeorgiaFlorida, Texas and Georgia top the list of migration destinations to Southern states for people 65 and older, according to a study by National Active Retirement Association (NARA), a North Carolina-based organization that provides information about active adult marketing, building, demographics, retirees as economic development, community planning and related 50+ topics. Florida, with 68,000 new transplants in 2005, had 2.5 times the number as second-place Texas, according to the study which was conducted for NARA by Phoenix-based Thomas, Warren + Associates. Within the Southern states, Florida had the largest 65+ population with 2.89 million residents in 2005 — second in the county to California’s 3.7 million — with a 65+ average household income of $44,485, according to the study. Texas followed with a 65+ population of 2.15 million with an average household income of $43,535. Virginia, with a 65+ population of 823,048, had the highest average 65+ household income in the South with $49,531. Florida’s 65+ residents brought $1.9 billion in income to the Sunshine State, the highest in the country. This was followed by Arizona, Texas and California with total 65+ incomes of $746 million, $732 million and $645 million, respectively. California had the highest average 65+ household income in the country with $55,673. California retirees brought $645 million in income to the state. Connecticut followed with a household income of $51,771. Those 65+ residents had a total income of $119 million. New Jersey had the third highest 65+ household income in the country with $50,673. They had a total income of $302 million. For a complete list of Southern in-migration rankings, click here. For a list of the country’s 65+ in-migration and incomes, click here. Trends Discussed at NARA Conference These and other retirement trends will be discussed at the NARA Conference in Atlanta, on Oct. 17-20. For more information, visit www.retirementlivingnews.com. The new Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving the rapidly burgeoning 50+ market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to serving the customer. Find upcoming CAASH classes by clicking here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154 or e-mail CAASHinfo@nahb.com.
50+ Buyers Seeking Simpler Lifestyle, Maintenance-Free Living50+ buyers are looking for a simpler lifestyle in maintenance-free communities targeted to their age group, according to Jeff Smedley, vice president and brand manager for Mature Living Choices, a California-based active adult housing listing service. Smedley will share his company’s latest research on 50+ buyers at the 2007 Northeast Fall Symposium, “A Season of Change: Succeeding in Today’s Market,” at the Sheraton Harborside Portsmouth Hotel and Conference Center in New Hampshire on Oct. 17-18. The conference, hosted by the New England 50+ Housing Council, will focus on the active adult housing market. In another session, Jane Meagher, president of Success Strategies Design Studio, one of the nation's leading design studio strategy companies, will show attendees how to use design upgrades to increase profits, improve customer satisfaction and reduce costly mistakes. Other sessions will teach attendees how to:
For more information, call the New England 50+ Housing Council at 617-773-1300, visit www.50plusne.com or fill out the registration form. The New England 50+ Housing Council is one of the 18 local, regional and state 50+ Housing Councils across the country. This six-state regional council, which encompasses Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, seeks to enhance the capabilities of members as well as to encourage affordable, high quality and professionally-managed housing specifically designed to meet the needs of the region’s rapidly growing 50+ population.
Find Out What the 55+ Market Wants “Boomers on the Horizon: Housing Preferences of the 55+ Market,” available through BuilderBooks.com, can help you better build and market homes to this age group. Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences. To view or purchase this publication online, click here, or call 800-223-2665.
The new Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving the rapidly burgeoning 50+ market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to serving the customer. Find upcoming CAASH classes here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154, or e-mail CAASHinfo@nahb.com. Briefs Sought to Have Supreme Court Hear Fair Housing CaseNAHB’s legal department is encouraging multifamily developers to work with their attorneys to submit an amicus brief in support of a petition by the association last month to have the U.S. Supreme Court hear a case on the Fair Housing Accessibility Act. NAHB would like to see the court resolve questions on the law’s statute of limitations and the legal standing of groups receiving HUD enforcement grants to sue for violations. The case involves a suit by a local fair housing interest group against NAHB member WKB Associates of Louisville, Ky., alleging that several of the developer’s multifamily projects did not comply with Fair Housing Act requirements for design and construction. The group received enforcement grants from HUD and hired testers to identify potential violations. Last year, the Sixth Circuit found in favor of the group, ruling that it has standing to sue. The court also was liberal in its interpretation of the statute of limitations, holding that as long as one unit in a development is sold within the appropriate period of time, all the units can be targeted in the lawsuit, no matter when they were sold. Other circuit courts hearing similar cases have reached different conclusions in their decisions. For example, a case involving the statute of limitations for fair housing violations in multifamily developments in Nevada and Idaho was just decided in the developer’s favor. According to the legal experts at NAHB, the Supreme Court is more likely to hear a case that is accompanied by a large number of friend-of-the-court briefs supporting the petition. Builders who want to participate in this effort need to act quickly, before a 30-day window closes. For more information, e-mail Tom Ward at NAHB, or call him at 800-368-5242 x8230. Entries Open for Pillars Design, Marketing Awards
NAHB Multifamily has announced a call for entries for the 2008 Pillars of the Industry Awards competition honoring excellence in apartment and condominium design and development, 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. Want to Know How to Advance Your Career? Ask a RAM The Registered in Apartment Management (RAM) professional designation is the oldest professional affiliation of its kind in the property management field. How can this designation help you as an apartment or condominium property manager? Find out directly from a RAM about course content, preparation for the exam or how the designation has propelled their career. RAM graduates have volunteered to answer your questions, provide guidance and help you navigate the RAM program. Visit the Ask a RAM page to find out more. Business Management Vital Addition to CAPS KnowledgeCertified Aging-in-Place Specialist (CAPS) candidates often question the business management requirement for the designation. I must confess that I, too, was skeptical of the need to take the business management course when I decided to get my CAPS designation. But, even after years of reading about and taking seminars on business management, as well as running my own company, I can honestly say I found this course well-organized and valuable. Here’s why: Reason #1 — Improve Communications, Build Trust An important goal of the CAPS program is to improve communications among all professionals in the aging-in-place network. In the field, social and health professionals are encouraged to work together with contractors and designers. The business management course teaches how this can be done smoothly. I remember many queries by a (skeptical) social worker or therapist about a cost estimate I presented. People who are not in business or construction sometimes find it difficult to grasp all the costs involved in home modifications. This course explains that my business needs to be profitable so I can be responsible to my family, my employees and my warranties. In this way the business management course helps develop trust among team members. Reason # 2 — Learn to Make Realistic Decisions People often enter business for the freedom to serve clients they care about under conditions they control — contractors are at the head of this list. And aging in place gives health and social professionals not currently in businesses an opportunity to strike out on their own. Too often these types of businesses are started with little understanding of the true costs involved. The entrepreneurs who start these businesses often burn out easily or lose too much of their savings. Then, they cannot provide the type of care they intended to the population they serve. The business management course will help you make realistic decisions when starting and running your business. Reason #3 — Keep Your Business Practices in Order This course can be a valuable refresher for experienced design and contracting professionals heading into aging in place. Aging in place is too new and too complex to be treated cavalierly. The work often requires more client contact per construction dollar than other projects. Even experienced contractors can find their hard-earned experience moved to the back burner in the face of all the excitement of starting a new venture. Most of us in business for awhile learned the hard way not to let future job Peter pay for current job Paul. An organized reminder of that pitfall is a good idea. The business management course is a great way to be sure that your business practices are in good order. I think everyone interested in CAPS gets good value from taking the NAHB business management class. Take advantage of what the class offers. Learn or relearn good business basics as we all work together to take CAPS to the next level. Louis Tenenbaum, CAPS, is president of Louis Tenenbaum, LLC, a Potomac, Md.-based consulting and training firm that specializes in environmental modifications, aging in place and universal design. For more information, e-mail Tenenbaum, call him at 301-983-0131, or visit his Web site at www.louistenenbaum.com. Updated CAPS Courses Debut in Las Vegas 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. A third course offered at the Remodeling Show, “Project Management,” has also been revised and teaches remodelers how to improve their project management processes. Register for the courses when registering for The Remodeling Show. NAHB member fees are $185. Fees for non-members are $235, unless otherwise noted. All pre- and post-conference courses will be capped at attendance of 50 registrants. Remodelers Gala at Hard Rock Hotel in Las Vegas, Oct. 11
During the gala, winners of the council’s CADRE awards for achievements by local councils, Remodeler of the Year, Remodelers Hall of Fame and Homes for Life honoring excellence in aging-in-place will be named. The evening will include a cocktail reception followed by the awards presentation, dinner and dancing. Black-tie is optional but requested. For more information or to purchase tickets, click here, or e-mail remodel@nahb.com.
Register for SHOWCASE 2007, Coming Oct. 28-31How 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.
A Wake-Up Call for New Home Salespeople in Today’s MarketWe’ve been in such a hot market for so many years that some salespeople have become rusty. All they’ve had to do to make fancy incomes is show and write. As markets soften, this doesn’t work anymore. Let’s all agree that builders deserve to have persuasive salespeople representing them. Builders pour tons of work, know-how and sweat into getting their new homes built — not to mention the financial risks they endure. To pay proper respect for all of that, salespeople must be persuasive advocates for the new homes that they are entrusted to sell. That said, here’s a wake-up call. If all you are going to do is show homes and write contracts, you can be replaced in a week’s time with good-looking, well-spoken people who will be happy to do what you’re doing for minimum wage. With a bit of training, they may even show and write better than you because they’ll be so eager to have the opportunity. To deserve the big bucks most new home salespeople hope for, you’ve got to bring something more to the party than showing and writing. So, what is it that you do to deserve what you make? Please don’t tell me you earn your pay by helping to get deals you’ve already written make it to the closing table. I know it’s customary for salespeople to do all that busy work, but it makes little sense. Many builders would be far better off paying delivery specialists to do that job and free up their salespeople to do what only good salespeople can do — produce signed purchase contracts with deposit checks attached. If we were able to get your builder to convert to the delivery specialist idea, what would you do with your newfound free time? Hopefully, you would work more thoroughly and skillfully with more customers — and persuade more of them to choose one of your new homes. With any luck at all, your company’s pace of sales absorption would increase more than enough to pay for the cost of using delivery specialists — and you’d have happier home owners to boot. “Ah ha,” you say. “If I had more time, I would work on becoming more persuasive, and I know just how to do it. I’ll get out all my sales training books and learn how to become a killer closer.” I certainly am a supporter of closing strong. You might even call me a “closing strong coach.” But, I’m here to tell you, there is much more to being persuasive than closing strong. It has always amazed me that much of the hyperbole about closing involves metaphors with words like “killing.” It’s as though our job is to mow down our prospects — overwhelming them into buying by the sheer force of our ruthlessness. What’s up with that? Thank goodness not many of us really do that. I know, because I get to analyze lots of mystery shopping tapes. Typical shoppers actually almost beg to be sold, and yet, many salespeople don’t get it. That’s truly awful. But, if we really used some of the entrapment closes we hear about, it would be worse. New homes salespeople would be featured on "60 Minutes" as abusers of the public. Hear this now and believe it, friends. The sales process is not about doing something to them for us. Persuasive selling is just the opposite. It’s about doing something to us for them. But exactly what is it we should do to ourselves for our prospects? Be Respectful First, we must be respectful of our customers — placing them at the top of our priority list for the work day. Receiving customers cheerfully when they arrive, asking thoughtful questions to draw out their needs and desires, listening attentively to their answers and knowing all there is to know about the homes we represent — these are what I call “Level One” persuasive selling skills. Know Everything You Need to Know About Selling — and More “Level Two” involves studying the body of knowledge that defines our profession and becoming proficient in a wide range of sales communication techniques. This includes understanding body language clues, knowing about behaviorally-based communication models, becoming aware of motivationally-based psychographic decision models and using the power of negotiation techniques. Putting It All Together You achieve “Level Three” salesmanship when you are able to integrate the many separate bodies of knowledge into a seamless whole. When you know — and you know you know — you can relax and wait for what comes your way. No matter how customers confront you, you’ll see it coming and handle it perfectly without having to worry a whit about what to do. That’s “Level Three.” A ‘Level Three’ Scenario Here’s an example of “Level Three” in action: Ted and Sally Johnson are in their late 30s. They are both doing well in their jobs — Ted is a financial analyst, Sally is an advertising executive — and they have two children, Martha, nine, and Ted, Jr., 13. They have come to our move-up gated community and are admiring our Amherst model, an impressive home with all the latest features. With Ted’s bonus, they can just barely afford it, but they can. Still, they are hanging back. Standing in the model with the Johnsons, Rhonda Peterson, our salesperson, doesn’t say anything. She just opens her presentation notebook to a pleasant-looking photo and the Johnsons stroll over to take a look. It’s a photo looking down onto a warm, homey living room with cream-colored carpeting. To the far left is a nice brick fireplace with a small fire inside. A honey-and-white cocker spaniel is placidly sleeping on the hearth. In the center of the photo, two youngsters lying on their stomachs and propped up on their elbows are busy doing their homework. Their parents, sitting on upholstered chairs in the foreground, are looking over their children’s shoulders and ready to help. A pretty nice picture of family togetherness, isn’t it? Rhonda chose to show that photo to the Johnsons because she sensed the couple was conflicted about how their high-powered careers might possibly be shortchanging their children. She let the photo convey the thought to the Johnsons that, “If we owned this home, we would really devote quality time to Martha and Ted, Jr. in the evenings.” The close happened without a word being spoken. Salespeople who can operate at this level can also name their price. They are the best of the best because they have done their homework and have honed their skills. It’s a demanding path to follow, but also fantastically rewarding. Bill Webb, MIRM, is the president and founder of William N. Webb & Company, Inc. based in Amelia Island, Fla. and works with home builders and their marketing and sales staffs nationwide. He is a past president of the Institute of Residential Marketing (IRM) and author of IRM Course I and Course IV. In his book, “Sweet Success in New Home Sales," available at www.builderbooks.com, Webb shares more of his powerful, proven techniques for those who are serious about selling new homes and delivering what customers want. Master the craft of successful selling with the Certified New Home Sales Professional (CSP) course. In this professional-level course, you’ll gain a broad understanding of the home building business and discuss consumer psychology, plus learn the advanced techniques used by real estate veterans for greeting, closing and overcoming objections. Other topics include construction process overview, financial and legal aspects of new home sales and the art of customer service. Find upcoming CSP courses by clicking here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154 or e-mail CSPinfo@nahb.com. Get Powerful Technique for Selling More Homes Bill Webb, MIRM, in “Sweet Success in New Home Sales,” available through BuilderBooks.com, provides 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.
Builders See Hispanics as Key to Houston Market's FutureWith former Secretary of Housing and Urban Development Henry Cisneros’ award-winning book, “Casa y Comunidad,” as a focal point, members of the home building community in Houston recently assembled to discuss the “critical importance” of the Hispanic population to the future of that market’s housing industry. Led by Dr. Oscar Gonzales, managing partner of the Gonzales Group, with Cisneros in attendance via teleconference, participants gathered for three open discussions of the distinct cultural differences of Hispanics and the housing trends, designs and services most likely to resonate with them. “Hispanics will drive the new home market for years to come,” Cisneros says in his book, noting that not all of this growth will be tied to immigration. “Latino families tend to be younger and larger; they also are very hard working,” he writes. “The Latino population lags the rest of the country in terms of homeownership, which is 20% under the national homeownership rate and 26% below the non-Hispanic white homeownership rate. Hispanics see homeownership as the typical path to the middle class.” Everything and the Kitchen Sink Published by NAHB, the book notes that homes designed for Latino families should have more bedrooms to accommodate larger families and floor plans suited to the needs of more than one generation living under the same roof, with the kitchen of particular importance. In addition to being centrally located and large, kitchens geared to the Hispanic market should include deep sinks, where dishes can stand longer, and a range with an open gas flame, which is necessary for preparing traditional recipes, Cisneros says. An extra three-quarters bathroom — including a sink, shower and toilet, but no tub – will also be sought by Hispanic buyers, he says. Also, “homes should have a green element, because Hispanic families like a garden where they can grow some of their own vegetables. That means extending a water line to the outside for irrigation and a gas line for an outdoor grill.” Young and Native-Born Reviewing current Hispanic demographics and growth trends, Gonzales said that a majority of the country’s Latinos are native-born U.S. citizens. Almost half are under 25, the age at which the prime home-buying years begin. Looking at prospective home buyers in the Hispanic market, Gonzales said that 11% are in the process of buying a home, 44% are planning to buy in one to five years and 29% aspire to become home owners, but not in the next five years. Third-generation Hispanics — those who are fully assimilated and fluent, at various levels, in English — are easily swayed by their parents and grandparents. “Homes should be functional but inspirational, as today’s shoppers fit the desired ‘urbanism trend’ of compact neighborhoods,” Gonzales said. Looking at 2010 and Beyond For builders and others who want to do business in Houston’s Hispanic market, Gonzales emphasized the importance of staying connected with people in the know and joining local and national Hispanic association groups. Housing industry professionals participating in the discussions said that their companies have been moving aggressively to position themselves to sell to the Hispanic market. Bill Fanning, vice president of sales and marketing for Beazer Homes, said that Beazer is already building some of the Hispanic-oriented features highlighted in the Cisneros book. “One of the things that became clear to me was how large the Latino market really is and what significant effects and influences this group will have on the future market,” said Fanning. “As we look to 2010 and beyond, I don’t think you will be able to build homes in Houston and not consider the fastest growing minority as a significant contributor to the market. I know Beazer Homes will be.” Susan Baldwin, vice president of marketing for Royce Builders, said that her company’s strategic growth model includes gaining market share among Houston’s large Hispanic population. “You hear a lot about the ‘emerging market,’” she said, “but it’s actually already here, and Royce is poised to meet their needs in the housing market.” Online in Three Languages Houston’s Harris County, where Hispanics outnumber Caucasians, has been recognized as one of the country’s friendliest markets for Hispanics because of its job and housing opportunities. It is also prime territory for CasaNuevaGuide.com, the first online new home trilingual real estate guide to inspire, motivate and teach shoppers how to purchase a home. Written in English, Spanish and Vietnamese, the site promotes the benefits of homeownership, explains financing, offers helpful resources and assistance programs and provides a full listing of all new home builders and communities in Texas. “We have made an effort to change conventional views and perceptions about the Hispanic market and influence how dynamic and unique this group is to our population,” said Lisa Zapalac, Casa Nueva’s co-founder and vice president for public affairs. “We work with our builder and developer partners to help them communicate the strategic elements of their business from the vision of the marketer to the Hispanic consumer.” “We are in the community, malls and local venues and visible in real estate associations, keeping our finger on the pulse of the market and embracing the technology to bring information directly to local and international buyers interested in real estate,” said Anita Sparks Bohn, the company’s co-founder and president. “Our customers are very important to us, so we always analyze and create online and offline segmentation approaches for reaching the Hispanic market for our advertisers,” said Sparks-Bohn. “We also want the shopping experience to be complete and educational for our online site visitors, so it’s vital to us that they understand the positioning and marketing statements of our customers and are pleased about their efforts in reaching out to them by demonstrating their desire to have them as a future home buyer.” Working with the Greater Houston Builders Association, Olga Garza, vice president of multicultural marketing, and Suzanne Schakett, vice president of builder relations, for Countrywide Home Loans, developed the Cisneros program in an effort to close the gap between Houston’s building industry and the Hispanic population. Are You Prepared for the New Emerging Market? "Casa y Comunidad: Latino Home and Neighborhood Design,” available through BuilderBooks.com, takes the first-ever look at the growing and increasingly prosperous U.S. Latino community and its housing needs and helps all segments of the housing industry to understand and prepare for this emerging market. To view or purchase this publication online, click here, or call 800-223-2665. Late Entries for The Nationals Due Friday, Oct. 12Late entries are now being accepted for The Nationals — the National Sales and Marketing awards honoring the best in architectural achievement, product and community design, advertising and promotion, interior merchandising, Web site design and more. All entries, including fees and exhibits, are due Friday, Oct. 12. The regular entry period ended Sept. 28. A $50 late fee per entry will be charged. Sponsored by NAHB’s National Sales and Marketing Council, The Nationals recognizes innovation and excellence in 59 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. The awards are open to individual sales and marketing professionals, home builders, associates and sales and marketing councils. 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.
Face Market Challenges With IRM Confidence Institute of Residential Marketing (IRM) classes help new home sales and marketing professionals meet market challenges. Courses include” The Challenge of New Home Sales Management,” “Understanding Housing Markets and Consumers,” “Marketing Strategies, Plans and Budgets” and more. The courses provide the credits needed to earn the MIRM designation, the top-level achievement for professionals in new home marketing. Find upcoming IRM classes here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154, or e-mail designations@nahb.com. Register for Custom Builder Show in Naples, Fla., Oct. 26-28Register for the 2007 Custom Builder Symposium, NAHB's premier educational and networking event for custom builders. The symposium will be held Oct. 26-28 at the Naples Grande Resort & Club in Naples, Fla. Discover Hidden Treasures This year's program, "Discover Hidden Treasures," is filled with hidden treasures and opportunities that will enable participants to improve their businesses. Tours, Golf, Education and More The symposium will include:
To Register Online registration is now open. For more information and to register, go to www.nahb.org/custom.
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