Builders in Sioux Falls, S.D., say increasing lumber costs haven’t hit them yet, but they are bracing for the future as they start new projects. “We won’t see the price increase for another month or so,” said Gary Harr, one of the owners of Harr and Lemme Homes. “Anything that we start from now on, it’s going to affect those prices.” The cost of lumber and wood products accounts for one-third of the cost of materials used to build a home, according to NAHB. At $350 per 1,000 board feet — close to the $365 cost reported by Random Lengths on April 30 — the lumber package for a 2,400-square-foot home would cost more than $9,000. The increase comes after a down period for lumber prices because of low demand and an oversupply in the market. But demand has started to build, and now supply is not able to keep up, explained Jon Anderson, publisher of Random Lengths. “When things start to get better, it’s a difficult decision to commit to reopening saw mills,” Anderson said. “It might take a while because despite the price behavior, the overall picture is still not anywhere close to health.” In Sioux Falls, Al Schoeneman, owner of Schoeneman’s Building Materials Center, said he has product in inventory that has helped him to avoid the steep rise in costs so far. But he said if he were to buy lumber today, it would be about 60% higher than it was in February. Daryl Christensen, president of the Home Builders Association of the Sioux Empire and owner of Prairie Risings Construction Services, said he has his lumber prices locked, but he’s noticed they’re starting to creep up. He expects the numbers to keep increasing. How much such cost increases raise the price of a home remains to be seen, though Harr said he doesn’t expect the effect to be severe. (www.argusleader.com)
Sioux Falls Argus Leader (4/28/10); Kelly Thurman

An unrelenting rise in the cost of raw materials — largely driven by mounting demand from Asia — is cutting corporate profits, hitting stocks and, in some cases, pushing up consumer prices. Data on producer prices released by the Bureau of Labor Statistics on April 22 showed that crude goods such as iron ore, construction sand and pulp shot up 44.5% year-over-year, the fastest rise since 1974. Lumber is up nearly 59%. The gains in lumber prices have added about $2,400, or 1.1%, to the price of the median home, according to NAHB. In a recent presentation, Raymond James analysts concluded that higher lumber costs could shave as much as 3% to 4% off home-builder profit margins unless they pass the costs on to customers or find some other way to reduce expenses. (www.wsj.com)
Wall Street Journal (4/23/10); Liam Pleven

Since the collapse of the housing market, home buyers trying to secure a mortgage of more than $729,750 have faced higher interest rates and tough new standards to even qualify for a loan. Now the market for these “jumbo” loans is starting to thaw. The average interest rate for a 30-year fixed-rate jumbo mortgage stood at about 5.8% for the week ending on April 24, according to HSH Associates. That was near historic lows and down significantly from the height of the financial crisis, when it was near 8%. Traditionally, jumbo loans account for 18% to 20% of mortgages issued, but by 2009 they were only 5%, according to Inside Mortgage Finance, a trade publication. Demand for jumbo loans has already picked up in California and New York, two traditionally high-priced markets, said Sanjiv Das, chief executive of CitiMortgage. “It looks like, at the higher end, prices have dropped by as much as they needed to, and there is some sense of stabilization in a much broader swath of the country as opposed to six months ago,” Das said. “I am much more confident than I was six months ago that there is a stabilization and that it will stay stable.” In another sign the market may be improving, California-based Redwood Trust said in a recent Securities and Exchange Commission filing that it would sell $222 million in securities backed by pools of jumbo mortgages. The average balance of the mortgages would be about $933,000. This will be the first securitization of jumbo mortgages since the market collapsed, said Greg McBride, senior financial analyst at Bankrate.com. “If lenders have the ability to sell those loans to investors, that opens up a pipeline of capital with which to make more jumbo loans,” he said. “It will increase availability of credit in the jumbo space and help bring down rates relative to smaller conforming loans.” (www.washingtonpost.com)
Washington Post (4/24/10); Renae Merle

In an April 14 bulletin to lenders, Fannie Mae said it is relaxing rules that prevented loan applicants who have participated in short sales or deeds in lieu of foreclosure from obtaining a new mortgage for extended periods of time. Under the new rules, which are scheduled to take effect on July 1, home owners who have done short sales will be able to qualify for a mortgage in as little as two years, instead of the four or five years that is typical. To qualify for a new loan in the minimum two years, most borrowers will need to come up with downpayments of at least 20%. If they can scrape together only 10% for a downpayment, the wait will revert to the four-year minimum. And if their downpayments are less than 10%, the wait could be even longer. On the other hand, if borrowers can demonstrate that their mortgage problems were directly attributable to “extenuating circumstances” — such as loss of employment, medical expenses or divorce — they might be able to qualify for new loans with minimum downpayments of 10% in just two years. (www.washingtonpost.com)
Washington Post (4/24/10); Kenneth R. Harney

On his website, yogafortheconstructionindustry.com, construction-guy turned-yoga-instructor Allan Nett, 64, of St. Helena, Calif., shows and tells how a version of lynegar yoga can benefit construction workers. Yoga opens up a tool box of benefits to guys in construction, Nett says. “The construction industry is known for sore hands and knees, bad backs and hurt shoulders,” he cautions. Yoga helps in recovery, he says, and it helps a guy from being injured in the first place. Keith Wingfield of River Rock Builders and president of the Homebuilders Association of Greater Little Rock takes pride in his company being “way ahead of most folks in terms of energy efficiency and green building,” but he rates the chances of yoga catching on among the guys who work for him at “zero to none.” Nett says that the first argument against yoga that he encounters is that a person who works construction all day winds up too tired for exercise. He counters that yoga gives him more energy more dependably than anything else. He also argues against another objection: that physical labor is all the workout a person needs. “It’s bogus,” Nett says. “Yeah, we get a lot of exercise [on the job]. I was very toned when I was swinging a hammer. But our activities are so lopsided.” A right-handed carpenter, for example is going to work that arm the way Nett did — thousands and thousands of swings and jolts to the right arm, compared to his left hand’s slacker job of holding a nail. In time, Nett says, repetition can throw the whole body out of alignment. Balance is the answer, and yoga is all about balance, Nett says. But even if the boss orders his crew to a yoga class for their own good, and for the company’s benefit as a way to have stronger, healthier workers and fewer injuries, there’s no forcing yoga. “They have to want to be in,” Nett says. “I’ve been where people have been mandated to take my classes, and it doesn’t work at all.” (www.arkansasonline.com)
Arkansas Democrat-Gazette (4/26/10); Ron Wolfe

The American house of 2020 will likely be smaller, smarter, more urban and efficient. More houses will have energy meters that track power usage and program appliances to run when electric rates are lowest. Houses also will waste less energy because they’ll have better insulation and windows. Production builders such as Pulte are already reducing the average size of their new models and offering more eco-features such as solar panels. KB Homes is now offering pre-wiring for electric vehicle charging stations. Alex Wilson, executive editor of BuildingGreen, expects lower prices and improved performance to make solar water heaters and rooftop panels “very common” by 2020, used in at least 30% of new homes. Among other changes he sees: more houses and apartments built in areas close to public transit, walkways and bike paths; an increased market share for LED lighting despite its higher cost compared to compact fluorescent; and ductless heating. Geothermal heat pumps will be replaced by lower-cost, ductless “mini-split” air-source heat pumps, predicts Wilson. He says ductless technology is improving, and while most manufacturers are now Japanese, more U.S. firms will move into the market. Efficient windows are also on the rise. Triple-glazed, low-emissive windows will become common, accounting for up to a third of sales in colder climates. It also will become common to “tune” windows, Wilson says, by using different glass on a home’s south side than on its east or west. (www.usatoday.com)
USA Today (4/22/10); Wendy Koch