Home Builder and Remodeler Cost Breakdown

An analysis of the latest Economic Census data by NAHB economist Natalia Siniavskaia shows that, on average, residential construction establishments were able to cover their hard and soft construction costs and generate positive profits in 2012.

The 2012 data show that the direct costs of construction – consisting of construction payroll, costs of construction work subcontracted out to others, and costs for materials/supplies – vary from 65% of total revenue of specialty trade contractors to 87% of the business receipts of multifamily general contractors without land costs. For single-family general contractors (who build on land customers own), the direct costs of construction consume on average 81% of the total revenue.

For single-family general contractors, 7% of total business receipts go to pay wages of construction workers. Specialty trade contractors, who maintain larger construction payrolls and subcontract out a minimum amount of work, spend on average 19% of total revenue on construction payroll.

In sharp contrast, multifamily general contractors who subcontract out most of the work, spend only 3% on the construction payroll. Their biggest expenditure is the cost of construction work subcontracted out to others, 63% of the total revenue. This far exceeds the typical spending by single-family general contractors on subcontractors, which amounts to 36% of outlays.

For a more detailed breakdown, click here.

Lowe’s to Offer CGR and CAPS Scholarships in 2015

Active HBA Remodeler members can expand their knowledge—and their businesses—by earning an NAHB educational designation with the generous support of Lowe’s ProServices.

The Lowe’s CGR Scholarship and the Lowe’s CAPS Scholarship help pay for the classes needed to earn the prestigious Certified Graduate Remodeler (CGR) and Certified Aging-in-Place Specialist (CAPS) designations.

First, interested participants must apply for the scholarships, which are offered on a first-come, first-served basis. The deadline for both scholarship applications is January 2, 2015.

CGR Scholarship recipients can take the Professional Remodeler Experience Profile (PREP) online for free until March 13, 2015. Results of the PREP guide individuals to the courses they need to complete to obtain the CGR.

If the PREP is taken prior to the 2015 NAHB International Builders Show® in Las Vegas, individuals can start taking Pre-Show courses at the show January 17-20.

CAPS Scholarship recipients can take the courses needed to obtain the designation at either IBS or at the Remodeling Show in Chicago, September 30 through October 2, 2015. Courses include Business Management for Building Professionals, Project Management and Design/Build Solutions for Aging and Accessibility (CAPS II).

Customers seek Remodelers with CGR and CAPS because these designees demonstrate passion for and commitment to being the best in the industry. And companies benefit too—as another indication of their professionalism, members with the CGR and CAPS report higher annual revenues than those without.

For more information, visit nahb.org/LowesScholarships or call 800-368-5242 x8153.

New Remodeler 20 Club is Being Formed

Are you an Approved Professional Remodeler?  Have you thought it would be helpful to network with other remodelers that are not competitors and learn more about how other professionals run their companies?

The 20 Club program is forming the first new Remodeler 20 Club since 2006. It will be the second remodelers’ club established in the program’s 20-year history.

A two-day meeting focused on the club’s formation will be held at NAHB headquarters in Washington, D.C. later this year. A working agenda for the new club includes team building exercises and discussions like sales and marketing, customer service, company financials, and presentations from some of the most knowledgeable and well respected consultants in the construction industry.

The remodelers who are forming the new club are excited about being able to exchange ideas and best practices with their peers – a dynamic often referred to among existing 20 Club members as their own personal “board of directors.”

Statistics show that this high level of interaction and connectivity with peers helps 20 Club members double their net profits by the third year of membership.

Knowing that help for any situation is just an email or phone call away is one of the greatest benefits of being a member of a 20 Club. For more information on how you can join the club, visit nahb.org/20clubs.

Remodeling Market Index Reclaims All-Time High

The Remodeling Market Index (RMI) reclaimed the high-water mark of 57 in the third quarter of 2014, the sixth consecutive quarter for a reading above 50.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

“Most remodelers remain confident that the market is improving as home owners undertake renovations, large and small,” said Paul Sullivan, CAPS, CGR, CGP, of Waterville Valley, NH, chairman of the Remodelers Council of the National Association of Home Builders. “The consistency and longevity of positive RMI readings are in line with the gradual recovery of the housing industry.”

The RMI’s future market conditions index rose to 58 from 56 in the previous quarter. All four sub-components − calls for bids, amount of work committed for the next three months, backlog of jobs and appointments for proposals – increased or remained level with the previous quarter’s reading.

The current market conditions component of the RMI increased one point to 57 this quarter. A two-point gain was made among the categories of large additions as well as smaller remodeling jobs with readings of 56 and 58, respectively.

“The stabilization of the RMI in the mid-50s for more than a year demonstrates the slow, steady recovery of the housing industry that we expect to continue,” said David Crowe, chief economist of the National Association of Home Builders. “The major headwind to a stronger recovery is a shortage of qualified labor and subcontractors in some parts of the county, making if difficult for remodelers to employ carpenters and finish projects as quickly and economically as many of their customers expect.”

Member Rebate Program

ATTENTION BUILDERS AND REMODELERS: If you have changed your mailing address since you have signed up with the program, please send us an email of your current/updated mailing address. All emails can be sent to Josh@HBArebates.com We look forward to writing your next rebate check!

Judges needed for the HBA of Greater Columbia Remodeling Awards

The HBA of Columbia is looking for judges for their Remodeling Awards. They are looking for builders, remodelers, or designers to help judge, though any member is welcome. The judging will be Tuesday, May 20th. starting at 9 a.m. and conclude around 2 or 3 p.m. and lunch will be provided.

For more information or to help out please contact Bin Wilcenski at the HBA of Greater Columbia
bin@columbiabuilders.com

(803) 256-6238

www.columbiabuilders.com

Homeowners cite traditional reasons to remodel over trendier reasons

According to NAHB's remodeler members, traditional reasons to remodel like repairing and replacing old systems and adding new amenities out weighed trendier reasons like energy efficiency and aging in place.  One of the recent trends that is now declining is to prepare a property for a short sale.

Read the complete report at Eye on Housing by clicking here.

NAHB Profiles Typical Remodeler

Have you wondered if your remodeling business is similar to others in the profession?  Did you know that NAHB conducts an annual census of Remodelers each year?

Click here to see the census data of single-family Home Builders at Eye on Housing.

Check out these selected details:

• There were 11,986 Remodelers in 2011, down 7 percent from 2008.
• The average revenue for a Remodeler was $586,234 in 2011
• The median age of the Remodeler in 2011 was 54
• 94 percent of Remodelers were male

In another report, NAHB found that the largest share of business for Remodelers comes from projects valued at more than $100,000.

Read the project size analysis at Eye on Housing by clicking here.

Homeowners avoid expense of remodeling under lead paint rule

The costs of remodeling a home built before 1978 can increase by as much as 24 percent, the result of the U.S. Environmental Protection Agency's Lead: Renovation, Repair, and Painting rule, according to the NAHB.

"Remodelers are finding that conducting renovation work in older homes has become more expensive under the lead regulation and that homeowners are reluctant to pay the increased cots," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Fort Collins, Colo.

Responding to special questions in NAHB's quarterly Remodeling Market Index (RMI) survey, many remodelers said they had estimated the price of remodeling projects with and without the lead rule requirements.  The percentage of price difference depended on the size of the remodeling project, with the smallest projects - less than $5,000 - experiencing the greatest cost increase at 24 percent.  As the project sizes increased, the overall costs of applying the lead rule fell.  At the high end, projects costing more than $100,000 had a 9 percent increase for lead rule requirements.

At least 65 percent of the remodeler respondents to the RMI survey reported that homeowners are taking actions to avoid the costs of the lead rule by attempting do-it-yourself work, looking for an uncertified contractor who would not comply with the lead rule, scaling back the size of planned remodeling projects, or deciding not to remodel at all.

"Remodelers want to protect vulnerable children from lead exposure, but we're seeing that homeowners do not want to pay the costs for complying with the lead regulation," said Peterson.  "A huge part of the problem is that homeowners with no children do not see the need to pay this expense.

Under the lead paint regulation, contractors disturbing painted surfaces in pre-1978 homes must obtain training and certification, distribute the Renovate Right pamphlet to homeowners, contain dust during the renovation, use lead-safe work practices, clean up after the project, and maintain detailed records.

According to the American Housing Survey, from the Department of Housing and Urban Development and the Census Bureau, professional remodelers are hired to perform about 16.6 million projects per year in housing built before 1980.  The vast majority of these projects - nearly 13 million - are small, priced under $5,000.  This means that homeowners with small remodeling projects will experience the majority of lead rule expenses.

The total estimated costs for remodeling under the lead rule, including training, equipment, materials, and work hours, would reach as high as $10.5 billion per year if homeowners did not change their remodeling plans.

For more information on the lead rule, visit www.nahb.org/leadpaint or call NAHB at 800-368-5242.

NAHB: EPA will step up inspections, enforcement of Lead Paint Rule in 2012

The Environmental Protection Agency is relying on tips and has begun stepping up its inspections and enforcement of the Lead: Renovation, Repair & Painting (RRP) rule, an associate director with the EPA’s Office of Enforcement and Compliance Assurance said at a free webinar hosted by the NAHB Remodelers on Dec. 14.

While only three lead-paint rule enforcement actions were taken during fiscal 2011, the EPA’s Don Lott said 2012 will be much busier. He noted that the agency already has conducted 1,000 compliance inspections, with more to follow.

Read the entire article at Nations Building News by clicking here.

Greenville in the top 100 markets for remodeling

Greenville South Carolina is ranked 82 in the Top 100 Markets list for remodeling, according to Remodeling magazine. The Top 100 Markets list is based on the Residential Remodeling Index, a metric developed by Hanley Wood Market Intelligence. The index measures the overall level of remodeling activity in 366 metropolitan statistical areas nationwide.

Also making the top 100 are Charlotte (8), Columbia (39), Atlanta (40), Augusta (62), and Charleston (76).

To read the Top 100 Markets article in Remodeling, click here.

Remodelers Decry Cut in Tax Credit for Energy Savings

Provisions in the $858 billion federal tax bill signed into law by President Obama on Dec. 17 could be bad news for home owners interested in remodeling projects to conserve energy.

The law slashed the popular tax credits for energy-efficient remodeling from the current 30% of an improvement’s cost ($1,500 maximum per taxpayer) to a 10% credit, with a $500 maximum for expenditures on insulation materials, exterior windows and storm doors, skylights and metal and asphalt roofs that resist heat gain. The law also clamped new dollar-specific limits on key improvements that had been eligible for 30% credits. These include a $150 tax credit limit on the costs of energy-efficient natural gas, propane and oil furnaces and hot water boilers, plus a $300 credit limit on the costs of central air-conditioning systems, electric heat pump water heaters, biomass stoves for heating or water heating, electrical heat pumps, and natural gas and propane water heaters.

The new law also limits allowable tax credits for energy-efficient windows installed during 2011 to a total of $200, compared with the previous $1,500. On top of that, it prohibits taxpayers who have taken total tax credits in past years exceeding $500 from claiming any additional credits on energy-conservation projects they undertake in the coming year.

Donna Shirey, chairman of NAHB Remodelers Council and president of a contracting firm in the Seattle area, said the gutting of energy-efficiency credits “is a big step backward. It’s bad for the environment, bad for consumers and, of course, bad for jobs in our economy. We’re heading the wrong way here, sending absolutely the wrong message.”

Washington Post (12/30/10); Kenneth R. Harney

New NAHB Report Finds Small Builders ar the Maintstay of the Nation

Small home builders are the mainstay of the nation’s housing industry, including a sizable number of self-employed mom-and-pop operations, according to a new study by economists at the National Association of Home Builders.

“Small businesses have always been the predominant force in housing and they lend this industry its economic vitality,” said Bob Jones, NAHB chairman and a builder from Bloomfield Hills, Mich.

“We are seeing market conditions returning to normal in many parts of the country after a long, hard downturn, and these companies have the agility to move quickly and start leading the economy forward,” Jones said. “But first they need access to financing to build, which remains scarce during this critical phase of the recovery.”

The study notes that the small builders and tradesmen who produce the majority of the nation’s new homes “compete in a fierce marketplace that challenges their economic survival. A much higher share of small businesses both enter and fail in the residential construction industry when compared to all U.S. firms,” according to the report.

“The residential construction industry is very dynamic, and a large number of firms enter the industry each year and a large number exit each year,” the report says. “With few barriers of entry, start-up builders can launch their business with a single new home.” Most home builders and remodelers are small businesses, “further facilitating movement into the industry when opportunities improve, and exiting either because of business failure or life-cycle decisions.”

The report concludes that housing remains the domain of small businesses and looks at the Census Bureau’s Economic Census, which provides information on the size of businesses in various industries. Conducted every five years, the most recent census is based on business activity that occurred in 2007. Final tables for the construction industry were published this fall, on Oct. 19.

Among the data that provides a profile of the housing industry as of 2007:

• Slightly more than 65 percent of all home building establishments had annual receipts below $1 million. Almost 31 percent generated between $1 million and $10 million; and 4.1 percent had more than $10 million.
• In 2007, 41,483 new single-family general contractors (who build on the owner’s land) did less than $1 million in business, about a 70 percent share of the 59,679 businesses in this group. Although multifamily general contractors tend to be somewhat larger, 42 percent of them also recorded less than $1 million in yearly sales or receipts. About 60 percent of the 35,378 “operative builders” (who own the land upon which they build) did less than $1 million in business. Eighty-four percent of 73,888 residential remodelers and 61 percent of 6,462 land developers saw less than $1 million.
• Some 25 percent of $89.3 billion in total construction value delivered by single-family general contractors in 2007 was subcontracted out. Subcontracting amounted to half of $34.6 billion worth of construction among multifamily general contractors, 22 percent of $180.1 billion for operative builders and 23 percent of the $52.1 billion for residential remodelers.
• These results are consistent with findings from NAHB’s monthly Builder Economic Council survey. Among the single-family builders responding, 40 percent said they subcontracted 100 percent of their work and another 39 percent subcontracted 76 percent to 99 percent of the work. The same builders used 24 specialty trade contractors in the process of building the average single-family home.
• Seventy-four percent of a total of 477,950 specialty trade contractors rang up less than $1 million in business in 2007.
• Under U.S. Small Business Administration standards, at least 96 percent of residential builders and remodelers were small (defined as doing no more than $33.5 million in annual business). Also considered small were 94 percent of land developer (less than $7.0 million) and 98 percent of specialty trade contractor (less than $14 million) establishments. Most of the home building and trade contractor establishments were far below the SBA ceilings.

Looking beyond the Economic Census, which only counts establishments with employees on the payroll, NAHB estimates that the ratio of the income of usually small, self-employed independent contractors to wages and salaries generated in the construction industry is one to four. This is compared to a ratio of one to 10 in some other industries, such as manufacturing.

Housing is also providing more opportunities for Hispanic businesses than U.S. industries overall, the study found.

The 2007 Survey of Business Owners (SBO) recently reported that in 8.3 percent of a total 27 million businesses -- or 2.3 million -- at least 51 percent of the stock or equity was Hispanic-owned. The Hispanic share for the construction industry (both residential and nonresidential) was higher -- at 10.0 percent, or 340,766 out of 3.4 million construction firms.

Of the 2.6 million construction non-employers found in the SBO survey, 11.6 percent were Hispanic-owned, as were 12.2 percent of the 1.9 million non-employer specialty trade contractors. For several trades, the Hispanic share among non-employers was around 20 percent -- including structural steel and precast concrete, drywall and insulation, tile and terrazzo and poured concrete.

Government Affairs Forum with Greenville City Manager

Your Home Builders Association of Greenville held the first Government Affairs Forum this week at the HBA Office. The guest speaker was John Castile, City Manager of the City of Greenville.

Nearly 20 HBA members turned out to discuss city issues with Castile. Among the issues discussed were balancing growth and development with density, staff reductions in the building inspections department, code enforcement issues and keeping the permit process up-to-date, future plans for moving the city forward in a new economy, and reforming business licenses.

The HBA committed to Castile that the association will work with the city to help it solve problems in a manner that does not contribute to delays and expenses for Home Builders.

A light breakfast and coffee was sponsored by Quinn-Satterfield.

The next Government Affairs Forum is being planned for early December in conjunction with the Remodelers Forum. Stay tuned for more information, including the meeting date.

Deadline to Apply for Lead Paint Certification is September 30

Remodelers and other contractors have until September 30 to apply to get their companies certified and to also sign up for the training required to comply with the U.S. Environmental Protection Agency’s Lead: Renovation, Repair and Painting rule.

Read more about the deadline in Nations Building News by clicking here.

NAHB to Sue EPA Over Lead Paint Regulations

NAHB Announced last week that is is joining a coalition of housing industry groups in suing the U.S. Environmental Protection Agency (EPA) for removing the "opt-out" provision from its Lead: Renovation, Repair, and Painting rule.

EPA enacted the rule on April 22, 2010, but recently delayed enforcing the licensing portion of the rule until October 1, 2010. However, the rule itself is in effect and contractors working on homes built before 1978 are required to comply.

The opt-out provision would have allowed contractors and homeowners to mutually agree to opt out of complying with the rule. By removing the opt-out provision, NAHB Chairman Bob Jones says EPA is "more than doubling the number of homes subject to the regulation."

Read the entire report at www.nahb.org by clicking here.

NAHB's Top 10 Actions To Benefit Members in May

These are the Top 10 Actions taken by NAHB to benefit members in May:

1. Credit Crisis: NAHB worked with members of Congress to draft the Residential Construction Lending Act. The bill is pending.
2. Cash for Caulkers: NAHB has taken steps to ensure that members will be tapped to participate in the work resulting from legislation that will offer tax-free rebates for residential energy-efficiency improvements. The bill is pending. www.nahb.org/energyefficiencyretrofits
3. Financial Regulatory Overhaul: NAHB was actively involved in passing the financial regulatory overhaul bill, Restoring American Financial Stability Act. The bill has passed Congress.
4. Green Multiple Listing Service Toolkit: NAHB developed a toolkit to help real estate appraisers provide more reliable valuations of homes with energy-efficient features. www.greenthemls.org
5. Study demonstrates benefits of housing tax incentives: NAHB's Economics and Housing Policy Group recently completed a study that demonstrates that households across the economic spectrum benefit from housing tax incentives.
6. Technical Assistance Hotline: NAHB has implemented a hotline where HBA members can find out about building products, techniques, technologies, and best practices. www.nahbrc/techassist
7. Construction Forecast Conference: NAHB's semi-annual Construction Forecast Conference is held in the Spring and the Fall, and is now available via webcast.
8. Homebuyer Tax Credit: The credit expired on April 30. NAHB has developed a useful brochure called "Opportunity Knocks" that outlines why now is a great time to buy a new home. www.nahb.org/homebuyerbrochure
9. OSHA Workplace Safety Agreement: NAHB and OSHA renewed a formal agreement to work together to provide home builders with information, guidance, and access to training to protect your workers on the job site. www.osha.gov/dcsp/alliances/hang.nahb.html
10. Webinar on Using Social Media: The NAHB Professional Women in Building Council hosted a webinar to teach builders how to use social media to build their brand and sell more homes.

HBA of Greenville members benefit from a three-in-one membership. As an HBA member, a portion of your dues are sent to NAHB and your receive membership benefits like those above from the National Association of Home Builders.

EPA delays enforcement of training and registration in Lead Paint Rule

Last Friday, NAHB scored a clear victory when EPA announced that it would delay enforcement of the worker training and firm certification requirements for the Lead-Based Paint (LBP) rule. Although the rule became effective April 22, this new directive effectively gives remodelers until Oct. 1, 2010 to file for firm certification, until Sept. 30 for workers to register and Dec. 31 for workers to take the required training course. However, they will still be required to use lead-safe work practices during this time. As you recall, NAHB has been urging EPA to delay the rule for a number of reasons, including the lack of training providers and training opportunities.

EPA’s action is in direct response to NAHB’s continued involvement in the LBP rule, NAHB’s petition to delay the rule, NAHB’s work with the HBA of Tennessee to provide relief in areas damaged by the recent flooding, NAHB’s strong support of Senator Collin’s amendment to the Supplemental Appropriations Act that would delay the rule’s effective date, and NAHB’s efforts to educate the Members of Congress on the rule and its ramifications. Indeed, EPA’s memo acknowledges that the delay was necessary because of concerns raised by the regulated community. Now that EPA has heard and acted on our concerns, it is incumbent on NAHB to continue to provide support to remodelers to increase their awareness of the rule and inform them of the opportunities to get the necessary training and certification.

It is very rare that we are able to claim clear victories in the regulatory arena, yet EPA’s delay of enforcement of the LBP rule is exactly that. Unfortunately, there are still a number of uphill battles ahead in the LBP arena related to clearance testing and removal of the “opt-out” provision – battles that staff and the members will continue to fight.

EPA Lead Paint Rule Briefing

First Remodelers Council of the Upstate Membership Meeting

What: EPA Lead Paint Rule Briefing

When: Thursday, March 18, 2010, 11:30 a.m. until 1 p.m.

Where: Greenville Hilton

Sign up at www.HBAofGreenville.com to Attend.

Lead Paint. In 1978 lead paint was banned for use in residences. As early as 1970 latex paints were already in use in new homes. How can you tell? Starting April 22, all contractors performing work for others for hire will be required to know whether lead paint is present, and if it is present, to advise the homeowner and possibly mitigate the lead paint. The fine for violating this new rule is more than $30,000 per day per occurrence.

Joy N. Finch, MS, CET, Director of Environmental Continuing Education , Health and Safety Training, for Greenville Tec, will educate members on the new EPA Lead Paint rule on what contractors need to do to comply. This is the first general membership meeting of the newly reconstituted Remodelers Council of the Home Builders Association of Greenville.

Residential remodeling is poised for a recovery

Residential remodeing is poised for a recovery starting after this year's first quarter, according to economists speaking at last month's International Builders' Show in Las Vegas. Read More.