OK, it's official - the national Green Building Council LEED standard for homes has been released and, USGBC is officially accepting applications.
What do you think? Is this going to change the way mainstream homes are built, are we going to make it to the 2030 Challenge, or is green just a passing fad? Sound off in the comments, please.
Our marketing all-stars just posted a brand new case study on one of my favorite builders, Veridian Homes, who are the largest builders in Wisconsin.
In this excellent case study, Dan Gorski, Veridian's Vice President of Estimating, Purchasing, and Design (pictured, at right) is quoted:
“Most of the guesswork has been taken out of our building equation. The cost, the performance, even the appearance of the house—they’re all built into the Revit platform model, so there’s less chance for error—resulting in a better product for our customers.”
and
“We have over 250 users—from roofers to cabinet manufacturers to appraisers—using Autodesk Buzzsaw,” reports Gorski. “With Autodesk Buzzsaw, we can get project information to them faster and more economically.”
I said it yesterday, I'll say it again: Excelsior!
The homebuilding market is seeing some tough times. TOUSA filed for Chapter 11 banktruptcy today. Layoffs and shutdowns are epidemic in places like California, Las Vegas, and Florida, while homeowners suffer with rate adjustments and foreclosures.
What went wrong? Here's my take: there were two fundamental underlying reasons that this market got to this point. One's money, and the other is land.
First of all, money. The Federal Reserve has created too much money in the last nine years, by keeping interest rates artificially low. This encouraged all manner of creative financing, and got people buying houses that shouldn't have, and got investors buying houses to flip them (because financing them was so cheap.) The low rates caused demand to skyrocket, prices went up, and everybody - homebuilder, homeowner, and investor - looked to be making money. In reality, the money itself was being devalued (we see that now with the dollar dropping against foreign currencies), which was sending a confusing signal to all participants.
Why did this happen? Greenspan's Fed pumped in liquidity in late 1999 to avoid a Y2K cash and banking crunch, again in 2001 after 9/11, and then left rates low through much of the 5 years after 9/11 to keep the U.S. from experiencing anything but a "shallow" recession. It worked, and we saw some economic growth after 2001, but there is no free lunch in economics. We are paying the price for that strategy today. (And we may not be done yet.)
Secondly, we have the land issue. Demand for homes was causing the price of raw land to skyrocket. Prime lots were being taken off the market quickly, and nearly every builder was afraid of being left out of the party. After all, without land to build on, a homebuilder cannot function. So there was a mad dash by builders and speculators to acquire the best land still left.
Compounding the problem was the entitlement process, which is municipally controlled in most areas of the country, and which can have long lead times of up to five years. If you are a builder and want to build in certain cities in the next few years, you better have your land in the permit process now, because it could take a while to get it permitted, developed, and ready to build on.
What that translates to is aggressive land acquisition and development. Builders acquired, optioned, and closed on parcels, in anticipation of future demand. They had no choice, really. They risked being locked out of the market with no lot inventory on the one side, and risked getting stuck holding too much land on the other. What to do?
Once demand turned down, all those plans with built-in expectations of growth began to unravel. One thing led to another, and soon you had subprime mortgages being defaulted, land and home prices dropping, builders dumping land at 40 cents on the dollar, and others going under completely. TOUSA will try to restructure under Chapter 11, and of course we wish them the best.
I do not fault management of these builders. Most were aggressive, smart, seasoned executives with business acumen and a strong desire to compete and win. We here at Autodesk work with many of them. Sure there were mistakes made, but every business lives with those. There's no homebuilding scandal.
The media loves to lavish praise on tech companies like Google, Yahoo!, Apple, and (sometimes) Autodesk. I would ask the managers of those companies to consider the following: what if your products required a raw material that was in scarce supply, required years to make ready for production, and depended on the graces of government before you could develop on it?
And what if your products were so expensive that nearly all customers had to take out 30-year loans at a rate driven by the actions of the Federal Reserve, before they could purchase them?
Would the techs be so flexible if they had to work within those parameters?
Homebuilding is a unique business with unique constraints. Let's cut our friends in the industry some slack while they work through this tough time. Technology can make homebuilders more flexible and more ready to weather the next downturn like this (and there will be another one...eventually), but the bottom line is the ship they're in gets tossed around on the ocean called Money, and they have a massive anchor called Land, and between the two, it can be difficult to stay afloat in a big storm like what we've got now.
Godspeed, TOUSA!
Mukesh Ambani is building a $1 billion home for himself in India. I guess there is not yet a housing slump in India.
I did a quick calculation at Bankrate.com, and found that if he had a 30-year fixed mortgage on the property with an 80% LTV, his monthly mortgage payment would be $5,322,419.
My guess though is that he doesn't. But that sure makes me feel better about my payment on the Pratt Mansion.
Not as many of the big production homebuilders do work in Santa Fe as I would have thought. It's more of a pricey market, with special construction techniques.
I took a trip through Santa Fe recently on my way to Colorado, and took some pictures of a home under construction there. They use honest-to-God clay brick construction - no stick framing here! I was pretty impressed and surprised to see how the adobe look is achieved...
Many trade partners in the homebuilding industry write newsletters to their homebuilder customers, to keep them informed on goings-on at their company and in the industry. Recently the following newsletter article crossed my desk, from AZ Sun Electric in Phoenix, Arizona:
The Bidding Process
Technology is ever-changing, the cost of computers was astronomical...remember the "brick phones." I remember when we first started AZ Sun Electric and Ron would have not only his tool belt on -- loaded, but also the brick phone and a pager. Now he carries just a Blackberry and gets all his emails as well.
The bidding process has also changed over the years. We'd pick up a set of plans that took an Ironman to lift and have to strap them with clamps to the drafting table and have another table next to the drafting table to hold all the rest of the pages. What a sight! Everything was hands-on, wire lengths were measured with a ruler...Now computers have taken over!
AZ Sun Electric now receives an email that bids are ready for viewing on Buzzsaw. We're able to print only the pages (at half size) that pertain to the electrical scope of work.
In the next few years, the homebuilding arena will see many more changes. We want to thank you for being innovative and pursuing excellence. With technology evolving, AZ Sun Electric must also be on the cutting edge. We are continually refining our procedures and policies to better serve the Home Builders.
(This one came to me via my good friend and co-worker Sandeep Hardas, who received it from a Nicholas Homes Purchasing Manager)
What we're seeing is nothing less than a complete transformation of the building industry towards electronic documents, and it's happening one trade partner, one company, and one process at a time. How cool it is to be part of it!
Cnet is reporting on a new eco-friendly drywall that cuts greenhouse gases.
We've done research that shows that using Buzzsaw to distribute plans saves the planet by reducing car trips, cutting down paper, and helping reduce congestion on the roads (which leads to more roadbuilding etc.)
I am not a greenie but I do think it's time we think about what we're doing to the mothership here. Any time somebody figures out how to do more with less waste, we're making progress towards good livin'.
