Small Change in Software may have a Big Impact on Compliance with the Xcel Energy’s New Homes Program Builder Incentive Payments

The ENERGY STAR® New Homes (ESNH) Program provides incentives for builders to build homes that exceed local energy code requirements for energy efficiency by at least 10%. Homes must be evaluated by a RESNET® accredited Home Energy Rating System (HERS®) Rater. HERS Raters help builders achieve energy savings by providing plan review analysis and on-site verification throughout the construction process. https://www.nrglogic.com/builders/xcel-energy-new-home-builders-rebate/

Software, program, and standard changes are converging in 2018 with a requirement to begin using a new version of the software to demonstrate compliance with the percentage above code requirement for receiving incentive dollars from Xcel Energy.  Codes are advancing and it has already been more difficult to achieve the percentage above code that is required to get an incentive payment.  Now, with the new version of the software, which more accurately models the home’s performance, it will be a little more difficult.  EnergyLogic is expecting fewer homes that we work with to achieve a level that qualifies for a builder incentive.

The Energy Efficiency Business Coalition (EEBC), an intervener in the Public Utility Commission DSM plan, is trying to offer ideas for more relevant builder incentive programs.  The two ideas being floated now are a HERS Index-based program and an a la carte program that could offer builder incentive payments for specific energy specifications installed in a home.  If you would like your voice to be heard in this process contact the EEBC. https://www.eebco.org/eebc

If you are interested in having EnergyLogic re-analyze your plans to see if there are specification changes that will help you achieve a more consistent incentive payment, please reach out to robby@nrglogic.com or rusty.buick@nrglogic.com. We will be happy to give you peace of mind with these changes.

Furnace Efficiency Rating (FER) Changing in 2019 – Here’s What You Need To Know!

Fans in residential furnaces will be subject to new Department of Energy (DOE) efficiency standards in July of 2019. Specifically, the fan motors will be targeted for change.  Carrier and other manufacturers are ensuring they will be ready to meet the new requirement. Manufacturers are currently planning to phase out older induction motors for newer constant torque ECM motors between March and April of 2019, in order to meet the new DOE Standards.

In July of 2014, the DOE established final standards for residential furnace fans. These standards outlined new technologically feasible energy conservation resulting in significant conservation of energy along with being economically justified.  Rich Bardgett, market manager for Nidec Corp., said, “the fan energy rating (FER) standard is essentially designed to regulate the efficiency of the fan in gas-fired furnaces, but that really means the motor;” hence the move away from induction motors to constant torque ECM motors.

The standard accounts for power consumption in heating, cooling, and constant circulation modes. The DOE predicts the new furnace fans will save approximately 3.99 quads of energy, reduce carbon pollution by up to 34 million metric tons (equivalent to the annual electricity use of 4.7 million homes), and save Americans more than $9 billion in home electricity bills through 2030. Although the savings have an increased initial cost, which is worrisome for many builders, the cost for homeowners is predicted to be dramatically reduced as power consumption of the motor will be reduced by as much as 46%.

 For more information click below:

http://www.goheil.com/go/index.asp?id=3516

https://www.greenbuildingadvisor.com/article/government-orders-more-efficient-furnace-fans

Colorado Housing Market Forecast – November, 2018

energylogic colorado housing market forecast november 2018

November’s Colorado Housing Market Forecast includes economic indicators, as well as single-family, and multi-family permits for metro Denver, Colorado Springs, and Northern Colorado markets. 

November 9, 2018

Denver-Aurora-Lakewood, CO – Economic Data

 

Denver-Aurora-Lakewood, CO Economic Indicators

Denver single-family permits are trending down, totaling 1,024 in August and 858 in September. However, despite underperforming the forecast, the decline appears to be seasonal, with the permit totals little changed from one year ago (1,007 in 08-2017 and 902 in 09-2017). On the other hand, multi-family permits have plummeted in the second half of 2018, and with 180 permits approved in August and 1,440 in September, the six-month average fell to a rate of just 466 per month. Denver multi-family units were being approved at a rate of over 1,000 permits per month at this time last year.

Sounding like a broken record at this point, the median sales price for Denver housing continues to outpace wage growth. Redfin reported that half of Denver homes sold in September went for more than $396k, up 6.2% from a year ago. My biggest concern moving forward is buyer exhaustion, as rising interest rates continue to stretch buyers’ budgets, with Zillow reporting that the typical new mortgage payment increased by 15.4% in the last year. (1) A former Chair of the Federal Reserve once joked that the Fed’s job is “to take away the punch bowl just as the party gets going.”(2) It’s debated whether tariffs are deflationary (due to a slowdown in economic activity) or inflationary (due to higher prices for both producers and consumers), but on balance this month’s robust jobs report with 250k jobs added and wage growth of 3.1% makes it likely that the Fed will continue tightening in the near future, with the central bank slated to increase the benchmark federal funds rate for a fourth time this year in December.(3)

Moreover, we can expect that interest rates will continue to see upwards pressure with the Fed accelerating its pace of balance sheet normalization. In short, to stabilize financial markets the Fed bought up troubled assets such as U.S. Treasuries and mortgage-backed securities (MBS) in the wake of the financial crisis, and consequently, the Fed’s balance sheet ballooned from under $1T in 2007 to over $4.5T in 2014. In the last year, the Fed has begun to allow maturing assets to roll off the balance sheet instead of reinvesting the proceeds.(4) The pace of this process will accelerate each quarter. As such, a large buyer of Treasuries and MBS has left the market while, simultaneously, the increased 2018 Federal budget deficit must be funded via greater sales of Treasuries. Higher supply and reduced demand for Treasuries will pressure the price of those bonds, causing rates to continue increasing into 2019.

Poor housing affordability may be starting to suppress sales in the Denver housing market, with the number of homes listed for sale at its highest level since fall 2015. Available inventory would provide for 1.9 months of supply at the current sales pace, which is the highest measure since early 2016. However, with 1.9 months of supply, this is still solidly a home sellers’ market and Denver remains one of the tightest major housing markets in the nation. It will be important to continue monitoring supply and pricing trends in the coming months to determine just how much higher interest rates and home prices are affecting the market.

Still, there are reasons to remain optimistic. Denver employment growth has stayed strong, with the metro area adding 39k jobs in the last year versus just 20k new housing units permitted. Denver unemployment, while creeping upwards, remains very low, and national measures of consumer confidence are at their highest levels in 15 years or more. There’s clearly still strong local demand for housing, but the question is whether buyers can stomach ever-higher prices — and whether, if prices do fall with rising interest rates, builders can rein in construction costs to keep building at lower price points. Economic expansions don’t die of old age, but this one is getting long in the tooth. It remains to be seen whether the party will continue once the Fed “takes away the punch” by ending this extraordinary period of the accommodative monetary policy. Looking forward, our forecast model suggests we’ll see single-family permit totals of 1,076 in October, 998 in November, 1,019 in December, and 1,029 in January 2019. With Denver rental vacancy below 4%, we should expect a rebound in multi-family permits. The forecast is for 943 MF permits per month for the six-month period ending January 2019.

(1) https://www.zillow.com/research/mortgage-payments-21610/
(2) https://www.nytimes.com/2007/12/23/business/23view.html
(3) https://www.cnbc.com/2018/11/02/us-created-250000-jobs-in-oct-vs-190000-jobs-expected.html
(4) https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Denver-Aurora-Lakewood, CO Single-Family Permits Forecast

 

Denver-Aurora-Lakewood CO Single-Family Permits Forecast

Denver-Aurora-Lakewood, CO Multi-Family Permits Forecast

 

Denver-Aurora-Lakewood CO Multi-Family Permits Forecast

Colorado Springs, CO – Economic Data

 

Colorado Springs, CO Economic Indicators

Colorado Springs, CO Single-Family Permits Forecast

 

Colorado Springs CO Single-Family Permits Forecast

Colorado Springs, CO Single-Family Permits Forecast

 

Colorado Springs CO Multi-Family Permits Forecast

Fort Collins, CO – Economic Data

 

Fort Collins CO Economic Indicators

Fort Collins, CO Single-Family Permits Forecast

 

Fort Collins CO Single-Family Permits Forecast

Fort Collins, CO Multi-Family Permits Forecast

 

Fort Collins CO Multi-Family Permits Forecast

Greeley, CO – Economic Data

 

Greeley CO Economic Indicators

Greeley, CO Single-Family Permits Forecast

 

Greeley CO Single-Family Permits Forecast

Greeley, CO Multi-Family Permits Forecast

 

Greeley CO Multi-Family Permits Forecast

Economic Data Definitions

SFD_units This is the number of single-family housing permits approved in the metropolitan statistical area (MSA) each month, reported by the Census Bureau.
2to4_units This is the number of housing permits for units in buildings with two to four total units approved in the MSA each month, reported by the Census Bureau.
MF_units This is the number of housing permits for units in buildings with five or more total units approved in the MSA each month, reported by the Census Bureau.
total_employment This is total employment in the MSA, reported each month by the Bureau of Labor Statistics.
total_employment_yoy This is the change in total employment in the MSA from one year ago.
unemployment_rate This is the U-3 unemployment rate for each MSA reported by the Bureau of Labor Statistics.
construction_employment This is total construction sector employment in the MSA, reported each month by the Bureau of Labor Statistics. This varies by availability in each location, some MSAs report residential building construction employment while some report only construction employment as a whole.
case_shiller This is the S&P CoreLogic Case-Shiller Home Price Index for the MSA. This is a repeat-sales index, tracking price changes for individual homes that have sold multiple times. Jan. 2000 = 100.
FHFA_HPI This is the Federal Housing Finance Agency’s House Price Index for the MSA. This is a repeat-sales index like Case-Shiller, but with coverage for more MSAs.
NAHB_HMI This is the NAHB/Wells Fargo Housing Market Index (HMI) for the Census Region. The HMI is a survey of NAHB members measuring sentiment about the residential construction industry. The HMI is a diffusion index with values between 0-100; sentiment is negative at values below 50, neutral at 50, and positive over 50.
UM_CSENT This is the University of Michigan’s Index of Consumer Sentiment. Survey data is used to estimate consumer optimism or pessimism. This is a national statistic. Mar. 1997 = 100.
construction_price_index This is the Construction Price Index as reported by the Census Bureau, which gives an account of the costs to builders when building new homes. This is a national statistic. 2005 = 100.
RVR This is the rental vacancy rate for the MSA as reported by the Census Bureau’s Housing Vacancies and Homeownership survey. These data are released quarterly and we use linear interpolation to estimate monthly figures.
hcai This is the Housing Credit Availability Index published by the Urban Institute.  A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, while a higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks.

 

 

Doom, Gloom and Reasons for Housing Optimism

Housing market media coverage image

Recently, news outlets have written that home construction and sales are plunging and crashing, with some arguing that we’re at “peak housing.”  We’re not so worried yet.  We could be due for some economic pain if the trade fight continues to escalate, and debt is an increasing issue for all parties.  In our opinion, there’s been such an unmet demand for housing that there shouldn’t be a huge drop in volume.

There may be some price pain as marginal buyers are discouraged by increasing payments with rates rising, though.  Builders will have to get the right product mix, which might mean a continued shift away from large, luxury units, as decreased purchasing power means buyers across the board will likely settle for less house than they otherwise would have sought due to caps on state and local tax deductions, rising mortgage rates and tariffs on imported lumber, steel, and aluminum.  Trulia recently noted the mismatch between those seeking entry-level housing and its availability, while the supply of affordable housing has dwindled in places like Colorado Springs and DallasNAHB research showed new home sizes increased in the first quarter of this year, but floor areas have fallen generally from a peak in 2014.

We like what Bill McBride at Calculated Risk has written about housing markets recently, arguing that existing home sales will be mostly flat over the next few years, but expecting continued increases in new home construction and sales.

It seems valuable to look at the year-over-year (YoY) change in permits and starts; on a rolling six-month basis, both single- and multi-family are still trending up.

year over year single family and multi family permits graph

US housing permits and starts graph

Still, it looks like June was the first time since 2016 that SFD starts were flat YoY, so it’s worth watching:

US housing permits and starts graph

Another hunch is that the market’s view is being affected by seasonal adjustments.  With housing so tight in recent years, it feels like there’s been some smoothing of seasonality.  If builders are ramping up activity in the winter months, “pulling forward” units, then they will both permit and start fewer units in the summer months as they work to complete the units begun earlier in the year.  We can look for evidence of this by taking a subset of years of housing data and comparing trajectory, for absolute numbers:

single family dwelling_starts_units graph

single family dwelling_starts_units graph

The view is clearer if we set values so that January of each year equals 100:

single family dwelling starts values

More consistent volume throughout the year, as is evident by looking at the standard deviation of the indexed series for each year, means that construction in the winter months will look comparatively strong and construction in the summer months will look comparatively weak.  In other words, if, say, 75k units in January has in the past been seasonally adjusted to a 1.2M SAAR, and 110k units in June is also adjusted to a 1.2M SAAR, then a smoothing of construction volume across the year could mean we interpret the data as a fantastic January and a terrible June, without adjustments to seasonal adjustment methods.

This last hypothesis needs more exploration, but there’s evidence that homebuilding isn’t crashing yet, particularly when we look at the total number of units under construction.  Note, however, that latest Census data for units under construction is from January 2018, so this deserves to be monitored in coming months.

privately owned housing units under_construction

About the Author

Jonathan Scott

Data Scientist

Email Jonathan

 

Jonathan is fascinated by the intersection of human behavior and economic outcomes, and his work helps to increase objective decision making by reducing cognitive bias. Jonathan studied Economics, History, and Philosophy at CSU.

EnergyLogic’s service offering expands to include National Green Building Standard (NGBS) Certification

Have you heard about NGBS Certification

EnergyLogic is adding National Green Building Standard (NGBS) Certification to our suite of “above code” energy-efficient and green building programs.

The National Green Building Standard™ certification goes well beyond saying that a home is energy-efficient; it provides independent, third-party verification that a home, apartment building, or land development is designed and built to achieve high-performance in six key areas:

  1. Energy Efficiency
  2. Water Efficiency
  3. Resource Efficiency
  4. Lot Development & Site Design
  5. Building Operation & Maintenance
  6. Indoor Environmental Quality

While any residential project can earn the NGBS Certification, it has significant value for multifamily projects that need to meet Housing and Urban Development (HUD), or other governmental green building requirements.

With bronze, silver, gold, or emerald levels, our partners can pursue a certification level that is appropriate for their project and achieve a nationally recognized and rigorous certification.

How do the various certification levels compare?

NGBS certification level comparison graph
Source: Home Innovation Research Labs

Discover more of what the NGBS Green Certified promise means for you.

If you would like to learn more about NGBS or have a project which may be appropriate, please contact Rusty Buick, Director of Sales at EnergyLogic.

Who to Contact:

Rusty Buick
Director of Sales/Customer Relations

Email Rusty
720-305-8436