Builder - August 2008 - (Page 70)

BEAT by insuring the construction portion of these loans in order to attract new loan originators. Because this is such a serious concern, the NAHB is closely monitoring the AD&C lending situation, and a recent survey of builders and developers revealed the scope of the problem. More than 80 percent of all respondents reported that the availability of new credit for land acquisition and land development had tightened this year compared to the second half of 2007. Sixty-nine percent of those surveyed said that credit has become more constricted over that time for singlefamily construction loans, and 29 percent responded THE NAHB that loan availability remained about the same. Among multifamily builders, 78 percent reported worsening conditions for construction loans, and 20 percent said they had seen no change. As we have learned, unnecessary tightening of AD&C lending and unreasonably tight mortgage credit for our customers can have a devastating impact on our industry. Ensuring that builders have ready access to reasonably priced AD&C funding and increasing liquidity in the mortgage market are top NAHB priorities as we work to minimize the effects of the housing market crisis and get the home building industry back on its feet. B CENTER CORNER NATIONAL NAHB BRIEFS general, they expect markets along the coast to revive faster than inland locations where the reverberations from the slump have been more pronounced. The mortgage credit crunch has hit RESEARCH Straight to the Source A new NAHBRC survey illuminates conditions in the slumping market. C ontrary to earlier forecasts by lead- ing housing economists, the U.S. housing market has continued its downward slide through 2008. Facing an uncertain future, home builders have begun to implement some dramatic changes in how they build and sell homes in order to remain competitive and proﬁtable. To help keep the industry abreast of the changing environment for home building, the NAHB Research Center conducted a study in early 2008 called, “Implications of the Soft Housing Market for Builders, Suppliers, and Manufacturers.” The study reveals that builders are focusing on making business improvements, especially in their sales efforts. Builders have reduced home prices as much as they can and have become more creative in luring potential buyers into sales offices. For example, three-quarters of the builders surveyed have redesigned their homes to represent the best value among competitors, and about 70 percent are making their homes more energy efficient. The study reveals that the most popular home purchase incentives are free upgrades, and the most commonly offered upgrades are in the kitchen. The majority of builders are now paying closing costs and fees for new-home buyers, while just under half are providing assistance to buyers in selling their current homes. The study also reveals that home builders have become more ﬂexible than ever, allowing buyers to specify modiﬁcations to home designs and material selections. The market downturn has also made now a great time for manufacturers to contact consumers directly to better understand their product needs. The study also reveals that home trade-in programs, used by only about 15 percent of home builders surveyed, are rated as some of the most effective programs for luring buyers back into the market. This process is similar to trade-ins in the sale of new cars, where the builder purchases the old home as part of the sales contract for the new home. Looking to future business improvements, about 30 percent of home builders surveyed stated they planned to adopt a green building program soon. Additionally, 18 percent said they would improve business performance monitoring; 17 percent said they planned to adopt a quality assurance program; and 16 percent said they would undergo major cost cutting. Answers to other important industry questions are also uncovered by this study. They include: How relationships are changing between builders, home buyers, manufacturers, suppliers, and subcontractors; The business and technology improvements builders are using to reduce operating costs and increase sales performance; How builder responses to the downturn vary by region and builder segment; The most popular manufacturer-sponsored programs for builders; Changes in home design and materials usage that have taken place in response to the housing downturn. Builders, suppliers, and manufacturers of home building products have realized that we now face a new industry environment. To be successful in both the short- and long-term, the industry must do more than wait for sales to pick up. The ﬁnal report is available for purchase through the NAHB Research Center’s online bookstore—www.nahbrc.org/bookstore—or by calling 800-638-8556. California’s high-priced housing markets particularly hard, the economists said, and the challenge is to get credit ﬂowing again for jumbo loans, which are signiﬁcantly less risky than their current pricing would suggest. Start Your Engines R egistration for the 2009 International Builders’ Show in Las Vegas on January 20–23—the single most important and largest industry event of the year—is now open. This year, IBS will feature more than 1,700 exhibitors showcasing their latest products and services and will hold more than 250 education sessions and programs designed to help members stay current on industry trends and issues. 70 ■ B U I LD E R augus t 2008 W W W.BUILDERONLINE.COM http://www.nahbrc.org/bookstore http://www.builderonline.com

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Builder - August 2008 Contents Editor’s Notes Bmail Book It Inside Story Success Stories Top Shelf Green House Sales Strategies Products Digital Home National Beat Seiders' Economy Trade Secrets: Staying Afloat Sign of the Times Missing Links Ad Index Last Word

Builder - August 2008

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