What is the American Dream? Different things to different people, no doubt. But most will agree that homeownership is an integral part of “the dream.” Along with the new homeowner’s property taxes comes a fundamental change in attitude. Social scientists have long observed that owning a home correlates with increased involvement in the community and a greater sense of responsibility.
Dreaming at record levels
New construction in the U.S. last year saw its best year in 25 years, according to an Associated Press story published in January. Based on national figures for January through November 2003, new construction was clearly the shining star in last year’s economy, due in large part to record-low mortgage rates. (The average fixed-rate mortgage for all of 2003 was 5.83 percent). Experts predict that the housing market will remain strong through 2004, perhaps slowing slightly as mortgage rates inch upward by year’s end.
Ground was broken on more than 1.85 million housing units in the first 11 months of last year. That’s even more im-pressive in light of the National Associa-tion of Home Builders’ (NAHB) estimate that construction of just 1,000 single-family homes generates 2,448 jobs in con-struction and construction-related industries; approximately $79.4 million in wages; and more than $42.5 million in federal, state and local tax revenues and fees.
Sales of existing homes, which fuels new home construction, also hit a high in 2003. The Associated Press reported that existing-home sales increased 9.6 percent over 2002. In the South, the increase for the same time period was 10.6 percent. In Charlotte the 26,370 existing-home sales in 2003 represented an eight percent increase over the previous year.
In addition to the existing home sales and new home construction, the remodeling industry also experienced a record-setting year, according to a January 2004 news release from NAHB. Increases were across the board, in every region of the U.S., and representing both major and minor remodeling projects.
The dream team
Nationally, the Charlotte Region raked 10th in single-family permits and 11th in multi-family permits, according to the June 2003 issue of Builder Magazine.
The trade organization that advocates for this thriving local industry is the Home Builders Association of Charlotte (HBAC). With 1,034 members representing more than 40,000 workers, HBAC membership is open to those directly involved in new home construction, remodeling, land development, new home sales, sales of building products, subcontracting and other aspects of real estate and financing. All members of HBAC also are members of the NAHB as well as the North Carolina Home Builders Association (NCHBA).
The triple-tiered trade association attracts widespread support and participation. In fact, about 80 percent of new homes across the U.S. are built by NAHB members. In Mecklenburg County, that figure is closer to 90 to 95 percent.
The local organization is led by Mark Baldwin, executive vice president, and Ray Killian, Jr., this year’s HBAC president.
Baldwin has worked with homebuilders associations around the country for more than 20 years and joined the Charlotte organization in 2001. A past board member of the national executive officers council, he currently serves as vice president of the NCHBA executive officers council.
Baldwin has nothing but praise for Charlotte, which he describes as sophisticated and caring. “Builders here work well with government, in a stable political environment,” he adds.
Killian, who recently began his term as HBAC president, is co-owner of Simonini Builders, one of the largest luxury custom home builders in the country, constructing between 60 and 90 homes each year in Charlotte, and Charleston, S.C. Awarded the National Housing Quality Award in 2001 by Professional Builder Magazine, the company also was named America’s Best Builder in 2002 by the National Association of Home Builders and Builder Magazine. Selected by Professional Builder Magazine in 2002 and 2003 as one of the top 100 builders to work for in the nation, Simonini Builders also recently won the Ethics in Business Award from the Charlotte Chapter of the Society of Financial Professionals.
Reflecting on his long and very successful career, Killian says, “It’s an honor to be in the industry; it is an honor to serve the industry.”
Interpreting the dream
Killian and Baldwin find that the general public often doesn’t understand the collective economic impact of the home building industry – an industry that encompasses a multitude of smaller, independent companies.
“It’s a giant food chain,” Killian says, “and a larger employer in Charlotte than banking.” He is quick to acknowledge, however, that banking provides tremendous stability to the local economy.
The two industries are inter-connected, of course. Baldwin asks, “Would the banks be here if there weren’t a good stock of housing here, quality products at affordable prices?”
What, then, is the collective economic impact of the local home-building industry?
According to the Mecklenburg County Building Standards Department, from January to November 2003, a total of 7,802 permits were issued for housing units. Of these, 6,849 were single-family home permits, 31 were duplex permits, and 922 were town-home permits. The construction value of those permits totaled more than $1.1 billion, and that is exclusive of land prices, homebuilder profit, other permits and fees. And that’s just Mecklenburg County. The U.S. Census in 2000 recorded 22,385 housing starts – nearly triple that number – in the Charlotte-Gastonia-Rock Hill MSA.
That’s even more impressive considering the fact that new homebuyers spend an average of $6,475 on home-related purchases during the year immediately following the purchase of a home, according to NAHB. In Mecklenburg County alone, for January through November 2003, this translates to more than $50 million spent on home-related purchases by new homebuyers. (This figure represents less than one year and doesn’t even include the entire MSA.)
And finally, what does the industry pump in the local economy in the form of wages? The U.S. Dept. of Labor in 2001 reported that in the Charlotte-Gastonia-Rock Hill MSA, 44,000 people were employed in the construction industry at an average hourly wage of $14.57. Do the math and this totals well over $1 billion.
Sharing the dream
HBAC makes it a priority to share the American Dream through a variety
of community service projects and special events.
For example, the “Home Builders Care” Council – just one of eight different councils of HBAC – has actively participated in Habitat for Humanity projects; repaired the parking lot and painted at the Uptown Men’s Shelter; and helped Classroom Central by finding a suitable location and then painting and repairing plumbing at the building. These are just a few of the ways in which HBAC members make a genuine effort to give back to the community that provides their livelihood.
Many more in the region are familiar with HBAC’s two major annual events: HomeArama and the Parade of Homes.
Later this spring, HomeArama will feature five fully decorated homes in Heydon Hall, which is in the South Park area of Charlotte. All five homes are valued at more than $1 million. Scott Teel, marketing coordinator for Simonini Builders, is chairing this year’s HomeArama, which is scheduled to run for 23 days, from May 15 through June 6. Drawing anywhere from 40,000 to 60,000 people, proceeds benefit the association and the Children’s Miracle Network.
“This is the most spectacular housing showcase event in the Southeast,” Killian says. “People come to get ideas, to plan, to dream, to learn about the latest industry trends and products. Many even bring their cameras, which is fine.”
Then for three weekends in the fall, HBAC sponsors the Parade of Homes. This event gives the general public an opportunity to tour 135 new homes, both furnished and unfurnished models, that range in price anywhere from $100,000 to more than $1 million.
Guiding the dream-makers in 2004
This year marks the final year of a four-year strategic plan developed by HBAC in 2000. Killian explains that the plan has five main initiatives, two of which (membership and operations) are internally focused. The other three – public image, regulatory issues and regional issues – are of greater interest to the public at large.
The “Image” initiative includes efforts to broaden HBAC’s community service efforts, promote home building as a profession, and educate the public about the home-building industry.
The “Regulatory Issues” initiative involves not only increasing awareness of and responding effectively to regulatory issues, but also intervening to prevent adoption of unnecessary regulation.
The “Regional Issues” initiative reflects the overall trend in both public and private sectors to adopt a more regional, interdependent approach, where appropriate. Right now HBAC represents only Mecklenburg County; surrounding counties and/or cities have their own local associations. In their day-to-day work lives, however, home builders routinely work across county and city boundaries. Likewise, housing-related issues such as air quality, water quality, conservation and transportation, increasingly are being examined from a regional perspective. So HBAC is looking for ways to collaborate and cooperate with other like-minded local associations.
When asked about things like “sprawl” or the NIMBY/BANANA mentality (Not In My Back Yard / Build Absolutely Nothing Anywhere Near Anything), Baldwin says, “Home builders don’t build homes where people don’t want to live. Builders don’t drive growth patterns; people do.” He adds that home building is a highly regulated industry that incorporates lots of checks and balances.
Keeping the dream alive
There is another aspect of the American Dream that most will acknowledge, and that is the idea that in this country, a person who starts out with very little can improve his or her station in life through education and hard work.
Baldwin and Killian are quick to point out that there are lots of job opportunities for skilled laborers and professionals of all kinds in the home building industry. Both praise the building trade classes offered by Central Piedmont Community College and emphasize the need to guide young people toward the trades.
In fact, they say the sky is the limit. Killian sums up: “There are many people in this industry who started out with a nothing more than a hammer, who went on to become very, very successful.”