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March 25, 2008

Is the End of the Bust in Sight?

Yesterday's news that sales of existing homes increased in February offers another bit of hope that the housing market is starting to recover -- or at least stabilize. Other indications include the Housing Market Index from the National Association of Home Builders, which held steady. Although only one in five respondents thinks that the market is getting better, that's an improvement from the 18% who felt that way in December.

There's no doubt that this is good news, but just how good is it? Apparently it depends on where you live; the market appears to be best in the Northeast, but it's still slipping a bit in the West.

There are some legitimate reasons to be hopeful, though. The inventory of unsold existing homes has dropped; mortgage rates are still low; and pent-up demand can be pent up for only so long. Do prospective buyers think that prices are as low as they're going to go? Apparently some of them do.

Despite that, though, the number of new houses started dropped 6.7% last month, according to the NAHB. David Seiders, NAHB's economist, attributes that to potential buyers being nervous about the economy overall. It's easy to understand being cautious about taking on a new mortgage when you're worried about your job.

What are you seeing where you live? Has activity in the housing market picked up at all? Or are you still looking at long lag times between listing a house and selling it?

Posted by Marjie O'Connor, HGTVPro.com Staff at 1:04 PM | Comments (2)

March 20, 2008

Green is Everywhere

Last week brought the announcement of yet another certification program for professionals in residential construction. This one, called ReGreen, comes from the American Society of Interior Designers. It follows the release of NAHB's National Green Building Program last month at the International Builders' Show. Other green programs include Green Certified Professional from the National Association of the Remodeling Industry and, of course, the LEED residential program from the U.S. Green Building Council.
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Why so many different certifications? I asked that of some people at the International Builders' Show, sponsored by NAHB. The answers were some variation of "The NAHB program is easier for builders to understand and implement."

Besides, with so many people claiming to be going green and the rise of greenwashing (the practice of claiming to be a green company despite minimal commitment to green practices), it's hard to know who knows what. Does installing Energy Star appliances make a builder green? Well, it's a start, but there are a lot of other considerations, too.

That's why I'm glad to see all of this activity. If I were planning to build a green house, I would want a builder who really knows his stuff -- someone I could work with, knowing that he had the same vision as I had. I know plenty of other people feel the same way; I've heard from some who are frustrated at not being able to find a builder or remodeler who is truly knowledgable about green building.

What's your experience? If you're a green builder, do you plan to get one of the available designations as evidence of your expertise? If you're a homeowner, would you feel more comfortable building a green house if you knew your builder had some kind of certification? Or would you be okay with someone who seems to know his stuff, even without certification?

And where do you seen the green movement headed? Is it absolutely the future of home building, or is it a trend that's doomed to fizzle because no one is particularly interested in green homes?

Posted by Marjie O'Connor, HGTVPro.com Staff at 1:37 PM | Comments (1)

March 14, 2008

The Narrowing Window of Opportunity?

Ever since the housing slowdown hit, the bright spot in the construction industry has been nonresidential building. Until very recently, it has been booming with the same enthusiasm as we saw in housing a couple of years ago. More than a few smart home builders moved into that market to even out the turndown in their usual work flow, getting involved with light commercial projects such as strip malls, doctors' offices and restaurants.

But uh-oh -- here comes a slowdown in that market, too. A press release from Associated General Contractors of America warns that the bloom is fading off that rose. AGC economist Ken Simonson cites rising material costs as one reason and labor shortages as another.

He also expects the brunt of the slowdown to hit exactly the kind of projects that those enterprising home builders have taken on; he expects big utility and public-works projects to continue. So while the developer may postpone the new mini-mall down the street, it's likely that the street itself will still be widened according to plan. Unfortunately that's one kind of construction that most home builders and remodelers don't know much about.

If you're a builder or remodeler, what have you been doing to prop up your company until new construction picks up again? Have you tried any light nonresidential construction? Multi-family projects? Any builders tried remodeling?

And what kind of results have you gotten? Do you think it's a good addition to your company's bag of tricks, or is it something you'll quit as soon as that wolf leaves your doorstep?

Posted by Marjie O'Connor, HGTVPro.com Staff at 4:01 PM | Comments (0)

March 4, 2008

The Cost of Doing Business

I had lunch today with Bob Gatton, a good friend who also writes for HGTVPro.com. Somehow we got to discussing how little attention some business owners pay to the numbers involved in running a business. Since Bob knows a lot of people in the home-electronics biz, he has seen some sad situations: technophiles who open a company to install home theaters, for example, but who really don't understand how to run a company.

They're not very good at estimating, so they lose their shirts on some (maybe most) jobs. They don't really know how to market the company, because they don't keep track of how their clients find them. They base their labor costs on how long it would take them to do the work, forgetting that employees are rarely as enthusiastic about saving time and money as the bosses. They just love all the cool equipment and want to put it in people's houses -- for money. They're just not real sure how much money.

If you're a builder, you undoubtedly can relate. You've probably spent hours putting together a "free" estimate for someone who either decided not to follow up on the project or to use another contractor. Lots of builders and remodelers are like Bob's friends: They got started in the business by doing the field work, but they never got the education about good business practices that helps them through the rough spots -- like 2008, for example.

By the way, you might want to check out something that's getting great reviews from people who have tried it: a free cost estimator available through HGTVPro.com. (No, I'm not getting paid to plug it; I'm just passing along the recommendation from other builders.)

What do you think is the biggest deficiency in business knowledge among contractors? In my experiences at seminars and conferences, I've seen an awful lot of people attending courses on determining mark-up. They know they're not doing it right, but they're trying to learn how. Sales workshops are perennial favorites. So are classes in using software such as QuickBooks or something that helps with scheduling.

Even better, where did you get your education about running your own business? The School of Hard Knocks? (Really expensive tuition there, I hear.) From a friend in the business? By reading a lot of books? Or are you still wondering where to turn for such information? Let me know. Maybe we can help you out.

Posted by Marjie O'Connor, HGTVPro.com Staff at 3:28 PM | Comments (3)