Housing Market turns around

CNBC, Fox News & Chicago Tribune all had great stories recently about optimism in the Housing market.  This is truly great to hear.  It’s not that there hasn’t been good housing stories to report, but that several sources are reporting how things are turning around and not beating negative stories into the ground. 

The Chicago Tribune story reads, “Reports from two major banks suggest housing market is on the mend.” It went on to read, “Wells Fargo issued 54% more mortgages than a year ago and took 84% more applications.”  The Fox News story reads, “US home-buying season finally signaling a recovery.”  and, “many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.”  

Our local RMLS Market Action report shows that we are down to 5 months of inventory in the Portland Metroplex.  We haven’t seen inventory this low since June of 2007!  Some areas closer into the core of the city are experiencing inventories much lower.

This has been a long schlogg and it is exciting to see things turning up.

Mt Hood
According to the Wall Street Journal article last week titled “Misery across the U.S.” by Kathleen Madigan, Portland ranks 2nd only to Phoenix for the most miserable city in the U.S. I understand that the common feeling now is, “enough already with the rain”, but miserable? In full disclosure, Ms. Madigan didn’t base her story on interviews with residents in the cities she ranked. In fact, the she didn’t base her index on the perception of living in these cities at all.

The misery index was established by the 12-month change in the jobless rate, the percent of change in gas prices since the end of 2010, and the percent change in home values. The story established that the U.S. misery index would stand at 20%, and up from 8.3% a year ago.

I thought a great response to this story was by Stumped in Stumptown titled “Portland is miserable… on paper.” I agree with the author that, “Portlanders aren’t miserable. Our city truly offers the best of everything.”
I have traveled extensively around the world, yet I have only lived within about 100 miles of where I was born. I believe Portland and the Northwest offer so much, that I can’t imagine living anywhere else. So, maybe Ms. Madigan’s miserable index would make you miserable if you obsessed over it, but we have too much to entertain ourselves here to get caught up in it.

I don’t know many real miserable people here in Portland, do you?

heat-recovery ventilatorDoes the quality of air in your home rank up there with the finish level of your counter tops? Maybe it should. To certify a home for even the basic level of Green or Performance building certification, a fresh air exchange is required. This is usually a fan in a utility room that is just blowing out stale air from the interior of the home and pulls in fresh air from the exterior. The downside to this is that on a 30 degree day, it is pulling in 30 degree air to your already comfortable 72 degree home. This makes your furnace work extra to heat up this cold fresh air. In addition, these fans are not balancing an equal amount of air being pulled from the home with an equal amount of air being drawn in. This can pressurize the home, potentially pulling air through unintended areas.

What you should be asking your builder for is a Heat-Recovery Ventilator or HRV. The HRV also brings in that 30 degree air, except it uses the heat in the outgoing stale air to warm up the fresh air. Depending on the model, HRVs can recover up to 85 percent of the heat in the outgoing airstream, making these ventilators a lot easier on your budget than opening a few windows.

Using a small fan, the HRV system maintains a continuous flow of filtered outdoor air in the home. To avoid pressurization the system removes an equal amount of stale, used air from the home, especially the kitchen and bathrooms where moisture and odors are heavy. These systems can change the entire air system in a home in under 3 hours.

HRVs are ideal for tight, moisture-prone homes, like here in the Northwest, because they replace the humid air with dry, fresh air. That is why an HRV is a standard feature in every Marnella Home. For the long term health of your family and home, shouldn’t you expect this of your next home?

If your home has a furnace installed in the garage, it most likely is. At one of our Construction 101 classes at Volare our Town Home community in Happy Valley, this came up. We have been installing our entire HVAC systems inside the conditioned space of our homes (meaning the interior living area of the home). We realized the obvious benefits of: improved performance by reducing the length of duct work for the air to travel, by not installing ducting in the attic or crawlspace spaces as they are much hotter or colder than the air we are providing to the rooms that need it. Another benefit is, if the duct system leaks air it is only leaking into your home not the outdoors. However, it never occurred to us the air quality benefit of a furnace in the home versus the garage.

The furnace unit that is installed inside the conditioned space is a “Sealed unit” this means that the cabinet of the furnace is entirely sealed up. Unlike, most furnace units that are installed in a garage. Most people can recall being near a furnace in a garage when it started up and seeing the flame burning through the venting of the front of the furnace cabinet. What probably didn’t come to mind was that when the fan motor started up it was pulling air from within the garage. This could be including the exhaust from the car, gas fumes from the gas can, bag of yard fertilizer, etc. Anything off gassing in your garage could have its fumes spread throughout your home.

The great benefit of a Marnella Homes system being entirely with the home is that it is only pulling fresh air from the exterior of the home with the assistance of the HRV (Heat Recovery Ventilator). The HRV periodically exchanges stale interior air with fresh outside air. This provides interior air quality that is superior to any traditionally installed HVAC system. This should be especially important to anyone with children that have asthma or any other respiratory health issues.

So, should you be stuck with a traditionally installed system in your home, consider this when you are letting your car warm up in the morning and you might want to find a better place to store the gas can, fertilizer bag or anything that you smell when in the garage. However, if you are looking at buying a new home, you owe it to you and your family’s health to consider how your next HVAC system is installed.

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The next 14 days will provide what I feel is truly the “Perfect Storm” for anyone looking to buy a home.

We currently have: 1) Our Lender offering 3% of the purchase price to our Buyers for closing costs, 2) Northwest Natural Gas is offering a years worth of Natural Gas on any of the homes in the Ultimate Open House, 3) The Federal Home Buyer tax credit is still available, 4) Exceptionally low mortgage interest rates and 5) Great home values that have reset to 2002 in many areas. For instance:

1) On any Marnella Homes town homes in Volare, Golf Savings Bank is providing a Lender Credit of 3% of the Sale Price up to $20,000. This program has just been extended for sales agreements dated on or before the 1st of June, 2010 with closing dates on or before the 30th of July, 2010.
2) Northwest Natural Gas is offering a year of Natural Gas, up to $800, on our homes that we have presented in this years Ultimate Open House.
3) The Federal Home Buyer tax credit is available for qualified home buyers on transactions executed by the 30th of April, 2010 and closed by the 30th of June, 2010
4) We are seeing mortgage rates that are as low as our Grandparents took advantage of after World War II. These are rates that cannot be sustained at these low levels and will have to begin to rise.
5) Home values in some areas, like here in Happy Valley, have reset to 2002/2003 prices. If you are looking at homes under $300,000, these values have bottomed out and have shown signs of strengthening in many areas.

So, for anyone thinking about or actively looking to buy a home, the current conditions for home buying are such that we may never see again in our lifetime.

Performance rating for new homes is equivalent to the Miles Per Gallon (MPG) rating for a car. Whether you chose your next car specifically because of it’s MPG rating or not, in most cases it at least makes up some part of the decision making process. Especially, if you were buying a car last summer. The building industry believes that energy efficiency, utility costs and environmental impact are factors to consider when buying or building a home. They can affect the real and perceived value of a home. The Energy Performance Score (EPS), developed by Energy Trust of Oregon, provides a clear and quantitative way to compare a home’s energy use and costs. The lower the score, the more efficient the home is and the lower your estimated utility costs.

A home energy rating involves an analysis of a home’s construction plans and onsite inspections. Based on the home’s plans, the Home Energy Rater uses an energy efficiency software package to perform an energy analysis of the home’s design. Upon completion of the plan review, the rater will work with the builder to identify the energy efficiency improvements needed to ensure the house will meet ENERGY STAR performance guidelines. A home’s EPS is based on many factors such as the home’s size, level of insulation, air leakage, heating and cooling systems, major appliances, lighting and water heating. The rater then conducts onsite inspections, typically including a blower door test (to test the leakiness of the house) and a duct test (to test the leakiness of the ducts). Results of these tests, along with inputs derived from the plan review, are used to generate the EPS for the home.

Marnella Homes, as an Energy Star and Earth Advantage Certified Master Builder, is using this rating system. Our homes have an EPS as low as 42 up to 52 which rates our homes as some of the most efficient new homes built in Oregon (as Compared to an average home score in Oregon of 81). Our homes have an estimated average monthly energy savings of $40 – $50. Our home owners realize that choosing an energy-efficient home not only benefits the environment, but can also help you save money.

We see this as a “separating the wheat from the chaff” on the over used “Energy Star Certified” claim that too many builders use. We see many builders that state that they are building homes to Energy Star Certification. A consumer doesn’t know whether they build 100% of their homes to this certification or 10%? Do they just meet the bare minimums to achieve the certification or are they truly committed to Green Performance building and exceed the minimum. As I have stated in an earlier post, whether a builder is doing just the minimum or much more, their homes usually have quality controls that are inherent to building to any level this certification. Which makes a “Certified” home in most cases still a better value than any “Uncertified” home. However, this rating system will clear away this confusion. The score will tell a consumer, if educated on what it means, all they need to know.

So, whether a low EPS score is the deciding factor in the purchase of your next home or just “a” factor, it will be made available to you by participating home builders. Our industry hopes that this rating system will be easy to understand and will be adopted by consumers much the same way as the MPG rating is in the auto industry. As this becomes more main stream it will become one more tool that consumers can use to make informed decisions on their home purchases.

No it isn’t what my sons do and giggle or what happened in that embarrassing situation in the elevator.  Offgassing or outgassing is what we tend to call the “New Home Smell” or “New Car Smell”.  We think we want it, but do we?  This smell is actually gases emitting from the materials in our new homes and cars. Like, carpet, vinyl, paint, etc. and even furniture. 

The Energy Star New Homes program requires that builders within their program build at a minimum of 15% above the code requirements.  However, Marnella Homes is building to 30 – 35% above code requirements with 100% of the homes we build.  Improved indoor air quality is one of the criteria that we must address. This begins by using materials that have low volatile organic compound (VOC) content.  VOCs include a variety of chemicals, some of which may have short and long-term adverse health effects.

To meet the requirements of the New Home program’s indoor air quality criteria, we use Green Sealed Certified carpet and low VOC content paint and caulking.  Since these products contain much less VOC they don’t emit as much VOC as similar uncertified products.  This is amazingly noticeable when walking into a home built with standard products without the indoor air quality consciousness compared to a home that is built to the Energy Star indoor air quality standards.

Whether you already have health concerns that require this attention to indoor air quality or not, you owe it to you and your family’s health to educate yourself on the importance of it. So, when looking for a new home, look for the Energy Star label.  Ask questions and investigate what, if any, indoor air quality features the builder is offering.  These features will not only benefit you as an occupant of your new home, but will provide lasting value to you when you resell in the future.

Your comments are welcome.

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I think one of the most under reported stories about the real estate market today is just how close to normal our markets are.  What we keep hearing is how far off we are “from the peak”.  Well, “the peak” was unsustainable in any market so, why are we comparing our current market’s health with such unrealistic statistics.  For our market here in Portland Oregon, inventory levels are currently at 6.5 months (inventory levels are calculated by taking the current number of active listings divided by the number of pending sales in any given month).  In fact, Happy Valley was one of the first and hardest hit markets in the Portland metro and it has reduced it’s inventory in line with the metro average as well.  The Portland metro started out in January of this year at 19.2 months of inventory!  Not a bad adjustment.  In comparison, the time period between 1998 and 2002 experienced monthly inventory levels ranging from 4.1 to 10.1.  Averaging mostly between 5 & 6 months of inventory until the spring of 2003.  We are currently carrying about 3000 more listings than we averaged during that time period however, we had approximately 350,000 fewer people then as well.   

In wrapping up this year, it is exciting to hear such statistics as “”The affordability equation is now at its most favorable point for buyers since 1970.”, “The 64% jump in pending sales Portland at sunriseis the largest same-month increase since February 1996.”, “New home inventory, on a non-seasonally adjusted basis, is at its lowest levels in over 14 years.” and “The 30-year (mortgage rate) has never been this low since Freddie Mac began its weekly survey in 1971.”  All of which came out this past week.

After the correction we just went through, normal is ok.  In fact, welcome.  So, it’s time that we started acknowledging, better yet, appreciating what we have instead of dwelling on such unrealistic comparisons. It is time to enjoy the sun rise on a new day, no matter how “normal”  it might feel and let yesterday, be just that.

The answer is, yes, to both. The architectural style is what most people associate town homes with, yet the lifestyle is truly the most appreciated aspect by those that chose town home living.

Webster’s Dictionary defines a town house as: “a usually single-family house of two or sometimes three stories that is usually connected to a similar house by a common sidewall.” Thus, an architectural style. However, what isn’t clarified is the lifestyle also associated with Town homes/houses. Town homes are ideal for those who lead active lives. Town home owners typically enjoy traveling, outdoor activities and social activities. They are often business professionals with careers, parents with children and those looking to wind down. One of the many benefits of town home living is that a homeowner can enjoy all their activities without having to worry about home maintenance like yard work, exterior painting, gutter cleaning and roof maintenance. These homes and communities are designed for a quality of life that puts you and your family first and leaves home maintenance and yard work up to someone else.

In a current societal shift that has brought back the theme of “less is more”, the town home lifestyle fits right in. Owning a home with unused rooms has become less important. The large abundance of square feet that was once deemed necessary is being replaced by smaller, more charming and functional spaces.

The Milano at Volare

With ever increasing energy costs, the smaller more energy efficient homes not only create a more comfortable living environment, but create less impact on the household budget and environment. As an example, the town homes at Volare in Happy Valley, being built by Marnella Homes, offer monthly energy savings of approximately $40 more than a code-built or detached home of similar size. This monthly savings equates to extra money that a homeowner can keep in their pocket.

Another positive aspect of town home living is a feeling of safety and security. Those living in town home communities tend to develop a “look out for your neighbor” atmosphere which is very comforting. You can leave on vacation and return to find your home just as you left it; not only secure and safe, but grass mowed, weeds pulled and well maintained.

If you walk through a town home community like Volare and meet the homeowners, you will find that the option to buy a single family detached home was available, yet they purchased a town home. Whether current Volare residents owned a larger home and decided to make the switch to town home living or were first-time homebuyers who liked the town home lifestyle, the reasons to live in a town home tend to be very similar. Ease of living to accommodate an active lifestyle.

So, before you think of a town home as just another style of housing, explore all they have to offer and you may find that a town home is in your future, too.

It is not surprising that when you talk with someone about our differences in how we insulate their eyes glaze over.  However, it is very important.  In a market that is no longer a “buy & flip”, but a “hold for the long term” as in years past.  Features like insulation, heating systems, quality levels of materials, etc are important for the lasting value of a home.  Considering that buying a home is only half of the transaction, the other half is when it is sold in 5 – 10 years.  What features will provide that lasting value that older homes and many of the other new homes on the market will not have.  I have commented on our testing and heating systems in the past, now I am going to talk about insulation and why blown-in bib (BIB) insulation should be an important feature to a home owner.

 The difference between BIB insulation and batt insulation is that batt insulation is rolled up insulation that is unrolled an applied between wall studs, ceilings trusses and floor joists.  Which means that it rolls over any electrical conduit, plumbing, heating ducts, etc. and cannot fill in the entire void between the wall studs or joists.  This leaves pockets or voids where the insulation couldn’t insulate which will allow for heat to escape.  However, BIB insulation is just that, insulation blown into a wall or ceiling cavity leaving no air pockets or voids.  The result is densely packed insulation producing higher R values, cuts down air infiltration and slowing the transfer of temperature in a wall or ceiling cavity through the flow of air.  This reduces both sound transmission as well as energy loss.

BIBS installation 

At Marnella Homes, Our current wall BIB system, for our Volare town homes in Happy Valley, is tested and documented at a R24 rating.  Code only requires a R21 rating for walls and our ceilings have a R49 rating with code only requiring R38.  This is a significant increase in insulating performance.  The R value insulation ratings are used to measure insulations ability to resist heat flow. The higher the R value, the more effective it is.  For more information on what the “R” value for insulation is, see the following link: http://rvalue.net

This results in a direct benefit to the home owner in reduced energy costs.  Combined with the other performance enhancements, like a high efficiency furnace and hot water heater significantly reduce monthly energy expenses.  Money each and every month that you keep in your pocket.  It today’s world every dollar saved is important.  At Volare, our town home owners are saving on average $40 a month compared to a home built to code.  These home owners are not only enjoying a more comfortable living environment, but they have extra cash to either save or treat themselves to something well deserved.