Chuck Miller's Building Industry Insights

Home Shoppers Opinions Regarding Short Sales and Foreclosures

noreply@blogger.com (Chuck Miller) — Mon, 26 Sep 2011 23:24:00 +0000

Sales of new U.S. homes fell to in August. The fourth straight monthly decline during the peak buying season suggests the housing market is years away from a recovery.

The Commerce Department said Monday that new-home sales fell 2.3 percent to a 295,000 - a six-month low – and less than half the roughly 700,000 that economists say must be sold to sustain a healthy housing market.

But all home sales remain weak. August sales for previously occupied homes at a seasonally adjusted annual rate of 5.03 million were slightly above last year's sales but still almost a million less that the roughly 6 million older homes that economists say need to be sold each year to sustain a healthy housing market.

The low sales have been attributed to a lack of consumer confidence and on competition from short sales and foreclosures which are selling at an average discount of 20 percent. But is that really the case?

The Builder Magazine/American LIVES 2011 Study of buyers who had recently purchased or looked at newly constructed homes measured, among other things, home shoppers opinions regarding Short Sales and Foreclosures. The survey asked:

“Home shoppers have different opinions about Short Sales and Foreclosures. Check what is true for you.”

 I’ve heard that Short Sales take forever and sometimes you don’t even get the house.
 I’ve heard that the Foreclosures can be a really good deal.
 You need to know a lot more than I do to consider a Short Sale or Foreclosure.
 You can find some really good deals in a Short Sale.
 I’ve heard that Short Sales are a pain in the neck, even if you finally get the house.

In the Builder Magazine/American LIVES 2011 Home Buyer Study , 40% responded that they’d heard that the Foreclosures can be a really good deal and 38% believed that you can find some good deals in short sales. But 41% heard that Short Sales take forever and sometimes you don’t even get the house, 40% felt that you need to know a lot more than they do to consider a short sale or foreclosure, and 32% had heard that Short Sales are a pain in the neck, even if you finally get the house.

Short Sale or Foreclosure homes are selling at an average discount of 20 percent, and they are lowering neighboring home values, making many re-sales a bargain compared with new homes and creating an average 30 percent disparity in prices.

Given the uncertainty about jobs and the economy, is it a surprise that people are shopping for “deals?” Getting a “perceived deal” can give you the psychological lift you need to be confident that you are making a good decision. In addition, our expectations are being set by all of the “deals” being offered by other parts of the economy – groceries, dining, vehicles, and vacations.

According to the latest report from my friend and fellow MIRM, Mike Pennington, while the number of distressed properties in Ada and Canyon counties is declining, it is not declining at the rate we need to cause average prices of homes to increase.

Because all real estate is local, I would like to know how you would respond to the survey question on short sales and foreclosure.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

Homeowners Seeking Increased Comfort, Not Increased Resale Value

noreply@blogger.com (Chuck Miller) — Sun, 14 Aug 2011 01:17:00 +0000

According to ServiceMagic’s recently released Home Remodeling & Repair Index containing information compiled from 3.1 million service requests received through online marketplace from January to June of this year, as well as results from a survey of homeowners and service professionals conducted in July, homeowners are still looking to invest in home improvement projects that increase their home's energy efficiency and contribute to better overall living quality.

When asked “Why are energy efficient home improvement projects important to you?” 35% of homeowners cited saving money on energy costs, 25% responded that saving energy helps the environment, and 23% responded it would increase the comfort of their home.

The majority of homeowners, 82%, said they were investing in home improvement projects to increase overall living quality. Only a very small percentage, 13%, were seeking to increase the value of their home. 4% were putting their house on the market and wanted to increase its value and 1% were putting their house on the market and wanted to increase its curb appeal.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

Americans Consider owning a home essential to the American Dream

noreply@blogger.com (Chuck Miller) — Wed, 29 Jun 2011 20:39:00 +0000

I realize it has been awhile since I posted anything. But I am back and I believe this is too important not to share.

A recent survey of people likely to vote in 2012 conducted on behalf of the National Association of Home Builders (NAHB) shows that despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream. 75% of the people polled said that owning a home is worth the risk of fluctuations in the market and 95% of home owners said they are happy with their decision to own a home. Follow the link below to download the slides and listen to an audio recording of the June 7 presentation of the results of the survey.

www.nahb.org/VoterPoll

But don't stop there. If you agree, contact your elected officials and let them know.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc. (208) 229-2553 chuck@chuckmillerconstruction.com

The Happiest Careers in America – Where’s Homebuilding?

noreply@blogger.com (Chuck Miller) — Fri, 11 Feb 2011 01:01:00 +0000

Forbes published an article today titled “The Happiest Careers In America.” The article highlights the results of a new survey from job site CareerBliss.com that revealed the top ten happiest professions in America. The survey results measured nine factors of workplace happiness, including the individual’s relationship with their boss and co-workers, their work environment, job resources, compensation, growth opportunities, company culture, company reputation, daily tasks and job control over the work that they do on a daily basis.

Homebuilding was not one of the ten happiest careers. As I read the article and viewed the slideshow of the “10 -Happiest Jobs in America”, I realized that they had obviously made a mistake. Why do I say that? Let me explain.

I teach the National Association of Home Builders “Business Management for Building Professionals” course. One of the slides from that course contains a picture of 14 different hard hats – each one representing a different role or job within a small volume building company. The building professionals in the class are asked “How Many Hats Do You Wear?”

According to the Census Bureau, as of 2007, there were almost 2.6 million nonemployer residential construction and specialty trade contracting firms, including foundation, framing, siding, masonry contractors, stucco, electrical, plumbing, heating, air-conditioning, drywall, painting, flooring, and landscaping contractors. So, naturally, the typical small volume builder wears many hats and fills many roles in his company.

As I viewed the slideshow of the “10 -Happiest Jobs in America”, I realized that a career in home building typically encompasses 7 of the 10 careers listed as the happiest.

No. 2 – Customer Service. Customer service professionals enjoy working directly with customers, helping people, managing conflict, and problem solving.

No. 3 – Education. Home builders are educators. We educate our customers about the building process and we educate our trade contractors on how we prefer our homes to be built

No. 4 – Administrative – Clerical. These professionals simply feel good about their daily tasks. They keep things running smoothly.

No. 5 – Purchasing – Procurement. These professionals are responsible for purchasing the materials and goods for their companies. Their satisfaction stems from relying on their superior negotiating skills to secure the best deals possible.

No. 6 – Accounting. The professionals hold the purse strings and ensure that their companies are run efficiently, that records are kept accurately, and that taxes are paid properly and on time.

No. 7 – Finance. These professional handle transactions and provide guidance to make sound investment decisions.

No. 8 – Non-Profit Employees. According to the National Association of Home Builders latest “Cost of Doing Business Study,” the average small-volume builder in 2008 had a net loss $53,000 or 1.4%. Non-profit employees derive satisfaction from doing good. Abraham Lincoln said that “The strength of our nation lies in the homes of its people.” Seeing a family move into a new home you built just feels good.

The only careers not encompassed by home building were No. 1 – Biotechnology, No. 9 – Health Care, and No. 10 – Legal.

So, if you're chosen career in home building, you've chosen one of the happiest careers in America. Don't you agree? I do.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
http://www.chuckmillerconstruction.com/

Building material prices continue to rise

noreply@blogger.com (Chuck Miller) — Tue, 01 Feb 2011 01:04:00 +0000

Single-family housing starts in 2010 totaled 475,000 – a 7 percent increase over 2009 but still substantially below the 1,256,000 average starts per year from 1995 through 2003. .Think the decrease in demand for new home construction has resulted in lower prices for building materials. Think again.

Prices for materials used in construction actually increased 5.4 percent in all of 2010. Prices increased at double-digit rates over the year for four key construction materials. Diesel fuel prices climbed 28 percent in 2010; steel mill product prices rose 12.5 percent (think rebar, nails, kitchen sinks, appliances, etc.); copper and brass mill shape prices were up 12 percent (think electrical wiring, water supply valves and fittings); and prices for aluminum mill shapes rose 12 percent over the year. Other items that contributed to the climb included lumber and plywood, 5.7 percent; architectural coatings, primarily paint, 1.5 percent; brick and structural clay tile, 1.0 percent; gypsum products, 3.4 percent; asphalt, 4.6 percent; and insulation materials, 4.4 percent. The National Association of Home Builders predicts single-family housing starts will increase 21 percent to 575,000 in 2011. Although the demand for construction in the United States will remain relatively weak, the price increases are likely to intensify in 2011 as global demand for construction materials grows.

Have you been waiting to build your new home or remodel your existing home hoping prices will continue to fall? You might have already waited too long.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

What Are You Thankful For?

noreply@blogger.com (Chuck Miller) — Sun, 21 Nov 2010 18:00:00 +0000

"The hardest arithmetic to master is that which enables us to count our blessings." — Eric Hoffer

As we prepare for another Thanksgiving holiday, I would like to encourage everyone to count our blessings. It has been a challenging couple of years for many of us. But I sincerely believe in the Law of Attraction and the importance and power of developing an "attitude of gratitude." Learning to appreciate what we have makes life more valuable and meaningful. Sharing our gratitude improves your quality of life because it can only result in positive emotions. So let's spread some positive emotions. I'll start.
I am grateful for my faith and my connection to my Source of Being.

I am grateful for my ability to think and reason and choose and for my desire to learn and grow.
I am grateful for having been born in the USA and for the freedoms we enjoy - the freedom to worship and believe as we choose, the freedom to express our opinions, the freedom to elect our leaders.
I am grateful for my family and friends and for the love and friendship we share
I am grateful for my health, for the food that nourishes me and the fresh water that sustains me.
I am grateful for my home and for a warm comfortable bed to sleep in
I m grateful for my successes in life - personal and professional
And I am grateful for the challenges that I face - for the opportunities they provide to face and overcome my fears and to learn and grow.

Your turn.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder

Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Building material prices edge up again

noreply@blogger.com (Chuck Miller) — Mon, 20 Sep 2010 00:11:00 +0000

Think the decrease in demand for new home construction is resulting in lower prices for building materials. Think again.

According to the September 16 producer price index (PPI) report by the U.S. Labor Department, prices for construction materials edged up 0.2% in August. Prices are 3.6% higher than one year ago.

Nonferrous wire and cable prices increased 1.8% for the month and are up 8.7% compared to August 2009. Prices for plumbing fixtures and fittings were up 0.6% in August and up 1.2% from the same time last year. Prices for concrete products inched up 0.5% for the month, but are down 1.1% from August 2009 levels.

Softwood lumber prices slid for a third straight month, down 3.1% in August. However, prices are still 6.8% higher on a year-over-year basis. Iron and steel prices were down 1.5% in August, the third straight monthly price decrease. But, prices are still 18.2% higher than they were one year ago. Steel mill product prices were down 3.9% August, but were still up 17.1% from last August. Prepared asphalt, tar roofing and siding prices slipped 0.9% in August, but were up 8.6% over the last twelve months. Prices for fabricated structural metal products decreased 0.2% for the month, but were up 2.8% compared to August 2009.

Overall, the nation's wholesale prices increased 0.4% last month and are 3.1 percent higher from August 2009.

Are you waiting for the price of that new home you’d like to build to drop further? I wouldn’t.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Improved insulation increases energy-efficiency

noreply@blogger.com (Chuck Miller) — Mon, 23 Aug 2010 23:13:00 +0000

Insulation is a key element in building a more comfortable and energy efficient home in Boise, Idaho or elsewhere.

Insulation materials are rated according to their ability to resist heat flow. The thermal resistance rating is known as an “R-value”. The higher the R-value of a material, the better its ability to resist heat flow.

Most new homes are insulated with fiberglass batt insulation. However, improper installation of the fiberglass batts can significantly reduce its effectiveness. Gaps or voids can provide paths through which heat and air can easily flow into or out of the home. Compressing the insulation behind piping and electrical wiring also reduces the thermal resistance.

Newer types of insulation like blown-in-blanket fiberglass, batts made of denim, blown cellulose, and spray foams have higher R-Values and protect against convective heat transfer because they penetrate around obstructions and into odd-shaped cavities, completely filling gaps or voids and providing a monolithic blanket of insulation that forms a tight seal around wiring, plumbing, and framing materials.

Benefits of improved insulation

Improved insulation provides:

Improved comfort

Improved insulation reduces conductive heat losses and gains resulting in warmer interior surfaces in the winter and cooler interior surfaces in the summer. As noted in my article on advance framing, approximately 40 percent of our physical comfort is due to the radiant heat exchange between our bodies and the surrounding interior surfaces. Improved insulation reduces this radiant heat exchange and minimizes temperature differences between rooms, thus maintaining a more consistent level of comfort throughout a house.

Improved indoor air quality

When insulation materials are properly installed, there are fewer gaps and voids through which unconditioned air can leak into a house. This helps avoid dirt, dust, and other impurities that can negatively affect indoor air quality. A tight building envelope is a critical component to ensure good indoor air quality.

Reduced heating and cooling loads

Improved insulation also helps to reduce heating and cooling loads, allowing smaller "right-sized" heating, ventilation, and air-conditioning (HVAC) systems. The cost savings from using smaller HVAC equipment can be used to offset the additional cost of high efficiency heating and cooling equipment.

Lower utility bills

More than 40 percent of the energy consumed in a typical household goes to heating and cooling. Proper insulation reduces this energy consumption which results in lower utility bills.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Where are the jobs?

noreply@blogger.com (Chuck Miller) — Mon, 16 Aug 2010 19:12:00 +0000

Two of the biggest issues facing this country today are unemployment and energy. Our elected officials seem to think that the solution to both is developing emerging renewable energy technology. I disagree.

In a blog in February 2009 titled “Home Remodels, Retrofits Are Key To An Energy-Efficient Future” I noted that “Industry research indicates that even the most aggressive efficiency goals for new homes won’t make a dent in overall energy consumption.” And that “remodeling and retrofitting the nation’s older homes is by far the more efficient solution.”

Today, McKinsey Quarterly arrived in my inbox. The subject “Where are the jobs?” In case you aren’t familiar with McKinsey Quarterly and McKinsey & Company, McKinsey Quarterly is the business journal of McKinsey & Company. Their goal is “to offer new ways of thinking about management in the private, public, and nonprofit sectors.” Quarterly articles are written by McKinsey consultants and “offer practical ideas based on the Firm's experience with the world's largest companies and on proprietary research and close ties to academic institutions.”

McKinsey notes that many governments, including our own, have been actively trying to promote growth, competitiveness, and employment. But the state that “policy makers who hope that advanced “clean” technologies can create work on a large scale will probably be disappointed, because these sectors are just too small to make an economy-wide difference. The local-business and household-services sectors are a much better bet: from 1995 to 2005, services generated all net job growth in high-income economies.” As I emphasized in my blog 18 months ago, McKinsey consultants have concluded that “Low-tech “green” activities, such as improving the insulation of buildings and replacing obsolete heating and cooling equipment, could generate more jobs than renewable technologies can.”

Just look at the chart below. A 10% increase in construction employment would create 637,000 jobs. To create the same number of jobs in the clean technologies sector would require an 82% increase.

To learn more, read “Where the US will find growth and jobs” (March 2010).

Now consider this.

How much do you spend to heat and cool your home every year? If you reduced that expense by 30% to 50%, what would you do with the money you saved? Even if you only spent a portion of it, it would further stimulate the economy and create jobs in other sectors, like retail.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

A tightly sealed building envelope is key to building an energy-efficient home

noreply@blogger.com (Chuck Miller) — Wed, 11 Aug 2010 21:36:00 +0000

The boundary between the conditioned, indoor living spaces and the unconditioned and outdoor spaces is referred to as the “building envelope” and consists of the walls, floor, and ceiling or roof. An airtight building envelope contributes directly to the energy efficiency and comfort of a home.

Air leakage accounts for 25 percent to 40 percent of the energy used for heating and cooling and also reduces the effectiveness of other energy-efficiency measures such as increased insulation and high-performance windows. Thus, a tightly sealed house envelope results in lower utility bills.

There are hundreds of penetrations through a typical home's building envelope. These include gaps in framing members and penetrations for wiring, plumbing, and ducts. Tightly sealing the house's envelope, combined with proper ventilation, can reduce energy bills and eliminate unwanted drafts and pollutants.

Reduced air infiltration combined with proper ventilation not only reduces energy bills but also improves the quality of your indoor air. Outdoor air that leaks indoors makes it difficult to maintain comfort and energy efficiency. In addition, heated or cooled indoor air leaking outdoors can account for 25 - 40% of the energy used for heating and cooling in a typical home.

There are a number of ways to construct a tight thermal envelope including house wraps like Tyvek or Typar and spray foam. One of the most effective ways is to use a double air-barrier system.

Installing STYROFOAM™ Residential Sheathing, Tongue & Groove, DURAMATE™ Plus, TUFF-R™, Super TUFF-R, THERMAX™ or STURDY-R™ over the OSB structural sheathing provides a thermal break to reduce heat loss and heat gain through thermal conductance. The vertical joints of the insulation board are tongue and groove and the horizontal joints are flashed with poly z-flashing. This allows the insulation board to act as an exterior air barrier as well as a drainage plane for rain control. This exterior sheathing eliminates the need for building paper or housewrap thus reducing construction costs.

Windows are set in sealant and flashed on all four sides.

Benefits of a tightly sealed thermal envelope

Improved comfort

A tighter building envelope reduces the amount of unconditioned air, drafts, noise, and moisture that enter your home. Proper air sealing will also minimize temperature differences between rooms. As a result, tight envelopes can maintain a more consistent level of comfort throughout a house.

Improved indoor air quality

A tighter building envelope reduces the infiltration of outdoor air pollutants, dust and radon as well as eliminating paths for insect infestation. Properly sealing the building envelope will also reduce moisture infiltration from outdoor air in humid climates.

Fewer condensation problems

Moisture and condensation on cold surfaces inside wall cavities can lead to mold problems and structural damage. Exterior air barriers and drainage planes prevent moisture from entering wall cavities eliminating or significantly reducing these problems.

Reduced heating and cooling loads

A tightly sealed thermal envelope helps reduce heating and cooling loads, enabling the use of smaller "right-sized" heating, ventilation, and air-conditioning (HVAC) systems. The cost savings from using smaller HVAC equipment are used to offset the additional cost of high efficiency heating and cooling equipment.

Lower utility bills

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
http://www.chuckmillerconstruction.com/

Improved insulation increases energy-efficiency

noreply@blogger.com (Chuck Miller) — Tue, 03 Aug 2010 15:22:00 +0000

Insulation is a key element in building a more comfortable and energy efficient home in Boise, Idaho or elsewhere.

Insulation materials are rated according to their ability to resist heat flow. The thermal resistance rating is known as an “R-value”. The higher the R-value of a material, the better its ability to resist heat flow.

Most new homes are insulated with fiberglass batt insulation. However, improper installation of the fiberglass batts can significantly reduce its effectiveness. Gaps or voids can provide paths through which heat and air can easily flow into or out of the home. Compressing the insulation behind piping and electrical wiring also reduces the thermal resistance.

Newer types of insulation like blown-in-blanket fiberglass, batts made of denim, blown cellulose, and spray foams have higher R-Values and protect against convective heat transfer because they penetrate around obstructions and into odd-shaped cavities, completely filling gaps or voids and providing a monolithic blanket of insulation that forms a tight seal around wiring, plumbing, and framing materials.

Benefits of improved insulation

Improved insulation provides:

Improved comfort

Improved insulation reduces conductive heat losses and gains resulting in warmer interior surfaces in the winter and cooler interior surfaces in the summer. As noted in my article on advance framing, approximately 40 percent of our physical comfort is due to the radiant heat exchange between our bodies and the surrounding interior surfaces. Improved insulation reduces this radiant heat exchange and minimizes temperature differences between rooms, thus maintaining a more consistent level of comfort throughout a house.

Improved indoor air quality

When insulation materials are properly installed, there are fewer gaps and voids through which unconditioned air can leak into a house. This helps avoid dirt, dust, and other impurities that can negatively affect indoor air quality. A tight building envelope is a critical component to ensure good indoor air quality.

Reduced heating and cooling loads

Improved insulation also helps to reduce heating and cooling loads, allowing smaller "right-sized" heating, ventilation, and air-conditioning (HVAC) systems. The cost savings from using smaller HVAC equipment can be used to offset the additional cost of high efficiency heating and cooling equipment.

Lower utility bills

More than 40 percent of the energy consumed in a typical household goes to heating and cooling. Proper insulation reduces this energy consumption which results in lower utility bills.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

Advanced framing techniques increase energy-efficiency

noreply@blogger.com (Chuck Miller) — Sat, 17 Jul 2010 02:40:00 +0000

An effective building envelope – the first floor, exterior walls, and roof - is a key element for an energy-efficient home. Advanced framing techniques increase efficiency and comfort while decreasing costs.

Most homes in Boise are framed with wood and wood loses or gains heat more quickly than insulation. In wood frame construction, studs, joists and rafters are placed at regular intervals throughout the building envelope. Standard construction practice places these framing members at 16 inches on center. The cavities formed by the framing members are filled with insulation. Standard construction practice at exterior corners and at the intersection of interior partitions and exterior walls creates pockets that are difficult or impossible to insulate and air seal. The unnecessary use of wood displaces insulation and degrades the thermal efficiency of the building envelope.

By eliminating unnecessary framing members, advanced framing increases the thermal resistance of the building envelope without compromising structural integrity. Advanced framing techniques include:

In-line framing

Wall studs, floor joist, and roof trusses are spaced 24 inches O.C. and aligned directly over top each other to promote thermally efficient walls, increase structural efficiency, reduce drywall cracking, and reduce wood waste.

2 X 6 - 24 inch o.c. exterior wall framing

2 x 6-inch studs set 24 inches apart instead of 2 x 4 inch studs set 16 inches apart are used to allow more room for insulation, reduce heat loss and heat gain due to thermal bridging through the studs, enhance the strength of the house, and reduce the overall amount of wood used in the construction of the home.

Exterior corners and intersections of interior partitions and exterior walls

Exterior corners and intersections of interior partitions and exterior walls are framed to allow space for insulation preventing uninsulated spaces in exterior walls and reduce heat loss and reduce the overall amount of wood used in the construction of the home.

Insulated door and window headers

In single story homes and in second floor walls of two-story homes, single-ply headers are used in load-bearing walls to allow for partial insulation. In non-load bearing exterior walls, headers are eliminated entirely to allow for full insulation. In two-story homes, a structural rim joist is used to eliminate the need for headers in first floor exterior walls allowing for full insulation.

Raised heel roof trusses

The heels of roof trusses where they bear on the outside walls are raised to allow for R-42 attic insulation to extend over the exterior walls reducing heat loss and improving attic ventilation.

Engineered lumber

Using engineered I-joists and beams, and OSB sheathing reduces problems associated with shrinkage and warpage, allows more flexibility in design, and reduces the impact on old growth forests.

Benefits of advanced framing

Improved comfort

Increasing wall insulation and eliminating air spaces increases the overall R-value and integrity of the building envelope resulting in walls that are warmer in winter and cooler in summer. Approximately 40 percent of our physical comfort is due to the radiant heat exchange between our bodies and the surrounding interior surfaces. Advanced framing reduces this radiant heat exchange maintaining a more consistent level of comfort throughout a house.

Reduced framing cost

Advanced framing reduces the amount of lumber and labor needed to build your home - up to a 25 percent reduction in the amount of wood used. The cost savings are “reinvested” in additional energy-saving features such as increased insulation and high efficiency heating and cooling equipment.

Lower utility bills

By reducing the amount of heat and air that flows through the building envelope, advanced framing results in lower utility bills.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553

www.chuckmillerconstruction.com

Building an energy-efficient home in Boise, Idaho

noreply@blogger.com (Chuck Miller) — Thu, 08 Jul 2010 03:56:00 +0000

The 2010 AVID Home Design Driver Research Survey showed that the majority of home buyers rated energy efficiency as a “Must Have” for their new homes. Although Boise and southwestern Idaho have some of the lowest power rates in the nation, home buyers still want their new homes to be energy efficient.

How do you build an energy-efficient home in Boise, Idaho and how much more does it cost? The U.S. Department of Energy’s Building America Program has shown that new homes can be both energy efficient to live in and cost effective to build. In fact, the energy consumption of new houses can be reduced by 40% or more with little or no impact on the cost of ownership.

Building America works with members of the home-building industry to produce quality homes that use less energy without costing more to build. The goal is to develop cost-effective solutions that dramatically reduce the average energy use of housing while improving comfort and quality. This is accomplished through a systems engineering approach to homebuilding.

Systems engineering

The systems engineering approach considers the interaction between the building site, envelope, and mechanical systems, as well as other factors, throughout the design and construction process, It recognizes that features of one component in the house can greatly affect others and it enables builders to incorporate energy-saving strategies at no extra cost . Systems engineering allows builders to identify improvements to the design of a home that will ultimately save money. For example, the design might incorporate advanced framing systems that require less wood and labor. The saving on lumber and framing labor can then be reinvested in improved insulation or high-performance windows. Controlling building envelope leakage by tightening the building envelope enables builders to install smaller, less expensive heating and cooling systems. These savings can then be reinvested in higher-efficiency equipment..

Other examples of systems engineering cost-saving trade-offs include:

Proper placement of heating and cooling systems allowing shorter duct runs saving material and installation costs.

Locating ducts in the interior, conditioned space of a home (as opposed to in exterior walls or unconditioned attic spaces) eliminates loss of conditioned air to the exterior allowing the use of smaller, less expensive heating and cooling systems.

Future articles will discuss each of these cost-effective solutions in more detail.

Next, Advanced Framing.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553 or (208) 571-0755

chuck@chuckmillerconstruction.com

What do buyers want in a green home?

noreply@blogger.com (Chuck Miller) — Sun, 04 Jul 2010 01:52:00 +0000

The 2010 AVID Home Design Driver Research Survey provides some insight into what features today’s home buyers equate with a green home. AVID Ratings is a a leading provider of enterprise-level surveys specializing in the home building industry. The AVID survey studied the preferences of nearly 12,000 North Americans who have built a new home in the past nine years. The survey participants were selected because, having been through the process of building a new home, they would understand the trade-offs and cost factors involved

The survey included six buyer segments, defined as

• First Time Buyers - Growing families seeking initial homeownership and single/couples (no kids) seeking initial homeownership

• Move Up Buyers – Single/couples (no kids) seeking larger/better home and growing families seeking larger/better home

• Second Home Buyers – Professionals seeking secondhome (vacation home)

• Displaced Buyers – Professionals relocating and families seeking a smaller home due to change in family situation

• Empty Nester Buyers – Semi-retirees/retirees seeking age restricted communities or mixed-age communities

• Custom Home Buyers - Seeking custom luxury homes

Survey participants were asked what they would choose if they were to build a new house today. Features were rated as

• Must Have

• Really Want

• Might Be Nice If Affordable

• Might Be Nice If Included

• Not Important

Overall, survey respondents labeled 60% of the green features as “Must Haves.”

Paul Cardis, CEO of Avid, oversaw the report and says “The interest in energy efficiency surprised us.”

Energy-Efficiency was rated as a “Must Have” by all buyer segments. 74.2% of Custom Buyers, 63.9% of Second Home Buyers, 62.5% of Empty-Nesters, 57.7% of First Time Buyers, 52.6% of Displaced Buyers, and 51.6% of Move-Up Buyers rated energy efficiency a “Must Have”

What were the green features considered “Must Haves?” Energy-effiency features like energy-efficient appliances, high-efficiency insulation, and high-window efficiency were rated as “Must Have” by the majority of the respondents in all but one buyer segment in one category. With U.S. Displaced Buyers, high-window efficiency was considered a “Must Have” feature by 38.8% of the respondents while 42.5% rated it as “Really Want.”

All but one buyer segment rated Recycled/Synthetic Materials as “Might Be Nice If Affordable.” 35.5% of U.S. Empty Nesters rated it as “Really Want” while 33.9% considered it “Might Be Nice If Affordable.”

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

May is National Remodeling Month

noreply@blogger.com (Chuck Miller) — Mon, 17 May 2010 01:23:00 +0000

Did you know that May is National Remodeling Month? Since the downturn in new residential construction that began in 2007, the media has been focusing on the number of new starts as the key indicator of the health of the residential construction industry. But focusing on the number of starts ignores an increasingly important component of residential construction – remodeling.

Not only is May National Remodeling Month but, according to David Crowe, Chief Economist for the National Association of Home Builders, depending upon how you measure it, remodeling has taken over first place in total residential construction expenditures.

There are two measures of remodeling activity. The U.S. Census Bureau measure or residential construction spending only counts improvements to owner-occupied homes. In January 2010, that component accounted for 48% of all residential construction spending. Prior to the recent mid-decade construction boom, improvements to owner-occupied homes accounted for approximately 25% of all new-residential construction spending. During the boom, it fell to 21%. But improvements to owner-occupied homes have exceeded new-single family construction value since February 2009.

The U.S. Department of Commerce’s Bureau of Economic Analysis which measures the U.S. Gross Domestic Product includes within its residential construction spending accounts for residential remodeling of rental, vacant, and second homes in addition to owner-occupied homes. In 2008, this broader measure of residential improvement expenditures accounted for 42% of all residential construction, In 2009, it is expected to top 50%. Prior to the mid-decade construction boom, this broader measure of residential improvement expenditures averaged around 30% of all residential construction spending. It fell to 25%. But improvements to owner-occupied homes have exceeded new-single family construction value since February 2009.

Professional remodeling activities are concentrated in the 85 million homes that are 25 years old and older. About one-fifth of the owners of these homes spent and average of $11,400 on professional remodeling in 2007.

There are two primary drivers – the energy tax credits and the Baby-Boomers who are choosing to remain in their existing homes.

Improvement to increase the energy-efficiency of your home and remodeling for Aging-in-Place to allow you to live in your home independently regardless of age or ability are two of our specialties. To learn more, visit our website http://www.chuckmillerconstruction.com/.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553 (208) 571-0755

chuck@chuckmillerconstruction.com

Inflation Trends and Building Material Prices

noreply@blogger.com (Chuck Miller) — Fri, 05 Mar 2010 20:12:00 +0000

For the past five months (September 2009 through January 2010), the Consumer Price Index (CPI) has risen 0.2% per month. Building materials prices are an exception to general inflation trends, which appear to be tame.

On a year-over-year basis, the Consumer Price Index (CPI) is up 2.6%. Excluding food and energy, the index is up 1.6% from a year ago. A broader measure of inflation used by the Federal Reserve — the price index for personal consumption expenditures excluding food and energy — rose 1.6% in the fourth quarter at a seasonally adjusted annual rate and 1.5% from fourth quarter 2008.

However, an index produced by the Bureau of Labor Statistics that tracks building material prices for builders of single-family homes and multifamily structures has now risen three months in a row.

Although on a year-over-year basis, the single-family index is up only 0.3% and the multifamily index is up a slight 0.2%, in January, both measures jumped 1.0% from December. Chief contributors to the recent rise are lumber, fuel products (gasoline and diesel), plumbing fixtures and copper products.

With a number of countries around the world on the expansion path, building material prices are likely to continue to rise in coming months.

The recent earthquake in Chile will disrupt supplies of some imported building materials — in particular, moldings and door frames. These items can be, and likely will be, replaced by items from other countries, but at a higher price. But Chile is also a major exporter of copper, and although the mines escaped direct damage, operations and shipping will likely be delayed as the country recovers. So far, copper prices on the COMEX are up about 4% since the quake.

Are you waiting for the price of that new home you’d like to build to drop further? I wouldn’t.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

"Language in Thought and Action" by S.I. Hayakawa

noreply@blogger.com (Chuck Miller) — Sun, 21 Feb 2010 22:31:00 +0000

I just finished reading “Language in Thought and Action” by S.I. Hayakawa and want to share a brief excerpt with you.

In the expression “We must listen to both sides of every question,” there is an assumption, frequently unexamined, that every question has two sides – and only two sides. This penchant to divide the world into two opposing forces – “right” versus “wrong,” “good” vs. “evil”- and to ignore or deny the existence of any middle ground, may be termed the two-valued orientation.

Under a two-party political system such as we have in the United States, there is an abundant occasion for uttering two-valued pronouncements….

Fortunately, most voters regard this two-valuedness of political debate as “part of the game,” … so that it does not appear to have uniformly harmful consequences; overstatements on either side are at least partially canceled out by overstatements on the other. Nevertheless, there remains a portion of the electorate-and this portion is by no means confined to the uneducated- who take the two-valued orientation seriously. These are the people (and the media) who speak of their opponents as if they were enemies of the nation rather than fellow citizens with differing views as to what is good for the nation.

On the whole, however, a two-valued orientation in politics is difficult to maintain in a two-party system of government. The parties have to cooperate with each other between elections and therefore have to assume that members of the opposition are something short of fiends in human form. The public, too, in a two-party system, seed that the dire predictions of Republicans regarding the probable results of Democratic rule, and the equally dire predictions of the Democrats regarding Republican rule, are never more than partially fulfilled. Furthermore, criticism of the administration is not only possible, it is energetically encouraged by the opposition. Hence the majority of people can never quite be convinced that one party is wholly good and the other wholly bad.

But when a nation’s traditions (or its lack of traditions) permit a political party to feel that is so good for the country that no other party has any right to exist-and such party gets control-there is immediate silencing of the opposition. In such case, the party declares its philosophy to be the official philosophy of the nation and its interests to be the interests of the people as a whole.

The author then goes on to recount how this happened in Nazi Germany and the Soviet Union.

The alternative to two-valued orientation is the "multi-valued orientation" - the ability to see things in terms of more than two values. Two-valued orientation limits our options. Mutli-valued orientation requires us to not only allow those with whom we may disagree to be heard and to defend their arguments, but also to be willing to admit that their arguments might be valid and to be open to the possiblity of adjusting differences, reconciling conflicting interests, and arriving at compromises.

While I don’t believe that our great nation is in danger of becoming a one-party government, I do believe that our elected officials, our citizens, and consequently our country could benefit from reading this book.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

Harris Interactive I Newsroom I The Harris Polls

noreply@blogger.com (Chuck Miller) — Mon, 08 Feb 2010 22:01:00 +0000

National Association of Home Builders (NAHB) among the most trusted organizations.

Harris Interactive I Newsroom I The Harris Polls

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

Construction Worker Rated the 8th Worst Job

noreply@blogger.com (Chuck Miller) — Mon, 08 Feb 2010 19:35:00 +0000

The headline read “Construction Worker Rated the 8th Worst Job.” Being a Builder who started out as construction worker, I just had to investigate further. Here is what I found.

The headline referred to JobsRated.com's 2010 Jobs Rated report which the website says “offers a comprehensive analysis of 200 different jobs giving each a unique ranking based on factual analysis and hard data, not guesswork.”

The report compares and contrasts careers across a multitude of industries, skill levels and salary ranges using five key measurement criteria – stress, working environment, physical demands, income and hiring outlook – and sorting them into a definitive list of jobs that can be called "worst" and "best." Jobs receive a score in each individual category, and when these are added together, the career with the best overall score is ranked 1st, while the one with the worst overall score is ranked 200th. They noted that, in compiling the list of highly-ranked jobs for 2010, researchers sought to find careers that are likely to provide a positive experience for a majority of employees, not just the uniquely talented. The top careers in the report “are the jobs that offer the greatest chance of enjoying a combination of good health, low stress, a pleasant workplace, solid income and strong growth potential.”

Of the 200 different jobs, 22 or 11% were construction related careers. Here is how they ranked.

For the Construction Laborer job which was the topic of the headline, the article listed both the Pros: Good income potential with overtime, opportunity to become an independent contractor and start your own business; and the Cons: Extreme, physically demanding labor in all weather conditions, risk of injury or death, poor hiring outlook in a struggling economy, seasonal layoffs.

In fact, it appeared that the poor hiring outlook was a big factor in most of the construction-related jobs. Understandable considering that unemployment in the construction industry is currently 23.7%. But regardless of the current outlook, I believe it is important to note that according to the U.S. Department of Labor, as the economy recovers and construction returns to normal levels, there will be a need for an additional 1.1 million construction trades people. This figure does not include construction management positions.

What I found interesting were the rankings of some of the non-construction related careers. Teacher ranked 116. Physician ranked 128. Commercial Airline Pilot ranked 129. Senior Corporate Executive ranked 133. Surgeon ranked 136.

So what was the Top Rated Job? Actuary – someone who interprets statistics to determine probabilities of accidents, sickness, and death, and loss of property from theft and natural disasters.

I think I’ll stick with construction.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
http://www.chuckmillerconstruction.com/

The Business of Building - Part 2

noreply@blogger.com (Chuck Miller) — Mon, 25 Jan 2010 21:34:00 +0000

Welcome to the second in my series of blog posts on the Business of Building. We started Part 1 with a quiz. I asked what the average Net Profit for a Builder is in a normal market. The correct answer was C. 3.7% to 8.7%. That was based on the National Association of Home Builders 2004 Cost of Doing Business Study. Here is today’s quiz.

In 2008, what was the average Net Profit for a Builder? Was it

A. 11.0% to 20.0%

B. 14.4% to 15.1%

C. 0.0% to 4.4%

D. -3.7% to -1.4%

The correct answer is D. -3.7% to -1.4%. It should be no surprise that the results for 2008 vary considerably from the results for 2004 especially if you are a Builder. As with the 2004 Cost of Doing Business Study, the range reflects the differences between Builders who built on land they developed or purchased and Builders who built exclusively on their customer’s land. Builders who built exclusively on their customer’s land were the only Builders who made a profit.

As noted in Part 1, the difference between the Builder’s Gross Profit Margin and Net Profit is the Builder’s expenses which included his or her General and Administrative Expenses, Financing Expenses, and Sales and Marketing Expenses. General and Administrative Expenses ranged from 5.8% to 13.1% and include employee salaries; payroll taxes, insurance, and other benefits; office expenses; vehicle expenses; taxes; general liability insurance; accounting and legal service fees and expenses, and depreciation. Financing expenses ranged from 0.4% to 3.4% and include interest lines of credit and construction loans; and closing costs. Sales and Marketing expenses ranged from 0.5% to 8.1% and include commissions, website hosting and maintenance, and other advertising and promotion expenses.

One thing that didn’t vary considerably between the 2004 study and the 2008 study was the Cost of Sales, which includes the land cost, the direct costs (the sticks and bricks and labor), and the indirect costs (permit fees, temporary utilities, etc.) In 2004, the Cost of Sales ranged between 79.1% and 83.2%.

In 2008, the Cost of Sales ranged between 80.1% and 90.6%.

As I cautioned in my last post, if you are waiting for the price of that new home you’d like to build to drop further? I wouldn’t.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Are You Waiting to Buy or Build? Don’t Wait Too Long.

noreply@blogger.com (Chuck Miller) — Thu, 07 Jan 2010 22:27:00 +0000

For the 80 percent of home buyers who need a mortgage to buy a home, the two major factors that determine affordability are mortgage interest rates and house prices. It appears that many buyers have been waiting for home prices to fall further while hoping that mortgage interest rates will remain at their current lows hovering around 5%.

The key catalyst for interest rates in 2010 will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. That program succeeded in immediately pushing mortgage rates well below the 6 percent mark when it was announced in 2008.

But the Fed has committed to winding down the program by March. The deputy chief economist at Freddie Mac said interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did. Lenders will have to raise the rates they charge to home buyers in order to make that happen.

According to the Federal Housing Finance Agency, the average purchase price of homes in November 2009 was $247,300. The average loan amount was $182,000 or 73.6% of the purchase price and the average interest rate was 5.09%. As you can see from the table below, a one-quarter percentage point change in mortgage interest rates has about the same impact on affordability for the average priced home as a 2% change in the purchase price or a 2.7% change in the loan amount.

As interest rates rise, home buyers who wait thinking that house prices will fall further will need to see up to another 7 percent decline in prices to maintain the same level of affordability.

And if you follow the Recent News posting on my website www.chuckmillerconstruction.com , you know that the cost to build a new home is not declining.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

The Business of Building - Part 1

noreply@blogger.com (Chuck Miller) — Fri, 01 Jan 2010 23:14:00 +0000

Welcome to the first in my series of blog posts on the Business of Building. Let’s start with a quiz.

In a normal market, what is the average Net Profit for a Builder? Is it

A. 21% to 30%

B. 17.3% to 20.9%

C. 3.7% to 8.7%

D. -5% to 0%

It has been my experience as a home builder that most home buyers have a real misconception regarding what percentage of the price of a new home is the Builder’s profit. The correct answer is C, 3.7% to 8.7%. The range reflects the differences between Builders who built exclusively on their customer’s land, Builders who built on land they developed or purchased, and Builders who built on both.

The difference between the Builder’s Gross Profit Margin and Net Profit is the Builder’s expenses which include his or her General and Administrative Expenses, Financing Expenses, and Sales and Marketing Expenses. General and Administrative Expenses range from 8.3% to 12.9% and include employee salaries; payroll taxes, insurance, and other benefits; office expenses; vehicle expenses; taxes; general liability insurance; accounting and legal service fees and expenses, and depreciation. Financing expenses range from 0.3% to 0.9% and include interest lines of credit and construction loans; and closing costs. Sales and Marketing expenses range from 0.9% to 3.8% and include commissions, website hosting and maintenance, and other advertising and promotion expenses.

The Net Profit is what enables the Builder to continue to operate when business is slow and revenues are down. It’s what enables them to perform warranty and maintenance services on their finished homes.

According to BuildIdaho.com, the average sales price for new homes is approximately $190,000 in Ada County and $145,000 in Canyon County. For a small volume builder in a normal market, the average net profit on that new home in Ada County would be somewhere between $6,080 and $10,450. Considering that new home takes approximately 90 to 150 days to build, that equates to $1,216 to 3,483 a month.

Are you waiting for the price of that new home you’d like to build to drop further? I wouldn’t.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
http://www.chuckmillerconstruction.com/

The End of the McMansion – I Think So

noreply@blogger.com (Chuck Miller) — Thu, 24 Dec 2009 16:13:00 +0000

The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007. The median size has declined almost 10% since then. Will the trend to smaller-sized homes persist?

While it is unlikely that the size of new homes will continue to decline, I think we have seen the end of the McMansion.

NAHB’s Chief Economist David Crowe, although he didn’t proclaim the end of the McMansion, believes that the trend to smaller homes may last longer than in past recoveries.

Baby-Boomers, although they might wish to downsize, might be unable to do so due to their inability to sell their existing McMansions because of an oversupply these larger homes and downward price pressure coupled with their recently decimated wealth. However, immigrant households with their lower incomes while they may be unable to afford new larger homes, might be able to purchase the Baby-Boomers existing homes allowing the Baby-Boomers to downsize into smaller new homes.

Gen X’ers could be driven to purchase smaller, more affordable homes due to affordability barriers combined with the more stringent lending standards and fewer mortgage options resulting from the subprime mortgage fiasco.

The sheer number of Gen Y households projected to increase by between 2.0 million and 3.4 million should keep the demand for smaller starter homes strong for the next 10 years.

The trend to single-person households and women as heads of households should also support the trend to smaller-sized homes.

While the rising cost of energy could also drive some buyers to purchase smaller homes, this may not be enough to drive the trend to smaller homes.

The information presented in this series of blogs appears to support a continuation of the trend to smaller homes and the end of the McMansion. However, all real estate is local and the impact of the changes I have discussed will vary by market. Each market will experience these changes to varying degrees and at varying times, but it is reasonably certain that they will experience them.

The National Association of Home Builders Institute of Residential Marketing (IRM) courses will teach you how to do market research so that you understand your local housing market and your potential customers. The BCASWI Sales and Marketing Council is offering IRM I – Understanding Housing Markets and Consumers on February 16th and 17th in Boise, Idaho. In IRM I, you'll gain knowledge of the demographic, economic, and psychographic factors that affect housing supply and demand and learn to employ a model that projects opportunities for specific local markets. For more information and to register, contact me or the BCASWI.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

The End of the McMansion? The Impact of Rising Energy Costs

noreply@blogger.com (Chuck Miller) — Mon, 21 Dec 2009 18:40:00 +0000

The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007. The median size has declined almost 10% since then. Will the trend to smaller-sized homes persist? Let’s consider the rising cost of energy.

The depth of the downturn may, for the first time in at least 40 years, reduce real median household incomes while the cost of energy is predicted to grow faster than incomes in the coming years. Some experts argue that because smaller homes cost less to heat and cool, this alone should continue to support the trend to smaller homes. I respectfully disagree.

I have been building energy-efficient homes since for the past 10 years. Through programs like the U.S. Department of Energy’s Building America Program, we learned how to increase the energy-efficiency of any new home regardless of size by 30% to 50%. Energy-efficiency is a major component of all green building programs and because of the increased emphasis on green building fueled in part by the International Energy Conservation Code® (IECC) and the growing popularity of programs like NAHB Green, building products manufacturers are improving their existing products and developing new products to improve the energy-efficiency of the homes being built.

But what about home buyers. Based on my own experience over the past 10 years, while energy-efficiency might make it onto a homebuyers list of priorities, rarely is it at the top of the list.

In the spring of 2007, RCLCO (Robert Charles Lesser & Co., LLC) conducted a national survey of homeowners to gain an understanding of their attitudes toward green residential products. Among the questions asked were:

• Are “green” features and amenities important in your next home purchase?

• What “green” features and amenities are important to you in your next home purchase?

• Would you be willing to pay more for a “green” home, if so, how much?

The results of the survey revealed that only 21% of home buyers were interested in saving energy and realizing lower utility bills. Those in this group are most interested in energy-efficient and energy-saving features. Among this 21% of home buyers, 75% indicated they would be willing to spend more for an energy-efficient home provided their investment paid them back over time. If their investment might not pay them back over time, that percentage drops to 18%.

So I don’t think rising energy costs will drive the trend toward smaller homes.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

The End of the McMansion? Changing Demographics – Immigrant Households

noreply@blogger.com (Chuck Miller) — Fri, 18 Dec 2009 21:23:00 +0000

The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007. The median size has declined almost 10% since then. Will the trend to smaller-sized homes persist? Let’s consider Immigrant Households.

Regardless of the government’s actions with regard to immigration reform, immigrants and the children of immigrants born in the United States will continue to be a significant factor in household growth. The Joint Center for Housing Studies of Harvard University has released two new household projections based on the Census Bureau’s latest population projections. The high series assumes that net immigration rises from 1.1 million in 2005 to 1.5 million in 2020. The low series assumes only half that pace of immigration, as well as a small decline in headship rates among the native-born population. Under these assumptions, household growth in 2010–20 could total as much as 14.8 million or remain closer to 12.5 million (nearly the same as in 1995–2005).

While white household growth will occur primarily among single-person households and the number of married couples with children will fall by nearly a million among whites, household growth among Hispanics and Asians will accelerate, increasing by more than a million. White household growth will slow sharply from 4.3 million to 3.3 million, and black household growth will slip from 2.4 million to about 2.2 million. Even under the low immigration assumptions, minorities will fuel 73 percent of household growth in 2010–20. Hispanic household growth will increase from 3.5 million in 1998–2008 to 4.5 million in 2010–20, while Asian household growth will increase from 1.5 million to 2.5 million. As a result, the minority share of households is projected to increase from 29 percent in 2005 to 35 percent in 2020. Asian Americans as a group are well educated and have the highest median income of all races. However, they only comprise 5 percent of the total U.S. population and, generally, minority households have lower average incomes and wealth. Thus, the increase in minority households could add significantly to the nation’s already widespread housing affordability challenges.

But the housing now occupied by many older white Baby Boomers will be well suited to the needs of these younger and generally larger minority households. These minority households with their lower incomes may be unable to afford these homes except that, as noted previously, the sell-off of existing McMansions by Baby-Boomers wishing to downsize could occur without regard for demand, resulting in excess supply. This excess supply and competition for buyers could create downward pressure on home prices and help improve affordability. While this excess supply of existing large homes and downward price pressure should limit the demand for new larger homes, it should also allow the Baby-Boomers to move creating demand for smaller new homes.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

http://www.chuckmillerconstruction.com/