INFORMATION

Below: Larry Mayer pictured at a new home build he is consulting to maximize energy efficiency and its ultimate "comfort factor." Facing page: A home Solution Design, Inc., assisted in building in 2013 that employs high performance features and functions.

Home Sale Demonstrates Untapped Profit Potential by Mark Puppe, Communications & Public Affairs Strategist

Coronavirus has put people in their homes where they have come to understand the need to have a healthy home. Cost has always been important, but previously unnoticed deficiencies have become high priorities and motivated homeowners to find ways to correct and prevent them. They have learned about the intricacies influencing how their home functions and whether they are comfortable within it.

Energy engineer Larry Mayer commits his business, Solution Design, Inc., to helping home builders construct and buyers select the healthiest and most energy-efficient homes possible. The result is a high-performance home that applies design, materials, building systems and site orientation to conserve nonrenewable fuels.

A buyer’s willingness to spend more to build a high-performance home stems from the value they directly receive. Mayer highlights one shining example of return on investment in the recent sale of a local home built to these standards: it sold for an 8 percent premium above neighboring homes after only ten days on the market.

Another owner who spent the extra cash to build a 4,500-sq.-ft. home is delighted to pay only $30 per month to heat it during the winter. Go a step further and high-performance homeowners reap the intangible rewards of improved health and what Mayer calls “platinum comfort.”

Building these homes requires builders to step outside their own comfort zone by adjusting their homebuilding priorities, making waterproofing their top priority followed by the insulation envelope and then airtightness. He realizes this is an untraditional perspective but so are the homes his clients build and contemporary buyers want.

Regulators mandate energy savings using rules that can increase cost, but Mayer says that paying the greater upfront cost to build a highperformance home pays off.

“Homeowners will pay even more to equalize their home with Mother Nature because Mother Nature does not cut corners trying remove energy from your house. Cutting corners can be tempting, but always creates problems that are even more expensive to correct,” he says.

High performance homes are somewhat novel in the Fargo-MoorheadWest Fargo landscape, but common elsewhere. For instance, there are 150 certified in our metro area of 250,000 people; a density of 1 highperformance home per 1,670 people. Whereas the Twin Cities metro area has roughly 30,000 high-performance homes and 3.6 million people; a density of 1 per 120 people.

Despite these statistics, Mayer says local communities are plush with opportunity.

He says, “Builders just need to school up on how to present the advantages, costs, cost savings and talk about the comfort and wellness of these homes, and the market will grow.”

So, what can builders expect when entering the high-performancehome market? A generation of customers that wants comfort and energy efficiency and is willing to pay more for a home that provides them. However, mastery of traditional homebuilding does not mean builders know how to answer the unique questions younger buyers will ask. Solution Designs facilitates “schooling up” by offering classes to ensure all stakeholders understand the unique processes, terms and priorities necessary for successful high-performance construction.

Builders must be willing to work as partner because building to the customer’s expectations requires the lender, appraiser, real estate agents and contractors to communicate actively with each other and be understood as intended. These partnerships might be challenging but they cultivate confidence and satisfaction in customers who will more readily and extensively invest because the builder has proven to be focused on the customer’s wants and expectations.

Traditional homebuilding is profitable for many but building highperformance homes increases profit potential, just ask the less than ten contractors currently building them locally.

When a prospective home buyer is given the option of a high performance home and super comfort, it is chosen over 80 percent of the time.

LARRY MAYER

STATE ADVOCACY UPDATE

KIM SCHNEIDER, NORTH DAKOTA ASSOCIATION OF BUILDERS CEO Need A Career Change? Consider Support Is Available To Launch A Career - Resources are available to Residential Construction help individuals interested in pursuing a rewarding career in the residential The spread of COVID-19 this year led to economic hardship and skyrocketing job construction industry. North Dakota losses across multiple industries nationwide. However, the latest employment data Association of Builders and any one of showed some good news — a decline in the unemployment rate and job gains in the six local associations have members several sectors as the nation reopens. who are ready to act as mentors, If you or someone you know is looking for a job change this year, don’t overlook their career path and help answer any a potential career in construction. Residential construction is poised to help lead questions. the economic recovery. Low interest rates and pent-up demand for homes places Supporting The Economy - The construction industry is critical to the economic

2020 Board of Directors

share their personal stories of choosing residential construction in a position to recover more quickly than other sectors of the Competitive Compensation - The economy. Here are a few of the several reasons to consider a rewarding career in homebuilding industry offers competitive residential construction. compensation. The top 25 percent in most construction trades professions Staying Safe On The Job Site - The health and safety of construction workers is can earn at least $60,000 annually. always a top priority in the residential construction industry. Employers are dedicated The gender pay gap is smaller in the to preventing worker exposure to coronavirus and educating employees on what construction trades. On average, women protective measures can be taken on the job site. The use of personal protective in the United States earn 80 cents for equipment is common on the job site as well as established cleaning and disinfecting every dollar a man earns. Women in the procedures outlined by the Occupational Safety and Health Administration. construction industry earn 97 cents for success of our area and has positive national economic impacts, generating jobs The construction field is one the best in industries such as manufacturing and engineering. A healthy economy relies on industries to work in. We strongly homebuilding, especially when that economy is in recovery. As a member of the encourage our youth and anyone residential construction industry, you’ll be contributing to the economic success of interested in making a career change your community. to learn more about these great

every dollar a man earns. opportunities.

President Nate Applegren

First Vice President Phil Risbrudt

Second Vice President Mike Jangula

Treasurer Tom Spaeth

Secretary Jeff Sattler

Directors

JoAnn Callahan Pat Graner Darrick Guthmiller Joe Hillerson Kim Hochhalter Shane Lider Greg Meidinger Ben Olin Scott Persoon David Reid Aaron Rosten Jim Sandbeck Steve Schwab Jeremy Stahowiak

Immediate Past President

Bob Horab

Senior Life Delegates Ralph Applegren Bruce Walker

Life Delegates Don Dabbert, Jr. Jason Eid John Gunkelman Tyrone Leslie Dan Lindquist Tim Rosencrans Joe Stenvold

North Dakota Association of Builders

1701 Burnt Boat Dr Ste 201 Bismarck, ND 58503 (701) 222-2401 • kim@ndbuild.com

Represent the professional building industry through legislation, information and education.

NATIONAL UPDATE

Average New Home Price Now $16K Higher Due To Lumber

Aug. 22, 2020 - NAHB Now - The recent spike in softwood lumber prices has caused the price of an average new single-family home to increase by $16,148 since April 17, according to NAHB standard estimates of lumber used to build the average home. Similarly, the market value of the average new multifamily home has increased by $6,107 over the same period due to the surge in lumber prices.

According to Random Lengths, as of Aug. 21 the price of framing lumber topped $800 per thousand board feet — a 130 percent increase since mid-April.

NAHB calculated these average home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs. Included is any softwood used in structural framing (including beams, joists, headers, rafters and trusses), sheathing, flooring and underlayment, interior wall and ceiling finishing, cabinets, doors, windows, roofing, siding, soffit and fascia, and exterior features such as garages, porches, decks, railing, fences and landscape walls.

The softwood products considered include lumber of various dimensions (including any that may be appearance grade or pressure treated for outdoor use), plywood, OSB, particleboard, fiberboard, shakes and shingles — in short, any of the products sold by U.S. sawmills and tracked on a weekly basis by Random Lengths.

At the prices reported by Random Lengths on April 17, 2020, the total cost to a builder for all the lumber and lumber-related products described above was $16,927 for the products in an average single-family home, and $5,940 for the products in an average multifamily home.

available at nahb.org.

1201 15th St NW, Washington, DC 20005 (800) 368-5242 • nahb.org • info@nahb.org But by the time Random Lengths reported prices on Aug. 21, the cost to builders had risen to $30,470 for the softwood lumber products in an average single-family home, and $11,061 for the products in an average multifamily home. This is a $13,543 (80 percent) and $5,122 (86 percent) increase respectively, in only four months.

The price of the home to the ultimate buyer has gone up by even somewhat more than this, due to factors such as interest on construction loans, brokers’ fees, and margins required to attract capital to residential construction and get construction loans underwritten. For items such as lumber that are purchased and used throughout the construction process, NAHB has estimated that the buyer’s price will increase by an additional 19.2 percent.

The bottom line is that the spike in lumber prices that occurred between April 17 and Aug. 21 caused the price of an average new single-family home to increase by $16,148, and the market value of an average new multifamily

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National Association of Home Builders

home to increase by $6,107.