The full study is quite expensive, but there are some interesting facts just in the description!
This study analyzes the global insulation industry. It presents historical demand data for the years 2001, 2006 and 2011, and forecasts for 2016 and 2021 by material (e.g., foamed plastics, fiberglass, mineral wool), market (construction and industrial, HVAC, and OEM), world regional market and for major national markets. The study also considers market environment factors, details industry structure, evaluates company market share and profiles industry players.
Demand to rise more than 5% annually through 2016
Global insulation consumption is forecast to rise more than five percent annually to approximately 29 billion square meters of R-1 value in 2016, a substantial acceleration from the 2006-2011 rate. In developing countries, insulation demand is expected to expand at a healthy pace due to rising building construction and industrial activity as well as growing per capita incomes that will lead to the adoption of modern building techniques and materials, including insulation. In most developed countries, insulation sales are expected to rebound after falling in 2008 and 2009 due to housing market collapses in several countries. In addition, governments will adopt new regulations concerning building insulation in an effort to reduce energy consumption, further boosting demand.
Building construction to be primary driver of demand
Solid residential building construction expenditure gains will be the primary driver of demand. In North America alone, insulation sales for residential applications will rise approximately nine percent annually between 2011 and 2016, primarily due to a recovery of the housing market in the US. In Western Europe, a rebound in several countries’ housing markets will cause insulation demand to post moderate gains through 2016, as opposed to the decline of the 2006-2011 period. In many West European countries, government efforts to encourage insulation use in order to lower energy consumption will also contribute to demand. In developing countries in the Asia/Pacific region, Africa/Mideast region, and Central and South America, rural-to-urban migration will stimulate building activity in urban areas, and therefore insulation demand. In some countries, the adoption of minimum insulation requirements will also contribute to demand. Demand for insulation in the industrial, HVAC, and OEM markets will be driven by expanding manufacturing activity, appliance output, and HVAC system installations.
Asia/Pacific region to be fastest growing market
The fastest growth in insulation demand through 2016 is forecast in the Asia/ Pacific region, due to advances in building construction activity as well as manufacturing and industrial output. More than 65 percent of new demand generated between 2011 and 2016 will be attributed to this region. Several Asia/ Pacific countries are expected to post solid growth, including China, India, Indonesia, and Thailand.
Foamed plastic insulation to lead value gains
In value terms, worldwide insulation consumption is projected to advance roughly seven percent per annum through 2016, approaching $60 billion. The fastest growth is expected in the foamed plastic insulation segment, as these products will be used more frequently in construction applications because of their high insulation values, allowing them to capture market share from fiberglass and mineral wool insulation. Foamed plastic insulation is also used extensively in refrigerator and freezer manufacture, further boosting demand. Demand for fiberglass insulation will benefit from the rebounding residential construction market in North America, as the material is widely used in the US and Canada. Other insulation materials, such as cellulose, will also see strong gains, as environmentally friendly options continue to gain popularity.
Profile global industry players including Johns Manville, Knauf Gips, Owens Corning, Rockwool, and Saint-Gobain
This comprehensive study analyzes the world market for thermal and acoustic insulation. Products include foamed plastic insulation (e.g., polyurethanes, polystyrenes, phenolics, polyimides, vinyl, and polyethylene), fiberglass insulation, mineral wool insulation (e.g., rock and slag wool), and others (e.g., cellulose, perlite, vermiculite). Foil and reflective insulation products are not covered by this study. Insulation markets include construction; industrial processes; heating, ventilation, and air conditioning (HVAC); and original equipment manufacturing (OEM).
Historical data for 2001, 2006, and 2011 and forecasts for 2016 and 2021 are provided. The term “demand” refers to apparent consumption and is defined as production (also referred to as “output,” “shipments,” or “supply”) from a country’s indigenous manufacturing facilities plus imports minus exports. “Demand” is used interchangeably with terms such as “market,” “sales,” and “consumption.” Data are presented in millions of square meters of R-1 value and millions of US dollars.
Note that the metric measures of thermal value used in this study cannot be converted to English units (those used in the US insulation study) simply by converting square meters to square feet. The metric version of thermal value defines heat transfer in metric units (watts) and is based on a material sample one meter thick; the English version of thermal value defines heat transfer in British thermal units and is based on a material sample one inch thick. Taking into account all of the differences in measurement, approximately 16.4 square
meters of R-1 value (metric system) is equal to 1,000 square feet of R-1 value (English system).
For individual countries, historical demand data were determined in the local currency and then converted to US dollars using the average annual exchange rate of that country’s currency to the US dollar as determined by the International Monetary Fund. Consequently, countries whose currencies appreciably changed in value relative to the US dollar from one presentation year to the next will have historical growth trends for insulation product demand that differ significantly from those measured in local currency terms. Forecasts for 2016 and 2021 assume no change in the exchange rate from 2011, and as a result reflect expected future growth in both local currency and US dollar terms.
In addition to providing a market outlook, the study identifies and profiles the major industry participants and discusses the key strategic competitive variables. The report is framed within the world insulation industry’s economic and market environments, and therefore environmental variables affecting demand are emphasized. World insulation market share data by company presented in the “Industry Structure” section are estimated based on consultation with multiple sources.
Data on global insulation demand are derived from differing sources and developed from statistical relationships. Variations are commonplace in this type of international reporting and, consequently, data presented in this study are historically consistent but may differ from other sources. Variances may occur because of definitional differences, inventory accumulations, and goodsin- transit. Tabular details may not always add to totals due to rounding. Ratios are rounded to the nearest significant digit. All dollar values cited for the industry are at the basic manufacturers’ level.
Macroeconomic and demographic indicators presented in this study were obtained from The Freedonia Group Consensus Forecasts dated June 2012. Gross Domestic Product (GDP) historical data are derived from the national income and products accounts from the Organisation for Economic Co- Operation and Development (OECD) for its member countries, from the European Bank for Reconstruction and Development (EBRD) for its member countries, and from the International Monetary Fund for its member countries that are not part of the OECD or EBRD. Sources of GDP estimates for other countries are based on information from the World Bank and a variety of sources including the countries’ statistical bureaus. GDP forecasts are developed from a consensus of public agencies and private firms.
All estimates of gross domestic product and components of GDP are done in terms of constant purchasing power parity in a benchmark year (2010) that is one year before the base year (2011) used in this study. Purchasing power parity GDP estimates for the benchmark year are obtained from the OECD; Eurostat; the World Bank; the International Monetary Fund; the US Central Intelligence Agency; and selected other sources. These purchasing power parity GDP estimates for the benchmark year are based on gross domestic product data expressed in the individual countries’ local currency, which are then converted to US dollars by valuing each country’s output at US prices in the benchmark year. This approach values the same physical output at a consistent price for all countries, thereby reducing the distorting influence of different price levels in the different countries.
The alternative approach of using exchange rates to convert local currency GDP to US dollars would tend to overvalue the output of countries with high average price levels and undervalue the output of countries with low average price levels, because exchange rate conversions only partially reflect the relative prices for goods and services that are domestically consumed and invested. Furthermore, factors other than relative prices, such as demand and supply in currency markets, interest rates, and capital flows, affect exchange rates.
Once the GDP values for a country are estimated for the benchmark year, we then calculate inflation-adjusted GDP for all other years for that country based on historical and forecast growth rates of GDP expressed in inflationadjusted units of that country’s local currency. This approach ensures that the GDP series for any given country is an accurate index of changes in inflationadjusted GDP for that country. However, it also implicitly assumes that the price structures across countries do not change from those of the benchmark year. Therefore, caution should be used in comparing the relative GDP of countries in years other than the benchmark year. If the ratio of prices across two countries in a given year differs from the ratio of prices across those countries in the benchmark year, then the change in the relative sizes of those two economies as measured will not accurately reflect changes in output.
The benchmark year is chosen to be one year prior to the base year for the study for reasons of data availability. One benefit of that choice is that the ratio of prices across countries in the base year is usually similar to that in the benchmark year. Therefore, the ratio of real GDP between two countries in the base year of 2011 is generally a reasonably accurate representation of the relative sizes of their economies.
A wide variety of primary and secondary sources were used in the compilation of this report. These include national government statistical agencies, trade associations, industry experts, financial sources, online databases, other Freedonia studies, and insulation company sources. The Organisation for Economic Co-Operation and Development, World Bank, International Monetary Fund, European Union, and various national government statistical publications were among the public sector sources utilized.
Product Code: Freedonia Group159
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The Senate bill that finally passed the House by a 259-167 vote extended a number of federal tax code provisions that are important to home buyers, sellers, builders and real estate professionals.
The bill also made permanent the Bush-era reduced tax brackets for all but the highest income earners in the country, along with a permanent "patch" to the increasingly troublesome alternative minimum tax (AMT) that threatened millions of middle-income homeowners with higher taxes.
Here's a quick overview of what the legislation means for housing:
Mortgage Forgiveness Debt Relief extended through 2013
For huge numbers of financially distressed owners of homes with underwater mortgages, this was the biggest issue in the entire fiscal cliff debate. The mortgage debt relief provisions in the tax code, first enacted in 2007, expired at midnight Dec. 31.
Had Congress not acted, the tax code would have reverted to its pre-2007 treatment of mortgage principal reductions or cancellations by lenders, whether through loan modifications, short sales, deeds-in-lieu or foreclosures: All principal balances written off would be treated as ordinary income to the homeowners who received them.
For illustration, if a lender wrote off $100,000 of debt to facilitate a short sale, the seller would be taxed on that $100,000 at regular marginal rates, just as if he or she had earned it as salary.
A return to taxation of principal reductions would have disrupted short sales -- a growing segment of the home real estate market -- in 2013, and almost certainly would have encouraged more distressed owners to opt for foreclosure and bankruptcy.
Deduction of mortgage insurance premiums
The bill retroactively extended this benefit to cover all of 2012, plus continues it through 2013. Qualified borrowers who pay private mortgage insurance premiums or guarantee fees on conventional, low down payment home loans, FHA, VA and Rural Housing mortgages will be able to write off those premiums along with their mortgage interest on federal tax returns. The retroactive feature is crucial because Congress had allowed this deduction to lapse at the end of 2011. There are limitations, however: The write-off is available only to borrowers who have an adjusted gross income below $110,000.
Tax credits for energy-efficiency home improvements
This benefit provides modest tax credits of $200 to $500 for owners who install energy-efficient windows, insulation and other upgrades designed to cut energy consumption. The bill covers improvements made during 2012 and 2013.
Tax credits for new energy-efficient new houses
This allows builders and contractors to claim a $2,000 tax credit on new homes constructed in 2012 and 2013 that meet federally specified energy-conservation standards. The bill also extends credits for U.S.-based manufacturers of energy-efficient refrigerators, clothes washers and dishwashers. As with other energy-related tax provisions, this had expired last year and will now be continued through 2013.
So what's negative in the fiscal cliff compromise bill for real estate?
Not a whole lot for homeowners who aren't in the highest income brackets. But for those who are, there are provisions that likely will inflict some pain.
Start with marginal tax rates and capital gains. If you earn $400,000 or more as a single filer or $450,000 as a joint filer, your new marginal federal tax rate is 39.6 percent.
You also get hit with a 20 percent rate on long-term capital gains, such as those from investment real estate and home sales that rack up gains beyond the $250,000/$500,000 thresholds.
Also, the new "Obamacare" 3.8 percent surcharge on certain investment income, which went into effect Jan. 1, could raise effective rates on capital gains for upper bracket households to 23.8 percent. As a result, some investors in rental property and commercial real estate may begin looking again to Section 1031 tax-deferred exchanges to hang onto their profits.
For taxpayers in the 33 percent, 28 percent and lower marginal tax brackets, capital gains will continue to be taxed at 15 percent.
Perhaps the crucial question to ask about the new legislation is: What could have been in the fiscal cliff compromise package affecting real estate but wasn't included? That's easy: There are none of the "grand bargain" deduction limitations on mortgage interest and property taxes that had been proposed by tax system reform proponents.
But don't assume those proposals are moribund. Quite to the contrary, they are likely to arise again this spring and summer, when broader scale debates over the shape of the tax code get under way. Once that process starts, watch out: Home real estate tax preferences like the "MID" will be front and center on the chopping block.
Ken Harney writes an award-winning, nationally syndicated column, "The Nation's Housing," and is the author of two books on real estate and mortgage finance.
To stay up to date on statistics, Check out THIS LINK.
On April 17th, the Census Bureau released March SF Housing Starts which were 22.7% higher than February 2012 and 8.5% higher than March 2011. March starts are used to develop our April market size in residential new construction. So for fiscal 2012 YTD SF starts have increased 12.9% compared to fiscal 2011 YTD. Regionally, all areas saw improvements over March 2011, and all regions are positive YTD relative to a year ago.
Multi-Family starts were (-4.4%) lower than February 2012, and were 11.0% higher than March 2011. Year to date Multi-Family is +56.1% over last year.
In other related news, builder confidence in the market for newly built, single-family homes declined for the first time in seven months this April, sliding three notches to 25 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline brings the index back to where it was in January, which was the highest level since 2007. Each of the index’s components registered declines in April. The component gauging current sales conditions and the component gauging sales expectations in the next six months fell three points, to 26 and 32, respectively, while the component gauging traffic of prospective buyers fell four points to 18.
“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB Chief Economist David Crowe. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery – particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
Housing groups and housing officials say that definitive statistical data covering multiple regions of the country are scarce. But some localized research projects in Oregon, Washington and California offer promising hints.
In a study covering existing and new houses sold from May 2010 through April of this year, the Earth Advantage Institute, a nonprofit group based in Portland, Ore., found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8% more on average than noncertified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30% more.
The raw sales data in the study were provided by the Portland Regional Multiple Listing Service. "Certified" houses were defined as those carrying Energy Star or LEED for Homes designations or Earth Advantage home certifications. (LEED stands for Leadership in Energy and Environmental Design.) The latest study was the fourth in an annual series conducted by Earth Advantage, each of which has shown clear price premiums for certified houses.
But officials caution that using average sales prices pulled from MLS data without trying to measure "comparable" homes against one another directly may not be conclusive. For instance, newly constructed certified houses may be more expensive to start, and existing certified homes may be larger and more likely to be in higher-cost neighborhoods where homeowner adoption rates for energy-efficiency measures are higher.
Nonetheless, said Dakota Gale, Earth Advantage's manager of sustainable finance, looking back at four years of studies, "we can still see a consistent trend that third-party certification continues to result in a higher sales price, even during the past year when home sales were down."
A study conducted two years ago by the institute in Seattle and Portland identified what may be another plus: Homes marketed with energy-efficiency certifications appear to sell faster on average than those without. The study tried to come up with rough comparability in appraisal terms between certified and noncertified properties, and it found that in Portland, certified homes spent 18 days less time on the market after listing than noncertified counterparts. In both Portland and Seattle, researchers documented price premiums — 9.6% in Seattle, 4.2% in Portland — in a statistical analysis with a 95% confidence level.
A recent study on houses in San Diego and Sacramento published by the National Bureau of Economic Research took a different tack: When you install photovoltaic solar panels on your roof, how much do you get back in market resale terms, beyond monthly energy savings?
Researchers examined a sample of home sales in the $500,000 range in both metropolitan areas between 2003 and 2010 and found that, on average, solar panel installations cost owners $35,967. But with federal and state subsidies, the net average cost came down to $20,892. This net expenditure, in turn, yielded an increase in appraised value by $20,194 — a 97% rate of recovery on the investment.
Though less than 100%, the rate is much higher than most home improvements in the most recent "Cost vs. Value" study conducted by Remodeling magazine — well above major kitchen and bathroom renovations.
Kevin Morrow, senior program manager for green building at the National Assn. of Home Builders, says that although many newly constructed homes come with energy and sustainability certifications, banks don't necessarily recognize their value when it comes to providing mortgage money.
For example, bank underwriters often do not include reduced monthly utility costs in the household income/household expense ratios that affect the maximum mortgage amounts available to buyers.
"The case needs to be made" to lenders, he said, "that, hey, these houses will cost less to operate, so they should be worth more."
Morrow added that appraisers are part of the issue as well if they don't have the training to recognize and credit extra value to houses that have money-saving solar installations, geothermal heating and cooling, Energy Star appliances, water conservation features and other green improvements.
The Appraisal Institute, the largest group representing that industry, says it has sponsored "green" appraisal courses for 2,300 appraisers during the last two years. It says it strongly supports efforts to better incorporate energy and environmental factors into mortgage underwriting and home valuations, including a possible congressional mandate requiring it.
In many markets, third party-certified homes command higher prices and sell more quickly than conventional ones.
Buyers are interested in third party-certified homes such as this LEED-Platinum project from Josh Wynne Construction in Sarasota, Fla.
In fact, one analysis in the Portland, Ore., metropolitan area found that green-certified dwellings sold for up to 30% more on average. The study from Portland-based nonprofit Earth Advantage Institute, which analyzed sales data for May 2010 through April 2011 from the Portland Regional MLS, found that green-certified new homes, on average, sold for 8% more than non-certified ones. In one of the six counties reporting figures, the premium was more than 23%. Certifications came from Energy Star, LEED for Homes, Earth Advantage, or an Earth Advantage/Energy Star combination.
The difference in sales price was even higher for existing homes: an average of 30%, with one county reporting a premium of more than 61%. This is the fourth year in a row that the institute has done the analysis and found certified homes selling for more than conventional ones.
The information was supplied by real estate agents and is based on averages—not comparables—but even so, the study’s authors noticed a consistent trend, even while home sales in general were down: Third-party certification results in a higher sales price, says Dakota Gale, sustainable finance program manager at the Earth Advantage Institute.
“There's certainly a premium there to be had,” says green builder Josh Wynne of his Sarasota, Fla., market. He compares homes to cars, saying that people willingly pay more for a Bentley than a Kia, but also warns against turning green certification into a commodity or using it specifically to drive up profitability.
“Clients are naturally skeptical of green building,” he says. “If you're disingenuous or sell green as an upgrade like a granite counter,” it won't work.
The company, which builds in Utah, Idaho, Wyoming, and Missouri, sells its Energy Star-certified single-family homes and townhomes for roughly $14,000 more than those of competing builders, according to marketing director Rene Oehlerking. Garbett Homes calculated its price point to be a little higher than a traditionally built home, aiming for buyers willing to pay more--but not too much more. “Everybody wants to go green,” Oehlerking says, “but nobody wants to pay for it.”
Garbett Homes was the first production builder in Utah to feature solar thermal technology standard at a price point, after tax credits and rebates, comparable to traditional homes in the area.
New research from the Lawrence Berkeley National Laboratory of California shows that Garbett Homes’ green price premiums for solar-powered homes are not unique. In evaluating the price impact of photovoltaic energy systems, the Berkeley Lab analyzed some 72,000 homes sold in California between 2000 and 2009, of which about 2,000 included the systems. Compared with conventionally built homes, new homes sold for a premium of $2.30 to $2.60 per watt generated by the photovoltaic system, the laboratory found, while existing homes sold for a premium of $6 per watt. The study controlled for factors such as housing market fluctuations, neighborhood effects, and the age and size of the home.
WHAT’S IT WORTH?
Another study of green-certified home sales prices, in Atlanta, found more mixed results. Although certified homes sold for lower prices, on average, they did sell faster and closer to asking price, according to the Atlanta Green Home Sales Report from local Realtor Carson Matthews. In 2010, certified homes spent an average of 97 days on the market, compared with 123 for traditionally built homes. The homes were certified by EarthCraft House, LEED for Homes, and Energy Star.
One obstacle for green builders seeking higher prices is that appraisers rarely value green features enough, especially since the recession, says David Johnston, president of What's Working, a green and low-energy consulting firm. “What advantages we used to have, at least according to appraisers, are gone,” Johnston says. “With house prices tumbling nationally, it doesn't matter what color the house is.” Buyers are simply looking to get as many square feet per dollar as they can, he says.
A bit of extra effort on the seller’s part can help appraisers—and, hopefully, buyers—see the light. Phoenix-based GreenStreet Development has created a package to provide appraisers with information that helps distinguish between homes with green features and traditionally built homes, says Philip Beere, founder and president.
For example, a GreenStreet remodel listed in Tempe, Ariz., for $185,000 was first appraised at $140,000. The lender found another appraiser who was more familiar with green construction and Beere's company, and the second appraisal came in at $200,000. Similarly, in Denver, a green-renovated home was appraised at 15% more than otherwise comparable homes on the same street.
“You have to establish that the property is special,” Beere says.
World insulation demand is forecast to increase 5.0 percent per year through 2014 to 22.9 billion square meters of R-1 value, a substantial improvement over the 2004-2009 rate. Insulation consumption in most industrializing nations will continue to expand at a healthy pace. In developed countries, sales of insulation materials are expected to rebound after falling sharply in 2008 and 2009 because of the global financial crisis. Impressive residential building construction spending gains will be the primary driver of growth. Sales of insulation for residential applications in North America will rise at a double-digit pace between 2009 and 2014, as the US housing market recovers. In Western Europe, both residential building construction activity and related product demand will expand at a much faster pace than during the previous five-year period. Solid residential construction expenditure gains in the Asia/Pacific region, the Africa/Mideast region, Central and South America, and Eastern Europe will stimulate insulation consumption as well. Numerous other trends will also contribute to advances in the global insulation market. Worldwide industrial output is projected to increase considerably during the 2009-2014 period, generating additional demand for insulation. Shipments of refrigerators and freezers, for example, are expected to climb almost four percent per annum. Nonresidential building construction activity and associated insulation demand are forecast to expand at a healthy pace as well. The adoption of new insulation standards for buildings, and the implementation of government programs to encourage insulation use will spur product sales in many countries.
North America, Asia/Pacific region to lead gains
The insulation market in North America will register the fastest growth through 2014, as product sales in the US recover. Insulation consumption in the US is expected to increase more than seven percent per year during this time, after it declined dramatically between 2007 and 2009 because of turmoil in the housing sector. The US residential segment will be responsible for nearly all insulation market gains through 2014. More than 40 percent of all new insulation demand generated worldwide during the 2009-2014 period will be attributable to the Asia/Pacific region. Insulation consumption in the region is predicted to increase almost six percent annually through 2014 because of solid advances in fixed investment spending, manufacturing activity, and residential and nonresidential building construction expenditures. Several Asia/Pacific countries are forecast to record rapid growth, including India, China and Indonesia. China alone will account for 29 percent of all new global insulation demand between 2009 and 2014.
Fiberglass, foamed plastics to grow the fastest
Among insulation materials, worldwide consumption of fiberglass and foamed plastics will expand at an above-average pace in monetary terms. Advances in manufacturing activity will stimulate demand for fiberglass insulation. Additionally, fiberglass products are becoming more popular with construction firms in many countries, capturing market share from mineral wool. Similarly, the foamed plastics segment will benefit from a more frequent use of these products in both industrial and construction applications.
This new industry study presents historical demand data (1999, 2004 and 2009) plus forecasts for 2014 and 2019 by material, market, world region and for 46 countries. The study also assesses key market environment factors, evaluates company market share data and profiles 37 industry competitors worldwide.
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The formerly high price of this equipment, $5,000 and up, made it a specialty item that only energy auditors and home inspectors could afford. They often use it, of course, to locate insulation that's missing under roofs, water that leaks around windows, and ducts that work in reverse. For builders, the results of these inspections were often calamitous. But now builders can use these lightweight cameras to detect problems during construction and before move-in--before they become lawsuits. Builders doing remodeling work can also use them to identify opportunities for energy retrofits that may be eligible for tax breaks.Even professional inspectors admit that this new generation of infrared equipment does the job. As we noted in the November issue of Builder, Flir makes one that retails for around $1,500 with a 2.8-inch color display and 80x80 pixel resolution that produces thermal images that are accurate within 2 percent. It measures from -20 degrees Celsius to 120 degrees Celsius. Extech, which is owned by Flir, makes a similar camera that works at a different temperature range.
Builders who belong to the Energy Star program may want to invest in one as well. Program requirements are likely to be stiffened next year. Among other new requirements, builders will have to build a completely sealed thermal envelope system that stands up to an infrared camera test.
We appreciate the perspective of Ted Cushman from his blog 'The Ten-Penny News" about changing energy codes.
here's what I'm saying — when it comes to energy, builders in the U.S. are being too defensive. We're guarding the pipeline. The whole U.S., in fact, is guarding the pipeline — we're doing whatever it takes to be able to keep on being hooked on fossil fuels and power-plant electricity, and we're doing too little to take control of our own destiny. But if we go on the offense, we can get to where we don't need the damn pipeline — we can get to where our houses can be heated, cooled, and lit using energy that is naturally generated on site, or at least nearby. Houses where, pipeline or no pipeline, we are still free and secure. And you do that one house at a time. It's house by house.And we don't have to win every battle. We don't have to hit zero energy on every house. Some customers don't have the budget, some sites don't have good solar exposure. Some states (I'm here to tell you, sitting in a library in Orono, Maine) are cold and don't get a whole lot of sunlight. It would be a lot easier to do zero energy in Texas, or in California (which is probably why that's where Meritage and KB are doing it). But going on offense isn't about wishing, "Oh dear me, I wish I had better conditions." It's about making the best use of what you have in the situation you're in. And every builder can do a little bit better job of energy efficiency on the next job than you did on the last job. And whether you win every battle or not, you do this: you change people's perceptions. And if you keep on doing that, it's not very long before you're saying, "Energy code? Hey — we don't need no stinking energy code. We're better than that." And we are.
Click here to read the entire article.
In an effort to revitalize much weakened demand from homebuyers, they are employing traditional incentives like allowances for designer upgrades, interest rate write-downs and covered closing costs.
Many builders are also taking a more innovative approach, by redesigning floor plans to align with the most pressing desires of today's budget-constrained households and adopting energy and water saving technologies, including rooftop solar systems, geared to lowering their monthly utility bills.
Because the economic recession shrank their pool of immediately qualified customers, some builders also have begun to offer sidelined buyers financial counseling.
The fondest hope of homebuilders today is that they can get an edge against the foreclosure-ridden resale market that's their fiercest competitor.
D.R. Horton has taken on the resale market with its "builder short sale" that seeks to entice buyers by deeply slashing its new home prices for a limited time so they are more price competitive with foreclosures and resale homes that are listed at prices below their mortgages.
The need for builders to get creative has never been greater. New home sales in April, compared to a year ago, fell 12 percent in Riverside County and more than 31 percent in San Bernardino County. That was a much steeper decline than for the resale market, which is attracting price-driven investors.
Last year's tax incentives accelerated new home purchases by first-time buyers that otherwise might have occurred this year. Also today's would-be buyers feel no sense of urgency and many are hesitating because they believe home prices could drop further.
The spring slump took builders by surprise. "Everyone in the industry at the beginning of this year felt we were at the cusp of a turning point and the market would gradually get better. Nobody expected a stall," said Steve Johnson, a director in the Riverside office of MetroStudy, a real estate consulting firm.
Builders meanwhile are launching sales in new tracts that were planned many months ago. In the first quarter, 16 new subdivisions opened in Riverside and 13 in San Bernardino County.
"Builders that are going to survive have to step up and build a better house and be clicking on all cylinders," said Matt Sauls, regional marketing director for Pardee Homes.
Pardee this year launched its Homeward Bound program to give potential buyers assistance with issues that have become vital to qualifying for a mortgage today -- the need for good credit and cash for a down payment.
In recent weeks Pardee also started promoting a down payment assistance program for low to moderate income buyers with good credit, said Sauls.
The program gives down payment assistance through the state of California by providing grants for 3 percent of the purchase price of a home selling for up to $417,000.
Pardee's marketing message, which the builder has placed on its billboards, says a home can be purchased with $999 down. That is figured on the purchase of a $199,800 house, which Sauls said is in the price range of homes Pardee is selling in Beaumont and Lake Elsinore.
Pardee's low down payment advertisement has created "a nice and steady surge in traffic and sales," Sauls said.
Because resale homes today frequently sell for less than the cost to replace them, it doesn't make sense for homebuilders to compete primarily by lowering their own prices, say real estate experts.
"There is no question that the market will dictate price. But we have to look at other strategies that are better," said Mollie Carmichael, principal at John Burns Real Estate Consulting in Newport Beach.
The need to find a way to differentiate new homes has prompted the homebuilding industry to invest in improved design and energy efficiency.
Carina Hathaway, vice president of marketing for Brookfield Homes, said design features of homes that Brookfield will offer for sale in Ontario later this year resulted from extensive consumer research and include a kitchen island large enough to seat five people, extra storage space in the garage, an extremely large family gathering space, and eight-foot-high French doors to let in an abundance of sunlight.
LOWER UTILITY BILLS
Also many homebuilders are heavily marketing more technological design features-like extra insulation, programmable thermostats, heat deflecting windows and rooftop solar panels -- all aimed at lowering a homebuyer's monthly utility bills.
The environmental advantages of conservation are clear. But builders say in this economy buyers are more interested in how energy and water efficient construction will make home ownership more affordable.
KB Home is efficiency testing all of its model homes and putting a sticker on each to inform prospective buyers how much the average utility bill for that home will be, said Steve Ruffner, president of KB's Southern California division.
Other builders also are taking pains to spell out the savings buyers can expect from the energy saving features they are employing.
"I think it is what separates new homes from used homes. All of our homes are at a minimum Energy Star (rated) and that is 15 percent better than code and significantly better than a used home," said Greg McGuff, president of Lennar Homes' Inland Empire division.
Matt Brost, sales director for the new homes division of SunPower Corp., a solar system manufacturer in San Jose, said this year he has seen a significant increase in the number of Southern California builders offering solar power as standard in new communities.
Meritage Homes last month opened a single-family community in Winchester called Kona where every home has a solar system that uses the sun's power to run air conditioners and electric appliances and to provide hot water and heat in the winter.
The solar system is placed on top of houses that Meritage completely redesigned over two years to use energy and water most efficiently, said C.R. Herro, the company's vice president of environmental affairs.
To see more of The Press-Enterprise or to subscribe to the newspaper, go to http://www.pe.com.
Copyright (c) 2011, The Press-Enterprise, Riverside, Calif.
Energy Efficiency Lab Home is the latest demonstration project from IBACOS, a building science consulting firm and team leader for the Department of Energy’s Building America program, and its Best Practices Research Alliance, a collaborative research-based community focused on improving the quality and performance of homes. Throughout the structure, carefully selected building techniques and systems aim to stretch the limits of efficiency to determine the best methods for making net-zero homes affordable to build on a production scale.
The 2,100-square-foot dwelling, a joint effort by IBACOS and S&A, was completed last fall and will undergo round-the-clock performance testing for the next three years. With the aim of attainability and affordability for builders replicating techniques, the team intentionally chose off-the-shelf products. It also used design methods that any builder can duplicate—albeit with some training and rethinking required because they are far more detailed and precise.
Before any construction began, however, the team held integrated design meetings and completed an intensive modeling process that included a review of 35 wall assembly options—some traditional, some never attempted before—that could achieve the desired performance of R-40 for above-grade walls, R-10 under the slab, R-20 for basement walls, and R-60 attic.
In the end, the crew constructed 2x8 walls with staggered 2x4s, which provide a thermal break, with blown fiberglass insulation and 2 inches of foam on the exterior. Choosing this modified traditional system also ensured that panelization could still be achieved, an essential component for ensuring acceptance and replication.“You have to keep in mind that the whole point is to identify cost-effective and constructable solutions that can be used by a production builder to move toward the net-zero-energy level of performance,” says Kevin Brozyna, building performance specialist and Lab Home program manager for IBACOS.
Further experimentation came with the selection of Dow’s Wallmate foam for the exterior. Designed for basement finishing, the panels include a recessed channel for a furring strip, a feature that allowed the framers to use inexpensive common framing nails to install the foam rather than longer, more expensive screws that would typically be required to get through the thickness of the foam and the surface-applied furring strips.
Two inches of extruded polystyrene foam board (XPS) helped bring the basement slab to R-10. The roof clearance was raised several inches to accommodate 13 inches of fiberglass insulation at the eaves and 22 inches of fiberglass throughout the rest of the attic to reach R-60, with housewrap lapping over the top of the second-floor wall to ensure a continuous air barrier. To see the impact of each step in the envelope, the team conducted blower-door tests multiple times: after housewrap was taped and sealed but before additional sealing (3ACH@50PA); after spray foaming strategic areas of the attic, over top plates, and any electrical or service penetrations in the ceiling (0.88ACH); after applying spray foam in the band joists (0.77ACH); after sealing penetrations in the exterior walls, blowing in insulation, and installing drywall (0.65); and after final caulking, which came in at 0.54ACH, surpassing the team’s goal of 0.6.
"That message is hard to forget. This salesperson, like so many in the industry, used to try to sell thicker insulation, low-E windows, and high-efficiency HVAC as upgrades. During good times, most customers wouldn't take them, even though consumer surveys showed energy consumption was a top concern.
Now that they are included in a competitive home price, the salesperson believes the package is helping him sell homes faster than competitors. Everything else the consumer wants needs to be there first, of course. The homes need to be in the right location. And the design needs to work for the buyer. Then lower operating costs become a compelling proposition.
I gathered several similar stories during visits to model homes in Phoenix and Dallas over the last several days. Many builders have staked out an energy-efficiency high ground. In doing so, they are finally drawing attention to the way new homes are built, after leaving buyers for decades to wonder what's actually behind the walls.In the most extreme example, One company leaves the innards of its homes exposed in the living room. Visitors to the company's model home are greeted by a view to ductwork, a heat exchanger, and an insulated attic. Then they have a choice where to go: To the left is a beautifully designed kitchen. To the right is a science museum. Interactive displays tout the benefits of spray foam insulation, double-coated low-E windows, photovoltaics, and much more. On this day, several potential buyers spend close to an hour in the model, learning how homes are built and how they function. One shopper in his early 60s tells me that he may pay extra for a zero-energy home. He's going to pay all cash for his home; he'd like to have no mortgage payment and no utility payments, too.Down the street, a video is running in the living room about the need to recycle and use less energy. The model includes a cut-away, covered with a clear plastic panel, that exposes the home's insulation. Green signs everywhere tout efficient air conditioners, windows, and other components.
On the other side of town a salesperson confirms that many younger buyers in this community expect an energy-efficient home; it's a given.
Energy efficient has emerged as a prime competitive weapon in today's marketplace. The question, of course, is whether it will go underground again as soon as the housing market turns from a buyer's to a seller's market. After all, SUVs are outselling hybrids again. Let's hope home consumers and builders aren't that shortsighted.
Save Money on Your Energy Bills
A RESNET Certified home energy professional is trained to pinpoint the areas of your home where energy is being wasted and used inefficiently. More importantly, the report will prioritize cost-effective improvement opportunities that will pay financial dividends every time your utility bill arrives.
Increase Your Comfort
When you implement home improvements recommended by a RESNET Certified professional, you will literally feel the difference. Air sealing the building shell, sealing leaky air handler ducts, adding insulation, or replacing that old furnace or air conditioner will make your home a more pleasant place to be.
Increase Your Home's Resale Value
For every $1 decrease in annual energy costs, the market value of a home increases by $20, according to a study published in the Appraisal Journal. If you decrease your energy costs by $300 per year, the value of your home increases by $6,000. RESNET Certified professionals can verify measurable results of the improvements performed.
Improve Your Home's Marketability
With rising fuel costs, home buyers are seriously considering the house's operating expenses. Measures to lower utility bills are valuable home improvements that reap dividends month after month. A home buyer will also have confidence that the house has been optimally maintained when you show it was audited by a RESNET Certified professional and retrofitted by a RESNET Qualified EnergySmart Contractor. You're more likely to make a faster sale for a higher price.
Uncover Hidden Problems
A home energy audit involves a thorough inspection of your home, which can uncover hidden structural and safety problems before they cause major damage. For example, improper ventilation can cause mold or mildew growth, which you may not discover until it becomes severe and costly repairs are required. A RESNET Certified professional can prevent problems before they affect your health or damage your home.
Help the Environment
By using less energy, you reduce the amount of pollution and greenhouse gasses that are created in the production of electricity and the fuels we burn. You can feel good about the energy (and money) you're saving because you're doing your part for the environment.
Take Advantage of Government Incentives
While you don't necessarily need a home energy audit in order to take advantage of government tax incentives and rebates, your RESNET Certified professional can show you which cost-effective improvements make the most sense for your home. With the recommendations from your energy audit report and tax incentive information, you can make the right decisions as to which measures will pay the biggest return on your investment - and have the government help you do it.
Invest in a Sure Money-Maker
Investing in your home's energy efficiency takes money. Fortunately, your return on investment is around 16% per year, after taking into account the money you spent on the improvements. As energy prices rise, so will your return on investment. It will likely be your most successful investment, without any risk. A RESNET Certified professional could help put more money in your pocket than your stock broker!
The changes made to residential R-values requirements are shown in the following table. The 2012 IECC will be published and available between May and June, 2011.
Heavy duty color banners for sale. Banner Size is 72” x 18”, seamed edges, grommets at corners, available in white or black. Ideal for home and garden shows, demonstrations, parade of homes, etc. Cost $40 plus postage. To order, call 800-525-8992.
My sons took judo lessons when they were younger. They made it to the yellow belt level before other interests took over. After high school they took the path that most of us do by joining one health club and quitting, joining another health club and quitting, etc. They would join the club depending on what special was being offered. Then, at age 19, my youngest son was diagnosed with type two diabetes. You have heard about the importance of exercise and eating right, but at the same time, I don’t believe any of us truly understand it until we are faced with a disease like diabetes. My son understood. He quickly adapted his diet and began to exercise. The balance of medicine, insulin, diet and exercise paid off. His diabetes was under control. While he was working out, he felt that he could get into better shape so he joined Farrell’s Extreme Body Shaping. “Is this the same Farrell’s where I sent you for judo lessons?” I asked. “Hardly,” he responded. At Farrell’s you pay your fees up front and in full. No refunds if you drop out or miss a class. There is a qualifying orientation class you have to take first. You are assigned a coach and put on a team. You show up six days a week for ten weeks for the work out and there are nutritional classes that you are expected to attend. There is an awards dinner and dance at the end of the program and the one who has improved the most wins $1,000.00. Classes are consistently sold out. While health clubs struggle, people line up to go to undoubtedly the toughest 10 weeks of their year at Farrell’s. What’s Farrell’s promise? It’s transformation.
In business today, it’s not about quality. That is the price of admission, and you had better have it. It’s not about price. Someone will sell what you sell cheaper on the internet. It’s not about expertise. Customers expect you to give that to them for free. What is it all about? Value. There are, however, different levels of value. What your product does is the first level of value. The second level is the experience it creates. The third, and highest, level of value is when it causes transformation. When the phones are ringing and people are buying, we tend to focus on what they want and what they say they want is our products and services. What we lose sight of is the fact that people don’t want our products and services; they want the net effect they bring. When people aren’t buying, they stop asking for our products and services, but since that’s all we know to talk about, we keep pitching our products in hopes that they will see the light and buy. During Turbulent Times, it’s not that opportunities go away, it’s that buyers start looking for the net effect; the results your products or services produce.
Do you know the net effect you bring? Can you clearly articulate that to the buyer? Do you know the questions to ask to uncover the need for the net effect you produce?
To start understanding the value you bring, ask your customers these questions:
- What do you like about the way we do business?
- What is the one thing we should never stop doing?
- What could we improve upon?
- What would you tell your best friend about what we do?
- On a scale of one to five, five being the highest, how would you rate your experience working with our company? (scores 1-3, you’re headed for trouble)
- Have we helped transform your business, the way you do business or your job in any way?
- If they outlawed our business today, who would you contact to replace us?
- What do you think we do well?
- If you were running our business, what would you do differently?
- What would it take for us to lose your business?
- As you look over the next three months, what would have to happen in order for you to feel good about your progress?
- Lastly, who else do you know who would appreciate the way we do business?
If you get responses back based on quality or price, you are either asking the questions wrong, have the wrong customer, or are in trouble.
Since the recent recession and ensuing credit crunch walloped American home buyers, demand for green homes has leveled off, according to a demographic expert who spoke at the 2010 ULI Fall Meeting in Washington, D.C.
Before the economic downturn, in 2006, interest in green housing was on the upswing with potential home buyers as were sustainable concepts such as walkable neighborhoods, urban living, and high-density communities. Consumers were willing to pay extra for some green features if they made their homes healthier—such as low-VOC paints--or provided a return on investment, such as energy-saving appliances or insulation.
Now, green has taken a back seat to consumer drivers like saving money, modest finishes, and smaller lots, according to Melina Duggal, senior principal with Washington, D.C.-based real estate research and consulting firm RCLCO. But the current mindset is only temporary, she said.
“All the information we have right now suggests that green is going to be a long-term trend once the economy recovers.”
Duggal said her company also has noticed a trend toward greater density in detached homes, with average lot sizes shrinking from 0.5 acre in 1999 to as small as 0.25 acre now. “And we see nothing that says builders are going to start offering larger lots again,” she said.
Attached dwellings such as townhomes have lost consumer appeal in favor of smaller detached homes on tiny lots, Duggal added. While average home size has declined from a high of 2,400 square feet, Duggal predicted that it will stabilize at or slightly above 1,900 square feet, where it is today.
The recession has changed Americans’ home-buying preferences in many ways, Duggal said. It has put an end to ultra-large McMasion-style dwellings and brought on a resurgence of interest in smaller homes with modest finishes. “Value is key right now,” she said.
Some of the trends brought on by the economy are temporary, some are here to stay, and many have implications for green builders and remodelers. Here is Duggal’s list of recession-induced housing trends:
Here to Stay
Traditional neighborhood development (TND)
Lack of affordable housing
Here for the Short Term
Lower levels of finishes
Gone for Now, But Will Be Back
Higher levels of finishes in small homes
Active adult communities
Luxury housing for the rich
Drive to homeownership
Gone for Good
Green houses with extra insulation, premium insulation such as BIBS or BIBS HP, active solar systems, and other features that enhance energy efficiency often cost more to build than conventional houses.
It’s a question of long term gain for a little bit more money up front. But builders and homeowners often hit a snag when it comes to construction loans and mortgages to cover the added costs. This week’s Q&A Spotlight on Finehomebuilding.com talks about this issue.
Appraisers who set values for bank loans may not know enough to give due credit for energy efficiency and green features. Even if they do, banks making the loans may not allow the practice.Although local banks may prove more flexible, there’s no guarantee you’ll get the financing you need to build the house you have in mind even if you’ve been pre-approved for the loan.
IR-2010-80, July 2, 2010
WASHINGTON — Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal, according to the Internal Revenue Service.
The Homebuyer Assistance and Improvement Act of 2010, signed by the President today, extended the closing deadline from June 30 to Sept. 30 for any eligible homebuyer who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline.
The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit. To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties' names and signatures if required by local law, the property address, the purchase price, and the date of the contract.
Besides filling out Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, all eligible homebuyers must also include with their return one of the following documents:
- A copy of the settlement statement showing all parties' names and signatures if required by local law, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
- For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
- For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
Besides providing a tax benefit to first-time homebuyers and purchasers who haven’t owned homes in recent years, the law allows a long-time resident of the same main home to claim the credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. Homebuyers claiming this credit can avoid refund delays by attaching documentation covering the five-consecutive-year period:
- Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
- Property tax records or
- Homeowner’s insurance records.
There are three options for claiming the credit on a qualifying 2010 purchase:
- If a 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009. Though these returns cannot be filed electronically, taxpayerscan still use IRS Free File to prepare their return. The returns must be printed out and sent to the IRS, along with all required documentation. The IRS urges taxpayers claiming refunds to choose direct deposit.
- If a 2009 return has already been filed, claim it on an amended return using Form 1040X.
- Whether or not a 2009 return has been filed, wait until next year and claim it on a 2010 Form 1040.
The U.S. Environmental Protection Agency (EPA) recently announced it was delaying enforcement of its Lead Renovation, Repair and Painting (RRP) Rule, which became effective on April 22, 2010. EPA has acknowledged the need for additional time for renovation firms and workers to become trained and certified under the rule.
The specific delays are: Until October 1, 2010, EPA will not take enforcement action for violations of the RRP Rule's firm certification requirement. For violations of the RRP Rule's renovation worker certification requirement, EPA will not enforce against individual renovation workers if the person has applied to enroll in, or has enrolled in, by not later than September 30, 2010, a certified renovator class to train contractors in practices necessary for compliance with the final rules. Renovators must complete the training by December 31, 2010.
Contractors have numerous concerns with the overly complex and burdensome RRP Rule, including the removal of the opt-out provision and the lack of reliable test kits. The rule could have a severe impact on the remodeling market in several parts of the country and expose dealers and contractors to unnecessary liability. In addition, new proposals from EPA on clearance testing and an expansion of the rule to commercial construction pose additional challenges for contractors of all types, who are still struggling with the economic downturn.
Click here to download the EPA's Delay announcement.
The U.S. House of Representatives passed the Home Star Bill by a vote of 246-161. The bill now heads to the Senate where there is a good possibility that it will be fast tracked. The HOMESTAR bill passed is estimated to create 170,000 jobs and save American families $9 Billion on their utility bills over the next ten years.
The bill will make available nearly $6 Billion in incentive rebates to homeowners for improving the energy efficiency of an existing homes. Many of the incentives in the bill will be earmarked for performance based improvements which is where premium Insulation systems like BIBS and BIBS HP will make the biggest impact.
To find contact information for your local member of the Senate visit: http://www.senate.gov/general/contact_information/senators_cfm. The first path, named the “Silver Star” program, would offers rebates up to 50% on home improvement purchases of weather-stripping, insulation, windows and high efficiency furnaces. Homeowners could get a combination of rebates up to a total of $3,000.The second path is the “Gold Star” program. Homeowner must undergo a home energy audit and make improvements that increase energy efficiency by 20% in order to receive a $3,000 rebate.
After that, under the Gold Star program, homeowners can receive $1,000 for every 5 percent they increase efficiency beyond 20 percent, up to a maximum total rebate of $8,000.For more detailed information on the bill visit: http://www.homestarcoalition.org
BIBCA is a member of the Home Star Coalition.
This house was insulated with BIBs and tested so tight that a fresh air exchanger was required to keep it safe. Watch the video: Certified Green Home Winner
This is a green certified home in Kansas City metro area and hit the news during the local Spring Parade of Homes show. The builder also ended up taking the Grand Award for this house during an awards ceremony our Home Builders Association has for the show. Judges come from all over the country to determine a non-biased winner. Over 170 new homes were on the tour. Watch the video here:
The Blow-In-Blanket System (BIBS) was introduced in 1983. For the first time, builders could pack their walls with custom-fit high-performance insulation. The key ingredient in a BIBS job is the mesh fabric stapled onto the stud faces, which allows cavities to be uniformly packed with loose-fill fiberglass to a density of 2 pounds per cubic foot.
According to Dan Stoner, the brand managerfor Blow-In-Blanket, this high-density fill (it’s two to four times denser than batt insulation) yields an R-value of 4.2 per inch and compares favorably with cellulose in stopping air movement.
Recently the company started offering the BIBS HP (Hybrid Performance) System, which is designed for builders in extreme hot or cold climates whose buildings may require an extra measure of air-sealing. Using what’s known as the “flash and fill” method, BIBS HP installers coat the wall cavity with a thin layer of high-density closed cell polyurethane foam before applying the mesh and blowing the fiber. Builders who choose the minimal 1/2-inch-thick layer of foam can expect an R-16 rating for a typical 2x4 wall. One inch of foam boosts the R-value to 17 and serves as an air barrier.
Although pricing is set by individual BIBS dealers, Stoner estimates that the cost for BIBS HP generally runs about halfway between a standard BIBS installation and a full polyurethane foam job. He also says that fiberglass insulation delivers better sound control than foam.
“We believe that BIBS HP provides the best qualities of fiberglass and foam at a price that’s more affordable than foam alone,” he says. BIBS installations can be performed only by authorized contractors. The company says it has a network of 600 contractors throughout North America who have insulated more than 2 million homes since 1983. About 50 of those contractors are authorized to install BIBS HP. Go to www.bibs.com to find out more.Tom O’Brien is a freelance writer and carpenter in New Milford, Conn.
Using DC 315 in projects can earn buildings 1 point for use of a low VOC, low emitting product, and an additional point because DC 315 contains no Formaldehyde
See the attached document below for more info
Angus E. Crane
Department of Energy
Washington, DC 20585
December 4, 2009
Executive Vice President, General Counsel
North American Insulation Manufacturers Association
44 Canal Center Plaza, Suite 310
Alexandria, Virginia 22314
Dear Mr. Crane:
Thank you for your October 20,2009, letter regarding the Depaliment of Energy' s(DOE) Weatherization Assistance Program (WAP) core competencies and the perceivedpreferential treatment given cellulose insulation. Let me assure you that fiberglass or
other mineral insulation products are approved for use in the Progra!11 and are already
contained in the W AP Federal Regulations 10CFR Part 440, Appendix A Standards for
Weatherization Materials. No preference is given to cellulose or any other product by
DOE or the WAP. Appendix A, available on the web and attached here for your
convenience, lists all of the materials approved for use, and the standards to which those
materials must adhere.
The sentence you referenced in the WAP core competencies document appears to offer a
preference for one product over another and will be changed. Thank you for calling this
to our attention. It was an inadvertent error and was provided in that manner for
demonstration purposes only. While mal1Y Weatherization agencies do use cellulose
insulation for walls and attics, still others prefer to use loose fill fiberglass. The core
competencies were only developed in the last three years and are still being refined. It is
impOliant to note that cost-effectiveness and procedural efficiency drive the Program and
it is never our intention to provide a market advantage for one product over another. We
will revise the existing document and distribute it to our network.
Finally, we are in the process of developing a standardized training curriculum for the
WAP. This includes presentations with many photos of work in the field. If you have
photos to share, we will gladly incorporate them along with those that show the use of
cellulose for a more balanced presentation. Photos of dense-packing walls are specifically
Thank you for your commitment to energy efficiency and renewable energy.
Henry C. Kelly
Principal Deputy Assistant Secretary
Energy Efficiency and Renewable Energy
(1) Printed with soy ink on recycled paper
NEW YORK (CNNMoney.com) -- The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday.
The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor's and economists Case-Shiller. It was the first increase in the monthly index since July 2006.
On an annual basis, home prices in the 20 cities fell 17.1%, but it was the second straight month that the year-over-year decline lessened.
"This could be an indication that home price declines are finally stabilizing," said David Blitzer, chairman of the index committee S&P, in a prepared statement.
While acknowledging that the report was good news, Mark Zandi, chief economist for Moody's Economy.com, downplayed the importance of a single month's statistics.
"I think it's a temporary respite," he said. "It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months."
Robert Shiller, the Yale economist who co-founded the index and who's famous for warning that the housing boom was, in fact, a bubble, said the decrease in foreclosure sales does show up in the index statistics as a plus for home prices. That's one reason he did not want to sound too optimistic; foreclosures could take off again.
"And we could get more economic bad news, but it does look encouraging," he said.
He added that he thought that Washington's efforts have boosted the nation's spirits, an important factor for the housing market.
"The government has done a lot to support the housing market," he said. "Confidence has improved. People are talking about 'green shoots.' People are thinking it's time the recession came to an end. The stock market is up."
Cleveland gains: The improvement in the index was as broad as it was deep, with 13 metro areas showing gains, compared with eight in April. Two, New York and Tampa, Fla., showed no change.
The biggest winner was long-suffering Cleveland, where prices rose 4.1%. The city still falling the most was Las Vegas, where prices declined 2.6%.
The report added to the list of positive housing market indicators. These include rising new home sales, increased home building and increased pending sales.
Paul Bishop, the managing director of research for the National Association of Realtors, was glad to see the upturn but did not want to overemphasize the results of a single month, saying the economy is not out of the woods yet.
"Job losses could continue after the recession ends," he said. "That's where the economy intersects with consumers in the most tangible way. Until consumers have some level of confidence that the economy is improving, many will be reluctant to buy."
Washington's goal: Stabilizing the housing market has been a primary goal of Washington policy makers. Congress has tried to stimulate homebuying by creating a temporary tax credit of $8,000 for people who have not owned a home for at least three years.
The administration has also tried to tackle the foreclosure problem, creating a program to help mortgage borrowers avoid defaulting on their loan payments and losing their homes.
Zandi added that lenders are still figuring out the administration's foreclosure prevention plan, and have suspended the foreclosure process for many borrowers in default. That means fewer distressed properties, which tend to bring in lower prices, than usual.
One of the most positive things the government has done, according to Shiller, was to take control of the failing mortgage companies Fannie Mae and Freddie Mac.
These were government sponsored enterprises that guaranteed a flow of mortgage lending by buying or backing mortgages in the secondary market. Without government backing up these companies, mortgage lending would have dried up, which would have devastated home sales.
Lower prices: Prices have also fallen so far in so many places that it's drawing people back into the market.
In Las Vegas, prices are off about 53% from their peak, set in August 2006. Phoenix prices are down 54%.
Overall, the 20-city index is down more than 32% from its high.
Interest rates were very low in May, which also could have helped the housing market. The rate for a 30-year mortgage was well below 5% during the month, which encouraged buyers and drove up demand.
Zandi is hopeful that the market is stabilizing. "It feels like the cycle is winding down," he said. "I think it depends on how well the mortgage modification plan will work and I'm guessing it will work reasonably well."
One possible scenario, according to Shiller, is that home price declines end and then nothing happens for several years, the "L-shaped" recovery.
At the recent BIBCA training on June 11th-13th in Denver, Kelly Parker of Guaranteed Watt Savers and past president of Resnet was one of the speakers. He explained to the group about how knowledgeable, trained insulators are going to be in large demand now and in the future. Building codes are changing, all are looking for higher R-values and attention is being placed on air sealing and home testing. There are not many people across the country right now that are air sealing and insulating existing homes to make them more energy efficient and there are well over 100,000,000 homes that need attention. Tremendous opportunity. This does require some training to do it right and provide a good service for the customer and reduce liability. When you throw in the rising cost of energy, environmental issues, the government incentives, and mandates being put on energy providers, there is going to be tremendous drive to fix existing housing.
As the building codes change builders will need more options as to getting higher R-value and doing it cost effectively. Hybrid systems like BIBS HP will probably become more common. The problem with these systems is they are more complicated and correct installation becomes more important. BIBS is already a class one insulation system with a high R-value for a low price so combining it with a good air sealing job it is very good but one of the techniques for improving the system is to add rigid foam board on the outside of the studs. This foam is continuous insulation creating a thermal break, and raises the dew point of the sheathing in colder climates. The building science people really like this application, and in my market area 1.5” of rigid foam plus BIBS in the cavity provides an R-30.5 wall for the same or less money than open or closed cell foam. One thing that always must be addressed with these more complicated wall systems is they can be climate specific and it can become hard to know what to do about vapor retarders and exterior and interior air barriers. Certainteed has building scientists that can analyze wall assemblies and give you an opinion on what will work. Contact your area Certainteed representative and he can contact the right people. This is a great service!
Another aspect of changing codes is the area of home testing. Blower door testing and thermal imaging will become used more. Kelly encouraged everyone to get to know the local Resnet rater or become one. The Resnet training is among the best in the country for understanding building science and using it for old and new homes. Some areas in the country are going to require home testing for selling homes and other areas are going to go to testing as part of the final home inspection on new homes. Resnet testing is another business opportunity, and again training is required. Home testing is on the brink of exploding, so like it or not, someone will be doing it in your area.
No interior vapor retarders are installed on the ceiling side (attic floor) of the unvented attic assembly.
An air-impermeable insulation is applied in direct contact to the underside/interior of the structural roof deck. "Air-impermeable" shall be defined by ASTM E 283.
In Zones 3 through 8, sufficient insulation is installed to maintain the monthly average temperature of the condensing surface above 45°F (7°C).
The condensing surface is defined as either the structural roof deck or the interior surface of an air-impermeable insulation applied in diret contact with the underside/inerior of the structural roof deck.
The ORSC's section on "unvented" attic assemblies is also in section 806.4. The ORSC requires the folling for an unvented attic:
The unvented attic space is completely contained within the building thermal envelope.
A minimum insulation level of R-20 air-impermeable or rigid board insulation imbedded into air-impermeable insulation shall be installed above all recessed fixtures such as recessed lights and exhaust fans.
Where wood shingles or shakes are used, a minimum 1/4 inch vented air space separates the shingles or shakes and the roofing underlayment above the structural sheathing.
Air-impermeable insulation shall be a vapor retarder, or shall have a vapor retarder coating or covering in direct contact with the underside of the insulation.
Either a, b, or c shall be met.
A. Air-impermeable insulation only. Insulation shall be applied in direct contact to the underside of the structural roof sheathing.
B. Air-permeable insulation only. In addition to the air-permeable insulation instaled directly below the structural sheathing, rigid board or sheet insulation shall be installed directly above the structural roof sheathing to a minimum insulation level of R-20 for condensation control.
C. Air-impermeable and air-permeable insulation. The air-impermeable insulation shall be applied in direct contact to the underside of the structural roof sheathing to a minimum insulation level of R-20 for condensation control. The air-permeable insulation shall be installed directly under the air-impermeable insulation.
At the current time a BIBS installer has a few options in Oregon when installing air-permeable insulation (fiber glass, cellulose, and possible low density spray foam depending upon the thickness) in a conditioned attic.
Have R-20 rigid board insulation installed above the roof sheathing and then fill the cavity with BIBs package.
Have R-20 rigid board or air-impermeable insulation (spray foam) installed under the roof sheathing and then install a BIBs package directly under the air-impermeable insulation. Similar to a BIBS-HP application.
As for options to change the code it would require you to start with a code change proposal http://www.cbs.state.or.us/external/bcd/pdf/2652.pdf.
According to the Oregon Building Codes Division http://www.cbs.state.or.us/external/bcd/ website they are oly accepting changes at this time for the commercial code.
Western Regional Manager
North American Insulation Manufacturers Association (NAIMA)
There is a wide open opportunity in whole house air sealing, also called home weatherization, and home testing for contractors looking to branch out and improve their business. There are hundreds of millions of existing homes that could be fixed to improve energy efficiency, indoor air quality, and safety. This is and will continue to be a growing opportunity because of rising energy costs and environmental pressure. In most areas of the country there are few, if any, companies doing this. It is cost effective for the consumer and if you can make money and help the planet, what's not to like?
Air sealing is sealing the penetrations in the building envelope where outlets and ceiling fixtures are visible and also sealing the penetrations that you can not see like where wires go down into the walls through the top plates, and pipe penetrations go through the walls. There are a lot more areas that leak than these, and classes are necessary to find them all and figure out how to fix them. Once the home is sealed up as much as possible, you also have the opportunity to add to the existing insulation.
Air leakage is the number one cause of lost heat or cooling energy. In cold climates, if you add attic insulation to existing insulation without air sealing first, moisture that was leaking out of the envelope with the warm air could be trapped in the added insulation. This moisture could get through all the insulation but be cooled off enough so it will not make it out of the vents. It could condense on the bottom of the roof deck, causing a structural problem. There are many other areas in a home that leak and need to be identified, fixed and insulated. Cavity insulation of any type in a wall does not seal a house. Homes usually leak far more through rim joists, windows, doors and other unblocked penetrations.
Another area of opportunity is in home testing with a blower door and a thermal imaging camera. The blower door measures how much air is leaking into a building and from where. In my opinion, every home should be tested. Again, if you are going to do home testing classes are necessary. If you want to do air sealing and not home testing, you can have it done by a Resnet qualified home tester. It would be a good idea to work closelyl with a Resnet tester because they pass tests in building science areas and others related to air quality and combustion safety.
As an example, we get a phone call from an unhappy homeowner saying they need insulation in their attic. We try to talk them into having a blower door test done before we go to the home. We live in Zone 7, so we always explain why the attic should be air sealed first. We usually refer them to our website which explains why air sealing is needed first. This saves a lot of phone time. Then when we do go to the home, the first thing done is an examination of the heating unit and hot water heater. By taking a combustion safety class, you can identify possible carbon monoxide leaks and how to fix them. If a contractor changes anything in a home, putting in a new window, changing a door, air sealing a home, or adding insulation, it could trap CO in the home that was leaking out that window or door, harming the inhabitants. We notify the homeowner if there is a problem and/or advise them to get a safety test. In the last 2 years, we have found 7 homes that have had a definite or suspected CO leak.
Moving on, we look in the attic and figure out how much insulation they need and how much it will cost to air seal. We will not add insulation to an attic without airsealing first as a matter of company policy. If the homeowner does not like this, they can get someone else. We can't fix all the homes in the area ourselves anyway. We also look at indoor air quality when in the home. Are there bathroom fans, do they work, and why they should work. Indoor air quality is another issue that is coming to attention as 90% of homes have worse indoor air quality than the outdoors.
In looking at the whole home, we have gone back to a home repeatedly to fix problems that they weren't able to afford at once. The neighbors see what is going on, ask questions, and we get more business. It can be a good idea to have literature to hand out explaining what you are doing and you are in their area, so why not them? Most areas have very few people doing home testing and air sealing. Utilities and local through federal units of government are increasingly developing programs to assist homeowners make their homes more efficient. Someone has to do it - why not you?!
Lakeside Advanced Building
BIBCA Board Member
There is a wide open opportunity in whole house air sealing, also called home weatherization, and home testing for contractors looking to branch out and improve their business. There are hundreds of millions of existing homes that could be fixed to improve energy efficiency, indoor air quality, and safety. This is and will be a growing opportunity because of rising energy costs and environmental pressure. In most areas of the country there are few, if any, companies doing this. It is cost effective for the consumer and if you can make money and help the planet, what's not to like?
Air sealing is sealing the penetrations in the building envelope where outlets and ceiling fixtures are visible and also sealing the penetrations that you can not see like where wires go down into the walls through the top plates, and pipe penetrations go through the walls. There are a lot more areas that leak than these, and classes are necessary to find them all and figure out how to fix them. Once the home is sealed up as much as possible, you also have the opportunity to add insulation to the existing insulation. Air leakage is the number one cause of lost heat or cooling energy. In cold climates, if you add attic insulation to existing insulation without air sealing first, moisture that was leaking out of the envelope with the warm air could be trapped in the added insulation. This moisture could get through all the insulation but be cooled off enough so it will not make it out of the vents, and it could condense on the bottom of the roof deck, causing a structual problem. There are many other areas in a home that leak and need to be identified, fixed and insulated. Cavity insulation of any type in a wall does not seal a house. Homes usually leak far more through rim joists, windows, doors and other unblocked penetrations.
Another area of opportunity is in home testing with a blower door and a thermal imaging camera. The blower door measures how much air is leaking into a building and from where. In my opinion, every home should be tested. Again, if you are going to do home testing classes are necessary. If you want to do air sealing and not home testing, you can have it done by a Resnet qualified home tester. It would be a good idea to work with a Resnet tester closely because they pass tests in building science areas and others related to air quality and combustion safety.
As an example, we get a phone call from an unhappy homeowner saying they need insulation in their attic. We try to talk them into having a blower door test done before we go to the home. We live in Zone 7, so we always explain why the attic should be air sealed first. We usually refer them to our website which explains why air sealing is needed first. This saves a lot of phone time. Then when we do go to the home, the first thing done is an examination of the heating unit and hot water heater. By taking a combustion safety class, you can identify possible carbon monoxide leaks and how to fix them. If a contractor changes anything in a home, putting in a new window, changing a door, air sealing a home, or adding insulation, it could trap CO in the home that was leaking out that window or door, harming the inhabitants. We notify the homeowner if there is a problem and/or advise them to get a safety test. In the last 2 years, we have found 7 homes that have had a definite or suspected CO leak. Moving on, we look in the attic and figure out how much insulation they need and how much it will cost to air seal. We will not add insulation to an attic without airsealing first as a matter of company policy. If the homeowner does not like this, they can get someone else. We can't fix all the homes in the area ourselves anyway. We also look at indoor air quality when in the home. Are there bathroom fans, do they work, and why they should work. Indoor air quality is another issue that is coming to attention as 90% of homes have worse indoor air quality than the outdoors.
In looking at the whole home, we have gone back to a home repeatedly to fix problems that they weren't able to afford at once. The neighbors see what is going, ask questions and we get more business. It can be a good idea to have literature to hand out explaining what you are doing and you are in their area, so why not them? Most areas have very few people doing home testing and air sealing. Utilities and local through federal units of government are increasingly developing programs to assist homeowners make their homes more efficient. Some one has to do it!
BIBCA Board of Directors
Lakeside Advanced Building
The problem lies in squaring the joys of insulating something beautiful and useful with the quagmire of financing, bookkeeping, and all the business-oriented tasks that come wraped in red tape. Once upon a time, builders could be in the game for the joy of building, not necessarily for money. But as the saying goes, "Richer or poorer, having money is better!"
This list of strategies will help your business get organized, and better budget your time. As we get into 2009, here's to better days ahead.
1. Get organized.
2. Use professional marketing help. A onetime expenditure of $400 should provide you with business cards, stationery and a logo. Once you've got it, use it. Always carry a supply of business cards, and hand them out like candy. Use letterheads for bids and correspondence. Place your yard sign at conspicuos jobs. That sign will work hard for you during the evenings and weekends when customers are out looking. And if you're thinking, "The last thing I need is more business," think again. Marketing can create a brand for your business that stands for quality and competence, traits that are synonymous with higher prices. The goal isn't just more business, it's better business. You don't want every job, just the best jobs.
3. Schedule jobs reliably.
4. Keep it clean. Think about the most successful insulation contractors- are they messy? The principle of uniformity suggests that the unseen is generally consistent with the seen. A visibly organized job site suggests professional diligence in all aspects of life. It goes back to the concept of creating a brand for your business. Cleanliness of the job site builds a quality reputation.
5. Be a mentor. Chronic shortages exist on both sides of the labor equation. There are scores young people waiting for a break. And you could use some help during the busy seasons. Make the commitment to hire and mentor an apprentice. You may find yourself making a large difference in someone's life while creating a little more time for yourself.
6. Computerize. Incredibly, there are insulation contractors who haven't joined the computer age. The newest low-end accounting software features simple setup and even accepts credit-card payments. Accounting spreadsheets, such as Excel, have marvelous functions. If you don't use spreadsheets yet, jump in! For marketing work online, it's amazing what you can do with a digital camera.
7. Strengthen supplier relations. We are all familiar with terms 2/10, net 30 (2% discount if the monthly bill is paid in 10 days, or pay the full amount in 30 days). According to the accounting text book, taking this discount is the same as earning 37% annually on your money. That's a lot less expensive than borrowed money.
8. Strengthen banking relations. Do you have an updated financial statement? How about giving your banker those updated financials, for no other reason than good form. Use bank templates to detail your balance sheet and income statement. Planning to borrow? Your banker should have the last three years' tax returns on file.
9. Innovate. Innovation is an excelent way to create reputation and value. Consumers will demonstrate appreciation with a sale, and your reputation as a leading insulator will be enhanced.
10. Invest. You're making a good living, but are you making any money? Wealth is measured on the balance sheet, not the income statement. Consider boosting your retirement fund with an annual purchase of at least one rental property. Put the pencil to funding 25 years of retirement, and the need becomes evident. Keep in mind that a goal without a deadline isn't a goal. Set goals and deadlines, make lists every day, and hustle. As Abraham Lincoln said, "Things may come to those that wait, but only the things left by those that hustle.
Reprinted by Doug Kooyman, Kooyman Lumber
2009 BIBCA President
The Housing Crisis Is Over
May 6, 2008; Page A23
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high - but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 - or seven months of supply - by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
See the IRS press release and the guidance for traditional homes and manufactured homes.
For existing homes, the law provides a 10 percent credit for buying qualified energy efficiency improvements, including insulation, reflective metal roofs, insulated exterior doors, and energy efficient exterior windows and skylights. The law also provides residential tax credits of $50 for each advanced main air circulation fan and $150 for qualified furnaces or hot water heaters fueled with natural gas, propane, or oil. That credit increases to $300 for qualified heat pump water heaters; high-efficiency water heaters, boilers, furnaces, and central air conditioners; and geothermal heat pumps. To earn the credit, the improvements must be made this year or next year. The maximum credit for both years is $500, of which expenses for windows can provide no more than $200. Manufacturers of these products may certify them as eligible for the tax credits, in which case the homeowner can rely on the certification to claim the credit. See the IRS press release and the full IRS guidance.
Housing Construction Posts Gains for 2005
Thursday January 19, 3:04 pm ET
By Martin Crutsinger, AP Economics Writer
Commerce Department Reports Housing Construction Posts Strong Gains for 2005, but Slows in Dec.
WASHINGTON (AP) -- Home building cooled in December, but even with the weakness 2005 was a record year.
The Commerce Department reported Thursday that construction of single-family homes and apartments totaled 2.065 million units last year. That was an increase of 5.6 percent over 2004 and pushed total construction to the second highest level on record, exceeded only by 2.357 million units built in 1972.
Construction of single-family homes did hit an all-time high for the third straight year, rising to 1.714 million units, up 6.4 percent from the previous record of 1.611 million single-family homes built in 2004.
That performance came despite the fact that housing activity dropped by 8.9 percent in December, the biggest decline in nine months.
Part of that fall-off was attributed to the weather. Unusually mild weather in November had boosted construction while wet and cold weather in many parts of the country depressed December activity.
However, analysts said they also believed the December decline was reflecting the start of a cooling-off period for construction as builders face rising inventories of unsold homes due to weakening demand.
"The expected pullback in housing is clearly underway," said Joel Naroff, chief economist at Naroff Economic Advisors. "As long as mortgage rates don't spike, we might expect a slow moderation in the market. But if rates do pop, watch out."
Sales of new and existing homes have been at all-time highs in 2005, marking the fifth straight year of record sales. But economists believe those sales will taper off in 2006 and construction will be down as well.
Michael Carliner, senior economist at the National Association of Home Builders, predicted that construction activity would drop by around 6.5 percent in 2006 with sales down by a similar amount.
He predicted that home prices, which have doubled over the past decade, will see a slowing as well. Instead of climbing at annual rates of 10 percent or more, Carliner predicted that home prices would probably rise by around 5 percent in 2006.
While some analysts have worried that housing has been griped by the same speculative frenzy that took control of the stock market in the late 1990s, most economists believe the slowdown in housing will have less severe consequences for the overall economy.
"I think the most likely scenario is that housing euphoria slowly deflates but doesn't burst," said Mark Zandi, chief economist at Moody's Economy.com.
He said his optimistic scenario could be put in jeopardy if the Federal Reserve feels the need to raise interest rates more than presently expected to combat inflation. Many economists believe the Fed will boost rates for a 14th time on Jan. 31 and then raise rates one last time on March 28.
Easing concerns about inflation have sent mortgage rates lower in recent weeks. Freddie Mac reported on Thursday that rates on 30-year mortgages dropped for a sixth consecutive week, falling to 6.10 percent, the lowest level in three months.
Meanwhile, the Labor Department reported Thursday that the number of Americans filing claims for unemployment benefits dropped to 271,000 last week, the lowest level since April 2000.
The unexpectedly sharp decline of 36,000 claims from the previous week provided further evidence that the labor market continues to show strength. The four-week moving average for claims, which smooths out volatility, declined by 12,000 to 299,000 last week, the lowest reading sine October 2000.
Some economists said weekly jobs claims at this level would be consistent with a monthly employment gain for January of around 250,000, up significantly from the 108,000 jobs created in December.
The housing report showed that building activity in December fell by 12.3 percent for single-family homes while multifamily construction rose by 10.2 percent.
Applications for building permits, considered a good indicator of future activity, fell by 4.4 percent in December to an annual rate of 2.068 million units.
Construction activity fell in every part of the country except the South where building rose by 5.2 percent, a gain analysts said reflected better weather than much of the rest of the country plus some initial activity in rebuilding following the fall hurricanes.
Construction activity fell by 23.6 percent in the Midwest and was down 21.7 percent in the West and 14 percent in the Northeast.
Thank you BIBCA member Richard Carroll for the continued supply of newsworthy items!