Nation's Building News Online: January 10, 2011

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Eliminating Mortgage Interest Deduction Would Raise Taxes for the Middle Class

Eliminating the deductions for mortgage interest and real estate taxes would raise taxes disproportionately for middle-class households and make the tax system less progressive, according to new research from NAHB’s Economics and Housing Policy Group.

The study also concludes that the benefits of these deductions are collected primarily by middle-class taxpayers, with incomes between $50,000 and $200,000, and that greater benefits are earned by larger households and families, such as those with children.

“Contrary to the claims of some economists, the benefits of the mortgage interest and real estate tax deductions are collected primarily by the middle class,” according to study authors Robert Dietz and Natalia Siniavskaia. “Of the total, 68% of the benefits of the mortgage interest deduction, and 77% of the real estate tax benefits are claimed by those earning less than $200,000. These same taxpayers pay only 43% of all income taxes.”

The research estimates the tax benefit (or tax expenditure) collected by home owners from these deductions, while accounting for factors that would “claw back” the net benefits, such as the Alternative Minimum Tax and the standard deduction.

The only government source of who benefits from the housing deductions is the annual tax expenditure report from the nonpartisan Joint Committee on Taxation (JCT). However, the JCT uses a broader measure of income than gross income or adjusted gross income (AGI) — what it calls “economic income” — which includes tax-exempt interest (largely from bond income), employer-paid Social Security taxes, employer payments for health and life insurance and more. As a result, most taxpayers would find that the JCT places them in an income grouping higher than the AGI on their IRS 1040 return would suggest, perhaps by $10,000 or more.

To compensate for this, the authors of the study used IRS Statistics of Income data and estimated the distributions of the benefits of the tax deductions by AGI, as well as reporting the JCT information.

The NAHB economists found that the JCT tables indeed overstated the benefit of the deductions to those in the top income group. “In 2004, JCT found that 75% of the mortgage interest deduction benefit was collected by those earning less than $200,000 in economic income, while we estimate with the IRS data that 79% was collected by those with less than $200,000 in AGI.”

Using the JCT data, NAHB’s Dietz and Siniavskaia showed the tax liability and mortgage interest deduction and real estate tax deduction benefits for five income groups — under $50,000, $50,000 to under $75,000, $75,000 to under $100,000, $100,000 to under $200,000 and $200,000 and higher. The authors report that the shares of the total benefits of the two housing deductions exceeded the shares of taxes paid for every income class except the last one, those earning $200,000 or more.

These data “demonstrate that the mortgage interest and real estate tax deductions make the U.S. tax system more progressive, not less, as is often claimed.”

Another way of looking at the data, the report suggests: “Taxpayers with less than $200,000 in economic income paid $396 billion in taxes according to the JCT figures and earned tax savings of $58 billion from the mortgage interest deduction and $19.3 billion from the real estate tax deduction (19.5% tax savings as a share of final tax liability). For taxpayers with incomes of less than $100,000 in income, $142.1 billion in taxes was paid and tax savings of $27.1 billion due to mortgage interest and $7.3 billion due to real estate tax were earned (24% tax savings as a share of final tax liability — a larger benefit for this lower income grouping).

The report adds that “for taxpayers with less than $200,000 in AGI, the average tax benefit of the mortgage interest deduction is equal to 1.76% of AGI. For taxpayers with more than $200,000 in AGI, it is equal to 1.5%. This is clearly indicative of a progressive tax benefit.”

Larger Families in Larger Homes

The study also examines the relationship between housing tax benefits and household size and addresses the criticism that the mortgage interest deduction provides people with an incentive to purchase a larger, more expensive home.

“While the conflation of size and cost is not exact — particularly if you consider that a more expensive home may mean a more energy-efficient home that is ultimately more economically efficient and valuable — it may also be the case that the causality is in fact reversed for this claim. It is more likely the case that larger families demand larger homes, and the tax incentives help these families more to finance these homes with debt, particularly for first-time home buyers who may have less equity in housing," the study says.

Using the IRS SOI data from 2004 and looking at the number of exemptions taken by taxpayers, the research found that the average amount of the mortgage interest and real estate tax deductions generally increased with the total number of exemptions claimed. For example, the average benefit of the mortgage interest deduction rose from $1,304 for a single tax filer to $1,735 for a three-person household to $2,008 for a household with five or more.

“These results are consistent with intuition,” the study says. “Larger households and families require larger homes. And larger homes require additional mortgage debt to finance, particularly for younger home buyers, who are or may be in the process of having children. These greater home finance costs imply larger deductions for mortgage interest and real estate taxes, and similarly greater tax expenditure totals for the same.”

To read the entire report — “Who Benefits From the Housing Tax Deductions?” — click here.

For more information, e-mail Robert Dietz, or call him at 800-368-5242 x8285.

New Storm Water Rules Expected to Make 2011 Difficult for Home Builders, Developers

A flurry of recently issued storm water and regulatory requirements that give new muscle to the U.S. Environmental Protection Agency — with more regulations on the way — are likely to make 2011 a difficult year for home builders and developers as they struggle to rebound from the deepest housing recession in more than 70 years.

More stringent permitting is already beginning to affect builders and developers in the Chesapeake Bay watershed — an area encompassing parts of five Mid-Atlantic states and the District of Columbia — under the newly enacted Chesapeake Bay Total Maximum Daily Load (TMDL) rule, an anti-pollution measure designed to restore clean water in the bay and the streams, creeks and rivers flowing into it.

The EPA is considering the rule as a model for future nutrient reduction actions across the country.

Later this year, the EPA also is expected to propose or complete stronger national storm water regulations and Effluent Limitation Guidelines (ELGs) that further limit turbidity specified in builder and developer storm water management permits.

EPA actions now in effect or expected to be proposed in 2011 include:

Chesapeake Bay TMDL Actions

The final Chesapeake Bay TMDL rule, which was completed on Dec. 29, 2010, and published on the EPA’s website, will require all new growth in the watershed to purchase “offsets” to accommodate nitrogen, phosphorus and sediment from new building projects.

The regulatory requirements on home building are primarily contained in Phase I of each state's Watershed Implementation Plan (WIP), which has been revised by the EPA and can be accessed in each state’s environmental agency website.

The EPA recently stated that offsets for new development are not required for new permits that will be issued early this year, but once the offset programs are approved by the EPA, builders and developers will have to purchase offsets for new projects. 

The states have until June 1 to submit their Phase II WIPs to the EPA for its review and approval — with final plans to be completed by Nov. 1 — but the states have asked for deadline extensions.

The Phase II WIPs will contain the detailed, finer-scaled plans that the states will develop for meeting their pollution reductions. Each state’s WIP will also detail alternative actions that can be taken in order to provide the EPA “reasonable assurance” that the reductions actually will be achieved.

By the end of 2011, the states also are required to complete two-year milestone goals for the period beginning on Jan. 1, 2012. These goals will be regulatory.

An “Independent evaluator” team acting as consultants to the EPA will judge the states' progress in meeting their two-year TMDL milestones and, if necessary, mete out punishment for states not meeting their goals.

Previous milestones for the multi-governmental Chesapeake Bay restoration effort, which began in 1983, have primarily been voluntary.

As the Chesapeake Bay rule proceeds, however, the EPA will have to revise the state pollutant allocations under the TMDL this year because the software that the agency used to model the TMDLs does not appear to be functioning properly.

However, there is a good chance that the TMDL goals for each state will become even more difficult and expensive to achieve by 2025 — 2020 for Maryland — once revisions to the EPA modeling have been made. 

More Stringent National Storm Water Rules to Be Proposed This Year

The EPA is also expected to re-propose a revised numeric limit to its Construction and Development Effluent Limitation Guidelines Rule (ELGs) early this year.

Finalized in 2009 with a turbidity limit of 280 nephelolometric turbidity units (NTUs), states now must incorporate the ELGs rule with the revised numeric limit into the next revision of their Construction General Permit.

The ELGs rule has an effective date of Aug. 1, 2011, for monitoring turbidity at construction sites with a disturbed area of 20 acres or more.

No federal guidance currently exists for monitoring turbidity on construction sites, and that can be problematic for construction activities utilizing low-impact development (infiltration devices) to manage storm water. State permitting authorities will need to provide guidance on how to monitor turbidity at such sites in order to comply with the ELGs rule.

In addition to the ELGs, the EPA is expected to propose a post-construction storm water discharge rule later this year. That rule will focus on volume and flow requirements for storm water runoff and is likely to break new ground by addressing storm water discharges that are currently unregulated.

In addition, some Chesapeake Bay-specific provisions may be issued as part of the post-construction rule.

In 2010, the EPA conducted surveys to assess the current storm water management systems and costs for industry, states and local government. The EPA also held two meetings with small home building companies to assess the impact of a new storm water rule.

Offset Requirements Rule Due Out in 2011

Yet another national storm water rule addressing offset requirements for new dischargers to protect water quality is due out in 2011, according to the recently published EPA semiannual regulatory agenda.

Offset requirements are necessary under some storm water TMDLs, with the Chesapeake Bay TMDL as the leading example of such a rule with offset requirements. However, language in the semiannual regulatory agenda hinted that the EPA may not limit offset requirements to just those watersheds that are impaired.

  A Question About Minimum Requirements for Construction General Permits

And an update of the EPA’s Construction General Permit (CGP), which sets the minimum requirements for state and local NPDES storm water programs, is expected to go into effect in August 2011.

Last updated in July 2008, the EPA submitted a revised CGP to the Office of Management and Budget (OMB) last month as part of the EPA’s plan  to incorporate the ELGs turbidity monitoring provisions into the new CGP before the monitoring provisions go into effect in August.

The EPA will submit the new CGP for public comments early this year. As the process proceeds, NAHB will continue to keep its members apprised of any changes to the CGP beyond the adoption of the ELG rule.

For more information, e-mail Glynn Rountree at NAHB, or call him at 800-368-5242 x8662.

Banks Open Loan Spigot; Uptick in Lending to Businesses Is Expected to Accelerate

Moody’s Analytics estimates that commercial and industrial lending in the fourth quarter grew 0.2% from the third quarter, to $1.22 trillion, the first quarterly increase in two years. Moody’s predicts such lending will rise 3% in 2011. Until recently, a chronic lack of lending to businesses was seen by economists as one of the obstacles to healthy recovery. Commercial and industrial lending “is the last thing that turns in a business cycle,” said Mark Zandi, chief economist of Moody’s Analytics. Coming off the dramatic lending drop after the financial crisis struck, recent increases in commercial lending reported by banks are modest. The amount of business loans outstanding remains well below historical levels. In addition, new activity varies significantly from bank to bank and industry to industry. Still, the uptick is notable, say banking analysts. (www.wsj.com)
Wall Street Journal (12/30/10); Ruth Simon

House Appraisals Under Fire; Computerized Models Are Assailed as Innacurate

Home appraisals, which were blamed for being too generous during the housing boom, are now being criticized by some home owners for being too stingy, preventing them from refinancing or borrowing against their houses. The criticism is being leveled at computerized real-estate appraisals, which depend on models that use prices from home sales and other data to determine the value of a house. Computerized appraisals calculate a home’s value by using an index derived from historical repeat-sales data, or sales records of homes with similar property characteristics, such as square footage and the number of bedrooms and baths. In-person appraisals don’t incorporate as much transactional data as a computer model. Yale economist Robert Shiller, who developed the first systems in the early 1990s, is among those who say that in some situations the models may be providing unrealistically low values, prompting lenders to reject loan applications or lend less money on particular properties. Some models weigh past sales of a particular property over time against a historical home-price index, and they are running into problems with properties that have been bought only once. This is the situation in places such as Nevada and Southern California, where new subdivisions sprouted during the housing boom but many homes never sold or entered foreclosure before ever being sold in a non-distressed transaction. (www.wsj.com)
Wall Street Journal (12/30/10); M.P. McQueen

A Little Known Strategy for Cutting Mortgage Payments

Home owners looking to lower their monthly mortgage payments and also save some on interest may be able to do so without all the hefty fees and daunting credit requirements of refinancing. A little-known strategy, called “recasting,” or “re-amortization,” is available though some mortgage lenders and servicers. It involves paying off a lump sum of the principal amount and asking to have the monthly payments reset according to the original interest rate and loan terms. The lump sum reduces the principal. So the new monthly payments decrease slightly and the borrower saves on interest paid over the life of the loan. Lenders typically charge an administrative fee of $150 or more for this service, though borrowers are not required to pay closing costs or submit to another credit check, because they are not asking for a new loan. Recasting works well for those unable to qualify for refinancing amid the ever-toughening credit guidelines — perhaps because they are self-employed or have less-than-stellar credit — as well as for those with extra cash, like a year-end bonus. (www.nytimes.com)
New York Times (12/20/10) Lynnley Browning

Manhattan Status Symbols: Washers and Dryers

For most people in the city, getting the laundry done will mean lugging it to a wash-and-fold service or taking it to the machines in the basement with a stack of quarters in hand. But a growing number of New Yorkers can wash their clothing at home in their own washers and dryers. This staple of the suburbs remains uncommon in the city — apartments that have washers and dryers make up only about 20% of the sales and rental listings in Manhattan, according to StreetEasy, the real estate website. But demand is increasing, condominium developers are making appliances part of the standard package, and older buildings — even prewar — are relaxing longtime bans to keep residents happy and to avoid scaring off buyers. Jonathan J. Miller, the president of Miller Samuel, the appraisal company, said that while there is no known empirical data to reliably measure this amenity,” a washing machine can add as much as 5% to an apartment’s price tag. New technology is helping to fuel the trend. The washers sold today, especially the front-loading type, tend to be smaller than the top-load models, making them an easier fit for, say, a kitchen alcove, said Allan Schuster, a manager at Gringer & Sons, an appliance store on First Avenue in Manhattan. The new appliances generally require less water and electricity than older models. In addition, ventless, or “condensing,” dryers don’t need an air pipe. That is a boon for city residents who can’t breach their exterior walls, said Schuster, who has been selling washers and dryers for four decades. (www.nytimes.com)
New York Times (12/31/10); C.J. Hughes

Shift Toward Renting Amid Decline in Marriage, Kids

A Fannie Mae survey of 3,600 people around the country concluded that, by a large majority, they’d still really like to own a home, but, in the meantime, renting is looking better every day. “In the near term, there’s significant caution, but it hasn’t changed the basic desire to own,” said Doug Duncan, Fannie Mae’s chief economist. “But no question, people are shifting attitudes toward renting. At the beginning of the year we asked the general public, ‘If you were to move, would you be more likely to rent or own?’ And 30% said they’d rent. Now it’s 33%.” In the same time frame, he said, the percentage of current renters who said they’d continue to rent grew to 59% from 54%. The primary driver of this attitude seems to be financial, Fannie Mae concluded. Americans said they’re not likely to buy because their credit isn’t strong enough, they can’t afford to buy and maintain a house, and they’re just generally queasy about the economy itself. Still, some separate demographic forces are at work that favor the rental world, the survey said. Single people are statistically the least likely to own their homes, and marriage isn’t exactly in fashion these days, Duncan said. Married couples represent a shrinking percentage of the population; 50% of households in 2009 versus 56% in 1990. Historically, having kids has increased the likelihood of buying a home, but the percentage of families in 2009 who had children — 45% — was an all-time low. And, in a flip-flop of circumstances, renters these days are statistically more likely than home owners to have children at home. (www.sun-sentinel.com)
South Florida Sun-Sentinel (12/27/10); Alan J. Heavens, McClatchy/Tribune News

Remodelers Decry Cut in Tax Credit for Energy Savings

Provisions in the $858 billion federal tax bill signed into law by President Obama on Dec. 17 could be bad news for home owners interested in remodeling projects to conserve energy. The law slashed the popular tax credits for energy-efficient remodeling from the current 30% of an improvement’s cost ($1,500 maximum per taxpayer) to a 10% credit, with a $500 maximum for expenditures on insulation materials, exterior windows and storm doors, skylights and metal and asphalt roofs that resist heat gain. The law also clamped new dollar-specific limits on key improvements that had been eligible for 30% credits. These include a $150 tax credit limit on the costs of energy-efficient natural gas, propane and oil furnaces and hot water boilers, plus a $300 credit limit on the costs of central air-conditioning systems, electric heat pump water heaters, biomass stoves for heating or water heating, electrical heat pumps, and natural gas and propane water heaters. The new law also limits allowable tax credits for energy-efficient windows installed during 2011 to a total of $200, compared with the previous $1,500. On top of that, it prohibits taxpayers who have taken total tax credits in past years exceeding $500 from claiming any additional credits on energy-conservation projects they undertake in the coming year. Donna Shirey, chairman of NAHB Remodelers Council and president of a contracting firm in the Seattle area, said the gutting of energy-efficiency credits “is a big step backward. It’s bad for the environment, bad for consumers and, of course, bad for jobs in our economy. We’re heading the wrong way here, sending absolutely the wrong message.” (www.washingtonpost.com)
Washington Post (12/30/10); Kenneth R. Harney

New-Home Sales Bounce Back in November From Near-Record Low

Sales of newly built, single-family homes rose 5.5% to a seasonally adjusted annual rate of 290,000 units in November, according to figures released from the U.S. Commerce Department on Dec. 23. The gain represents a partial bounce-back from a near-record low, downwardly revised number of new-home sales in October.

“While builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign,” said NAHB Chairman Bob Jones. “With consumer interest in new homes expected to continue to revive as the economy and job markets improve, and inventories of new homes for sale near record lows, our concern now is that a lack of construction financing will keep builders from being able to expand the selection of what they have to offer buyers heading into the spring.” 

“Builders in our latest surveys have indicated that they are starting to see more buyers who are seriously considering a new-home purchase, and today’s numbers showing that sales headed in the right direction in November bode well for what the future may hold,” agreed NAHB Chief Economist David Crowe.

“The extremely low inventory of new homes on the market is also a positive sign that builders have been exercising tremendous caution with regard to new construction activity,” Crowe said. “That said, unless builders’ access to financing for new development improves, many will not have a product to sell when the opportunity arises, which in turn would slow a market recovery as well as potential job generation from new home building.”

The improvement in new-home sales was driven by gains in two regions in November. The South, which is the nation’s largest housing market, posted a 5.8% increase, while the West showed a 37.3% rebound from the previous month. Meanwhile, declines of 26.75% and 13.2% were registered in the Northeast and Midwest, respectively.

 The inventory of new homes for sale fell to 197,000 units in November, marking the first time in 42 years that this measure has fallen below the 200,000 level. This amounts to an 8.2-month supply at the current sales pace.



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Recession-Battered Consumers Still Up in the Air on the Housing They Want

Housing analysts at last fall's Urban Land Institute (ULI) meeting in Washington, D.C., said they saw it coming even before the most devastating U.S. housing downturn since the 1940s, but the recession has virtually assured some seismic shifts in housing demand that are being colored by a new consumer mindset.

The disappointingly slow materialization of job growth has constrained housing activity, but even when employment prospects do show improvement, the vast majority of the nation's consumers will have fewer financial resources for housing, speakers at the ULI conference said. Demographics and healthy growth in the U.S. population will be on the side of the nation's residential builders and developers in the period ahead, they said. And the past few years have created a backlog of household formations and pent-up demand for housing, but opportunities in the marketplace will be significantly different than previously, and home builders will have to scrutinize the wants and needs of consumers to find them.

As evidence that adopting a new perspective on the product being delivered and how it is marketed is well worth the effort and necessary for success in the new emerging housing market, speakers also cited examples of homes in various locations that were attracting buyers during the slow periods of last year.

"The good news is that the American population has the remarkable ability to redefine and rejuvenate markets," said James Chung, president of Reach Advisors. As the only fully industrialized nation with significant population growth, the U.S. will see an increase in demand for real estate over the mid- and long-terms, he said. "But the growth ahead is going to be rather lumpy, far different than we've seen before."

Chung added that major shifts in population dynamics, income dynamics and consumer behavior "will totally rewrite the past for some classes of real estate this decade."

A ‘Jump-Ball’ Economy

While housing economists generally expect housing to continue moving slowly in an upward direction this year, Chung said that builders will be contending with a "jump ball economy" in 2011 — "with so many consumer decisions up in the air." Most consumer segments are still assessing their discretionary spending habits, their brand preferences and their aspirations and constraints.

Even before the economy ran into financial catastrophe, the decade of 2000-2009 saw inflation-adjusted household incomes on the decline, with the exception of the most experienced workers in the 55+ age cohorts, he said. Analyzing household income statistics from the U.S. Census Bureau shows that the decade left the very youngest workers ages 15 to 24 with roughly a 12% decline in income, about the same as for those aged 45 to 54. Households 25 to 34 years old saw their incomes go down 10% and those 35 to 44 sustained about an 8% loss. Fifty-five to 64-year-old heads of household eked out an increase of about 1% and those 65 to 74 came out the real winners with average income growth of 10%.

Despite what was happening to incomes, consumers continued to spend, bolstered by borrowing, which led to nearly a doubling of household debt over the decade.

Over the past 15 years, those with the top 10% of incomes captured 48% of U.S. earned income and capital gains. Those with the top 1% of incomes claimed 21% of earned income and capital gains and received 52% of America's income growth. The spending outlook for the top 10% is encouraging, Chung said, because average income for this group was largely unaffected by the recession. The downturn did pull down the highest earners' capital gains, so spending should return to normal once those capital gains return.

The situation will be far less robust for the bottom 90% of households in income. While they did their part by borrowing and thus contributing significantly to the aggregate spending growth of the last decade, 80% of these households will be in no financial position to rebound for some time, he said.

While recent income dynamics suggest challenges, the dynamics of the U.S. population provide a more tangible indication of growth ahead, according to Chung. The 2010 Census completed in December found the population growing 9.7% from 281.4 million in 2000 to 308.7 million. Projections from the Census Bureau suggest the possibility of 350 million Americans by 2025 and 400 million by 2040.

Generational Shifts

However, major, unprecedented shifts within the U.S. population will give builders and other businesses a lot of sorting out to do, he said. The aging of the population will push the over-65 segment from one in eight to one in five. Non-white minorities — which now hold a 34% share of the population — will claim 50% in about 25 years, a situation that already exists in the nation's kindergartens. And young women are 1.5 times more likely than young men to graduate from college these days.

As a result of women being better educated than men, in the top 25 metropolitan areas, single, childless women 22-30 years old earn median full-time wages that are 108% higher than the earnings of their male peers, he said.

At this point in the economic recovery, builders are also having to distinguish consumer behaviors that are most likely the temporary result of the cyclical downturn from those that represent a more lasting generational shift. A case in point is the decline in household formations in the last couple of years despite a growing population. In part, this is a cyclical issue, he said, but it also does have a generational component that can easily be seen in such statistics as a 17.1% unemployment rate in men who are 20 to 24 in age or one-third of single men in their 20s living with their parents.

There has been a 37% increase in the number of single Americans in their 20s over the last decade, Chung said, and that raises a question with serious implications for builders and others: "What happens if their patterns don't follow those of previous generations?" If this is a fundamental shift, he said, it could "take the wind out of the sails" of the demand that is expected to materialize in the housing market as members of Generation Y — the children of the baby boomers — enter their peak home-buying years.

There is evidence in at least some cities that the departure of today's young from their parents' way of doing things represents a "teutonic shift," he said. For example, only 18% of the current residents of San Francisco and Boston between the ages of 25 and 34 have ever been married. In other cities, he said, the majority of the young can still be expected to marry like prior generations, only just a few years later. Both trends, to various extent, hold implications for housing demand and the kinds of housing that will be needed, and both point to the need to watch how the situation can unfold in different ways in different places in a context that is not entirely familiar territory. "Like with most of today's data, the story is lumpy on a market-to-market and segment-to-segment basis," Chung said.

The Post-Recession Consumer

According to Teri Slavik-Tsuyuki, senior vice president and chief marketing officer for Newland Real Estate Group, LLC, the consumer who is coming out of recession is decidedly not the same consumer going in. The recession moved consumers out of an indulgent era of trading-up and accumulating goods into a period of economizing, anxiety, frugality and self-preservation, she said. And today, consumers are emerging into a consequences era in which they are assuming responsibility for the part they played; they are vigilant and resourceful, setting priorities and joining networks to achieve what they cannot accomplish alone.

"Consumers are redefining the value of what's worth the money," she said, and asking which features in a home really make a difference, what are the real benefits and reasons for buying and what tradeoffs should be considered. "There is a commitment to creating more meaning in everyday life, including a richer life centered around the home and connections."

For example, looking at the results of polling by Yankelovich, for 65% of consumers, responsibility and good citizenship in home buying today means making sure your home is as energy-efficient as possible. For 42%, it means not buying a home that is larger than you really need (up from 34% in a 2007 survey). For 22% of those polled, if the home doesn't offer savings through energy efficiency, it's an absolute deal breaker; for an additional 19%, residential energy efficiency is very important and they would be willing to pay more for a home that offered it.

Since 2007, Slavik-Tsuyuki's research has found a shift in household composition away from couples with kids to couples without them. Couples with children were the most common family type in 2007, with a 51% share that today has dropped to 41%. Childless couples, on the other hand, have grown from 30% to 44%.

Newland Research has also uncovered significant changes in the disposition of the recovery consumer. In 2008, dining out was what most consumers — 48% — believed was the best way to spend their free time. In 2010, only 11% cited dining out as their favorite pastime. In 2010, 23% said relaxing at home was the best use of their free time, and 10% said the time was best spent visiting with neighbors in their community (up from 2% in 2008).

Sixty-one percent of the consumers surveyed by Newland last year said they planned to spend less than $300,000 on their next home, up from 51% two years earlier.

Retooling Product Segmentation

From last year's less than stellar housing market, Slavik-Tsuyuki related several success stories where retooled product segmentation made her company's product more affordable and widened that product offering. "Ask the buyers what they want and develop niche products," she said. "How people shop for homes has changed," she added, and builders need to be cultivating targeted, customer-centric relationships at the individual level.

In Houston's Summerwood community, retooling for young couples and singles entailed reducing lot widths from 60 feet to 50 feet, bringing the homes down into the $130,000 to $180,000 range. The surgical move resulted in 22 sales in three months. The reintroduction of townhouses also worked in landing sales.

In Stonemill Farms in Woodbury, Minn., builders set out to deliver single-family detached homes at a townhome price by moving to small homes and lots and redesigning an 11-acre, 99-home enclave from cul-de-sacs and long fingers to a "coving" plan with one undulating road running through the property. The plan reduced the speed of the traffic and widened the frontage of lots to accommodate two- to three-car garages. Homes averaging about 2,200 square feet were priced at $259,000 in a community where the average home price settled at a loftier $360,000.

Attracting a sub-market of empty nester buyers, but converting less than half of them into sales, Briar Chapel, in Chapel Hill, N.C., decided to conduct focus groups to find out what was wrong, and the older prospective buyers were able to provide the builder with the details of what was missing. A master bedroom on the first floor was not the only thing that mattered to these buyers:

  • A second story was ok, they said, "but close off the upstairs so I don't need to pay to heat it when the family leaves.

  • Give me rooms with a "designated purpose that doesn't require me to guess how it should be used, or where to put my furniture."

  • The kitchen needs natural light and should be located near the garage, to avoid "traipsing through multiple rooms."

  • Steps into the house from the garage or front door are not acceptable.

  • Dual master walk-ins and sinks are a must. Female heads of households requested two entirely separate areas for each sink.

Slavik-Tsuyuki stressed the importance of talking to prospective buyers as individuals. In the initial marketing for Briar Chapel, six e-mails were sent to an internal list of prospects; there was no external marketing. Eleven homes in the community were sold before the model opened, five as a result of this campaign, she said.

Among the sales lessons learned from the recession, she said, homes can no longer be sold "by the pound" or like commodities.

The recession has also created new priorities for the amenities that consumers want in their communities, she said. For households that expect to be staying closer to home more, hiking and biking trails and the ability to connect with neighbors have gained importance. At the top of the list of what consumers want are nearby shopping, restaurants, libraries, schools, a swimming pool, small parks and a trail system. At the bottom of the list are tennis courts, a golf course, a community amphitheater, daycare, planned activities by a social director and a country club.

"Be prepared to adapt," advised Slavik-Tsuyuki, "and do things in smaller chunks." As for marketing to buyer needs, "customers know what they want," she said. "If you don't have it, they won't buy it. If you ask them, they'll tell you.”



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Nation’s Population in a Dramatic State of Flux

A growing elderly population and increasing racial diversity among the young are two major trends of growing consequence for builders and developers in the period ahead, according to demographers attending last fall's meeting of the Urban Land Institute in Washington, D.C.

Senior fellows from the Brookings Institution suggested that the recession had somewhat complicated the U.S. population picture, but migration trends prevailing prior to the collapse of the financial system will return.

Assessing the population mix, William Frey said that immigration had been adding one million persons annually, and although it slowed notably as the nation's economy soured, it is poised to push whites to a tipping point in 2042, when for the first time they will be in the minority, falling to 46% nationwide.

Also, Jan. 1 of the New Year marked the first 65th birthdays of members of the post-World War II baby boom, and that is the start of a 20-year boom for seniors, Frey said. Members of this out-sized generation, which is now being surpassed in size by their children, who are roughly in their 20s, "have always broken the mold," he said, and in how they face their later years, "they will be different." Numbers alone suggest significant change at the top of the population chart, with the share of the 65+ population climbing from 12.4% in 2000 to 20.2% by 2050.

At the same time, the population will continue to fan out in familiar patterns. The 2010 Census — which Frey pointed out asked only 10 questions and is therefore less informative than the Census Bureau's annual American Community Survey — portrays a wider picture of population gains in the Sunbelt and West at the expense of the Northeast and the Midwest.

Looking beyond regional shifts related to sunshine and job growth, people have been leaving more expensive coastal areas, such as those of California, and moving into the interior of the country in search of cheaper housing and less density, both of which have been easy to find in more suburban neighborhoods, according to Frey. Many underutilized parts of the country have been filling up. That trend screeched to a halt during the recession when people started losing their jobs and were forced to double up with family and friends, but "it will rev up again," he predicted.

U.S. Divided Into Three Parts

Frey has divided the U.S. into three distinct demographic regions, based on characteristics that can give builders and developers a broad sense of the populations they increasingly will be serving in those areas.

Home today to roughly 40% of the U.S. population and the most racially diverse of the three regions with a 53% share of whites, Melting Pot America is based in New York, New Jersey, Florida, Texas, New Mexico, California and Alaska. It is the place to disproportionately find those who have emigrated to the U.S. in recent years. It contains 70% of the nation's foreign-born residents, as opposed to 37% of native-born Americans. Seventy-six percent of those who speak Spanish at home live in these states, as do 68% of those who converse in an Asian language. English is the first language of only 34%. Immigration accounted for 45% of the growth of this region from 2000-2009; domestic population actually drew its residents down by a full 19%.

The New Sunbelt (68% white) is where the existing domestic population feels most at home, attracted by opportunities to pursue a more inexpensive lifestyle and encounter a more suburban character. Here there can still readily be found the traditional white husband and wife household with children that once was a mainstay of suburban development but has been dwindling to a 20% population share. Domestic migration accounted for 66% of the region's growth in the 2000-2009 period, while immigration also provided 30% of its boost. Geographically expansive, this region includes Virginia, the Carolinas, Tennessee, Georgia, the Pacific Northwest, Idaho, Nevada, Arizona, Utah and Colorado.

The remainder of the country — 28 states and the District of Columbia — comprises the Heartland (79% white), where growth is relatively slow and domestic migration over the 10 years preceding 2010 provided a small drag (-15%) and immigration a small lift (16%).

At the top of the list for magnet metropolitan areas for immigrants from 2000-2009 were: New York (1.079 million), Los Angeles (803,000), Miami (506,000), Chicago (363,000), Dallas (324,000), Washington, D.C. (310,000), Houston (289,000) and San Francisco (257,000).

During that same period, the top eight metro areas for drawing domestic migrants were: Phoenix (531,000), Riverside, Calif. (457,000), Atlanta (413,000), Dallas (308,000), Las Vegas (299,000), Tampa, Fla. (255,000), Charlotte, N.C. (243,000) and Houston (243,000).

The greatest domestic out-migration occurred in: New York (a loss of 1.9 million), Los Angeles (1.3 million), Chicago (547,000), Detroit (362,000), San Francisco (344,000), New Orleans (299,000), Miami (285,000) and San Jose, Calif. (233,000).

Frey noted that domestic population movements have generally followed jobs. A dearth of available jobs may help explain why the share of Americans moving last year was roughly in the low 12% range — the lowest rate since the end of World War II. The nation was decidedly on the move in the 1950s and 1960s, when roughly one-fifth of households moved each year, a pace that slowed to 16% in the 1990s and 13% in the early 2000s.

Frey said he discerned a "big drop in long-distance migration" and he doesn't see an end to this trend in sight. Of those who moved between the states in 2004-2005, 22% cited housing-related reasons; that dropped to 14% in 2008-2009.

The more recent demographic story shows Americans in retreat from many boom areas. According to Frey's research, Phoenix, which added almost 99,000 migrants in 2004-2005 to rank #1 in population growth, was down to growth of about 12,000 in 2008-2009, falling to 13th place. Second ranked Riverside, Calif., dropped from more than 72,000 to a loss of 616 and a rank of 279 between the two periods. Third-placed Tampa dropped from almost 52,000 to about 4,700 and 30th place; fourth-placed Orlando was down from almost 52,000 to a loss of almost 4,300 and 346th place; fifth-ranked Atlanta declined from about 51,000 to more than 17,000 and ninth place; and sixth-placed Las Vegas dropped from more than 39,000 to a loss of 1,256 and the 306th spot of migration gainers.

The new line-up of migration gainers for 2008-2009: Houston (almost 50,000), Dallas (more than 45,000), Austin, Texas (almost 26,000), Raleigh, N.C. (more than 20,000), Denver (almost 20,000) and Charlotte (more than 19,000).

The apparent difficulty of being able to afford to keep a home in suburban or even farther-out areas worked to the benefit of the cities, Frey said. Nineteen of 36 cities with populations of more than one million saw faster growth in 2008-2009, while the suburbs and exurbs generally saw declines in their rates of growth.

Minority Young and Elderly Whites

Frey’s research has pinpointed metro gains in black, Hispanic and Asian populations around the country, and he noted that the places with the youngest populations are also the most racially and ethnically diverse.

Idaho, Nevada, Colorado, Arizona, Texas, Florida, Georgia and North Carolina all saw growth in their under-18 population of 10% or more between 2000 and 2009.

As of 2009, states where minority children constituted a majority included California, Nevada, Arizona, New Mexico, Texas, Florida and Georgia. These tend to be the children of immigrants, he said.

Looking at education levels of the population by race and ethnicity, he found that the Hispanic population is lagging the most, with 39% having less than a high school degree and only 13% graduating from college. That’s compared to 19% of blacks having less than high school and 18% graduating from college; and 10% and 31% for whites and 15% and 50% for Asians, respectively.

The current decade will see rapid growth in the young elderly between 65 and 74 and similar growth will occur in the old elderly 75+ population in the period of 2020-2030, he said.

Projected growth in the 65+ population between 2000 and 2030 will run above 140% in Georgia, Florida, Texas, New Mexico, Arizona, Nevada, Wyoming, Idaho and Alaska. Many of these states have climates that are especially conducive to allowing elderly households to age in place. Nevada will see the biggest change, with a 264% increase, and Pennsylvania will see the least — 51%.

Frey added that there is a great deal of economic inequality among the baby boom elderly. Consequently, “they won’t all be Yuppie elderly going to gated and retirement communities.”

Seventy-one percent of seniors will still be white in 2030, but that will be the case for only 46% of children.

“We are a country very much in flux,” Frey concluded.

Educating the Workforce

Brookings Senior Fellow Anthony Downs said that the period ahead will see the most vigorous population growth in metropolitan areas but outside the central city, the continuation of a trend that flies in the face of the higher density, closer-in communities that most urban planners want.

The biggest demographic challenge ahead, however, is finding a better racial balance for the population, he said, in order to boost the educational level of the workforce as it becomes increasingly dominated by minorities.

“Most white households don’t want to live in areas with more than one-third Hispanics or African Americans,” he said. “But if we continue to live in segregated groups, we may be dragging the education of workers so low that we won’t be competitive with foreign nations.”

From 2010 to 2020, Frey projected that the U.S. labor force will grow by 9.6 million Hispanics (the least educated), 3.5 million Asians and others and two million blacks. The labor force will lose 5 million white workers during this period.



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Eye on the Economy: Housing Shows Modest Improvement

Positive signals are coming from housing, though some of them are weak. New and existing home sales rose in November. Pending existing home sales increased as well. Two widely accepted house price indexes on closer examination suggest that house prices have stabilized in much of the country.

The Latest Postings



Subscribe to the Free Eye on Housing Blog

For in-depth analysis of the latest housing statistics and research from the federal government, NAHB and other sources, Eye on the Economy readers are encouraged to visit Eye on Housing at http://eyeonhousing.wordpress.com/follow-us/.

They can also subscribe to the blog’s free RSS feed, which will automatically alert them to every new posting.

 

Useful Links to Monitor Economic and Housing Trends

The 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.



Visit NAHB’s Eye on Housing Blog for the Latest Economics and Housing Policy News and Analysis

Housing and economics followers can get the latest economics and housing policy news, analysis, studies, charts and graphs from NAHB’s free, new Eye on Housing blog at http://eyeonhousing.wordpress.com.

Featuring NAHB Chief Economist David Crowe, as well as observations and comments from NAHB economists Bernie Markstein, Paul Emrath, Robert Dietz, Peter Grist and Robert Denk, the blog also includes links to relevant housing stories and information from other news sources.

Readers can either visit the free blog directly at http://eyeonhousing.wordpress.com, or subscribe to the RSS feed on the blog to have the latest entries sent to them as they are posted.



Want to Know Your State’s Starts Forecast for 2011?

Find out in HousingEconomic.com’s State Starts Forecast (sample).

The forecasts include downloadable Excel tables of total, single-family and multifamily starts by region and state.

To learn more, visit www.housingeconomics.com.

Builders’ Tip: A Modified Guide Block for Making Straight, Square Reciprocating-Saw Cuts

 
Click for larger image.

When cutting with a reciprocating saw, it’s standard practice to use a wood block as a guide

But if the block is secured on only one side of the blade — either above or below it — the blade can still wander beyond the cutline.

I wanted a more effective way to guide both sides of the blade when cutting the tops off some old studs before installing a header, and when I couldn't find a guide block that did the job, I fabricated one so I could make a more accurate cut.

As shown in the accompanying drawing, I simply took scrap  2x4 and made a square cut almost all the way through it — leaving only about a quarter-inch uncut.

Then I clamped the guide to the old stud — aligning the square cut with my cutline mark on the stud.

The cut guided the blade straight and square.

—    Don Mathis, Macomb, Ill.

Tips & Techniques provided by Fine Homebuilding.
©2010 The Taunton Press

To contact Fine Homebuilding, e-mail Christina Glennon.



Get NAHB BuilderBooks 2010 Virtual Publications Catalog Online

The NAHB 2010 Publications Catalog from NAHB BuilderBooks is available online.

Presented in a virtual format as part of the NAHB BuilderBooks effort to go green and streamline delivery, the catalog includes publications and products to help building industry professionals ramp up for a successful year as the industry and the economy begin to recover.

The materials in the catalog, written by industry leaders in various fields of residential construction, feature publications and products about accounting, estimating, business management, green building, sales and marketing, safety, construction codes, 50+ housing, multifamily housing, construction management remodeling and more.

Some of the newest publications in the catalog include “Social Media for Home Builders,” the “National Green Building Standard Commentary” and “Paper Trail: Systems and Forms for a Well-Run Remodeling Company, Second Edition.”

To view the virtual catalog, click here.

Scalable Home Automation Systems Gain Traction for Homes in All Price Ranges

As recently as five years ago, multi-room audio, streaming video, lighting, remote climate control — and the ability to manage each system through a keypad or computer — primarily were installed in only the highest-end, luxury custom homes.

Today, however, scalable home automation technologies are much more widespread across all markets and within budgetary reach of typical home buyers or owners renovating their home.

While a “smart home” integrates systems such as lighting, climate control, energy monitoring, security and surveillance, automatic shades and hot tubs and pools through a central computer, today’s potential home buyers seek only to integrate the individual systems that meet their needs and demands.

“Home [technology] encompasses a wide range of systems, such as a simple programmable thermostat to whole-home climate, security and media control,” said Daron Bush, owner of Safe and Sound Systems, the largest custom integrator in Utah.

“While it is optimal for a builder to provide a structured wiring backbone for a home automation system, wireless options that enable consumers to scale a home automation system to suit their individual lifestyle demands are growing in the market.”

Builders who partner with their buyer and an electronic systems contractor (ESC) to deliver home automation systems can increase their profitability. In addition, they can also receive additional referrals from their contented buyers.

Michaels Development Company Named Multifamily Development Firm of the Year


Michael J. Levitt, founder and CEO
The Michaels Organization


Robert Greer, president
Michaels Development Company

A combination of business strategy, philanthropy and unwavering commitment to each of its multifamily developments earned the Michaels Development Company top honors as the Multifamily Development Firm of the Year  in the NAHB Multifamily Pillars of the Industry Awards announced last week.

“The achievements of Michaels Development are impressive,” said Charles R. Brindell, Jr., chair of NAHB’s Multifamily Leadership Board and CEO of Mill Creek Residential Trust LLC. “That’s especially noteworthy given this difficult economic climate.”

“This company’s success reflects the firm’s first-rate management, as well as its unwavering commitment to delivering quality, affordable housing,” he added.   

The Development Firm of the Year Award honors excellence in multifamily housing development, financial performance, innovative development strategies and practices, and successful achievement of the company's vision and goals.

Michaels Development Company, a New Jersey-based firm with 54 projects in development and a pipeline of 11,000 units, is ranked the most active and wide-ranging affordable housing developer in the nation. The firm's portfolio includes 260 properties — approximately 33,000 units — in 27 states.

Since its founding, the Michaels Development has raised more than $240 million in tax credit equity, and introduced market-rate-quality housing to low-income families across the country.

With a focus on building self-sustaining communities, the company’s' projects include revitalized historic sites and transit-oriented, affordable apartment communities. Among the firm's accomplishments, Michaels Development was the first affordable-housing developer to rebuild and reopen all its housing sites in New Orleans’ Lower Ninth Ward following Hurricane Katrina.

Over the years, the firm completed 19 HOPE VI properties, playing a vital role in the effort to revitalize distressed public housing communities. It also is an industry leader in the privatization of sustainable and affordable military housing.

As a testament to the firm’s dedication to enhancing the quality of life of its residents, Michaels Development Company offers educational scholarships to those who live in housing managed or owned by the company. All residents may apply and the scholarships can be used towards higher education at any accredited college, university or vocational program in the country.

To date, Michaels Development has awarded $2.4 million in grants to more than 1,100 students.

"We are gratified every day that we are able to give back to society by providing homes to thousands of people who would not otherwise have adequate housing, and we appreciate the industry's recognition of this important work by bestowing this prestigious award on our organization," said Michael Levitt, chairman and CEO of the Michaels Organization, the parent organization of the Michaels Development Company.

NAHB Multifamily's 2010 Pillars Awards recognized winners for excellence and superior leadership in 21 categories, including Property Management Company of the Year, won by Freeman Webb Company, of Nashville, Tenn.; and Community of the Year, won by The Heights at Park Lane in Dallas and developed by the PM Realty Group.

To see the virtual awards ceremony, complete with pictures and commentary, visit www.nahb.org/pillarsawards.

To view the full list of Pillars winners, click here.

Freeman Webb Company Earns Top Property Manager Honors in 2010 Pillars Awards


Bill Freeman, co-founder
The Freeman Webb Company


Jimmy Webb, co-founder
The Freeman Webb Company

The Freeman Webb Company of Nashville, Tenn., used strategic initiatives, multifamily industry partnerships and enhanced leasing procedures to garner the 2010 NAHB Pillars Property Management Company of the Year Award.

Freeman Webb manages 63 properties and 12, 000 units of market-rate and affordable rentals. The company has grown 25% during the last two years and increased occupancy to more that 90% in a number of its properties.

The company uses an innovative on-site software program to track and collect leasing data, which has improved management efficiency of all its properties.

In addition, Freeman Webb partnered with Grace Hill, an online multifamily education company, and other industry groups to provide more than 4,000 hours of training for its employees who, as a result, acquired dozens of certifications and additional expertise.

This effort factored into the Freeman Webb Company winning “Best Places to Work” honors in 2009, an award presented annually by the Nashville Business Journal.

“Property management starts with great properties, but doesn’t end there,” said Charles R. Brindell, Jr. Chair of NAHB’s Multifamily Leadership Board and CEO of Mill Creek Residential Trust LLC. “Freeman Webb’s commitment to nurturing employees’ skills through training and education helped the company show significant growth during difficult times.”

NAHB Multifamily's 2010 Pillars Awards recognized winners for excellence and superior leadership in 21 categories, including Multifamily Development Firm of the Year, won by the Michaels Development Company, based in Marlton, N.J.; and Community of the Year, won by The Heights at Park Lane in Dallas and developed by the PM Realty Group.

To see the virtual awards ceremony, complete with pictures and commentary, visit www.nahb.org/pillarsawards.

To view the full list of Pillars winners, click here.

Aging-in-Place Expertise Aids in Remodeling for Clients With Disabled Family Members

Scott Sevon, CGR, CAPS, GMR, with Men at Work Chicago (MAW), stumbled upon an untapped and overlooked remodeling market segment when a potential client came to him with a new challenge — to modify their home to accommodate a disabled child.


A track lift system transports disabled children or adults who are too big for the caregiver to lift.

Aging-in-place is used in many MAW remodeling and custom home building projects — several of staff members hold Certified Aging-in-Place (CAPS) designations — and he applied that expertise to the new challenge.

“The CAPS designation, along with other designations attained by our staff, has put us heads and shoulders above our competition,” said Sevon. “It shows the clients that we care about continuing education and that we are on top of the new trends in home remodeling.”

The experience and skills they had in modifying homes to enable clients to age comfortably in their home came in handy with this new challenge — which turned out to be a very successful project for the company.

“After completing that first project, we were able to secure similar remodeling jobs by letting fellow remodelers, suppliers, banks, trust departments and physical therapists know of our expertise,” said Sevon.

“We give seminars to help others understand our certifications, including our CAPS designation, and the value we can bring to this type of work. This has allowed us to diversify into a previously overlooked market,” he said.

For the original project and other remodeling jobs, MAW incorporated technologies and modifications that not only benefit the disabled family member, but the caregiver as well.

These included:

Elevators and Lifts to Expand Access


A lift in the garage enables disabled family members to transfer to and from their home in comfort.

Elevators and wheelchair lifts give people with disabilities and severe injuries full access to their homes, allow them to interact with their families and lead a fuller life — especially in homes that have a lot of stairs.

Wheelchair lifts are typically three times larger than standard stair lifts and feature a built-in handle to support the person as they go up and down the stairs.

Ramps That Conform to ADA Requirements

Sevon also builds ramps inside clients' garages and outside their homes. Short lift systems, such as Bruno or ThyssenKrupp manufactured units, are often installed as part of the ramp.

Some of their ramps have been constructed from cement, wood, recycled products, stone pavers and pre-manufactured systems, but all conform to ADA grades of 1-in-12 inches (or less) and ADA minimum dimensions. They all also have wheel stop toe plates.

Tracked Lift Systems That Help Move People Too Big to Lift

Tracked lift systems transport disabled children or adults who are too big for the caregiver to lift. The systems are used to transfer them in and out of bathtubs, showers, personal sanitary facilities, sleeping areas and more.

Sevon specifies Horcher, a single-track, overhead mounted system, or Egrolet, which manufactures a dual-track, wall-mounted slide rail tracking system, for his clients. He noted that both systems require detailed and defined site layouts and embedded support — engineered headers, beams and support systems — to carry the tracks and the individual.  

The systems are often a boon to family caregivers because, as Sevon explained, they can reduce injuries and muscle strain sustained through years of lifting, while also helping to remove some family stress inherant in an already stressful situation.

Two Key Garage Renovations

Sevon said he focuses on two particular garage renovations when adapting homes for the disabled — enlarging the overhead garage doors and installing a climate control system.

The larger doors are necessary because they enable families to fit their conversion vans inside the garage so they can safely unload their disabled family members.

With many disabled family members sensitive and susceptible to heat or cold, he said, keeping garages at a comfortable temperature is important when they are transferring to or from their home.

Costs Will Vary

Sevon said costs will vary depending upon the extent of the remodel — whether fully gutting the home or just adding the features required by the client.

“If added to a full remodel, the backing and supports go in very easily and could add 10% to 15% to the cost of the remodel,” Sevon said. “The lifts and slings fall between $5,000 to $15,000 depending on options, access points and needs.”

He added that a fully renovated bathroom with supports, lifts, slings and an accessible tub, toilet and shower could double the standard cost of a remodel, but the comfort and assurance it provides clients is worth much more to them.

“Although the work is profitable, it is even more rewarding to know that we are able to help make houses a better home for our clients’ disabled family members,” said Sevon.

For more information, e-mail Scott Sevon of Men At Work, or call him at 847-359-3591.

Five Myths About Realtors® That Stop Builders From Tapping Into a Profitable Resource

 
By Andy Bearden

The housing downturn has affected more than builders’ bottom lines. It's caused many of the industry's business fundamentals to shift beneath our feet.

On the brokerage side, fewer agents are finalizing more transactions than ever before. And while agents have less time to just visit communities and preview properties, they are selling a higher percentage of new homes than in the past.

On the home building side, cheap credit is no longer available and traditional marketing channels — newspapers, for instance — that were effective in the past are no longer working.

Builders are beginning to look to real estate agents for help, but many still are held back by the myths that surfaced in markets past.

Yes, those who embrace working with agents in today's market can thrive. But to do so, they first must dispel those myths. The following should help: 

Myth #1: Bonuses Attract More Agents

Many builders may be shocked that this would be considered a myth rather than the truth. After all, builder sales normally increase when an agent is offered a bonus.

But keep in mind that every time a builder offers a bonus, it’s often accompanied by increased marketing to the agent community.

So, is the corresponding increase in sales due to the bonus or the increased marketing?   

Agents at a large broker in Texas who responded to an anonymous survey indicated that bonuses were secondary to meeting their clients' needs and to being more effective salespeople.

They wanted to build long-term relationships with their clients — and to build a steady stream of referrals — so meeting their clients' needs with accurate and valuable information was more important than a bonus from a builder.

Of course, this doesn’t mean agents won't ask builders for bonuses — or refuse them if they're offered. But more consistent, informative and accurage marketing to agents, with possibly a smaller incentive offer, would be more cost-effective for builders.

Myth #2: All Realtors® Are the Same.

This is little more than saying that agents that shook builders down for their commission three weeks after the contract was signed represent the entire industry. Or that agents who only visit models for free lunches are typical of the industry.

Yes, those unprofessional agents are out there.  

But the good news is that during the past few years, the real estate industry has drawn in many professionals seeking a second career, and that has raised the bar. The 80/20 rule that 20% of the agents produce 80% of the business is alive and well in today's market — and high-performing agents are selling more new construction than ever before.

With that in mind, the most cost-effective strategy for builders today is to target and market to that productive 20% of agents — and trim their mass marketing to the remaining 80% by abandoning flyer drops, magazine ads and other channels.

With more of their marketing budget directed at high performers, builders should identify key agents in their area and then personalize their marketing to them by sending them notes, candy, invitations to a special lunches and events. Builders will get noticed with this type of personlized and appreciative marketing — and enjoy greater success having those agents selling their homes.

Myth #3: Realtors® Don’t Add Value to the Transaction

But they can if the builder will let them because Realtors® can bring value to builders' bottom lines.

In most states, real estate agents earn their commission when they deliver a buyer to the builder, who later closes the sale. Essentially, they are being paid for generating a lead.

But, if builders focus on attracting high-performing Realtors®, they will get even more for their money.

First, they'll get an agent who can be a trusted third party and who can help set expectations and explain the ongoing building process to the buyer. For instance, they can explain that the bricks and mortar in the front yard  will be removed as construction proceeds and that the rubble will, indeed, be replaced by a green lawn.

As a third party with no vested interest, the agent can intercede and explain to the buyer why the color of the carpet cannot be changed on the day it's scheduled to be installed without affecting the production schedule and adding to the cost of the home. The agent can step in and explain the procedures and — more importantly — calm the client down before the situation escalates into an argument with the builder.

This way, a happy home buyer costs less to maintain than an upset one.

Myth #4:  The Key in My Marketing Is to Get Agents to Visit My Model.  

Models win over buyers, not agents.

Customers buy on emotion. An agent give their clients opinion and advice based on information — the more accurate the information, the better. 

What’s more, agents today generally don’t have time to visit a model home park to get the information they need. But once they have the information, they will visit a model when they have a potential buyer in tow. So what't the best way to get them that information?

During a recent roundtable interview, a large Dallas builder said he wasn't bothered by the fact that his website wasn’t accurate. He only wanted to use his website to pique the interest of prospects and agents.

Such an approach will discourage the high-performing agents that builders want to attract. If a community or builder website is inaccurate, agents simply won't bring prospective buyers to that community.

Accurate websites and next generation web services, such as buildersupdate.com, will help agents get the details they need to advise their client.

Myth #5:  I Don’t Want to List With an Agent Because Other Agents Won’t Look at a Property Marketed by a Competitor 

Agents have been cooperating when selling pre-owned homes for more than 40 years and they are cooperating when selling new homes, too.

Using as many marketing channels as possible is fundamental to selling effectively, and listing an inventory home with an agent will generate leads that builders cannot generate by themselves. Besides, builders don’t pay  agents until closing, so exploiting their lead generation capabilities is simply wise and cost-effective marketing.  

Because of the inherent fear in the current market, buyers are increasingly seeking agents to help them navigate the new-home market and provide them a certain level of peace of mind.

With this in mind, builders should approach agents with fresh eyes and effective marketing tactics. They must rid themselves of old assumptions and commit to a well thought-out agent strategy. Good results will follow.

Andy Bearden is a consultant for home builders and residential developers in Texas and Mexico and a speaker on marketing to real estate agents. He has more than 15 years of new-home construction sales and marketing experience, including nine years as a vice president of sales and marketing for a national home builder and six years on the executive team of the 11th largest real estate broker in the U.S. For more information, e-mail Bearden.

This article originally appeared on the NAHB Sales and Marketing Channel.



In Today’s Market, 'Think Sold!' With Help From NAHB BuilderBooks

Think Sold! Creating Home Sales in Any Market,” available at NAHB BuilderBooks, is a practical, how-to guide for developing the self-awareness, knowledge and skills needed to succeed in the competitive field of new home sales.

The book covers everything from the home buying process and new home financing to strategies for making better sales presentations and sizing up the competition. It teaches readers how to overcome customers’ concerns and provides specific examples of how to explain the benefits of new home features in customer-friendly language.

“Think Sold” provides insights on how to approach sales and life from a position of optimism that will create successful outcomes; how to improve upon potential customer prospecting and follow-up skills; and how to communicate effectively with various types of buyers and learn how to adjust communication strategies to increase rapport and alignment with buyers’ motives.

To view or purchase this publication online, click here, or call 800-223-2665.



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.

 

Taxing Capital Gains as Ordinary Income Would Harm Commercial Builders

Among recommendations from the Obama Administration’s deficit reduction committee toward the end of last year , a proposal to tax capital gains and dividends as ordinary income would have negative consequences for commercial builders by raising taxes on the sale of properties like market-rate apartment buildings and light commercial property.

If this proposal were to be adopted, the tax on these sales would rise from today’s preferred rate of 15% to an ordinary income rate, which could be as high as almost 40%. This would greatly reduce profits from light commercial properties that are held and operated for several years and then sold.

“This commission could not have picked a worse time to come out with concepts to further chip away at the confidence of the commercial real estate investor,” said National Commercial Builders Council Chairman Carl Harris.

“These changes would continue to have investors second guess projects they were about to move forward with,” Harris said. “Tax reasons are only part of the equation when deciding to move forward on a project, but in these times of uncertainty, decreased margins and low cap rates, this will not help the recovery and job creation needed to decrease the deficit.”

Bernard Markstein, NAHB’s vice president for forecasting and analysis, added that conjecture over the shift in tax policy is poorly timed for an industry that has been bouncing along the bottom and only recently seen signs of slight improvement, with prospects for moderate growth in 2011.

“With both residential and commercial construction activity operating at extremely low levels, any increase in their tax burden would be an additional impediment to their eventual return to health and their ability to contribute to the national economic recovery,” Markstein said.

For more information, e-mail Kisha DeSandies at NAHB, or call her at 800-368-5242 x8455.

After a Three-Year Decline, Construction Starts Are Up and Down at Weak Levels

In an up and down pattern that has characterized construction in recent months, new construction in November fell 9% to a seasonally adjusted annual rate of $375.9 billion, according to McGraw-Hill Construction.

Non-residential building during the month dropped 12% to an annual rate of $130.1 billion. For the first 11 months of 2010, total construction on an unadjusted basis was reported at $378.7 billion, down 4% from the corresponding period of 2009.

Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, said that construction starts appear to have leveled off “within a set range following an extended three-year decline,” although “there’s yet to be evidence that renewed expansion is taking hold. For non-residential building, the worst of the decline for the commercial structure types has run its course, but the volume of activity remains weak.”

Members of the NAHB National Commercial Builders Council (NCBC) continue to report a mixed picture around the nation, with the outlook brightening for some.

“Based upon business start-ups and available commercial real estate, we’ve experienced an increase in commercial build-outs and renovations,” reported Jim Hill, vice president of the Bayview Construction Corporation in Stuart, Fla.

“We’re also experiencing an increase in home renovations and more of a demand for luxury homes, which in past economic downturns have always been the first to rebound,” said Hill. “In South Florida, our current economic climate has made it necessary for builders to be resourceful and to offer and seek opportunities in both commercial and residential construction.”

NCBC Chairman Carl Harris, of the Carl Harris Company in Wichita, Kan., said that McGraw-Hill’s November report “continues to show the lack of confidence in the recovery, placing dependency on government dollars as they continue to drive most of the non-residential market place. Government office buildings, schools and infrastructure are where we’ve seen the growth as evidenced by this report.”

However, Murray said that stimulus support from the government is already fading and this will be one of the constraints facing the construction industry in 2011, along with restrictive bank lending standards that have yet to ease and further erosion in the fiscal health of states and localities.

The educational building category, which is the largest non-residential project type, plunged 23% in November.

McGraw-Hill said that several commercial categories showed growth in November, although their volume of activity remained very weak. Office construction grew 24%, warehouses advanced 19% and hotels increased 15% during the month.

For the first 11 months of 2010, non-residential building was down 12% from a year earlier. The commercial sector fell 20% as the result of declines of 8% in stores, 22% in warehouses, 29% in offices and 32% in hotels.

For more information on resources available from the National Commercial Builders Council, e-mail Kisha DeSandies, or call her at 800-368-5242 x8455.

Huge Jumps in Materials Prices Squeezing Contractors in Weak Market

Facing weak demand for construction, contractors held down bid prices in November despite huge jumps in diesel fuel and copper prices, the Associated General Contractors of America (AGC) reported on Dec. 16.

Prices for construction materials climbed 0.5% in November and 4.8% over the past 12 months, AGC said, while price indexes for finished buildings remained flat.

The price jumps could be “the last straw for some hard-pressed contractors,” said Ken Simonson, the association’s chief economist.

Simonson noted that prices shot up 5.6% in November and 16% over the last 12 months for copper and brass mill shapes, 4.8% and 18% respectively for diesel fuel and 3.5% and 14% for aluminum mill shapes.

“Since these data were collected in mid-November, prices have risen further for all of these materials, and steel makers have also announced hefty increases,” he said.

“Contractors have been unable to recoup these costs in what they charge,” Simonson added. “Indexes for new office, school, warehouse and industrial buildings were virtually unchanged both for the month and over 12 months. Prices charged by concrete, roofing, electrical and plumbing contractors showed very small movements in either direction.”

Contractors are likely to be squeezed by rising material prices and flat prices for complete projects for the foreseeable future, Simonson predicted. He forecasted that contractors would experience periods of simultaneous price spikes in multiple materials in 2011 as the U.S. and foreign economies pick up speed.

“Unfortunately, demand for construction will be erratic for months to come, worsening the price pinch that has already devastated too many firms and their workers,” he said.

On the employment front — which has been decimated for the nation’s construction workers — AGC reported more encouraging news, with construction employment in November expanding in 20 states and 13 states and the District of Columbia showing year-over-year job gains for that month.

Unemployment in construction was running at 18.8% in November, almost double the national unemployment rate.

He also noted that the gains in construction employment have been “as spotty as they are tenuous.”

California had the largest monthly increase in construction employment — adding 7,800 jobs — but also the largest 12-month drop — 36,900 jobs, or 6.4%.

New Jersey and New York had the next-highest number of construction job gains in November, with 4,500. New Jersey also led the nation in monthly percentage gains (3.7%), followed by Vermont (3.4%, 400 jobs) and Maine (2.5%, 600 jobs).

For information on resources available from NAHB’s National Commercial Builders Council, e-mail Kisha DeSandies, or call her at 800-368-5242 x8455.

OSHA Makes Changes to Residential Fall Protection Requirements

The Occupational Safety and Health Administration on Dec. 22 withdrew the Plain Language Revision of OSHA Instruction STD 3.1, Interim Fall Protection Compliance Guidelines for Residential Construction. First issued in 1995, the directive was a source of confusion among home builders over what fall protection methods and systems should be used to comply with OSHA’s fall protection standards.

The confusion stems from the variety of sources of fall protection compliance information that builders and trade contractors need to find, read, understand and then follow. To understand what they need to do to protect workers, builders have to read OSHA’s fall protection regulation, then read the interim fall protection guidelines and then find the 25 or more letters of interpretation of what is required.

Because falls continue to be the leading cause of costly accidents, injuries and even fatalities in the home building industry, NAHB is actively engaged in seeking solutions to address this very real and serious problem. Concerned that the interim guidelines were making the work environment less safe for employees on the home building site, NAHB in April 2008 asked OSHA to withdraw them and instead follow the fall protection regulations in OSHA standard 29 CFR 1926 Subpart M, which allows residential construction employers some flexibility in providing fall protection systems.

This important enforcement policy change will require employers to take additional steps to ensure worker safety when working six feet or more above a lower level. The new Compliance Guidance for Residential Construction will go into effect on June 16, 2011.

Among the significant changes resulting from the withdrawal of OSHA STD 03-00-001:

  • Roofing contractors must use guardrails, personal fall arrest systems (harnesses and lanyards) or safety nets on all roofs with slopes exceeding 4-in-12 when working six feet or more above a lower level.

  • All other trade contractors must use guardrails or personal fall arrest systems (harnesses and lanyards) or safety nets when the height from one elevation to another is greater than six feet. However, employers who can demonstrate that these fall protection systems are not feasible or create a greater hazard can use a plan outlining alternative fall protection measures that must be followed.

  • The fall protection plan must be in writing and site-specific. However, a written plan developed for repeated use for a particular model or style of home will be considered site-specific.

  • The use of fall protection plans is limited to “residential construction” in which the structure will be used as a home and constructed with traditional wood frame materials and methods (although the limited use of structural steel in a predominantly wood-framed home — such as a steel I-beam to help support wood framing — does not disqualify a structure from being considered residential construction).

NAHB expects the OSHA policy change to ultimately make it easier for home builders to understand what's necessary to achieve compliance, to ensure safer worksites and to reduce the occurrence of costly accidents.

If you are attending the International Builders’ Show in Orlando, OSHA staff will be in attendance to discuss the policy change in detail at the NAHB Construction Safety and Health Committee meeting on Tuesday, Jan. 11, from 10:30 a.m.-1:00 p.m. in Room West 312 B, Level III at the Orange County Convention Center.

For more information about the residential fall protection requirements, visit www.nahb.org/fallprotection; or e-mail Rob Matuga at NAHB, or call him at 800-368-5242 x8507.

 

Exposure to Spray Polyurethane Foam Insulation Can Adversely Affect Health

Builders should be aware of some of the safety issues presented by the installation of spray polyurethane foam (SPF) — spray-applied insulating foam plastic that is installed as a liquid and then expands to many times its original size. 

SPF is a widely used and highly-effective insulator and sealant. However, exposure to its key ingredient, isocyanates — along with other chemicals in SPF products — can cause the following adverse health effects:

  • Asthma, a potentially life-threatening disease
  • Lung damage
  • Respiratory problems and other breathing difficulties
  • Skin and eye irritation
  • Other potential adverse health effects

It is important to review the manufacturer’s recommendations for handling the chemicals that make up SPF. A few safety best practices to avoid injury or illness when handling SPF include:

  • Review product ingredients and use information, such as material safety data sheets (MSDSs).
  • Vacate building occupants and other trade workers who are unprotected.
  • Isolate the work site.
  • Wear prescribed personal protective equipment — such as chemical-resistant (nitrile) gloves and clothing and an appropriate respirator.
  • Ventilate the work site.
  • Clean the area thoroughly before unprotected workers or occupants reenter it.

In order to ensure safe re-entry into a building after the SPF has been installed, it is important to follow the manufacturer’s guidelines for proper foam curing time.

For more information on spray polyurethane foam insulation and isocyanates, visit the Occupational and Safety Administration's safety and health topics section on its website.

DIY Star Chris Grundy to Host SAFE Awards at Builders’ Show

Chris Grundy, star and host of the DIY Network shows, “DIY Dominator” and “Cool Tools,” will host the fifth annual NAHB/Builders Mutual Safety Award For Excellence (SAFE) at the 2011 NAHB International Builders’ Show.

The SAFE awards recognize the achievements of builders and trade contractors who have developed and implemented high-quality work-site safety programs, as well as government officials who have made successful efforts to advance safety in the home building industry.

The awards ceremony, which will recogize 15 industry professionals and government officials, will be held from 5:00-7:00 p.m. on Tuesday, Jan. 11, at the Peabody Orlando hotel. The free event includes cocktails and hors d'oeuvres from 5:00-5:30 p.m.

For more information or to attend, visit www.nahb.org/SAFE; or e-mail Tonia Green at NAHB, or call her 800-368-5242 x8163.

Feb. 3: Free Webinar on How to Respond to Buyer Expectations Evolving Since the Downturn

A recent survey on home design trends by the American Institute of Architects indicates that buyers will not be seeking the same product mix that builders have previously offered.

To help builders discern what today’s buyers want, NAHB’s Business Management and Information Technology Committee and Builder magazine are presenting a free webinar, “New Horizons: Design Trends and Market Trends,” from 2:00-3:00 p.m. on Thursday, Feb. 3.

During the webinar, panelists will discuss the effects of the recent downturn on buyer expectations and demands. They will also provide insight into consumer buying trends and how they are evolving.

Attendees will also learn how these trends can affect their market and product mix and get pointers on how to stay ahead of consumer trends rather than constantly react and play catch-up as they continue to evolve.

The webinar is the last of a four-part series, “New Horizons Webinars: Setting a Course for Success in the New Market,” that began in September.

To Register

For more information and to register, visit www.nahb.org/newhorizons; or e-mail Marcia Childs at NAHB, or call her at 800-368-5242 x8388, or Agustín Cruz, x8472.

The New Horizons webinar series is sponsored by Simonton Windows and Therma-Tru Doors.

Hone Business Skills, Enhance Credibility During National Designation Month in February

NAHB members have an opportunity to jump-start or complete their designation and enhance their credibility during National Designation Month in February, now in its ninth year and sponsored by NAHB Education.

“Obtaining a designation adds some credibility to builders. It provides a third-party endorsement that says, ‘I’m not doing this just as a job, I’m doing it as a profession,’” said Jim Carr, a Graduate Master Builder (GMB), Certified Green Professional (CGP), professor at the University of Arkansas and an NAHB Education instructor.  

National Designation Month promotes ongoing education in the housing industry, recognizing the achievements of building professionals and educating the public about the value of selecting builders, remodelers and other industry professionals who hold NAHB designations.

NAHB professional designations are aimed at improving business skills, providing career advancement and recognizing industry expertise and commitment to professional growth in the home building industry.

The designations convey to potential clients that they can expect superior training, practical experience and an in-depth knowledge from those who have earned them. 

Additionally, home building professionals enjoy valuable networking opportunities while they are earning their designation — working closely with expert instructors and other professionals within and outside their specific areas of expertise.

NAHB and its licensed education distributors are stepping up efforts to educate the public about the value of selecting building industry professionals who earn a designation, to build support for continuing education programs and to increase recognition of the comprehensive training required for earning an NAHB designation.

Click here to view the designations that are available.

For more information on participating in or promoting National Designation Month, visit www.nahb.org/ndm; or call the Professional Designation Help Line at 800-368-5242 x8154.

Education Calendar

Jan. 11

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 11

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 11

"Construction Contracts and Law"

Orlando, Fla.

Jan. 11

"Design/Build Solutions for Aging and Accessibility (CAPS II)"

Orlando, Fla.

Jan. 11

"Estimating for Builders and Remodelers"

Orlando, Fla.

Jan. 11

"Marketing to the Active Adult"

Orlando, Fla.

Jan. 11

"Professional Remodeler Experience Profile (PREP)"

Orlando, Fla.

Jan. 11

"Project Management"

Orlando, Fla.

Jan. 11

"Train the Trainer"

Orlando, Fla.

Jan. 12-15

2011 NAHB International Builders' Show

Orlando, Fla.

Jan. 14

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 14

"Professional Remodeler Experience Profile (PREP)"

Orlando, Fla.

Feb. 3

Design Trends and Market Trends

Webinar

May 1-3

National Green Building Conference

Salt Lake City, Utah

Aug. 17-20

Executive Officers Council Seminar

Naples, Fla.

Learn More About NAHB Professional Development Offerings

View the variety of professional development offerings available through NAHB and its local associations at www.nahb.org/education.

Search for Upcoming Courses in Your Area

Or, search for specific course offerings in your area and check out upcoming conferences.

HBI Seeks Home Building Veterans for New Mentoring Program

With its new Construction-Coaching Opportunities to Reach Employment Opportunities (C-CORE) program, the Home Builders Institute (HBI) is putting a twist on an age-old tradition of passing trade skills down from one generation to the next.

HBI C-CORE — a three-year program funded by the U.S. Department of Justice — matches teens aged 16-18 with adult mentors who encourage them to consider careers in the home building industry and coach them toward success.

Anyone involved in the home building industry is eligible to be a C-CORE mentor. HBI currently is recruiting mentors for the program, which was launched in October with the goal of matching 5,000 youths with 1,600 mentors in the states of California, Nevada, Arizona, New Mexico, Colorado, Texas, Louisiana, Mississippi, Florida, South Carolina and Florida. 

So far, 45 coaches and 127 youths have signed up for the C-CORE program at 16 sites, including partnerships with the Home Builders Association of Greater Columbia, the Home Builders Association of Greenville, and the Builders Association of Northern Nevada.

The entire board of directors of the Home Builders Association of Middle Georgia showed its commitment by signing up as C-CORE coaches, according to Dennis Torbett, vice president of HBI Workforce Training and Employment, which oversees the program.

The program will be expanded by 11 more sites in 2011.

“I encourage my fellow NAHB members to become coaches for the C-CORE program,” said NAHB Chairman-elect Robert Nielsen, president of Shelter Properties Inc. in Reno, Nev. “The commitment requires a time investment of only a few hours a month for such a great impact on a young person’s life. You’ll not only help tap their potential, you will gain a sense of personal and professional satisfaction from the experience.”

  An HBI C-CORE youth member works on a community service project at the Las Amigas Residential Center.

Mentors are matched with a group of three youths with whom they spend as little as two hours per week helping and advising them in a supportive team environment with other HBI C-C-CORE mentors and youth.

HBI provides volunteer mentors with training that explains their roles and responsibilities, gives them insight into how to build their mentoring relationships, and builds their skills in effective communication and problem-solving. Continued advice and resources are available after the initial training.

Because building a trusting relationship between a mentor and a young person takes time, HBI C-CORE asks mentors to commit a minimum of one year to the program.

Earl McLeod, executive director of the HBA of Greater Columbia and a member of the HBI Board of Trustees, has signed up to become a mentor, and he looks forward to what he calls a “feel-good, do-good opportunity” to engage young people in the residential construction trades and make a positive difference in their lives.

“I encourage my colleagues to become mentors for the HBI C-CORE program,” McLeod said. “You will influence these young people with your caring and guidance, and you will be helping to develop the next generation of trades people for the residential construction industry. ”

Two new C-CORE mentors — Beth Underwood and Franqee Higgins — said they know the value mentoring played in their lives when they embarked on careers in the home building industry.  They are now doing everything they can to make sure that young people who sign up for the HBI C-CORE program receive a similar benefit.

Underwood, a Tucson, Ariz., Realtor®, remembers when she decided to become a customer service representative for K. Hovnanian Homes. She set out to find out all she could about the residential construction industry, and her quest to learn what it actually takes to build a home landed her a spot in the first class of The Southern Arizona Home Builders Association Institute of Construction.

Underwood spent a year learning the trades. The work was tough, but with the support of her mentor, Les Wolfe, owner of The L.G. Wolfe Co., she graduated.

“Les Wolfe inspired me and made sure I didn’t fail. It was an easy decision to give back what already had been given to me,” Underwood said of her enrollment as a C-CORE mentor.

Underwood takes every opportunity to encourage fellow industry leaders in her area to become C-CORE mentors. “These young men and women need someone to believe in them. They need encouragement, and they need to learn a trade. We are in the perfect industry to provide a support system for them,” she said.

Franqee Higgins, Texas/Northern Louisiana regional coordinator for C-CORE, was 19 and ready to change his life when he met his mentor, Philip Orr, an HBI electrical instructor at Guthrie (Okla.) Job Corps Center. Higgins studied the electrical and plumbing trades at Guthrie, winning the NAHB Chairman’s Award at the 2007 International Builders’ Show. He eventually became an HBI Job Corps electrical instructor at the Clearfield Job Corps Center in Utah, where he was named “Rookie Instructor of the Year.”

“Phil told me that if I would do what he said, my life would change,” Higgins said. “I kept up with him — whenever I took a college course or won an award. When I became a Job Corps instructor, it was the culmination of what Phil means to me because I knew then that I could make a difference in a young person’s life too.”

Higgins now matches young people interested in the home building industry with C-CORE mentors from his Dallas office. “Many of our youths do not come from the most positive of situations,” he said. “C-CORE mentors not only guide them on the path to success by showing them the ropes of the home building industry, they help them shape a positive outlook on life.”

For more information about how you can become an HBI C-CORE mentor, contact Tadar Muhammad at 863-557-5054 or e-mail mentoring@hbi.org.

CMI’s MiraTEC Outperforms Hardboard Trim, Warranty Extended

CraftMaster Manufacturing Inc. (CMI) has increased the warranty period for its MiraTEC Treated Exterior Composite trim from 30 years to 50 years, as a result of independent weatherability testing.

The new 50-year warranty continues to cover hail damage, delamination, decomposition due to fungal growth, splitting and cracking, excessive swelling and buckling, and damage from termites. No fiber cement, OSB or fiber substrate/hardboard trim product available today offers this level of protection.

Unlike warranties offered by competitive products, the new MiraTEC warranty does not require registration with the manufacturer (CMI), and it is valid for the original purchaser plus two other home owners of the structure to which the trim was applied.

Since its introduction to the residential and commercial building markets in 1999, MiraTEC has become a trusted alternative to hardboard products for exterior trim applications by new home builders, remodelers and do-it-yourselfers. In addition to its track record of success and longevity, MiraTEC recently outperformed all brands of hardboard trim in a weatherability test conducted by an accredited third-party testing agency.

Performed in accordance with ANSI A135.6 (2006), the weatherability test subjected MiraTEC and three other trim samples to six cycles of water soaking, heat/freeze and humidity changes to assess their ability to withstand exposure to the elements. The test calculates the residual or remaining thickness swell of the trim products to measure water absorption.

The extensive testing found that MiraTEC trim exhibited the lowest percentage of residual swelling of all the exterior trim samples. MiraTEC performed more than nine times better in long-term performance than one hardboard trim sample, over six times better than another and nearly three times better than the third sample tested.

“A strong warranty is a critical factor in the selection of exterior trim products, and the new 50-year warranty for MiraTEC trim provides builders, remodelers and home owners with peace of mind that their purchase decision is backed by a comprehensive performance guarantee,” said Bob Merrill, CMI’s president and CEO. “Swelling of exterior trim is a chief concern for builders and remodelers. As this test clearly shows, hardboard trim products have a greater tendency to swell when exposed to the elements, compared to MiraTEC.”

MiraTEC is an engineered wood trim that is manufactured as one solid piece with uniform density and thickness; it is not two separate pieces laminated together like hardboard trim products.

MiraTEC features a reversible wood-grain texture on one side and a contemporary, smooth finish on the other, which offers great design possibilities for decorative trim, gables, board and batten applications, dentil trim, corner posts, porch trim, roofline fascia, window and door trim, and similar architectural components. It also provides the perfect accent to any exterior cladding.

The product is created using CMI’s patented and proprietary TEC manufacturing process, which was developed specifically to make trim. This sealed press, steam-injected process creates a trim board that is one solid piece.

During manufacturing, wood fibers and other ingredients are bonded under heat and pressure, combined with phenolic resins for moisture resistance, and treated with zinc borate, an EPA-registered wood preservative, for added protection against rot and termite damage. MiraTEC trim has no knots or voids like wood, so it eliminates waste. Plus, it accepts paint beautifully and is not prone to thermal expansion.

Headquartered in Chicago, CMI is a member of the National Council of the Housing Industry — The Leading Suppliers of the Housing Industry.

This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.

Cal Poly HELP Grant Continues to Deliver Two Years After Funding Expired

More than two years after funding for the HELP ― Homebuilding Education Leadership Program initiative ended at California Polytechnic University — San Luis Obispo in San Luis Obispo, Calif., the fruits of those funds, which were used to improve and expand the residential construction management program at the university, continue to flourish.

Each year, the National Housing Endowment awards $100,000 grants to colleges and universities to help them create, expand and enhance existing residential construction management programs — and to enable them to provide programs that respond to the current state of the home building industry and anticipate and prepare for its future.

In 2007, the endowment awarded a two-year grant to Cal Poly to integrate its residential curriculum and provide a residential focus to its construction management programs. Before the grant was awarded, the university’s estimating, scheduling and contract courses focused on commercial construction.

The grant also has enabled Cal Poly to foster and develop close ties with residential construction industry professionals in California that are helping students better prepare for careers in the industry.

“We at Pulte are really excited about the learning environment at Cal Poly,” said Andy Cripe, of Pulte Homes. “We have hired many of the students from the university’s construction management program and they have grown to become some of our most successful employees.”

“We really value the relationship and partnership we have with the professors, staff and students in the program,” Cripe said.

The grant also was used to provide seed funding to hire a full-time faculty member with a background in home building to develop the residential construction management program. The university hired former Centex employee Scott Kelting.  

In addition to creating the program at Cal Poly in 2007, Kelting has acquired several professional designations, including Certified Green Professional (CGP) and a train-the-trainer certification.

He is also Ph.D. candidate at University of California, Santa Barbara, which offers a Green Building Professional Certificate program, and is currently developing new and more interactive teaching methods for the Cal Poly program. He was awarded the NAHB Outstanding Junior Faculty Award and elected as vice-chair of the NAHB Student Chapters Advisory Board for his efforts.

“We are thrilled to see this seed grant continue to grow and flourish two years after the funds have expired,” said Gary Garczynski, endowment chairman and 2002 NAHB president. “This was the goal of the HELP grant program, and it is rewarding to watch our investment in the industry's future pay off.”

The endowment established the HELP initiative in 2006 to bolster or start residential construction management programs in two- and four-year colleges and universities across the country and to increase the number of qualified graduates entering the industry. To date, the endowment has awarded more than $1.4 million in HELP grants to educational institutions.

For more information on HELP grants, call the endowment at 800-368-5242 x8069, or visit www.nationalhousingendowment.org.

 

A Message From the NAHB Third Vice Chairman Candidate

Following is a message from Kevin Kelly, who is a candidate for NAHB third vice chairman.

On Friday, Jan. 14, 2011, the NAHB Board of Directors will elect the NAHB Senior Officer team for 2011 and I will stand before you asking for your support and vote to be your Third Vice Chairman.

Over the past year, I have traveled around the country attending builders association meetings and events and I appreciate the many opportunities that I have had to talk with so many members — builders and associates — and to hear first-hand their concerns and issues.

With little exception, our conversations have focused on our industry, the economy, our businesses, the association and the challenges confronting us in these areas as we slowly emerge from the worst housing recession in decades.

Many of our local affiliates are struggling to keep their doors open as they try to deliver services to their members. State associations are finding the volume and level of legislative and regulatory initiatives unchanged, or even increasing, despite the downturn in the economy. NAHB is confronting multiple issues that go to the core of our business and ability to provide housing and shelter.

Experience in leadership and advocacy is essential to properly address these challenges in the coming critical years. I believe that my many years of membership and leadership with both my local association and NAHB, and my unabashed and unapologetic advocacy for America’s home builders and housing, have given me the necessary preparation and ability to effectively represent and serve you.

Working together we can enhance our prospects to survive this housing depression and emerge stronger and more resilient than ever. I will bring my commitment to the industry, my commitment to NAHB, my commitment to the federation and, above all, my commitment to you, the members, to work productively with the NAHB leadership to find solutions that will put us back on the road to recovery and prosperity.

Thank you for your encouragement, your support and your friendship.

 

Raleigh, N.C., Home Builders Build, Donate Home to Marine Severely Wounded in Iraq

Last month, Marine Corps Sgt. Stan Roberts — who was severely wounded in 2007 when an improvised exploding device (IED) blast tore through his amphibious assault vehicle while on patrol in Iraq — was given a brand new home through Operation: Coming Home, a joint volunteer effort led by the Home Builders Association of Raleigh-Wake County and the Triangle Real Estate and Construction Veterans (TREACV) to build and donate homes for disabled combat veterans in North Carolina.

During the Nov. 4 celebration, Hero Home Finale, Sgt. Roberts was handed the keys to his new, handicap-accessible 1,800-square-foot ranch-style home by Sgt. Daniel Kim, the Marine corpsman who saved his life after the blast.

HBA member Royal Oaks Building Group, LLC, built the home in Fuquay-Varina, N.C., on land donated by developer Gaines and Company. Additional HBA members, sponsors and volunteers donated materials and labor for the home, which features  handicap-accessible doorways and bathrooms, low-profile thresholds, adjustable storage spaces — and a special Marine Corps man-cave.

Sgt. Roberts was on his third tour of duty in Iraq when his vehicle was attacked. He lost his right leg and suffered traumatic brain injury as well as injuries to his right arm in the blast. He spent two years of intensive therapy at Walter Reed Army Hospital in Bethesda, Md., recovering from his wounds before finally returning to the cramped apartment in Cary, N.C., that he shared with his wife and four young children.

That is until the volunteers of Operation: Coming Home built him a new home.

More than 400 people attended the home’s dedication, including representatives of Disabled American Veterans (DAV); National Association of Buffalo Soldiers & Troopers Motorcycle Club (NABSTMC); U.S. Veterans Corps; the Fuquay-Varina police, fire and utilities departments; servicemen from Camp Lejeune; the 2d Marine Division Band; the N.C. State dance team; the Carolina Hurricanes mascot Stormy and the Storm Squad; and local schoolchildren.

Appreciation for Sgt. Roberts’ service didn’t end there, however. Neighbors, a local school, military groups and various organizations also overwhelmed the Roberts family with gifts for their new home including a stainless steel Weber propane grill, a washer and dryer, bedroom furniture, a security system, a fully stocked kitchen and — for Sgt. Roberts’ Marine Corps man-cave — a set of USMC painted lockers, custom flooring and a display cabinet for his uniform.

In addition, a story about Sgt. Roberts and Operation: Coming Home, “Volunteers Build Homes for Wounded Vets,” appeared in Aol Real Estate and on the home page of Aol.com on Veteran’s Day, Nov. 11.

In the Aol story, Tim Minton, executive vice president of the Raleigh-Wake County HBA, explained some of the builders’ motivation behind building and donating the house to the Roberts family.

We figured, build a house for a disabled veteran and give it to them free and clear — a reasonable home they can afford the taxes on," Minton said in the article. "They are adjusting back to civilian life. And don't have to worry about where they are going to live or make their home," he said.

To read the Aol story, click here.

NAHB also has posted a video that the Raleigh-Wake County HBA created about Sgt. Roberts and the event. To view the video on NAHB’s YouTube channel, click here.

For more information, e-mail Gwyn Donohue at NAHB, or call her at 800-368-5242 x8447.


Members of the Raleigh-Wake County HBA built and donated a handicap-accessible ranch-style home for Sgt. Roberts through Operation: Coming Home.

NAHB Board Meets in Orlando on Jan. 14 During International Builders' Show

OFFICIAL MEETING NOTICE OF
THE NATIONAL ASSOCIATION OF HOME BUILDERS
BOARD OF DIRECTORS

The following schedule of events is a partial listing provided as a notice for the upcoming NAHB Board of Directors meeting and other associated NAHB meetings to be held at the 2011 NAHB International Builders’ Show in Orlando from Jan. 9-15, 2011. The board meeting will be held at the Orange County Convention Center on Friday, Jan. 14, from 8:00 a.m.-2:00 p.m. The NAHB International Builders’ Show program will identify the exact time and place of each scheduled meeting.

Sunday, Jan. 9
State Representatives
National Area Chairmen
Executive Board

Monday, Jan. 10
Committees and Subcommittees
Home Builders Institute
National Housing Endowment
NAHB Research Center
National Housing Center Board of Governors
Nominations Committee

Tuesday, Jan. 11
Committee Meetings
NAHB Past Chairmen/Presidents’ Council

Wednesday, Jan. 12
Area Caucuses 1-15
Joint Executive Board, Budget & Resolutions Committee

Thursday, Jan. 13 (Green Day)
Spike Party & Directors’ Reception

Friday, Jan. 14
Board of Directors Meeting

Saturday, Jan. 15
Educational Seminars

FedEx Offers NAHB Members Big Savings on Express, Freight and Ground Shipping

NAHB members can save up to 29% on select FedEx Express shipping services and up to 70% on FedEx Freight.

There are no costs and no minimum shipping requirements to take advantage of this member benefit.

  • FedEx Express: Save Up to 29%*
    Fast, reliable delivery of time-critical shipments

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    Cost-effective delivery of shipments that don't need the speed of express shipping

  • FedEx Freight: Save up to 70%*
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Drop off shipments at thousands of convenient locations. Ship and manage packages and take advantage of shipping tools and resources at fedex.com.

For more information, or to enroll in this program, click here, and enter passcode HVCSP8.

For more information, call 1-800-MEMBERS (800-636-2377) between 8:00 a.m. and 6:00 p.m. EST Mondays through Fridays to speak to a dedicated member service representative.

* For terms and conditions, click here.

Other Member Advantage Discounts

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to www.nahb.org/MA.

NAHB Members Can Save Up to 25% With Avis

NAHB members can take advantage of exclusive savings from Avis. When making reservations, mention AWD #G572900 and save up to 25%.

Visit avis.com/nahb, or call 800-331-1212 to make reservations.

Other Member Advantage Discounts

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to www.nahb.org/MA.

Budget Has Constructed Special Savings for NAHB Members

NAHB members can save big on Budget rentals. When making reservations, mention BCD #Z536900 to save up to 20% on Budget car rentals.

Visit budget.com/nahb, or call 800-527-0700 to make reservations.

Other Member Advantage Discounts

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to www.nahb.org/MA.

NAHB Calendar of Events

Jan. 11

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 11

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 11

"Construction Contracts and Law"

Orlando, Fla.

Jan. 11

"Design/Build Solutions for Aging and Accessibility (CAPS II)"

Orlando, Fla.

Jan. 11

"Estimating for Builders and Remodelers"

Orlando, Fla.

Jan. 11

"Marketing to the Active Adult"

Orlando, Fla.

Jan. 11

"Professional Remodeler Experience Profile (PREP)"

Orlando, Fla.

Jan. 11

"Project Management"

Orlando, Fla.

Jan. 11

"Train the Trainer"

Orlando, Fla.

Jan. 12

The Nationals — National Sales and Marketing Awards Ceremony

Orlando, Fla.

Jan. 12-15

2011 NAHB International Builders' Show

Orlando, Fla.

Jan. 13

Safety Award for Excellence (SAFE) Ceremony

Orlando, Fla.

Jan. 14

"Builder Assessment Review (BAR)"

Orlando, Fla.

Jan. 14

"Professional Remodeler Experience Profile (PREP)"

Orlando, Fla.

Feb. 3

Design Trends and Market Trends

Webinar

March 16

Legislative Conference

Washington, D.C.

May 1-3

National Green Building Conference

Salt Lake City, Utah

May 18-21

Spring NAHB Board of Directors Meeting

Washington, D.C.

Aug. 17-20

Executive Officers Council Seminar

Naples, Fla.

Learn More About 2009 NAHB Professional Development Offerings

See the variety of professional development offerings available through NAHB and its local associations in this brochure

Or, search for specific course offerings and check out upcoming conferences.