Nation's Building News Online: March 17, 2008Print All Articles Text Version |
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Research Weighs Consumer Preferences in Soft MarketEven in the depths of the current cyclical housing downturn, consumers continue to be interested in housing and home builders can tap into that potential by paying careful attention to home buying preferences, according to two experts on market trends who presented their latest research findings at the International Builders’ Show in Orlando last month. Emerging as a strong draw for consumers this year is anything “green,” a market force that has been gaining strength with the continuing rise of energy costs, according to Gopal Ahluwalia, NAHB’s vice president of research. “New home buyers are most influenced by greener choices that include energy-efficient features and equipment-based energy saving features,” said Ahluwalia. “They are also very interested in exterior features, such as a front porch, deck or patio in the rear, and exterior lighting. In addition, laundry rooms and dining rooms are widely considered to be essential in new homes.” Gayle Butler, editor-in-chief of Better Homes and Gardens, confirmed that eco-friendly building is also very much on the radar of a growing number of consumers. In a research study conducted by the magazine in January surveying more than 2,000 home enthusiasts from across the country who bought a new home in the past 10 years or plan to build one in the next 10 years, more than half of the respondents said they wanted green building and remodeling options presented to them. This number jumps to more than two out of three in the millennial age group. Nineteen percent said that it is the responsibility of builders to use eco-friendly materials and build highly energy-efficient homes, even if it adds to the cost of the home, said Butler. Thirty-one percent said their neighbors would buy a green home “when the cost of such homes are within 3% to 5% of conventional homes.” Sparking Interest in a Down Market When asked the best way for a builder to spark a buyer’s interest in today’s market, the Better Homes and Gardens survey found that 44% of the respondents prefer bonus home amenities and upgrades; 42% would like a discount on the price of a new home; 37% want the builder to buy their old home at a fair price; and 31% desire free professional decorating and landscaping advice. “What we’ve discovered is that home continues to be our emotional center and the sweet spot of everyday life,” said Butler. “Economic uncertainty aside, we won’t stop spending, improving and dreaming when it comes to home.” Better Homes and Gardens found that its readers prefer a home that accommodates modern lifestyles, has the flexibility to be adapted for future needs, is special “for me” and provides greener choices. More specifically, 71% identified an all-new kitchen that looks great and is a fun place in which to work as an exciting feature to look for when shopping for a newly built home. Forty-three percent rated sufficient storage as a top priority and 41% cited a master suite “that feels like a luxurious hotel room.” In the next five to 10 years, Butler reported, 50% of those under age 43 expect to need a home office that functions as a full-time work space, 30% of baby boomers expect an aging parent to move in and 66% of boomers expect to need guest accommodations for grown children and grandchildren. Today’s home buyer prefers designs tailor-made for their specific needs. “Sixty-nine percent said no more cookie-cutter houses,” she said. “They want a house that has character and charm.” Satisfaction With Kitchens and Baths Although consumers generally prefer homes that are bigger and equipped with more amenities, said Ahluwalia, some features of new homes have now improved to the point where home buyers are relatively satisfied. For example, while large kitchens are desirable, many consumers would be reluctant to see the kitchen expand further at the expense of other space, said Ahluwalia. “Just over 37% of shoppers would sacrifice living space for a larger-than-average kitchen,” he said. Home buyers are generally content with the number of bathrooms in typical new homes being built today, Ahluwalia said, and continuing a trend identified in earlier NAHB studies, more than one-third of home buyers do not think it is necessary to have a living room. These conclusions come from a new NAHB survey of more than 2,300 recent and prospective home buyers that examined the features, amenities and layouts preferred in a new home. Top-10 ‘Must-Have’ Features Among the 10 features or designs most frequently rated as “essential/must have” before a consumer would consider buying a specific home, four were energy-related and two were exterior features. A laundry room topped the list, rated essential by 55% of the survey respondents. Energy-related features in the top 10 included a high level of insulation (48%), exhaust fans (48%), Energy Star-rated windows (36%) and equipment-based energy saving measures (34%). Exterior lighting (33%) and fenced yards (33%) were the two outdoor features that also made the top 10 list. Of 21 different kitchen features, a walk-in pantry was rated as essential/must have or desirable by 86% of those surveyed, followed by an island work area (80%), built-in microwave (72%), drinking water filtration (69%) and special use storage (wine rack, spice drawer, pots and pans, cabinet, etc.) by 16%. Granite/natural stone was the most popular kitchen counter material and a linen closet topped the list of bathroom features, with 89% of respondents categorizing it as essential/must have or desirable followed by an exhaust fan (88%), separate shower enclosure and water temperature control at 79% each. The median home size of those surveyed was 1,835 square feet and the respondents said they wanted a median of 2,354 square feet in a new home. With the additional space, home shoppers expected to pay a median of $241,699, about 6% more than the $227,500 estimated median value of their current homes. More than half (52%) of respondents prefer a master bedroom only on the second floor of a two-story home, while 16% prefer it on the first floor only and 22% would accept it on either floor. More than two out of three respondents preferred nine-foot or higher ceilings on the first floor, and, continuing a popular trend of the last 20 years, more than 40% said they wanted the kitchen and family room to be adjacent and visually open, but with a half-wall separating the two rooms. More than half of the respondents said they would like a minimum of four bedrooms, while 39% would accept three bedrooms. Twenty-eight percent of those surveyed preferred at least three full bathrooms, one-third would like to have 2-1/2 bathrooms and 31% expressed satisfaction with only two bathrooms. On the front exterior, brick was the most preferred, followed by stone, vinyl and stucco.
‘Trillion Dollar Women’ Give Viewpoint, Objectives of Female Buyers Though written for the female consumer, “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions,” available at BuilderBooks.com, is a valuable resource for housing professionals to gain perspective on ways to better serve and market to this growing segment of customers. According to a recent Harvard University study, women control 91% of home buying or remodeling decisions. “Trillion Dollar Women” provides builders and other housing professionals with a detailed look at the motivations, objectives and viewpoints of female buyers. To view or purchase this publication online, click here, or call 800-223-2665.
Floor Plans: BALA Home — Actually, Cottage — of the Year
The 2007 Best in American Living Awards (BALA) Home of the Year, Tucker Bayou, is a modular cottage built as an empty-nester vacation home in WaterSound along the Florida panhandle. Nestled among southern pine and fronting a golf course, the home is also the 2007 Southern Living magazine “Idea House.” Though designed and built as a cottage, the 3,544-square-foot house also works just as easily as a family home — with clear differentiation of public and private spaces.
The more private entrance is on the front elevation faces the golf course. A Home of Subtle Space Distinctions Homes often distinguish public spaces from private spaces by having the private spaces on the second floor and reserving the public spaces for the first floor. Tucker Bayou draws more subtly on these distinctions, beginning with its two entrances to the home. While the front elevation faces the golf course, it is accessible only by a private pathway that connects to the other homes in the area. The home’s more public entrance, the one that most visitors use, is at the rear of the home where there is a car park area and an enclosed garden.
That entry through the garden area also helps define public and private spaces. From the garden, an entry hallway brings visitors through a gallery. There is also a private entry into the kitchen from a covered walkway and the rear porch. Off the kitchen are a family work area that serves as a staging area for groceries and an adjacent utility area. Public spaces on the first floor include the kitchen, dining area and living room. Private spaces include the owner’s suite and an exercise or study area. The master bedroom has a private entrance.
The children’s bunkroom on the second floor offers a retreat for the children, giving the adults downstairs quiet time of their own. Two additional bedrooms and a media room upstairs also provide a guest getaway — when kids aren't occupying the bunks.
The public versus private aspects fit with the way empty nesters use this house, according to architect J. Carson Looney, of Looney Ricks Kiss Architects of Memphis. “It’s a lot of what we see in the panhandle region,” he said. “Homes may blow you away by what’s inside. But there is an overwhelming desire to be understated from the street. Big developments (in the area) don’t sustain value or achieve the price point per foot.”
Blending in With Its Environment The cottage fits its environment with ease, both standing out from the forest setting and blending in comfortably. The roof’s shape, with its strong cross gable, accommodates a lot of space, said the architect, but the shape also enables the house to fit into its elegant location. A Big Home or a Cottage? Nowhere is that understated nature of Tucker Bayou more obvious than the seeming contradiction of it being a 3,544 square-foot home and a cottage.
The home reads as an intimate space with human-scale rooms that allow people to feel relaxed and welcome in the environment. The architects achieved this by making the roof line seem smaller while delivering more space within the home. The interior design elements also play to the feeling of the cottage. In particular, the palette reflects a quiet life and the bead-board walls, coffered ceilings and pine floor present a pastiche of cottage life that fits the empty nester vacation lifestyle. “People from Chicago may live in a fine, stately home, but when they come here, they come for relaxation,” said Looney. They don’t want to give up niceties, but they don’t necessarily want to show off, either, he added.
The BALA awards, the nation’s foremost residential design competition, are co-sponsored by Professional Builder magazine and NAHB. Photos by Jack Gardner Photography
‘Smaller, Smarter Home Plans” Available at BuilderBooks.com “Smaller, Smarter Home Plans,” available through BuilderBooks.com, showcases more than 300 favorite home plans — mostly 2,000 square feet — from top designers. The plans are presented in full-color photographs and artists' renderings. To view or purchase this publication online, click here, or call 800-223-2665. Builders in Kansas City Bust Housing Myths in the News MediaIn a housing market that has been down but clearly not out, prospective home buyers in Kansas City earlier this month found in-depth reporting in their local newspaper of real estate experts suggesting that now is an opportune time to find out what the market has to offer. Behind the scenes, local home builders had a hand in the news story, which provides extensive information on the dynamics of the local market and helps dispel the public perception of doom and gloom that has been conveyed by national media reports of conditions that don’t pertain to Kansas City. “This much is certain: It’s a buyers’ market,” wrote The Kansas City Star's business editor, Chris Lester, in his introduction to a transcript of the panel discussion. “But the panelists also took pains to delineate differences between the local market and the woes of California and Florida markets that dominate national headlines. Moreover, they see signs that the current buyers’ edge in Kansas City could be a memory within a year.” The idea for the story, which appeared on the front page of the newspaper’s business section on March 9 and 11, started with media coverage of the annual housing forecast conference by the Home Builders Association of Greater Kansas City in January. Following the forecast, Lester “approached us about putting together a roundtable of housing experts to discuss the market and where we are headed,” said Matt Derrick, the association's staff vice president of public affairs. “The roundtable eventually consisted of seven industry professionals, including five HBA members and staff provided by the association, along with the CEO of the local Realtors® association and a local mortgage lender,” Derrick said. Coverage of the panelists in the Star makes it clear that the Kansas City market has not hit the cyclical highs and lows experienced by some of the markets that have been making headlines in the national news. The market’s inventories of unsold homes also appear to be dropping fairly quickly, and with new construction significantly slower than it was a few years ago, panelists warned prospective buyers who are trying to time the market and make their move when prices are at their absolute bottom that the selection of homes available today might not be available for much longer. “Because we’ve cut production (of new homes) so drastically the last few years, once the inventory moves, there’s not going to be a lot behind it….Once we hit the bottom (and) stuff starts clearing out, there’s not a lot left behind that’s going to be for sale,” said Tim Underwood, executive vice president of the HBA. “The reaction to the articles has been overwhelmingly positive from our membership,” said Derrick. “The feedback from members has reflected their appreciation that the panel discussion supported the ‘buy now’ message and that we were able to have the Star run a story focusing solely on the local market and explaining why Kansas City is faring much better than the national average.” The HBA has been using the forecasts and other resources from NAHB — available to members and affiliated associations in the Myth Buster section on nahb.org — to highlight the relative health of the Kansas City housing market and promote a ‘buy now’ message in a media campaign launched last summer.
The continuously-updated materials in the Myth Buster section contain housing market data and information to help members and HBAs provide accurate information and combat misleading media reports that often don’t reflect local market conditions. They include housing forecasts for the nation’s top 100 markets, background information on reports frequently cited by the media, questions and answers on housing myths and consumer concerns and consumer-targeted television spots, print ads and handouts that can be customized for a local audience. For more information, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447. Case Says Housing Prices 'Flat' in Most Local MarketsBy Lew Sichelman PARK CITY, UTAH — The housing markets in the vast majority of the country have been largely unaffected by recent price declines, according to a partner in a popular index the media likes to use to show the enormity of the housing crisis, and an index housing trade groups say paints exactly the wrong picture. "There's no question there's no bubble in 43 states," Karl Case, who distributes the monthly S&P/Case-Shiller Housing Price Index with Robert Shiller, said at the Midwinter Executive Housing Conference here late last month. Case's presentation reinforces protests by NAHB and the National Association of Realtors®, among others, which argue that there is no national housing market. Robert Shiller, an economics professor at Yale, is generally the Case-Shiller Index's public persona. The trade associations have complained bitterly that both the popular press and the trade media focus on the composite figures when the index is published each month instead of looking to see what is going on in each individual market. Even small-town newspapers and television stations point to the overall average rather than digging to determine the numbers for their particular burgs and hamlets, they grumble. According to the latest index, the composite for the 20 major markets followed closely by Case-Shiller is down 10.5% from the peak in July 2006. In addition, the average price in the 20 markets is down from each of their peaks. Nevertheless, Case, who noted that "housing markets are very emotional," said that prices have remained relatively flat in most places. The Wellesley College economics professor predicted that prices "are likely to correct further," though he stopped short of forecasting exactly when they will hit bottom. "Trying to predict that is a fool's game," he told the conference. "There's no way to tell when the downturn will run out of gas. You can tell when it's beginning, but not exactly when." But he did point out that the current cycle is looking more and more like the last three downturns, which may mean the end is near. In each of the three previous cycles — 1973-75, 1978-82 and 1986-91 — gross residential investment dropped more than 30% and housing starts tumbled 60% or so. This time around, residential investment is down 29% so far and housing starts are off 56%. "It's got a little ways to go," he said of the current housing recession. "But we're getting close." Case said his index is as precise a model as there is in determining the path house prices are taking. "It's based on every transaction we can get our hands on," he said. "It really tracks what's happening with inflation." Based on the index, the economist said the country's housing market falls into "three regimes," each of which will "unwind differently." One is the group of states, mostly in the Midwest and South, where falling or rising incomes explain everything. Another is comprised of states like Massachusetts and California, where the limited supply of land drives prices. And the third includes the "Johnny Come Lately" states, places like Florida, Arizona and Nevada where greed and gluttony took hold. (c) 2008 National Mortgage News and SourceMedia, Inc. All Rights Reserved. Reprinted with permission. Affluent Are Also Losing HomesThe number of home owners defaulting on their loans in the Baltimore metro area last year rose the fastest among highest-income counties with the most expensive housing — Howard, Anne Arundel and Carroll. Foreclosures were even higher in the wealthy Washington, D.C. suburbs, according to a Baltimore Sun analysis of court records statewide. All but two of Maryland’s 10 most affluent counties — those with median household incomes topping $70,000 — saw foreclosure rates rise by more than 50% in 2007. Montgomery County, where the typical household income is more than $87,000, saw its foreclosure cases rise nearly 130% — the biggest jump in the state. Housing experts blame the frenzy of easy mortgage money available during the housing boom and the beginning of the slump. The share of buyers opting for “piggyback loans” to cover the full cost of a home with no donwpayment tripled in Montgomery County between 2004 and 2006 to three out of every 10, according to a recent study by the Reinvestment Fund for the Baltimore Homeownership Preservation Coalition. “I realize I’m not the only one, but I didn’t realize how many people are being confronted…with this kind of situation,” said LuJuanda Dixon, who is working with counseling group HomeFree-USA to try to save the house in Bowie that she bought with her husband last year for $650,000. Before Danny Dixon lost his job in November, they were making $100,000 a year. (www.baltimoresun.com)
Swooping in From OverseasWith the U.S. dollar at its weakest level in decades, international buyers are chasing housing bargains here, eager to take advantage of their purchasing power and the declining prices in some of the best-known U.S. cities. Stephane Torriglia flew in from Spain about a month ago to check out a rowhouse for sale on Capitol Hill that belongs to a friend and former Marine who now lives in Spain. He estimates that it could be worth as much as $1 million and has offered $800,000. He plans to put 50% down if the offer is accepted. “The idea is we’ll convert our euros into dollars,” Torriglia said. “We can rent the place out. Maybe in five years or six, the dollar will be strong again and the real estate will gain value. It’s an opportunity.” A study by the National Association of Realtors® found that about 25% of the real estate agents surveyed last summer said they had more business from international clients than they did five years ago. The weak dollar was cited as one of the reasons for the uptick. More than a quarter of the foreign buyers bought their homes with cash, and when they took out loans, they put down more money than domestic buyers, the study found. About 26% of foreign buyers ended up in Florida and another 16% in California, with Texas in third place. (www.washingtonpost.com)
Utah Seeing Less of Housing SlumpWhile its housing price appreciation dropped in the fourth quarter of 2007, Utah’s numbers for the entire year show a 9% increase, according to the Office of Federal Housing Enterprise Oversight’s fourth quarter national report of price appreciation rates. This was the highest of the 50 states, according to the report, which showed a national average increase of 0.8% last year. “Utah didn’t experience the type of price appreciation of other states in the bulk of the boom,” said Andrew Leventis, senior economist for OFHEO. “Utah did not have the affordability constraints that have really affected other places.” “You have to keep these things in perspective,” said Carol Sapp, executive officer for the Southern Utah Home Builders Association. She said that five-year appreciation rates give residents a better idea of their home’s value. Utah’s western neighbors didn’t fare so well. In all, Nevada had a 5.9% decrease in price appreciation. Arizona saw a 2.4% decrease and California a 6.7% decrease, according to the report. Other high appreciating states included Wyoming, 8.3%; North Dakota, 7.9%; Montana, 6.9%; and Alaska, 6%. (www.thespectrum.com)
Builders Stand Pat Here, Put Up Sticks ElsewhereIn response to a severe local housing recession, developers like Mick Pattinson, president of Carlsbad, Calif. home builder Barratt American, are sitting on land plots they have poured millions of dollars into and looking outside of the state to build. Because readying land for homes can take three years or longer, builders acquired and invested in land long before the start of the housing downturn. Now that the land is ready, Pattinson will wait until the market shows signs of recovery to build. In the meantime, he has started looking at projects in Idaho, Utah and Canada. “We’re all dressed up with nowhere to go,” said Pattinson, whose company sold 397 homes in Southern California in 2006 and 116 in 2007. Michael Crews, founder and president of Michael Crews Development in Escondido, said his company probably invests more money outside the state than within it. While waiting to develop 13 land plots in Fallbrook, Calif., his company is selling homes or developed land in Arizona, Idaho, Texas and Utah. His company sold 63 homes last year, down from 111 in 2006. Pattinson expects to be building in California again in about one year, with a seven-month housing inventory, down from 12 months currently. But some economists and academics have predicted it will take longer, maybe three or four years, because the median home price needs to be affordable for the median-income households. But some builders say it is impossible to build affordable housing in San Diego and turn a profit because of permitting fees, which have been ramped up in recent years. “You can’t have some of the regulations and priorities that we encumber housing with in California and then lament the lack of affordable housing in any genuine sense,” said Paul Tryon, chairman of San Diego’s Building Industry Association. “If you go back to 1977, housing in California was exactly as it was nationwide in average price….It was desirable in 1977. It didn’t get sunnier. The surf didn’t get bigger.” (www.nctimes.com)
Regulations Are at the Root of U.S. Housing MessA recent study by Cato Institute scholar Randal O’Toole draws on broad economic literature to conclude that recent price swings in housing are the result of out-of-control government regulation. For most of U.S. history, real estate prices have tended to rise with inflation. In periods when they increase faster than that, home building activity rises, driving prices back. Since the U.S. is flush with land, it has generally been easy for supply to respond to higher prices, and push them back down. But in the 1960s and 1970s, California and Hawaii began a movement that sought to limit this with growth management planning that effectively confined growth to within a line around the city. Over time, this regulation has spread dramatically. “In 2006,” O’Toole reports in his study, “the price of a median home in the 10 states that have passed laws requiring local governments to do growth-management planning was five times the median family income in those states. In contrast, a median home in the 22 states that have no growth-management laws or institutions cost only 2.7 times the median family income.” (www.bloomberg.com)
The House in a BoxPromoted by design magazines such as Dwell, kit homes sold as parts have attracted a near cult-like following among style-minded home shoppers and do-it-yourselfers. The factory-fabricated houses, often in modernist designs, can bring efficiencies to a process notorious for cost overruns and delays. And fans say they are greener because they create less waste than on-site construction. The kit house from designer Rocio Romero starts at $42,000, but Matthew and Allison Meeks spent nearly eight times that to have it assembled in Gallatin, N.Y. At 1,500 square feet, the house had three bedrooms and two baths. But buying the roofing, doors, windows and interiors, plus other charges, quickly blew their $260,000 budget. Mrs. Romero charged $8,400 in design fees to allow the owners to eliminate the basement, take out a wall to open up the kitchen and flip the floor plan. They swapped out the galvanized steel exterior for cedar, costing $4,500. The cost of floor-to-ceiling windows and doors containing argon gas between the double panes for energy efficiency was $32,500. The land was a bargain $42,000 for three acres, but it was sloped, requiring a $22,000 above-ground septic system, versus about $3,000 for a standard in-ground one. The Meeks paid their contractor a fixed price of $64,000 for what they thought would be four months of work. But site conditions such as hitting rock and delays from ordering custom materials not included in the kit stretched the project to a full year. All told, the house cost $250 a square foot, or $375,000. While local architects say custom building starts at about that price, it was 44% over the couple’s budget. Still, “it was worth it,” Mr. Meeks says. “I wound up with a home that was way cooler than I thought it would be.” (www.marketwatch.com)
Congress, White House Step Up Efforts to Rescue Economy
In a March 14 address to the Economic Club of New York, President Bush touched on the success of steps his Administration has taken to limit the number of households who will lose their homes to foreclosure and he called on Congress to do a number of things to address the current downturn in the housing market, which he called “a root cause of the economic slowdown.” Members of Congress, the President said, “need to move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow state housing agencies to issue tax-free bonds to home owners to refinance their mortgages.” Bush cited efforts by the Federal Reserve Board and the Treasury Department to help financial institutions make more credit available to businesses and home buyers, and he said that consumer spending will receive a boost in the second week of May when income tax rebates start going out to 130 million households. “I’m coming to you as an optimistic fellow,” he said. “I’ve seen what happens when America deals with difficulty. I believe that we’re a resilient economy, and I believe that the ingenuity and resolve of the American people is what helps us deal with these issues.” Fixing What Went Wrong On March 13, the day prior to Bush’s trip to New York, the Treasury Department released a report by the President’s Working Group on Financial Markets on what went wrong leading up to the collapse of the subprime mortgage market last summer and what actions are needed to prevent a recurrence. Commenting on the report, Treasury Secretary Henry Paulson signaled a need for greater transparency and other reforms to prevent the kind of sudden downturn that has struck credit markets in recent months. The changes include tougher disclosure requirements for banks and Wall Street firms, a nationwide licensing system for mortgage brokers and new rules for credit rating agencies. Waiting for an FHA Bill On Capitol Hill last week, NAHB lobbyists held several meetings with key lawmakers and their staffs to help move Federal Housing Administration modernization forward. In addition, grassroots members of the association were actively involved, reaching out to members of Congress to urge them to get the job done. While both Senate Banking Committee Chairman Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) reported progress, ultimately House and Senate negotiators failed to approve a final bill before Congress adjourned for a two-week recess. It appeared, however, that important groundwork had been laid to move this legislation forward upon Congress’s return. More Plans to Limit Foreclosures In another development on the housing front being monitored closely by NAHB, Frank on March 13 announced a plan to let the FHA insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. Frank said he wanted the FHA to provide up to $300 billion in new guarantees to get borrowers into viable mortgages, which he predicted could help refinance between 1 and 2 million home loans and help these families stay in their homes. In exchange for accepting a writedown of principal, lenders or mortgage holders would receive a payment from the proceeds of a new FHA loan if the borrower "can reasonably be expected to pay" the restructured mortgage. In announcing the new proposal, Frank cautioned that the bill text could change before it was introduced. Dodd also unveiled his own legislative plan to help strapped home borrowers. Under the "HOPE for Homeowners Act of 2008," new mortgages that are offered by FHA-approved lenders will refinance abusive loans at a significant discount for home owners facing difficulty meeting their mortgage payments.
With Congress off for the Easter holiday, home builders are encouraged to set up meetings with their representatives and senators in their home districts and urge their lawmakers to take immediate action to shore up home prices, which will stabilize housing and the financial markets. Specifically, builders should call on their federal lawmakers to create a temporary home buyer tax credit to boost sales, enact FHA and GSE reform, expand the mortgage revenue bond program and allow businesses to carry back net operating losses for five years. For more information on these issues, and for help in setting up an appointment with your lawmaker in your home district, e-mail Molly Murray at NAHB, or call her at 800-368-5242 x8282. NAHB Steps Up Call for GSE Reform After Syron RemarksThe nation’s home builders reacted swiftly last week to March 12 comments by Freddie Mac CEO Richard Syron indicating to investors and stock analysts in New York that his giant mortgage-funding company was disinclined to to raise more capital to help stabilize the troubled housing market. Citing management’s fiduciary responsibilities, Syron suggested that Freddie Mac would put the interests of its shareholders first as the housing finance industry weathers the current “crisis,” which he described as a “100-year storm.” "As a congressionally chartered enterprise, Freddie Mac has two significant and equal responsibilities — that of serving its housing mission and its shareholders. With the housing market in the midst of its worst downturn in decades and millions of Americans facing foreclosure or unable to obtain financing to buy a home, Freddie Mac CEO Richard Syron said yesterday that his chief interest is making money for his shareholders. It is now painfully obvious that the company has strayed light years away from its other vitally important congressionally mandated mission of ensuring an adequate flow of credit for housing and home buyers, said Jerry Howard, executive vice president and CEO of NAHB, in a statement issued on March 13. "This underscores the need for Congress to act now to enact comprehensive reform of the GSEs and strengthen the regulatory oversight over these institutions so that they can return to an aggressive pursuit of their housing mission,” Howard said. “Today's mortgage credit crunch has profound implications not just for housing, but for the overall economy, which, at best, is teetering on the brink of recession. "It is deeply discouraging that a company that should be doing everything within its power to restore liquidity to the marketplace has instead decided to neglect that responsibility," he said. Fund Helps Builders Fight Battles in Arizona and FloridaHome builders associations received funding at last month’s International Builders’ Show in Orlando to battle a burdensome immigration law and a proposal for “ballot box zoning.” The financial assistance was provided by NAHB's State & Local Issues Fund (SLIF), which helps state and local HBAs deal with legislative, regulatory and ballot issues that have national significance for the housing industry. At the winter board of directors meeting, the Home Builders Association of Central Arizona was awarded funding to help amend HB 2779, which on a first offense suspends for 10 days all of the business licenses of an employer who has hired an illegal alien and revokes them entirely on a second offense. Passed by the Arizona legislature during its 2007 session, the measure is considered the most draconian immigration law in the country. A lawsuit against HB 2779 has been unsuccessful in lower federal court, but an appeal is expected to the Ninth Circuit. An initiative filed by an anti-illegal immigration group would shut down a business on a first offense, and legislation has been introduced this year to make the bill’s provisions retroactive to “any” hire prior to Jan. 1, 2008, which is the law’s effective date. An initiative to amend the law has also been filed by the business community. The Volusia Home Builders Association in Florida also received funding last month to support its campaign against a proposed charter amendment that would subject all future comprehensive plan changes to a public vote.
Proponents of the amendments were able to collect the signatures they now have in less than four months, and they are well financed. The other five amendments would lower water/sewer rates by 33%, outsource the city attorney’s office, prohibit corporate entities from donating to campaigns, require any expenditure exceeding $1,000 to be voted on individually by the city commission and terminate certain city employee positions. The deadline for the next round of applications for the State & Local Issues Fund, which will be reviewed at NAHB’s upcoming spring board of directors meeting, is April 6. For more information on the fund or to request an application, e-mail Alex Strong at NAHB, or call him at 800-368-5242 x8326. Builder Confidence Unchanged in MarchBuilder confidence in the market for new single-family homes has remained unchanged this month, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), which was released on March 17. The HMI held firm at 20, which is near its historic low of 18 set in December. The series began in January of 1985. "Our surveys confirm what I've been hearing personally from builders across the country, which is that interested buyers are out there, but they are either reluctant to go ahead with a home purchase or they are unable to find mortgage financing they can afford," said NAHB President Sandy Dunn. "NAHB applauds the Federal Reserve's aggressive actions over the weekend in response to escalation of financial market pressures, and we strongly encourage the Fed to ease monetary policy substantially when the Federal Open Market Committee meets tomorrow," said NAHB Chief Economist David Seiders. "With the deepening problems in today's economy and financial markets, Congress and the Administration should enact additional stimulative measures, and the next round should be directed squarely at the housing sector," he added. "A temporary home buyer tax credit, FHA modernization and GSE oversight reform are the three most important things that Congress can accomplish right now to help ensure that housing does not drag the economy into a full-blown recession. Provided that the necessary actions are taken promptly, a housing market recovery most likely would take shape by the second half of this year." 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 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. Two out of three of the HMI component indexes were unchanged in March from the previous month. The index gauging current sales conditions for newly built single-family homes held firm at 20 and the index gauging traffic of prospective buyers stayed at 19 following a significant gain in February. The index gauging sales expectations for the next six months edged downward by a single point to 26. Regionally, the HMI rose two points in the South to 26. It held even in the Midwest at 16 and declined one point to 15 in the West and two points to 21 in the Northeast.
Attend the Spring Construction Forecast Conference in April Plan to attend NAHB's Spring Construction Forecast Conference on Thursday, April 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc.
Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 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. Strong Growth Projected for Cement Demand Through 2030Looking beyond the negative impact of the current downturn in housing production, Ed Sullivan, chief economist for the Portland Cement Association (PCA), is bullish about prospects for U.S. cement consumption through the year 2030. In the residential sector, demographic factors and growing interest in green building are expected to help push cement consumption to 183 million metric tons by 2030, according to PCA, an increase of nearly 56 million tons over the period beginning in 2006 and representing a 1.5% compound annual growth rate. By comparison, during the 1980 to 2005 period, cement consumption grew by 57 million metric tons at a compound annual growth rate of 2.5%. The PCA forecast is based upon the assumption that the housing stock will reach 155 million units by 2030 and that annual housing starts will average roughly 1.85 million throughout the 25-year period. “The anticipated increase in population of 63 million persons will result in more additional demand for housing, commercial buildings, public buildings and infrastructure — all boosting demand for cement consumption,” according to PCA. Energy and environmental concerns will play a growing role in the construction materials used in home building, says PCA, which will be good for cement demand because of the superior energy performance of concrete wall systems. According to a PCA study, houses built with insulating concrete form walls (ICFs) can require up to 44% less energy to heat and 32% less energy to cool than comparable frame homes. This translates into a savings of about 1.8 million metric tons of carbon dioxide emissions annually. Assuming that the average life of a home is 50 years, this translates into a lifetime savings of 92 metric tons of carbon dioxide per home built with ICFs. Taking into account the addition carbon dioxide emitted due to higher volumes of cement associated with ICF home building, over its lifetime an ICF home saves a net 72 tons in emissions — nearly a five-time payoff over the increased emissions associated with increased cement production for the home. Approximately 77 million BTUs of energy is used per home annually for heating and cooling, or four tons of carbon dioxide per home. According to the Energy Information Administration (EIA), residential carbon dioxide emissions were an estimated 1.2 billion metric tons in 2005 — accounting for 21% of total emissions. Roughly 40% of residential energy consumption — or more than 500 million metric tons of emissions — was attributed to heating and cooling. The cumulative carbon dioxide savings associated with heating and cooling resulting from ICF home construction will reach 15 million metric tons by 2030, PCA says, as the green properties of cement lead to greater use of ICFs in home building. PCA expects the share of these wall systems used in home construction to eventually reach 30% of the market by 2030, compared to a 7% share in 2005. 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. Attend the Spring Construction Forecast Conference in April Plan to attend NAHB's Spring Construction Forecast Conference on Thursday, April 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc. Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 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 Members Urged to Complete Economic Data Census FormThe U.S. Census Bureau is urging NAHB members who have recently received economic census forms to return them within 30 days. The economic data, which is collected by the Census Bureau every five years, is used to support public policy and business decisions at the national and local level. The government also uses the data to help measure how the economy is performing. “Economic indicators we use all the time ― like gross domestic product (GDP), monthly retail sales and the producer price index ― all depend on the economic census for continued accuracy,” the Census Bureau said. This census is "indispensable to understanding America's economy," said Ben Benanke, chairman of the Federal Reserve. More than 4 million Census forms were sent to businesses of all sizes late last year. Federal law — Title 13. U.S. Code — requires that the forms are completed and returned to the Census Bureau. For more information or help completing the form, visit the Census Bureau help site at www.census.gov/econhelp, or call 800-233-6136. Attend the Spring Construction Forecast Conference in April Plan to attend NAHB's Spring Construction Forecast Conference on Thursday, April 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc. Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 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.
Attend the Spring Construction Forecast Conference in April Plan to attend NAHB's Spring Construction Forecast Conference on Thursday, April 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry. Can't attend? Watch the conference webcast live. For more information, or to register for the conference or webcast, visit www.nahb.org/cfc. Want to Know the Housing Forecast for the Top 100 Metros? Find out in HousingEconomic.com’s 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: How to Cope-Cut Quarter-Round Trim
I prefer coped corners to mitered corners, but given the amount of trim required by this job, I had to find an expedient way to cut it all. As shown in the accompanying drawing, I devised a rig that yields accurate results with a minimum of effort.
For quarter-rounds of a different radius, simply cut a groove to fit the trim, and use a hole saw that is twice the radius of the trim. — M. P. Whipple, Afton, N.Y. Tips & Techniques provided by Fine Homebuilding.
To contact Fine Homebuilding, e-mail Christina Glennon.
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. Five Common Construction Mistakes Undermine SalesEmphasizing practical, cost-effective building solutions that will help home builders sell more homes, the Partnership for Advancing Technology in Housing (PATH) has identified five common construction mistakes worth noting. “The trim is on, the site cleaned up. The tools are packed away. Few feelings are more rewarding than stepping back and looking at a job well-done. But is that job really done well? Your crew may have fumbled some building basics along the way without even knowing it,” PATH writes in the current issue of Quality Matters, the e-newsletter of the NAHB Research Center's National Housing Quality Program. PATH cites these common mistakes: Ductwork The conventional method: Run ductwork through an unconditioned attic. Job well-done: Either run ducts in conditioned space or insulate them really well in unconditioned space. According to the NAHB Research Center, placing ductwork in conditioned space can reduce heating and cooling loads by 20% to 35%. It also reduces overall ductwork length because supply register locations are more flexible. Wrap ductwork in conditioned spaces with R-4 insulation to prevent condensation. Joe Gregory, purchasing manager for Bob Ward Companies, recently built the near zero energy Maximum Efficiency Home series in Baltimore. He ran a duct-blaster test to show his crew how leaky the ducts were. Now he says his subcontractors understand the level of work required to install ducts with 4% to 5% leakage rates, instead of the more typical 10%. Floor Plan Design The conventional method: Design the floor plan with no concern for site orientation. Job well-done: Orient the home to take advantage of natural day lighting — and some free solar heating in the winter. The benefits of natural lighting have been well-documented: people work better, students learn better and people are healthier in general. And designing a day-lit home needn't add expense to the project. In all but the hottest southern climates, orient the building so the long axis runs east to west. Place a row of windows along the south wall for winter gain. Size roof overhangs to block the summer sun, but let in light and warmth from the winter sun. Cluster the main living areas along the south wall and mechanical and storage areas to the north. Skylights are energy hogs that can make a room uncomfortably hot. Try sun tubes, or tubular skylights, to bring light into dark corners, interior rooms or even the basement without as much energy loss. Building Wrap The conventional method: Put building wrap up as quickly as possible, and don't worry about tape or careful installation. Job well-done: Follow the manufacturer's instructions. Getting this wrong risks mold and mildew, rotting window jams and drafty walls and floors. To get it right, overlap all seams at least 6 inches in shingle fashion so they shed water. Seal with code-approved contractor sheathing tape to make a weather-tight bond. Use proper fasteners (plastic cap nails are the best), and make inverted Y cuts (also called modified I cuts) to wrap window openings.
Deliver High-Performance Homes With ‘Residential Construction Performance Guidelines: Contractor's Reference, 3rd Edition’ “Residential Construction Performance Guidelines,” available from BuilderBooks.com, is the industry's most widely-accepted reference on how homes should perform. The fully revised and updated reference was created specially for builders and remodelers to help successfully manage customer expectations — and protect the bottom line — while delivering high-performance homes. The reference includes 300 guidelines in 12 major construction categories, new remodeling-specific content, guidance on how to take critical measurements and more. To view or purchase this publication online, click here, or call 800-223-2665. KB Home First to Earn National Housing Quality CertificationThe latest issue of Quality Matters reports that KB Home has been named the first builder to earn the prestigious National Housing Quality (NHQ) Certified Builder Program certification for all of its operations nationwide. Following a rigorous audit by the NAHB Research Center of the quality assurance systems of each division, KB Home was awarded this unique recognition for its company-wide commitment to quality and customer satisfaction. KB Home was also the first major builder to participate in the program, with its Las Vegas division earning the certification during the program’s pilot phase in 2004. Since then, no other home builder has certified more divisions than KB Home, a landmark achievement that sets the bar for others in the industry. Designed to foster consistency and quality in building practices, NHQ certification is presented to home builders and trade contractors who have documented and implemented quality management systems and participated in systematic reviews of the implementation of those systems. Today, 45 home building companies are certified under the program. Certification requirements ensure that all elements of a company’s quality assurance systems are aligned to improve quality performance and provide greater customer satisfaction. To achieve certification, each of KB Home’s divisions also independently sponsored numerous training sessions for their trades. “At KB Home, what’s important to the customer is at the heart of everything we do — and we know that quality is the number-one priority for our home buyers,” said Jeffrey Mezger, president and chief executive officer of KB Home. “That’s why we are so proud to be honored with the nationwide National Housing Quality certification. Our customers can have the home of their dreams built to order just the way they want it, backed up by the peace of mind that this unique national quality certification offers them.” KB Home has long been a pioneer in quality assurance in the home building industry. The builder was the first to earn the NHQ designation in many regional markets and has encouraged its critical trades to become NHQ-certified. Since implementing the NHQ program, KB Home has seen its customer satisfaction rise to its highest levels ever. “We are extremely pleased that KB Home has taken the lead in implementing this program on a national level, a major accomplishment that speaks volumes about their commitment to quality,” said Michael Luzier, president of the NAHB Research Center. “The program is a powerful management tool that will continue to play a vital role in changing the business of home building. It is definitely making a positive impact for builders, their trades and home buyers, and we hope to see more builders of all sizes take the position that KB Home has by achieving NHQ certification for all its operations.” Seventeen builders, small and large, are currently involved in the program’s consultative phase and are working toward certification by 2009. Frank Alexander, NHQ program director at the Research Center, credits the consistent growth of the program to the support of industry partners. And, in the current slow housing market an increasing number of builders are seeking higher customer satisfaction ratings and a competitive edge. For information on starting on the path to NHQ certification, visit www.nahbrc.org/quality or e-mail Alexander. National Housing Quality Award Entries Due April 30Entries for the National Housing Quality Awards (NHQA) are now being accepted, and award applications for 2009 are due by April 30. Patterned after the Malcolm Baldrige National Quality Award, the NHQ Award recognizes home building and trade companies for excellence in residential construction and business management practices. Sponsored by the NAHB Research Center and Professional Builder magazine, the awards will be presented at a gala dinner during the Benchmark Conference in Phoenix on Oct. 5-8. NHQ Award applicants are judged by a panel of experts who evaluate the role that customer-focused quality plays in the company’s construction, business management, sales, design and warranty service. Applicants benefit from a comprehensive evaluative report from the judges that provides insightful feedback and suggestions for improving business processes. For 15 years, the awards have been important tools for hundreds of home builders and trade contractors to assess and improve performance on critical factors to business success. These criteria can help companies align resources, improve communication, increase productivity, boost effectiveness and achieve strategic goals. Award categories include Gold, Silver, and Honorable Mention for home builder and trade divisions. The home builder awards are open to all U.S. companies that build or remodel residential homes using light construction methods; the trade contractor awards are open to all U.S. independent contractors that provide construction services to home builders or remodeling companies. Winners are featured in a series of Professional Builder magazine articles that highlight their quality management principles and best practices. They also participate in an NHQ Award panel discussion held annually at the NAHB International Builders' Show. For more information on the awards program or to request an application, e-mail Rita Knab at the NAHB Research Center or call her at 800-638-8556 x6225; or click here. Making Money Starts With a Good Business PlanA thriving business starts with a sound business plan, Tim Davis, a builder and author of “How to Make Money in the Home Building Business Without Losing Your Mind,” told convention-goers at the International Builders’ Show in Orlando last month. “A good business plan will transform your banking relationships, attract investors and kick your business into high gear,” said Davis. When crafting a business plan, Davis said that more does not necessarily mean better. A five-page plan should define who you are; your product, market niche and target market(s); who is going to buy your product; how you are going to make money; and your cash flow projections and projected profits and losses. To make bank dealings run more smoothly, Davis said that builders should create relationships with bankers, and not banks, and they should ask for what they want and not be intimidated by the process. “Terms are negotiable with banks,” he said. “Go in with the attitude, ‘what can my business do to help this bank?’ You answer that question, and you sell the bank on your terms.” Every builder has a brand, Davis said. “This is the image that first comes to the mind of the general public when they hear or read your company’s name.” Everything Is Marketing To generate a positive impression with the public, builders need to maintain a clean job site and an uncluttered office and ensure that subcontractors act in a professional manner. “Everything is marketing,” said Davis. To “keep your business going forever,” Davis encouraged builders to maintain a formal referral program. “It’s not enough just to ask for a referral,” said Davis, who added that builders should advertise the program with their current as well as prospective customers. Noting that written testimonials are one of the most powerful marketing tools a builder can have, Davis said that builders should interview their customers soon after a home purchase, transcribe their comments and have the buyer sign them. “Often a customer will say they will be happy to write a testimonial. But the fact is, they get busy and rarely follow through. If you take the notes and send it back to them to read and sign, they will often be happy to oblige.” When working with outside Realtors®, Davis said that both parties should establish written guidelines on what they each expect from the relationship, maintain frequent communication and answer two important questions in advance: What happens to the commission if the builder has to lower the price in order to get it sold and who gets the commission if the builder sells the house on his own? The only reason for a builder to establish a Web site is “to make more money,” Davis said. When designing a site, Davis said that builders should avoid flash introductions, flash animation and fancy graphics. The site should be easy to navigate and omit links to other sites. “If you link to another site, the chance of the customer coming back is one in 10,” he said. “If it’s hard to navigate the site, people will just click right out.” When drawing up contracts, builders should always include the following six clauses:
For more information, visit www.thebuilderscoach.com. 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. Build a Profitable Relationship Creating positive partnerships with brokers can enhance business and boost sales. Builders can learn how to profit from alliances with brokers by taking the “Increased Profits Through Effective Builder-Broker Cooperation” course from The NAHB University of Housing. The course shows how to use common interests to connect with brokers and how to choose compatible sales professionals. Find out where upcoming courses are being held here, or call 800-368-5242 x8154 for 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. Generation Y Is Ready to Buy, Technology Will Help Sell ThemWith Generation Y beginning to enter the home buying market, home builders must re-think how to market and sell to them or risk losing them to the competition. Generation Y home buyers ― whose leading edge is turning 27 this year — generally have more spending power than preceding generations at this stage in their lives because they are well-educated and have higher starting salaries out of college. Generation Y consumers understand that this is a prime time for them to buy because of market conditions and that, potentially, they can have a mortgage payment that is less than what they would pay in rent. In addition, research indicates that more single females of this generation are buying homes because of optimal market conditions and their improved financial situation. When shopping for a new home, Generation Y consumers want to live close to where they work and socialize but also be near friends and family. Most prefer living in the city or at least in close proximity. Research also indicates that this generation of home buyers is willing to spend more money on a new home in order to get exactly what they want. Generation Y Wants Quick, Personalized Answers If home builders want to reach out to these potential customers, they must realize how important a role technology plays in their lives. Generation Y grew up with technology and rely on it to stay informed, especially when they’re making serious purchasing decisions. Generation Y relies on e-mail, the Internet, PDAs, BlackBerrys and other electronic devices and, for many, these technologies are their preferred method of communication. In addition, studies show that eight out of 10 Generation Y home buyers use the Internet to research their home choices. Once they have narrowed their choices, they expect their requests for more information to be answered quickly and for those answers to be personalized ― they don’t want to wait a week or two for a generic response. According to the technology and market research firm Forrester Research, based in Cambridge, Mass., Generation Y consumers will lose interest quickly if those trying to reach them don’t value quick communication. Customer Relationship Management Levels the Playing Field So how does a home builder level the playing field with Generation Y? Home builders looking to sell to this generation should utilize a customer relationship management (CRM) system with a strong marketing automation suite that can deliver detailed, personalized information in a timely fashion, nurture prospects until they turn into hot leads and collect data to build customer profiles. Using a CRM tool, home builders can have personalized information sent automatically to potential buyers based on the questions they answer in a survey, such as what they are looking for in a home, what is their timeframe for buying and what kind of amenities are most important to them. Generation Y consumers will appreciate getting a tailored response to their inquiries. This will also make them more likely to provide additional information about their buying preferences. Armed with this type of information — especially the buying timeframe — a home builder’s sales team can be instantly alerted to hot leads, allowing them to launch follow-up programs to get these prospects into the office. Marketing Automation Builds Rapport Responding quickly can be an important differentiator when reaching out to buyers, especially those using Web sites like Move.com or NewHomeSource.com that feature multiple home builders. Using marketing automation and collecting buyer data are effective ways to build rapport, but it doesn’t end there. Time is very valuable to Generation Y and they want to use technology to create wish lists for the communities they are interested in and also for the design of their dream home. Builders can use the Web and surveying to educate buyers about communities and assist them in identifying a home that meets their needs. Providing a list of communities that fit their needs lets home buyers narrow down their wish list and spend more time checking out the communities that are right for them. By the time they actually visit the community, they already have a good idea of what they want in their home. The sales associate also has a much better understanding of their customers’ needs because of the information gleaned online and is much better prepared to offer effective recommendations. Home builders can also use Web-based technology to provide convenience and personalization in the design process via a virtual design center. The center is accessible via a Web browser so home buyers can actually start looking at the available options for their homes. Enabling them to start designing their dream home also gives them more ownership and a connection to the home, sometimes even before they walk into the community. The virtual design center provides this generation with the ultimate in convenience because it can be accessed 24 hours a day, seven days a week, and enable them to store and update their preferences. In the end, they will be happier with their decisions because they’ve had more time to think them over, which, for the builder, can reduce cancellations. After the house is sold, home builders can continue to communicate with customers via e-mail or a Web portal about things like warranty information, maintaining the connection with the home buyer and encouraging referrals. Through a deeper knowledge and use of Web-based technology so central to this generation’s buying habits, home builders can provide a better, more personalized customer experience, achieve a faster sales cycle, gain a deeper understanding of customers’ needs, sell more options and build stronger, more profitable relationships. Steve Lewkowitz is the home building and real estate professional services director for CDC Software’s Pivotal CRM, a leading line of customer relationship management solutions. For more information, e-mail Lewkowitz, or visit www.pivotal.com/homebuilders. 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. Build a Profitable Relationship Creating positive partnerships with brokers can enhance business and boost sales. Builders can learn how to profit from alliances with brokers by taking the “Increased Profits Through Effective Builder-Broker Cooperation” course from The NAHB University of Housing. The course shows how to use common interests to connect with brokers and how to choose compatible sales professionals. Find out where upcoming courses are being held here, or call 800-368-5242 x8154 for 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. Attend 50+ Symposium in New Orleans on May 19-21Many builders in the 55+ market have reported little or no change in sales and traffic since the downturn, with 55+ households accounting for 21% of new home sales and 18% of the total new home buying market. Learn more about this growing market at 2008 Building for Boomers & Beyond: 50+ Housing Symposium at the Sheraton New Orleans Hotel in New Orleans from May 19-21. The symposium features more than 35 sessions on redefining lifestyle communities, design, development and operations, sales and marketing, technology and more. Attendees will discover how to:
For more information, see the symposium brochure on the NAHB Web site, or e-mail The NAHB University of Housing’s Office of the Registrar at registrar@nahb.com, or call 800-368-5242 x8338. 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.
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. Builder Confidence in Condo Market Erodes FurtherBuilder confidence in current condominium market conditions ended on a low note last year, according to NAHB’s Multifamily Condo Market Index (MCMI) for the fourth quarter of 2007, falling to 18.8, down nearly 11 points from the same period a year earlier. "Given that the condo market became so overheated during the peak of the housing boom, it is not surprising that the market now continues to struggle, considering the difficulties in the mortgage sector and the fears about the economy in general," said David Seiders, NAHB's chief economist. "It is going to take time for the extra inventory to be absorbed." The index is derived from a quarterly survey of multifamily builders and developers. On a scale of 0 to 100, a rating of 50 generally indicates an equal number of positive and negative responses. The component of the index gauging current conditions in the condo market never rose above 25 last year. Fourth-quarter builder expectations for the next six months were only slightly more optimistic, standing at 29.2 on the index, down from 49.1 at the end of 2006. Responding to a series of special questions in the MCMI survey for the fourth quarter, 28% of survey respondents reported higher or somewhat higher sales cancellation rates compared to a year earlier. The average sales cancellation rate was 19% and the median was 12%. About two-thirds of builders reported that they had lowered prices to bolster sales. The average price reduction was 11%. When asked about other marketing strategies they were using to shore up sales, more than 70% of the respondents said they were including optional items at no costs, paying closing costs or fees or absorbing financial points for their buyers. For more information, e-mail Ann Marie Moriarty at NAHB, or call her at 800-368-5242 x8350. Are You Qualified to be an HCCP? The Housing Credit Certified Professional (HCCP) is a specialized designation for developers, property managers, asset managers and others working in the affordable housing industry. It is the leading designation in the Low-Income Housing Tax Credit industry, representing the highest level of competency and knowledge, as well as a commitment to the highest ethical standards. For information about the requirements, click here, or e-mail HCCPinfo@nahb.com. Remodelers Have a P |