Clock Running Out on Extending Energy Tax Credits Expiring at Year’s End

Congress is unlikely to extend by the end of this year several tax incentives used by developers and remodelers that expire on Jan. 1.

The clock is running down on the New Energy Efficient Home Tax Credit (45L), the only federal incentive available for efficiency in new home construction. It provides a $2,000 tax credit to builders and developers for the construction and sale of homes that achieve a 50% improvement in energy efficiency over the 2004 International Energy Conservation Code.

Also nearing an end is the Existing Home Retrofit Tax Credit (25C), which provides consumers a tax credit of up to $500 for the purchase of qualifying energy-efficient products. Remodelers often leverage 25C tax incentives when working with clients. 

NAHB is actively working to extend these tax credits.

Both 45L and 25C are traditionally renewed by Congress at the end of each year as part of a package of expiring tax credits. 

Commonly referred to as “tax extenders,” this package has become more difficult to pass due to the government’s fiscal belt-tightening.

Because extending these tax credits would increase the deficit, Congress is required to offset the cost of the extension by either cutting spending or raising other taxes. Finding bipartisan “pay-for’s” has been difficult. 

Last year, the credits were allowed to lapse for 11-1/2 months before Congress finally extended them retroactively for 2010 and until the end of 2011. 

In addition to pushing for an extension, NAHB is working with a broad coalition of product manufacturers to modernize the 25C tax incentive.

In 2009 and 2010, Congress temporarily increased the 25C tax credit to allow taxpayers to claim 30% of the product cost — up to $1,500 — for installing eligible energy-saving retrofits in their homes. 

These higher tax credits were involved in more than $25 billion of remodeling activity in 2009, which NAHB estimates was associated with over 276,000 jobs.

For 2011, 25C fell back to its pre-stimulus level of 10% of the installed costs, with a maximum credit for all qualified retrofits of $500. In addition, many products have lower thresholds, which have created confusion among taxpayers.

NAHB and its coalition partners are working with allies in the House and Senate to introduce legislation to increase the $500 cap to $1,000. 

In addition, NAHB is proposing to eliminate the lower, individual product thresholds and permit taxpayers to claim labor costs for all qualifying products. For consumers, this would create a more robust — yet simpler — tax credit. 

Although the tax extender package has been renewed before without controversy, taxpayers cannot assume that Congress will proceed as it has in the past.

While support in Congress remains high for extending these incentives and lawmakers have renewed these tax credits retroactively in the past, their fate remains in doubt as Congress wrestles with offsetting their costs.

Recognizing the uncertainty confronting small businesses and consumers, NAHB is continuing to urge lawmakers to extend these tax credits in a timely fashion.

For more information, email J.P. Delmore at NAHB, or call him at 800-368-5242 x8412.

Congress Acts to Reduce Excessive Regulatory Burden on Small Businesses

Ongoing efforts by NAHB to reduce excessive regulatory burdens on small businesses produced results in Congress last week with the approval of two bills that would rein in and reduce the costs of new federal regulations.

In a victory for the nation’s home builders, the House on Dec. 2 voted 253 to 167 to approve H.R. 3010, the Regulatory Accountability Act of 2011, which would modernize the 65-year-old Administrative Procedure Act to permit federal agencies to select the least costly options when writing new rules.

On Dec. 1, the House also approved the Regulatory Flexibility Improvements Act (H.R. 527), companion legislation supported by NAHB stipulating that federal agencies must identify and reduce the costs of regulations on small businesses when determining the economic benefits of a proposed rule.

A recent study by NAHB economists found that, on average, 25% of the cost of a single-family home is attributable to government regulation.

Given the substantial regulatory burden already borne by the housing industry and the fact that the Small Business Administration has acknowledged that small businesses continue to bear a disproportionate share of the federal regulatory burden, the NAHB board — at the behest of the Home Builders Association of Kentucky — enacted policy at its fall meeting in Milwaukee to “support congressional efforts to address overly burdensome regulations, especially those that impact small businesses in the housing industry.”

In leading a business community push for passage of these bills, NAHB sent a “key vote” letter to House members prior to the vote on H.R. 3010 urging them to support the measure because it would reduce regulatory costs, limit unnecessary regulations, spur job growth and strengthen the economy.

“H.R. 3010 will help ensure that regulations are narrowly tailored, supported by strong and credible data and evidence, and impose the least burden possible while still implementing congressional intent,” the letter said.

“This bill will make the regulatory process more transparent, agencies more accountable and regulations more cost-effective.”

Sponsored by Reps. Lamar Smith (R-Texas), Howard Coble (R-Minn.) and Collin Peterson (D-Minn.), the bipartisan bill seeks to rein in costly and unnecessary regulations by placing permanent restrictions on regulatory agencies and requiring openness and transparency in the regulatory process.

“Government regulation has become a barrier to economic growth and job creation,” said Rep. Smith, who also serves as chairman of the House Judiciary Committee.

“We need to encourage businesses to expand, not tie them up with red tape,” Smith said. “The Regulatory Accountability Act will help lift the regulatory burden and free up small businesses and employers to spend more, invest more and produce more to create more jobs for American workers.”

The legislation would enhance the regulatory process by:

• Increasing public participation in shaping the most costly regulations ($100 million in impact or more annually) before they are proposed
  
• Requiring agencies to choose the least costly option unless they can demonstrate a need to do otherwise to protect public health, safety or welfare
  
• Providing for on-the-record administrative hearings for the most costly regulations to insure that data from agencies are well tested and reviewed
  
• Restricting agencies’ use of interim final regulations where no comments are taken before a regulation takes effect and providing expedited judicial review of whether that approach is justified
  
• Providing a more rigorous test in legal challenges for those regulations that would have the most impact ($1 billion in impact or more annually).

The House is expected to vote on a third regulatory reform bill this week.

H.R. 10, the Regulations From the Executive in Need of Scrutiny (REINS) Act, is sponsored by Rep. Geoff Davis(R-Ky.) and would require congressional approval for government regulations that have an annual impact of at least $100 million.

Companion bills for H.R. 3010 (S. 1606) and H.R. 10 (S. 299) are pending in the Senate.

The legislation can be viewed on http://thomas.loc.gov by typing the bill number in the box at the upper center of the page.

For more information, email Alex Strong at NAHB, or call him at 800-368-5242 x8279.

Article reprinted with permission from the NAHB

NAHB Continues to Make Headway on Fixing Broken New-Home Appraisal System

On improving the residential appraisal process — an issue that continues to hold major implications for the nation’s housing markets -— NAHB has been working hard behind the scenes on several fronts and has been able to make significant headway.

Deficiencies in the current system for evaluating homes have become glaringly evident in the unprecedented housing downturn of the past few years.

Faced with declining home prices, rising foreclosures and plunging new-home sales, builders have had to contend with inaccurate appraisals that have further undermined the health of their businesses and the housing market.

Widely reported around the country, poor appraisals have reduced home sales, taken a vicious swipe at the profitability of builders and have made it difficult for them to project whether they will be able to attain the prices they need to cover the construction costs of their new homes.

“Too often, due to faulty appraisal practices, the builder’s house winds up getting appraised at less than the cost of construction,” said NAHB Chairman Bob Nielsen.

“This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, negatively affects housing demand and acts as an obstacle to the recovery of the housing market,” he said.

“Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility,” he said.

An ongoing series of surveys of builders by NAHB’s Economics and Housing Policy Group shows that appraisal problems persist today.In the latest survey in October, a full 60% of the respondents reported that they were experiencing appraisals coming in below their contract sales price.

Of those reporting that they had encountered this problem, 53% said that the appraisal they received was lower than the cost of producing the home.

One-third of the builders responding said that they had lost sales during the preceding six months as the result of an appraisal that was less than the contract sales price.

The inappropriate use of distressed properties as comparables, confusion over the ability of builders to convey relevant information to appraisers, a shortage of local appraisers with the experience and knowledge needed to recognize the value of green and other home features to arrive at good evaluations, and the complexity and fragmentation of the appraisal system have all contributed to the faulty process.

The good news is that by working with representatives of federal banking regulators, the appraisal industry, the housing finance industry, the real estate and housing sectors and others, NAHB has scored considerable progress in finding remedies for what seriously ails the appraisal system.

Several milestones center around the four appraisal summits that NAHB has held in Washington, commencing in 2009, with the latest held last month.

A timeline of events tracing the problem and its solutions is included in this special issue of Nation’s Building News. Also available is an overview of the fourth summit, with links to coverage on the first three meetings.

With the decline in home prices appearing to have ended or to be coming to an end in most parts of the country, improving housing market conditions themselves are expected to gradually alleviate some of the negative impact of appraisals.

However, those within the appraisal industry itself recognize that today’s system is outmoded and to be truly effective will require a major overhaul that will take years to accomplish.

A white paper in this issue by Joan Trice — who is working with NAHB to provide resources that association members can use to get the best results from a malfunctioning appraisal system — describes in detail the major undertaking that will be needed to reengineer the appraisal process.

Resources have been collected on NAHB’s website to assist builders on the appraisal issue (some of the links below are available to NAHB members only).

Following are specific issues where builders have gained ground and are working to make further strides in the year ahead:

• Communication between the builder and the appraiser
  
  NAHB worked extensively with Fannie Mae and Freddie Mac to clarify that neither the Home Valuation Code of Conduct nor Fannie Mae prevents a builder from communicating with an Appraisal Management Company or appraiser to provide additional information or explanation on the basis for a valuation or to correct objective factual errors in an appraisal report.
  
  Guidance released by Fannie Mae on June 30, 2010, addressed this issue. (It also addressed many other issues that NAHB had been working on with Fannie Mae — such as requiring appraisers to identify the differences between the home being appraised and a distressed property being used as a comparable sale; requiring lenders to only use appraisers who are knowledgeable and experienced in appraising specific property types located in a given market; allowing sales of the builder to be used as comparable properties; and barring lenders from making unilateral changes to appraisal reports.)
  
  NAHB developed a two-page summary for members on how to build stronger and more productive relationships with appraisers.
  
  Builder communication with lenders and appraisers should include: market and absorption information, sales information, all relevant data, specifications of the property, details on the materials that were chosen and buyers’ reactions to the products selected.
  
• The Federal Reserve Board’s interim final rule on appraisal independence 
  Provisions in the Dodd-Frank Act, which was signed into law on July 21, 2010, prohibit appraiser coercion and required rulemaking by the federal financial regulators on the independence of appraisers.
  
  The guidance is headed in the right direction and is aligned with many of the concerns discussed at NAHB’s summits — including open communication and the need for a process to contest an inaccurate appraisal.
  
  There has been general agreement among industry stakeholders participating in the summits that a sales contract contains critical information about the real estate transaction — such as the scope of work, upgrades and more — and should be made available so the appraiser can use it. The interim final rule does not preclude the sharing of the sales contract with the appraiser.
  
• Appraiser qualifications
  
  NAHB discussions have increased awareness of the need for appraisers of new homes to have sufficient education and experience.
  
  In a letter to the Appraisal Qualifications Board commenting on proposed revisions to appraiser qualifications that are expected to become effective around the start of 2015, NAHB wrote that, “It is necessary that an appraiser of new construction make every effort to obtain comprehensive information on the subject property — including lot values, custom features, upgrades and energy efficiency data. A new construction appraisal requires the appraiser to have the ability to read plans, review the materials description lists and evaluate the builder’s contract and any other special additions.”
  
  NAHB said that minimum educational requirements for appraisers should be set for lot values and building costs — including those for green building and other evolving new construction techniques.
  
• Appraisal workout guidance
  In both federal banking regulation and H.R. 1755 — the Home Construction Lending Regulatory Improvement Act of 2011 — NAHB has focused on the importance of appraisals in enabling creditworthy borrowers of acquisition, development and construction loans to have their loans renewed or restructured.
  
  NAHB has been working on the regulatory front so that builders can benefit from guidance that enables commercial property lenders in their collateral assessment for credit risk grading to utilize an “as stabilized” market value — or prospective market value if there are plans to provide the resources to complete the project — instead of an “as is” market value.
  
• Limitations on new-home sales information
  
  Because new-home sales are not reported to local multiple listing services in many areas, NAHB has encouraged builders and home builders associations to maintain records on new home sales in a format provided by NAHB that appraisers can easily use as comparables.
  
  The format suggested by NAHB would capture information similar to what is in the “comparables” section on page two of the Uniform Residential Appraisal Report, Form 1004.

With the goal of improving the accuracy of new-home appraisals to achieve greater long-term stability in home valuations, NAHB is pursuing a multi-faceted work plan through the end of 2012.

As part of that agenda, the association plans to meet with key appraisal and lending organizations; pursue stronger appraiser qualifications and licensing requirements; assist in the development of data collection on new homes — including Fannie Mae and Freddie Mac’s Uniform Appraisal Dataset; and improve the licensing, oversight and appeals processes of the states.

For more information, email Steve Linville at NAHB, or call him at 800-368-5242 x8597.

Article reprinted with permission from the NAHB

Senate Moves to Reinstate Higher Conforming Loan Limits

In an important victory for NAHB, the Senate on Oct. 20 approved an amendment to an appropriations bill offered by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.) to reinstate for another two years the higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30.

The vote was 60 to 38, just meeting the necessary 60-vote threshold required for passage under Senate rules.

The appropriations bill includes spending for the Department of Housing and Urban Development and other federal agencies.

NAHB has been aggressively lobbying for the Menendez-Isakson amendment directly on Capitol Hill and through its grassroots membership.

A “key vote” letter was sent to members of the Senate on Oct. 19 urging them to support the amendment to spending bill H.R. 2112 to temporarily restore the higher conforming loan limits.

The letter noted that the current lower loan limits will “further restrict overall mortgage liquidity in the marketplace and place further downward pressure on home prices. Restoring the higher loan limits will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.”

To build support for the amendment, NAHB also sent out a BuilderLink Alert notifying association members that the Senate might consider a measure to reinstate the higher conforming loan limits.

Members were urged to contact their senators and call on them to support the Menendez-Isakson amendment.

Effective on Oct. 1, the loan limits reverted to the lower levels for high-cost areas established under the Housing and Economic Recovery Act of 2008. The national ceiling for mortgages securitized by Fannie Mae and Freddie Mac or insured by the FHA dropped from $729,750 to $625,500 and the formula for establishing area loan limits became more restrictive, producing decreases for areas in addition to those currently bound by the national ceiling.

A recent NAHB study found that allowing the limits to revert to 2008 levels would make millions of home purchases ineligible for Fannie Mae, Freddie Mac and FHA funding and require them to be financed with higher mortgages interest rates, fees and downpayments and more stringent credit standards.

After passage of the Menendez-Isakson amendment, NAHB Chairman Bob Nielsen issued a statementcommending the Senate action and noting that “the 60-to-38 vote demonstrates bipartisan support for pro-housing policies that will help our industry to create jobs and spur economic growth.”

He also called on Congress to move soon to ensure that this measure is enacted into law.

“Otherwise,” said Nielsen, “the current drop in mortgage loan limits will reduce housing demand and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery.” 

As the appropriations process moves forward, NAHB will turn its focus to preserving the loan limits extension, among other priorities, in the HUD appropriations bill.

To view the legislation, click here and type bill number H.R. 2112 in the box in the center screen.

For more information, email Scott Meyer at NAHB, or call him at 800-368-5242 x8144.

This Article reposted with permission from the NAHB.

HARP Phase II Announced to Rescue Underwater Mortgages

The Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs), has announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their mortgage. Dubbed Harp Phase II, the program enhancements were developed at the direction of the FHFA, with input from lenders, mortgage insurers and other industry participants.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco. “Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the GSEs. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

Mark Zandi, chief economist at Moody’s Analytics, has estimated that the new plan could help an additional 1.6 million homeowners refinance by the end of 2013. By refinancing at today’s low rates, the average homeowner–with a $150,000 loan–could save approximately $1,600 a year according to Zandi.

"The mortgage industry welcomes these changes designed to help more underwater borrowers who are current on their mortgages refinance at today's historically low interest rates," said David H. Stevens, president and chief executive officer of the Mortgage Bankers Association (MBA). "Not only will these changes allow more borrowers to qualify, but they will streamline the process and reduce the cost to borrowers and should lessen risk for Fannie Mae and Freddie Mac. Lenders are particularly gratified that the refinements will provide relief from some representations and warranties that lenders face when originating new loans. These changes alone should encourage lenders to more actively participate in HARP."

To date, Fannie Mae and Freddie Mac have helped approximately nine million families refinance into a lower cost or more sustainable mortgage product, approximately 10 percent of those via HARP. The HARP program will continue to be available to borrowers with loans sold to the GSEs on or before May 31, 2009 with current loan-to-value (LTV) ratios above 80 percent.

“These enhancements will not only help responsible homeowners who have been unable to refinance because the equity in their home has disappeared, but it will also help spur the economy by allowing homeowners to reduce their monthly payment, thus allowing homeowners to spend the extra savings on much-need household expenses to spur the economy,” said NAMB President Michael D’Alonzo. “NAMB applauds the Obama Administration and the FHFA for realizing this program had limited success to the consumer and making the necessary changes so that the average American homeowner who pays their mortgage on time but is underwater can benefit.”

Enhancements to HARP Phase II address several other key aspects of HARP including:

►Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;

►Removing the current 125 percent LTV ceiling for fixed-rate mortgages (FRMs) backed by the GSEs;

►Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by the GSEs;

►Eliminating the need for a new property appraisal where there is a reliable automated valuation model (AVM) estimate provided by the GSEs; and

►Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the GSEs on or before May 31, 2009.

HARP Phase II includes key elements proposed by U.S. Sens. Barbara Boxer (D-CA) and Johnny Isakson (R-GA) in their bipartisan Helping Responsible Homeowners Act.

“This is a positive step in the right direction for the preservation of homeownership for those Americans who have been making their payments and met their obligations," said Sen. Isakson. "They deserve the benefit of today’s lower interest rates.” 

A coalition of bipartisan U.S. Senators, led by Sens. Boxer, Sen. Isakson and Sen. Robert Menendez (D-NJ), recently joined 13 of their colleagues in urging the Obama Administration to quickly implement administrative reforms to help millions of responsible homeowners refinance and take advantage of today’s record low interest rates.

“I am very pleased that the administration is taking these steps to help responsible homeowners refinance at historically low interest rates," said Sen. Boxer. "Allowing these homeowners to refinance at today’s record low rates will keep families in their homes and boost the economy by putting thousands of dollars back in the pockets of borrowers. I urge FHFA to move swiftly to assure that these new policies will help as many homeowners as possible.”

The GSEs plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Tuesday, Nov. 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.

"We still have an enormous amount of work to do to repair housing," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "The HARP changes are a good step, but our leaders in Washington need to quickly focus on a broader range of actions for improving the housing marketplace. It has taken a painfully long time for them to recognize that housing is indispensable to the job creation and growth that have been sorely lacking since the end of the recession. The American people are losing patience and they expect far better economic prospects than those they are finding today, which stem in large part from neglecting housing."

Article originally published in the National Professional Mortgage Magazine

Fall Gala and AHBA Annual Awards a Resounding Success!

This Years Fall Gala took Place at the Crest Center and Pavilion in Asheville. With over 130 people in attendance, a good time was had by all. The Parade of Homes winners included:

Craftsmanship Winners by Price Category

$279,000 - $339,000

Mountain Green Builders – Silver Winner

Sulaski & Tinsley Homes, LLC – Gold Winner

$352,000 - $375,000

JAG and Associates Construction, Inc. – Silver Winner

GreenCraft, Inc. – Gold Winner

$600,000 - $650,000

Jade Mountain Builders – Gold Winners

$750,000 - $875,000

Living Stone Construction, Inc. – Silver Winner

HomeSource Builders – Gold Winner

$1,100,000 - $1,350,000

Sulaski & Tinsley Homes, LLC – Gold Winner

Also Awarded were several Special awards for the Parade Homes. Each was judged by a group of out of town judges, and were chosen for their category based on different criteria.

Viewers Choice Awards – Living Stone Construction

NAHB Green Awards – Mountain Green Builders

Innovative Home Award – Mountain Green Builders “SUM House”

AHBA Motto Award – GreenCraft, Inc.

Special Project Award – Living Stone Construction and Westall Chandley Building Supplies.

Best in Show Award is the highest of awards for our Parade. The home chosen represents the beautiful craftsmanship and hard work of the builder, and exemplifies what the Parade of Homes is about.  This years Best of Show award went to HomeSource Builders.

Also awarded at the Gala was the AHBA Annual Awards. These award winners were nominated by their fellow members, and were chosen as an excellent example of what the AHBA is about.

Recruitment of Members is what helps to keep the Asheville Home Builders strong. Skip Brewer of C. Skip Brewer AMP, CGB, Custom Builders was chosen for the Top Recruiter of the year.

This years Affiliate of the year was a instrumental part of the success of the PWB fundraising even this June, and is a regular attendee of our Home Builder events. Kate Duinkerken of Duinkerken Homes was awarded the Affiliate of the year.

As a Co-Chair of the Parade of Homes Committee, Jason Weils of Retro+Fit Design, LLC helped to make this years Parade of Homes a great success. Jason is also a regular attendee to all of the AHBA events.

Builder of the Year award went to a man that has worked hard for the Asheville Home Builders in the past year, and has been willing to offer his time serving on mulitiple boards, as well as our current President. Skip Brewer of C. Skip Brewer AMB  CGP  Custom Builder  was a very worthy choice for Builder of the Year.

The Final Award of the Evening was for the Career Achievement Award. This Award is presented to one individual who has worked hard within the Home Building Industry to help our area as well as fellow builders. This years Career Achievement Award went to W.D. Metcalf of Metcalf Bldg & Rlty Corp  WD Metcalf. W.D. is a charter member of the AHBA, and remains a very influential part of the building community.

Want to know more about this event? Check out our Facebook page for pictures from the evening as well as a overview in the November Blueprints Newsletter.

Congress Fails to Act to Stop Loan Limit Decline But Could Reinstate Higher Levels

Despite an industry-wide legislative and grassroots push to stave off a reduction in the size of federally approved home loan guarantees, Congress failed to act, leaving millions of potential home buyers with the prospect of facing higher mortgage interest rates and downpayment costs and other less favorable loan terms.

As of Oct. 1, the conforming loan limits in high-cost areas for Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) reverted to the lower levels established under the Housing and Economic Recovery Act of 2008.

“With the housing market struggling to regain its footing, a drop in mortgage loan limits could not come at a worse time,” said NAHB Chairman Bob Nielsen.

“This will depress home values, increase foreclosures, impede job growth and jeopardize the tenuous economic recovery,” he said. “That is why NAHB will continue to lead the charge to reinstate the expiring loan limits.”

As a result of the failure by Congress to address this issue, the national ceiling for mortgages securitized by Fannie Mae and Freddie Mac or insured by the FHA has dropped from $729,750 to $625,500 and the formula for establishing area loan limits is now more restrictive, producing decreases for areas in addition to those currently bound by the national ceiling. 

Loan limits are based on a percentage of median area home prices.

As the result of reverting to 2008 loan limits, millions of homes will be more difficult to finance when they are sold, according to a recent NAHB study.

While only a minority of counties in the nation have been affected, these areas represent large concentrations of homes and population.

The counties affected by the changes in the FHA limits contain nearly 60% of all owner-occupied homes; those affected by the Fannie-Freddie changes contain nearly 30% of all owner-occupied homes.

Bipartisan legislation to increase the amount of federal home loan guarantees to their pre-Oct. 1 levels is still pending in both chambers of Congress, and NAHB will continue to work with leaders in both parties to enact it.

“With credit conditions extremely tight for home builders and home buyers, reducing the loan limits only exacerbates the current situation and will prevent many creditworthy buyers from being able to purchase a home,” said Nielsen. “Congress must act quickly to rectify this situation.”

Articles published with permission from NAHB.

For more information, email Scott Meyer at NAHB, or call him at 800-368-5242 x8144.

30 Years of Excellence

It's that time of year again! The weather is beginning to cool off and the leaves are beginning to change. What does this all mean for the Asheville Home Builders Association? October is Parade of Homes month! With 15 homes in the tour this year ranging from $279,000 up to 1.35 million, you will see all the latest in home building trends.

Celebrating Our 30th Anniversary of the Parade this year, we are proud of our Builders, Sub-Contractors, and Suppliers for the homes they have built. All of the homes in the tour will be open October 8-9 and 15-16 from 12 pm to 5 pm. Located in the surrounding Asheville area, we encourage you to visit these beautiful homes and see why Asheville is such a wonderful place to call home.

Are you interested in a guide of the Parade of Homes? The Full Color, glossy Parade of Homes Guide can be found free of cost at over 30 locations around the Asheville area. For a full list of distribution points, click here. This year there is also an option for you to voice your option on which home you liked the best. The 'Viewers Choice' survey will be made available on Saturday, October 8 on the Asheville HBA site.

A special thanks to the Parade of Homes Committee, AHBA Staff, and the Builders for making the Parade of Homes something to be proud of!

Thank you for supporting the Parade of Homes!

Hunkering Down Until Housing Markets Turn Up Seen as a Poor Business Strategy

As the housing market continues to bounce along the bottom, home builders and remodelers may think the best thing to do is to hunker down and lay low until the economy rights itself. But that’s not a good idea at all, according to panelists participating in an NAHB webinar last month.

“It’s not a viable strategy,” said moderator Ron Robichaud of Robichaud Financial Services, adding that home building professionals need to look for ways to change their business now — or they won’t survive.

When the downturn first became evident, “we listened to those predictions for a soft landing, but instead we sailed into a perfect storm” of changing consumer expectations amid a looming federal deficit. “A return to the 2004-2006 market,” when healthy profit margins were the norm for most home builders, “is not going to happen,” he said.

From 2002 to 2005, Robichaud said, an estimated 78% of the growth in builders’ profits came from land.

Robichaud spoke along with Steve Black, the owner of Stephen Black Builders Inc., and Joe Pfeiffer, president ofBusiness RIO Inc. in the Aug. 17 webinar, "Business Operations: Successful Strategies That Work in Any Economy." A recording of the webinar is available for purchase.

“You know your market,” Robichaud said. “You know the geography and the economy, and you have relationships with the community, and you have skills and expertise, so you need to identify and maximize opportunities. No town or community is static — and in the course of change, new opportunities emerge.”

For example, depending on where they live, many baby boomers who helped fuel the hot home buying market may want to downsize because their children have left home but find moving more difficult because the value of their home has declined. Creating product for that specialized niche might be the way to thrive in those markets, he said.

“As the market stabilizes, it will be very difficult for the small builder to compete with the highly capitalized larger builder who is committed to control the housing market,” he added. “The small private builder has a very big target on his back” and must be “nimble, flexible and creative” to make the most of opportunities as they arise.

Black said that he has been able to score success by becoming a jack of all trades. “We have to start expanding how we do business,” he said.

For instance, working with restoration companies that usually outsource the work can provide an ongoing revenue stream for a builder, he said, while fostering profitable new relationships.

Black also cited retirement communities as a source of new business activity.

“These communities present a great source of work due to the constant turnover of people," he said. As residents leave independent living cottages for nursing facilities, the homes they vacate need new carpet, doors, repainting and more.

Pfeiffer agreed. “The only way home builders can expect to survive is to learn new skills, use new tools and invest their time differently,” he said. “It’s risky, but it must happen to effectively address change. That’s why hunkering down won’t work. The changing conditions and increased competition mean the change is going to be permanent — and new changes are coming,” he said.

Having an operations manual and being able to accurately value-engineer each house plan is no longer a luxury, but a necessity, he said. “You can use it to see how you can specifically react to changes in the market, the new products and segments.”

In addition, “networking is huge,” Pfeiffer said, and getting together with a group of builders or remodelers with similar businesses can reap great rewards.

In addition to spending time with other industry professionals at local home builders association meetings and events, builders can join NAHB’s  20 Clubs, which are groups of 15 to 20 members who have businesses that are alike but located in different markets across the country.

“As you build your professional network and form business relationships, it’s great to have someone to bounce ideas off of, and as you join as a group to discuss issues, this can be extremely productive and it cuts down on research time,” Pfeiffer said. “It’ll make your job a whole lot easier because you won’t have to do all of it yourself.”

Boomers Don’t Have to Budge if They Remodel Right

Baby boomers — people born in the post-World War II years between 1946 and 1964 — are entering or nearing retirement age. And research shows that Americans have a strong preference to remain in their current residence for as long as possible as they grow older, meaning they will need to remodel or adapt their homes to meet their changing abilities and circumstances. This is called aging-in-place. 

Aging-in-place is generally defined as living in one’s home safely, comfortably and independently, regardless of age, income or level of mobility.

It can be an agonizing decision to have to choose whether to move or stay put. Older Americans have always been the least inclined to move, compared to home owners of any other age group.

Research from the National Association of Home Builders (NAHB) found that more than 50 percent of those ages 55 or older have lived in their homes longer than 10 years. 

Many older home owners would prefer to stay close to friends and family, value the community that they have been a part of for many years and don’t want to start over someplace new. Also, some may have to stay where they presently live because of financial concerns and limitations imposed by living on fixed incomes. 

Very simply, “getting around” is the key to making a house compatible to the needs of the aging-in-place occupant.  Remodelers report that the most common projects for their aging-in-place clients are making more accessible accommodations, installing brighter lighting, widening doors and hallways, adding railings or grab bars to prevent falls, changing floor coverings to add traction and eliminate slippery surfaces, and installing ease-of-reach and bend systems. 

Home builders and remodelers are ready for this large population that will seek their services to help them live conveniently and safely in the home and community where they feel most comfortable.

To address the unique demands of the burgeoning aging-in-place market, NAHB Remodelers, in collaboration with the NAHB Research Center, the NAHB Seniors Housing Council and AARP, developed the Certified Aging-in-Place Specialists (CAPS) program. This designation program equips remodelers with the marketing, technical and customer service skills required to help home owners, regardless of age, maintain their independence and increase security in their present homes.

CAPS remodelers and builders have been trained in the unique needs of the older adult population, aging-in-place home modifications, and common remodeling expenditures and projects. They have been taught the strategies and techniques for designing and building aesthetically enriching, barrier-free living environments, and given the resources needed to provide comprehensive and practical aging-in-place solutions.

Finally, CAPS graduates pledge to uphold a code of ethics and are required to maintain their designation by attending continuing education programs and participating in community service.

To find an NAHB member builder who holds a CAPS professional designation in the Asheville area, contact www.Ashevillehba.com. You can also search for Certified Aging-In-Place Specialist designation holders at www.nahb.org/designationsdirectory.