WORTH REPEATING … RTD PUBLISHER SALUTES SUCCESS OF HBAR’S 2009 PARADE OF HOMES

In a recent commentary, Tom Silvestri, President and Publisher of the Richmond Times Dispatch complimented HBAR’s success with the 2009 Parade of Homes despite the state of the market. A copy of his commentary is printed below:  

Covering Business Requires Realism, Splash of Optimism

By Tom Silvestri: Published: October 11, 2009

You're staring at a 12-ounce glass. It's holding about six ounces of water. Is the glass half-filled or half-empty?

Chances are good the optimist will say half-filled, noting something is always better than nothing and 50 percent or more gets you closer to where you want to be. You're headed in the right direction. Keep trying. Besides, there's an amazing story in how the water was discovered, transported, and poured, no doubt.

By contrast, the pessimist will pick half-empty, saying what's missing robs the drinker of being satisfied and suggests the provider fell short of what's really possible. It's terrible. Why did you do that? You should have used a smaller glass if that's all the water you're capable of sharing. Cheapskate. Idiot.

And so it goes with life's developments and news reporting. Most people like good times. Journalists are paid skeptics. A conflict from time to time is natural, especially when it comes to the economy.

Struggling businesses thirst for indications the worst recession since the Great Depression is over. Consumers will spend, especially on big purchases, if they're confident their jobs aren't threatened by uncertainty. Optimistic employers will return to hiring. Additional paychecks are further predictors of growth that can erase months of painful declines.

The glass half-filled, half-empty reference has come up repeatedly during this lingering recession.

Generally, our Business News team has done a good job lately of balancing the good with the bad, especially in the Sunday Moneywise section. But a steady dose of bad news about the economy can overwhelm.

Everyone is looking for signs the recovery is here. (A local Realtor sent letters to potential clients saying the recession is over because she read in The Times-Dispatch that Federal Reserve Chairman Ben Bernanke said it.) So, when we report yet another negative economic report, reporters and editors are branded pessimists and purveyors of negativity.

The problem is, both the optimists and pessimists are right when looking at our glass of water. It's a fact -- six is half of 12. You need six more ounces for a full glass. No arguments. But in these times, the better solution is to recognize the context. And to surprise with a new angle.

An issue with economic reports is that they cover what happened weeks or months ago, not what's ahead. A continuation of a recession is news. Again, no argument here. But how hard people, businesses, and organizations are battling to survive and, in some cases, prosper is emerging as the most important account. You remember happy endings. You try to forget bad experiences.

Our work with the Southeastern Institute of Research of Richmond backs this up.

In studies about our readership, SIR found that interest rises in uplifting articles that give people hope and inspiration. It's not that bad news always repels. Important watchdog journalism always scores high.

But what people really want are healthy doses of how people confronted a problem, figured out ways to rebound, and lived to tell a story full of valuable lessons that could help others. Success attracts.

That brings us to the glass-half-empty headline on the main Business page Oct 1. The story was a good overview of the annual Parade of Homes, which showcases the work of local builders over three consecutive weekends this month. But the secondary headline read: "Parade of Homes has only 71 entries, fewest since 1984."

It's an accurate statement. But an optimist would have seized that even having a show this year was a major accomplishment.

Assembling a show of 71 new homes is amazing given the punishing, bumpy financial landscape the real estate industry is traveling. And while other regions decided not to organize open houses of new homes, the Richmond builders found a way to keep the program going, with a renewed emphasis on first houses for entry-level buyers.

So, let's mark the 2009 Parade of Homes a victory.

It's easy to be a pessimist. And I'm not saying watchdogs should all be lapdogs. But these days, we all could use a solid period of looking through the lens of an optimist when it comes to the economy. (I could make the same argument about coverage of my industry.)

You'd still report the glass was half-filled, noting the room for improvement. But we might actually like what we see. And that's also a better conversation.

By the way, thanks for the water.

 

Recovery For New Homes Slow, Says Realtors Economist

The chief economist for the National Association of Realtors told about 200 Realtors Thursday afternoon at The Jefferson Hotel that the new home industry most likely will not see a significant recovery in sales until 2011.

In a wide-ranging discussion on real estate trends, Lawrence Yun, recognized as one of the top economic forecasters in America, said the nation may be out of a recession but the recovery has not yet fully begun. He said there is still no clear sign home values are recovering, which is keeping many sellers on the sidelines. He does believe values have hit bottom.

New home builders, he said, are in a terrible position. When people don’t sell their homes they can’t move up, which means there’s no market for new homes. Builders nationwide have essentially stopped building, he said, due to the inability to get bank loans and a glut of existing and foreclosed homes that are priced at levels they can’t match.

“The home builders really have no choice but to hold back production,” Yun said. “They can’t get loans.”Yun said on average, home builders income has been cut 80 percent since 2006.

New home inventory nationwide is now below the levels of 2000, Yun said. If inventories do not increase soon, America could run into a housing shortage in 2011. Though new checks and balances are in place at banks to prevent what occurred last year, the need to make up for a significant housing shortfall could potentially trigger another banking and housing bubble.

Yun said America needs to produce 1.5 million new housing units each year to keep up with population growth. In 2009 the housing industry is projected to produce about 500,000 new housing units, the lowest level since World War II. In 2010 Yun predicts we will only see about 600,000 units built.

“Household formation is very low right now,” he said. “People are moving in with families and friends to save costs and because they can’t get mortgages. We are not producing enough housing to keep up with the population.”

In the Richmond area more than 9,000 housing permits were issued in 2005. In 2009 Yun projects as few as 2,500 housing permits will be issued.

Foreclosures are a serious problem and will continue to be for 6-12 months, although Virginia’s foreclosure rate is about half the national average, Yun said. But unlike a year ago, when foreclosures were lingering on the market, foreclosed homes are now being purchased much faster. Yun said in San Diego recently, one foreclosed home brought 130 bids in one day.

The price-to-income ratio for homebuyers is also coming down nationwide, though we are not seeing it drop as far in Virginia, Yun said. Nationally the ratio is about 2.4-to-1, down from about 3.3-to-1 in 2005, he said. In Virginia the ratio has dropped from about 3.4-to-1 to right at 3-to-1. Part of the reason is that about 20 percent of all homebuyers are now paying cash for their homes. Many can’t qualify for mortgages, Yun said.

Bad appraisals continue to be a real problem, Yun said. Appraisers are paid less and have to drive longer distances to do their work, which is resulting in higher fees for homeowners and less time spent examining a home, and a lower estimate. It is leaving many homeowners underwater on their mortgages and unable to sell their own homes so they can buy up in the market. When Yun asked the audience if they felt appraisals are coming back too low, almost everyone raised their hands. When he asked if they think appraisals are getting better, only one person raised their hand.

Yun called on Congress not only to extend the $8,000 tax credit at least through the end of the 2009-10 fiscal year, but to either increase the amount to $15,000 or the income cap above $75,000 for individuals and $150,000 for families and expand the credit to all homebuyers. There are 4.8 million renters earning more than $75,000 per year, the cap for individuals looking to utilize the tax credit

Yun said the initial credit supplied for the tax credit was $15 billion, a small portion of the almost $800 billion stimulus package and even smaller portion of the almost $1.5 trillion federal deficit.

“The economic growth generated from these sales will easily pay back the $15 billion set aside for the program,” he said. 

Yun thinks the Obama administration will announce within the next two weeks whether it will support extending the credit and how it might support expanding the credit.

Yun also hinted that when builders can build again, they must build smaller, less expensive homes. He said the Northern Virginia market is beginning to recover, but only at the low end of the price spectrum. Realtors are getting multiple bidders on lower-priced homes there, he said. The trend has not trickled down to Richmond yet, he said, but he feels it will within the next six months.

Yun said by March or April 2010 Realtors should see sales begin to increase from the previous year’s sales. He thinks new home sales will follow 6-12 months later.

 

TAKING HBAR FROM GOOD TO GREAT
David Reel, CAE, HBA of Richmond
As the building industry continues to struggle with an economic downturn that has lasted far longer and run much deeper than ever expected, the volunteer leadership and staff of the Home Building Association of Richmond (HBAR) took to heart the advice given by Sir Winston Churchill during the darkest days of World War II: "In times of great uncertainty – always look for great opportunities."

The HBAR realized that in this time of great uncertainty, virtually all of the association’s members viewed the downturn as an opportunity to review, evaluate and make improvements to nearly every aspect of how they conduct their businesses. In response, the HBAR volunteer leadership and staff followed the lead of their members by launching a bold new initiative to ensure that the association was also reviewing, evaluating and making improvements to almost every aspect of how the association conducted business on behalf of the members.

The blueprint for this new initiative was the book Seven Measures of Success – What Remarkable Associations Do That Others Don’t. Developed by the American Society of Association Executives (ASAE), Seven Measures of Success is the best-selling publication in ASAE’s history. It was inspired by the work of Jim Collins, author of the revolutionary business management books Good to Great and Built to Last.

The HBAR initiative, christened early on as "Taking HBAR from Good to Great," was launched in early 2008. While the process is never-ending, the results after just one year are nothing short of amazing. At the end of 2008, the HBAR Board approved more than twenty-five significant improvements to HBAR’s governing structures, volunteer leadership roles and responsibilities, decision-making processes, meetings, events, programs and members’ services.

While execution of "Taking HBAR from Good to Great" was underway throughout all of 2008, HBAR continues to build upon a solid track record of providing significant value to members. The association has made many accomplishments throughout the initiative, and more recently HBAR:

  • Prevented Chesterfield County from enacting a $5,820 road impact fee on new development and a growth-killing phosphorous run-off mitigation proposal.
  • Worked with Hanover County to enact workforce housing guidelines that will provide affordable and encourage more economic development in the County.
  • Convinced Henrico County to delay enacting a $3,500 water and sewer tap in fee increase until January 2010.
  • Supported the City of Richmond’s efforts to streamline the development approval process by supporting installation of a new computer system for tracking development projects.
  • Sponsored the annual Parade of Homes, the largest fall new home marketing event in Central Virginia, as well as the annual Dream Home Tour, the largest spring new home marketing event in Central Virginia.
  • Solicited positive news on local real estate issues from members, relayed that positive news for inclusion in a Fall 2008 New Homes tabloid in the Richmond Times-Dispatch and continuously posted positive industry news on RichmondHomeFacts.com, the HBAR-sponsored consumer website.
  • Sent a survey to all members to help ensure that association resources are being allocated to programs, events and services that provide the greatest value to a constantly changing membership.

Sponsored the following wide range of meetings and events designed to meet the needs of members who place a high value on networking opportunities, as well as those members who place a high value on educational opportunities:

  • Seminars on, Business Diversification, Codes, How to Sell a Green Home and Finding Alternative Funding to Keep Your Business on Track.
  • NAHB Professional Designation Seminars for, Certified Green Building Professionals (CGP), Residential Construction Superintendents (RCS) andCertified New Home Sales Professionals (CSP).
  • Local Economic Forecast and Business Trends.
  • Networking at Night.
  • New Home Socials.
  • Spring Golf Outing.
  • Fall Golf Outing and Seafood Feast.
  • Associates Showcase.
  • Reverse Trade Show.
  • General Assembly Breakfast.
  • Builder Bash.
  • President’s Ball.

Sponsored the following awards programs to recognize industry and individual excellence:

  • Parade of Homes Awards
  • Excellence in Remodeling Awards
  • Together Everyone Achieves More (T.E.A.M.) Awards
  • Major Achievement in Marketing Excellence (MAME) Awards
  • Pacesetter Awards for New Homes Sales Volume

Hosted "Lunch and Learn" issues briefings on:

  • Green Building
  • Current and emerging issues in Chesterfield County
  • Proposals to streamline the City of Richmond’s permitting and inspection process

Launched a public affairs campaign designed to mobilize public opinion against a proposed proffer increase in Chesterfield County.

Supported establishment of a new regional Partnership for Affordable Housing.

While the severe hardships resulting from this unprecedented downturn will end at some point, there is no doubt that brand-new problems and challenges will emerge in the building industry to take their place. When they do, the hard work and visionary leadership that led HBAR to execute the ongoing "Taking HBAR from Good to Great" initiative will help ensure that HBAR always matches the definition of a "remarkable association." As identified in Seven Measures of Success, remarkable associations:

  • Are highly efficient, as well as highly effective.
  • Provide products and services of value to members at the right time, in the right ay and at the right cost.
  • Know what needs to be done and do it well.

In sum, in these times of great uncertainty, the volunteer leaders and the professional staff at HBAR have successfully searched for and found great opportunities to meet members’ needs now and in the future.