Archive for the ‘Energy Efficiency’ Category

If I’ve said it once, I have said it 1000 times. Follow the new home market for insight on the overall market. Understanding what is being spent on a new homes is valuable information. There is a relationship between the value of new homes and resale homes.

That being said, there is some very interesting information coming out of the new home market right now. When it comes to new home values, there are many angles to consider.  Overall residential supply, availability of land, short sales and foreclosures, and cost of construction all have impact on values.  For some time now, lack of confidence and declining housing starts have kept construction costs down.  That may have just changed.

From Drew Holzwarth of Piedmont Realty and Construction: 

“This has been an interesting week for a variety of reasons.  The positive industry news in the media, with several industry analysts calling the bottom of the housing market, has led to a building production manufacturer reaction that I expected.  Anemic margins have been achieved by suppliers, contractors and builders alike the past few years in the real estate market.  The fourth quarter of 2011 has been highlighted with attractive corporate profits in other industries that  have lifted the equities  markets and increased consumer confidence.  This positive global news has led to Analysts who follow our industry to say that we have hit the bottom and there should be a slow climb from this point.   I fully expected our national building material suppliers to pounce on this news and they have.  On Wednesday, all 3 national drywall suppliers – the only ones left that produce drywall in the United States announced price increases – all the same – all 35% increases, Effective immediately.   In my career of following pricing of building products, I have never seen this level of a price increase.  The bumps are historically 5%  to a maximum of 10%.  Their only competition is Chinese Drywall…..pass.    On Friday, Timberline and Tamko announced a 15% increase on roofing products.  This week, I expect, similar increases from Fiberglass insulation, PVC plumbing pipe, lumber, and cement – raising concrete prices.  Crazy and frustrating.  The market remains challenging and homebuilders will have to continues to stay relevant and sell value in order to justify building new vs. the value in buying resale homes.”

Holzwarth’s company is the largest privately held home builder in our area. Piedmont Realty and Construction closed 72 sales for just over $29 million in sales volume in 2011.

This is a very interesting development for certain and some builders will react faster than others. I read somewhere that builders will need to absorb these additional costs themselves. I don’t see that happening. From the builder’s I talk to, there really isn’t room. Over the last few months, new homes sales have been steady in our area with renewed, yet cautious, optimism going forward. Hopefully, the market can absorb these price increases and keep moving. We will see.

New home sales have represented roughly 20% of all sales in Albemarle County for the last 2 years. In many segments of the market, buyers are evaluating their choices and finding that  a new home, exactly the way they want with energy efficiency features, is a better value than their resale options. Today’s buyer is far more deliberate and long term minded than the buyer from just a few years ago.

It will be very interesting to monitor new home prices and their impact on sales in both the new home and resale markets. But as you can see from above, the builders and developers are working hard to be relevant in the market and respond to demand.  If you are considering a purchase in the coming months, be sure and get out there to see what is available new, even if for no other reason that the context it provides.

If you’d like to have a conversation about this market and your goals for buying or selling in 2012, feel free to contact me.

A little over a week ago when I heard NAR was revising their national data, my immediate reaction was… so what? I commented to a colleague that if I challenged them to find an agent with a client that referenced national data when making a home buying or selling decision, they would have a difficult time locating one. I have never had a client reference this data.  I assume there is going to be a lot press surrounding these numbers. While these numbers are going to change, and the numbers of sales is going to decrease, I don’t think it really matters to the overall market. This conversation is far too local and we have far better data available to us in our local MLS. For example, when we tally the numbers, we are going to see more homes sold in 2011 in Albemarle and Charlottesville than did in 2010.

Here is some commentary on this topic from VAR and CNBC for reference.  The data will be release on December 21. (Tomorrow at the time of this post.)

It’s important to understand your segment of the market. I gain a lot of my insight into the marketplace through my relationship with Piedmont Realty and Construction. Understanding the new home market is vital to understanding the overall market. 2011 is going to go down as the worst year in homebuilding since they started keeping records 48 years ago. The number of homes built in 2011 will be just 14% of the number of homes built in 2004. 6 out of 10 privately held home building business that were in operation in 2004 no longer exist.

Piedmont Realty and Construction launched in 2009. In 2011, they will contract for over 70 homes and close over 70 homes in this calendar year. This is truly remarkable and incredibly relevant to our market.

A lot has changed since 2004. The business model is different. Demand has changed. Construction methods to achieve energy efficiency is here to stay. We take orders for new homes now and speculative building is all but gone. I think this is a good thing. I gain an incredible amount of knowledge and insight in to this market by being exposed to all of those sales. Each sale is a tremendous amount of market data. Why did they choose to build? What was the floor plan type chosen and why? What features are most important? What locations are in demand and why? I could go on and on. The order for a new home is the leading edge of demand in the market place. I balance that against my analysis of the resale market and my experience helping buyers in seller in the overall market.

If you are interested in buying or selling in the Charlottesville area real estate market, I am interested in that conversation. Feel free to contact me if you would like to learn more about my approach to helping my clients make the best decision possible in the context of their situation.

The 2011 BRHBA Parade of Homes is just around the corner. This is a great time to get out and see what’s going on in the new home market in the area and to learn more about the latest trends and construction practices.  Energy efficiency continues to be a driving factor with potentional new home buyers. I’ve always believed that understanding the new home market really helps gain insight into the overall market. There’s no better way to understand what’s happening than to go out and see for yourself.

Piedmont Realty and Construction has now completed their first entry for this year’s parade. This home is located in Spring Creek. If you can’t wait, it’s open now Tuesday-Sunday 11-5. Otherwise, the parade is October 1st and 2nd/8th and 9th this year. I’ll post more information here as it is available.

Here’s a blog where Piedmont shared construction progress, floor plans, and final photography of this new one level plan. Feel free to contact me for a private showing or a conversation about the Charlottesville area real estate market.

The Fairview.

Model Home Now Open Tues-Sun 11-5

I visited Avinity and Belvedere today and took a quick video to show the progress of the Piedmont Realty and Construction town home offering in both communities.  These two communities both offer the opportunity to live in an Earth Friendly Piedmont town home.

In the last video, we discussed the structure and how it was insulated. In this video, we talk about what I like to think of as the “engine” of the home.  Piedmont has partnered with Trane for their HVAC equipment. Very important.

The conversation regarding energy efficiency and how to improve the Piedmont Realty and Construction  “Earth Friendly” home is on going. Since Piedmont launched in 2009, their offering has improved along the way. (That’s one of the things I like most about working with Piedmont. They are constantly looking to innovate and improve their standard specifications.) Drew Holzwarth and I have made a series of videos to try and explain some of the core components they use to create an energy efficient home.

Here’s Part 1.

Please note. The term “Earth Friendly” is trademarked by Piedmont Realty and Construction as their branding for the way they achieve energy efficiency in the homes they build.

It was 2007 when a few of our local area home builders started utilizing new building sciences to achieve energy efficiency. Lots of different materials and methods were being tried and there was definitely a learning curve.

Regardless of the methods at the time, I was impressed immediately. I can remember spending winter mornings in my home built in 2003 and afternoons in one of these brand new energy efficient homes. The difference was maddening. I wanted to tear down my 4 year old home.  My home felt drafty and uncomfortable by comparison. This was before there was any real data regarding energy cost savings.

Fast forward to 2010, and I finally got my new energy efficient home. Living  in this home since September, I have now experienced Fall to Winter to Spring.  I am constantly looking for ways to share what it is really like to live in a home built this way.

The analogy that comes to mind is from the auto industry. I am interested in energy efficient cars too. We own a VW TDI (Clean Diesel). The best way to describe this 40MPG avg vehicle is that it sips gasoline. Hybrid is the other new car technology and by far more well known. I test drove a Prius for 24 hours last month. This car achieves 50MPG by switching between battery power and gas. What I didn’t realize was how it operated in start and stop and slower speeds. Sitting at a stop sign, the car simply does not run. It is the savings from not using any gas at all that brings the MPG way up.

Now back to the “Earth Friendly” home.  I was reminded of the Prius over the last couple of months. When discussing the Earth Friendly home, we always start with the way the home is insulated. The structure is foamed in to “seal the envelope.” I’ve heard it described  as building an igloo cooler. When the home is heated, it holds the warmth longer. When the home is cooled, it has the same effect. In the Spring and Fall in the area, we have warm days and cool nights. Not unlike a Prius at a stop sign, this is when the savings start to add up. We turned our heat off after the first few above 70 degree days. With warm days and cool nights, I noticed our HVAC was not running at all. Over night, the home held its heat acquired during the day.  Essentially, for the past two months this home as pretty much held a range from 68-72 with virtually no support from the HVAC. This is where the savings really start to add up.

I am collecting data on two homes for comparison. More below. I don’t have enough to share the results in their entirety. However, I was so impressed by the early data, I felt compelled to start telling this story.

EARTH FRIENDLY HOME A: Built 2010, 3400 finished sq ft, Two zone Trane HVAC, (Zone 1 gas furnace), tankless gas water heater. This home also has a finished space over the detached garage with its own electric HVAC system not run full time.

NON-EARTH FRIENDLY HOME B: Built 2000, 2995 finished sq ft, one zone electric HVAC system, traditional electric water heater.

Since there is gas involved in one of these homes and not the other, we will look at the winter months when more data is available on the cost of the gas consumption.

HOME A electric bill March $115, April $98 for a total of $213.

HOME  B electric bill March $200, April $180 for a total of $380.

More to follow.  Feel free to contact me to discuss any of this in greater detail.

Just a little past their two year anniversary, Piedmont Realty and Construction is expanding their offering.  This is consistent with why I think they have been successful.  Drew Holzwarth continues to innovate and stay relevant.  More on the new offering in a moment.

Tracking new home sales in the area, I see Piedmont continuing to grow their market share.  One reason is innovation. Piedmont is constantly trying to improve their offering. The latest innovation? Every Earth Friendly Piedmont home now comes standard with a Trane hybridHVAC system. This is remarkable and going to save their owners thousands of dollars over the life of the home.  Other 2011 improvements include quiet close cabinet doors, new double hung low-E windows, and tank-less water heaters.

Another reason for their continued success is finding segments of the market under served and customizing an offering that adds value to that segment of the market. I refer to this as staying relevant. Even after two years, I find myself impressed by the depth of experience that allows them to stay relevant.

This brings me to the topic of this post. Piedmont Realty and Construction is developing and introducing what will be known as their Estate Series of homes. Starting with the Keswick (tour below), Piedmont is now serving the $800k-$1.5M range by offering custom homes in Albemarle County communities like Glenmore, Ragged Mountain Farm, South Ivy Estates, and Old Trail. With two homes over $1M currently under construction in Old Trail, Piedmont is proving their capabilities once again in this new price range.

Check out The Keswick.

I’ve always believed having a solid understanding of the new construction market was vital to understanding the over all market.  One can capture important insights into marketplace demand and trends from following new developements, builders, and even meeting people working a model home. I’ve compiled some data on what occurred this past year in the Charlottesville Area and will share as Part 1 of an over all analysis of the new home market. All data is as reported to the CAAR MLS. While this data is accurate enough to tell the story, historically all new home sales are not reported to the MLS.

The Top 5 – Community Sales – Albemarle

1. Pavilions at Pantops -51
2. Old Trail-47
3. Belvedere-29
4. Montgomery Ridge-14
5. Liberty Hall-12

There are a  few things that are interesting to me when looking at the list of communities and where the sales occurred.  The Pavilions at Pantops represents the majority of attached housing sold and benefitted greatly from its location, price point, and the first time homebuyer tax credit.  However, it is important to note that detached home sales exceeded attached home sales in 2010. This was not the case in 2009. Attached sales in Albemarle dropped from 131 to 108.  In they city the year over year change was 33 in 2009 to 7 in 2010. Significant change. Detached  new home sales were up 64% in Albemarle. (Up from 75 in 2009 to 123 in 2010)

Overall, Albemarle and Greene saw increases in new home sales, while Fluvanna and Charlottesville saw a decline. Here are the top sellers in each of the following localities:

1. Charlottesville : Rock Creek Village 20
2. Fluvanna: Sycamore Square 31
3. Louisa: Spring Creek 20
4. Greene: Greenecroft 12 and Holly Hill 11

Another interesting development was the pace of new home sales in Montgomery Ridge. This is a roughly 60 home community of half acre lots with sidewalks and cul de sacs in the 29N corrider. You have to go to Crozet to find a comparable lot size and value to serve this segment of the market. These 14 sales ranged from the mid $400′s to the high $600′s.  My theory for the sales here is that the builders, led by Piedmont Realty and Construction, were able to adjust there offering to fit the market demand and look better than the resale options on the market.  The opportunity to customize the home and energy efficiency were major considerations.

Old Trail was also a top story of 2010 with 47 sales ranging from the mid $200′s with townhomes, detached homes starting just under $300k, and larger lots for homes in the $500k+ range. A wide range of home types and prices is one consideration, but I think the real story was the arrival of some more infrastructure of the master plan of the community. The golf course has been there, but the pool and towncenter pushed it over the top. People can very easily get a feel for what  this major development might feel like long term. Add the gorgeous environment, more commercial development anchored by Harris Teeter, fabulous public school reputations at all three levels, and lack of development elsewhere in the county, Crozet became attractive to even folks commuting up 29N for NGIC and DIA positions.

Another community I’ve had a relationship with since its inception is Belvedere. Belvedere had a better year than I think most would have predicted.  Still in its infancy in regards to community and master plan infrastructure, zoning that allows legal rental apartments over the garage and green building show that there is demand for this type of community. Energy efficiency is a major trend, and I think all homeowners should be evaluating their homes and considering improvements in this area. Most are amazed at the difference in comfort and cost to operate. However, all trends aside, its the central location of Belvedere that will make it successful at the end of the day.

There are many ways to slice and dice the data. If you are interested in more analysis of the new home market, feel free to contact me. I really enjoy getting to work in the new home market and my relationships with the local builders, developers and trades.  If you are considering a new home purchase, my expertise is helping buyers understand the new home landscape, evaluate their choices, and find the best builder “fit” to get the home they want.

Looking ahead, I’ll share some information on which builders were the most active in our market in 2010 and after that, I’ll outline what’s on the horizon for 2011.