Nation's Building News Online: March 3, 2008Print All Articles Text Version |
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Builders Adjusting Business Plans to Survive 2008Builders and remodelers who work steadily on readjusting their business practices in response to the current economic downturn stand a good chance of surviving until better times arrive and trouncing the competition during the recovery, according to housing industry veterans appearing at the International Builders’ Show (IBS) in Orlando last month with the battle scars to prove they have weathered previous housing slumps. “Today's housing market is obviously not the same housing market that existed a couple of years ago, and that means you can't afford to run your company the same way you did then,” said Michael Sivage, of Sivage Community Development in Albuquerque, N.M., who moderated the panel. The industry faces “another challenging year” following a “tough” 2007, he warned, and the burden is on builders to persuade consumers to consider the home-buying opportunities in today’s market despite the daily barrage of negative reports in the news media. Sivage asked each builder to track where their businesses have gone since the start of the downturn in 2006 and discuss what they are doing to get through 2008 and prepare for better times ahead. Among the accounts shared with the convention audience:
Congress Told Home Buyer Tax Credit Would Help Rally EconomyWith the housing industry facing its greatest crisis since the Great Depression and the economy teetering on the brink of recession, NAHB last week called on Congress to move quickly to enact a second round of economic stimulus directed squarely at the housing sector — including a tax credit for the purchase of a home. "The biggest bang for the buck most likely would be provided by a temporary home buyer tax credit," NAHB Chief Economist David Seiders told the Senate Finance Committee on Feb. 28. "Tax credits for the purchase of a home are a means of eliminating excess inventory, relieving some of the pressure on falling housing prices and ending the waiting-on-the-sidelines strategy some potential buyers have adopted in response to overly negative media stories concerning the future of the housing market." The recently enacted Economic Stimulus Act of 2008 could fall short of achieving its intended results because it does not address the problems posed by the housing contraction that are at the root of today's economic and financial market problems, he said. "The U.S. housing market now is in the contraction phase of the most pronounced housing cycle since the Great Depression," said Seiders. "Single-family housing starts are already down by 60% from their peak at the beginning of 2006 and the bottom is not yet in sight. Congress can, and should, do more." There are many models that Congress can look to when designing home buyer tax credits. The District of Columbia, for example, offers a $5,000 tax credit to first-time home buyers for the purchase of a new or existing home. With housing affordability improving over a year ago, a national first-time home buyer tax credit would stimulate buyer demand among households that do not have a home to sell. In turn, those who sell their existing home to a first-time home buyer will purchase another home and spur additional economic activity. A similar version of a home buyer tax credit was used successfully in the mid-1970s when Congress established a temporary tax credit for the purchase of a newly-constructed home to help clear off a then-record number of unsold homes on the market. NAHB cited the efforts of several senators who are seeking similar solutions. For example, Sen. Debbie Stabenow (D-Mich.) has introduced S. 1988, legislation that provides for a temporary, one-time refundable tax credit for first-time home buyers of 10% of the purchase price of a principal residence. Additionally, Sen. Johnny Isakson (R-Ga.) introduced S. 2566, a bill creating a one-time $15,000 tax credit for purchasers of a single-family principal residence that is a newly constructed home or a home in default or foreclosure purchased within a one-year time period. "What is common among these tax credits for the purchase of a home is that they represent policies that increase housing demand, thereby enabling home purchases for families, and fight falling housing prices, which threaten the economy as a whole," said Seiders. "We recommend a targeted home buyer tax incentive in order to maximize induced purchases." Seiders also urged the Senate Finance Committee to consider making the following changes to tax policy in order to get housing moving again:
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. Lower Housing Prices Entice BuyersAs prices drop and inventory and foreclosures rise in the San Francisco Bay Area, many buyers feel it’s time to start looking for a bargain and hopefully, their dream house. The debut of bigger government-backed loans and an expected interest rate cut could even ignite home purchases, especially for those previously priced out of the housing boom. Alexandra Whitford, 26, of Walnut Creek recently signed the dotted line on a 1,400-square-foot, three-bedroom, two-and-a-half-bath home in Bay Point with her husband, after looking at properties for two weeks. “Two or three years ago, we wouldn’t have been able to buy anything,” she said. “It’s an opportunity for the younger generation to purchase.” The Whitfords said that with lower interest rates and prices, it seemed like a good time to buy. The couple budgeted $400,000 and started looking. Although Alexandra said she didn’t plan to buy a bank-owned home, she and her husband found one that had been on the market for less than a week, paying $385,000 and 5% down after some negotiation. “It turned out that prices were lower than we expected…It was a nice little surprise,” she said. “A few years ago, $400,000 was the condo next to mine, a one-bedroom, 900-square-foot condo.” (www.mercurynews.com)
L.A.’s Troubled Watts Neighborhood Is Now Site of Home-Construction BoomIn an improbable place to find a home building boom in the midst of Los Angeles’ sluggish housing market, just three blocks from the Imperial Courts public housing project, along a stretch of dirt once used as a neighborhood dump, 44 homes are rising in Watts within sight of its famous towers. Across the street from bars on their windows and trash in their yards, a developer and a grassroots organization are selling the American dream: two-stories, four bedrooms, two-and-a-half baths, with master suites and marble countertops — optimistically priced from the mid-$400,000s. It is believed to be the largest development of new homes in Watts in at least three decades, one aimed at teachers, firefighters, nurses and other first-time middle-income buyers, some of whom might qualify for interest-free loans from the city that could shave $75,000 off the cost of 17 of the homes. (www.sfgate.com)
Nationwide Housing Slump Hasn’t Hit AlbuquerqueThe New Mexico Mortgage Finance Authority and the Greater Albuquerque Association of Realtors® say that Albuquerque, N.M. has not suffered the dramatic sell-offs that other cities have, in large part because it has not seen the job layoffs and home price inflation of other communities. Data from RealtyTrak.com, which tracks foreclosures from markets throughout the country, shows New Mexico ranked 32nd in the nation in foreclosure filings for 2007, at 3,893 homes. This was 26% lower than 2006 and 46% lower than 2005. For the nation as a whole, foreclosures were up 75% last year. Michael Sivage, an Albuquerque builder and developer, said building permits are down more than 50% from the boom of 2005, but still more than double the number of 1990, the low point of the last housing market recession. The big question, he said, is “what can we expect in 2008, 2009 and beyond?” National experts expect the housing market for new homes to continue to decline through 2008, he said, “and then we’ll see a modest recovery.” (www.abqtrib.com)
The Joy of Smoke-Free Apartment BuildingsResidents of San Francisco’s first new apartment building with a smoking ban are celebrating the right to breathe smoke-free air in their homes. Built by Citizens Housing Corp., a nonprofit developer dedicated to preserving and increasing affordable housing for poor residents, Buena Vista Terrace is part of a growing, nationwide movement to ban smoking in privately owned apartments and condominiums. From Michigan’s Kalamazoo County to Carlsbad in San Diego County, more and more landlords, for a variety of reasons, are snuffing out smoking in their buildings. And while one of the last bastions of the smoker is under assault, the thorny, unresolved legal issues make it difficult, if not impossible, for many apartment house dwellers to extricate themselves from a toxic environment. (www.sfgate.com)
Disney Revives ‘House of the Future’The Walt Disney Co., Microsoft Corp., Hewlett-Packard Co., software maker LifeWare and home builder Taylor Morrison are collaborating to build a new $15 million “House of the Future” in Tomorrowland. Scheduled to open in Disneyland in Anaheim, Calif. in May, the 5,000-square-foot home will look like a normal suburban home outside, but inside it will feature hardware, software and touch-screen systems that could simplify everyday living. Lights and thermostats will automatically adjust when people walk into a room. Closets will help pick out the right dress for a party. Countertops will be able to identify groceries set on them and make menu suggestions. The new home will be made of wood and steel and finished in muted browns and beiges, said Sheryl Palmer, president and chief executive of Taylor Morrision in North America. (www.ap.org)
Housing Crunch Squeezes Beaver Creek Ski InstructorsSki instructor Ben Smith, who asked that his real name not be used, has been homeless for several weeks since arriving in Colorado’s Vail Valley in December. He has been an involuntary ski bum — living in his makeshift camper van and moving to different parking lots around town — because finding a place at the height of the ski season is nearly impossible, and he can’t afford the places that are available. “I like the job, and I like working with the kids, but it’s just frustrating how expensive it is to live here, especially starting out at $10 an hour. I had no idea (the cost of living) was this high,” Smith said, “I don’t know how anyone can make it here on that wage.” Smith said that he is more than 60 people down on the waiting list for employee housing, and they do not allow dogs, so he would have to give up his dog Buster. He knows of other instructors looking for housing too, but many already knew people coming here and are “couch surfing.” Vail Resorts provides about 3,000 employee beds, mostly to seasonal workers in entry-level positions, such as ski instructors and lift operators. In the valley, Vail Resorts owns some units and also rents some from the towns. "But this year there has been a shortage,” admits Kelly Ladyga, Vail Resorts’ director of communications. (www.vaildaily.com)
Stiffer Fines Proposed for Employing Illegal AliensEmployers who knowingly hire illegal aliens will receive stiffer fines under an inflation adjustment procedure recently announced by the Bush Administration. “Work site enforcement and interior enforcement are critical elements of a strategy to deal with this issue of illegal immigration,” said Homeland Security Secretary Michael Chertoff, who on Feb. 22 conducted a joint news conference in the nation’s capital with Attorney General Michael Mukasey to highlight the Administration’s immigration enforcement and border security efforts. “We are increasing civil fines imposed on employers who knowingly hire illegal immigrants by 25%, the maximum allowed by law and the first such increase since 1999,” said Mukasey. “We are also working with the Department of Homeland Security to increase criminal prosecutions against the most egregious employer offenders.” Chertoff said that these actions are being taken “to continue to make it less appealing for people to break the law” and as a way to “keep that pressure up to make sure people are compliant with the law.” The new rule increasing employer fines was published in the Federal Register during the week of Feb. 25, and is set to take effect on March 27. Chertoff said that his agency plans to issue additional immigration rules in the future. One rule would require federal contractors to participate in E-Verify, an Internet-based identity and work authorization verification system, which is currently a voluntary program. The other proposed rule is a revision to the controversial no-match rule that would have forced employers to fire their workers for unresolved name and Social Security number mismatches. A coalition of civil rights, business and labor groups and the U.S. Chamber of Commerce had sued to halt that rule's implementation. The rule was then stayed by order of the U.S. District Court after a finding that Homeland Security had failed to assess the impact on small businesses, and that many legal workers, including U.S. citizens, faced termination because of inaccurate Social Security Administration records. Homeland Security subsequently agreed to withdraw the original rule in light of the court's findings. The provisions of the proposed new rule are expected to be announced in March. For more information, e-mail David Crump at NAHB, or call him at 800-368-5242 x8491. Bill Would Provide New Employee Verification SystemA bill introduced by Reps. Sam Johnson (R-Texas), Ron Lewis (R-Ky.), Kevin Brady (R-Texas) and Paul Ryan (R-Wis.) that would create a new, mandatory employer verification system for all future employees received the endorsement of NAHB last week. H.R. 5515, the New Employee Verification Act (NEVA), would require all U.S. employers to verify the work authorization of their future employees through a system operated by the Social Security Administration (SSA) via either an online program or telephone access to the verification system. Under the bill, employers could not be prosecuted without the federal government proving that they “knew” that an employee was illegal. Additionally, the legislation contains language long supported by NAHB that clarifies the relationship between an employer and the employees of its subcontractors. An employer cannot be held accountable for the work status of a subcontractor’s employees unless the employer “knew” that the subcontractor was using illegal labor. Of particular interest to NAHB members and many state and local home builders associations is significant pre-emption language that would reinforce the federal government’s authority over immigration-related laws by invalidating all state and local laws that attempt to regulate or penalize employers in relation to the work authorization status of their employees, as well as all state and local laws that attempt to require employers to use the Basic Pilot/E-Verify program operated out of the Department of Homeland Security (DHS). The legislation would repeal the current Basic Pilot program in its entirety, replacing it with the program managed by the Social Security Administration. Under the SSA program, an employer inputs the required information on a new employee, and SSA databases then send the employer an approval code indicating that the employee is authorized to work. SSA would be the only entity reviewing work authorization information on all U.S. citizens, and in a matter of seconds it would be able to verify the information provided against DHS’s database of workers holding valid work visas and of legal permanent residents. Employees who receive a “tentative disapproval” notice indicating that there is a problem with their records would be given a full opportunity to contest the determination and fix any problems in their records. Under the system, an employer would be required to terminate any employee who, after a further review by the government, receives a “final disapproval” notice. Additionally, employers would have liability protection from lawsuits by employees who are denied a job based on incorrect information in the government database. The NEVA legislation comes at an important time, with Congress — particularly, the House of Representatives — poised to attempt to take up several different employer verification plans that raise concerns with NAHB and other employer groups. Many of these plans provide little federal pre-emption of state and local laws, no liability protection and no safe harbor language for the relationship with subcontractor employees. By contrast, H.R. 5515 provides a fair and workable verification standard that reinforces the employer’s role in ensuring that their workers are legally authorized to work in the United States, while severely penalizing those employers who knowingly flaunt the law. NAHB will continue to monitor the progress of the bill, which has not yet been scheduled for a hearing. To read the legislation, click here and enter H.R. 5515 in the box at the center of the page. For more information, e-mail Jenna Hamilton at NAHB, or call her at 800-368-5242 x8407. Bankruptcy Provision Puts Snag in Senate Housing BillSenate Republicans last week blocked a housing bill (S. 2636) introduced by Senate Majority Leader Harry Reid (D-Nev.) containing a controversial bankruptcy provision that could actually prolong the mortgage crisis. A 48 to 46 vote fell 12 short of the 60 needed to halt a threatened filibuster and proceed to a debate on the legislation. While the bill contains many positive elements supported by NAHB — including provisions that would expand the mortgage revenue bond program and allow businesses to carry back net operating losses for five years — the legislation would do more harm than good because of its contentious bankruptcy language. This provision 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.
To read the legislation, click here and enter S. 2636 in the box at the center of the page. For more information, e-mail J.P. Delmore at 800-368-5242 x8412. Legislative Conference Coming at a Pivotal Time for HousingBuilders looking to send a message to Congress that it needs to take action to jump-start housing and the economy should mark their calendar 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 this year’s Legislative Conference — which will take place six weeks earlier than the 2007 conference — is particularly significant considering the precarious condition of the housing sector and overall economy. Builders are encouraged to travel to the nation’s capital and 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. Specifically, NAHB is urging Congress to:
Especially in these challenging times, participation by NAHB members 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 and to register for NAHB’s 2008 Legislative Conference, click here; or e-mail Molly Murray at NAHB, or call her at 800-368-5242 x8282. New-Home Sales Move Lower in JanuaryIn the latest evidence of a continuing housing market contraction, the U.S. Commerce Department reported on Feb. 27 that sales of new single-family homes declined 2.8% in January to a seasonally adjusted annual rate of 588,000 units, the slowest pace since February of 1995. “While home builders are reporting some glimmers of buyer interest starting to develop, many consumers are still firmly planted on the fence, waiting for just the right incentive to make their move,” said NAHB President Sandy Dunn. “Clearly, now would be an ideal time for Congress to follow up on its recently enacted economic stimulus program by passing legislation such as a home buyer tax credit that would help push those who are on the edge of a home buying decision off that fence and into the home of their dreams,” she said. “Such action would reduce the inventory of units on the market and help restore housing to its historic role as a primary engine of economic growth.” “Our latest surveys reveal that builders are seeing greater traffic of prospective buyers through their model homes than in previous months, yet this has yet to translate to any improvement in actual sales activity,” noted NAHB Chief Economist David Seiders. “It stands to reason that policy measures to stimulate housing demand could be a powerful force and help bring about a housing and economic recovery.” Three out of four regions of the country posted lower new-home sales in January, with declines of 10.3% in the Northeast, 7.6% in the Midwest and 2.4% in the South. The West showed a 2.2% gain for the month, making up for some lost ground from a large decline in December. While the inventory of new homes for sale was down 2.2% to 482,000 units in January, the supply of units at the current sales pace edged up to 9.9 months, its highest level since April of 1982. The median length of time that completed homes were on the market was 6.7 months in January, up from 6.2 months in December and 4.8 months a year earlier.
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. OFHEO Takes a Step to Raise Mortgage Market LiquidityThe Office of Federal Housing Enterprise Oversight (OFHEO) on Feb. 27 moved to help ease the mortgage credit crunch by allowing Fannie Mae and Freddie Mac to purchase and hold more home loans in their portfolios, but more needs to be done, according to NAHB. "We applaud OFHEO for taking this step to help inject more liquidity into the mortgage markets by giving Fannie Mae and Freddie Mac added flexibility to invest in the housing market," said Jerry Howard, the association’s executive vice president and CEO. "However, OFHEO, the two housing government enterprises (GSEs) and Congress all need to take further action to help struggling home buyers and the ailing housing market." Specifically, Howard said that OFHEO needs to go a step further by removing the current capital surcharge on the GSEs to allow them to truly become more active in buying mortgages. Currently, OFHEO is requiring Fannie Mae and Freddie Mac to hold 30% more capital in addition to the minimum legal requirement. OFHEO said last week that it would consider gradually decreasing the capital surcharge, with reductions depending on the financial health of the companies, market conditions and the breadth of their mission obligations, which have been expanded temporarily. The higher capital requirements have constrained Fannie Mae and Freddie Mac from responding more aggressively to the liquidity problems in the mortgage markets and will also impede their use of the new flexibility on portfolio investments. The capital penalty also has raised costs for the GSEs, and both Fannie Mae and Freddie Mac have taken several steps in recent weeks to raise lending fees, resulting in higher costs for home buyers at a time when the housing market is struggling to stay afloat. Just last week, Freddie Mac announced that it would impose additional lending fees and stricter downpayment requirements on borrowers in order to boost its capital reserves. "Now that Fannie and Freddie have their books in order and have addressed operational concerns, OFHEO should move immediately to rescind its 30% capital surcharge. In turn, the two GSEs need to repeal their recent fee hikes to lower borrowing costs for struggling consumers," said Howard. Congress also needs to act quickly, Howard said, by passing full GSE reform for Fannie Mae and Freddie Mac that would strengthen regulatory oversight over these financial institutions while also preserving their vital housing mission. For more information, e-mail Michelle Hamecs at NAHB, or call her at 800-368-5242 x8425. Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 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.
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: Fine-Tuning an Aerosol Insulation Nozzle
The accompanying drawing shows how I modify the tube to get it to fit in tight places.
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. Fair Housing Scores a Victory in South Carolina SettlementIn a major victory for fair housing, a lawsuit brought by South Carolina developer Connelly Development, LLC and NAHB has been settled just as it was ready to go to trial. The case was designed to demonstrate how local governments can run afoul of the federal Fair Housing Act even when government officials do not intend to discriminate. The effect of a local government action can trigger serious fair housing concerns for racial or ethnic minorities. Connelly Development and NAHB filed litigation in federal court in 2005 after the City of West Columbia took action to stop development of a multifamily rental project supported by the low-income housing tax credit (LIHTC) program. The case was scheduled to go to court on Feb. 19, but the city chose instead to settle the litigation. “Although I would much rather have just built the development without interference, I am pleased with this outcome,” said Kevin Connelly, president of Connelly Development. “Throughout this process, the NAHB litigation team has been right there with us. After all the time and effort we’ve put into this lawsuit, this is a very satisfying result. “My hope is that municipalities across the nation will focus on the needs of all the residents in a community, focus on the qualifications of the developer and dismiss the preconceived notions of affordable housing that is being built today. Affordable housing has improved vastly over the last 20 years and these developments are an excellent example of that, given the chance.” Another lesson for other local governments is that the city could easily have avoided litigation and the costly settlement, which was more than half a million dollars, said Jerry Howard, NAHB’s executive vice president and chief executive officer. “A little more than three years ago, Kevin Connelly asked NAHB for help,” Howard said. “The city should have been doing everything in its power to support his project. Instead, it withheld one letter that was needed to make the whole development viable.” “This has been a considerable effort for us,” Howard added. “We have been viewing the Connelly case as an important part of NAHB’s overall litigation strategy. The outcome affirms that effort and provides the industry with an important tool for those who want to build affordable housing to serve the needs of minority families.” NAHB’s litigation team worked closely with Benjamin E. “Ned” Nicholson V and others at the McNair Law Firm in Columbia, S.C. In 2004, Connelly Development, LLC planned to build “Tanners Crossing,” a rental project with units affordable to tenants earning no more than 60% of the area’s median income. Connelly successfully navigated all of the land use, zoning and financing challenges for the development, but the city withheld one last but necessary approval of sewer service for the project. The sewer lines already existed, no costly extension of new lines was needed and there was more than sufficient capacity within the current infrastructure to accommodate the housing. Yet the city would not approve a sewer hook-up for the project. Without a final sewer approval, Connelly became ineligible for low-income housing tax credits from the South Carolina State Housing Finance and Development Authority, making the venture economically infeasible. After Connelly lost the opportunity to receive a tax credit allocation, the city annexed the Tanners Crossing site within its jurisdiction and used a restrictive zoning classification to block Connelly, or anyone else, from building a multifamily project on it. “These tax credit projects aren’t easy, and it’s frustrating when the city won’t work with you when you’re trying to do the right thing,” Connelly said. “I hope other cities will understand now that they need to take care to stay on the right side of the Fair Housing Act.” Congress created the Fair Housing Act in 1968 to ensure that certain classes of people most likely to experience discrimination — including racial minorities — would not be discriminated against in the sale or rental of housing. The Fair Housing Act also makes it unlawful to interfere with someone who seeks to aid or encourage racial minorities to enjoy their right to housing. “Regardless of the motivation, the effect of the city’s actions was that Connelly was unable to build apartments for low-income families,” Howard said. “We felt there was a strong case for a Fair Housing Act complaint in this instance, and we were right.” For more information, e-mail Blake Smith at NAHB, or call him at 800-368-5242 x8583. New Study Finds Inclusionary Zoning a Flawed PolicyInclusionary zoning programs are a tax on housing consumers, according to new research from the National Center for Smart Growth Research and Education at the University of Maryland (UMD). “Just like other taxes, the burdens of inclusionary zoning are passed on to housing consumers, housing producers and landowners,” according to the study, which was conducted by Gerrit Knaap, Antonio Bento and Scott Lowe using data from a large number of jurisdictions in California from 1988 through 2005. The University of Maryland study is one of three major research projects funded by NAHB in an effort to identify the most effective housing affordability strategies. The two other research initiatives were case studies on housing affordability by Abt Associates of Cambridge, Mass.and a look at inclusionary zoning statutes and ordinances, by Tim Hollister of the law firm Shipman and Goodwin in Hartford, Conn. The UMD study finds that inclusionary zoning ordinances in the state failed to increase the total supply of new housing, but showed measurable effects on a variety of market factors:
Although the price increases and size reductions may seem relatively small, any policy that moves in the direction of making housing less affordable is undesirable and ineffective. Also, there are easier ways of getting smaller multifamily units built, if that is a community’s express goal, than by using this complex market intervention. “This is important research that gets to the heart of the inclusionary zoning issue,” said Jerry Howard, NAHB’s executive vice president and chief executive officer. “Inclusionary zoning is a manipulation of the housing market that hurts far more low- and moderate-income families than it helps.” Hollister has reviewed inclusionary zoning statutes and ordinances across the country to provide a national perspective on them. He found that inclusionary zoning is a complex market intervention that should not be taken lightly or simply copied from another community. It must be considered carefully before it is adopted. Some communities have enjoyed significant success with other state and local programs designed to address the housing affordability challenge, and many of the most innovative and successful approaches have been detailed in the comprehensive report prepared by Abt Associates. The 350-page compilation of state and local affordability strategies explains how these strategies work, how they are funded, where they have been used and the advantages and disadvantages of each. In the most extensive report ever compiled on the subject of non-federal affordable housing solutions, researchers at Abt Associates have produced 30 detailed case studies explaining how local governments have used these strategies to address their housing needs. For the most part, the report provides new examples that have not previously appeared in research by such organizations as the Department of Housing and Urban Development, the Center for Housing Policy and the Urban Land Institute. The Abt Associates study found that the most successful localities have pursued a variety of strategies to encourage affordable housing, and that the strategies getting the most press have not necessarily been the most effective. As an example, it cites North Kingstown, R.I., which used state mandates and guidance for local planning and a significant density bonus and streamlined permitting program for developers. For resources on housing affordability available from NAHB — including all three reports, which are downloadable for free as public documents — click here (nahb.org/housingaffordability). For more information, e-mail Debbie Bassert at NAHB, or call her at 800-368-5242 x8443; or contact Ed Tombari, x8309. Defying Down Trend, Builders Report Profitable 2007Contrary to popular belief, not every builder suffered a downturn in 2007. During an educational seminar at last month’s International Builders’ Show in Orlando, three entrepreneurial builders shared their “lessons learned” and successful business strategies on how they survived 2007 and managed to turn a profit. The first step is to stop procrastinating and develop a “call to action” plan, said John Schleimer, MIRM, CAASH, president of Market Perspectives, a residential and commercial real estate consulting firm based in Roseville, Calif. A key element of that plan is compiling comprehensive data on competitors, he said. Assess the standards and features of their homes, noting ceiling heights; approximate room, deck and patio sizes; and specialty rooms and flex space. After evaluating what other builders are putting into their homes, the next step is to conduct a comprehensive product review of your own business — including front elevations, plan design quality, standard features, pricing and value-engineering, said Schleimer. “Find out where you are priced in the market,” he said. “Conduct focus groups with buyers and prospects to find out what floor plans work. Don’t let the purchasing staff make design and feature decisions that should be made by the marketing team.” While it may sound counterintuitive to some builders, Schleimer said it is vitally important to allocate sufficient resources to marketing in down periods. “You need traffic-generating ads with sharp headlines to bring in qualified buyers,” he said, adding that an effective Web site and properly trained sales staff are essential elements to a successful marketing operation. To survive in 2008 and position their business for next year, Schleimer said that builders should also consider diversifying into infill projects, 50-plus housing or affordable attached and detached homes. Knowing Your Market Rick Tollakson, president and chief financial officer of Hubbell Homes in Des Moines, Iowa, said that knowing your market is essential to succeed. “I want to know what the competition is charging for the same product,” said Tollakson. Hubbell Homes is constantly evaluating current plans and amenities along with pricing, and its sales team recommends changes based on market comparisons. The company is well diversified, building homes tailored specifically for first-time buyers, empty nesters and growing families. “A big focus is on green home building,” said Tollakson. “We are the only home builder with geothermal as standard on all our brownstones.” A top-notch Web site is an essential selling point, he added. “We direct all e-mail leads through a dedicated sales agent. We get at least two to three Web leads per day. People want to communicate instantaneously. The only way to do that is with a dedicated Internet sales associate.” Looking ahead in 2008, Tollakson says his firm will be focusing on hard costs, streamlining the production process, raising its Web presence and increasing its sales. Diversification the Key to Success Steve Hall, president and CEO of Hallmark Homes of Savannah, Ga., credits diversification with the success of his firm, which just celebrated its 25th year in business. “In 2000, by taking advantage of the opportunity to buy bulk land and develop a master planned community, we diversified our construction efforts by focusing on production housing,” he said. “We now succeed in building homes starting at $140,000 as well as homes into the millions. We are currently building in 16 neighborhoods, closed 164 homes in 2006 and in 2007 topped that with 235 closings.” As the market began slowing in 2007, Hall acted on several fronts to adjust to the changing landscape. His firm streamlined operations by combining its buying power with builder affiliates. “Sharing expenses reduced the margin between the cost of materials and allowed access to a wider range of materials and vendors,” said Hall. Hallmark Homes also instituted a zero-defect punch list, set a tight building schedule, streamlined policies and procedures for its custom division and created a customer care department. To meet customer niches, the firm created a more diverse product line, and it changed designs to provide consumers what they were asking for. Another useful marketing strategy is to provide sales representatives with $15,000 in leeway to negotiate a price on-site. “If the sale goes through, the sales rep gets part of the action,” Hall said. To assuage consumer fears that prices haven’t hit bottom yet, Hallmark Homes also provides its customers with a one-year price guarantee to honor the sales price if it drops in the community. Submit Comments by April 4 to Update ‘Performance Guidelines’
Builders and contractors are encouraged to submit comments by April 4 to update the “Residential Construction Performance Guidelines” (RCPG) — the industry's most widely accepted reference on how homes should perform. The current RCPG, available through BuilderBooks.com, contains more than 300 guidelines in 12 major construction categories, including cabinets, cement board siding, concrete, countertops, drainage, driveways, drywall, landscaping, water infiltration and more. It was created for builders and remodelers to help them successfully manage customer expectations — and protect the bottom line — while delivering high-performance homes. It is also popular among consumers. The RCPG work group, part of the Business Management and Information Technology Committee, is overseeing the development of the new edition of the guidelines. Members of various NAHB committees and councils were chosen to serve on the work group. To Submit Comments NAHB members can submit comments for the updated guidelines through the NAHB Web site. A comment form is available at www.nahb.org/rcpgcomments. The new edition of the RCPG is slated for publication in 2010. For more information about the RCPG review process, e-mail Joshua Nester at NAHB, or call him at 800-368-5242 x8461.
NAHB Has Nearly 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 nearly 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.
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. Family Builders Win $50,000 Treasure Trail GiveawayAttending the International Builders’ Show (IBS) for the first time last month in Orlando, Judy and Carl Goshy found the trove of product information and business contacts they had been looking for, and they also received the unexpected good news that they had won $50,000 in the show’s Treasure Trail $50K Giveaway. “Although Carl has been building homes since 1981, he started his own company in 1995 and this was our first visit to the show,” said Judy Goshy. Judy at first found the news hard to believe when she received a telephone call from NAHB. “Any other call from someone telling me I have won usually means that I am being sold something,” she said. “I still do not believe that I have won anything of substance, much less $50,000. But I’ll allow myself to admit that perhaps I am too skeptical of many things and trust that this is true, as I did enter that contest and spent time getting all the spaces stamped on the card.” Contest participants at the IBS were required to pick up an entry form and have it stamped by each of the 10 participating sponsors’ exhibition booths. The winner was selected in a random drawing at the conclusion of the show. Judy Goshy said that some of the winnings might end up in the hands of a professional Web site designer. “Our Web site (www.goshyhomes.com) needs reworking and updating as I am so busy with all that I do.” Located in the Houston market, Goshy Homes has concentrated most of its construction activities in Carlton Woods in The Woodlands, Texas. “My husband builds excellent homes and receives all of his contract homes by referral,” said Judy. “We build specs also, but right now they are all sold.” The family company also builds recreation centers, entryway monuments and other light commercial projects. After leaving understandably “exhausted” from two full days on the exhibit floor, “on Saturday we returned home around 2:30 p.m. to very heavy rain and a dead car battery,” said Judy. “But everything all seemed to work out fine and we did enjoy the show and got a lot of information we need. Although my name is on the winning card, this is really a win for both of us.” Sponsors of the Treasure Trail $50K Giveaway included: American Express, AT&T Connected Communities, the Consumer Electronics Association (CEA), Heatilator/Heat & Glo/Hearth & Home Technologies, The Home Depot, PGT Industries, Time Warner Cable, Verizon, Wayne-Dalton and Weather Shield Windows & Doors. BALA Hot Design Trends: Bold Colors, Human Scale, Modular
Bold colors for interiors and exteriors, smaller homes, the continuing evolution of outdoor living space and modular homes offering heightened design are among the eight design trends noted in the 2007 Best in American Living Awards (BALA) — the nation’s foremost residential design competition ― according to judges who analyzed the hundreds of BALA entries. Other hot trends, as seen in the BALA entries, include:
BALA Home of the Year Tucker Bayou — the BALA Home of the Year, built in WaterSound, Fla. — exhibited many of this year’s leading trends. Designed by Looney, Ricks, Kiss Architects of Memphis, Tenn. and built by Haven Custom Homes of Ridgeland, S.C., the modular home is nestled in the middle of a pine forest alongside a golf course in the panhandle of Florida.
BALA Room of the Year New this year, the judges also recognized a BALA Room of the Year, the Potts Residence Boat Builder's Refuge, a sumptuous billiard room and retreat inspired by the home owner’s desire to maximize views of a river and marsh from the second story of his home. The room’s defining feature is its arching ceiling — shaped like a hull and detailed in ash, teak and mahogany. The Potts Residence, on Daniel Island, S.C., was designed by Stephen Herlong and Associates Architects, Isle of Palms, S.C., and built by Philip Smith General Contractors, Mount Pleasant, S.C. The interior designer was Designs Three and Associates, John’s Island, S.C. 2007 BALA Winners The 2007 BALA winners were named at the 24th Annual BALA celebration held Tues., Feb. 12 at Sea World in Orlando. They include: Platinum Winners
For more information on the BALA winning entries, visit the Professional Builder Web site at www.probuilder.com/BALA. Small Is the New Big in Active Adult Communities
“For many years big was in — big communities with extensive amenities,” said Janis Ehlers, CAASH, of The Ehlers Group, a marketing and communications company that specializes in real estate development and active adult communities. “While these fully-amenitized communities may continue to hold appeal with the growing number of boomers looking for new homes, there are tremendous opportunities for smaller niche communities,” said Ehlers during a presentation at the International Builders’ Show in Orlando last month. Ehlers said that marketing strategies used by big builders and their communities can easily be adapted for smaller communities — with the same level of success. These strategies for small and midsized active adult communities include:
Janis Ehlers, CAASH, is one of the nation’s foremost active adult and senior housing specialists and has built a 30-year career in marketing and communications. She heads The Ehlers Group, an award-winning strategic marketing company with offices in Florida and Virginia specializing in real estate development and active adult communities throughout the country. Her corporate experience includes marketing positions with two major developers of active adult communities, Levitt & Sons and Cenvill Corp. A Certified Active Adult Specialist in Housing (CAASH), Ehlers is active in national and regional associations related to 50+ housing. She has an MBA in real estate from Nova Southeastern University. For more information, e-mail Ehlers, or call her at 954-726-9228.
Tour Top 50+ Communities in New Orleans Sign up for the active adult housing tour at the 2008 Boomers and Beyond: 50+ Housing Symposium in New Orleans, May 19-21. The symposium will also feature the most innovative new community designs during the Best of 50+ Housing Awards gala. Click here to register, or for more information.
Earn CAASH Credits at Building for Boomers & Beyond The three required courses for the Certified Active Adult Specialist in Housing (CAASH) designation will be held Saturday, May 17 and Sunday, May 18 at the 2008 Building for Boomers & Beyond: 50+ Housing Symposium in New Orleans. The CAASH designation gives housing professionals serving this rapidly burgeoning market the essential knowledge, tools and skills that will help them succeed. To learn more about CAASH, visit www.nahb.org/CAASHinfo.
Find Out What the 45+ Housing Market Wants “Right House, Right Place, Right Time: Community and Lifestyle Preferences of the 45+ Housing Market,” available through BuilderBooks.com, will help 50+ housing professionals determine the right design, home features and amenities to attract boomer home buyers in their market. Margaret Wylde guides readers through the latest survey results on this important consumer group and explains what their responses mean for today’s and tomorrow’s home building industry. To view or purchase this publication online, click here, or call 800-223-2665. Help Rebuild New Orleans at 50+ Housing SymposiumBuilding for Boomers & Beyond: 50+ Housing Symposium is partnering with Rebuilding Together New Orleans and the NAHB National Green Building Conference on a special two-day community service project in which symposium attendees can help rehabilitate homes in New Orleans that were severely damaged by Hurricane Katrina. The 50+ Housing Symposium will be held in New Orleans May 19-21. Two pre-conference days, Saturday and Sunday, May 17-18, have been reserved for the rebuilding project and symposium attendees are encouraged to volunteer. Attendees participating in the rebuilding project will work on the NAHB house begun on May 10 by volunteers attending the Green Building Conference, also in New Orleans. The Green Building Conference will be held May 11-13. Since Hurricane Katrina struck New Orleans in August 2005, more than 1,700 volunteers have worked with Rebuilding Together New Orleans to help more than 50 low-income, elderly and disabled residents return to their homes. The volunteers have provided more than 40,000 hours of labor worth nearly $1.3 million. Symposium attendees, as well as others interested in participating, are encouraged to volunteer on one or both days. All skill levels are welcome. Participants must be 18 or older. Transportation from the symposium at the Sheraton New Orleans Hotel to the building sites and all tools and building materials, lunch, water and T-shirts will be provided. There is no cost to participate, but participants must register in advance. For more information about the symposium or how to volunteer or make a donation to Rebuilding Together New Orleans, visit www.nahb.org/build4boomers, e-mail Janice Coyle at NAHB, or call her at 800-368-5242 x8386. To be a corporate sponsor for the project, e-mail Harris Floyd at NAHB, or call her at 800-368-5242 x8208.
Tour Top 50+ Communities in New Orleans Sign up for the active adult housing tour at the 2008 Boomers and Beyond: 50+ Housing Symposium in New Orleans, May 19-21. The symposium will also feature the most innovative new community designs during the Best of 50+ Housing Awards gala. Click here to register, or for more information. |