Short Sales Have More Favorable Impact on Home Prices

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Every time a bank makes a home loan, it creates a positive domino effect within local economies.  Builders, architects, roofers, plumbers, furniture retailers and other companies reap the benefits as homebuyers spend their dollars.  But today, these new home loans are no longer happening at the rate they should be.  Homeowners are generally staying put and many owe more on their homes than they are worth.  When they need or want to move, they’re finding they would have to bring thousands of dollars in cash to the closing.  Most cannot afford it, so they continue to wait out the economy and hope home values will eventually recover.

Economists predicting home values will not return to their pre-2007 levels anytime in the next decade.  That’s a long time to wait.  This stagnation in new home loans and home-related transactions negatively impacts the economy.  Homes need to be revalued at more appropriate levels so that families can move now and new homes can be built.

The value of a home drops by 1 percent, on average, if it is within 250 feet of a foreclosed home.  This happens for multiple reasons.  If you live near a foreclosed home, it may not be maintained and diminishes the appearance of the neighborhood reducing real estate value.  Secondly, even without visible deterioration, such homes, when sold quickly for a discount, can affect neighborhood values because homebuyers and real estate brokers look at comparable sales when making an offer or listing a home.

The best way to get home revalued appropriately and back on the market is if upside-down homeowners understand the value of negotiating a short sale.  A short sale occurs when the lender agrees to the sale of a home for an amount less than the outstanding mortgage balance.  The sale is short of the payoff.

The lender’s approval is required because it has a lien on the property that must be released to allow for the transfer to the buyer.

In a regular sale, the mortgage would be paid in full and the lien would be released, but in a short sale, there isn’t enough money to pay off the mortgage, therefore approval from the lender must be received in order to release the lien short of the full payoff.  Legal counsel can advise homeowners on their liability for the difference between the payoff and negotiated amount, as well as credit and tax consequences.

Short sales benefit the economy because they help maintain home values as high as possible.  They also free homeowners to make buying and selling decisions for their individual circumstances.

The overall impact is that homeowners who do short sales are incrementally increasing activity in new-home building and loans, helping to revalue area homes, and keeping money local and not on Wall Street.

 

 

Home Sales are Expected To Accelerate In The Coming Months

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The National Association of Realtors® (NAR) is reporting pending home sales rose strongly in October with mixed regional results.  The Pending Homes Sales Index (PHSI), a forward-looking indicator based on contract signings, increased 5.2 percent in October.  The data reflect contracts but not closings.

Lawrence Yun, NAR chief economist, said buyers are responding to favorable market conditions.  “We have had very good housing affordability conditions for some time, but we’re seeing more from rising consumer confidence about home buying now that home prices have turned positive,” he explained.

Pending home sales are the highest level since March 2007.  Contract activity surged in the Midwest and is showing healthy gains in the South, but was down slightly in both the Northeast and West.  The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market.  All regions are up from a year ago, with double-digit gains in every regions but the West.

The recent PHSI release suggests that home sales should accelerate in November and December.  Since home sales are considered pending when the contract is signed, but the transaction has not yet closed, the PHSI is considered a leading indicator of home sales.

What Does “Stabilized Attic Application” Mean?

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Stabilizing cellulose insulation in an attic is the process of applying the insulation at a density which limits settling to less than 5%.  Stabilizing an attic requires more than installing a cellulose product labeled “Stabilized.”  A stabilized product must contain a dry adhesive and you must add water during the installation process. Most manufacturers suggest six pounds (approximately 3 quarts) of water to a 30 lb. bag of stabilized cellulose insulation material.  However, it is important to note that you should always check with the manufacturer for the recommended ratio of material to water as this will vary from manufacturer to manufacturer.

It is essential to understand the difference between stabilized cellulose products and dry-blown loose-fill products.  These two products are governed by different standards.  Stabilized products must be tested to ASTM C1497 (Standard Specification for Cellulosic Fiber Stabilized Thermal Insulation) and loose-fill products must be tested to ASTM C739 (Specification for Cellulosic Fiber Loose-Fill Thermal Insulation).  The other important difference is the two products have completely different cover charts that are not interchangeable. Continue reading →

Test Your Knowledge Answers:

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  1. Which of the following ASTM Test is required for all loose-fill cellulose insulation?

     b. ASTM C-739

The standard for loose-fill is ASTM C-739, which provides test for R-Value, odor, moisture vapor absorption, and fungi resistance, as well as critical radian flux,  smoldering, combustion, corrosiveness, and settled density.

2.  When building a blocking device around heat-producing fixtures, the clearance around these fixtures must be a minimum of:

       b. 3 inches

 Blocking should be permanently placed so as to keep insulation a minimum of three inches away from all sides of recessed lighting fixtures and other heat- producing devises.

3.  Which of the following products is not an approved material for blocking the soffit/top plate area of the roof and wall system?

       c. Plastic (any type)

 The following materials are approved materials for blocking soffit/top plate area of the roof and wall system:  1) windblock product or moisture resistant     cardboard installed to the outside edge of the top plate, 2) batt insulation with the paper facing the outside soffit, 3) anchored foam board.

4.  Heat is moved by what method?

       d. All the above

 Buildings respond to three types of heat transfer-conduction, convection and radiation.  Conduction occurs by direct contact.  Convection is heat transfer that occurs when a substance is in a gaseous state.  Radiation is the type of heat transfer that you cannot see but can feel.

5.  The installer must provide a signed and dated statement describing the insulation installed and stating:

      e. All the above

 The FTC Rule 16 CFR 460 required the insulation contractor to provide a signed and dated statement describing the insulation installed, stating the thickness, coverage area, R-Value and number of bags used.

Test Your Knowledge

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1. Which of the following ASTM Tests is required for all loose-fill cellulose insulation?

a. ASTM C-1149

b. ASTM C-739

c. ASTM C-764

 

2. When building a blocking device around heat producing fixtures, the clearance around these fixtures must be a minimum of:

a. 2 inches

b. 3 inches

c. 4 inches

 

3. Which of the following products is not an approved material for blocking the soffit/top plate area of the roof and wall system?

a. Wind blocks or water resistant cardboard

b. Batt material

c. Plastic (any type)

 

4. Heat is moved by what method?

a. Conduction

b. Convection

c. Radiation

d. All the above

 

5.  The installer must provide a signed and dated statement describing the insulation installed and stating:

a. Thickness

b. Coverage area

c. R-Value

d. Number of bags used

e.  All the above

 

These questions were taken from our Contractor Certification Exam.  Answers will be given in our next post. If you have not yet taken the exam, we encourage you to do so.

Optimum Value Engineering and Cellulose Insulation

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Building experts have performed considerable research on ways to reduce the amount of framing in our homes.  The U.S. Forestry Products Association and other organizations have devised a framing system using Optimum Value Engineering (O.V.E.) that reduces unnecessary framing, yet maintains structural integrity.  The goals of O.V.E. are to:

Reduce framing time and lower construction costs

Save on increasingly scarce dimensional framing lumber

Increase energy efficiency allowing more space for insulation and reducing annual energy costs Continue reading →

Drill & Fill Application Procedure for Cellulose Insulation

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With the winter months rapidly approaching, many homeowners are beginning to worry about their upcoming heating costs.  We all know adding insulation to the attic can reduce your utility bill.  However, homeowners may not be aware that additional insulation may be added to existing walls by using cellulose insulation with the drill and fill method, saving them money month after month.

If you are providing this service, or are not sure about the proper installation procedures, we offer the following guidance.

We recommend using the “tubing” method for drill and fill applications.  This will require the following equipment and accessories:

  • Clear, flexible, vinyl hose- 1 ½” diameter, 10 ft. long
  • 2” plugs
  • Drill and 2” hole saw

Mark the vinyl hose in 12” intervals and cut end of hose on bias.  Carefully remove siding 18-24” above the base plate.  Drill a 2” hole in the center of each wall cavity.  Then insert tubing until you hit the top of the wall.  Retract the hose approximately 12” and turn your machine on.  Adjust machine settings according to manufacturer’s recommendations.  Begin filling the cavity.  The material will begin to slow as the cavity becomes full.  When the material slows, bring the tube down another 12”.  Continue this process until the cavity is filled at the hole and repeat the process on each cavity.  Once all cavities are filled, plug holes and replace siding.

Cellulose insulation installed in existing walls is a very cost effective way to save money on monthly heating costs.

 

 

NAHB FALL CONSTRUCTION FORECAST

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Sparked by rising home prices across much of the nation, the housing recovery is now under way, but fiscal uncertainties and other challenges could result in a bumpy ride in the coming months, according to economists participating in the National Association of Home Builders (NAHB) webinar on the construction and economic outlook.

“We’re seeing a more robust housing sector than many other parts of the economy,” said NAHB Chief Economists David Crowe.  “One of the reasons is we have finally begun to see on a national scale that house prices are picking up again.”

Crow cited a number of other factors that are carrying the housing momentum forward.  These include:

• Pent-up household formations

• Rising consumer confidence

• Increasing builder confidence in all three legs of the industry: remodeling, multifamily and single-family construction

• Growing rental demand

However, Crowe offered several cautionary factors that continue to put a drag on housing activity at this time–including builders who are experiencing difficulties in obtaining production credit, qualified buyers who are unable to obtain mortgage loans, inaccurate appraisals, seriously delinquent mortgages that are at least 90 days late or in foreclosure, and limited inventory of developed lots in certain markets. Continue reading →

October is National Energy Action Month

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October is Energy Awareness Month, a time to think about what you can do to reduce your energy use.  Wise energy attitudes, behaviors, and organizational decision can ensure results. Take the time to review your daily routine to conserve energy, empower others to take action and join together to save energy and money.

How We Use Energy in Our Homes:

Space Heating – 31%                                    Computers & Electronics – 9%

Space Cooling –  12%                                    Appliances – 9%

Water Heating – 12%                                    Refrigeration – 8%

Lighting 11%                                                  Other-8%

Don’t know where to begin?  Here are a few simple tips that can save you money month after month.

•  Check the insulation levels in your attic, exterior and basement walls, ceilings, floors, and crawl spaces.

•  Turn the temperature of your hot water heater to 120o F.

•  Purchase an insulating blanket for your water heater.

•  Make sure you appliances and heating and cooling systems are properly maintained.

•  Check for open fireplace dampers.

•  Turn off the lights in unoccupied rooms.

•  Turn off computer monitors.

•  Install a programmable thermostat.

For a complete Home Energy Checklist, visit the U.S. Department of Energy’s website.

The “SATAC” System

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Commercial building spray is an ideal way to expand your insulation business.  With the slowing of the housing industry and the recent boom in the construction of commercial buildings, you may want to explore this opportunity.

FTI’s “SATAC” Building Insulation System consists of “SATAC” (Spray Applied Thermal Acoustical Cellulose Insulation) Building Insulation and Encotec Adhesives.  These products are highly recommended for commercial building applications.

“SATAC” is available in a variety of colors and  coupled with our Encotec Adhesives creates an attractive, seamless and energy efficient finish.  The “SATAC” System forms a monolithic seal, which significantly decreases the chance of moisture development and is effective in controlling a building’s gain or loss of heat.  It also creates a sound barrier by sealing off potential sound transmission points. Continue reading →