Nation's Building News Online: October 6, 2008Print All Articles Text Version |
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Rescue Plan Shores Up Hopes for Housing Turnaround
Out of concern that turmoil in the financial markets was severely curtailing the flow of credit for housing and other business sectors and that the global economy was teetering on the brink of catastrophe, the leadership of NAHB on Sept. 24 called on Congress to pass the Emergency Economic Stabilization Act of 2008 “as soon as possible.” In conjunction with the call to action, which was unanimously adopted at a special session during NAHB’s fall board of directors meeting in San Diego, all 235,000 members of the association were urged to immediately contact their congressional delegations and ask them to pass the plan without delay. The board formally voted in support of the legislative effort at its official meeting on Sept. 26. Last week’s House action came two days after the Senate approved the measure by a margin of 74 to 25. The bill was then quickly signed into law by President Bush. “This legislation was absolutely essential to prevent a collapse in our financial system that would have inflicted devastating damage to our nation’s economy,” said NAHB Chairman Sandy Dunn. “Hopefully, this will set the stage for rebuilding confidence, restoring the availability of credit for businesses and consumers, and reversing the downward spiral in home prices and rising foreclosures that are root causes of today’s financial turmoil,” she said. “We will continue to work with lawmakers on both sides of the aisle to take whatever other steps are necessary to put housing and the economy back on track,” Dunn added. The legislation will allow the U.S. Treasury to purchase troubled mortgage assets that have been weighing heavily on the balance sheets of financial institutions, a process that will help recapitalize them and restore the flow of credit. The Treasury will hold those assets until conditions improve and then resell them. The bill also contains other NAHB priorities, including a one-year “patch” of the Alternative Minimum Tax and extension of several business tax breaks, including the 45L credit for new, energy-efficient homes that is due to expire at year-end. (For a related story in this issue of NBN, click here.) The measure also contains a provision to temporarily increase federal deposit insurance on bank and credit union accounts to $250,000, up from $100,000. NAHB Chief Economist David Seiders told the board that there is more than a 50% chance that the economy will lapse into a recession. Seiders predicted that the long decline in new home sales is in the process of reaching a bottom that will be followed by growth in 2009 that should put new residential construction on a slow, upward path. The ultimate objective now, he said, is to stabilize home prices and the foreclosure rate. “There is a lot to be fixed here,” he said, “but it is not a doomsday scenario.” Seiders noted that with Fannie Mae and Freddie Mac now recognized as being fully backed by the U.S. government and the FHA market growing rapidly there are “large, strong, reliable sources of home mortgage credit” available to help restore the housing market, and regulators will hopefully roll back some of the mortgage underwriting standards that have cut off many prospective home buyers from the credit they need. “Once we turn the corner” on the housing downturn, he said, “the longer-term outlook is terrific.” Also on hand to provide some words of encouragement to the NAHB board was Irish ambassador John Bruton, Ireland’s former prime minister and the current head of the European Union delegation to the U.S. “Credit is about belief, and what the U.S. needs is an injection of confidence,” Bruton said. He predicted that the U.S. will experience “a certain amount of pain or deferred pleasure” to solve its current financial problems. In its drive to publicize its position on the economic rescue plan and the urgent need for congressional action, NAHB was widely represented in the news media. In the first two days following the endorsement of the call to action in San Diego, NAHB Executive Vice President and CEO Jerry Howard was interviewed by Reuters, Bloomberg, The Wall Street Journal, CNN Money and Finance & Commerce Magazine. In addition, NAHB arranged for ABC Nightly News to interview a builder member in Kansas City to discuss his local housing market as well as the need for Congress to enact the rescue plan. In the days approaching the decisive House vote, NAHB, along with the U.S. Chamber of Commerce, the National Association of Realtors®, the National Federation of Independent Business and other business groups ran a full-page ad in the Oct. 1 issue of The Washington Post encouraging citizens to call their lawmakers and ask them to pass the rescue plan. The same ad ran in the Oct. 2 editions of USA Today, The Wall Street Journal, The New York Times, the Los Angeles Times, the Chicago Tribune, the Orlando Sentinel, Roll Call, Politico and The Hill. As leaders in Washington continued to deliberate over the bill, NAHB members e-mailed and phoned their congressional delegations at www.capitolconnect.com/builderlink and the NAHB toll-free legislative hotline, respectively, citing the need for the rescue plan and urging Congress to “act this week to bring stability to the financial markets.” For more information on the legislation, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421. Floor Plans: Rustic Elegance, Contemporary Comfort
Nestled on 730 acres in rural middle Tennessee, this 6,051-square-foot, four-bedroom, three-and-a-half bath log home radiates thoroughly modern, rustic elegance. Handcrafted by StoneMill Log Homes with 6-inch by 12-inch, dovetail-cornered, chinked-style logs, this home ― with all the modern efficiencies expected in an urban lifestyle ― was built for a family wanting lots of space and who loves to entertain.
Kitchen The spacious kitchen is equipped with state-of-the-art appliances and boasts granite counter tops and custom-made, curly cherry cabinetry. The kitchen graciously flows into an open, vaulted dining and great room, perfect for large family gatherings. The living room features a massive, full masonry, wood-burning fireplace with a gas starter and is finished with natural, hand-cut limestone. The open, living room gable with ample glass also is perfect for taking full advantage of the area’s lake and mountain views. For extra comfort and warmth, steam-heated radiant floors have been installed throughout the home.
Great room The master suite on the ground level serves as a haven for privacy, relaxation and 21st-century conveniences. The master bedroom is equipped with satellite TV and satellite Internet connections (also available throughout the entire home). The master bath, finished with Turkish limestone floors and countertops, features an oversized steam shower and Jacuzzi tub and an environmentally sound, gas powered, “instant-on” hot water system. The “instant hot” system is available throughout the home. Adjoining the master suite is a spacious office ― perfect for a family member who works from home. Upstairs, two sizable bedrooms share a bath and an open loft that overlooks the living room.
Office adjoining the master bedroom A Home for Retiring Types The home also features a bonus suite located atop a three-car garage. The suite, designed for extended visits or college students returning home on break, has a full kitchen, living room, bedroom and full bath. According to the manufacturer’s survey of home owners, the home primarily appeals to empty nesters who are nearing retirement or have already retired. Most of the owners in the survey also said they plan on living in their home the “rest of their lives.” While the home’s modern amenities add comfort and lifestyle appeal, the surveyed owners pointed out that the home's dovetailed, chinked look is what won them over.
Builders Cite Appraisal Problems in Declining Housing MarketsAt a time of rising foreclosures, low-ball appraisals have emerged as a significant stumbling block in lining up credit for the construction and sale of new homes, builders attending NAHB’S fall board of directors meeting in San Diego complained to representatives from the Appraisal Institute. In a special presentation convened and moderated by NAHB Chairman Sandy Dunn on Sept. 24, two appraisers — Jim Amorin, vice president of Atrium Real Estate Services in Austin, Texas and the incoming 2009 president of the institute; and Robert Caringella, a principal of Jones, Roach & Caringella, Inc. in San Diego — said they have been seeing some systemic problems in today’s appraisals of residential properties, but they also made several suggestions about what builders should be doing to make the best of a less than perfect situation. “The financial markets are in such disarray, it’s making it hard for us to do our job,” said Amorin. Home prices nationwide have continued to decline at a rapid rate, “going lower and lower,” he said, but then there are local markets — such as his home town of Austin — that are doing much better than the norm. Complicating the picture, homes are being sold at bargain basement prices that are increasingly below their replacement cost. According to the National Bureau of Economic Research, construction costs last year were higher than home prices in 33 out of the 79 metro areas studied. “Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price,” he said. Accurate and competent appraisals are needed “now more than ever,” Amorin said, but that task has become difficult in declining markets, where knowledge of local conditions is particularly important. Other factors, such as sales concessions, are also coming into play and may provide an explanation for an appraisal coming in lower than anticipated. “Your appraiser needs to have local knowledge,” said Caringella, “and needs to be putting an ear to the ground and finding out what’s really happening.” In San Diego, for instance, which has been hammered by foreclosures and where residential building permits are down 80% from historic levels, home values in “micro-neighborhoods” along the coast or in good school districts have been “holding up nicely,” Caringella said. He cited the case of one local builder/developer, a former appraiser himself, who was able to get good results because “he knew to give them the same information the builder had that convinced him to go forward. Give them the facts; drag in sales people, engineers; walk the appraiser through the analysis,” he said. Even though it is something that the lender should be able to give the appraiser, builders can ensure the appraiser is knowledgeable about the property by providing a complete pro-forma that packages the budget, costs and fees, finish levels of the house, pricing support and real information on concessions, said Caringella. One builder attending the presentation complained that the low assessment of a home he was selling was based on the price of a distressed sale by an appraiser who ignored five comparable properties that were close in price to the home being sold. “If the appraiser didn’t know it was a distressed property, he wasn’t doing a competent job,” Amorin responded. “Very seldom do I run into a lender saying they need a lower value,” Amorin said, “but it takes place in some instances.” One way to determine if a low-priced home should be used as a comp in the appraisal, he said, is to ask whether that home is “in the universe of properties that the buyer would consider buying.” A custom builder in the audience said that when his houses appraised low two weeks earlier, his lender stopped draws on all of them in the middle of the night. Fortunately, he was able to work things out by showing why the appraisals on the properties were too low. “Good lenders will try to make the deal work, not pull the rug out from under the builder,” said Amorin. Another member of the audience said that banks are no longer satisfied with comps that have been made within the past six months, and are seeking them on sales that have been made within three months; finding those can be a difficult prospect in markets where sales have slowed to a trickle. Also, he said, following bank consolidations, most lenders in his area now go to a selection wheel from which they can choose appraisers who “might be located 30, 40 miles away and don’t have a clue about the local market.” Finally, appraisers are required to contact the bank if the Realtor® has contacted them and resign. Amorin responded that the requirement for comparable properties to be located within one-half mile of the home being appraised can also pose problems. He added that appraisers value the opportunity to obtain information on the home from the builder, and there is no legal prohibition against communications between a builder and an appraiser. “The more information we have about the deal, the better we can do our job,” Amorin said. Caringella suggested that a good time for the builder to introduce himself is when the appraiser looks at the property. “Is there anything you need to know from me?” is an appropriate question to ask the appraiser. The builder should also fill the appraiser in on anything that may not be apparent. “Do this work before the appraiser reaches a conclusion,” he advised. Amorin noted that his organization has been working with NAHB on appraisal issues, an effort that includes educating members of the Appraisal Institute on how to appraise “green” homes and appraising in declining markets. For more information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597. For Bailout to Work, Housing Market Needs to MendAn end to falling home prices is the most important thing that needs to happen for the $700 billion bailout to work, according to experts. The problem is that the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the housing inventory, including properties that have come on the market because of foreclosures, before home prices start appreciating. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again. “Banks know the economy is getting worse, so…they will keep being cautious,” said Sung Won Sohn, an economics professor at California State University, Channel Islands and a former banking executive. Still, the government hopes that by scooping up billions of dollars in bad mortgage debt and other toxic assets, banks eventually can clean up their shaky balance sheets, crack open the vaults and send money washing through the system again. Rep. Barney Frank (D-Mass.), the Financial Services Committee chairman and a key negotiator over the past weeks on the emergency rescue bill, said the measure was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort comparable to the New Deal. (www.businessweek.com)
With Bailout Approved, What’s Next?The bill to stabilize the financial markets enacted on Oct. 3 gives the Treasury Department broad running room to start buying $250 billion of illiquid assets immediately from banks and other companies so long as it consults with the federal banking agencies and HUD. It can ask the President to release an additional $350 billion without any further congressional action. Lawrence E. Platt, a lawyer at K&L Gates, said that the Treasury must better define eligible types of institutions, troubled assets and asset managers but that, most importantly, it must decide “where they first should deploy capital.” The Treasury is expected within a few weeks to begin buying illiquid assets in order to send a signal to the marketplace, and will probably start buying simpler securities first. Treasury Secretary Paulson has told lawmakers that the agency can probably handle roughly $50 billion of purchases per month; it is required to issue a detailed report disclosing its purchases within seven days of spending the money. The law says that a financial stability oversight board comprised of the heads of the Securities and Exchange Commission, Federal Reserve, Federal Deposit Insurance Corp., Federal Housing Finance Agency, HUD and Treasury must meet within two weeks of the first use of purchase authority. Within 60 days, the Treasury must clarify its process for expanding foreclosure prevention efforts on the loans that underlie the securities it buys and any whole-loan purchases. This includes an explanation of how it plans to use its authority to set up loan guarantees and credit enhancements — a provision lauded by FDIC Chairman Sheila Bair as a potential way to speed up loan modifications. The Treasury is also tasked with using, and encouraging servicers to use, an FHA refinancing program that took effect on Oct. 1 to insure reduced-cost mortgages. (www.financial-planning.com)
Builder, Banker Weigh in on U.S. Bailout PackagePeople who believe that banks were using the bailout proposal as a scare tactic and that lenders could ultimately tap into other sources of credit and liquidity instead of borrowing from taxpayers, “should call up the former CEO of Washington Mutual or Merrill Lynch,” said Jeff Burum, who is co-principal of home builder Diversified Pacific in Rancho Cucamonga, Calif. “These organizations no longer exist because of the (dried-up) financial markets. You can’t even get an acquisition and development loan in the Inland Empire today — it doesn’t exist.” Burum called the government bailout “the most important domestic issue we’re facing right now. There will be a tremendous opportunity for our region to recover. We need credit, we need jobs and we need stabilization of our (housing) values.” He added that, “Local residents won’t know how bad it would’ve gotten if the bailout didn’t occur. It would have been like the earthquake that no one saw coming. Credit is what fuels our economy.” (www.sbsun.com)
‘We Can See the Bottom’: Home Depot Says Housing Market Won’t Go Too Much LowerWith 60 years of data tracking how much Americans spend on building and remodeling their homes, Home Depot says it appears that the housing crisis hasn’t hit bottom yet, but the end is in sight, if Americans continue to behave as they have in the past. “We can see the bottom,” said Carol Tome, chief financial officer for the Atlanta-based company in a recent interview at the Home Depot in Lincoln Park, Ill. The home improvement chain gauges market conditions by measuring private residential investment as a percentage of gross domestic product. The rate stands at 3.5% today. That is below the 4.8% average from 1948 to 2008, but still above the 3.2% reached in the second quarter of 1982, when the country was in a severe recession. The high was 6.3% in 2005. For now, Tome said she sees consumers focused on repairing their homes rather than remodeling. To that end, Home Depot cut prices on about 1,200 items from insulation to caulk to paint last month to emphasize everyday low prices over promotions. Small arrow-shaped signs point out the rollbacks on store shelves. The retailer also introduced clinics on saving money around the house, such as how to cut energy bills. (www.istockanalyst.com)
Real Estate Agent: ‘The Sky Isn’t Falling’Real estate agent Ron Jones took with caution Friday the news that Wisconsin’s affordable-housing agency was having difficult raising money for mortgages and stopped making loans — a high-profile indication in the state of the national credit crisis. “I think it is a temporary halt,” said Jones, an agent with Keller Williams Realty in Wausau. “There are other programs out there for first-time buyers. Will it have a huge effect on the market? I don’t believe so. The sky isn’t falling.” The Wisconsin Housing and Economic Development Authority, created in 1972 to offer loans to first-time home buyers with moderate incomes, suspended the program because of an inability to sell tax-exempt revenue bonds to finance them, spokeswoman Kate Venne said. About 200 loans in the pipeline with set interest rates were not affected, she said in a telephone interview from Madison. “We have money to close.” Jones hopes the financial bailout in Congress will solve the problem and put the housing authority back on the market. “I think this is going to be a real short-lived thing,” he said. “At least I am hoping that.” (www.chicagotribune.com)
What the FHA Needs to Get the Job DoneWith its new loan volume exploding — tripling in the past 12 months alone — the Federal Housing Administration says it needs to hire more staff and upgrade its technology to be able to handle the crush of new business, but it complains that Congress hasn’t appropriated the necessary funds — $65 million — to do the job fast enough. But the real question is whether a government agency whose market share dropped below 3% during the heyday of the subprime boom can now properly handle explosive volume rocketing it to an estimated market share of 30% this year. Mortgage industry, home builder and real estate experts worry about the possible consequences of shifting too heavy a share of the mortgage market too quickly to an agency that may be inadequately staffed or funded. “FHA is assuming the risks of a mortgage market abandoned by private investors — without the risk management tools,” said Howard Glaser, who served during the Clinton Administration as acting general counsel for HUD. “My fear is that next year at this time, we will be debating an FHA bailout.” To some mortgage lenders and loan officers, the FHA is now the main game in town. “Nothing compares with them,” said Paul Skeens, chief executive of Colonial Mortgage Group in Waldorf, Md. In 2001 and 2002, Skeens’ firm did just one-quarter of 1% of its volume in the FHA. Now it’s 60%. “The last thing we need right now, with the shape the housing market is in,” he said, “is for FHA not to function well.” (www.washingtonpost.com)
Expiring Energy Tax Incentives ExtendedTucked away in the financial rescue package approved by Congress last week is a set of provisions championed by NAHB that extend several expiring energy tax incentives in the Internal Revenue Code, including those for new home construction (Section 45L), existing homes (Section 25C) and commercial buildings and larger multifamily properties (Section 179D). Section 45L allows a $2,000 tax credit for the construction and sale or lease of a home that achieves a 50% reduction in energy use relative to a home constructed according to the 2004 IECC energy code. This incentive locks in energy cost savings for the lifetime of a home, which averages more than 60 years. The usage of this credit has increased nearly three-fold from 2006 levels, demonstrating that it is performing as Congress intended and gaining acceptance in the marketplace. NAHB successfully advocated numerous regulatory changes that have also made it easier for builders to certify that their energy-efficient homes qualify for the credit. The legislation extends the new energy efficient home credit through the end of 2009. Under prior law, it was scheduled to expire at the end of 2008. “Extending this credit for an additional year will ensure that it is in place when the housing market turns around,” said NAHB Chairman Sandy Dunn. “That way, more home buyers can reap the benefits of high-efficiency homes constructed with the help of this tax incentive.” The Section 25C credit will provide immediate help with reducing utility bills while addressing one of the most significant contributors to energy inefficiency — existing homes. Taxpayers can use the incentive, for example, to purchase high-efficiency windows or heating and cooling appliances, or make other home renovations that can save literally hundreds of dollars per year in energy costs. The tax credit for existing homes, which expired on Dec. 31, 2007, will be reinstated for installations made in calendar year 2009. The credit was not extended for installations in 2008. The 179D deduction supports increased energy efficiency in the multifamily housing sector, a significant segment of the housing market, by providing a deduction per square foot of the property placed in service. This credit targeting commercial and large multifamily energy improvements has been extended five years through Dec. 31, 2013. For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421. 50+ Home Owners See Tax Benefits in Housing BillTax incentives provided under the landmark Housing and Economic Recovery Act of 2008 enacted at the end of July may be especially helpful to home owners who are preparing for their retirement years, according to NAHB tax analyst Robert Dietz. The temporary $7,500 tax credit for first-time home buyers — the most widely publicized of the numerous benefits in the legislation for home buyers, home owners and renters — will make it easier for some older home owners to sell an existing home on the market and make a retirement-related move to new housing, he said. With the availability of the tax credit, some owners of first homes will be better able to sell their existing property and move up the housing ladder, boosting demand far beyond the starter housing market, Dietz explained. Of further interest to 50+ home owners, he said, is a provision under the bill that has established an additional standard deduction for property taxes paid on an owner-occupied home in 2008. This will enable home owners to get a break on their federal income tax to partially offset their 2008 local property payments, even if they do not itemize their deductions. Because they tend to own homes with little or no deductible mortgage interest debt, 50+ home owners are less likely than the general population to itemize deductions on their income tax return. According to the Census Bureau’s Housing Vacancy Survey data, more than 80% of 55+ households own their own home, but according to NAHB estimates of IRS data only 44% of primary taxpayers who are 55 or older itemize their deductions. The tax code allows taxpayers to deduct state and local property taxes, but only if they itemize their deductions on Schedule A of their tax forms. But only one-third of taxpayers itemize in a given year, Dietz said. Taxpayers who do not itemize instead claim the standard deduction, which in tax year 2008 is $10,900 for married couples filing a joint return, $5,450 for single taxpayers and $8,000 for taxpayers filing as heads of household. The new provision allows non-itemizing home owners to add an additional amount to their otherwise applicable standard deduction. This additional standard deduction is equal to the amount of state and local property taxes they would deduct if they itemized, up to a maximum of $1,000 for married taxpayers and $500 for single taxpayers. Taxpayers who use the new provision will save several hundred dollars on average for tax year 2008. A special NAHB Web site — www.federalhousingtaxcredit.com — provides comprehensive information on the first-time home buyer tax credit. For more information, e-mail Rob Dietz, or call him at 800-368-5242 x8285. FBI Investigating Construction Defect Schemes in Las VegasA team of FBI agents and detectives with the Las Vegas Metropolitan Police Department have joined forces to investigate alleged corruption among local home owners associations, involving a web of board members, management companies, lawyers, contractors and others who have allegedly siphoned away millions of dollars from home owners and developers in construction defect litigation cases. Specifically, the FBI is investigating whether individuals were placed on home owner association boards to direct business stemming from construction defect lawsuits to select companies.
A review of court documents indicates that some of the developments have the same board members, with links between the neighborhoods and Benzer companies and associates. “We applaud the efforts of law enforcement officials investigating these complex, often highly technical cases. The home building industry stands ready to provide whatever assistance may be required. We are confident that the professionals of Metro and the FBI will bring this investigation to a just conclusion,” Porter said.
Benzer has owned Silver Lining Construction since 1992. The company specializes in remediation work and claims involvement in 300 local building projects, including Vistana. Owners at Vistana who initiated a massive construction defect lawsuit paid Benzer’s company more than $1 million to fix some of the defects.
For more information, e-mail Elizabeth Ambrose at NAHB, or call her at 800-368-5242 x8253. New Jersey Builders, Realtors Host Seminar on Housing Act BenefitsOn Oct. 1, more than 125 home builders and Realtors® attended a New Jersey Builders Association (NJBA) and New Jersey Association of Realtors® (NJAR) seminar on the home buying benefits contained in the 2008 Housing and Economic Recovery Act (HERA). Recognizing the importance of alerting their members to how the legislation can help home buyers and home owners, NJBA Executive Vice President Tim Touhey and Carol Ann Short, the association’s director of government affairs, worked with NJAR Executive Vice President Jarrod Grasso to initiate the event. The meeting was held at the Wyndham Princeton Forrestal Hotel & Conference Center in Plainsboro, N.J. “We are pleased to bring building and real estate professionals together to collaborate and discuss how the various components of the legislation, including the temporary tax credit for home buyers, will benefit New Jersey’s residents and its economy,” Touhey said. The two organizations invited representatives from the local government, NAHB and the National Association of Realtors® to share their expertise on provisions of the landmark housing bill and other housing programs for New Jersey residents. They included:
“We sent three different blast e-mails to our members, and included items in our weekly e-newsletter and in the ‘Events and Seminars’ section of our Web site,” said Amy Whilldin, NJBA’s director of communications. She said that the member of record is often a builder or company president who might not automatically think of the benefits of having employees such as sales representatives attend the seminar, so that was highlighted in the communications. “One builder member turned right around and registered seven of his sales office staff,” Whilldin said. Local media were invited with an e-mailed advisory and follow-up telephone calls. Stories about the event ran on New Jersey News television, in the Courier-Post and Courier News/Home News Tribune, and on the New Jersey RealEstateRama Web site. Attendees responded positively to the event. “One thing I was hearing after the seminar again and again was how great an event it was and that we should collaborate with the Realtors® and other groups more often,” Whilldin said. “NJBA continues to identify ways in which to be of service to our members through education, communication and advocacy.” Go to www.nahb.org/mythbuster or e-mail NAHB Public Affairs (800-368-5242 x8447) to learn more about HBA efforts and the resources available from NAHB to promote the tax credit. New Single-Family Home Sales Slip Further in AugustIn the latest evidence of severe and ongoing weakness in the housing and financial markets, the Commerce Department reported on Sept. 25 that sales of newly built single-family homes fell 11.5% to a seasonally adjusted annual rate of 460,000 units in August. This was 34.5% below the rate of a year earlier and the lowest level since January of 1991. “This report is yet another example of how the housing sector is suffering the effects of the financial meltdown and extreme tightening of consumer and business credit,” said NAHB Chairman Sandy Dunn, who was attending the association’s board of directors meeting in San Diego on the day the government sales report was released. The NAHB directors decided that morning to mount a full-scale effort to contact their members of Congress in support of a plan to stabilize financial markets and address the declining home values and rising foreclosures that are the root cause of the collapse in confidence. Dunn called for bipartisan cooperation in Congress to pass the urgently needed legislation, which she said would help shore up home values and unfreeze credit lines, “two moves that are absolutely essential to get the economy moving again.” “The major downshift in new-home sales in August reflected a weakening economy and job market as well as tight mortgage credit market conditions,” said NAHB Chief Economist Dave Seiders. “And this occurred well before the most recent round of financial market turmoil, accentuating the urgent need for immediate action on the financial rescue plan.” Regionally, sales skidded 36.1% in the West, 31.9% in the Northeast and 2.1% in the South. The sales pace rose 7.2% in the Midwest. There was a 10.9-month supply of unsold new single-family homes on the market in August, up from a 10.3-month supply in July and back to the same level as in May and June.
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry. Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market. To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
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 ‘Hope for Homeowners’ Program Up and RunningThe Federal Housing Administration’s new Hope for Homeowners program, initiated on Oct. 1, has been welcomed by NAHB as a means for insuring new, more affordable mortgages for home owners who are struggling with burdensome payments on their current home loans. “It was critical to get this program up and running quickly in order to help stem mounting mortgage foreclosures that add to unsold home inventories and undermine home prices,” said NAHB Chairman Sandy Dunn. Under the program, the holder of a troubled mortgage must agree to accept, as payment-in-full, an amount equal to 87% of the current value of the mortgaged property. The borrower then receives a new, FHA-insured mortgage that represents 90% of the home's current value, with the 3% balance going to cover the borrower's upfront FHA mortgage insurance premium. The home owner is then responsible for an annual mortgage insurance premium of 1.5%. Eligible borrowers must meet a mortgage payment-to-income test and agree to share equity gains on their home with the federal government. The recently enacted housing stimulus legislation, the Housing and Economic Recovery Act of 2008, provided FHA with an additional $300 billion in mortgage insurance authority to operate the new program for the next three years. “Our members are hoping mortgage investors and servicers take full advantage of the Hope for Homeowners program,” said Jerry Howard, NAHB’s executive vice president and CEO. Replacing toxic mortgages with sound and affordable FHA-backed loans would go a long way in restoring order to what has been a very chaotic mortgage market.” For more information on the program, click here; or e-mail David Ledford at NAHB, or call him at 800-368-5242 x8265.
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry. Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market. To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables. To learn more, visit www.HousingEconomics.com.
Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn. To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here. To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar. For assistance, call the NAHB Member Service Center at 800-368-5242. Eye on the Economy: Near-Term Housing Outlook Has DarkenedReal gross domestic product (GDP) growth for the second quarter has been revised downward from 3.3% to 2.8% — still a respectable pace. Of more importance, key sectors of the economy weakened considerably during the third quarter and the economy is entering the final quarter of the year in troublesome condition, despite recent declines in oil prices. The housing sector continues to pull the U.S. economy downward. Housing-related weakness is progressively spreading to other sectors, and credit-market constraints are weighing on virtually all components of spending except for outlays by the federal government. Consumer spending, accounting for about 70% of overall GDP, has been flagging badly as the special stimulus from the personal tax rebates has run out of steam, as job losses have accumulated and as wealth losses in housing and the stock market have weighed on consumer confidence and discretionary spending. Indeed, real disposable income has been declining in recent months and it’s now pretty clear that real personal consumption expenditures contracted in the third quarter — the first quarterly setback since 1991. Plummeting auto sales are an important part of that story. The confidence of nonfarm nonresidential businesses also has been shaken badly and recent indictors point to a manufacturing sector in recession and systematic declines in commercial construction as well. It’s now likely that nonresidential fixed investment, in total, will slip into the red zone in the third quarter of the year and that overall GDP growth will be around zero for that quarter — a percentage point below our most recent baseline forecast. Stutter-Steps on Financial ‘Bailout’ Plan Roil the Markets Panic gripped equity and credit markets two weeks ago as a series of major financial institutions either went under or were “rescued” by the federal government. Some relief was provided the following day when news leaked out that the Treasury and the Fed were crafting a big plan to rescue the U.S. and global economies from financial Armageddon. Both the Treasury Secretary Henry Paulson and the Fed Chairman Ben Bernanke, joined at times by the SEC Chairman Christopher Cox, spent much of last week on Capitol Hill and at the White House, and President Bush made a series of public statements to stress the extreme seriousness of the situation and to rally public support for the plan that had been presented and defended by Paulson and Bernanke. Unfortunately, the financial rescue plan was quickly dubbed a “Wall Street Bailout Plan,” an incredibly inaccurate and inflammatory handle. This characterization not only made it virtually impossible to rally public support for the plan, it also cleared the way for political wrangling in Washington over self-serving issues or ideological principles — just weeks before the national elections. As a result, the proposed $700 billion financial rescue plan that apparently had broad bipartisan support went down in flames in the House of Representatives on Sept. 29, provoking another massive stock market contraction and a deep freeze in credit markets here and abroad. Equity markets staged a partial rebound the next day as battered House members in both parties held open the possibility of a near-term compromise on an amended package. Meanwhile, the Senate actually went ahead with passage of a similar plan on the evening of Oct. 1, effectively handing the ball back to the beleaguered House, which agreed to the plan two days later. The bill's enactment certainly will not ensure immediate repair of credit markets or quick economic recovery, but outright failure in the House would have ensured a deep recession and a major financial market meltdown. New-Home Sales Shift Down Again Sales of existing (previously owned) homes have been essentially flat since late last year, prompting suggestions that housing demand has already “stabilized.” But a large and rising proportion of existing-home sales are sales of foreclosed homes (or short sales) at fire-sale prices, especially in previously overheated markets where prices have fallen dramatically. While it is good that many foreclosed homes are being taken off the markets, the foreclosure surge is hardly a sign of housing market vitality. Competition from foreclosure sales actually is a major negative for the new-home market. In fact, new-home sales still are heading downward, falling by a whopping 11.5% in August to the lowest level since the depths of the 1990-1991 recession. Furthermore, NAHB’s proprietary survey of 30 large single-family builders showed ongoing erosion of both gross sales (new orders) and net sales (accounting for cancellations) in August, on a seasonally adjusted basis. NAHB’s single-family Housing Market Index (HMI) perked up a bit in September, rising by two points from record lows posted in July and August, and the rise primarily reflecting a better outlook by builders for future home sales. However, that survey was taken before the incredible events in financial markets after mid-September and it’s entirely possible that the HMI will fall back in our October survey. House Prices Continue Downward, Eating Away at the Financial System Falling house prices are a deadly cancer that’s eating away at the national and global financial systems — and making the financial rescue plan absolutely essential for survival. Unfortunately, recent news on the house-price front only accentuates the urgency of the situation. All major measures of U.S. house prices are retreating rapidly. OFHEO’s purchase-only House Price Index (conforming market only) fell at a 7.5% seasonally adjusted annual rate in July while the S&P/Case-Shiller composite index for 20 large metro areas fell at a 12.2% pace for the same period. While these rates of decline are somewhat slower than earlier this year, the breadth and depth of the declines still are highly destructive to mortgage credit quality and the financial system. The median price of existing homes sold (not controlled for compositional shifts) fell by 9.5% in August (year-over-year), with a 9.7% decline in the single-family market and a 7.2% decline in the condo market. In the West, single-family prices were down by 24.8% while condo prices were off by 17.9%. The Fed Pulls Out (Most of) the Stops The Federal Reserve has been pumping massive amounts of liquidity into the financial system during the incredible round of turmoil that erupted around mid-September, including a huge injection on the heels of the failure of the financial rescue plan in the House of Representatives on Sept. 29. These extraordinary efforts by the Fed, in conjunction with steps by foreign central banks along the same lines, certainly have helped to maintain some order in short-term credit markets here and abroad. Even so, a seemingly irresistible flight to credit quality has virtually strangled interbank markets as well as securities markets for short-term credit, including the commercial paper market in the U.S. Prompt enactment of the financial market rescue plan presumably will boost confidence in the financial system, although credit-quality spreads in money and bond markets figure to remain quite wide for an extended period of time. The Fed has been holding the federal funds rate target at 2.0% throughout the recent period of turmoil. However, our central bank has allowed its special liquidity injections to push the effective funds rate below target for most of this period — rather than “draining” bank reserves through open-market operations to keep the funds rate on target. We believe the Fed will cut the federal funds rate target after the financial rescue plan is enacted. We expect cuts of 50 to 75 basis points by the end of the year, and we do not expect any upward adjustments before mid-2009. The Probability of Recession Has Risen Considerably NAHB’s most-recent short-term forecasts for real GDP and payroll employment are being marked down at this time, despite our new monetary policy assumptions, and the forecasts are being fully revised following enactment of the financial rescue plan. Recent evidence of economic weakness, substantial wealth losses in equities and housing, and stubbornly tight credit market conditions are likely to take enough additional toll on the economy to justify an official recession “call” by the experts at the National Bureau of Economic Research. We’re now looking for a medium-sized U.S. recession in 2008 and part of 2009, with a peak unemployment rate around 7% — compared with 6.3% in our most-recent baseline forecast. We still expect the global economy to maintain positive growth throughout this period, and that’s an important call. The Near-Term Housing Outlook Has Darkened Fixed-rate home mortgage credit remains available at reasonable rates through the FHA/VA/Ginnie Mae system as well as through Fannie Mae and Freddie Mac — the GSEs currently under federal conservatorship. But the shortage of mortgage credit outside these market segments is quite serious and the weakening economy inevitably will be taking a toll on home buying as we move ahead. Furthermore, increasingly tight credit conditions in the markets for land development and construction loans — markets that are served primarily by depository institutions — inevitably will sap the strength of the early stages of recovery in housing production. With respect to our baseline (most probable) forecast, we’ve essentially kicked out the projected troughs in new-home sales, housing starts and residential fixed investment by one calendar quarter and deepened the declines modestly in the process. The projected peak-to-trough declines easily stack up as the deepest since the 1930s. However, there is good news ― most of the projected decline is behind us, and the growth potential from the cyclical trough is immense. 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 Oct. 2 edition. To subscribe to “Eye on the Economy,” click here.
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry. Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market. To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
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. Get Essential Housing Analysis at Construction Forecast ConferenceDuring the daylong NAHB Fall Construction Forecast Conference on Wednesday, Oct. 22 in Washington, D.C., nationally-recognized housing and economics experts will provide answers to the most critical questions facing the industry today. Panelists at the conference, which will also be presented on a webcast, will discuss key questions including:
The panels include:
To Register Online registration is available through Wednesday, Oct. 8. To register and learn more, visit www.nahb.org/CFC. Can't Attend in Person? Webcast of Conference Also Available For webcast information, visit www.nahb.org/CFC. The purchase price includes unlimited access to the webcast archive for three months and electronic copies of the presentation materials. 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.
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry. Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market. To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
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. Coaching Legend Lou Holtz to Kick Off 2009 Builders' Show
Widely regarded as one of the most successful college football coaches in history and the only coach to take six different college teams to bowl games, the West Virginia native began his coaching career in 1969 at the College of William & Mary, followed by head coaching positions at the University of Minnesota, University of Arkansas, North Carolina State University and then a season as head coach of the NFL's New York Jets. In 1985, Holtz became the 27th head coach of Notre Dame. He spent 11 seasons, taking what was a struggling team and building a program that achieved the longest winning streak in the school's storied football history. Following his retirement from Notre Dame in 1996, Holz joined CBS Sports' “College Football Today” for two seasons before becoming head coach at the University of South Carolina for six seasons. No longer coaching, he currently serves as a college football analyst on ESPN and tours the country as a motivational speaker. “If what you did yesterday seems big,” the much-quoted couch has said, “you haven’t done anything today.” Grand Opening Ceremonies to Feature Holtz’ Keynote, 44th Presidential Inaugural Address The IBS Grand Oopening ceremonies will be held Tuesday, Jan. 20 and feature Holtz’ keynote address as well as a live broadcast of the 44th Presidential Inaugural Address from Capitol Hill in Washington, D.C. Then, throughout the show, attendees will hear from some of the nation’s top business leaders representing a wide range of industry specialties. Speakers include renowned green business expert Andrew Winston, founder of Winston Eco-Strategies; Kevin Freiberg, professional speaker and founder and CEO of the San Diego Consulting Group, Inc.; and Peter Hart, top public opinion analyst and founder of Peter D. Hart Research Associates. “We are thrilled to have such extraordinary speakers presenting at the show this year,” noted NAHB Chairman Sandy Dunn. “Especially in these challenging times for our industry, attendees will benefit from hearing the advice of a legendary motivator and coach, as well as from some of the top minds in the business world on strategies for success in a changing marketplace.” This year, IBS will feature more than 1,700 exhibitors showcasing their latest products and services, and more than 250 education sessions or programs designed to help members stay current on industry trends and issues. Educational session topics range from green building and construction codes to 50+ housing, design and business management. IBS will also feature numerous networking events and home tours. In particular, The New American Home will showcase the latest in green building technology, the hottest trends in outdoor living and the most up-to-date building techniques. IBS is expected to attract more than 90,000 attendees from around the U.S. and more than 100 countries, representing every facet of the home building and related industries. For more information and to register, visit www.BuildersShow.com. 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. 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. Think — and Act — Radically About Industry Education. Sign Up at IBSThink radically about industry education programs from The NAHB University of Housing and embrace new ways to navigate the downturn and strengthen your company while attending the 2009 International Builders’ Show in Las Vegas on Jan. 16-19. The University of Housing is offering courses, designations, special all-day sessions and more, so members and their employees can gain the knowledge they need to survive and thrive. Designation Courses Plan to participate in one or more of the IBS pre-show designation courses. Brush up on a particular subject or work towards one of NAHB's 16 professional designations to increase your industry knowledge and stay ahead of the competition. For a complete listing of course and descriptions, and to register, visit www.BuildersShow.com/PreShow. All-Day Events Monday, Jan. 19
More than 250 educational sessions across 10 tracks will be offered at IBS. The sessions are available with full registration to IBS, or session admission can be purchased individually. For more information about the designation courses, education sessions and special all-day education events at IBS, visit www.BuildersShow.com/Education. Builders’ Tip: Bend PVC Pipe Without Putting a Kink in It
Years ago, I worked in a mock-up shop where we bent plenty of PVC pipe of different diameters using heat and a bending form. I thought I would share the technique here because it enables you to bend the PVC without kinking it. As always,when working with heat and heat guns or torches, be sure to have a fire extinguisher nearby.
Once it has cooled, the pipe is ready to use. — Peter Doherty, Waterford, Conn. 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. Properly Focused Technology Can Help Builders SurviveWeathering the downturn requires up-to-date information on every aspect of a builder’s business operations to make the tough decisions on everything from inventory, land, cash and staffing to even whether or not to stay in business. In these difficult times, builders should seek out builder- and business-oriented technology that will enable them to gather and analyze information about their business operations, the market and prospective customers and their profitability so they can have a clear, comprehensive knowledge-base on which to base their decisions. But in order for builders to take the actions necessary to survive and position their business for the market’s eventual return, they have to first rethink the way they use the technology. The old ways of focusing on using it to improve business operations won't give builders the information they need to survive the downturn. Today, builders need cash in order to operate and stay in business, so that's where they should focus their technology. Closings and profits are two primary sources of cash. Builders can use their business-oriented technology to enhance both sources. To head in this direction, the first thing builders must do is rethink how they use technology.
Operational Controls — Digging Out Starts Here Digging out of the downturn begins with properly managed marketing and sales operations. Surveys of prospects, customer follow-up, market research, marketing and advertising are as valuable now as they are in boom times. Branding, marketing and advertising are still the best tools to convince buyers to purchase a home ― and the best way to learn what prospective buyers want. The Internet and Web-based technology are effective tools that can help builders’ determine prospective buyers’ interests. Buyers visting a builder's Web site can explore homes and options at their leisure while the builder can use the Web site to help build a bridge ― and closer ties ― to the prospect. Web-based technology also can help builders determine, in depth, the effectiveness of marketing. Software can help builders determine if their advertising and incentives are creating the right type of traffic; what marketing and advertising programs are generating traffic; what marketing and sales programs are turning traffic into buyers; and, of course, what traffic-to-buyer ratio is needed to survive the downturn. Technology will provide answers to these important questions, but don’t overlook the human element. Follow-up is as essential as ever. To view some applicable Internet solutions, visit NAHB’s Technology Solutions Directory at www.nahb.org/tsd. Technology on the Job Site Technology-based operational controls are just as important on the job site as they are in the sales office. In the field, technology can streamline processes and make them more accurate, saving builders time and money and making customers happier. When construction supervisors have computerized perpetual-reporting systems that can accurately track schedules and variances, they can improve the efficiency of their construction schedule and operations. Once subs see and reap the value of more efficient scheduling and organization, they may be willing to lower their costs for a better return on investment. Likewise, if materials and payments are accurate and predictable because of better technology ― such as electronic purchase orders ― everybody in the field wins. Finally, job site-based technology can help builders respond quickly to customer queries and needs — and help build loyalty and referrals. Survival vs. Profitability Accurate, agile technology can mean the difference between working just to survive and profitability. Builders should not lose sight of the future, but they have to balance that vision with present conditions. To begin, builders should budget for what they will need to remain in business and put it in a timeline. The next step is to look at every variance and re-adjust their plan as needed. For example, if a builders must sell 10 homes a month at $20,000 profit per home to stay in business but misses his forecast by three homes a month for two months during the year, spreadsheet software will enable the builder to determine how much of a shortfall needs to be made up and how. If, for instance, the builder offers a $5,000 closing incentive to make up for the shortfall, dynamic technology tools will allow him to track the effectiveness of the incentives ― as well as how many additional closings a month will be needed to compensate for lost additional revenue. The bottom line is that technology can help everyone involved in the builder’s construction processes operate efficiently and effectively. Through the added accuracy achieved by technology tools, builders can re-negotiate bids and scopes of work that will enable everyone ― vendors and subs ― to stay in business. The wild card, of course, is funding. Technology won’t cure the credit crunch builders are facing, but automated processes that keep lenders in the business loop and help demonstrate that the builder “has his act together” could go a long way to convincing lenders that an investment was worthy. Bill Allen is president of W.A. Allen Consulting and a member of NAHB’s Business Management & Information Technology Committee. His company, headquartered in Redmond, Wash., provides information technology consulting services and process management assistance to the home building industry. For more information, e-mail Allen, call him at 425-885-4489 or visit the W.A. Allen Consulting Web site at http://waallenconsulting.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.
NAHB Safety Training Program Receives OSHA Grant
“More than 3,500 residential construction employees have received safety and fall prevention training since 2006 as a result of OSHA-funded training seminars,” said Buck Roberts, chair of the NAHB Construction Safety & Health Committee and a builder from Anderson, S.C. “Thanks to this grant, NAHB will again provide critical fall prevention training to the top home building markets throughout the United States in 2009.” According to the NAHB study “Residential Construction Industry Fatalities 2003-2006,” falls are the most common cause of accidental deaths in home building, accounting for 45% of fatalities. “We decided to focus this year’s safety training program on roofs, ladders and scaffolding after the study showed that these were the areas from which fatally injured workers most often fell,” said Michael Luzier, president and CEO of the NAHB Research Center, a wholly-owned subsidiary of NAHB. “These seminars are specifically designed for construction crew members and anyone who is on residential construction sites on a regular basis.” This year, Harwood grants totaling $6.7 million were awarded to 36 recipients. To see the complete list, click here. The Harwood grants support workplace safety and health training programs that educate employees in industries with high hazard and fatality rates, employees with limited English proficiency, hard-to-reach employees and small business employers. The grants are for training programs that address safety and health topic areas such as construction and general industry hazards. The Home Builders Association of South Carolina received a 2008 Harwood grant of $173,163 to develop and conduct English- and Spanish-language fall-prevention training sessions to approximately 600 of their members. OSHA has supported NAHB and the NAHB Research Center with more than $1.5 million in grants to provide safety training and materials to the residential construction industry since 2000. For more information on NAHB construction safety issues and training programs, e-mail Rob Matuga at NAHB, or call him at 800-368-5242 x8507.
Boost Job Site Safety With Fall Protection Training Products In an effort to increase job site safety and reduce the chance of job related accidents, NAHB has produced the “Fall Protection Video, English-Spanish” and “NAHB-OSHA Fall Protection Handbook, English-Spanish.” Both are available through BuilderBooks.com. The 30-minute “Fall Protection Video, English-Spanish” can be used by builders to train workers to use safe work practices that eliminate fall hazards and comply with OSHA fall-protection standards. The “NAHB-OSHA Fall Protection Handbook, English-Spanish” provides guidelines for creating a written fall-protection plan and identifying safe work practices that can prevent costly accidents and injuries. Written with clear text, photographs and illustrations, the book serves as a user-friendly resource for promoting safety on any job site. To purchase the handbook and video online, click here, or call 800-223-2665.
Four common hazards cause 90% of the injuries and fatalities on residential construction job sites. The “Recognizing the Big-Four Safety Hazards for the Home Building Industry” course from The NAHB University of Housing shows how to comply with OSHA regulations and to recognize and minimize those hazards most likely to cause accidents. The course teaches builders to protect their workers from harm and themselves from liability. This course is also available in Spanish. To find out where upcoming courses are being held, click here, or call 800-368-5242 x8154 for more information.
Home Builders Institute Offers New Program to Teach Hispanic Adults English Sed de Saber™-Construction Edition is an easy-to-use, take-home learning tool created exclusively for the construction industry by the Home Builders Institute to improve communication, quality and safety on the job site. The product, now available at www.seddesaberconstruction.com, uses proven LeapFrog technology to allow workers to listen, record and play back their pronunciation of more than 500 vocabulary words and 340 phrases. Participants who practice 30 minutes each day will complete the program in just four months. Learning at home, on their own time, also eliminates scheduling conflicts. Sed de Saber™-Construction Edition was developed by a team of subject matter experts assembled through HBI — including superintendents, craft skills experts, remodelers and builders — to ensure that the information is relevant to today’s home building workforce. To address worker safety issues related to the language barrier, HBI created a seventh book based entirely on the NAHB-OSHA Job Site Safety Handbook. NAHB members can purchase the learning system, all seven books and a skills assessment to chart employee progress for $395 per kit. The non-member price is $495. Order today and empower your workers to learn English at www.seddesaberconstruction.com. Apply for NAHB SAFE Award by Oct. 13Applications for the 2008 NAHB Safety Award For Excellence (SAFE), which provides recognition for home builders who develop outstanding work-site safety programs, are now available. For information, requirements and an online application, click here (nahb.org/SAFE). Applications are due by Oct. 13. The award honors the achievements of builders and trade contractors who have developed and implemented high-quality construction safety programs, as well as those government officials and NAHB-affiliated associations who have made successful efforts to advance safety in the home building industry. Last year, 14 companies were cited for their safety achievements. Read about them here. “The home builders and housing industry professionals who have received SAFE awards during the past two programs are an outstanding representation of the commitment to safe behavior and safety education practiced by NAHB members across the country,” said Buck Roberts, president of A.B. Roberts Construction Company in Anderson, S.C. and chairman of NAHB’s Construction Safety and Health Committee. “We look forward to recognizing many more safety best practices in Las Vegas in January in the 2008 SAFE awards.” NAHB member companies in good standing that build residential homes or town homes using light construction methods can apply for a SAFE award. Specialty trade contractors, remodelers and light commercial and multifamily builders, as well as NAHB-affiliated associations and federal or state Occupational Safety and Health Administration (OSHA) officials who have been nominated by an NAHB member or association, are also welcome to apply. Awards will be made in a variety of categories; for a detailed listing, click here. Award winners will be recognized during a breakfast ceremony on Jan. 20 during the 2009 International Builders’ Show in Las Vegas. Winners will receive an award and coverage in this publication. NAHB is seeking companies to become sponsors for this safety awards program. For sponsorship information, click here, e-mail Andy Flank at NAHB, or call him at 800-368-5242 x8059. NAHB provides members and others in the residential construction industry — including non-English and limited English-speaking employees and trade contractors — with information, guidance and access to training resources to help them protect employees' health and safety. A variety of safety resources and guidebooks, including the NAHB-OSHA Jobsite Safety Handbook: English-Spanish Edition, are available for purchase through www.builderbooks.com. For more information on the SAFE Awards Program, click here; or e-mail Lindsay Cather at NAHB, or call her at 800-368-5242 x8163.
Boost Job Site Safety With Fall Protection Training Products In an effort to increase job site safety and reduce the chance of job related accidents, NAHB has produced the “Fall Protection Video, English-Spanish” and “NAHB-OSHA Fall Protection Handbook, English-Spanish.” Both are available through BuilderBooks.com. The 30-minute “Fall Protection Video, English-Spanish” can be used by builders to train workers to use safe work practices that eliminate fall hazards and comply with OSHA fall-protection standards. The “NAHB-OSHA Fall Protection Handbook, English-Spanish” provides guidelines for creating a written fall-protection plan and identifying safe work practices that can prevent costly accidents and injuries. Written with clear text, photographs and illustrations, the book serves as a user-friendly resource for promoting safety on any job site. To purchase the handbook and video online, click here, or call 800-223-2665.
Four common hazards cause 90% of the injuries and fatalities on residential construction job sites. The “Recognizing the Big-Four Safety Hazards for the Home Building Industry” course from The NAHB University of Housing shows how to comply with OSHA regulations and to recognize and minimize those hazards most likely to cause accidents. The course teaches builders to protect their workers from harm and themselves from liability. This course is also available in Spanish. To find out where upcoming courses are being held, click here, or call 800-368-5242 x8154 for more information.
Home Builders Institute Offers New Program to Teach Hispanic Adults English Sed de Saber™-Construction Edition is an easy-to-use, take-home learning tool created exclusively for the construction industry by the Home Builders Institute to improve communication, quality and safety on the job site. The product, now available at www.seddesaberconstruction.com, uses proven LeapFrog technology to allow workers to listen, record and play back their pronunciation of more than 500 vocabulary words and 340 phrases. Participants who practice 30 minutes each day will complete the program in just four months. Learning at home, on their own time, also eliminates scheduling conflicts. Sed de Saber™-Construction Edition was developed by a team of subject matter experts assembled through HBI — including superintendents, craft skills experts, remodelers and builders — to ensure that the information is relevant to today’s home building workforce. To address worker safety issues related to the language barrier, HBI created a seventh book based entirely on the NAHB-OSHA Job Site Safety Handbook. NAHB members can purchase the learning system, all seven books and a skills assessment to chart employee progress for $395 per kit. The non-member price is $495. Order today and empower your workers to learn English at www.seddesaberconstruction.com. Experts to Discuss Diversifying Into Light CommercialWith builders looking to boost business and bolster morale during the downturn, residential builders who have expanded into commercial construction will particpate in an NAHB audio seminar to discuss how to diversify into the light commercial market. The hour-long broadcast begins at 2:00 p.m. EST on Wednesday, Nov. 5. Presented by the National Commercial Builders Council (NCBC) and The NAHB University of Housing, participants in the “Up Your Profits in a Down Market with Light Commercial Construction” seminar will explain how to diversify into light commercial construction and this segment’s similarities and differences — particularly regarding codes and business process — to residential construction. In addition, the seminar’s experts will discuss why diversifying into light commercial might be easier than you think and how builders can identify opportunities in their markets. The featured speakers for the seminar include:
For more information and to register for the seminar, visit www.nahb.org/lightcommercialaudio. For additional resources about commercial construction, visit the National Commercial Builders Council Web page, e-mail commercialbuilders@nahb.org, or call 800-368-5242 x8455. Suspended Ceilings Have Economic, Green Advantages
A new study examining interior ceilings in light commercial construction finds that suspended ceilings can provide builders and property owners more “green” and long-term cost advantages than open plenum ceilings. Research by the Ceilings and Interior Systems Construction Association (CISA) found that suspended ceilings can reduce energy consumption and life-cycle payback schedules — decreasing a building’s lifetime operating costs ― and offer solid sustainable design potential on projects. “This is an important step forward for the interior ceiling construction industry,” said Bonny Luck, CISCA executive director. “According to the data, wall-to-wall ceiling systems save energy, lower maintenance costs and represent a ‘green’ construction advantage.” However, Joann Davis Brayman, vice president of marketing at Armstrong Commercial Ceilings, said that building owners, architects and designers have been gravitating toward the use of exposed structure ceilings primarily for aesthetics, sustainability, easy acces and lower construction costs. “Based on research that Armstrong conducted, aesthetics is the main driver for choosing plenum ceilings,” said Brayman. “The people we spoke to told us they liked the appearance of different elevations and the more contemporary look. In some spaces, eliminating the ceiling contributes to a feeling of volume in a tight space and for big box retailers, the warehouse look sends the message that they have low prices.” The CISCA study — “Life Cycle Analysis: Wall-to-Wall Ceilings and the Open Plenum” — compared cost and performance considerations for continuous ceilings and open plenum environments. The study examined two building types — a low-rise/mid-rise office building and a single-story retail food store — in Chicago; Charlotte, N.C.; Oklahoma City; Orlando; and Phoenix, markets that reflect differences in energy costs, construction/installation costs and climate zones. According to the study, suspended ceilings generate a rapid payback because they significantly lower building operating costs by reducing energy consumption and ongoing maintenance costs. Based on 2006-2007 energy rates, suspended ceilings can lower energy costs by 9% to 17%. Maintenance costs are estimated to be at least 10% less than open plenum designs. “The higher initial construction costs of a suspended ceiling are offset by the increased energy savings compared to an open plenum design, often generating a remarkably fast payback,” said Barry Donaldson, who conducted the CISCA study. Donaldson is a principal at Barry Donaldson and Associates, based in Croton-on-Hudson, N.Y. The study’s prototype buildings were evaluated using data from the U.S. Department of Commerce, the U.S. Department of Energy, the Environmental Protection Agency and the Building Owners and Managers Association. Construction characteristics — such as equipment loads, lighting systems and envelope thermal performance — were based on the minimum code criteria described in ASHRAE Standard 90.1. Construction and operating cost data by city and by building type was based on RSMeans construction data found in “Construction Cost Data 2007.”
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