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Home-building industry falls short in environmental efforts, report finds

Also, Congress pares tax credits for energy-saving home renovations, the mortgage industry shrinks, and Fannie Mae and Freddie Mac are more likely to foreclose than modify home loans.

January 23, 2011|By Mary Umberger

Reporting from Chicago — My notebook runneth over. Sightings from the real estate landscape:

Still going green. Impaired as it has been by the economy, the home-building industry nonetheless has been making a fair amount of noise in the last couple of years about efforts to be more environmentally friendly.

But it has a long way to go, according to a new report from Calvert Investments, a Bethesda, Md., company that specializes in sustainable and socially responsible investing. Calvert compiled a ranking of sustainability practices at the top 10 publicly held home-building firms, and despite giving a couple of builders a shout-out for their improved performances, the investment firm still flunked them. With a possible overall score of 42, the average builder scored just over 6 points.

Where the builders are making strides is in the areas of energy- and water-conservation aspects of the homes they're constructing, as well as building material recycling, Calvert reported.

The report did single out Westwood-based KB Home for being the only national builder to produce a comprehensive "sustainability report" for consumers. It said that without the efforts of KB Home and Pulte Homes, "the overall analytical performance of the industry in our study would have been far worse."

Pared back. Congress taketh away, and then it giveth back, after a fashion. Although a popular two-year program to award sizable tax credits to homeowners for making certain energy-saving renovations was set to expire Dec. 31, Congress extended the program for another year. The revamped credit is filled with "howevers," however.

In 2011 the tax credit will be considerably less generous. Where the old provision granted a tax credit of up to $1,500 for such projects as replacing windows, doors, water heaters, insulation, heating and air conditioning units, the credit for 2011 work is capped at $500.

If you have already claimed at least $500 in credits for previous years' work, you're ineligible to claim credit for renovations done in 2011.

Further, the old rules allowed homeowners to claim up to 30% of the costs of doors, roofs and insulation, but now they can only claim up to 10%. Claims for the costs of air conditioners, heat pumps, water heaters and furnaces now have dollar limits.

Vanishing acts. The mortgage industry is eroding faster than the polar ice caps. The number of people employed in some aspect of the home loan business was more than half a million in the fall of 2005, at the peak of the real estate boom. Today that number has shrunk by half, according to, a trade publication. The numbers are still falling. Although some lenders and affiliated businesses were hiring in the third quarter, the industry saw a net loss of more than 900 workers in that period.

Ominous odds. If you're a homeowner in financial trouble and are looking at Fannie Mae or Freddie Mac to modify your mortgage rather than foreclose on your loan, well, I wouldn't bet on a modification.

Fannie's and Freddie's overseer, the Federal Housing Finance Agency, says that for each loan modified by the mortgage giants during the third quarter of 2010, they foreclosed on 2.3 loans. Fannie and Freddie foreclosed on about 339,000 home loans in July, August and September, while modifying about 147,000.

The two government-owned entities hold about 29 million loans, about 10% of which were delinquent in the third quarter, according to the oversight agency.

Who's hot and not. When interest rates started climbing in November, first-time home buyers got off that proverbial fence.

The share of first-timers buying homes that month climbed to about 37%, from 34% in October, according to the Campbell Surveys' monthly HousingPulse poll of 3,000 real estate agents.

On the other hand, investors apparently decided that the rising finance costs were making the game too pricey for them, according to the survey, which also cited agents' field reports of investors backing out of deals because of fears that home values would continue to fall.

The survey said investor activity amounted to about 20% of all purchase transactions in November, down from more than 22% in September.

Umberger writes for the Chicago Tribune.

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