Chuck's Blog

Return to "sound mortgage standards"

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Thu, 17 Jul 2008 23:54:34 -0500

As a Builder, I am extremely interested in the current debate about the home building and mortgage finance industry. One comment I have heard repeatedly over the past several weeks is the need to return to "sound mortgage standards" based on home values of 2.5 to 3 times income, 30 year fixed rate mortgages at 80% loan-to-value and a 20% down payment. But just how realistic is this?

According to the U. S. Department of Housing and Urban Development, the median household income in the U.S. in 2007 was $59,000. If we return to sound mortgage standards, median home values would have to be $147,500 (2.5x) to $177,000 (3x).

So under "sound mortgage standards," a household earning the median income would have to save $29,500 (2.5x) to $35,400 (3x) - 50% to 58.5% of their annual household income - for their down payment before they could purchase a home. Is this realistic? I did an informal poll of mortgage lenders and found that, home buyers with down payments of 20% or more accounted for approximately 30% of the purchase transactions over the past 12 months and approximately 70% of home buyers purchased their homes with less than 20% down.

According to the U.S. Census Bureau, the median home price in the U.S. is $231,000, so median home prices would have to drop 37% to 48%. Is this realistic? Even those homeowners who purchased their homes using "sound mortgage standards" would owe more than their home is worth.

According to the NAHB / Wells Fargo Housing Opportunity Index, which tracks the sale prices of homes sold in 223 metropolitan statistical areas, there were actually 77 markets in the U.S. where the median home price is less than $147,500 and 107 markets where the median house price is less than $177,000 in the 1^st Quarter of 2008. Those include 23 MSA's in Texas, 13 in Ohio, 12 in Michigan, 11 in Florida, 10 in New York, 7 in Illinois, 7 Pennsylvania, 5 in North Carolina, 4 in South Carolina, 4 in Indiana, 4 in Tennessee, 3 in Georgia, 3 in Arizona, 3 in Oklahoma, 3 in Massachusetts, 2 in Maryland, 1 in West Virginia, 1 in Colorado, 1 in Kansas, 1 in Montana, 1 in Wisconsin, 1 in Washington, 1 in New Jersey, and 1 in Minnesota. And if you want to stay in Idaho, you can move to Pocatello. Of course, there's no guarantee that the median home price in these markets won't rise as more people move there in search of homes with sales prices low enough to allow them to qualify for mortgage under sound mortgage standards.

The Housing Opportunity Index is based on the sales prices of all homes sold in the MSA which includes both existing and new homes. Considering the data on existing and new home sales in the U.S. in the 1^st Quarter of 2008, it is probably safe to assume that most of the homes sold were existing homes.

As a Builder, I would love to be able to build and sell new homes for under $148,000. But is that realistic?

According to the National Association of Home Builders Economics Department Construction Cost Survey, the average new home built in the U.S. in 2007 was 3,340 sq.ft, was built on an 11,968 sq.ft. lot, and had a total sales price of $454,906. At 11,968 sq.ft., that equals a finished lot cost of $9.31 per sq.ft. The finished lot cost was $111,452 and accounted for 24.50% of the Sales Price. The cost of the raw land accounted for 40.8% of the finished lot cost and the development cost accounted for the other 59.2%.

Construction cost was $$218,810 or $65.50 per square foot and accounted for 48.1% of the Sales Price. Labor cost is typically about 20% of the Sales Price or 40% of the Construction Cost so in the average home, the labor cost would be approximately $90,981 which is actually 41.6% of the Construction Cost. According to the U.S. Department of Labor Bureau of Labor Statistics May 2007 National Occupational Employment and Wage Estimates, the median hourly wage for construction occupations was $17.57 plus 21% for payroll taxes and insurance equals $21.25 per hour. So dividing the labor cost by the hourly cost, the number of man hours required to build the average house was approximately 4,000.

The cost of construction financing marketing (2.4%), sales commissions and marketing costs (6.8%), overhead and general expenses (7%), and the builder's profit (11.2%) account for the remaining 27.4%.

According to the U. S. Department of Housing and Urban Development, the median household income in Idaho in 2007 was $51,500. If we return to sound mortgage standards, median home values would have to be $128,750 (2.5x) to $154,500 (3x). If I use the same percentages as the average new home built in the U.S. in 2007 for finished lot cost, I would need to be able to purchase the finished lots for $31,544. The raw land cost at 40.8% would be $12,870 per lot. Assuming a density of 4 dwelling units per acre, the raw land cost would need to be around $51,500 per acre. Is that realistic? Possibly.

In the Boise City - Nampa MSA, finished lot costs start at about $6.50 per sq.ft. Using this cost per sq.ft., the lot size would be approximately 4,850 sq.ft. Is this realistic? There are developments in the area with 4,500 - 5,000 sq.ft. lots, but these will need to become the norm.

However, there are other factors that need to be considered. The cost of materials used in land development, like steel, concrete, pvc pipe, and asphalt continues to increase. As fuel costs continue to increase, so does the cost to operate the equipment used in the construction. Fees also continue to increase as does the time required to obtain the necessary approvals. This added time equates to additional costs. So as development cost increase, something else will have to decrease in order to maintain a finished lot cost of $31,544. Is this realistic? Will land owners be willing to accept less per acre for their raw land? Can the lot size be decreased even more and the density increased?

If I use the same percentages as the average new home built in the U.S. in 2007 for construction cost, my construction cost at 48.1% of the Sales Price would need to be $61,929 and 41.6% of the construction cost or $25,750 would be labor cost. According to the Idaho Department of Labor 2007 Occupational Employment and Wage Report, the median hourly wage for construction trades workers in the Boise City - Nampa MSA $13.85 plus 21% for payroll taxes and insurance equals $16.75 per hour. So dividing the labor cost by the hourly cost, I would have to build the house in 1,010 man hours. Is that realistic? Not very.

Let's look at it another way. Idaho's hourly labor cost at $16.75 per hour is $4.50 or 21% less than the national cost of $21.25. We'll assume material costs are about the same. Adjusting the average per square foot construction cost figure for the difference in the labor cost would give us a per square foot cost of $59.78 ($65.50 x 41.6% x 21% = $5.72 / $65.50 - $5.72 = $59.78). Dividing the construction cost of $61,929 by $59.78 per square foot, the homes I build would be just over 1,036 sq.ft. Is this realistic? How many households do you know who would want to live in a 1,036 sq.ft. home?

In conclusion, how realistic would it be to return to "sound mortgage standards" based on home values of 2.5 to 3 times income, 30 year fixed rate mortgages at 80% loan-to-value and a 20% down payment? Not very. Doing so would certainly change the home building industry which historically accounts for 10% to 15% of the gross domestic product of the U.S. We would build fewer new homes and the ones we do build would be much smaller homes on much smaller lots. And home buyers would certainly have to adjust their expectations.

Maybe I should start building apartments

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

www.chuckmillerconstruction.com

Is This a Crisis? Should We Panic?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 13 Jul 2008 20:08:47 -0500

In my blog on the BuildingCredibility.com website last weekend, I posed the question "Does the Rise in Foreclosures Constitute a Crisis?" Last Monday I responded to a commentor who reported a rumor that IndyMac bank was close to bankruptcy. Based on my research of the facts, I concluded that it was unlikely. While IndyMac did not file bankruptcy, IndyMac Bank, F.S.B., Pasadena, CA was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Conservator on Friday July 11^th. This is the 3^rd largest bank failure in U.S. history. So is this a crisis? Should we panic?

There is a great deal of debate over whether we are currently in a recession. It is commonly accepted that recession cycles are a normal part of living in a world of inexact balances between supply and demand. But what turns a usually mild and short recession into a great depression? I spent some time this past week and most of the day yesterday studying the Great Depression. The exact causes of the Great Depression is also the subject of debate and concern. While scholars have not agreed on the exact causes and their relative importance, the search for causes is closely connected to the question of how to avoid a future depression.

Was the October 29, 1929 stock market crash the cause of the Great Depression? The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.Economists dispute how much weight to give the stock market crash, but it clearly changed sentiment about and expectations of the future, shifting the outlook from very positive to negative, with a dampening effect on investment and entrepreneurship, In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing.

Debt is seen as one of the causes of the Great Depression. In the 1920s, American consumers and businesses relied on cheap credit, the former to purchase consumer goods such as automobiles and furniture and the latter for capital investment to increase production. This fueled strong short-term growth but created consumer and commercial debt. People and businesses who were deeply in debt when price deflation occurred or demand for their product decreased often risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.

As debtors defaulted on debt and depositors became worried about their deposits, worry turned to fear and panic. Panic created runs on banks. As panicked depositors made massive withdrawals from the banks which had financed this debt, banks began to fail. Government guarantees and Federal Reserve banking regulations to prevent these types of panics were either ineffective or not used.

Regarding the closing of IndyMac Bank, here are some excerpts from the Office of Thrift Supervision's Press Release last Friday:

The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMacs viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts. This institution failed today due to a liquidity crisis, OTS Director John Reich said. Although this institution was already in distress, I am troubled by any interference in the regulatory process.

As a result of an OTS examination that began in January 2008, the OTS deemed IndyMac to be in troubled condition. An overwhelming majority of problem institutions are able to successfully modify their operations and business plans, work closely with their regulator and eventually return to a healthy condition. IndyMac had reacted to market conditions and OTS concerns in November 2007 by changing its operations and business plan to build a foundation for recovery. IndyMac was actively seeking to arrange a significant capital infusion or find a buyer. The recent release of the senators letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery.

In addition to studying the Great Depression, I looked up the definition of Crisis. Wikipedia defines a crisis as

· A crucial or decisive point or situation; a turning point.

· An unstable situation, in political, social, economic or military affairs, especially one involving an impending abrupt change.

· A traumatic or stressful change in a person's life.

It says that reactions to a crisis include Fear, Stress, Shock and Disbelief, and Anger, and it describes the crisis response process as having definite phases which include Shock and Disbelief, Denial, Overwhelming Thoughts or Emotions, Acceptance, and Conclusion. After we accept what is happening, we are ready to work through the problems and all of their ramification and impacts on our lives. We are left with a desire to see things to their conclusion.

So does the rise in foreclosures constitute a crisis? The failure of IndyMac Bank, one of the largest bank failures in U.S. history, could certainly be considered a crucial or decisive point or situation; a turning point. I think we would all agree that are current economic situation could be described as unstable. And the rise is foreclosures is surely creating trauma and stress - for those facing foreclosure, for those homeowners who are seeing their property values decline, and for some depositors. So based on the definition of a crisis and after much soul searching, I have moved through the Shock and Disbelief, Denial, and the Overwhelming Thoughts or Emotions phases to Acceptance that this is a crisis.

I also looked up Panic. Wikipedia defines Panic is a sudden fear which dominates or replaces thinking and often affects groups of people.

So should we panic? NO. We should not allow our fear to replace rational thinking. We should simply accept what is happening and start working through the problems. We need to see this crisis through to its conclusion.

That's the primary reason I blog - to present the facts based on my knowledge and experience and encourage my readers to replace the overwhelming thoughts of fear and despair with rational thought based on the facts so we can all start working through the problems to find solutions.

What is the solution? I believe that one solution - possibly the best solution - is to halt the slide in home prices. The U.S. Senate last week passed an extensive package of housing legislation Friday, reacting to the continuing erosion of home prices and growing foreclosures by taking their most aggressive step yet to address the housing crisis. The package includes tax relief for homeowners, changes to the Federal Housing Administration, and a $300 billion program to refinance mortgages headed toward foreclosure into affordable loans. The legislation also overhauls regulation of faltering mortgage-finance firms Fannie Mae and Freddie Mac. The two companies have seen their stock prices drop precipitously this week because of solvency concerns, and lawmakers hope the creation of a new regulator with broader authority over the companies boosts market confidence.

House and Senate lawmakers still need to overcome a number of impediments before President Bush can sign the bill into law, but lawmakers are hopeful they can reconcile competing versions of the bill. The centerpiece for both bills is a program offering up to $300 billion of FHA-insured mortgages to help refinance struggling borrowers into affordable loans. The program would rely on lenders voluntarily writing down the value of a distressed loan for the homeowner to qualify for the new FHA-backed loan, and in return borrowers would have to share future price appreciation with the federal government. Other foreclosure-prevention and housing-related efforts in the Senate bill include $150 million in additional funding for housing counseling, $10 billion in additional mortgage-revenue bonds, and a housing trust fund to be funded by Fannie Mae and Freddie Mac.

The temporary first-time home buyer tax credit and foreclosure relief programs would increase home sales causing inventories to fall and helping to stabilize home prices and mortgage markets.

The National Association of Home Builders continues to lobby for several amendments to be included in the final cut of the bill - particularly a change to make the first-time home buyer tax credit (currently set at $8,000) effective for a full year starting on the date of enactment. Congress must move quickly to craft a final housing bill that will help struggling home owners and get the housing market and the economy back on their feet.

I encourage you to contact your Senators and Congressman and ask them to move quickly to reconcile the two bills and deliver the legislation to President Bush to sign.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

www.chuckmillerconstruction.com

Affordable Condos

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sat, 10 May 2008 17:45:56 -0500

There has been a lot of media focus in the past few months on the historic rise in the price of housing in the United States over the past few years. This rise in price has made housing out of reach for many home buyers. For those who think housing in the United States is unaffordable, consider the following from an article in Thursday's Wall Street Journal titled How to Find Foreign Buyers For U.S. Properties.

Urban real estate in major U.S. cities costs much less than it does in many other industrialized nations. According to the Global Property Guide, an apartment in London costs $28,355 per square meter ($2,637 per square foot), and Paris $15,670 per square meter ($1,457 per square foot). By comparison, according to Chicagocondosonline.com, the median sales price in 2007 for a Chicago condo was only $294 per square foot, which comes to $3,165 per square meter.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

Green Building Program Needs Verifiers

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Fri, 09 May 2008 16:11:40 -0500

As green building grows in notoriety, how can you be assured that your new home or remodel is truly Green. You need to insist that your Builder's or Remodeler's claims are checked by an accredited, third-party certifier.

The Building Contractors Association of Southwestern Idaho (BCASWI) has formed a Green Building Council to encourage builders to adopt the NAHB National Green Building Program which offers innovative, resource-efficient building techniques, while preserving affordability. One key element of NAHB's suite of green building tools is their green home certification program, which is administered by the NAHB Research Center. The Research Center will accredit home certification program verifiers and act as the sole home certifying body for the National Green Building Program.

The NAHB Research Center is seeking interested, qualified individuals to become green building field verifiers the program. As the sole certifying body under the NAHB's National Green Building Program, the Research Center is responsible for training and accrediting eligible individuals to verify that homes across the country meet the criteria of the national certification program.

Verifiers accredited by the NAHB Research Center will, through a process of document review and on-site inspections, independently confirm that all green program requirements and points specified by the Builder or Remodeler are in place before a home is accredited.

If you are interested in becoming a verifier, you must have prerequisite training or experience that provides you a baseline understanding of general home building practices and specific green building knowledge. Specific types of experience that meet this eligibility requirement include:

One year of acceptable professional experience in home building and green building practices (the NAHB Research Center will determine what experience meets the acceptable level), or

At least 12 hours of green training approved by the NAHB Research Center, or

Designation by the NAHB as a Green Building Professional, or

Professional certification from Green Advantage (Green Advantage is a strong supporter of the U.S. Green Building Council and USGBC chapters), or

NARI Green Building Certification from National Association of the Remodelers Industry (NARI), or

RESNET Green Rater Certification, or

LEED Accredited Professional Certification from the U.S. Green Building Council

In order to become accredited by the NAHB Research Center, you must participate in training administered by the Research Center-either in person, via Web cast, or via self-guided online materials-and pass a verifier accreditation test. The course covers the protocol for verifying that a house meets the national certification program requirements and is intended to ensure that all verifiers across the country evaluate homes in a consistent manner. This training does not include developing the green expertise each prospective verifier is expected to have as a prerequisite.

In order for our local Green Building program to work, we need accredited verifiers. If you are interested or know someone who might be interested, you can learn more at http://www.nahbgreen.org/Certification/becomeverifier.aspx. Or you can call the NAHB National Green Building Program Hotline at 877-NAHB-GRN.

If you are a consumer and want to learn more about the NAHB National Green Building Program, you can visit the website www.nahbgreen.org or you can call or email me.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

Can You Guess Which Housing Market the Writer is Writing About?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Mon, 28 Apr 2008 14:04:42 -0500

I read the following article this morning and thought I would try something a little different. I've replaced all the references to the particular housing market and any other key words that might give away the answer with blank spaces. Can you guess which market the writer is writing about? I'll give you the answer at the end of the article.

Chuck

_______________ House Prices Decline the Most in Three Years

April 28 (Bloomberg) -- ____ house prices fell the most in more than three years in April as a dearth of credit and concern that the property slump is deepening deterred prospective homebuyers, Hometrack said.

The average cost of a home in __________________ dropped 0.6 percent, the most since December 2004, to $344,000, the ______-based research company said today in a statement. Prices declined 0.9 percent from a year earlier.

A surge in borrowing costs has prompted banks to withdraw their best mortgage offers, worsening the housing decline. Falling home prices are sapping consumer confidence and held economic growth to the slowest pace since 2005 in the first quarter.

``Weak confidence is effectively resulting in a `buyers strike,''' Richard Donnell, director of research at Hometrack, said in the statement. ``The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence'' that will ``revolve around greater stability in the financial markets and an improved economic outlook.''

The report is based on a survey of 3,500 real estate agents and ___________________ calculating average values using judgments of achievable prices rather than sale prices alone.

Prices fell in all 10 of the regions Hometrack follows. ___________ and ___ _____________ led declines, with a 0.8 percent drop. Prices in _________________, home to one in eight of the ___________ population, fell 0.7 percent. The average time to sell a property was nine weeks, compared with six weeks a year earlier.

Deepening Slump

The findings add to evidence the housing slump is deepening. House prices declined 2.5 percent last month, the most since 1992, according to ___________, the largest ____ mortgage lender. The _______________________________________s' measure of sentiment in the housing market fell to the lowest since records began in 1978.

Prices in _________________ fell 0.4 percent in March, declining for a second month, the _____________ said today in a separate report. On the year, home values increased 3.6 percent, the least since February 2006.

Mortgages approved by banks fell 46 percent in March from a year earlier to the lowest level since 1997, the ____________________ Bankers' Association said April 23. Falling property prices make ___________ feel less wealthy and reduce the amount of equity owners can tap for spending. A threefold increase in home values over the past decade has helped the ______ economy expand for 63 quarters.

Economic Growth

The slump has put the economy on course for its worst performance in 16 years, with the ___________________ predicting growth of 1.6 percent this year. Growth was 0.4 percent in the first three months of the year, the Office of ____________________ said April 25. The _______________, backed by the Treasury, on April 21 offered to swap around $99 billion in government bonds for mortgage-backed securities in an effort kick- start lending.

Higher money-market funding costs are making lenders reluctant to pass on ______________________ interest-rate cuts since December to homeowners. __________________________ and _________________ have led write-downs among banks on securities tied to U.S. subprime mortgages. Losses worldwide total almost $309 billion.

To contact the reporter on this story: Jennifer Ryan at Jryan13@bloomberg.net

Last Updated: April 28, 2008 06:57 EDT

The article was about the housing market in the United Kingdom. Did you guess correctly? Click here to read the original article.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}
President / Builder - Chuck Miller Construction Inc
(208) 229-2553
http://www.chuckmillerconstruction.com/

Is it Easy Being Green?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 27 Apr 2008 18:37:16 -0500

Kermit the Frog doesn't think so. But like a lot of things, it depends on who you ask. If you ask me, my answer would be "Yes, it is easy and it's getting easier."

In a new survey, which polled 1,001 U.S. homeowners, 28 percent of respondents said they believe it's extremely important to be environmentally responsible. But is it hard to build green? Do you have to live in a straw-bale cottage or some other strange building to say you're a green home owner? The answer is NO and NO.

In February, the National Association of Home Builders (NAHB) launched the NAHB National Green Building Program at the International Builders' Show^® in Orlando, Fla. The new program helps to demystify the process and debunk the myths of green building for consumers and home builders. The NAHB program is designed to accelerate the movement of residential green building into the mainstream.

The program has an easy-to-follow checklist on its Web site - http://www.nahbgreen.org/ - to help make it easier for builders and consumers to include the seven essential elements of green building: energy efficiency, water efficiency, resource efficiency, indoor environmental quality, effective lot and site development, minimal global impact and homeowner education and maintenance.

Along with the checklist, builders and home buyers will find a wealth of resources on the site to help make green building a reality, including links showing how environmentally-friendly products and materials work.

Is it a lot more expensive? The survey revealed that 32% of U.S. consumers consider purchasing more expensive renewably sourced products to help deter global warming; and nearly 65% of U.S. consumers said they are willing to pay 5 percent more for products made with renewable resources. Whether you're considering building a new home, or just want to make your existing home more environmentally-friendly, you can take steps to go green that won't break the bank.

Many green elements can be included during the building design process. Using the Systems Engineering Approach to Home Design and Building we are able to design homes that are cost effective to build as well as energy and resource efficient. In fact, the energy consumption of new houses can be reduced by as much as 50% with little or no impact on the cost of construction.

Now more than ever, you can find a wide range of green building products in the marketplace to help achieve your goal of being more environmentally responsible. These green building products include green insulation products, like GreenFiber's Cocoon Cellulose Insulation made from 85% recycled paper fiber, mostly recovered post consumer content; BioBased spray foam insulation made from soybean oil, an annually renewable resource, produced by over 600,000 farmers, right here in the U.S; or UltraTouch fiber insulation made from recycled denim; energy-efficient windows and doors; energy-efficient furnaces, air conditioners, and water heaters; energy-efficient appliances; chemically neutral low VOC (volatile organic compound) paints; flooring; and natural landscaping products. Mst, if not all, home improvement stores carry a full line of compact fluorescent bulbs which use 70 percent less energy. And advances in green technology like solar roof panels and shingles and wind turbines have made these items less expensive.

The Building Contractors Association of Southwestern Idaho (BCASWI) has just formed a Green Building Council to promote the NAHB Green program to educate our members and consumers and encouraging builders to adopt the NAHB National Green Building Program which offers innovative, resource-efficient building techniques, while preserving affordability.

"We're bringing green building into mainstream home construction," said Steve Martinez, BCASWI President and local home builder. "Builders can do a tremendous amount to make homes more environmentally friendly, without pricing them out of the reach of the average homebuyer. The goal of our Green Building Council will be to educate builders and consumers about building green."

This summer, the BCASWI will begin offering the NAHB University of Housing's Green Building for Building Professionals course, leading to the Certified Green Professional designation - your assurance of commitment to continued education of the green building process.

But you don't have to wait to learn more about being green. You can visit the NAHB Green website at http://www.nahbgreen.org/. You can download a free guide at www.nahb.com/greeninnovation, or you call or email me.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553

http://www.chuckmillerconstruction.com/

Report Determines Housing in Boise “Moderately Overpriced”

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 27 Apr 2008 18:30:34 -0500

The recent report for the fourth quarter of 2007 found the price of housing in Boise “moderately overpriced.” So what does that mean with regard to the risk of future price declines? Before I begin, I would like to emphasize that I adhere to the advice of the sixth century Chinese sage Lao Tzu. My intent is simply to share a little knowledge and offer a few observations. I am not making any predictions. National City Corporation and Global Insights, an economic research firm, publish a Housing Valuation Analysis in which they evaluate single-family house prices in 330 metro areas to determine the extent to which housing in those markets is under or overvalued. That report designated the Boise metro area “moderately overvalued.” Metro areas with valuations below the historically normal range, that is below -15 percent, are considered “undervalued.” Twenty-six of the 330 metro areas (7.8%) were actually considered “undervalued” in the 4th Quarter of 2007. Metro areas with valuations in excess of +32 percent are designated as “overvalued.” Twenty-one of the 330 metro areas (6.3%) were considered “overvalued” in the 4th Quarter of 2007, but this was down from a peak of 58 metro areas during the fourth quarter of 2005 and the second quarter of 2006 (a reduction of 11.2%). “Overvalued” markets present a risk of substantial future price declines (10 percent or greater). Metro areas with valuations between ±15 percent are consistent with the study’s standard deviation of the historically normal distribution and are considered “fairly valued.” Metro areas between “overvalued” and “fairly valued” are areas above the historically normal range of +15 percent, like Boise, and are designated “moderately overvalued.” While “moderately overvalued” markets have values above the historically normal range, they present very little or no risk of substantial future price declines. National City Corporation and Global Insights employ a statistical technique to evaluate single-family house prices to determine “fair value” in the housing market. “Fair value” contrasts with financial asset valuation or “intrinsic value.” Unlike the Case/Shiller index which only considers the 20 largest housing markets in the U.S.. the National City Corporation and Global Insights study evaluates 330 metro areas which collectively account for 93 percent of all existing single-family housing units and 78 percent of all related real estate value, as of the fourth quarter of 2007. Their approach is statistical in orientation, examines a particular historical period — Q1/1985 to Q4/2007 — and accepts that house prices, on average, adhered to some normal relationship to underlying determinants during that time. The study examines the ratio of home prices to household incomes and attempts to explain the variation in that ratio as a function of four key determinants: Household Population Density, Conventional Mortgage Rates, Relative Income Level, and something they refer to as Constant. Constant is a value they calculate for each metropolitan area to control for historically observed differences in metro area price-to-income ratios that are not explained by the other three determinants. These values reflect a variety of difficult to quantify, but nonetheless important, factors that influence prices including pollution, climate, expected property price appreciation, cultural amenities, school systems, miscellaneous costs, (e.g. tax and utility rates) and geographic location. The data for the Boise MSA suggests that housing in the 4th quarter of 2007 was overvalued by 26.1%. But the study cautions against assuming that a particular degree of overvaluation implies that house prices are destined to decline by that amount. For example, the observation that Boise, Idaho is overvalued by 26.1% should not be assumed to imply that prices here are headed for a 26.1% drop. They explain that this is not necessarily correct for the following reasons: • Housing markets tend to adjust very gradually and price declines, when they occur, have historically averaged 18 quarters in duration. Because house prices determinants generally improve over that time (especially population density and incomes), price declines are typically about one-half the initial degree of overvaluation. • Historically normal dispersion of valuations is quite wide and their model has a standard deviation in house price valuations of +/-15 percent, meaning that any valuation between 15 percent overvalued and 15 percent undervalued should be considered statistically normal. The report includes data on past price corrections in metropolitan areas over the past 23 years. It defines price corrections as declines of at least 10% over a period of at least 8 quarters. Only 102 of the 330 markets have experienced severe enough price corrections to be included in the report. The peak valuation in those 102 markets ranged from 98.5% in Midland Texas in the 2nd quarter of 1986 to a -0.9% for Merced, California in the 4th quarter of 1990. The price corrections ranged from a decline of 35% over 20 quarters in Anchorage, Alaska from the 2nd quarter of 1985 through the 1st quarter of 1990 to a decline of 10% over 23 quarters in Napa, California from the 3rd quarter of 1991 through the 1st quarter of 1997. For the 102 markets, the median or typical degree of overvaluation was +32.1% and the typical correction episode saw a median decline of 17% over a median duration of 16 quarters. Chuck Miller GMB CGB MIRM CMP MCSP CSP President / Builder – Chuck Miller Construction Inc. (208) 229-2553 www.chuckmillerconstruction.com

Is condominium living right for you?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Fri, 25 Apr 2008 21:09:08 -0500

Condominium Living Offers Convenience, Amenities and a Good Return on Your Investment.

Is condominium living right for you? According to the National Association of Home Builders (NAHB), condos are now an important housing option for home buyers nationwide. At the height of last year’s wave of new condominium construction, condos represented nearly half of all new multifamily building, with that rate forecast to stabilize at about a third of the multifamily market by late 2008.

Why are people choosing condominium ownership? Many home buyers find that condos offer advantages that a traditional single-family home doesn’t.

Many empty nesters thinking about enjoying their freedom now that the kids are out of the house are purchasing condos. Active seniors—especially those who once lived in urban areas—are returning to downtown areas, leaving behind the larger house, yard maintenance and the daily commute. If you fall into this category, you may want to opt for a smaller, easier-to-manage condominium home that’s not only close to your job, but also near shopping, dining and entertainment.

Baby boomers anticipating retirement frequently purchase condominiums or townhomes in areas offering a favorable climate, a variety of recreational opportunities, cultural attractions and easy access to good medical facilities. Some purchase condominiums or townhouses near their grown children and grandchildren. These may be primary residences or secondary homes. Keeping a second home tidy and undisturbed when you are not there can be a hassle. However, when you purchase a condo most of the unit’s upkeep is covered by your monthly condo fee, whether you are there or not.

As I have noted in previous blogs, most of the rapid unsustainable appreciation in the price of houses in the past few years was the result of increases in the cost of land. An NAHB study on construction costs for single-family homes in 2007revealed that the raw land cost represented 10% of the cost of a new home. Because condominiums and townhomes projects typically are higher-density developments (more living units per acre) than single family detached home projects, the raw land cost is spread over more units. For this reason, the cost of condominium is generally less than that of a single-family detached home of similar size and quality.

Even though rates have risen slightly, mortgage interest rates are still near a 45 year low. Young people may find that purchasing a condo as their first home can be both more financially attractive and more feasible than you might have anticipated. They may consider the purchase as a step towards affording a more substantial residence later. Many of today’s condos are located in downtown in neighborhoods where young professionals congregate.

Condo can also be a good stand-alone investment. You might find that it makes financial sense for you to purchase a condo in a university community like Boise as an investment – one that can be used by your child during his or her college career, then rented or resold after graduation. You could purchase a smaller used single family home, but multifamily developments built to be sold as condominiums often feature value-added amenities and services not found in older existing neighborhoods.

I don’t know about you but I have can think of much more enjoyable ways to spend my evenings and weekends than mowing the lawn, pulling weeds, or cleaning the gutters. That’s why I chose a condominium. When you invest in a condominium, many everyday maintenance activities are no longer necessary, and the few that are generally are covered by your monthly condo fee.

Are you empty-nesters or soon to be empty-nesters? Is your current home larger than you need or will it soon be? Are you retired or nearing retirement? Do you travel frequently on business or vacation? Are you busy professionals who value your free time? Are you a younger buyer looking to purchase their first home? If you answered yes to any of these questions, condominium living might be a good bet.

If you think condominium living might be right for you, I know of two very nice new condominium units in Hidden Springs with more on the way. You can view them both right here on BuildingCredibility.com or you can visit my website.

Interested in a more urban lifestyle, check out Bryant Forrester’s blog right here on BuildingCrediblity.com visit his website http://www.boisecondosandlofts.com/ or contact Bryant directly at (208) 342-2700.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

http://www.chuckmillerconstruction.com/

Fear and Anxiety

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 06 Apr 2008 15:51:22 -0500

A good friend of mine recently observed that I seem to be using my blogs to save the home building industry. He expressed his concern that most of my readers would view that as self-serving. He strongly encouraged me start selling myself and provide people invaluable information.

My friend's observation leads me to believe that my purpose has been misinterpreted. I am not trying to save the home building industry. So what does this have to do with Fear and Anxiety? While I admit that might be a secondary objective, my primary objective is to help you, my readers, overcome your fears and anxieties regarding your decision to buy or build a new home.

Wikipedia defines fear as an emotional response to tangible and realistic dangers and states that most fear is usually connected to pain and offers the example that some people fear heights because if they fall, they may suffer severe injury or even die upon landing. It notes that fear is a survival mechanism, and usually occurs in response to a specific negative stimulus. It also emphasizes that fear should be distinguished from anxiety, an emotion that often arises out of proportion to the actual threat or danger involved. It describes anxiety as a physiological state characterized by a number of components that combine to create the feelings that we typically recognize as fear, apprehension, or worry.

I have also heard fear and anxiety described using the acronym FEAR standing for False Expectations Appearing Real. As I stated previously, my primary objective is to help you overcome your fears and anxieties regarding your decision to buy or build a new home. The available economic and demographic data such as the employment to permit ratio, the number of new household being formed or in-migrating to our market, the low vacancy rates, and other data indicates that there are a lot of you who would normally be buying new homes who aren't. I and others in the industry believe that your decision to wait is based, at least in part, on fear and anxiety arising out of all the negative news and misleading data on the state of the national housing market and the national economy - news of plummeting home values or the inability of anyone with less than perfect credit and or a large down payment to obtain a mortgage.

I would like to know if I'm right or wrong. If I'm right, I would like to know what your fears are so that I can either validate or, hopefully, alleviate them.

There is a Japanese proverb that "Vision without action is a daydream. Action without vision is a nightmare." If you have a vision of home ownership, but fear and anxiety are preventing you from taking action, let me help you overcome your fears. If you are prepared to act on your vision of home ownership, let me help you clarify your vision and set realistic expectations so your action doesn't turn into your nightmare.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc. (208) 229-2553

http://www.chuckmillerconstruction.com/

Find Your Part in the American Dream with a New Home

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 06 Apr 2008 15:48:58 -0500

A home is more than just a structure where people take up residency. For most people, owning a home means freedom, financial independence and security. For many, owning a home brings a feeling of success and the knowledge that they've obtained their own bit in the American dream. And of course, a home-according to Dorothy as well as millions of home owners-well, there's no place quite like it.

In April, the National Association of Home Builders (NAHB) celebrates New Homes Month. In addition to all the benefits of being a home owner, new homes offer safety, energy efficiency amenities, and a lifestyle like never before.

The advantages of today's new homes are unparalleled. New technology has brought safety and energy efficiency in homes to a new level, and for conveniences and amenities, it's hard to beat a new home.

Technology Brings Safety to the Forefront

Technological advances mean that today's homes are safer, because new homes take advantage of breakthroughs in building science. For example, hard-wired and interconnected smoke alarms bring a new level of fire safety to new homes. If one alarm goes off, they will all go off, giving your family ample time to get to safety. New fire-resistant construction materials mean less chance of a fire. Tempered glass, now found in all doors and many windows, means less chance of an injury should one break.

New Homes: Greener and More Energy Efficient

Many builders participate in programs like ENERGY STAR^®, promoting energy-efficient building practices. The homes they build feature improved insulation, high efficiency furnaces and air-conditioners, better ventilation, and energy-efficient windows.

As more and more consumers ask for green homes, builders are responding by adopting green building guidelines and incorporating healthy, nontoxic, sustainable building materials into the homes they build. Earlier this year, NAHB launched the National Green Building Program so that any home buyer anywhere can have a green home without significantly increasing the cost. Your home builder can choose from an ever-expanding array of products and materials to make a house more energy-, water- and resource-efficient. To learn more, visit nahbgreen.org.

Innovations like insulation made from recycled materials, tankless on-demand water heaters, and solar shingles (not just solar roof panels) are also changing the market.

New Homes Offer Home Buyers Their Choice of Lifestyles

Today's new homes offer more of what buyers want. Because of increased demands for larger socializing spaces in the home, larger kitchens are becoming more common. New homes also feature more bathrooms and more storage space. Consumers are seeking greater ceiling heights, walk-in showers with multiple heads, three-car garages and outdoor entertainment spaces with fireplaces and grills. And builders are responding with new homes that provide these features.

So why do Americans like new homes? The answer lies in choice. People want to be able to personalize their home with their own tile, flooring and appliance choices. In a new home, the consumer can select virtually everything down to the knobs on their kitchen cabinets. It's all part of the American Dream.

For information on why now is a great time to buy, visit www.nahb.org/timetobuy or contact me. To sign up for NAHB's free consumer e-newsletter, visit www.nahb.org/housekeys .

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc. (208) 229-2553

http://www.chuckmillerconstruction.com/

April is New Home Month. Is It Time To Buy?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Thu, 03 Apr 2008 10:21:23 -0500

Since 1990 in this country, buying a home has been a "no brainer," a can't-miss investment. But things have changed. If you believe the national media, home prices across the nation continue to fall. But all real estate is local, and we need to understand what is going on in our local market area before buying.

If you read my recent blog on BuildingCredibility.com titled "Idaho Home Values Continue to Appreciate" and, more specifically, my comments in response to one reader who questioned the data, you know that home prices in Idaho and the Boise MSA are not falling - although the rate of appreciation has slowed significantly.

The National Association of Realtors (NAR), reports that sales of single-family homes were down by 13 percent in 2007, the biggest drop since a 17.7 plunge in 1982. Representatives of the NAR say that this makes it the best buyer's market in a long time. Prices are down, interest rates are near a 45-year low and the supply of houses is high.

There are others who argue that the real estate market is in a tailspin and it might be a very long time before prices rebound -- making it a poor market at this time.

But even those who advocate that home ownership is still one of the best long term investments for individual households, including me (‘The Top 10 Reasons You Shouldn't Wait to Buy a New Home") advise that the circumstances need to be right before you take the plunge.

The first thing that everyone needs to accept is that the market has changed and we can no longer expect home price appreciation of 32.4% over 2 years as was the case in Idaho or home price appreciation of 43.7% as was the case in the Boise MSA over 2 years (based on HPI figures for the 1^st quarter of 2005 to the 4^th quarter of 2006). Those rates of appreciation were unsustainable and home price appreciation rates have fallen back to a more normal 4% - 8% per year.

Any one shopping for a new home needs to shop intelligently. They need to consider the probability that the actual appreciation could be less than expected and avoid taking unnecessary risk. Many of the home owners currently facing foreclosure gambled on those unsustainably high appreciation rates and lost. Bottom line, you need to buy what you can afford. Home buyers must not get in over their heads. You must feel comfortable with your mortgage and be confident you can handle the payments, including taxes, insurance, homeowners' association dues and all the other expenses related to home ownership.

So, who should buy a home now? I believe that renters who have stable jobs should consider buying a home now. The inventory of new homes is high and builders might be willing to offer you incentives to purchase, like an interest rate buy-down. But you need to be realistic and not expect deep price cuts.

If you are in the market for and can afford a higher end home, now might be a particularly good time to buy because of the number of months of inventory in both new and existing higher end homes. Builders who have new higher end homes to sell may have some room to negotiate price and you could purchase a more expensive home at a lower price than you could a few years ago.

Dual-income home buyers whose jobs are secure should definitely consider buying a home now. People with assets in reserve and a credit score of at least 680 should also consider buying

If you have a credit score below 680, you will find it a little tougher. Not impossible as you might think if you've believe the media. Anyone with a credit score less than 680 will have to verify their income. But if you have some credit challenges or less than 20 percent of the purchase price for a down payment, you need to be prepared for higher interest rates due to risk-based lending.

Who should not buy now? The decision whether or not to own a home should be based on many factors. Tax advantages and the potential to build equity can make home ownership quite appealing. But some other factors that need to be considered are the amount of debt you currently have, your employment status, life changes, how long you intend to live in the home, the size of the down payment, and the size of the mortgage and monthly payment.

Whether the real estate market is up or down, there are no hard and fast rules that apply in all cases and dictate who should or shouldn't buy. While prices are down, interest rates are near a 45-year low, and the supply of houses is high, not everyone should be in the market.

If you have a lot of credit card debt and / or a low credit score, you must clean up your credit first.

As a general rule, people should not buy a home based on their current income if their future income is not stable. If your job is shaky, you should wait until your job situation is more secure.

If you are experiencing a life change, such as an upcoming job transfer, getting married, planning to move geographically within the next two years or if you are struggling financially, you should wait.

If you are thinking about buy a home and selling it in a year or two, you should not buy. "Housing is a long term investment, and if you're only planning to be there for a year or two, keep renting." says Walter Molony, spokesman for the National Association of Realtors.

If you are thinking about buying an existing home to renovate and flip, you probably shouldn't. With inventories of existing homes up and sales down, you may have to sit on that renovated home for awhile and the gain you thought you would realize could be eaten away by interest payments or a decline in existing home prices.

If you are a homeowner considering buying a new home and don't have 20 percent of the purchase price for the down payment on that new home you're considering, you would require private mortgage insurance (PMI) on your new home. PMI can run anywhere from $50 to $150 per month.

If you are a homeowner considering buying a new home, you should probably not purchase another home or one on contingency unless your home sells first. Otherwise, you could end up carrying two mortgages. But if this is the only hurdle, you might consider asking the Builder if he would be willing to take your existing home in trade.

In certain situations, it might be advisable to consult a professional financial advisor. For example, if you are retired or near retirement and thinking of selling your home to downsize. If you get less than fair market value for you current home, you could lose more financially then what you gain by getting a good deal on a less expensive house, in which case you would be better off financially waiting until the market turns around.

No one can predict the future. Even the economists could be wrong. So you should consider the possibility that the real estate market could be no better or even worse a year from now, and decide if you want to wait it out and see what happens.

Why not wait until the economy turns around? Interest rates are at historical lows. If you wait till the economy turns around, the interest rates may not be as favorable, and in all probability, inventory levels will be down reducing the downward pressure on prices.

It's hard to predict when the market will bottom out, just as you can't predict when a stock has "bottomed out" until it has started to rise again.

When will the housing market turn around? It depends on who you ask. The National Association of Realtors is projecting that home sales will trend up this year.

"The timing of the recovery is a bit ambiguous because there are buyers looking for a bargain, while others are looking for more signs of stability. Still others are looking for interest rates to keep lowering, with prices still bottoming out in their area," says NAR spokesman Molony.

Molony predicts that 2009 will lead back to more normal market conditions with prices rising 3.1 percent. However, he suggests the window of opportunity for buying is within the next six months.

During the 2008 International Builders' Show in February in Orlando, FL, the National Association of Home Builders' Chief Economist David Seiders, PMI Group Chief Economist David Berson and Freddie Mac Chief Economist Frank Nothaft presented housing and economic forecasts that project no recession at all, despite numerous reports of one. However, Seiders did say one could be likely, and things could spiral downward from this point, but the stabilization process is the key to recovery in the housing sector.

"We're happy that the economic stimulus package is being signed into law, happy with what the Federal Reserve is doing, but we may need even more strenuous legislation to help the housing situation," he said. In fact, the U.S. Senate is currently considering major housing legislation.

The trio of economists indicated that 2008 will see a bottoming out of the market, with recovery ahead in 2009.

Seiders predicts the U.S. economy will see two quarters of slow growth in 2008, before getting help from tax rebates and growing more vigorously after the middle of the year. He believes "The vast bulk of the housing contraction is behind us."

Others think the market turnaround could be prolonged people as home buyers take a wait and see attitude until after the presidential election. Still others believe it will not be till the first half of 2009.

If you fall into the category of who should buy now, I will be offering additional thoughts throughout the month to further encourage and support your decision to buy.

Chuck Miller _{GMB CGB MIRM CMP MCSP CSP}

President / Builder - Chuck Miller Construction Inc.

(208) 229-2553 www.chuckmillerconstruction.com

How Do Your Customers Define Value?

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Wed, 02 Apr 2008 09:32:31 -0500

As a Builder, I am frequently asked by prospective customers how much I charge per square foot. I recently taught an Institute of Residential Marketing course for Builders, Developers and Realtors. One of the chapters was titled "Customer Value and Marketing" and provided a methodology for measuring value other than by price per square foot.

What motivates someone to select one Builder or Remodeler over another or one Builder's home over another's? It is the perceived value. Our industry has allowed price per square foot to become the most common way for people to define value. Price / Square Footage = Value. By definition, the lowest price/square foot represents the best value. But the problem with this value equation is that it completely ignores other attributes that most buyers associate with quality. Price is not an attribute of quality.

Wouldn't you agree that a better way to quantify value is with the equation Price / Quality = Value. Using this equation requires us as building industry professionals to create a list of those attributes our customers associate with quality and to then ask them to rate the importance of each attribute (say on a scale of 1 to 10) in their decision to buy. Living area or square footage could be one of the attributes. But here are some other things that might be included in the list:

•· Location

•· School District(s)

•· Community

•· Size of homesite (lot)

•· Exterior design of home

•· Interior design of home / Floor plan

•· Number of Bedrooms

•· Number of Bathrooms

•· Size of rooms

•· Living area (sq. ft.) of home

•· Standard features included in the home

•· Available options

•· Ability to customize

•· Quality of materials and workmanship

•· Energy efficiency / indoor air quality

•· Builder's reputation

•· Builder's Customer Service Program

•· Special incentives offered by builder

What attributes would your customers include on their list? How would they rate them in order of importance in their decision to buy?

Once you've created this list of attributes and had your customers rate the importance of each attribute in their decision to buy, you can use the same list of attributes and ask your customers to rate your performance with regard to each attribute.

If you would like an editable copy of a survey, just email me.

Equipped with this information on your performance, you can set out to improve your performance. There are basically 3 ways to improve how your customers perceive your performance and the value of your product. Using the equation Price / Quality = Value, you can

•1. Do more

•2. Do things differently

•3. Do different things.

Successful Builders are market driven and not product driven. Successful Builders know what is important to their customers. They design and build their homes and manage their businesses to specifically address those attributes.

Want to learn how to be a successful, market driven Builder? Invest in the education provided by the National Association of Home Builders Institute of Residential Marketing

Chuck Miller _{MIRM CMP MCSP CSP GMB CGB}

President / Builder - Chuck Miller Construction Inc.

Boise, Idaho

www.chuckmillerconstruction.com

(208) 229-2553

A Credible Third Party Source for Estimating Existing Home Values

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Sun, 30 Mar 2008 19:07:45 -0500

In my previous blog post titled Housing Affordability and Realistic Expectations, I commented about the apparent unrealistic expectation the average home owner has regarding the value of their existing home. If you are a home owner considering purchasing a new home but have an existing home to sell, or if you are a Realtor working with a home owner to list their existing home, or if you are a Realtor working with a buyer who has an existing home to sell, the Office of Federal Housing Enterprise Oversight (OFHEO) provides an easy to use House Price Calculator. The calculator uses the OFHEO Housing Price Index for the area and calculates the value bases on the average appreciation for all homes in the area based on the original purchase price and date of purchase.

The website notes that when using the House Price Calculator, it does not project the actual value of any particular house. Rather, it projects what a given house purchased at a point in time would be worth today if it appreciated at the average appreciation rate of all homes in the area. The actual value of any house will depend on the local real estate market, house condition and age, home improvements made and needed, and many other factors. But it's a good place to start.

Chuck Miller

President / CEO

Chuck Miller Construction Inc.

Boise, Idaho

www.chuckmillerconstruction.com

Business Owners and Entrepreneurs – You Should Seriously Consider Boise, Idaho.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Fri, 28 Mar 2008 17:36:48 -0500

Forbes released its annual list of the Best Places for Business and Careers on March 19,2008 and Boise moved up one spot from No. 3 in 2007. For a fourth straight year, Boise landed in the top 5 in the rankings compiled by national business magazines. Common themes for the business-welcoming metros include solid job growth, an educated labor supply and low business costs.

Boise ranked highest in job growth at 13. It also ranked 17th for the cost of doing business and 15th for net migration. Kurt Badenhausen, associate editor at Forbes, said the rankings aren't based on just one year of data, but on five years.

"Every area has its highs and lows, but on an overall long-term basis we look at the long-term strength," he said. "In Boise you may not think things are going so well, but a lot of places in the country are really hurting a lot more."

In 2005, Boise took the top spot but dropped to No. 4 in 2006 before climbing to No. 3 in 2007.

Badenhausen said only Boise and Raleigh have been the most consistent top performers, appearing on the list more often than other cities. He credits both areas' steady economic performance.

Forbes' rankings cover the 200 largest metro areas (populations over 240,000) as defined by the U.S. Office of Management and Budget and are based on nine factors including five-year historical job and income growth, migration trends, business cost index, which considers labor, tax, energy and office space costs, and its living cost index, which factors in housing, transportation, food and other household expenditures.

The rest of the data for the rankings was furnished by Portland, Ore., demographer Bertrand Sperling, who last year published the second edition of Cities Ranked & Rated along with Peter Sander. He provided stats on crime, educational attainment, presence of four-year colleges and an index on cultural and recreational opportunities

Kevin Benedict, CEO of MobileDataforce, left the crowds of Seattle to move his family to Boise eight years ago and hasn't regretted it once. Boise's strong reputation has helped him boost sales at his software business and attract employees, Benedict said. Only a handful of his 47 employees are from Boise. To close a sale, he often brings a potential client to Boise and gives a tour of the area, often with activities like fly fishing. "We have a 90 percent close rate when we have a company come visit us, so we promote the heck out of Boise," Benedict said.

If you would like more information on Boise, Idaho and the Treasure Valley, visit my website http://www.chuckmillerconstruction.com/ or just contact me directly.

Housing Affordability and Realistic Expectations

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP (Chuck Miller Construction Inc.) — Fri, 21 Mar 2008 11:24:25 -0500

Housing affordability is a complicated issue. Building affordable housing is not simply a matter of builders building less expensive homes. It requires the cooperation of a number of parties, including but not limited to state and local governments, land owners - both those selling developable land and those living adjacent to that land, lenders, Realtors, and the home buyers themselves. Today we will discuss the home buyers.

In a research study conducted by Better Homes and Gardens in January surveying more than 2,000 home enthusiasts from across the country who bought a new home in the past 10 years or plan to build one in the next 10 years, more than half of the respondents said they wanted green building and remodeling options presented to them. This number jumps to more than two out of three in the millennial age group.

Among the features or designs most frequently rated as "essential/must have" before a consumer would consider buying a specific home, four were energy-related and two were exterior features.

Energy-related features included a high level of insulation (48%), exhaust fans (48%), Energy Star-rated windows (36%) and equipment-based energy saving measures (34%).

A laundry room topped the list, rated essential by 55% of the survey respondents.

A walk-in pantry was rated as essential/must have or desirable by 86% of those surveyed, followed by an island work area (80%), built-in microwave (72%), drinking water filtration (69%) and special use storage (wine rack, spice drawer, pots and pans, cabinet, etc.) by 16%. Granite/natural stone was the most popular kitchen counter material.

A linen closet topped the list of bathroom features, with 89% of respondents categorizing it as essential/must have or desirable followed by an exhaust fan (88%), separate shower enclosure and water temperature control at 79% each.

More than two out of three respondents preferred nine-foot or higher ceilings on the first floor.

More than half of the respondents said they would like a minimum of four bedrooms, while 39% would accept three bedrooms.

Twenty-eight percent of those surveyed preferred at least three full bathrooms, one-third would like to have 2-1/2 bathrooms and 31% expressed satisfaction with only two bathrooms.

On the front exterior, brick was the most preferred, followed by stone, vinyl and stucco.

Exterior lighting (33%) and fenced yards (33%) were the two outdoor features that also made the list.

The median home size of those surveyed was 1,835 square feet and the respondents said they wanted a median of 2,354 square feet in a new home, an increase of 38%. The home shoppers estimated median value of their current homes $227,500 and expected to pay a median of $241,699 for their new home, about 6% more.

Is this a realistic expectation?

A conventional assumption in the lending industry is that a family can afford to spend 28 percent of its gross income on housing - principal, interest, taxes and insurance. Using the median price of $241,699 which the home shoppers in the survey expected to pay and assuming a 90% 30year fixed rate mortgage at 5 5/8%, the monthly principal and interest payment would be $1,252. A 90% loan would require private mortgage insurance which at 0.5% adds $91 a month to the monthly payment. Property taxes at 1.25% add $252 per month and homeowner's insurance at 0.5% adds $101 a month. That's a total housing cost of $1,696 a month or $20,352 a year. At 28% of gross household income, that median priced home would require a household income of $72,686 a year. According to the U.S. Census Bureau, the median household income in the U.S. in 2006, the last year for which we have data, was $48,201.

The median price of the 2,354 square foot home for which the home shoppers expected to pay $241,699 equates to cost of $103 per square foot while the estimated median value of the 1,835 square foot at $227,500 equates to cost of $124 per square foot. While the escalation in the cost of building materials has slowed, those cost continues to increase. Is it realistic to expect the cost to construct that new home with the higher level of insulation, the Energy-Star rated windows and appliance, the granite/natural stone countertops, fenced yards, etc. for 20% less than the value of their existing home?

When asked the best way for a Builder to spark a buyer's interest in today's market, the Better Homes and Gardens survey found that 44% of the respondents prefer bonus home amenities and upgrades; 42% would like a discount on the price of a new home; 37% want the builder to buy their old home at a fair price; and 31% desire free professional decorating and landscaping advice. Is it realistic to expect a Builder to not only price his homes for less than it costs to build them, but to also give bonus amenities and upgrades and / or discount the price? Is it realistic to expect a Builder to purchase a buyer's old home at fair price? Not if the expectation is that a fair price for their old home is 6% less than the cost of the new home they're purchasing which is not only used but 38% smaller than the new one.

I love what I do. I love designing and building my clients' dream homes, especially when those clients have realistic expectations. Our approach to home building is designed to help our clients understand what is realistic and what is not. When clients have unrealistic expectations, that love of what I do can be lost. As we state on our website, we are extremely proud of the fact that many of our clients have become some of our closest friends. Regrettably, those clients who had unrealistic expectations are not among them.