The All-Electric “Elephant” in the Room.

We all know it’s there and we all know that no one wants to talk about it. The all-electric “elephant” in the room. Or more specifically, the home. We are about to rip-off the band-aid and address the belief that it costs more to have all-electric appliances than gas or duel-fuel appliances.

For purposes of this discussion, we’ll be focusing specifically on the incorporation of electric cooktop, heat-pump water heater, HVAC, and heat pump -=clothes dryer in both single-family and multi-family California residents*.  (Climate Zone 9: Los Angeles, Pasadena, Burbank & Pomona)

Myth: It is more expensive to build a home with all-electric appliances.

Reality: The savings of switching from mixed-fuel appliances to all-electric appliances is significant on both the cost of the appliances as well as the infrastructure.

  • The appliance savings on a 2-story, 2,700 sq. ft. single-family home is $3,282 per home, and a multi-family, 2-story, 6,980 sq. ft. 8-plex is $2,650/unit.
  • The infrastructure savings that can be obtained by switching to all-electric home construction, based on Southern California Edison CPUC Rule 16, is approximately $1,400 per single-family detached and $1,000 -$2,500 per multi-family attached building.
  • Reach Codes, local enhancements to state codes, typically act to the benefit of all-electric construction. Under the reach codes, mixed-fuel homes must meet additional requirements which will add to the cost of construction, whereas all-electric homes have no additional

Myth: Buyers will not settle for an all-electric home. They won’t settle for an electric stove/range nor do they want a heat pump water heater, HVAC heat pump, or electric clothes dryer.

Reality: According to a recent study conducted by Meyers Research, health and wellness features are the new premium elements desired in a new home, with the second most desired feature being Indoor Air Quality (IAQ). What does this have to do with making the switch to all-electric appliances?

  • Gas stoves are a primary source of combustion (burning) pollution inside the home. Cooking on gas can spike emissions of nitrogen dioxide and carbon monoxide making the IAQ up to 5-times more polluted than outside air pollution.

“There are clearly climate and economic arguments for electrifying buildings, but there is also a profound health imperative. A new RMI report highlights the impact of gas stoves on air pollution and public health. “  Rocky Mountain Institute

  • Researchers in the UCLA Fielding School of Public Health have released a report focused on the impacts of residential natural gas appliances on indoor and outdoor air quality, human health, and potential benefits of widespread residential electrification. Although the study focused on California, indoor, and outdoor air pollution from gas appliances can be expected everywhere.
  • Indoor air pollutants can lead to a wide range of illnesses, in both children and adults, including asthma, heart problems, lung cancer, poisonings, musculoskeletal injuries, and accidents.
  • The EPA lists indoor air pollutants as one of the top 5 environmental dangers. With people spend 90% of their time inside (plus the coronavirus pandemic), healthy indoor air quality has become increasingly important.
  • Recent research has also demonstrated that poor indoor air quality has effects on productivity, decision-making, and well-being.

Myth: Electric appliances are inefficient, ugly, or both!

Reality: Appliance manufacturers have done a great job keeping up with modern technology to design and develop safe, efficient, affordable, and space-saving, smart, and environmentally responsible appliances. which accounts for more than 10% of the US carbon emissions. The new electric induction cooktops are not your grandmother’s coil range tops.

 Induction cooktops/ranges are safe, as there is no open flame. They are efficient, “no other cooking technology that we’ve tested is faster than the fastest induction elements.” They also maintain a consistent and precise temperature, unlike gas which fluxgates and uses more energy (gas) to maintain the desired temperature.

“I am a big fan of the control, efficiency & consistency I have with an induction cooking.”

Travis Swikard, Chef/Owner of Callie Restaurant.

 Home heating is the largest direct use of fossil fuel. Using heat pump versus a gas furnace, will significantly reduce carbon emissions, and is 2 – 4.5 much more efficient than Energy Star gas furnace (even in cold climates), delivers 2-4 times more heating energy than the electricity it consumes, and lowers monthly utility bills.

  • Gas water heaters are another fossil fuel using appliance affecting IAQ in homes. Using a heat pump water heater, which is typically cheaper to install than a gas system, will have a positive impact on the environment and be more cost-effective for the consumer, but it will also be beneficial for developers and contractors through the rebates made available by electric utilities and governing bodies in an effort to achieve their carbon goals.

MEETING YOUR CUSTOMER LIFESTYLE & WELLNESS DEMANDS IN THE COVID-19 ENVIRONMENT

As the impact of COVID-19 continues to play a big role in our lives, Americans have realized now more than ever, “there’s no place like home.” In the last six months, shelter-in-place orders and the continuing spread of COVID-19 have made our home spaces more than just a place of rest and refuge. They’ve become workplaces, school spaces, gyms, restaurants, playgrounds, meeting places, dance halls, artist’s retreats, libraries, and much more.

All of this excessive home time has given Americans a lot of time to think about what they want in their home in the future. Many of their demands center around lifestyle and wellness, which they place at the top of their new home wish list. Smart homebuilders can increase sales of their new homes by meeting these demands, while also ensuring health, safety, and well-being of their homeowners. Research about the impact of the pandemic on new home design, reveals that the top four areas that homebuyers want to see changed in new homes are:

  • Safety First
  • Floorplan Design
  • Interior Materials & Products
  • Technology

SAFETY

There has been a lot of research about the short and long-term impact of the pandemic on the home building industry. One of the most in-depth studies was the America at Home Study, which gave insight into a collective changing viewpoint of home and safety as a direct result of the pandemic. The study was hosted online by Gazelle Global Research from April 23 to 30 with a nationally representative sample of 3,001 consumers 25 to 74 years of age with household incomes of more than $50,000.

One of the most important areas that the study focused on was how safe owners & renters were feeling in their homes. An overwhelming majority of respondents said that their home now represented a “safe place” for them. In addition, 91% of respondents said safety from disease is their number one priority in their home. When respondents were asked what is missing that they would like to have and be willing to pay for in a new home, they mentioned separate entrances for family/guests, mud rooms where they can remove clothing and a bathroom nearby to shower before entering the home. They indicated that they wanted control of how they lived in their homes, with special attention paid to cleanliness, indoor air quality, separate spaces for residents, germ-free surfaces, and touch-free entries & plumbing

FLOORPLAN DESIGN

 Multiple Home Offices

With more people working from home, new home buyers are demanding multiple home office spaces. As the tools to work from home get better, the next generation of buyers will look for homes where living spaces and working spaces are more defined or adaptable. For some families, that might mean multiple adults need workspaces. In the America at Home Study, over 30% of the respondents said they would need office space for more than one person.

Multi-Purpose Spaces & Flexible Walls

Since homes are playing a central role in the lives of their residents, the need for multi-purpose spaces is a top priority. Open floor plans can be difficult to manage lots of varying activities happening at the same time, so buyers are looking for spaces that can easily be turned into a playroom, classroom, meeting space, etc. Buyers would like to have more privacy in those plans, so it would be a good idea to offer flexible walls.  Garages are one of the areas that buyers want to be able to have flexibility, so make sure that there are plenty of design options to make the garage into a gym, office, or classroom. Over 49% of the respondents in the America at Home Study had made significant changes to their garage to meet their privacy and space needs.

INTERIOR MATERIALS & PRODUCTS

With all the emphasis on health, safety, and wellness homeowners are looking for ways to easily and safely keep themselves protected from illness. The America at Home Study found that 73% of respondents are disinfecting their homes more as a result of COVID-19. When respondents were asked what is missing that they would like to have and be willing to pay for in a home, the top results were related to the interior materials and surfaces of their homes that they now find themselves so frequently disinfecting.

Specifically addressed were germ-resistant countertops and flooring (55% overall) highest among older millennials/young Gen Xers (63%) and then millennials (59%) as well as touch-free faucets, appliances and smart toilets being desired by more than half of millennials and Gen Xers.

When looking at interior finishes, you should consider using copper, bronze, and brass that have intrinsic antimicrobial and virus-fighting agent properties rather than stainless steel, which is shown to hold onto the live virus for several days.

Since residents are spending more of their time in their home homebuyers are very concerned about indoor air quality, energy efficiency, and a quiet, healthy environment. They understand the benefits of dual paned windows, high-efficiency HVAC systems, insulated roofs, foam insulation, induction cooktops, and other construction techniques and products that make their homes safer, provide better indoor air quality, and are healthier living environments.

“Today a new home needs to be healthy, built beyond code requirements to deliver the best energy efficient and healthy features available. Fit, connected with the latest and best single application control and Fabulous, able to be completely personalized on schedule, so schedules and the release for sale should be adapted allow for earlier sales in the construction process. Delivering all three, Healthy, Fit and Fabulous homes transforms a homebuilder into a New Home Retailer who builds what today’s new home shoppers really want. If new homebuilders want to increase and continue to grow their sales during and beyond the pandemic, they’ll make this transition immediately and stop building old homes that haven’t been lived in,” said Mike Moore, owner of Moore Leadership & Peak Performance.

TECHNOLOGY

Technology has become one of the biggest winners in the COVID-19 homebuilding environment. New homebuyers are more than willing to pay for products that will help them manage their energy, ensure cleaner water and indoor air, and protect the overall environment. In a June 2020 study of 2,000 prospective new homebuyers, Meyers Research found the following:

When asked “How much would you be willing to pay for these features?”, the survey found the following:

Controlled Clean Air Unit:  $800 (66%)

Water Filtration Whole House:  $1,200: (69%)

Circadian Lighting for Healthy Sleep:  $700 (32%)

Virtual Appliances:  $500 (26%)

Net Zero Living:  $30,000 (22%)

Features to Saving Money & Be Green – Would Pay $30K+ (67%)

Nortek Controls has seen an increase in demand for their Elan Smart Home Automation system, which allows residents to control their entire home with an app on their smart-phone.

“A home isn’t smart if it’s not healthy and healthy home is the new home people are looking for today. Premium home control platforms have a wealth of abilities to deliver intelligent wellness solutions and improve the lives of new homeowners.  The solutions available today that address air filtration, water purification, circadian lighting, and sleep/comfort features make a new home today superior to any home on the market,” said Bret Jacob Director of Builder Services, Nortek Controls.

Redefining Events Amid Social Challenges and Beyond

We are all very aware of the impact COVID-19 is having on our daily lives, both personally and professionally.  “Social Distancing” is now a mandated practice that has disrupted the core of many businesses.  One specific outcome of “Social Distancing” is the cancellation of events, large and small. 

How will event cancellation impact business? Your marketing strategy plays an important role in your overall business plan, which includes introducing your product or service.

  • Events are key to an overall marketing campaign and essential to reach defined business goals.
  • Networking/Relationship building is a fundamental component of business development. Personal connection, facial expressions, voice fluctuation, and a handshake (yes, they will make a comeback) are an essential part of creating trust.
  • Events from gala’s to 5k runs are huge fundraising opportunities for non-profit charitable organizations.  The financial impact for these organizations and others that rely on event revenue could be devastating.

In a few months, the COVID-19 epidemic will be behind us and things will get back to normal, albeit a new normal. And that new normal will include things we’ve had to learn and remind us of procedural steps we’d often sacrifice in order to speed up completion.  

  • Online meetings and training will be incorporated with marketing and business meetings.
  • Businesses will ascertain the importance of sufficient lead-time for planning, promoting and executing events, training sessions and conferences. Depending on the size of an event and the new components needing to be incorporated, it can take 2-6 months (or longer) to plan. 
  • Re-scheduling and re-programming canceled events need to start as soon as possible.  Hundreds if not thousands of events in Southern California are going to be vying for new dates, times and programming at venues in an already crowded Summer/Fall calendar.

For now, during this time of “social distancing,” consider supplementing your marketing campaign with staged events. By utilizing a live-streaming, two-way platform you can connect and personally engage with clients for a model grand opening, new phase release, or a small reception to share information on a product or achieved milestone. These assets will continue to be valuable, even after COVID-19 is gone and “social distancing” is a thing of the past!

Think Ahead. Be Prepared. Get Off Your…

The homebuilding industry has been around for quite some time and has gone through its fair share of ups and downs. And it has survived – despite its resistance to change.

Think Ahead. Change IS inevitable.

The notion that “we’ve always done it this way,” is what prevents the industry from being a process innovator and systems thought leader. Harsh? Sure. But having worked in homebuilding for more than 30 years, it’s also true.

Overall, the industry is not good at thinking ahead and preparing for change. For instance, the CALIFORNIA ENERGY EFFICIENCY LONG-TERM STRATEGIC PLAN (CAEESP). This plan is California’s roadmap to achieving maximum energy savings in the state between 2009 and 2020. It was adopted in 2008 – more than 10 years ago. The Plan was known as were the dates for various code changes. What did a majority of California homebuilders do at the end of 2019, before the latest code changes went in to effect? They pulled as many building permits as possible under the “old” code. The absence of thinking ahead, 10 years is plenty of time, there will be a slew of newly constructed homes which will be outdated, even obsolete, by the time they are completed and ready for a family to move-in.

 Be Prepared. Change IS unexpected.

Social Distancing ala COVID-19, need I say more? We’ve had to put in place and adopt ways of doing business, building and selling homes. Embracing technology that has been in use by other industries, has been homebuilding’s saving grace. However, implement technological tools that are readily available into industry processes that have been resistant to change, has fallen short at the implementation stage. Virtual tours are great but lack personal connection. Skype and FaceTime can work in a one-on-one situation, but sales teams have not been trained on how to adjust their in-person sales approach to one that remains professional and on-brand in an online format. Learning from other industries that have been selling and teaching by using live-digital platforms will help bridge our connection with our home buyers. And moving forward, you will have a new mechanism for your Sales & Marketing toolbox, unexpected challenge or not. 

Get Off Your Arse. Change IS leaving you behind.

We will survive this challenge, but let’s learn from it and make strategic changes with the intention and incorporate tools that will advance our industry. Think Ahead. Be Prepared. And take the necessary steps, now. (aka Get Off Your Arse!) 

BUILDING GREEN HOMES ARE NOW MORE POPULAR WITH PRODUCTION HOME BUILDERS

In a recent study by the National Association of Home Builders (NAHB), in conjunction with Dodge Data & Analytics, single-family builders who self-identified as green builders (building at least half of their projects green) were asked why they choose to build green, and what their top practices and strategies are to improve green home performance.

More than two-thirds of those surveyed said they build green projects because they believe it is the right thing to do. This strong position shows how the green building trend has become more about building homes that have a clean energy footprint for the environment than the use of green terminology for marketing, a practice known as “greenwashing.” 

Other top reasons builders cited include creating healthier homes, meeting market demand and differentiating their product in their local market, which are compelling market opportunities for builders considering entering this market segment.

The biggest goal for all green builders is building homes that are highly energy efficient. As noted in the full report, almost all respondents (91%) are using energy-efficient practices to some extent, whether or not they identify as green, and two-thirds of all builders do so on at least 75% of their homes, illustrating how the mainstream home building industry is increasing the use of green building practices.

Almost half of the green builders say that building a healthier indoor living environment, also known as improving the indoor living environment, is a practice heavily utilized in their projects. Almost 50% of the green builders cite it as a top way to improve green home performance, and two-thirds of all builders are employing strategies to achieve this practice. Over 39% are doing it for 75% of their projects. This is a significant market segment but may also provide opportunity in many areas to differentiate a builder in his/her local market.

The 2020 Green Single Family and Multifamily Homes Smart Market Brief is available at the NAHB website – https://www.nahb.org/Advocacy/Industry-Issues/Sustainability-and-Green-Building/Green-Smartmarket-Reports?_ga=2.66968238.1490863034.1585685584-1394325025.1585685584