Building Code Concerns

The NAHB, along with a coalition of building-oriented trade groups, has serious questions about the energy-saving goals and administrative provisions included in the House version of energy legislation passed last August.

The House bill is backed by John Dingell, the powerful chairman of the House Energy and Commerce Committee, who has stated that the proposed law is about “as easy and as mild” as Congress could make it.

The proposed legislation, which will be in conference this fall with the Senate-side energy bill, grants the federal DOE broad new powers to develop and amend building codes if they do not meet the new standards as set by the law.

The House's proposed law would require all new construction to be 30 percent more energy efficient by 2010 and 50 percent more efficient by 2020. The Senate energy bill deals with overall energy efficiency, but other than setting energy goals for federal buildings, has no specific provisions that focus on private commercial and residential construction.

“Our industry is suffering through a market correction and these proposed regulations on new construction have our members even more concerned,” says Elizabeth Odina, the NAHB's federal legislative director, who says the builders really question if the DOE has the resources to develop and manage building codes.

“If the DOE is allowed to write code language, it takes the responsibility from the private sector and puts it in federal hands,” says Sara Yerkes, senior vice president of government relations for the International Code Council, the voluntary standards group that's responsible for developing and updating commercial and residential building codes.

“About 15 or 20 years ago, there was a huge movement to change from government-developed standards to a voluntary consensus,” explains Yerkes. “There's a history that the federal government can't keep up with the changes in science and technology,” she adds.

The Alliance to Save Energy, a Washington-based environmental group that lobbied hard for the Dingell bill, says that if the bill is enacted, in 2030 the new codes will have reduced total energy usage by 5 percent, which would save consumers $50 billion in energy bills and reduce greenhouse gas emissions by 100 million tons of carbon.

“This is like taking 70 million cars off the road,” says Lowell Ungar, director of policy for the Alliance to Save Energy.

“People don't always realize that the typical home results in more greenhouse gas emissions than automobiles,” he explains, adding that more than half the electricity generated nationwide is from environmentally unfriendly coal plants.

Odina says that while the trade group supports saving energy, the builders question whether the 30 percent and 50 percent goals are workable and technically feasible.

For example, significant above-code increases require homes to be more airtight, which make ventilation specifications (added exhaust fans) extremely important, often mandatory, thus reducing energy savings. Another concern is that the benchmarks set by the bill far exceed a variety of already successful programs, most notably the Energy Star program managed by the DOE.

“Energy Star homes are significantly below the 30 percent and 50 percent levels, as are Energy Star windows,” says Odina, who points out that the vast majority of windows on the market today would not meet the goals specified in the bill.

“Builders can't [add] on several thousand dollars worth of efficiency upgrades and just pass them on to home buyers,” she concludes, adding that builders met personally with Dingell when the House bill was in markup and are hopeful that some of the points they raised will be considered.

Here are some of the concerns the NAHB has regarding Dingell's energy bill.

Economic: Using average incomes and mortgage qualifying information across the country, the NAHB has determined that every $1,000 increase in the cost of a home prices out 240,000 potential home buyers.

Administrative: The DOE gains new authority to amend any updated code or standard that does not meet the efficiency targets set in the new law, thus undermining the existing voluntary consensus system.

Technical: The benchmarks set far exceed a variety of successful existing programs. For example, most green building programs would not reach the 50 percent benchmark set for 2020.

As part of his “Make It Right” program to help New Orleans, actor Brad Pitt along with real estate developer and philanthropist Steve Bing have announced plans to build 150 affordable and sustainable homes in New Orleans' Lower Ninth Ward. Pitt pledged to match $5 million in contributions to the project and Bing pledged to match another $5 million. The plan calls for healthy homes that incorporate modern, high-quality design and construction while preserving the spirit of the community's culture.—N.F. Maynard

Efforts to keep homes affordable and satisfy buyer demand for low-maintenance living have no doubt affected builders' choices in cladding materials. Among the 1.65 billion single-family homes completed in 2006, vinyl was the most commonly used primary siding material, skinning 30 percent of new homes, followed by stucco (22 percent), brick (21 percent), and wood (8 percent). Regional and climatic variables place vinyl as the dominant material used in the Northeast and Midwest, while stucco is most popular in the West, and brick is king in the South. Some 15 percent of homes built in 2006 feature brick as a secondary exterior cladding material. Notably, the use of wood siding has steadily declined in recent decades, from 42 percent in 1988, to 25 percent in 1995, to just 8 percent of homes in 2006.—J. Sullivan

SOURCE: NAHB “HOME OF THE FUTURE” REPORT, 2007

One industry's drought is another's deluge. With the meltdown of the sub-prime mortgage market, law firms are developing niche practices to work with borrowers, regulators, and lenders looking to sue mortgage lenders. Others are defending lenders, agents, mortgage brokers, and other real estate professionals against claims ranging from fraud to breach of contract, as well as predatory lending charges. The industry foresees enough work to keep them busy for three to 10 years.—P. Curry

SOURCE: LAWYERS USA

According to a recent survey on home design trends by the American Institute of Architects (AIA), 91 percent of registered voters say they would be willing to pay $5,000 more for a house that uses less energy, costs less to operate, and helps protect the earth. With the environment and utility prices becoming more and more of an issue for everyday Americans, homeowners are demanding more efficient products and sustainable designs, says Kermit Baker, AIA's chief economist.—E. Butterfield

Fleetwood Homes, a maker of manufactured homes, plans to shut down its Woodland, Wash., facility this month. The company said it would lay off 135 workers and consolidate the Woodland facility with a plant in Woodburn, Ore. In an interesting twist, company officials say the manufactured-home business has been down for six years, mostly because creative financing made site-based homes more attractive to buyers. Now that the market has crashed, the company hopes its product will be on a level playing field with site-based homes.—S. Zurier

SOURCE: THE COLUMBIAN (vancouver, wash.)

According to Coldwell Banker's annual home prices survey, the Beverly Hills section of California is the most expensive real estate market in the country, with a four-bedroom, 2 ½-bath, 2,200-square-foot house costing $2.2 million. It is followed closely by the Boston metro area where the cost for the same space is $2.1 million. Eight of the top 10 most-expensive markets are in California.—N.F.M.

SOURCE: USA TODAY

Much to the chagrin of local builders, the city of Mesa, Ariz., is so bent on building a new Mesa Southwest Museum that cultural impact fees have risen from $59 on each new home in 1998 to $221 today. Impact fees have climbed to $8,523 per home from $5,233 nine years ago, which finally prompted the HBA of Central Arizona and the Goldwater Institute to sue the city over the fees. The lawsuit claims impact fees can only be levied for necessary services such as roads and sewers.—S.Z.

SOURCE: THE PHOENIX BUSINESS JOURNAL

The Big Trade-Off

A study suggests cheaper housing often goes hand-in-hand with higher commuting costs.

The average american family devotes more than half of its income (52 percent) to housing and transportation combined, according to a study put out by the Surface Transportation Policy Partnership and the Center for Neighborhood Technology, two nonprofit research groups that crunch Bureau of Labor Statistics data. But the proportion a family allocates to one versus the other varies by market, and research suggests that the amount a family spends on transportation may be in many cases inversely proportional to what it spends on housing.

Houstonians, who endure the highest commuting costs in the nation, devote roughly 21 percent of their income to transportation and 32 percent to housing, according to the study, “Driven to Spend,” while San Francisco residents spend only 16 percent getting to work, but a heftier 38 percent on housing. In Cleveland, the second most-expensive commuter city, residents fork over 20 percent for commuting costs and 33 percent for shelter. New Yorkers, who inhabit one of the nation's least-expensive commuter cities, spend only 15 percent on transportation, but fork over 38 percent for the roofs over their heads.

Transportation costs are often lowest in metro areas with well-established mass transit systems, according to the study, which tracked expenses related to gas, tolls, public transit fares, car payments, and auto maintenance in 28 major metro areas. Researchers noted four of the five cities with the lowest transportation costs as having “large” or “extensive” rail systems, while five of the six cities with the highest transportation costs were found to have small, start-up, or nonexistent rail systems.

The study authors further noted that a low-income, workforce family's ability to afford housing is significantly affected by higher transportation costs, since commuting expenses gobble up a larger proportion of the family budget. In locales where public transit options are sparse and cars are the predominant mode of transportation, such families may be especially vulnerable to volatile spikes in gas prices. Here's hoping those don't come in tandem with ARMS that are kicking into high gear. - Jenny Sullivan

Money Matters

A California lender launches a loan program for green, sustainable projects.

It has gotten a little easier for developers and builders to borrow money for green building projects thanks to a recent launch by Second Angel Bancorp (SAB) of a lending program aimed at such projects.

“Our belief is that investors and lenders like us will help drive green building,” says Richard Zahm, a principal at the Fair Oaks, Calif.–based lender. These types of loans make sense, Zahm says, because “our risk factors will be lower because the projects will pay for themselves over time.”

Under the program, SAB will provide money and incentives to builders who are pursuing energy-efficient or green multifamily projects. The lender will give priority to projects that adhere to U.S. Green Building Council's Leadership in Energy Efficient Designs or buildings that are constructed with environmentally friendly or renewable materials. They will also single out homes that include such features as water collection, graywater systems, motion-sensing lights, and high-efficiency appliances, among many other earth-friendly features.

For projects that include these features, SAB will offer credit at lower costs and a 1/8 percent to ¼ percent discount on loans. These discounts, the company says, will likely result in significant savings over time for the borrower.

The typical loan so far is $1.5 million, Zahm says. However, the bank partners with other lending institutions, which lend or invest in a portion of larger transactions that may go up to $20 million, the company explains. The program covers loans on the West Coast, but Zahm says the company will be covering more Eastern areas soon. - Nigel F. Maynard

Take a Walk

Google Maps' new application scores walkability.

So, what's your walk score? It's a question that home buyers could start asking, thanks to a new application on the popular Google Maps Web site. The score measures the walkability of an address on a scale of one to 100, with 100 being a perfect score. A high score means it's close enough to walk to a host of necessary and desirable services. The farther residents have to drive to school or to pick up a gallon of milk, the lower the score will be.

The application, which actually takes you from Google Maps to the Walk Score Web site, currently is Google Map's most popular search feature, says Matt Lerner, co-founder of the Walk Score site. It was inspired by a collection of walking maps printed by Sightline, a Seattle-based nonprofit group, in an effort to encourage people to walk to places near their homes, rather than drive.

“Being software guys, we saw we could make them interactive,” Lerner says. “Our goal was to make walkability part of the home buying process. People always ask, ‘What can I walk to?' when they're going to buy a house or rent. This puts a quantitative score to something that before was more just an emotion.” Rather than buyers having to rely on a general sense of which neighborhoods are closer to desired amenities, Walk Score gives them the exact measurements.

Jeff DuFresne, executive director of the Atlanta District Council of the Urban Land Institute, says there have been similar software and services available in the past, but “this takes it to a new level. It's a revolutionary application that will encourage people to make use of their free time when visiting other cities or even their home towns.”

There are limitations, of course. The score doesn't take into account crime in the neighborhood, the availability of sidewalks, the width of the streets or length of the blocks, or the topography. It strictly measures distance, Lerner says. - Pat Curry

Ray of Light

Communities catering to 55-plus buyers have been busy during the housing slump, but they haven't escaped it entirely.

As the housing industry reeled this summer, several retirement and active adult communities seemed to flourish. Pulte Homes' Sun City neighborhood in Carolina Lakes, N.C., for one, closed more than 600 homes during the 12 months ended June 30, according to the Charlotte Observer. And two of Shea Homes' Trilogy active adult subdivisions near Phoenix enjoyed a 210 percent increase in sales during May and June, compared to the same months a year earlier, reported local radio station KTAR-FM and confirmed by the builder.

The potential market for age-qualified and age-restricted homes makes some people giddy. “College towns are generally very good candidates for being retirement destinations,” László Kulcsár, director of the Kansas Population Center, told the Lawrence (Kan.) Journal-World, which reports that Douglass County, home to the University of Kansas, saw its population over 55 rise to 19,159 in 2006, higher than the 18,690 that the state had projected for the year 2020.

But euphoria can be fleeting. By September, Shea was offering generous price breaks on inventoried homes in several Trilogy communities, including Rio Vista near Sacramento, Calif., which J.D. Power & Associates rated as one of the top active adult communities for customer satisfaction. Steve Hextell, Rio Vista's general manager, says that 55-and-over buyers, like everyone else, are having trouble selling their homes to purchase one of Trilogy's products. “If we expect them to take a discount, than we have to be willing to take one, too.” Still, Shea remains optimistic about the active adult market, having opened its 481-unit Trilogy at the Vineyards in Brentwood, Calif., in September, with another community, Trilogy at Mountain House in Tracy, Calif., on the way in late fall. - John Caulfield