More Home Owners Seeking Energy-Efficiency Upgrades

As home owners grapple with skyrocketing energy costs, more of them are turning to remodelers for money-saving solutions, according to a recent NAHB quarterly Remodeling Market Index (RMI).

“It’s no surprise with rising energy prices and other costs draining the piggy bank that home owners want to maximize home performance with green remodeling options,” said NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, president of Legacy Construction, Inc. in Farmington, N.M.

According to the RMI, 33% of the remodelers surveyed said that they are increasingly called on to improve the energy efficiency of their client’s homes.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects.

The growing home owner interest in green remodeling comes just as NAHB prepares for the upcoming National Green Building Standard, which includes the only consensus rating system for remodeling. The standard provides a roadmap for green remodeling and assures consumers that remodelers know how to plan and complete authentically green remodels.

According to the survey, remodelers have installed a number of efficiency-enhancing products in recent months, including:

• Windows — 73% of surveyed remodelers installed more energy-efficient windows that are insulated to prevent outdoor heat exchange.
  
  
• Insulation — 65% made upgrades such as insulation replacement and spraying foam or fiber insulation into enclosed walls and roof cavities, while 27% insulated foundations and 52% installed insulated exterior doors.
  
  
• High-efficiency HVAC systems — 56% of surveyed remodelers installed them.
  
  
• High-efficiency kitchen appliances ― 47% installed them.
  
  
• Water-saving faucets and fixtures ― 46% installed them.

“Newer technologies are also quickly gaining in popularity,” said Rutherford. “Thirty-five percent of remodelers reported installing tankless water heaters, which can save on energy costs by heating water on demand instead of continuously eating energy.”

For more information, e-mail Kelly Mack, or call her at 800-368-5242 x8451.

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Subject: A Neat Tip

Go to the kitchen and check this out for yourself. Whoever looks at the end of your aluminum foil box?

We all use aluminum foil, which is great stuff, but sometimes it can be a pain. You know, like when you are in the middle of doing something and you try to pull some foil out and the roll comes out of the box. Then you have to put the roll back in the box and start over. Well, I would like to share this with you. Yesterday I went to throw out an empty Reynolds foil box and for some reason I turned it and looked at the end of the box. And written on the end it said, "Press here to lock end." Right there on the end of the box is a tab to lock the roll in place. How long has this little locking tab been there?????
I looked at a generic brand of aluminum foil and it had one too. Then I looked at a box of Saran wrap and it had one too! I cannot count the number of times the Saran wrap roll has jumped out when I was trying to cover something up. I am sharing this in case you also did not know this.

 

Northeast Will Be First to See Signs of a Housing Upturn

Although the national housing outlook has continued to deteriorate this spring, which is normally the peak home buying season, housing is expected to start climbing into positive territory before the end of the year in some parts of the country, according to NAHB’s state and top 100 metro housing starts forecast for 2008-2009.

Continuing turmoil in the credit markets and a weakening economy guarantee that “housing markets will face another challenging year in 2008 before any meaningful recovery takes hold in 2009,” the NAHB forecast says.

The credit market crisis alone, which started with last summer’s subprime mortgage meltdown and has since resulted in a broad-based mortgage credit crunch for prospective home buyers, has depressed housing sector activity by an additional 30%, NAHB economists calculate. As a result, housing permits nationwide have plunged to only 37% of their levels at the height of the boom in 2005.

“Anticipation of further declines in house prices in many markets will keep demand soft and additions to supply minimal in the near term,” the forecast says. “Foreclosures threaten to dump additional houses back into markets with already bloated inventories of unsold homes.

“But the level of distress in local and regional housing markets is far from uniform. While the annual figures will be negative for most markets, our forecast is for recovery in a number of areas by the fourth quarter of 2008.”

The Northeast will be the first to emerge from the current housing correction, with several states turning the corner in the third quarter and most by the fourth, according to the forecast.

“While some of these markets experienced rapid price appreciation over the decade, the largest markets — New York, Boston and Philadelphia — avoided the extent of over-building that accompanied the price run-ups in other markets,” the study says. “The absence of large unsold inventories will help to mitigate the downward pressure on prices that will drag out the recovery process in markets that have similarly elevated housing prices but also have large inventories.”

A growth patch for single-family housing starts in the Northeast during this year’s fourth quarter encompasses all of the New England states and extends into New York, New Jersey and Maryland in the Mid-Atlantic region. “Moving away from the eastern seaboard, markets in the western and northern parts of these states experienced more moderate house price appreciation and so are less vulnerable to price corrections and inventory problems,” the report says.

Next in line for a regional housing recovery is the South, with the notable exception of Florida.

“Housing markets in Texas, Atlanta and parts of the Carolinas performed well during the housing boom,” the forecast says, “resisting the excesses that have come back to haunt other markets.” These markets weathered the onset of the cyclical correction in the industry in 2006 better than most, but they did feel the negative repercussions of 2007 and will experience a mild 2% decline in single-family construction in this year’s final quarter before returning to robust growth in the first quarter of 2009.

Most housing markets in Florida will continue to struggle through the middle of next year, NAHB predicts. “These markets have been the most volatile through the boom and bust of this housing cycle and will be the slowest to recover from the heights of speculative excess,” and they have also been hard hit by escalating foreclosure rates.

Pensacola, where prices and production stayed closer to historical norms during the boom years, and Jacksonville, where production surged but price appreciation was more restrained, will experience weakness this year but are expected to display more strength in 2009 compared to other Florida markets.

Although the Midwest on the whole is expected to move into a recovery mode next year, prospects are a bit divided between the region’s eastern industrial states, which are projected to experience further declines in the second half of 2008 as the result of ongoing economic weakness, and the western farm states, which will show signs of improvement earlier stemming from flourishing agricultural commodities.

The West will be the slowest to recover, according to the NAHB forecast.

“This should not be surprising since this region is dominated by Las Vegas, Phoenix and markets in California,” the forecast says. “These markets join the Florida markets as among the most troubled in the nation. Over-production, double-digit house price appreciation, heavy reliance on subprime mortgages and rapidly rising foreclosure rates were staples of these markets through this housing cycle and most of these markets are expected to decline through the end of 2009.”

Levels of excess in western markets where prices have been on the decline are an almost certain indicator of further price erosion, the study says.

Notable exceptions to the relatively gloomy outlook for the region include:

• New Mexico, where production and price growth have been moderate and subprime mortgages and foreclosures have remained below the national average
  
  
• Colorado, where production and prices remained restrained, subprime borrowing has been high but foreclosures have so far been low
  
  
• Idaho, where production spiked during the boom put price appreciation remained modest, and subprime mortgages and foreclosures have remained low

Jim Glassman, managing director and senior policy strategist with J.P. Morgan Chase & Co., said that prospective home owners will have to return to how their parents bought homes and start saving more money for a downpayment.

"The customer you have known for the past 20 years is not the customer you will know in the next 10 years," he said, as the economy transitions into a new era that "won't feel like it has as much oomph."

The best news for the economy, he said, is that the emerging economies, largely in Asia, are doing fine and providing strong demand for U.S. exports and providing U.S. companies with "spectacular levels of profits."

"The world has never seen such great economic performance since the dinosaurs," Glassman said, and as a result, the winds are shifting in favor of regions of the U.S. that rely heavily on exports, including Michigan.

In NAHB's latest housing forecast, new single-family home sales are projected to decline 21.8% this year, to 605,000, before climbing 18% in 2009 to 714,000.

Total housing starts are forecast to decline 29.5% to 948,000 in 2008 and rise 10.8% to 1.05 million next year. Most of this year's decline will be concentrated in single-family production, which is expected to drop by 37.1% to 653,000 homes.

Home prices are down about 12% since the height of the housing boom in 2005 and incomes have grown 14%, bringing "prices relative to income to about where they were in 2003" during this year's first quarter, he said. "We have flushed out most of the excess."

Glassman said his guess is that home prices will decline 5% or so further, but gloomier forecasts foresee another 15% to 20% drop, and what will actually happen is probably somewhere in between those two views. "By fall, we will start to see that most of this is over," he predicted, but he conceded that he wished he knew "where home prices would settle out."

The outlook for housing and the economy should be gradually brightening within a few months, but before there can be any assurance that the worst of the downturn is over, there needs to be a pickup in home sales, according to panelists at NAHB's Spring Construction Forecast Conference on April 24 in Washington, D.C.

Residential production and sales this year have declined "more sharply than anticipated," said NAHB Chief Economist David Seiders, and the situation for the U.S. economy "definitely has darkened," with more than an even chance that it has lapsed into a "mild" and brief recession in the first and second quarters.

Seiders said that he continues to believe that new single-family home sales will stabilize during the middle of this year, paving the way for an upturn in late 2008 and in 2009 and leading to improvements in housing starts next year. However, "the sales side has to be off the deck before starts stabilize and move up," he said.

And so far, he reported, there are few signs that new single-family sales are close to bottoming out, with the Commerce Department just announcing an 8.5% decline in March, to a seasonally adjusted annual rate of 575,000, a 17-year low, and increasing the unsold inventory to an 11-month supply at the March sales pace.

Through March, Seiders said, NAHB surveys of 30 large builders accounting for 25% of sales nationwide, showed "no signs of stabilization, although the rate of the decline may be slowing." Likewise, the NAHB/Wells Fargo Housing Market Index, which polls builders to gauge their opinion of current sales conditions and demand six months down the road, remains close to its record low recorded in December and "shows no recovery yet, implying further deterioration of sales."

"We need demand to revive to turn around the market," Seiders said, and he suggested that a temporary tax credit for home buyers, an approach being considered in housing and economic stimulus legislation on Capitol Hill, could help provide the impetus to boost sales and end the downward spiral in home prices that is the biggest concern for the health of the nation's economy.

As home prices have declined, he said, "underwater" mortgages with balances exceeding the value of the home have been adding to the deterioration of loan quality that began in the subprime sector last summer. This is "bad for the financial markets," he said, and could result in further tightening of lending standards, yet more foreclosures and even softer housing demand.

Economists participating in the conference were fairly optimistic that the downward turn in housing prices, while substantial, will taper off before it takes a toll on the longer-range outlook for the economy, but nobody can know for sure, they said.

Seiders also stressed that there are negative implications for the economy if housing does not move into positive territory next year. The tax rebate checks that households will soon begin receiving as part of February's economic stimulus legislation should help revive the economy during the second half of this year, he said, but growth in housing will be needed to keep the economy on a positive course in 2009 as that stimulus fades.