Nation's Building News Online: July 28, 2008Print All Articles Text Version |
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Builders Can Use New Tax Credit to Help Spur Home SalesProspective first-time home buyers who have been sitting on the fence now have a significant financial incentive to explore the opportunities available in today’s housing market. H.R. 3221, the Housing and Economic Recovery Act of 2008 — which was passed by the Congress on July 26 and signed by President Bush on July 30 — allows first-time home buyers to take a $7,500 tax credit from the purchase of a single-family home, townhome or condominium apartment. To get the word out to the home-buying public, NAHB has assembled materials that will help association members maximize the impact of this temporary sales incentive. Among those resources:
To qualify, buyers must actually close on the sale of the home on or after April 9, 2008 and before July 1, 2009. The original eligibility period expired in April 2009, but following a major grassroots campaign from NAHB members, the period was extended to enable home builders to include the credit in their sales and marketing next spring and into the early summer — the peak home buying season. The program does have income limits. Single or head-of-household filers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000. Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. The same applies to married couples who earn between $150,000 and $170,000. The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples with an AGI exceeding $170,000. A refundable credit means that if a taxpayer pays less than $7,500 in federal income taxes, the government will write them a check for the difference. For example, if $5,000 in federal taxes is owed, the taxpayer would pay nothing and a $2,500 payment would be received from the IRS. If a qualifying home buyer were owed a $1,000 tax refund, they would receive $8,500. Buyers can take the tax credit on their 2008 or 2009 tax return. Those who close in 2008 take the credit on their 2008 return. Buyers in 2009 have the option of taking the credit on their 2008 or 2009 returns. The tax-credit program also has payback provisions. The credit essentially serves as an interest-free loan to be repaid over 15 years. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. If the home owner sold the home, then the remaining credit would be due from the profit of the home sale. If there is insufficient profit, then the remaining credit payback would be forgiven. For more information on NAHB tax credit resources, e-mail NAHB Public Affairs or call 800-368-5242 x8061. Questions and Answers for Consumers Following are the “Frequently Asked Questions About the First-Time Home Buyer Tax Credit” that appear on NAHB’s consumer Web site — www.federalhousingtaxcredit.com. 1. Who is eligible to claim the $7,500 tax credit? First time-home buyers purchasing any kind of home — new or resale — are eligible for the tax credit. 2. What is the definition of a first-time home buyer? The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his or her spouse. For example, if you have not owned a home in the past three years but your spouse has owned one, neither you nor your spouse qualifies for the first-time home buyer tax credit. 3. What types of homes will qualify for the tax credit? Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses, and condominiums. 4. Are there income limits to determine who is eligible to take the tax credit? Yes. Home buyers who file their taxes as single or head-of-household taxpayers can claim the credit if their modified adjusted gross income (MAGI) is less than $75,000. For married taxpayers filing a joint tax return, the MAGI limit is $150,000. The limit is based on the buyer’s modified adjusted gross income for the year that the house is purchased, except for certain purchases in 2009. 5. What is “modified adjusted gross income”? Modified adjusted gross income, or MAGI, is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income,” or AGI, which is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income — including wages, salaries, interest income, dividends and capital gains. To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs. 6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
7. Can you give me an example of how the partial tax credit is determined?
Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625. Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances. 8. Does the credit amount differ based on tax filing status? No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files its taxes as “married filing separately” (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns. 9. Are there any circumstances under which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit? In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price. 10. I heard that the tax credit is refundable. What does that mean? The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit. For example, if a qualified home buyer expected federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed). 11. What is the difference between a tax credit and a tax deduction? A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS. A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15% tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15% of $7,500), or lowered from $7,500 to $6,375. 12. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program? No. The tax credit cannot be combined with the MRB home buyer program. 13. I live in the District of Columbia. Can I claim both the D.C. first-time home buyer credit and this new credit? No. You can claim only one. 14. I am not a U.S. citizen. Can I claim the tax credit? Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519 (www.irs.gov/pub/irs-pdf/p519.pdf). 15. Does the credit have to be paid back to the government? If so, what are the payback provisions?
16. Why must the money be repaid? The intent of Congress was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices and will increase home sales. The repayment requirement reduces the impact on the U.S. Treasury and assumes that home buyers will benefit from stabilized and, eventually, rising future housing prices. 17. Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on Dec. 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount. 19. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest? Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount. Nation's Building News Will Not Be Published Aug. 4Nation's Building News will not be published on Aug. 4. Regular weekly publication will resume Aug 11. Landmark Housing Bill Awaits Signature of President BushCulminating months of intensive advocacy efforts by the entire NAHB federation, the Senate has approved a major housing stimulus package that will go to the President’s desk to be signed into law shortly. (The bill was signed by President Bush on July 30, after this issue of NBN was first published.) “This landmark bill contains several provisions to help home buyers, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn. “We commend Congress for working in a bipartisan fashion to provide much-needed relief to the American people.” For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy. Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, calls it “the most important piece of housing legislation in a generation.” Echoing those comments, House Speaker Nancy Pelosi (D-Calif.) said that the bill “represents the most far-reaching reform of our nation’s housing finance system in a generation.” H.R. 3221, the Housing and Economic Recovery Act of 2008, includes several provisions aimed at ending the current cyclical downturn in the housing industry and strengthening the housing finance system so that it will provide critical support as the marketplace gains strength. The House on July 23 approved the legislation by a vote of 272 to 152, sending the measure back to the Senate where Majority Leader Harry Reid (D-Nev.) shortly thereafter attempted to bring the bill up for immediate consideration through a unanimous consent agreement. Reid’s effort was thwarted by Sen. Jim DeMint (R-S.C.), a long-time opponent of the bill, who used parliamentary maneuvers to delay a final vote on the bill until today when the Senate approved the measure by a solid bipartisan vote of 72 to 13. The key elements of the bill are:
The centerpiece of the housing bill is a temporary, $7,500 first-time home buyer tax credit for the purchase of any home. The tax credit can be used for a home sale closing on or after April 9, 2008 and before July 1, 2009. It is expected to provide a significant financial incentive for home buyers. “The tax credit is the best stimulative measure,” said Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.” As first drafted, the tax credit was set to expire on April 1, 2009. At NAHB’s urging, Congress extended the expiration date through June 2009. “Extending the credit an additional 90 days was important so that home buyers would have use of the credit during the critical 2009 spring and early summer buying season, when we believe the bulk of home purchases will occur,” said Dunn. NAHB has launched a new Web site — www.federalhousingtaxcredit.com — which includes a set of comprehensive questions and answers about how the credit works and how consumers can put it to their advantage. Further resources to help NAHB members promote consumer awareness about the credit are available at www.nahb.org/mythbuster. For more specifics on provisions of the housing and economic stimulus legislation, read the stories in the Government section of this edition of Nation’s Building News. Other Provisions The legislation would also:
For more information on the tax portion of the housing legislation, e-mail Rob Dietz at NAHB, or call him at 800-368-5242 x8285; or contact Dave Ledford about the bill’s other provisions, x8265. Gas Prices Drive Push to Reinvent America’s SuburbsAs gas prices hover around $4 a gallon, the nation’s far-flung suburbs — which have boomed because they could provide larger homes at cheaper prices to those willing to drive farther — are losing their appeal. Soaring energy costs and the foreclosure epidemic have jolted many Americans into realizing that their lifestyles are at risk. For many, ever-lengthening commutes in the search for affordable homes no longer make financial sense. The city of Maricopa, Ariz., located about 35 miles south of Phoenix, is asking builders not to develop just isolated subdivisions behind walls, but whole communities that encourage walking by including stores, schools and services nearby. Suburbs on the far edge of metro areas are turning aside strip malls and creating new downtowns and neighborhoods that favor pedestrians. They are trying to attract more employers and services such as hospitals, colleges and small airports. “Absolutely, suburbs are not going to go away,” says David Goldberg, spokesman for Smart Growth America, a national coalition of groups pushing for conservation and sustainable growth. “But the math is becoming very clear.” Until now, people were willing to drive increasingly far for a home they could afford. “Drive-till-you-qualify collapsed,” Goldberg says. “It’s done. It’s not going to work as a housing strategy anymore.” (www.usatoday.com)
Housing Crisis Hits Exurbs HardVictorville, Calif. and other exurbs like it lie at the core of America’s mortgage meltdown. A year ago, it was America’s second-fastest-growing city, behind New Orleans, with a 9.5% surge between July 2006 and July 2007. Now, foreclosures have more than doubled in the county. New home prices in the city have plunged 43%. George Air Force Base, originally built as a flight-training school for World War II pilots, brought jobs and people to the area. But when the base was deactivated in December 1992, the city fell on hard times, losing about 10,000 jobs. The airbase was subsequently converted to serve commercial interests and renamed the Southern California Logistics Airport. This attracted Pratt & Whitney, ConAgra Foods and General Electric Aircraft Engines, among others, along with 3,500 new jobs. There are signs that the city’s stock of bank-owned homes is dwindling, but for Victorville to quickly fill the houses left vacant in undersold developments, it will have to find even more ways to bring jobs to the city, say experts. That’s because long-distance commuters to metro Los Angeles, who once flocked here, are now put off by high gas prices. (www.csmonitor.com)
Housing Crisis Spurs Sharp Jump in BankruptciesThis month, nearing $1 million in debt, Arthur, a veteran real estate agent and San Jose, Calif. father of three, filed for Chapter 13 bankruptcy. “I have taken upward of 25 calls a day from creditors,” he said. “When you have 25 people grinding on you day after day, it takes a toll.” Arthur can add himself to the list of 5,941 people who filed for bankruptcy in the San Jose division of the U.S. Bankruptcy Court from July 2007 through June 2008. Of the four Bay Area bankruptcy courts, San Jose’s posted the highest increase in bankruptcies — 69.7% — over the 12 previous months. Once, job losses, medical bills or divorce were the primary reasons people declared bankruptcy. Now, a growing number of filings are related to the housing crisis, say local judges, attorneys and credit counselors. For people like Arthur, who asked not to be fully identified, it started with a home he bought 10 years ago for $450,000. As its value rose to $900,000, he used the equity to start his own business. Along the way, the home’s value dropped to $600,000, and business expenses rose. To make his mortgage payments, he began relying on credit cards — at least 20 — for living expenses. “What’s different about this new wave is the number of people who are simply walking away from their houses,” said Northern District of California Chief Bankruptcy Judge Randall Newsome, who has overseen bankruptcy filings for two decades. “It’s unlike anything I’ve ever seen in my career.” “People know there’s no hope” of holding onto their homes, said San Jose bankruptcy judge Marilyn Morgan. In fact, 90% of today’s debtors facing foreclosure don’t even contest it, she said. (www.mercurynews.com)
Nationwide Housing Slump Hurting South Florida Businesses, According to SurveyAfter sinking to its lowest level in June, economic confidence among small-business owners nationwide rebounded in July as the number of small firms experiencing cash flow issues decreased significantly, according to a Discover Card survey released on July 28. Still, the housing and credit market turbulence continues to be a factor for many. About four in 10 business owners, or 42%, said the nationwide downturn in the housing market has had a negative impact on their business; 47% said it has not negatively affected them. While no breakout on the survey was available for Florida, small-business owners and experts say firms tied to the building and housing markets are especially hurting. “My nails are down to my cuticles,” said Jay Mack, who owns The Mack Group, an insurance firm in Deerfield Beach. The company’s revenue has been affected both by less insurance being written because of fewer home sales and insurance premiums falling 15% to 20%. “It’s getting harder and harder to deal,” said Charles Webster, president of TEC Florida, an international organization of chief executives that has chapters in South Florida. “For businesses trying to expand, it’s getting tougher to find capital.” When a business wanted to buy a building, it could usually do so with 5% or 10% down. “Now they want 20% down,” Webster said. (www.sun-sentinel.com)
Housing Out of Reach for MostA recent report produced by the Region 9 Economic Development District of Southwest Colorado shows that nearly three-quarters of families in Durango can’t afford to buy a home. According to the report, the 2007 median price of a home in Durango was $350,000. The qualifying annual income to purchase that home is $86,900, based on information from Wells Fargo Bank. But in 2007, the median family income in La Plata County was $60,600 and 72% of families didn’t earn enough to qualify. Using the guideline that people can usually afford to spend 30% of their monthly income on rent, researchers estimated that an annual income of $25,800 would be necessary to afford a one-bedroom home in Durango. For a three-bedroom, a person would have to make $43,080 a year. Lewis Marchino noted the difference between that number and the income necessary to buy a home. “That’s why rentals are so key,” she said, “because we have a community that can’t buy even if they want to and even if they’re not in debt and even if they’re making a livable wage. There’s still a huge gap.” (www.durangoherald.com)
The Custom McMansion; Mass-Market Builders Woo Upscale Home Buyers With Deals on One-of-a-Kind HomesCompanies such as John Laing Homes, Toll Brothers Inc. and K. Hovnanian Homes are now getting into custom-home building, a field that takes more time, patience and hand-holding than production building. Custom-home building is more profitable for builders, and in today’s tough market, it also carries less risk. Builders avoid the carrying costs of land, taxes and other monthly expenses that can come with speculative building. And because custom building caters to the upper end of the market, it’s doing better than production building right now, says Steve Melman, an economist at NAHB. Although home building of all types is stagnating, he says that the custom share of the market tends to go up during down times, while production building peaks during boom times. In 2007, the custom share of the market was 24%, up from 19% in 2005 during the peak of the boom. Big builders benefit from economies of scale in buying materials and have developed efficient systems for negotiating with and scheduling contractors. So even though they charge more per square foot for a custom home than they do for one that is mass-produced, big builders can usually undercut the price of their smaller competitors. Cost was the main reason that Terry and Pam Hannock decided to use Toll Brothers to build a house on the lakefront lot they bought in Bluffton, S.C. three years ago. The custom builders they had interviewed asked for between $170 and $200 per square foot; Toll came in at $137. Although they had to pick from a set array of floor plans, they were able to tweak one of the models — a 3,300-square-foot stucco house — by adding an office over the three-car garage, expanding the size of some closets, extending the patio and putting in a pool and spa. (www.wsj.com)
Now Could Be a Great Time to Buy a HomeBy Suze Orman Even though every nook and cranny of the housing market is draped in doom and gloom, it may be a good time for potential buyers to take a contrarian look. I'm not minimizing the risks in the housing market, because they're very real in many locations. Nor am I predicting any sort of miraculous turnaround in the next six months, since I doubt we'll see that happen. But I'm still a believer in the long-term viability of housing as a solid investment if you buy at the right price. This has me thinking the current shakeout is in fact creating an interesting sweet spot for first-time home buyers to at least start checking out the market. Take a New Look Right now, some of the markets that were hot a few years ago are full of overextended builders looking to unload their unsold inventory. First-timers tend to focus on existing homes rather than more expensive new construction, but I advise them to take a look at new homes as well. All those stressed-out developers are motivated to make deals. That can mean sharp price discounts or great offers to help with your mortgage financing. But be careful, too — you don't want to be the only owner on a block where half of the homes haven't even been finished. Price Is Right In today's market, it's crucial to load up on as much data before you bid on a home. Get at least three to five recent comparable sales, what are known as "comps," from your real estate agent. You want to know the differential between the initial list price and the sale price for those homes. The size of the gap, and whether it's been trending lower or higher, is what will determine your aggressiveness in bidding. Keep updating your market analysis every few weeks to stay on top of your market's twists and turns. Shore Up Your Score Before you look at a single house, check your FICO credit scores. Home buying is the one time you want to pay up for all three scores, because many lenders base the interest rate you're offered on a calculation that takes all three scores into account. If you're applying for a mortgage with someone else, make sure both of you have strong FICO credit scores. Some lenders will base the rate you're offered on the lowest score between the two of you. If your scores aren't in the top range of 760 to 850, chances are you'll be given a higher interest rate on a loan — and that can make all the difference in whether you can afford to buy or not. Downpayments During the housing boom, lenders were all too happy to dole out mortgages that didn't require a downpayment. That's coming back to sting many lenders — and crippling the entire credit system — as home owners who never had to put equity into their homes are now walking away from them when their outstanding mortgage is more than the current value of the home. The upshot is that to have any chance of getting a mortgage in today's tight lending market, you need to come to the loan table with a downpayment. Suze Orman is a best-selling author and award-winning broadcaster. She may be contacted at www.suzeorman.com. ©2008 Star Ledger © 2008 NJ.com All Rights Reserved. FHA Retooled to Meet Nation's Housing NeedsLegislation approved on July 26 by Congress will modernize the Federal Housing Administration to enable it to be more effective in helping to meet the nation’s housing needs. “H.R. 3221 will give the FHA greater flexibility to respond to the needs of borrowers, enable more working families to become home owners, expand affordable mortgage loan opportunities for seniors and allow the agency to play an important role in stabilizing the mortgage markets,” said NAHB President Sandy Dunn. Over the past two decades, the popularity and relevance of FHA’s single-family programs has waned because statutory and regulatory constraints have limited the agency’s ability to carry out its mission to spur housing opportunities for America’s working families. The differences between FHA’s requirements and those for conventional mortgages have been viewed by lenders, appraisers and others as a disincentive to use FHA programs. FHA’s program and operational requirements, which are established by Congress, have seriously limited its ability to deliver the range of mortgage products that are needed to fulfill its housing mission. H.R. 3221, the Housing and Economic Recovery Act of 2008, contains several provisions that will allow the FHA to deliver a range of mortgage products more effectively. However, the FHA's minimum downpayment has been increased from 3% to 3.5%. The bill:
FHA Provides Relief to Owners Facing ForeclosureTo address the nation’s foreclosure crisis, the housing stimulus package approved by Congress will allow the Federal Housing Administration (FHA) to guarantee up to $300 billion in new mortgages if lenders voluntarily agree to reduce the outstanding principal and adjust the terms to make them more affordable for borrowers. “Expansion of the FHA program to provide new loan guarantees will help finance at-risk borrowers into viable mortgages and prevent further foreclosures,” said NAHB President Sandy Dunn. The Congressional Budget Office (CBO) estimates that the FHA foreclosure relief plan could help as many as 400,000 struggling home owners to stay in their homes. According to the CBO, this three-year program, which becomes effective on Oct. 1, will not cost taxpayers a dime; it will be more than paid for by using funds in the first few years from a new affordable housing trust fund to be established by Fannie Mae and Freddie Mac. Known as the FHA Housing Stabilization and Homeownership Retention Act, the program is designed to help borrowers in danger of losing their home to refinance into lower-cost government-insured mortgages they can repay. The program contains key protections to limit its budgetary impact, including higher refinancing fees that will be used to establish a new FHA reserve to cover possible losses from defaults on these government-backed mortgages. In order to participate in the voluntary program, lenders and mortgage investors must take significant losses by reducing the loan principal on an existing mortgage. In exchange for an FHA guarantee on the home loan, borrowers must share any profit from the resale of a refinanced home with the government. Only primary residences are eligible; no speculators, investment properties or second homes will be refinanced. Specifically, the FHA would pay the existing lender no more than 85% of the property’s present appraised value. The FHA would then charge the home owner a loan at 90% of the appraised value. The extra 5% is a cushion against losses and would pay for the up-front premium. In the example of a $250,000 home with a 100% mortgage that has declined 10% in value to $225,000, the FHA loan would repay the lender 85% of the home’s current worth, about $191,250. The existing home owner’s new loan would be for 90% of the $225,000, or $202,500. The plan also provides $180 million for financial counseling and legal assistance to help families stay in their homes. Housing GSEs Receive New Support, a Strong RegulatorTo help stabilize today’s struggling housing and financial markets, H.R. 3221, the Housing and Economic Recovery Act of 2008, contains important provisions to bolster the housing government-sponsored enterprises (GSEs) — Fannie Mae, Freddie Mac and the Federal Home Loan Banks. “Continued federal government support of America's housing finance system through the GSEs is essential to our nation's housing policy and must be maintained,” said NAHB President Sandy Dunn. “H.R. 3221 provides a strong, new regulator for these vital institutions that will also be responsible for ensuring that they successfully continue their critical housing mission to reduce the cost of housing credit and improve affordable homeownership and rental housing opportunities.” At a time of declining confidence in the nation’s financial markets, H.R. 3221 will strengthen and safeguard the financial health of the GSEs while also preserving their vital housing mission. Fannie Mae and Freddie Mac play a primary role in federal housing policy and serve as the main engine of mortgage lending in the U.S. They own or guarantee about $5 trillion of the nation’s home loans, or nearly half of all home mortgage debt outstanding. For mortgages taken out this year, their share is two-thirds. The measure will establish a strong, independent regulator that will have enhanced authority to establish capital standards and take corrective actions if the GSEs are undercapitalized. The new director will oversee, and can directly restrict, executive compensation at Fannie Mae and Freddie Mac. The bill includes provisions authorizing the Department of the Treasury to purchase debt or equity obligations of the GSEs. This provides an open-ended increase in the relatively small lines of credit the GSEs currently have with the Treasury and provides a safety valve to access additional equity capital. This authority will expire at the end of 2009. The temporary Treasury support measures are accompanied by a requirement for the new regulator to consult with the Federal Reserve before undertaking any actions related to safety and soundness. This requirement also sunsets at the end of next year.
The bill also creates a new permanent affordable housing fund to be financed by the GSEs. The fund will be used to finance the construction, maintenance and preservation of affordable rental housing projects in both rural and urban areas nationwide. Portions of this fund will be diverted during the first three years to pay for the new FHA foreclosure relief package within the legislation. Fannie, Freddie Given Temporary Line of CreditTo help shore up Fannie Mae and Freddie Mac and boost confidence in the two housing finance institutions after their share prices plunged earlier this month, the housing stimulus package approved by Congress includes a Treasury-led proposal that will temporarily expand the government’s line of credit to Fannie and Freddie and permit the Treasury to purchase an equity stake in the companies through the end of 2009. In addition, the Federal Reserve would also be given a supervisory role over the two government sponsored enterprises (GSEs). “Our proposal was not prompted by any sudden deterioration in conditions at Fannie Mae or Freddie Mac,” Treasury Secretary Henry Paulson said when he announced the plan. “OFHEO has reaffirmed that both GSEs remain adequately capitalized. At the same time, recent developments convinced policymakers and the GSEs that steps are needed to respond to market concerns and increase confidence by providing assurances of access to liquidity and capital on a temporary basis if necessary,” he said. “The plan we announced will strengthen our financial system as we weather this housing correction and establish a new world-class regulator for the GSEs,” Paulson said. “Let me stress that there are no immediate plans to access either the proposed liquidity or the proposed capital backstop. If either of these authorities is used, it would be done only at Treasury's discretion, under terms and conditions that protect the U.S. taxpayer and are agreed to by both Treasury and the GSE.” The measure gives the Treasury secretary the authority to increase the already existing line of credit to Fannie and Freddie for the next 18 months, as well as giving the Treasury Department standby authority to buy stock in these companies to provide confidence in the GSEs and stabilize housing finance markets. Should the GSEs tap into this credit line, the legislation provides that taxpayers should be the first in line to be paid back, before other shareholders. While Fannie Mae and Freddie Mac each currently meet the capital and liquidity requirements set by their regulator, the Administration felt this new standby authority was necessary to increase market confidence and enable both of these institutions to continue to raise capital and maintain the availability of mortgage credit. The Congressional Budget Office says that “there is a significant chance — probably better than 50% — that the proposed new Treasury authority would not be used before it expired at the end of December 2009.” CBO estimates that, if used, the federal budgetary cost of this proposal would be $25 billion over fiscal years 2009 and 2010. The bill requires the Treasury Secretary to make an emergency designation before using the authority, certifying that he is acting to provide stability to financial markets, prevent disruptions in the availability of mortgage finance, protect taxpayers and facilitate an orderly restoration of private markets. The bill further specifies that GSE agreement is a prerequisite for any Treasury purchases.
Impact Fee Relief Spurs Local Growth in Down EconomyImpact fee relief is one of several approaches that local governments can take to encourage growth during the current economic downturn, according to NAHB. Grappling with a slowdown in new development that is drying up this source of funding for infrastructure and services, many communities in the U.S. are concluding that they need to postpone impact fee increases, reduce the fees or even temporarily halt their collection. In addition to reducing the burden of impact fees, state and local governments can spur their economies by providing mortgage and foreclosure assistance, tax credit programs, alternative infrastructure funding mechanisms and a streamlined regulatory process. These stimulus proposals are posted on an NAHB Web site that was launched in March (nahb.org/economicstimulus). Impact fee income for local governments varies annually depending upon the amount of new residential construction. When building permits drop sharply, as they have in many parts of the country, so do these revenues. Compounding the problem, tax revenue has also declined, forcing many localities to reconsider or slow down their infrastructure expansion plans. Impact fees can only be used for the purposes for which they are collected and most state statutes and local ordinances set a time frame within which they must be spent before they are refunded, often with interest. Many local jurisdictions are now questioning whether they should continue collecting impact fees at a time when they might have to delay capital projects and possibly refund the fees. Alternatively, some communities are debating the merits of impact fee reductions as a way to stimulate the home building industry and the local economy by making new development more financially viable. Hernando County, Fla., for one, has been hit hard by the housing slump, with much of its economic base tied to construction. Builders in that community have approached the county to consider a temporary 25% reduction in their fees to stimulate new home construction and make housing more affordable. In the process, the county would qualify for a new state first-time home buying program offering downpayment assistance to communities that reduce impact fees. Other communities such as Redding, Calif. have postponed impact fee increases until 2009. Local home builders associations should consider approaching their local jurisdictions to ask for impact fee reductions and rollbacks, NAHB says. Information about impact fees and alternative methods of finance for local governments is available at www.nahb.org/infrastructurefinance. For more information, e-mail Thais Austin at NAHB, or call her at 800-368-5242 x8343. New Homes for Sale Drop Off Some in JuneSales of new single-family homes dipped a slight 0.6% in June from an upwardly revised pace in the previous month, to a seasonally adjusted annual rate of 530,000, the Commerce Department reported on July 25. "While the housing downswing continues — with new-home sales down by a third from year-ago levels and builder confidence at a record low this month — the report for June shows that builders are making some progress on reducing the inventory of unsold units," said NAHB Chief Economist David Seiders. The Commerce report indicated that the inventory of new homes for sale eased down 5.3% in June to 426,000 units. This represented a 10-month supply at the current sales pace, compared to a 10.4-month supply in May. Regionally, sales activity was mixed in June, with the Northeast and Midwest posting gains of 5.3% and 2.5%, respectively, and the South and West dropping 2% and 0.9%, respectively. Every region of the country saw declines in the number of new homes for sale in June.
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: Quick and Accurate Shorthand MeasuringI learned this trick about relaying measurements to crew members on the job by listening to drywall hangers call out dimensions to each other. When my crew calls out dimensions now, all the dimensions are given in units of whole inches and in sixteenths of an inch.
— Mark Padbury, Orcas Island, Wash. 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. Business Analysis Builds on Strengths, Isolates ThreatsMany builders are second guessing their business strategies while trying to figure out a way to get through the downturn. One way to make the right decisions, especially if you plan on making long-term decisions, is to conduct a SWOT (strengths, weaknesses, opportunities, threats) analysis of your business. By examining your business’s internal strengths and weaknesses, you can look at your business assets and detriments side-by-side. Your strengths can include such things as a good marketing plan, keeping meticulous records, fair trade partners and developing solid business relationships. Weaknesses are more difficult to target. Be honest about your business when you develop this list or the SWOT analysis will not help you improve your business. List items like construction schedules that are always late and a selection process that needs better documentation, if they are applicable. Evaluate Available Opportunities and Harmful Threats List every opportunity and new revenue stream you can think of that can potentially boost your business. For example, residential builders could consider pursuing remodeling or commercial build-outs to supplement their business or partnering with Realtors® or developers. Creativity is key when filling this list. Threats, on the other hand, are potential hazards to a company and can include such realities as the weakening state of your local market, growing competition or too many spec homes in your inventory. Understand SWOTs, Then Think Strategically First, evaluate which strengths to build upon to help maximize business, which ones don’t need changing and which ones should be aligned with available opportunities. Then focus on weaknesses. Fix the weaknesses that are critical and de-emphasize the weaknesses that are difficult to eliminate. Finally, look at the strengths and weaknesses collectively and apply them to your available opportunities. If one of your strengths is having a well-documented building process and great sub-contractors and your weakness is marketing, for example, then look for opportunities to contract your marketing and sales. Keep in mind that every SWOT analysis can yield multiple strategies worth pursuing. Consider this scenario. Your strengths are working with customers and designing plans. Your weaknesses include having little building experience and a poor trade partnership network. One strategy might be to hire skilled employees with building expertise who are well connected to preferred vendors. Another strategy might be to develop a partnership with a general contracting company that can do the actual construction work once you finish the design. Further analysis will determine which strategy is best. Hiring skilled employees works if the “skilled workers available” represent an opportunity and “cash flow” is not a weakness. Likewise, partnering with another general contractor could work for you if you listed “plenty of prospects” as one of your strengths. If “increased competition” is a threat, consider more marketing to increase demand as a strategy. Once you’ve performed a thorough SWOT analysis, the key is to create strategies that insulate your business from threats. Andy Elsbury, a member of NAHB’s Custom Home Builders Committee, is the founder of Indianapolis-based SelectionWare, which provides consulting services and solutions for home builders to improve the building process. For more information, e-mail Elsbury, call him at 866-585-9222 or visit the SelectionWare Web site at www.SelectionWare.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. Improve Business Operations With ‘Cost of Doing Business Study’ The “Cost of Doing Business Study, 2008 Edition,” available through BuilderBooks.com, enables home builders to compare their business operations with like-sized builders across the country so they can fine-tune their businesses and boost profits. The study analyzes several operational business categories ― including volume, operation type and land vs. no land costs ― and enables builders to identify their strengths and weaknesses, increase efficiency, set realistic budget targets and improve business practices. The categories have been analyzed, where applicable, by average and by the top and bottom 25% of performers by net profitability. Builders can use the the study to develop proven strategies to succeed in an increasingly competitive market. To view or order the “Cost of Doing Business Study” online, click here, or call 800-223-2665. Missing a deadline can seriously damage your bottom line. The "Scheduling" course from The NAHB University of Housing shows building professionals how to set workable schedules and use various time-management tools. The course teaches the benefits of scheduling and integrating scheduling with other management activities and will help builders, remodelers and site managers deal with those days when nothing goes according to plan. Find upcoming Scheduling courses here, or call 800-368-5242 x8154 for more information.
Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar. For assistance, call the NAHB Member Service Center at 800-368-5242.
Online Conference Looks at Coping in Difficult TimesA builder, restructuring specialist, banker and bankruptcy attorney will give recommendations on how to cope with the current state of the industry during a free, 90-minute online discussion beginning 1:00 p.m. EDT, Thursday, Aug. 21. “Coping With Financial Distress” online panelists will provide tips on how to cope and survive, communicate and work with bankers, deal with bankruptcy, survive financial restructuring and protect company assets. Panelists include moderator Ron Robichaud, of Robichaud Financial Services in Laconia, N.H.; bankruptcy attorney Harley Riedel, of Stichter, Riedel, Blain and Prosser, P.A. in Tampa, Fla.; restructuring expert Troy Taylor, of Algon Group in Atlanta; and builder Randy Noel, of Reve, Inc. in New Orleans. The free conference is provided by Constellation HomeBuilder Systems and supported by NAHB’s Business Management & Information Technology Committee. Participation is limited to the first 200 registrants. For more information and to register, click here, or e-mail ckotsopoulos@constellationhb.com. Bill Webb, MIRM, in “Sweet Success in New Home Sales,” available through BuilderBooks.com, provides the most powerful techniques ever devised for selling more homes and making more money in lean times. This instructive guide lays out the proven approaches for crafting and delivering sales excellence. To view or purchase this publication online, click here, or call 800-223-2665.
When You Can’t Recoup Your Losses, Exit GracefullyBy Karen Dry and Linda Hebert The daily stress of keeping the business going and finding new streams of revenue has become just about too much to bear. You’ve evaluated your dwindling bank account and long-shot prospects and cannot see even a glimmer of light at the end of the tunnel. It may be time to call it quits. Deciding to sell or close your business is not an easy choice. You’ve invested a lot and have clients and employees who depend on you. The key is to exit gracefully on your own terms rather than have the rug pulled out from under you. “It was difficult,” said Kellee Krause, president of Integrity Service Solutions, Inc., Murrieta, Calif., who recently closed her consulting business, which provided third-party warranty and customer service for builders. “I kept looking for ways to avoid the inevitable.” “Finally, I realized the company could not stand on its own any longer,” she said. “I didn’t want to bankrupt the corporation, but I had to find a way to take care of my clients and employees. I wanted to honor our contracts, but was faced with making a decision that would mean I could not deliver.” Krause honestly approached her clients and settled contracts with them. She was also able to place all but three of her employees in positions at various clients’ firms. Then she liquidated what she could and paid her debts. So what steps do you need to go through so your company can die a less painful death? Here are some guidelines to help. There are companies that seek to acquire companies that are failing in difficult times. Once you decide to sell, look into these options:
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. 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. Deliver Exceptional Customer Service Take the “Profitable Business Through Quality Practices” course from The NAHB University of Housing and learn key strategies for providing a quality building/remodeling experience for home owners.
To find out where upcoming courses are being held, click here, or call 800-368-5242 x8154 for more information. Register for the 2009 Builders' Show in Las VegasRegistration for the 2009 International Builders’ Show (IBS) in Las Vegas on Jan. 20-23 — the single, most important and largest industry event of the year — is now open. This year, IBS will feature:
Full registration provides attendees with access to four days of exhibits on one million net square feet of exhibit space, all the educational sessions and new, daily-featured speakers.{{MORE}} Full registration is $295 for members through Nov. 7 and $425 thereafter. Full registration for non-members is $475 and $575, respectively. Exhibits-Only Registration Exhibits-only registration is $50 for members through Nov. 7 and $100 after and $50 for their spouses. Exhibits-only registration for non-members is $100 through Nov. 7 and $200 after and $70 for their spouses. Education Session Tickets Exhibits-only registered attendees can purchase tickets to individual IBS education sessions. Individual tickets are $50 for members and $70 for non-members. Registrants can purchase packages of four tickets and get one free or seven tickets and get three free. (Attendees who purchase full registrations do not have to purchases education session tickets or exhibits-only registration.) To Register For registration information, click here. For hotel information, click here. To register online, click here. For the latest IBS information — including floor plans, renderings and construction photos of The New American Home — visit the 2009 International Builders’ Show Web site at www.BuildersShow.com. Aug. 12 Audio Seminar: Getting Hesitant Boomers to BuyIn an hour-long audio seminar from 2:00-3:00 p.m. EDT on Tuesday, Aug. 12, experts on selling to the 50+ market will give tips on how to get fence-sitting boomers and others in the 50+ market to buy now. “Get Hesitant Boomers to Buy Now!” audio seminar participants will discuss how to motivate prospective 50+ home buyers to move forward despite today's market conditions. Seminar panelists will discuss:
For more information, visit www.nahb.org/boomersbuynow. Participants will earn one hour of continuing education credit toward NAHB’s Certified Active Adult Specialist in Housing (CAASH) designation. To Register Registration is $79 per phone site. Companies, local home builders associations and local 50+ councils are encouraged to register and can participate with one site registration fee. Click here to register. For more information, or to submit questions to be answered during the audio conference, e-mail Jeff Jenkins at NAHB, or call him at 800-368-5242 x8292. 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. IRS Provides New Ways to Compute Utility AllowancesNew Internal Revenue Service regulations giving Low Income Housing Tax Credit (LIHTC) property owners more flexibility in how they calculate utility payment allowances for their low-income residents represent an important victory for affordable housing, NAHB said on July 29. “Considering the exponential increases in energy costs, the new utility allowance regulation will enable builders to more accurately calculate the energy usage for their buildings and reduce long-term operating costs,” said Justin MacDonald, an LIHTC developer in Kerrville, Texas, and chairman of NAHB’s Housing Credit Group, which had been leading efforts to change the new regulations for the past several years. With LIHTC properties already under pressure from the current woes in the housing and capital markets, the feasibility of existing and new LIHTC-financed affordable housing was being seriously threatened by the previous regulation, according to MacDonald. LIHTC owners are required to make allowances for utilities by deducting them from gross rents. The previous method of calculating allowances for the utilities paid by residents often was based on averages that included older, less efficient properties or did not take into account the cost differences between more urban and rural areas. This could result in larger allowances than residents were actually paying for their utilities. As a result, the owners and managers of some properties were unable to keep the correct portion of the rent charged, and were nearly at the point of having to run at a loss — a situation that eventually would have closed communities, forcing residents to scramble for alternative housing. NAHB led a coalition effort to modify the IRS regulations to allow owners to use alternative methods to compute the utility allowances for their properties to more closely reflect actual expenses. The Low Income Housing Tax Credit program is the primary vehicle for financing construction of affordable rental apartments and is credited with creating more than 1 million affordable housing units since it was enacted by Congress in 1986. For the complete IRS announcement on the updated regulation, click here. For more information, e-mail Ann Marie Moriarty at NAHB, or call her at 800-368-5242 x8350. SEBC Courses Discuss How to Revitalize Sales, RentalsMultifamily builders will learn about the state of the multifamily market, how to revitalize sales and best practices in condominium and apartment marketing during three courses at the Southeast Building Conference in Orlando on July 30-Aug. 2. The courses, presented by NAHB Multifamily, are designed to help condo and apartment builders drive sales in today’s challenging market. All the courses will be held on Friday, Aug. 1.
For more information, e-mail Lawrence McFadden at NAHB, or call him at 800-368-5242 x8550. Builders of Madison County Report Impressive Home SalesIn a new, consumer-focused Web site, builders and brokers explain why it’s time to buy a home in Madison County, Ala. The site is the cornerstone of a public relations collaboration between the Huntsville/Madison County Builders Association (H/MCBA) and the Huntsville Area Association of Realtors®. Pooling their resources, the two groups have kicked off a six-month advertising and public relations campaign that also includes television, radio and print ads, as well as billboards to demonstrate why Madison County is a great place to buy right now. Focusing on the area’s strengths, the campaign’s message is that, “Every market is different…Ours is healthy!” The campaign was kicked off in mid-April, coinciding with the area’s Spring Tour of Homes. Visitors received a “Top Ten Reasons to Buy Now” flyer, and tent cards with the top five reasons were strategically placed throughout the houses. At the conclusion of the open-house period, the local and state presidents from both groups held a press conference to present statistics from their market and discuss trends. “Our local numbers are impressive, and we wanted the media to convey that to the public,” said Lynn Kilgore, executive officer of the H/MCBA. “Our houses are still selling at over 98% of the list price on average and property values have increased 7.8%.” Madison County, which has a low unemployment rate, experienced positive growth in total home sales in the 12-month period ending in February. The response from the press has been positive. The Huntsville Times included local statistics and a “buy now” message in its article, “Huntsville's housing market appears stable.” Local CBS-affiliate WHNT-TV featured John Allen, president of the H/MCBA, and the local market in its piece, “Huntsville Seeing Economic Rise.” Relatively healthy local market conditions, combined with currently low mortgage interest rates and competitive pricing, make now the perfect time for people to buy their next house in the Huntsville area. “We have already seen the message resonating in the market,” said Kilgore. “Houses are starting to move. I have spoken to home buyers who said they were going to wait to buy a house, but once they saw the numbers they knew they shouldn’t wait any longer.” The campaign will continue into October with the Parade of Homes. To help turn the tide in your market, go to www.nahb.org/mythbuster to access the continuously-updated resources available and to read more Myth Buster success stories about locals around the country. For more information on the Myth Buster resources, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447. Nature Blossoms as an Amenity in the SoutheastAmenities steeped in nature have become an integral part of master-planned communities throughout the southeastern United States. In addition to amenity-rich clubhouses, fitness centers with spa-treatment rooms and championship golf courses, communities now are offering residents trails and bike paths, neighborhood parks and gardens and even paddling trails for canoe and kayak enthusiasts. Connecting with nature is important in today’s deadline-driven society, according to Ellin Goetz, of Goetz and Stropes, a landscape architect based in Naples, Fla. who has created parks and natural amenities for several southwest Florida communities developed by Bonita Bay Group. “Studies show that disposable time is really limited these days and, because of that, people are choosier about how they spend that time,” Goetz said. “People are looking for experiences that are a little different. They find spending time outside very engaging and more experiential.” They are reconnecting with nature. Bird-watching and kayaking are on the rise and home owners are spending more time and money on their gardens and landscaping.
When Bonita Bay Group took over development of TwinEagles in North Naples, for example, it restored wetlands and a natural flow way ― creating a marsh, tree islands and deep pools that attract wood storks and other water birds.
The developer also created a wildlife corridor that enables small animals to pass safely under Immokalee Road, a major roadway bordering the community, and studies by the University of Florida have show that lakes along the community’s two golf courses provide valuable habitat and are widely used by water birds. Many of these nature-enhancing projects were accomplished with assistance from the Florida Wildlife Federation and Collier County Audubon Society and have been recognized by the Council for Sustainable Florida.
A River, Meadow and Mountain — Oh, My! When the Graves family set out to develop the 220-acre Cold Mountain community along the Blue Ridge Mountains and a half-mile stretch of the east fork of the Pigeon River near Asheville, N.C., one of their primary goals was to preserve nature. “Half of the property is conservation easement,” said Amanda Graves. “We spent a lot of time working around the trees and working within the lay of the land to build roads and bridges. We went to great lengths building and designing the bridge over the river so as not to disrupt a trout bed.”
The community also has a 150-foot organic garden with annuals, perennials and herbs and has an orchard with apple, pear and peach trees. Blackberries and raspberries are grown on site, as are grapes that were harvested last year for grape jelly, said Graves. “We have a very unique mountain property,” she said. “Cold Mountain has a river, a meadow and a mountain.” “The fitness center and clubhouse will be our last amenities developed,” she said. “People are here because they want to be outside. They’d rather be hiking or fishing.”
The Esplanade walking and jogging path in Sandoval in Cape Coral, Fla. The master plan for Verandah, the Fort Myers community named Florida’s first green land development in 2003 by the independent Florida Green Building Coalition, was carefully designed around the site’s 1.75-mile stretch along the Orange River and its dense hammocks of moss-draped oaks and sabal palms. Bonita Bay Group, said Fikoski, repeatedly reworked neighborhoods, infrastructure and amenities to fit in with the trees. Instead of a large clubhouse, smaller buildings were carefully fitted into a riverfront hammock. The result is a four-building amenities village whose residents can soak up the scenery along riverfront terraces and at the community's Oak Park. Since the creation of its first community, Bonita Bay, in the 1980s, Bonita Bay Group has worked within the natural palette of each property, weaving in walking paths, ample open space, parks and biking trails. Several communities also offer waterways that are ideal for kayaking and are now part of the Great Calusa Blueway Paddling Trail, a 100-mile water trail in Lee County, Fla. The Lodges at Eagles Nest, in Banner Elk, N.C. offers 600 acres of trails for horseback riding, hiking, biking and even four-wheeling, according to Yvette Travaris, the community’s broker for new development sales. The trails, marked by difficulty, meander past brooks and waterfalls and even include a ropes course and swinging rope bridge. “One of our home owners will spend the day exploring the trails and big rock formations,” said Travaris. “His wife picks him up on the other side.” The 1,400-acre property also has an undisturbed beaver dam and a teepee village of 300 guest rooms with electricity. At Grand Arbors in TwinEagles, “boardwalks will lead to a wonderful wetland through a cypress head,” Goetz said, noting that interpretive signage will identify plants and their significance in the southwest Florida environment. The interconnection between home and nature is important, Goetz said, and one that developers should explore. “Studies show that people don’t want to spend a lot of time getting to nature. That’s why neighborhood parks are great. A resident can get on a bike and go experience them as opposed to taking a car.” “Parks and other natural areas within a community provide a calm, green place in the world,” said Goetz. “The more we can make these outdoor places more experiential and engaging, the more residents are going to enjoy living where they do.”
Amy Gravina, vice president of sales and marketing for Bonita Bay Group, is responsible for management of sales and marketing initiatives for the company’s seven masterplanned communities. For more information, call her at 239-390-1258. This article was originally published in NAHB's Sales + Marketing Ideas magazine. 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. Learn More About New Lead Paint Rule at Free SeminarsThe NAHB Remodelers will host several seminars at the upcoming Remodeling Show in Baltimore on the U.S. Environmental Protection Agency's recently-published rule governing the work of professional remodelers in homes where there is lead-based paint. A panel of experts from the industry and the EPA will give an overview of the new rule, Lead: Renovation, Repair and Painting, and answer questions about training, lead-safe work practices, cleaning verification and other practices specified in the rule. The seminars will be held at 1:00 p.m. on Wednesday and Thursday, Sept. 10 and 11, in Room 328 of the Baltimore Convention Center.
The EPA lead paint rule addresses remodeling and renovation projects disturbing more than six square feet of potentially contaminated painted surfaces for all residential and multifamily structures built prior to 1978 that are inhabited or frequented by pregnant women and children under the age of six. It will take effect in April 2010. It requires a cleaning inspection after the work is completed and grants the remodeler flexibility in determining the size of the work area, which can reduce the size of the area subject to containment. The EPA rule also lists prohibited work practices ― including open-torch burning and using high-heat guns and high-speed equipment such as grinders and sanders not equipped with a HEPA filter. The 2008 Remodeling Show will be held Sept. 10-12. For more information about the free seminars, e-mail Kelly Mack at NAHB, call her at 800-368-5242 x8451, or visit the NAHB Remodelers booth #2609 at the Remodeling Show. NAHB has prepared a free, lead paint resource document, “Lead Paint: EPA’s Final Rule on Remodeling and Renovation” to help remodelers understand and prepare for the rule. To review or download NAHB’s lead paint resource document, click here. Member Profile: Getting Involved, Giving BackThe latest in a series that profiles members of local NAHB Remodelers who are strengthening their local councils through networking and recruiting new members. The grassroots champions who are being highlighted in this series have collectively recruited more than 400 new members for the NAHB Remodelers to date.
Josh Dunn
Josh Dunn is a strong advocate of giving back to the community, and through his involvement with the Master Builders Association of Pierce County (MBAPC) and Olympia Master Builders Association (OMB) in Washington, he’s constantly finding new ways to do so. Dunn, the founder of Premier Media Group (PMG), heads a multi-faceted publishing company that produces local magazines for western Washington — including 425, South Sound and other titles with a collective readership of more than 100,000. One of the secrets of his publishing success has been his ability to develop a strong understanding of local communities, serving as the leading authority on how to get the most out of living in the region. Building Connections Another key to PMG’s success, Dunn said, is building relationships with the local business community, including building and remodeling. Dunn joined his local HBAs less than 18 months after starting his business and he has participated on a number of councils and committees ever since. “Being active in these associations has definitely increased our capacity to build relationships,” Dunn said. Dunn and his staff have been very active in the HBAs’ Remodelers Councils and membership drives. “Our overriding goal is to see the entire region be successful,” he said. “The more we can help our fellow members get involved and connected with the resources they need, the better off we all are.” In addition to publishing, PMG provides its clients design services, brand consulting, custom publications and marketing. Dunn and his staff share a great deal of media and communication savvy with fellow HBA members to help the associations connect with their members and to help the members connect with their customers. Filling in Gaps While Dunn may not know all the nuances of the remodeling business, that doesn’t stop him from connecting with and sharing ideas with members. “One thing that every business owner wants to know is how to run a better business, especially in the areas of marketing and communication, where they often are not as strong as they want to be. I can offer valuable insights and ideas in those areas, and I’ve built some great relationships as a result.” Dunn also notes the need for increasing public awareness of the value of doing business with members. “In building and remodeling, just as in other industries, communication and branding are ongoing challenges and we need to constantly refresh our messaging to persuade consumers to hire our members,” he said. “Reaching younger audiences can be especially challenging — and we stress that these days it’s not enough to just maintain a Web site, you also need to use additional channels and tools, such as blogging, media feeds, search engine optimization and others,” Dunn added. “With organizations like MBAPC and OMB, what you get from them is directly linked to what you put in,” he said, adding that at the same time that he has increased his knowledge of the building and remodeling industry, he has also introduced builders to new communication and marketing ideas that are at the leading edge of his own industry. “When you focus on adding to the community and building the brotherhood, the close business relationships will come,” Dunn said. “For me, that’s the payoff.”
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. 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 t |