ReNews -- Remodelors Council News - February 15, 2006 (Print All Articles)
EPA Puts Sweeping Lead Paint Regulation in Federal Registry
The Environmental Protection Agency's newly proposed rule governing lead-based paint in the remodeling industry will not solve the serious health problem it was designed to help prevent: lead poisoning in young children.
Instead, the new rule, which EPA unveiled on Dec. 29, will add delays to renovation projects and cost home owners more.
“There is no scientific research that shows that remodeling causes lead poisoning in children,” said Bob Hanbury, a Newington, Conn. remodeler and past chair of the Remodelors Council. “Federal efforts should focus on finding the sources of lead exposure — usually tap water, peeling paint or contaminated soil or dust — and developing ways to mitigate that exposure. Instead, this rule concentrates on expensive restrictions that only affect the cost of remodeling.”
The new EPA rule, which applies to all contractors working in homes built before 1978, changes practices regarding training, licensing and insurance, the costs of which will ultimately be passed on to home owners. Because of liability issues, it is likely that fewer firms will continue working on pre-1978 homes, which will limit the availability of certified renovators and drive costs even higher.
The EPA’s recent announcement follows a year of change that has many NAHB members wondering what happened to the voluntary program that was envisioned both by the agency and affected home builders. A pilot Lead Safety Partnership program was unveiled just before the 2005 International Builders’ Show, but in May the agency announced that the program had been withdrawn. No explanation was provided.
A voluntary program combined with effective consumer education, NAHB believes, would create a more affordable market for consumers who want a remodeling firm that follows lead-safe work practices.
“By eliminating universal compliance costs, there is a greater likelihood that a home owner needing a lead-safe contractor can afford one,” Hanbury said. “There is also less incentive for a home owner to find an alternate, and potentially less safe, means of getting remodeling done.”
Disagreeing With EPA’s ‘Facts’
Hanbury said he disagrees with the EPA’s assertion last month that it is proposing “some simple but effective work practice standards.”
“The work practices discussed are not at all simple,” he said. “Some of the steps involve advanced technology like HEPA filter vacuums that are not common on a typical job site. Conventional vacuums can be outfitted with inexpensive filters to remove lead-contaminated dust, but the new rule does not allow them.”
Also, the standards apply to “all persons who do renovation for compensation,” leaving a wide range of projects unregulated.
“If it is so important to protect the consumer from the ‘danger’ of remodeling, then EPA needs a new standard,” Hanbury said. “Half the remodeling work in the U.S. is done by the home owner, not a contractor.”
A proposed requirement for the firm to clean the work area after completing the renovation raises another problem, he said.
“It’s one thing to clean up after you are finished, but this rule leaves us exposed to the responsibility of trying to fix pre-existing conditions. This asks us to take the place of lead-abatement firms and likely will result in remodelers declining jobs in homes that need lead-safe work practices the most,” Hanbury said.
Finally, the new rule is based on “just bad science,” Hanbury said. “There is no study that links remodeling jobs to children having blood lead levels higher than 10 micrograms per deciliter, which is the Center for Disease Control’s definition of an elevated level in a child under the age of six.”
“We also know that 90% of the homes built between 1960 and 1978 do not contain lead paint. Forcing all remodeling firms to comply with onerous new rules even when there is a low likelihood of exposure is a waste of money and time that would be better spent on targeted prevention and eradication efforts,” he said. “The EPA is headed in the wrong direction with this rule.”
Learn more about the rule by visiting the Council's lead paint section of NAHB's Web site.
Remodeling Growth Will Cool in 2006
Growth in the volume of remodeling jobs by the nation’s home owners will be simmering down this year in tandem with a small decline in home building and sales activity, Kermit Baker, a director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies, said earlier this month at the International Builders’ Show in Orlando, Fla.
Harvard’s Remodeling Market Indicator showed that home owners spent $149.5 billion on residential improvements last year, a 4.3% increase over 2004, Baker reported. During the first quarter of 2005, growth was 20.4% ahead of the same period of 2004, he said, before moving sharply downward to a range of 4.3%-4.4% in the second half.
In his projections for remodeling activity, Baker said he expected to see “a trajectory of easing moving forward” as consumers rein in their optimism about the housing industry to some degree because of rising mortgage interest rates and a slower pace of home price appreciation. However, remodeling should fare better this year than overall housing activity, which is expected to decline by 4%-5%, he said.
Tracking remodeling contractors who are not in the specialty trades and who do have employees, Baker cited payroll statistics gathered by the Department of Labor showing annual payroll growth moving down into an estimated 2.5%-3% range in the fourth quarter of 2005, down from job growth exceeding 5% in the first half of the year.
In third-quarter 2005 findings from the Home Design Survey of the American Institute of Architects, where Baker is the chief economist, the 600 architects who were asked to evaluate the remodeling market identified additions and alterations; kitchen and baths; and townhouses and condominiums as the healthiest parts of the home remodeling market. Demand from first-time buyers and in affordable housing registered the lowest on the list, with a negative response.
Total remodeling volume, including maintenance, amounted to an estimated $275 billion in 2005, he indicated, with $220 billion spent on owner-occupied units, and the balance of $35 billion going for rental units. This represents almost a doubling of remodeling activity over the past decade, and shows that remodeling activity is responsible for about a 40% share of the entire U.S. residential market.
While Baker cited research showing that there is little danger of consolidation squeezing out smaller remodelers anytime in the foreseeable future, an issue that is of greater concern to medium-sized home builders, larger firms in the current slowdown are in a good position to exceed the average growth rates for the industry overall.
Larger Companies Will Grow Faster
“The remodeling market remains fragmented,” Baker said, with the top 500 contractors accounting for 3.9% of the market in 2003. However, according to Census Bureau statistics, the largest 3.2% of the nation’s remodeling general contractors with payrolls, with annual billings of $2.5 million or more, accounted for 32.7% of total firm billings in 2002.
In 2004, according to Qualified Remodeler magazine, 47% of the country’s top 100 remodeling firms engaged in specialty jobs; 12% were design/build contractors; and 21% engaged in other operations such as restoration or insurance repair. Only 20% of these firms were full-service remodelers, Baker said, an indication that these companies typically focus their business in an effort to remain more competitive and efficient.
From 1999-2004, according to Joint Center analysis of Qualified Remodeler surveys, the top 10 remodelers out of the top 100 registered median annual growth rates in revenue of 7.7%, compared to 2.2% for the middle 41-50 companies and 1.3% for the 91-100 biggest.
The analysis also found that median annual growth of the top 10 firms was highest over the five-year period for the full-service companies, with 10.9% growth; followed by 7.6% for those classified as specialty remodelers, 5.1% for design/build and 6.6% for other work.
Because large firms are able to sub out more work and achieve significant efficiencies, they are able to attain far higher levels of worker productivity — measured as net revenue per employee — than smaller remodelers, Baker reported.
With some 35 million homes sold over the past five years and home owners holding $10 trillion in equity on properties worth $17 trillion, Gopal Ahluwalia, NAHB’s staff vice president for research, said he expected the remodeling market to remain healthy over the long-run, growing 2%-3% annually on average, adjusted for inflation, through 2013.
Ahluwalia was not too concerned about the upward drift in interest rates, pointing out that 50% of remodeling activity isn't usually significantly affected by the rates. "When you have a leak in the roof, you can't wait for interest rates to come down or the economy to improve."
Baby Boomers Won't Bust Remodeling Market
Home builders and remodelers can stop worrying about the baby bust that was supposed to slow demand to a relative trickle following the exuberant years of the expansive baby boom generation, according to William Apgar, director of the Joint Center for Housing at Harvard University.
From research with colleague Amal Bendimerad on the demographics of U.S. households, Apgar told an audience at the International Builders’ Show last month in Orlando, Fla. that it is now apparent that the Gen X population, those born between 1965 and 1974, has received a healthy infusion of immigrants and in sheer numbers has come within hailing distance of the massive post-World War II generation born between 1945 and 1964.
“What looked like a big cliff is now just a small valley,” Apgar said. The Generation X population may now be about 5% smaller than the generation that has just preceded it, he said, but that difference will be hardly noticeable to the housing industry because Gen Xers spend more.
Apgar listed several demographic findings about GenX suggesting expanding opportunities for builders and remodelers:
Dissecting home improvement activity by generation, Apgar demonstrated that Gen Xers are likely to be a healthy force in the nation’s housing market and will be able to pick up the slack as the baby boom jolt begins to fade:
While there is a scarcity of survey data to substantiate the emphasis of Gen Xers on quality, Apgar said that consumer design magazines provide a good idea of the products they are looking at. New construction is defining the upgrades, and condo developers, who have to grapple with soaring land costs and still provide “essential frills” for their buyers, are doing a good job, Apgar said, of putting the value package in while maintaining certain price levels.
Vince Butler to Lead Remodelors Council in 2006
Vince Butler, CGR, GMB, CAPS, president of Butler Brothers Co. in Clifton, Va., was recently appointed as 2006 chairman of the NAHB Remodelors™ Council during the International Builders’ Show in Orlando, Fla. As chair of the leading professional organization for home remodelers, Butler works to continue growth of industry professionalism, consumer awareness of remodeling, protection against contractor fraud, as well as keeping members at the forefront of industry developments.
“As Chairman of the Remodelors Council, my goal in 2006 is to build and foster relationships throughout the industry,” Butler said. “Whether it’s with our members, consumers, suppliers or other organizations, I plan to work one-on-one to demonstrate the value Council membership brings to the table.”
Butler is a second-generation builder and remodeler from the Northern Virginia suburbs of Washington, D.C. He has served as President of Butler Brothers Corporation since 1984 and has extensive experience in the design, sales and production of residential construction and remodeling.
Butler received a business degree in Real Estate Finance from Virginia Tech and is a
Certified Graduate Remodelor (CGR), Graduate Master Builder (GMB) and Certified Aging-In-Place Specialist (CAPS). He also teaches CGR, GMB and CAPS courses across the country. Butler has served in several positions at the local and national level of NAHB including Chair of his local Remodelors Council, Trustee with the NAHB Remodelors Council and Chair of the CGR Board of Governors.
The Council will have two Vice Chairmen in 2006 for the first time in its history. Mike Nagel, CGR, CAPS will lead the Council in 2007 and Lonny Rutherford, CGR, will follow in 2008.
Council Launches New Consumer Ad
The Council has launched a new consumer ad promoting members and the member directory. The ad will run in Hanley Wood's House Beautiful: Home Remodeling & Decorating, House Beautiful Kitchens/Baths, and House Beautiful Kitchen & Bath Planner.
Each magazine goes to approximately 300,000 consumers who are looking for home remodeling ideas. The ad directs consumers to the new Directory of Professional Remodelers, which is a list of all Council builder members.
The results from a brainstorming session during the Council's Public Affairs Committee meeting in Reno were used to create the ad, and it includes the words “integrity”, “educated”, “experienced” and “innovative”, which were deemed the best words to describe Council members.
Ed McGowan, Council Leader, Dies at 69
Edward W. McGowan, CGR, the sole 2003 NAHB Remodeling Hall of Fame inductee and a builder/developer in the greater Binghamton, N.Y. area, died on Dec. 28 at his winter home in North Carolina at age 69.
McGowan was an accomplished businessman who started his own construction and remodeling company in 1959 and later branched out into land development. In the 1980s while building the 94-unit Quinn Estates in Chenango, N.Y., he worked with New York State officials to lower mortgage rates for first-time home buyers. He also invented his own prefabrication process to make homes more affordable to working people.
He was dedicated to his family, his community and his industry and had a long history of service to the home building industry at the local, state and national levels. He also served numerous community groups.
Within the industry, McGowan played an important role in the development of the Remodelors™ Council's Certified Graduate Remodelor™ (CGR) professional designation program and in the publication of "Quality Standards for the Professional Remodeler." At NAHB, he was a senior life director, Area II vice president and past chair of the board of trustees of the Remodelors™ Council.
McGowan was awarded the 1986 Distinguished Service Award from the New York State director of housing and was inducted into the New York State Builders Association (NYSBA) Hall of Fame in 2000. In 1989, McGowan was named to the prestigious remodeling "Big 50." In addition, his company's work has been featured in The New York Times and numerous industry publications. He was serving as chair of the New York State Builders Association Research and Education Fund at the time of his death.
Within the community, McGowan was involved with his local Boy Scout troop, Rotary Club, Chamber of Commerce and other community organizations. In 1993, he was named the Broome County Small Business Person of the Year.
He is survived by his wife of 46 years, Sally McGowan; his son and daughter-in-law, Mike and Nancy McGowan; daughter, Sue Bartlett; and son, Bill McGowan, all of Binghamton; as well as six grandchildren, numerous nieces and nephews and two sisters. A third sister died the same day as McGowan, Dec. 28.
Donations may be sent in McGowan' name to the Remodelors Fund at NAHB's National Housing Endowment at 1201 15th Street NW, Washington, D.C. 20005, or to the New York State REF for scholarships in the building industry, 1 Commerce Plaza, Suite 704, Albany, N.Y. 12210.
Remodelors Council in Wall Street Journal and More!
2006 kicked off with a bang, as CNN promoted NAHB.org as the source to find professional remodelers during a news segment at the International Builders Show. In addition, the Wall Street Journal interviewed current Council Chairman Vince Butler, and former Chairmen Don Novak and Bill Owens on the state of the industry. The article was distributed to other newspapers all across the country. Read that article here. The Dallas Morning News also interviewed Don Novak and Vince Butler.
The Certified Aging in Place Specialist (CAPS) program went international in January when a Web site dedicated to the mature market in the United Kingdom featured the designation.
These stories followed a strong end of the year, as Entrepreneur magazine selected aging in place as a hot new business for 2006 (see bottom of page) and Smart Money magazine endorced the Remodelors Council as a source of home remodeling professionals.
Committee Highlights from 2006 Remodelors Council Winter Board
2006 Remodelors Council Winter Board Meeting
Public Affairs Committee
Remodelor of the Month
New Consumer Ad
RC In the News
Local Council Brainstorm
CAPS Board of Governors
Rules and Procedures
CAPS Statistics/ University of Housing Report
CGR Board of Governors
Public Affairs Update
Leadership Development Committee
Membership and Local Council Development Committee
Current Membership Statistics
Year Long Membership Contest
Members on the Web Directory
Education and Business Development
IBS Education Programs
Cost of Doing Business Study
Business Associates Committee