How Much is a Human Life Worth?

Editor's Note: The following article was written by the Michigan Association of Home Builders to answer the argument that no cost is too great to save a life.

Michigan, like South Carolina, has been arguing over whether automatic fire sprinkler systems should be mandated in all newly constructed homes. Michigan officials recently delayed implementing the requirement in the International Residential Code that mandates automatic fire sprinklers in new single-family homes. South Carolina, at the urging of Home Builders, also delayed sprinklers until 2014.

The sprinkler argument will come up again, and again the big businesses that want to profit from installing automatic fire sprinklers in new homes will again argue, "what is the price of a life?"

How Much is a Human Life Worth?

When all their other arguments for forcing consumers to buy fire sprinklers fail, sprinkler manufacturers and their allies turn to an emotional question, one intended to shame people into supporting mandatory sprinklers: “How much is a human life worth?”

If the goal is saving lives and not selling sprinklers, the question to answer is “What’s the best way to save the largest number of lives in the most cost-effective manner?” We already know the answer to that question. Working smoke alarms are the most practical, cost-effective method of preventing home fire fatalities.

A 2008 study by the National Fire Protection Association found, “The chances of surviving a reported home fire when working smoke alarms are present are 99.45%.”

That doesn’t mean people don’t die in home fires. Over the seven-year period of 2000-2006, Michigan averaged 109 fatal residential fires a year in its 4.5 million residences. Ninety-three percent of all those fatal fires occurred in residences without working smoke alarms.

Those who want to force homeowners to install fire sprinklers say, “If those homes had both working smoke alarms and sprinklers even more lives would have been saved.” Now the question is how many, and at what cost?

Johns Hopkins University found 75 percent of residential fire deaths could have been prevented by smoke alarms. The Home Fire Sprinkler Coalition says installing both smoke alarms and a fire sprinkler system reduces the risk of death in a home by fire by 82 percent, relative to having neither.

If smoke alarms can reduce residential fire deaths by 75 percent and if having both smoke alarms and a fire sprinkler system can reduce residential fire death by 82 percent over having neither, then mandatory fire sprinklers would only reduce deaths in homes with working smoke alarms by 7 percent.

Michigan averages 1.31 residential fire fatalities per 100,000 homes or 131 fatalities a year. Working smoke alarms could have saved 91 of those 131 lives. The benefit of mandated sprinklers could be the saving of an additional 8.5 lives. But at what cost?

During the seven-year period of 2000-2006, an average of 40,544 new homes were built each year in Michigan. At an average price of $6,000 per home to add fire sprinklers to homes that already have smoke alarms, the price of housing in Michigan would rise by $243,264,000 each year.

Taking away a homebuyer’s choice of how to spend more than $243 million of their money as the sprinkler mandate does, means they lose the ability to use that money in other ways they have decided would better increase the quality of life for themselves and their families. Mandatory sprinklers take away their choice to use that money for a newer, safer home, improved medical care, better insurance, a safer and more fuel-efficient car, education expenses, retirement accounts, or charitable giving.

Every fire death is a tragedy. The solution to reducing these deaths isn’t mandating expensive sprinkler systems. The solution is to make sure every home has working smoke alarms.

FHFA: Mortgage interest rates fall again in June

The Federal Housing Finance Agency today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 4.62 percent based on loans closed in June. This is a decrease of 0.12 percent from the previous month.

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 13 basis points to 4.79 percent in June. These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note). These results reflect loans closed during the June 24-30 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-May.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.61 percent in June, down 14 basis points from 4.75 percent in May. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.74 percent in June, down 13 basis points from 4.87 percent in May.

This report contains no data on adjustable-rate mortgages due to insufficient sample size. Initial fees and charges were 0.94 percent of the loan balance in June, up 0.09 percent from 0.85 in May. Twenty-eight percent of the purchase-money mortgage loans originated in June were "no-point" mortgages, matching the share in April and May. The average term was 28.2 years in June, up 0.3 years from 27.9 years in May. The average loan-toprice ratio in June was 76.3 percent, down 0.1 percent from 76.4 percent in May. The average loan amount was $219,100 in June, down $3,800 from $222,900 in May.

Read the contract rate series at FHFA.org by clicking here.

NAHB: Builder confidence increases two points in July

Builder confidence in the market for newly built, single-family homes rose two points to 15 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, released today. The gain largely offsets a three-point dip recorded in June, and marks the ninth time out of the past 10 months in which the index has held within the same three-point range.

"The improvement in builder confidence in July is a positive sign that the outlook perhaps isn't quite as bleak as was feared in June," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions."

"We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said NAHB Chief Economist David Crowe. "The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Two out of three of the HMI's component indexes rebounded in July from declines in the previous month. The component gauging current sales conditions rose two points to 15, returning to its May level, while the component gauging sales expectations in the next six months rose seven points to 22, which is where it stood in April. The component gauging traffic of prospective buyers held even with the previous month, at 12.

Regionally, the HMI inched up one point to 12 in the Midwest and posted three-point gains in both the South and West, to 17 and 14, respectively. Only the Northeast posted a decline, slipping two points to 15.

FHFA House Price Index rises 0.4 percent in May

U.S. house prices rose 0.4 percent on a seasonally adjusted basis from April to May, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.8 percent increase in April was revised to a 0.2 percent increase. For the 12 months ending in May, U.S. prices fell 6.3 percent. The U.S. index is 19.6 percent below its April 2007 peak and roughly the same as the January 2004 index level.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from April to May ranged from -1.0 percent in the West South Central Division to +2.0 percent in the Mountain Division. Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Click here for complete historical data at FHFA.gov.

Bob McLain: the Federal budget, spending, and budget cuts in context

by Bob McLain, WORD AM

WORD's Bob McLain will broadcast live from the floor of the Southern Home and Garden Show on Friday, September 30. If you have never heard Bob, he makes sense out of our world on a daily basis. Read on for a sample of Bob's wisdom:

The Jones Family Budget

On yesterday's show I talked about the web posting I found. It's a simplified explanation of just how much money the U.S. owes and our plan to pay it down. The U.S. Congress sets a Federal Budget every year that's in the trillions of dollars. Few people know how much money that is so here's a breakdown on spending in June:

• U.S. Income $2,170,000,000,000
• Federal Budget $3,820,000,000,000
• New debt $1,650,000,000,000
• national debt $14,271,000,000,000
• recent budget cut $38,500,000,000 (About 1% of the budget.)

Think of it in terms we can relate to. I've removed 8 zeroes from the numbers and pretend this is the household budget for the "Jones" family.

• Total Annual Income $21,700
• Jones Family spending $38,200
• New debt added $16,500
• Current total debt owed $142,710
• Amount cut from budge $385

So in effect last month Congress sat down at the kitchen table and like the Jones family agreed to cut $385 from it''s annual budget. They cut $385 in order to cut $16,500 in defecit spending. Will this work? You tell me.

Greenville Water System eliminates same day tap service

Beginning September 1, 2011, Greenville Water System will not longer be making taps or setting meters on a half-day notice. All taps and meter sets will now be required to be scheduled no later than 4 p.m. the day before the tap is to be made or the meter is to be set. Large taps that are scheduled with more than a days notice also will require confirmation no later than 4 p.m. the day before the scheduled appointment. Please take this information into consideration as you plan future projects.

Murray W. Dood, P.E., Chief Operations Officer

Greenville Water System

NAHB: Addison Homes Wins National Safety Award

The Greenville-based homebuilder won a first-place Safety Award for Excellence from the National Association of Home Builders and Builders Mutual Insurance Company. Presented in the Single Family Builder Safety Program of the Year category, this top honor recognizes Addison Homes for its comprehensive efforts designed to ensure an accident-free work environment for employees, trade partners and vendors.

Addison Homes advances safety in the homebuilding industry in a number of ways. The company has established clearly-defined procedures for its office as well as worksites and provides ongoing safety training for all employees. An on-site supervisor monitors compliance of both company and OSHA guidelines at every jobsite. A commitment to research keeps Addison Homes current on the latest developments related to construction safety.

“We strive, every day and on every job, to maintain a safe, healthy work environment,” says Todd Usher, president of Addison Homes. “Our company invests significant resources to provide for the well-being of our employees, partners and clients.”

Usher notes there’s never been an incidence of “serious” physical injury on an Addison worksite. “This record is a testament to the success of our company’s safety program,” he says.

The NAHB/Builders Mutual Insurance Company SAFE Awards are presented annually to builders and trade contractors whose high-quality safety programs make them leaders in the residential construction industry.