The Fed is still meeting and is expected to announce a rate decision later today. Will it be another quarter percent cut, as predicted? Or more? Or nothing at all?
With the recent positive growth news — but the continued news that housing is still on the decline — it’s hard to say. Stay tuned to MHN Out and About for a later update today!
McGraw-Hill Construction, in conjunction with the National Association of Home Builders, recently released a report on residential green building trends.
And it seems green building may be one of the most successful word-of-mouth marketing campaigns of the past few years, according to the CNNMoney.com article talking points.
The major findings of the report include:
Another key report finding? Education and awareness was ranked more important than any other obstacle to green building. Previous surveys showed cost perception was most important. That’s interesting, given the growth the study found would indicate green building is more widely known than it’s ever been — but as previous surveys have found, cost perception is often an issue, with industry experts sometimes overestimating the true cost of building green.
Yet more good green news is on the way: The NAHB is launching a National Green Building Program and green building residential standards, which National Association of Homebuilders CEO Jerry Howard said in a speech this week would be available by year’s end.
And the USGBC’s residential LEED for Homes standards are still due out this fall, according to its Web site — in development since 2000, the guidelines are expected to further influence green building in the residential community. (Although it’s unclear yet what the associated certification costs may be because they will be based on factors like home size and numbers of homes being built, which may deter some small builders.)
But do we still need to spread the green word? Absolutely. The over-time energy and other savings that can offset initial building expenses are a valid point; more builders, homeowners and developers need to know that.
Green homes are popular with homebuyers — and are selling: More industry players need to know that, too.
The bottom line: Green is going strong — but we’ve still got a lot of room to grow.
Times are a changin’ for subcontractors — and for once, we’re not talking about the housing slump.
Even in the midst of the drastic U.S. housing downturn, there’s good news from the American Subcontractors Association. Its local chapters have lobbied for a number of public policy reforms, according to Contractormag.com, which should make working conditions, contracts and other building aspects easier.
A few highlights achieved in 2007 through successful lobbying include:
For information about all ASA-sponsored changes, visit the news section of the American Subcontractors Association’s site.
The changes in 2007 were significant. And the new year is just around the corner; what changes do you think still need to made in the construction industry? What should local lobbyists in your area be fighting for?
We want to hear — post or e-mail us your thoughts.
Homebuilders and developers who embrace green building may not be sure how to market it — but as sustainability becomes more and more popular, there’s reason to.
But where do you begin? Is it worth the expense of seeking a seal of approval from an official green building organization? Are there guidelines you can find to follow without having to use any that don’t apply to your project?
All valid questions — which are nicely addressed in a recent article on HGTVpro.com, a Web site for professional homebuilders.
The article offers some focus about what things to consider before building and what different organizations offer guidelines — it’s an Out and About recommended read.
In addition, you might find the following helpful:
Have any other great green sites? Let us know!
We’ve all received a number of big residential outlooks and predictions this week — some just today, as industry players like McGraw-Hill Construction and the Commerce Department weighed in on the current and future housing situation.
Commenting on the residential decline is nothing new; but within these takes was hope — some actual positive findings that indicate improvement to balance out the negative — making this series of forecasts more encouraging than most from the past six months. And that’s newsworthy, indeed.
The picture this week’s data painted, in fact, was somewhat rosier than many people — possibly even the news sources themselves — anticipated.
Some news, ranging from the least to the most encouraging:
Are things great? No. Are things getting slightly better? It would seem so.
The housing slump is going to go on for awhile. Experts keep adding months (and quarters) to their estimates. And big-picture views show a less sunny image: For example home sales, while up last month, are still down for the year.
Which is no huge surprise. No one expects dancing in the streets because construction spending will still go down, but will fall less than this year, in 2008. And no one expects the housing slump to end overnight — it certainly didn’t start that way.
Yet maybe we should focus on the faint circle of tunnel-ending light in this week’s news. Enthusiasm and industry confidence declined gradually during the start of the slump; and now it seems optimism is slowly rising the same way.
And that’s more than enough to make us focus on the positive today.
For communities interested in green building, a little push may be all it takes to incorporate sustainability into future building and expansion plans.
Supporting green building is one thing — encouraging it, entirely another. Aside from passing an all-construction mandate or instituting a fine, how can towns — and builders — inspire sustainability?
Take a look at ways some communities are promoting green building:
Richard Zimmerman, a founding member of Scottsdale’s green building program, agrees. "The builders can differentiate themselves from their competitors by
embracing these programs, at the same time, homeowners are demanding
green strategies and are shopping online aggressively," he said.
Green building starts at the local level — at least for now — and requires company and political initiative. There are many reasons to build green: It can reduce energy costs over time, improve the economy through job creation and — of course — help the environment.
And really, isn’t that reason enough?
We’ve become accustomed to hearing that home prices are down, housing supply is up and residential construction is sharply slowing down as a result.
But there’s another threat looming on the new project horizon — construction costs — and developers are directly in its path, according to Financial Week.
The Associated General Contractors of America warned builders that construction costs would increase in 2008 in its Construction Inflation Alert report, issued earlier this month.
Even with the current residential decline? It’s possible.
Why overall costs are rising:
A residential builder, for example, will likely not be able to switch and become a pipefitter — which an increasing number of industrial projects, such as power plants and refineries, need. According to Ken Simonson, AGC’s chief economist, specialty trade contractor wages have begun sharply rising, which indicates the amount of residential workers with the skills to transfer into commercial building is "close to exhaustion."
The rate of wage increases is likely to hit 5 to 5.5 percent in the next few months, up from a recent 4.5 percent increase.
It did, somewhat — but commercial construction’s relatively consistent strength has kept material demand up.
As a result, material costs are up — slightly more than double the general rate of inflation, according to Financial Week. That will hurt 2008-planned projects that designed a budget based on lower material costs.
What It Means for the Industry
Analysts predict the housing decline will lessen and that home sales and construction will eventually increase in 2008.
The past indicates that construction sector activity does greatly affect material prices: Highway and street construction have boomed in recent years, and so did diesel fuel, asphalt, concrete and steel costs, which more than doubled in 2005 and 2006, according to the AGC.
That’s good news for the housing industry, because the AGC predicted that residential construction will put more downward pressure on lumber, plywood and gypsum product prices and affect demand (and therefore, costs) for other materials in the overall construction market.
And the residential sector won’t be affected by some increased costs for materials that are not used in home construction.
Wages are less likely to be an issue as more residential jobs become available. The supply of residential workers should be plentiful if housing construction picks up gradually, which it’s predicted to do.
However, if construction rises suddenly — or if a significant number of residential workers have either transferred to commercial and find it more lucrative or have undergone specialty training to fill commercial voids and don’t want to return to more general residential building tasks – the residential workforce may actually see a need for more workers. (That’s not highly likely, though.)
All builders will have to deal with higher shipping rates — unless they opt to purchase locally (which is better for the environment.) Hopefully, that will spur some interest in sustainable building and material reuse and recycling.
In fact, residential construction’s biggest threat actually may be from another country — not another sector. Not only are developing areas like China drawing from the U.S. materials supply as they beef up housing and infrastructure, importing materials won’t be easy for the U.S., either. The cost of shipping raw materials has gone way up — reported this week by the Wall Street Journal — which will affect some materials’ entry into the U.S.
An interesting article in today’s New York Times outlined the rising popularity of social networking sites designed for residential buildings — and the article makes a good case for building-exclusive online communities.
Since March, more than 335 buildings have signed up for the Brooklyn-based LifeAt.com service for the $6,000 start fee, according to the Times. Since, as of now, LifeAt doesn’t charge an annual fee, that isn’t a bad investment for a building to make, considering the potential payoff with owners.
Who could benefit from a social networking site? A number of residential buildings:
The only problem? When your building has six residents, things may feel a little too close for comfort.
A couple I know lives in a small building and had to twice deal with personally confronting residents about unpaid assessments (awkward) and deal with a faulty accusation that funds had been mismanaged (even more awkward).
Imagine how easily both situations could have been avoided if the building had set up a community Web site, listing expenditures and sending out e-mail notifications about late payments from an official association address?
However, getting residents to sign up to be on the board can be a difficult task if it means being hounded by owners. Most of the time, the matters in question will likely be things that need to be voted on by the entire board or part of the board anyway — subverting the proper channels is just a waste of everybody’s time.
An online community would allow residents to offer suggestions for the building, submit official complaints, ask questions and more — contacting each other and the board via a simple, organized format.
It also would provide an easy way for the board to track such input and would remove any personal responsibility busy board members may feel to respond to requests.
Posting guidelines in an easily accessed, public place like a community Web site not only offers unit owners and renters the chance to frequently check them but also gives residents a forum to ask questions about the rules to clear up any misunderstandings or misinterpretations before they happen.
Residential social networking sites aren’t the perfect solution for every building — as the article noted, it would seem to make more sense in large cities, and selling ads to local vendors, which often don’t advertise online, could be tricky.
However, it would seem that some advertisers — like contractors, cleaning services and real estate agents — could greatly benefit from reaching a condo or apartment building’s small, localized audience. A building-owned Web site provides a targeted advertising opportunity a local paper couldn’t.
Will condo sites be the next MySpace? It’s to hard to say — but it could make everything from borrowing a cup of sugar to finding a plumber a lot easier for residents.
This summer, a New York Times article about parking introduced non-New Yorkers to a shocking concept: the $225,000 parking space.
Think that sounds high? Some New Yorkers don’t — there’s a waiting list for those spaces in Manhattan.
If that price tag blows your mind, considering we’re in the midst of a national housing decline in which homes are losing value, the concept of the auto condo — essentially a purchasing living space for several high-end cars — likely won’t make much more sense.
But some developers are revving up to build them all the same.
Many condos will feature bathrooms, showers and kitchens or bars, and Dream Garage is going to build a club area for socializing. Owners will also be able to use the Dream Garage dual dynamometers, which will tally horsepower as cars drive on to large floor rollers.
Cars, Not Consumers
The housing market news seems worse every day — new construction has dropped because housing demand has dropped, and reports of condo developments being canceled as a result are rampant. (The Washington Post reported in August that nearly 20,000 condo units in the past 12 months have been removed from the construction schedule in the DC area alone.)
How, then, did former racer Jack Griffin, who owns a Dallas real estate and brokerage company, get funding for a residential structure for cars?
Fairly easily, it seems. Several months ago, Griffin approached Tres Vista Group to garner additional resources for Dream Garage. It signed on as a partner.
Dream Garage, in fact, now has all its financial backing and zoning approvals in place, Tres Vista partner Jerry W. Mooty Jr. told the Dallas Morning News.
That’s more than we can say for a number of new residential complexes. Why?
Smart Development, High Demand
One possible reason Dream Garage got support: it’s hitting a niche audience. Collectible cars are a $3.5-billion industry, according to American Collectors Insurance. Offering high-end storage space is an untapped market.
Plus, given that owners can easily spend more than $230,000 on their car collection, it stands to reason they’d spend that to store it.
"We think this concept is unique," Griffin said. "Warehouses are just storage. They’re dark, they’re dusty. People want more than that now."
Another possible reason: Dream Garage will be a mixed-use complex, also housing the American Driver magazine offices, a paintless dent-removal company and an Autoscope, which is a garage specializing in BMW, Audi, Porsche and Mercedes-Benz repairs and high-performance work.
The commercial space use is likely to provide an additional revenue stream and also, because the residents are auto industry-related, give car fanatics an extra purchase push. That’s clever planning.
And it’s planning some developers may want to consider. Packaging commercial, which has remained stronger through most of the slump, with residential projects may make investors feel more secure, help safeguard against market instability — and spark that rise in new construction we need.
Likewise, planning highly targeted projects — addressing the needs of consumers who are still looking to buy despite the slump, from first-time buyers looking for no-frills property at reasonable prices to retirees looking to downsize — is now more essential than ever to a project’s success.
That’s a concept Griffin understands.
"We envision [Dream Garage to be] a lot more than just a place to store a car," Griffin said "A lot of us view cars as art, and we want to have a place where we can see these rolling galleries."
Which might explain why his development, unlike so many other new construction projects is rolling along.
Talk to us: Do you think auto condos will be a hit with buyers? Will they have a high resale value? Post your thoughts below.
When real estate agents are offered swanky incentives by developers and other agents — which, as mentioned yesterday, can include gift cards, cars and more — does it create a conflict of interest?
It’s a tricky issue — and one that’s playing out in the industry as declining home sales make developers and agents more and more anxious to sell.
The National Association of Realtors’ Code of Ethics and Standards of Practice states that "REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value."
But there isn’t a law that prevents agents from getting incentives if it doesn’t influence their obligation to get buyers the best price.
And times are tough for real estate agents:
So it’s understandable why a monetary bonus or hefty gift (or for that California agent, a cab) would be enticing.
Buyer (and Agent) Beware
True, buyers make the ultimate decision about whether or not to buy. But an agent hoping for a hefty prize if they do — even if that agent is careful to try not to influence the buyer’s decision — can’t be considered completely impartial.
Which makes the practice somewhat unsafe:
That’s no surprise to the Indiana Attorney General. In Northwest Indiana in 2005, local real estate company co-owner Kevin T. Pastrick was sentenced to 3 years and 1 month in prison for persuading a union pension fund to buy 55 acres of land for $10 million.
A large portion of his sentencing hearing revolved around the debate over whether or not the payment was a bribe or a gratuity — ruling it the latter would have saved him 13 months in prison.
However, the judge determined the money was a bribe because it was offered early in the negotiations to ensure the union contact moved the land purchase to completion, the Northwest Times reported.
Is dangling a hefty gift in front of a real estate agent — obtainable only if the property sells — really so different?
Paycheck vs. Paydirt
Everyone appreciates that real estate agents and developers need to make a living — which is likely getting harder for them to do by the week.
But don’t discount the increase of property buy-and-sell Web sites. Last year roughly 20 percent of sellers sold their homes without an agent, up from 12 percent in 2005, according to Real Trends.
If buyers start feeling like using an agent won’t get them the best deal because of the agent’s interests — and sellers then start feeling that buyers would rather contact them directly — what’s to stop everyone from buying and selling themselves? In this time of declining home values, I don’t think anyone would complain about saving the commission cash.
And yet — real estate professionals provide a real service. A Web site can’t address individual purchase questions, give you a property tour, acquaint you with the perfect neighborhood for your price and space needs.
Why, then, has this dubious gift-giving practice seemed to have gone largely unnoticed? Is it a case of clever developers and agents creatively sparking market interest, or is it bordering on bribery?
And should it be stopped?
Because somehow, a gift certificate — no matter how much it’s made out for — just doesn’t seem like that wonderful a bonus if it threatens the future of the industry.
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