How Homebuilding Can Aid Economic Recovery

2020 is a year like no other, where communities must join forces (socially distanced, of course) and make a collective effort to support local businesses in an attempt to keep small-town economies alive. 

A major proponent to flourishing local economies is steady home building. People attract business, and housing attracts people. This year more than ever, the market is experiencing low housing inventory in many suburban communities across the United States. Housing developments create new jobs for citizens and provide desired housing options that attract residents. 

The National Association of Home Builders has tested these economic effects and have divided the economic influx into three phases. 

Phase I

Phase I includes the effects that result directly from construction activity and local industries that contribute to it. This consists of all contracted services, such as electricians, plumbers, architects, and engineers. Phase I also includes related jobs, such as truck drivers, developers, and bankers.

Phase II

Phase II includes the effects that occur as a result from the wages and profits from Phase I being spent in local economies. 

Phase III

Phase III is an ongoing effect that includes property tax payments and local spending by the occupants of the new housing units. 

As shown in the NAHB three-phase economic process, multiple forms of local income can be generated through residential construction. From more basic flows of income, such as workers spending their hourly wages on local goods and services, to more steady streams of income like annual property taxes paid. Local governments prosper from new residencies and more activity within the community. 

7 Ways to Improve Indoor Air Quality

We often think of air pollution as something that could affect us outside. However, as Americans spend about 90% of their time indoors, keeping indoor air as clean as possible is essential. 

You can make simple changes to reduce the number and exposure of air pollutants in your home. Here are seven things you can do right away to improve the air quality in your home:

Get Rid of Mold

In bathrooms and kitchens, mold and mildew can easily grow where moisture levels are higher than the rest of your house. Plus, the hot summer months can bring about incredibly humid conditions. Exposure to mold can lead to respiratory issues like allergies and asthma. Invest in a dehumidifier in an HVAC system to reduce humidity levels and create comfortable living conditions in your home. 

Purchase an Air Purifier

Using air purifiers is another effective way to limit air pollutants. There’s a variety of indoor air quality products on the market to combat common indoor pollutants. Place purifiers in the house’s most commonly used areas, including the kitchen, bedroom, and living room. 

Invest in Indoor Plants

Houseplants can detoxify indoor air naturally. Spider plants, Chinese evergreens, snake plants, and aloe vera are all plants that NASA recommends for the best air purification.

Increase Ventilation

Proper airflow and ventilation are crucial for good indoor air quality. Over time, dust and mold can accumulate in your ducts. Opening your windows and cleaning your ducts allows harmful air pollutants and allergens to circulate outside, thereby limiting your exposure to it. 

Clean and Vacuum 

Rugs and carpets can easily trap dust particles in their many fibers. Use a vacuum cleaner with a HEPA filter, strong suction, and rotating brushes to suck up all the dust and dirt. Try to vacuum once or twice a week, and don’t forget about furniture, shades, and sheets. 

Keep it Outside

People can track all sorts of chemicals from the dirt on their shoes. Put a large floor mat at every entrance. By simply wiping your shoes off, you can reduce the amount of dirt and pollutants fin your home. 

With summer nearing an end, many of us will be spending more time indoors. Determine what you need in place to keep your indoor air quality high all winter long. 

 

Builder Confidence Increased in July 2020

News about low inventory and historic low mortgage rates has been garnering a lot of attention in the housing market. While real estate agents have been noticing a recovery in the market for the past couple of months, the latest NAHB/Wells Fargo Housing Market Index (HMI) is also showing an increase in builder confidence. 

 

July 2020 Builder Confidence

 

In July, builder confidence in the market for new single-family homes jumped to 72 points, up from 58 points in June. This is a significant increase from April, when builder confidence plummeted to a low of 30 points, the lowest level since 2012.

 

The HMI is a monthly survey that has been conducted for 30 years. It gathers information about builder perceptions and buyer traffic for single-family homes. Anything above 50 points indicates a positive outlook for the market, and below 50 indicates a negative outlook. 

 

The Appeal of New Construction

 

Buyers are actively searching for homes. With low inventory and the desire for a floorplan to meet needs created by the pandemic (like home offices and outdoor living spaces), builders are seeing more interest from prospective buyers. 

 

“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke.  “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”

 

Low mortgage rates aren’t just for existing homes, they extend to new construction. If you are a prospective buyer who isn’t haven’t luck with current inventory, consider building new or looking at new developments.

New Construction Loans

Buying a home may require a mortgage, but building your dream home requires a different type of mortgage – a construction loan. New construction loans can help pay for home building or renovations and work differently from traditional loans. We’ll delve into what you need to know about a construction loan and how it works. 

 

What is a new construction loan?

A construction loan is a short-term loan that covers the costs of work and materials for new-build homes. Some of the items you can finance with a construction loan include permits, contractor labor, roof framing costs, and many other expenses that come with building a house. 

 

Types of New Construction Loans

Construction lenders provide different types of loans for a variety of homebuilding scenarios. Here are some financing options when building a new house:

 

Construction-to-Permanent

Also known as “single-close” construction loans, this type of loan converts to a permanent mortgage after construction is completed. The benefit with construction-to-permanent is that there is only one set of closing costs to pay, reducing your overall fees.

 

Construction-only

Construction-only loans are also referred to as “two-close” construction loans that require closing on two different loans. The first loan is taken out for the construction. Once work is completed, the loan is paid off with a new loan, called an end loan. The end loan is based on terms locked-in as the home nears completion. 

 

Renovation Construction Loan 

If you want to upgrade your existing home instead of building one, you can look for a renovation loan. This type of loan comes in various forms depending on the amount of money you’re planning on spending. 

 

How Construction Loans Work

As mentioned previously, new home construction loans work much differently from the typical mortgage loans. The lender pays the loan to the contractor, not the borrower, in installments. Once the project has been completed, construction loans can be either converted to permanent mortgage or paid in full. 

 

How to get a Home Construction Loan

Before applying for a loan, the borrower should meet with the designated contractor to understand the total cost to build so a  loan amount can be established. The lender will then review a borrowers’ employment history, savings, income stability, and ability to pay back the loan. A property appraisal will also be obtained to support the value of the project. To qualify you will need an excellent credit score, stable income, low debt-to-income ratio, and a down payment of 20 percent. 

 

How to Find a Lender

It is important to find a lender who specializes in construction lending and isn’t new to the process. Research several lenders to obtain detailed information about their background and specific programs. We recommend that you compare construction loan rates, terms, and down payment requirements to make sure you’re getting the best deal possible. 

 

Protect your Home from Termites

Termites have been around for millions of years. While the insects are small, they can cause major damage to the structure of homes. Since they work from the inside out, the destruction begins without you knowing it. Cindy Mannes, vice president of the National Pest Management Association, said,

 

“Termites cause more than $5 billion in property damage in the U.S. annually, which is typically not covered by homeowners’ insurance.”

We know this sounds scary, but don’t worry! There are numerous things you can do to prevent termites in new builds and existing homes. As you prepare complete spring home maintenance tasks, make sure you add in preventative measures against termites and other insects. 

 

New Homes

If you are building a new home, termite prevention begins with the foundation. Termite mesh, a termite barrier, and concrete can be packed beneath a house, making it impossible for termites to pass through the ground and into the house. Pressure-treated wood is also highly recommended for termite prevention.

 

Existing Homes

Homeowners can take measures to prevent an infestation in existing homes as well. Create a barrier between your home and the ground, so only the concrete foundation of the house touches mulch, plants, and soil. The siding should begin at least 6 inches above the soil, making it difficult for termites to reach. 

 

Tips to Protect against Pests

  1. Reduce moisture in and around the home.
  2. Repair leaky faucets, pipes, and exterior HVAC units.
  3. Repair rotted roof shingles. 
  4. Replace weather-stripping around windows and doors. 
  5. Check to ensure gutters and downspouts divert water away from the house.
  6. Inspect your home throughout the year for evidence of termite waste, patterns in wood, or mud tunnels leading up the house. 

You can also get a yearly inspection completed by a pest professional, who can treat both the yard and structure of the wood, should there be evidence of termites. 

The trick with termites? Prevention! Take the time each year to check for signs of termites so you can get ahead of any damage they may cause. 

How Builders are Responding to Changing Times

Connecticut, like many states, has deemed construction as an essential business. Builders and developers have quickly adapted to make worksites and client interactions safe for all. 

According to a recent survey of NAHB members, several measures are being implemented that allow the construction industry to continue to build and sell homes. 

The majority of those who responded stated that non-construction employees are working from home during these times. Also, instead of open hours for tours, 59% of those surveyed are scheduling private showings. 

Though not mentioned in the survey, many builders are also implementing virtual options. At the Residences at 66 High Street, interested parties can either schedule a private showing (two people per showing), or a virtual showing. We are able to utilize technology to best fit the needs of every individual. 

Even with an essential business status, not all construction jobs have continued. Of those surveyed, 48% have halted construction projects, or will do so in the near future. Fortunately, however, only 25% have needed to lay off or furlough workers. 

At The Horton Group, we continue to make adaptations and follow CDC guidelines so we can continue to move forward safely. 

 

What is a HERS Index?

There are plenty of ways to make your home more energy-efficient. As homeowners, you know that with every scheduled maintenance and every home purchase, there are ways to save energy, money, and have a more sustainable household. 

With all of the options available, it can be overwhelming to sort through what will help your home run more efficiently, and what isn’t necessary. That is where the HERS Index can help.

What is the HERS Index?

The Home Energy Rating System (HERS) Index is the nationally recognized system to assess a home’s energy performance. 

HERS scores are designed to calculate the energy efficiency of new or remodeled homes. If you are in the market to buy a brand new home, the HERS score will give you an idea of the energy costs for the house.

How do you find out the HERS Index Score?

A certified HERS Rater can determine the HERS Index Score of your home. They will complete an onsite energy rating of the home, and then compare the data to a reference home. The reference home is an analysis tool designed to resemble the actual house in size, shape, style, environment, and climate. 

What does the score mean?

The HERS Index ranges from 0 to 150, with 0 being a home that produces or conserves as much energy as it uses. While a score of 0 is unlikely, the lower the score, the more energy-efficient the home.

The standard new home typically has a rating of 100, while the typical resale home has a score of 130. Using these scores as reference points, you can get an idea of how efficient your home is. 

How can I improve my home’s HERS Index Score?

The greatest energy expenses in a house are for heating and cooling. Whether you are remodeling your entire home or just looking for a way to save on energy costs, you can get a programmable thermostat, upgrade your HVAC system, or simply get an annual tune-up to make sure it is working properly. 

Other energy-saving tips include: sealing all air leaks, add insulation, upgrade to ENERGY STAR appliances, and consider installing solar panels

A HERS index rating can help you determine what type of fixes will be most beneficial for your home. 

 

Builder Confidence Reaches 20-year High

If you are in the market to buy or sell a home, you may have heard that at the end of 2019, the national inventory declined by 9.5%, according to realtor.com

What does this mean? With fewer homes on the market, and buyers actively searching for their next house, experts predict inventory will remain low into 2020. 

It also means that builder confidence levels are breaking records.

National Association of Home Builders/Wells Fargo Housing Market Index

Every month for the past 30 years, the National Association of Home Builders (NAHB) conducts a Housing Market Index survey. This survey gauges builder perceptions of current single-family homes sales and sales expectations for the next six months.

The last two monthly surveys – December 2019 and January 2020 – have the highest confidence levels for builders since 1999. The confidence level reached 76 points in December and decreased by just one point in January. To compare, builder confidence in January 2019 was 58 points. 

What does this mean?

With low inventory levels, low mortgage rates, and a strong labor market, builders are going into 2020 with high levels of optimism. 

NAHB Chairman Greg Ugalde said,

“Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020.”

Builders are prepared to tackle the problem of low housing inventory, particularly for single-family homes and starter homes. Buyers who are frustrated with a lack of housing options can work with builders or search for new development projects in the area. 

Are you considering building in 2020? Contact us today!

 

 

Design-Build vs. Design-Bid-Build

You decided to build.

Do you know what type of build process you want to commit to?

Beyond choosing the right builder, you need to understand how the builder will complete the scope of work. Two methods are design-build and design-bid-build. We go over the differences between these two processes below. 

Design-Build

With design-build, the owner signs just one contract with the builder (or project manager).

Often, design-build companies have their own team to handle all aspects of the project, including design, construction, and all trades. With this type of construction process, the owner has one point of contact, making it easier to communicate. 

The contractor can also hire subcontractors for trades as needed, though they resume all responsibility for the finished project, cost, and schedule. 

Design-Bid-Build

Design-bid-build is the more traditional model in construction. Design and construction are handled by two different companies, with two separate contracts. 

Where does the bidding come in?

First, the design team works to complete a set of construction documents for the project. From there, various contractors can submit bids for the project. Usually, the work goes to the lowest bidder. This can help to ensure the cost of construction will stay low. When communication between all parties is strong, this process is effective. 

When completing new construction, it is most important to feel comfortable with who you are working with. From there, you can discuss the type of building process that best fits your needs. 

 

Recycling Construction Materials

Sustainability and green living is becoming more evident in homes and workplaces. It’s one thing to create a green finished product; it’s just as important to make the construction process environmentally friendly. 

Construction & Demolition Materials

Many of the materials used in construction can be recycled. Construction & demolition (C&D) waste comes from building and tearing down houses, buildings, roads, and bridges. C&D materials can be recycled in the following ways:

  • Concrete rubble can be reused in new projects. 
  • Wood can be recycled into mulch, compost, animal bedding, wood pellets, and more.
  • Gypsum drywall can be recycled into new drywall, in the production of cement, and as an additive to composting operations.
  • Asphalt can be recycled an endless number of times, as it never loses quality.
  • Metals can be sent to metal scrap yards and reused.

Additional materials that can be recycled include glass, cardboard, and paper.

Many C&D materials can be reused. During a demolition or remodel, items that can be reused in new projects should be removed carefully before tearing anything down. Items that can be reused include:

  • Doors
  • Hardware
  • Appliances
  • Lighting fixtures
  • Windows
  • Brick and masonry
  • Excess insulation
  • Paint
  • Packaging materials 

Benefits of Recycling C&D Materials

In 2015 alone, 548 million tons of C&D debris was created, with 90% coming from demolition, according to the United States Environmental Protection Agency. Recycling construction materials has both environmental and economic benefits. 

When recycled materials are used, the consumption of natural resources is decreased, saving energy. By reusing materials, less waste goes to landfills. Since landfills are filling quickly, it often costs more money to dispose of materials than it does to recycle them. This can help to reduce the building project expenses. 

Whether recycling of reusing materials, planning is essential to fulfill rules and regulations. Local recycling centers, landfills, and waste departments all work with construction companies to reduce waste and achieve green building practices. 

 

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