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Builder Business Update:

Senate Adds $15,000 Home Buyer Tax Credit to Stimulus
Amendment to Senate version of stimulus bill provides the credit to all home buyers and doesn’t require repayment.
By Pat Curry

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price in its version of the stimulus bill. This proposed credit would be available to all home buyers and would not have to be repaid as long as a buyer lives in the house for at least two years. The amendment to the Senate’s economic stimulus package, co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.), offers the credit on purchases from one year of the date of enactment and could be applied to the home buyer’s 2008 taxes.

Isakson, who spent more than 30 years in the real estate business, proposed the tax credit because he’d seen it used effectively to jump-start housing in the 1970s.

“It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said in a prepared statement Wednesday evening. “We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history, and repeated a method that worked by adopting this amendment.”

Dwight Jaffee, a professor of finance and real estate at the Haas School of Business at the University of California, Berkeley, called the 1973-1975 recession the “classic example” of how a direct stimulus to housing demand impacted economic recovery. “Housing led us into this recession, and we really need a stimulus for it to lead us out,” Jaffee said in a statement released by the Fix Housing First coalition, a group of home builders, manufacturers, and others advocating for several housing-related measures, including the tax credit.

According to Jerry Howard, the NAHB’s CEO, the amendment’s provision to offer the tax credit for a year from the date of enactment “reflects Sen. Isakson’s in-depth understanding of housing. It gives the people who market housing a chance to ramp this up and put it in its proper perspective in the field.” Depending on the enactment date, it could make the tax credit available well into 2010. (In previous versions, the tax credit was only availble through Dec. 31, 2009.)

Howard also said Thursday that the NAHB’s staff is working closely with the Senate offices of Sen. Mitch McConnell (R-Ky.), John Ensign (R-Nev.) and Lamar Alexander (R-Tenn.) on additional amendments that the Fix Housing First Coalition considers crucial to solving the housing crisis. Those include low-interest mortgages for home buyers and additional measures to stem foreclosures.

The National Lumber and Building Material Dealers Association also issued a statement this morning applauding the adoption of the amendment and thanking the senators for their leadership. “We believe, if adopted in the final stimulus package, the tax credit could go a long way toward reviving the housing economy by encouraging more home purchases, creating new jobs, and restoring consumer confidence in the housing market,” said NLBMDA President and CEO Michael O’Brien.

The Fix Housing First coalition, which includes the NAHB and NLBMDA, continues to advocate for additional housing stimulus measures, including an amendment that would provide discounted 30-year fixed-rate mortgage financing for eligible home buyers.

In appearances on television news shows, several senators this week expressed support for such an amendment. “We have a 4% mortgage proposal where creditworthy home buyers could buy down their mortgages or save them on the average $5,600 a year,” Sen. McConnell said on Sunday on “Face the Nation.”

One disappointment for home builders in the bill is that this amendment does not include the ability to monetize the credit at closing, a feature in an earlier bill Isakson filed in mid-January. “Emails were flying back and forth this morning, asking ‘Can it be used for closing?’” says Michelle Smallwood, vice president of sales for Melbourne, Fla.-based Holiday Builders.

Pat Curry is senior editor, sales and marketing, at BUILDER magazine.Senate Adds $15,000 Home Buyer Tax Credit to Stimulus
Amendment to Senate version of stimulus bill provides the credit to all home buyers and doesn’t require repayment.

By:
Pat Curry

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price in its version of the stimulus bill. This proposed credit would be available to all home buyers and would not have to be repaid as long as a buyer lives in the house for at least two years. The amendment to the Senate’s economic stimulus package, co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.), offers the credit on purchases from one year of the date of enactment and could be applied to the home buyer’s 2008 taxes.

Isakson, who spent more than 30 years in the real estate business, proposed the tax credit because he’d seen it used effectively to jump-start housing in the 1970s.

“It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said in a prepared statement Wednesday evening. “We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history, and repeated a method that worked by adopting this amendment.”

Dwight Jaffee, a professor of finance and real estate at the Haas School of Business at the University of California, Berkeley, called the 1973-1975 recession the “classic example” of how a direct stimulus to housing demand impacted economic recovery. “Housing led us into this recession, and we really need a stimulus for it to lead us out,” Jaffee said in a statement released by the Fix Housing First coalition, a group of home builders, manufacturers, and others advocating for several housing-related measures, including the tax credit.

According to Jerry Howard, the NAHB’s CEO, the amendment’s provision to offer the tax credit for a year from the date of enactment “reflects Sen. Isakson’s in-depth understanding of housing. It gives the people who market housing a chance to ramp this up and put it in its proper perspective in the field.” Depending on the enactment date, it could make the tax credit available well into 2010. (In previous versions, the tax credit was only availble through Dec. 31, 2009.)

Howard also said Thursday that the NAHB’s staff is working closely with the Senate offices of Sen. Mitch McConnell (R-Ky.), John Ensign (R-Nev.) and Lamar Alexander (R-Tenn.) on additional amendments that the Fix Housing First Coalition considers crucial to solving the housing crisis. Those include low-interest mortgages for home buyers and additional measures to stem foreclosures.

The National Lumber and Building Material Dealers Association also issued a statement this morning applauding the adoption of the amendment and thanking the senators for their leadership. “We believe, if adopted in the final stimulus package, the tax credit could go a long way toward reviving the housing economy by encouraging more home purchases, creating new jobs, and restoring consumer confidence in the housing market,” said NLBMDA President and CEO Michael O’Brien.

The Fix Housing First coalition, which includes the NAHB and NLBMDA, continues to advocate for additional housing stimulus measures, including an amendment that would provide discounted 30-year fixed-rate mortgage financing for eligible home buyers.

In appearances on television news shows, several senators this week expressed support for such an amendment. “We have a 4% mortgage proposal where creditworthy home buyers could buy down their mortgages or save them on the average $5,600 a year,” Sen. McConnell said on Sunday on “Face the Nation.”

One disappointment for home builders in the bill is that this amendment does not include the ability to monetize the credit at closing, a feature in an earlier bill Isakson filed in mid-January. “Emails were flying back and forth this morning, asking ‘Can it be used for closing?’” says Michelle Smallwood, vice president of sales for Melbourne, Fla.-based Holiday Builders.

Pat Curry is senior editor, sales and marketing, at BUILDER magazine.

Question:
Do you think this is a good idea as a taxpayer?
If you are in the market to purchase a home, will this impact your decision to buy a home?

We’re working hard with double crew sizes to keep the house ahead of schedule. We’ll have weekly meetings with the owners on the work site to answer any questions and keep the owners fully informed of progress and information.

Our staff architect is part of these meetings, along with our project manager. This team approach is the best way to execute the original concept architectural design and minimize any surprises. Owners feel comfortable knowing all efforts are focused on building a high quality home, on time and on budget.

Here is the Free 31-rules-of-kitchen-design

With so many details to think about, where do you start the
custom home process?  While it’s easy to get overwhelmed, we
like to simplify the custom home process by starting out
just looking at only two things.

What are these two things?
I can’t tell you because that would give away our
competitive advantage.

All right. You twisted my arm. Here they are:

Our process starts with two things:  1) you and 2) your lot.
That’s it. Pretty simple.

So I like to start things off playing Columbo.  When we meet
I’ll ask you questions that fall into just a four
categories. Here’s a small sample of our routine:

A.    $MONEY$ category

–    How important is resale to you?
–    Is return on investment your number one motivation
or is it a lower priority and you just want to
make sure you don’t do anything someone else would
think odd when you sell?
–    How are you going to finance your new home?
–    If you are going to use a lender, is a construction
loan, new first mortgage or new second mortgage best for
you? Can you use collateral of other assets to improve
your options?
–    How much cash do you have to put into your new home?

–    How much cash do you want to put in to the new home?

–    Have you spoken with a lender (we prefer you use ours I’ll

explain some advantages in future post)?
–    What tax bracket are you in? There could be some tax benefits

related to the project that may apply to your situation.

B.    Lifestyle category:

–    How long do you think you want to live in your new
home? This usually factors in to energy efficiency
and “green” options and calculating the pay-back period.
–    Are you there for 5 years and then on to the vineyards
of Oregon or is this your last home and you want us
to design a master suite on the first floor or an
elevator to get to the 2nd floor?
–    When do you want to see the home started by? This
can be a big factor when jurisdictions like Arlington,
D.C. and Montgomery County are constantly changing
zoning and building codes. Montgomery County just
passed a law that takes effect in four months
decreasing height and density in many neighborhoods
& sprinklers will be required in all dwellings in
two years (I’ll verify the exact date).
–    When do you want to move in to the home?  – “by Christmas”
is always a lofty goal and as long as you don’t
mind me asking “which one?” (I couldn’t resist)
we’ll always hit it.
–    Where will you live during the construction
(we have sources for short term rentals, but ask
me early since they go fast)?
–    Do you plan on in-laws or relatives coming back
for any period of time? What bathroom will they
use? What kitchen will they use? We just finished
a home in Silver Spring with three kitchens – one
for the kids with 5 kids of their own, one for the
parents and one for Aunt Lee, who visits during
the summers.

C.    Your Future Home (and little bit about your
current home) category

–    What are the features and amenities that you must
have, or the project just isn’t worth doing?
–    What are the features and amenities that would
be nice to have?
–    What style home do you love?
–    What style home do you hate?
–    What bothers you about your current home?
–    What do you love about your current home?
– How important are energy efficient features?
–    How important are green features?
–    Do you like open plans with a ton of natural
light and views from front to back or would you
prefer something more intimate and cozy?
–    What ceiling heights do you want? How do you feel
about two story spaces?
–    Do you want a basement? If so do you want it
finished?

D.    And Last but not least – Your Lot category – this
is always a biggie, so big I’m adding these extra
few sentences before I get to the.

It always surprises and shocks me, like a slurp
of Red Bull, when people don’t call us prior to
buying a lot (I bet you can tell, it especially
upsets me).

There could be so many restrictions on lots, for
instance: easements, setbacks, alleys, lot coverage,
height, etc., etc., etc., etc., etc., which you
would never know just by looking at a piece of dirt
with your eyes.

We just completed two subdivisions, on two separate
projects, that probably added six (unexpected)
months to each project. And added thousands of
dollars in engineering and permitting fees.
In each case the owners were not aware of the
restrictions until we performed our zoning analysis.
And in each case they had owned the lots for many years.

So checking the “buildability” of your lot is one
of the very first steps we take.
IF YOU’RE PURCHASING A LOT, please call me before
you pull that trigger!

Here are some things we look at (this is so
critical I’m tossing out the regular bullets):

• Zoning category
• Public utility easements
• Building restriction lines
• Established front yard building line
• Setbacks on all sides of the property
• Floor area ratio
• Year the lot was recorded
• Is the lot a conforming or non-conforming
• Specimen tree issues
• Tree Save issues
• Water Run-off
• Wetlands

Due to the complexity of some of these issues,
complete research and answers may be a few steps
into our process. And to paraphrase a soon to be
ex-senator, this stuff is way beyond my pay grade,
so, Kevin, our excellent and unflappable architect,
handles most of this.

Well that’s a brief primer on how we start the custom
home process.  It all starts with you and your lot,
as it should be.

Next time I’ll give you an idea of what we do once
we get your answers. But it’s 12:08 a.m. and I need
to take out the garbage so I can earn my keep.

Please keep the comments and critiques coming
and let me know what’s on your mind. And I’d appreciate
if you could tell me:

• What would you love to see during the home building process that would make your life easier?

• What frustrates you the most about the home design and building process?

Products made from natural, rapidly renewable, or agricultural waste materials dominate annual list.

BuildingGreen, the publisher of the highly regarded GreenSpec Directory & Environmental Building News newsletter, posted their seventh annual list top 10 green building products for 2008.

Of the products on this year’s list, half have been deemed green because they are made from natural or rapidly renewable materials or agricultural waste. Such products, the Brattleboro, Vt.-based group says, require significantly less energy to manufacture.

“Our selections of the Top 10 Green Building Products represent a wide range of product types in many different application areas,” says BuildingGreen president Alex Wilson.

This Top 10 Green Products list has become an annual ritual in which the Vermont publisher picks the most exciting products added to its GreenSpec Directory in the past year.

An appearance on BuildingGreen’s list is seen by many in the industry as a significant event, as the company’s endorsement signals that a product is legitimately sustainable. “New products seem to be appearing all the time, making it a challenge for our staff to keep up,” Wilson says.

This year’s list includes the very first Forest Stewardship Council-certified and formaldehyde-free bamboo flooring, doors made with wheat-straw particleboard, a transparent finish produced from a byproduct of cheese making, and a compressed-earth masonry block. Three of the remaining products save energy, including a low-cost, solar water-heating system; a combination heating, water heating, and heat-recovery ventilation system; and a system for monitoring real-time energy (and water) use in buildings.

Last year’s list included LED downlights from LED Light Fixtures, Alpen fiberglass windows from Alpen Energy Group, Cube3 Ultra urinal from Caroma, and Bosch Evolution 800 Series dishwasher.

What Slowdown? Why are there new homes still going up on just about every street in Bethesda, Mclean, N. Arlington, Chevy Chase, etc.?

Let us know your opinion………

Considering how fragile the economy is right now and how timid banks are to loan money for new homes I thought I’d share my experience with saving money on new home construction. It wasn’t that long ago when getting loans was really easy and building large homes was the trend. Today banks are less likely to fun new construction because of the premium costs associated with new construction.

In most real estate markets today you can purchase an existing home for quite a bit less money than a comparable new home. Because of this banks are much more likely to focus their loans on very good customers with plenty of equity (skin in the game!) and homes that will hold their value in this turbulent real estate market.

Having said that if you’re really set on building a new home there are ways you can keep the budget down and the banks more likely to fund your project. Here are my top five ways of saving money on new home construction.

1. Square footage is the name of the game. No matter how you slice it every square foot you add to the footprint of your new home is going to cost money. It affects every aspect of the construction from the foundation all the way to the finish coat of paint. I tell customers to start off with a floor plan that has everything they want and all the room they want. Then you need to take the time to analyze each and every room and see if you can make them smaller and keep the functionality. If you take a simple 30 foot wide home and remove 2 feet of length you can save 60 square feet. 60 sq. ft multiplied times an average cost of over $150 equals $9000. Now you might be saying $9000 is nothing….but I say that will pay for over half of your flooring. So if you want to be serious about keeping costs down then always keep the square footage to a minimum.

2. Choose a home that is 2 stories if at all possible. This concept is pretty simple yet some people never realize how effective it can be. Let’s compare two homes; home A is a 2000 sq. ft. ranch style single level home, home B is a 2000 sq. ft. colonial two story home. Both homes have 2000 sq. ft. so you might say they would cost the same. I would argue the opposite and heres why. House A has a foundation that is twice the size as House B. House A has a roof twice the size of House B. This simple example can easily save you $10,000 to $20,000 yet you end up with the same livable space.

3. Instead of having an attached garage you can save a large sum of money if your house lot topography will allow for a drive under garage. In this scenario you use a portion of your basement for your garage and you can easily save $15,000 to $25,000. Now this option won’t work well for level lots or areas of the country that build home on flat slabs but it’s still a great money savings idea.

4. Ask your builder if there are any simple, safe construction tasks that you could do to reduce the costs. Many customers end up doing their own painting, cleaning or even final landscaping. These tasks could save you anywhere from a few thousand dollars up to tens of thousands of dollars.

5. Another recent option is to consider using certain Energy Star appliances, furnaces and air conditioning units. By using some of these products you may qualify for substantial government tax credits that can help offset some of your construction costs. My only word of caution on this item is that some banks are still trying to figure out new technologies like geothermal heat or solar panels. So they may be less interested in funding these types of products.

There you have it my top five money saving ideas for new home construction.

Clients always ask us about what their choices are when it comes to countertop materials. Well, when it comes to bathroom countertops there’s no limit to how creative you can be, because most countertops are custom-designed for each installation. There are hundreds of colors, patterns, and materials to choose from, but not all of them work well in the bathroom where water and condensation are a constant concern. Your best choices are marble, granite, ceramic or porcelain tiles, solid surface materials and cultured marble.

Cultured Marble is the most common and least expensive countertop material, by a considerable margin and is available in many colors. A nice feature with cultured marble tops is that the top and the sink bowl are one piece. This is called a top with an integral bowl.

Ceramic & Porcelain Tile are very versatile materials that you can use on your countertop to create a specific style or look. Contemporary, retro, traditional, rustic, country, and everything in-between is possible when working with ceramic tile. The only drawback to using tile is the grout lines, because nobody wants to invest the time and energy necessary to keep grout clean, especially in the bathroom. And don’t be fooled – tile grout requires regular maintenance and lots of elbow grease. On the flip side, the tile itself is easy to clean. Cost is between $50 to $80 per linear foot, installed. Plain-colored tiles cost from $2 to $40 per tile with hand-painted tiles running from $5 to $75.

Corian and Solid Surfacing is made of either a pure acrylic product or a polyester-acrylic mix. The most widely available and widely known 100 percent synthetic countertop material is Corian by Dupont, but other manufacturers including Wilsonart, Formica and Avenite also make it in a wide range of colors and textures. Some of the materials are solid colors, but most have flecks that give it a textured look that resembles real stone (that will run the cost up). Cost is between $75 to $150 a linear foot, installed.

Granite slabs are the most expensive of all countertop surfaces, but this is one product that holds its weight. The expense of granite will vary greatly, depending on the type, quality and availability of granite that you select, as well as the finished edge that you choose. If you just can’t resist the look of granite and your purse is stretched, try going for granite tiles. Cost is between $75 to $200 a linear foot, installed.

Composite Stone is the hot new surface when it comes to tops and a big rival to granite. It is a stone-synthetic composite made of about 90 percent quartz particles and 10 percent acrylic or epoxy binder. Some of the composites look like natural stone, but not one that you could identify. Others are so close to real granite that you’re left wondering if it’s real or not? Since the composites are man-made materials, they do not have the unexpected variation of granite or marble and they do not need to be sealed. The four major choices – Silestone, Okite, CaesarStone and DuPont’s Zodiaq – all use the same process. The only differences between them for the end users are the colors and textures offered. Taken together, the four companies offer more than 130 countertop choices. Cost is between $110 to $250 a linear foot, installed.