The list of problems troubling the home-building industry is a long one. It starts with the tight money policy of the Federal Reserve Board -- which has pushed up interest rates and driven buyers out of the market -- and goes on to include rent controls, environmental restraints and a whole slew of other federal and local restrictions.
Demoralized by a slump that has driven many of its members into remodeling work or out of business, the National Association of Home Builders is trying to teach builders to fight back.
At its giant convention last weekend -- attended by 51,000 architects, builders, lenders, suppliers, real estate professionals and others involved in housing -- the NAHB called in experts on a variety of the industry's problems: unions, rent control and condominium conversion moratoria.
It also raised money with a Wayne Newton show for the campaigns of sympatetic politicians, made plans for lobbying Congress for emergency housing legislation whenever housing starts fall and vowed that, as an industry, it wasn't seeking handouts. And, finally, there was a how-to-do-it session on taking government to court -- "When All Else Fails, Sue Them." For good measure, there were a number of seminars on how to get into remodeling and rehabilitation.
Confused both by the rapid evolution of traditional mortgage lending into a smorgasbord of short-term and/or nontraditional instruments and the failure of this housing slump to act like all those that have gone before, builders say they have been unable to plan as they once did, nor to afford construction financing.
On the regulatory level, it is clearly an industry that sees itself as beleaguered. Satisfying the burgeoning number of local regulations is "the biggest problem of the typical small builder," a spokesman for the NAHB said. Meeting subdivision regulations, zoning and building codes and other requirements in the planning stage has added up to a "lengthy and complicated process," requiring the services of lawyers and land planners -- an expense most small builders cannot afford.
About two-thirds of the country's homebuilders construct fewer than 2,500 units a year, and the NAHB estimates that as of last spring, following a previous housing decline, 20 to 30 percent of its member builders simply stopped building.
Some who were constructing apartments laid much of the blame on rent controls, which Silver Spring, Md., attorney Earl Segal described here as a "disease" that is spreading from jurisdiction to jurisdiction. "Once you get the disease," he told a session on the last day, "it's hard to get rid of it."
A coalition of real estate industry groups has been fighting rent control in Montgomery County since it was introduced in 1973. The coalition recently helped defeat a measure that would have extended the county's law, which will expire tomorrow.
segal, from the Washington-based development law firm of Linowes and Blocher, urged apartment owners wishing to convert to condominiums to "battle tenant groups on their own level. You're dealing with a very emotional issue -- people's homes." Where all else fails, "try to have the state preempt the local jurisdiction" in its regulation of condominium conversions, said Segal, a member of the Montgomery County executive's task force on condominium conversion. "We've had some success in Maryland where a county (Montgomery) ran amuck," said Segal, "and the state court struck down part of the law."
"Tenants are converting emotional title [to their apartments] into legal title," said Richard L. Fore, a Las Vegas developer and former Housing and Urban Development department official who served on President Ronald Reagan's transition team. "Many realize they can't buy their own homes and get attached to their apartments. They see it as we would, legal title."
Fore, who heads up a nationwide housing industry campaign to defeat rent controls, Robert Brown, executive vice president of the Maryland Home Builders Association, and other speakers urged builders to organize in a sophisticated way and to raise as much money for a war chest as possible. Rent control laws are often enacted swiftly, the speakers said, taking apartment owners by surprise. Tenants are highly organized in many areas and communicate swiftly with each other nationwide, they said.
"We expect to live with rent control the rest of our natural lives," said Brown, whose association was the first in NAHB to organize an apartment owners' council to combat that type of regulation and who has fought such controls successfully in several Maryland jurisdictions. He urged builders to "make more political contributions" and, like builder associations in Baltimore and the Maryland suburbs of Washington, to recruit member builders and their families for lobbying on the issue.
Brown suggested that hotlines be set up for tenants to use when they have problems with their buildings and that the hotline numbers be supplied to county council members so they can give it in turn to constituents who complain. "It takes the heat off politicians and they love it," he said.
When a referendum on rent control is at hand, enlist a telephone network of real estate agents to spread the anti-rent control message, advised Norman Flynn, who directed a successful campaign that overwhelmingly defeated a proposed ordinance in Madison, Wis., three years ago. Realtors can "get your point of view across without seeming as self-serving," he told the builders. Builders, on the other hand, are more willing to supply the money needed for the drives, which demand the services of professional campaign organizers, lawyers and pollsters, Flynn said.
Labor unions have not been making many demands on builders this year because there have been so many layoffs during the housing depression, said the NAHB's new president, Fort Worth builder Herman Smith. "Contracts have been more a question of survival," he noted, predicting that in 1981, "union negotiations in the crafts won't be a problem." p
The builders also heard from the organization's legal counsel on labor matters, McNeill Stokes of Atlanta, on "how to successfully confront a union organizing campaign."
First, he said, "go back and fire the person you've been meaning to fire for six-months, the unhappy person who is drawing you down" with his complaints. "This employe never quite measures up; he's always complaining, he's late and takes long coffee breaks. They can never accept the fact that they have a problem and they take it out on the employer."
Such an employe is the first to call a union about organizing a company, Stokes said. Union organizers "sit in their air-conditioned offices and wait for their phones to ring," he observed.