Sep 24 2019
Love0

Navigating The ‘Gray Zone’ in Green: Commercial-Grade Residential Construction

By Home Innovation

The application of the National Green Building Standard (NGBS) to multifamily construction has been very successful over the past few years with it being accepted as the green program of choice at near exponential rates. There are many factors that promote its success, including affordability, ease of understanding from a residential builder’s perspective, and less onerous time and documentation demands for builders than other rating systems. These same factors make some feel that it is not a serious certification process. However, the rigorous approach of the NGBS to meeting the various levels of certification and its requirements to meet minimum levels in each of the major construction/building categories can allay the fears of most skeptics.

As an accredited Home Innovation NGBS Green Verifier since the certification program started, I have had an opportunity to verify 41 single-family homes and 29 multifamily buildings accounting for 740 apartments. In addition to new construction, I have also had considerable experience verifying green land development and renovations of existing buildings using the NGBS. All NGBS Green Verifiers are trained by Home Innovation to verify all types of green projects eligible for NGBS certification, but on-the-ground expertise in different verification types varies from verifier to verifier.

During a recent job site visit to conduct my initial team meeting and make introductions, it quickly became apparent that the level of code controlling this particular multifamily project fell under commercial construction guidelines. The questions being asked by the architect, engineer, and the mechanical, electrical, and plumbing (MEP) contractors made me realize how important it was to have the benefit of many years of experience working in both the residential and commercial construction industry.

Transitioning from multifamily low- and mid-rise buildings to multifamily high-rise buildings, it is important that your NGBS Green Verifier has experience in commercial-level construction and codes. Without this kind of experience, a verifier can be placed in a role that taxes the extent of his/her knowledge, thus requiring extra time, effort, and cost to understand the situation and research the proper interpretation. For example, construction tasks that are normally relegated to a subcontractor for smaller, garden-style projects are more typically handled by the larger nationally-oriented engineering and architectural firms for high-rise projects. Verifiers for these types of buildings are sometimes even called on to train the various subs for the project on green requirements and criteria of the NGBS. Also, ASHRAE 91.1-2007 plays a larger role in the energy and building envelope; the energy analysis for high-rise multifamily buildings is more complex. Even the building materials themselves become less familiar – high-rise buildings present a very different landscape of steel, concrete, and glass, as opposed to the wood, brick, and vinyl that are so familiar in single-family and smaller multifamily projects. You can see where there is a specialization for this type of verification work.

The housing market has seen trends towards higher-end, all-inclusive communities as multifamily living becomes the preferred residential lifestyle for many generations. With that trend increasing, more residential building will include commercial features, be located in urban areas, and be considered a high-rise structure. The NGBS scope clearly encompasses high-rise residential structures, but the proper application of certain practices is not explicit in the practice. It is therefore critical to understand the intent of the rules within the NGBS in order to provide an effective verification process for this sector of the industry. An NGBS Green Verifier’s role in confirming a building’s compliance with the NGBS is critical to the developer. However, because of the unique questions that arise with high-rise buildings, I also believe that involving an NGBS Green Verifier with appropriate high-rise/multifamily experience can offer valuable guidance and expertise that the developer’s entire project team will find useful from the beginning of the design process.

I am pleased to have been selected to serve on the ANSI Consensus Committee charged with development of the 2015 version of the NGBS, assigned to the Multifamily Task Group. I served previously on the ANSI Committee that developed the current 2012 version of the NGBS. I look forward to working with my peers on the Committee and the Task Groups to improve the sustainability practices and clarity of the NGBS, especially with regard to high-rise multifamily construction, to ensure the NGBS continues to be an affordable, yet rigorous, green building standard for all residential development.

Sep 23 2019
Love0

Real Estate’s Market Value Shows Minimal Growth in Q2 2019

By Housing, Uncategorized

The recently released Federal Reserve’s Z.1 Financial Accounts of the United States report (formerly known as the Flow of Funds report) shows the latest transactions in households’ balance sheets as they occurred in the second quarter of 2019. The growth in the market values of homes in the U.S. grew less proportionately to the growth in mortgages taken on them than in previous quarters, i.e., households’ liabilities grew more than their assets. Thus, for the first time since the first quarter of 2012, owners’ equity in real estate as a percentage of household real estate declined, from 64.3% to 64.2%. On a non-seasonally adjusted basis, the market value of homes in the U.S. totaled $29.1 trillion and their mortgages totaled $10.4 trillion, leaving net equity at $18.7 trillion.

The above figure shows the plateauing of total real estate’s market value in the most recent quarter of data. As noted above, this is the first time since the first quarter of 2012 that the net owners’ equity as a percentage of household real estate declined. The first quarter of 2012 was also the trough of household’s assets’ market values following the Great Recession.

Sep 23 2019
Love0

Gains for Top Builder Share

By Housing

The top 20 builders produced 29.0% of all the homes constructed in the country in 2018, according to data from BUILDER magazine. That share is a notable gain from 2017, when the largest 20 builders were responsible for 26.8% of all completions.

Historical data shows a rising trend in the market share of the top 20 builders[1].  In 2000, these businesses built 16.6% of homes completed.  By 2005, the share was 22.1%.  The impact of the Great Recession drove the share down to 21.0% by 2008, but it bounced back in the following years, surpassing 25% for the first time in 2013.

Large builders have grown by both entering new markets and expanding their operations in existing markets. An important component of this growth strategy has been the acquisitions of smaller firms and their land.  The recent purchase of American West by Pulte is an example of this phenomenon. Large builders have also been able to leverage their size to access credit markets to acquire land and to achieve economies of scale in the purchase of building materials.

Nonetheless, local and regional builders continue to be responsible for the majority of the homes constructed in the nation.

[1] The exact composition of the top 20 builders has varied over the years, so this analysis is based on the 20 builders with the largest number of closings in any given year and not on a fixed set of builders.

Sep 20 2019
Love0

Examining Rental Housing Spatial Distribution

By Housing

With disruption to home construction from the Great Recession and more recently, declining affordability of homeownership, the number of renters in the US has expanded, reaching 109 million in 2017 or 34 percent of the population (up from 89 million and 30 percent in 2007).

As renting becomes more common, it is important to examine the types of rental structures people live in and their spatial distribution. Using the 2017 American Community Survey (ACS), this post explores the distribution of renter-occupied housing in the U.S.

Detached Rental Housing

After the recession, demand for detached rental homes rose significantly. In fact, detached renter-occupied housing accounted for 40 percent of all rental stock added between 2007 and 2017, more than any other structure type.

Concentrations of detached rental housing are scattered throughout the country, but many metro areas in the Southeast as well as the West have higher concentrations (Figure 1). Of the 10 metro areas with the highest concentrations, five are in California – Merced (59.7%), Visalia-Porterville (53.8%), Modesto (53.2%), Stockton-Lodi (52.4%) and Bakersfield (51.7%). These five metro areas also had some of the highest foreclosure rates at the height of the downturn, indicating an association between areas with high foreclosure rates and detached rental units.

ACS data also show that metro areas with higher concentrations of detached rental units are negatively associated with family income, indicating that detached rentals are more common in areas with lower-income families who cannot afford to buy a home, but are looking for more space than what a typical rental apartment would typically provide.

 

Attached Rental Housing

Attached renter-occupied units (townhouses) are a small share of the rental stock (6.4 percent in 2017) and accounted for 10 percent of rental stock growth between 2007 and 2017 (2.1 million to 2.7 million units). They do, however, make up a large share of the new construction rental segment: single-family built-for-rent (SFBFR) homes.

Attached rentals are concentrated in metro areas in the Mid-Atlantic region (Figure 2). The metro areas with the largest concentrations are Lebanon, PA (28.4%), Philadelphia (27.7%) and Baltimore (27.1%). The southeast coastal areas and the west coast have moderate concentrations of attached rental units.

Attached units are more common in areas with land constraints. Behind New England, the Mid-Atlantic region has the most expensive lot prices, indicating a shortage of lots. Research also shows that Millennials want to live in medium-density, walkable developments. Going forward, areas with higher shares of millennials may see growth in this structure type.

 

Large Rental Housing (Buildings with 50 plus units)

Renter-occupied units in buildings with 50+ units make up 12.6 percent of the rental stock and accounted for 21 percent of the rental stock growth between 2007 and 2017, second only to detached renter-occupied units.

Like detached rentals, the concentration of 50+ unit rental structures are relatively dispersed throughout the country (Figure 3). However, the concentration of 50+ unit rental structures reaches 20 percent in only six metro areas – Minneapolis (29%), New York (28.5%), Washington, DC (28%), San Jose (22.8%), Honolulu (21%), and Seattle (20.9%). With the exception of Honolulu, these metro areas have large populations, with at least 2 million inhabitants.

50+ renter-occupied units are most concentrated in metro areas with large urban centers and renter populations.  These areas tend to have lot shortages, but possess zoning for high-density construction.

 

Manufactured Rental Housing

The manufactured housing share of the rental stock is small at 4.4 percent, and grew by 7 percent between 2007 and 2017. Going forward this segment may grow at a faster pace given ongoing housing affordability challenges.

Manufactured rental housing is concentrated in metro areas in the Southeast and the Southwest regions (Figure 4). The Midwest, Northeast and the coastal west regions have lower concentrations.

Manufactured rental housing is more concentrated in metro areas with lower incomes, many of which are in the South. It provides an affordable option for households who cannot afford to rent single-family structures or to own. Research also shows that demand for manufactured housing is growing among retirees, as it provides a low-cost option for this submarket. This may be why manufactured housing shares are higher in states such as Arizona and New Mexico.

 

Sep 20 2019
Love0

Market-Driven Solutions Boost Energy Efficiency

By Industry News

The National Association of Home Builders (NAHB) told Congress today that it wants to work as a partner with officials at all levels of government to encourage energy efficiency, but also stressed that it is urgent that housing affordability is not jeopardized in the process.

Testifying on behalf of NAHB before the House Energy and Commerce Subcommittee on Energy, Arn McIntyre, a green builder from Grand Rapids, Mich., urged Congress to promote voluntary, market-driven and viable green building initiatives.

“These programs lower total ownership costs through utility savings as well as provide the flexibility builders need to construct homes that are cost-effective, affordable and appropriate to a home’s geographic location,” said McIntyre.

New home construction is much more energy efficient than existing construction because of better insulation, energy-efficient appliances and HVAC equipment, and other improvements stemming from compliance to more modern and stringent building codes. Therefore, McIntyre said it would make no sense to apply even more costly and rigorous energy conservation requirements to new homes.

“Targeting new homes would harm housing affordability and encourage people to remain in older, less energy-efficient homes. In turn, this would result in higher energy usage, higher greenhouse gas emissions and lower standards of living,” McIntyre said. “Improving the energy efficiency of the 130 million homes built before 2010 that are much less energy efficient than today’s new homes is a much more effective approach to reduce carbon emissions and achieve energy savings.”

McIntyre also emphasized the following points to lawmakers:

  • Climate change mitigation programs that recognize and promote voluntary-above code compliance for energy efficiency have a proven track record and demonstrate that mandates are not necessary.
  • Mandating net zero or near net zero energy emissions or usage is extremely difficult, costly and impractical in most if not all of the nation.
  • Any federal intrusion into the building codes adoption process could have a dramatic impact on each states’ ability to implement the codes that best fit their jurisdiction.
  • Incentives play an important role in providing home owners a cost-effective way to invest in energy efficiency.
  • Any federal mandates would have a negative impact on housing affordability and will prevent healthy competition in the marketplace.
Sep 18 2019
Love0

Housing Posts Healthy August Gains

By Industry News

Led by a surge in multifamily production, total housing starts rose 12.3 percent in August to a seasonally adjusted annual rate of 1.36 million units from an upwardly revised reading in July, according to a report from the U.S. Housing and Urban Development and Commerce Department. This is the highest level since May 2007.

The August reading of 1.36 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 4.4 percent to 919,000 units. The multifamily sector, which includes apartment buildings and condos, jumped 32.8 percent to a 445,000 pace.

“This solid report is in line with our latest survey on builder sentiment,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn. “However, builders continue to wrestle with affordability concerns stemming from excessive regulations and other supply-side challenges.”

“Housing has been on an upswing in recent months as the pace of permits and starts has been rising since spring,” NAHB Chief Economist Robert Dietz. “While these are positive developments, single-family starts are down 2.7 percent year-to-date as the catch up process continues.”

On a regional and year-to-date basis, combined single-family and multifamily starts in August rose 4.4 percent in the South. Starts declined 1.8 percent in Northeast, 5.6 percent in the Midwest and 11.3 percent in the West.

Overall permits, which are a harbinger of future housing production, increased 7.7 percent to a 1.42 million unit annualized rate in August. Single-family permits increased 4.5 percent to a 866,000 rate while multifamily permits rose 13.3 percent to a 553,000 pace.

Looking at regional permit data on a year-to-date basis, permits rose 5.7 percent in the Northeast and 1.6 percent in the South. Permits fell 6.9 percent in the Midwest and 5.6 percent in the West.