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Tag Archives: Housing

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Shifting conditions present challenges for designers

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At the beginning of the third quarter, as many states began to relax restrictions, business appeared to be picking up for interior designers in some sectors and regions of the country. With the recent resurgence in outbreaks of the coronavirus nationwide, however, activity has pulled back somewhat in recent weeks.

In addition, delays in manufacturing and purchasing, along with a shortage of skilled tradespeople, have added to designers’ challenges on top of adapting their practices to ensure the health and safety of their employees and clients.

Continuing its recovery from a record low in April, the American Society of Interior Designers (ASID) Interior Design Billings Index (IDBI) rose nearly 8 points in June, after rebounding more than 25 points in May. The Inquiries index moved into positive territory, at 52.3, for the first time in several months. Gains were reported in all regions of the country.

Similarly, A&D firms responding to the Houzz Q3 2020 Renovation Barometer survey, fielded from June 27 through July 10, reported a modest growth in recent business activity, up 4 points from the first quarter, but anticipated substantial improvement in the third quarter.

The indicator for Expected Business Activity, related to project inquiries and new committed projects, jumped from 35 in the second quarter to 67 for the third quarter. Designers posted a whopping 51-point increase, reflecting a flurry of new prospect interest as optimism that the country was on its way to recovery spread.

That optimism was short-lived, though, as states that had begun to open early experienced a rapid rise in new cases of the virus, triggering a return to stricter containment measures. Between Memorial Day and Independence Day, it was becoming evident that hopes for a quick return to some kind of normalcy were premature, thus delaying the reopening of many sectors of the economy.

A Pulse survey conducted by the National Kitchen & Bath Association (NKBA) at the beginning of July found little change in members’ assessment of the impact of the health crisis on business activity between early June and early July. Designers especially appeared to be struggling a bit more than other member segments, with their impact rating increasing slightly to 6.8, compared to 6.5 in June. Only 37% of designers said demand for their services was increasing, while 25% said demand had decreased from the previous month.

Results from the most recent ASID COVID-19 Pulse Survey, from July 28, show renewed concern about the impact of the health crisis on designers’ businesses, with more designers reporting a medium-high level of concern.

Nearly half of firms participating said they currently were experiencing no notable negative effect on their business, and the overall portion of firms having projects in projects increased from June by nearly 10 percent. But there is concern that conditions could worsen depending on how the health crisis unfolds in the coming months.

Some sectors have fared better during the crisis than others. High-end residential design has enjoyed a fairly quick recovery, with clients stuck at home or buying second homes outside urban areas wanting immediate upgrades and renovations. Multi-residential design in areas where housing is expensive and in short supply has performed well, also. Commercial practices, on the other hand, particularly hospitality and restaurants, retail and office understandably are struggling along with their clients whose businesses are shut or substantially scaled back.

Further complicating matters for designers are shortages and delays of certain products and materials due to factory closings, and a shortage of skilled tradespeople, for whom demand is high for both new and existing construction.

Kitchen and bath designers have seen a shift from large-scale to smaller-scale projects, plus more competition from DIY projects with the re-opening of home improvement stores, since homeowners are stuck at home and have more time on their hands to shop online and do much of the work themselves.

Given the developments of the past couple of weeks, it seems likely that business activity for the third quarter will not meet earlier expectations. But it does look as though the coming months hold more promise than the first half of the year.

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Practical ways to reduce gender inequality in the workplace

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Studies still show that working women are paid about 80 cents for every dollar men are paid. These studies suggest that women are at a disadvantage when it comes to holding higher-paying jobs and that men are generally on more accelerated career paths.

This article offers some practical suggestions for actions that human resources professionals can take in their companies to address and hopefully improve this gender inequality.

1. Have fair and equitable procedures for addressing sexual harassment/discrimination

Your written policies must make clear that harassment and discrimination is unacceptable within your company. Leaders must set the tone by publicly stating that sexual harassment will not be tolerated and they must model appropriate behavior. Discipline, including termination, for inappropriate behavior must be consistently applied across all levels of the company.

Your employee handbooks and policies should include a comprehensive anti-harassment and anti-discrimination policy that expresses the company’s commitment to providing a working environment free of harassment and discrimination. The policy should inform employees how they can report concerns or complaints of harassment and discrimination, including more than one option to whom employees can report concerns.

Additionally, the policy should inform employees of the type of investigation that will take place in response to complaints. All investigations must be fair and equitable, and you should follow the same procedure regardless of the source or type of complaint received.

Once the investigation is completed, both the employee reporting the concern and employee about whom the concern was raised should be informed that the investigation has concluded. If it is determined that there was a policy violation, discipline should be commensurate with the circumstances, up to and including termination.

Even if no policy violation was found, the company should consider whether any remedial steps can be taken. You must be careful to avoid adversely impacting the employee who raised the concern or employee who participated in the investigation.

2. Conduct training on promoting an inclusive workplace

Human Resources teams should be provided with detailed training and ensure that they know how to fully and fairly investigate claims — even if the claims involve senior leaders. This training is essential because proper investigations are key to building trust within the company.

All employees must be trained on how to create and maintain a positive, respectful work environment and ensure that everyone knows what to do if they see or hear something that is troubling. Several states, including New York and California, require such training.

You should review guidance published by the Equal Employment Opportunity Commission (EEOC) on effective harassment training. That guidance states that harassment training is most effective if it is: championed by senior leaders; repeated and reinforced regularly; provided to employees at every level and company location; provided in a clear, easy to understand style and format; provided in languages commonly used by employees; tailored to the specific workplace and workforce; conducted by qualified, live, interactive trainers, or, if live training is not feasible, designed to include active engagement by participants; and is routinely evaluated by participants and revised as necessary.

3. Consider unconscious bias training

To combat unconscious bias, you should consider offering or requiring training on unconscious bias to all employees, especially managers and human resource professionals. Through training, employees can start identifying when they are making assumptions based on biases and stereotypes and remove these considerations from workplace decisions. You should also establish clear, understandable, actionable, and transparent metrics around recruitment, retention, advancement, and pay so these decisions are based upon merit and are not influenced by implicit bias.

4. Build diversity and inclusion into your culture

Building a culture of diversity and inclusion needs to start from the top, with a clear statement of the leadership’s commitment to a culture of inclusion and recognition. A diverse and inclusive workplace benefits employees individually and the company as a whole.

You can assist in cultivating an inclusive environment by promoting the creation of multicultural and women-focused employee resource groups that include men to foster increased engagement and networking opportunities. Additionally, compensation for key leaders can be linked to taking certain diversity and inclusion actions.

5. Review your leave policies

Another area for employers to be mindful about is the impact of leave on pay and advancement. Women often take more and longer leaves of absence from work than men, primarily to take care of children and family members. These leaves of absence have been shown to correlate to a loss of earning power.

To minimize this penalty and promote opportunities for women who have family obligations, employers should consider flexible work policies that support a work-life balance for caregivers and all employees throughout the ebbs and flows of their careers. You can conduct periodic analyses to determine whether pay and position correlate with contributions to the company to avoid women being penalized for leave time.

6. Ensure compliance with changing pay equity laws

You should review company policies and handbooks to make sure they are consistent with applicable state laws and local ordinances. Remove any policies and statements that prohibit employees from discussing compensation as most states now require transparency.

Many states and localities also prohibit employers from seeking salary history from job applicants and/or using salary history to make compensation decisions. Therefore, you should update applications and other hiring documents to remove requests for salary history and instruct those conducting interviews not to ask questions about salary history during the interview process.

7. Conduct a pay equity audit

You should consider conducting a pay equity audit to identify any potentially unlawful pay disparities and remedy them before a claim is brought forward. Through an audit, you would gather relevant pay data, identify comparable jobs, and calculate whether women are paid equally in comparison to men who perform substantially similar work.

If you identify any inequities, you should determine whether differences in pay are justified and, if not, remediate the unjustified pay differentials. After an audit is completed, you can adjust pay practices going forward. You should attempt to analyze the reasons why there was an unjustified pay disparity and take steps to remedy practices and policies that were the root cause of the pay disparities.

A pay audit also provides you an opportunity to identify and correct weaknesses in the company’s systems to protect against claims of disparity going forward. As a general rule, you should conduct an audit every few years. Not only is this a best practice, but certain states, including Massachusetts and Oregon, provide a safe harbor or affirmative defense where employers conducted pay audits and took steps to eliminate gender-based compensation differentials. Outside counsel can play an important role in the pay equity audit by ensuring that the audit is conducted on a privileged basis.

8. Be flexible

To address the wage “penalty” often experienced by women who find themselves in caregiver roles, you should consider policies that allow for flexibility. These policies may include allowing employees to work from home or to have reduced hours at different stages of an employee’s life and career.

One way employers can foster flexibility is to measure career progress by business results and performance, not physical presence in the workplace. You should encourage male and female employees in leadership positions to take advantage of flexible work policies as a way of assuring all employees that your company supports those policies.

Conclusion

No easy, quick fix solution exists for closing the gender pay gaps that persist in our society. As a human resources professional, you have the opportunity and ability to initiate changes within your company so that female employees are provided with equal opportunities for advancement and compensated equally for performing the same work. These improvements should help your company either become or maintain its status as an employer of choice.

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Tips for safer property management during COVID-19

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Many people are leery of changes, moves or disruptions to their routines during COVID-19 and with good reason. Information may be difficult to distill from regular news sources, so here are seven tips to help you manage a property during this crisis.

Routine Maintenance

There are many routine maintenance activities that must be taken care of regardless of the current pandemic. Garbage must be removed, landscaping tended, and clogged sinks need attention. All the routine jobs that keep your property in good shape can continue to be done with certain precautions.

Create a schedule and let tenants know when someone will be cutting the grass or cleaning public areas of the building. This way contact can be avoided between personnel and tenants. And if someone is moving into the building, it’s important to communicate very clearly during this time.

Showings

Managing a property requires that you show prospective tenants the various spaces that are available to rent.

The safest method is to use digital tools. Use your smartphone to create a virtual walk-through. If a prospective tenant expresses real interest you can text, email or speak to them and find out specific areas they would like to see virtually or take them on an individual tour using FaceTime.

Seriously interested parties can arrange to visit the property in person. Sanitize all touchpoint areas of the home before and after their visit and if you will be there to guide them continue to wear your personal protective equipment (PPE) and ask them to do the same.

Communicate with Tenants

Whether you’re in a COVID-19 hotspot like some luxurious Chicago neighborhoods or a rural area with very few cases, current and new tenants will want to be notified of any changes regarding their homes. If amenities are closed because they could pose a health risk, make sure to get that information to everyone in clear, concise language.

Work out rooms and swimming pools are two areas that potentially involve close contact and potential viral spread. If you would like to make certain amenities available to your tenants, figure out a schedule and a cleaning system that reduces contact between people and sanitize, sanitize, sanitize. Continuous updates, with good and bad news, should be given to residents on a weekly basis.

This assures them that you are mindful of their health. Include links to sites with more information, like the CDC. Send information to tenants using mail, email, texts, and bulletin boards. Let everyone know what additional precautions and procedures are being used to keep everyone healthy.

Protocols for COVID-19 Emergencies

It is a fact that people can carry and spread COVID-19 and never feel ill themselves. Asymptomatic spread is perhaps the most dangerous method of spread because a person does not realize that they are a threat. In the event someone in a building you manage does become ill there are certain legal guidelines you must follow. Though it may seem like a good idea to notify everyone that the person living in unit 2314 has become sick, legally you cannot do this.

Disclosure of such information is a violation of federal privacy laws and can subject you to liability. While there are no mandatory federal guidelines for protocol in this situation, there are guidelines from the CDC, local and state health departments.

There also may be terms suggested in the lease which require a landlord or property manager to notify all remaining tenants of a health threat. Most landlords follow similar guides and protocols, so communication should be very detailed.

Residents should be warned that a co-tenant, employee, or vendor has become infected and has been encouraged to self-isolate. Follow up with reminders to continue to practice precautionary hygiene procedures and limit contact with other people.

Requests from Tenants

Although you may want to limit contact between staff and tenants there are times when an incident requires immediate attention.

Think plumbing. Not only could a plumbing issue be inconvenient for the resident, but this type of issue can also cause serious damage to one or more units.

When something like this occurs make sure to prepare your staff with all necessary PPE to mitigate possible contamination from close contact with a tenant. Assure the tenant that all safety precautions are being taken and if possible, ask the tenant to leave the apartment while the issue is addressed.

Monitor Personnel

It is incumbent upon you to provide a safe work environment for your employees. Taking temperatures before working, asking questions about employees’ contacts and how they are feeling are completely acceptable if your employees are aware of the procedures. Avoiding becoming a virus hot spot is beneficial to you, your employees, and your tenants.

Be Nice

The old saying, “You catch more flies with honey than with vinegar” is always appropriate. Be nice to your employees during these demanding times. You depend on them to keep your buildings running smoothly. Your employees should be your allies in the fight to keep buildings and grounds safe for everyone. Hand out a small bonus periodically. It could be cash or a grocery store gift card — really anything that shows you appreciate the work they do.

With a little kindness and diligent sanitizing, you can easily maintain your properties with safety during COVID-19.

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Homeowners doing more improvements with less

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Home renovation and improvement activity has surged in recent months as owners confined to home have responded to the urge to undertake needed repairs or make their living environment more pleasant.

Due to concerns about health, finances or the unavailability of renovation specialists, many of these homeowners have chosen to do the work themselves, often taking on smaller projects and spending less than what they might if they had hired a pro. In some sectors, though, remodelers also are experiencing increased demand.

By all accounts, the number of DIY home improvement projects has increased significantly during the months in which restrictions have been imposed on outdoor activity and social interaction. Surveys conducted by the Home Improvement Research Institute (HIRI) in conjunction with the Farnsworth Group show that as many as 90% of homeowners have undertaken or planned to undertake one or more home improvement projects themselves in recent months. They are also doing more shopping online for materials, products and appliances.

Likewise, an email survey of 174 homeowners conducted by Fixr, an online home remodeling contractor matching service, found 68% of respondents had done more DIY projects while confined to home than at any other time in the past. Another 20% said they were completing about the same number of projects as before the pandemic.

For the most part, homeowners completed basic improvement projects such as landscaping and painting, although nearly one in four had done electrical or plumbing work of some kind.

Having more time on their hands, concern about having a contractor enter the home, and saving money were common reasons why homeowners chose to do the work themselves. However, 40% of the respondents to the Fixr survey said they were unable to find an available pro to do the work. Only 7% of those in the HIRI surveys stated the unavailability of a contractor as a reason for taking on the project themselves.

Concurring with these findings, home improvement contractors responding to the HIRI surveys reported widespread projects delays or stoppages because of the health crisis. In addition, they indicated that new requests are fewer in number and for smaller projects. Analysis of Census Construction data by the National Association of Home Builders (NAHB) shows a slight decline overall in spending on single-family home improvements in the month of June of 0.4%.

Not all parts of the industry are equally affected, though. Houzz announced this week that its data shows a 58% increase in the number of project leads for home professionals in June compared to a year ago. The biggest demand has been for professionals working on outdoor spaces, but kitchen and bath remodelers experienced a 40% increase in requests, as well. One remodeler cited in the release said clients were foregoing vacations and using the funds to make their homes more enjoyable instead.

Another hopeful sign is a rise in requests for single-family residential remodeling permits in some parts of the country during the second quarter. That should translate into more active projects in the third quarter. The burst of homebuying in recent months may help to push demand into the latter part of the year as well.

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Delayed buying season pushes home sales to record levels

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Pent-up demand from months of home confinement combined with record-low mortgage interest rates created a surge in home buying in June. Sales of new and existing homes reached some of their highest levels ever and were up in every region of the country.

Industry experts differ, though, on whether this is a sign of the market’s recovery or just a temporary boost before activity tapers off again.

Following three months of declining sales, purchases of existing homes in June rebounded at a record month-over-month pace, jumping 20.7% compared to May. Sales of single-family homes rose just a tad below 20% and those of condos nearly 30%. Although sales overall are still down 11.3% from those of June 2018, the rapid comeback in buyer activity helped to confirm speculation that demand for homeownership remains high and that sales would be even more robust if market conditions were to improve.

Aided by a shortage of existing homes for sale and renewed buyer interest in larger single-family homes, new homes sales, which bounced back by almost 17% in May, continued their upward trend, climbing 13.8% over the previous month, reaching their highest level since the Great Recession, according to the National Association of Home Builders (NAHB).

The Mortgage Bankers Association (MBA) reported new home mortgage applications were up 20% for the month and a whopping 54.1% compared to a year ago. Based on application data, the MBA estimated a 15% increase in the sale of new single-family homes in June.

Renewed construction activity and favorable weather also gave builders a lift in June. New home starts rose for the second month in a row, up 17.3% for the month, with new single-family starts up 17.2%. In addition, new permit requests increased 2.1% (up 11.8% for single-family homes) and new home completions 4.3% (up 9.6% for single-family homes).

While record-low interest rates, currently below 3% in some instances, are helping to fuel buyer activity, they are also pushing prices higher as more buyers compete for the limited number of available homes for sale.

Online real estate brokerage Redfin said the median price of a home in the 85 metro areas it tracks increased 4% in June compared to May, at $299,400. The National Association of Realtors (NAR) stated the median price of an existing home sold in June was 3.5% higher than the previous year, at $295,300. The median price of a new home went from $317,900 to $329,000 in a month, while the average size of a new home loan went from $332,793 to $338,589.

Rising prices are good news for current homeowners but can quickly become an impediment for those looking to buy, especially for first-time buyers, who made up 35% of purchasers in June. Increases in materials costs and a shortage of lumber for home building are threatening to drive up the cost new construction, says the NAHB, which could eventually mean higher prices at a time when builders have been struggling to keep prices competitive.

In recent weeks renewed outbreaks have driven the number of cases of the coronavirus to new highs in some areas, leading to the closure of some businesses again and more economic and employment uncertainty. What further relief the federal government may provide is unclear at the moment.

These conditions may dampen home buying activity in the short term, as may the inability of schools to reopen. As June’s activity demonstrated, those with means are eager to buy, but the pool of eligible buyers may shrink as we move into the latter part of the year.

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Pandemic accelerates next-generation design in senior living

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With among the highest mortality rates in the nation, nursing homes and assisted living facilities are applying a battery of solutions to contain the spread of the COVID-19 virus and provide greater protection against contagion for residents and staff.

Because it spreads so rapidly, often undetected, and is disproportionately fatal in the case of elderly patients, the pandemic has exposed underlying vulnerabilities in the current design and operation of senior living facilities. This has some in the sector, including architects and designers, developing new models of what senior living might look like in the near future.

Although only 9% of all coronavirus cases in the United States since the onset of the pandemic in March have occurred in nursing homes, they account for 42% of all deaths (57,000 residents and workers, as of July 15), according to data collected by The New York Times. A federal investigation of conditions in assisted living facilities conducted in late April and May found that nearly 1 in 4 had at least one positive test for coronavirus among residents, and of those testing positive around 43% were hospitalized and nearly one third died.

Residents in long-term care facilities have experienced higher rates of infection and death than those in other types of senior living communities. On the whole, they tend to be older and have multiple health issues.

A study involving a sampling of different types of senior care facilities conducted by the National Investment Center for Seniors Housing & Care (NIC) found that nursing homes and memory care facilities had higher proportions of residents testing positive, with assisted living and independent living facilities experiencing much lower rates.

To various extents, facilities have employed a wide variety of strategies to try to reduce infections and fatalities. They have increased testing, quarantined those who test positive for the virus, implemented more rigorous cleaning and disinfecting protocols, purchased protective gear for staff, eliminated group dining and other activities, and prohibited visitors. In addition, over time knowledge about the virus and how to treat it have improved, helping to decrease fatalities.

One factor contributing to the health crisis in senior living facilities is the design of the facilities themselves. They were not created to deal with such a widespread outbreak. In an effort to provide guidance to administrators, healthcare professionals, and state officials on how to improve conditions in facilities, the American Institute of Architects (AIA) issued “Strategies for Safer Senior Living Communities” in May. It identifies environmental risks related to COVID-19 transmissions and describes design and behavioral strategies to minimize or eradicate those risks.

Others in the sector are looking ahead to what the next generation of senior living might look like. Speaking with Multi-Housing News, Daun St. Armand, senior vice president at CalisonRTKL, discussed a number of factors that architects and designers will need to consider in designing or renovating facilities in the future.

He emphasized the need for greater flexibility and adaptability in design so administrators can respond more quickly to changing conditions, repurposing and isolating spaces as needed. He also spoke of ways to increase the use of technology and reconfigure resident quarters to allow for continued socialization and visits during a health emergency.

Going a step further, OZ Architecture of Denver released a white paper, “Designing for Emergency Preparedness: Considerations to Reduce the Spread of Disease and Infection in Older Adult Communities During an Emergency,” that, along with recommendations for immediate steps administrators and facilities personnel can take to make their properties safer, makes the case for moving to a small house model for older communities — an idea that had been gaining traction prior to the pandemic. The paper illustrates various ways the model lends itself to compartmentalizing public, private, visitor and delivery spaces, and how it can be applied to meet a range of needs, scales and footprints.

For some time now, the senior living sector has been facing declining occupancies as more older persons choose to remain in their own home or to live with family members or friends. News reports of high fatalities in nursing homes likely will heighten their reluctance to opt for a communal living environment. Innovative designs, like the small house model, could help to turn around that trend. In an odd way, the pandemic may be pushing senior living even faster toward the future it needs to embrace.

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Remodelers hopeful resurgence in business will continue

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Renewed homeowner interest in undertaking home renovation projects has boosted remodelers’ optimism that demand for their services will rebound in the third quarter. Activity began to improve in the latter part of the second quarter as some states started opening up businesses and relaxing stay-at-home orders.

An increase in project inquiries is driving expectations for an even better third quarter. But with some cities and states reinstating closures and lockdowns due to renewed outbreaks of the COVID-19 virus, the outlook at present is more uncertain.

Market conditions for remodelers have improved substantially since March and April, finds the National Association of Home Builders. Its Remodeling Market Index (RMI) for the second quarter came soaring back at 73 after plummeting to 24 in the previous poll. On average, members rated current business conditions at 77 and future indicators at 70, both well within “good” territory.

Remodelers and contractors responding to the Q3 2020 Houzz Renovation Barometer survey reported recent business activity in the second quarter had increased only slightly from the first quarter, but that their expected business activity in the third quarter was a solid reading of 75, compared to 18 the quarter before. Overall, they exuded confidence that the worst was behind them. Their outlook for how the sector would perform over the entire year improved from 66 to 82.

Heading into the third quarter, the most recent Pulse survey from the National Kitchen & Bath Association, released on July 9, shows conditions improving but at a slower pace than anticipated. It recorded an overall rating of the pandemic’s impact of 6.4, nearly the same as the 6.5 for June.

Some sectors reported more improvement than others, with builders and construction professionals seeing a lessening of an impact on their business, while manufacturers and designers said the impact had increased somewhat. Among the latter group, just 37% said demand for their services was on the rise (down from 43% the previous month). The decline was attributed to an increase in DIY and smaller quick-fix projects, facilitated by homeowners being able to do their own shopping again.

Taking the longer view, the latest forecast of the Leading Indicator of Remodeling Activity (LIRA) from the Remodeling Futures Program at Joint Center for Housing Studies of Harvard University (JCHS) projects annual declines in home renovation and repair spending throughout the remainder of this year and into the first half of next year, reaching only 0.4% by the second quarter of 2021. It expects that the current upward trend in activity will eventually taper off, with homeowners choosing to scale back, postpone and cancel major renovation projects as home sales flatten and unemployment remains high.

Another damper is surely to be the recent upswing in COVID-19 cases and deaths spreading across the country, causing officials to once again shut down some businesses and urge residents to stay at home as much as possible. Without doubt, the demand for remodeling services is real, but whether homeowners will feel comfortable undertaking projects in the midst of so much uncertainty is yet another challenge for the industry.

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Homebuyers head to the ‘burbs

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New home sales soared in May, pushing year-over-year sales figures back into the black. Low interest rates, a shortage of existing homes for sale, and early steps to revive economic activity helped to fuel the demand for new homes. So did what appears to be a growing pandemic-driven trend, a migration from cities to the suburbs.

After two months of declining sales, purchases of new homes vaulted 16.6% in May compared to the previous month, according to U.S. Census Bureau estimates, and are now up 12.7% over May of last year. Demand drove prices back up as well. The median price of a new home sold in May was $317,900, versus $309,900 in April, and the average price was $368,800, versus $364,500.

The Mortgage Bankers Association (MBA) reported mortgage applications for new homes in May were up 26.6% compared to April and 10.9% annually. Based on its data, the MBA estimates new home sales rocketed 26.1% over April and 27.5% year-over-year. The average loan size for a new home decreased somewhat, from $334,641 in April to $332,793 in May, but was still within the range reported by the Census Bureau.

Existing homes sales, on the other hand, fell for a third month in a row. The National Association of Realtors (NAR) announced total sales nationally were down 9.7% from April and 26.6% compared to a year ago, and off per month and per year in every region of the country. So far, sales have plummeted 32% since February. Sales of single-family homes dropped 9.4% for the month and are down 24.8% annually.

Although the number of existing homes for sale increased by more than 6% in May, inventory remains well below that of previous years and far below demand. That imbalance is driving bidding wars for the most desirable homes and causing prices to remain high despite weaker sales. The median price of an existing home sold in May dipped slightly, from $286,800 in April to $284,600, largely due to fewer sales in more expensive markets.

Of particular note in the May data from the NAR was a more substantial slide in sales of condominiums and co-ops, down 12.8% from April and 41.4% from a year ago. NAR chief economist Lawrence Yun observed that lower demand for multifamily properties likely reflects the migration of homebuyers from city centers to the suburbs. “After witnessing several consecutive years of urban revival,” he said, “the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home.”

The same trends helps to account for the turnaround in new home sales, as well. According to the Meyers Research New Home Pending Sales Index (PSI), which tracks the number of signed contracts completed on a monthly basis in some 18,000 communities nationwide, the best new home markets in May were in more affordable, heavily suburban metro areas such as Houston, Jacksonville, Tampa, Raleigh, and Dallas. The fact that Florida and Texas were among the first states to relax health restrictions may have helped to drive traffic as well.

In the release of the Housing Market Index (HMI) readings for the month of June, National Association of Home Builders (NAHB) chief economist Robert Dietz also mentioned, “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods.”

While the outlook for existing home sales remains uncertain (although more sellers have been going into the market), home builders are bullish about their prospects in the coming months. The HMI, which registers builder sentiment, jumped 21 points for the month of June, with builders indicating buyer traffic had doubled in just one month from April to May. Sales expectations for the next six months leapt 22 points. In addition, both new home starts and permit requests rose in May after nosediving in April (by roughly 30% and 21%, respectively).

Overall, realtors and builders are optimistic sales will rebound during the summer months. With so much pent up demand, both sellers and buyers are eager to take advantage of exceedingly low mortgage rates, provided the economic news is favorable and more people are able to return to work.

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Redlining: Why white people are typically wealthier than Black people

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After a relatively long period of stable opinion, a confluence of early 2020 events has rapidly changed white Americans’ views on race, and, specifically, on why white Americans have so much more wealth than Blacks.

Many white Americans, newly conscious of various inequalities holding Black Americans back, may believe these problems, once identified, can be remedied relatively quickly — if not in a few months, then certainly in a few years. A closer look at the wealth gap and its causes, however, suggests that remedies will be neither fast nor easy.

The Scope of the Problem

The 2018 Census Report confirmed the persistence of the income gap between Black and white households in this country. Specifically, median Black household income was only 59% of median white household income.

This, however, doesn’t begin to describe the scope of the problem. To understand its real severity, look instead at the difference in wealth. According to a 2020 Brookings Institute study, the average white family has a net worth of around $171,000; the average Black family has a net worth of about $17,000.

When Black and white incomes differ by a little more than a third, what accounts for this tenfold difference in wealth? A look at where families, regardless of race, derive their wealth does much to explain how this astonishing wealth disparity originated. It also suggests that almost every remedy will be controversial or politically difficult to achieve.

Born That Way…

Two related wealth statistics show why with only a one-third income difference, Black households average worth is only about a tenth that of white households. The first, which may surprise you, is that in the U.S. most wealth — nearly two-thirds of it on average — is inherited rather than earned.

This statistic counters a lot of popular opinion, which means, particularly when the subject is a fraught as this one — why white families are worth so much more than Black families — that not everyone who reads this will accept that it’s true. Popular and not particularly biased sources like U.S. News & World Report commonly and confidently explain that most millionaires earn their wealth. This same belief is also a mainstay of conservative politics. As a 2019 Forbes article puts it, “The vast majority (of the richest people in the world) have earned their fortunes as entrepreneurs.”

There are a couple of problems with this and many similar opinions. The first is that, yes, Jeff Bezos and Bill Gates, for example, earned most of their money, but this has almost nothing to do with the experience of the American middle class. It’s a bit like the old joke about being in the same room with Rockefeller meaning that on average you’re both millionaires.

The second problem with the belief that most wealth is earned, not inherited ,is that the most rigorous study of wealth, how it occurs and accumulates, Thomas Piketty’s ground-breaking and data-rich study “Capital in the 21st Century,” confirms the often-denied truth: Like it or not, the data show that the majority of millionaires got rich through inheritance.

Household Wealth and the 30-Year Mortgage

The second statistic that goes far to explain the racial wealth gap is that the principal source of wealth for middle-class families in the U.S. isn’t retirement savings or other investments, but the equity in their home.

Think about this works. As a young family, you put down something between 5 and 20% of a home purchase price, and over the course of 30 years you make payments that are often about the same or a little more than the monthly rental on a comparable property.

Thirty years later, you own the house outright and at some later date you pass the house on to your heirs. While it may not be the very highest returning investment (stocks and bonds regularly outperform real estate), it beats paying monthly rental fees that allow you accumulate nothing.

The problem for Black families is that for more than 70 years, this primary means of wealth accumulation for the middle class has been restricted and often not available at all.

Redlining

Redlining is the practice by banks of identifying certain geographic areas in a city as being more prone to loan default. Once an area was redlined, banks wouldn’t make mortgage loans in that area.

The practice was actually encouraged for many years by a quasi-federal agency, the Homeowners Loan Association. This practice, combined with neighborhood housing segregation, ensured that many African American would-be homebuyers couldn’t obtain mortgages. A study recently cited on CBS news estimated that this practice alone deprived the average African American family of “at least $212,000 in personal wealth over the last 40 years.” This is approximately the amount of the wealth gap identified in the Brookings study.

Few white Americans know that the practice persists. When combined with another continuing disadvantage — mortgages offered to Black homebuyers often come with higher interest rates — these disadvantages more than fully account for the wealth difference between white Americans and Black Americans.

What Next?

An economically sophisticated remedy for this problem would take into account that depriving so many Americans of economic opportunities others enjoy actually hurts everyone economically, white and Black alike. Support for such remedies, however, has historically run into passionate opposition from many white Americans, who fear that if African Americans do better economically, it will be at their expense.

Once the current spring 2020 protests die down and until there’s a more realistic understanding of voter interests that doesn’t depend on race-based economic subordination, it’s not easy to see how this will quickly or easily change.

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New advocacy group launches to help America’s small businesses

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Policymakers, beware. Small Business for America’s Future (SBAF) is a new advocacy group, evolved from Businesses for Responsible Tax Reform. Why? Look no further than the performance of Congress and the White House as the COVID-19 pandemic hammered mom-and-pop shops with a crash in consumer demand across the U.S.

SBAF surveyed 1,200 small business owners whose responses show the damage as Capitol Hill dithered. For instance, 53% of small business owners have increased debt during the pandemic. One-third surveyed have added over $50,000 to their debt loads in a bid to stay afloat.

According to the SBAF survey, only 12% of Black and Latino small business owners who applied for Small Business Administration aid received such help. Half of responding minority owners reported that they would be permanently out of business at the end of 2020.

SBAF’s three main areas of interest are economic security, health insurance, and taxes to back a recovery for Main Street firms. Conan Knoll is the communications director for the SBAF.

“We continue to actively engage with Congressional leaders in both chambers and across party lines to address the growing inequities small business owners face,” he told MultiBriefs in an email. “In the last few months, we have especially been focused on providing feedback to members as to the challenges the Paycheck Protection Program has created for small business owners, providing technical assistance and review of proposed legislation that would revise or revamp the PPP program and offer tangible legislative alternates.”

Small businesses created almost two-thirds of new employment after the Great Recession, according to the SBAF. Yet the Trump administration’s policies such as the PPP favor big business over mom-and-pop shops.

On that note, transparency of the PPP has spurred outrage after Treasury Secretary Steven Mnuchin said PPP borrowers’ names were “confidential” and “proprietary” during sworn testimony to the Senate Committee on Small Business & Entrepreneurship recently. His words in part led the Treasury and SBA to issue a statement promising enhanced transparency for the program moving forward.

Nomi Prins is an author and financial journalist. “The enhanced transparency measures for the Paycheck Protection Program should have been present from the beginning,” she told MultiBriefs via email. “However, this compromise is an important step toward instilling confidence in the program.

According to her, there is a positive aspect for Main Street PPP borrowers. “The fact that the smallest loans are excluded from the most detailed transparency level is actually a good thing,” Prins said. “That ensures that the smallest business borrowers are shielded from private equity or other forms of distressed company speculators that would seek to pressure them into selling their businesses instead of taking the time to get back on their feet.”

The SBAF is also involved with advocating for the interests of mom-and-pop shops at the state and local government levels. Dr. Erika Gonzalez is an SBAF co-chair, CEO of the South Texas Allergy and Asthma Medical Professionals, and Chair of the San Antonio Hispanic Chamber of Commerce. “We’re committed to ensuring policymakers at every level of government prioritize Main Street by advancing an economic framework that benefits both small businesses and our employees,” she said in a statement.

As the economy reopens while state and local governments face budget shortfalls due to the pandemic shutdown of commerce, uncertainty reigns for small businesses. One thing is certain: the SBAF has much on its plate.

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