LUMBERYARDS

D.C. Hotline: NLBMDA releases policy agenda

BY HBSDEALER Staff

The National Lumber and Building Material Dealers Association 2011 National Policy Agenda hasn’t changed a lot since 2011. But there have been some twists.

For instance, the document’s Housing & Economic Policy sections declare an unchanged commitment to “support America’s housing recovery and restore housing as the cornerstone of our national economy.” New bullet points embrace support for the mortgage interest deduction and a belief that “any strategy to jump-start the economy must have a robust small business component that allows entrepreneurs to access capital and credit and retain existing cash flow from operations in order to grow and expand their enterprises.”

Other new principles emphasized this year are support for extending the current capital gains tax rate, reforming debit and credit card interchange swipe fees (representing “billions of dollars in unreasonable costs”), and guaranteeing an employer’s ability to participate in a fair union election.

NLMBDA chair and Zarsky Lumber executive VP Cally Coleman Fromme, wrote: “We look forward to working with Congress to review and roll back regulatory red tape.”

The association intends to press these principals during the NLBMDA Legislative Conference March 5 to 7 in Washington, D.C. For more information, visit dealer.org.

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Joint Center points to housing opportunities

BY Ken Clark

Orlando, Fla. — The bar charts and graphs told a complicated construction story that was interpreted with a certain degree of optimism by a Harvard economist.

Joint Center for Housing Studies of Harvard University economist Kermit Baker gave his presentation during the Presidents Council advisory board meeting held Wednesday here at the Orange County Convention Center.

There are many opinions about the health of the remodeling market, he said, pointing to a wide range of statistics. According to Baker, home improvement spending (rental and owner improvements as well as maintenance and repair) was a $280 billion market last year, reflecting very little growth over the last two years.

One positive factor is the old and under-invested rental stock in America today. "I think we’ll see a lot of growth there in the coming years," Baker said. 

Three strong opportunities for housing include sustainable (green) remodeling, rehabilitating distressed properties, and serving an aging population. Historically, the industry hasn’t done very well in these areas, Baker said.

When asked about housing starts forecasts for 2012 that call for 700,000 total starts in 2012 reflecting a 17% gain, Baker said it could happen.

"I think there’s a lot of strength in the multi-family market; I don’t think we’re seeing a lot of strength yet in the single-family side," he said. "We are beginning to see some pent-up demand that’s going to break loose at some point."

He referred to a colleague Chip Case, (the "Case" from the S&P Case-Shiller Home Price Index) who remarked: " ‘At some point in the housing cycle, there’s a whistle that only home buyers and dogs can hear,’ ” he said. "I don’t know when we’re going to hear that whistle. But some point in time we’re going to see a pretty strong uptick in activity." 

When prices and mortgage rates start inching up and consumers feel that they might miss out on a deal, that’s when he expects the growth story to begin in force. 

Baker is co-author of "Bigger Isn’t Necessarily Better," about efficiencies and best practices in the housing construction industry. Profits rise, but not necessarily efficiencies, he said.

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Building booms, past and present, are hot topics at IBS

BY Brae Canlen

Orlando, Fla. — Perhaps the second half of the seminar title said it all: “How long can the good times last?” A large group of skittish apartment and condo builders attended the multi-family forecast of David Crowe, the chief economist of the National Association of Home Builders (NAHB), here on the second day of the International Builders’ Show. What they hoped to hear was that the high demand for rental units will continue to fuel multi-family starts, which continue to outpace single family starts.

“Even the condo — the lower indicator — has shown some expectations for the future,” Crowe said. “But you’ve gotten to a new [low-vacancy] level for a while now.”

Ron Witten of Witten Advisors, a consulting firm to owners of apartment complexes and multi-family developers, said it was a misconception that people from foreclosed homes are moving into apartments and rented condos. The increase in occupancy levels can be attributed mostly to rented houses, he said.

“The growth has not come from a flight from foreclosed homes but the arrival of this echo boom generation and their ability to get jobs,” Witten explained.

Both men agreed that the health of the multi-family housing industry is tied directly to job growth more than any other factor.

On the single-family home front, a panel that included Paul Hylbert of Kodiak Building Partners in addition to Kermit Baker and Kent Colton, both from the Harvard Joint Center for Housing Studies, discussed the latter two’s new book called “Bigger isn’t necessarily better: Lessons from the Harvard Home Building Study.” The authors polled 78 large production builders in 2003 to analyze whether they used best practices such as using pre-assembled components, installed sales, information technology and supply chain collaboration. The answers give a peek into the homebuilding industry at its peak production but not necessarily its peak performance.

The International Builders’ Show, sponsored by the NAHB, concludes today after Federal Reserve chairman Ben Bernanke addresses the NAHB board of directors in a special session.

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