You’ve heard the horror stories — buyers move into their newly purchased home and not long after, a huge catastrophe occurs. Maybe the plumbing goes bad, the roof leaks or electrical systems go awry.

In many cases, the buyers reach for the phone and call a lawyer first.

But the Home Builders Association is hoping that homeowners will take a different approach that could result in faster and better outcomes.

“In a number of sub-divisions builders were being sued by homeowners. And when the builders looked at their service logs they found that the homeowners had never contacted them. Never complained. Never even asked for anything,” says Guy Bjerke, Chief Operating Officer of Home Builders Association of Northern California.

That has sparked a media campaign in San Francisco, urging homeowners who have problems with their houses to seek help directly from the builder first.

The TV commercials have aired in Northern California, but the message is being carried to other areas such as San Diego via the organization’s websites.

Bjerke said builders were surprised that homeowners didn’t try to get them to fix the problem before more severe action was taken. “They were kind of perplexed as to why all of the sudden these homeowners thought that there was something so seriously wrong with their homes that they decided to sue,” says Bjerke.

Often the outcome is less than desirable and usually always costly.

“For every dollar that’s spent on what we call indemnity or to fix a home, anywhere from $5 to $8 is spent in litigation costs,” says Michael Strech, Director of Risk Management and Insurance for California Building Industry Association.

Homes have a 10-year statue of limitations, but some functionality standards are under 10-years (see chart for specifics). It’s sometime during that decade that homeowners are typically approached by lawyers.

“What’s been occurring in certain subdivisions in various parts of the state is there are about three or four law firms that will blanket a subdivision with flyers, almost generic, stating that, ‘There’s a neighbor somewhere in the subdivision that’s found something wrong. There’s probably something wrong with your house. Wouldn’t you like to find out or have us sue on your behalf to protect your rights?’”

Calling the builder first is aligned with public policy. In January 2003 the FIX IT law went into effect providing the builder an opportunity to repair the home when a defect occurs.

“Most builders will stand behind their product — will come out and find out what’s going on, fix it if it needs a fix. And, generally speaking, the homeowner is going to be much better off having that kind of scenario play out rather than calling the lawyer and getting entangled in litigation,” says Bjerke.

“All it does is get the right people involved in the process to get the home repaired as quickly and economically as possible,” says Strech.

If you don’t know who your builder is, Bjerke suggests asking neighbors or contacting the city planning department to find the building permit.

If you must file a legal claim Citizens Against Lawsuit Abuse suggest that homeowners ask the following questions:

Can you show me the specific problems I have in my home, and tell me how much you will claim is necessary to repair them?

How much money is likely to be awarded and where does it all go?

How do you make your money?

How much do you expect to pay for expert witnesses and testing?

What happens if we receive less than the costs of the repair you claim are needed?

When I sell my house, do I have to disclose this lawsuit, and that possibly not enough money was collected to fund the repair of the alleged defects?
Function Time Limit Code Section
Operation of plumbing and sewer systems 4 years from close of escrow (COE) 869(e)
Electrical systems 869(f)
Cracks in exterior pathways, driveways, hardscape, sidewalls, sidewalks, and patios 4 years from COE 896(g)(1)
Manufacture products including windows, doors, roofs, plumbing products, and fixtures, fireplaces, electrical fixtures, HVAC units, countertops, cabinets, paint, appliances, and any other product that is completely manufactured offsite 1 year unless manufacturer specifies a greater period 895(g)(3)
Noise for attached units 1 year from original occupancy of adjacent unit 896(g)(6)
Operation of irrigation and drainage system 1 year from COE 896(g)(7)

Courtesy California Building Industry Association. For more information contact the association.

Source: The San Diego Union-Tribune
Publication date: 2004-06-08

Jun. 8–The rising prices that have pushed homeownership beyond the reach of middle-wage earners in San Diego County are spreading to communities across the country, according to Harvard University’s annual State of the Nation’s Housing report.
Despite a record national homeownership rate of 68 percent, millions of Americans pay more than a third of their income on housing, leaving less money for such essentials as food, medicine and savings accounts, researchers reported yesterday.

“Affordability is by far the most prevalent challenge” among housing issues, the report found. Many of the jobs created in today’s economy “do not provide enough income to enable workers to afford even the most modest housing.”

“More than twice as many people in this country face housing problems as lack health insurance,” the report said. “In addition, one in 50 households live in housing that is seriously substandard.”

The types of housing generally favored by builders no longer fit into a working-class budget, said Allegra Calder, research coordinator for the study conducted by Harvard’s Joint Center for Housing Studies.

“Our approach to building across the country is to build more at the luxury end,” she said. “In places like California there is a real push for people who want to get into any type of affordable housing.”

The search for reasonable prices has pushed middle-income San Diego County workers into far-flung suburbs, such as southwest Riverside County, Calder noted. The study agrees with builders who hold that increasingly strict land-use regulations are making it difficult to construct affordable homes. Although “the lowest mortgage interest rates in over 45 years” kept sales strong in 2003, home prices could decline in some U.S. markets as local economies fluctuate, the study warned.

That warning follows much debate among economists and industry analysts on whether the rapid climb of housing prices in some areas has created a bubble of inflated values that inevitably will burst.

Although other parts of the country have mounting challenges, California is a trouble spot. The state association of Realtors has reported that about 58 percent of households can afford a median-priced home nationwide, compared with 21 percent in California and 15 percent in the San Diego region.

In many of the nation’s metropolitan centers, people are coping with higher prices by living in more crowded conditions and moving farther away from their jobs. Some who are unable to purchase a home are being squeezed into aging apartments and low-cost, subsidized housing, the Harvard group said. The redevelopment of older neighborhoods often results in a loss of affordable homes.

Although the greatest pressures are being felt on the West Coast and the Northeast, the pattern is being repeated around the country, from Seattle to Omaha to Atlanta, officials said.

Regarding rental construction, the report said more than 1.3 million apartments in two- to four-unit buildings were lost nationwide, from 1992 to 2001, while only 450,000 were built.

“The already scarce supply of low-cost housing continues to shrink because of physical deterioration on the one hand and gentrification on the other,” researchers said.

The study foresees problems for homeowners and renters alike. “Without fundamental changes, these challenges will continue to escalate, further dividing the two-thirds of Americans who are well-housed and the remaining third who are not, including a substantial minority who must struggle simply to keep a roof over their heads and meet other basic needs.”

Government intervention is needed, said G. Allan Kingston, chairman of the National Housing Conference, a sponsor of the report. He called for “targeted policies and incentives at the state, local and national level.”

Not all news was bad. Private wealth generated by increased home equity has helped sustain consumer spending. Housing starts totaled 1.85 million in 2003. “Not since the 1970s when the baby boomers started forming their own households have starts been at such high levels,” the report said. Much of the building in 2003 took place in the South and Southwest. “Just five states, Florida, California, Texas, Georgia and North Carolina, accounted for 40 percent of housing permits issued.”

Older Americans face several problems in the years ahead. Many have inadequate incomes and rising health-care needs. The traditional pattern of developing on the edge of suburbia has left many seniors isolated from relatives and other caregivers, the study reported. As households age, they also are growing more crowded.

In 2000, 6.1 million households, or 5.8 percent, lived in crowded conditions. The report attributes the gain to America’s rising immigrant population.

Virginia’s Loudoun County, one of the Washington, D.C. area’s bedroom neighbors, was the fastest growing county in the country between April 2000 and July 2003, according to the latest tabulation from the Census Bureau.

But half the nation’s 10 fastest-growing counties during the 39-month period were located in Georgia. Chattahoochee, Forsyth, Henry, Newton and Paulding all had with growth rates above 20 percent.

All five are located within commuting distance of Atlanta, which has led the nation in new-home construction for the last 13 consecutive years, according to the National Association of Home Builders.

During Atlanta’s reign as the hottest housing market in the country, total annual building permits in Greater Atlanta have ranged from a low of 24,684 in 1991 at the start of the reign, to a high of 66,550 in 2002.

“It has been a long run,” commented David Smith, president of the Greater Atlanta Home Builders Association. “Overall, housing demand has remained strong and the market has been vibrant.”

In all, the Peach State was home to 20 of the 100 fastest-growing counties in the country, according to the Census Bureau. Next, but not even close, were Texas with 12 counties and Florida with 9.

Loudoun County west of the Nation’s Capital in Northern Virginia experienced a 30.7 percent population increase during the survey period.

Chattahoochee was second with 29.9 percent gain, followed by Douglas, Col., outside of Denver, with a 27.1 percent jump; Rockwall, Tex., near Dallas with a 26.8 percent increase; and Forsyth, Ga., with a 25.8 percent gain.

The next 5 were Henry, Ga., (25.7 percent); Flagler, Fla., just north of Daytona Beach, (24.8 percent); Newton, Ga. (22.8 percent); Paulding, Ga. (22.7 percent) and Kendall, Ill. in the Chicago area (22 percent).

Despite the big jumps elsewhere, Los Angeles, Calif., is still the most populous county in the nation, with 9.9 million residents. It also gained the most residents with an increase of 352,000 over the 39-month period.

Other counties that ranked in the top 10 in both categories — total population and numerical increase — include Maricopa (Phoenix), Ariz.; Harris (Houston), Texas; San Diego, Calif.; and Orange, Calif.

Of the 100 fastest-growing counties, 60 were located in the South, 20 in the West and 18 in the Midwest. Only two were in the Northeast.

Of the 100 most populous counties, 32 were located in the South, 27 in the Northeast, 25 in the West and 16 in the Midwest.

Interestingly, 20 states did not have any counties that made the list of the 100 most populous and 21 did not have any counties among the 100 fastest-growing.

But California alone had 15, the most counties among the 100 most populous, while New York had 9, Texas had 8 and Florida had 7.

Last year, though, the greater Atlanta area recorded 53,750 single-family housing permits to lead the nation for the 13th year in a row, the NAHB says. But the market for new houses is changing.

“The market for higher end homes has fluctuated during the last two years, though it has been gaining strength in recent months,” Smith, who also is president of Hedgewood Development Corp., reported. “The first-time buyer and first-time move-up markets have not slowed since 1991.”

Rounding out the top 5 housing markets for single-family construction in 2003 were the metropolitan areas of Phoenix-Mesa with 46,590 starts, Riverside-San Bernardino with 35,730, Houston with 33,970 and Washington, D.C. with 30,760.

Fifteen years ago the Houston area was ranked 32nd in the country with 6,788 single-family permits. Last year, it was the fourth hottest market.

“Houston is hot, and that is not just the weather,” said Mike Karm, president of the Greater Houston Builders Association and of Larus Builders, Inc. “New home starts have broken records and pumped billions of dollars into the local economy over the past few years.”

A total of 1.444 million single-family permits were issued nationwide last year, according to the Commerce Department. And the top 20 most active metropolitan areas accounted for 33 percent, or 480,330, of the total.

Atlanta leads nation in single-family permits

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Houston makes gains in new home starts
Friday, March 12, 2004

Inman News

The greater Atlanta area, which recorded 53,750 single-family housing permits last year, led the nation in housing activity for the 13th consecutive year beginning in 1991, according to the Commerce Department.

Rounding out the top five housing markets for single-family permits were the metropolitan areas of Phoenix-Mesa with 46,590, Riverside-San Bernardino with 35,730, Houston with 33,970 and Washington, D.C., with 30,760. The total issuance of single-family permits across the country for 2003 was 1.444 million, according to the Commerce Department.

“We are excited to be the most active housing market in the country once again. It has been a long run,” said David M. Smith, president of the Greater Atlanta Home Builders Association and a builder/developer in the Atlanta metropolitan area. “Overall, housing demand has remained strong and the market has been vibrant, but we are seeing changes in buying activity.

“The market for higher-end homes has fluctuated during the last two years, though it has been gaining strength in recent months. The first-time buyer and first-time move-up markets have not slowed since 1991,” said Smith, who is also president of Hedgewood Development Corp. “Low interest rates continue to fuel the market and are a major factor behind the strength of our entry-level market. Coupled with the recent increase in job growth occurring throughout the Atlanta area, we are optimistic about 2004.”

During Atlanta’s 13-year reign as the hottest housing market in the country, total annual building permits in Greater Atlanta have ranged from a low of 24,684 in 1991 at the start of the reign, to a high of 66,550 in 2002.

The Houston metropolitan area, which 15 years ago ranked 32nd in the country with 6,788 single-family permits, moved up to fourth in the nation last year.

“Houston is hot, and that is not just the weather,” said Mike Karm, president of the Greater Houston Builders Association and of Larus Builders Inc., a builder in the greater Houston metropolitan area. “New home starts have broken records and pumped billions of dollars into the local economy over the past few years.”

“Due to the strong and diverse economy here, low interest rates and the fact that the Houston housing market is truly synonymous with value, we are experiencing a truly preeminent building market. When high-end housing slowed, the affordable market took up the slack. We are excited here in Houston about the future,” said Karm.

Across the country, the top 20 most active metropolitan areas accounted for 33 percent, or 480,330, of the 1.4 million single-family permits issued nationwide during 2003.

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