The Relationship Between Code Changes and Market Reaction

Traditionally, innovative and superior building practices in the home building industry and their market adoption drive changes in building codes. In some cases, code changes prompt a strong market reaction.

Ed Hudson, Director of Market Research at Home Innovation Research Labs tracks which practices the industry will most easily adopt when codes change. A few years ago, Home Innovation asked builders how they might alter their R-value processes if the requirement changed. Builders responded saying they would use longer studs, and insulation material with a higher R-value-per-inch. Hudson says, "These responses have been borne out in the past several years of tracking, 2 by 6 wall framing is now in more than 40 percent of all new homes, and spray foam has grown to more than 12 percent of all exterior wall insulation material."

The typical process goes like this: First, an innovative builder or manufacturer creates a solution that offers improved home performance. Next, technology and manufacturing developments make that solution cost-effective. Then, if there is market demand for the solution, the industry learns how to incorporate it into building practices. Finally, after a portion of the industry demonstrates the new solution as viable, building codes gradually raise minimum performance requirements to pull the remaining market into the new practice.

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