Nation's Building News Online: June 30, 2008Print All Articles Text Version |
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California’s Housing Market Finds Itself in Dire StraitsWhile the underlying demographics for housing remain strong in California and are expected to gain even greater strength as its population continues to grow, the immediate outlook is grim and the industry remains in dire straits, representatives from the California Building Industry Association (CBIA) told the media at a June 25 news conference in San Francisco during the annual PCBC conference and tradeshow. The state’s home building industry will languish well into next year, with some areas performing noticeably better than others, and the marketplace could sustain even more damage if lawmakers fail to move forward with stimulus legislation aimed at propping up the economy by stabilizing housing conditions. “Without reforms being considered right now in Sacramento and Washington, D.C., I fear many more builders will go out of business and many more jobs will be lost,” said Ray Becker, a Bay Area developer and this year’s chair of CBIA. “Equally important, this attrition will make it even more difficult to ramp up production when the market finally does start to turn.” In a sharp plunge from peak levels averaging about 210,000 units in 2004 and 2005, this year’s construction levels are projected to sink below 80,000 permits, to the lowest level since those figures first started being compiled in 1954, noted Robert Rivinius, the association’s president and CEO. “We need 230,000 starts a year just to meet our growing population,” Rivinius said. Despite the current housing slump, California’s population will grow by 490,000 this year alone, said Alan Nevin, CBIA’s chief economist, reaching 38 million and advancing to 40 million by 2011, not counting residents who are illegal immigrants. “It doesn’t appear to make much difference whether there are jobs here or housing here,” Nevin said. “We just keep growing.” On the employment front, the state’s residential real estate sector clearly has borne the brunt of the economic downturn, with nearly 200,000 home building-related jobs lost during the past two years — before counting the negative impact on furniture distributors, interior decorators, landscapers and others who increasingly have been going out of business. “During the past two years, the state reported a loss of 181,300 construction, finance and insurance jobs,” Nevin said. “But in fact, the job losses related to construction have been much more severe as the multiplier effect of the construction industry is higher than any other.” He added that the downturn has also crippled state and local government budgets due to the lost revenue from taxes and development fees. On the plus side, Nevin said, the state’s unemployment rate is barely up thanks to ongoing growth in such key areas as manufacturing and tourism. Unlike the Midwest, which is suffering from systemic economic problems, California’s housing market overall is poised to move up rapidly once it bottoms out. Nevin said that he has had to pare down his housing forecast from fairly upbeat levels foreseen at the start of the year because of “double trouble” stemming from last summer’s subprime mortgage meltdown and the accelerating price of fuel. Single-family permits in 2008 now are likely to slip to 38,000, down from a peak of more than 155,000 in 2005; and with the condo market at a standstill, multifamily construction will fall to 34,000 from a peak of less than 62,000 in 2004, with activity generated by “apartment builders buying condo sites and building apartments on them.” The sharp home price declines being posted on various indexes for California tend to be overstated, Nevin said, because they are only based on homes sold, and 40% of those have involved foreclosures. In the Riverside and Sacramento areas, more than 70% of home sales have been in foreclosures. Foreclosures have been less pronounced in markets close to the Pacific Coast, he said. “We are not anticipating a return to vitality in the rest of 2008 and 2009,” he added. But “foreclosures are making their way through the smoke and will decline dramatically by the end of the year. This will bring a new level of stability to the market, and resales will start back up.” Concerned that many more builders will shutter their businesses without help from the state legislature, Becker said that builders in California are seeking some short-term relief:
Also appearing at PCBC, a panel of economists from the University of Southern California's Lusk Center for Real Estate, while not downplaying the seriousness of the current situation and the need for a legislative response, presented evidence suggesting that the state’s housing market is moving toward a position in which it will be poised for recovery. That story, and others from PCBC, will be reported in the July 14 issue of NBN. Nation's Building News Will Not Be Published July 7Nation's Building News will not be published on July 7. Regular weekly publication will resume July 14. Happy Fourth of July.
Sen. Ensign Stalls Consideration of Housing BillWith the Senate poised to pass badly needed housing stimulus legislation, Sen. John Ensign (R-Nev.) abruptly stopped the bill in its tracks when he insisted on voting on an amendment that would add $8.2 billion in energy tax-break extensions to the package. Ensign’s 11th hour procedural hurdle has kept the Senate from voting on the housing bill until lawmakers return from their July 4th recess. Prior to Ensign’s action, the Senate completed work on one section of the housing package, approving by an overwhelming 79 to 16 vote a portion of the bill that would modernize the Federal Housing Administration (FHA) and reform for government sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The bill has been pulled from the floor and Majority Leader Harry Reid (D-Nev.) has indicated that the Senate will try again to complete work on the legislation after lawmakers return on July 7 from a week-long break. Ensign Digs In Ensign had delayed the bill’s progress for two days, while the Senate leadership objected that the energy provisions would nearly double the cost of the housing package but include no offsetting revenue-raisers. In addition, the energy package was not “housing-related,” breaking an agreement that the only amendments eligible for inclusion would be those specifically related to housing. When Reid tried to bring up the final package, Ensign blocked it, believing that attaching his energy package to the housing bill was the best way for the energy provisions to be enacted into law. NAHB worked feverishly to get Ensign to reconsider his stand and to urge Reid to keep the Senate in session until the housing bill passed. Grassroots alerts were launched in Nevada, as well as the states that have Republican senators who are facing tough re-election fights. NAHB also contacted the Nevada governor’s office and spoke with the Nevada Republican House offices. In addition, NAHB Senior Vice President/Secretary Bob Nielsen, a builder from Reno, Nev., and NAHB Executive Vice President and CEO Jerry Howard went to Ensign’s Capitol Hill office to urge him to reconsider. Prior to meeting with Ensign, Nielsen was interviewed by Fox Business News and Reuters on his upcoming visit to the Hill and the urgent need to enact stimulus legislation. Howard discussed the same issues in interviews with AP, the Washington Post and Politico. Unfortunately, Ensign held firm on his position. A Week-Long Push for the Housing Bill Earlier in the week, shortly before the Senate began consideration of housing bill H.R. 3221, Howard participated in a press conference with Sens. John Kerry (D-Mass.) and Sherrod Brown (D-Ohio). “We need to pass housing stimulus legislation now to jump-start the economy, save jobs and restore confidence,” he said. NAHB sent a letter to senators urging them to invoke cloture on H.R. 3221 so that they could move forward to vote on the measure. Because of the importance of this legislation to help alleviate the current housing crisis, NAHB designated a vote in support of cloture as a “key vote.” Senators subsequently approved the motion by a vote of 83 to 9. In addition, NAHB ran “An Open Letter to Congress” last week in The Washington Post, USA Today, Roll Call and Politico under the headline, “A Time for Leadership.” In the letter, NAHB President Sandy Dunn called on Congress to complete work on the housing stimulus bill before the Fourth of July. “This is not the time for demagoguery or partisanship. It is the time for flexibility and compromise. It is the time for action,” the letter says. A press release was issued touting NAHB’s all-out push to get housing stimulus legislation passed. The Next Step With consideration of the housing bill pushed back, NAHB is busy working to identify any other senators who might try to impede enactment of the legislation. To that end, South Carolina home builders held a conference call last week with Sen. Jim DeMint (R-S.C.) to explain the immediate need for the legislation and to urge him to work for its expeditious passage. NAHB is continuing to push aggressively to convince Ensign to drop his objection and remains in talks with key Senate leaders about overcoming any procedural hurdles that might arise when the Senate resumes consideration of the bill. For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421; or contact Scott Meyer, x8144. Resets Peaking on Subprime LoansThe number of home owners facing an increase in their subprime adjustable-rate mortgage payments will peak this summer, testing the efforts of lenders and others to keep those people out of foreclosure and stabilize the housing market. The timing reflects the height of subprime lending in the summer of 2005 and 2006, when many borrowers secured loans scheduled to adjust in two or three years. For many, an adjustment means their interest rate will go up two to three percentage points. “The next six months, the industry, all of the folks that are out there trying to solve this problem, they are going to be very busy,” said Mark Fleming, chief economist for First American CoreLogic, a California research firm. “There are a lot of people facing their resets right now. A good share of them don’t have the refinance option.” Nationally, the number of subprime ARMs resetting peaked at 7.61% of the loans outstanding last month, according to data from CoreLogic. More than 300,000 such loans will adjust this summer. CoreLogic’s data covers about 80% of the mortgage market. ARMs facing resets drop off significantly early next year. By January, only 4.8% of subprime loans will face resets and by May that will fall to 1.94%. (www.washingtonpost.com)
Mortgage Rates Creeping UpwardWith mortgage interest rates creeping back up, the wobbly real estate market could be losing one of its last pillars of support, and some experts say they are worried that rising rates threaten to prolong the housing crisis. The average rate on a 30-year fixed-rate mortgage edged up to 6.45% last week, according to Freddie Mac, compared with 5.48% in January. “For months, the only thing the housing market had going for it was that mortgage rates were low,” says Grey McBride, senior financial analyst at Bankrate.com. “With them going up to 6.5%, it’s like getting kicked when you’re down.” “In the next three months, I’d see rates rising only slightly, because the concern of inflation is already factored in to where they sit today,” says Cameron Findlay, chief economist at LendingTree. But in the next six months, Findlay cautions, rates could rise rapidly. “If we don’t have inflation under control by then, and there are still signs of inflation — the dollar’s continuing to be eroded, oil prices are still high — rates are going to be rising faster.” Still, Findlay and other experts suggest that home prices and credit availability will have more pull in drawing in buyers than mortgage rates will. Historically, he notes, even 7% is a relatively low rate. (www.usatoday.com)
Success in Being Small: Builders Stay Busy Despite Low Housing MarketA growing contracting business was the result of Josh Lessman, a former rodeo rider from Nebraska, and Kirk Ivankovich, a construction worker from Montana, being transplanted to Detroit Lakes, Minn. Six months after meeting each other about three years ago, they decided to go into business together as L.I. Builders, Inc. Their first project was a house on Cotton Lake in June 2006. Since then, they’ve continued to work on some custom homes, remodeling, garages and some commercial work. The upscale custom home market, however, is where they would like to find their niche. Lessman said they’re currently working on a custom home on Pearl Lake, and he’s been able to play “half-architect,” a job he says he enjoys. So how is their business, which has stayed busy through the last two summers and winters, flourishing with the recent downturn in the housing market? Detroit Lakes seems to be in a protected bubble, they said. Although they said they’re really only seeing new construction of custom homes from people “with money to spend,” the only thing that has really died is the developers and speculators that can’t sell the houses they build. Ivankovich said the up tick in business has been in remodels and additions. The two cite the benefits of being a small organization. They typically work with one other crew member and don’t have to worry about overhead management and can build closer relationships with clients. “We can handle the big jobs and we have what we need in equipment,” Ivankovich said. “We just don’t have the overhead.” (www.dl-online.com)
Housing Market Ripe for First-Time BuyersThe national housing market has been spewing bad news about foreclosures, dropping prices and a glut of homes on the market. But the bad news for the market could be good news for buyers, said Verna Saladino, a real estate agent with Coldwell Banker Success in Janesville, Wis. That’s especially true for first-time home buyers who don’t have to worry about selling their current homes. “There’s just great opportunities for a first-time home buyer in the area,” she said. “There’s great properties to choose from, and the interest rates are still phenomenal.” For buyers focused on foreclosed homes, Saladino cautions that while they might save some money, they probably will not get a bargain basement because banks know how much homes are worth, and while they want to sell the product quickly, they’re not looking to lose a lot of money. People who buy foreclosed homes should be prepared for some extra wait and work, she added. Banks have their own timetables, and they don’t have the urgency to close the deal that some sellers might have. And the bank doesn’t have the knowledge about the home that an owner would have. When you buy a foreclosed home, you’re basically buying it “as is,” she said. (www.gazettextra.com)
Builders: Regulations Keep Suburban Home Prices Unreasonably HighDecades of regulations have smothered housing affordability. Cost estimates vary, but one study by Harvard’s Rappaport Institute for Greater Boston put the cost of regulation in Massachusetts at 30% of a home’s cost. In the past, when buyers wanted a certain type of home, developers built it, said Ed Goetz, professor of urban and regional planning for the Humphrey Institute of Public Affairs at the University of Minnesota. But now, thanks to regulations, they can’t. “This is not a free market,” said Goetz. Suburbs don’t respond to consumer demand because they fear density. Officials and voters see it as a step toward crowded, high-crime, inner-city neighborhoods. Instead, suburbs have building and zoning codes favoring large houses on large, expensive lots. In West Lakewood Township, Minn., for example, the average home sells for about $380,000, thanks in part to the requirement of multi-acre lots. “Go ahead. Ask around in the suburbs how much land they set aside for higher-density housing,” he said. “It will be in the single digits, if it’s there at all.” (www.twincities.com)
Carried Interest Provision in AMT Bill Would Harm HousingWhile legislation approved by the House last week would provide temporary relief from the Alternative Minimum Tax (AMT), NAHB opposes the measure because a plan to tax "carried interest" to pay for the bill would impose a multi-billion dollar tax increase on real estate at a time when the industry is already reeling from a major cyclical downswing. While sharing the goals embodied in H.R. 6275, the Alternative Minimum Tax Relief Act of 2008, to halt the reach of the AMT for another year, NAHB noted that the carried interest proposal to offset the cost of this relief would result in higher prices for multifamily housing, less job creation and lower community development, especially in underserved areas. NAHB sent this message to lawmakers in a letter delivered before they voted on the bill.
While the Senate also supports reining in the AMT, the chamber in December rejected a similar House plan to tie AMT relief to increasing the tax on carried interest. If the Senate considers AMT relief later in the year, NAHB will work aggressively to oppose any efforts to include the carried interest proposal because of its damaging impact on real estate development. To read the House bill, click here and type H.R. 6275 in the box in the center of the page. For more information, e-mail Greg Brown at NAHB at 800-368-5242 x8421. States, Cities Offering Mortgage Counseling and RefinancingArizona Gov. Janet Napolitano (D) recently announced a local toll-free helpline for families that have fallen behind on their mortgage payments and are facing the prospect of foreclosure. Arizona had the third highest rate of foreclosure in the country for the first quarter of 2008, according to the Arizona Department of Housing (ADOH). With the initiative, Arizona joins cities and states across the country that are helping home owners avoid foreclosure during the housing downturn. The Arizona Foreclosure Helpline, made possible by a $1.3 million grant, is the state’s latest response to the wave of foreclosures that is overwhelming families and threatening to slow the state’s economy. ADOH will manage the helpline. People who call the toll-free number, 877-448-1211, will be directed to the counseling agency closest to their home. Twelve foreclosure counseling organizations have agreed to be a part of the program and 60 professional foreclosure counselors have been trained for it through the nonprofit NeighborWorks Center for Foreclosure Solutions. Most states, and many cities, have stepped up their counseling services to families struggling to make their mortgage payments. Families that receive such services and talk with their lenders are much more likely to benefit and have a good outcome than families who do not seek help. The following is a list of state and local governments that offer mortgage counseling services and mortgage refinancing programs. They represent a fraction of the counseling services now available to home owners across the country:
New-Home Sales Decline In MayLargely offsetting the gain recorded in April, sales of newly built, single-family homes fell 2.5% in May to a seasonally adjusted annual rate of 512,000 units, the Commerce Department reported last week. “The fact that new-home sales are occurring at such a slow pace in the middle of the home buying season, with inventories only barely inching downward, is a strong indication of just how critical it is for Congress to move forward immediately with housing stimulus legislation,” said NAHB President Sandy Dunn. A bill under consideration in the Senate contains the crucial element of a temporary home buyer tax credit, which would help shrink inventories of unsold units and reduce housing’s significant drag on economic growth. “The nation’s housing market clearly continues to display fundamental weakness, and May’s sales numbers are in line with what builders have been telling us in our regular surveys,” said NAHB Chief Economist David Seiders. “Home builders have been doing everything they can to limit the production of new units and move existing inventory, but it hasn’t been enough to make a significant dent in the backlog yet,” Seiders continued. “A temporary home buyer tax credit would help release some of the pent-up demand among potential buyers who are holding off on a home purchase in hopes of prices going lower. This, in turn, could provide a significant shot in the arm for the overall economy.” Commerce’s report indicated that the inventory of new homes for sale fell 1.7% in May to 453,000 units, which is a 10.9-month supply at the current sales pace. Regionally, sales were down 7.9% in the Northeast and 11.6% in the West in May. Sales gained 5.1% in the Midwest and rose a marginal 0.4% in the South. 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. FHA Implements Risk-Based Mortgage Insurance PremiumsOn July 14, the Federal Housing Administration (FHA) will implement a system of risk-based mortgage insurance premiums (MIPs) for one- to four-family FHA-insured mortgage loans. Historically, FHA has charged the same up-front and annual premiums for virtually all FHA-insured single-family loans. A system of risk-based MIPs proposed by the Department of Housing and Urban Development late last year was withdrawn in response to pressure from the Senate, which passed legislation that included a 12-month moratorium on changing the FHA’s MIP structure. However, the freeze was not enacted by the full Congress. The new MIP structure has revised and finalized the 2007 proposal, but could still be sidelined if a moratorium on FHA risk-based premiums, which remains under consideration, is signed into law. According to FHA Mortgagee Letter 2008-16, which was issued on June 11, the revised MIP structure is needed to maintain the solvency of FHA’s Mutual Mortgage Insurance Fund by charging FHA’s borrowers a MIP that is commensurate with the risk profile for their loans. For years, FHA has relied upon MIPs paid by its more creditworthy borrowers to subsidize the losses that were primarily associated with loans to borrowers with less favorable credit histories. This worked well until recent years when the FHA suffered sharp declines in its market share and saw a significant increase in the portion of higher-risk loans in its portfolio. More recent FHA efforts to provide insurance for borrowers refinancing subprime mortgages have increased concerns over the inadequacy of its one-premium-fits-all policy. Without a move to a risk-based premium structure, FHA projects that it would be required to significantly increase the MIP on all FHA-insured single-family mortgages to avoid having to ask Congress for a budget appropriation to cover its operating deficits. Since 2001, all borrowers with FHA-insured mortgage loans have paid an up-front MIP of 150 basis points, or 1.5% of the initial principal balance of their loan, in addition to an annual MIP of 55 basis points. The up-front MIP is incorporated into the total amount borrowed for almost all FHA-insured loans. Under the law, FHA currently has the authority to charge as much as 225 basis points for the up-front MIP, but it has never exercised this authority. Under the new program, the up-front MIP will range from 125 basis points of the loan amount for lower-risk borrowers to 225 basis points for riskier borrowers. The borrower’s risk profile is based on their credit score and the loan-to-value ratio of the mortgage. Borrowers who have a loan-to-value (LTV) ratio of 90% or less and have relatively high credit scores will be charged an up-front MIP of 125 basis points and an annual MIP of 50 basis points. Borrowers at the other end of the risk profile, whose loans have an LTV greater than 95% and credit scores in the 500 to 599 range, will pay an up-front MIP of 225 basis points and an annual MIP of 55 basis points. The up-front MIP will be capped at 200 basis points for first-time home buyers in the higher-risk category who receive pre-purchase counseling from a HUD-approved counseling agency. Borrowers who refinance delinquent non-FHA adjustable rate loans into FHA-insured loans under the FHASecure program will pay an up-front MIP of 225 basis points regardless of the LTV of the new loan. NAHB submitted a comment letter in support of the FHA’s 2007 proposal to vary mortgage insurance premiums to reflect risk. In its comments, the association stated that these changes are particularly appropriate in light of efforts by the FHA to fill the gaps in the housing finance system stemming from dislocations in the subprime lending area and to assist in mortgage refinancing for borrowers experiencing difficulty with their current mortgage. For more information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597. FHA Proposes to Halt Seller-Funded DownpaymentsOn June 16, the Department of Housing and Urban Development published a proposed rule that would prohibit home sellers from contributing to a purchaser’s downpayment either directly, or indirectly through a third party, when a home purchase is being financed with a mortgage loan insured by the Federal Housing Administration (FHA). HUD’s proposal would allow home buyers to receive downpayment assistance from family members, government or public agencies or the borrower’s employer or labor union. Contributions from a tax-exempt charitable or educational organization would also be permitted as long as the downpayment doesn’t come from a party involved in the sale transaction. The comment period on the proposal closes on Aug. 15. First adopted in 1999 and updated in 2006, NAHB’s policy on seller-assisted downpayments calls for the development of criteria under which such assistance would be allowed. When this proposal was originally published in the May 11, 2007 Federal Register, NAHB urged HUD to refrain from implementing an absolute prohibition of seller-provided downpayment assistance. NAHB recommended allowing sellers to provide downpayment assistance to buyers under appropriate circumstances in which there are prudent credit analysis, appraisals and underwriting and adequate home buyer information and counseling. HUD does not address NAHB’s recommendations in its latest proposal. HUD was prevented from implementing the rule when it was scheduled to take effect on Oct. 31, 2007 after two courts found that the department had violated the Administrative Procedures Act. The rule was subsequently remanded to HUD, which was left with the option of either abandoning the rulemaking or revising its analysis and reissuing the rule. In a related development, the Senate version of the latest housing bill (H.R. 3221) includes language that, if enacted, would prohibit downpayment assistance from parties to the home sale transaction. The House version of this bill does not include this restriction and it would support such programs. NAHB opposes the Senate provisions and has informed Senate leaders that it favors reform, not elimination, of seller-provided downpayment assistance programs. Members of Congress are being urged to include the House provisions in a final bill. For more information, e-mail Michelle Hamecs at NAHB, or call her at 800-368-5242 x8425. Eye on the Economy: Housing Policy Support Should Arrive SoonAnnualized growth of real gross domestic product (GDP) has been running well below trend since late last year, not in typical recession territory but slow enough to result in systematic deterioration of the labor market. This pattern will qualify as an unofficial “growth recession” if it persists for much longer. First-quarter GDP growth stands at 1.0%, according to the “final” estimate released from the Commerce Department, and we’re estimating a similar performance in the second quarter of this year. The economy lost 324,000 payroll jobs in the first five months of the year, and the unemployment rate rose by 0.5% during that period. The employment report for June, to be released on July 3, should show a further decline in payroll employment, although the unemployment rate could edge downward — following a seasonal quirk in May. Maintenance of positive GDP growth in recent quarters actually is remarkable, in view of the strong headwinds that are buffeting the U.S. economy. These include the deepening housing contraction, the unprecedented turmoil in national and global credit markets and the virtual explosion of global oil prices since late last year — a combination of factors commonly dubbed the “troublesome trio.” The economy will continue to face formidable difficulties as the year proceeds, although both monetary and fiscal policy most likely will be providing crucial support to the system. The Consumer Is Being Pulled in All Directions at Once Consumer spending accounts for more than 70% of GDP, so a serious shortfall in personal consumption expenditures (PCE) inevitably spells big trouble for the U.S. economy. Growth of real PCE slowed to an anemic 1.1% annual rate in the first quarter, and spending on consumer durables contracted at a 6.0% rate. Furthermore, real PCE was dead flat in April, as slow growth in spending on services barely offset contractions in both the durable and nondurable goods categories. This is hardly good news for the U.S. economy. Rebates of personal income taxes, authorized by the Fiscal Stimulus Act of 2008, come to $116 billion, an amount that could stimulate solid growth in PCE in short order. The rebates started to go out at the end of April, about $50 billion were dispersed in May, and the rest should be received by taxpayers by the end of July. It appears that the tax rebates are “working” reasonably well. Retail sales strengthened considerably in May, even after accounting for surging gasoline prices, and we expect positive support to be maintained for at least a few more months. On the negative side, measures of consumer confidence/sentiment have slipped into recession-like territory, pushed down by growing concerns about the weakening job market, surging energy costs, falling house prices and a retreating stock market. There’s a real tug-of-war going on here, and it remains to be seen how well consumer spending will hold up over the balance of the year. We expect maintenance of modest growth in real PCE, but that’s hardly a slam-dunk. The Fed Maintains a Stimulative Policy Stance The Federal Reserve held monetary policy steady at the June 24-25 meeting of the Federal Open Market Committee (FOMC), keeping the federal funds rate target at 2.0% and the discount rate at 2.25%. Thus the real (inflation-adjusted) funds rate remains in the negative zone, clearly a stimulative monetary policy stance. The June 25 FOMC statement expressed a good bit of concern about the near-term prospects for economic growth, citing “tight credit conditions, the ongoing housing contraction, and the rise in energy prices.” But the statement definitely upgraded inflation concerns, stating that “upside risks to inflation and inflation expectations have increased.” It’s fair to say that the Fed’s view of the balance of risk to the U.S. economy has shifted toward the inflation side, but the FOMC statement still was technically neutral — consistent with a stable policy stance for now. We continue to believe that the Fed will hold steady over the balance of this year and into the beginning of 2009, as long as inflation moderates as expected and inflation expectations in the private sector do not rise substantially. Mixed Pattern of Home Sales Is Not a Reassuring Sign for the Economy Sales of new homes fell by 2.5% in May, continuing the irregular but persistent slide that began in the fall of 2005, while sales of existing (previously owned) homes rose by 2.0% in May. In fact, existing-home sales have been in a narrow range all year, while new-home sales have been trailing downward systematically. It’s clear that the relatively strong performance of existing-home sales in recent times reflects rising sales of foreclosed homes that get into the multiple listing service. While it’s good that foreclosed homes are selling ― generally at fire-sale prices ― rising foreclosures are hardly a sign of vitality in the nation’s housing market. Indeed, rising foreclosures dump more inventory onto the market, making it even harder for builders to sell new homes in inventory. The key to a meaningful turnaround in the housing market is recovery in net sales of new homes (new orders less cancellations) to levels that systematically exceed starts of new homes for sale (excluding homes built on owners’ lots). Such a pattern will systematically reduce inventories of new homes on the ground (under construction or completed) and pave the way for recovery in production of new housing units — the key to restoring housing as a positive factor in economic growth. NAHB’s proprietary survey of large single-family builders, accounting for about one-fourth of all for-sale homes built in the U.S., has yet to show meaningful stabilization of seasonally adjusted net home sales, as reported through May. Gross sales continue to trend downward, and cancellation rates measured relative to gross sales or sales backlog still are at historically high levels. NAHB’s broad-based Housing Market Index, based on monthly surveys of roughly 400 single-family builders, show no improvement in builders’ perceptions of the demand side of the market. Indeed, the HMI fell back to 18 in June, returning to the record low posted in December of last year. All three components of the HMI — current sales, sales expectations and buyer traffic — were at or near record lows, and all four regions of the country had depressed HMI readings. Housing Production Still Is Falling The ongoing deterioration in net sales of new homes, the record numbers of vacant homes for sale including foreclosed homes, and large declines in home prices in many areas naturally continue to put strong downward pressure on the production of new housing. Residential fixed investment (RFI) contracted at a 25% annual rate in the “final” estimate of GDP for the first quarter, lopping off nearly 1.2 percentage points from the overall GDP growth rate. Single-family starts and permits fell a good bit further during the April-May period, locking in another major decline in RFI for the second quarter of at least 20%. Absent much-needed policy support, home sales will remain quite weak for some time and RFI will decline over the balance of this year and into 2009. We’re currently projecting a 21% decline in RFI for 2008 year-over-year and a further 3.3% decline in 2009. That’s a lot for the U.S. economy to handle, particularly when energy costs are creating strong headwinds and the financial system is in a state of disrepair. Policy Support Should Arrive Soon The Congress and the Administration have come to appreciate the seriousness of the downswing in housing production, the downswing in house prices and the associated upswing in foreclosures. Both the House and the Senate have been working hard on housing stimulus legislation, and opposition from the White House with respect to some provisions appears to be softening. It’s unlikely that Congress will send a bill to the President before the July 4th recess, but chances for enactment later in July look pretty good, subject to the vagaries of congressional behavior. A temporary $8,000 tax credit for first-time home buyers could very well jump-start home sales and help to stabilize both house prices and mortgage credit quality. Other key provisions should provide relief on the mortgage foreclosure front and strengthen key components of the mortgage finance system — FHA and the government sponsored enterprises (Fannie Mae, Freddie Mac and the Federal Home Loan Bank System). We’re now working out appropriate forecast adjustments to accompany enactment of a housing stimulus package. Stay tuned. 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 25 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. Labor Department Collecting Building Industry Employment DataThe U.S. Department of Labor Bureau of Labor Statistics (BLS) is contacting home building industry professionals in order to collect wage and benefit information for the National Compensation Survey (NCS) and the Occupational Employment Statistics Survey (OES). The information provided produces:
BLS observes absolute confidentiality of survey information provided by employers and will help companies to complete the survey as efficiently as possible. For more information, contact the Office of Compensation Levels and Trends at 202-691-6199, or e-mail ocltinfo@bls.gov. For information benefit and wage data, the employment cost index, occupational employment statistics, occupational employment projections, consumer price index, producer price indexes and other economic statistics, visit the BLS Web site (bls.gov), or request information through its fax-on-demand service at 202-691-6325. 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: Fabricating an Inexpensive Dust Collector
I came up with an inexpensive dust filter that works for my shop as well as for the interior remodeling that I do. I bought a 20-inch box fan for $13, a piece of 1-1⁄4-inch vinyl-siding J-channel for $2 and a 20-inch by 20-inch furnace filter for 50 cents. As shown in the accompanying drawing, I attached the J-channel in a U-configuration on the intake side of the fan and slid in the filter. It works great and the total cost was only $15.50. I usually buy the better particle filters for $2 or $3 and use my compressor to clean them out periodically. — Phil Giordano, Sterling, Va. 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. Solidify Warranty Expectations With a Knowledgeable StaffBy Tracey Gundersen, CEO, Warranty Management Technologies Warranty documents and procedures can confuse even the most savvy builder, staff person, Realtor® or trade contractor. Warranty law changes, and edits such as right to repair, are sure to cause confusion about response times and documentation. If the builder is confused, then where does this leave the other stakeholders who interact with the buyer? Customer service expert and author Carol Smith says that everyone in the customer service chain ought to develop complete warranty knowledge. After all, how can a staff establish reasonable expectations without understanding the company warranty document? A thorough warranty document presented by a knowledgeable staff establishes proper buyer expectations and a solid customer foundation. What should a builder’s staff know in order to create this solid foundation? Beyond legalese, what should a warranty document include? And how can a builder present the document as an expectation management tool? Smith offers 20 points to consider:
Tracey Gundersen is the founder and CEO of Warranty Management Technologies, LLC, of Burnsville, Minn. The firm provides warranty process management software, consulting services and fully outsourced customer service to new home builders. For more information, e-mail Gundersen, call her at 952-707-0725, or visit www.homsoft.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. Learn How to Maintain Positive Customer Relationships With ‘Beyond Warranty’ “Beyond Warranty: Building Your Referral Business” by Carol Smith, available at BuilderBooks.com, provides practical tips and tools for builders and their sales and warranty staffs to understand and plan for the customer service that follows the sale of a house, especially warranty service. “Beyond Warranty” takes builders step-by-step through the complicated but essential process of creating a home warranty program that can improve housing quality and earn satisfied customers and referral business. To view or order this publication online, click here, or call 800-223-2665. Draw on Business Basics When the Sky is FallingBy Karen Dry and Linda Hebert Housing market headlines couldn’t be more pessimistic. Projects have stalled, new business isn’t coming in and you can’t see feasible options in the midst of business turmoil. You need solid information on what to do. Business management consultants say that this is not the time to blindly seek out a silver bullet solution. Instead, they recommend that you dig deep and go back to the basics to find the best strategic direction for your specific business situation. That means taking a breath, evaluating where your business stands in the industry and making realistic projections. “People are often so focused on the problem that they forget to focus on the solution,” said Misti Burmeister, CEO of Inspirion Inc. based in Fairfax, Va., a consulting firm committed to helping organizations and professionals reach their potential. “The worst thing any business owner can do is to act out of fear.” So how do you find this information without paying a monthly retainer to a consultant you can’t afford? “Don’t be afraid to go to your network and ask for help, because you can’t do it on your own,” said Burmeister. Many builders cannot rely on their traditional business base right now, so they need to hit the pavement again. “This is a particularly bad time in the industry, but there are always challenges in the marketplace,” Burmeister said. “You have to shift gears and think about the unique areas where you can add value because, even in the slow economy, people are still trying to buy and sell, remodel and build homes.” Burmeister said people do not simply buy things, they do business with people they trust, so be the trusted and respected go-to professional. That’s where you can build relationships and grow new business areas. “Women are inherently resourceful and natural relationship builders,” Burmeister said. “However, when they get into business, women sometimes think they have to be like the boys and don’t do what comes naturally.” “If women did what they know best, they would stand out and ultimately get the business they want,” Burmeister added, Consider the following fundamental questions as you determine the direction you need to take in these challenging times.
Whatever you decide, decide now because inaction on your part will most likely result in quick and unhappy consequences that are out of your control. NAHB Women’s Council Vice Chair Karen Dry is president of Garrett Interiors, Inc., an interior design company based in Westlake Village, Calif. specializing in model home merchandising along with residential, commercial and hospitality interior design. For more information, e-mail Dry, or call her at 818-991-3487. Linda Hebert is the chair of the Women’s Council communications subcommittee and president of Diversified Marketing & Communications, of Pleasanton, Calif. For more information, e-mail Hebert, or call her at 925-577-5300. Next: Assess your business choices — you’re going to ride it out. More Home Owners Seeking Energy-Efficiency UpgradesAs home owners grapple with skyrocketing energy costs, more of them are turning to remodelers for money-saving solutions, according to a recent NAHB quarterly Remodeling Market Index (RMI). “It’s no surprise with rising energy prices and other costs draining the piggy bank that home owners want to maximize home performance with green remodeling options,” said NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, president of Legacy Construction, Inc. in Farmington, N.M. According to the RMI, 33% of the remodelers surveyed said that they are increasingly called on to improve the energy efficiency of their client’s homes. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. The growing home owner interest in green remodeling comes just as NAHB prepares for the upcoming National Green Building Standard, which includes the only consensus rating system for remodeling. The standard provides a roadmap for green remodeling and assures consumers that remodelers know how to plan and complete authentically green remodels. According to the survey, remodelers have installed a number of efficiency-enhancing products in recent months, including:
For more information, e-mail Kelly Mack, or call her at 800-368-5242 x8451.
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.
'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.
Blaze a Trail to Success at the Custom Builder Symposium Attend NAHB’s Custom Builder Symposium, October 24-26 in Austin, Texas and get the knowledge to make the most of the current market. Advanced education sessions and new tracks on design and technology provide tactics to help identify and capitalize on trends and areas of growth. Also, learn how to market your business to capitalize on the growing demand for green. Earn Designation Credits at the Remodeling ShowNAHB Remodelers who want to learn more about green building, estimating, risk management and the latest technical skills and business practices, as well as earn designation credits, should attend NAHB pre-show education courses at the upcoming Remodeling Show in Baltimore. Pre-show courses will be held Sept. 7-9, followed by the Remodeling Show on Sept. 10-12. In addition, The NAHB University of Housing is offering two “PREP: The Professional Remodeler Experience Profile” assessments, the first step in the process of becoming a Certified Graduate Remodeler (CGR) before and after the show. The pre-show courses include: Sunday, Sept. 7
Attendance will be capped at 50 registrants per course. To register, visit the Remodeling Show Web site at www.theremodelingshow.com.
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.
'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.
Blaze a Trail to Success at the Custom Builder Symposium Attend NAHB’s Custom Builder Symposium, October 24-26 in Austin, Texas and get the knowledge to make the most of the current market. Advanced education sessions and new tracks on design and technology provide tactics to help identify and capitalize on trends and areas of growth. Also, learn how to market your business to capitalize on the growing demand for green.
New Graduate-Level Designation Expands CGR Knowlege BaseThe NAHB University of Housing recently launched the Graduate Master Remodeler (GMR) designation as a master-level education advancement for Certified Graduate Remodeler (CGR) designees. The GMR designation requires courses in financial management, risk management and insurance, green building, diversification and quality business practices. Designees must also follow a GMR code of ethics. The following qualifications are needed to obtain the GMR:
'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.
Blaze a Trail to Success at the Custom Builder Symposium Attend NAHB’s Custom Builder Symposium, October 24-26 in Austin, Texas and get the knowledge to make the most of the current market. Advanced education sessions and new tracks on design and technology provide tactics to help identify and capitalize on trends and areas of growth. Also, learn how to market your business to capitalize on the growing demand for green.
Smaller Homes Could Be Making a ComebackA number of trends suggest that Americans really might be willing to swap their McMansions for McCottages. Soaring fuel costs, environmental concerns and aging baby boomers mean the American dream home may be getting a lot smaller than it used to be. Over the years, a number of industry professionals have predicted the mass downsizing of the American home. Instead, the average size of newly-built houses has continued to rise from just over 1,600 square feet in the late 1970s to nearly 2,300 square feet now. But, in a February survey of potential home buyers by NAHB, 60% said they would rather have a smaller house with more amenities than the other way around. For starters, baby boomers, whose eldest members turned 62 this year, are increasingly becoming empty-nesters. And with the children gone, they need less space. Families also have changed dramatically. Between 1970 and 2000, the percentage of nuclear families — married couples with children — declined from 40% of households to 24%, according to the Census Bureau. And childless families are expected to increase. Also, members of Generations X and Y seem more intrigued with life downtown where they can enjoy easy access to restaurants and entertainment, a minimal commute and smaller, easier-to-care-for living spaces. So how will Americans cope with shrinking space? Some architects and builders believe that newly-built houses will have layouts that can "live bigger" than their square footage would suggest with rooms that can do double duty. For example, a den can be dressed up as a formal living room when needed. Formal dining rooms are beginning to fall out of favor as families begin to satisfy their dining and entertaining needs by slightly expanding the breakfast nook. If the trend toward smaller homes does take root, it could trigger a significant shift in home values. A study released in May by the online house-pricing service Zillow.com found that less expensive houses appreciated more than costlier top-tier and presumably larger homes over the past five years — 10.1% versus 5.4%, respectively. Enter the BALA Design Competition by July 31
Entries are being accepted for the 2008 Best in American Living Awards (BALA), the foremost residential design competition in the country. Builders, interior designers, architects, land planners, developers and marketing and real estate professionals are invited to enter. The entry deadline has been extended till Thursday, July 31. The competition includes 36 categories — from single-family attached and detached homes in a variety of sizes to rental developments and custom homes, plus categories for interior design, communities and neighborhoods, affordable housing, smart growth and others. A panel of design professionals judge entries on design appearance and curb appeal, interior floor plans, how the project relates to its own local market and the construction techniques and materials used. Homes that were completed or that had their first model opened between May 1, 2007 and July 15, 2008 are eligible for this year’s competition. Entry Dates:
Winning entries also will be posted on the Professional Builder Web site (probuilder.com) for up to one year after the announcement. For additional information and to download a BALA entry form, click here, go to www.probuilder.com/bala, or contact Judy Brociek, Professional Builder, at 630-288-8184 or Jennifer Jones at NAHB, at 800-368-5242 x8343. Training and Evaluating Sales Teams Bring Sales SuccessWhile many companies are cutting their training and evaluation budgets, smart builders are finding ways to continue training and testing ― and seeing solid results. We at Melinda Brody and Company, which trains home builders to sell, have seen these kinds of results ourselves among our clients. Two of our clients, different-sized builders in Lakeland, Fla. and Charlotte, N.C., have both experienced rising sales after increasing their training and evaluation processes. In fact, one of them went from 14 net sales in January to 54 net sales one month later, and this was with the same amount of traffic. Intrigued, I asked representatives of each company to share their “secrets” of how they train and how they utilize evaluations to eliminate the non-producers. One of them, Highland Homes in Lakeland, pointed to its in-house testing-training-testing process, and its video shopping or “shops.” “In January, we had only 14 net sales,” said Kathie McDaniel, director of marketing and advertising for Highland Homes. “We ended February with 63 gross and 54 net sales and the conversion rate has doubled.” “I attribute this to our agents watching their video shops and getting into the game of sales,” McDaniel said. “They were astounded at the buying signals they were missing.”
“After watching the tapes, I realized that the agents were not using tie-downs or closing,” McDaniel said. “They were continually asking management to lower the price so they could get sales.” “They had a real wake-up call watching themselves on the video, and were appalled at how many buying signals they were missing,” she said. So McDaniel instituted a regular training program with three-hour sessions every other week. Each session focused on a different topic and used role playing to demonstrate good and bad techniques. The sessions also included discussions and brainstorming solutions. McDaniel also used industry-specific training DVDs, saving her some time by providing a ready-made lesson pla upon which she could build. McDaniel also said she requires all her agents to become Certified New Homes Sales Professionals (CSPs) within two years of joining the company, “and they must pay half of the investment,” she said. “This has more buy-in for them.” “They also must submit a personal marketing plan on how to generate traffic each week,” McDaniel added. “Our company has invested in ads in the newspaper, Internet, New Homes Guide, etc. to drive the traffic, but we want to see the agent’s proactive role in traffic generation, too” The training program involves creating proactive roles for the entire sales team, not just the agents. Highland Homes began hiring only licensed assistants after seeing unmotivated sales assistants on the company’s video shops. Highland Homes also began to include the assistants in sales training and give them more opportunities to take part in the sales process. By changing the company’s approach to assistants, Highland Homes now has a “feeder line” for bringing on new, well-trained sales representatives.
Doug Bevington, director of sales and marketing for Pasquinelli and Portrait Homes in Charlotte, also found great success in the testing-training-testing process. But with 28 agents and two area managers, it made more sense for the builder to bring a national trainer, Myers Barnes, to Charlotte. Training also included an in-house performance coach to help implement group and field training, video shop reviews and a three-week internal “boot camp” for agents. “We started with Myers Barnes coming in for a three-day workshop,” said Bevington. “We adopted his scripts and trained our agents to use them. We used the video shops as our ‘field test’ and then re-trained where necessary and shopped again.” Some agents, including an eight-year veteran, underwent extensive training for 40 hours a week for three weeks. As a result, Charlotte is now the national company’s top-producing division. In today’s market, sales representatives actually have to sell. Statistics show that companies that are dedicated to training and evaluating their sales teams, whether through an outside source or by themselves, are clearly the front runners in selling new homes. Melinda Brody, MIRM, is president of Melinda Brody and Company, which helps builders sell more homes with video shopping, seminars and training products. For more information, visit the company’s Web site www.melindabrody.com, or e-mail sell@melindabrody.com. Enter The Nationals Sales and Marketing Awards by Sept. 26Enter your best in new home sales and marketing and design for 2009's The Nationals — the National Sales and Marketing awards, the largest and most prestigious competition for new-home sales and marketing professionals and communities. Sponsored by NAHB’s National Sales and Marketing Council, The Nationals honor the best in architectural achievement, product and community design, advertising and promotion, interior merchandising, Web site design and more. The awards are open to individual sales and marketing professionals, home builders, associates and sales and marketing councils. All entries, including fees and exhibits, are due Friday, Sept. 26. Late entries will be accepted by Oct. 3, with an additional fee. The Nationals recognizes innovation and excellence in 52 categories. During a three-day judging process, a panel of industry professionals from across the country selects Silver and Gold award winners from a field that typically includes more than 1,200 entries.
To Apply
Awards Gala at IBS on Jan. 20 Category winners will be honored during a gala event at Caesars Palace in Las Vegas on Jan. 20 during the International Builders' Show. For more information, visit www.TheNationals.com, e-mail Lisa Parrish, or call her at 800-658-2751. To Get Entries Noticed For expert advice on getting noticed, participate in the sales and marketing council (SMC) conference call, "Tips from The Nationals — Secrets to Help Your SMC Awards Program Take the Prize," on Wednesday, July 9 from 2:00-3:00 p.m. EST. Parrish and DeWalt will provide tips on how to create winning awards entries for The Nationals. To participate in this workshop, call 888-813-8477 and use the passcode 2668066.
Subscribe to Sales + Marketing Ideas Magazine for Cutting-Edge Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine (www.smimagazine.com). Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. 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. Consumers Want Green Benefits, Confused by DetailsConsumers are not fully embracing green building because most are not aware of what is required and the costs involved, according to the latest Eco Pulse green marketing consumer survey. The survey is conducted annually by the Shelton Group, a Tennessee advertising agency that focuses on energy and sustainability. Most consumers seem to think green homes are an all-or-nothing proposition, said Shelton Group CEO Suzanne Shelton, adding that marketers need to make green purchasing decisions easier, simple and less overwhelming for consumers. From a list of 17 green features, consumers chose an average of 10.4 that they thought were required to make a house green. Eighty-two percent of the respondents believed that Energy Star®-rated appliances were required, followed by water conserving features (78%), high-efficiency windows and solar powered electric systems (71%). Shelton said solar power was a big stumbling block to green building because it is one of the most expensive home upgrades and because most consumers mistakenly believe it is required when building green. Consumers are throwing their hands up and saying, “I just can’t do all of this,” Shelton said. When asked for the primary reason they would purchase green products for their home, 49% of the consumers surveyed said they want to reduce their energy bills. Though 78% believe that green products “sometimes to always” cost more, they are willing to pay a premium for products that will increase their home’s efficiency and lower their monthly bills, the survey said. The study results echo a survey conducted for NAHB in October 2007 that found that consumers’ primary reason to choose a green home was to achieve greater energy efficiency. Of the 800 consumers polled in the NAHB survey, 64% said that “reduced energy costs” would be the most important factor in their decision to purchase a new green home or remodel their home green. “I have seen a change in my clients’ awareness,” said NAHB Green Building Subcommittee Chair Ray Tonjes of Ray Tonjes Builder, Inc. in Austin, Texas. “I’ve always had clients who are pretty conscientious about energy features, but now with national attention on green, there is a heightened awareness.” A recent survey of builders on the trends and opportunities in residential green building, conducted by McGraw-Hill Construction, found that the number of builders who are “moderately green” has surpassed those with a “low share” of green building. Of the builders surveyed by McGraw Hill:
The green features builders installed most were air sealing, insulation and water-reduced plumbing. “Builders aren’t as keyed in as consumers are starting to be,” Tonjes said. The consumer and builders surveys about green building provide “a great deal of knowledge and benefits to builders. In the uncertainty of today’s market, it helps to know how other builders are dealing with the same issues.” Harvey Bernstein, of McGraw Hill, said that rising energy costs are increasing customers’ willingness to pay a premium for green homes and predicted that “highly green builders” ― those whose homes are 60% green or more ― will see greater sales. Over the next five years, green building is estimated to double, from $40 billion to $70 billion in sales by 2012. 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. ‘WaterSmart’ Conference Set for Las VegasAt a conference in Las Vegas this fall, builders and developers can learn more about combating water shortages that have become an increasingly serious problem in many regions of the country. Conference organizers say it’s a valuable opportunity to learn more about urban water-efficiency practices and products that may affect how the home building industry operates in a world where it is increasingly challenging to meet the demand for water. The inaugural WaterSmart Innovations Conference and Exposition, set for Oct. 8-10 at the South Point Hotel and Casino, will include a number of educational seminars and an expo hall with products and services for builders, landscapers, elected officials, plumbers and water agency representatives. Keynoting the conference on Oct. 9 will be climatologist Jonathan Overpeck, director of the Institute for the Study of Planet Earth at the University of Arizona in Tucson. Overpeck helped to produce the Nobel Prize-winning United Nations Intergovernmental Panel on Climate Change Fourth Assessment in 2007. NAHB is partnering with the Southern Nevada Water Authority, the U.S. Environmental Protection Agency WaterSense program and other organizations to produce the conference. With presenters from 24 states and five nations, WaterSmart Innovations has been designed to provide a platform for sharing success stories and exchanging ideas. More than 1,000 professionals from around the world are expected to attend WaterSmart Innovations, making it the largest conference of its kind. Registration is available for $330 before July 11 and $390 after that date. Go to www.watersmartinnovations.com to learn more and to register. 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. NAHB Takes Issue With New Construction General PermitClose to the expiration date, the U.S. Evironmental Protection Agency has proposed extending its Construction General Permit for two years. The permit allows home builders and developers to work on construction and development sites from which sediment can run off during rainfall. In comments on the proposal, NAHB noted its concern about a possible gap in coverage for some applicants when the current permit expires on July 1 and the agency continues to respond to public comments. The association also said that the EPA had missed opportunities to make it easier for builders to comply with the regulation. Those who are caught in the gap without the general permit they need for construction activities “may be required to apply for an individual permit or face stiff CWA penalties,” the letter said. “This ‘gap’ in permit coverage, during which time no new general permits can be issued, will result in builders having to delay or forego projects or to wade though a lengthy, extensive and inappropriate individual permit process prior to commencing construction projects,” it continued. “As a result, any gap will simply and effectively halt development, and not promote clean water, as intended by the statute.” NAHB’s response to the EPA is part of a larger association effort to educate its members about storm water permit compliance and to convince regulators that clearer rules are needed. Construction General Permits are used in Alaska, Idaho, Massachusetts, New Hampshire, New Mexico and U.S. territories and federal lands. The remaining states have taken over the permitting process from the federal government, but must look to the EPA permit when updating theirs. NAHB noted it was pleased that the EPA is considering promoting Qualifying Local Program (QLP) permits in lieu of duplicative federal permits, but it said that the proposed criteria included by the EPA for the local permits “add an unnecessary regulatory specificity and review burdens to the QLP approval process.” Permits for Single Lots The EPA has not considered a five-year-old NAHB proposal for a new permit for builders constructing homes on a single lot within a subdivision. This single-lot permit would be more appropriate than the existing permit, which is designed for storm water discharges from larger developments; and delaying its consideration for at least another two years “is frustrating to say the least,” the comments said. Pointing out another shortcoming of the general permit, NAHB said that permits are required of builders who can demonstrate that their storm water retention plans or geographic features of the site ensure there is no runoff. “There is no mechanism in place by which a discharger may certify or otherwise notify the agency that no storm water will exit the site,” the letter said. Without providing a way to demonstrate that there will be no runoff, the EPA “assumes everyone has or needs a permit.” Making Sense of Storm Water The EPA has no reliable figures on the rate of compliance with its storm water discharge regulations, an indication of the patchwork of regulatory and compliance issues that exists across the country. Enforcement varies state by state and jurisdiction by jurisdiction, depending on how agency officials interpret the regulations; and rules that might apply to developments on certain soils in rainy climates have no application in the dry, sandy Southwest, the association said. NAHB continues to update materials for builders to help them stay in compliance at www.nahb.org/stormwatertoolkit. For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132. OSHA Has Free, Teen Summer Job Safety MaterialsFree educational brochures, posters and fact sheets are available from the Occupational Safety and Health Administration (OSHA) as part of its 2008 Teen Summer Job Safety Campaign to reduce work-related injuries among teens by teaching them on-the-job safety. OSHA is making the material available to educate teenagers, parents, educators and employers as part of its Teen Summer Job Safety program. Employers who employ young workers this summer can download PDF versions of the free OSHA materials to distribute and post on their job sites. The material includes a:
Answers to questions often asked by working teens, details about workers' rights and responsibilities, links to training and other educational tools and youth employment laws for each state also can be found on the site. NAHB provides training resources to help employers educate workers of all ages on safe work practices. More than 800,000 home builders, their employees and contractors have received safety training during the past six years through on-site sessions, print and video materials or Web-based resources through the NAHB-OSHA Alliance. The Department of Labor’s Web site, www.youthrules.dol.gov, helps employers understand the laws regarding hiring teen workers. Employers can also call: 866-4US-WAGE. In addition, the quick reference guide, “Construction Employers Quick Guide to Teen Workers Rules,” can be downloaded free in English and Spanish. For more information, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447.
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