Nation's Building News Online: December 17, 2007Print All Articles Text Version |
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Fed and Senate Take Steps to End Mortgage Credit CrunchAs the Federal Reserve Board continued last week to reduce interest rates and alleviate stress in the money markets, the Senate made up for several weeks of inaction on key legislative priorities for NAHB and passed bills that would modernize the Federal Housing Administration and eliminate taxes on forgiven mortgage debt. During the previous week, the White House announced an ambitious effort to significantly reduce foreclosures with a five-year interest rate freeze on certain subprime mortgages, another important provision that home builders are hoping will help restore confidence in the housing market and lead to a prolonged period of recovery beginning in 2008. At its meeting in Seattle in September, the NAHB Board of Directors laid out a detailed strategy to correct the current mortgage credit crunch and restore the health of the housing industry, and most of the individual provisions in that plan have been falling into place in rapid succession recently. A prime impetus among leaders in Washington has been the looming specter of an economic recession should the housing downturn take a further toll on the financial sector and lead to an erosion in consumer spending. NAHB President Brian Catlade called the Fed’s Dec. 11 decision to cut short-term interest rates by 25 basis points, the third rate reduction since September, a reassuring sign that “it is determined to cut interest rates as needed in order to keep the economy moving forward, boost consumer confidence and increase liquidity in the credit markets.” Catalde added that the Fed should be prepared to act again quickly in the event that further reductions in interest rates become necessary to stabilize financial markets and reassure investors. Recent efforts by the Administration, he noted, show that the government realizes the importance of housing to the nation’s economy and the need to get housing back on track. Calling on the Senate Catalde also called on the Senate to move quickly to approve House-passed initiatives “to modernize the FHA, provide tax debt forgiveness when the terms of a mortgage are renegotiated and a portion of the loan is forgiven, strengthen the regulatory oversight of the GSEs and allow Fannie Mae and Freddie Mac to purchase mortgages in high-cost markets.” By the end of the week, the first two of those congressional objectives had been accomplished. On Dec. 14, the Senate by an overwhelming 93 to 1 margin approved S. 2338, the FHA Modernization Act of 2007, which would enable the FHA to respond to the needs of borrowers and play an important role in stabilizing the mortgage markets. “The measure would offer borrowers a safe and fair mortgage alternative to the volatile subprime market,” said Catalde. “We urge the House and Senate to move quickly to iron out differences between their bills and bring this legislation to the President’s desk before year-end.” Specifically, S. 2338 would:
Existing tax rules under Section 108 of the Internal Revenue Code impel many struggling home owners to seek foreclosure over restructuring their loan with lenders because forgiven mortgage debt is taxed as ordinary income. S. 1394, the Mortgage Cancellation Relief Act of 2007, would remove this tax burden on mortgage indebtedness, encourage market-based restructuring between lenders and home owners and discourage foreclosures, said Catalde. Sponsored by Sens. Debbie Stabenow (D-Mich.) and George Voinovich (R-Ohio), the bill would provide a temporary, three-year change to the tax code to eliminate taxes on forgiven mortgage debt. For example, to keep a struggling borrower with a generally solid credit history from losing their home, a bank could elect to reduce the amount of the loan by 20% — from $250,000 to $200,000. While substantial, the $50,000 reduction would still be considerably less than the 30% to 50% loss that would be likely if the home were repossessed. The outcome, obviously, would be better for the home owner, who otherwise would lose the property. Under current tax law, the $50,000 in forgiven mortgage debt is considered taxable income. “That’s a deal-killer for the home owner who is already fighting just to stay afloat. That’s why we need to change the law,” said Catalde. S. 1394 also includes an NAHB-supported provision that extends the deductibility of mortgage insurance for three more years. 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. Easing Money Market Strains On a more technical note, the Federal Reserve on Dec. 12 announced that it had established a plan to “address elevated pressures in short-term funding markets.” The Fed plan establishes a temporary Term Auction Facility (TAF) designed to inject liquidity into the U.S. banking system. The Fed also established reciprocal foreign exchange “swap” lines with the European Central Bank and the Swiss national bank in an effort to put downward pressure on interbank dollar rates in offshore markets, particularly in the LIBOR market. The TAF will advance funds through the Federal Reserve discount window, but at a lower (auction-determined) rate than currently available on discount window loans and without the stigma associated with ordinary borrowing at the window. While the TAF is not designed to increase the overall volume of reserves in the banking system, the facility should make banks more willing to lend into the interbank market, helping to ease strains in the money markets. Four TAF auctions currently are scheduled, two this month and two in January, and the TAF may eventually become a permanent part of the Fed’s monetary policy tool kit. To read legislation, click here and enter the bill number in the box at the center of the page. For more informatiion on legislation, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Washington Builders Limit Runoff From Record Rainfall
In 48 hours, the Bremerton, Wash. area was saturated by about 13 inches of precipitation, a record even for the rainy Northwest, or at least for the city itself, said the association’s executive director, Art Castle. “When I came in to work Monday morning, the rainfall was still at its peak and I saw a river running down the street,” he said. But at the HBA headquarters, “there was no surface runoff from the site,” he said. Low-impact development uses features that stop or slow the release of storm water from a site, enabling the water to gradually seep into the ground rather than flow from the site into a storm water or sewer system. The HBA applied for and won a Public Involvement and Education grant from the Puget Sound Action Team to install and then demonstrate low-impact development projects. The association is also participating in an effort to develop voluntary low-impact development standards under a U.S. Environmental Protection Agency Section 319 grant that is being managed by the Washington Department of Ecology. Association members broke ground for the project on May 1, and soon began digging up the parking lot and landscaping and replacing them with pervious pavement blocks, adding pervious concrete and asphalt, installing native plants and other drought-resistant vegetation,and putting a green roof on a storage shed. Where possible, the existing pavement was recycled to create the new surfaces, and old plants were moved to gardens in other areas. Sixty volunteers donated time, materials and services worth $3.50 per every dollar of the $40,000 installation grant. When the deluge arrived, the low-impact features of the site came through with flying colors, as a video that Castle posted on the HBA site demonstrates. On Monday, Dec. 3, the video shows only a trickle of rainwater leaving the HBA parking lot even as rain floods the surrounding businesses and streets. The HBA is working on a voluntary standard for low-impact development that Bremerton and surrounding jurisdictions can use to help encourage its use. Right now, builders have an impervious surface limit of 5,000 square feet — including driveways, sidewalks and the house itself — before a requirement kicks in to hire a professional engineer to create a storm water plan, which can add costly consulting and installation fees, Castle noted. But if the builder installs pervious pavement for the driveway, sidewalk and other outdoor surfaces, the first 5,000 square feet do not count toward the limit, potentially saving the builder and home owner thousands in fees and materials costs. The association plans to finish the standard by the spring of 2008. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. Nation's Building News Will Not Be Published During the HolidaysNation's Building News will not be published on Dec. 24, Dec. 31 or Jan. 7. Publication will resume on Jan. 14 with a special preview issue of the 2008 International Builders' Show. Have a happy and warm holiday season and a Happy New Year.
Read Our International Builders' Show Preview on Jan. 14Nation's Building News will be publishing a special issue on Jan. 14 that will highlight the upcoming 2008 International Builders' Show in Orlando, the largest residential and light commercial trade show in the world. The issue will feature events, courses, schedules, products and more. More than 100,000 housing professionals — including home and apartment builders, architects and product manufacturers — are expected to attend the show at the Orange County Convention Center Feb. 13-16. For more information, visit the International Builders' Show Web site at www.BuildersShow.com. Lennar Homes Underscores Its Commitment to the Northeast Housing MarketFred Rothman, a 20-plus-year veteran of New York Metropolitan real estate development, was lured out of a temporary Florida reprieve last year to become Lennar’s Northeast regional president. His mission was to navigate the company through the current market while simultaneously plotting a course for the future that would ensure Lennar’s position as one of the leading and most admired home builders in the region for years to come. “There are significant opportunities for growth here,” he said, “much the same as we experienced in 1990. You build for the future in a market like today. That’s exactly what we’re doing.” While Lennar will consider all property types, the preference will be on infill, redevelopment sites, rezoned former industrial properties and transit villages, and premier active adult communities. “We’re emphasizing selling off existing inventory, using incentives when necessary to seal the deal,” he said, “and there are still some very limited opportunities for buyers to take advantage of these incentives on existing homes. Once these homes are sold, we will forego spec homes and will instead build specifically for our home buyers. At that point, incentives will be a thing of the past.” (www.prweb.com)
Local Housing Market Ripe for LoonieWith the financial exchange rate turning in the Canadians’ favor and hitting a three-decade high, countless Canadians looking for retirement homes where they can escape frigid weather are investing in desert homes in the Palm Springs, Calif. market. Most buyers are paying cash — not wanting to risk the exchange rate souring while paying off a loan on their second or third home. No one knows exactly how many Canadians have purchased homes this season. But other warm climate, resort communities across the country — from Arizona to Florida — are seeing a similar trend in their winter housing sales. At Coldwell Banker’s six locations in Coachella Valley, Calif., each office is averaging about six sales a month to Canadian buyers. That’s double what they were doing two years ago, according to regional vice president Ron Gerlich. Canadians who have purchased here say it’s a perfect time, thanks to the favorable exchange rate, the nearly 10,000 homes for sale in the area and soft market prices that are almost 8% lower than last year. (www.mydesert.com)
Hot Housing Land Sales Offset a Housing Glut in PhoenixWhat’s happening in Phoenix has begun to play out across the U.S. in recent weeks. Public home builders and land developers, who dominated the market during the boom, are bloated with land and need to sell, partly to record losses to recoup taxes. Meanwhile, more nimble private builders and opportunistic investors are raising money and starting to snap up the pieces, buying parcels for as much as 60% discounts. “It’s a great time to be looking for land in Phoenix,” says John Fioramonti, senior managing director at Myers Builder Advisor, a real-estate consulting firm in Scottsdale, Ariz. “The national builders are just in a panic to get rid of excess inventory.” The land deals in Phoenix and elsewhere are a vivid reminder that even when housing markets are scraping bottom, investors are willing to buy land if the price falls low enough. Many of these investors will hold the property for several years confident that the market will eventually recover. Others, like John Laing Homes, think they can still profitably develop homes in the next few months if the land they buy is in the right location. Still others are looking to take land off a builder’s books and then sell lots piecemeal back to that same builder for a hefty profit or fee. Even the large public builders will at some point need to replenish their supplies. (www.realestatejournal.com)
Economist Sees Rebound From Nevada’s Mortgage CrisisNevada’s economy should be so strong by 2009 that a housing shortage may be the big concern rather than the current mortgage crisis and heavy surplus of homes for sale, Jeremy Aguero of Las Vegas-based Applied Analysis told a legislative panel studying the state’s mortgage problems. With some $36 billion in mega-resort construction occurring in Las Vegas in the next few years, Aguero said the people holding new jobs created by the building activity will buy up homes now available on the market and probably need more. “You won’t have enough housing stock for all the jobs in the near-term pipeline,” he said. “How many markets can you point to with a $36 billion investment in core industry alone that have long-term housing problems? Very, very few.” (www.nevadaappeal.com)
Cumberland One of Few Cities Where Housing Prices Are RisingCumberland, Md. is one of the top 10 cities in the nation where housing prices are rising, according to Forbes magazine. That list includes Salt Lake City; Binghamton, N.Y.; Salem, Ore.; Farmington, N.M.; Allentown-Bethlehem-Easton, Pa.-N.J.; Reading, Pa.; Glens Falls, N.Y.; and Spokane, Wash. Cumberland is at the bottom of the list with a 9.3% increase in home prices, while the others range from 10.4% to 21.9%. With an average home price of $109,300, Cumberland is in the midst of a renaissance in its downtown area and Alliant Tech at Rocket Center is fueling growth with high-paying jobs for employees who also want good housing. Many of the local homes are older and were allowed to deteriorate after the large manufacturers moved out of the area in the latter part of the 20th century. (www.times-news.com)
A Sweet ‘Housing Boom’: Gingerbread Town Models AnnapolisJames Barrett, the executive chef at The Westin Annapolis Hotel in Maryland, and his two sous chefs spent more than 300 hours creating an entirely edible gingerbread village in hopes of starting a tradition among small business owners in the vicinity. The village is on display in the hotel lobby through Jan. 6. “I hope some of the shop owners down here will come and see my gingerbread village this year and be inspired to create a gingerbread scene in their storefront windows next year,” said Barrett. “I hope to start a gingerbread housing boom.” Made with about 800 pounds of gingerbread, 200 pounds of frosting, a case of Necco Wafers, 40 pounds of hard Christmas candies, about 20 pounds of pretzels, Hershey’s Kisses, candy canes and boxes of cereal, the 20-foot long, 10-foot wide village comprises scale representations of the hotel, row houses, St. Anne’s Episcopal Church and various Annapolis houses. Constructed with frosted wheat and crisped rice cereals and chocolate bars, the roofs were tedious. “We had to put the shingles, which were done with cereal, on the buildings one piece at a time,” said sous chef Troy Jones. The Cinnamon Toast Crunch was bad enough, he said. But the Captain Crunch was even worse. “Captain Crunch cereal is so small, it took forever to do it,” he said. “I got quicker at building the roofs with the larger items like the graham cracker squares.” Several of the single-family dwellings in the village are replicas of homes on East and Maryland streets. The homes include peppermint stick fences, and Christmas trees made using Peppermint Patties at the base, and upside-down sugar cones coated with green frosting as the trees. (www.baltimoresun.com)
Senate Energy Bill Passed Without Tax IncentivesThe Senate passed a revised energy bill late on Dec. 13 after an attempt to include a $22 billion package of tax incentives for energy conservation fell one vote short earlier in the day. After agreeing to remove the controversial tax items for renewable energy and conservation projects following two failed attempts to keep them, Senate leaders were able to gain broad bipartisan support and the bill was approved by a wide margin of 86 to 8. President Bush indicated that he would sign this version into law once it reached his desk. The measure includes the first increase in corporate average fuel economy (CAFE) standards in 32 years for cars and light trucks. It also sets mandates for renewable fuel production, appliance and lighting efficiency and green building for federal construction. Notably, the building code provisions that NAHB and several real estate leaders lobbied against were not included in the final bill. In addition, NAHB worked to modify language acceptable to the home building industry on improving energy efficiency for FHA properties and successfully lobbied to remove language that could have greatly expanded the scope of the Endangered Species Act in addressing climate change. NAHB was also able to ensure that new storm water requirements for federal facilities did not encroach upon residential construction and helped lobby for the removal of all references to the U.S. Green Building Council’s LEED rating system for new green building requirements for federal construction projects. The House passed its energy bill last week with $11 billion in tax provisions and now is expected to hold a vote early this week to approve the Senate changes before sending the legislation to the White House. For more information, e-mail Elizabeth Odina at NAHB or call her at 800-368-5242 x8570. House-Passed AMT Relief Bill Faces Uncertain FutureBy a vote of 226 to 193, the House on Dec. 12 approved legislation (H.R. 4351) that would provide a one-year patch to the alternative minimum tax, effectively keeping it from reaching an additional 20 million taxpayers in the 2007 tax year. The bill includes revenue offsets to pay for the measure but differs in one key respect from a similar measure passed by the chamber on Nov. 9. In a victory for multifamily home builders, the revised legislation no longer includes a provision to tax “carried interest” to pay for the bill. NAHB lobbied intensively to remove this controversial measure from the legislation because it would have imposed a multi-billion dollar tax increase on real estate at a time when the industry was already struggling with a serious slowdown in the marketplace. The fate of the bill remains uncertain because Republican senators and President Bush still insist on a stand-alone AMT relief bill without any offsetting spending cuts or tax increases, arguing that the excessive AMT revenue was never intended to be collected in the first place. They are at odds with House Democratic leaders, who insist that pay-as-you-go budget rules are essential to enforcing fiscal discipline and not adding further to the national debt. The White House also issued a new veto threat, warning that the failure of Congress to move quickly will cause the IRS to delay millions of tax refunds because the agency will be unable to process the necessary administrative changes in a timely manner. At this point, it remains uncertain which chamber will compromise first, or whether the deadlock between the House and Senate will ultimately result in no AMT relief for American taxpayers. NAHB continues to urge Congress to enact swift passage of AMT relief and ensure that the carried interest proposal stays out of any final bill because of its damaging impact on real estate development. To view the bill, click here and type H.R. 4351 in the box in the upper center screen. For more information, e-mail Greg Brown at NAHB or call him at 800-368-5242 x8421. Bill Would Let Bankruptcy Judges Alter Mortgage TermsThe House Judiciary Committee on Dec. 12 completed its markup of H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007. Introduced by Rep. Brad Miller (D-N.C.), the measure would allow bankruptcy judges to reduce the value of a home loan, extend the terms of the loan, lower the interest rate, delay the effective date of an adjustable rate increase and make other similar changes to a mortgage for home owners going through Chapter 13 bankruptcy proceedings. NAHB is concerned that this legislation would add substantial new risks to investors in the secondary market. The likely effect would be to reduce liquidity, make it more difficult for borrowers to obtain a mortgage or refinance, and increase mortgage rates. In a joint letter sent to the committee by NAHB and several other trade associations, it was noted that “H.R. 3609 will actually cause harm to future home buyers. Last week, during a hearing in the Senate Judiciary Committee, several economists testified that granting bankruptcy judges new powers to alter the terms of a mortgage will increase the cost of mortgages for all future borrowers.” The potential for higher mortgage rates is a big concern, as even a small increase in mortgage rates will force millions of Americans from the marketplace. The committee approved the bill by a mostly party-line vote of 17 to 15, with only one Republican voting in favor, after adopting a compromise agreed to by Chairman John Conyers (D-Mich.) and Rep. Steve Chabot (R-Ohio). While the compromise does limit the scope of the bill, it may only serve to undermine the Administration’s efforts to encourage voluntary loan restructuring by incentivizing bankruptcy while adding uncertainty to the mortgage finance market. To view the legislation, click here and type the bill number in the box in the upper center screen. For more information, e-mail J.P. Delmore at NAHB, or call him at 800-368-5242 x8412. Legislative Conference Set for April 30Looking ahead to 2008, builders are reminded to mark their calendars now for the most important grassroots event of the year — the 2008 NAHB Legislative Conference — which will take place on Wednesday, April 30 in Washington, D.C. leading into the association’s spring board meeting. The timing of next year’s Legislative Conference — which will take place six weeks earlier than the 2007 conference — is particularly significant considering the current shakeout in the subprime mortgage sector and its repercussions for the housing market. Builders are encouraged to travel to the nation’s capitol and to urge their representatives and senators to support policies that will stabilize the housing market, help reduce foreclosures, restore confidence in the credit markets and keep the economy moving forward. The annual NAHB conference provides an ideal opportunity for association members to share their concerns on housing-related issues with lawmakers on Capitol Hill. Especially in these challenging times, your participation can make a huge difference as various interest groups compete to push their agendas in Washington. A strong builder turnout on April 30 will certainly send a powerful message to members of Congress that housing must remain a top national priority. For more information, e-mail Molly Murray at NAHB or call her at 800-368-5242 x8282. Builders Look for Signs of ImprovementBuilder confidence in the market for new single-family homes remained unchanged for a third consecutive month in December as problems in the mortgage market and excess inventory issues continued, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The HMI held even at 19 this month, its lowest reading since the series began in January 1985. “Builders continue to look for signs of improvement in the ongoing mortgage market crisis that is weighing on housing and the overall economy,” said NAHB President Brian Catalde. “Recent actions taken by Congress and the Administration addressing certain aspects of the problem are definitely a step in the right direction.” “December’s report shows that builders’ views of housing market conditions haven’t changed in the past several months, and there clearly are signs of stabilization in the HMI,” noted NAHB Chief Economist David Seiders. “At this point, many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity — most likely by the second half of 2008.” Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. In December, the index gauging current sales conditions for single-family homes climbed by a single point, to 19, and the index gauging sales expectations for the next six months rose two points to 26. Meanwhile, the index gauging traffic of prospective buyers declined three points to 14. Regionally, the HMI results were mixed in December. The Midwest and South each posted two-point gains in their HMI readings, to 15 and 21, respectively. The West held even at 18, and the Northeast, which experienced wetter weather conditions than normal during the survey period, posted a seven-point decline to 19. All regions were down on a year-over-year basis. Catalde applauded the Senate’s recent approval of two vitally important pieces of legislation, including one bill on Federal Housing Administration reform and another addressing the tax burden on struggling home owners when banks forgive a portion of their mortgage debt as part of a loan workout. “Congress must now move quickly to achieve final enactment of these bills into law as well as key legislation to accomplish oversight reform for Fannie Mae and Freddie Mac,” he said. “Together with the Bush Administration’s recently announced plan to freeze rates on certain adjustable-rate subprime mortgages, these are essential measures for improving credit liquidity, restoring consumer confidence and reviving the overall housing market and economy.”
Webcast of NAHB Fall Construction Forecast Available Till Feb. 5 The webcast of the NAHB Fall Construction Forecast Conference held in Washington, D.C. on Oct. 24. is available for purchase through Feb. 5. The conference webcast includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys. Purchasers will receive unlimited access to the webcast archive though Feb. 5, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections. To Purchase the Webcast To purchase the webcast, visit www.nahb.org/cfcwebcast. For more information, contact Kate Carrigan at NAHB, or call her at 800-369-5242 x8244.
Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2008 to 2009 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 to 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. Florida Builders Must Adjust to New Market RealitiesA great line from my favorite sci-fi thriller “Aliens” is spoken by Newt, the film’s little-girl-in-distress: “My mommy told me there aren’t any monsters. No real ones.” Sigourney Weaver replies: “Most of the time it’s true.” There have been some builders and speculators who were told (not by me), “Florida home prices never go down.” Most of the time, it was true. The change in the housing market over the last two years was expected, but not to this degree, at least by most builders. It is time to confront the new reality and adapt. We have seen new home prices fall, and now we are starting to see resale prices decline, and now even some land sellers are starting to settle for lower prices. Lower land prices will be an important part of the foundation of the next up-cycle. Buyers are already absorbing the current inventory, and the recovery of demand will accelerate this healing. People are still being born, getting married, getting new jobs, getting divorced, having babies and retiring. These life changes mean that someone’s housing needs have changed. Demand is still out there. It is being kept pent up by market anxiety, tax impacts, mortgage availability and inability to sell another home, but sooner or later many of these barriers will become less onerous, and people who need (as opposed to want) a new home will go ahead and buy. A Life and Death Struggle The problem is, although builder inventories are being worked off, more inventory is coming. Resale inventories will once again swell, this time with listings of foreclosed homes. Resets of adjustable rate mortgages will surge in the spring (mostly subprime loans), and again in the summer (subprime, prime and especially jumbo loans), and many people will not be able to sustain the increase in their monthly payment. More foreclosures are looming. It is now clear that 2008 will be another extremely challenging year for builders. Auctions have started to happen, and some homes have sold in bulk for less that 60 cents on the dollar — less than their peak price. There will be more auctions next year. This is part of the new reality. Adapting to the new reality does not mean you should fire all your key workers and stop advertising. Marketing (advertising, market research, product redesign) has to be given even more importance than before. The winners in the battle to come will be the builders who move quickly to meet the needs of today’s home buyer, and those needs are very different from the insouciant ideals of the 2005-vintage investors. For builders, this is a struggle of life and death. There will some builders who will be bankrupt because they made poor decisions and did not react and recover quickly enough from the results. At the End of the Day, Long-Term Housing Demand Is Strong The important thing is to remember at the end of the day is that long-term prospects for housing demand are strong. Demographic trends suggest that demand for new homes in Florida, driven by the boomers, will be stronger than ever in a few years. This will stem from a strong resurgence of second-home demand, and later, retiree demand. There is a great deal of pent-up demand. Most of you undoubtedly read or heard about the book about the mice and the cheese. For years, the cheese never moved, but now it has, and looking for it in the same places as before will be a waste of time. It is a time to study the market and adapt. The builders with the best information will eat the others’ cheese. The encouraging news in Metrostudy’s latest study (third quarter, consisting of a 100% count of all subdivision activity in Collier) is that new home starts are down 45.4% versus a year earlier, a necessary reduction. New home inventories have not yet fallen, however, because home completions are still running more than 450 to 500 per quarter. The pipeline of homes under construction has dwindled, suggesting that completions will soon fall low enough to allow net absorption to pull ahead, drawing down the list of empty homes. The foreclosure surge we anticipate in the next 12 months, however, will add to supply. Resale prices are finally starting to fall, which is good news for transaction-starved Realtors®, but bad news for builders. Brad Hunter runs Metrostudy’s research in Southeast and Southwest Florida. Metrostudy is the leading provider of primary market information to the housing industry and related industries nationwide. The company is recognized for its consulting expertise on development, strategy, marketing and economic issues and is a key source of research studies evaluating the marketability of residential projects. Brad Hunter can be reached at 562-835-9235. This article was previously published by the Florida Home Builders Association and is reprinted with permission.
Webcast of NAHB Fall Construction Forecast Available Till Feb. 5 The webcast of the NAHB Fall Construction Forecast Conference held in Washington, D.C. on Oct. 24. is available for purchase through Feb. 5. The conference webcast includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys. Purchasers will receive unlimited access to the webcast archive though Feb. 5, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections. To Purchase the Webcast To purchase the webcast, visit www.nahb.org/cfcwebcast. For more information, contact Kate Carrigan at NAHB, or call her at 800-369-5242 x8244.
Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2008 to 2009 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 to 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 Teleconference Looks at What’s Ahead for HousingAlong with members of the news media, professionals in the home building industry will be able to listen to Jerry Howard, NAHB’s vice president and CEO, and David Seiders, the association’s chief economist, discuss the direction of the housing market, the overall economy and policy issues in a year-end housing forecast conference. The teleconference will take place on Thursday, Dec. 20 at 2:00 p.m. ET. Among the questions under discussion:
Members of the media will ask questions at the conclusion of the call. To participate, dial 800-860-2442 and ask for the “NAHB Year-end Housing Forecast Call.” Presentations and reference materials will be available at www.nahb.org/teleconference 10 minutes prior to the start of the conference. To listen to a full replay of the call after the conference has concluded, call 877-344-7529 and enter 414427 followed by the # sign when prompted for the account number. The replay will be accessible from 4:00 p.m. on Dec. 20 through 4:00 p.m. on Jan. 3. For more information, e-mail Liz Warin at NAHB, or call her at 800-368-5242 x8495.
Webcast of NAHB Fall Construction Forecast Available Till Feb. 5 The webcast of the NAHB Fall Construction Forecast Conference held in Washington, D.C. on Oct. 24. is available for purchase through Feb. 5. The conference webcast includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys. Purchasers will receive unlimited access to the webcast archive though Feb. 5, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections. To Purchase the Webcast To purchase the webcast, visit www.nahb.org/cfcwebcast. For more information, contact Kate Carrigan at NAHB, or call her at 800-369-5242 x8244.
Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2008 to 2009 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 to 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.
Webcast of NAHB Fall Construction Forecast Available Till Feb. 5 The webcast of the NAHB Fall Construction Forecast Conference held in Washington, D.C. on Oct. 24. is available for purchase through Feb. 5. The conference webcast includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys. Purchasers will receive unlimited access to the webcast archive though Feb. 5, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections. To Purchase the Webcast To purchase the webcast, visit www.nahb.org/cfcwebcast. For more information, contact Kate Carrigan at NAHB, or call her at 800-369-5242 x8244.
Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 2008 to 2009 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 to 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: Steel Corners Make Clean Corners
I’ve been installing a lot of non-wood siding, such as cement-based and hardboard lap siding, during the past few years. To complement the clean look of these sidings, I’ve taken to installing custom-made steel corners. As shown in the accompanying drawing, the corners have flanges that are nailed to the wall and act as integral flashings in case any moisture gets behind the siding. The siding abuts the projecting corner of the metal trim details. I have a local metal shop make the corners from steel gutter stock. This material is inexpensive and comes in brown, white or primer. The steel corners also hold paint beautifully. Before I started using these corners, I used cedar corner boards. But they would eventually shrink, leaving a cracked caulk joint. With the steel corners I now use, that problem is a thing of the past. — Richard Darby, Merlin, Ore. Tips & Techniques provided by Fine Homebuilding.
To request a reprint of this feature, e-mail Christina Glennon at Fine Homebuilding.
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.
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 to 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. Let Buyers 'Option Up' With More Packaged OptionsThe first in a series about how to ramp up sales and marketing in a changing market. One key to getting to the next cycle in the housing market is to cut costs and let home buyers “option up” their homes through pre-priced structural options much like automobile dealers sell cars, said Ross Robins, MIRM, of the Lee Evans Group/Shinn Consulting Inc., an operations and marketing consulting firm based in Littleton, Colo. Robbins discussed how to strengthen company financials during NAHB’s free hour-long teleconference, “Ramp Up Your Sales & Marketing in a Changing Market,” on Dec. 12. Bonnie Alfriend, MIRM, of Alfriend and Associates in Pebble Beach, Calif., and Dan Levitan, MIRM, Levitan & Associates of Fort Lauderdale, Fla. also participated in the teleconference. “The problem that we have had is that we have been living high on the hog for a long time,” Robbins said. “We’ve outpaced our buyers’ ability to buy the homes we have for sale. With the new loan standards that we have we are facing issues to get the costs out of houses.” Robbins said that builders could learn how to cut costs and restructure sales from automobile dealers. He suggested that builders should be offering fewer single options or amenities and, like automobile dealers, package options and let home buyers choose from various packages to upgrade their homes. “We could do well to learn from these people and configure the houses in different ways pre-priced for our buyers,” said Robbins. “For example, if you have a flex space that could be an office, nursery or artist studio, you could configure those spaces and have those pre-priced packages for whatever direction your buyer wanted to go.” Be Prepared for 2008
Robbins said that cash will be critical to businesses that are working to survive the housing slowdown. Credit lines can dissolve, he said, but cash has staying value. In addition, opportunities will arise when the market enters its next cycle and cash will be needed to take advantage of them. “We may be closer than we think to that part of the cycle,” Robbins said. “You need to minimize your financed land and inventory, get your cash out and your properties sold, or even walk away from deals if you have to.” “Too many specs or widgets can take you down,” he added. “Sell them for what you can get, and get out of there. If one or more of your inventory homes is aging, cut your prices now, not later.” “Have some preplanned action points, say, 30-, 60- or 90-day holding periods and what you will do at each of those points,” Robbins suggested. A company can survive a down market as long as it stays above the break-even point, Robbins said, adding that no one knows how long that will be. Cut Overhead But Keep Key Team Members Robbins said companies should cut as much overhead as they can, but not so deeply that they would lose key team members. “In order to be ready for the next cycle, you need to have a team of capable people that can take you to the next level,” Robbins said. “You need to identify who they are ahead of time. They may be doing more jobs, but they must remain intact.” Don’t Over-Enforce Buyer Contracts Levitan, of Levitan & Associates, warned teleconference participants not to go overboard when enforcing buyers’ contracts during the slowdown. Builders can realize short-term benefits by strictly enforcing their customers’ contracts, but if they do they probably shouldn't plan on staying in business too long in their current location. Builders should consider the negative publicity and repercussions that could arise if they decide to aggressively sue buyers who are not adhering to their contracts. “I’m involved with a number of builders around the country,” Levitan said. “Some of them are enforcing 100% of their contracts. They are suing buyers that have not performed. Most of these people are not going to be in business in that community long term.” “You have got to come up with a position of where you want to be long-term, and what you’re willing to put up with for the short term,” he said. Renegotiate Credit Builders should also focus on asset protection in order to survive the slowdown. “If you haven’t already done so, get an attorney and make sure that you are going to be around for the long term,” Levitan told listeners. Levitan also encouraged builders to work closely with their lenders. Lenders, he said, are dealing with many of the same issues that are confronting builders and better and more effective solutions can be achieved if builders and lenders work together. “The lenders have to understand that they are your partner with this issue and that you are better than anyone else at working out this existing job,” Levitan said. “If they foreclose on the deal or if they take the land back, they are going to dump it at a substantial loss.” “It’s better for you and for them for you to stay in the deal somehow and work out any issues that arise,” he said. “To keep you in the relationship means everyone will get a higher return on investment.” Teleconference Recording Still Available A recording of the teleconference, “Ramp Up Your Sales & Marketing in a Changing Market,” is available free to NAHB members on the NAHB Web site. The hour-long recording includes a panel discussion by industry veterans who have been through market shifts in their careers. They discussed what sales and marketing changes are needed in order to thrive in today’s market. Topics discussed include:
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. A Community With Sol Thrives in Tucson
Armory Park del Sol in Tucson, Ariz. has a lot of appealing qualities and characteristics going for it. It is full of universal design features. It features energy-efficient homes, including two all-electric “net zero energy” homes that put energy back into the power grid. It is within easy walking distance to downtown Tucson. And it is an urban infill that fits the character of the existing neighborhood. Armory Park del Sol, by the John Wesley Miller Companies, now has one more accolade. One of its homes is one of five winners of the inaugural AARP-NAHB Livable Communities Awards acknowledging builders, remodelers and developers who build homes and communities with features that improve everyday comfort, safety and personal independence for those who live in them. Armory Park del Sol, a 92-home community on 13.98 acres in downtown Tucson, was designed to be aesthetically compatible with the adjoining historic neighborhood, include state-of-the-art energy efficient technology and be “livable” for all physical abilities and ages, John Miller said.
The development is designed to emphasize community and people over vehicles, with the majority of homes facing common area sidewalks and having rear-loading garages. A small park used for picnics and other events was created to enhance the spirit of the community.
Some universal design features discreetly built into every home at Armory Park del Sol include:
Miller is long recognized as a national leader in energy-efficient homes. His two all-electric “net zero energy Homes” at Armory Park del Sol feature photovoltaic electric power generating systems and solar water heaters with on-demand water heater backup systems. John Wesley Miller Companies is one of four builders selected by the Department of Energy to develop net zero energy-use homes that are designed to put energy back into the grid rather than taking energy from it. One of the net zero energy homes earned the AARP-NAHB Livable Communities Award. Current standard energy-saving features in all the homes include:
For more information on zero energy homes, visit the NAHB Research Center zero energy homes project. For more information on Armory Park del Sol and the John Wesley Miller Companies, visit www.armoryparkdelsol.com and www.johnwesleymillercompanies.com. For more information about the AARP-NAHB Livable Communities Awards, e-mail Blake Smith at NAHB, call him at 800-368-5242 x8583 or visit www.nahb.org/livablecommunities. To read about the Livable Communities Awards elsewhere in this issue, click here.
First AARP-NAHB ‘Livable Communities’ HonoredFive winners ― builders in Tucson, Ariz. and Atlanta; a developer in Raleigh, N.C.; a developer in Atlanta and a land trust community in Madison, Wis. — were named the industry’s first recipients of the Livable Community Awards during ceremonies in Washington, D.C. last week. The awards, co-sponsored by AARP and NAHB, were created to shine a spotlight on builders, remodelers and developers who build homes and communities with features that improve everyday comfort, safety and personal independence for those who live in them. “We’re in the business of creating livable communities that attract people and make them feel warm,” said Bill Slenker, of Slenker Communities an active adult community builder based in Springfield, Va., who announced the winners at the National Housing Center on Dec. 11. Livable communities are not just about the home, they are also about the surrounding area, transportation and access to shopping and recreation, added Elinor Ginzler, director of AARP’s livable communities program. The winners were:
For more information about the 2007 Livable Communities Award winners, click here on the AARP Web site. Read profiles of each winning project in upcoming issues of Nation’s Building News. The series begins with a story on Amory Park del Sol in this issue. Slow Times Are the Go Time for Tuning Up Your BusinessNo matter the size of your business, the volume in your pipeline is bound to fluctuate. And for many of us, it can be an uneasy feeling wondering when the phone will start ringing again. Rather than resorting to gnashing of teeth and slashing of budgets, view those lulls between busy times as a welcome opportunity to run a complete diagnostic check on your business. Essentially, use your slow times to plan for the future. Take the time to re-examine and retune every aspect of your operation. This will help position your business to improve, grow in a sustainable way and, ultimately, better withstand future quiet periods. Use your down time to look at all aspects of your operation in particular, including: Market Research How well do you and your sales and marketing team ― even if they are one and the same ― understand the makeup of your pool of potential clients? Make sure that you understand the social, cultural and physical makeup of your market. Are you in a predominantly baby boomer market, a pool of Gen Xers or a mix? What does research show to be their remodeling preferences, and where are the trends going in materials, style and budget? Is the majority of the housing stock in your market area 25 years old, 50 years old or barely past 10? Do you need to expand your territory or improve your focus on more lucrative geographic areas, such as those with a growing need for repair and maintenance work? All of this information is available in surveys like the NAHB’s Remodeling Market Index and from sources like the U.S. Census Bureau and your state and local government. Use your slow time to dig deep into the numbers and ramp up your strategy to outsmart the competition. Branding, Marketing and Advertising Strategies What does your company’s image — your logo, crew’s uniforms, job site signage, even door hangers — say about your company? Are they making an effective connection with the key target groups you’ve identified from your market research? How does your message compare with those of your competitors in terms of hitting hot-button issues like green remodeling, professionalism and warranties? Hiring a marketing student from a local college to do some re-writing for you could be an investment worth considering when budgets are tight. Advertising tends to be the first line item on the chopping block when cash flow slows. Don’t be tempted to cut back during a slow period just when you need to work the hardest to maintain your visibility. Also, don’t forget that, just as you are planning during the slow time of the market cycle, home owners are mulling over their options before they take action. Today’s remodeling-savvy home owners are likely to keep files of potential contractors on hand. Make sure your company is included in those files. A lot of our job as remodelers is educating consumers. Don’t take your knowledge for granted. Instead put it to use. Send then a simple newsletter that features products and methods that save home owners time or money, are environmentally friendly or otherwise appeal to your market. This will help build your company’s image as being reputable and reliable. Internal Systems and Processes Once you’ve got your message out, it is mission-critical that you ensure that your in-house systems are ready to handle the follow-through on leads that builds your customer base and client loyalty. Use your down time to examine the efficiency of your entire project flow, from the first inquiry to the final customer satisfaction survey ― and every step in between. Whether you have a staff of two or 20, slow periods are ideal for one-on-one reviews and troubleshooting of their on-the-job experiences to make your company run better. Make sure that your business administrative tools pass muster. This includes your telephone system, your estimating and billing software and everything in between. Be sure that every minute ― and every dollar ― is being tracked and can be analyzed and that your customers are receiving superior service. Clients on terminal hold or in voicemail jail every time they call aren’t going to keep calling for very long, and given the critical importance of word-of-mouth in marketing remodeling, you can’t afford a reputation for poor customer interface. If you’re hiring and firing more than you are closing leads, a slow period is a good time to examine your recruiting and retention strategies. Who’s leaving, who’s staying and why? Who’s always late to the job site and who has leadership potential? Re-examine Your Reasons for Being in the Business Once you’ve taken an in-depth look at the operation, take stock of where you are and why you got into the business in the first place. Ask yourself if you are doing the type of projects you’d like to be doing with your firm. If the answer is no, set your new course and sail in that direction because before your know it the wind will be picking up. Bob Birner, CGR, CAPS, is vice president of Amazing Siding Corp. in Houston, Texas. He also co-hosts, “Remodeling Pro Radio Show,” a weekly radio talk show about remodeling. For more information, e-mail Birner, call him at 281-378-6000 or visit the Amazing Siding Web site at http://www.amazingsiding.com. Get Your Professional Designation at IBS Earning the CAPS, CGR, CGB or GMB designation demonstrates a commitment to excellence and keeps builders and remodelers on top of industry innovation. A number of International Builders’ Show pre-show courses qualify for these builder and remodeler professional designations or for continuing education needed for other NAHB designations. For more information, visit www.buildersshow.com/PreShowEducation. SIPs the Way of the Future, SIPs User for 20 Years Says
Donna Shirey, Shirey Construction In May, the International Code Council voted to adopt SIPs into the International Residential Code. PATH partner and NAHB Building Systems Councils member Shirey Contracting, based in Issaquah, Wash., has been using SIPs since 1988. Recently, PATH talked to Donna Shirey, president of Shirey Contracting, about the company’s 20 years of experience using SIPs. PATH: Why does Shirey Contracting use SIPs? Donna Shirey: We feel it’s the best way to build. We can give our clients a strong, energy-efficient structure that goes up quickly and eliminates job-site waste. SIPs are a building system, where everything is custom-cut in the plant and delivered to the job site. It’s virtually built by numbers. When we build a second-story addition, for example, we can get the house covered up in a matter of days instead of weeks. PATH: Have there been a lot of changes in the way SIPs are used today compared to when you started? Shirey: When we first started out, we had to cut the panels on the job site, which we did not like. Now, almost all of the panel manufacturers custom cut their panels in their factories. I have not noticed significant changes in the product. But I think that’s because panels have to undergo a lot of testing. Manufacturers can’t change anything. They can’t even move their plant, or they have to have everything re-tested. PATH: After so many years, SIPs still are used in only about 1% of residential and light commercial construction projects. What do you think it will take for more builders to use SIPs? Shirey: The smart builders are waking up and realizing that this is the way to build ― and I commend them for that. But it’s not right for everybody. It’s important to be open to new techniques. It’s all about attitude. I’ve talked to builders for 20 years about SIPs and they say, “Well, this is how we build, and the subs won’t understand it.” And the subs say, “Well, the builders think it’s too expensive, and they won’t spend the money on it.” It’s a catch-22! PATH: What are some of the challenges of using SIPs? Shirey: One of the biggest challenges is finding subs who are open to new techniques and understand what an airtight house is all about. We’re building a SIPs house in Florida, and we had such a difficult time with our HVAC guys. We wanted everything to go into our heat recovery system. They just wanted to slap in a great big huge system and be done with it. If the system is too big, it’ll never turn on because these houses don’t lose their heat ― but you do have to change the air in them. The flap over the HVAC system delayed us about two months. With SIPs, there’s a lot of education involved. PATH: I hear you’re working on your own zero-energy house in Washington. Shirey: The site is steep — a 40% grade ― so it’s going to be on pilings drilled into the ground. Floors, walls and roof will be SIPs. It’s going to have a green roof, solar panels and some wind power. It’s only 1,700 square feet and has two bedrooms. It’s perfect for what’s happening to my generation where people are downsizing. We just want to have a great, well-designed, beautiful little jewel of a house. PATH: There have been some cases that got a lot of press of poorly built SIPs homes. How does Shirey Contracting avoid that? Shirey: It is really a shame, because it does give the industry a black eye. We generally do not have problems because we understand the importance of planning. You have to have the shop drawings correct. If you have, for example, a window that is not the correct height off the floor on the drawing, it’s not going to be right when they produce the panel. You can shift openings in a panel wall, but as with stick-built walls, shifting window openings will cost you time and money. We also plan ahead to have the correct personnel on-site to encourage efficiency of movement. With SIPs, you don’t need all the carpenters to be journeymen. Apprentices and laborers are really valuable when we’re putting these things together. But having a few journeymen carpenters on-site means that they can make changes if, for example, a window opening is in the wrong place, without additional supervision. PATH: How do you find good carpenters? Shirey: If you interview a carpenter, he’s going to say, “I know how to do everything.” We actually give a written test, because we want to know what they know. On the other hand, if we find someone who is interested in construction and has a good attitude, good personal habits, can get to work on time and has a vehicle, we’re glad to train him or her. Labor is in short supply. We don’t have as many people going into the physical trades. There are a lot of people who want to go into project management. SIPs are a great place to get into construction management. To be able to order those panels correctly off their panel layout is a great thing for a project manager. Think how wonderful it is to have everything custom cut in the plant and delivered to the job site that you simply assemble. PATH: What are your recommendations to builders just getting started with SIPs? Shirey: It’s a simple learning process. I would recommend that they have a company like ours consult with them — a company that knows panels and can walk them through the first project. People who are involved with panels are really willing to teach others because all of us want to build the market. But my best advice? Have a good attitude. Don’t be afraid. SIPs are the way of the future. Free Builders’ Show Lunch Focuses on ConcreteThe Concrete Home Building Council is inviting builders, manufacturers and industry partners attending the International Builders’ Show in Orlando to a free “Connect With Concrete” luncheon. The luncheon will feature information on the variety of ways in which using concrete can make homes stand out from the crowd and help businesses grow. Advances in concrete have made concrete one of the fastest growing sectors of the housing industry. Concrete is cost-effective and green, efficient, versatile and environmentally-friendly. It’s also something that home buyers want. The luncheon is scheduled for Friday Feb. 15, noon-2 p.m. in W108A on Level 1 of the Orange County Convention Center. For reservations, which are on a first-come, first-serve basis, e-mail Kate Driscoll at NAHB, or call her at 800-368-5242 x8362. Concrete Can Do That — Take the Technologies Tour and See How NAHB’s 2008 Concrete Technologies Tour gives attendees an inside look at the residential concrete industry and a chance to see the latest production techniques and building trends up close. Concrete is cost-effective and green and is becoming one of the fastest growing sectors of the residential building industry. The upcoming tour will be on June 1-3 in Charlotte, N.C. For more information, visit www.nahb.org/ConcreteTour. Education Calendar
Learn More About Upcoming Conferences and Designations Interested in attending a University of Housing conference or learning more about NAHB designation programs? Visit www.nahb.org/notifyme, and sign up to receive more information.
Free NAHB Kit Gives Builders Back-to-Basics Tips to 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. Brad Pitt Seeks Donations to Build 150 New Orleans HomesThis holiday season Brad Pitt is asking for donations to build 150 sustainable, affordable homes to help victims of Hurricane Katrina reestablish residency in New Orleans — including donations to pay for NAHB Model Green Home Building Guidelines verification. The 43-year-old actor has pledged $5 million of his own money for this effort. The “Make It Right” project is being located in the city’s historic Lower 9th Ward in one of its most devastated neighborhoods. The area is situated directly adjacent to the breach in the Industrial Canal levee, where a barge exacerbated devastation as it plowed through the levee, sweeping Lower 9th Ward homes in its path off of their foundations. The New Orleans Office of Recovery Management has established two priority rebuilding zones for the city in the Lower 9th Ward. The Make It Right target area intersects one of those zones, which represents the potential for returning schools, community resources and additional neighborhoods. A team of 14 local, national and international world-renowned architecture firms specializing in innovative, ecologically responsible design have been assembled for the project. The core team for Make It Right includes:
Click here to visit the Make It Right Web site. Donations of $150,000 can be made to support the construction of an entire house. “I mean, this is really an adopt-a-house campaign,” Pitt said in an interview with NBC’s “Today” show. “I’m asking for foundations, for high-net-worth individuals, for church groups, for corporations to come in and adopt a house — basically $150,000 will get a family back in their home.” Donations can be made in any amount. Contributors also have the opportunity to buy specific items for the house, including:
NAHB’s Bob Jones to Address EnergyValue Housing AwardsBob Jones, NAHB’s vice president/secretary and leading industry spokesman on green building, will be the keynote speaker at the 2008 EnergyValue Housing Awards (EVHA) ceremony, the NAHB Research Center announced. Held annually, the EVHA recognizes visionary residential builders who have successfully integrated energy-efficiency and environmental responsibility into the design, construction and marketing of their new homes. The winners among the 13 finalists will be announced during an awards ceremony on Feb. 13 during the International Builders’ Show in Orlando. Bob Jones, president of Robert R. Jones Homes, was elected as an NAHB Senior Officer early this year. With oversight of the association’s green building activities, he has made substantial advances in raising awareness of green building and energy efficiency among NAHB members, policy makers, associated trade groups and the public. During his 35-year career in home building, Jones has earned a reputation for excellence and made a continuing commitment to the industry at the local, state and national levels. Throughout his five-year tenure as an NAHB Senior Officer, Jones will continue to steer the association's green building efforts, including its ongoing work with the NAHB Research Center and the International Code Council (ICC) to develop the National Green Building Standard — the first and only national green building standard for residential construction. While concerns over energy resources and the environment continue to make recent news headlines, an increasing number of home builders have shifted their focus to developing affordable, energy-efficient and environmentally-responsible construction techniques. Jones has noted that this movement toward environmentally sensitive construction will be hastened by the arrival of the standard. “Bob Jones is a respected NAHB Senior Officer who believes wholeheartedly in the work we’re doing through the EVHA program to elevate the standards for energy-efficient construction,” said Michael Luzier, president of the NAHB Research Center. “It is fitting that such an esteemed builder who is leading the green cause for our industry will join us to honor some of the best and brightest for their outstanding achievement and commitment to improving the performance of American homes.” EVHA is coordinated by the NAHB Research Center in partnership with the U.S. Department of Energy through the National Renewable Energy Laboratory, and NAHB. EVHA dinner banquet tickets are now available for purchase online at www.nahbrc.org/evha/tickets.html. Click here to learn more about the 2008 EVHA finalists and vote for the People’s Choice Award. For additional information, e-mail Dr. Kevin Mo, EVHA program manager, or call him at 800-638-8556 x210. Feb. 14 ‘Green Day' Highlight of Builders’ ShowIn recognition of the phenomenal growth of green building, NAHB will celebrate "Green Day" on Thursday, Feb. 14, at the International Builders' Show in Orlando. On Green Day, the association will officially launch the NAHB National Green Building Program and will unveil the new Certified Green Professional educational designation for home builders, remodelers and other industry professionals. A dedicated green building display will allow participants to try out a new online scoring tool that is an important component of the NAHB National Green Building Program. The tool shows how green building techniques and materials will affect a new home and allows builders and consumers to select the measures and materials that are most cost-effective and best meet their needs. Builders can also test the tool at www.nahbgreen.org. Also on the docket:
NAHB volunteer leaders and staff members plan to join the celebration as well, donning green golf shirts provided by Green Day sponsors Whirlpool and Kohler. At last count, more than 170 companies will be exhibiting green products and services at the show. Last year, the International Builders' Show attracted more than 100,000 attendees during four days of seminars and other special presentations. They walked 11 miles of aisles through two million square feet of gross exhibit space, enough to cover 35 football fields. More than 1,900 exhibitors displayed the latest in housing products and services. "We're very proud that NAHB and the International Builders' Show have long been ahead of the curve in introducing innovative products and technologies to our members," said NAHB President Brian Catalde. "Our Green Day celebration honors these pioneering industry leaders as it launches the next steps for home builders in the United States." For registration information and more details, visit www.buildersshow.com. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. New Green Standard Comment Period Starts Dec. 21The consensus committee for the National Green Building Standard met in Washington Dec. 3 to 4 to review public and committee member comments on the draft of the standard that was released on Aug. 10. The draft is now being updated to reflect the changes that were approved and will be available on Dec. 21 for the next 45-day comment period. Members can see the the draft standard on the NAHB Research Center Web site. Instructions on submitting public comments will be available when the standard is posted. The new green building standard is a joint project of NAHB and the International Code Council, which promulgates model building codes. It will go to the American National Standards Institute for approval after the new public comment period is closed and consensus committee members have had the opportunity to review the comments and vote on any proposed changes. When finished, the National Green Building Standard will encompass all residential construction, remodeling and lot and site development. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. Consumer Spending on Green to Double Next YearConsumers expect to double their spending on green products and services in the next year, totaling an estimated $500 billion annually or $43 billion per month, according to findings from a survey released early this fall at the Sustainable Green Brands conference in New Orleans. The survey was conducted by Landor Associates; Penn, Schoen & Berland (PSB) Associates; and Cohn & Wolfe. “The wave of research very clearly indicates an uptick in purchase intent for most consumers when it comes to green products and services, particularly those that are relatively simple to implement such as installing environmentally friendly lighting and upgrading energy-saving appliances,” said Tom Agan, managing director of PSB. The research also found that 90% of Americans agree that there are important green issues and problems, and 82% believe it is important for companies to implement environmentally friendly practices. The survey also showed that consumer perceptions of green continue to change and have a direct bearing on their buying decisions. In early research, consumers closely associated the color green with environmentally friendly products. Last year, as products and consumer awareness were becoming more sophisticated, perceptions steadily shifted to equating green with saving money and caring for oneself and society. The most recent survey found that consumers perceive green as a direct and positive reflection of their social status, in addition to recognizing its broader value to society and the world. “Mainstream consumers can now join celebrities in supporting good causes,” said Russ Meyer, chief strategy officer of Landor Associates. “As issues continue to arise around the world, so do positive perceptions of the people who support those issues. With every cause, there is opportunity to gain support through a green-savvy consumer population.” The study defined five “green attitudes,” which range from “Dull Green” respondents on one end of the spectrum who make a minimal effort to support environmental change to “Bright Greens” who are doing everything they can to make a long-term impact on the environment. One in five Dull Greens indicated they were satisfied with the current state of the environment, while Bright Greens were skeptical about the outlook for the environment and one in three were angry about the situation. For information about green resources available from NAHB, e-mail Calli Schmidt, or call her at 800-368-5242 x8132. Proposed Bill on Clean Water Goes OverboardProposed legislation that would broaden the authority of the Clean Water Act is a leap in the wrong direction, NAHB told the U.S. Senate Committee on Environment and Public Works on Dec. 13. “The Clean Water Act has helped the nation make significant strides in improving the quality of our water resources,” Duane Desiderio, NAHB staff vice president of litigation, told Senate leaders during the hearings. NAHB has long supported the goals of the Clean Water Act, which is called into play when homes are built near rivers or wetlands and when builders take steps to avoid storm water runoff from construction sites. But broadening the scope of the act to include all waters within its regulatory reach — including roadside ditches — loads on more regulation without a corresponding environmental benefit, Desiderio said. Especially today, with a credit crisis exacerbating the housing slowdown, NAHB believes that Congress should focus its limited time and resources on legislation to help home owners and home buyers, rather than pursue legislative ideas that not only will restrict the industry’s ability to recover but also make new homes more costly, he told senators. The federal government now has authority over navigable waters, as well as wetlands and other aquatic features that have a substantial connection to those waters. These bodies of water are protected for commerce as well as for their biological and ecological well-being — and that’s how it should be, he added. There has been controversy over the purpose of the Clean Water Act since its enactment 35 years ago. In 2006, the U.S. Supreme Court issued a decision in Rapanos and Carabell that failed to end that controversy. However, lower courts have since ruled that for a water resource to come within the control of the federal government it must have more than a hypothetical or potential connection to traditionally navigable waters, Desiderio said. Advocates for expanding federal control seek to bring upland ditches and desert washes within the oversight authority of the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency, he said. But there is no evidence that Congress ever intended to sweep such isolated and remote features into the federal regulatory net. In the meantime, builders have reported long backlogs in the processing of permit applications and in some areas that process has come to a standstill, obstructing all residential construction. Solving these thorny jurisdictional issues by expanding Clean Water Act authority to cover all waters, everywhere, would add significant time and costs for both regulators and builders, and would drive up the cost of housing, Desiderio said. “Clean Water Act regulation cannot go to extreme lengths so as to subvert the act’s purpose to recognize, preserve and protect the primary rights and responsibilities of states to control water resources and address water pollution within their borders,” he said. “It would greatly undermine the careful balance among competing policies that Congress, the Supreme Court and the executive agencies have been working towards over the past 35 years.” For more information, e-mail Calli Schmidt, or call her at 800-368-5242 x8132. Complete RCS Lineup Being Offered at Builders' ShowFor the first time, Home Builders Institute, the workforce development arm of NAHB, will be offering the entire eight-course curriculum of its Residential Construction Superintendent (RCS) designation program at the International Builders’ Show (IBS). Convention-goers will have the opportunity to earn the RCS designation in the days preceding the IBS at Orlando’s Orange County Convention Center. The courses have grown in popularity among convention attendees since several of them were first offered at the IBS in 2006. As of this fall, more than 16,000 superintendents nationwide have participated in HBI’s RCS series, with more than 900 students achieving their RCS designation. The schedule for the full eight-course RCS curriculum that will be available:
For more information on the RCS designation, visit www.hbi.org/rcs; or e-mail Kevin Thorn at HBI, or call him at 800-795-7955 x8928. Strong Door, Small Cut Saw Best of What’s New in 2007A door that can withstand 236 mph winds and eight inches of rain an hour without letting in any wind or water and a saw that is nearly as powerful as standard reciprocating saws but fits in tight spaces and is easy to control with one hand are among this year’s winners of Popular Science’s Best of What’s New Awards in the Home Tech category.
To prevent water from coming into the home during a storm, Therma-Tru's Tru-Defense comes with L-shaped seals and is made of compression-molded fiberglass, polyurethane foam and 24-gauge steel. “When it comes to driving rains, hurricane-force winds and flying debris, the door is often the Achilles heel of the home,” the magazine says. “Leaky seals can fill your house with water — not to mention heat and cold — and a weak structure can crack or collapse under duress.” In |