From a small northwestern observatory…

Finance and economics generally focused on real estate

Archive for April 3rd, 2010

Chinese drywall

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The consumer products safety commission finally issued an interim set of guidelines regarding Chinese Drywall remediation. You can view the entire document as a .pdf at: (Naturally, you’ll need adobe reader to view it, if you don’t have it already — it’s free — visit

The guidance is “interim” for several reasons. Most importantly, issued regarding off-gassing of the drywall itself were studied at Lawrence Berkeley National Lab, while secondary impacts (e.g. — electronics, appliances) are being studied at Sandia National Lab. The latter’s preliminary results won’t be available until this summer.

Nonetheless, even these preliminary guidelines are significant. They call for a complete “stripping” of the drywall and electrical wiring (including breaker systems) back to the studs and then refinishing the home. Coupled with the probable need to replace electronic appliances (e.g. — alarm systems, computers, microwaves) and the expense per home will be huge.

This does not yet even address the question of property values post-remediation. Our experience with other construction defects situations, such as synthetic stucco and moisture intrusion cases, suggests that even after remediation, these homes will be problematic to market.

I’ve inspected several Chinese drywall homes recently, including situations where the homes have been remediated (albeit without authoritative guidance) and situations in which the homes are still affected. Included among the homes I inspected was the home of Sean and Beth Payton — Sean, of course, is the coach of the current Superbowl Champions, the New Orleans Saints.

Cases are currently headed for court in Louisiana and Florida. I’ll keep you posted.

Written by johnkilpatrick

April 3, 2010 at 10:56 am

Posted in Real Estate, Valuation

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