   Two weeks ago we wrote that early data suggest there’s little “fallout” from the September 11 events, at least in relationship to the local housing market. Well, as September’s data continues to reach our eyes, that premise appears correct. However, the direction the market was taking prior to August seems to have shifted slightly, beginning well before the attacks in Washington and New York.
   There are some fascinating trends that are evident in the Department of Commerce’s housing data for September, primarily as it relates to Michigan in general, and its Southeast region in particular. As we viewed the data, a couple of items stood out, suggesting we look at previous years’ data from a new perspective.
First, unlike the rest of the U.S., the state is running well behind last year. Through the third quarter, total permits are off 5.8%, while single family activity’s declined 3.8% (state report—page 4), basically numbers we’ve been reporting since early summer. And, this year’s downturn is still centered in the “traditional” Metro-Detroit area, which represents 138% of the decline in Single Family activity and 63% of the total decline.
   What we hadn’t noted before September’s report is that it’s indicative of a trend that’s been in effect since 1998. When we look at the first three quarters of the past five years (chart below) we find that total housing activity has been sliding in the south, west and central sections of the Detroit area, while it’s been consistently rising in the north. Total permit authorizations peaked in the traditional Detroit and Ann Arbor sectors in 1998, while the “Flint” sector experienced its weakest period since ‘94. However, since that time, the sectors have trended in opposite directions.
   The reason for these trends becomes obvious when we look at companies pulling local permits. Through the first three quarters of ‘98, fewer than 100 single family permits were pulled by large building companies with Oakland Co. addresses. One year later, similar data showed roughly 300 units authorized to those few large companies. So, what more than likely took place was merely a shift in the direction of the primary “Detroit” market.
   The other trend in the state’s housing activity relates to sharp downturns during the months since July. However, the data may not mean much, particularly considering the temporary effects in the days following the attacks. August’s activity plummeted from an exceptional July, but its single family rates were stronger than most recent Augusts. September, on the other hand, was up from August on a seasonally adjusted basis, but experienced a weak single family sector, 11% under average Septembers, which is likely just a reflection on the week following the attack. In other words, October data will tell the story.

Business News & Issues

   There was a sense of “bad news/good news” for General Motors in yesterday morning’s report of Jac Nasser’s forced resignation as Ford CEO, to be replaced by current Ford Chairman William Clay Ford, Jr. Obviously, with Nasser (blamed for many of Ford’s problems) out, it could be bad news for GM as it’s the company that’s improved its market share at the expense of Ford. However, the decision to place William Clay Jr. in charge may be the the #1 automaker’s good news.
   Ford, the Princeton and MIT educated great—grandson of Henry Ford, who claims to be a life long environmentalist committed to developing environmentally friendly products, took over as chairman just prior to Nasser being hired as CEO. And, since that time, Ford introduced the biggest gas guzzler (Expedition) on the market.
   But the new CEO is probably best known for his activities as Vice Chairman (and decision making owner [almost in the Al Davis mold]) of the Detroit Lions. And in that capacity, he brought in a management team to convert a team built for girth and power, into a team that relies on quickness and finesse. Well, each Sunday this fall we’ve seen the results.
   Now, if we apply a lionesque analogy to Ford, we find a company that’s beset with low productivity, weak sales and SUVs that tumble like running backs (since Barry Sanders). In other words, bloated and unbalanced like the Lions.
   So, much like Packers, Bucs, Vikings and Bears have benefited from “Ford” management decisions, GM, Chrysler, Honda and Toyota will likely continue to be major beneficiaries.

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A New Danger Lurks in Detroit

   In October’s issue of Michigan Builder, Lee Schwartz reminded me of a Wall Street Journal column by former Detroit News editor Tom Bray that was critical of the auto industry for being outsmarted and outflanked by environmentalists on the issue of fuel economy standards. In his column, Bray noted that Ford Chairman, Bill Ford Jr, suggested that “human caused climate change is already taking place,” concluding (in agreement with Al Gore’s ‘93 best seller “Earth in the Balance”) that the internal combustion engine will become obsolete.
   I read Schwartz’ reference to Ford on Monday, the day after Bill Ford Jr’s other business interest, the new look Detroit Lions, continued as the only winless team in the NFL. Then, on the way to the office Tuesday came the report that Ford CEO Jacques Nasser was being fired, and replaced by William Clay Ford Jr. My immediate thought was that Gore would be hired as Vice President for spiritual affairs, but quickly realized there wasn’t really much humor in this story ... in fact, it’s really quite troubling.
   On page four I summed up, in comparison, similarities of Bill Ford’s hand-me- down toys, “bloated and unbalanced.” And the reference to Ford Explorers tumbling like Lion running backs is probably more than accurate. But it’s the essence of Mr. Ford raising his visibility in the auto industry that sends up the red flag.
   Schwartz used Bray’s column, and ultimately Ford’s statement, as an example of how “percep-tion becomes reality” in the political arena in his attempt to stress that it’s dangerous to put PR ahead of “other, more central needs.” By giving “lip service” to stronger fuel economy standards, the auto industry tacitly implied a problem, giving credence to those in Washington looking for a governmental fix. And, Bray notes, “by not standing firm on principles of free markets and solid science, other industries are backing themselves into a bigger corner (could he be talking about NAHB’s flirtation with ‘Smart Growth?’).” Bringing us back to Bill Ford Jr.
   Today, Ford Motor Co. is a “wounded animal” with a front man spouting ideas that harm his industry as a whole. By speaking environmental babble, Ford Jr. gives industry enemies credibility to put greater restrictions on automakers, and provides good, (though inaccurate) PR for Ford.
   We’ve already seen this in the building industry. It’s similar, in concept, to the zealots on NAHB’s energy committee who gave credibility to the CABO Energy Code back in '95. And, it's happening to the auto industry today.

Barry

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Taxation and Finance ---- Tired of Unsolicitated Mail, Telemarketing and E-mail? Well, here’s where to go, to “just say no!”

Tired of having your mailbox crammed with unsolicited mail, including pre-ap-proved credit card applications? Fed up with getting telemarketing calls just as you're sitting down to dinner? Fuming that your email inbox is chock-full of unsolicited advertising? The good news is that you can cut down on the number of unsolicited mailings, calls and emails you receive by learning where to go to "just say no."

Credit Bureaus
The credit bureaus offer a toll-free number that enables you to "opt-out" of having pre-approved credit offers sent to you for two years. Call 1-888-5-OPTOUT (567-8688) for more information.
In addition, you can notify the three major credit bureaus that you do not want personal information about you shared for promotional purposes—an important step toward eliminating unsolicited mail. Write your own letter or use a standard letter (available on request) to limit the amount of information the credit bureaus will share about you. Send your letter to each of the three major credit bureaus:(1) Equifax, Inc. Options P.O. Box 740123; Atlanta, GA 30374-0123; (2) Experian Consumer Opt-Out; 701 Experian Parkway; Allen, TX, 75013; and (3) Trans Union Marketing List PO Box 97328; Jackson, MS 39288-7328.

Direct Marketers
   The Direct Marketing Association offers its Mail and Telephone Preference Services, which allow you to reduce the amount of direct mail marketing and telemarketing you receive from many national companies for five years. When you register with these services, your name will be put on a "delete" file that’s updated four times each year—in January, April, July and October—and made available to direct-mail and telephone marketers. Two to three months after your name is entered into the quarterly file, you should notice a decrease in the number of solicitations you receive. However, your registration will not stop mailings or calls from organizations not registered with the DMA's Mail and Telephone Preference Services.
   To have your name deleted from many direct mail or telemarketing lists, write your own letter (or use the sample letter available by request) and mail it to the following addresses: For direct mail marketing: (1) Direct Marketing Association; Mail Preference Service; PO Box 9008; Farmingdale, NY 11735-9008, or (2) Preference Service Manager; Direct Marketing Association; 1120 Avenue of the Americas; New York, NY 10036-6700.
   For telemarketing: Direct Marketing Association; Telephone Preference Service; PO Box 9014; Farmingdale, NY 11735-9014 OR Preference Service Manager; Direct Marketing Association; 1120 Avenue of the Americas; New York, NY 10036- 6700. Or send via fax to: 212-790-1427. In addition, the DMA recently launched  a new EMail Preference Service to help you reduce unsolicited commercial emails. To opt-out of receiving unsolicited commercial email, use the Direct Marketing Association’s online form at www.e-mps.org. Your online request will remain effective for one year.

Department of Motor Vehicles
   The Drivers Privacy Protection Act allows states to distribute personal information only to law enforcement officials, courts, government agencies, private investigators, insurance underwriters and similar businesses-but not for direct marketing and other uses.
   The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, try www.ftc.gov/ftc/consumer.htm call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form rn.ftc.gov/dodwsolcq$.startup?Z_ORG_CODE=PU0.
   The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel www.consumer.gov/sentinel , a secure, online database available to hundreds of civil and criminal law enforcement agencies U.S. and abroad.

R, P & T

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Anti-Sprawl issues take ‘back seat’ to economics

There’s been a noticeable concern across the nation regarding falling tax revenues, not only at the federal level, but at the state and local levels as well. Falling governmental receipts had been a focal point for the past several months, but have received considerably more attention since last month’s terrorist attacks as the already slowing economy was considered to have clearly fallen into recession.
   One interesting consequence of the resulting budgetary concerns has been, what the Wall Street Journal calls, “reshaping of the debate over controlling development.” Noting “fears of recession trump urban-sprawl issues,” a WSJ feature focused on growth management issues losing their luster as the primary concerns of fast growing states.
   For example, it tells of Arizona, where “controlling growth has consistently ranked among the top concerns in pubic opinion polls, the issue has all but lost its urgency in the wake of rap-idly deteriorating revenues and a projected budget shortfall of $1.6 billion.” And, in Colorado (which had population growth of 30% during the last decade), where growth’s impact “domi-nated politics for more than a year, growth control measures were to top the agenda in a special legislative session set to end last week. But those issues were immediately overshadowed by news of projections for a $264 million revenue shortfall.” (Note: both states had Sierra Club initiated growth boundary referendums in 2000).
   The article explains, “growth management is clearly moving down on states’ priority lists as the economy moves up.” Pointing again to Colorado, it quoted a Denver based Political Consultant who said that, up until a few weeks ago, “anti-sprawl measures were certain to dominate next year’s state election.” But “no longer,” he said, noting that there’s been a turn of “180 degrees in a matter of weeks. We were debating growth,” he told the Journal, “but now we have to start worrying about jobs and economic development.”
   The article continued on to explain how Arizona’s environmentalists lost the initiative in trying to forge a consensus on their concerns and “even in Oregon (the poster child/state for anti-sprawl activists) the slow growth movement suffered a setback,” as voters passed a measure requiring state and local governments to compensate landowners for losses in property values due to regulatory restrictions.
   Most interesting is how elected officials seem to focus on sprawl when fighting it IS popular. However, at a time of fiscal crisis there appears to be a realization that development isn’t draining state budgets but, in fact, enhancing fiscal stability.

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Beyond Seinfeld: It’s still about "Nothing" in particular

The “Right Stuff” for Flint City Council?
   The Builders’ Association has refrained from taking a position on any Flint City election for the past 14 years. After all, if one of our endorsed candidates won, someone might blame us for what followed.
   However, this column’s been biting its proverbial tongue for months regarding the race for the city’s 8th Ward Councilman, a position effectively held for years by Lawrence B. Murphy, who previously represented the 5th Ward back in the ‘60s. Murphy will likely win, and probably should, due primarily to the exceptional service he’s provided his constituents over the years. But we can’t help but think that his challenger may have the better background to deal with Flint’s problems.
   Back in 1987, when we were heavily involved in Flint’s mayoral race, the downtown tavern debate was focused on the primary question, “who is better equipped to lead a dying city to as painless a death as possible?” From those nearly nightly debates came 2 theories of urban salvation:The “incineration” theory (burn the charter and let it become a problem for the surrounding townships) and the “Formaldehyde” theory (mayor needs to embalm the city).
   Well, Murphy’s opponent, Har-old Doll, a long time Flint Funeral Director, is also chairman of the state’s Board of Mortuary Science. No one in either campaign seems to have much of a sense of humor about it, which is particularly unfortunate considering election day comes the Tuesday after Halloween. But wouldn’t it be nice to see cardboard tombstones on 8th ward lawns stating, “Flint needs an Undertaker; Elect Doll ...”

That Other “Big” City
   We realize that few north of 8 Mile Rd. actually care who wins the Detroit mayoral race, but a victory by Councilman/cop Gil Hill (also known as Eddie Murphy’s boss, Inspector Todd, in the “Beverly Hills Cop” movies’ series) would raise Detroit’s status, at least by Hollywood standards. And, a victory by his opponent, Kwame Kilpatrick, would probably help his sister, Jennifer Granholm, (both appear to be offspring of Wayne Co. Executive Ed McNamara) in her quest to become Michigan’s next governor.
   But as we’d expect in Democrat politics, another celebrity’s taken front stage in the waning days of the campaign, as Geoffrey Fieger cut a commercial for Hill. The spot brought an attack from Kilpatrick, who said it was “deplorable” that Hill appeared with Fieger.
   In response to the attack, the smart, and somewhat paranoid Mr. Fieger, released the audio tape of a phone message from Kilpatrick who, at the time, was seeking Fieger’s support. And worse, the call came from Kilpatrick’s State Representative office, where he’s House Democrat leader, a likely violation of campaign law.
   What’s amazing about this situation is that Fieger despises Kilpatrick’s “sister,” and would do anything to assure she won’t be the next Governor. Apparently Kwame, despite his insider status, was unaware of this, and suggests that, at his young age and sheltered life, he lacks the street smarts to follow in the footsteps of Coleman Young.

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Association News and Events -- Holiday Party; “Flint” President of MAHB

   At its October meeting, the Board of Directors voted to try a different concept for the association Holiday celebration, and hold an Office Party at BAMF’s office. The concept had been discussed for the past several years, ever since the tremendous response given to the office “open house,” held in December 1997. So, after analysis of recent Christmas Parties, the vote was unanimous.
   The event’s set for Wednesday, December 5th, from 4:00 pm, to 7:30 that evening. And, there will be no charge.
   So, mark your calendar, and look to coming issues of Veritas for further details.

   Many of the association’s directors will attend the MAHB fall Board of Directors’ meeting on November 8th, to see Rodney Rajala’s induction as President of the State association. His designation as the MAHB “President Elect” this past July represented the first time a Flint area resident has been so honored since 1975, when Billy Pittman was duly elected.
   For those who don’t remember, or weren’t here six years ago, Rajala was President of BAMF in ‘95. Since that time he has served in various capacities with the MAHB, and is currently 1st Vice President and Legislative Chair.
   In ‘95, Rajala created a bit of a stir with a series of President’s Awards, presented in mockery of public officials who were out of line, on occasion, with rulings or actions relating to the home building industry. Knowing that the state of Michigan presents many more viable targets than the Metro-Flint area, we’re anxiously awaiting to see if he instates a similar program at the state level.

At the upcoming Directors’ meeting, the BAMF Board will be considering the 2002 meeting and event schedule. Last year we altered the schedule to increase attendance at General membership meetings, and the numbers seem to indicate the schedule worked. If you have any thoughts on this subject, we urge you to contact Laura or Barry at 603-2200.

Economic Update: 3rd quarter GDP stronger than expected

At the greatly hyped press conference at the National Housing Center, NAHB officials, joined by several housing analysts, concluded that the nation’s home building industry would hold up “fairly well against a general decline in economic growth during the final two business quarters of this year.” Noting the “terrorist attacks had a negative impact on consumer confidence,” speakers at the October 23rd event reported that a “healthy number of prospective buyers remain in the marketplace, while low mortgage rates are helping to moderate the housing slowdown that’s currently occurring.” From the session came:

· Dave Seiders, NAHB’s Economics Chief, said that, despite negative growth in the 3rd and 4th quarters of this year and higher unemployment rates (which will reach 5.8% in ‘02’s 2nd quarter), the “short, and relatively mild downturn, will be followed by ‘quite strong’ growth during the second half of next year.

· David Berson (Fannie Mae) predicted that the current housing downturn would be the “smallest of any in the post war period.” He noted that confidence has rallied since its post September 11th low and that the tremendous drop in mortgage rates had increased housing’s affordability, offsetting some of the negative effects of 9/11.

· David Lereah (Realtors) said that open house traffic was down 10% in mid September, recovered halfway by mid October, and “should return fairly quickly to where it was prior to the downturn.”

Also, at the conference, Seiders, like most economists, said he expected the final two quarters of ‘01 to show respective declines in Gross Domestic Product of 1% and 2%. So, it was no surprise this morning when the Commerce Department announced that its estimate of 3rd quarter GDP showed a decline.
However, what may indicate that the economy is stronger than anticipated is that the decline was only 0.4%. Furthermore, in an unusual commentary on its report, the Department said revisions (there will be 2) would “probably” not show a decline of 1%, the consensus forecast of America’s economists.
Interestingly enough, the immediate response to the first quarter of negative growth in ten years was “ho-hum.” The stock indexes were up early Wednesday morning, and there remained talk it would only mean the Federal Reserve would continue to fight recession.
However, if this first estimate holds, it means that the economy held despite the fact that the terrorist attacks took place late in the quarter, with no real time for recovery. It conceivably could be indicative of an upturn in consumer activity in the fourth quarter, which may surprise all the high paid analysts, and keep the economy out of a “defined” recession (2 consecutive quarters of negative growth.”

Economic Notes:
It may not show at the pump, but a spike in gasoline prices last month is blamed for a higher than expected rise in the Consumer Price Index, which rose 0.4% in September, double the expected rate. However, the Core rate of inflation (minus food and energy) was up just 0.2%, the same as most analysts had forecast. For the fiscal year the rise was 2.6%, well below FY’00’s 3.5% ... The Index of Leading Economic Indicators fell for the second consecutive month in September, an indication that the already weak economy will remain weak for the next three to six months. However, its 0.5% decline, the largest in nearly six years, was likely a reflection of the immediate aftermath of September 11th, and may not be too indicative of the economy’s actual health.

Housing Industry Update

September sales say little about market
Headlines from the release of September home sales data may may look dramatic (Existing Sales Plummet 11.7%; New Homes Sell at weakest pace in a year), but in reality mean virtually nothing in regards to the overall health of the U.S. housing market. In fact, when one considers that business activity was almost nil during the week of September 11th, the month’s sales figures were surprisingly strong.
Existing homes, for example, as reported by the National Association of Realtors, sold at a 4.89 million unit pace, well below Augusts’ 5.54 million. However, August’s rate was an all time record, and September was only the fifth month in the past 3 years that the pace fell below the 5 million mark. In its release the NAR noted that the market remains strong, and its forecasting 5.19 million units by year’s end, the second strongest on record. The problem with that is, through the 3rd quarter sales have come at an average rate of 5.26 million, which is more than a percent above the record set in 1999.
New homes sold at a rate of 864,000 units during the month, according to the Commerce Department, 1.4% below August, and their lowest rate since August of last year. NAHB said the decline was expected and suggests “there was no dramatic drop due to terrorist attacks.”
However, we’re still averaging 900,000 sales per month, and our best guess is that sales were impacted by 9/11, up 1.7% from ‘98’s record, and will go on a limb and claim a big upswing in October.

Homeownership record
The nation’s homeownership rate rose to 68.1% in the third quarter, eclipsing the 2nd quarter record of 67.7%. The fact that 1/2 million more families became owners in the past 3 months may explain the continuation of the lofty sales’ data.

Look Here for Previous Issues of Veritas

State’s New Housing Activity Down 5.8% “Commerce” data show interesting 3 quarter regional trend

A New Danger Lurks in Detroit

Taxation and Finance ---- Tired of Unsolicitated Mail, Telemarketing and E-mail? Well, here’s where to go, to “just say no!”

Anti-Sprawl issues take ‘back seat’ to economics

Association News and Events -- Holiday Party; “Flint” President of MAHB