Tuesday, December 30, 2014

FHFA Index Shows Mortgage Interest Rates Decrease in November


Nationally, interest rates on conventional purchase-money mortgages decreased from October to November, according to several indices of new mortgage contracts.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.00 percent for loans closed in late November, down 11 basis points from 4.11 percent in October.

The average interest rate on all mortgage loans was 4.01 percent, down 10 basis points from 4.11 in October.

The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.24 percent, a decrease of 8 basis points from 4.32 in October.

The effective interest rate on all mortgage loans was 4.16 percent in November, down 11 basis points from 4.27 percent in November. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.

The average loan amount for all loans was $293,600 in November, up $8,600 from $285,000 in October.

Monday, December 29, 2014

With the New Year Comes New Reporting Requirements

Beginning Jan. 1, the Occupational Safety and Health Administration will require employers to report all work-related fatalities within eight hours and all in-patient hospitalizations, amputations and losses of an eye within 24 hours of being notified of the incident. In the past, employers only reported all workplace fatalities and when three or more workers were hospitalized in the same incident. Since September's announcement of its new requirements, OSHA has conducted extensive outreach to help employers understand the new standards. The agency recently held its first-ever Twitter chat on the subject, answering questions and directing the broader worker safety audience to useful resources.

Changes Loom for HVAC Systems, Some Water Heaters

Here is an end-of-the-year reminder of two changes planned for early 2015 for HVAC systems and some water heaters.
  • New regional standards for furnaces, air conditioners and heat pumps have been approved by the federal Department of Energy (DOE) for units installed in homes after Jan. 1, 2015. Get the details in this NAHBNow post from November.
  • Custom builders and others who install extra-large water heaters should also be aware of new requirements that go into effect for electric and gas models produced after April 15, 2015. There are alternatives, though: Get the details here.

How To Make Social Media an Effective Marketing Tool

There are three things required to make social media work as an effective marketing tool:

Develop a clear strategy before engaging in social media; define what your objectives are, who your audience is, what they’re interested in and what actions you want them to take.

Create content that is interesting and relevant to your prospective buying group. Publish this regularly through your company’s blog, then use your key social sites – Facebook, Twitter, Pinterest, Google+, etc., to drive traffic to your blog and website.

Don’t ignore other media outlets. Social media is most effective when used as an integral part of an overall marketing strategy and marketing mix.

What are the most useful social sites and where should I start?
  • Company Website or Blog
  • Facebook
  • Twitter
  • YouTube
  • LinkedIn
  • Google+ (great for SEO, or search engine optimization)

Then, when you’re comfortable with those, add:
  • Pinterest
  • Instagram
  • Vine
  • Foursquare

What’s an example of a good social media campaign?
Hold a contest, such as: Where will our next community be?
Promote it on all website, offline advertising, and social sites; Entrants go to Facebook page to submit answers – requires name and email; Entrants get information on other communities, plans, etc.; Prize: $500 gift card.

How to get started with a social media program:
  • Create an in-house team to manage your social media
  • Make sure you that everyone on the team promotes a singular message
  • Larger companies should outsource social media management

Why should I invest in a social media program?
  • It’s where the buyers are online.
  • It’s easy for prospects and buyers to learn about you in an informal way.
  • People share things they like with their friends and contacts.
  • It’s where they go to get quick answers … and they expect you to be there.
  • Social Media is branding – third-party validation
Source: NAHBNow, the blog of the National Association of Home Builders, excerpted from Social Media 3.0: It’s Easier Than You Think by Carol L. Morgan, CAPS, CSP, MIRM. To read more about the book, visit BuilderBooks.com.

Top 10 Mistakes Builders Make & How to Avoid Them in the New Year

1. Fail to see a collapse coming. All markets are local, and they all go through an up-and-down cycle, Stephani said. He said builders need to keep tabs of warning signs by monitoring the number of starts in their area, being prudent with their specs and examining fluctuations in the cost of land.

2. Don’t ask for help. Too often, builders stubbornly cling to the notion that they have all the answers and that the competition is their enemy, said Stephani. The best way for builders to find answers to improve their business is to become actively involved in their local and national builders associations. Some of the benefits of membership include advocacy, education, networking and joint marketing resources, he said. “Through NAHB, I have a network of hundreds of people I’ve met over the past years,” said Stephani. “That knowledge sharing is immense. The 20 clubs provide that opportunity as well.”

3. Alienate Realtors. The purpose of Realtors is to sell home, and builders are being penny wise and pound foolish when they try to work around them and avoid the commission fee because Realtors will often bypass the builder’s properties when showing prospective clients homes to sell. Stephani said it is wise to use Realtors because they are professional at marketing and sales, provide better access to pre-qualified clients and can help to manage client expectations.

4. Fail to set realistic expectations. To remedy this, Stephani said that the builder must make it clear to their clients that they are in charge of the project. The customer must make selections on time, be able to afford what they want, and must not attempt to supervise subcontractors or suppliers. The builder must communicate to the client that changes to the job require time and money, that delays during construction are common and that workers will not necessarily be on the job eight hours every day. “Let the client know there could be bumps in the road but that they will be happy in their home when they move in,” he said.

5. Ignore customer service. Those who ignore this item because there is no money in it, or because they are too busy, do so at their own peril. Good customer service is essential, Stephani said, and the best way to provide it is to see issues from the customer’s perspective. Builders who have a willingness to exceed customer expectations and to do what is promised often reap great rewards through word-of-mouth referrals.

6. Fail to price for profit. Builders often fail to price their homes properly due to competition, market conditions, inaccurate appraisals and pressure from Realtors. As a result, their cash flow becomes critical and they try to compensate by increasing volume. To fix this problem, Stephani suggests that builders better manage their specs, tighten financial controls and reporting, and develop a pricing approach based not just on cost but also on location.

7. Don’t update the business plan. “If you don’t put a plan in writing it can guarantee you won’t reach your goals,” he said. Builders should update their business plans on an annual basis, he added.

8. Fail to manage conflict effectively. Too often, builders do not recognize the emotional state of owners during construction and are not committed to win-win agreements with them, Stephani said. Most builder/client conflicts arise from disagreements about what was promised and what was delivered. Clear and concise wording of the contract; a complete set of plans and specifications; and good documentation of all communication are essential.

9. Don’t manage design and budget. Too often, builders fail to properly manage their clients’ expectations, fail to control the architect and let clients take control over their subcontractors and suppliers. Builders need to be up front with their clients, let them know what to expect during the building process and work in tandem with the architect.

10. Take on the client from hell. A true client from hell often displays wild mood swings; obsesses over minor details; invites conflict; demands perfection but is not willing to pay for it; creates problems for subcontractors and employees; berates, belittles and badmouths the builder; refuses to pay until sued; and is never happy. To avoid this situation, Stephani recommends that builders go with their gut feeling when interviewing a client, evaluate their personalities and traits, take note of their occupation and observe whether a husband and wife are openly arguing – which can be a warning sign.

Source: NAHBNow, official blog of the National Association of Home Builders.

About the author: Tom Stephani, president of Custom Construction Concepts Inc. based in Crystal Lake, Ill., is an internationally recognized speaker, trainer and consultant on issues relating to the residential construction industry.

FHFA House Price Index Up 0.6 Percent in October

U.S. house prices rose in October, up 0.6 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). The previously reported house price change of 0.0 percent in September remained unchanged.

The FHFA HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac. From October 2013 to October 2014, house prices were up 4.5 percent. The U.S. index is 5.1 percent below its April 2007 peak and is roughly the same as the September 2005 index level.

For the nine census divisions, seasonally adjusted monthly price changes from September 2014 to October 2014 ranged from -0.3 percent in the Pacific division to +1.5 percent in the South Atlantic division. The 12-month changes were all positive, ranging from +0.8 percent in the Middle Atlantic division to +6.0 percent in the Pacific division.

To read the complete report at FHFA.gov, click here.