Monday Morning Briefing Letter - 10/15/2007 (Plain Text Version)

By Brian Catalde, NAHB President and
Jerry Howard, NAHB Executive VP and CEO

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NAHB's "Myth Buster" campaign is now underway

in a concerted effort to boost consumer confidence and debunk sensationalized media reports about the nation's housing finance system and housing market.

State and local HBA presidents, with the help of HBA Executive Officers and newly developed NAHB resources, are being engaged in the front lines of this initiative to become more vocal spokespersons for the industry. In some markets, local HBA presidents may also recruit a few of their most seasoned and knowledgeable builder colleagues to create a team of "myth busters" who can talk to reporters about current conditions in the housing market. To assist in this effort, NAHB has created a new Myth Buster section under our Back to Basics Toolkit resources that are available to NAHB members-only on our Web site.

Understanding that the press has a tremendous influence on consumer behavior, NAHB's National Vice Presidents and State Representatives have initiated this program as a way to pro-actively engage the media and present a more balanced and accurate picture of current and projected conditions in the housing market. Specifically, the aim is to correct the record on the following:

Myth # 1: The sky is falling. Housing has always been a cyclical business, and it WILL bounce back with time. During the mid 1970s and early 80s and 90s, housing production and sales dropped by more than 60% in a matter of months. At those times, we confronted and overcame many of the same problems we face today, including an inventory overhang, tight credit and reluctant buyers.

Myth # 2: There's no mortgage money. The vast majority of home buyers are seeking conventional, conforming mortgages at or below $417,000. These loans are purchased by Fannie Mae and Freddie Mac and carry an implicit government guarantee. So, while underwriting standards may be tighter for all loans, credit-worthy home buyers should have no problem finding conventional conforming mortgages at very attractive rates. Moreover, the latest moves by the Fed to cut interest rates and increase liquidity mean the availabilty of money for jumbo loans has also improved for credit-worthy borrowers.

Myth # 3: Foreclosure rates are skyrocketing. While foreclosure rates have increased, almost all American home owners are making their mortgage payments on time and are in no danger of losing their homes. Most foreclosures are concentrated in the once-super-heated markets of California, Florida, Arizona and Nevada and the upper Midwest states of Michigan, Ohio and Indiana that have been hit by job losses and weak economies. Meanwhile, 97% of prime borrowers – the bulk of the market – are up-to-date on their mortgage payments.

Myth # 4: Home values are in a free-fall with no end in sight. Outside the 30 or so high-flying metro markets where home values doubled in four or five years, the correction in home values has been relatively modest. And, over time, home values will stabilize and then edge upward with the next recovery. To argue that home values will never recover, you would have to believe that it will cost less to build a new home five years from now than it does today – and that's not likely.

NAHB Member Benefit: See our Myth Buster resources for HBA leadership, including media talking points, Q&A examples and helpful statistics, on our Web site. Note: you must be logged in as an NAHB member to view these resources. Also, visit www.nahb.org/toolkit for additional resources on coping with a down housing market, or contact Jay Shackford at x8406.

Helping consumers see things in a new light,

NAHB has developed five new eye-catching ads that can be used by our members and HBAs in newsletters and on Web sites, placed with local media or printed as handouts. Each of the ads are designed to encourage consumers to buy a new home or to promote the general benefits of buying a new or existing home. They are immediately available on our Web site in PDF format, but HBAs and members who require them in a different format or need additional information on their use can contact Gwyn Donohue at x8447.

NAHB Member Benefit: NAHB strives to provide useful resources that can help our members bolster consumer confidence and navigate a safe course through today's difficult housing market. [return to top]

A new government program to assist distressed borrowers

was announced by the Bush Administration to NAHB applause this week. The latest initiative aimed at alleviating the crisis in home mortgage markets, "HOPE NOW" was announced by Treasury Secretary Henry Paulson and HUD Secretary Alphonso Jackson. The program brings together foreclosure prevention counselors, mortgage servicers and other mortgage market participants in an alliance to assist borrowers who are facing default, with the goal of helping American families avoid foreclosure and stay in their homes. In NAHB's official statement following announcement of the program, President Brian Catalde noted that "HOPE NOW will encourage many more troubled borrowers to seek out their mortgage provider or housing counselor to help them explore alternatives to stay in their homes." Our statement also noted the substantial efforts NAHB has undertaken to support such programs, including our efforts to publicize via our Web site a special hotline that has been established to assist borrowers who are having mortgage troubles. It is expected that the HOPE NOW Alliance will greatly expand the capacity, coordination and effectiveness of such existing outreach efforts.

NAHB Member Benefit: NAHB has strongly encouraged and supported recent efforts by the mortgage industry to provide foreclosure prevention counseling and assistance to borrowers who have encountered mortgage difficulties. Such efforts can help Americans keep their homes, while reducing the buildup of vacant units on the market and showing that home builders care about their customers and the communities they help create. Going forward, NAHB will continue to publicize foreclosure prevention resources in communities throughout the country. [return to top]

NAHB comments on proposed changes to air quality rules

spell out our concerns about the effect those changes could have on a huge portion of all U.S. housing starts. Filed with the Office of Air Quality Planning and Standards on Oct. 9, our comments point out that under the current ozone standard of 0.08 parts per million (ppm), 14 of the top 20 housing markets are currently in non-attainment areas for National Ambient Air Quality Standards (NAAQS). If the ozone NAAQS were to be lowered to 0.07 ppm, as the EPA has proposed, 19 of the top 20 housing markets would be in non-attainment areas. In total, the proposed new standard could affect as many as 33 new metro areas that account for $53 billion in single-family construction annually. But the significance of this proposed new ozone standard becomes truly apparent when one realizes that for the first time, entire regions of the country would become subject to federal requirements for controlling air pollution – along with over a dozen smaller housing markets in certain areas, including places like Cedar Rapids, IA and Topeka, KS. Because these jurisdictions do not have prior experience with such requirements, significant delays in key transportation infrastructure and housing projects will inevitably result.

The bottom line, we told the government, is that any downward revision of the current EPA ozone standard will result in additional rules and regulations at the state and local level that will directly impact home builders and developers. Examples range from impact fees on new subdivisions based on anticipated vehicle emissions, to restrictions on the use of diesel construction equipment and delays in getting needed public infrastructure projects approved. Our final assessment, as our comments state for the record, is that the government's latest proposal "ignores the vast amount of evidence that proves any revision to the ozone NAAQS is unachievable, unwarranted and unnecessary." A decision on this issue is expected from the EPA Administrator by March 12, 2008. In the meantime, for more info please contact: Matthew Watkins, x8327. [return to top]

The House approved creation of a National Housing Trust Fund

on Oct. 10 via H.R. 2895, the National Affordable Housing Trust Fund Act of 2007. The legislation, which passed by a vote of 264 to 148, would provide grants and other assistance to support producing, rehabilitating and preserving 1.5 million affordable-housing units over the next 10 years. The fund would be financed by House-passed bills that would take part of the FHA's mortgage lending surpluses (H.R. 1852) and from a portion of the portfolios of Fannie Mae and Freddie Mac (H.R. 1427). At this point, no comparable legislation has been introduced in the Senate. To view a detailed summary of H.R. 2895, click here. For more information, contact Scott Meyer at x8144. [return to top]

HBA pilot green building programs are being launched Oct. 15

in the latest step toward finalizing NAHB's new national green building program. The pilot programs involve volunteer HBAs testing the new verification process and online certification tools, and providing suggestions for possible improvements. The idea is to make sure the new program is intuitive, eases administrative burdens for local HBAs and is simple to navigate. Participants in NAHB's National Program Pilots will be announced on Oct. 15, and were selected with consideration to geographic diversity as well as other factors. They include:

-Three HBAs with existing green building programs
-Three HBAs just starting their own local green building programs
-Four builders willing to test the verification process directly
through the NAHB Research Center
-Two types of verifiers at each pilot location

For the latest developments in our efforts to create a national green building program, visit www.nahb.org/greenbuildingprogram, or contact Calli Schmidt at x8132.

NAHB Member Benefit: NAHB is committed to helping our members take advantage of arising opportunities in green building while avoiding inflexible, unworkable and costly mandates. [return to top]

Remember to apply for a SAFE Award by Oct. 19!

The deadline to apply for a Safety Award for Excellence has been extended to the end of this week, so you still have a chance to be a winner. The awards honor government officials and NAHB-affiliated associations who have contributed to safety advancements in the home building industry. Get all the information you need, including eligibility requirements, on our Web site, or contact Lindsay Cather at x8163. [return to top]