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New vs. Existing Homes

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According to recently released data from HUD and the U.S. Census Bureau, sales of newly built, single-family homes rose 2.2 percent to a seasonally adjusted annual rate of 546,000 units in May. This is the highest new-home sales rate since February 2008.   The National Association of Realtors reported that the sale of previously owned homes also surged in May, rising to a seasonally adjusted rate of 5.35 million, buoyed in part by the return of younger buyers who had long struggled to find a path into the market.

As the housing market returns to normal, we are seeing more and more articles on the pros and cons of buying a new home vs. an existing home.

According to recent survey by Trulia, twice as many people prefer new homes to existing homes.  A “new” home is a home that has never been lived in before, or a home purchased in the pre-construction phase. An “existing” or resale home is a home that was pre-owned. Most existing homes were built between the 1920s and the 1970s.  For the same price, 2 in 5 Americans – a sizeable 41% of the population – either somewhat or strongly prefer a newly-built home over an existing one.

Among the myriad of decisions to make when buying a home is should you purchase a new home or one that has been previously lived in.  Ultimately you have to decide which is best for you and your family.  There are advantages and disadvantages to both. Here are a few things to help you make an informed decision.

New homes can cost more. According to Trulia, a new home costs 20% more than a resale home.

When buying a new home, you are able to work with the builder to customize your home before construction is completed.  Depending on the Builder, you might be able to design your new home from scratch.  At a minimum, you can pick out the carpet, countertops, flooring and paint colors.  You might even get to pick out things like sinks, shower heads and door handles.

With a new home, most of the work is done for you.  You don’t have to lift a finger, a paint brush, or a hammer.  You won’t have to do much maintenance. With brand new appliances, plumbing, heating, and air, you should be repair free for at least a few years – a big financial benefit vs. an existing home.

If you are someone who takes pleasure in fixing up a home, customizing and upgrading it yourself, or tailoring it to your preferences, an existing home might be for you.

New homes come with some of the design elements that today’s lifestyle demands: open floor plans, eat-in kitchens, large master baths, and walk-in closets to name a few.

A new home will likely be more energy efficient built using high-efficiency furnaces, air conditioners, and water heaters, added insulation, energy efficient windows, along with ENERGY STAR appliances that could reduce utility bills by thousands of dollars over the course of home ownership.

A new home might not include certain appliances like the refrigerator, washer and dryer.

An existing home might include appliances which are typically not included in new homes and might also include window coverings and some furniture, etc. which are usually sold for much less since they are used and a burden for the seller to move.

A new home will most likely have the option to include modern technology that many savvy homeowners want like Wi-Fi, USB plug-ins, surround sound, smart gadget capabilities and more saving you lots of time, money, and holes in the walls.

If you want to make a change to energy efficient appliances or more “smart” technology in an existing home, you could end up spending a lot of money.  An existing home was most likely built when the technology for wireless internet and smart security systems wasn’t even a thought in the builder’s mind. Upgrading to modern technology in an existing home can be expensive and can mean more holes in walls and more remodeling.

Besides the fact the home has never been lived in, a new home is clean and worry-free.

A previously owned home can be hiding huge money traps.  The home may look fine, but it could be hiding major issues beneath the surface, such as mold or water damage. The home’s systems and appliances have been used.  The water heater has produced thousands of gallons of hot water, appliances have been used hundreds or thousands of times, and the HVAC system has already weathered a number of winters and summers.  Systems and appliances that have already been used have a shorter lifespan, and may fail earlier than brand new appliances. Previous wear and tear can be hard your wallet.

There are also lifestyle factors to consider.  After all, you’re not just buying a house – you’re buying a home and a neighborhood.

A new home is generally in a neighborhood of new construction, as opposed to existing homes. New homes are created in brand new subdivisions that are having houses built all at the same time. Although some individuals may think this is a plus, it also means that you could be stuck in a construction zone for a few months or years after purchasing your new home.  Some necessities might not yet have been built close to new subdivisions, which could mean you might have to drive farther to schools, grocery stores and work.  If you’re looking for a lovely, quaint, tree-lined older neighborhood that has a well-established community of neighbors, you won’t get it for many years in a new development.

A previously owned home will be in an established neighborhood close to necessities and with a neighborhood culture.  A home in a neighborhood that has been established can be a huge boost to property values and buyer morale.

New homes are typically built on smaller lots than most older homes.  If you’re looking for that big backyard – and lots of space between your house and the next door neighbor’s, you may not find it in a new home.

Take your time and weigh the pros and cons of buying a new versus pre-owned home.  At the end of the day, new or pre-owned, your home should make you feel comfortable for years to follow.

Chuck Miller Construction Inc. believes that homes should be a safe and sacred haven. They should reflect our clients’ values and lifestyle while providing a sense of community. They should be comfortable and long lasting, be designed and built so that you can live there independently regardless of your age or physical ability, and should use energy and resources efficiently and responsibly.  So whether you decide to purchase a new home or a previously owned home, we have the knowledge, experience, and team of qualified trade contractors and suppliers to turn your dreams into reality.

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Posted in: cost of building, energy-efficient remodeling, green building, home building, home buyers, homeownership, real estate, Remodeling

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Are you a savvy homeowner?

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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.

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Building an energy-efficient home in Boise, Idaho

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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

 

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What do buyers want in a green home?

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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

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The End of the McMansion? The Impact of Rising Energy Costs

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The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007.  The median size has declined almost 10% since then.  Will the trend to smaller-sized homes persist? Let’s consider the rising cost of energy.

The depth of the downturn may, for the first time in at least 40 years, reduce real median household incomes while the cost of energy is predicted to grow faster than incomes in the coming years.  Some experts argue that because smaller homes cost less to heat and cool, this alone should continue to support the trend to smaller homes.  I respectfully disagree.

I have been building energy-efficient homes since for the past 10 years.  Through programs like the U.S. Department of Energy’s Building America Program, we learned how to increase the energy-efficiency of any new home regardless of size by 30% to 50%.  Energy-efficiency is a major component of all green building programs and because of the increased emphasis on green building fueled in part by the International Energy Conservation Code® (IECC) and the growing popularity of programs like NAHB Green, building products manufacturers are improving their existing products and developing new products to improve the energy-efficiency of the homes being built.

But what about home buyers.  Based on my own experience over the past 10 years, while energy-efficiency might make it onto a homebuyers list of priorities, rarely is it at the top of the list.

In the spring of 2007, RCLCO (Robert Charles Lesser & Co., LLC) conducted a national survey of homeowners to gain an understanding of their attitudes toward green residential products. Among the questions asked were:

• Are “green” features and amenities important in your next home purchase?

• What “green” features and amenities are important to you in your next home purchase?

• Would you be willing to pay more for a “green” home, if so, how much?

The results of the survey revealed that only 21% of home buyers were interested in saving energy and realizing lower utility bills. Those in this group are most interested in energy-efficient and energy-saving features.  Among this 21% of home buyers, 75% indicated they would be willing to spend more for an energy-efficient home provided their investment paid them back over time.  If their investment might not pay them back over time, that percentage drops to 18%.

So I don’t think rising energy costs will drive the trend toward smaller homes.

Chuck Miller GMB   CGP   CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

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Eco-friendly Construction Leading to Healthier & Asbestos Free Homes

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Are you considering purchasing a “fixer-upper” or remodeling your older existing home?  Here is something to consider.

Highly regarded throughout the 20th century, asbestos gained immense popularity because of its reluctance to conduct electricity and fire resistance qualities. Asbestos can appear in roof shingles, dry wall, attic insulation, popcorn ceilings, joint compounds and electrical wires.

Most homes built before 1980 could harvest asbestos or other environmental defected insulation methods. Those involved in home improvement, construction and remodeling scenarios should know that the implementation of eco-sustainable construction, green remodeling and green energy home solutions will play an important role in the transformation to a healthier and sustainable world.

According to the experts, the general rule of thumb is if the asbestos is in good shape, it’s posing no apparent risk. If it’s in bad shape, it could be a problem. In many situations, the best action in dealing with asbestos is no action at all. However, if an inspector deems removal necessary, it must be performed by a licensed abatement contractor who is trained in handling asbestos materials.  They must wear protective equipment such as masks and gloves to avoid any potential exposure.

When asbestos deteriorates and its fibers become airborne, it has the potential of causing severe lung ailments such as mesothelioma and asbestosis. Due to the fact most asbestos-related illness are usually diagnosed in late stages, sometimes 20 to 50 years after exposure, a mesothelioma prognosis is usually poor.

 

When involved in home improvement or remodeling, it is especially important to embark on the proper inspections to insure the safety of your clients, building workers and your reputation. Problems with asbestos in older buildings should be addressed in a rational manner. The removal of asbestos must be done by professional abatement contractors who are trained in handling toxic materials. Although not all asbestos is considered dangerous, it is best to leave any suspected materials un-disturbed until a professional can determine the best course of action.

 

Once the removal is complete, green alternatives should be considered, such as: cotton fiber, lcynene and cellulose. These green options have the same beneficial qualities as asbestos, minus the health deteriorating and toxic components.

 

The Department of Energy concluded that cooling and heating counts for up to 50-70 percent of all energy used in the average home in the U.S. In today’s state, this philosophy can also save natural resources. Using methods of sustainable construction allow for you and your family to live in a healthy and safe home, free of health corroding materials.

Chuck Miller GMB   CGB  CGP   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

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House Energy Bill Would Create National Building Code

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Last month by a 33 to 25 vote, the House Energy and Commerce Committee approved legislation that would limit greenhouse-gas emissions and create a national building code that completely supplants the national model code development process.Prior to consideration of H.R. 2454, the American Clean Energy Security Act, NAHB sent a letter to members of the committee expressing the association’s concerns over the federal preemption of states’ rights to determine building codes.”NAHB is concerned that H.R. 2454 violates state and local rights to establish building codes and efficiency targets within their jurisdiction,” the letter said. “We regret that the committee did not consider NAHB’s testimony presented on April 24, 2009, and that we must oppose this legislation. H.R. 2454 is unnecessarily prescriptive, falls short of creating an effective energy policy that is constitutional and endangers housing affordability.”

The House committee approved new measures to establish a national energy code administered by the Department of Energy (DOE) that comes complete with enforcement penalties and civil action against builders and home owners occupying non-compliant homes and buildings.

NAHB, along with a handful of other real estate groups, supported an amendment offered by Rep. Steve Scalise (R-La.)  to strike the egregious language, but it failed on a party-line vote of 31 to 20.

The new building code provisions in HR. 2454 provide for the following:

  • New national energy efficiency targets taking effect on the date of the bill’s enactment that require states and localities to prove code compliance at 30% above the 2006 International Energy Conservation Code (IECC) level. By Jan. 1, 2014, the new target would be 50% above the 2006 IECC.  Between years 2017 and 2029, the code target increases 5% every three years until it reaches 75% above the 2006 IECC by 2029.
  • The Department of Energy secretary can set interim code targets, as long as they are higher and based on the life-cycle of the home, not on economics or the payback to consumers.
  • Within one year after the date of enactment, a national building code will be established. States are required to adopt the national code within one year from that date, they can adopt a state code that is equally stringent or they can adopt California’s Title 24 building code within two years.
  • If after one year the DOE doesn’t have a certification from a state that its code meets the targets, then the national energy code automatically becomes the applicable building code for that state or locality.
  • Federal violations will be levied against builders or owners of a building if they permit occupancy of a home or building that is out of compliance with the national energy targets, even if the state refuses to adopt the new code, because the national building code will be in effect regardless.
  • If a state or locality is out of compliance with the codes, it will not receive emission allowances under any cap and trade plan. Also, states will lose federal funding from other parts of the bill on a sliding scale for each year of non-compliance.
  • If a state or locality fails to enforce either a compliant code or the national building code, then the DOE will enforce codes federally through “inspections” and enforcement fees.
  • The DOE will also assess a civil penalty for violators of this section. Each day of unlawful occupancy is considered a separate violation. If the home is constructed out of compliance with the provisions of this bill and it has been conveyed by a knowing builder or a knowing seller to an unknowing purchaser, then the builder or seller is the violator. The U.S. District Court has jurisdiction for all legal issues.

To read the legislation, click here and enter H. 2454 in the box at the center of the page.

It is unclear when the bill will go to the House floor. NAHB will continue to monitor the situation closely.

I encourage all building industry professionals to contact your congressman and voice your opposition to this bill.  I suggest that you also contact your Senators and express you opposition should this bill pass the House.

Chuck Miller GMB   CGB  CGP   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

 
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