Expressing builders' support for sensible flood insurance reforms,
NAHB President David Pressly testified before the Senate Banking Committee on February 2nd.

David told Senators that NAHB is in favor of efforts to reform the National Flood Insurance Program (NFIP) in order to ensure that program's long-term financial stability, yet he also cautioned against legislative proposals that would constitute an overreaction to unusual circumstances stemming from last year's devastating hurricane season. "While a financially stable NFIP is in all of our interests, the steps that Congress takes to achieve this aim have the potential to greatly impact housing affordability and the ability of local communities to exercise control over their growth and development," he said.

In order to help the Federal Emergency Management Agency (FEMA) and the NFIP adapt to changing conditions, NAHB can support adoption of several proposed reforms, such as:

1) Providing FEMA the authority to allow for slightly higher annual premium increases;
2) Increasing coverage limits to better reflect today's home values;
3) Creating more insurance options to allow policyholders greater
     flexibility and provide additional home owner benefits while advancing
     the program's solvency;
4) Raising the minimum deductible for paid claims in order to provide a strong
     incentive for owners to protect their homes; and
5) Updating Flood Insurance Rate maps to eliminate large discrepancies between
     what was mapped as the 100-year floodplain decades ago and what
     the 100-year floodplain is today. 

However, David stipulated that NAHB opposes any effort to statutorily change the 100-year floodplain standard to a 500-year floodplain standard as a way to require more home owners to participate in the NFIP and thereby bolster its finances. Likewise, he said, Congress should NOT consider mandating flood insurance for homeowners who reside behind flood control structures such as dams and levees until FEMA can adequately demonstrate that the benefits of such compulsory coverage outweigh the costs.

Proposed changes to the NFIP, such as a shift to the 500-year floodplain, would require millions of additional property owners to purchase insurance, while expanding residential design standards beyond current law (to require, for example, elevating new structures on the Gulf Coast), could add an average of $30,000 to the cost of a new home. NAHB's advocacy on this issue is aimed at preventing unnecessary costs for builders and keeping homeownership affordable to as many Americans as possible. Contact: Michael Strauss, x8252 or Scott Meyer, x8144.

What President Bush did and didn't say in his State of the Union
address was encouraging to the nation's home builders on several counts. Notably absent from the Jan. 31st speech was any mention of the unwelcome proposals that were recommended by a tax reform panel several months ago to "simplify" the federal tax code. Those proposals, which include replacing the mortgage interest deduction with a much more limited 15% tax credit, eliminating deductions for state and local taxes (including property taxes) and eliminating the Low Income Housing Tax Credit, sparked an immediate and strong response from NAHB in the media and on Capitol Hill. The fact that the President did NOT reference the proposals is a good sign that his Administration does not embrace them and will not go forward with them in the coming year. Even so, NAHB will remain vigilant on this issue to ensure that current housing tax incentives aren't targetted to help pay for other tax proposals that require major revenue offsets. 

What the President DID include in his speech was a call to permanently extend tax relief that's currently set to expire in the next few years, as well as a call to enact immigration reform that provides for a guest worker program — both of which initiatives are supported by NAHB. The President also expressed his desire to pass necessary healthcare reforms that would grant individuals and small business employees the same opportunities to purchase health insurance as are currently enjoyed by those working for large corporations. This objective squares with NAHB's long-term advocacy of Association Health Plans. Moreover, NAHB certainly looks forward to working with the White House and Congress in the coming year to enact policies that the President said are needed to provide "more opportunities to own a home and start a business."  Contact: Jim Tobin, x8258.  [return to top]

An instructive study on the impact of local regulations
on housing costs has produced some very interesting findings that add further credibility to what home builders have been saying for many years in localities far and wide. The study, which was conducted by the Pioneer Institute for Public Policy Research and Harvard's Rappaport Institute for Greater Boston, examined development regulations in 187 cities and towns across eastern Massachusetts. It determined that such regulations can add as much as 30% to the cost of a new home. And that's not all. Findings showed that for each instance where communities had increased minimum lot sizes by one-quarter of an acre, about 10% fewer homes were permitted, and that within eastern Massachusetts, at least 14 municipalities zone more than 90% of their land in two-acre increments. Fully half of the municipalities that were studied zone at least one-acre lot sizes on more than half of their land. Called "Regulation and the Rise of Housing Prices in Greater Boston," the completed study was presented during the 2006 International Builders' Show in Orlando this January. Read more about it in the latest edition of NBN Online, or contact Blake Smith, x8583. [return to top]

Requiring banks to provide more detail on their construction lending
activities should help expand financing channels for residential production loans and is a step advocated by our association for several years under the direction of former NAHB President Kent Conine. NAHB therefore applauded a newly announced decision by federal banking regulators to do just that. The new policy will help differentiate the disparate risks posed by residential versus commercial lending activities, a necessary step toward developing a secondary market for single-family housing production loans. Specifically, regulators are telling large banks and banks with a high volume of residential production loans on their books to break out their one-to-four family housing production data in their quarterly Bank Call Report, effective March 31, 2007. All other banks will need to begin reporting this breakdown of their construction loans as of March 31, 2008.

Bottom line for NAHB members: More residential-specific data will be reported on loan volume and loan performance, which in turn will invite market analysts and investors to treat housing production loans more favorably. Such information should help build a secondary market for construction financing, which will make it easier for builders to get the money they need to borrow for certain projects. Contact: Michael Carrier, x8529. [return to top]

Alan Greenspan's last day at the Federal Reserve Board
on Jan. 31 marked an end to an era in which, for the past 18+ years, he has shepherded the U.S. economy through all kinds of weather and with many accolades overall. The day also brought with it an expected, additional increase in the benchmark short-term interest rate as Federal Reserve officials voted to further tighten monetary policy. Offiicials also did not rule out the possibility that they might have to raise the rate again in coming months to stem potential inflation risks. This was the 14th time since June 2004 that the Fed has raised its benchmark federal funds rate. The Fed now operates under its new Chairman, Ben S. Bernanke, who President Bush nominated for the office last October.

NAHB members can read what our chief economist, Dave Seiders, has to say about the current direction of interest rates and the economy in his Eye on the Economy report. For help receiving this report, contact Elliott Finkelstein, x8055. [return to top]

What's up with the date for this year's Spring Board meeting?
Readers who've correctly noted that NAHB's Spring Board of Directors Meeting, scheduled for May 10-14, 2006, ends on Mother's Day this year will be happy to know that this should be the last of two of our meetings to confront such an unavoidable conflict. Unfortunately, when meeting and room space had to be booked quite a few years ago, the only dates available ended on Mother's Day for the years 2003 and 2006. Though every effort was made to secure space on different weekends, the reality was that nothing else could work. According to our meeting planners, the problem stemmed from the fact that we needed an earlier arrival date for those participating in our very important Legislative Conference — an event that had then been re-combined with Spring Board. At the time, an announcement to this effect was made to Board members and others who would potentially be affected. The NAHB Senior Officers and staff apologize for every inconvenience, but wholeheartedly encourage as many of our members as possible to participate in both NAHB events. Please direct any questions on Spring Board logistics to Wayne Stetson (x8180) or his staff (x8111).  [return to top]

February is National Designation Month,
that special time of year when NAHB's University of Housing steps up its promotion of ongoing education in the housing industry by recognizing the achievements of professional builders and letting the public know how important it is to select a contractor who holds a designation from NAHB. Such designations, which come in more than a dozen varieties, are a way to advance your career, learn and improve certain skills and demonstrate your committment to professional growth within the housing industry. Helpful resources for promoting National Designation Month can be found online at: www.nahb.org/NDMTools. Here, you'll find articles for use in newsletters, sample press releases, flyers, logos and more. Also, check out www.NAHB.org/designations to see the wide range of educational opportunities available. Contact: Niki Clark, x8061, or the University of Housing registrar at x8338.

NAHB has the most targeted curriculum, accomplished teachers and widely respected education opportunities in the business. Your membership in NAHB gives you discounted access to these resources. Programs that lead to professional designations, including the Certified Aging-in-Place Specialist (CAPs), Certified Graduate Builder (CGB), Certified Graduate Associate (CGA), Master Certified New-Home Sales Professional (MCSP), Registered in Apartment Management (RAM) designation and many others, give you the competitive edge you need as well as the satisfaction of knowing you're the best you can be. 
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