According to the study, construction industry professionals report an even steeper increase in green home remodeling; 34% of remodelers expect to be doing mostly green work by 2016, a 150% increase over 2011 activity levels. Many home builders have shifted to the remodeling market due to the drastic drop in new home construction. In fact, 62% of the builders who do both new and remodeling work verified that the economy has increased their renovation work.

“The housing market is critical to the U.S. economy,” said Harvey M. Bernstein, VP of Industry Insights and Alliances, McGraw-Hill Construction, “and the results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity— indicating that the green market is becoming an important part of our overall economic landscape.”

The green home building study, produced by McGraw-Hill Construction in conjunction with the NAHB and Waste Management, is designed to provide key insights into market opportunities, backed by proprietary research surveys and the power of the Dodge database. The study reveals business benefits afforded by green building, such as a competitive marketing advantage: 46% of builders and remodelers find that “building green” makes it easier to market themselves in a down economy, and an overwhelming 71% of firms that are dedicated to green home building report the same.

“This study demonstrates phenomenal growth in green building and indicates that we can expect even larger increases in the coming years,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In a sample of NAHB builder and remodeler members, nearly 90% reported building green at some level. This is a powerful testament to the importance of green home building—and transforms the way we think of homes overall.”

By 2016, many more builders anticipate that they will be dedicated to green building work on over 90% of projects— 33% expect to be dedicated to green work in 2016, up from 17% in 2011. Remodeling will grow even more dramatically— 22% of remodelers report that they anticipate they will be dedicated to green work in 2016, nearly triple the 8% who report being dedicated to green work in 2011. These builders are clued into the revenue opportunity afforded by green building and know that home buyers will pay more for green homes, according to 61% of builders and 66% of remodelers.

“Home buyers and builders increasingly want to do what’s right for the environment,” said Jim Halter, VP for Construction Solutions, Waste Management. “This trend has been taking off within our business as customers look to recycle and divert more materials from landfills. We’re excited to see the results of the study; they validate the services we offer.”

Many factors are driving the green homes market, with “higher quality” and “increases in energy costs” topping the list, indicating that today’s green homebuyer is not just a green consumer. Buyers recognize that green homes have lower bills due to higher building performance. The reported costs of building a green home have also gone down significantly. Builders report that the cost to go green is now 7%, as compared to 10% in 2008 and 11% in 2006.

While green is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest’s northern region, west of the Mississippi, is second highest; and New England ranks third.

McGraw-Hill Construction will continue analyzing the results of the Green Home Builders and Remodelers Study and release a printed report in April during the NAHB’s National Green Building Conference and Expo in Nashville. Further findings, including remodeling details, green technologies, and green product adoption in green homes, will be included in that report.

Thanks to NAHB.org

“The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Texas.

A complete list of all 98 metropolitan areas currently on the IMI, and a separate breakout of metros newly added to the list in February, is available at: www.nahb.org/imi.

Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m., ET, unless that day falls on a Friday – in which case, the index will be released on the following Monday. A full calendar of release dates can be found at www.nahb.org/imi.

Though it is true that newly remodeled kitchens and bathrooms, deck additions and other improvements can add to the value of your home, look closely at the true return on investment before you leap into the project.

These home improvements might pay for themselves

Each year, Remodeling Magazine compares the average cost of the most popular home improvement projects and compares them with the average value the project adds at resale time. If you are thinking about putting your home on the market in the next few years, these home improvement projects could offer the biggest bang for your buck.

1. Minor kitchen remodel

The kitchen is often what sells the home, so it pays to make it as welcoming as possible. A minor kitchen remodel can offer an average return on investment of 72.1 percent. The recoup can be even greater when you turn to money-savers like cabinet refacing and vinyl tile flooring. Think a more expensive remodel is better? Think again. The 2011 average return on investment for a major kitchen remodel was 57.4 percent–much less than you might make back by taking the cheaper route.

2. Siding replacement

At a 78 percent return on investment, adding fiber cement siding is definitely a good idea for a home improvement project. Vinyl siding can also be a good option, giving you back 69.5 percent of what you put into it.

3. Entry door replacement

The front door makes a first impression and provides security for your family. Opting for a steel entry door can provide beauty and safety while giving you a nice 73 percent return on investment. With an average cost of $1,238 per project, it is also one of the most affordable improvements you can make.

4. Creating an attic bedroom

The more bedrooms you have in your home, the more potential home-buyers you will attract. Adding an attic bedroom can give you a 72.5 percent average return on investment. In some cases, since the bones of the room are already in place, an attic bedroom can be substantially cheaper than a new construction addition.

Other upgrades to consider

There are many other common home improvement projects that can bring you a boost when it’s time for resale. Other good options include vinyl replacement windows and the addition of a wooden deck. Replacing your garage door with a new one is one of the most affordable projects at an average cost of $1,512, and it is also one of the nicest returns, giving you back an average of 71.9 percent on investment.

Doing your research pays off

Before you choose to sink money into a remodel, look into what the latest trends are and what potential home-buyers in your area are looking for, then plan your improvements accordingly. If the goal is to enjoy the improvements for a few years and then sell the house for a tidy profit, these four projects can help you make that plan a reality.

Thanks to Shannon Dauphin at Build Direct

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months.

New entrants to the list in December include the following:

Ann Arbor, MI
Athens, GA
Boulder, CO
Burlington, VT
Canton, OH
Charleston, WV
Danville, VA
Fort Wayne, IN
Grand Forks, ND
Jackson, MS
Kingsport, TN
Laredo, TX
Lincoln, NE
Muncie, IN
Muskegon, MI
San Jose, CA
Scranton, PA
Toledo, OH
Washington, DC
Winchester, VA

“The increases we continue to see in the number and geographic diversity of improving metros are quite encouraging, and evidence of the fact that all housing markets are dependent on uniquely local factors,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. He noted that as of December, a total of 21 states and the District of Columbia are represented on the improving markets list — up from14 states represented in November.

“The December IMI results are very much in keeping with the latest government housing data and our own builder surveys, which have shown modest signs of improvement in certain individual markets where employment is gaining and distressed properties are not as numerous,” said NAHB Chief Economist David Crowe. “These gradual improvements are now becoming evident not just in small, energy-producing metros that have previously dominated the IMI, but also in several larger markets and areas with more diverse economies.”

The nine markets that dropped off the IMI in December include Alexandria, La.; Fairbanks, Alaska; Hinesville, Ga.; Houma, La.; Jonesboro, Ark.; Lima, Ohio; Pine Bluff, Ark.; Sumter, S.C. and Waco, Tex. All but two of these metros fell from the list due to softening house prices. The exceptions to the rule were Jonesboro and Waco, where declines were registered in employment and single-family housing permits, respectively.

The total list of improving housing markets in December, as defined by the IMI, includes the following 41 entries (listed alphabetically by state):

Anchorage, AK
San Jose, CA
Boulder, CO
Fort Collins, CO
Washington, DC
Athens, GA
Davenport, IA
Waterloo, IA
Kankakee, IL
Fort Wayne, IN
Muncie, IN
Monroe, LA
New Orleans, LA
Ann Arbor, MI
Muskegon, MI
Jackson, MS
Fayetteville, NC
Winston-Salem, NC
Bismarck, ND
Grand Forks, ND
Lincoln, NE
Canton, OH
Toledo, OH
Pittsburgh, PA
Scranton, PA
Williamsport, PA
Kingsport, TN
Amarillo, TX
Corpus Christi, TX
Laredo, TX
McAllen, TX
Midland, TX
Odessa, TX
Sherman, TX
Tyler, TX
Danville, VA
Winchester, VA
Burlington, VT
Charleston, WV
Casper, WY
Cheyenne, WY

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Please visit www.nahb.org/imi for additional data, tables and a list of future economic release dates.

Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m. ET, unless that day falls on a Friday – in which case, the index will be released the following Monday. A full calendar of future release dates can be found at www.nahb.org/imi.

A new report has found that consumers who previously purchased green products have decreased their green purchasing as a result of the recession.

In the study by Massachusetts-based Grail Research, 43% of “light green” consumers—those who buy some green products—said they have reduced their usage of green products or switched to conventional ones. At the same time, the percentage of non-green consumers rose from 15% to 22%.

“Although it’s clear that the market for green products is here to stay, the number of green consumers declined over the past two years,” notes Annica Blake, global head of research services at Grail Research.

Conversely, Blake says, the number of “dark green” consumers—those who select earth-friendly products for most of their purchases—increased by 1% and now make up 9% of the consumer market. Other key findings of the “Green Revolution” report include:

·         Sixty-five percent of respondents changed their purchasing behavior as a result of the recession, with most turning to less expensive green products.

·         Nine percent of consumers said they never consider buying green products, an increase of 4 percentage points since the previous report.

·         Only 11% of consumers reported that they seek information on green companies and their products.

·         Packaging still remains the most important source of information for green products, with more than half of consumers saying it impacts their purchasing decision.

·         Consumers are more likely to find green claims compelling if they provide quantitative information in an easy-to-visualize description that communicates the impact on the environment.

To improve consumer awareness, manufacturers should work to effectively articulate their products’ green attributes, says Blake, adding that the success of the green market will be determined by how well marketing messages resonate with buyers.

“It’s no longer enough to just say you’re green,” she says. “Consumers now expect comparable value and performance.”

Thanks to Jennifer Goodman, Senior Editor for EcoHome.

Arieff is certainly correct that if there was ever a time to re-envision housing and community development, it’s now. Housing starts in 2010 numbered fewer than 600,000—roughly one-fourth of the level in 2005. While the earth-movers are idle, households and policymakers have time to catch their breath and challenge the notion that a single-family unit on a large lot is housing’s best incarnation.

Demographic trends suggest that the demand for large, single-family homes in auto-oriented communities should be on the decline. For decades, households have been getting smaller, and our population has been getting older. Combined with rising gas costs and concerns for the environment, these trends suggest that large homes in auto-dependent neighborhoods may not be the most practical option going forward. A university professor speaking at a recent research and practice forum hosted by HUD claimed that the United States already has enough detached single-family housing to satisfy demand for the next several decades, and that the real unmet demand was for attached or multifamily units in urban, transit-oriented environments.

Consumer preference may not be responding to these trends as expected, however. Survey data collected by the National Association of Realtors and reported by RCLCO show that only 19 percent of respondents want to live in a city, with the remainder split between suburbs and small town or rural areas. The most-preferred setting, appealing to 28 percent, is a suburban environment with a mix of uses, rather than one that is solely residential.

As society struggles with the tension between the type of housing that it wants and the type of housing that it – and the environment – appears to need, it must also come to grips with the type of housing it can afford. Regardless of the form and context of tomorrow’s communities, the majority of households today live in the suburbs. Will future generations want to live in the homes that we’ve already built? More importantly, will they be able to afford to?

Aron Chang wrote recently about ways that today’s suburbs can be transformed to accommodate higher densities, a mix of uses, and more affordable options. His ideas include zoning to allow for the construction of accessory dwelling units and the subdividing of single-family homes into smaller units for extended families, tenants, and even businesses.

These are but a few ideas that communities can use to retrofit their current housing stock to residents’ preferences if and when demand for the suburbs wanes. Will these strategies be effective? Are there others?

Thanks to Keith Wardrip, Center for Housing Policy

President Obama has directed a small team of advisers to develop a proposal that would keep the government playing a major role in the nation’s mortgage market, extending a federal loan subsidy for most home buyers, according to the Washington Post.

The decision follows the advice of his senior economic and housing advisers, who favor maintaining the government’s role as an insurer of mortgages for most borrowers. The approach could even preserve Fannie Mae and Freddie Mac, the mortgage finance giants owned by the government, although under different names and with significant new constraints, said sources knowledgeable about the discussions.

A decision to preserve a major government role would mark a big milestone in the effort to craft a new housing policy from the wreckage of the mortgage meltdown and could mean a larger part for Fannie and Freddie than administration officials had signaled.

In a statement, the White House said it is premature to say that senior officials have agreed on any of the three main options outlined earlier this year in an administration white paper on reforming the housing finance system.

For more information: www.washingtonpost.com/business/economy/on-mortgage-rates-government-should-keep-significant-role-obama-says/2011/08/15/gIQA8wP0HJ_story.html?wpisrc=al_national

Thanks to Mary Beth Nevulis, HousingZone Contributing Editor

Mortgage rates have fallen in recent days because of the debt deal — which averted a feared scenario in which the US Treasury ran out of funds to pay all its bills. That could have sent ripples of unrest through financial markets, pushing up interest rates throughout the economy.

So the good news for potential home-buyers is that the worst didn’t happen, and that mortgage rates have actually fallen a bit as a deal was reached.

Rates may have also come down for other reasons, such as signs of weakness in the US economy, which in turn postpones the day when interest rates will start rising back toward more typical levels. Also, fresh concerns about government debts mean firmer demand for US Treasury bonds as a comparatively safe alternative.

Low mortgage rates, however, are just one building block for a recovery in the US housing market. Many forecasters continue to warn that interest rates could start rising later this year and into next year, perhaps as high as 5.5 or 6 percent on a 30-year loan.

Basic problems in the market include downward pressure on home prices, which has made some would-be buyers hesitant and is also a factor behind cautious appraisal values that are causing many home-sale deals to fall apart at the last minute. A weak job market also contributes to slack demand for homes. Meanwhile, supply of homes is comparatively strong, the result of a high level of foreclosures.

Also, although interest rates are low, many lenders are being stringent when it comes to deciding who can get a loan.

Some housing analysts say a healthier market is starting to appear on the horizon, although slowly. The pace of borrower delinquency and foreclosures has been declining in recent quarters, and even a modest improvement in the job market (which many forecasters expect) could help to end declines in home prices.

Other economists say the recovery process still has a long way to go.

“Our view that the housing recovery, which has yet to begin in earnest, will be bumpy and prolonged,” writes Michelle Meyer, an economist at Bank of America Merrill Lynch. “The path will largely depend on the health of the economy, particularly the labor market.”

Still, for now, attractive mortgage rates have helped to make the typical single-family home very affordable by historic standards.

The Standard & Poor’s/Case-Shiller index showed Tuesday that prices increased in August from July in 10 of the 20 cities tracked. That marked the fifth straight month that at least half of the cities in the survey showed monthly gains.

The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

The August data provides a “modest glimmer of hope” that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S&P’s index committee. He noted that cities in the Midwest — Chicago, Detroit and Minneapolis — have shown some strength since May.

Still, Robert Shiller, the co-founder of the index and a Yale economics professor, said in an interview on CNBC that overall home prices were “flat” and a recovery in the struggling housing market was not on the horizon.

Over the past 12 months, prices have fallen in all but two cities. Detroit and Washington were the only two cities to show year-over-year gains.

The index, which covers half of all U.S. homes, measures prices compared with those in January 2000 and creates a three-month moving average. The August data are the latest available.

“We certainly believe the bulk of the decline in housing is behind us and indeed, one might even say that ‘housing’ is more likely to improve from here,” said Dan Greenhaus, chief global strategist for BTIG. “But given the overwhelming level of inventory that remains on the market … further price declines seem almost assured to help clear the market.”

Prices are certain to fall again once banks resume millions of foreclosures that have been delayed because of a yearlong government investigation into mortgage lending practices.

Those homes at risk of foreclosure promise “to keep pressure on prices for some time,” said Joshua Shapiro, chief U.S. economist at MFR Inc.

Home prices have stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, home prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

Many people are reluctant to purchase a home more than two years after the recession officially ended. Even the lowest mortgage rates in history haven’t been enough to lift sales.

Some can’t qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that home prices will keep falling.

Sales of previously occupied home sales are on pace to match last year’s dismal figures — the worst in 13 years. Sales of new homes fell to a six-month low in August and this year could be the worst since the government began keeping records a half century ago.

Foreclosures and short sales — when a lender accepts less for a home than what is owed on a mortgage — makes up about 30 percent of all home sales last month, up from about 10 percent in past years. The large number of unsold homes and foreclosures are sending prices lower and hurting sales.

By Associated Press

Population growth and demographic shifts – particularly the ongoing maturation of a diverse, well-educated Gen Y – will drive improvements in the real estate market over the next 10 years, according to economists with the University of Southern California Lusk Center for Real Estate.

Together, Baby Boomers and Gen Y comprise 50 percent of the population and will soon be part of the largest U.S. wealth transfer ever. About 4.3 million Gen Y residents reached age 22 in 2010. As more of this group enters the workforce over the next 10 years, they will produce a massive increase in housing demand. However, it’s likely that Gen Y will be relatively prudent when it comes to real estate investment.

Gen Y will produce market potential for every residential product except senior housing, an assertion made by the Summer 2010 ULI/Lachman Associates Survey, which found 37 percent are renters; 35 percent are homeowners; 26 percent live with parents/siblings or student housing; and 2 percent live in mobile homes.

For more information, visit: www.usc.edu/lusk

Thanks to Mary Beth Nevulis, HousingZone