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NAIL The official magazine of Home Builders Association of Middle Tennessee President John Zelenak Vice President Keith Porterfield Secretary/Treasurer Justin Hicks Executive Vice President John Sheley Editor and Designer Jim Argo Staff Connie Nicley Pat Newsome Charlotte Fischer
THE NAIL is published monthly by the Home Builders Association of Middle Tennessee, a non-profit trade association dedicated to promoting the American dream of homeownership to all residents of Middle Tennessee. SUBMISSIONS: THE NAIL welcomes manuscripts and photos related to the Middle Tennessee housing industry for publication. Editor reserves the right to edit due to content and space limitations. POSTMASTER: Please send address changes to: HBAMT, 9007 Overlook Boulevard, Brentwood, TN 37027. Phone: (615) 377-1055.
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FEATURES 9 Scenes from the 2017 HBAMT Caribbean Cruise
Check out some of the scenes from last monthâ€™s HBAMT Caribbean Cruise aboard the Allure of the Seas!
11 Building Success with Happy Home Owners
Happy home owners are the number one referral source for home builders and remodelers.
DEPARTMENTS 6 News & Information 12 2017 HBAMT Application 13 SPIKE Club Report 14 March Calendar 14 Chapters and Councils
ON THE COVER: Happy Home Owners fuel your business. Learn how to keep them happy and boost referrals here. Full story on page eleven. March, 2017
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Single family housing starts post slight gains in January
otal housing starts recorded a small decline in January, as multifamily starts fell back, albeit from an upwardly revised number in December. Total starts were down 2.6%, falling to a 1.246 million seasonally adjusted annual rate. However, single-family starts posted a small monthly increase in January, rising 1.9% to an 823,000 annual rate As measured on a three-month moving average, the current changes are consistent with recent trends in the NAHB/Wells Fargo measure of single-family builder confidence. NAHB is forecasting continued growth for single-family construction over the course of 2017. Multifamily development was the reason the headline starts number declined in January. Apartment starts in 5+ unit properties were down 7.9% for the month. Monthly volatility for multifamily starts has been a factor in the data since August. A surprise upward revision for December, to an annual rate of 457,000 starts for 5+ unit multifamily, meant a drop in
These numbers are consistent with NAHBâ€™s 2017 forecast, which indicates continued growth for single-family construction. 6 The NAIL
January to what was a still solid 421,000 rate. Permits for multifamily in January also showed strength, consistent with our forecast of the multifamily development market leveling off at elevated levels of production. Focusing on housingâ€™s economic impact, in January 58% of homes under construction were multifamily (622,000). This multifamily count is 12% higher than a year ago. There were 447,000 single-family units under construction, a gain of 6% from this time in 2016. This is just slightly below the highest count of single-family units under construction since 2008 (450,000). Regionally, single-family starts posted month-over-month gains in all regions except the West, where the pace of monthly construction was down almost 19% from the December rate. Single-family permits also posted a decline in the West of 17%. These numbers are worth noting as new homes are typically more expensive in the West, and competitive pricing is a key concern in 2017 as mortgage interest rates increase. These numbers are consistent with NAHBâ€™s 2017 forecast, which indicates continued growth for single-family construction (limited by availability of workers and lots) and continued leveling off of multifamily production in the year ahead. Changes in building material prices are also an issue to watch.n
2016 reaches post recession high for custom home growth
AHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates that the number of 2016 custom home building starts (homes built on an owner’s land, with either the owner or a builder acting as the general contractor) set a post-recession high for an annual total. There were 41,000 total custom starts for the final quarter of the year. Over the course of 2016, there were 169,000 total custom single-family home starts, an increase of almost 8% over the 2015 total. Note that this definition of custom home building does not in-
clude homes intended for sale, so the analysis uses a narrow definition of the sector. The onset of the housing crisis and the
Housing production, builder confidence levels off
ousing starts returned to trend, dropping 2.6 percent to a seasonally adjusted annual rate of 1.246 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Multifamily production fell 10.2 percent to 423,000 units after an unusually high December 2016 reading, whereas single-family starts ticked up 1.9 percent to 823,000 units. “A settling of housing production is in line with what we are hearing from builders — that they are largely optimistic about current market conditions but still face supply-side headwinds and regulatory hurdles,” said Granger MacDonald, NAHB chairman. “Some pull back in housing production is unsurprising after an overly strong multifamily reading last month,” said NAHB Chief Economist Robert Dietz. “As we move forward in 2017, we can expect the multifamily sector to continue to stabilize and single-family production to move forward at a gradual but consistent pace.” Regionally in January, combined singleand multifamily housing production rose 55.4 percent in the Northeast and 20 percent in the South. Starts fell by 17.9 percent in the Midwest and 41.3 percent in the West. Overall permit issuance rose 4.6 percent in January to 1.285 million units. Single-family permits fell 2.7 percent to 808,000 units. Meanwhile, multifamily permits increased
19.8 percent to 477,000 units. Regionally, permits rose 29.6 percent in the Northeast, 9.9 percent in the South and 5.3 percent in the Midwest. The West registered a decline of 13.2 percent. Builder confidence settle Builder confidence in the market for newly-built single-family homes declined two points in February to a level of 65 on the NAHB/Wells Fargo Housing Market Index (HMI).
“While builders remain optimistic, we are seeing the numbers settling back into a normal range,” said MacDonald. “Regulatory burdens remain a major challenge to our industry, and NAHB looks forward to working with the new Congress and administration to help alleviate some of the pressures that are holding small businesses back and making homes less affordable.” “With much of the decline this month
Great Recession interrupted a 15-year long trend away from homes built on the eventual owner’s land. As housing production slowed in 2006 and 2007, the market share of this not-for-sale new housing increased as the number of single-family starts declined. The share increased because the credit crunch made it more difficult for builders to obtain AD&C credit, thus producing relatively greater production declines of for-sale single-family housing. The market share for custom home building will likely experience ups and downs in the quarters ahead as the overall single-family construction market expands. Recent declines in market share are due to an acceleration in overall single-family construction. For a look at the geography of custom home building, read this review of 2015 data. n
resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges such as a lack of developed lots and labor shortages,” said Dietz. “Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed.” The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. All three HMI components fell in February. The component gauging current sales conditions dipped one point to 71, and the index charting sales expectations in the next six months registered a three-point decline to 73. The component measuring buyer traffic dropped five points to 46. Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 50 and the Midwest rose one point to 65. The South dipped one point to 67 and the West held steady at 79 for the third month in a row. n Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.
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Housing affordability remains favorable despite eight year low
hortages of buildable lots and skilled labor, along with excessive regulations, rising mortgage interest rates and ongoing home price appreciation pushed housing affordability in the fourth quarter of 2016 to its lowest point since the third quarter of 2008, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released today. “Though builders remain confident that housing markets across the nation will continue to show gradual improvement in the year ahead, they remain concerned that regulatory constraints and lot and labor supply issues are preventing a more robust recovery,” said NAHB Chairman Granger MacDonald. “The rising costs of construction as it relates to land and labor are putting upward pressure on home prices.” “Affordability remains positive nationwide even as demand is outstripping supply in many markets,” said NAHB Chief Economist Robert Dietz. “Though mortgage rates are rising, incomes should rise faster as well, helping to keep home prices affordable. Meanwhile, policymakers at all levels of government must address regulatory burdens that are raising housing costs while officials at the state and local level need to take steps to put more lots in the pipeline to help offset future price growth.” In all, 59.9 percent of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $65,700. This is down from the 61.4 percent of homes sold that were affordable to median-income earners in the third quarter. The national median home price increased from $247,000 in the third quarter to $250,000 in the fourth quarter. Meanwhile, average mortgage rates edged higher from 3.76 percent to 3.84 percent in the same period. Youngstown-Warren-Boardman, Ohio-Pa., was rated the nation’s most affordable major housing market, where 90.4 percent of all new and existing homes sold in the fourth quarter were affordable
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to families earning the area’s median income of $53,900. Meanwhile, Fairbanks, Alaska, was once again rated the nation’s most affordable smaller market, with 95.1 percent of homes sold in the fourth quarter being affordable to families earning the median income of $93,800. Rounding out the top five affordable major housing markets in respective order were Buffalo-Cheektowaga-Niagara Falls, N.Y.; Harrisburg-Carlisle, Pa.; Cincinnati, Ohio-Ky.-Ind. (tied with Harrisburg); and Syracuse, N.Y. Smaller markets joining Fairbanks at the top of the list included Elizabethtown-Fort Knox, Ky.; Binghamton, N.Y.; Canton-Massillon, Ohio; and Springfield, Ill. For the 17th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 7.8 percent of homes sold in the fourth quarter were affordable to families earning the area’s median income of $104,700. Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Diego-Carlsbad; and San Jose-Sunnyvale-Santa Clara. Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Salinas, where 15.2 percent of all new and existing homes sold were affordable to families earning the area’s median income of $63,500. In descending order, other small markets at the lowest end of the affordability scale included Napa; Santa Cruz-Watsonville; San Luis Obispo-Paso Robles-Arroyo Grande; and Kahului-Wailuku-Lahaina, Hawaii. Please visit www.nahb.org/hoi for tables, historic data and details. Editor’s Note: The NAHB/Wells Fargo Housing Opportunity Index (HOI) is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Agency. The NAHB/Wells Fargo HOI is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. n
2017 HBAMT Cruise!
The HBAMTâ€™s 2017 Caribbean Cruise set sail last month aboard the Allure of the Seas. More photos online here.
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Building success with happy home owners
ll hail the happy home owner: the No. 1 referral source for home builders and remodelers. Companies that forget to keep that top of mind are companies that are in for a bumpy ride, presenter Ed Earl of Priority One Projects told attendees at an educational session during the 2017 NAHB International Builders’ Show. “Quality construction does not guarantee a happy home owner, because your home owner is going to focus on the construction process rather than the final product,” Earl said. “The home owner is part of the project, and [he or she] is the best source of your new business.” That’s why we’d do well to understand the home owner’s perspective, take steps to communicate effectively and make sure to manage expectations, Eral said.
Communication Learn each customer’s communication preferences, including which channels and how often. Sometimes it’s one long email at the end of the day, or a series of texts throughout the day, and for others it’s speaking by phone. Make sure you find a method the customer is most comfortable with. No matter what the form of communication, document everything. “A group text is great for a lot of conversations and a way to get husbands and wives on the same page, but make sure you get a screen shot of the conversation and put it in your records,” Earl said. Investing in a cloud-based construction management system is a great customer service tool because your home owner can log in and see the progress, view photos and see what’s next on the schedule.
Perspective It does not matter how many DIY cable shows the average home owner watches — or maybe because of them, the average home owner “doesn’t understand construction on a fundamental level. They don’t have the experience. They don’t understand it’s a process — you can’t go and buy a kitchen in a box from Amazon,” he said. Continually managing customers’ expectations and ensuring they understand the meaning and impact of change orders will save them a lot of heartache and bad feelings, he said.
Expectations Make sure your client knows that every project is really a prototype. “No one has ever built this exact project before,” Earl said. That can help set the stage for the uncertainty inherent in every project, from missed schedules to change orders. The truth is, once a schedule is printed, it’s outdated. “Let them know it will be an emotional journey, so they can be pleasantly surprised and thankful when things go smoothly.” Audio recordings of IBS education sessions, like Building Happy Homeowners, can be purchased on nahb.org. n March, 2017
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SPIKE REPORT Life Spikes
Fourteen SPIKES (in bold) increased their recruitment numbers last month. What is a SPIKE? SPIKES recruit new members and help the association retain members. Here is the latest SPIKE report as of January 31, 2017. Top 20 Big Spikes Jim Ford 912 Virgil Ray 821 Bill King 776 Mitzi Spann 744 Terry Cobb 569 Jim Fischer 566 John Whitaker 502 James Carbine 371 Jennifer Earnest 353 Trey Lewis 335 Kevin Hale 294 David Crane 289 Tonya Jones 271 Reese Smith III 261 Steve Moody 219 Sonny Shackelford 219 James Franks 214 Davis Lamb 200 Jackson Downey 182 Tim Ferguson 177
Jim McLean 164 Louise Stark 163 Harry Johnson 146 Steve Cates 142 C.W. Bartlett 138 Sam Carbine 131 Tonya Alexander 128 Tonya Esquibel 126 Steve Hewlett 119 B.J. Hanson 114 Carmen Ryan 113 Jordan Clark 109 Dave McGowan 106 Johnny Watson 101 Julie DuPree 97 Duane Vanhook 94 Wiggs Thompson 93 Jeff Zeitlin 87 John Zelenak 85 Helmut Mundt 81 Michael Dillon 77 Erin Richardson 76 Randall Smith 74 Christina Cunningham 70 Jeff Slusher 70 John Baugh 68 Lori Fisk-Conners 64 Don Bruce 62 Jim Ford, Jr. 62 Beth Sturm 60 Justin Hicks 59 Hill McAlister 57 David Hughes 56 Joe Morgan 54 John Broderick 54 Gerald Bucy 53 Andrew Neuman 50
Marty Maitland 48 Al Davis 47 John Ganschow 47 Ron Schroeder 45 Kay Russell 44 Derenda Sircy 40 Peggy Krebs 40 Andy Wyatt 37 Chuck Clarkson 36 Frank Miller 36 Brad Butler 35 Al Hacker 34 Keith Porterfield 34 Ray Edwards 32 Ricky Scott 29 Ashley Crews 26 Don Mahone 25 Spikes Phillip Smith 23 Frank Tyree 23 Rick Olszewski 21 Jay Elisar 18 Jody Derrick 16 John Burns 15 Frank Jones 15 Gina Hewlett 10 Pam Smith 10 Kenny Burd 9 Will Montgomery 9 Perry Pratt 8 Bob Bellenfant 7 Stacy DeSoto 7 McClain Franks 6 Rob Pease 6
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MARCH Calendar Sunday
Sales and Marketing Council meeting
HBAMT Remodelers Council meeting
Dickson County Chapter meeting
Metro/Nashville Chapter meeting
Chapters & Councils CHAPTERS CHEATHAM COUNTY CHAPTER Chapter President - Roy Miles: 615/646-3303 Cheatham County Chapter details are being planned. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 310 DICKSON COUNTY CHAPTER Chapter President - Mark Denney: 615/446-2873. The Dickson County Chapter meets on the third Monday of the month, 12:00 p.m. at the Ponderosa Restaurant in Dickson. Next meeting: Monday, March 20. Topic: PPG Paints. Price: FREE, lunch dutch treat. Chapter RSVP Line: 615/377-9651, ext. 307 MAURY COUNTY CHAPTER Maury County Chapter details are currently being planned. Next meeting: to be announced. Chapter RSVP line: 615-377-9651, ext. 312; for callers outside the 615 area code, 1-800-571-9995, ext. 312 METRO/NASHVILLE CHAPTER Chapter President - John Whitaker: 615/843-3300. The Metro/Nashville Chapter meets on the fourth Monday of the month, 11:30 a.m. at the HBAMT offices. Next meeting: Monday, March 27. Topic: to be announced. Builders Free pending sponsorship. Price: $10 per person with RSVP ($20 w/o RSVP). Chapter RSVP Line: 615/377-9651, ext. 304 ROBERTSON COUNTY CHAPTER
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Next meeting: to be announced. Robertson County RSVP line: 615-377-9651, ext. 313.
sponsorship; $20 for non-members with RSVP ($25 w/o). Council RSVP Line: 615/377-9651, ext. 308
SUMNER COUNTY CHAPTER The Sumner County Chapter meets on the fourth Tuesday of the month, 11:30 a.m. at the new Hendersonville Library. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 306
HBAMT REMODELERS COUNCIL Council President - Ricky Scott. The HBAMT Remodelers Council meets on the third Wednesday of the month at varying locations. Next meeting: Wednesday, March 15. Location: to be announced. Topic: to be announced. Price: free for RMC members with RSVP; $15 for non-members with RSVP ($20 w/o). Council RSVP Line: 615/377-9651, ext. 301
WILLIAMSON COUNTY CHAPTER Chapter President - BJ Hanson: 615/884-4935. The Williamson County Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices. Next meeting: to be announced. Builders Free pending sponsorship. Price: $10 per person with RSVP ($20 w/o RSVP). Chapter RSVP Line: 615/377-9651, ext. 305 WILSON COUNTY CHAPTER The Wilson County Chapter meets on the second Thursday of the month, 11:30 a.m. at the Five Oaks Golf & Country Club in Lebanon. Next meeting: to be announced. Chapter RSVP Line: 615/377-9651, ext. 309 COUNCILS GREEN BUILDING COUNCIL Council President - Erin Richardson: 615/883-8526. The Green Building Council meets on the fourth Wednesday of the month, 11:00 a.m. Next meeting: to be announced. Topic: to be announced. Price: free for Green Building Council members pending
INFILL BUILDERS COUNCIL The Infill Builders meets on the third Thursday of the month, 11:30 a.m. at the HBAMT offices until further notice. Next meeting: to be announced. Council RSVP Line: 615/377-9651, ext. 311 MIDDLE TENN SALES & MARKETING COUNCIL Council President - Ashley Crews. The SMC meets on the first Thursday of the month, 9:00 a.m. at the HBAMT offices. Next meeting: Thursday, March 2, 9:00 a.m. at the HBAMT. Topic: “Using Your Time Efficiently,” with Kima Green. SMC members free thanks to Wells Fargo and Regent Homes; non-SMC members $25 w/RSVP, $35 w/o RSVP Council RSVP Line: 615/377-9651, ext. 302.
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The March, 2017 issue of The Nail, the official monthly magazine of the Home Builders Association of Middle Tennessee (HBAMT).