Housing Market Slows to Plateau

The nation’s housing market continues to exhibit signs of a slowdown, which is expected to moderate as the balance of 2006 unfolds, analysts reported last month.

Existing-home sales

The housing market is “stabilizing,” with little change in existing-home sales expected over the balance of the year, according to the National Association of Realtors. David Lereah, chief economist for the Washington, D.C.-based NAR, said last month that key housing indicators are leveling off. “New-home sales and housing starts have been fluctuating, so the overall market is stabilizing,” Lereah commmented. Although resales will be fairly steady over the balance of the year, declines since last fall mean annual totals will be lower this year, he noted, adding that existing-home sales are forecast to fall 6.5 percent, to 6.61 million units, in 2006 — the third highest on record after 2005 and 2004.

Housing starts

The current downswing in housing starts and permits is expected to continue for several months, although solid economic fundamentals, a favorable financing environment, and widespread use of sales incentives “will limit the degree of decline,” the chief economist for the National Association of Home Builders said last month. “Housing demand has been weakening as affordability has deteriorated and investors/speculators have pulled out of the market, and builders are adjusting their production levels accordingly,” observed NAHB chief economist David Seiders. Issuing his comments in the wake of a 2.5 percent July dip in housing starts, Seiders said that the NAHB is currently projecting a 9.4 percent decline in total housing starts for 2006, with single-family starts off by 10.8 percent from their record level in 2005. |

Remodeling Activity

Slower Activity Reported During the Second Quarter of 2006

Remodeling activity slowed in the second quarter of 2006, according to the National Association of Home Builders’ Remodeling Market Index (RMI). The current market conditions index decreased from 48.1 to 45.6, and future expectations moved from 48.9 to 43.5.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving.

“We expected lower sentiment as the overall housing market slows, and the second-quarter numbers certainly reflect that,” said Remodelors Council Chair Vince Butler, CGR, CAPS, GMB. “However, the remodeling market should perform relatively well as the overall housing market slows.”

The RMI component for owner-occupied units moved from 53.8 to 49.0 in the second quarter, while the component for renter-occupied units increased from 36.7 to 39.0 during the same period. In the future expectations index, the component for owner-occupied units moved from 53.2 to 47.2 and the renter-occupied component decreased from 30.4 to 28.8. Rental-property remodeling accounts for a third of all remodeling expenditures.

“Remodeling is less volatile than new home construction partly because nearly half of all expenditures represent nondiscretionary maintenance and repair projects,” said NAHB Chief Economist Dave Seiders. “The average age of the housing stock is 32 years and rising — well past the time when major home systems need replacement. Supported by more than $11 trillion in home-owner equity, the fundamentals of the remodeling market will remain strong for the foreseeable future.”

Insurance Regulation

San Diego GC Convicted of Workers’ Compensation Insurance Premium Fraud

A San Diego Superior judge last month ordered the owner of a San Diego company to pay $456,061 in restitution to the California State Compensation Insurance Fund in a workers’ compensation insurance fraud case.

David Haskit a licensed general contractor and owner of Haskit Construction, Inc., was sentenced to three years in prison after pleading guilty to workers’ compensation insurance premium fraud.

“Employers cannot cut corners to create profit for themselves while putting their employees at risk,” said Fiona Khalil, San Diego County Deputy District Attorney. “If they decide not to adequately insure those who work for them, they will be investigated and face serious criminal penalties.”

Haskit has owned his San Diego residential remodeling company since 1986. State Fund participated in the investigation by conducting audits of Haskit’s workers’ compensation records.

Universal Design

Aging-in-Place Requests Increasing

Washington, D.C. — A majority of residential remodelers, including those who focus heavily on kitchens and baths, are reporting increasing requests for aging-in-place features, the National Association of Home Builders reported.

According to the latest in a series of quarterly surveys conducted by the NAHB’s Remodelors Council, 75 percent of the remodelers polled reported their clients are increasingly requesting aging-in-place features. Asked to identify the age of their clients, 76 percent of the surveyed remodelers indicated that they have clients aged 55 to 64; 67 percent said they had clients aged 65 and older; and 43 percent said their clients were aged 45 to 54, the Remodelors Council said.

Asked to identify the main reasons that customers requested aging-in-place modifications, 75 percent of respondents said their clients were planning ahead for future needs. Other reasons included living with older parents (53 percent), acute age-related disabilities (46 percent), and acute non-age-related disabilities (23 percent). The majority of aging-in-place work is determined by the client (66 percent), as opposed to being suggested by the contractor (34 percent). Only 4 percent of remodelers found potential clients not receptive to suggested aging-in-place modifications, the Remodelors Council noted.

RemodelorTM of the Month

Bill Brinkman, CR, CLC Brinkman Russell, Inc. Oakdale, Minn.

Bill Brinkman, an active member of both local remodeling associations — NARI and the Twin Cities Remodelors Council — has been named national Remodelor of the Month for September 2006 by the Remodelors Council of the NAHB.

For the past five years Brinkman has been active in the Remodelor’s Showcase program. He has worked on behalf of the local home builders association to develop a protocol for handling water intrusion problems in the Twin Cities area. Six Brinkman Russell carpenters are currently enrolled in Remodelors Council training programs. And, he recently sat on the curriculum committee in advance of a local JLC Live trade show. But Brinkman’s biggest accomplishments are business related.

  • Over the past four years, Brinkman Russell Inc. has grown from just over $1 million annually to $4 million. Along the way he has instituted a number of outstanding best practices.
  • The company is working to implement Production Management Institute (PMI) standards. This standard brings the company’s production managers into the estimating process earlier in the design/sales cycle. Through this process the company catches more details upfront and achieves greater buy-in on project budgets.
  • The company recently launched an aggressive and innovative marketing program that incorporates brand-building direct mail, targeted mail, private open houses, advertising and public relations. As part of this effort Brinkman has become somewhat of a expert in the local media.
  • To better manage blueprints and drawings, blueprints are scanned and converted into .TIF files. AutoCAD and Chief Architect drawings get saved into .LDF or .PDF formats that can be e-mailed to clients. All drawings are kept on file and can be viewed by everyone in our office.

Perhaps most compelling of Brinkman’s achievements has been building a team that is deeply involved in a long list of community programs. This is by design, says Brinkman.

“Our core ideology is to have an organization ‘where self-motivated, innovative craftsmen and professionals with strong morals can feel the entrepreneurial spirit while having the security and structure of an organization,’ “ notes Brinkman. “People who are secure in their job are more effective with their families, in their communities and the industry.”