The price of general liability insurance and the ongoing shortage of carriers willing to write such policies for builders pushed these issue to the top of NAHB's annual critical issues surveys. On a scale of one to five, where one equals not at all critical and five equals very critical, general liability insurance cost scored 4.49 and availability scored 4.26. These results parallel the numbers from the three previous surveys.
Rounding out the top five issues: lumber price/supply at 4.25, development approval process at 4.22 and development costs at 4.18.
Missing from the top ten list this year was mold, which peaked at fourth during the 2002–2003 survey period. Concern over mold dropped to 29th this year. Labor availability experienced a similar drop, ranking as the industry's most critical issue for several years running before dropping to 14th this year.
Building MaterialsRanking of building materials prices and supply moved up significantly during the current survey period. Cement prices and supply was ranked tenth during the July 2003 to June 2004 period, up from 43 in the previous survey year. Gypsum board/sheetrock price and supply moved to sixteenth this year versus 43rd last year. Similarly, insulation price and supply moved to 20th from 42nd.
Regional VariationsIn that home building remains a local business, different issues dominate in the various regions. In the Northeast and Mid-Atlantic states, land and entitlement issues dominate. Survey comments cited "too strict" development approval and permitting processes. This political landscape feeds the area builders biggest concern — the cost of lots — followed at number three by the availability of lots.
In the high housing growth states in the Southeast, builders rate most critical increasing impact fees and development exactions as local governments seek new revenue sources. Material shortages, particularly cement, also concern builders as they seek to sustain the region's robust housing market. In comments submitted along with the survey, respondents wrote, "Local governments abuse the impact fee as a source to fund infrastructure concurrency in high growth areas. They are inflationary, artificial and ignore growth in a community that occurs outside of new construction."
The three remaining regions — the Midwest, West and Southwest — fall in with the national norm, rating liability insurance cost as critical issue number one. In the Southwest and West, product liability/construction defect laws rated in the top five critical issues. One respondent wrote, "Insurance companies aren't giving a break on general liability policies until the legislation is tested in court. This is our number one issue at the state level."
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