Monday Morning Briefing Letter - 10/13/2008 (Plain Text Version)

By Sandy Dunn, NAHB Chairman and
Jerry Howard, NAHB Executive VP and CEO

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Understanding housing's importance to state and local economies

is particularly important as our leaders seek innovative ways to stabilize and rejuvenate communities across the nation. A newly released NAHB study quantifies the contributions that home building and related activities make in terms that policymakers at every level can understand and appreciate.

The study, which is available to the public via NAHB's HousingEconomics.com, estimates the direct economic impacts of new residential construction and remodeling, including the number of jobs and income created as well as the amount of government revenues generated. In 2008, NAHB estimates that:

- Construction of 1,000 new single-family homes creates 3,049 jobs
and generates more than $89 million in tax and other revenues for
federal, state and local governments.

- Construction of 1,000 new multifamily rental units creates 1,155 jobs
and generates more than $33 million in tax and other government revenues.

- $100 million worth of residential remodeling activity creates 1,109 jobs and
generates more than $30 million in tax and other government revenues.

These estimates are based primarily on industry accounts published by the U.S. Bureau of Economic Analysis, which is part of the national accounting system that is used to produce official estimates of Gross Domestic Product. They clearly demonstrate housing's importance to the U.S. economy and give credibility to the argument that the most effective way to turn this economy around is to shore up the housing sector, noted NAHB Chairman Sandy Dunn in an official statement. And in adversity, we sometimes find opportunity, she added. "This is the time to be creative and work collaboratively. Builders, developers, lenders, local policy makers and other stakeholders need to work together to promote smart growth practices that can help us build vibrant communities that meet the needs of families across the economic spectrum." Read the complete study here, or contact NAHB economists and study authors Helen Fei Liu (x8488) and Paul Emrath (x8449) for details.

Low-ball appraisals are a significant stumbling block

in lining up credit for the construction and sale of new homes, and a special session devoted to this topic at NAHB's Fall Board of Directors meeting was meant to get builders some answers on this troubling issue. Convened and moderated by NAHB Chairman Sandy Dunn on Sept. 24, the presentation featured representatives from the Appraisal Institute explaining some of the rules and procedures that appraisers use and fielding builders' questions regarding the problems that have been emerging. Incoming Appraisal Institute President Jim Amorin, of Atrium Real Estate Services in Austin, TX, was on hand along with Robert Caringella, a principal of Jones, Roach & Caringella, Inc. in San Diego. Both gentlemen acknowledged that they are seeing systemic problems in today's appraisals of residential properties, and made several suggestions about what builders can do to better deal with the situation.

Because financial markets are in such disarray, appraisers are having a difficult time doing their job, they said, particularly as home prices continue to decline in certain markets. Complicating the situation are bargain-basement sales of foreclosed and "short sale" homes, which are creating a downward pull on the national median home price. These and other factors mean that "Your appraiser needs to have local knowledge and needs to be putting an ear to the ground and finding out what's really happening," said Caringella. "Give them the facts; drag in sales people, engineers; walk the appraiser through the analysis," he said. Builders can ensure the appraiser is knowledgeable about the property by providing a complete pro-forma that packages the budget, costs and fees, finish levels of the house, pricing support and real information on concessions, he added. Read more on this important informational session in NBN Online, or contact Bill Renner at x8597. [return to top]

An emergency interest-rate cut

was announced by the Federal Reserve in conjunction with cuts by other central banks worldwide on Oct. 8. Citing the worsening crisis in global financial markets, the Fed lowered its fed funds rate by half a percentage point to 1.5%. Also on Oct. 8, the Fed reduced its discount rate – the level at which it lends money directly to banks and Wall Street firms – by half a percentage point to 1.75%. These bold moves followed steps taken by the Fed earlier in the week to free up potentially trillions of dollars for banks and major businesses beyond what was called for in the $700 billion rescue plan approved by Congress. An additional rate cut by the Fed at its regularly scheduled meeting on Oct. 29 is still possible, as the Fed has cut rates at regular meetings following each of its previous three emergency rate cuts in January of this year and January and September of 2001. [return to top]

NAHB.org has a new search tool powered by Google!

That means it’s easier than ever for you to find the information and member resources you're looking for with targeted results, alternate search terms, and suggested spellings. It also means that our site is more user-friendly than ever for both members and the general viewing public. The new tool also features fully-indexed downloadable documents such as PDFs. And if you're looking for contact information for an Executive Officer, NAHB staffer or committee member, simply type the person's name into the search box. You'll be surpised at how much more versatile our site really is with this top-notch search engine in place. Check it out at the top of every page, and let us know what you think! Contact: Hina Ansari, x8137. [return to top]

Extensions of energy tax incentives for new-home construction,

existing homes, commercial buildings and larger multifamily properties were included in the financial rescue package approved by Congress last week. In particular, the legislation extends the new energy efficient home credit from its previous expiration at the end of 2008 to the end of 2009. Contained in Section 45L of the Internal Revenue Code, this measure allows a $2,000 tax credit for the construction and sale or lease of a home that achieves a 50% reduction in energy use relative to a home constructed according to the 2004 IECC energy code. The fact that usage of this credit has increased nearly three-fold from 2006 levels indicates that it is performing as Congress intended and gaining acceptance in the marketplace. NAHB also successfully advocated for numerous regulatory changes that have made it easier for builders to certify that their energy-efficient homes qualify for the credit.

Meanwhile, the extension of the credit under Section 25C of the Internal Revenue Code will provide immediate help with reducing utility bills in existing homes. Taxpayers can use this incentive to, for example, purchase high-efficiency windows or heating and cooling appliances, or make other home renovations that can save literally hundreds of dollars per year in energy costs. This tax credit, which expired at the end of 2007, has now been extended through the end of 2009. The extended tax credit under Section 179D of the code supports energy efficiency in the multifamily sector by providing a deduction per square foot of the property placed in service. This credit, which targets commercial and large multifamily energy improvements, has been extended five years, to the end of 2013. Read more in NBN Online, or contact Greg Brown (x8421) for details. [return to top]

Find out about the EPA's new lead paint rule

in a special NAHB audio seminar scheduled for 2:00 pm EST on Tuesday, Oct. 28. Presented by the NAHB Remodelers and the NAHB University of Housing, the seminar will provide participants with details on what the new rule covers, what remodelers will have to do to be in compliance, and where to go for more information. Featured speakers include NAHB Remodelers Lead Based Task Force member Brindley Byrd, CGR, CAPS; NAHB member and member of the Connecticut Department of Public Safety State Codes and Standards Committee Bob Hanbury, CGR; and NAHB environmental analyst Matt Watkins. The EPA's new lead paint rule takes effect in April of 2010. Read more about it at www.nahb.org/leadpaint and access a free NAHB lead paint resource guide here. A fee of $79 per phone site applies for the audio seminar. Register for it and get more information here. [return to top]

Legal advice for green builders and remodelers

is available via a new brochure from the NAHB Building Products Issues Committee. “Before You Build Green: A Primer on Avoiding Liability Pitfalls” offers pointers on marketing, contracts, warranties, training and compliance issues — all with an eye toward promoting successful green building projects and limiting exposure to liability. Among other examples of advice provided by the brochure, builders/remodelers are cautioned against making marketing promises that may not be realized, such as saying that the home will achieve a certain level of energy efficiency; whether energy savings will actually be attained will depend on occupancy habits and effective maintenance. As another example, the brochure advises readers to make sure that trade contractors are adequately trained to properly install green products or components that may be unfamiliar. The report also points builders to additional technical and educational assistance. Download the brochure online, or order a print version by calling 800-368-5242 x8291. Contact: David Crump, x8491. [return to top]

A $265,000 OSHA safety grant

has been awarded to NAHB and the NAHB Research Center for purposes of training English- and Spanish-speaking employees in the residential construction industry how to recognize hazards and prevent falls from scaffolds and ladders. In all, Susan Harwood Training Grants totaling $6.7 million have been awarded to a total of 36 recipients this year. Reacting to the good news for NAHB's program, Construction Safety & Health Committee Chairman Buck Roberts noted that more than 3,500 residential construction employees have received safety and fall prevention training since 2006 as a result of OSHA-funded training seminars. "Thanks to this grant, NAHB will again provide critical fall prevention training to the top home building markets throughout the United States in 2009," he said. Since 2000, OSHA has supported NAHB and the NAHB Research Center with over $1.5 million in grants for safety training and materials. For more information, contact Rob Matuga, x8507. [return to top]

Don't miss these upcoming BIG events:

Construction Forecast Conference
Oct. 22 in Washington, DC

Custom Builder Symposium
Oct. 24-26 in Austin, TX

Building Systems Councils Showcase
Nov. 16-19 in Memphis, TN

International Builders' Show

Jan. 20-23 in Las Vegas, NV

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NAHB offices will be closed on Columbus Day

this Monday, Oct. 13. We will be back in business right after the federal holiday on Tuesday, Oct. 14. Until then, we wish our readers a very pleasant, long weekend. [return to top]