By Jill Ralph.

Credit Boost

If passed, a single-family affordable housing tax credit — the first of its kind — could stimulate $256 billion of growth in the housing sector of the U.S. economy by adding 5.5 million minority homeowners. The credit, awaiting budget approval by Congress in fiscal 2003, encourages construction of affordable, single-family for-sale units in distressed neighborhoods and inner cities. Historically, builders have avoided these areas because the economics don't pan out.

President Bush hopes the bill will "sweeten the pot" and encourage builders to build and renovate in distressed neighborhoods. Proponents hope that in five year's time, the tax credit would generate 200,000 affordable, single-family homes and help create a sense of community.

Brian Sullivan, public affairs specialist with the U.S. Department of Housing and Urban Development, says he believes this tax credit will stimulate the economy. "If the economics are there, they [home builders] will build. This credit brings market value in line with construction costs to make it economically doable."

Debt Load

Delinquencies may be up (see Payback Problem), but consumers aren't dangerously overleveraged. That's the word from Maury Harris, chief economist for UBS Warburg Research. During the past 20 years, household leverage (debt as a percentage of disposable income) rose almost steadily to new highs. But given the economy's growth during that period, more spending isn't a bad thing. "It's a reflection of prosperity," Harris says. "The ability to carry more debt over time is one result of affluence." In short, consumers have been spending more on luxuries and less on necessities. By contrast, real median family income has risen from $37,000 in the 1970s to more than $43,000 in the 1990s.

Another key factor is debt service. While consumers are spending more, they're keeping up with payments. Harris says the lower interest rates that have prevailed prevented any dramatic rise in the ratio of debt service payments to disposable income. That ratio, now at a comfortable 14, has rarely dipped below 12 or risen above 15 since 1980.

Industry Movers and Shakers

The California Building Industry Association's board of directors has elected officers to lead CBIA in 2003. The new officers include Harry Elliott, president, and Sherm Harmer, vice president. Elliott, president of Folsom, Calif.-based Elliott Homes, heads one of the largest privately held home building companies in the United States. Under his direction, Elliott Homes has consistently been ranked among the top 100 builders in the nation.

Harmer, managing principal of San Diego-based Urban Development Group, specializes in working with government and private entities to develop urban, transit, infill, and affordable housing.

The 36-year-old Standard Pacific Corp. has announced that Robert Ryan will be dubbed the company's CIO. Ryan, an information systems executive with more than 18 years of experience in the home building industry, was an executive with Continental Homes, of Scottsdale, Ariz.

Colony Homes has promoted Kristine Gaskins to the position of trade relations manager. The Atlanta-based firm is a privately held single-family builder that closed 372 homes in 2001 and expects to close more than 550 homes this year.

Adding to its senior management team, M.D.C. Holdings — dba Richmond American Homes — has appointed Charles Schneider as senior vice president. His focus will be on growth, company operations, and how the company uses technology.

Personnel changes? E-mail Jill Ralph at:

Southwest Move

To reflect the company's core business, Senior Care has dropped its name and will now be known as U.S. West Homes. The company's goal is to become one of the Southwest's major builders of single-family homes for the 55+ market. At present, the firm builds mainly in California and Nevada.

The builder plans to offer seniors entry-level homes starting at $150,000. The single-level homes will run from one bedroom to four. In 2003, U.S. West will build about 120 homes in San Jacinto. Craig Brown, the company's president, expects to sell about 10 homes monthly in the Cottages of San Jacinto community.

Heading the construction division will be Richard Greene, a contractor who has built more than 5,000 homes in Southern California. Formerly, Greene headed up Richard Greene Construction, a general contracting company.


Homeownership could get a boost if the House passes the "FHA Down payment Simplification Act of 2002" (S. 2239). Introduced by Paul Sarbanes (D-Md.) and Sen. John Ensign (R-Nev.), the measure made it past the Senate in October. House passage of the bill — about which NAHB officials are cautiously optimistic — would amend the National Housing Act to permanently simplify the down payment requirements for FHA-insured mortgages for single-family home buyers. The change would help new buyers qualify for home purchases, and, in theory, it would encourage construction.

Energy Savers

CertainTeed Corp. was among the four "Stars of Energy Efficiency" named this year by the Alliance to Save Energy, a coalition based in Washington, D.C. CertainTeed was joined by Sears, Amory Lovins, and Consumer Reports for their "outstanding contributions to the advancement of energy efficiency."

The manufacturer, located in Valley Forge, Pa., independently tests insulation contractors to ensure they are installing insulation to maximize thermal integrity of the homes.

Wired for Sales

When it comes to new-home marketing, builders may not be on the same channel as buyers. A poll by American Home Guides shows that builders significantly underestimate home shoppers' use of the Internet to find their next new home. From 5,013 responses, the Internet dominated the choices at more than 54 percent. The combined total of about 45 percent includes driving around, housing magazines, newspaper ads, radio and TV advertising, and real estate agents. It appears that buyers use the Internet at nearly twice the levels builders think they do, according to the AHG, based in Hollywood, Fla.

Published in BIG BUILDER Magazine, December 2002