Thursday, August 21, 2014

New Home Starts Top One Million - Finally

U.S. home construction rebounded in July, rising to an eight-month high and offering hope that housing has regained momentum after two months of declines.

Construction increased 15.7 percent in July to a seasonally adjusted annual rate of 1.09 million homes, the Commerce Department reported Tuesday. That was the fastest pace since November and followed declines of 4 percent in June and 7.4 percent in May.

Applications for building permits, considered a good sign of future activity, also showed strength in July, advancing 8.1 percent to an annual rate of 1.05 million, after declines of 3.1 percent in June and 5.1 percent in May.

The July rebound reflected strength in single-family home construction, which rose 8.3 percent, and in apartment construction, which was up 33 percent.

The strength in July was led by a 44 percent rise in construction starts in the Northeast. Housing construction was up 29 percent in the South, recovering from a 26.8 percent plunge the month before blamed in part on heavy rains in that part of the country. Sales rose 18.6 percent in the West but fell 24.8 percent in the Midwest.

Wednesday, August 20, 2014

Modular Industry Could Lead the Charge to Safer Housing

Steve Conboy, the CEO of Eco Building Products, has been championing building safer homes with his "RED" lumber and Disaster Break coatings. Modular home factories are already starting to embrace it for it's fire, water, mold and infestation proofing and now Home Depot has joined the growing army of 'red' believers.

For all you firefighters out there, this is the product that will help keep you safer than sprinklers and modular homes are already building with it. Enjoy the video.

Tuesday, August 19, 2014

Investment Groups Buy Controlling Interest in Guerdon Industries

A Portland private-equity firm has bought controlling share of Guerdon Enterprises, a Boise modular-building maker.

Riverlake Partners was joined in its investment by MainStreet Capital Corp. of Houston. The price was not disclosed.

Guerdon specializes in building components and providing assembly services for large modular buildings, including multifamily housing. Guerdon focuses on Western U.S. and Canadian markets. The company, founded in 2001, has more than 300 employees and reported more than $80 million in sales in 2013.

CEO Laurence "Lad" Dawson, who bought Guerdon's southeast Boise factory in 2001 from his former employer, will continue as CEO and remain a substantial shareholder. Leaders from Riverlake and Main Street Capital will gain seats on the company’s board of directors.

“We’ve enjoyed strong growth during the past several years, and we look forward to working with a new equity partner offering expanded opportunities to support our future growth plans and strategies,” Dawson said. Riverlake Partners invests in companies typically valued between $20 and $75 million that are located in the Pacific Northwest of the U.S. and Canada.

“From the beginning, we were impressed with Mr. Dawson, his management team and the company as a whole,” said Erik Krieger, a partner at Riverlake. “Guerdon is the type of high-quality organization we strive to partner with, and we’re looking forward to helping achieve the company’s future objectives.”

Guerdon struggled when the housing crisis hit in 2007 but recovered thanks to the surging oil industry in North Dakota, which needed quickly constructed buildings for worker camps. 

Stick Builders Have Hard Time Matching Insulation Qualities of Modular Construction

I just received this email from Harris Woodward, owner of Finish Werks in Savage, MD who builds some of the best High Performance modular homes in the country. His email speaks for itself.

This is a monthly report that comes from ICF – the contractor that administers Maryland’s Builder Rewards program (regulated by the Public Service Commission from utility company grants) that pays out up to $1600 for Energy Star rated homes.

My point is this: when you look at the photos you can tell right away this substandard insulation installation does not happen in modular. With indoor, line-production controls, installing insulation is almost always “Class I”. Stick builders have a problem on their hands because the insulation subs are cutting corners and the other trades and not talking to the insulation team.

In modular home building, given the close proximity of each trade to the other, these challenges just don’t happen. If there is an issue with compressing insulation, one man simply walks down the assembly line to discuss the solution with the other guy.

Problem solved.

Another reason to go modular.

BTW,                             is a senior consultant at ICFI. He comes to me occasionally on building science advice so that he can council Ryan Homes and other regional builders how to tighten up their homes cost effectively. I’m not making this up!... and yet these stick builders continue to try and hit IECC 2012 one Stick at a time. Good grief.


W. Harris Woodward
Member, Master CGP

Monday, August 18, 2014

Another Reason to Build Modular

From the Halifax Herald News in Nova Scotia, Canada, fire crews responded to a blaze on Saturday night after neighbours reported hearing a loud boom at a duplex under construction.

It didn’t take long for firefighters to arrive at 11 Armshore Dr., just up from the Armdale rotary. Six units with 22 firefighters attended the scene. There were no injuries.

“Crews attacked and quickly knocked it down within 10 minutes,” said Pat Kline, a division commander with the fire service. Kline said the fire was located on the second floor of the structure.

Halifax Fire investigators have finished working at the scene, but had not made a final determination on the cause as of Sunday morning.

A cinder block fire wall helped contain the flames to the right side of the three-storey building. The floor of the third storey had burned through and partially collapsed in the back, as had the stairs to the third floor.

Kline said an investigation would look at the cause of the fire. Although neighbours said construction crews at the site worked with compressed air, Kline said there didn’t appear to be any kind of tanks when firefighters arrived.

Here is why modular construction might have saved the day:

“There’s some reports that there might have been people in the building, like just kids using it as a fort,” he said. “It’s been under construction so it’s been wide open.”

A passerby Sunday morning said the property had been under construction for close to a year.

Proposed "Affordable" Housing Fee is Worst Idea Yet

Affordable housing is a laudable public policy goal, of benefit to the whole community. But, who pays for it?

Santa Cruz County, California is considering a major building permit fee increase in order to fund its Affordable/Inclusionary Housing Program. The current shortfall is due to the loss of redevelopment funds since 2011. The county hired Keyser Marston Associates to provide an Affordable Housing Program Analysis. This report includes recommendations on how to raise funds to implement the program.

Their main proposal is a new $15-per-square-foot fee on all new home construction and remodel addition projects. This proposed fee is to be added to current building permit fees, which are already sky high.

If approved, the cost to permit a modest new home of 2,000 square feet increases by $30,000. A simple 500 square foot addition will cost an additional $7,500. With fee increases like these, many homeowners may simply choose not to build.

This fee may also lead to an increase in nonpermitted and undocumented work, which often results in poor construction and hazardous buildings. Unpermitted work reduces legitimate building permit income to the county while increasing the cost of code enforcement.

The proposed fee will place the burden of cost for the countywide affordable housing solution squarely on the shoulders of those residents who wish to add needed space to their home, build an accessory dwelling or build a new home.

Saturday, August 16, 2014

China Moving Faster into the Prefab Housing Market in the Americas

Suriname has entered into an agreement with China to produce prefabricated homes for export to South America and the Caribbean.

The financial details of the accord was not disclosed, but Foreign Affairs Minister Winston Lackin signed declarations of intent with the Chinese ambassador Yang Zigang and He Baoxiang, vice governor of the Hunan province, regarding the construction of the plant and the supply of houses.

Lackin said the operation will make it possible for more people in Suriname to own a home.

“There will be houses in different price ranges, from low income, mid class to large. This will satisfy the people who want to own their own home,” he said.

The vice governor of the Hunan province said the Smalkalden operation should become the center from which his province will penetrate the Caribbean and South America markets.

If we are not careful, China will begin making inroads into both the prefab and modular housing industries in the US market and expect them to be more like an on-frame modular which is an easier market for them to exploit.

“We will be coming in with companies and technology to help develop the economy here further,” he added.

Director at the Ministry of Public Works, Anwar Hassankhan, said the company, Broad Homes Industrial International Co, will produce between 2,000 and 2,500 prefab homes monthly. He said it should begin operations early next year.

Hassankhan said the deal presented a win-win situation for Suriname, hinting that Suriname is providing the land while Beijing is providing the investment.

They will not be sending for Chinese products, but they have decided to set up a plant here that will be using local products. In addition they will be employing local people and supply Suriname with affordable homes,” Hassankhan said, noting that while the homes will be sold on the local market, the intention is also to export to the region.