Cutting Edge Insights
with Dr. Lee

“The Customer Will Never Know”

When you hire someone, you expect them to know and perform their discipline well. They are held to certain standards that vary by state/jurisdiction as well as by their discipline or trade.

For example, concerning my day job as an eye care professional, the State of Michigan regulates the scope of practice, the continuing education requirements for the profession, the process for handling consumer complaints, etc.

In the residential construction realm, the State of Michigan stipulates that the home builder must give the new homeowner an 18-month warranty against defects.

It doesn’t matter whether or not this language exists in the construction contract. It’s implied due to its presence within state statue. No matter who does or does not know about it.

That’s the law.

And each state and/or individual jurisdiction has its own set of laws governing business activity in that state or region.

OK, now shift gears to weather and climate.

As you know, weather patterns vary across the country. The south tends to be warm and humid. The north tends to be colder. Maybe dry, maybe humid, depending on your area.

With me so far? Logical stuff. Not Rocket Science. (But are you curious as to what rocket science is? Then read my earlier article here).

In the current era of sky-high home prices, it’s easy for the little guy to get screwed. Especially when you consider that A) one’s total monthly housing expense (mortgage payment and all associated expenses) is typically the largest monthly budgetary item for a family and B) the average worker has knowledge of his or her skill or trade, but may not know how to build a house, or else they’d organize their own construction company and do it right and do it for less.

Again, more simply, horse-sense logic. Thanks to Professor J.J.Saladin, Michigan College of Optometry, for engraining that term in me circa 1998.

OK, shift gears again.

D.R. Horton is the largest home builder in the nation by volume. Its revenue was $21.5 billion in U.S. dollars in 2020. I wasn’t immediately able to find the annual number of homes they build; that figure isn’t entirely germane to this discussion, but it would be interesting. Later update:  65,388 homes “closed” in fiscal 2020, which probably means contracts signed.

D.R. Horton, on its website, calls itself, “America’s Builder.”  (That’s a bold assertion.)

Q: Why are they being sued?

Recent articles in the media highlight class action lawsuit activity from homeowners alleging faulty construction leading to mold/rot/etc. from D.R. Horton – constructed homes. See links in references.

Q:  Don’t you think that a multi-billion dollar company would tend to be sued more than your local home builder?

A: Yes.

But, while I’ve got your attention, consider why they are being sued. Even better, consider some of their own responses to the class action lawsuits.

The faulty construction claims center around mold and moisture and other related items. Certainly, many things can cause mold and moisture in a residential enclosure. That growing facility in your basement – your home wasn’t designed for that. And it isn’t the builder’s fault.

In one of the articles (again see references), a D.R. Horton representative made the following statement:

“We build to the federal mandate code, and we are regulated by federal law.” Then, “We build in that code and that code was not designed for very humid markets.”

Q:  What is the “federal mandate code?”

A:  There is no “federal mandate code.”

All building codes in the United States are derivations of codes from the International Code Council, of which I am a member, not that you should care.
If you’re so inclined, see www.iccsafe.org.

The International Code Council produces many codes, the most prominent of which are the International Building Code (IBC; commercial construction) and the International Residential Code (IRC; residential).

Most states and local jurisdictions adopt and apply prevailing versions of the ICC codes for use in their area.

For example, even though the ICC released the 2021 IRC recently, Michigan is still relying on the 2015 IRC for its Michigan Residential Code. I sense an update soon.

But a smaller and more local jurisdiction, such as my township or yours, may have a lag time in adopting the newest Michigan Residential Code when the state adopts a new one. MI may have a 2021 or 2022 Residential Code (not yet!), and our township may still rely on a previous state version to approve plans and inspect construction techniques.

The moral is that your building code is what your local municipality says it is. But of course, it has to originate somewhere, and that is the ICC.

Can you see how a stubborn and anal retentive, stand-up-for-the-little-guy contrarian like me gets worked up when a representative for a multi-billion dollar company says:

“We build to the federal mandate code…that code was not designed for very humid markets.”

Shame on you, D.R. Horton. You ought to be embarrassed.

Consider the following climate zone map:

This was adapted by our old friend Dr. Joe Lstiburek at Building Science Corporation, who is the first to admit he didn’t “invent” it. He simply looked a map of where and when things grow and morphed it into construction guidance, and the U.S. Department of Energy grabbed hold of it.

Cool. I wish I had that much influence.

Q: What types of things could lead to problems more in the warmer climate zones than the other zones?

A: It usually involves moisture control. A wall assembly not having good drying potential. A wall that is leaky to air (which carries water within it, then it undergoes a phase change called condensation and rots away wall cavities). Having an interior vapor barrier, whether by design or not.

As you read the psychobabble from the company representative while knowing that building codes are based on local conditions (called climate zones) and are locally mandated and enforced, don’t you get a little bit defensive for the little guys paying spendable money for a home that doesn’t work?

No, I don’t have it in for D.R. Horton; I really don’t care if they succeed or fail.

Actually, I do care, because 1) I don’t wish failure on anyone and 2) if they fail, then the affected homeowners may not be made whole on their claims.

Consider D.R. Horton’s market performance YTD for 2022:

Its share value is down nearly 30% this year. And houses are selling for record prices?

In all fairness to D.R. Horton, all publicly traded home builder companies’ shares are down this year. Financial columnist Logan Kane in “Seeking Alpha” speculates that the market may actually be anticipating a correction. I think it’s a remarkably interesting tangent. Link in references should you want a deeper dive.

Back to the theme of this article.

I can’t believe that a company representative for the nation’s largest home builder

  1. Acknowledged that the company failed to build structures with the appropriate wall assembly details for the climate zones in which they were buildingAND
  2. Tried to hide behind a non-existent “federal mandate code.”

I really hope this doesn’t happen, but I sense this may be the next Zaring Homes mess.

{Zaring Homes was a Cincinnati-based homebuilder, then the largest in the country, which got caught in the trend of adding indoor cooling to homes in the 1980s and 1990s. What they didn’t do was consider the physics and building science when they created a condensing surface because they continued to install an interior vapor barrier “because that’s the way we’ve always done it.”  Thousands of homes developed mold and rotted walls, and Zaring Homes was no longer.}

Or maybe there is a third item that irritates me even more – operating under the assumption that the customer isn’t smart enough to know difference.

Because if that is your attitude, you have officially become your own worst enemy. You have become complacent, and you have lost.

I invite your questions and feedback.

Until next time,

Dr. Lee Newton

How A Doctor Learned To Develop Real Estate

References:

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