Newly elected chairman of the NAHB, Greg Ugalde discusses the need for affordable housing, as well as some possible solutions
Builder & Developer: First off, congratulations on being elected Chairman of the NAHB. Can you tell us what the NAHB’s top priorities are this year?
Greg Ugalde: I have more than 25 years of experience in home building and am the president and chief legal officer of T&M Building Co., Inc., which is based in Torrington, Conn. T&M was founded in 1962 and has built more than 4,000 homes for first-time and trade-up home buyers in communities throughout Connecticut. I am also the founder and owner of GFU Investments, LLC, a builder-developer minority owned business focused on urban development and workforce housing.
Throughout my career, I have been very involved in the NAHB leadership structure at the local, state and national levels.
BD: What are the NAHB’s top priorities this year?
GU: NAHB will be focusing on housing affordability and working to counteract the factors that can add unnecessarily to the cost of building a new home. According to the Joint Center for Housing Studies of Harvard University, almost one third of U.S. households are cost-burdened, meaning they pay more than 30 percent of their income for housing.
As a nation, we can — and must — do better than that.
BD: What can we, as an industry, do to help make housing more affordable?
GU: Housing is subject to the law of supply and demand; prices rise when the supply is not adequate to meet demand. At a basic level, that means ensuring that local governments are aware of the need for a wide range of housing types, including higher density, and that they don’t exclude such housing.
Addressing regulatory excesses will also help trim costs. NAHB studies show that almost 25 percent of the cost of building a new home is attributable to regulations imposed by different levels of government. The percentage is even higher for multifamily housing.
There’s no question that regulations are necessary to ensure safety and health. Beyond those fundamentals, regulations need to be based on sound data and carefully evaluated to ensure that they don’t drive up costs.
Overregulation is a concern at local, state, and national levels, and NAHB will address it at the national level while our local and state affiliates tackle it in their jurisdictions.
Another factor affecting housing costs is the availability of skilled labor. As an industry, we need to push Congress to provide more job training programs to prepare people for careers in home building. Likewise, we need to ensure that our local school systems are providing options — including skills training — for kids who want good paying careers but don’t want to go to college.
Other concerns that NAHB will be addressing that add to housing costs include prices of construction materials; the need for housing finance reform; and the need to improve the nation’s infrastructure.
Finally, many of us remember when energy efficiency wasn’t a major concern in choosing appliances or buying a car. Today, it’s a key consideration. Likewise, recycling has not always been a priority, but today it’s a way of life for most of us.
I would like to see it become second nature for elected leaders and regulators at every level to routinely consider how their actions might affect housing affordability. Encouraging such a mindset is a goal that every builder in every market can help support.
BD: Through your eyes, as an experienced homebuilder, what is your take on the current market? What sort of advice can you offer other builders in regards to the market?
GU: I think it’s important for builders to remember that every housing market is local. When economists and other experts talk about the housing market, they are almost always discussing it in broad national or regional terms.
However, markets just down the road from each other sometimes vary considerably; thus I would tell every builder to learn as much as possible about their own market.
The best way to do that is by joining and becoming active in your local homebuilder association (HBA). NAHB members build about 80 percent of the new homes constructed in the U.S. each year, so the folks at your HBA are likely to have a wealth of information to share about the market. Equally important, being a part of the local HBA provides an opportunity to help shape your market and advocate for housing.
It is also important to heed the basic rules that apply to all businesses: Know your customers well and don’t get overextended. This is particularly important for builders because housing is so cyclical. Many builders have found that careful diversification can help cushion against market extremes.
Finally, use our two great NAHB blogs: NAHBNow and Eye on Housing. With news coverage and market analysis from NAHB’s communications and economics groups, they provide essential information that can help frame a successful business and career.