Nation's Strong Housing Market Seen 'Simmering Down' In 2006
Following strong growth over the past three years, home sales and housing production will ease back next year to around 2004’s historically healthy levels, according to economists participating in a teleconference hosted by NAHB on Dec. 21.
Striking an overall positive tone, NAHB Chief Economist David Seiders and JP Morgan Chase Senior Economist James Glassman were largely in agreement in their forecasts for the coming year in terms of the outlook for housing and the overall economy.
“We’re looking for a good economy through 2006, with GDP growth remaining strong and with job creation running at roughly the same pace as in 2005 — key positive factors in the housing outlook,” said NAHB’s Seiders.
“For housing, it will be a systematic simmering down process toward more sustainable levels of sales, production and price appreciation as opposed to a full-blown cyclical contraction. In terms of single-family sales and starts, we’ll basically be retracing the increases we saw in 2005, heading back to 2004’s very healthy levels.”
Seiders’ forecast envisions overall housing starts reaching 1.94 million units in 2006, which is down from an estimated 2.06 million units this year and very close to 2004’s 1.95 million units. Single-family starts will decline to 1.59 million next year from this year’s 1.71 million units, while sales of new single-family homes will ease to about 1.19 million units from this year’s record-breaking 1.27 million. Likewise, multifamily starts will slip to 350,000 in 2006 from about 354,000 in 2005.
“Multifamily is doing well, with the condo share of the market up to about 50% at this point,” Seiders noted. “We think multifamily starts will be pretty stable, with condos losing some market share in the year ahead and the rental side regaining some ground.”
Meanwhile, manufactured or “HUD-code” homes can be expected to see a temporary surge, due in part to orders for affordable housing in areas hit by the 2005 hurricanes.
“The remodeling sector in NAHB’s forecast is also showing persistent positive growth during 2006, partly reflecting hurricane-related expenditures. There’s also a huge amount of home equity available for owners to borrow against for home improvements across the country,” said Seiders.
Seiders foresees only a bit more tightening of monetary policy by the Federal Reserve in the coming year, thanks to the expectation that inflationary pressures will be kept in check. The average rate on a 30-year, fixed mortgage, recently around 6.3%, should inch up gradually to about 6.75% by the third quarter of 2006 and average about 6.6% for the year as a whole.
The pace of home price appreciation will be cut about in half over the next year, from an estimated average of 10.7% for 2005 as a whole (according to the OFHEO house price index for home purchases) to 6.5% in 2006 and about 4.4% in 2007.
The rate of price appreciation may have peaked in the second quarter of this year, Seiders noted, observing that many builders are reporting increased buyer resistance to the higher costs of housing and are turning to buyer incentives such as upgraded options to help maintain sales volume.
“It’s pretty obvious at this point that the real estate market is gradually shifting to more of a buyer’s market,” said Glassman. “This has been a case of real estate prices catching up to market fundamentals — not a ‘bubble.’” With this in mind, “It’s reasonable to assume that house-price appreciation will be slowing down to the single digits.”
Glassman’s description of the economic outlook for 2006 is “growth without the steroids.” In other words, he explained, conditions will be relatively good but without the benefit of tax cuts or cuts in interest rates by the Federal Reserve. He too sees core inflation remaining relatively tame in 2006, gauging it at between 1.75% and 2%, which is why the Fed should be able to refrain from tightening monetary policy more than once.
Overall, Glassman believes we’re just hitting the midpoint of an economic expansion, and “The next several years should present a good backdrop for growth with low inflation. It looks to me like a pretty good — if not ‘boomy’ — outlook for the housing sector,” he concluded.
EDITOR’S NOTE: A full replay of the teleconference is accessible by calling 888-203-1112 and entering pass code 4770200.
Housing Tax Incentives Show Strong Public Support
Given a choice of simplifying federal tax laws or retaining current housing incentives, Americans resoundingly prefer the latter, according to a new nationwide survey of 1,001 adults.
Two out of three survey participants (68%) favor retaining deductions for mortgage interest and state and local taxes over a plan to simplify the current tax code, according to the polling conducted by RT Strategies on Nov. 17-20.
“The survey offers a cautionary note for those in the Administration and on Capitol Hill who
may be tempted to endorse the recommendations of the President’s Advisory Panel on Federal Tax Reform, which would wipe out popular tax incentives that promote homeownership and affordable housing,” said Jerry Howard, executive vice president and CEO of NAHB.
The White House and Treasury Department have yet to comment on the advisory panel’s proposal, which was presented to the Administration on Nov. 1 as part of an overall attempt to overhaul the tax code.
The plan calls for replacing the mortgage interest deduction with a far more limited 15% tax credit. Also gone would be deductions for state and local taxes (including property taxes) and interest deductions for home equity loans and second homes. It would also eliminate the Low Income Housing Tax Credit, which accounts for the construction of more than 130,000 affordable rental housing units annually.
Commissioned by NAHB to determine the public reaction to revamping the current tax system, the polling firm found that an overwhelming majority of respondents support federal tax policies that foster the American dream of owning a home.
Specifically, 79% said it is reasonable for the federal government to provide tax incentives to promote homeownership, and 82% believe the government should use the tax code to encourage affordable housing.
“Registered Democratic and Republican voters in all age groups view efforts to tamper with home interest deductibility as a major threat to their retirement security and their ability to pay for their children’s college educations,” said Lance Tarrance, who, along with Thomas Riehle, is a partner of RT Strategies. “For many older home owners, the equity built up in a home also provides an important hedge against unanticipated health care costs.”
Moreover, 71% of survey respondents oppose the idea of changing the tax code to encourage people to invest more in stocks and bonds and less in the homes that they own. “And that is exactly what the advisory tax panel’s plan would do,” said Howard.
“As we learned in watching the recent California initiative battles, complex proposals tend to lose support, not gain support, as they get more public attention,” said Riehle. “This proposal starts with no real core of supporters.”
U.S. Move to Cut Lumber Duties a 'Halfway Measure'
While the U.S. Commerce Department’s decision to cut duties on Canadian softwood lumber imports is a positive development for housing affordability and consumers, the nation’s home builders are calling on the Administration to follow its legal obligation to completely rescind the tariffs.
“Reducing overall duties from 20.2% to 10.8% is a halfway measure,” said David Wilson, NAHB president and a custom home builder from Ketchum, Idaho.
As stipulated by NAFTA binational appeals panels, Wilson said the Administration should eliminate all the border taxes on lumber and refund to Canada more than $4 billion in duties that have been collected.
There are not enough trees available for harvesting in the U.S. to fill the demand for lumber to build American homes. Canadian imports account for more than one-third of the entire lumber supply used in U.S. home building and are essential for meeting domestic housing demand.
Expected to take effect in about a week, the new countervailing duty will be 8.7%, down from 16.2%, and an anti-dumping tariff will decline from 4% to 2.1%.
U.S. law allows countervailing duties to be imposed only if a foreign supplier is benefiting from subsidies and U.S. producers are being injured, or threatened with injury, as a result. Several rulings have found that neither of those requirements were met.
NAFTA panel decisions have unanimously determined that the Commerce Department’s finding of a Canadian lumber subsidy was based on flawed calculations. And separate binational review panels have ruled that there was no threat of injury from Canadian imports. Appellate decisions also have stipulated that the U.S. must refund the billions of dollars in duties that have been paid to date.
NAFTA rulings carry the weight of law in Canada, the U.S. and Mexico, but the Administration has not implemented decisions that invalidate the lumber duties and return all duties paid out by Canadian firms.
Hurricane Damage Reveals Need for Stronger Building Materials
As cities and towns in areas devastated by recent hurricanes begin the process of rebuilding, national attention has focused on the need to prevent future losses. Numerous building professionals and public officials — including President Bush — stress the importance of replacing leveled buildings with stronger structures that strictly adhere to current building codes.
Three days after Hurricane Katrina struck the
Gulf
Coast
, The Masonry Society sent a disaster investigative team to affected areas in
Mississippi
and
Louisiana
to assess how masonry structures fared against the Category 4 storm’s 145 mph winds. The team discovered that single-family homes and businesses built under current building codes using masonry products remained standing in most cases, while structures surrounding them often were severely damaged or washed away in the storm surge.
Sylvester Schmidt, Chairman of the Board of the National Concrete Masonry Association, said, "There is [also] a need to revise our thinking about the building materials specified for reconstruction. Particular attention needs to be paid to both proper construction methods and the use of substantial materials," Schmidt said. In an address to the nation on September 15, President Bush said, “Clearly, communities will need to move decisively to change zoning laws and building codes, in order to avoid a repeat of what we've seen.” Masonry products have been shown to provide greater protection against hurricane-force winds, reducing the likelihood of property damage as well as the loss of human life.
In August 2004, the Brick Industry Association (BIA) sponsored a wind-blown debris impact study conducted at
Texas
Tech
University
. Its purpose was to test the strength and durability of brick against vinyl and fiber cement in high-wind weather conditions such as hurricanes and tornadoes. A 9-pound, 7.5-foot-long two-by-four was propelled at each wall system at different wind speeds. The study revealed that while a wind-blown object traveling only 25 miles per hour would penetrate homes built with vinyl or fiber cement, the same object would have to travel more than 80 miles per hour to penetrate a brick wall system — more than double the 34 mile-per-hour requirement for high-velocity hurricane zones in Florida, and well above the 55 mile-per-hour ASTM international building standard that Florida adopted for essential facilities, such as hospitals and police stations.
“Studies like these prove that brick provides a high level of protection against winds associated with hurricanes. It’s simply safer and more durable than other building materials,” said Eric N. Johnson, P.E., director of engineering for Brick SouthEast. “During such a devastating hurricane season, we are reminded of how important this protection can be, particularly for residential structures.”
IBS 2006: Plan Now to Take Advantage of All NAHB Women’s Council Offers
The 2006 International Builder’s Show (IBS) has much to offer attendees, and as a member or prospective member of the Women’s Council, you’ve got access to that much more! Educational opportunities are plentiful this year, so be sure to attend as many NAHB programs as you can. The following programs are sponsored by the NAHB Women’s Council:
Education
Wednesday, Jan. 11, 2006
9:00-10:00 a.m. Build Your Business by Effective Association Networking (W306B)
Networking opportunities are plentiful within NAHB’s amazing network of councils committees and association. This program will demonstrate effective and appropriate ways to network with builders and increase the bottom line through your association membership.
Moderator: Linda Hebert, Diversified Marketing & Communications,
Pleasanton
,
CA
; Speaker: Sonny Antonio, Sunshine Design LLC,
Fairfield
,
Calif.
Thursday, Jan. 12, 2006
1:30-3:00 p.m. Dealing with Difficult Customers (S330)
Buying a home is an important decision, one that can cause buyers to be emotional. Attend this session to learn calming communication techniques and to prepare a personal plan that helps you handle those difficult situations.
Speaker: Marylee Putnam, Greater
Atlanta
HBA,
Atlanta
,
Ga.
Friday, Jan. 13, 2006
9:00-10:00 a.m. How to Identify Key Buying Motivators (S330)
Attendees will understand the five primary motivators that prompt buyers to make a decision. They’ll discover key questions to ask that reveal underlying reasons for their choices. Learn to use the buyer’s motivators to deliver an effective presentation that gets the sale.
Speaker: Paul Montelongo, Paul Montelongo Enterprises, Inc.,
San Antonio,
Texas
4:00-5:00 p.m. Time Management – Prioritizing, Balance & Personal Leadership (S330)
In this session, learn the keys to planning, prioritizing and getting organized. Take advantage of the four keys to using time management devices more effectively. This can’t-miss session promises to change the way you manage your time forever.
Speaker: Steve McClatchy, Alleer Training & Consulting,
Malvern
,
Pa.
Special Events
Thanks to the generosity of our wonderful sponsors, we’re hosting four great events this year. Come join us as we celebrate with the Women’s Council Breakfast, Awards Luncheon, and Spikette and Leadership Circle Receptions:
Wednesday, Jan. 11, 2006
7:45-9:30 a.m.
Breakfast sponsored by GAMA (W207C)*
1:00-2:30 p.m.
Awards Luncheon sponsored by Trane (Rosen Centre Hotel, Junior G)*
6:30-8:00 p.m. Leadership Circle Reception sponsored by Whirlpool (Marriott, Palazzo F-H)*
* Room assignments are subject to change. Please consult the IBS Program Guide onsite for final room assignments.
Meetings
The schedule that follows itemizes 2006 IBS Women’s Council meetings and events. Unless otherwise indicated, all meetings beginning on Tuesday are open to all members and prospects. Please be sure to attend committee meetings on Tuesday, the board of delegates and trustees meeting on Wednesday, and the local presidents and leadership orientation on Thursday, in addition to any other meetings that interest you.
ASSE Offers Safety Tips for Women in Construction
As the construction field continues to grow, the American Society of Safety Engineers (ASSE) is providing workplace safety tips aimed at helping reduce injuries and illnesses for women in the construction industry.
Both men and women working in construction are susceptible to reproductive hazards, sanitary concerns, muscle strains and lifting issues. However, these issues are not solved the same way for men as for women, notes ASSE member and author Carol Schmeidler, CSP, of Buffalo, N.Y.
In ASSE’s Construction Safety Management and Engineering book, Schmeidler stated in her ‘Safety and Health Issues for Women in Construction’ chapter that personal protective equipment (PPE) and clothing are often designed for average-sized men, so equipment and clothing that does not properly fit could reduce its effectiveness in providing protection. So for women, make sure the PPE fits and protects.
As for heavy loads, women construction workers may want to use alternate means such as dragging the load instead of lifting it or using a wheelbarrow or cart to move the load. The average construction worker can lift 30 to 50 pounds, but the actual load capacity can vary from person to person, regardless of gender.
Also alternate methods of completing a task can be helpful such as using a ladder when hammering nails just out of reach. Unnecessary stretching and awkward positioning to complete a task could result in back strain, muscle aches or even cause a fall if unbalanced.
Female construction workers may want to consider the following safety tips:
Always wear the correct size and type of PPE. Equipment that does not fit properly or is not used in the correct manner can further expose workers to hazardous conditions. This includes breathing apparatus, hardhats, hand protection, and much more equipment depending on the potential workplace hazards.
Find a healthy way to manage workplace stress. If one encourages hostility or harassment, it is important to report them to upper management and human resources.
Maintain your visibility at a construction site by wearing a reflective/bright vest. Individuals smaller in size may not be as visible to other workers, such as those operating heavy machinery and vehicles. Wearing bright visible vests over existing clothing can help increase visibility during adverse weather conditions such as fog or snow, as well as dusk, pre-dawn or other low visibility conditions, especially for flaggers at a work zone.
Always wash your hands after working. If hand-washing facilities are not available, carry your own sanitizing wipes.
Drink plenty of fluids to avoid dehydration. Working in the summer heat or around equipment that emits high levels of heat can increase the need for water/fluids.
Women working in construction need proper bathroom facilities, just as their fellow male workers. If conditions are not sanitary, women may consider bringing their own supply of sanitizing wipes, hand soap, etc. and in some cases, a small portable toilet. Remember that it is unhealthy to delay using the bathroom facilities, which can lead to infections or other health problems.
This need for sanitary conditions is even greater for pregnant workers, due to the threat of infection and an increased need of bathroom facilities. Hydration and taking rest breaks is important.
Get enough sleep. Mistakes and accidents are more likely to occur when tired, especially in construction where work typically starts early in the day.
Take care of yourself. If you must have a second job, try to find one that uses different muscle groups. For example, if your construction job requires heavy lifting, your second job should involve little or no lifting.
Founded in 1911, the Des Plaines, IL-based ASSE is the oldest and largest professional safety organization and is committed to protecting people, property and the environment. For more information on construction safety resources and standards visit
www.asse.org.
Top Ten Ways to Gain Two Hours a Day Or More! By Chris Widener, Made for Success
When you gain two hours a day, it’s 14 hours a week and a whopping 728 hours a year or 18.2 workweeks!
Take a look at the list below and implement a few — if not all — of them and see how much time you gain this week and how much more you accomplish! (Note: The time saved listed is per day! They are also very conservative estimates.)
Turn off the TV. We may as well start at the easy one. The average person watches three hours a day. So turn it off for one of those hours. Do something else instead. Read a book. Better yet, start writing YOUR book! Time saved — One hour.
Group your projects together. Do all you email at once or make all your calls at once. Starting and stopping wastes a lot of time. Time saved — 15 minutes.
Don't answer the phone. Let it go to voice mail. Then, at a set time, listen to the voice mail, delete liberally, and write down the info on a pad to call back when it is best for you. Talk to them only about the issue at hand. Time saved — 30 minutes. Another 30 if you count the telemarketers you avoid.
Get up 15 minutes earlier. Go to bed 15 minutes later. If your alarm goes off every day at
, make it
. You don't need that much sleep anyway! Time saved — 30 minutes!
Enroll in what Zig Ziglar calls "
Automobile
University
." I have a friend that uses his library card like nobody's business and always has the best cd's with him. And it costs him nothing. He listens to close to 10 hours of great material a week. All while in the car. Time saved — one hour.
Cut your lunch short. No matter how much you take, shave 15 minutes off of it. Side benefit: You'll lose weight without the dessert! Time saved — 15 minutes.
Hire an assistant. Let him or her do the smaller tasks like answering email, copying, screening calls, and filing. Time saved — one hour.
Focus. Different people are distracted by different things. Whatever it is that distracts you, cut it out. Tune it out and lock in like a laser on your work. You will save time and your work will be better! Time saved — 30 minutes.
Shift you work hours to include time when others aren't at the office. Being there alone will help you stay on task and you will be shocked at how much you get done — Time saved - 15 minutes.
Plan. Spend 15 minutes a day planning your day to work on the most important tasks in the most efficient way. You will lose 15 minutes but gain an hour. Total saved — 45 minutes.
Total if you do them all: Six hours a day of time saved, improved focus and a dramatic increase in productivity! If you will just implement a few of these — those that work best for you - you will see a dramatic improvement in your time management and productivity — I guarantee it!
Infrastructure Finance: Does Your State Encourage Innovation?
Not all states are equal when it comes to encouraging the use of innovative infrastructure finance alternatives, according to a new study by researchers at the National Conference of State Legislatures. The study, which looks at state enabling authority for 12 infrastructure financing tools, is the focus of a new publication from the National Association of Home Builders (NAHB), “Infrastructure Finance: Does your state encourage innovation?”
“It is becoming increasingly difficult for local governments to finance much needed infrastructure,” said David Pressly, NAHB’s president-elect and a builder from
Statesville
,
N.C.
“This new publication will help local officials determine the financing options that are available in their states.”
NCSL looked at state authorization of 12 key infrastructure financing tools:
Community Development Districts
Certificates of Participation
Design-Build
Electronic Road Pricing
GARVEE Bonds
Partnership Schools
State Infrastructure Banks
Small-Scale Water and Wastewater Systems
Special Districts
State Revolving Loan Funds
Tax-Exempt Municipal Lease Financing
Tax Increment Financing
Click here to see which of these tools are specifically authorized for use in your state.
“Infrastructure Finance” is Part Two in a series about innovative infrastructure tools and bridges two significant pieces of research. The main body of NCSL’s research – examples of existing statutes with citations and summary analysis – can be found online at www.nahb.org/infrastructuretools.
Two years ago, NAHB published Part One of this series on infrastructure tools: “Building for Tomorrow: Innovative Infrastructure Solutions.” That 32-page report explains more than 20 infrastructure financing tools and delivery mechanisms and presents case studies on how those tools have been applied successfully. “Building for Tomorrow” can also be found at www.nahb.org/infrastructuretools.
“NAHB is working hard to help local government officials understand the range of tools that are available to finance and manage infrastructure in a cost-effective manner,” Pressly said. “Forward-thinking jurisdictions can use these alternative financing tools to better leverage community resources to meet current and future infrastructure needs.”
The NCSL study was funded by NAHB, the National Council of the Housing Industry (NCHI), National Association of REALTORS (NAR), the National Association of Industrial and Office Properties (NAIOP), the National Apartment Association (NAA) and the International Council of Shopping Centers (ICSC). [return
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Protect Your Workers...And Your Profits
Protect Your Workers...and Your Profits
The failure to properly train workers is one of the top 15 most frequently cited OSHA standards in residential construction and could cost a company up to $7,000 for a single serious violation.
OSHA requires each employer to train their employees to recognize and avoid safety hazards on the job and to understand the applicable safety regulations.
The new English-Spanish Jobsite Safety Video, developed by NAHB, provides an overview of the key safety issues residential builders and workers need to focus on in order to reduce accidents and injuries and to comply with OSHA regulations. The Jobsite Safety Video is based on the popular “NAHB-OSHA Jobsite Safety Handbook,” and both can be used to form an essential, comprehensive residential construction safety-training program.
The Jobsite Safety Video is available as two 20-minute videos — one in English, the other in Spanish — on one DVD. The English-Spanish Jobsite Safety Video covers the following topics:
Personal Protective Equipment
Housekeeping
Lifting Safety
Stairways and Ladders
Scaffolding
Fall Protection
Trenching and Excavation
Tools and Equipment
Vehicles/Mobile Equipment
Electrical Safety
Fire Prevention
Hazard Communication
To order the Jobsite Safety Video from BuilderBooks.com, click here, or call 800-223-2665. [return
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New GM Program for 2006
With DOUBLE the revenue for participating HBAs!
GM continues to show their commitment to NAHB and our state and local associations by doubling the royalty for participating HBAs.
Beginning in January, all members and Executive Officers (effective November 1, 2005) will receive a direct mail piece from GM. Please remember to tell your members not to discard this mailing – it will contain the $500 GM Discount Card.
Members who misplace or don’t receive a card may go to www.nahb.org/MA where a link will be available for them to download their own cards. The NAHB Membership list is refreshed with GM every 30 days.
Also for new members in 2006, you’ll be able to go to the “Resources and Services” section of the EOC Web page or the Member Advantage Toolkit and find an official authorization letter provided by GM. Print it out on your letterhead for your new members to use to receive the discount when they take it to an authorized GM dealer.
Regardless of any promotional offer or purchase incentives, members can make their very best deal and then use the GM $500 Discount Card for NAHB members.
If your HBA is already signed up for the NAHB Revenue Sharing Program, you don’t need to sign up again. Your HBA will be included in the double royalty payment program.
Complete details for the 2006 GM program will be posted on www.nahb.org/MA as soon as they are finalized. The program will be effective January 4, 2006. And remember, your local and state builder association staff also qualifies. [return
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GM continues to show their commitment to NAHB and our state and local associations by doubling the royalty for participating HBAs.