Progress and Paradox—A Housing Headlines Recap

DOE Final Rule on Transformers is a Win for Housing Affordability

The Department of Energy introduced an original rule proposal that effectively required all electrical distribution transformers to shift from the industry standard grain-oriented electrical steel (GOES) cores to amorphous steel cores.  NAHB argued that the change marginally increased energy efficiency standards for transformers and came at a time when home builders already cited that the soaring costs and shortages of distribution transformers were delaying housing projects across the nation and increasing construction costs.

GOES currently accounts for more than 95% of the domestic distribution transformer market, and manufacturers’ production lines are tooled for designs that use GOES.  Industry spokespersons testified that if the original DOE plan had been enacted, it would have further curtailed the production of transformers.

NAHB commends the DOE for listening to the concerns and significantly amending the final rule to ensure that 75% of transformers, including those used for housing developments, can continue to use the industry’s standard GOES cores.

A California Case may have a Significant Long-Term Impact on Permitting Fees for Home Development.

Following a unanimous decision handed down by the U.S. Supreme Court homeowners, builders and developers may now challenge improper local impact fees for housing development even if the fees are authorized by legislation.

High Speed Rail Connecting Dallas and Houston Still on the Table

The federal government is reportedly seeking to revive a project that would construct a high-speed railway from Houston to Dallas in Texas utilizing Japanese bullet trains.

Travelling at a speed of 200 mph, it would take an estimated 90 minutes to travel between Dallas and Houston.  The same journey by road takes about three and a half hours. Proponents say this would make traveling between the two cities easier, promoting the economies of both and stimulating the jobs market. 

Solar Generation Increased 35% Last Year in Texas

Texas led the United States in solar installations in 2023. The effect on the ERCOT grid is starting to have tangible effects on the daily supply of electricity, says the Solar Energy Industry Association (SEIA).  On a daily basis, solar generation is being used to displace natural gas generation during the middle of the day.  And this summer, we should expect less use of natural gas when electricity demand is at its highest in Texas.

SEIA reports that 16 GW of solar was added across the state in 2023 alone. Developers are expected to add another 24 GW in 2024 and 2025.  To place this solar boom in context, the entire United States had just 40 GW of total cumulative installed solar capacity in 2016, according to SEIA.

Amendments to the Clean Water Act (CWA) Permitting Process Provide Clarity and Certainty

Home builders plead for clarity and confidence as they seek federal permits for home building and development projects.  NAHB supports recent federal legislation H.R. 7023 designed to improve the Nationwide Permit (NWP) process.

To assist with planning and permit backlogs, this legislation codifies the duration of an NWP from five to 10 years. The bill provides a defined timeline to when the EPA may veto a Section 404 permit, and places sensible timelines on when judicial reviews may be filed. Having this predictability will allow home builders to reliably proceed with construction once a permit is granted.

Builders Consider Direct Sales to Home Buyers Amid Realtor Commission Shake-Up

Referring to the recent National Association of Realtors (NAR) lawsuit that changes how commissions are paid, Zonda chief economist Ali Wolf says, “This settlement is huge news for the housing market.  Buyers facing higher Realtor fees may realize that buying directly from a home builder might make more sense. In fact, the timing couldn’t be better for home builders as they currently represent 30% of total inventory, up from 10% to 15% historically.”

Tom Nelson, founder of Zonda-owned UTour, states that the most significant impact of the NAR settlement is how it relates to the new-home market. The policy changes would allow buyers the option to negotiate their agent’s compensation should they opt for Realtors to represent them as a buyers’ agent. 

Nelson says this opens the door for direct interaction between builders and potential buyers. He says a builder’s direction communication is crucial for educating buyers on the advantages of new construction. Zonda chief advisory officer Tim Sullivan concurs that the changes underscore the importance for home builders to have full transparency in their initial engagement with consumers.

EPA Requires New Coolant for ACs Jan 1, 2025

For the second time in recent years, The U.S. Environmental Protection Agency are phasing out coolants currently used for AC systems and replacing it with a new one.  As of Jan. 1, 2025, a new coolant, R-454B, will be required in all new residential AC systems.  Existing homeowners will deal with the change when their current system fails and can no longer be repaired. 

While the EPA will not require anyone to stop using their existing equipment, the prices of old coolants needed to keep them going will get very expensive, eventually forcing people to pay for an updated system. EPA will also require sensors on the evaporator coils. If a leak is detected, the compressor shuts the system down. Then, after 15 minutes, the system is ready to come back on, if the leak has dissipated. Opponents to the new EPA changes proclaim that’s because the new coolant is flammable.

Replacement costs and skeptisim about the new coolant has already prompted illegal activity.

A man was arrested in March after he was caught smuggling canisters of old AC coolant from Mexico into the U.S. under a tarp in his vehicle.  The U.S. Attorneys Office stated that though this was the first time the Department of Justice is prosecuting someone for illegally importing greenhouse gases, it will not be the last.

Debates Stir Over Reducing City Zoning and Land-Use Rules

One idea to solve the country’s growing housing crisis is reducing or eliminating city zoning and land-use rules that determine what kind of housing can be built and where. Many housing advocates believe these policies get in the way of adding enough homes.

Some say reducing government regulations and letting the free market take the wheel holds a clear appeal. It could also bolster property owners’ rights by allowing them to build more on their land.  Allowing more homes to be built could also be another way of curtailing or reducing property tax bills.

Meanwhile the controversial Texas House Bill 2127 proposes to limit cities’ ability to enact zoning rules stricter than the state. After the bill passed in the state legislature, several cities sued, and a judge ruled it unconstitutional. But state law allows it to continue as it makes its way through the appellate courts.

housing headlines

Dozens of Texas Water Systems Exceed New Federal Limits on “Forever Chemicals.” 

PFAS, or perfluoroalkyl and polyfluoroalkyl substances are called “forever chemicals” because they can persist in water and soil, and even human blood indefinitely, reports the Texas Tribune.  The chemicals have been used since the 1940s on thousands of household products–from nonstick cookware to industrial products like firefighting foam.  They were developed to help these types of products repel oil and water and resist heat. 

One study found the chemicals in the blood of nearly 97% of all Americans.  The EPA estimates that the new limits will reduce exposure for 100 million people nationwide. And this could help prevent thousands of deaths and illnesses, including cancer.

The new standards will require all public water utility systems to submit their PFAS data to the EPA.  And with only part of the municipalities completing their reporting requirement thusfar, the results show that many are out of compliance.  The EPA has approved the use of activated carbon, reverse osmosis (purifying water using pressure) and ion exchange systems (a chemical process) to remove PFAS from drinking water.  Water utilities will be required to comply with the new standards within five years.

LGI Homes, Inc. receives the 2024 Top Workplace USA Award

housing headlines
This is LGI’s fourth year to earn the award.

Issued by Energage and USA Today, the Top Workplaces USA Award program celebrates nationally recognized companies who focus on making the world a better place by prioritizing a people-centered culture, giving employees a voice and seeking to optimize the workplace experience. This is LGI Homes’ 4th consecutive year to receive this distinction. 

Headquartered in The Woodlands, Texas, LGI Homes, Inc. is a pioneer in the homebuilding industry, successfully applying an innovative and systematic approach to the design, construction and sale of homes across 36 markets in 21 states. As one of America’s fastest growing companies, LGI Homes has closed over 65,000 homes since its founding in 2003 and has delivered profitable financial results every year.

Nationally recognized for its quality construction and exceptional customer service, LGI Homes was also named to Newsweek’s list of the World’s Most Trustworthy Companies. LGI Homes’ commitment to excellence extends to its more than 1,000 employees, earning the Company numerous workplace awards at the local, state and national level, including the Top Workplaces USA 2024 Award. 

Rates for conforming loans on the rise again

Mortgage interest rates recently pushed through 7% and continue to rise.  The latest inflation data and remarks by Fed Chair Jerome Powell indicate dim prospects that Fed will ease in June.

Texas has the Fifth-Highest Insurance Rates
in the Country

Read our recent articles about how rising insurance rates
have some builders rethinking traditional ways of building.

U.S. home insurance rates are expected to reach a record high this year. The biggest increases will occur in states prone to severe weather events, according to a new analysis. Texas insurance rates average $4,437 per home, significantly higher than the national average premium for homeowners insurance in the U.S. (expected to hit $2,522 by the end of the year). 

The hikes are driven largely by intensifying natural disasters, rising reinsurance costs and higher fees for home repair, according to Insurify, a Massachusetts-based insurance-comparison platform. That figure would represent a 6% increase over the average U.S. premium at the end of 2023, and follows a roughly 20% increase over the past two years. 

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