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

How can you help NGBS Green?

EnergyLogic is a National Green Building Standard (NGBS) Green advocate. We believe it is affordable and among the most rigorous green building rating systems available, and we believe that developers should have a choice of green certification programs.

The City of Denver is currently collecting comments on their Green Roofs Building Policy Proposal. In short, they have proposed that as an alternative to the mandate for a green roof, new and existing buildings are allowed to install a cool roof and elect for LEED Gold or Enterprise Green Communities certification.

The Denver Department of Public Health and Environment (DDPHE) is leading a formal stakeholder engagement and public input process to review and possibly modify Denver’s Green Roof Ordinance. Based on the ICC/ASHRAE – 700 National Green Building Standard (NGBS), EnergyLogic has respectfully requested that NGBS Green Certification be recognized as a named alternative to LEED Gold or Enterprise Green Communities as one of the allowable green certification compliance options for new or existing building to comply with the Denver Green Roof requirements.

Will you join us in supporting NGBS?

Please consider sending comments requesting that NGBS Green is included as a certification option for their policy.

Click here for a sample letter on Denver Green Roof Proposed Policy that you are free to use or edit to help make your submission easier.

Comments are due by noon on June 3rd and can be sent to Katrina Managan via email:

Click here to email Katrina Managan

 

EnergyLogic would like to thank you so much for your consideration to join forces and support NGBS!

 

If you have any questions, please reach out to Michelle Foster:

Michelle Foster | Vice President, Innovation Services

400 Prince George’s Blvd. | Upper Marlboro, MD 20774

P: 301.430.6205 | C: 240.997.8027

HomeInnovation.com | Follow us on Twitter @HomeResearchLab @NGBSGreen

Find a better place to call home: ngbs.com

Join TeamDURA to Rebuild this Zero-Energy DURA Home

Get Ready for an Exciting Summer with Berthoud Habitat for Humanity!

This is a unique opportunity for you to partner with Berthoud Habitat for Humanity in supporting a special home built by students at the New York City College of Technology (NYCCT).

Every 2 years the U.S. Department of Energy puts on a “Solar Decathlon” to challenge collegiate teams to design, build, and operate solar-powered houses that are cost-effective, energy-efficient, and eye-catching. Teams work on creating the best blends of affordability, consumer appeal, and design excellence with optimal energy production and maximum efficiency.

For the 2015 Solar Decathlon, NYCCT put together a team of 60+ students to design and construct a resilient, energy-efficient home that could adapt to the needs of a diverse urban community. Thus, TeamDURA was created:  Diverse, Urban, Resilient, and Adaptable.

Check out the videos below to learn about the team’s 2015 Solar Decathlon journey:

Video: NYC Tech Presentation – Solar Decathlon 2015

Video: NY City Tech Team Interview – Solar Decathlon 2015

In 2017, Berthoud Habitat for Humanity became aware of the availability of this home and negotiated with the college to purchase and move the DURA house – in 6 pieces – to Berthoud, CO. From June 11 – 27, 2018, approximately 20 to 25 students and professors from NYCCT will be staying in Berthoud to reassemble this state-of-the-art house – the first of its kind for Habitat affiliates in Northern Colorado.

The Zero-Energy DURA Home Construction

Image credit: Ngawang
Image credit: Ngawang
Image credit: Ngawang

Explore the DURA Home Interior

DURA Home Floorplan
Dining Room – Image credit: Prof. A. Aptekar
Dining Room Image credit: Prof. A. Aptekar
Living Room – Image credit: Prof. A. Aptekar
Kitchen and Dining Room – Image credit: Prof. A. Aptekar
Adaptable Room – Image credit: Prof. A. Aptekar
Master Bedroom – Image credit: Prof. A. Aptekar
Bathroom – Image credit: Prof. A. Aptekar

Join the Summer Class – Opportunity Details Below!

Click here for a detailed overview of the Zero-Energy DURA Home Opportunity

We encourage you to help make history and showcase this energy-efficient home. Come change the look of affordable housing.  Join EnergyLogic as a supporter of the DURA House project and team up with Berthoud Habitat!

Zero-Energy DURA Home Contacts:

Stefanie Allison  | Associate Director of Development

Berthoud Habitat for Humanity

Email Allison

Phone: (970) 308 8772

Michael T. Cooke PE  | Construction Superintendent

Berthoud Habitat for Humanity

Email Michael

Phone: (970) 310-9332

Professor Alexander Aptekar

Email Professor Aptekar

Learn more about TeamDURA  – Diverse | Urban | Resilient | Adaptable

 

 

EnergyLogic Inspection Report Updates

If you thought that communicating the status of an inspection would be straightforward you would be wrong.    Therefore, in an effort to better ensure clarity and consistency in the delivery of our inspection reports we will highlight the following changes, effective Monday, May 21, 2018. 

One very important change is regarding inspection report language.

The term “Builder Sign Off” will be changed to “Fix and Proceed”.  Items that were formally designated as a “Builder Sign Off” will now be designated with hammer icon and a “Fix and Proceed” message.

   Fix and Proceed

   Correct and Re-inspect

   Photo Re-Inspection 

  • These are inspection items that fail to meet the intent of a program or code but are minor in nature and do not warrant an on-site re-inspection.  They, however, must be fixed in order to ensure compliance with the appropriate code or program.  Any issue designated as “Fix and Proceed” becomes the sole responsibility of the Builder’s field construction management team.
  • Items that were formally designated as a “Failure” will be replaced with the message “Correct and Re-inspect”.  The “Correct and Re-inspect” designation is for inspection items that clearly fail to meet the intent of a program or code and are serious enough in nature to require on-site verification that the item has been corrected.
  • EnergyLogic has added a “Photo Re-inspection” ability which will be designated using a blue camera icon on our reports.   “Photo Re-inspection” is an option used at the discretion of the HERS Rater. It can be used when, and only when, all “Correct and Re-inspect” items do not warrant an on-site re-inspection.

For example, if five items are called out as “Correct and Re-inspect” and four of them could be “Photo Re-inspected” but one needs an on-site inspection the entire group would be assigned “Correct and Re-inspect” with an on-site re-inspection as a trip is required.  On the other hand, if at the time of re-inspection some inspection items have not been fully fixed but it is clear that they are being addressed, a “Correct and Re-inspect” may change to a “Photo Re-inspection”.

Regardless, when “Photo Re-inspection” is called out items need to be addressed, photo documented and sent to the Rater as quickly as possible or an on-site re-inspection may be ordered, drywall may need to be removed, and all kinds of issues could arise. It is EnergyLogic’s expectation that photos will be received within 24-36 hours to verify that the item has been corrected.

It is obvious that every scenario can’t be exemplified here so I want to make it clear that inspection items will be assessed and allocated as Passed, “Fix and Proceed”, “Correct and Re-inspect”, or “Photo Re-inspection” at the sole discretion of the Rater based on their judgment. EnergyLogic is always open to dialogue so please ask questions of our field rating team whenever needed and we will do our best to get you the clarification you need in the timeliest manner possible.

Lastly, the structure and look of our reports are changing as well. 

All changes have been instituted to more clearly express and report the issues that are occurring in the homes we work in.  We need to know if you agree, so please let us know if you see areas for greater clarity.

Thank you!

If you have any questions, please email Robby Schwarz.

Robby Schwarz (faked)

Who to Contact:

Robby Schwarz
Principal, Director of Builder Relations

Email Robby
720-838-0677