Spring 2008 issue of Horizons

INDUSTRy u

HOME BUILDERS

with another 5 percent decrease expected. There is apparent capacity in many of the production facilities, especially in the Southwest and Southeast, barring any future hurricanes. The NAHB is working very hard to lobby the Fed for some additional short and long term interest rate relief. If nothing else, these rate cuts should help the psyche of the market and provide some much needed good news.; The market continues to sputter along. Despite time periods of inconsistent sales, decent to good traffic, and very attractive incentives, the home-buying public continues to lack a sense of urgency to buy. It is truly unfortunate given all the excellent opportunities available to purchase. Also, for the first time, there is a fear from potential buyers of swapping their existing mortgage rate for one that is likely to be substantially higher. The local market showed signs of a slowdown beginning in August 2005. Despite a few spurts in the last two years, overall sales have decreased since 2005. Eventually there will be some pent-up demand that should occur, especially given the reduction of finished spec inventory. The slowdown in new projects being developed also will help reduce the perceived oversupply of lots. It remains even more imperative that all home builders, lenders, suppliers and subcontractors work together to navigate these challenging times. Other News NAHB is concerned about Congress’s renewed efforts to close what is perceived as the “Tax Gap,” i.e., what is actually collected versus what is owed. Legislators have increased resources to examine those in the industry classified as “independent contractors.” In particular, it is alleged or assumed that many of these workers are treated as independent contractors instead of employees to avoid the required • THE LOCAL MARKET Stay tuned!

Surviving the Market

NEWS FROM NAHB

“Survival” and “crisis” were the words most uttered by those in attendance at the NAHB fall board meeting in Seattle. There was certainly a serious tone as all in the home building industry attempt to maneuver through these challenging times. Only a few markets in the country have not been affected by the downturn. NAHB is now predicting the market may hit bottom sometime in 2008, although all recent forecasts have been off target. “Mortgage disruption,” as it is now called, is a huge concern for an otherwise weakened industry. The sub-prime market is virtually gone, and the availability of credit has been limited, especially for jumbo loans. While not as much of a problem locally, the number of foreclosures that will impact the market and compete with new home inventory is substantial.

Some good news – it appears raw material prices nationally have fallen an average of 10 percent this year,

23 u spring 2008 issue