MODULAR HOME BUILDER

EXCEL HOMES GIVES UP MAINE FACTORY

2009-12-17T07:16:00.001-05:00

Excel Homes, the Pennsylvania-based company that last year bought a modular home builder in Oxford, has abandoned its plans to reopen the facility.

Steve Scharnhorst, president of Excel Homes, said that poor market conditions made it impossible for his company to reopen the former Oxford Homes as originally planned when the company bought Oxford's assets in June 2008. Excel let its lease on Oxford's 46,000-square-foot building run out, and that building was sold at an auction last month for $562,000 to its mortgage holder. Excel had planned to restart work at the facility last spring and hire 50 to 70 employees.

Once a major employer, Oxford Homes was forced by bankruptcy to liquidate in 2007, and a group of investors purchased its assets and renamed the company Eco Building Systems. Slow sales in 2008 forced Eco Building to close the facility and lay off its 93 employees.

SOME BUILDINGS DEFY MODULAR CONCEPT

2009-12-16T08:44:00.001-05:00

Here are some more buildings that our industry cannot build. Or maybe we can!

20 NEW YEAR’S RESOLUTIONS FOR SALES MANAGERS

2009-12-15T15:09:00.001-05:00

It’s almost time for that list of things that you need to improve for the New Year. Sales Managers trying to get sales during this recession are especially hard pressed to come up with a list that will build sales and maintain a great sales force.

Here are 20 suggestions for your New Year. The more of these you put on your list, the better 2010 will be for you and your factory.

1.   Develop a Set of Goals with all your staff members.
2.   Have a crystal clear plan, a road map to achieve those goals.
3.   Develop a great attitude in the work place.
4.   Constantly talk to them about those goals and plans.
4.   Develop a strong team spirit among your workers
5.   Have regular team meetings, ask questions, interact with them, talk to them about their sales targets.
6.   Be a role model
7.   Develop a Competitive but a co-operative climate.
8.   Organize sales training on a regular basis
9.   A good impression about yourself will make the team more confident.
10. Always talk good about your company and the products you sell.
11. Set realistic sales targets. Let your sales targets be challenging.
12. Never make promises you can’t keep. Under promise and over deliver
13. Never entertain gossip. Gossip will split your team and ruin relationships.
14. Set clear Objectives.
15. When you leave the premises tell them how you can be contacted.

16. Give them your mobile number and email.
17. If there is a job vacancy advertise internally. Choose the best candidate.
18. Be a good Communicator.
19. Always show Empathy for your fellow employees
20. Never make hasty decisions. Don’t procrastinate

EXCEL PARTNERS WITH NH DEVELOPER

2009-12-15T09:03:00.001-05:00

IT’S A TWO-WEEK STREET : NEW HAMPSHIRE

NEIGHBORHOOD GOES UP IN LESS THAN A MONTH

CAMP HILL, Pa. (December 14, 2009) PR –

Traditionally, it can take up to six months to build a custom stick-built home after breaking ground, and even longer depending on the weather. For the future residents of Paugus Woods in Laconia , New Hampshire , their custom modular homes were set in just two weeks, as a result of Excel’s custom modular process and set service option.

Partnering with New Hampshire-based real estate developer, Brady Sullivan, Excel designed, manufactured and shipped ten single-family homes to the site in Laconia in less than a month. Excel’s in-house team of set experts selected and oversaw the experienced building crew who installed the homes for the Paugus Woods project, creating a more timely and efficient environment during the process.

“Working with Excel has been fantastic, simply top notch,” said Larry St. Pierre, project manager for Brady Sullivan. “Having the set crew on-site was great. If there was a problem, it was taken care of right away; this has been a productive venture for us; a real team effort.”

Excel worked with the developer to develop five designs that fit both their vision and budget. Because of Excel’s efficient and quality building process, the homes were manufactured, shipped and delivered in the same sequence to make the best use of land, equipment, crews and, most importantly, time.

“Our set service option provided Brady Sullivan with an added value that’s already expected from our engineering process,” said Excel CEO Steve Scharnhorst. “The set service not only ensures quality and efficiency on-site, it also offers piece of mind, because who understands the process better than the people who manage it in the factory everyday?”

Homes in the Paugus Woods neighborhood are being built fast, and by the beginning of next year, Excel will manufacture, ship and use its set service option to set ten more homes for Brady Sullivan. The Ranch style homes include attached garages and are 1,200 to 1,300 square feet. The homes are priced starting at $159,000 and are ideal for any type of buyer, whether they are looking for their first house, a seasonal house, a vacation getaway or a permanent residence. At the end of the project, Brady Sullivan plans to have a total of 97 homes in the neighborhood.

Because Brady Sullivan chose to use the set service option, all homes built for the project will have a 10-year warranty against structural defects, a value for both the developer and the future residents of Paugus Woods.

EMPATHY, THE KEY TO SUCCESS FOR FACTORY REPS

2009-12-15T08:55:00.001-05:00

Within the first couple of minutes you can tell if the factory rep that’s calling on you is a someone you can work with to help you grow your business. You’ve all had that rep that seems aloof to your needs and just couldn’t wait to get out of your office. Everyone has had a rep that wouldn’t take your calls because they knew you were upset about a problem with the house you just received.

And we’ve probably all had the factory rep that was eager to help you land every prospect that entered your office, was there quickly when the house was delivered with major problems and even helped you get your booth ready for the big annual Spring Home Show.

The difference between these two extremes and the difference between a successful rep and the next loser in the revolving door of factory sales reps is one word….EMPATHY!

Empathy is understanding and entering into another’s feelings.

It’s also that “Touchy, feely thing” that most sales reps would avoid at any cost. The successful reps actually embrace it and use it to help their builders become successful too.

Specifically for a factory rep, empathy is the ability to sense, understand, and respect the builder’s and their customer’s perspective, ideas and feelings. Empathy increases influence, because it’s a pre-condition to to influence.

The builder’s prospects and even the builders become most open to influence when they feel the other person understands where they are coming from.

For factory reps, the desired outcome of showing empathy toward the builder and their prospects is simply to make their builders feel safe adopting the rep’s conclusions about the process, because those conclusions support their own interests.

Isn’t that what we all want? The builder’s and their customer’s “Buy In”.

So how do you build your empathy quotient? Well, you have to listen to the builder with not only your ears but also with your heart. For male reps, that can be a little tough. Men like to talk about their knowledge and have little time left for empathy. Female reps are at a definite advantage in this department because it seems to flow naturally into their everyday lives. Empathy does not show weakness. It shows strength and builders and their customers can spot that quickly and will “Buy In” just about every time.

Empathy is the quality that makes the difference between being an “OK” rep and being a Star!

BECOMING A BETTER SALES MANAGER

2009-12-14T08:59:00.001-05:00

For every one of you that has been in sales (Wait a minute…that’s all of us) we’ve had a sales manager. Some are great and some just grate. The evolution from being a great salesperson to the new Sales Manager is inevitable and another great example of The Peter Principle. “People tend to rise to their level of incompetency”.

If you have been asked to be the new Sales Manager for your company, here are a few few tips to help make you a great choice for the job.

You need to ask you boss and even beg if you have to, to allow you to some “fundamentals of sales management” courses. There a lot to choose from. They can be found at your local community college, university (either in class or correspondence) and over the Internet.
You must become a voracious ready of publications like Builder, Professional Builder, Forbes, The Wall Street Journal and any Sales Management magazines you can find. Buy and read at least one business book a month. If you aren’t willing to invest time in this, you might find yourself the next ex-sales manager of your company.
You must spend at least 70% of your time in the field with your salespeople, sales prospects, and customers. Generals don't win wars seated comfortably behind big oak desks. Your sales team will achieve successful selling results the less time you spend behind your desk.

The skill set you acquired as a Sales Person will only give you the foundation for a Sales Management position. As you acquire more skills, you will continue to become a better Sales Manager.

BUY A CLAYTON HOME, GET A FREE CAN OF BEANS

2009-12-11T09:32:00.001-05:00

When it comes to promotions, nobody will top this one for quite some time. Forget the TV in the Master Bath from Champion; the free heating offer from Westchester or free furniture. Clayton Homes in Columbia, TN is getting a lot of traffic over a can of pork and beans.

Rich Duprey, a writer from the Motley Fool heard about this unique offer and investigated. Here is his report:

Apparently the guy who runs the local Clayton outfit in Columbia, TN, had a customer walk in and say a competitor was offering free furniture with their homes and wanted to know if Clayton would do the same. They declined saying it wasn't "free" furniture they were getting, that the price of the home was increased to pay for the furniture.

So to show that there is such a thing as a free lunch, Clayton bought a bunch of cans of beans from the local WalMart and will give you one if you buy one of their modular homes.

In other words, if your mobile home was going to cost you $200,000, but the Clayton competitor threw in $10,000 worth of tables, chairs, and beer coolers, the new base price of the house would be $210,000 with a "free" furniture bonus. So does that mean that instead of listing at $200,000, Clayton's mobile homes are now going for $200,000.89, with "free" eats included?

Rich reports that the campaign has generated a good amount of publicity for Clayton. Whether it's been enough to get a potential homebuyer off the fence, however, remains unclear. But whatever you do, act quickly, because Clayton can only offer a deal this good through the end of the month. If you were reluctant to take out a 30-year mortgage on a house, clearly, now is the time to act.

Make your own jokes about why offering a free can of pork and beans for buying a mobile home in the rural South might entice consumers. I'm not going there. But my inner 12-year-old can't resist suggesting that at least Clayton didn't offer "free gas" with a home purchase.

Say what you want about this gimmick but here is the Motley Fool writing about it and giving it press and isn’t that what you want for your business? I wonder if Warren Buffet authorized this?

WHAT I LEARNED FROM WATCHING THE BOSS

2009-12-11T09:14:00.001-05:00

What I Learned from Watching the Boss (aka Bruce Springsteen)

by Adrian Miller, Adrian Miller Sales Training

No, this isn’t another article about observing your management team. It’s about what you can learn from the “Boss” Bruce Springsteen. Yep, that’s right. There are a handful of extremely helpful takeaways that all of us business people can learn from this veteran rock and roller.

Connect with Your Audience in a BIG Way

A Bruce Springsteen concert is never a quiet, low-key show. He works the crowd and plays his band like an orchestra. You can’t help but feel as if he’s singing straight to you, even in a sold-out stadium. Bruce gets it. Without his legions of devoted fans, he’d be just another guy from New Jersey.

In business, it’s just as important to make the connection with those around you. To grow long-term success, you, too, need devotees that truly believe that you’re working just for them. Build your fan base just like Bruce.

Be Real, Not Superficial

Even though Bruce probably has more money than some small nations, he still successfully projects an image of blue-collar, straightforwardness that you rarely see in other rock stars.

You just can’t envision him lip-synching a song on stage, nor wearing a sequined, glam get-up. Because he’s so good at what he does, there’s no need for distracting background dancers, dizzying light displays, or overly-synthesized songs. That’s just not Bruce. He writes and performs real music that’s straight from the heart. He wears jeans and a t-shirt and plays his guitar. No muss, no fuss!

Being down-to-earth is a good strategy for business, too. It doesn’t take a rocket scientist to spot the salesperson who is better at show-boating than really selling or the marketing director who has a knack for making a sub-standard product look very appealing in a presentation. Instead, the best approach is always honest and real. Having a reputation as someone who isn’t full of B.S. will always work to your benefit in the long run.

Work Hard

Anyone who has ever been to a Bruce Springsteen concert knows that they can be long. While most performers tire and quit after an hour and a half, Bruce can go on for hours and hours. During one tour in the early 80s, his band consistently played nearly 40 songs over four hours each night. His tireless work ethic has definitely added to his popularity and mystique. When you buy a ticket to one of his concerts, you know you’ll definitely get your money’s worth.

Bruce has found success through hard work, and so can you. By putting your hours in, you’ll not only improve your skills, you’ll establish yourself as a roll-your-sleeves-up type who is willing to do what’s necessary to get a job done.

Be a Perfectionist

Like all rock and roll stars with staying power, Bruce Springsteen makes performing look easy. He just picks up a guitar and plays, right? Not hardly! His “E Street Band” has up to nine performers on stage that all must work in synch to create the incredible music that they’re known for. This requires tremendous amounts of time rehearsing, practicing, and fine-tuning. Want to be a business rock star? Perfect what you do and then make it look easy.

Over Deliver

At the core of every performance is Bruce’s desire to do anything and everything to make his crowd happy. Even now at 60 years old, he works the stage and makes his way into the audience just as he has done for decades. He takes audience requests for songs and belts out each tune with the enthusiasm and vigor of someone half his age. Of course, he rarely ends any show with less than a five song encore. Why do many fans almost consider his concerts “pilgrimages” that they couldn’t dare miss? It’s because he consistently over delivers, always leaving them feeling like they’re truly appreciated.

Are you going ov er and above the call of duty and providing more than expected with your prospects, clients, and colleagues? Take it from “The Boss”, if you’re really “Born to Run”, you’ll make it your passion to over deliver, too!

MARKETING YOUR JOBSITE

2009-12-10T09:53:00.001-05:00

The time has finally arrived. You’ve signed the contract to build a new home and are getting ready to order the house from the factory. What you do next just might help you sell a couple more houses this year.

Marketing Your Jobsite 101

SIGNAGE I

This is one of the most important things you can do to start the marketing process. Before you stake out the lot or break ground, put up a good looking sign. Make sure that people can see it as they drive past by using a double sided sign just like the real estate people. Make sure your phone number is large enough to read it as cars pass at 35 MPH.

Too often the only signs I see at jobsites are on the Job Johnny and garbage roll-off.

SIGNAGE II

After you have the excavation and foundation in there is usually a lull in the action until the house arrives from the factory. This is when you want to put up the second sign on the lot. Use one of those real estate literature boxes with the clear plastic. Put 5-10 of your brochures in it and check it often. Be sure to include the floorplan for the house that is going on this foundation. The busier the street, the faster the lit will disappear. I was a at a jobsite on a back road with a builder that used these. The lot was off the secondary road about 100 feet and very little traffic passed the lot. He was still filling it every week and said that he sold another house from it.

SIGNAGE III

This is a little harder to enforce but well worth the work. Get 10 magnetic truck signs made and make sure that all the subs put them on their vehicles while on your job site. Enforce this though the contract you sign with each subcontractor. This will make it look like you have a large work force. Don’t tell them to cover their own names, just put yours on their vehicles and this includes the crane!

MEET AND GREET

When you know the date of the house set, call ALL the local TV stations and PRINT media and ask them to send out a reporter. If they can’t do it, ask them if you supply the pictures and a brief story, would they run it?

A few days before the the house is to be set, call all your prospects and invite them to the house set. Have plenty of coffee and donuts available for both the people showing up and the workers. A happy, well fed set crew will be one of the biggest assets you can have when visitors are there.

Make sure you invite all the neighbors. They have to live beside the new house and if they think you are just trying to set a double wide, they will bad mouth you for a long time.

Have plenty of extra floorplans of the house your setting to give to everyone that shows up. It’s fun to watch people look at the floorplan and then at the actual house. You can see couples looking at each other and the plans and then point to the house. GREAT!

OPEN HOUSE I

Ask the homeowners permission to hold an open house when the house is set but before the interior finish. Advertise in the local penny shopper and on your website. Invite your prospects again. Even invite local land developers. You will be amazed at the looks on their faces when they see how things fit together. MAKE SURE you clean up the house before the open house and remove any hazardous or tripping objects. Check with both your insurance carrier and your home buyer’s insurance agents before you do this.

OPEN HOUSE II

Schedule another Open House just before the carpet and hardwood is installed. This is the very least you should do. Remember, always ask the home owner’s permission.

Doing this a couple of times and it will start to become part of your home building process. What does this cost? Usually less than $200 per house. And it’s well worth it.

1 MODULAR FACTORY = 2 CONVENIENCE STORES

2009-12-10T08:52:00.001-05:00

In my past life (25 years ago) my family owned a chain of convenience stores in PA. One of our major competitors was a chain of stores going by the name of Sheetz Markets. Our stores have since been sold but the Sheetz family has continued to prosper and now have 360 stores in 6 states including PA, WV, MD, VA, OH and NC.

One of their newest stores

I recently read where they were named one of the best companies to work for in PA for the eighth straight year. That is a great accomplishment.

Then I started to do some math and that’s when it hit me:

2 Sheetz stores = 1 average modular factory!

If the average modular factory produces 15 modules or floors a week at a value of $26,000 for 52 weeks a year, that equates to total sales of $20,280,000 a year. It takes about 100 people to operate the factory, sales, accounting and management. Big numbers!

Now let’s see what the average Sheetz market does in a year. The entire chain does $3.5 billion dollars. They have 360 stores and 13,000 employees. Doing the math gives us a $9.8 million per store in yearly sales and the average store has 36 employees including shared supervisors, management and accounting personnel.

Two Sheetz stores have a combined total of $19,600,000 in sales with only 72 employees. They are consistently ranked in the top ten for customer service by Convenience Store News, a trade publication. And they are opening stores every year and making more and more money.

2 Sheetz stores = 1 average modular factory!

If I owned a modular factory, I might just look at franchising a couple of convenience stores and getting out of the housing industry. People always have to eat and fill their cars with gas.

Just sayin’

THE LATEST HOUSING FROM CHINA

2009-12-09T11:32:00.001-05:00

This is one of the latest housing projects from China. Is it just a coincidence that they look like another Michele Kaufmann design?

This is what the Chinese do with their shipping containers.

DESIGN HOMES, LLC USES YOU-TUBE

2009-12-09T11:03:00.001-05:00

I’ve been telling both factories and builders to get the media involved when you set or finish a modular home. Design Homes, LLC in Berwick, PA has done a great job of this in the past but their latest endeavor is absolutely right on the money.

If you don’t buy a Design Homes’ modular house after watching their latest You Tube video, I don’t know what else any factory could do. They got WNEP TV from Scranton, PA to do a story about their energy efficient and green homes being built in a local community.

The builder and the HERS rater are interviewed and they make a compelling argument for both going green and building with Design Homes.

Click here to visit DESIGN HOMES

HOUSE “FLIPPING” IS MAKING A COMEBACK

2009-12-09T10:34:00.001-05:00

I thought that after the last round of house flipping that we had seen the last of it. I was wrong. It not only is back, it’s getting stronger!

Short sales by lenders of their foreclosed properties is bringing out more and more “flippers”. I’ve had people email me about homes that were listed with a Real Estate companies for $4-600,000 that were in foreclosure only to be sold for a third of that at a “Short Sale” and relisted and sold for for half of the original listing price. What a sweet deal!

Flippers swoop in at public auctions of these foreclosed homes, known as trustee or sheriff sales. In many states the lender sets the minimum bid and takes possession of the property only if no one bids more. In the past, the minimum generally was about equal to the mortgage balance due. But in today’s market, in which many home values have dropped so far below the mortgage loan balance, lenders wouldn’t attract many investors if they set the minimum at that level.

So lenders, or the loan-servicing firms that represent banks and investors, are increasingly likely to set the minimum much lower. Their goal is to tempt others to buy the house and spare banks the headaches and costs that come with taking possession.

The result is that the “Flippers” are back making profit on the recession.

"What this country needs is a really good five-cent cigar."

2009-12-09T09:56:00.001-05:00

Thomas Riley Marshall was vice president of the United States from 1913 to 1921 when he made this statement. And what would he say today if he were here about our housing industry?

“What we need is a good affordable house”

Could he find one today? Maybe but I doubt it. With the cost of land, impact fees, zoning and code requirements, legal fees, taxes, utilities, water management, environmental fees and many more factors, the affordable house is still out of reach of many Americans.

My father built a home in Lewistown, PA in the late 1930’s and faced very few of the things mentioned above. He found a 4 acre parcel near town and along the Juniata River in what today would be considered a flood plain and unbuildable.

He built a 2 story 1,700 sq ft brick home with a nice front porch and a detached garage. I was told he paid $1,400 for the land and my mother’s family helped build the house. He had no impact fees, Realtor involvement or city utilities except electricity and phone.

He sold it before I was born and made a nice profit. I drove past it a couple of years ago and guess what Ethel? It’s still there and it has never flooded.

If he were to build that same house today, the cost would be double or triple the 1930’s dollars he spent and he probably would have continued to rent a house.

The bottom line to this is that when regulators are involved and start to wield more and more power, prices naturally have to go up. Am I saying that we don’t need regulations? Absolutely not! It’s just over the past few decades we have introduced so many things into the home building process that the price of building a home is less about the cost of the materials and labor and more about keeping the regulators, lawyers and Realtors happy.

Affordable housing is getting to be one of those elusive things to find just like leprechauns and unicorns.

What we need is still a “good five-cent cigar”

ALL-AMERICAN HOMES WILL MARKET WICK’S MODULAR HOME DESIGNS

2009-12-09T09:04:00.001-05:00

I have to hand it to All-American Homes! When one of your competitors for modular home builders goes out of business, don’t start cold calling all their former builders, do something original.

And that’s just what All-American did. When Wick’s decided to exit the modular home manufacturing business and leave builders in 11 Midwestern states high and dry, All-American, one of the biggest names in the industry agreed to purchase the intellectual property for all of their modular home lines.

"This is a win-win for All American and Wick's modular home builders," stated Rick Bedell, President of All American Homes, LLC. "We intend to continue offering these product lines to the Wick independent builder network, through the All American Homes modular manufacturing facilities. This will provide an immediate and uninterrupted supply of Wick designed homes to their current builder base, as well as add to production throughput for the All American manufacturing facilities."

Great move for all of Wick’s builders!

CPSC RELEASES CHINESE DRYWALL REPORT

2009-12-09T08:47:00.001-05:00

After the release of the Consumer Product Safety Commission’s report of their findings on the Chinese drywall problem in thousands of homes throughout the US, every state and territory has been asked to compile an accounting of drywall complaints submitted by homeowners.

Click here to read the report: Chinese Drywall Report

And if you are really, really interested in getting to the bottom of the problem, Click here for the 190 page report.

9 TOUGH BREAKS FOR THE HOUSING INDUSTRY

2009-12-07T11:06:00.001-05:00

From Builder Ezine; December 3, 2009 by Teresa Burney

Every business gets hit with a piece or two of bad news in a normal year. But builders again hit numerous obstacles to profitability--and just business survival--this year in an onslaught that took out many weakened players and continues to challenge the rest. Here are our 9 tough breaks for builders in 2009.

1. Foreclosures
Foreclosures--and distressed sales--continued to rank as one of the biggest business challenges of the year in 2009 for builders and, unfortunately, are expected to be a plague in 2010 as well.

The numbers are sobering. In October, for example, more than 332,000, or one in every 385 housing units in the country, received some sort of foreclosure filing (default notices, scheduled auctions, and bank repossessions), according to California-based RealtyTrac. That figure, while down slightly from the previous month, was up nearly 19% from the same month in 2008.

The builders who could fight back did, by redesigning their homes or options to compete. They marketed the economic value of their new homes' greater energy efficiency compared to existing houses. Many also focused on the entry-level market, where buyers could take advantage of the first-time buyer tax credit and didn't have to worry about selling a current home.

2. Appraisal Problems
New appraisal rules introduced in 2009 sucker-punched builders who were already trying to get off the mat. Even if a builder (or an existing homeowner) managed to find someone to purchase a house, builders and sellers often found themselves forced to lower the price at closing or lose the sale when appraisals came in below the sales price.

It wasn't supposed to work this way. The new Home Valuation Code of Conduct, HVCC for short, requires lenders who want to sell their conforming loans to Fannie Mae and Freddie Mac to follow new rules designed to ensure greater appraiser independence and more honest home valuations.

However, critics complained that the rules overcorrected for boom time sins, turning home price inflation to deflation.They argued that low prices for distressed properties were unreasonably dragging down values for other homes, that the new rules encouraged the use of appraisers who were either inexperienced or unfamiliar with the market, and that the new requirements slowed down the sales process.

3. Weak Consumer Confidence
Uncertainty about the job market, falling home values, and worries that they couldn’t sell their own homes for any price--much less for what the paid for them--kept many consumers out of the housing market in 2009.

As the year wore on, there were some signs of improvement, as home prices seemed to bottom and stabilize. But builders have pronounced that stability to be fragile at best, saying that new declines in home prices or rises in mortgage rates could shatter that tenuous situation.

4. Elusive Profits
Builders who did sell homes in 2009 often lost money in the process, selling homes at low or nonexistent margins to shake whatever cash they could from the market. And they started the year in tough shape. According to Shinn Consulting, which does an annual financial survey of private builders, 2008 was the worst year financially for builders since 1970.

Public builders also struggled, adding minuses to their quarterly financial reports. Most managed to narrow their losses as the year progressed by slashing overhead, and a few are promising a profitable 2010. Still, it will be a challenging year. Many have shrunk themselves to the limit and the number of homes they closed in 2009 was even lower than in 2008.

5. Evaporated Financing
Banks' reluctance to loan money hit both builders and buyers of homes in 2009.

Banks pulled construction money from builders, effectively putting many private builders out of business unless they were able to find alternative sources of money from friends and family, private equity funds, or had personal funds squirreled away that they could tap. (Click here for strategies on avoiding a credit crisis.)

Again, this hit private builders harder than public builders, but the publics didn't escape the credit crunch either. Many shut down their revolving lines of credit or lowered their balances when banks started charging more for the money and adding more requirements for access to the cash.

As for those consumers who bought homes in 2009, if it weren’t for the government loan programs a majority of sales wouldn’t have happened at all. In June, for example, FHA loans represented 36% of the market--a far cry from the roughly 6% it captured during the boom.

6. Builder Bankruptcies
It was another busy year for the bankruptcy courts as builders, hat-in-hand, asked judges to hold creditors at bay while they reorganized their finances under Chapter 11.

For some builders, the code worked in their favor, giving them breathing space to negotiate with their creditors and the opportunity to shed some of their debt. Mercedes Homes, for example, moved into and out of bankruptcy in eight months, which less time than it takes many businesses to come up with a proposed plan. However, Mercedes’ plan was not without controversy as the reorganization wiped out the value of all the employee-owned company’s stock.

Others got stuck in the process when it became clear that they had no future as a going concern. Technical Olympic USA (TOUSA) is a good example of that. The company filed for Chapter 11 protection in January 2007, and it has since stopped building homes and is gradually liquidating its assets.

Other builders who sought the court’s help in 2009 include Fulton Homes, Woodside, McStain Neighborhoods, Kirk Homes, and Woodside Homes. C.P. Morgan and a host of other smaller home building companies simply closed their doors without seeking bankruptcy help.

7. Lawsuits
Economic loss sparks finger pointing and lawsuits, so it’s no surprise that 2009 was a litigious year for builders, who were sued by banks, the government, and homeowners this year.

At least one case filed in 2009 on behalf of upside-down homeowners blames eight production home builders and their mortgage companies for causing the mess.

This case, which was filed in California, accuses the builders of fraud, negligent representation, and a breach of the implied covenant of good faith and fair dealing. It asserts that the builders knew--or should have known--that selling homes to investors and credit-challenged buyers would create communities that would lose their value in a declining house market where buyers with little investment had more incentive to walk from their purchase than to keep it.

That lawsuit is seeking class-action status.

Beazer Homes USA’s legal woes also continued in 2009. Just as the Atlanta-based builder settled federal investigations regarding mortgage fraud, other legal issues emerged.

In September, a number of Franklin Templeton Investments mutual funds sued Beazer and several of its officers, accusing the company of violating securities laws by using accounting tricks to paint a false picture of its profitability in 2006 and 2007.

In November, Securities and Exchange Commission (SEC) staff said it would recommend that the federal agency sue Beazer CEO Ian McCarthy to collect past bonuses, incentive compensation, and profit from stock sales he received when the company's accounting was in noncompliance.

8. Chinese Drywall
At the worst possible time, builders were hit with a problem they never could have anticipated from a product they never would have thought could hold any hazards.

In 2009, drywall--a product that had been used without complaint for decades--suddenly turned toxic as buyers of homes built at the peak of the boom started complaining about corroded and failing copper air-conditioning coils and health problems related to sulfuric smells coming from their walls. Soon, it was discovered most of the complaint-generating gypsum board had been imported from China during a period of high demand for drywall.

The threat brought out scientists, government investigators, and lawyers itchy to litigate in droves. By November, the Consumer Products Safety Commission (CPSC) had received more than 2,000 reports from 32 states, the District of Columbia, and Puerto Rico from consumers and homeowners concerned about problem drywall in their homes.

Many builders began trying to mitigate the problem, replacing drywall in some homes and setting aside money to cover potential claims.

Last month, the CPSC said that it had found a strong association between homes with the problem drywall and the levels of hydrogen sulfide gas as well as corrosion of metals in those homes. Researchers are still working to determine how best to resolve the problem.

9. Union Pressures
For the first time in decades, builders began to feel heavy pressure from a labor union attempting to organize their workers.

In 2009, Laborers International Union of North America (LiUNA) stepped up an already aggressive campaign against Pulte Homes and other builders, showing up at meetings toting placards and pretend pigs and lobbing strong language at those attending.

The protests reached a boiling point in October, when LiUNA allegedly barged into a private Pulte meeting in Missouri where union member verbally and physically assaulted the company’s employees, according to legal documents filed by Pulte.

The Jones Company, a subsidiary builder acquired by Pulte in its merger with Centex, filed suit Dec. 1 against the union accusing the union of violating federal and state laws during the encounter that drove Pulte out of a hotel conference room.

FOOD STAMP USE UP 30% IN HEART OF PA’S MODULAR FACTORY CORRIDOR

2009-12-07T11:00:00.001-05:00

When searching for the heart and soul of the modular housing industry in the US, you only have one place to look…along the Susquehanna River valley in Pennsylvania. It is home to some of the biggest names in our industry; Ritz Craft, Excel, PBS, IBS, Signature, Manorwood and many others. Many factories supplying this industry are also located here including Wood Mode and Yorktowne Cabinets.

When the housing industry went south, this area went right down the drain with it. Yes Virginia, most of these factories have remained open and are still producing homes but at a much smaller level than 3 years ago. Layoffs that were once thought of as just seasonal are becoming permanent. Every job opening brings hundreds of applicants. The recession can’t end fast enough for this region of our country.

From the Danville, PA Item:

SUNBURY — Food stamp use, which doubled in Northumberland County in just under five years, now infuses $1 million a month into the Valley economy.

Combined with Union, Snyder and Montour counties, that’s $1.82 million a month, according to Gene DellaCroce, executive director of the Northumberland County Assistance Office.

In the four counties during the past year alone, participation in SNAP — Supplemental Nutritional Assistance Program — the new name for the food stamp program, is up an average of 30 percent, but Northumberland County is the fourth-highest growth county in the state in terms of food stamp use, he said.

The growth is primarily due to people losing jobs and earning less. The number of Northumberland County seniors and disabled persons on food stamps, which account for about half the total, has remained steady.

Kathy Mordan, director of the Montour and Snyder assistance offices, confirmed that joblessness is driving the numbers up.

“Those people who recently lost employment or were downgraded in earnings may qualify now,” Mordan said.

The Reigels, of Mifflinburg, are typical. Charles Reigel was laid off from modular home builder Ritz-Craft in April. His unemployment compensation didn’t stretch far enough to feed a family of five, plus pay for other necessities, such as electricity.

“Right now, food stamps are helping to feed my children,” said Bonnie Reigel. “It’s like a blessing.”

Otherwise, she said, it was a choice of feed the children or pay the bills.

“If you buy food, you still need to pay the light bill to keep the food cold,” she said.

MORE APPLICANTS TURNED DOWN FOR MORTGAGES

2009-12-07T10:37:00.001-05:00

You would think that people wanting to buy homes would increase because of the low interest rates and lower home prices and you’d be right. Applications are up 21% but a figure that you won’t find on the front page is that one in three are being turned down. That’s 30% of all applications are rejected. Haven’t Realtors learned anything about qualifying yet?

The reasons for denial range from lack of savings or liquid asset reserves to debt ratios exceeding reasonable limits for the applicants. Additionally most lenders began the practice in 2008 of applying what are known as "lender over-lays". The FHA does not have a minimum credit score requirement to be eligible for FHA insured financing. However, the lender making the loan may have a minimum credit score requirement and in fact some of them are setting it at 700 or higher.

These safeguards, intended to lower risk to the lenders, are additional qualifying factors which are added on top of the guidelines provided by insurers like FHA.

I’ve talked with several builders this year that have horror stories about their prospects trying to get mortgages. One had a 710 credit score and decent credit but was turned down for a new home she could easily afford. The rejection letter stated that the industry she works in (automotive sales) is having a large number of layoffs and since she has only been with her employer for 3 years, she is considered a risk.

Technorati Tags: mortgage,home loans,lender over-lays

MODULAR AND PANELIZATION CAN COEXIST

2009-12-05T15:05:00.001-05:00

Is it a bird? Is it a plane? NO! It’s SUPER HOUSE!

For as long as I’ve been in this industry, there have been a lot of builders that have embraced modular housing but not many have joined modular construction and panelized home building. But we need to change that.

Every modular home builder has had a customer come to them with a really way-out design, remodel project or an addition that they’ve had to turn down because it couldn’t be done by their modular factory.

The real shame of that is that there is another way to complete these projects. Marrying what is best done in the modular factory with what can be accomplished using panels and roof trusses turns any modular builder into a true custom home builder.

When I was a sales rep for a large East Coast factory, I was presented with a house by one of my builders that couldn’t be built in any factory. I counted 12 roof line changes and a master bedroom suite that defied modular construction. What I did notice was that the core of the 2 story house could be built as a modular home but the rest would have to be site built including the entire roof system.

The builder was intrigued by my approach and we gave it a try. After the foundation was set, the 6 modular boxes were installed (no roof trusses were included). Quickly the master bedroom suite was built using panelized walls and trusses were installed, sheathed and shingled.

If we hadn’t done it like this, the modular builder would have had to walk away from the project. However, the house was completed on schedule and the customer was delighted.

So the next time you have this scenario, don’t just throw your arms in the air and say “damn it”, find a local source for custom wall panels and trusses and you will be ahead of the game.

Small companies that can produce wall panels and trusses can be found all over the country, like Precision Building Systems in Michigan.

ZETA’S THE NAME…NET ZERO’S THE GAME

2009-12-05T14:38:00.001-05:00

For readers of this blog, you’ve noticed over the years that I have little time for just about anything green or energy efficient coming out of California. The homes produced by companies spouting their green and eco-friendly slogans have almost entirely looked like abandoned shipping containers and have the curb appeal of a shoe box.

But now I’m starting to get a glimmer of what can happen when creative people start a modular home company that keep design and efficiency in sync with good old fashioned common sense. They have a chance to show the rest of the modular industry what a good forward thinking company can do!

Enter Zeta Communities. I’ve visited their website, read the press releases and followed them long enough to know that just maybe somebody in CA has decided not to follow the Michelle Kaufmann school of ugly design.

I really can’t say enough about this company, so take my advice and visit them at Zeta Communities

Naomi Porat, CEO, Zeta Communities

Naomi is a nationally recognized social entrepreneur and expert in sustainable development and urban revitalization. As a founder and CEO of ZETA, she contributes extensive expertise in the management of urban land planning and development ventures that achieve economic, social, and environmental sustainability. With more than 20 years of experience and a portfolio of projects across the U. S., Naomi's projects have achieved national awards for landmark public/private partnerships on large, mixed-use developments, military base conversions, affordable housing, and economic development ventures.

Prior to ZETA, Naomi was COO of an affordable housing product development company, where she led a team of building science professionals in the design, research and development of sustainable, ultra-low cost building materials and methods for developing countries. Previously, she was a principal of Porat Consulting and Sedway Group, national urban land use and real estate consulting firms. Naomi also is a co-founder of the Institute at the Golden Gate, a nonprofit global sustainability organization at Cavallo Point, Fort Baker. Naomi earned an MBA from Yale University, a Masters in City and Regional Planning from UC Berkeley and a BA from Stanford.

I spent over an hour on their website and would have stayed longer but it was time for dinner.

Technorati Tags: Zeta,Zeta Communities,California,Net Zero

EXTREME ECO-FRIENDLY HOMES

2009-12-03T07:08:00.001-05:00

I read quite a few articles about our industry while preparing stories for this blog but last week I received an email from Elizabeth Johnson about 10 Extreme Eco-Friendly homes by a site called Construction Management Degrees.

Here is the link to this fascinating article: Click Here

WILL REAL ESTATE AGENTS BECOME OBSOLETE?

2009-11-29T15:04:00.001-05:00

With the downturn in the housing industry many homeowners are moving away from using Real Estate agents to sell their home. Even though the benefits of using them to navigate the treacherous waters of mortgages and real estate transfers has always been one of their biggest advantages, about 20% of all home sellers are now choosing to go it alone.

Since most homes for sale are now listed on the Internet, either by Real Estate companies or by homeowners themselves, there have been more websites designed for the “For Sale by Owner” crowd.

It won’t be long before Real Estate agents will morph into “closing agents only” with little need to market homes or show them. Commissions will drop to the 1-2% level instead of the 5-7% currently used by Real Estate agencies. That could mean up to a $10,000 savings on a $200,000 home.

Homeowners can find out how much their home should sell for just by visiting the Internet. Then they can put it out there for everyone to see. They can add hundreds of pictures, lengthy descriptions and can even find the best mortgage companies for their buyers. WOW!

With the Fed instituting new regulations and HUD forms to insure that all home purchasers are protected, why would a homeowner need to list with a Realtor?

Very soon you will see a new industry being born that just “shows” homes to prospective buyers without trying to sell them anything. These new “agents” will not have to be licensed or insured. They will be paid to only “show the house” by the homeowner. If someone wants to make an offer on the home, they simply contact the homeowner, make an offer, agree to a price and wait for the closing company to schedule the sale.

It’s coming folks!

WICK BUILDING SYSTEMS LATEST CASUALTY OF RECESSION

2009-11-29T14:24:00.001-05:00

Wick Building Systems of Mazomanie, Wisconsin, a maker of homes and other buildings, has filed for Chapter-11 bankruptcy saying it’s the most efficient way to re-structure a division that makes farm-and-commercial buildings – while shutting down two other divisions which make manufactured-and-custom homes.

259 jobs are being lost in those two divisions located in Mazomanie and Marshfield. Wick is leaving Marshfield entirely, while the farm-and-commercial division known as Wick Buildings will stay in Mazomanie.

CEO Jeff Wick said losses in the housing industry made its balance sheet “un-sustainable,” while the farm-and-commercial building division remains profitable.

On November 10th, the company said 222 people in the Wick Buildings division might be laid off – but the re-structuring would save as many jobs as possible. Jeff Wick said normal operations in that division will continue through the Chapter-11 proceedings.

MORE CHINESE DRYWALL LAWSUITS COMING

2009-11-28T14:11:00.001-05:00

Consumers in 24 states have filed a total of 1,174 Chinese drywall complaints with the Consumer Products Safety Commission (CPSC). Hundreds of homeowners have filed lawsuits against the manufacturers, distributors, builders and others in the Chinese drywall supply chain.

Gases emitted from the drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode.

A local worker making drywall in Huzhu County of Qunghai Province, China.