Nation's Building News Online: June 16, 2008Print All Articles Text Version |
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Stimulus Bill Urgently Needed as Housing Signs DarkenThe push is on for enactment of housing stimulus legislation before Congress leaves for its July 4th recess, and NAHB members are being urged to participate in the association's current lobbying blitz. For more information, click here. For a related story in this week's NBN, click here. With the severe housing downturn taking a mounting toll on the U.S. economy, the nation’s home builders in a June 16 news media teleconference stressed the urgency of Congress enacting a housing recovery plan before it leaves Washington for its July 4th recess. “Too much time has passed, too many home owners are in trouble, too many home buyers are waiting and too many home builders are going out of business,” said Jerry Howard, NAHB’s executive vice president and CEO. The U.S. economy has lost jobs for five straight months, shedding 324,000 jobs this year, Howard noted. Residential construction has thinned its ranks by some 500,000 jobs since February 2006; more than 1 million homes are now in foreclosure, the highest ever recorded; and aging home owners are starting to lose the equity in their houses they need to pay for their retirement, he said. “Another 15,000 Americans will lose their jobs this week and more than 47,000 home owners will go into foreclosure,” Howard said. The Federal Reserve has done what it can to stem the damage from the housing downturn, Howard said, and “now it’s up to Congress to break that negative spiral. Nothing will change on the ground until Congress finishes the job.” At the top of the list of provisions that are needed, he said, is a temporary home buyer tax credit to stimulate home buying and reduce excess inventory. To maximize its effectiveness, the credit should be as big and unencumbered as possible, he said, and it should be geared to taking effect “as rapidly as Congress can make it.” Revitalization of the Federal Housing Administration, reform of Fannie Mae and Freddie Mac, expansion of the mortgage revenue bond program and enhancements for the low-income housing tax credit are other components of the final bill that the Congress should soon be presenting to the President for his signature, Howard indicated. To hasten consideration of a stimulus package, Howard said that the association had decided to jettison its support for a provision to allow businesses to carry back their net operating losses (NOLs) over an additional timeframe. “Though NOL would have been helpful, even our big builders agree that the best way to get housing back on its feet is to enact a temporary home buyer tax credit,” he said. The Worst Housing Downturn Ever Participating in the teleconference to provide a perspective of the dire conditions that home builders are facing around the country, Vincent Napolitano, president of Napolitano Homes in Virginia Beach. Va., said that “this is without a doubt the worst housing downturn I’ve experienced in the 31 years we’ve been in business." Since noticing the beginnings of a housing slowdown in the summer of 2005, Napolitano said that his company has reduced its annual housing production from the 200 to 250 range to about 70 homes this year. And, as a matter of survival, he has had to cut his employees from 60 to 25. The inadequate availability of mortgage credit is the biggest problem for the housing industry, he said. One-third of the sales contracts he signs aren’t going to closing, because the buyers can’t qualify for the mortgage. And even those who can qualify for a loan still have their previous home to sell, and they “have to keep their fingers crossed” that they will be able to find a qualified buyer, he said. For the most part, people in the Virginia Beach market are only buying homes out of necessity, because of a job relocation or changing family needs, Napolitano said. The discretionary buyers who typically account for a large portion of the market are “staying on the sidelines waiting to see what happens to the economy.” Layoffs of construction subcontractors and suppliers have now spilled over into retail sales, Napolitano noted, with one major furniture store in Virginia Beach shuttering its business, and state and local governments have seen revenue surpluses turn into shortfalls. Near-Term Outlook Not Encouraging On hand to announce the June results for the NAHB/Wells Fargo Housing Market Index, NAHB Chief Economist David Seiders said that builder confidence in the single-family housing market is continuing “scraping along the bottom,” where it has languished for the past 10 months. (For a related story in this issue of NBN, click here.) “The implications for the near-term housing outlook are not encouraging,” he said. While NAHB still sees housing sales bottoming out in the second and third quarters of this year, Seiders conceded that “right now risks are piling up on the down side” of that forecast. If conditions don’t improve soon, it is possible that sales won’t start turning around until the start of next year, he said. Sharp downward momentum in home prices is accelerating, he warned, and prices on the national average are likely to erode further throughout 2009. Last week’s upward “jog” in mortgage interest rates prompted by new concerns over inflationary expectations, Seiders said, is the latest worry for the industry. Although this was precipitated by remarks by Fed Chairman Ben Bernanke, with further economic weakness ahead, the “Fed will have to change its tune a bit.” In its weekly Primary Mortgage Market Survey, Freddie Mac reported that 30-year fixed-rate mortgages averaged 6.32% for the week ending on Thursday, June 12. This was their highest level in nearly eight months. Mortgage interest rates should start easing back down in a couple of weeks, Seiders said; otherwise, interest rates could become an unanticipated problem for an already beleaguered housing industry. Reader Survey: Tell Us What Housing News Is Important to YouBecause you regularly read Nation's Building News, we value your ideas and would like your help. Please tell us what information in Nation's Building News is important to you — what you read and what you might like us to add — by answering our short online reader survey. To take the survey, click here. (Please note: If you have already answered the survey questions, thank you.) Lexington Builders Put ‘Buy Now’ Message on TelevisionWith its payroll employment on an upswing, unemployment down, home prices rising 3% over the past year and Bloomberg.com describing the area as “a true housing bargain,” Lexington, Ky. nevertheless has seen negative reporting on its housing market, prompting the Home Builders Association of Lexington (HBAL) to fight back on the media’s own turf. “There’s no doubt our market had slowed, like everywhere else, but in no way should the papers have been comparing Lexington to other markets around the country that are experiencing a significant downturn,” said Todd Johnson, the association’s executive vice president. The Lexington HBA worked with a prominent local advertising agency that was able to negotiate favorable rates for television spots because it buys a large amount of advertising from the local media. This enabled the association to run a cooperative television campaign throughout central Kentucky with the participation of its members. The advertising contained “buy now” messages and directed viewers to factual information on the local housing market as a counterpoint to the negative national statistics that were providing the focus of local stories. Packages of 30-second television spots running 40 times a month were created and offered to the association’s builder and associate members. Each spot ended with 10 seconds for the HBA’s “buy now” message and Web site address. “It’s been a win-win for everyone,” said Johnson. “Not only are we getting positive messages out to buyers, but it’s a valuable benefit of membership because our members wouldn’t be able to buy ads this economically on their own.” Nearly 30,000 commercials have aired since the association started the co-op program in early 2007. The local Realtors® association even purchased a number of the discounted television spot packages. “As an associate member, they were eligible to take advantage of the co-op program,” said Johnson. “And we worked with them to develop joint advertising that promotes working with professional builders and Realtors® within the industry.” The association also worked with builders to purchase tabloid inserts in the local newspaper. The inserts highlighted members and communities, and delivered the message that throughout central Kentucky there are exceptional neighborhoods with desirable homes. Johnson said that the promotional resources NAHB was providing to its members and affiliated HBAs came in handy as the association developed campaign themes and consumer content for its Wb site. “The ‘it’s a good time to buy’ theme was from the NAHB toolkit, and we used the Myth Buster articles under our president’s signature,” he said. Johnson added that the association’s members love the campaign, and they appreciate the proactive approach that their local association is taking. A member recently made Johnson’s day when he told him, “I can’t imagine how bad it would be if we didn’t have such an active HBA.” Go to www.nahb.org/mythbuster to access the continuously-updated resources and read more Myth Buster success stories about locals around the country. For more information, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447. Equity Losses Aren’t Felt EvenlyIn the Federal Reserve’s latest report, home owners on a national basis lost an estimated $879.6 billion in net equity wealth in the first quarter of this year compared to a year earlier. The number may sound shocking, but it needs to be put into perspective. During the housing boom years, nearly $3 trillion in net equity was racked up in a few years as prices exploded in local markets with high levels of speculative investments powered in part by low interest rates and exotic mortgages. For individual property owners, depending upon where they live, these wild gyrations of equity growth, followed by equity shrinkage, may not mean a lot. “I don’t think numbers like an $880 billion equity loss are all that meaningful for most individual home owners,” said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association. “When you look at home price data over the last five years, you find that large parts of the country never got caught up in the boom and bust cycle.” The big drops in prices are disproportionately concentrated in California, Florida, the mid-Atlantic states and New England, he said, and “most markets haven’t been hit anywhere near as hard.” (www.washingtonpost.com)
Housing Slump Helps the Draw of Fixer-Upper TVThe housing market is collapsing, but television shows about housing are booming. The audiences for HGTV and TLC, the two channels with the most so-called property programming, have grown steadily over the last three years as they have shifted their focus away from buying real estate as speculative sport to more educational and emotional shows. Last year, with the housing market slumping, programmers at HGTV doubled their orders of “House Hunters” and “Designed to Sell,” two shows offering advice on buying and selling decisions. Susan Miller of Louisville, Ky., considers herself a student of HGTV. She said the channel offers her family advice as it sells a small rental house and searches for a vacation home. The shows “have taught us that investing a few hundred dollars in repairs, painting and accessories can yield thousands of dollars from the sale,” she said. While Miller has not sold the rental house yet, she said she nevertheless takes guilty pleasure from seeing $50,000 living-room makeovers on HGTV’s “Divine Design,” and $500,000 homes on “What You Get for the Money.” (www.nytimes.com)
Rental Revival: Soft Condo Sales Prompt Strategy ShiftThe Atlanta condo market has become a victim of the subprime mortgage crisis and subsequent global credit crunch, with local real estate developers saying that financial backing for condo projects has all but dried up. Those able to get financing are turning to high-end rental apartments instead. “Building condos right now is next to impossible, it really is,” said Stephen Franco, a partner at Franco DeFoor Properties, an Atlanta real estate development company. “It’s just financing. You can’t get financing for condos.” Franco said his company is planning to build 250 to 300 upscale apartments in southeast Atlanta’s Reynoldstown neighborhood, not far from a cluster of condo complexes. “The new darling child of multifamily residential is rental,” he said. While the Atlanta market never became as overheated as areas such as Miami, a glut of units has forced prices down and left some buildings half-empty. And a number of condo projects begun during the boom are under construction and poised to come online, further saturating the market. “Apartments are a fabulous sector to be in right now,” said Bill Donges, CEO of Atlanta-based Lane Co. and chairman-elect of the NAHB Multifamily Council. “People are coming back to rent because less people are able to qualify” for home mortgages, he said. (www.ajc.com/)
Housing Slump Hits Microbusinesses HardThe housing slump is hitting doubly hard a growing number of owners who run microbusinesses — small, often home-based companies that employ nine or fewer workers. A new report from the National Association for the Self-Employed in Washington, D.C., found that 62% of microbusiness operators said they’re concerned that sliding home values will affect their ability to survive and grow. Eighteen percent of the respondents reported having adjustable-rate mortgages, and they’re faced with resetting interest payments that could mean they’re out of house and headquarters alike. But the 60% of participants who took out fixed-rate mortgages aren’t immune to the housing downturn. Falling values and rising foreclosures everywhere mean borrowers with safer, traditional mortgages can no longer rely on home equity to finance expansion. Big lenders such as Countrywide have frozen home-equity lines of credit for virtually all Nevada customers, while other banks have constricted loans for all but the most creditworthy borrowers. “Because so many home-based business owners use the equity in their home to grow or keep the business afloat, they’re in a dire situation when home values are dropping and the credit market is tightening,” said Kristie Darien, executive director of the National Association for the Self-Employed. (www.lvbusinesspress.com)
Relocating to Houston Proves Difficult When a House Won’t SellCarole Hackett, vice president of human resources of The Methodist Hospital in Houston, has some high-level management jobs to fill, but she is having trouble because of slumping real estate markets in Michigan, Illinois and Ohio. Since about January, good candidates from the Midwest and beyond have been saying: “I’d love to come to Houston, but there is no way I can sell my house,” said Hackett. As houses linger on the market and prices continue to fall in many U.S. cities, some recruiters in Houston are wringing their hands. “My intuition is that the housing market crisis in the United States is greatly affecting labor mobility,” said Barton Smith, director of the Institute for Regional Forecasting at the University of Houston. “But we may not get a handle on that until the 2010 Census comes out.” One reason he suspects something is afoot is that word is getting out that Houston is a job creation machine, yet some openings are going begging. “In this stage of the countercyclical economy, you would expect mass migration to Houston,” said Smith. But the city hasn’t been flooded by out-of-state license plates, and one explanation is negative equity — people owe more on a house back home than it’s worth so they’re stuck unless they’re willing to eat a big loss. (www.chron.com)
Today’s Floor Plans Reflect Dimensions of Modern LifeToday, master bedrooms are in on the ground floor of home design and they are bigger than ever before, often coming with sitting areas, spacious walk-in closets or dressing rooms, and even efficiency kitchens. The most tossed-about term these days for buyers, real estate agents and designers alike is Master on Main. “I don’t know of a new house we’re selling that doesn’t’ have a master on main, or even more common, a master and another bedroom on the main floor,” says Kirby Britt, a real estate agent with Keller Williams in Greenville, S.C. “They use that second bedroom as a second bedroom, an office or a guest room.” To add utility, the spare bedroom is usually accompanied by a full bath. Heather McGowen, communications director for Greenville-based Donald A. Gardner Architects, says that the rooms, or suites, often have refrigerators, a coffee maker, sitting area, oversized bathrooms with huge shower rooms, along with a large tub, and giant walk-in closets. (www.app.com)
Members Urged to Participate in Stimulus Lobbying BlitzMembers of NAHB are being urged to contact their members of Congress and seek their support to enact housing stimulus legislation before the July 4th recess by calling 1-866-924-6242. The grassroots effort coincides with a blitz by the association’s lobbyists on Capitol Hill, who last week contacted more than 100 lawmakers to relay to them the urgency of moving quickly to pass housing stimulus legislation that will avert an economic crisis, jump-start housing, save jobs and restore confidence. The lobbyists presented each lawmaker with detailed economic data for their congressional district; media reports on record foreclosures, surging unemployment, sky high oil prices, and a deepening credit crunch crisis and housing slump; and recent ads produced by NAHB’s Public Affairs that ran in USA Today and National Journal stating that “America is hurting” and Congress needs to enact housing stimulus legislation now. NAHB Executive Vice President and CEO Jerry Howard last week met with Senate Finance Committee Chairman Max Baucus (D-Mont.) to discuss strategies to move the legislative process forward and to push for the best overall package of proposals in any final housing stimulus bill. In an interview with Congressional Quarterly, Howard cited the need to pass housing stimulus legislation now and discussed NAHB’s outreach efforts to key members of Congress, including Sen. Baucus. In conjunction with the lobbing blitz, NAHB on June 11-12 ran a new ad in Roll Call and Politico using the same theme that “America is hurting.” The ad says: “In the month since the House adopted housing stimulus legislation, another 49,000 Americans have lost their jobs and 190,000 home owners have gone into foreclosure. America can’t afford to wait another month. It’s time for Congress to enact a final housing bill.” Utilizing Builderlink, NAHB’s national grassroots program, employees from Centex sent more than 6,000 letters to Congress calling on their individual lawmakers to pass badly needed housing stimulus legislation before the July 4th congressional recess. NAHB has expanded its outreach this week to get its members and the general public involved in this effort. The association has issued a Legislative Alert urging all members to phone their federal lawmakers, share their stories on how the housing downturn has affected their businesses and local communities, and call on their representatives and senators to pass a housing stimulus bill before July 4. In addition, NAHB has created three rotating ads that prominently appear on the front page of nahb.org . The ads appear on the public site as well as the members-only section of nahb.org. A separate smaller banner on the inside Web pages of nahb.org contains a similar message and links to the Legislative Alert. For more information on the grassroots campaign, e-mail Molly Murray at NAHB, or call her at 800-368-5242 x8282. Proposed Rule Requires Federal Contractors to Use E-VerifyA proposed rule by the Department of Homeland Security in response to a June 6 Executive Order (EO) issued by President Bush would have an impact on nearly every small entity in the federal contractor base, except those providing commercially available off-the-shelf items. This proposed rule, which is expected to take effect in 2009, would require federal contractors to enroll in the E-Verify program within 30 calendar days after the contract award. The employer must then verify current employees who are assigned to the contract and performing work in the U.S. All new employees of the contractor hired after the federal contract award must be E-Verified within three days of being hired, regardless of whether the new hires are assigned to the contract. Under the proposed rule, the federal contractor must include a written clause in its subcontracts, requiring subcontractors (with subcontracts in excess of $3,000) to use the same E-Verify procedures for their current employees and new hires working in the U.S. While the majority of NAHB members do not engage in federal contract work, NAHB will review and monitor the rule-making process to identify the impact of its provisions on NAHB membership. For example, it is likely that all NAHB members who are currently working on military housing privatization projects will need to comply with this requirement. With the rule not yet final and open for public comment for 60 days, contractors are not likely to see its requirements in their bidding documents or federal contracts for several months. For more information on the E-Verify program, click here. To register your company to use the E-Verify program, click here. For more information, e-mail Jenna Hamilton at NAHB, or call her at 800-368-5242 x8407; or contact David Crump, x8491. States Act as Copper Thefts Continue to Plague BuildersState legislatures are increasingly addressing an outbreak of copper thefts stemming from a roughly five-fold increase in copper prices since 2004 in response to rising demand from China and India. Copper today can fetch between $3 and $4 a pound, providing an inducement for thieves to steal the metal in every possible form — air conditioning units, telephone lines, railroad signaling wire, beer kegs, manhole covers, bleachers, guard rails, signs and traffic lights. Especially hard hit, home builders have had to resort to security details to stem costly copper thefts. Thieves breaking into an unoccupied house can steal hundreds of dollars of copper parts, and leave behind thousands of dollars in damage. At least 26 states have attempted to address metal theft by passing laws that enforce stricter penalties for stealing copper as well as tightening the record-keeping requirements of scrap yards. Florida and Missouri have been the latest states to act on the issue. Missouri Gov. Matt Blunt (R) signed into law MO Senate Bill 1034, which requires dealers to obtain a copy of photo identification from sellers who are not regular business customers and are offering more than $50 worth of copper, brass, bronze or aluminum. Transaction records need to be kept for two years and available for inspection by law enforcement. The Missouri Information and Analysis Center (MIAC) has developed a state-wide database on metal theft to share with investigators, who as of late April were working on a reported 240 metal thefts in the state with losses exceeding $1 million. A bill recently signed by Florida Governor Charlie Crist (R) as of Oct. 1 will require scrap-metal dealers to name or describe the person who sold them the metal and to get their telephone number and address and verify their personal identification card. A thumbprint of the seller would be required, and the scrap-metal dealers would be required to install a camera or videotape to document their transactions.
A draft bill currently being circulated for discussion on Capitol Hill would require secondary metal recyclers to document transactions or face penalties for noncompliance. The legislation would not preempt states from enforcing stricter penalties.
Builder Confidence Stuck in a Rut in JuneBuilder confidence in the market for newly built single-family homes has edged down this month, according to the NAHB/Wells Fargo Housing Market Index (HMI), slipping to 18 and returning to the record low posted in December of 2007. “Clearly, conditions in the housing market remain very weak, and our builder members are not seeing any signs of improvement,” noted NAHB Chief Economist David Seiders. “Indeed, the continuing erosion of employment and consumer confidence/sentiment, coupled with surging energy costs, falling house prices and rising home mortgage foreclosures, pose considerable downside risks to the economy and our housing forecast,” Seiders said. “A targeted stimulus such as a temporary home-buyer tax credit would help turn this situation around and restore housing as an engine of economic growth.” Started in January of 1985 and derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. The HMI’s component indexes gauging current sales conditions and sales expectations for the next six months each remained unchanged in June, at 17 and 28, respectively. Meanwhile, the component gauging traffic of prospective buyers fell a single point to 17. Regional results, which have shown characteristic volatility on the index, were mixed this month. The Northeast posted a six-point decline to 12 — its lowest-ever reading since index numbers first started being broken down by region in December of 2004. Meanwhile, the Midwest posted a five-point gain to 17, the South was unchanged at 22 and the West posted a four-point decline to 16. All regions are down dramatically from their respective peaks in 2005. “Today’s numbers are a reflection of how much our members are hurting as this downturn in housing markets continues,” said NAHB President Sandy Dunn. “Many are small-business owners who are the backbone of their local economies, and in some cases they are having to lay off family members and friends just to stay afloat. Congress can’t act too quickly to help reverse this trend.” 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. Eye on the Economy: The Fed Rattles Its Anti-Inflation SaberPayroll employment fell by 49,000 in May, about as expected, while the unemployment rate jumped to 5.5%, much more than expected. Payroll employment fell for the fifth consecutive month in May, bringing the cumulative loss so far this year to 324,000 — an average monthly setback of 65,000 jobs. Employment in residential construction fell by 25,000 in May and now is down by 494,000 from its cyclical peak in early 2006. The civilian unemployment rate jumped by half a percentage point in May and now is 1.2 percentage points above its cyclical trough early last year. This increase was the largest one-month gain in unemployment since the 1980 recession and reflected a very large increase in the labor force ― 577,000 — along with a sizable decline in household employment — 285,000. The moderate downward trend in payroll employment reveals an economy having slow growth in real gross domestic product (GDP) and healthy growth in labor productivity. The stunning one-month jump in the unemployment rate could spell much deeper trouble in the labor market, although it appears that a temporary glitch in the numbers ― a flood of students entering the labor market during the survey week — accounted for much of the jump. Surging Energy Costs Pose Serious Risks to the Economy Crude oil prices in global markets and gasoline prices at U.S. pumps have risen sharply to record highs in recent days. Persistent upward pressures in recent months have reflected fundamental imbalances between strong global demand and shortfalls in supply, and sharp day-to-day movements generally have reflected shifting speculation about political instability in oil-producing regions of the world. Surging energy costs endanger the U.S. economy in two ways. First, higher costs act like taxes on households and businesses, sapping purchasing power and cutting into discretionary outlays. Second, rising energy costs boost headline inflation measures and can feed through to measures of core consumer price inflation — to the displeasure of central banks in the U.S. and other industrialized economies. The current negative “tax” effects of record-high energy costs on real economic activity, particularly on real consumer spending, are occurring in the same time frame as the rebates of personal income taxes that began in May and will extend into the summer months. The tax rebates, about $110 billion, should more than cancel out the negative effects of the increase in energy costs, protecting the economy from that potential recessionary impulse — at least in the short term. On the inflation front, the surge in energy costs is occurring at the same time that the labor market is weakening for other reasons, limiting the potential impacts on unit labor costs and core inflation. A sustained inflation problem will not develop without the participation of the labor market, and we’re actually looking for more slack in labor markets during the next few quarters. Mortgage Foreclosures Are Surging Foreclosures on home mortgages have been soaring to record highs, according to the National Delinquency Survey conducted the Mortgage Bankers Association (MBA) for the first quarter of the year. This pattern reflects the lax lending standards that prevailed during the earlier housing boom, the house price declines that have been accumulating during the current housing bust, and rising levels of unemployment as the economy has weakened recently. MBA’s first-quarter report showed record highs across most loan types for serious delinquencies, foreclosures started and the inventory of loans in the foreclosure process. MBA began compiling this data in 1979. The most alarming deterioration has been occurring in the subprime component, particularly subprime adjustable-rate mortgages (ARMs), although the quality of prime ARMs now is weakening badly as well. Even prime fixed-rate loans are becoming more troublesome. The MBA report highlighted the severe deterioration of mortgage credit quality in the states that have been experiencing the most rapid declines in house prices — California, Florida, Nevada and Arizona. These states accounted for 25% of all first mortgages outstanding and 42% of all foreclosures started in the first quarter. Housing Construction Still Is Heading Downhill The housing production component of GDP, residential fixed investment (RFI), contracted at an annual rate of 25.5% in the first quarter and subtracted a whopping 1.2 percentage points from the GDP growth rate. That was the ninth consecutive quarterly decline in RFI, following several years of rapid growth during the previous housing boom. The pattern of housing starts through April virtually guarantees another sizable decline in RFI for the second quarter. In fact, data on residential construction put-in-place during April point in that direction. We’re currently expecting RFI to contract at a 22% annual rate this quarter, with progressively smaller negative GDP effects through the first quarter of 2009. The Trade Sector Is Providing Solid Support to the Economy The U.S. economy has been running a sizable trade deficit for a long time, but real net exports have been providing welcome support to GDP growth during the past year as the trade deficit has narrowed systematically in constant-dollar terms. Indeed, the support from trade has essentially offset the negative impact from the contraction in residential construction since the second quarter of last year. The slowing U.S. economy, strengthening foreign economies and the lower dollar are behind the recent improvements to real net exports. The nominal trade deficit widened in April as imports of goods and services grew at an even stronger pace than exports ― 4.5% versus 3.3%. However, the surge in nominal imports largely reflected sharply rising prices for various commodities, particularly imported oil. Excluding petroleum products, the nominal trade deficit in goods was essentially unchanged while the real deficit, after adjusting for price changes, actually continued to narrow. Net exports should continue to provide solid support to the U.S. economy over the balance of the second quarter, and we’re counting on ongoing support through early next year as the negative impacts from the housing contraction run their course. The Fed Rattles Its Anti-Inflation Saber The minutes from the April 29-30 meeting of the Federal Open Market Committee (FOMC) reveal growing concerns among FOMC members about commodity price inflation and potential implications for core consumer price inflation down the line. More recently, Fed Chairman Ben Bernanke said the run-up in oil prices “has added to the upside risks to inflation and inflation expectations.” In this regard, Bernanke also said that the surprising jump in the unemployment rate for May hasn’t materially affected the economic outlook. The Fed now seems preoccupied with the potential impacts of inflation expectations on actual core inflation. On June 9, Bernanke pledged that the Fed “will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation.” NAHB’s forecast now assumes the Fed will maintain the current 2.0% federal funds rate target at the next FOMC meeting on June 24-25, consistent with market expectations embedded in futures market pricing. We believe that this position will be held through the first quarter of 2009, followed by a gradual march back toward monetary neutrality as economic growth gets back to trend. Futures market pricing implies that the Fed will begin raising the funds rate later this year, but we don’t share that view. The Composition of NAHB’s Housing Forecast Has Been Changed NAHB’s revised forecast of housing production shows a shift in composition of housing starts from the multifamily sector to the single-family sector. Worsening supply-demand fundamentals have prompted downward revisions to all three components of multifamily — market-rate rentals, subsidized rentals and for-sale condos and co-ops. Our multifamily forecast now shows 285,000 starts in 2008, down 7% from 2007, followed by a 23% reduction in 2009 to 221,000 units — the lowest since 1993. The reshaping of the housing starts forecast softens the projected downswing in residential fixed investment to some degree, since single-family starts have larger value-per-unit than multifamily starts. RFI still moves down though the first quarter of next year, however, and the housing sector continues to pose considerable downside risk to out GDP projections for 2008 and 2009. NAHB Chief Economist David Seiders analyzes the economy from the point of view of the housing market every other week in the free e-newsletter, “Eye on the Economy.” The preceding is a reissue of his June 11 edition. To subscribe to “Eye on the Economy,” click here.
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: Simple Drying Racks for Painted Trim Work
I especially dislike the chore when it comes to new construction where I consider it practically unnecessary. My crews paint or stain virtually all the woodwork and trim before we put it up. This policy has its drawbacks, however. It requires us to find a place to lay out all those hundreds and hundreds of linear feet of baseboard, casing and crown moldings while they dry. For years, we had to wait for good weather. Then we’d set up every sawhorse, stepladder and milk crate we could find along with a few dozen 1x3s for crossbars. We’d paint or stain outside, then spend a lot of time picking mosquitoes and black flies from the dried finish. Yuck. Last autumn, I got a bit behind schedule and wound up finishing a major kitchen project in November. Staining the wainscoting, chair rails, baseboards and crown moldings outside was not possible. Already, six inches of snow covered the ground and my next window of good weather was about seven months in the future. The solution that I came up with was so laughably simple that I nearly smacked myself on the back of the head for not having thought of it years ago:
Although the racks didn’t cost much, I didn’t toss them at the end of the job. Instead, I wrapped them into bundles and put them in the shed. They’re never there for long, though. If I charged rent to my friends and competitors for each time someone borrowed them, I’d probably be able to take a little more time off and work on my own house. — T. H. Richards, Mont-Tremblant, Quebec, Canada 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. Retrofit Technology to Existing Homes Without New WiringBy Erik Anderson and Jacqueline Woo, Lutron
RF technology is fairly commonplace today and includes items such as cordless phones, garage door openers and the anti-shoplifting detectors often found in department stores. RF technology also is incorporated in many of the home technologies that enable consumers to save energy and enhance their lifestyles. In fact, some RF products have been on the market more than 10 years. While technologies that are hard-wired have greater reliability — primarily because they aren’t subject to interference from microwaves, cordless phones or other electronic devices — strong and dependable wireless options for builders and remodelers do exist. One of the most cost-effective ways remodelers can easily include many of the new technologies not found in older homes is to replace light switches with electronic dimmers, old thermostats with programmable models and ceiling and bath fan controls with controls that have timers. By regularly selling and marketing these technologies to home owners, builders and remodelers can create a consistent revenue stream that makes a positive difference to their bottom line. They also benefit by increasing service to their customers — by providing key products such as automated energy management systems that can help home owners save money. With rising fuel costs, consumers are looking for new ways to cut expenses. By making small investments in dimmers, programmable thermostats and controls with timers, home owners can pocket immediate savings. But they need to be offered and sold these options. RF technology adds a bit more “wow” to these retrofitted products by enabling them to be operated remotely. With RF built into the lighting, for instance, home owners can turn on house lights from their car — creating a safe pathway into the home. They can also press the “goodnight” button on the controller on their nightstand, which can be set to automatically turn off all the lights and adjust other controls ― such as leaving the bathroom light on at 15% so it can serve as a nightlight. Home owners can also program the "goodnight" button to adjust their thermostats to a night setting that can reduce energy usage or set a comfort level. RF solutions also can be added to a single room or throughout the entire house. For instance, there are multi-room audio and media server systems with RF capabilities. These systems enable home owners to watch and listen to their digital content ― music and images ― on TVs, audio systems and computers in different rooms throughout their homes without being tied to one personal computer. Wireless technology — which has greatly increased in quality and consistency — can meet customer demand for an automated and more comfortable lifestyle, especially when cost and space issues inhibit tearing down walls. In addition, consumers who want less time for remodeling projects can enjoy almost instant technology gratification with wireless retrofit solutions. Building industry professionals who provide and market retrofit products understand this and regularly talk to their customers about lifestyle needs. They have differentiated themselves from their peers and increased their revenue as a result. Erik Anderson, CGA, CGP, of Lutron Electronics, is an active member of NAHB. He works with the 20 Club Program and Home Technology Alliance. For more information, e-mail Anderson, or call him at 484-809-3867. Jacqueline Woo, of Lutron Electronics, is a member of the Remodelers Council of the Greater Atlanta Home Builders Association. For more information, e-mail Woo, or call her at 610-392-3258.
Information About Home Technology Available From HTA The Home Technology Alliance (HTA) is a partnership between NAHB and the Custom Electronic Design Installation Association (CEDIA) that was formed to position the housing industry to effectively meet the growing home buyer demand for home technology and provide maximum return on investment in the new home building and remodeling process. For more information, visit www.nahb.org/HTA.
CEDIA: A Source for Experienced ESCs The Custom Electronic Design Installation Association (CEDIA) is a founding sponsor in the Home Technology Alliance and an international trade association of companies that specialize in designing and installing electronic systems for the home. CEDIA members are established and insured businesses with bona fide qualifications and experience in this field. CEDIA serves as a source for Electronic Systems Contractors (ESCs). For more information on CEDIA, visit the association’s Web site at www.cedia.org. To find an ESC, click here. Retiring Boomers Shape Up as a Bonanza for Home BuildersAs the U.S. housing economy struggles to regain its footing, one noted economist who has studied the mature market for more than a decade, says builders who focus on serving the needs of the nation’s 76 million baby boomers are in the right place at the right time. Gene Warren, president of Phoenix-based Thomas, Warren + Associates, predicts that more mobile retirees will create a demand for 11 million homes during the next 22 years. Warren, whose firm completed groundbreaking studies of the economic impacts of the mature market in Arizona in 1998 and in Florida in 2002 also noted that his demand numbers could double if workforce housing for those workers serving the retiring baby boomers were factored into the equation. “All of the studies and migration data we have reviewed points to a dramatic increase in the rate of migration among baby boomers,” Warren said. “While less than 10% of the previous generation, the boomers’ parents, relocated after retirement, we’re looking at a number that could exceed 20% when it comes to boomer migration. This generation has traveled more and is much more experiential in their lifestyle pursuits and as a result, they will be on the move,” he said. Warren says that if 20% of the nation’s 91 million Americans between the ages of 43 and 64 relocate as they retire during the next 22 years, more than 18 million mature Americans, equal to 11 million households, will be on the move and looking for lifestyle-oriented housing. According to Warren’s calculations, in 2007 there were approximately 2.25 million homes occupied by relocated retirees. Even when factoring those existing households into his demand model, Warren says the U.S. housing market will be 8.75 million units short of serving the demand he expects to be created by relocating baby boomers. “These statistics and trends bode well for home builders who understand how to attract and serve these future retirees,” Warren said. “In recent years, not only home builders, but also municipalities have gotten into the business of retiree attraction. As these forces converge, we may very well see many new retirement meccas emerging in locations all across America,” he added. In addition to performing economic analysis and market evaluations on the mature market, Warren has consulted with communities in Arizona, Nevada, South Carolina, Georgia, Louisiana, and even in Mexico, on the subject of retiree attraction. Warren goes on to predict that more than 16 million jobs will be created in the communities that are successful in attracting boomer retirees during the next 22 years, spurring demand for another 9.5 million new homes to accommodate these service providers. “The bottom line is that the emerging aspirations of an affluent and more mobile baby boom population will have a dramatically positive impact on the housing industry for decades to come,” Warren said. “In totality, boomers will create a demand for almost one million housing units a year and we should see this trend build quickly after the excessive building of the early 2000s is absorbed, and an ever increasing number of boomers enter the retirement phase of their lives,” he said. Improve Your Focus on the 50+ Market With Publications From BuilderBooks.com The 50+ market provides some great opportunities for builders today. BuilderBooks.com brings together the essential resources for builders seeking to grow their businesses while bringing high-quality product to this demanding, often affluent consumer group that has planned well and is ready to build or buy. BuilderBooks.com also offers publications on customer service so builders can start building strong relationships before breaking ground and turn these experienced consumers into enthusiastic sales people. To view or purchase these and a wide variety of industry publications online, click here or call 800-223-2665. The Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving the rapidly burgeoning 50+ market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to serving the customer. Find upcoming CAASH classes by clicking here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154 or e-mail CAASHinfo@nahb.com. Creating a Boomer Market: Give 'em LifestyleThe current boomers are the healthiest, wealthiest and most active generation to ever pass the 50-year mark. They do not look at the years ahead in terms of slowing down, they see them as a time of opportunity and fulfillment. Their optimism provides a wonderful opportunity to home builders. So, what do you, as a builder, offer boomers to entice them to leave their comfort zone? What will it take to make this optimistic, but comfortable buyer make the move? The ‘boomer-savvy’ builder will find innumerable ways to show that they understand their buyers and offer lifestyle that can’t be matched in the boomers’ current residence. Flexibility Let’s start with flexibility. Boomers are an incredibly diverse group. The best homes will take into account all of the diverse interests of this active, vibrant market. Floor plans and rooms that offer flexibility are the most marketable.
So, consider offering a plan that has a home office and guest suite on the main level. Some boomers will trade the guest suite for his and her home offices — for couples who both work from home. Others will want a guest suite so they can care for an aging parent. Still others will turn the space into a library or music room. Remember, also, that a number of boomers still need a place for the baby grand. A plan that has built-in flexibility allows a builder to meet the needs of this diverse market. Function Boomers want to see a noticeable, no, make that a huge improvement, in the way their new home functions with their lifestyle. They look for specific, well-designed spaces for the stuff that fits their lifestyle. These may include a butler’s pantry with wine captain, art and book spaces, pet wash, well-designed mud room, teen laundry, command center, truly-functional home office or more. They want carefully thought-out spaces and technology that will enhance their lifestyle, not over-complicate it.
One of the main reasons that boomers won’t leave their current “comfy” homes is the lack of storage in new homes. So, don’t forget the linen storage, the cleaning supply and vacuum storage, the food pantry and the “Costco pantry.” One of the big benefits of new homes is the spacious master closets but don’t forget that they will need other storage space, as well. Friends and Family Marti Barletta, of Trendsight Group, a Winnetka, Ill.-based marketing firm that incorporates gender differences when developing communication and marketing strategies, calls women 50 to 70 “prime-time women.” These women care about the fullness of experience and prize warm honest relationships above all else. Because of these women’s needs ― Thanksgiving dinner with all the kids and grandkids around the table — no other room will do. Keep in mind that this room is often tied to an heirloom piece of furniture. If the room isn’t large enough to hold the treasured piece, the space is worthless. But a wonderful thing about the formal dining room is that it can easily be converted into a home office or library/music room for the buyer who doesn’t want a formal space.
It’s no big surprise that the kitchen is still the heart of the home. Kitchens are not just about cooking, they are where relationships thrive. Yes, you still have to cook there, but now the kitchen is a place for entertaining. Make certain that your kitchen allows for easy conversation with guests in the great room. Outdoor living areas also can provide places for friends and family relationships. Pay attention to the courtyards, outdoor living rooms and kitchens, covered decks and patios, and porches. One of the most important lifestyle trends for today is the blurring of the line between indoor and outdoor spaces. These outdoor living areas add some often-ignored flexibility to the boomer home by expanding the homes usable square footage. Don’t’ forget to offer important lifestyle features like outdoor fireplaces, barbecues and kitchens. ‘Fully Mine’ Today’s boomer buyer is looking to create a home that is theirs alone, so allow for some truly unique design options. Don’t misinterpret this to mean unlimited options. Strive for reasonable options, within the context of service. Show your buyers that you have taken the time to understand who they are and have your options reflect this level of research and service.
Details matter here. Unique details will make you stand out as prospective buyers compare your home with those of your competitors. Most builders will offer an array of interior finish selections. Don’t stop there. Do the research and offer the option packages that buyers in your area desire. When it comes to unique, start with your streetscape. Offer elevations that distinguish one home from another with the same floor plan. This involves more than just offering different colors of brick. Offer a variety of elevations that will match the individuality of your buyers. Also, consider landscape option packages that include the design of outdoor living areas. If possible, offer maintenance packages as well. The boomer buyer will probably travel and can’t be tied to home and yard maintenance. It Is All About Lifestyle Lifestyle is the key. Today’s boomers want a home that perfectly meshes with their lifestyle. Pay attention to the lifestyle hot-buttons of flexibility, function and friends and family, and don’t forget that this buyer won’t settle for a home that is anything less than “fully mine.” If you pay attention to these key areas in the design of your boomer homes, you will find yourself well on your way to capturing the attention of your next boomer home buyer. Anne Olson, A.I.A., of Olson Architecture, Inc., a Niwot, Colo.-based architecture firm that specializes in custom residential, builder product and specialized commercial projects. Olson has more than 20 years of experience in market-driven residential architecture and has worked with home builders throughout the country, including Standard Pacific Homes, Village Homes and Masterwork Homebuilding Company. For more information, e-mail Olson, call her at 303-652-2668, or visit the Olson Architecture Web site at www.olsonarchitecture.com. Photos by: Philip Wegener Improve Your Focus on the 50+ Market With Publications From BuilderBooks.com The 50+ market provides some great opportunities for builders today. BuilderBooks.com brings together the essential resources for builders seeking to grow their businesses while bringing high-quality product to this demanding, often affluent consumer group that has planned well and is ready to build or buy. BuilderBooks.com also offers publications on customer service so builders can start building strong relationships before breaking ground and turn these experienced consumers into enthusiastic sales people. To view or purchase these and a wide variety of industry publications online, click here or call 800-223-2665. The Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving the rapidly burgeoning 50+ market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to serving the customer. Find upcoming CAASH classes by clicking here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154 or e-mail CAASHinfo@nahb.com. Speakers Sought for 2009 50+ Symposium in PhiladelphiaNAHB’s 50+ Housing Council is seeking speakers and proposals for next year's Building for Boomers & Beyond: 50+ Housing Symposium on April 27-29, 2009 in Philadelphia. The deadline for proposals is Friday, July 11. Speakers are encouraged to submit fresh, new ideas and programs should include success stories as well as case studies that break the mold. Programs also should be interactive, thought-provoking and fun while deviating from the standard lecture format. All breakout sessions should involve some type of question-and-answer session to engage the audience The symposium will also feature a new “Executive Track” tailored to builders, developers and high-level professionals. Executive programs will focus heavily on finance, impacts and issues that affect a company's movers and shakers. When submitting a program for the “Executive Track,” submitters must explain why the program should be included. The symposium will be held at the Philadelphia Marriott Downtown. For more information and to learn how to submit a proposal, click here. To submit a proposal by Friday, July 11, click here. For more information, e-mail Janice Coyle at NAHB, or call her at 800-368-5242 x8386. Improve Your Focus on the 50+ Market With Publications From BuilderBooks.com The 50+ market provides some great opportunities for builders today. BuilderBooks.com brings together the essential resources for builders seeking to grow their businesses while bringing high-quality product to this demanding, often affluent consumer group that has planned well and is ready to build or buy. BuilderBooks.com also offers publications on customer service so builders can start building strong relationships before breaking ground and turn these experienced consumers into enthusiastic sales people. To view or purchase these and a wide variety of industry publications online, click here or call 800-223-2665. The Certified Active Adult Specialist in Housing (CAASH) designation gives housing professionals serving the rapidly burgeoning 50+ market the essential knowledge, tools and skills that will help them succeed — from conducting initial research to design considerations and features to serving the customer. Find upcoming CAASH classes by clicking here. For more information, call the Professional Designation Help Line at 800-368-5242 x8154 or e-mail CAASHinfo@nahb.com. Promote Remodeling With Free NAHB ‘Remodel Now’ Material
NAHB Remodelers has rolled out a year-long campaign called "Remodel Now" to educate home owners about the benefits of remodeling. Campaign materials include articles, press releases, ads and other tools that NAHB remodelers, home builders associations and local remodelers councils can adapt for their markets. All materials are available free and can be downloaded from the “Remodel Now” section of the NAHB Web site. “Remodel Now” features two new customizable consumer-oriented ads that highlight why home owners should remodel now. The “Top 5 Reasons to Remodel Now” ad showcases five financial and lifestyle benefits of remodeling. The “Outdoor Living” ad encourages home owners to realize their backyard dreams. The "Remodel Now" campaign materials — which can be easily adapted — include:
Increase Your Professional Credibility The Certified Graduate Remodeler (CGR) designation emphasizes business management skills as the key to a professional remodeling operation. Remodelers who earn the CGR become members of an exclusive national program and gain recognition as industry leaders. To learn more about the CGR designation, visit www.nahb.org/CGRinfo, or call The Professional Designation Help Line at 800-368-5242 x8154.
Blaze a Trail to Success at the Custom Builder Symposium Attend NAHB’s Custom Builder Symposium, October 24-26 in Austin, Texas to get the knowledge needed to make the most of the current market. Advanced education sessions and new tracks on design and technology will provide attendees the tactics to help identify and capitalize on trends and areas of growth. Attendees will also learn how to market their business to capitalize on the growing demand for green. For more information, visit www.nahb.org/Custom.
'How to Find a Professional Remodeler' Available at BuilderBooks.com "How to Find a Professional Remodeler," available at BuilderBooks.com, promotes the professionalism of your remodeling business by offering valuable advice to your customers on the process of selecting a remodeler. The brochure guides consumers from the dream to the reality of having their homes remodeled by skilled and trained professionals. Sections include what to look for in a professional remodeler and what questions to ask. To view or puchase this publication online, click here, or call 800-223-2665 to order.
Cold-Formed Steel Offers Cost-Competitive Solution
From apartments and condominiums to hotels, motels and office buildings, cold-formed steel is finding its way into more and more load bearing, mid-rise projects. Total shipments of cold-formed steel have increased by 46% in the last decade, with most of the steel being used in multifamily and commercial construction. With the skyrocketing price of land, labor and materials, its use is expected to grow for some time. The Reasons Why As baby boomers age, they seek to downsize and many are drawn to the advantages of a more urban lifestyle. These trends mean more demand for more mixed use, mid-rise and multifamily projects throughout the country. There’s also a lot more pressure on developers to maximize their return on investment because of the scarcity of available land for construction projects and off-the-chart costs. One of the most logical solutions to this dilemma is more mid-rise projects because more stories and higher density translate into increased revenue from the same urban footprint. Steel framing for mid-rise projects enables builders to build taller projects faster than they can with other materials. In addition, the demand for cold-formed steel has grown because building codes specifications for non-combustible materials around the country are on the rise — and steel does not burn or contribute fuel to a fire. Building codes now permit steel framing to be used in structures taller than the four-story height limit imposed on wood-framed buildings. According to George Richards, a principal with the Costa Mesa, Calif.-based engineering firm Borm Engineering, choosing cold formed steel for multifamily or hospitality structures like hotels and motels makes good financial sense as well. “For these types of structures, you’re looking at a very short span and a lot of wall compared to the floor area,” Richards said. “Previously, the structural system was always built with concrete or red iron, while steel framing has traditionally been used for the interior walls.” “With cold-formed steel, you are utilizing all of the things in the structural system that you would use in the interior partition” Richards said. “This saves you from having to also buy materials for walls, which is going to save you a lot of money and time.” Steel framing as the structural material for mid-rise projects offers builders and developers other opportunities to increase their bottom lines as well, including:
Builder Gains Opportunities, Credibility With Designation
Earning designations is nothing new to Greenhouse, a past president of both the New York State Builders Association and the Tompkins/Cortland Builders and Remodelers Association. In addition to the CAPS designation, he is a Certified Graduate Builder (CGB). Many NAHB members who have earned professional designations from The NAHB University of Housing are taking the expert knowledge they’ve gained and promoting their expertise to clients as a way of differentiating themselves in the marketplace. Since earning his CAPS designation, Greenhouse has expanded his opportunities and is more confident when meeting with clients. Nation’s Building News spoke with Greenhouse recently about what the CAPS designation has done for his career and business. Here is what he said: What prompted you to get the CAPS designation? I realized that my clients aren’t getting any younger. My wife, Esther Greenhouse, M.S., CAPS, is an environmental gerontologist and a CAPS instructor, so we had been talking for years about how to make homes better for people. I saw earning the CAPS designation as an opportunity to follow through on that. We knew that aging-in-place building was the right thing to do, but wanted to learn how to market it to clients. How has having a CAPS designation benefited your career? First, it has improved our knowledge and confidence. Second, it gives our company more credibility with consumers. Finally, the designation has given us opportunities to open discussions with potential clients. The responses are still mixed — many prospective clients really don’t want to acknowledge that they're getting older. However, the most significant difference is that people no longer get offended when you mention aging in place. The results aren’t always dramatic, but it is a better response. Was it difficult to find time to complete the course work? As a CGB, I was exempt from the business management class, so I only had to take two of the three required courses. The Builders Association of the Hudson Valley that taught my classes made it convenient for me and my classmates. They offered the two CAPS courses back-to-back. Taking the CAPS courses also gave me a great opportunity to network with other builders who told me how they and their clients dealt with aging-in-place issues. How do you publicize or market your designation? We put out a press release to announce it and we promote it at home shows by displaying the certificate. We’re currently working on an article for our company newsletter to introduce past and potential clients to the concept. The designation is also on my business card. In what ways do you think having your CAPS designation has helped you in the current housing market? The CAPS designation gives us two things. One, it’s an important way to demonstrate our professionalism. And two, it opens up new market opportunities. Do you plan to get any more NAHB designations? I will be working on the Certified Green Professional (CGP) and I’m working toward the Graduate Master Builder (GMB) designation. To learn more about The NAHB University of Housing designations, call The Professional Designation Help Line at 800-368-5242 x8154, or visit www.nahb.org/Designations. NAHB University of Housing Seeks Feedback on EducationThe NAHB University of Housing is seeking feedback from participants in NAHB courses, designations and conferences about how the education opportunities may have helped increase their profits, expand their networking or enhance their careers. Among the feedback sought:
For more information, e-mail Elizabeth Moore at NAHB. Education Calendar
Learn More About Upcoming Conferences and Designations Interested in attending a University of Housing conference or learning more about NAHB designation programs? Visit www.nahb.org/notifyme, and sign up to receive more information.
Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar. For assistance, call the NAHB Member Service Center at 800-368-5242. Multifamily Builders Await New Green Building StandardMultifamily builders and developers are eagerly awaiting publication of the National Green Building Standard, the first and only consensus-based standard for all residential construction, renovation and development. The standard is in the final round of the approval process set by the American National Standards Institute (ANSI). While there are other green rating systems for multifamily and mixed-use construction, NAHB and the International Code Council saw the need for a voluntary consensus standard reflecting state-of-the-art building practices through regular ANSI-approved updates, Carlos Martín, NAHB’s assistant staff vice president for construction codes and standards, told participants at last month’s National Green Building Conference in New Orleans. The new standard will provide prescriptive paths defining material selection and performance paths describing expected results, which will enhance its flexibility, he said. Most importantly, the new standard will offer a viable, credible alternative for communities that have resorted to mandates to encourage green building. “Our efforts stem from a change in the green building conversation,” said Paula Cino, director of energy and environment for the National Multi Housing Council (NMHC) who has been a participant in the standard development process. A number of green building advocates are now pushing a one-size-fits-all solution, and “we are trying to stem this tide of mandates,” she said. The National Green Building Standard is a more stringent and more all-encompassing document than the NAHB Model Green Home Building Guidelines, upon which it is based. The standard can be applied to high- and low-rise condominiums and apartment buildings and to all dwelling and sleeping units in hotels and dormitories as defined by the International Residential Code. It can also apply to the housing in mixed-use projects. The standard is also more flexible than competing programs, while recognizing the inherent green characteristics of multifamily projects. The standard offers points for high-density development; proximity to mass transit and commercial resources; and brownfield, grayfield or infill sites, but, unlike programs such as the Green Communities rating system it also recognizes that green multifamily development can occur even on brand-new suburban or rural greenfield sites, Cino said. There are “a lot of opportunities” for multifamily builders in the proposed standard, agreed speaker Ron Nixon, vice president of building codes for NMHC. For example, the standard recognizes the importance of “right sizing” heating and air conditioning equipment in multifamily units that typically differ in their exposure to the outside, he said. Points are available for properly sized air ducts and for ensuring a tested, balanced HVAC air flow. Points also are available if at least 50% of the lighting fixtures and bulbs and 80% of the exterior lighting is Energy Star-rated. Providing the ability to re-use graywater also adds points to the score. Good building practices combined with the energy efficiency inherent in multifamily construction means that most builders, “if they mind their p’s and q’s, can get to the bronze or even the silver level of the standard,” Nixon said. “But you’re not going to get to gold or emerald without significant alternative or innovative sources of energy. The standard has to be a stretch or else we’re just kidding ourselves.” For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.
The Future of Residential Construction Is Green The Certified Green Professional (CGP) designation teaches builders, remodelers and other industry professionals techniques for incorporating green building principles into homes using cost-effective and affordable options. Earning the CGP demonstrates to clients and peers your commitment to the best and latest in green building practices and techniques. More than 500 people have earned the CGPdesignation to date. For more information, visit www.nahb.org/CGPinfo.Big Builders Agree to Pay Storm Water Violation Fines
Fines are being paid to the EPA as well as the seven states that joined in a lawsuit contending the builders, among other things, failed to submit appropriate paperwork and take adequate measures to prevent storm water runoff from job sites. While not being able to cite any specific damage caused by the home builders involved in the lawsuit, EPA officials noted that the dirt moved and redistributed at construction sites can lead to erosion problems and damage neighboring waterways and wildlife. Home builders must “reduce their environmental footprint” to get off regulatory agency radar screens, said EPA administrator Granta Nakayama. Increased compliance with storm water regulations will eventually convince officials to move enforcement to the back burner, he added. “We are pleased that some of our larger members have reached this important resolution with the Environmental Protection Agency. An agreement is always a positive step,” NAHB said in a statement after the fines were announced. “Now, we look forward to learning more about the specifics of the settlement agreements and using that knowledge as we continue our regulatory assistance and enforcement discussions with the EPA. Our goal is to provide more resources and educate our membership on Clean Water Act regulations and compliance. Clear rules — and understanding how to follow them — enable builders to help protect the environment while keeping housing affordable,” the statement said. The fines are a result of inspections that took place mostly in 2005, officials said. In addition to the fines, the home builders cited must institute measures that Assistant Attorney General Ronald Tenpas said “go beyond regulatory requirements” at their construction sites. The companies must train site superintendents and subcontractors and ensure that they are present at each site, institute a management and internal reporting system and submit annual reports on compliance progress to the agency. NAHB has long asked federal regulators to provide more specific information on compliance violations to better educate its members — even going so far as to submit a Freedom of Information Act request for documents indicating how builders and developers are most likely to be cited. That information could help improve the association’s education efforts, said Susan Asmus, NAHB’s staff vice president for environmental and labor safety policy. Published in 2004, NAHB’s “Storm Water Permitting: A Guide for Builders and Developers” details storm water regulations throughout the U.S. and provides a set of storm water regulatory compliance cards that members can download from the association’s Web site. To address the concerns of smaller builders, NAHB drafted a single lot construction permit last fall to cover storm water discharges from residential construction activities on small lots within a larger subdivision. The proposal would make it easier for builders to comply, for example, by allowing them to indicate the location of a lot by its street address instead of its latitude and longitude, as is now required. The proposed permit for building on a single lot would protect the environment, specify more relevant permit requirements for small residential builders and increase the rate of compliance, especially for small businesses, NAHB said. However, it was not included in the latest Construction General Permit proposal issued last month. “We will continue to work with the EPA on this issue. We need storm water regulations that do the job of helping to keep sediment from leaving the site, but are not so onerous that make compliance too difficult or that make housing so expensive that first-time owners are priced out of the market,” Asmus said. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. National Safety Month Puts Focus on Fall PreventionSponsoring June as "National Safety Month," the National Safety Council has created a set of materials and activities to help organizations make a difference in safety both on and off the job. Emergencies, distracted driving, poisoning and falls are specifically being addressed as sources of unintentional injuries and deaths in the U.S. Residential construction frequently involves operating vehicles and working at heights, activities that are among the top causes of fatal injuries in the home building industry. In an NAHB study, “Residential Construction Industry Fatalities, 2003-2006,” falls were the leading cause of fatal injuries in the home building industry, accounting for 45% of the deaths. Fourteen percent of home building deaths occurred in transportation accidents. NAHB works with the Occupational Health and Safety Administration (OSHA) to provide the residential construction industry with information, guidance and access to training resources geared to protecting employee health and safety. Through BuilderBooks, NAHB offers a comprehensive set of resources that can help companies improve the safety awareness and practices of their employees. Too see all of NAHB’s safety resources available through BuilderBooks, go to: www.builderbooks.com/safety. The NAHB Research Center, in conjunction with NAHB, offers a fall protection training seminar in locations around the country for builders, trade contractors, supervisors and workers. The seminar focuses on identifying fall hazards in residential construction and understanding OSHA fall protection regulations and safe work practices in order to prevent fall-related injuries and deaths. To learn more about the fall protection training program, and to see a list of scheduled seminar locations for 2008, go to: www.nahb.org/fallprotectiontraining. For more information on NAHB safety training programs, e-mail Lindsay Cather or call her at 800-368-5242 x8163. Builders Address CDC's Hispanic Worker Safety Issues
Sed de Saber — Construction Edition, a special training tool developed by the Home Builders Institute (HBI) with Retention Education, Inc. and sponsored by Lowe’s Corp., can considerably improve work site safety among Hispanic workers and addresses many of the concerns highlighted in a recent Centers for Disease Control and Prevention (CDC) study. The CDC’s findings, released in its June 6 Morbidity and Mortality Weekly Report, indicate that Hispanic workers experience higher fatality rates than others on the job site, with construction sites representing a particular area of concern. Miscommunication because of language differences was cited as a key factor that needs to be addressed. A similar study by NAHB, "Residential Construction Fatalities 2003-2006," used the same data source as this CDC study and found that 28% of the fatalities in residential construction occurred to workers of Hispanic origin, almost exactly the same finding as the CDC study. Introduced in mid-2007 and increasingly being implemented on construction job sites nationwide to improve safety among non-English speakers, Sed de Saber™-Construction Edition teaches Spanish speakers English-language conversational skills and critical job site safety tips. Lowe’s Commercial Services serves as the home improvement sponsor of the program. “NAHB and its workforce development arm, the Home Builders Institute, have long championed job site safety through our ongoing efforts and partnership with the Occupational Safety and Health Administration (OSHA),” said 2008 NAHB President Sandy Dunn. “Evidence strongly suggests that communication is a major factor in improving safety, and with the growing number of Hispanic employees in our industry, it’s extremely important that everyone on the job site understands one another,” said Dunn. “Sed de Saber-Construction Edition is the most efficient tool on the market for teaching construction-related English to Spanish speaking workers.” Custom-built by HBI and Retention Education, Inc., Sed de Saber-Construction Edition utilizes innovative Leapfrog™ technology to help Spanish-speakers learn at their own pace and on their own time. The system teaches 500 words and 340 phrases, providing a functional level of English-language conversation and comprehension in about five months. With job site safety as a primary goal, the program relies on job site safety details from a jointly-developed NAHB/OSHA Job Site Safety Handbook. “The recent CDC study is alarming, but this is an issue we’ve been aware of at HBI for some time,” said HBI Chairman John Moffitt. “Builders should be taking every precaution to ensure that the job site is safe. Sed de Saber-Construction edition is an advance in technology that can save lives and money.”
Pulte Homes hosted the program in Phoenix late last year, and the employees who participated increased their English language proficiency by an average of 51%. For more information, e-mail Maria McIntyre at HBI, or call her at 800-795-7955 x8912.
Sed de Saber™-Construction Edition is an easy-to-use, take-home learning tool created by Home Builders Institute (HBI) to improve job site communication, construction quality and safety by teaching English to Spanish-speaking workers, who make up 25% of today’s construction industry workforce. Sponsored by Lowe’s Commercial Services, Sed de Saber™-Construction Edition was developed by a team of subject matter experts — including superintendents, craft skills experts, remodelers and builders — to ensure that its contents was relevant to today’s home building workforce. HBI also created a seventh book based entirely on the NAHB-OSHA Job Site Safety Handbook to address job site safety issues related to the language barrier. Sed de Saber™-Construction Edition uses proven LeapFrog technology to allow learners to listen, record and play back their pronunciation of more than 500 vocabulary words and 340 phrases. Participants who practice 30 minutes each day will complete the program in about five months. Learning at home, on their own time, also eliminates scheduling conflicts. NAHB members can purchase the learning system, all seven books and a skills assessment to chart progress for $395 per kit. The non-member price is $495. Order today at www.seddesaberconstruction.com or at www.lowesforpros.com.
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