AP Photo/Susan Walsh

Cash for Caulkers, or Home Star, has been in the hands of the U.S. Senate for 15 days, just six months after the potential program first started making buzz. If you followed the news or poked around on blogs, there’s no doubt reactions have been mixed – we are talking politics. That said, though, many in our industry are taking a stand, ready to soon breathe a big sigh of relief with all the promises of job creation and the impending need for building materials.

To get a better understanding of how our colleagues are reflecting on the passage of Cash for Caulkers, we reached out to a product manufacturer, a remodeler, and a member of the trade media to hear first-hand their thoughts on the impending bill.

The experienced panel consisted of Shawn Rippon, Vice President of Marketing for Icynene, Michael Anschel, Principal of Otogawa-Anschel Design-Build, LLC, and Rick Schumacher, Editor and Publisher of LBM Journal. See what they had to say…

What buzz have you heard from the industry on Cash for Caulkers?

RS: The buzz I’ve heard has all been positive. Just as the first-time homebuyer tax credit breathed new life into the residential construction industry, dealers and manufacturers I’ve talked to are confident that the Cash for Caulkers program will help them continue to generate sales while the economy continues to rebuild. I don’t recall any specific comments, but NLBMDA (National Lumber & Building Material Dealers Association) did come out with a statement applauding passage of the bill by the U.S. House of Representatives.  One question mark that NLBMDA and others have brought up is EPA’s lead paint rule, which requires painters and contractors working in homes that may have lead paint to have passed a certification. The concern is that there weren’t enough trainers to certify the vast numbers of people this rule will affect.

SR: The insulation industry, and specifically the Council of NAIMA (North American Insulation Manufacturers Association) has a very positive view on the Home Star program.  The outcome of the program would be beneficial in that:

1. Jobs would be created for those in our industry negatively impacted by the downturn in housing;
2. The existing housing stock in the United Sates would become more energy efficient and lessen the country’s dependence on foreign oil & gas;
3. A reduction in imported oil would lessen the country’s trade deficit.

I have read both the original House and Senate bills and found them to be the best piece of energy efficiency legislation that I have seen in the last nine years. It appeared that they learned from past mistakes and attempted to put forward a meaningful and executable program. We will have to wait and see what the final version of the program delivers.

MA: The unfortunately named “Cash for Caulkers” program has been talked about by the remodeling magazines, the building performance people, the energy people, and the policy people, but the majority of remodelers seem to be relatively quiet on the subject. I can speculate as to the reasons:

1. The program requires reading, and learning a new system of doing business;
2. The program requires a level of training and understanding of rudimentary building science;
3. The program is focusing on a subject that is largely uninteresting to most people, including remodelers.

Are the majority of your colleagues, and in Rick’s case, specifically readers, positively anticipating the bill being passed? Why or why not?

SR: Icynene, its installing dealer contractors and the sales team are closely watching the progress of this legislation. Both the Silver Star and Gold Star elements of the program will generate significant insulation business as we upgrade the thermal envelope of existing homes.

Icynene

MA: Remodelers come in a variety of types. Replacement contractors who handle roofing, siding and windows, are generally used to hanging out with the insurance industry and are familiar with rebate programs and the like. For them, Cash for Caulkers is just another incentive program that helps them sell their product. A number of them have added insulation to their repertoire, so this naturally fits.  Remodelers who see themselves as craftspeople don’t like this kind of work. They feel it is beneath them to some extent. They want to remodel and build stuff. They like being their own bosses and are generally uncomfortable with regulation, rules, licenses, etc. This program to them this is another government subsidy that they will not be able to take advantage of.

My customers don’t seem to care much. We have had a few who took advantage of the rebates on windows and insulation as part of larger projects. I don’t think any of them have heard of Home Star.

Some of my colleagues are talking about Home Star and a couple have gone out and gotten BPI certified and purchased IR equipment. They are the remodelers who are super interested in energy stuff or recognize that there is a huge business opportunity in front of them. Still, they are hardly mainstream or the majority.

RS: I’d say the vast majority of our readers are anxious for this bill to pass, because it is almost certain to help them grow their sales.

If there could be any changes to the Home Star bill, what would you and/or your readers want to see?

MA: I have a couple of thoughts on the Home Star program. First, I like that it is tied to BPI standards and includes test-in/test-out protocols. Second, I like that it requires a documented process that follows some guidelines. Third, I think the program is designed to support Matt Golden’s celebrity energy auditing company and essentially fund an otherwise unviable business model. Fourth, I think that the protocols may be good for some climates, but they do not adequately address the extreme climates. Moreover, they do not address long-term potentially adverse impacts on occupants through indoor living environment. Fifth, the focus on energy without a solid science-based understanding of the materials being used and their global warming potential or their impact on human health is dangerous. The rush to save energy at the expense of our health is dumb. The use of materials that may release more carbon than they will save (until 60+ years have passed) seems especially ridiculous.

If there was a change, I would like to see it better address the true value of the materials being used to make the energy upgrades. I would like to see strict rules for the monitoring of indoor environmental concerns for occupants. I would like to see rigorous training for the homeowners who will be operating the house after the contractor leaves. I think I would also like to see some requirement that Home Star work with existing green building programs (local and national) in an effort to encourage homeowners to engage in the more dynamic and well rounded process required by green building (vs the narrow bandwidth of energy efficiency).

RS: The only change I can think of would be the modification of the Lead Paint rule, which some view as overly onerous. Otherwise, from my understanding, it’s all good.

SR: The original legislation had the installing contractor provide the rebate directly to the consumer at time of installation. The installing contractor would then receive the rebate funds from a designated aggregator within 30 days. Net/Net: Lower initial cash outlay for the homeowner. As I understand it, the bill passed by the House has the consumer paying the full amount at time of installation and then applying for the rebate directly to the government. This change requires a higher initial cash outlay by the consumer, who then has to wait for the government to process the paperwork and send a rebate check. How long will it take for the government to “process” the paperwork? If there is a mistake or problem with the rebate submission or amount rebated, how easy is it going to be to talk to someone at the government redemption center?

Overall, we found our experts’ perspectives to be very insightful. Do you agree or disagree with any of their comments? How would you answer our questions?

• Cash for Caulkers: Filling Up the (Business) Case

Unfortunately, we weren’table to attend this year’s event, however, NAHB makes it easy to stay connected at home with the only national conference targeted to green building for the mainstream residential building industry (according to NAHB). NAHB is taking their conference marketing a step further this year (while still several steps behind the commercial and AEC industry), employing a full arsenal of social marketing tools to grow their green building community for the longterm.

The following channels are available to get involved with the NAHB Green practices:

• Facebook – Connect with attendees and presenters in dialogue about topics and current events about green building
• LinkedIn – Join the NAHB National Green Building Conference Group on LinkedIn and then notify your colleagues and others who are interested in residential green building about the group
• Twitter – Search for #NAHBGreen on Twitter to get the latest information from the Conference

Topics at this year’s Conference range from “Selecting the most cost-efficient green practice,” “Quality management for high performance homes,” and “Water conservation: a balance of technology and behavior.”

Here are the numbers about the NAHB Green Building Program:

• Over 5,200 professionals have reached the Certified Green Professional educational designation platform, making it the NAHB’s fastest growing professional designation
• More than 1,000 homes, remodeling projects and residential developments now have National Green Building Certification from the NAHB Research Center, verifying that they have met rigorous benchmarks in energy efficiency, indoor environmental quality and other green categories

Although they tweeted this afternoon that attendance is up, it appears that many decided to follow from home. Or they’re too busy learning new practices to spend time looking at exhibits. How will you get connected this year?

This photo was sent to us this afternoon:

• Green Roundup: Stats on Green Construction
• Green Building: Where Are We Going and How Will We Get There?
• Discussing the New Baltimore Green Building Law with Patrick Turner
• Green Building Trends at Public Schools
• While Some Media is Dying, Green is Growing Up

Strategic defaults are increasing in popularity. That number is estimated to be at least a million. These individuals can afford to pay their mortgage, but they’re walking away from an investment that has gone sour. But what kind of penalty will they pay? Their credit will certainly be hampered (if not destroyed), their home taken away, and what’s certain to be some ugly stares from neighbors. At least the ones that are still there.

How about the impact on the rest of the industry? What kind of burden do banks, builders, consumers and the communities now take on? With a lot of uncertainty in the future health of the housing industry following the expiration of the first-time homebuyer credit, the last thing we need is an increase in abandoned homes. This will continue to devalue the homes in the neighborhood and surrounding areas, making it harder to move inventory. And it’s only going make things more difficult for homebuyers when credit policies tighten up. There are other options, but government intervention doesn’t seem to be working.

So what’s your take? Smart, selfish or irresponsible? No matter your perspective, this will have an effect on you.

More on the subject from last night’s 60 Minutes:

Watch CBS News Videos Online

• Are You Ready for a Healthy Housing Market?
• Housing Market Collects a Rebound
• Housing Prices: Every Which Way But Up

We’re beginning to see some home builders offering new features to keep homeownership in the minds of potential buyers, regardless of how an extension of the bill plays out. In early March, for example, Lennar Homes announced their plans to offer, standard, an energy efficient home package designed to cut energy usage by 40%. Home energy monitors, energy efficient appliances, and even rooftop solar paneling, are becoming built-in features. Beazer is offering up to an additional $8,000 on their eSmart high performance homes. Green homes are selling, and at higher prices.

The latest comes from KB Home. Just yesterday they announced plans to offer the option of pre-wired homes for charging electric cars as part of their Made to Order™ homes program. ”KB Home is building new homes that are relevant to the way homebuyers are living – now and in the future,” said Jeffrey Mezger, president and chief executive officer of KB Home. “This is just one of many innovative and earth-friendly options that homeowners can choose from as part of KB Home’s Built to Order experience. It’s a great feature for homebuyers who currently drive electric cars, or for those who want to build their new home to accommodate these cars in the future.”

Knowing that time is running out, relatively speaking, it should be interesting to see how the factors of an economic upswing, marketing offerings from builders, and other variables combine to impact sale of new homes in this final 50-day stretch. Meanwhile, many will be waiting out the tax credit, as they expect prices will fall even further. What’s it going to take to save the housing industry?

• Harebrained Ideas for Home Builders
• Home Builders In Step with Move-Up Buyers
• Big Green Builders
• Is the Stock Market a Good Indicator of Housing Recovery?

Greenville’s housing market has remained relatively steady in the boom and bust that have been trademarks of the past ten years in real estate. The market was recently ranked #19 in Builder Magazine’s listing of the healthiest housing markets in the U.S. With modest 3-5% appreciation throughout the early part of the decade, home prices stayed relatively affordable and thus didn’t see a major decline the past couple years as witnessed in markets with double digit annual run-ups like Florida and California.

While prices have remained fairly stable in the market, both Creech and Oles have shared some of the same pains other builders and remodelers have faced throughout the country. Below is a summary of our recent discussion.

Build Intel: How has the recession impacted your business?

Doug Oles: Our production has slowed due to lack of demand and an increase of competition. We’ve had to trim our staff and try to make it through these tough times. We are fortunate enough to have projects through these times. We also had a little foresight and were able to prepare for this downturn. Unfortunately we really do not know how long this downturn will last, and I am sure that many companies in our industry will not make it.

Marty Creech: Dramatically, it has changed people’s priorities from large-scale projects to minor projects. I’ve gone from an average job of $250,000 to $100,000 the past two years. We’ve also had some challenges working with banks that may not be local and understand this housing market has remained stable. I recently had a homeowner wait nine weeks for financing. That’s never been an issue in the past. We’ve had more competition popping up too, from new homebuilders who have entered the remodeling market. I’ve gone from four to five competitors in my market space to 10 to 20.

BI: Have there been any silver linings for you and your business during the downturn?

DO: We have been able to “take stock” in our company and our process. We have had the time to streamline and increase efficiency in regards to process and sub-contract management. Also, with the downturn, pricing on materials and labor has come down giving our clients more value for less cost, making it an excellent time to build.

MC: Yes, we have remained somewhat busy, but I’ve also been able to spend more time with my family during the downturn.

BI: The stock market / analysts have followed the home building industry religiously since the recession began. How much do you follow the housing start numbers and the performance of the big builders?

DO: I do follow these numbers and reports fairly regularly. Because we are in a specific market at a specific price range, I do not put a lot of emphasis in these numbers. It’s good to speak to clients about these things, especially when the numbers are positive, but our clients typically know that they are going to build before they start speaking with us. We do follow some analysts and economic forecasts that pertain to us regionally. Also, I feel the local home sales numbers are a good indicator for new construction in my market.

MC: I really don’t follow these reports. It has little bearing on my market.

BI: Lumber prices are on the rise due to tight supply, have you seen an impact yet with your business?

DO: We have not seen a big impact as of yet, but we are preparing for this in our bids. Obviously an increase in lumber pricing is not going to help the building industry unless you can tell a client that they should build today, because tomorrow their house will cost more. In recent history this has just caused a decrease in builder profit.

MC: Due to the size of my company, I haven’t seen a major repercussion yet. It may have jumped 5%, but on my projects, a 5% jump on the cost of lumber isn’t a huge issue. During the gas crisis about five years ago, we adjusted prices then because everyone else was adding fuel and delivery surcharges, but so far this has had little impact.

BI: What is the general mindset of your buyer right now?

DO: Today’s buyer is looking for a great deal. They know the market is down and they expect to get an excellent price on their project. Today’s buyer is justifiably more discriminating and knowledgeable of costs. These are good things. We recommend being as knowledgeable as possible about a purchase and investment at this level. Today’s buyer must be cautious and make sure they do their homework on the builder as well. Because of the down market we have seen some interesting and possible dishonorable tactics from builders trying to get an edge.

MC: I’ve had many people think that right now in this market, everything is on sale and pricing should be very aggressive. While there is some truth to that, material has really held constant or gone up, so pricing reflects that as well. I have been able to leverage the downturn with some of my laborers because they are short on work.

BI: Are you starting to see signs of a turnaround in the market?

DO: Just within the past two weeks we have started to see a slight uptick in interest. We’ve seen some action in the local sales scene as well as a few more inquiries from potential clients. We have seen some negative news recently on the national new home sales front so we will see if that has an impact on this overall fragile market.

MC: I have a lot of estimates out there. The downtown area has remained strong for me. I’m still seeing customers doing a lot of homework, pulling multiple quotes from different remodelers and builders, but I do feel like this market is heading in the right direction.

BI: Anything else you’d like to add?

DO: It is a great time to build for people who have the financial ability right now. You should be able to get a good price on most projects. The market will come back. Sometimes it’s hard to stay positive, but we must remember that markets do cycle, and this industry has had, and will have, some great years. The companies that can make it through the bad times should be set up for positive gains when we get back to a better economy.

• Industry Insider: The Future of Remodeling
• Builders Remodel Their Identity

Officially wrapping up our 2010 International Builder’s Show coverage, we leave you with the thoughts of some of the industry’s largest product manufacturers and most recognizable brands.  These companies, including Kohler, LP, Masco Bath and Broan-NuTone, all have a positive outlook for 2010, although a cautious one that will continue to be influenced by housing trends.

Is it too early to start thinking about what’s in store for Orlando next year?  At a very minimum, this story should continue to take a different turn…

• 2010 International Builders’ Show Coverage
• Weekly Intel: 2010 International Builders’ Show Primer

Now, this post won’t get into all of the details and speculation of the program; we would’ve written it a lot sooner if so. Besides, just Google “Cash for Caulkers” and look through the 785,000 search results to see exactly what the bill’s all about.

Conservationvalue.blogspot.com

We’ve been following the buzz and offer the following recommendations, if you will, to capitalize on the program and the impending future of the building energy performance certification industry.

1. If you, your colleagues or partners are not already, get certified. There’s no better time than now and the resources are more accessible – and qualified – and ever before. We suggest looking into programs with the Building Performance Institute (BPI), RESnet (Residential Energy Services Network), and Home Performance with ENERGY STAR (a national program from the U.S. EPA and U.S. DOE).
2. Think globally, act locally. Look at the example from the Builders Association of Minnesota. They partnered with a remodeler and window manufacturer. The “trifecta” employed 600 people that quickly trained and certified contractors and insulation installers to make improvements to 1,400 homes. A Win-Win.
3. Get your voice heard. A number of organizations, from national to grassroots, are cropping up to best position themselves, their employees and clients to meet the needs of both certified professionals and engaged consumers. We recommend looking into Efficiency First, “a national nonprofit trade association that unites the Home Performance workforce, building product manufacturers and related businesses and organizations in the escalating fight against global warming and rising energy costs.
4. New product and program development – Although we have to believe Honeywell was planning their Enovate™PRO Contractor Program well in advance of Cash for Caulkers news, they have the right idea. With new products, marketing support and professional development training, the program comes full circle for the professional.

How is your business reacting to the Cash for Caulkers buzz? What expectations do you have for the program?

• Pro Panel: Cash for Caulkers
• Green Will Grow Remodeling Business

As we collect our thoughts and evaluate our strategies, here is some of the best coverage of IBS from around the Web (not including the large volume of Twitter updates).  We’ve also highlighted some of the sights and sounds that caught our attention.  If you read through this, you’ll find just about every product that was worth mentioning from the Show, as well as the top news stories that were released last week.

Comprehensive Coverage

Builder Magazine

Charles & Hudson

Bob Vila: On the Level

Popular Mechanics

Marvin Windows and Doors Blog

Consumer Reports Home & Garden Blog

WSJ Developments

ECOHOME

Home Construction & Improvement

Charles & Hudson

News

55,000 crowded the aisles

Homebuilders sticking with less-is-more approach

Homebuilding’s biggest CEOs to skip Show

More suffering in housing

Hard times show at builders’ expo

Remodeling activity forecast to pick up

Homebuilders hope to find financing

Photos

Video

Werner Ladder

LP SmartSide

Behr (Behr is an IMRE client)

Did we miss anything?

• The 2010 International Builders’ Show: Live Look from Las Vegas
• Weekly Intel: 2010 International Builders’ Show Primer
• Making the Most of the International Builders’ Show
• Product Manufacturers Look Ahead to 2010
• Builders Remodel Their Identity

By now, if you read this blog you’ve gathered how important The International Builders’ Show is to the residential building industry.  It’s the annual gathering of the greatest minds, brands and hands in the industry.  Here you’ll find the latest in product innovations and construction technology and friends you see only once a year.  And because we’re in Las Vegas, it’s sure to bring the best out of people.

Because you weren’t able to make it, we’ll bring the Show to you.  Enjoy our view this week and follow us for updates, news and witty commentary, providing some insight that will get you prepared for what we expect to be a successful year ahead.

• 2010 International Builders’ Show Coverage
• Looking Ahead to The International Builders’ Show

The countdown to the 2010 International Builders’ Show (IBS) has begun.  Okay, it actually started a few months ago – now it’s crunch time.  All final preparations are being made and the assembly of the booths will begin this weekend.

As you get ready for the Show, here’s a list of things you can expect next week:

• The most innovative building products
• The absence of the New American Home
• Twitter chatter – follow our list of attendees and exhibitors
• Smaller, modular, green homes
• More business services provided by manufacturers, and specialty providers, including Internet-based tools
• “Celebrities”

Also check out Builder Magazine’s 10 Things to Do at IBS article.  Even if you’re not attending, you can experience everything the Show has to offer thanks to social marketing.

More from us next week, including live updates, images and video.  Follow us from the Show on Twitter – @BuildIntel.

• 2010 International Builders’ Show Coverage
• Making the Most of the International Builders’ Show
• Product Manufacturers Look Ahead to 2010
• Weekly Intel: Top Tweeps of the Week
• Weekly Intel: Top COP15 Tweeps of the Week