Archive for building

Are you a savvy homeowner?

Your home is an investment, and the value of that investment is determined by the housing market.  According to the latest American Express Spending & Saving Tracker, nearly two-thirds of homeowners say they will invest in renovation projects this year. You can increase the value of your home as an investment by increasing its energy efficiency. Energy efficiency equates to lower operating costs. Lower operating costs mean savings and that savings makes a home more desirable to potential buyers.

Research shows that eco-friendly homes are selling faster and for more money than traditional homes. In 2010, certified green homes spent an average of 97 days on the market, compared with 123 for traditionally remodeled homes. And although the numbers vary, in general they sell for 8% to 30% more.

Despite the sluggish economy and anxiety about price, “savvy” homeowners that are aware of the benefits of sustainable building solutions are willing to pay for them. Who are the “savvy” homeowners?  Savvy homeowners are the ones who know how to protect their investment. Whether purchasing or improving a home, you should realize you are making an investment with the objective of making a profit — at some point.

In an economy that’s made money a little tighter for everyone, are green improvements really necessary?  The answer to this question is “Yes.”  Homeowners should take note of the International Energy Conservation Code (IECC) and the impending 2012 residential changes to that code because it is about to have a substantial impact on the value of your investment.

You might have heard of Bill H.R.2454 – American Clean Energy and Security Act of 2009.  H.R.2454 contained a provision that would have mandated energy audits and labeling before any home – new or used – was sold. The bill passed in the House of Representatives but stalled in the Senate because it was viewed as too stringent.  Since the “powers that be” cannot agree on how and where to build new energy plants to increase supply or even what types of plants to build, their only option is to decrease consumption.  So predictions are that mandated energy audits and labeling of homes will  eventually pass because of the International Energy Conservation Code and the 30 percent Energy Savings Goal changes to be enacted in 2012.

Regardless of what the federal government might mandate, the Idaho Building Code Act (Title 39 Chapter 41) requires all local governments in the State that issue building permits to adopt the most recent version of the International Building Code by January 1st of the year following its adoption by the Idaho Building Code Board.  And the adoption of the IECC 2012 code changes will eventually force you and other homeowners to incorporate green into your remodel projects or take a loss on your investment.

If you’re like most consumers, you are spending smart and looking for a greater ROI when it comes to home renovation.  Right now, it makes more sense to invest in your home than it does an IRA.  As a National Association of Home Builders Certified Green Professional, a U.S. Department of Energy Building America Builder’s Challenge Partner, and an Energy-Star 100% Builder Partner, I can help you protect your investment.   Call me at (208) 571-0755 or email me at chuck@chuckmillerconstruction.com.

Posted in: building, energy codes, energy-efficient remodeling, green building, green remodeling, home building, real estate, Remodeling, sustainable building, sustainable development

Leave a Comment (2) →

Are you ready to buy or build a new home?

Are you ready to buy or build a new home?  If so, you probably read all the news stories and predictions that the market has a long way to go before it starts to recover and that home prices will continue to fall for months or years to come.  If you waiting for the market to improve before you buy or build your Dream home, remember that, despite all their claims to the contrary, no one can predict precisely where the market is going.  Trying to time your home purchase with the bottom of the market is futile. If you’re financially and emotionally ready to be a homeowner, it’s always a good time to buy.   All the time you spend procrastinating on purchasing or building a home, you could be building equity, getting tax deductions and enjoying the many other benefits of homeownership!

Or maybe you’re just not sure if you are financially ready.  Here’s a little quiz that might help.

Which one of the following do you NOT need to purchase a home:

  1. A decent credit record.
  2. A big down payment.
  3. Enough money to make monthly mortgage payments.
  4. Enough income to pay property taxes and homeowner’s insurance.
  5. The ability to maintain the property.

Check back in a few days for the answer.

Chuck Miller

Posted in: building, cost of building, home building, real estate

Leave a Comment (2) →

The Happiest Careers in America – Where’s Homebuilding?

Forbes published an article today titled “The Happiest Careers In America.” The article highlights the results of a new survey from job site CareerBliss.com that revealed the top ten happiest professions in America. The survey results measured nine factors of workplace happiness, including the individual’s relationship with their boss and co-workers, their work environment, job resources, compensation, growth opportunities, company culture, company reputation, daily tasks and job control over the work that they do on a daily basis.

Homebuilding was not one of the ten happiest careers. As I read the article and viewed the slideshow of the “10 -Happiest Jobs in America”, I realized that they had obviously made a mistake. Why do I say that? Let me explain.

I teach the National Association of Home Builders “Business Management for Building Professionals” course. One of the slides from that course contains a picture of 14 different hard hats – each one representing a different role or job within a small volume building company. The building professionals in the class are asked “How Many Hats Do You Wear?”

According to the Census Bureau, as of 2007, there were almost 2.6 million nonemployer residential construction and specialty trade contracting firms, including foundation, framing, siding, masonry contractors, stucco, electrical, plumbing, heating, air-conditioning, drywall, painting, flooring, and landscaping contractors. So, naturally, the typical small volume builder wears many hats and fills many roles in his company. As I viewed the slideshow of the “10 -Happiest Jobs in America”, I realized that a career in home building typically encompasses 7 of the 10 careers listed as the happiest.

No. 2 – Customer Service. Customer service professionals enjoy working directly with customers, helping people, managing conflict, and problem solving.

No. 3 – Education. Home builders are educators. We educate our customers about the building process and we educate our trade contractors on how we prefer our homes to be built

No. 4 – Administrative – Clerical.  These professionals simply feel good about their daily tasks. They keep things running smoothly.

No. 5 – Purchasing – Procurement.  These professionals are responsible for purchasing the materials and goods for their companies. Their satisfaction stems from relying on their superior negotiating skills to secure the best deals possible.

No. 6 – Accounting.  The professionals hold the purse strings and ensure that their companies are run efficiently, that records are kept accurately, and that taxes are paid properly and on time.

No. 7 – Finance.  These professional handle transactions and provide guidance to make sound investment decisions.

No. 8 – Non-Profit Employees.  According to the National Association of Home Builders latest “Cost of Doing Business Study,” the average small-volume builder in 2008 had a net loss $53,000 or 1.4%. Non-profit employees derive satisfaction from doing good. Abraham Lincoln said that “The strength of our nation lies in the homes of its people.” Seeing a family move into a new home you built just feels good.

The only careers not encompassed by home building were No. 1 – Biotechnology, No. 9 – Health Care, and No. 10 – Legal. So, if you’re chosen career in home building, you’ve chosen one of the happiest careers in America. Don’t you agree? I do.

Chuck Miller GMB CGB CGP CAPS MIRM CMP MCSP CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Posted in: builder profit, building, home building

Leave a Comment (1) →

Building material prices continue to rise

Single-family housing starts in 2010 totaled 475,000 – a 7 percent increase over 2009 but still substantially below the 1,256,000 average starts per year from 1995 through 2003.  .Think the decrease in demand for new home construction has resulted in lower prices for building materials.  Think again.

Prices for materials used in construction actually increased 5.4 percent in all of 2010.  Prices increased at double-digit rates over the year for four key construction materials. Diesel fuel prices climbed 28 percent in 2010; steel mill product prices rose 12.5 percent (think rebar, nails, kitchen sinks, appliances, etc.); copper and brass mill shape prices were up 12 percent (think electrical wiring, water supply valves and fittings); and prices for aluminum mill shapes rose 12 percent over the year.  Other items that contributed to the climb included lumber and plywood, 5.7 percent; architectural coatings, primarily paint, 1.5 percent; brick and structural clay tile, 1.0 percent; gypsum products, 3.4 percent; asphalt, 4.6 percent; and insulation materials, 4.4 percent.  The National Association of Home Builders predicts single-family housing starts will increase 21 percent to 575,000 in 2011.  Although the demand for construction in the United States will remain relatively weak, the price increases are likely to intensify in 2011 as global demand for construction materials grows.

Have you been waiting to build your new home or remodel your existing home hoping prices will continue to fall?  You might have already waited too long.

Chuck Miller GMB   CGB  CGP  CAPS  MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Posted in: building, building material prices, cost of building, Remodeling

Leave a Comment (0) →

Building material prices edge up again

Think the decrease in demand for new home construction is resulting in lower prices for building materials.  Think again.

According to the September 16 producer price index (PPI) report by the U.S. Labor Department, prices for construction materials edged up 0.2% in August. Prices are 3.6% higher than one year ago.

Nonferrous wire and cable prices increased 1.8% for the month and are up 8.7% compared to August 2009. Prices for plumbing fixtures and fittings were up 0.6% in August and up 1.2% from the same time last year. Prices for concrete products inched up 0.5% for the month, but are down 1.1% from August 2009 levels.

Softwood lumber prices slid for a third straight month, down 3.1% in August. However, prices are still 6.8% higher on a year-over-year basis. Iron and steel prices were down 1.5% in August, the third straight monthly price decrease. But, prices are still 18.2% higher than they were one year ago. Steel mill product prices were down 3.9% August, but were still up 17.1% from last August. Prepared asphalt, tar roofing and siding prices slipped 0.9% in August, but were up 8.6% over the last twelve months. Prices for fabricated structural metal products decreased 0.2% for the month, but were up 2.8% compared to August 2009.

Overall, the nation’s wholesale prices increased 0.4% last month and are 3.1 percent higher from August 2009.

Are you waiting for the price of that new home you’d like to build to drop further?  I wouldn’t.

Chuck Miller GMB   CGB  CGP   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Posted in: building, building material prices, cost of building, home building

Leave a Comment (0) →

Building an energy-efficient home in Boise, Idaho

The 2010 AVID Home Design Driver Research Survey showed that the majority of home buyers rated energy efficiency as a “Must Have” for their new homes.  Although Boise and southwestern Idaho have some of the lowest power rates in the nation, home buyers still want their new homes to be energy efficient. 

How do you build an energy-efficient home in Boise, Idaho and how much more does it cost?  The U.S. Department of Energy’s Building America Program has shown that new homes can be both energy efficient to live in and cost effective to build.  In fact, the energy consumption of new houses can be reduced by 40% or more with little or no impact on the cost of ownership.

Building America works with members of the home-building industry to produce quality homes that use less energy without costing more to build.  The goal is to develop cost-effective solutions that dramatically reduce the average energy use of housing while improving comfort and quality.  This is accomplished through a systems engineering approach to homebuilding.

Systems engineering

The systems engineering approach considers the interaction between the building site, envelope, and mechanical systems, as well as other factors, throughout the design and construction process,  It recognizes that features of one component in the house can greatly affect others and it enables builders to incorporate energy-saving strategies at no extra cost . Systems engineering allows builders to identify improvements to the design of a home that will ultimately save money.  For example, the design might incorporate advanced framing systems that require less wood and labor.  The saving on lumber and framing labor can then be reinvested in improved insulation or high-performance windows.  Controlling building envelope leakage by tightening the building envelope enables builders to install smaller, less expensive heating and cooling systems. These savings can then be reinvested in higher-efficiency equipment..

Other examples of systems engineering cost-saving trade-offs include:

Proper placement of heating and cooling systems allowing shorter duct runs saving material and installation costs.

Locating ducts in the interior, conditioned space of a home (as opposed to in exterior walls or unconditioned attic spaces) eliminates loss of conditioned air to the exterior allowing the use of smaller, less expensive heating and cooling systems.

Future articles will discuss each of these cost-effective solutions in more detail. 

Next, Advanced Framing.

 

Chuck Miller GMB   CGB CGP   MIRM   CMP   MCSP   CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553 or (208) 571-0755

 

Posted in: building, cost of building, green building, home building

Leave a Comment (0) →

What do buyers want in a green home?

The 2010 AVID Home Design Driver Research Survey provides some insight into what features today’s home buyers equate with a green home. AVID Ratings is a a leading provider of enterprise-level surveys specializing in the home building industry. The AVID survey studied the preferences of nearly 12,000 North Americans who have built a new home in the past nine years. The survey participants were selected because, having been through the process of building a new home, they would understand the trade-offs and cost factors involved

The survey included six buyer segments, defined as

  • First Time Buyers – Growing families seeking initial homeownership and single/couples (no kids) seeking initial homeownership
  • Move Up Buyers – Single/couples (no kids) seeking larger/better home and growing families seeking larger/better home
  • Second Home Buyers – Professionals seeking secondhome (vacation home)
  • Displaced Buyers – Professionals relocating and families seeking a smaller home due to change in family situation
  • Empty Nester Buyers – Semi-retirees/retirees seeking age restricted communities or mixed-age communities
  • Custom Home Buyers – Seeking custom luxury homes

Survey participants were asked what they would choose if they were to build a new house today. Features were rated as

  • Must Have
  • Really Want
  • Might Be Nice If Affordable
  • Might Be Nice If Included
  • Not Important

Overall, survey respondents labeled 60% of the green features as “Must Haves.”

Paul Cardis, CEO of Avid, oversaw the report and says “The interest in energy efficiency surprised us.”

Energy-Efficiency was rated as a “Must Have” by all buyer segments. 74.2% of Custom Buyers, 63.9% of Second Home Buyers, 62.5% of Empty-Nesters, 57.7% of First Time Buyers, 52.6% of Displaced Buyers, and 51.6% of Move-Up Buyers rated energy efficiency a “Must Have”

What were the green features considered “Must Haves?”  Energy-effiency features like energy-efficient appliances, high-efficiency insulation, and high-window efficiency were rated as “Must Have” by the majority of the respondents in all but one buyer segment in one category.  With U.S. Displaced Buyers, high-window efficiency was considered a “Must Have” feature by 38.8% of the respondents while 42.5% rated it as “Really Want.”

All but one buyer segment rated Recycled/Synthetic Materials as “Might Be Nice If Affordable.” 35.5% of U.S. Empty Nesters rated it as “Really Want” while 33.9% considered it “Might Be Nice If Affordable.”

Chuck Miller GMB   CGP  CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Posted in: building, green building, home building, marketing, real estate

Leave a Comment (0) →

Inflation Trends and Building Material Prices

For the past five months (September 2009 through January 2010), the Consumer Price Index (CPI) has risen 0.2% per month. Building materials prices are an exception to general inflation trends, which appear to be tame.

On a year-over-year basis, the Consumer Price Index (CPI) is up 2.6%. Excluding food and energy, the index is up 1.6% from a year ago. A broader measure of inflation used by the Federal Reserve — the price index for personal consumption expenditures excluding food and energy — rose 1.6% in the fourth quarter at a seasonally adjusted annual rate and 1.5% from fourth quarter 2008.

However, an index produced by the Bureau of Labor Statistics that tracks building material prices for builders of single-family homes and multifamily structures has now risen three months in a row.

Although on a year-over-year basis, the single-family index is up only 0.3% and the multifamily index is up a slight 0.2%, in January, both measures jumped 1.0% from December. Chief contributors to the recent rise are lumber, fuel products (gasoline and diesel), plumbing fixtures and copper products.

With a number of countries around the world on the expansion path, building material prices are likely to continue to rise in coming months.

The recent earthquake in Chile will disrupt supplies of some imported building materials — in particular, moldings and door frames. These items can be, and likely will be, replaced by items from other countries, but at a higher price. But Chile is also a major exporter of copper, and although the mines escaped direct damage, operations and shipping will likely be delayed as the country recovers. So far, copper prices on the COMEX are up about 4% since the quake.

Are you waiting for the price of that new home you’d like to build to drop further?  I wouldn’t.

Chuck Miller GMB   CGB  CGP   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Posted in: building, building material prices, cost of building, home building, real estate

Leave a Comment (2) →

Construction Worker Rated the 8th Worst Job

The headline read “Construction Worker Rated the 8th Worst Job.”  Being a Builder who started out as construction worker, I just had to investigate further.  Here is what I found.

The headline referred to JobsRated.com’s 2010 Jobs Rated report which the website says “offers a comprehensive analysis of 200 different jobs giving each a unique ranking based on factual analysis and hard data, not guesswork.”

The report compares and contrasts careers across a multitude of industries, skill levels and salary ranges using five key measurement criteria – stress, working environment, physical demands, income and hiring outlook – and sorting them into a definitive list of jobs that can be called “worst” and “best.”  Jobs receive a score in each individual category, and when these are added together, the career with the best overall score is ranked 1st, while the one with the worst overall score is ranked 200th.  They noted that, in compiling the list of highly-ranked jobs for 2010,  researchers sought to find careers that are likely to provide a positive experience for a majority of employees, not just the uniquely talented. The top careers in the report “are the jobs that offer the greatest chance of enjoying a combination of good health, low stress, a pleasant workplace, solid income and strong growth potential.”

Of the 200 different jobs, 22 or 11% were construction related careers.  Here is how they ranked.

Rank Job
33 Civil Engineer
48 Architectural Drafter
71 Mechanical Engineer
86 Architect
110 Construction Foreman
119 HVAC Mechanic
120 Surveyor
141 Glazer
145 Realtor
150 Plumber
153 Electrician
159 Painter
164 Drywall Installer / Finisher
167 Construction Equipment Operator
169 Carpet/Tile Installer
170 Plasterer
171 Carpenter
173 Bricklayer
179 Roofer
187

Sheetmetal Worker

193 Construction Laborer
198 Ironworker

 For the Construction Laborer job which was the topic of the headline, the article listed both the Pros: Good income potential with overtime, opportunity to become an independent contractor and start your own business; and the Cons: Extreme, physically demanding labor in all weather conditions, risk of injury or death, poor hiring outlook in a struggling economy, seasonal layoffs.

In fact, it appeared that the poor hiring outlook was a big factor in most of the construction-related jobs.  Understandable considering that unemployment in the construction industry is currently 23.7%.  But regardless of the current outlook, I believe it is important to note that according to the U.S. Department of Labor, as the economy recovers and construction returns to normal levels, there will be a need for an additional 1.1 million construction trades people.  This figure does not include construction management positions.

What I found interesting were the rankings of some of the non-construction related careers.  Teacher ranked 116. Physician ranked 128.  Commercial Airline Pilot ranked 129.  Senior Corporate Executive ranked 133.  Surgeon ranked 136.

So what was the Top Rated Job? Actuary – someone who interprets statistics to determine probabilities of accidents, sickness, and death, and loss of property from theft and natural disasters.

I think I’ll stick with construction.

Chuck Miller GMB   CGP  CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Posted in: building, home building, real estate, Remodeling, Uncategorized

Leave a Comment (0) →

The Business of Building – Part 1

Welcome to the first in my series of blog posts on the Business of Building.  Let’s start with a quiz.

In a normal market, what is the average Net Profit for a Builder?  Is it

  1. 21% to 30%
  2. 17.3% to 20.9%
  3. 3.7% to 8.7%
  4. -5% to 0%

 

It has been my experience as a home builder that most home buyers have a real misconception regarding what percentage of the price of a new home is the Builder’s profit.  The correct answer is C, 3.7% to 8.7%.  The range reflects the differences between Builders who built exclusively on their customer’s land, Builders who built on land they developed or purchased, and Builders who built on both.

Type of Builder Gross Profit Margin Net Profit
All Builders 17.3% to 19.0% 3.7% to 5.4%
Small-Volume Builders (1) 16.8% to 19.5% 3.2% to 5.5%
Production Builders (2) 18.5% to 20.9% 5.4% to 8.7%
     
Notes:(1) Builders who build 25 or fewer single-family homes per year
(2) Builders who build 26 or more single-family homes per year
Source: NAHB Cost of Doing Business Study

 

The difference between the Builder’s Gross Profit Margin and Net Profit is the Builder’s expenses which include his or her General and Administrative Expenses, Financing Expenses, and Sales and Marketing Expenses. General and Administrative Expenses range from 8.3% to 12.9% and include employee salaries; payroll taxes, insurance, and other benefits; office expenses; vehicle expenses; taxes; general liability insurance; accounting and legal service fees and expenses, and depreciation.  Financing expenses range from 0.3% to 0.9% and include interest lines of credit and construction loans; and closing costs. Sales and Marketing expenses range from 0.9% to 3.8% and include commissions, website hosting and maintenance, and other advertising and promotion expenses.

The Net Profit is what enables the Builder to continue to operate when business is slow and revenues are down.  It’s what enables them to perform warranty and maintenance services on their finished homes.

According to BuildIdaho.com, the average sales price for new homes is approximately $190,000 in Ada County and $145,000 in Canyon County.  For a small volume builder in a normal market, the average net profit on that new home in Ada County would be somewhere between $6,080 and $10,450. Considering that new home takes approximately 90 to 150 days to build, that equates to $1,216 to 3,483 a month.

Are you waiting for the price of that new home you’d like to build to drop further?  I wouldn’t.

Chuck Miller GMB   CGP  CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Posted in: builder profit, building, home building, real estate

Leave a Comment (3) →
Page 2 of 3 123