Built-for-sale or “spec” homes have been particularly hard hit by the housing downturn, according to a new NAHB survey on the various components that go into the price of a typical single-family home.

Based on responses from 54 builders in 2009, “Breaking Down House Price and Construction Costs” found a relatively high proportion of custom homes — homes built on a lot owned by the customer, who hires a general contractor to perform the construction work — rather than spec homes.

The 2009 construction cost survey also found that the costs of construction accounted for nearly three-fifths of the final sales price of the average home, and the cost of the finished lot accounted for just over one-fifth.

The average size of the surveyed homes was just over 2,700 square feet, and the average lot size was one-half acre.

The average price of the new single-family homes in the 2009 construction cost survey was $377,624. The cost of the finished lot accounted for a little over one-fifth of that price, the cost of construction accounted for nearly three-fifths and the balance came from the costs of construction financing, selling the home and overhead and profit.

At 15.6%, framing and trusses accounted for the largest share of construction costs, followed by excavation, foundation and backfill work (7.1%). Siding, plumbing, drywall, cabinets and countertops, and tiles and carpet accounted for between 5% and 6% each.
NAHB’s research has identified framing/trusses and windows as the two components of a single-family home that have been on the decline fairly steadily since 1988. Siding and roofing shingles are two components that have been on the rise as a share of total construction costs.

The Builder Practices Survey suggests that the rising cost-share of siding may be the result of a shift toward more expensive materials. That survey indicates that, since 2002, brick has steadily increased its market share and replaced vinyl as the siding material most commonly used on single-family detached homes.

Profits amounted to 8.9% of the house price last year, the survey also found.

Click here to read the entire report.


 

We blogged about Seed Architecture’s SIPs house a while back and recently got word that the firm is close to finishing another local project.

According to Seed, the 14 house [the name is based on the sum of the address numbers] will be a “showpiece of innovation in sustainability.” Seed principal, Darin Dougherty, shot over some of the features that define the home’s sustainability:

•    ICF walls
•    steel framing (pan deck, light gauge framing = no wood)
•    hydronic radiant heat from gas boiler - boiler also supplies domestic hot water
•    open volume center of house has a custom skylight that opens to release hot air (passive cooling)
•    minimal materials (no interior trim)
•    eco-roof mitigates roof drainage into the storm system
•    bamboo cabinets, no/low voc paint, sealants and finishes and urea formaldehyde free cabinets

The firm also designed and installed a whole house automation system to manage resource use and used careful site placement to take advantage of passive cooling / heating strategies.

14 house, says Seed, was “conceptualized as a piece of modern sculpture” set into the Portland’s West Hills location. We agree.

Photographs courtesy by Jeff Beck.

An expanded tour of green homes, advanced educational sessions and the National Green Building Awards Dinner will be highlights of the 12th annual NAHB National Green Building Conference in Raleigh, N.C., May 16-18.

Registration opened last month and so far is running slightly ahead of last year’s figures. There were about 1,200 attendees at the conference in Dallas last May.

The annual Tour of Homes is being organized by the Green Home Builders of the Triangle, veterans of green home tours in the Raleigh-Durham-Chapel Hill area.

The tour includes examples of affordable, production and high-end homes, both completed and under construction. Remodeling and multifamily projects are included as well.

The growing interest in green building and requests from long-time conference attendees and more experienced green builders convinced the conference working group, led by Maryland builder Mike Bell, to increase the selection of more advanced, in-depth educational sessions along with the introductory courses and seminars.

Among the new offerings:

• The Economics of Green Homes and Green Home Building. This session will examine real world case studies drawn from both single-family and multifamily new construction and weatherization projects to demonstrate the economics of green homes and identify opportunities to build a better, more salable product; reduce costs;  deliver good investment returns and value to the customer; and differentiate green homes from the competition.
• The Latest in Appraising and Lending on Green Buildings. This program will provide an update on FHA, VA and conventional financing as well as the state of green appraising. Also covered will be the so-called “smart commute” and movement within the secondary market to create a true green mortgage.
• Green Renovation & Addition. A start-to-finish case study of an extensive renovation and addition project that turned a 15-year-old, 1,800-square-foot, inefficient home into an award-winning green project will review the decision-making process of the home owners as they worked with an experienced team of green builders.

NAHB members receive discounted conference registration. Visit the registration page for more details.

According to the EPA, beginning April 22, 2010, any contractor — from plumbers to electricians to painters to window replacement experts — who disturbs lead paint while working in a pre-1978 home, school or day care center, must be Lead-Safe Certified. Those who aren’t could face tens of thousands of dollars in fines per violation, per day and potential lawsuits, according to the EPA.

Here's the EPA FAQ with more infornation.

So, what does billionaire Warren Buffett think about the future of the U.S. residential home building industry? Plenty, according to his annual letter to the shareholders of his company, Berkshire Hathaway.

Some of the choice quotes from the report include:

The industry is in shambles for two reasons, the first of which must be lived with if the U.S. economy is to recover. This reason concerns U.S. housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data. Paradoxically, this is good news.

People thought it was good news a few years back when housing starts – the supply side of the picture– were running about two million annually. But household formations – the demand side – only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.

There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.

Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.

^{Generation Y has a population of about 86 million and place high value on community; on places (either virtual or actual) to gather and share information, ideas and opinions. -- Urban Land Institute}

In the March editor’s letter, Editor in Chief John Chilson writes about how important it is for builders to know their market and understand who they are building homes for.

As some of you may have noticed from a recent post of mine, my wife and I just bought a new home in Portland, OR. Although it was new to us, the home was originally built in the 1920s and was recently bought and flipped. As much as I love our new home, I can’t help but feel that the people who flipped the house did not understand who their market was.

During our search for a new home, we talked with real estate agents around the Portland area who all claimed that the only people buying in this market were first time homebuyers, many the Y Generation.  My wife and I belong to the Y Generation, but when I toured many of the newly constructed homes for sale, they all seemed to be geared towards my mother.

Now, I’m not saying my mother doesn’t have great taste; it’s just not my taste. Take the home we bought for example. One of the things the seller boasted about as a selling point was brand new Italian tile floors and granite countertops - features my parents just put into their home. I realize I do not speak for everyone in this generation, but these are things that do not impress me. In fact, the countertops and tile were the main things about the house that we did not like. If we had our way, we would have liked concrete counters and floors. Not only do we like the way concrete looks, it’s not as busy as tile or granite, and it helps regulate the temperature of the home.

The cabinets and doors in the house where another thing that looked like they came straight out of a Martha Stewart catalog. The first thing I did was pull the moldings off of the cabinets in an effort to dress down the kitchen. As for the doors, we’ll be replacing them one by one as we can afford it. 

I was somewhat shocked to find so many houses concentrating on traditional design, when most studies show that the generation that is currently buying houses likes more modern design and energy-efficient materials. You can keep your fancy tile, countertops and carpet. I’d rather spend my money on Energy Star appliances and better performing and nicer looking windows that match my taste, not my parent's.
 

Beginning its third year of negative conditions, the Architecture Billings Index (ABI) had a drop of almost three points in January. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI rating was 42.5, down sharply from a revised reading of 45.4 in December.  This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 52.5, down more than seven points.
 
“Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments. This is even happening to financially sound companies with strong credit ratings,” says AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “This serious situation is being compounded by a skittish bond market, decreased tax revenues for publicly financed projects and declining property values – all which serve as deterrents for construction activity. Until these factors are resolved, the design and construction industry -- which accounts for roughly 10 percent of GDP and is facing unemployment figures in excess of 20 percent -- will continue to face deteriorating market conditions.”

BUILDERnews writer Daniel Savickas just bought his first home. Having written about the industry, the builders and designers , their projects and the materials they use, Dan is now putting some of that knowledge – and the products he’s written about – to real-world use as he makes his home more energy efficient, healthier and livable.

This weekend my wife and I painted and moved into our new house. Normally painting is something I downright loathe, usually from the dizzying fumes off gassed from the paint and the constant up and down on the ladder and attempting to paint a straight line.

After all the articles I’ve written about the benefits of low-VOC paints and its effects on indoor air quality, I decided to go with low-VOC paints. All the colors we chose were available in no-VOC, so I coughed up the few extra bucks. More pictures after the jump.

We just blogged yesterday about the fact that there’s a glut of new homes strewn across the country sitting vacant waiting for buyers – and now we get wind that there may be a shortage of market-rate rental apartments looming.

How is this possible? According to the NAHB:

The housing downturn and economic recession have kept household formation rates at below-normal levels for roughly three years. As the economy moves to higher ground, the housing market will begin to feel the pressure from new households, he said, and there will be a surge of demand from echo boomers, who comprise an even larger group than their baby-boomer parents.

NAHB economists project that the industry will need to deliver 16 million homes over the next 10 years to keep pace with demand. As the excess inventory is worked off, which is likely by the end of 2012, the long-run demand for new housing — based on population growth, immigration and the replacement of losses from the housing stock — will average approximately 1.5 million single-family and 300,000 multifamily units annually, or about 1.8 to 1.9 million total starts.

By the end of 2011, though,  the top 20% of the states will see their production levels back to normal. Those states include Montana, Wyoming, North Dakota, New Mexico, Kansas, Oklahoma, Texas, Louisiana, Mississippi and Alabama.
 

There is a really interesting article on the New York Times Blog about the economy and unemployment, specifically focusing on the building industry, which according to the post has a 24.7 percent unemployment rate.

But the point the article tries to make is not that the building industry is hurting because builders finished 700,000 fewer homes in 2009 than they did in 2007, but rather, it is hurting because they built 9.1 million units between 2002 and 2006. In that same four-year time span, the number of households in the U.S. only grew by 6.7 million, leaving us with 1.4 million excess homes.

Add that to a bad economy and more and more kids moving back home in their mid 20s instead of buying or renting homes, and you still have a big gap in the amount of housing available, versus the amount that is needed. Read the article here.