U.S. Cement Shortage Spreads, Threatens Construction Boom
Rising mortgage rates appear to be tapping the brakes on the home building sector; and the industry now is concerned about a crunch in the supply of cement, which is used to make concrete for residential foundations and has many other construction uses. A shortage in cement began in Florida in April, and industry officials now say the supply crisis has started to spread to other states that depend heavily on imports — including South Carolina, Texas and Louisiana. The shortage is tied to the lack of ships hauling cement to U.S. ports from exporters like Columbia and Thailand as demand for other building materials by China, the largest cement producer in the world, ties up the shipping lines. U.S. Rep Mark Foley (R-Fla.) has asked the Commerce Department to investigate whether there are any potential solutions to the cement supply problem. (www.wsj.com)
Wall Street Journal (05/20/04) P. A2; Carlton, Jim
Construction Liability Insurance Costs Hurt Contractors
Sharp increases in liability insurance premiums for general contractors and subcontractors involved in residential construction have been causing some smaller businesses to close down, while others are passing the added cost on to buyers. Liability coverage, designed to protect both the consumer and the contractor, has been mandatory in Oregon since 1973; but, lately, insurance costs have more than tripled for residential builders, even those that have never made claims. Single-family home builders are paying about $8,000 a year in liability costs, while some larger residential contractors are paying over $1 million, according to Craig Smith, administrator of the Oregon Construction Contractors Board. Builders say increased litigation over construction defects, particularly toxic-mold problems, are to blame for the rising costs; and Contractors Insurance Services President Kelly Atwood says rates may not drop for another few years. (www.ap.org)
Associated Press (05/16/04)
House and Garden — a Seamless Match
Many home owners, in a quest to merge indoor and outdoor elements, are matching their garden plants to their interior decor. Flowers, shrubs and plants are readily available in this season's favorite interior colors — particularly pink, peach, gray and green. Rather than simply coordinating their gardens to the major indoor color scheme, some home owners are going as far as planting flowers that complement quilt and sofa patterns as well as artwork. Others want their gardens' aromas to match their decorative styles. According to Nan Sinton of Horticulture magazine, "The American lifestyle is moving outdoors. People want gardens that make that progression as seamless as possible." (www.usatoday.com)
USA Today (05/21/04) P. 6D; Temple, Linda
The Backyard Solar System
Advances in solar power technology have made products more efficient and more affordable. For home owners — especially environmentally friendly types — these improvements mean a greater range of products for the outdoors. The promise of not having to drag an electrical wire across the yard to plug in such products is proving to be attractive on a widespread level, with mainstream retailers like Target as well as gardening catalogues hawking everything from faux stones that light up walkways at night, bird baths with fountains that operate on solar energy, patio lights, table umbrellas with built-in bulbs, lawn decorations and the especially popular line of products designed to repel animals and other pests. While they certainly are more efficient than before, many of these devices still falter on days when the sun does not shine, however. Still, many come with backup batteries for such days. Also, it is still difficult to camouflage the solar panels that power up household gadgets — although more manufacturers are embedding the panels to make them more aesthetically appealing. (www.wsj.com)
Wall Street Journal (05/21/04) P. W12; Fletcher, June
Minorities Increase Homeownership
While reporting that the nation's overall homeownership level held steady at 68.6% in the first three months of 2004, Fannie Mae said the rate among minorities rose during that same period to the highest level it has ever been since record-keeping began in 1975. Fannie Mae, which based its findings on data from the U.S. Census Bureau, also noted that the difference between the number of minority and non-minority owner-occupied homes shrank to an unprecedented low of 24.6 percentage points during the 2004 first quarter. Between 1994 and last year, meanwhile, Fannie Mae reported that homeownership was up by 6.6 percentage points among minority buyers while climbing just 5.1% for non-minorities. (www.latimes.com)
Los Angeles Times (05/20/04) P. C3
Floors With a Pedigree: Remodeling Using 'Reclaimed' Wood
Many home owners are shelling out about $14-$23 per square foot for reclaimed wood when installing new floors, cabinets and walls — much more than the $9-$14 per square foot that is typical for new woods. Reclaimed or antique wood is salvaged from old barns, factories, railroad tracks and lake bottoms; and many pieces are considered especially precious because they come from old-growth forests where logging is now prohibited. Elm, chestnut, hemlock, walnut, hickory-pecan, redwood, white pine, Douglas fir and white oak are among the most common types of reclaimed wood. The trend can be attributed to aesthetics as well as a desire among many home owners to protect the environment. The wood is air- and kiln-dried before the milling process, and much of the steep cost is tied to the removal of old nails and the fact that many pieces are thrown out due to decay. Home owners often do not realize that reclaimed wood is prone to stains and scrapes because it lacks a polyurethane coating, and some pieces remain infested with beetles and other pests.
(www.wsj.com)
Wall Street Journal (05/20/04) P. D1; Swisher, Kara
School Ties Entice Buyers
Universities in Georgia, Michigan and across the country are moving beyond dorm construction and teaming up with developers to create affiliated communities for alumni, parents of students and others interested in higher education. Many of these are age-restricted developments for retirees — who often provide endowments, act as mentors and help cultivate intergenerational relationships. Georgia Tech, for instance, has joined forces with Melrose Co. to build $800,000-plus dwellings on 600 nearby acres, a partnership that will give the school a yearly profit of $500,000-$1 million from a portion of the development's net operating income and initiation fees. Leon Pastalan of the University of Michigan's National Center on Housing and Living Arrangements for Older Americans says colleges and universities "will play a major role, or should play a major role, with what happens in retirement." While some purists insist that the educational opportunities should be the main selling points of these communities, many university-linked developments have succeeded by building around golf courses. Alumni are the primary targets for these developments, but buyers do not necessarily have to have any connection at all to the sponsoring college in order to live in a university-themed community. (www.accessatlanta.com/ajc)
Atlanta Journal-Constitution (05/17/04) P. 1E; Frankston, Janet
City Reshaping Building Codes to U.S. Model
CA panel of 13 committees of engineers, safety experts and real estate developers — about 400 members in all — has been holding closed meetings over the past few years with officials from the administration of New York City Mayor Michael Bloomberg in a sweeping effort to revise the city's building, fire, plumbing and electric codes. In response to national pressure to standardize building codes and incorporate new materials and technologies, officials have decided to start the massive revision project by throwing out all of the city's existing codes, replacing them with U.S. model codes and then deciding which New York-specific rules should be kept and which should be discarded. "New York City is preparing to give up its own home grown codes, which are too expensive to maintain on our own and have left us way behind the rest of the country," says Glenn P. Corbett, an assistant fire science professor at John Jay College of Criminal Justice and a member of the fire-protection rules review committee. This final step in the process is fueling much debate, mainly over the question of whether to place more importance on cost or on safety improvements. Conflicting interests among developers, unions, environmentalists and other groups are making it difficult for committee members to agree on code changes, especially those that may increase building expenses. According to the city's buildings commissioner, Patricia J. Lancaster, officials are conducting tests on past and current building projects to measure the effect of code changes on construction costs. The panel's recommendations for the new building codes are expected to be released this June, and once adopted, the codes will be updated regularly following an expert review. (www.nytimes.com)
New York Times (05/17/04) P. A1; Lipton, Eric
Exporting a Way to Live
Some major U.S. residential construction companies are being encouraged by both NAHB and the U.S. Commerce Department to expand into foreign markets as close as Mexico and as far away as New Zealand. Los Angeles-based KB Home currently boasts a design showroom in France; while Pulte Homes, the largest U.S.-based residential builder, has operations in Mexico and Argentina. NAHB's "Access Mexico" program, developed last year with a $400,000 grant from the Commerce Department, is designed to promote U.S. builders and construction materials as Mexico faces a major housing shortage. The American government also is fostering expansion into Eastern Europe, where large numbers of remodeling and do-it-yourself construction projects are driving up demand for building materials and supplies. Some U.S. builders are looking at Poland as a potential new area, as falling inflation and its recent accession into the European Union are making it a more Westernized and lucrative market for real estate. Other emerging markets catching the attention of U.S. builders are China and New Zealand. Both countries are experiencing a period of growth and change in their residential real estate markets, and both are becoming increasingly receptive to American styles and building practices. (www.philly.com)
Philadelphia Inquirer (05/16/04) Heavens, Alan J.
Size Does Matter
Lennar, WCI Communities and 11 other large home builders have created a trade group that aims to inform analysts and investors of their strength in the face of rising interest rates, which already have pushed the Bloomberg U.S. Homebuilders stock index down 20% from its peak of 278.84 in early March. Major builders insist that large cash reserves, improved management and their nationwide reach will help them survive interest rate hikes, whereas smaller companies do not have such protections. "The public builders right now are not as cyclical as the industry, certainly, potentially not even cyclical at all," insists Raymond James analyst Rick Murray. Despite the buying power of Lennar and other industry heavyweights, analysts — including Murray — continue to revise housing stock ratings downward. Murray does not foresee a drop in housing demand, but he does expect the negative interest-rate outlook to hinder stock performance in the short term. (www.miami.com)
Miami Herald (05/18/04) P. C1; Hanks III, Douglas
End of Tax Credits Brings Buying Opportunities
Developers of affordable housing may be rewarded with 10-year tax credits, provided that they retain the properties for 15 years. Investment opportunities are opening up now that many of these 15-year deals, sealed in the late 1980s and early 1990s, are set to expire. Those who purchased credits from the owners of low-income apartments will receive a share of the profits when the buildings are sold. Investors also can make money by purchasing these buildings and either converting them to market-rate housing or reapplying for the tax credits and selling them to other investors. New York-based CharterMac and many other affordable-housing owners are hoping to preserve the supply of low-income units by helping buyers obtain new tax credits. However, investors who decide against market-rate conversions are likely to encounter lower appreciation rates — especially since many of these properties are in undesirable neighborhoods. Furthermore, holders of the tax credits are subject to capital gains taxes if the buildings generate a resale profit. (www.wsj.com)
Wall Street Journal (05/19/04) P. B8; Smith, Ray A.
Redeveloping Work Sites
Residential developers across the nation increasingly are turning to vacant commercial sites due to the lack of developable land as well as to anti-sprawl efforts. "These are sites that are now very attractive to builders because there is the desire by jurisdictions to encourage development in these existing areas where the infrastructure is already in place," notes Beazer Homes land acquisition manager George Rathlev. Though local governments would rather see the tax revenues and jobs generated by commercial projects, many are willing to rezone commercial sites for housing in order to preserve open space in other areas. LIN-MAR Homes is involved in a redevelopment project in Harford County, MD, where 101 single-family residences priced in the mid-$400,000s will be built on land that once housed Fallston General Hospital. With six of the seven homes of the first wave of development already under contract, LIN-MAR has not encountered resistance from buyers. Still, builders will face the costly endeavor of locating water, sewer, gas, electrical and telephone lines before breaking ground. Nevertheless, Mark Building Co. President Larry Rosenberg expects builders to embrace redevelopment as a means of complying with Smart Growth principles and continuing to meet demand. (www.baltimoresun.com)
Baltimore Sun (05/16/04) P. 1L; Henslee, Anne Lauren
Study Finds Homeownership Down for Working Families With Kids
An affordable housing coalition has released a new study indicating that the homeownership rate for working families with children was 56.6% in 2001, a drop from 62.5 % in 1978. The Center for Housing Policy, the nonprofit research arm for the National Housing Conference coalition, used government figures for the study — which point to the construction of bigger homes, rising housing costs and limited affordable units as reasons why homeownership is declining for low-and moderate-income working families. "Larger homes tend to be more expensive, and any new supply created tends to be geared toward higher-income people," explains Barbara Lipman, research director for the center. Conference President Conrad Egan believes the problem could be alleviated if the U.S. government would support zoning for affordable housing and if more businesses would offer employees homeownership-assistance and credit-counseling programs. (www.djnewswires.com)
Dow Jones Newswire (05/18/04)
Youth Movement
Many families seek out child-friendly communities with clubhouses, swimming pools, parks and numerous activities as well as access to top-notch schools. Parents may have to do their homework to locate such developments, looking for backyard swing sets, soccer fields, open space and other kid-oriented amenities during their property search. However, those who buy in new developments might not have access to schools, fields, swimming pools and other infrastructure for several years as the community grows. They can do additional research by logging on to city and village Web sites, where information about the neighborhood can be found, and also by picking up a program guide from the park district, which will reveal a great deal about the local demographics. Although homes in kid-friendly communities might be cheaper than existing dwellings in established neighborhoods, families will have to pay non-resident fees to take part in activities elsewhere until their amenities are phased in. (www.chicagotribune.com)
Chicago Tribune (05/15/04) P. 1; Mannion, Annemarie
Firms Getting Braver About Going Wireless
Lobo Internet Services and other Internet Service Providers (ISP) based in Albuquerque, NM, say more and more local businesses are opting for wireless high-speed Internet over Digital Subscriber Lines (DSL) as they begin to understand the technology. Wireless users access the Web via a high-mounted antenna linked to an ISP. Some businesses are also employing wireless technology to create local area networks, which enable users in different locations to exchange data. However, users must deal with signal interference and limited range. According to New Mexico Internet Access President Stan Orrell, many businesses will switch from wireless to DSL when the service is offered in their area solely to cut costs. (www.albuquerque.bizjournals.com)
New Mexico Business Weekly Online (05/17/04) Holtzman, Clay |
