ColoradoBuilder Fall 2010
FORUM
Journal of the Colorado Association of Home Builders www.hbacolorado.com
Builders are building homes again some never stopped and are having the best year ever
Election ‘10 Builders encouraged by slate of industry– friendly candidates
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features
ColoradoBuilder FORUM
contents »
Fall 2010 vol. 14 no. 4
43 Remodelers keep busy through steady growth Home owners who decide to stay put are choosing to do smaller projects
28 | Upcoming election encourages builders Pendulum may be swinging toward industry-friendly candidates
29 | CAHB endorses state candidates Support those who have backed builders
30 | “Ugly Three” initiatives could cripple Colorado If passed, could plunge state into deep recession
15
Builders are building homes again While some never stopped, others are getting off sidelines and into the game
52 | Peterson to lead nation’s prestigious remodeling group Named 2011 Chair of NAHB’s Remodeling Board of Trustees, will lead 8,000 members
COVER PHOTO: associates in building design remodeled 1,200 sq. ft. of a 1980s custom home, including the family room with a new ledgestone fireplace.
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departments contents »
10
President’s Letter
12
From the Hallway
40
Rocky Mountain Builder Conference
54
Where are you on the web?
Time to face down press: Now IS best time to buy home
CAHB cuts back so it can continue defending builders at state capitol
A big thanks to all who supported this year’s Conference
Strategic, effective presence adds to your bottom line
Colorado Builder Forum is printed on elemental chlorine-free paper in conjunction with the International Joint Commission and is consistent with the U.S. Environmental Protection Agency’s standards.
Please recycle this magazine.
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President’s Letter
Contrary to popular press’ opinion, now is best time to buy a home In recent weeks, there’s been a spate of articles generated by the mainstream media questioning the wisdom of home ownership. The most egregious of these articles was certainly the cover story of the September 6, 2010 edition of Time magazine. The myopic perspective and distorted bias of this article downplayed the positive aspects of home ownership and exaggerated the negatives, by extrapolating what happened to the housing market over the past few years, to the past century. Emil Wanatka In addition to making other erroneous assumptions, toward the CAHB President end of her article, the author writes: “If there were a time to start weaning America off the idea that home ownership cures all our ills, now - after the worst housing crash in 75 years - would be it.” I couldn’t disagree more with this statement. Now is not only the time to invest in housing as individuals, but, also collectively as a nation. While this recession has proved that owning a home isn’t right for everyone, it still makes sense for the majority of Americans, especially now. Consider: Only three short years ago in 2007, the average American home cost $313,600. Paying 20 percent down and using the then-interest rate of 6.6% percent for a 30-year, fixed-rate mortgage, the monthly payment for this home was $1,602. Today, you could buy that same home for $222,656. Put down 20 percent, use today’s interest rate of 4.5 percent on a 30-year, fixed-rate mortgage, and the monthly payment is only $902. Not only is the mortgage payment $700 less each month now versus then, but the required down payment is almost $20,000 less than it was three years ago.
Lots of upside potential for buying now I would further argue that the home in 2007 offered little to no mid-term upside potential, but at today’s price, it most certainly does. Collectively, our leaders and policy makers must continue to support home ownership if we are to recover from this recession. Empirical studies of the Great Depression, as well as of all the post-war recessions, clearly shows that without a recovery in housing and the subsequent expenditures of consumer durable goods, there will be no economic recovery. In each of these instances, the recovery of residential construction preceded recovery in every other sector of the economy — and had larger percentage gains than the recovery in any other major sector. Let’s hope history repeats itself, soon. Along with everyone else associated with the industry, the recession has had a major impact on CAHB. While times are admittedly difficult for the organization, staff and the Executive Committee continue to work diligently to ensure that the organization is able to fulfill its mission of advocacy and legislative work on behalf of the home builders. Part of this response has been to cut operating costs and reduce overhead wherever possible. As examples, we’ve reduced staff and frozen wages, eliminated travel reimbursement for the Executive Committee, and renegotiated our office lease. Meanwhile, we continue to work toward enhancing member benefits, increasing membership, and reallocating funds as necessary to ensure we’re a viable organization going into the future. I’d like to take this opportunity to thank my fellow Executive Committee members, and especially staff for not only your hard work, but, the sacrifices you’ve all made on behalf of this organization and the home building industry.
ColoradoBuilder
FORUM
www.hbacolorado.com Fall 2010 vol. 14, no. 3
Official Publication of the Colorado Association of Home Builders
CAHB Senior Officers President Emil Wanatka President-Elect Peter Tobin Treasurer David Tschetter Secretary Jeff Piper Immediate Past President David Hansen Government Affairs Chair Chris Elliott Executive Officers Council Chair Roger Reinhardt State Representative to NAHB Skip Howes
CAHB Staff Executive Vice President Rob Nanfelt Vice President of Public Affairs Amie Mayhew Executive Secretary Sally Kemp
CAHB editorial board Tom Brinkman, Chair Bill Armstrong Randy Feuerstein
Tom Hayden Duane Marlatt Peter Tobin Merlin Widick
600 Grant Street, Ste 550 Denver, Colorado 80203 P: 303.691.CAHB (2242) F: 303.639.4954 www.hbacolorado.com Dedicated to the advancement of the home building industry, Colorado Builder Forum is published five times a year for members of the Colorado Association of Home Builders. Copyright © 2010 by CAHB. No material may be reproduced without the express permission of CAHB. Acceptances of advertisement in Colorado Builder Forum do not imply endorsement or approval of the product or service advertised.
6160 S. Syracuse Way, Ste 300 Greenwood Village, CO 80111 T: 303.662.5322 F: 303.397.7619 www.custompublishingco.com vice president – group publisher
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Best to all, Emil Wanatka CAHB President
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CAHB cuts back on staff and space to continue defending builders at state capitol In the previous issue of colorado builder forum, there was a lengthy article providing an extensive legislative wrap-up. On page 28 of this issue, there is a piece on the upcoming elections and on page 30, there is an article about measures 60, 61, and 101 and the potential havoc they could create for our state. We are currently working on putting together our 2011 Legislative Agenda and will finalize it during the fall meetings in Beaver Creek. As a result, there is not much new to report now as it relates to legislative and regulatory matters. As such, I’m going to use this opportunity to share some of the steps we as an association have taken in recent years to adjust to a changing economy, while keeping the doors open, and reasserting our commitment to maintaining our core mission intact.
Budget cut in half
Rob Nanfelt CAHB Executive Vice President
For the 2008/2009 fiscal year, our annual budget was just over $1 million. Since then, we have slashed it by nearly half and have adapted to doing more with less. We have gone from five full-time staffers to two and have cut back on benefits, as well. Our leadership has also felt the pinch, as we have eliminated any reimbursements for participation in CAHB Leadership meetings and events. We were successful in renegotiating our contract with the Park Hyatt Beaver Creek for our annual Rocky Mountain Builder Conference and in doing so, saved our association — ultimately the membership — in excess of an additional $100,000. More recently, we engaged in an effort to provide more transparency to our Board of Directors regarding our financials. Unfortunately, in the course of doing so, we ended up creating more confusion and less clarity. As a result, the CAHB Executive Committee once again exhibited sound leadership and appointed a Financial Task Force (David Tschetter, Chair – Northern; Jack Acuff – Northwestern; John Bissett – Colorado Springs; Tom Brinkman – Denver; Jeff Piper – Northwestern and Peter Tobin – Denver) to fix the problem. The Task Force in turn recommended hiring a new accounting firm and worked with the new firm to establish a process and form for financial reporting. In addition to being affordable, our new firm, Rubin Brown, has been attentive and treats us like we’re a million-dollar account.
Office space halved, as well With our staff reduction, we initially attempted to fill the gap by subleasing our extra office space. Over time, we realized this was only a stop-gap measure and we would need to seriously analyze our current needs and consider all our options. Once again, Leadership stepped up and appointed a Task Force of Peter Tobin, Bruce Likoff, and Chris Elliott to renegotiate our existing lease with building management. After several months of negotiations, we successfully reached an agreement to cut our existing office space in half, thereby effectively reducing our monthly rental expense 50 percent.
New GL, workers’ comp alliances provide revenue We have also successfully developed a new general liability insurance program — which continues to experience growth despite tough economic times — and managed to recreate a workers’ compensation program with our partners at Pinnacol Assurance. We continually work to find opportunities to grow these programs so that we can ultimately rely more on them as a dedicated income stream and less on membership dues. As you can see, over the last couple of years we have attempted to become as lean as possible, but still be able to provide the core service we provide best, advocacy at the State Capitol.
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Generation Y
During the boomer years of 19461964, America surpassed the 3.9 million births per year mark 11 times. During 1980 and 1996, known as the Generation Y or Echo Boomer Era, America surpassed the 3.9 million births per year mark 7 times. And, now we are experiencing another “Echo” with births exceeding 4.0 million each year from 2000-2008.
(je-n∂-’ra-shen wī)
Primarlity the children of the Baby Boomers and generation X, born between 1979 and the mid 1990’s. Also known as Millennials and Echo Boomers.
“Generation Y will have more impact on the housing market than any group since the Boomers. It is a market segment on the verge of becoming a major consumer force with impact, both urban and suburban, defined by life choices.”
While
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Boomers numbered 80 million, Generation Y represents a comparative 74 million new buyers. Their impact on the housing market is just beginning. Aged from the teens into their early 30’s, some are singles or first time buyers while others are moving through the household formation years and attending parent/ teacher conferences. Some are focused on being hip and happening in their first home purchase. Others are seeking enduring family homes with an understanding that future move up purchases will be limited by slowly increasing equity growth. Here’s a short list of this buyers’ expectations in the homes they purchase.
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A Greater Responsibility
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This buyer wants a housing selection to represent a “responsible continuousness” including the use of green materials, fewer garage bays, electric car plug-ins, energy performance/management and optimized square footage.
Low Maintenance
Minimum lawn work and home maintenance. MAIN FLOOR
Social Interaction
Internet driven, this generation thrives on impromptu gatherings and entertainment.
Good Value
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Low interest rates and highly competitive pricing have become an expectation for this Generation dogged by a tough job market, diminished savings and college loans.
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Flexibility and Enduring
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Plan flexibility provides opportunity for a home to adapt to lifecycle changes.
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Contemporary Edge
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This buyer appreciates clean lines and organization, perhaps reflective of their computer centric lifestyle.
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Room Count
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On the main floor this buyer isappreciative of one large “assembled” space which merges kitchen with an eating and living spaces. On the upper floor a master and 2 other bedrooms a hall bath suffice. A minor bedroom can be oversized for two kids to share.
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Sounds of hammers echo throughout state
Builders are building homes again; some never stopped
by Kim Jackson
O
verall, the numbers don’t bode well for builders across the state. In the Denver metro area, 4,000 permits are expected to be pulled for the year — a far cry from the 12,000 - 14,000 permits that are considered normal volume for the area. Yet builders all over Colorado are building homes; some are doing well, and have been, throughout the past two years. Others have been sitting on the sidelines, patiently waiting for the right time to re-enter the market. Builders who are thriving these days are smart. They’ve figured out where their niche is and with a laser-like focus, have been selling homes to those targeted buyers. They’ve kept a close eye on their land holdings and debt and are cautiously optimistic about the future, some more than others.
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Colorado Builder Forum
Fall 2010
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Challenger Homes listens to its home owners and customizes each home to a buyer’s desires. The 3,036 sq. ft., four bedroom, two-and-a-half bath Roanoke model in the GreyHawk subdivision, starts in the $200s and include breakfast nooks, as shown in these photos. (above): Owners opted for hardwood floors and the three windows behind the couch, giving them spectacular views of the mountains beyond. A huge loft and walk out basement round out the home that sold in the $300s. (opposite): In this 2,975 sq. ft. Roanoke, the owners opted for a door and hardwood floors off the breakfast nook.
Challenger Homes on track for best year in history B rian Bahr launched Colorado Springs-based Challenger Homes ten years ago. Most of what the company builds are starter and first-time move-up homes. With homes in 11 communities throughout the Colorado Springs area, many of Challenger Home’s buyers are serving our country in the military. When the market turned, Bahr said that one of the things that helped was that he didn’t have a lot of land on the books. “We had some land, but we were not heavily leveraged. For the most part, we were taking land down on take down schedules with developers, so we were able to react and expand through the downturn.” That clean balance sheet let Challenger Homes take advantage of low-cost land and deliver homes at a better value than perhaps someone who had a high basis in their land. In fact, Bahr observed, “Last year, we had our best year ever. We more than doubled our number of homes sold in the previous year. This year, we’ve already surpassed lat year, and expect that we’ll be somewhere between 30 and 50 percent better off than last year.” Last year, Challenger Homes sold 93 homes. In August, the company had closed on 80 homes. By the end of the
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year, Bahr said, “I expect we’ll be in the 120 range. Next year, we expect we’ll be selling and building about 15 homes a month, so about 180 homes.”
More square footage, standard features sets company apart
The core of Challenger Homes’ business has been providing great value to the home buyer. “Some buyers want a nice home, and as much house as they can afford,” he said. “Our philosophy has been to provide more house to call home. That includes more square footage and standard features we feel the majority of buyers want.” For example, garage door openers are standard in his homes. Granite countertops are optional and Bahr has discovered that fewer than ten percent of his buyers want them. Challenger Home’s range from the $150s to the mid-$400s and the average price is in the low $200s. Three years ago, Bahr did very little advertising. But when the downturn hit, he ramped it up. “When a market starts to turn southward, you need to have a plan to attack it,” he said. “We’ve increased our marketing eight- to tenfold since then.” In addition to on-line marketing, he’s now
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a heavy radio advertiser, and does a lot of marketing to the realtor community. What’s more, “we’ve introduced some programs we think are innovative and will attract more buyers to us.” On top of that, many buyers have been referred to Challenger Homes from others who bought a home from the company. Bahr also believes people buy from Challenger Homes “because we have an optimistic and positive attitude. We are not bemoaning the bad market and we’re not making excuses for why we’re not selling houses. We’re just getting it done,” he said.
economic indicators point to continued growth
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That philosophy has encouraged the builder to expand into new neighborhoods. “We’re optimistic that a lot of indicators locally and nationally are positive,” he said. Even so, he’s continuing to be smart about debt by not buying lots up front. He’s working with developers or banks that have lots who are willing to do a takedown schedule. “And we’re also walking away from some deals,” he said, “because we don’t think the terms are appropriate for the risk of this market.”
AND MORE... Bahr met with Colorado Springs Economist Fred Crowley, who told Bahr that the foreclosure rate in El Paso County has dropped approximately 20 percent. “That’s going to give us opportunities to build new houses,” Bahr said, “because we’re competing less with existing inventory.” Also, the median price is up five percent over last year. So while builders in the area have been thinking prices have gone “down, down, down, the statistics are no, they’re actually going up,” Bahr said. “That’s important because buyers are always looking for the best deal and sometimes, they’re going to lose out. With interest rates as low as they are and with with prices fairly stable, compared to the fact that income’s actually grown over the last few years, we have the most affordable housing index than we’ve ever had in our area.” With an affordable housing index in El Paso county of 155, compared to 101 four years ago, “we’re 55 percent more affordable today than we were four years ago,” Bahr said. “As a builder, we need to make sure buyers understand that this is the best time to buy we’ve seen. Let’s not be bashful about it. Let’s make sure they know.”
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Fall 2010
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Ryland Homes' Cognac model in Aurora's Blackstone Country Club is a 3,103 square foot, four bed, three-and-a-half bath home with three garages. Priced from $330,990, the model features an open layout that flows from the family room to the kitchen. Shown is the Mountain Lodge elevation, however, several exterior styles are available with the Cognac.
Ryland Homes jumps off sidelines and gets back in game R
yland Homes was one of the builders that sat waiting for the right time to re-enter the market. This summer, for the first time in five years, the national builder’s Colorado division began to buy land. Dan Nickless, division president for Ryland Homes’ Colorado operation, explained that several years ago, the company reduced much of its asset base and generated a fair amount of cash. “We’re in a position now that we can re-employ that cash to grow the operations again,” he said. “We’re actively looking for communities and project sites that meet our business plan goals.” His overriding objective is to find sites that track with the division’s philosophy as it re-emerges in the Denver market, which is centered around first-time move-up and lifestyle buyers. “We’re also looking for opportunities to identify unique parcels that help us limit some of our competition,” he said. “We’re interested in being in master-planned communities with a distinct marketing advantage, relative to things that are attracting the consumer. That may lead to us developing our own communities to meet that need.” During the height of the market, Ryland Homes didn’t add a lot of ground to its portfolio. That prudent decision, along with
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a lean staff and a frugal mindset, let the company streamline operations and focus on operational efficiencies. “That’s really how we survived to fight a better battle another day,” he said.
poised to capitalize on buyers who are now ready to move up
Ryland Homes’ prices range from the $250s to $400s. Nickless observed that currently, some buyers were pulled into the market through the previous tax credit effort, and may have bought foreclosures at a significantly discounted prices. Nickless said, “Our feeling is that this group of buyers is now ripe to move up into a new property — hopefully, a more exciting one like we plan to offer — and really cash in on some of the equity from the foreclosure, the fix-it-up-and-sell-it mentality.” As these move-up and first-time buyers realize there’s more to a house than four walls and basic features, and as the market recovers and equity solidifies for these two buyer groups, he said, “there’ll be an opportunity for us to capture them, as we target that group today.” Lifestyle buyers are often Baby Boomers. Nickless observed that these buyers aren’t necessarily concerned about price point as much as they are about features and livability of the homes. “Our focus has been to design homes, with the help of some great outside architects who really understand that it’s about the spaces you’re living in right now and not so much about room counts — or even the specifications within the house. We’re going for a lifestyle that is consistent with how people are truly living today. With the Baby Boomer demographic, you have to excite
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them with some new concepts and design, not just provide the same old floor plans they’ve seen for the past 15 years, but new floor plans that function around the activities they do every day.”
land grab? not in ryland’s future
Going forward, Ryland Homes is careful about where it’s acquiring land. While it can be tougher to find locations that give the company a competitive edge in the Denver metro area, Nickless feels that with a little hard work, “we can identify sites that do meet that criteria. That’ll help us be even more profitable and successful as we go forward.” He’s also careful to avoid getting caught up in the “land grab” that some big builders have been doing over the previous 18 months, and forcing up prices. For example, a couple of lendercontrolled land transaction sites were out for RFPs, which garnered five builder bids. The lenders then asked the bidders for last and best offers, which boosted the prices. “A year ago,” Nickless said, “I don’t think you would have had four or five suitors for a site; it’s more likely there were one or two — and there certainly wasn’t any bidding going on. We want to make make sure that the fundamental economics of a project make sense before we take it on.” The company heavily relies on electronic media to market its homes. “Some people will tell you 80 to 90 percent of buyers look on the web before buying a home,” he said. “I’ll
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tell you that 100 percent do.” As a result, it’s where the bulk of Ryland Homes’ marketing dollars are spent, although there are plans for traditional media buys, such as newspaper and radio advertising.
geographical diversification is key to ryland’s growth
Ryland Homes is currently building in Timnath and Johnstown, Roxborough and far southeast in the Blackstone Country Club. In addition, the company recently completed the acquisition of an infill site in Louisville, and is working on two “fairly significant” projects in the south metro and north metro Denver areas. “One of our goals is for better geographical diversification, as well as expand the operations more specifically within the metro Denver area.” Nickless embraces competition in the communities Ryland Homes builds. “If people take the time to evaluate our product against some of the competition, they’ll see the differences and appreciate that we have their lifestyle in mind,” he said. “That’s what’s going to help us beat the competition. We pride ourselves on a great customer experience, great customer service. More importantly, we’re delivering a house that really coincides with their desires to have a floor plan that lives the way they do.”
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Restructured Village Homes is happily building throughout state F or its part, Village Homes has been through hell and back. Heavily loaded down with a big land position, the company plunged into bankruptcy in late 2008 and emerged earlier this year, with managing partner Lowe Enterprises and majority owner Home Building Capital Solutions behind the statewide builder. President Matt Osborn explained that because Village Homes’ access to capital is significantly better now, the builder’s ability to fund new construction is much more sound. “That’s a big challenge for private builders, even with non-contingent contracts,” Osborn said. “It’s tough to find financing for new construction. Our capital structure allows us some more flexibility than a lot of private builders have right now.”
restarts construction in six communities, gains market share
The new company bought a considerable amount of inventory from the original one, which it’s been selling through the first three quarters of this year. However, because Village Homes is no longer saddled with a lot of inventory from previous years, “we were able to restart
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communities where we didn’t have that kind of glut of inventory to hold us back,” Osborn said. So the builder has restarted construction in six communities: Two in Parker, one in Castle Pines North, one in Castle Rock, one in Granby and one in Fort Collins. “In all cases, they’re going well,” he said. “The market certainly hans’t been a V-shaped recovery, but we’re getting our share of sales, and our models aren’t complete.”
model homes boost home sales In this world where many builders have turned to virtual model homes, Village Homes is building on-the-ground models and re-establishing sales offices in those communities it builds. “As much as the virtual technology gets people interested in the product you offer, I still think it helps to really stand in a model and understand how a plan spatially feels,” Osborn explained. “For most buyers, they need to see it, whether it’s the models or inventory under construction. You can label a room size, but until you can stand in it and map out where your furniture goes, I think it’s a challenge for a lot of people.” He also sees the model home advantage in selling options and upgrades. “If you’re in a model, you’re really seeing,
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With 1,801 sq. ft., Village Homes’ Sagewood model is a two bedroom plus study, two bath, two garage home with a kitchen that opens out to the great room and dining room. Energy Star-certified Sagewood includes an unfinished basement and begins in the low $300s.
touching and feeling upgrades, versus just seeing a virtual model of a granite countertop. To me, that doesn’t have the pizazz that actually seeing a six-by-eight granite island is going to have by seeing it in person.”
marketing message: we’re back!
Some of Village Homes’ buyers knew about the company’s troubles; others didn’t. As such, there has been a big marketing push to boost the builder’s brand awareness in the markets it’s building homes. Like other builders, it has a strong on-line presence. Village Homes also regionally advertises in traditional media. Osborn said they’re doing a lot of work with the brokerage community, as well. “Part of it is getting our name back out there and helping people understand we’re back in business. From what we’re seeing, a lot of our buyers are coming from realtor contacts. It’s a lot of on-the-ground, face-to-face meetings with our sales people and realtors and really leveraging those relationships to mine prospects.”
second-home buyers are surfacing again
Depending on the community, Village Homes’ buyers range from first-time to second-home buyers. For example, a couple of its collections in Douglas County and Fort Collins are geared toward first-time and first-time moveup buyers. Other communities are geared toward active adults and move down buyers. And in its Granby community, “we’re seeing some activity with second-home buyers
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there, as well,” Osborn said. “Part of it there is price point. The Granby market, for us, is between $300,000 and $500,000, so it’s very affordable for people who have the ability to purchase a second home.” While it’ll start somewhere around 60 homes, Village Homes is on track to close between 70 and 80 homes this year. Next year, Osborn said, “our hope is to get into the mid-100s.”
“dream element” is a key differentiator
In some communities where Village Homes is building, there’s a lot of competition; it’s tough for the builder to differentiate itself on price. Osborn feels his company stands apart through its model homes, with some of the finishes, “and almost more of the dream element. It’s really going to be the attributes as they relate to the home, location and, frankly, it’s going to come down to your onsite sales people, as well. They’re the people building the relationship with the buyers and having the right person on site is that piece that pushes you over the top.” Looking ahead, Osborn feels it’s important to reestablish expectations by understanding the market, recognizing what you can generate within that market and focusing on hitting that target. “In a community that you may have been selling four or five a month several years ago, two a month may be the best you can expect to generate — and that’s okay. If you’re doing that, you should feel pretty darn good about your activity levels.”
Keep your project on schedule. Call our Builders Call Line at 1-800-628-2121 to schedule your service connection, or fax your application to us at 1-800-628-2521. xcelenergy.com Š 2010 Xcel energy Inc.
Caption: Century Communities’ Madison 3210 model is a three bedroom, three-and-a-half bath town home with a main-floor study, spacious dining room and great room with fireplace. With a base price of $434,950, the Grand Master Suite in this 2,629 square foot home has a five-piece bath and its own private deck.
Through good times and bad, multifamily builder Century Communities continues to turn a profit builder’s success rests on its people, buying smart L ike Challenger Homes, Century Communities was launched early in 2000. Years ago, though, the company started as TriMark Homes, a multifamily single family and attached town home, condo and mansion builder. It grew to be the biggest multifamily builder in the state and was sold to DR Horton in the ‘90s. From there, Century Communities was born and historically focused on attached housing, although during the past two years, it has been opening single family detached communities. Century Communities has opened four communities this year, most with a 50-50 mix of single family and attached homes. “That’s the direction we’re heading as a company,” said Todd Amberry, vice president of Land for the builder. Throughout the economic ups and downs over the past decade, and in particular the past couple years, the company has been actively building homes. “We’ve always been active and we never lost money,” Amberry observed. “We’ve come on the scene the last couple years because we’ve been able to hold steady sales, turn a profit and really be one of the shining stars of the downturn.”
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Amberry believes most of the company’s success is directly attributable to its people. “Century Communities enjoys one of the strongest management teams in the state,” he said. “There are some fantastic people here who have really kept costs down. We also have some great sales teams to push units out the door and bring in buyers.” Another reason for its success is “we were always buying smart,” he said. “We have the model that we make the money on the buy. When looking at new communities, lots or option deals, we’re always focused on getting the best deal we can and making sure we maximize our ability to turn a profit on that project, by making sure we buy the land right.”
true reason for success? location really does matter
He also focused on location. “I think that’s one thing that got lost in the downturn,” Amberry said. “When things started to heat up, guys forgot that location mattered.
They began to build and develop in all kinds of locations, whether the supply-demand mix worked or not. We’ve always said location really matters, so the locations we had were in places where people wanted to live. They’re infill locations. They’re near retail. They’re near commercial and employment. It’s back to the fundamentals of real estate.” Century Communities is on target to build 250 to 275 homes this year. Of those homes, 65 to 70 percent will be attached homes. Next year, Amberry expects the company to build 300 to 350. “We see next year as a much better one than this year, especially with the dip we saw after the expiration of the tax credit. That really took the wind out of everyone’s sails. Next year, we’ll build off what we did accomplish this year and continue to grow in terms of number of sales, as well as appreciation and home pricing.”
opportunity is everywhere in state
The company is building in the Denver metro area, as well as Colorado Springs and north of Denver. “I think there’s opportunity all over the state,” Amberry said. “There’s definitely still opportunity and I think that it’s just being able to define the right projects, the right communities and build the right product that people really want to buy.”
Because of the nature of most of its product, Century Communities has a lot of first-time buyers. The builder also has move-up, move down and move-across buyers. Most people, Amberry feels, buy for the location. “Our marketing efforts, obviously, help that out,” Amberry said. “But really, they’re in locations where people want to live. RidgeGate is a perfect example in Lone Tree. It’s a location where there’s very little supply and it’s a place where people have a demand and desire to live there. Our locations speak for themselves.” Like Bahr, Amberry feels that this is one of the best times for buyers to get off the sidelines and get into the market. “Population is still growing,” he said. “Unemployment is coming down and people are hiring. There’s plenty of demand. And I keep saying they’ll never get lower, but interest rates keep getting lower. There’s not much room left before you get to par. I look at all the indicators and say, there’s no better time than now. I see all these positive factors and I hear people saying they feel better about things than they did a year ago. I think that plays a lot into the demand role, into what’s driving all the sales right now. Overall, everything’s pointing in the right direction.”
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how's life now compared to 4 years ago?
November election shows encouraging signs of pendulum swinging toward industry-friendly candidates
by Kim Jackson
Pull out your wallet. Look at how much money you have in it. How much was there four years ago? Gets you thinking, doesn’t it? How was your business doing four years ago? Were you building homes and making money? What about the future: Were you optimistic and hopeful, looking to expand and grow? And while we all felt the economy skid to a stop, you still gotta wonder, really, what the hell happened? And how did it happen so damned fast? It’s why the upcoming election is so important to us. “Elections have consequences,” explained Steve Durham, CAHB lobbyist, “consequences that affect builders’ daily lives and their ability to make a living.”
Gubernatorial race conundrum: Who’s pro business? In what’s been one of the strangest turn of political events in the state’s history, we now have three gubernatorial candidates; one is predicted as the odds on favorite to win. And according to CAHB Government Affairs Committee Chair Chris Elliott, many within the business community have rationalized, “just like they did with Bill Ritter four years ago,” that Denver Mayor John Hickenlooper is a “pro business Democrat and that life with him in that office will be acceptable.” Yet, party trumps the person. Regardless of who is running for which office, each candidate has to answer to the base of the party. The people who help to get a candidate elected expect that person to have similar attitudes and positions on their issues. “Even the best possible Democrat who goes in to the office tries to walk the fine line and ends up with nobody happy,” Elliott said. “Hickenlooper’s a little more savvy about those things, but he’s still subject to the same political pressures from his own support base — just as anyone else would be.” Durham observed that all the gubernatorial candidates claim to be pro business. “But you have to remember Bill Ritter claimed to be pro business and he proved to be anything but pro business. The business community should be very cautious of people who claim to be pro business and have antibusiness constituencies, such as organized labor, environmental extremists, trial lawyers and teachers’ unions.” He added, “You have to look at the total actions of a candidate, not just their background. What charities do they give to? Who are their friends and associates? Whose advice do they take? You have to be sophisticated in your evaluation.” With another Democrat as governor, Elliott noted, the business community could expect to continue seeing more
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torte issues and construction defects with trial lawyers, more erosion of people’s right to work and union pressures, along with environmental issues that continue restricting transportation and mandate climate change improvements in houses — on top of the industry’s voluntary, proactive actions toward energy efficiency. “What mitigates the situation is if we indeed have the Republicans take control of the House, we have a backstop for the more onerous stuff. It will be tougher to get those things passed and we’ll end up with a stalemate. In this kind of an environment, a stalemate is probably not a bad thing.”
Sea change turning toward industry-friendly candidates Other elections are at stake, too. Elliott feels that with sufficient funds to support industry-friendly candidates, “we probably could have changed the leadership in both the House and Senate, but we’re likely to consider success changing just one of those, probably the House.” He feels the lack of meaningful dollars to support candidates is the biggest obstacle to taking control of both the House and Senate. “The evidence of the political whims are such that if you’ve got a decent Republican candidate and they’ve got the money to spend, they’ll get elected in a great number of districts,” he said. “The detrimental effects are from all those other constituencies that favor the Democrats and if they retain control, then we lose. I think it’s that simple.”
Local HBA opinions help fund candidates CAHB’s Political Committee and Small Donor Committee heavily count on local HBs’ feedback about candidates in their districts. Like many businesses throughout the state, HBA members are facing their own financial challenges. That means that, according to Jeff Piper, chair of both committees and division manager for Western Building Solutions, some members are “choosing not to participate in the political process as much as they had in years past. Money’s tight everywhere and unfortunately, it’s not going to be any less expensive to run a political campaign this year than others get good people elected.” That’s why it’s vital for local HBAs to share with the committees what’s happening in their local districts — and identify the industryfriendly candidates they want to support. CAHB, in turn, will do all it can to support them. Piper said, “We have to look very carefully at races where we feel we have an opportunity to put in candidates who are more up front about their support of our industry and hopefully, unseat others who have not supported our industry.”
For incumbents who have repeatedly supported the industry, CAHB wants to ensure that they have the help they need. “In years past, we’ve been able to cover many more races with financial support,” Piper explained. “That’s not going to be the case this year, partly due to limited resources. That can be directly attributed to the change in business environment. So we’re going to have to make sure our money is well spent.”
Get behind industry-friendly candidates If you can’t financially support a candidate, Elliott suggests walking your district on behalf of industry-friendly candidates, putting up yard signs and speaking up on the candidates’ behalf whenever you can. In fact, Keith Swerdfeger, a member of the Pueblo HBA, is running for House District 47. Elliott said. “If we have a member who’s brave enough to run for office, Elliott said, “we need to get out there and support him.” Educate yourself about the candidates. Know what’s happening at your local level: Who’s running in your district and what are their platforms? If the candidate is an incumbent, has this person supported the home building industry? “Have they indicated their interest in continuing support? What’s their track record? If the candidate is not an incumbent, what’s this person’s experience? Is he or she business savvy, a business owner? Piper said, “There’s value in that experience that comes from
owning and operating a business, the budget challenges they face. It’s going to be a tough proposition to balance the state’s budget going forward. To have real practical business sense will be more important than ever.”
Long-run election outlook: Look at business and regulatory positions Durham observed that there are two things to look for in the long run. “One is, what will a business-unfriendly election result mean in terms of increased costs and outright barriers to build? And two, from a regulatory standpoint, will it be harder or easier to business next year than today?” Piper added, “If our industry is going to ensure that our market stays free and open, we’ve got to start with candidates. And it’s easier to participate in a candidate’s race than it is to exploit the past by docking legislation that’s already started.” Remind your friends, employees, family members and the public at large that elections matter. Durham said, “They make a big difference in how our industry is going to be treated and whether we’ll have the ability to thrive, prosper and provide jobs to tens of thousands of Coloradans. “We have a chance to have a more businessfriendly legislature than we have had over the past four years.” So before you pull out your wallet again, stop for a second and think. What do you want to see there four years from now? Then do everything you can to make it happen.
CAHB endorses state candidates
The Colorado Association of Home Builders, in conjunction the Committee for the American Dream and Homes for All Coloradoans, is proud to endorse the following candidates for the 2010 General Election.
Statewide Offices Secretary of State Scott Gessler State Treasurer Walker Stapleton Attorney General John Suthers
State Senate
State House of Representatives
SD-1: Greg Brophy SD-3: Vera Ortegon SD-5: Bob Rankin SD-6: Ellen Roberts SD-7: Steve King SD-9: Kent Lambert SD-11: Owen Hill SD-13: Scott Renfroe SD-15: Kevin Lundberg SD-22: Mike Kopp SD-32: Chris Romer
HD-1: Christine Mastin HD-14: Janak Joshi HD-15: Mark Waller HD-16: Larry Liston HD-17: Mark Barker HD-18: Karen Cullen HD-19: Marsha Looper HD-20: Amy Stephens HD-21: Bob Gardner HD-22: Ken Summer HD-23: Edgar Johansson HD-24: Su Schafer HD-25: Cheri Gerou HD-27: Libby Szabo HD-28: Jim Kerr HD-29: Robert Ramierz
Don’t know what House or Senate district you live in?
Visit www.votesmart.org to find out!
HD-30: Kevin Priola HD-33: Donald Beezly HD-37: Spencer Swalm HD-39: David Balmer HD-43: Frank McNulty HD-44: Chris Holbert HD-47: Keith Swerdfeger HD-48: Glenn Vaad HD-50: Jim Riesberg HD-51: Brian DelGrosso HD-54: Ray Scott HD-55: Laura Bradford HD-56: Christine Scanlan HD-60: Tom Massey HD-65: Jerry Sonnenberg
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vote no. get employees, friends, family to vote no, too.
If passed, “Ugly Three” ballot measures would cripple Colorado and plunge state back into recession by Dan Hopkins, Campaign Press Secretary, Coloradans for Responsible Reform
Home builders are painfully aware of just how harmful the recession has been with the loss of thousands of jobs. And now, just as we’re beginning to recover, there are three dangerous proposals on the ballot: Amendments 60 and 61 and Proposition 101. The Greeley Tribune appropriately named them the “Ugly Three.” Says the Trib, “The three amendments will kill economic growth in Colorado.”
ugly three will plunge colorado back in recession If passed, these measures will drive Colorado back into recession, one that voters approved. That means more foreclosures and even lower home values. And it means another blow to home builders. At least 73,000 additional jobs will be lost. That’s on top of the 110,000 jobs lost in the recent recession. Most of the 73,000 jobs will come from the private sector — with over 21,000 lost in the construction industry. Unemployment in the construction industry already is much higher than in most other professions — hovering between 16 and 20 percent, depending on the time of year. That’s an improvement from 29 percent last year, but these proposals could send those numbers soaring sky-high once again. Here are the facts:
amendment 60: k-12 funding cuts Amendment 60 cuts the funding for K-12 education in half — ultimately a loss of $1.2 to $1.5 billion annually. Our schools will have to terminate at least 8,000 teachers and classrooms will become even more crowded. The proponents of Amendment 60 claim that the state would somehow find the money to make up the billions of dollars in lost funding. However, that assertion is highly questionable, since the state budget already has already been cut to the quick. Just this year, state funding for K-12 education was cut by $260 million.
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amendment 61: kills public financing by prohibiting bonds Amendment 61 virtually eliminates public financing for projects like roads, schools, water — any public infrastructure. The state would be prohibited from issuing any bonds. Voters wouldn’t even be allowed to voice their opinion on something like TRANS — revenue notes passed in 1999 to fund T-REX and dozens of other highway projects statewide. Under Amendment 61, the University of Colorado hospital at the Anschutz Medical Center could not have been built. Most of the buildings on our college campuses would not exist. Construction of new prisons would have been stopped. If 61 passes, Colorado will become the only state in the nation to prohibit bonding and public finance.
restricts bond issuance — and requires 10-year bond repayment Amendment 61 restricts local communities and districts from issuing bonds. Because of a new “one size fits all” formula on debt capacity, most school districts would face an eight-year moratorium on holding any new bond elections. Denver would face an 18-year moratorium. Also, 61 requires that local bonds be back in ten years. How would you handle a ten-year mortgage on your home? Bonding is a prudent method of financing large projects and puts some $2 billion into the economy each year. The only way a large local project could be built would be for voters to approve a big one-year tax increase, paying all the construction costs up front. That makes Amendment 61 fundamentally unfair because voters in one year pay the entire cost of a project that will serve for 20 or 30 years, while future users pay nothing.
cuts schools off from borrowing Amendment 61 also hits schools. Since schools depend primarily on property taxes, most of their revenue arrives in the spring. During periods of low cash flow, the state’s largest school districts depend on a no-interest loan from the state
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treasurer’s office, which is paid back in full. But under Amendment 61, such “borrowing” would be prohibited. Some school districts have flatly said they would be unable to pay their bills.
proposition 101: Proposition 101 cuts revenue going to the state’s general fund by more than $1.2 billion a year. That means higher college tuition for students and parents. Prop 101 also eliminates a fourth of the funding for road and bridge maintenance, meaning more potholes and crumbling bridges. Health care would be impacted. Since Proposition 101 would result in a substantial loss of state revenue, there would be major cuts in programs like Medicaid and the health care plan for children in low-income families. Those cuts would be magnified by the loss of federal matching funds. The cuts not only would affect the availability and quality of health care, but also result in the loss of up to 11,000 private-sector jobs in the health care industry.
ugly three will create an annual deficit of more than $4 billion Coloradans for Responsible Reform (CFRR) — the coalition fighting these three measures — calculates they will create a $4.2 billion annual deficit, a deficit that grows each year, with no plan in place to replace the lost funds. At a
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time when other states are striving for economic recovery, Colorado is courting economic disaster. The CFRR coalition is over 300 strong and including business and economic development groups statewide. The coalition recognizes that 60, 61 and 101 are especially lethal for small businesses. Economist Henry Sobanet, the budget director for former Governor Bill Owens, observed, “Electricians, plumbers, carpenters, pavers, design firms — anyone involved in a constructionrelated trade — would suffer. Small businesses account for over half of the private sector jobs in Colorado and they will take the brunt of the private sector losses from these initiatives.”
newspapers statewide oppose measures These measures are indeed the Ugly Three. And The Greeley Tribune is just one of many newspapers opposed to these measures. The Pueblo Chieftain calls them “Draconian,” warning there is “no free lunch” and pointing out that hundreds of local elections held since 1992 would be overturned. “Wait a minute,” says the Chieftain. “Amendment 60 would invalidate all of those votes and require that local governments… recalculate their property tax revenues.” So much for local control. The Denver Post calls them a trio of Trojan horses. “Don’t be fooled, Colorado. Amendments 60 and 61 and Prop 101 are not smart budget-cutting measures. They’re out to cripple Colorado.” And The Durango Herald simply says, “This is nuts.”
here's the bottom line A recent study by the non-partisan Legislative Council determined that if the provisions of 60, 61 and 101 were fully implemented, 99 percent of the state budget would have to go to K-12 education – an impossibility. It would leave only $38 million for all other state needs: Higher education, health care, prisons, public safety, emergencies. How could that ever work? Under those conditions, companies would move out of the state and new businesses would be reluctant to relocate. The consequences are severe. To find out more, go to the CFRR website – www. donthurtcolorado.com. You can also follow the campaign on Facebook and Twitter. Most importantly, become involved. Tell friends, neighbors and business associates about the dangers of these proposals. Let them know how Colorado businesses are going to be hurt. “These proposals are absolutely lethal to Colorado,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corporation. “We will have a state where no one will have any interest in doing business. The measures will handcuff Colorado’s efforts to recover from the recession. Colorado will lose the economic development battle as businesses have little choice but to locate or relocate to other states. We can’t afford to let that happen.” The CAHB Board of Directors unanimously voted to oppose these measures. CAHB encourages you and your employees to vote NO on 60, 61 and 101!
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Legislation, Administrative proposal at nation’s capitol can give many builders the shot in the arm they need to build again by Kim Jackson
While builders have been scratching their heads and becoming increasingly frustrated over banks’ refusal to lend them money, the National Association of Home Builders has said enough is enough and introduced two pieces of legislation earlier this year to reverse the situation.
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In response to the housing market decline, banking regulators have pressured regulated lenders — namely community financial institutions — to reduce their exposure to acquisition, development and construction (AD&C) loans and pare down their outstanding real estate loan portfolios. This pressure has caused community financial institutions to halt making AD&C loans, even for profitable new housing projects. What’s more, as many Colorado home builders and developers can testify, they’ve even called in performing loans. That’s hit many Colorado developers and builders hard, to the point of forcing some into foreclosure. It’s also created losses on what were affordable and profitable loans.
House passes construction loan amendment to $30 billion bill Early this year, the Administration pushed for legislation that would give a shot in the arm to struggling small businesses throughout the country. As initially drafted, however, construction loans weren’t eligible for the $30 billion measure. For its part, NAHB applied its own powers of persuasion and on June 17, an amendment to H.R. 5297, the Small Business Lending Fund Act of 2010, was passed in the House to make construction loans eligible for funding. From there, NAHB’s focus has shifted to the Senate bill, which as currently drafted, does not allow for construction loans to be made. Scott Meyer, NAHB’s federal legislative director, explained that because most construction loans are made for small businesses, “if Congress is going to pass legislation to do a small business lending fund, home builders are small businesses and we want to be eligible for that program, as well.”
NAHB-introduced bill offers builders $15 billion in loans Not willing to sit around and hold its breath while waiting for Senate approval, NAHB drafted H.R. 5409, the Residential Construction Lending Act, which was introduced and sponsored by Brad Miller, Carolyn Maloney and Joe Baca in early June. As drafted, the $15 billion Residential Construction Lending Act will establish a new loan guarantee program within the Treasury Department as a way to create jobs and ease access to credit for residential builders with financially viable construction projects. In short, the bill provides for the Treasury Department to guarantee loans made by small lending institutions. There are parameters to these loans (see sidebar page 32). The Treasury will determine and limit the amount of the federal guarantee to no more than 80 percent of the market value of the project. A third of the money is earmarked to guarantee loans in areas of the country with the greatest unmet need for residential construction financing; the Treasury Secretary makes that decision.
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“We want to show that construction loans CAN be safely made in the current lending environment,” Meyer said. “That’s really a rallying point to focus our [Capitol] Hill efforts, because we’re getting quite a bit of support from the [NAHB] member level for doing something to open up credit liquidity for the AD&C markets.” He added that the legislation creates a specific program for the Hill to focus on and “it’s a good rallying point for putting pressure on the regulators throughout the debate, while also moving toward ultimate passage of this bill.” There are rather significant statistics that can help propel the measure forward. One is that nationwide, the current inventory of new homes is at a 42-year low. Meyer observed that demand for new residential construction is strengthening in some markets. Another is that since 2005, the home building industry has lost three million jobs. The home building industry can’t single handedly bring the country out of our current economic woes. But the continued inability of qualified home builders — even in markets with strong demand for new construction — to get AD&C loans will only prolong the recession and make it even worse. Although H.R. 5409 isn’t getting the attention Meyer would like, “it’s had the effect of really focusing our efforts,” he said. While the Small Business Lending Fund wasn’t a NAHB program, he added, “we already had a core group of supporters out there that we could put rally to put pressure on to include AD&C loans into that program and get something accomplished there.” When Congress returned in September, Meyer noted that the Small Business Lending Fund ACt is was slated to be the first order of business. “That’s a high priority of the President and his administration, so I imagine they’re going to work strongly to get this done. At the same time, we’re continuing to push for H.R. 5409, the loan guarantee program.”
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How H.R. 5409, The Residential Construction Lending Act will work The NAHB-proposed Residential Construction Lending Act will help jump start the home building industry by providing evidence to lenders and regulators that residential construction loans can be safely made with proper criteria. As drafted, $15 billion will be made available to implement the program; a third of it is slated for guaranteeing loans in parts of the country with the greatest amount of unmet residential construction needs. From the date of enactment, loans will be made for three years. Loans will be guaranteed on a first-come, first-served, basis, through approved financial institutions. The Treasury Department has oversight over the lenders who make loans under the program. Lenders must be approved by the Treasury before disbursing the funds to builders. The loan can only be guaranteed under the program if it’s for a viable building project and made to an eligible
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home builder. A viable building project is where housing demand, local government support, percentage of workforce and speculative units are considered. An eligible builder or developer includes criteria such as creditworthiness, reputation and a success record of residential building projects. To be eligible, the builder or developer needs a minimum net worth equal to the loan amount guaranteed — and must guarantee repayment. The maximum loan term is five years, with an option to extend. Loans are based on 75 percent of loan-tovalue on the land and no more than 100 percent of construction and development costs. The total loan amount will be no more than 80 percent of the market value. The interest rate is capped by the current average market yield on outstanding marketable obligations of similar privately held loans — with remaining periods to maturity comparable to such loan.
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Remodeling ABD opened the wall from a fourth bedroom to create a breakfast nook/informal dining area, along with a custom, twoperson work station and study
recap
area. The redesigned kitchen included new custom-glazed finish cabinets, an island four times the previous size, flat black countertops, a farmhouse style sink and new appliances
Expect slow, continued growth while EPA lead-based paint ruling causes schism between pros and “amateurs� by Kim Jackson
Colorado Builder Forum
Fall 2010
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ABD recreated the standard rear patio into an outdoor living space, which included a roof, tongue-and-groove ceiling, stamped colored concrete and a fireplace.
It’s no secret that during the past two years, many home owners who planned to move up into new construction have decided to stay put. They may like the neighborhood and the schools there, or even the security of a home in a mature neighborhood that’s built a fair amount of equity. Whatever the reason, they’ve looked around and decided that with a few modifications here and there, they can easily stay in their homes for years to come. And they’re remodeling, although not like their neighbors did earlier in the decade. According to Bob Peterson, president of Associates in Building Design, home owners are opting for smaller projects, such as kitchens, bathrooms and decks, along with maintenance and repair work. “For 15 years, people didn’t do maintenance on homes, because they were moving every three to five years,” he said. Now that people are staying in their homes longer, “they’re needing to do more maintenance, other than just painting.”
Economic outlook: Slow, steady growth Peterson expects the remodeling industry to remain flat for the rest of the year, and to gradually get better as we move through next year. “It’s a slow recovery and the job
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market has to improve greatly before people will spend money again,” he said. “I think we still need to see a little more growth before it’s really going to turn around.” As he sees it, Colorado has a couple of things going for it. First, the state’s unemployment didn’t take the big hit other states did. While job insecurity has been a factor in people holding off remodeling projects, it’s been less so in Colorado than other parts of the country. Second, people will continue moving into the state. The NAHB reflected those trends in its late July Remodeling Market Index (RMI), which combines current and future market indicators. Where the remodeling market worsened in the Northeast and South, the indices improved in the West, from 34.8 in the first quarter to 42.0 in the second. While most people aren’t expanding their space through an addition, Peterson has found that some want their existing square footage re-arranged into more functional space within the home’s footprint. From moving walls to open up the kitchen or taking over a fourth bedroom to create a more luxurious master suite, “we’re seeing more and more of that,” he said. “And people are expecting more bang for their buck. The public knows that people are struggling to find work, so they think they can get it pretty cheap.”
non-professional remodelers are a concern
That’s where things begin to rub him the wrong way. As a professional remodeler, he’s observed many out-of-work new construction subcontractors and builders fill in the gaps with remodel work. “They’re doing it very, very cheaply and probably not making any money,” Peterson said. “When new construction comes back a little more, these people will migrate back, because it’s so much easier. My big concern is if they’ve done these remodels and move back to new homes, the home owner calls with a warranty or service issue, are these guys going to stand behind their work?” Naturally, he acknowledges, it’s still a free country and people can do what they want. If they’re serious about switching careers, though, as he did 18 years ago, Peterson encourages these guys to get educated, to better understand the remodeling industry. Nearly everything is different with remodeling, he explained. “Pricing is different; customer service issues are different. The whole process is totally different from building a new home. Join a Remodeler’s Council, and if there isn’t one locally, you can directly join NAHB’s. Talk to people like myself — and there are hundreds of remodelers in Colorado — and we’ll help educate them on how to do it in a professional manner.” As he looks ahead to the long-term future of remodeling in Colorado, Peterson sees blue skies. Our housing stock is aging and land is becoming more valuable. That means more remodeling work for a very long time. “I’m thrilled to have a company that’s in this business,” he added. “The future of remodeling is phenomenal. As people realize they want to stay where they are, that’s going to keep remodeling going.”
epa ruling creates industry disparity
Yet there are a few clouds that need to clear out. One of them is in the form of these renegade “remodelers” and the EPA’s Lead: Renovation, Repair and Painting rule. The ruling went into effect April 22 and mandates that remodelers inform owners of homes built before 1978 about the potential
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hazards to children under seven years old, pregnant women or women who can become pregnant, that lead-based paint may be present in the home. According to Peterson, more than 200,000 remodelers have spent thousands of dollars ensuring they and their staffs are certified and investing in equipment required to perform the work according to the EPA. A violation of this ruling can lead to fines up to $37,500 a day, for each occurrence. So remodeling professionals took the ruling seriously and ensured they were in compliance by April 22.
The home was an ‘80s custom home. ABD remodeled 1,200 sq. ft. of it, including the family room’s fireplace, which replaced the ‘80s standard drywall front with ledgestone and built in shelves
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The compliance adds costs to home owners, too. For example, a single window replacement generally increases the price of the window by $200-$250. A single room remodel, such as a kitchen or bathroom, has boosted Peterson’s prices by $1,000 - $1,500. “We’ve done a fairly major remodel,” Peterson said, “which increased the cost of that project a little more than $3,000, to protect the family from the lead-based paint dust we created when we did our demo work.”
If a remodeler pleads ignorance, he’s off the hook for the hefty fines for non-compliance. Non-professional remodelers can “use that as an excuse if they get busted,” Peterson quipped. “It’s affecting the legitimate remodeling industry in a big way. There’s a lot of work that’s not being done according to this lead-based paint rule.”
many non-professional remodelers ignore ruling
That’s recently changed, too. The EPA extended the deadline from April 22 to September 30 for remodelers, window installers and other contractors who work in housing to get certified and sign up for training that’s required for compliance. To be allowed to work in houses affected by the rule, remodelers have until December 30 to complete the training, but the EPA may require proof that training has been scheduled.
The playing field hasn’t been leveled though. Many short-term remodelers are ignoring the ruling, and suggesting home owners do the same. That’s done two things to the industry. One is it creates an unfair competitive situation for those remodelers who are following the ruling mandates; the short timers can easily undercut professionals’ bids. The other is that by suggesting home owners ignore the ruling puts families with young children at risk. Several studies conducted by both the EPA and the medical community have found that lead-based paint is really only dangerous to children under seven years old.
epa mandates end-of-year compliance
nahb files suit against epa When the EPA ruling went into effect April 22, there was an opt-out clause that let home owners of a pre-1978 home who didn’t meet the criteria of the ruling opt out of the program. It saved them money, yet needed to be documented.
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The master bathroom was gutted, keeping the existing tub to reuse. ABD added a larger shower, custom vanities, salt white marble countertop, new wall and floor tiles, plumbing and light fixtures.
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The day after, April 23, the EPA threw out the opt-out clause. “What that meant in terms of numbers,” Peterson explained, “is that an estimated 30 million homes in the U.S. could not opt out. By removing the opt-out clause, it increased the number of people who were going to have to follow this by about ten fold.” Even so, home owners who choose to remodel their homes themselves, with children under six years old who choose to remodel their homes themselves without the help of a professional, don’t have to follow the EPA ruling. “So you can kill your own kids, but I can’t kill them for you,” Peterson added. The NAHB Remodeling Council has been working to reverse the opt-out ruling. “We’re asking for the ability — the free American right, to make a choice about whether you want to follow the rule, if you don’t have children under six or there are no pregnant females living in the home,” he said. “It will take the affected housing numbers back down by ten fold.”
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Poised to lead nation’s most prestigious remodeling organization
Bob Peterson named 2011 Chair of nAHB-Remodeling Board of Trustees Congratulations to Bob Peterson, who is just the right person to talk to about the state of the remodeling industry. As a member of the Northern Colorado Home Builder’s Association for 18 years, and an active member of the NAHB Remodeling Council for 12, he will chair the nation’s most prestigious remodeling organization next year. Unofficially, the post begins just after the meeting at the International Builders’ Show in January. Officially, he’ll be formally instated at the spring board meeting. “About eight years ago,” Peterson said, “I had the goal to serve in this position.” So he worked his way on the ladder. Last year, he served as Second Vice Chair and as Vice Chair this year. As Chair, he’ll be the spokesman for NAHB’s professional remodeling industry, conducting meetings and as budget allows, travel for local council meetings and
industry conferences. He’s also excited about the two-day Spring and Fall meetings of Harvard University’s Joint Housing Center for Housing Studies’ economic forecasts. “It’s a big honor; I’m going to lead about 8,000 remodelers,” Peterson said. “I have a huge passion for this industry. It’s been very good to me and it’s a way I can give back, because it’s a great industry.” He added, tongue in cheek, “Hopefully, I can make an impact enough that I don’t get impeached sometime during the year.”
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marketing
by Paula Huggett
Where are you on the web? In 2010, we know – that most new home buyers begin their search on line. Whether it is the National Association of Home Builders, the National Association of REALTORS®, or any other real estate organization, between 84 and 92 percent of new home purchasers surveyed cite the Internet as their top choice for information about homes. Despite this clear preference for the Internet, a Harris Interactive study revealed that there continues to be a disparity between where home builders currently advertise, versus where consumers are looking for new home information. While on-line consumers spend half of their time using online media, builders allocate less than one-fifth of their budgets to Internet-based media. Imagine a continuum with zero web presence at the left extreme, and a maximum “10” web presence at the other side.Where would you place your company? Let’s look at some of the benchmarks along our continuum to help clarify where you are, and where you might want to be.
lead to expensive and time-consuming changes if the web developer you choose does not deliver what you or your buyers are expecting. This approach is like cutting corners on the foundation; it can come back to haunt you.
Home buyers look for quality in web sites The most important thing to remember is that on-line buyers will decide if they want to consider your homes based on how they perceive your on-line presence. Making a good initial impression is essential. Poor representation on the Internet can cause potential buyers to eliminate your company. If you are serious about Internet marketing, build your web presence as you would one of your homes: With careful planning and quality construction.
Does your web site sell homes? One of the main challenges builders face is converting on-line visitors into real buyers. Converting interest into income requires a system that effectively and efficiently tracks the behavior of web site visitors. When site navigation and functionality are designed right, interested buyers easily can submit queries and receive prompt responses, with continuous follow-up from builders. In review, here are some questions to help determine where you are on the web, and where you might want to be.
1. Z ero web presence is easy to identify, and not automatically a bad place to be. This is because it is worse to have a substandard Analytics and testing were used to determine the web presence than no web presbest navigation & functionality for the home page of ence at all. More on this later. Banning Lewis Ranch, a master-planned community 2. From zero to 50 gets you in the in Colorado Springs. game, providing your web site attracts visitors and provides them with a positive experience. 1. Is our web site designed to suit our taste 3. 50 toward 100+ covers a lot of ground and brands your or is it strategically crafted to capture buyer interest? company as a serious player. Robust lead management 2. Do we have practices in place to ensure the and tracking, on-line sales counselors, search engine accuracy of our web site content? optimization, search engine marketing, blogs, RSS feeds, 3. Do we have a system in place to generate, and interactive floor plans are some of the elements found capture and follow up with sales leads? within this section of the continuum. 4. How do we know our web site is working?
Web site options abound Imagine another web site continuum, with offerings ranging from “canned” to custom-tailored. Ideally, you want your web site to grow with you as your Internet marketing succeeds, since it is counterproductive to repeatedly recreate your site. Web site firms that specialize in the home building industry understand the nuances of the business and provide modules, functionality and features that must be custom-created with other web site companies. Whether you need to redesign your existing site or start from scratch, pay attention to price. Low initial bids can
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In answering these questions, you will have a better idea of where you are on the web. From there, consult with an Internet marketing expert to explore the available web site options as you successfully pursue marketing your homes and communities on line. Paula Huggett is VP/Client Services Director at the Bokka Group®. The Bokka Group® recently launched the JumpStart for Builders™ product line to offer affordable, lead-focused, customized template sites to builders of all sizes. Contact Paula by visiting BokkaGroup.com or JumpStartforBuilders.com.
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