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?

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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.

For our potential first time home buyers out there, the $8000 Federal Housing Tax Credit that you are eligible for is coming to a close.  By the 1st of December 2009, only 3 months way, this tax credit will be no more.  However, due to the time necessary to close a home taking about 30 – 45 days, what this really means is that you will need to have your sales agreement accepted and in escrow by the 15th of October just to be safe.  Since you have only about a month and a half of shopping time left, don’t delay.  Take advantage of all that is available in the market place right now; historically low interest rates, home values that have reset in many markets to 2003/2004 prices and an $8000 government give-a-way.

Don’t be one of those who feels that the housing market has a long way to fall.  There is too much positive news coming out all over the country to counter that theory.  Remember, it only takes interest rates to move up a half of a percent to wipe out the benefit of a 10% drop in sales price.  With many markets identifying their bottoms already, waiting for deeper price cuts is a mistake that you will surely regret when the tax credit is gone and rates go up.  Which, they will.

Don’t miss out on what will be looked back upon as an opportunity of a lifetime for those willing to take advantage of it.

For frequently asked questions and more information on the Federal Housing Tax Credit refer to: http://www.federalhousingtaxcredit.com/2009/index.html

and

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

I wrote back in January about the behind the scenes inspections and testing that the green high performance homes get that many don’t know about or if they do, don’t appreciate the intensity of them.  Since we continue to hear about Buyers wanting the “Best Deal” or the “Best Value”, it occurred to me that the Value of these homes is also not being realized.

For instance, 100% of the homes we build here at Marnella Homes are built to the Earth Advantage/Energy Star “Gold” level.  Our homes are extremely well sealed and with blow-in insulation achieve a very low leakage rating.  Also, with our 95%+ HVAC systems, fully sealed ducting and all inside the home in conditioned space.  Our home owners save on average $40 – $50 a month in our 1400 – 1600 sqft homes over a similiar sized code built home.  

Home owners have been sold over the years all the features that builders put in and are told how great they are and sometimes even how many years the home owner will receive a payback from these features.  What so many times doesn’t get either explained or truly appreciated by the home owner or buyer is the value of these features.  We took on the venture of Green performance building with the “What’s in it for me” approach.  Thinking just selling features to someone who doesn’t know much about the industry will tend to make their eyes glaze over.  So, we have tried to show our home owners and buyers “what is in it for them”. 

In the case of a monthly savings, this is a direct savings over what they would be paying for utilities at any other new code built home.  Plus, even with many builders getting on the green built performance band wagon most are doing just the minimum to get their homes certified so, we are outperforming most builders in our area.  This is money that can be for that massage every month, the manicure, dinner, a movie with the family, a ski lift ticket in the winter, etc.  So, many things that these homes make easier to afford.  Because, isn’t the old saying, “a penny saved is a penny earned” more relevant today than ever before in our life time?

Now that I have addressed the actual savings, let’s look at the added value.  Using the $40 – $50 a month in savings, at today’s interest rates that is about $8,000 to $10,000 in additional value to the home. Of course, our lenders aren’t going to let you borrow more because we can show the energy savings, but wouldn’t it be great to know that you have built-in additional financial strength due to the lower monthly cost of home ownership?  I do believe that some lenders will eventually see this value and want to work with builders like us once this resonates with them. However, I am not holding my breath for this to happen anytime soon.

Lastly, now that real estate has moved back to a more traditional style of ownership, I feel that the long term value that these homes offer is also important.  Energy costs are going to continually rise so, in 5, 7, 10 years or so when we sell our homes doesn’t it seem that it will be a added value to your buyer that your home saves a considerable amount in monthly utility costs over the resale homes that will be on the market at the same time?  I think it should now and most assuredly then.

So, buying a home isn’t just the countertops, the carpet and appliances.  Sure those are the features that you can see, feel and touch, but don’t over look some of the most important features that truly create the “value” in your home.  You can always change your carpet, appliances and countertops, but it tends to be a little harder to retrofit a high performance HVAC system inside your home in the conditioned space if you are replacing a traditional system it’s not very easy to go back and effectively caulk and seal up a home that is already completed.

Please share your comments.  I would like to hear from you.

Marnella Homes has had many firsts for a home building company here in the northwest.  As we strive to improve our homes and the buying experience, we continue to look outside the box and create new programs to assist and benefit our home buyers and owners.  Some of the things that we have done to differentiate ourselves are:

 Our “Home Sellers Assistance Program”.  This program offers our home buyers the opportunity to list their current homes at a 3% total brokerage fee.  We bring in an interior designer to assist in getting their home ready to sell. We coordinate any necessary repairs and we credit back to our buyer the cost of these repairs towards their home purchase up to $5000. 

  • We are the first production builder to build 100% of our homes over the Earth Advantage/Energy Star Gold level.  Which combined with our marketing efforts earned us the Energy Star award for large builder in Oregon.
  • We also offer a buyer’s guide to our home buyers to use when shopping for a home. It helps to educate and inform them of what features they should look for that will provide them lasting value and comfort in their next home.
  • Now, we offer the “Rest Assured Plan”. 

 Marnella Homes’ Rest Assured Plan provides security and reassurance in these uncertain times. At no cost to our buyers, our plan guarantees that in the event of a job loss within 24 months after closing, their mortgage will be paid for up to 6 months. We want to make sure that the fear of something that may not ever happen doesn’t keep someone from purchasing their next home.  We understand that there are economic challenges right now however, we hope that these concerns won’t prevent families from making a sound investment in their future. Now is a great time to buy a home. Prices and interest rates are at record lows and the U.S. government has created incentive programs and tax advantages for home buyers.  We have faith in the American Dream and we’re here to help families achieve it without losing sleep.

Our list won’t end here as complacency will never be acceptable.  With our home buyer’s needs ever changing in a market that is ever changing, it will be necessary to continually strive to improve our programs and our buying experience.

Wow, what a week for housing news.  Whether this is a flash in the pan or it is truly a sign of more great things to come, we are encouraged by it either way.  Of course, our “glass half full” friends will discredit any of the many groups reporting this, but this shouldn’t be much of a surprise.  They will claim that this is just a normal seasonal increase.  It might be, but it is still an increase.  They will claim that the only reason for the increase in sales is due to the short sales, foreclosures and deep price reductions.  Doesn’t this still mean that people are buying again and lenders are still lending?  At the end of the day, sales are still up Month over Month.

 

There was a story from MarketWatch by Rex Nutting on Tuesday the 24th.  Mr. Nutting reports,  “U.S. Housing prices rose 1.7% in January compared to December, the Federal Housing Finance Agency reported on Tuesday. This was the first increase in a year.”  I feel this is big.  Bigger than an increase in sales.  Showing the possible signs that in some markets there is some bottoming being found.  Mr. Nutting goes on, “The “unexpected rise” in January was partially due to stronger sales in some markets, the FHFA said.”

 

For a viewing of the complete story, follow this link: http://tinyurl.com/de37e3

 

There was a MarketWatch news story by Stacey Delo on Wednesday the 25th.  She discusses with USC real estate economist Delores Conway this surprise in news in the Housing data.  Ms. Conway states that the reason for this increase is really a bit of both the lower prices and interest rates that have pushed sales up Month over Month.  Still acknowledging that sales are down compared to last year.  It noted that over half of the sales that have been reported are to first time home buyers.  This is due to the affordability being enhanced by historically low interest rates and lower prices.

 

To watch this entire story, please see the following link:  http://bit.ly/QSKf8

 

We had a CNN Money News report by Paul R. La Monica, on Wednesday the 25th, that talked about how Wall Street and the Housing Sector was very encouraged by this weeks results. This story reported; “The Commerce Department reported Wednesday that new-home sales rose almost 5% last month after hitting their lowest point ever in January. Economists were expecting a decline of about 3%

This comes on the heels of two reports showing a better-than-expected gain in existing-home sales and the first increase in construction of new homes since June.”

 

John Buckingham, fund manager said, “Clearly there is interest in homes. Whether it’s in foreclosure or not, there’s still a buyer. That helps put in a floor on prices and could boost confidence.”

 

To read this complete story, please see the following link: http://tinyurl.com/c4cxxq

 

There was also a story in Reuters by Lucia Mutikani on Wednesday the 25th.  Ms. Mutikani noted that in a Commerce Department report, ” Sales of newly built U.S. single-family homes rose at their fastest pace in 10 months in February, it said in another report.”

 

To read this complete story, please see the following link: http://tinyurl.com/cmsdpz

 

What is amazing is that these are just some of the reports out this week.  From many sources and from many perspectives, we are seeing some signs of improvement.  Most do feel that it is too early to tell if a recovery is process, but regardless of the reason, it is still good news and we will take it!