Sweet Orange

Downs [of the Brookings Institute] expects big changes because of the recession, such as homes being built smaller and being less affordable. He also expects a switch from the more conservative spending and fewer government restrictions of the Reagan and Bush eras to the more liberal government spending and tighter government regulations that the Obama administration has already started to enforce.–”Brookings fellow: Recession is not over yet,” Jacksonville Business Journal

We are about to have new legislation that is aimed at preventing the housing and financial market crashes that we recently experienced from occurring again. Opinions differ on where or not this new legislation adequately addresses these problems while at the same time not unnecessarily stifling financial institutions ability to lend.

Back in February at an Urban Land Institute event, Anthony Downs of the Brookings Institute identified the following as issues that the new financial legislation should address but probably would not due to “political backlash.” When reviewing this new legislation, keeping this points in mind can help you decide how successful lawmakers were in their attempt at reform.

Here are the points that Downs thought were necessary for successful reform of the financial institutions:

• Break up the largest U.S. banks that control much of the nation’s money
• Require that financial institutions have adequate reserves
• Reorganizing securities
• Require that mortgage bankers conform to stricter rules
• Ensure international cooperation on financial regulations

What do you think? Does the new legislation go too far or not far enough in addressing the problems that lead to our current financial difficulties?

Note: For one analysis with some pros and cons, see “The Dodd-Frank Financial Reform Bill is a Valuable Step Forward” Douglas J. Elliott, Brookings Institute.

Photo Courtesy Brookings Institute

In a previous post, I wrote about the Urban Land Institute report that states:

The age of suburbanization and growing homeownership is over. The outer suburbs will have the least expensive housing but the cost in time and money of long commutes will eliminate any savings. Many who live there will do so not by choice but by necessity.

Recently, I came across another report that also predicts a gloomy outcome for the U.S. suburbs. This Brookings report (The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008) states:

By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent-almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall.

These reports raises the question: Are the suburbs, or at least some of the U.S. suburbs, destined to be the new inner cities?

Photo Courtesy Scorpions and Centaurs’

The City of Irvine has been ranked as one of the country’s “Smarter Cities,” by the Natural Resources Defense Council for its strides in environmental stewardship, sustainable growth, and livability. Irvine ranked 13th among the 178 medium-sized cities surveyed.–City of Irvine website

One of the programs that helped Irvine obtain the “Smarter Cities” award was the giveaway of over 60,000 CFL light bulbs to Irvine residents.

An ENERGY STAR qualified compact fluorescent light bulb (CFL) will save about $30 over its lifetime and pay for itself in about 6 months. It uses 75 percent less energy and lasts about 10 times longer than an incandescent bulb.–EPA

Irvine’s award-winning program that distributed 71,706 to Irvine residents between 2006 to 2008 achieved the following benefits:

• An annual saving to Irvine residents of $392,000
• Annual carbon emissions reduction of 1,421 tons
• The carbon emissions reduction is equivalent to taking 241 cars off the road every year.

The City exceeded its goal of distributing 60,000 CFLs to Irvine residents.

To see a list of additional programs that make the City of Irvine one of the country’s “Smarter Cities,” see the City’s Environmental Programs page.

Graphic Courtesy City of Irvine

Earlier in the week I posted information that listed some of  Southern California Edison’s (SCE) green rebate programs for home and  apartment owners.

Today’s post lists some of SCE’s green rebate programs for businesses. Again, this information is straight from Irvine’s environmental programs webpage. But the rebates are available to all SCE businesses, not just Irvine businesses.

SCE provides a wide variety of rebates and other incentives to small, medium and large commercial customers. A brief description of each program is below.

• Express Efficiency - provides rebates for a wide variety of energy efficient products - lighting, refrigeration, food service, agriculture, air conditioning and premium efficiency motors to retrofit existing buildings.

• California New Homes Program - provides financial incentives to builders and developers for exceeding Title 24 Energy Standards in new home construction.

• Retro Commissioning - provides an in-depth investigation of building operation and maintenance improvements to HVAC mechanical equipment, lighting, refrigeration and related controls to optimize energy usage and reduce inefficiencies in existing commercial buildings.

• Savings By Design - provides assistance in the designing of energy efficient commercial buildings and incentives to owners to offset the costs of energy efficient buildings and to designers who meet ambitious energy efficiency targets. For more information visit www.savingsbydesign.com or call (800) 338-8502.

• California Solar Initiative - provides incentives on a per watt basis for solar generation.

For more information on SCE’s business rebates, see SCE’s Energy Management Solution webpage.

Related post: The Gas Company Green Rebates for Homes (and Businesses)

Source: City of Irvine, Green Building Resource Guide

Following is a list of green energy rebates that Southern California Edison (SCE) offers to owners of residential buildings. The list is from the City of Irvine’s webpage, so no original writing here–just some good information.

Although the list is from Irvine’s environmental programs webpage, the rebates are available to all SCE residential customers. This includes separate rebates for homeowners and apartment owners.

SCE offers a rebate program that allows residents to save money and energy. The rebate program offers cash rebates on qualifying energy-efficient upgrades or improvements you make to your home. A brief description of available rebates is below.

Appliances

• ENERGY STAR® Qualified Refrigerator Rebate Program - Receive $50 back.
• Refrigerator & Freezer Recycling Program - Receive $50 back.
• Energy Efficient Electric Water Heater Rebate Program - Receive $30 back.

Heating and Cooling

• ENERGY STAR® Qualified Room Air Conditioner - Receive up to $50 back.
• Summer Discount Plan - Receive up to $200 back.
• Whole House Fan - Receive up to $50 back.
• Evaporative Cooling - Receive up to $600 back.
• Cool Roof - Receive up to $0.20 per square foot on qualified roofing materials.

Lighting

• ENERGY STAR® Qualified Lighting - Save up to $125.
• Lighting Emitting Diode - Save up to $6 per month.

Pool Maintenance

• Pool Pump Rebate Program - Receive up to $200 back.

Renewable Energy

• California Solar Initiative

For multifamily building owners and managers, SCE also provides rebates for energy efficiency improvements in the categories of lighting, HVAC, insulation and windows to retrofit existing multifamily properties of two or more units through the Multifamily Energy Efficiency Rebate Program.

For more information on SCE rebates for homeowners and multi-unit owners, see SCE’s Home Rebate and Savings page.

Research by the National Association of Home Builders (NAHB) revealed that three factors are influencing homebuyers to shift their preference to smaller homes than were preferred in the recent past. These factors are an economy in recession, first-time homebuyers making up a larger portion of the homebuying market than has traditionally been the case, and the 55+ age group making up a larger portion of the homebuying market than has traditionally been the case.

The NAHB report, which was published in January 2010, found that builders are adjusting to the new market demands.  To meet current market desires, ninety-five percent of the builders that were surveyed for the NAHB report stated that smaller homes were part of their upcoming business plans. In fact, builders have already made adjustments.

In 2008, the average square footage of a new home was 2,520 square feet; however, in 2009, the average square footage of a new home was 2,480 square feet. The last time a decline in the average square footage of newly built homes was this large was 1982.

As reported in the Walls Street Journal, the following features are those that the NAHB research found to be most and least desirable to potential buyers in 2010:

Most desirable:

• Walk-in closets in the master bedroom
• Laundry rooms
• Insulated front doors
• Great rooms
• Energy-efficient windows
• Linen closets
• Programmable thermostats
• Energy-efficient appliances and lighting
• Separate shower and tub in master bathrooms
• Nine-foot ceilings on the first floor

Least desirable:

• Outdoor kitchens
• Outdoor fireplaces
• Sunrooms
• Butler’s pantries
• Media rooms
• Desks in kitchens
• Two-story foyers
• Eight foot ceilings on the first floor
• Multiple shower heads in the master bath
• Smaller kitchens

For comparison, a 2008 Better Homes and Garden survey revealed that homebuyers and remodelers found that the following features were the most desirable features to a potential home:

• Impressive kitchens
• Plenty of storage
• A large master bedroom
• Personalized spaces
• Generously-sized laundry rooms

The 2008 Better Homes and Garden survey also found that potential homebuyers preferred sun rooms (36%), extra-large front porches (35%) and oversized laundry rooms (34%) to home offices, exercise rooms, playrooms and wine cellars.

And for more comparison, a 2005 Better Homes and Garden survey identified five trends that the survey respondents wanted in their ideal home:

• Affordability
• Flexibility
• Indoor and outdoor livability
• Innovation
• Kitchen centered

Cash-in-hand converts to house-in-hand in current market

MDA DataQuick had the following to report on the number of Southern California homes that are bought but do not end up being occupied by the owner:

Absentee buyers - mostly investors and some second-home purchasers - bought 18.9 percent of the homes sold in February. Buyers who appeared to have paid all cash - meaning there was no indication that a corresponding purchase loan was recorded - accounted for 29.3 percent of February sales. In January it was a revised 29.7 percent - an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

As would be expected, some of these absentee buyers are flippers. According to DataQuick’s DQNews, 3.4% of Southern California homes were flipped* last month (February 2010). This is up 1.6% from February 2009.

This brings up the question: What is the optimum percentage of homes that should be owner-occupied versus rentals? Urban Land Institute (ULI) predicts that homeownership levels in the U.S. will stabilize at 62% to 64%.** Whether or not that is the optimum level is a discussion that I’ll leave for another time.

*Flipped is defined as bought and sold within a three-week to six-month period.

**The U.S. homeownership rate is currently approximately 67% and was approximately 45% between 1900 and 1945. I’ll have more on this in an upcoming post. You can also read more about this in the ULI report “Housing in America: The Next Decade,”

According to a report from the Urban Land Institute (ULI), when the economy picks up, the demand for housing will increase, However, this does not mean that ULI sees a return to “normal” for the U.S. housing market in the coming decade:

Workforce housing will remain a challenge. The age of suburbanization and growing homeownership is over. The outer suburbs will have the least expensive housing but the cost in time and money of long commutes will eliminate any savings. Many who live there will do so not by choice but by necessity.

An article in Time magazine gives another twist on what the new normal for housing will be:

“The housing that has been built doesn’t fit the market any longer,” says Berkus [Barry Berkus, president of B3 Architects]. Which is part of the reason that, even with so many existing homes sitting unsold, we keep building.–”Downsizing: Today’s Home Buyers Are Thinking Small,” Barbara Kiviat, Time

The ULI report goes on to say that four groups will have the most influence on the housing market in the coming decade. And the report states that the circumstances that these four groups will encounter will affect their buying power.

These four groups are as follows:

• Older Baby Boomers who will become seniors in unprecedented numbers
• Younger Baby Boomers many of whom will be unable to sell their current suburban homes to move to new jobs
• Generation Y who will be renting far longer than past generations
• Immigrants and their children who will want to move to the suburbs but may find them too expensive even after current drop in housing prices.

What do you think? Are we just in a down phase of a cyclical housing market? If so, when the upswing occurs, will it look like the traditional housing market of the last fifty years? And if not, what will the new normal be for the U.S. housing market? The ULI report and Time magazine article provide some thoughts on this.

Here is an example of a home that sold for more than the list price. This home, which is in Irvine’s El Camino neighborhood, was listed on August 12, 2009, for $415,000, delisted on August 19, then relisted on September 8 for $415,000. This El Camino condo sold on 10/19/2009 for $437,500, approximately $22,000 more than the asking price.

8 Pierre Irvine, CA 92604 (El Camino neighborhood)

• 3 beds/2 baths
• 1223 SF
• Condo built in 1977
• HOA: $175
• Asking price: $415,000 ($339/SF)
• Selling price: $437,500 ($358/SF)

Current estimates for this home:

• Cyberhomes: $406,828.
• Eappraisal: $362,930
• Zillow: $438,000.

You might be surprised to learn that the Big Orange is a green jobs hub. In addition, green jobs on the national level are growing faster than most other job categories. Here is a breakdown of how green jobs are an important feature of our economy:

Green jobs on the county level:

Orange County will likely add 3,130 new energy-related jobs over the next three years, most of them in the realm of project managers for construction or design work, according to a new report by a local college-affiliated group.–Pat Brennan, “Report: O.C. to add 3,000 jobs in energy sector”

Green jobs on the state level:

From January 2007 to January 2008, green jobs in California increased by 5 percent, while jobs decreased by 1 percent in the economy as a whole.–Pat Brennan, “Need a job? Think ‘green’ - jobs booming in O.C., statewide“

Green jobs on the national level:

The push for clean energy could lead to explosive job growth in the United States, according to a new report by a clean-energy research group.

The report, Clean Tech Job Trends 2009, says activity is high in the renewable energy market, with some predicting the biggest chance for wealth and job creation since the rise of computers and the Internet.–Pat Brennan, “Report: job potential high in renewable energy“

Green jobs and national security:

According to Mayor Michael Bloomberg, going green is important not only because of the personal job benefits it might bring us, but also for our national security.

We are transferring our wealth to countries around the world who don’t agree with us and, in many cases, are funding the very terrorists that we are sending our young men and women out to fight….We have got to get somehow or other to [energy] independence. It’s doesn’t matter if you are a greeny or not. The bottom line is we cannot keep funding our enemies.–Michael Bloomberg on Meet the Press

For more information on green jobs and the economy, see:

• Energy Efficient Occupations in Orange County, Center for Excellance, California Community Colleges
• Green Business by Media Planet
• EDF’s Clean Energy Jobs State Fact Sheets
  

Graph Courtesy Wikipedia