Friday, April 29, 2011


An old rerun of Hoosiers with Gene Hackman was playing yesterday on cable. Thinking back on my playing days (a long time ago!) I got a little nostalgic remembering the way things used to be. At the risk of sounding a little old here, today's modern game of basketball doesn't begin to resemble the game we played back in the early 70's! Not that our era was better - most would argue it wasn't, but the emphasis was totally different. We were dedicated to our team and to our school, not like today's players who are dedicated to the "I" which doesn't seem to be a letter in the word "TEAM."

That got me to thinking about the homebuilding business and the changes I have seen in thirty-four years. In many respects the industry has gotten much better. Materials and technology have evolved wonderfully into attractive features that most people desire. Engineered wood allows longer structural spans without support; longer dimension lumber yields higher ceilings; exotic harvested woods have created rich elegant finishes; quarried stone provides elegance and durability whether you are using it on the outside of your home or on the Kitchen countertops; and technological advancements now run parts of your home. The list goes on, and on.....

Unavoidably with monumental advancements comes increased regulation. City, state and federal regulations are "pinching" the industry to the point that most builders are screaming. Here are a few of the more common complaints:

  • Lending. The very lifeblood of the industry has been reduced to a mere trickle by overzealous federal regulators imposing rules that most homeowners, builders, and real estate investors can't meet. Just yesterday a report on Fox News highlighted nine big banks including J.P. Morgan Chase and Bank of America that had borrowed billions of dollars from the Federal Reserve at .008% and re-invested most of the proceeds in Treasury Bills that are yielding 3.2% currently! This is not what our industry needs!

  • Stricter Energy Codes. We all should be for conservation, but "going green" requires a lot of green! Before we can obtain our first construction inspection from our local municipality we have to submit plans to an independent third  party energy consultant who calculates numerous energy co-efficients that must comply with federal standards. The consultant must then perform their own inspections to verify compliance. Who do you suppose pays for all of that? Sadly, it's not the builder!

  • Local Building Codes. Particularly in Dallas and University Park the building codes change so often it most likely will vary from project to project when we apply for a permit. No such thing anymore as "walking a set of plans through" for a permit - we leave multiple sets to be reviewed and approved over the course of about a week.

  • Environmental Protection Agency (EPA). Big government must justify it's existence so the EPA has just instituted a rigorous set of lead paint abatement rules for remodeling homes built prior to 1978. Estimated by the EPA to cost no more than $1,000 per project, some builder friends who have "tented" their projects to limit particle migration, and then used  hepa vacuums while scraping lead paint, have seen costs upwards of $30,000. Oddly, if you don't remodel, and instead tear the house down destined for the dump, no special permitting or abatement procedures are required to protect against the migration of lead particles! Does this make any sense when we are so rigorously enforcing paint scraping?

  • Occupational Health and Safety Administration (OSHA). This self funded government agency used to only bother commercial construction sites as they looked for safety infractions that can fund their operations. With the recession in full bloom, and commercial construction almost non-existent, they have been making the rounds on residential sites. Just what we need!

  • Fuel Costs. Realizing that almost all of the materials necessary in the construction of a home have to come from somewhere that probably is not close, the cost of fuel potentially will have a dramatic effect on housing. Transportation costs for planes, trains, and automobiles most assuredly will rise meaning that this cost will be passed on to the consumer. On a microeconomic level just the fuel involved in getting workers and supervision to the jobsite will have an impact. "Pinched at the pump" threatens to have a big role in homebuilding in the very near future.

In editing this post I have realized that my text has become very political. Sorry!! When you are passionate about something you want to pursue it with as few encumbrances as possible. Obviously this is not the same business environment as we had back in 1978. But we are building much finer homes today than what was built back then. We will all adapt - but it sure would be easier if Uncle Sam could lighten up just a bit!

No comments:

Post a Comment