The five states with the best business conditions, as selected by the group of 650 CEOs, are:

1. Texas (2011 rank: 1)
2. Florida (2011 rank: 3)
3. North Carolina (2011 rank: 2)
4. Tennessee (2011 rank: 4)
5. Indiana (2011 rank: 6)

The five states with the worst business conditions are:

50. California (2011 rank: 50)
49. New York (2011 rank: 49)
48. Illinois (2011 rank: 48)
47. Massachusetts (2011 rank: 45)
46. Michigan (2011 rank: 46)

Conducted from Jan. 24-26, the Best & Worst States Survey asks CEOs to rank all 50 states based on business conditions within each state. Factors that are measured include regulations, tax policies, workforce quality, educational resources, quality of living, and infrastructure.

Louisiana moved up the most spots, rising from 27 to 13 in one year. On the other hand, Oregon dropped nine spots from 33 to 42 in the same period.

by Jeff Zagoudis, Associate Editor, Professional Builder magazine

www.dvwise.com

For several years, NAHB’s Building Product Issues Committee has tracked the adverse effects of unwanted excess moisture in homes. Most of the recurring themes have been identified to be specific to certain regions of the country and certain exterior claddings. Building code requirements have changed in response to the need for more robust weather resistance performance of exterior envelopes. Product specifications and performance requirements have changed, as well, but it’s often hard to keep on top of all the code and technology changes that are happening in the industry.

In an effort to help builders avoid the pitfalls of inadequate moisture management in home construction, the Forest Products Lab and the NAHB Research Center developed an online video resource — a series of 14 “how-to” videos that illustrate construction techniques that minimize moisture-related performance issues in the design and construction of wood-framed wall systems. The videos serve as a building science primer for construction elements that can be affected by moisture. (Watch the videos at www.toolbase.org/videos.)

Here are several of the suggestions highlighted in the videos as key areas of focus for managing moisture accumulation and dissipation.

Material Selection

When selecting construction materials, you obviously need to consider the desires of your customers and the needs of your particular climate zone. The rise and fall of temperatures within a certain range for each climate zone should be anticipated and accounted for in your material selection. Be sure to employ the right construction details based on the cladding material type selected and the climate zone. Some products retain water, others repel water. Some products allow moisture to flow through them with ease, while others retard the flow of moisture. It is critical to understand how different materials must be assembled in order to prevent moisture problems originating at the foundation, within the exterior walls, and on the roof of the house.

Foundation: Stormwater management and having a good drainage system are critical for keeping the foundation dry and ensuring the durability of the building envelope. To direct water away from the foundation at the ground surface, the site should be graded a minimum of 4 percent away from the house. Run-off from the roof should be guided by down spouts then dispersed with the help of splash blocks (typical length: 2 feet) and the site grading. To ensure adequate water drainage away from the house, a downspout extension (typical length: 6 feet) can be used as well. Run-off from the downspout should be guided to stormwater collection areas, such as swales and wet detention ponds.

Exterior Walls: There are several moisture management features built into the exterior wall. A water-resistive barrier (WRB) is commonly used to protect the outer surface of wood sheathing from any rain water that penetrates past the cladding. All exterior wall penetrations require flashing, which is designed to direct bulk water away from the wall cavity. Window openings use flashing in several locations such as the sill, the jambs, and the header. For doors, the threshold is a critical flashing location, and all utilities service penetrations need flashing. (More details on effective window and door installation can be found in videos 6 and 7.)

Masonry cladding such as brick and stone manage bulk water by allowing pathways for drainage. Brick veneer is installed with a one-inch air gap between the brick and the covered sheathing surface, which functions as a drainage cavity and allows bulk water to drain through weep holes and wall components inside the cavity to dry. Stone masonry veneer products are often installed with a drainage plane instead of an air gap. The drainage plane allows water to drain behind the masonry cladding and out from the drip edge. (More details on effective brick and stone exterior installation can be found in videos 8 and 9.)

The exterior wall construction inward from the WRB is also a factor in moisture management. The effective management of heat flow, airflow, and water vapor flow through the use of insulation, air barriers, and vapor retarders can prevent the formation of water condensation within the exterior wall cavity or high moisture content in water-absorbing materials such as wood.

Roof: The roof has several moisture management features. Roof overhangs can protect exterior walls and foundation from excessive wetting by rain. The size of the overhang will depend on exterior wall features such as the number of windows, doors, the height of the wall, and climate conditions. To protect the roof from the weather, roofing paper or felt is installed over the wood sheathing, and depending upon the climate, an ice and water membrane should be installed to prevent water intrusion caused by ice dams.

Air Tightness of the Building Enclosure

Depending upon how the air tightness is achieved, moisture issues can arise in tighter buildings, especially when vapor retarders are used incorrectly or when the design requirements of the climate zone are not well understood. Generally, you have to consider managing the heat flow, airflow, and vapor flow within, around, and through the home; These are all interrelated and depend upon the outdoor climate conditions and the indoor environmental control systems.

Heat flow is defined by three modes of heat transfer: radiation, convection, and conduction. Radiant heat primarily enters the building enclosure through windows and the roof, and can be reflected by radiant barriers, such as low-e windows and reflective insulating materials in the attic. Convective heat transfer is driven by air through openings in the building enclosure. The convection can be both natural, such as hot air rising in a “stack effect,” or forced by equipment such as a fan. Air barriers (tape, caulk, foam, and other similar materials) manage heat flow by creating a continuous air barrier system and minimizing air infiltration through the building enclosure. Conductive heat transfer occurs when heat goes through the building enclosure components from a hot environment into a cold environment. Materials with a low thermal conductivity, such as fiberglass, cellulose, and foam insulation, manage heat flow by minimizing thermal conduction through building enclosure components. To ensure good thermal resistance performance of fiberglass batt insulation, it is important to avoid compression, voids, and gaps during the installation. It’s also important to minimize thermal bridging, which provides a path for heat flow across the building enclosure through a material with low thermal resistance. This can be significant even when the area of the low-R material is small. For example, wood framing has much lower thermal resistance than insulation materials, which means it’s important to avoid over-framing the exterior walls.

Air flow conveys both heat and moisture. Air infiltration and exfiltration can both be created by wind pressure, the temperature difference between indoors and outdoors (or “stack effect”), or the HVAC and exhaust systems. Continuous air barriers reduce air infiltration and exfiltration through the building enclosure. The highest levels of air tightness are achieved using sheet materials that block airflow, such as housewrap, drywall, or rigid insulating sheathing, combined with complementary materials that seal the gaps and penetrations, such as gaskets or tapes. Caulking can be a tedious job, but it is a necessary part of airflow management. The application of spray foam insulation provides a continuous air barrier and is ideal for locations where caulking can be difficult, such as the transitions between the foundation and the wall, roof and the wall, and unconditioned spaces, such as ceilings in a garage. HVAC and exhaust systems must also be sealed and balanced to minimize the pressures they induce across the building enclosure.

Vapor flow through the building enclosure occurs by airflow or diffusion. The rate of vapor transport by airflow depends on the air pressure difference between indoors and outdoors, the air tightness of the enclosure, and the water vapor content of the air. The rate of diffusion depends on indoor and outdoor relative humidity and temperature, and the permeability of the building materials.

Keep in mind several key principles related to diffusion of water vapor. First, the building enclosure needs to be protected from significant moisture sources (for example, use vapor retarders with very low permeability rates on the ground in crawl spaces to minimize water vapor migration from the ground into the house). Second, moisture should not be trapped within the building enclosure between impermeable membranes; the enclosure needs to be able to dry to either the inside or outside of the house.

Since the primary sources of indoor water vapor are in the bathroom and kitchen, you should install (and educate homeowners to use) bathroom and kitchen exhausts, and control the indoor humidity through the proper design and use of the HVAC system. An HVAC system that brings unconditioned outdoor air into the house will increase or decrease the indoor humidity level depending on the vapor content of the outdoor air. To prevent potential condensation on ductwork in an unconditioned space and improve energy performance, install the HVAC system and ductwork within the conditioned space of the house. If that’s not feasible, then ensure that the ductwork in unconditioned space is sealed and well insulated.

Flashing Systems

The management of bulk water (rain and other precipitation) is critical to preventing moisture issues in residential construction. Beyond the basic function of a good roof and gutter system, a home requires equally good flashing systems because this is the primary way to prevent water from becoming trapped within the building enclosure. Flashing systems promote drainage of water at construction interfaces — roof and wall interfaces, door openings, windows, utility penetrations, and the foundation. The durability of a typical residential house can be improved with good flashing practices and maintenance, like the ones described below.

House wrap: Most housewrap products resist air infiltration and bulk water intrusion, while allowing water vapor to transmit through the material. When fastening the housewrap to the sheathing, space evenly every 12 to 18 inches and use plastic cap nails or staples to minimize the chance of the fastener pulling through the wrap during installation. In order to be effective, the vertical ends of housewrap material must overlap at least six inches, the horizontal ends must overlap at least four inches, and the lowest layer should always be under the higher layer to ensure drainage away from the sheathing. At window and door openings, housewrap must be cut, trimmed, and fastened into place at the bottom and sides.

Window installation: To ensure proper water drainage around a window opening, start by installing sill flashing on top of the house wrap. This allows for any water that leaks on the sill flashing to flow over the housewrap and out; not toward the sheathing. Next, apply caulk to the window flange area to seal the perimeter during installation. Then be sure the jamb flashings are installed extending slightly above the window, covering the sill flashing below the window, and are covered by the head flashing. Finally, fold the housewrap over the head flashing and tape it to ensure that all flashings are properly overlapped in a shingle fashion. Air-tightness of the window assembly is ensured by installing tape, caulk, or foam around the window perimeter from the inside.

Door Installation: To minimize moisture intrusion, ensure proper flashing at the threshold. Flexible flashing is recommended. Additional moisture prevention steps can be taken when the exterior around the door entry is being completed. Roof covering is also critical to minimize the effects of water intrusion at the door opening.

Like most of the resources on ToolBase.org, the videos are free to view (www.toolbase.org/videos). They are designed to be a quick, easy way for builders and contractors to get the information they want and need about code requirements, new technologies, and effective building practices related to moisture management. An additional chapter on floor systems, which is currently in development, will be added online this summer.

Created in 1964, the NAHB Research Center (www.nahbrc.com) is a full-service product commercialization company that strives to make housing more durable, affordable, and efficient. The Research Center provides public and private clients with an unrivaled depth of understanding of the housing industry and access to its business leaders.

By John Peavey, Director of Applied Technologies, NAHB Research Center

www.dvwise.com

They requested 5 percent more permits in February to build single-family homes and apartments in the coming months. That increased the annual rate to a seasonally adjusted 717,000 permits, the Commerce Department said Tuesday.

While that’s still half the rate considered healthy by most economists, it’s the highest since October 2008.

“This report is one of the more encouraging new construction reports we have seen in the last four years,” said Patrick Newport, an economist with IHS Global Insight.

Builders have grown more confident over the past six months after seeing more people express interest in buying a home.

The rise in permits suggests builders see that interest translating into sales over the next 12 months. That’s how long it typically takes to build a home after a permit is obtained.

Economists cautioned that construction levels remain depressed and the housing market has a long way to go before it is back to full health.

In an indication of that challenge, the government said builders broke ground on slightly fewer homes in February. The seasonally adjusted rate of 698,000 housing starts fell from January’s revised level of 706,000, which was the highest since October 2008.

“The key numbers in this report are the housing permits-not the starts,” said Newport. “The permits are better measured than starts, are less influenced by weather and are forward looking.”

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said he expects further gains over the next few months.

“Housing will add to growth all year, and beyond,” Shepherdson said.

A mild winter allowed builders to keep working in most parts of the country. And an improving job market has many slightly more optimistic about home sales this year.

Newport said 2012 should be a better year for construction of homes. He projects 745,000 homes will be started, up from 611,000 last year. Two-thirds are likely to be apartments and condos, reflecting pent-up demand for housing among young adults who are living with their parents.

Builders are starting to see some signs of progress. They are more confident after seeing more people express interest in buying a home. Mortgage rates are hovering near record lows below 4 percent. And home sales started to rise at the end of last year.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

There are some hurdles to a smooth recovery: Builders are struggling to compete with deeply discounted foreclosures and short sales – when lenders allow homes to be sold for less than what’s owed on the mortgage.

After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.

Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That’s nearly twice the markup typical in a healthy housing market.
By Derek Kravitz
www.dvwise.com

Meeting the standards set by the 2009 or 2012 codes—along with complying with Energy Star Version 3, which went into effect on Jan. 1, 2012—would challenge almost any builder. And standards are only going to get more rigorous. “Advocates are pushing for codes that would be 70% to 100% more efficient [than the 2006 code] by 2030,” cautioned Bill Wachtler, executive director of the Structural Insulated Panel Association. That’s the same year the U.S. Department of Energy is calling for affordable net-zero homes and the 2030 Challenge wants all new homes to be carbon neutral.

Wachtler made these observations during an informative panel discussion he moderated at the recent International Builders’ Show on energy code compliance using advanced building systems such as structural insulated panels (SIPs) and insulated concrete forms (ICFs). He also pointed out that the 2012 code requires all new houses to undergo blower-door tests that achieve an air infiltration rate of between three and five air exchanges per hour, depending on the climate zone. And Energy Star Version 3’s HERs score standard is 64. To achieve either of these via stick framing would require considerably more insulation and sealing than is currently common in most residential construction.

Wachtler and his fellow panelists—Frank Baker, the founder of Riverbend Framing Timber and Insulspan, who has been using advanced building systems for 30 years; and Don Ferrier of Ferrier Custom Homes in Fort Worth, Texas, who has been using SIPs in his construction since 1985—offered a detailed and sometimes highly technical argument in favor of advanced building systems. Such systems, they asserted, are more efficient and can help builders meet the new energy code standards because they provide an envelope with continuous insulation, no thermal bridging, and near-perfect air sealing. Advanced systems can also reduce builders’ labor expenses.

Baker conceded that, from a strictly materials standpoint, SIPs can be more expensive to install than stick framing. The 2012 code calls for six- to eight-inch SIPs for walls and 10- to 12-inch SIPs for roofs. “Greater thickness translates into higher costs.” He also pointed to the two Zebra Alliance Research Homes in Kentucky, whose thermal performance is being monitored by the Oak Ridge National Laboratory. One of the houses was built using optimal value framing, the other with six-inch SIPs. The SIPs home cost between $8,000 and $10,000 more. But it also saves 21% more energy and attained 40% greater air tightness. Perhaps even more important to builders in the audience, the envelope of the SIPs house went up in five days, compared to 15 for the stick-framed house.

Baker noted that a recent R.S. Means “time and motion” study found that using SIPs can cut framing labor costs by as much as 55% over stick framing, and 11% on electrical rough-ins.

Baker isn’t a fan of prescribing how builders achieve energy efficiency in their construction; he much prefers the “performance” method that measures the end result and pays less attention to how it’s achieved. This performance method, he said, is more likely to take a whole-house approach to energy efficiency than might a prescriptive method that measures each component’s efficiency individually. “Whole-house modeling also sometimes requires thinner panels and takes into account air infiltration,” he said.

He argued, too, that houses built with advanced building systems are less wasteful than stick-built construction, and often require smaller HVAC systems and shorter ductwork runs.

Ferrier lent his practical experience to Baker’s thesis when he noted that SIPs have become part of his marketing arsenal aimed at his two primary customer groups—retiring baby boomers and young professionals—who “are either looking for cost savings or green.”

He showed the audience some of the construction methods he’s used to reduce air infiltration, which mostly emphasize sealing before installation. Ferrier has found that SIPs work better on gable roofs than conventional plywood-and-truss construction because the cuts are more precise and easier to seal. It’s been his experience that SIPs are four to six times stronger than conventional stick-built walls, and are more adaptable to architectural designs, especially when it comes to window cutouts.

Ferrier was quick to note, however, that a given market’s labor costs will ultimately determine the relative cost benefits of using SIPs. He also noted that any efficiency measurement of advanced building systems is likely to depend on the orientation of the house to the sun, as well as the house’s air tightness and insulation. “These are the bases of our efficient homes,” he said.

By John Caulfield, senior editor for Builder magazine.
www.dvwise.com

Permits for privately owned housing units were up 5.1% in February on a monthly basis and were 34.3% higher year-over-year, reaching a seasonally adjusted annual rate of 717,000, according to data released today by the U.S. Census Bureau. The rate is the highest seen in more than three years.

Single-family permits were up 4.9% to an annual rate of 472,000. Among multifamily projects, permits for buildings with five units or more were up 3.3% to a rate of 219,000, and permits for buildings with two to four units were up 30% to an annual rate of 26,000.

However—just as this month’s Housing Market Index reported builders’ confidence in the future rising while sentiment about current conditions was down—the Census Bureau reports that as builders were pulling more permits for future projects, housing starts moved lower.

Overall, starts were down by 1.1% for the month to a seasonally adjusted annual rate of 698,000, although the number was still 34.7% higher year-over-year. The monthly decline came from the single-family sector, which was down 9.9% from January but up 17.8% from February 2011. Multifamily starts on buildings with five or more units were up 28.7% and 108.0% on a monthly and yearly basis, respectively.

However, single-family’s decline in activity is likely related to weather, as conditions were milder in January than February, wrote Patrick Newport, U.S. economist at IHS Global Insight, in an email to Builder today. Newport also pointed to the decline’s margin of error: plus or minus 15.9%. “The drop could just be statistical noise,” he wrote.

While noting that the housing market is still depressed, Newport expects this year to be better than last. IHS estimates that single-family starts will rise to 487,000 in 2012, compared to 434,000 last year; and that multifamily starts will jump by almost 50% to 258,000 from 177,000 in 2011.

Much of the improvement could be coming from young adults forming households after spending a few years living at home, Newport says. He referenced a Pew Research Center report released last week that stated that more than 75% of young adults between ages 25 to 34 who moved in with their families during the economic turmoil of the Great Recession are now feeling good about their financial future. “This group may be behind the pickup in demand,” Newport wrote. “They are finding jobs and heading out on their own.”

By: Claire Easley, a senior editor at Builder

www.dvwise.com

Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condominiums and co-ops—slipped 0.9 percent to a seasonally adjusted annual rate of 4.59 million in February from an upwardly revised 4.63 million in January. They are, however, 8.8 percent higher than the 4.22 million-unit level in February 2011.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 3.89 percent in February, down from 3.92 percent in January; the rate was 4.95 percent in February 2011. Recordkeeping began in 1971.

NAR President Moe Veissi said market conditions are improving. “Supply and demand have become more balanced in more markets, but with tight supply in the lower price ranges – particularly in the West,” he said. “When markets are balanced, we normally see prices rise one to two percentage points above the rate of inflation, but foreclosures and short sales are holding back median prices.”

The national median existing-home price for all housing types was $156,600 in February, up 0.3 percent from February 2011. Distressed homes—foreclosures and short sales sold at deep discounts—accounted for 34 percent of February sales (20 percent were foreclosures and 14 percent were short sales), down from 35 percent in January and 39 percent in February 2011.

Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, which represents a 6.4-month supply at the current sales pace, up from a 6-month supply in January. Even so, unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 19.3 percent below a year ago.

Fifty-one percent of NAR members report that contracts settled on time in February; 18 percent had delays and 31 percent experienced contract failures. The cancellation rate was 33 percent in January and 9 percent in February 2011.

All-cash sales rose to 33 percent of transactions in February from 31 percent in January; they were 33 percent in February 2011.

Investors purchased 23 percent of homes in February, unchanged from January; they were 20 percent in February 2011. First-time buyers accounted for 32 percent of transactions in February, down from 33 percent in January and 34 percent in February 2011.

Single-family home sales declined 1 percent to a seasonally adjusted annual rate of 4.06 million in February from 4.10 million in January, but are 9.4 percent higher than the 3.71 million-unit level a year ago. The median existing single-family home price was $157,100 in February, which is 0.1 percent above February 2011.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 530,000 in February and are 3.9 percent above the 510,000-unit pace in February 2011. The median existing condo price was $153,000 in February, up 1.6 percent from a year ago.

Regionally, existing-home sales in the Northeast fell 3.3 percent to an annual level of 580,000 in February but are 5.5 percent above a year ago. The median price in the Northeast was $225,800, down 1.9 percent from February 2011.

Existing-home sales in the Midwest rose 1 percent in February to a pace of 1.02 million and are 13.3 percent higher than February 2011. The median price in the Midwest was $120,500, which is 0.5 percent below a year ago.

In the South, existing-home sales increased 0.6 percent to an annual level of 1.77 million in February and are 9.3 percent higher than a year ago. The median price in the South was $138,100, up 1.8 percent from February 2011.

Existing-home sales in the West declined 3.2 percent to an annual pace of 1.22 million in February but are 6.1 percent above February 2011. The median price in the West was $195,300, up 3.1 percent from a year ago.

By: Housing Zone Staff

www.dvwise.com

The study also illustrates that home shoppers are not only searching for information on their mobile devices, but also taking action afterwards. Sixty-eight percent said they contacted a real estate professional to view a home based on their mobile search.

The research also indicates there is still significant room for mobile usage to grow, with 85 percent of non-users stating they’d consider using a mobile device in their next home search.

“Our research supports that home buyers are turning to their smartphones and tablets in their search and taking action to reach real estate professionals,” says Scott Dixon, president of NCI’s Real Estate Division.

The Real Estate Book Mobile Home Shoppers study found that the activities conducted most often from a mobile device were:

• 78 percent viewed photos and videos of homes
• 66 percent inquired for more information about a listing
• 60 percent found listing details, price, description, amenities and contact information
• 57 percent located a house listing with GPS
• 55 percent searched by city
• 42 percent downloaded a home buying search app
• 30 percent shared listing information with friends and family

Dixon adds, “The time is now for agents and brokers to add mobile tools in their marketing mix to increase traffic and reach home shoppers right when they are actively engaged in their search process.”

“Mobile is a complementary to our print and web offerings. We use our printed pages and sign riders to drive traffic online. We track the results and see our peak traffic on our website on Monday and Tuesday, but our peak traffic on mobile is Friday, Saturday, and Sunday – when people are on the go,” says Dixon.

By: HZ Staff

www.dvwise.com

The survey in question, conducted in February, continued a modest upward trend in consumer confidence in home prices. Doug Duncan, chief economist for Fannie Mae, said that number has grown 19 percent since November 2011.

The Commerce Department released corresponding data on gross domestic product (GDP) in the same time period. Adjusted for inflation, statistics show 3 percent annual growth in the last three months of 2011, up from an earlier estimate of 2.8 percent.

As unemployment started to tick down at the end of 2011, Fannie Mae’s data shows Americans started spending more – personal consumption spending increased 2.1 percent in the fourth quarter. This was the most growth seen in three quarters.

Housing demand also increased in the fourth quarter, but roughly two-thirds of that demand was related to growing inventories.

By: Jeff Zagoudis, Associate Editor,Professional Builder

www.dvwise.com

Over the last few weeks, though, sales have suddenly started to kick in. Cellar isn’t exactly sure why, but this activity has at least given him hope that business will carry through the rest of the year and beyond. “It might not be the train, but we are seeing some light” in what has been a long, dark tunnel, he says.

Builders around the country, buoyed by sales that, for some, took off in February, are crossing their fingers that 2012 will be when their businesses grow from the start of the year to its finish. No one expects a boom, but neither are builders expecting home purchases to eventually fizzle, as they did two years ago after an initial burst.

“We’re not on the ‘sugar high’ of the tax credit, and homes are selling even with high unemployment,” says Chris Cates, co-owner of Caviness and Cates Communities in Fayetteville, N.C., whose two primary markets benefit from their proximity to Fort Bragg and Camp Lejeune. “Even our ‘conventional’ markets are doing better. It’s not going to be a gangbuster recovery; just gradual and steady.”

It’s the timing of the recovery that still has builders and prognosticators guessing. On Thursday, for example, the Irvine, Calif.-based market research firm John Burns Real Estate Consulting forecast a 21% increase in housing construction activity this year, propelled in part by resurgent master-planned community development and sales.

But housing statistics so far haven’t been as clear. National home prices and starts in February declined, but permits rose to their highest annualized level since October 2008. Existing home sales, while down a bit last month, were up solidly over a year ago, a signal to builders that markets are making headway clearing out their unsold inventories. In Raleigh, N.C., one of Cates’ markets, existing home sales were up 33.8% in February, according to the RE/MAX National Housing Report.

Bellevue, Wash.-based Quadrant Homes has capitalized on this existing-home dilemma via a new program that offers buyers a three-year lease guarantee on homes they already own but can’t get rid of. Sales at Quadrant’s 16 Puget Sound-area communities soared by 50% in the first two months of 2012. And four out of every five customers are availing themselves of Quadrant’s “Build Your Way” program, which allows buyers considerable latitude to customize and personalize their new houses. (Through a spokesperson, Quadrant’s president Ken Krivanec declined to project future sales because his company is a subsidiary of publicly traded Weyerhaeuser’s real estate division.)

Another positive sign of the housing market’s nascent recovery has been the restarting of stalled residential projects by banks that took them over from bankrupt builders and developers. Since 2009, lenders have awarded contracts to McBride & Son Homes to build out more than 30 of these REO projects in the greater St. Louis market, including 200 units in the New Town master-planned community in St. Charles, Mo., a deal valued at $35 million. “We have worked very hard to foster banking relationships and, most important, we deliver what we promise,” John Eilermann Jr., McBride’s CEO, tells Builder.

But McBride is also “transitioning” from building out foreclosed projects to developing its own again, and the company has enough confidence that its markets are improving to begin buying land for that purpose. “We just closed on our first raw land deal this month and will immediately begin development,” says Eilermann. “We have three more coming in the next six months.” His company is only interested in what he calls “A-plus” real estate, “meaning projects in ideal locations and ideal prices. It is definitely a lesson learned in our industry over the last six years: builders were convincing themselves that ‘C’ and ‘B’ grade projects were viable and acceptable. They are not.”

Houston-based David Weekley Homes expects to open another 30 to 40 new communities this year. Those projects will be modestly scaled, to between six and 50 units each, as this builder focuses on what its chairman, David Weekley, calls “unique positional community development.” What he means by that is, for example, building patio homes or in-town homes in markets where there are short supplies of these products. The builder relies on its team of Internet Advisors to promote “Coming Soon” communities and assemble lists of eager shoppers.

David Weekley Homes sold more than 100 houses in February, which represented a 40% increase over the same month in 2011. Weekley says business “in general” has been “improving” in the 16 cities where his company builds and sells. The builder has been selling more presales and fewer specs to move-up customers who “want what they want and are spending more time picking out options and making changes. That plays right into our strength because we’ll do customization.”

Headwinds Are Still Blowing

Weekley thinks his company’s sales should continue to expand in the coming months. But, like other builders, he’s hedging his bets and being careful not to overestimate early sales returns.

“It will be interesting to see how interest rates—which have risen 30 basis points—affect sales,” he says. Weekley also worries about the prospect of rising costs for materials and labor, which could further erode margins that are already thin because of price discounting that is necessary in order to sell houses. “It’s still competitive, and there are customers who want to negotiate every price,” observes Carl Mulac, CEO of Avatar Homes, which builds in Florida and Arizona. And yet, Avatar has been able to take modest price gains at some of its communities.

Greg Yakim, CEO of Texas-based Castlerock Communities, says his company “strategically” scaled back its unit sales last year as not to “chase margin” with national builders he claims are “underpricing their products.” But pricing worries him less than a “dysfunctional mortgage environment” with “uncertain” regulatory restrictions that Yakim claims “is getting worse” and could make it even harder for buyers to qualify for loans.

These impediments, though, didn’t keep Castlerock from expanding its business during the recession, during which it reduced its debt to zero. This year, it will open new communities and Yakim is anticipating “a significant increase in unit sales.”

“It just feels better out there,” says Mulac. But not quite right enough to be buying land because, he explains, “when it costs $25,000 to $30,000 to develop a lot, it’s hard to make deals work.”

By John Caulfield, senior editor for Builder magazine.
www.dvwise.com

So when they got the opportunity to team up on a universal design project house, they jumped at the chance. Their resulting brain child, the LIFEhouse—a 1,992-square-foot, ranch-style home near Antioch, Ill., that recently won the National Association of Home Builders’ Best of 50+ Housing Award—is a trifecta of beauty, brains, and accessibility.

“The home can comfortably accommodate a young family with a live-in elderly parent, disabled individuals, aging persons, or even a family with young children or whose adult children have come back home,” Beth says. “In other words, it is universally designed. It’s designed for everyone.”

But while its high accessibility makes the home notable, it’s the whisper-quiet incorporation of accessible features that makes it a show-stopper.

From the street, a ramp providing access to the front door is cleverly concealed by landscaping and a porch. Just inside the door, the plan includes a “memory niche”—cabinetry for dropping off keys, cellphones, and the like, that not only offers a quick spot to empty hands but also a go-to place for those with fading memories in search of their wallet.

And while the home features the standard, universal design offerings, such as lever door handles, extra-wide doorways and halls, and no-step entrances, it goes much further, starting with the layout as a whole. On the main level, the ultra-open plan provides minimal obstructions between the kitchen, living room, and den. The home office is a designated area against the wall of an extra-wide hallway, “or shall we call it a room?” Beth says. “The more open your plan can be, and if you’re thinking about those things up front, the more universally designed the house will be, just naturally.”

One of the points the Taukes make with the project is that a big part of universal design is preparing for the future by building homes that can be easily adapted should needs arise. “Three different times in my career I’ve had to take a house that I had done and make it accessible,” Susanne says. “One of my customers was in a debilitating car accident. Another had an allergic reaction that left her paralyzed. Things happen.”

And when they do, she says, it saves a lot of expense if bathroom walls are already prepped for grab bars and closets are stacked for quick conversion into an elevator shaft.

One element that no builder should ignore, Susanne and Beth agree, is lighting. “When you are dealing with issues of growing old, many more people have eyesight issues than mobility issues, and they happen much sooner.” Susanne says. “How many times have you not been able to read a recipe?”

The LIFEhouse responds with eight levels of lighting in the kitchen and at least four sources of light in other rooms. Even closets are outfitted with multiple levels of lighting fixtures, and rope lighting was installed inside the stair banister to illuminate the steps to the finished lower level. When entering and moving through the home, automatic lights illuminate the path to public spaces and the bedroom.

The home offers an elevator, but for those using the stairs, visibility is enhanced by alternating light- and dark-beige carpeting on treads, which Susanne says has been a hit far beyond the active adult set. “Young, old, and in between, they all love it!”

In the kitchen, countertops are staggered at three heights, one accessible from a seated position, one at standard counter height, and one extra tall—the result of IDeA Center research that found that one of the most common causes for kitchen injuries is bending over while cutting.

Similarly, two of the three bathrooms offer sinks at different levels, and a full-length mirror disguises a medicine cabinet that can be accessed by someone in either a seated or standing position.

But one idea that Susanne takes issue with is the claim that universal design is cost-neutral.

“The academics say it doesn’t cost any more,” she says. “Yes it does. It does because you need to have more square footage and square footage costs money. However, not everyone needs every one of these features. The way I look at it is there are many things we can do that are cost effective or cost nothing at all. It just depends on what they need.”

By Claire Easley, a senior editor at Builder
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