Steel Frame Housing on the Rise
A fledgling industry is hoping that steel framing and durability turn into insurance discounts as Louisiana rebuilds
Sunday, April 30, 2006
By Greg Thomas Real estate writer
Steel-framed homes are touted for their speed of construction, their ability to withstand high winds, and their resistance to termites and fire. Advertisement
And if the industry has its way, another advantage will be attributed to the homes: lower insurance premiums . . . and a big slice of a new market along the Gulf Coast.
The steel-framed housing industry is lobbying Louisiana insurance regulators to give the homes they build a break on insurance premiums. The issue was first brought up by two builders at a meeting of Louisiana's Insurance Rating Commission nearly two weeks ago.
Such a discount would help make steel-framed homes, which are usually at least 5 percent more expensive to build than their wooden counterparts, more affordable long-term.
A break on rates is probably years away, partly because the insurance industry and its regulators are unlikely to grant such a request until they've been able to track the durability of steel framing, a concept that has come into extensive residential use only in the past 10 years.
Still, even talk of such a discount -- which could be as modest as a few percent -- has encouraged the steel-framed housing industry to begin positioning itself for a major expansion in Louisiana. And for Louisiana residents attempting to rebuild after Hurricane Katrina, the possibility of an eventual rate reduction offers an early indication that the steep investment tied to building a steel-framed home possibly could pay off down the line.
Aside from lobbying by the builders, no insurance companies have filed requests asking the state for special deductions or policy changes for steel-framed homes, according to Bobby Clark, spokeswoman for the Louisiana Department of Insurance.
According to the Insurance Information Institute and the American Insurance Association, the only building product that has earned an insurance discount in Louisiana and most other states is metal roofing, which is considered to be extra wind resistant. Homes with fire-retardant roofs often garner insurance deductions in wildfire-prone areas out West.
But spokeswomen for both insurance groups say their members are intrigued by the strength of steel-framed homes.
Loretta Worters, vice president of communications for the Insurance Information Institute, said that there is interest among major insurance carriers in promoting and possibly discounting premiums for steel-framed homes, but the actuarial records don't yet exist for the industry to conduct a full evaluation.
Steel-framed homes need to be tested by hurricanes over a period of time before insurance carriers will consider giving owners of those structures a break on their premiums.
Tiffany O'Shea, a spokesperson for the American Insurance Association, said she sees inherent advantages in steel framing, but adds that the issue needs to be further studied.
"There's a lot of information on steel framing and while we're not giving discounts, we're learning" about the product, she said.
Following Hawaii's lead
Meanwhile Larry Williams, president of the Steel Framing Alliance, said his industry is poised to move into markets along the Gulf Coast in a big way.
"I can see us having the same market share that we now have in Hawaii" where 70 percent of all new homes have steel frames, Williams said.
Jon Luther, executive director of the Home Builders Association of Greater New Orleans, said that six weeks ago the Steel Frame Alliance brought in a bus load of nearly 30 steel-frame manufacturers interested in investing in the Gulf Coast area.
Luther and association president Toni Wendel told the group that they believe in the strength and potential of steel framing, but they warned the manufacturers about a potential challenge they may face in the local market.
"If you can enter the market you're going to probably have to provide the labor training or bring in your own existing labor," Luther said he told the framers.
Most builders in the New Orleans area are not skilled in working with steel framing. There are few local homes being built using steel and few government inspectors in the area who are qualified to inspect residential steel framing.
Maribeth Rizzuto, director of training for the Steel Framing Alliance, said she has met with officials from Delgado and Nunez community colleges to train workers on steel-frame construction. She also is exploring ways in which the state could assist with the training. However, she said that in other states, it has been the community colleges or technical schools that have approached government for help with job training.
She said the training is speedy and relatively cheap.
Not to belittle the process, but "It's basically putting down the hammer and nail and picking up the screw drill," Rizzuto said.
A four-man team usually can frame a 2,200-square-foot home in two days without the use of cranes or other heavy equipment.
Once they're constructed, steel-framed homes look exactly like wooden ones. In addition to their strength, steel-framed homes are lighter in weight and therefore cheaper to raise on piers.
Steel framing was first developed in the late 1950s and used as a quick way to erect shelter and storage structures that were used primarily by the military. Though the cost of framing a home with steel has always stymied the industry's growth -- steel-framed homes initially cost as much as 15 percent more than traditional wooden homes -- the price tag has come down since standardized construction procedures were established in 1997. Those procedures were adopted into the International Residential Code of 2000. The Louisiana Legislature adopted an updated version of the building code, the IRC Code of 2003, during one of its special hurricane legislative sessions this year.
Lafayette builder Jarvis Noel of the Noel Group, who has been framing steel homes exclusively for nine years, says he's gotten the difference between steel and wood down to 3 percent.
Banking on a new trend
To date, steel framing has rarely been used in the metro area.
"It's a matter of educating builders and consumers, and that's my job," said Ernie Casados Jr., a technical field representative for the Steel Framing Alliance. He is trying to educate builders and regulators on the material's use.
He admits he has a long way to go. "You're not going to find a lot of (steel-framing for residential) here," he said.
But he's convinced that will change. One local builder agrees, and is investing a lot of money to make sure it happens.
Andrew Marshall of IM Construction of Baton Rouge said that he has bought an 84,000-square-foot building in Houston and will be manufacturing cold-coiled steel framing studs, beginning with 25 workers and hoping to move up to 100.
He, like many builders, said that steel framing is not being used for repairs to damaged homes, but is best suited for new-home construction.
Chuck Vance, program manager for the Institute for Business and Home Safety in Tampa, said steel and other new products eventually will catch on.
Florida was an active market for steel-framed housing even before the storm. And in the aftermath of the 2005 storms, "I didn't see any steel laying around (in Florida), but I saw a whole bunch of wood," Vance said.
Florida also went through a training shortage when steel framing first caught on, but Jeff Burton, building code manager for the IBHS, said that won't be a problem indefinitely.
"The market will adjust," he said. If builders see that consumers are insisting on steel, they'll ensure "that their workers get trained."
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Greg Thomas can be reached at firstname.lastname@example.org or (504) 826-3399.