As I look back on the events of the last few years (which are a result of the activities of the previous 20 years), I ponder – like many others in our industry – how all of this is going to affect what we are going to do now, and how we’ll go about doing it. There is no lack of articles to read on the subject, as there are plenty of new statistics, not to mention opinions. Based on what I am seeing, it seems to me that the housing industry is facing an extreme makeover.
Real-estate values have seen serious drops and approximately a quarter of today’s homeowners are living in houses with upside down mortgages. In the past, many people have relied on the acquired equity in their homes to secure financing for remodel/additions or even vacation homes. Clearly the number of people in position to do either has considerably diminished.
The age of “McMansions” is over and the average size of the American home is shrinking. Having separate rooms for every conceivable purpose or activity is history. Rooms that can accommodate multiple purposes are in. I could go on and on with the list but the bottom line is that we are doing everything we can to be more efficient and reduce the cost of housing.
To make things more interesting we are also in the midst of a new awareness to design and build responsibly which is commonly referred to as “Green Building”. Although some aspects of green building, such as framing systems that require less lumber or using building materials produced locally, can be cost effective right up front. The up front costs for other aspects of green building can be downright expensive when looking at the short term picture. The return on your investment for stalling solar cells and wind turbines can take years. Right now most of these are elective expenses that home owners can choose to do or not to do depending on their ability to pay for them. Legislation of green building practices is in the foreseeable near future based on what I’ve been reading, so it’s only a matter of time before home builders will be forced into looking for additional ways to keep homes affordable.
Smaller homes require less material and labor. Smaller homes also require less energy to heat and cool them. Using less material and consuming less energy are both very “Green” things to do. Building smaller homes is clearly the first logical step. It is our ability to over react and get carried away with the process that has me concerned.
As we endeavor to design and build more affordable housing it becomes easier to slip into the mode of creating what I like to refer to as “spreadsheet houses”. These are homes whose designs in my opinion address overall cost and features, but have a tendency to give little or no consideration to quality and functionality. There is a reasonable amount of wiggle-room when it comes to the subject of quality. Functionality however is pretty black and white. It either works or it doesn’t work.
A chrome plated faucet is certainly not as expensive as a gold plated faucet; yet both will do the same job. On the other hand, if you buy a faucet with inferior quality valve components, that would be a different story. Facade front homes are a typical subdivision practice where window trim and alternate exterior finishes, such as brick or stone veneer, may be used on the front elevation only but omitted on the sides and rear to save money. While this may not be the preferred reduction in quality, it certainly has proven to be an acceptable way to reduce the cost.
Prior to starting my own business designing custom homes and remodel /additions of existing homes, I spent a fair amount of time working for architectural firms drawing up plans for subdivisions and apartment buildings. This is where I was introduced to the concept of “design by spreadsheet”. The process isn’t all that complicated. The size of the home is determined by taking the amount of money they think they can sell it for, divided by what it cost them per square foot to build. The number and type of rooms included in that amount of area is determined by what the market demand is at the time. The end result for example, can be the developer’s number cruncher asking the architect to squeeze 3 bedrooms, 2 baths, living room, dining room & a family room into 1,200 square feet of living space. This may sound good on paper, but the reality is that trying to fit the new home owner’s furniture into the less than appropriate sized rooms can be very challenging. Unless of course, they think to ask the developer where they can buy the ¾ sized furniture that was used in the models to make the homes look larger and more spacious than they actually are. In this case, the addition of the family room to the equation causes a negative impact on the functional size of the other rooms in this home, including the amount of closet space for storage. I can pretty much guarantee that whoever buys this home won’t be parking their cars in the garage, because that is where everything that doesn’t fit in the house will end up being stored!
Spreadsheets are a powerful tool when used responsibly and I have no doubt we will all be using our computers to re-shape the future of home building. That being said, I would like to end by reminding everyone not to forget …”Garbage in = Garbage out”.
I learned a new term today, which among other things, means that there is a light at the end of the tunnel. I’ve seen that light off in the distance for a little while now. I have questioned whether or not it was indeed hope for those of us in the housing industry, or simply just the headlight of another freight train. If I believe what the “Center for Housing Studies” at Harvard University is saying, it’s not a headlight of a train. It appears that it is a light, held by the ones who will lead us out of this cold dark tunnel and back into the sunlight we sorely miss. Who are they? They are the “Echo Boomers” (also know as Generation “Y” or the Millennial Generation). To put it simply for those of us known as the “Baby Boomers”, it’s our kids. The Echo Boomers represent the largest demographic group ever, and they are coming of the age where they need places of their own. According the Harvard University study
“population trends will restore vitality to the housing market as the nation emerges from the current recession”. In other words the expanding population means there is going to be increased demand for housing.
Ok, there is nobody more ready to get all excited about this than I am. After all, I have been watching my career flash in front of my eyes every month for the last 36 months. I am very grateful that I’m still standing, and not just more collateral damage lying by the side of the road. I am not an expert at economics. So before I get my hopes up that I am on the verge of being saved by the Echo Boomers, I need to ask a question. Don’t they need jobs first? I’m not talking about flipping burgers either. I’m talking about the kind of jobs that will help them qualify to purchase or at least rent all these homes they are going to need! Now some of you may be asking, “You mean the same generation that we watched sitting on our sofas, consuming huge amounts of pizza and various energy drinks while participating in what we considered non-stop video game marathons?” Yes, I am telling you that’s the ones. But they are
becoming adults now. I’m pleased to say that from my point of view, it appears that the majority have “found themselves” and developed much clearer pictures of their futures, They are deciding what are their wants, what are their goals, and what they need to do to achieve those wants. So I am not the least bit worried about the potential of this very large group of young adults. I am worried that they won’t have the opportunity to do what they are very willing and capable of doing. This recession, which has resulted in so many job losses, has not shown much discrimination regarding age. From young to old, we’ve all been hit pretty hard economically.
Wall Street has eluded financial collapse and has been spared the consequences of having made so many bad decisions by the American taxpayers. In fact, they are doing so well now, that they are handing out record bonuses to those individuals that have been deemed responsible for all this success. All of this progress inside a matter of just months too. These institutions were on the brink of total failure and today are turning impressive profits. Pretty amazing! So while Wall Street is in great shape, Main Street, (the rest of us) is still struggling. Small businesses, that provide goods and services to the general population, have been seeing declining demand for those goods and services. This has in turn caused them to scale back their work force, thus increasing the number of people who can’t afford those goods and services. It seems to me that if the downward spiral is not interrupted and reversed Main Street will eventually go down taking
anything that depends on it as well. That in my opinion would include Wall Street.
So let’s get back to the subject of being rescued by the Echo Boomers. I think they are going to need some help getting started. Somehow, the economic pump needs to be primed. Without jobs these kids, or any of the rest of us for that matter, won’t have the means to create the demand for goods and services. Just as a downward spiral can perpetuate itself, so can an upward spiral. Once we have more people earning income and spending it on goods and services, the more goods and services will be needed. The more goods and services we need; the more people we will be needed to employ to provide them. If we could just get this process jump started, it will become self sustaining and once again America will be back on the path to prosperity.
I would like to recommend that we consult with some of the financial geniuses that were responsible for the big turnaround of Wall Streets financial institutions. I’m wondering if they could do the same for Main Street. Ok, never mind, I was just being sarcastic, they probably don’t know the answer either.
So who is going to “prime the pump”, “get the ball rolling” or “make something happen”? I really don’t think Wall Street thinks that Main Street is as important to them as I do. Why? First of all, yet least important, those people that control the big financial institutions have already made enough money to spend the rest of their lives very comfortable even if they don’t ever earn another dime. There really isn’t any pressure for them to do anything that might possibly cause them to take the risk of loosing money. Secondly, and more importantly, didn’t we just publicly criticize them in front of congress for lending massive amounts of money to people that couldn’t repay the loans? That is what got us in this mess in the first place right? Been there, done that, no reason to revisit that scenario. The banks have learned their lesson. If you don’t believe me, simply ask yourself how many small businesses or individuals
you know, that has had much success at getting loans for whatever. I’ve heard people with good credit ratings complaining. Wall Street will be right there doing their part only if they can be assured they will be making profit for their effort. Rest assured that they won’t be volunteering to be the leaders of this great undertaking either.
So here we are looking for a solution. Who should we be looking to that will provide us with the answers? It is our elected government officials; the Senate, the House of representatives and, of course, our President. This is the same group of people who felt it was more important to put our ability to feed and shelter our families to the side while they spent the whole last year “making history” by passing a healthcare overhaul bill. Don’t misunderstand me, because I agree that something needed to be done about healthcare. I simple think they put the cart in front of the horse so to speak. Here again I am not an economist, but wouldn’t it be logical that if you’re going to require that everyone buy health insurance, they had a way to pay for it? I am supposed to be comforted by the fact, that if I can no longer afford to pay my medical insurance premiums, the government has stipulated that those individuals who make more than $250,000 a year will pay increased taxes to cover my premiums. Of course I should remind myself not to have any serious illnesses until 2014. Otherwise it will be
my problem to pay for them. Speaking of my problem, like many others, I would prefer not to have a free ride but rather opt for the dignity of paying my own way. I could be an asset contributing to the system, or I could become a burden draining off resources. The longer it takes our government to address this issue the more likely I will become the latter. I can only speak for myself, but I’ve lost a whole year of my life now and have run out of things I can sell or give up. Like many others I’ve also run out of patience. So now that Washington has made their history, I would like to ask them to please get serious about the problem that is the number one priority of the people they represent. If they aren’t up to it, then come November maybe we can vote for someone else that will.
So, if you ask me do I think the Echo Boomers can save us from the recession,. All they need is the same thing the rest of us have needed since this whole mess started….JOBS!
A lot has happened over the past couple of years and I have no doubts that a lot more is yet to happen. Despite knowing it’s not over yet, I am encouraged by the news that people are starting to buy homes again. Although there still are a very large number of people who are able to afford the price of home ownership, they have been sitting quietly on the sidelines waiting for the market to hit bottom. It appears that some of these people think we have. Leading the pack on the way to the housing market recovery are first time buyers & investors. They are buying mainly the smaller less expensive and/or foreclosed properties. This could be good news for new home builders. Although home sales were on the incline last month, new home sales were still on the decline. There is no way a new home builder can compete with the kind of deals the banks are offering to unload all those properties. The sooner we get those homes off the market, the sooner new home builders will have a chance at being competitive again.
When the market comes back, we will not be doing, what we were doing, nor will we be doing things the same way we were before the economic meltdown. Just like the auto industry where large fuel gobbling vehicles have become less popular, large inefficient homes have also become less attractive to home buyers. I don’t think every one is going to go crazy and try and fit their lives into 1,000 square foot bungalows. I do think that people will be more conscious of how much space they really need to heat, cool and, let’s not forget, clean.
We are coming out of a period of bigger, more and faster. (I left out the word better on purpose). Pick almost any subject and insert the word “Extreme” and you can characterize the atmosphere of our world for the last 10 years or so. You might say we have been burning the candle at both ends, and we simply burned out. Another thing to consider is that the boomer generation is now starting to retire. They have raised their families, become empty nesters and are now looking to simplify their lifestyles. Downsize is the word I am starting to hear a lot.
It seems very clear to me that the quality of what we build will also become a major consideration for home buyers. Green sustainable building practices aren’t just popular or even faddish things to do anymore; their getting legislated. Government financed projects are now required to be LEED certified. LEED (Leadership in Energy & Environmental Design) is an internationally recognized certification system that measures how well a building or community performs across all the metrics that matter most in energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, stewardship of resources and sensitivity to their impacts. LEED was created in 1994 by the U.S. Green Building Council (USGBC). Many developers have already recognized how important LEED certification can be in their marketing campaigns and are voluntarily having their projects rated. Because LEED ratings are based on a point system of 0-100 possible points, the more points you can get the greener you are. Tighter and better built structures with better insulation and higher efficiency mechanical systems are only a few of the many things builders will be incorporating to obtain the highest possible scores.
Regardless of a homes size, or if it’s high end or low end, we will be building better homes than ever before. As for myself, I am looking forward to being a part of that.
Did you know?
Your cell phone is responsible for contributing 5 lbs of CO2 into our atmosphere each year.
Our cars produce 19.6 lbs of CO2 per gallon of gas we use.
Your gas lawn mower produces the same amount of CO2 per hour as eleven cars.
Buildings, not cars, produce the most CO2 in the United States .
I just read an article in the National Geographic titled “Saving Energy – It Starts at Home” by Peter Miller. The author and his wife decided to go on a low carbon diet along with some friends to try and answer the questions: What can we do as individuals to address the issues of climate change, and can we make a difference? Their goal was to reduce their carbon footprint by a substantial percentage. This meant evaluating how they do what they do and even how much they do it. They used the EPA’s carbon footprint calculator to establish their starting point; then, using the statistical data provided by the EPA’s web site, they compiled a list of all the things they do and how many lbs of CO2 were associated with those activities. A large part of what they did really didn’t have any negative effects on their lives. Turning lights off in rooms your not using and only making one trip to the market instead of three does not make your life tougher. Walking or riding a bike instead of driving the car whenever possible might actually have health benefits. On the other hand taking the time to hang the laundry on the clothes line outside, instead of just throwing them in the dryer in order to save 1,500 lbs of CO2 per year, might get old after awhile.
At the end of the month they actually were able to achieve a substantial decrease in their carbon footprint, but it wasn’t all due to being more conservative or less wasteful. We’ll get back to this shortly. I really don’t know what the impact of what they did, and even if we could get everyone else to do the same, could we stop or even control Global Warming. What I do know is that by trimming their energy usage and driving their cars less, they were able to decrease their cost of living by a few hundred dollars a month. In today’s economic environment, I would say that is a good move financially.
Getting back to the subject of reducing their carbon footprint, the author and his wife had gone on a trip that month which involved flying. Airplanes release their CO2 at high altitudes, which according to scientists, has a greater effect than at ground level. This single activity could have undermined all their efforts to reduce their carbon footprints. So how did they overcome this obstacle? They took the money they saved on gas and electricity and bought “Carbon Credits”!
This was not the first time I’ve heard the term. The first time was when Al Gore was asked to explain how he could justify having a big house, a number of vehicles and flying all over the country so he could educate us on how we are destroying our beloved planet. He answered, “I buy Carbon Credits”. Carbon credits are purchased by giving money to companies and non profits that invest in wind farms, solar plants or anything else that contributes to reducing CO2 emissions. It’s kind of like the old days when wealthy people didn’t want to serve in the military and go to war. They would pay someone to go in their place. So in plain simple English if you can’t conserve enough energy yourself, you can pay someone else to do it for you. When I heard this I thought, “You’ve got to be joking!”. I was wrong; that wasn’t the joke. Al Gore buys his carbon credits from a company called The Generation Investment Management LLP which is a private, owner managed partnership established in 2004 with offices in London and Washington D.C. It just so happens that the chairman and founding partner of the company is no other than Al Gore himself. That’s not only the joke but I think it might be an “Inconvenient Truth” as well!
I recently acquired a book about passive solar houses in the U.S. titled “Homes for a Changing Climate” by Katrin Klingenberg, Mike Kernagis, and Mary James. The subject of the book is nothing new. In fact passive solar home design was very popular during the 1970’s when I first got into this business. Although passive solar home design didn’t really catch on the way everyone hoped it would, it did affect the way we build houses today. Putting insulation in the building envelope and the use of dual glazed windows are two of them. Even though we had the technology to build very energy efficient passive solar homes we built homes which employed only some of the technologies available to us instead. The reason, in three words, is “practicality”, “affordability” and attractiveness.
After reading the book I have to say I’m very encouraged by how far we have come over the last thirty years. The concept of super insulated building envelopes and high performance doors and windows that lower heat transfer has not changed. Our ability to produce more efficient high performance building components is improving significantly but we still need to make more progress when it comes to getting costs down. There used to be some serious problems with making a building air tight, such as, poor air quality, problems with molds developing or fears of someone suffocating in their sleep due to lack of oxygen. Today we have ventilation systems known as “ERVs” (energy recovery ventilators) and “HRVs” (heat recovery ventilators); the latter being specified in cold, dry climates. These systems are able to recover 75%-95% of the energy from the exhaust air and transfer it to the filtered, continuous, incoming fresh air thus reducing the heating and cooling needs as well as improving indoor air quality (IAQ). There is a lot more to these systems than I have just mentioned so if you’re interest was peaked as was mine, you should start by reading the above mentioned book.
The front part of this book gives you some background on the subject then briefly explains each of the concepts and principals of designing the passive (& sometimes “carbon neutral”) home. The rest of the book showcases eight different projects with different approaches trying to build the home that uses only 10% of the energy of a similar home built conventionally. Because these were real projects for real people, they had no choice when it came to the subjects of practicality and affordability. Nobody really can do all the different things you should do: so each has to carefully choose those things that they could do. In all cases the results were impressive. One home in Urbana Illinois was a modest 1200 square feet and built for $145,000.00 in 2002. In contrast another home of 4,500 square feet was constructed in Martha’s Vineyard for $1.3 million in 2008. One pleasant surprise as I read about each of these projects was that there is more flexibility when it comes to the subject of architectural character than I remember. It has been the strict interpretation of the concept that form follows function which has in the past characterized passive solar structures and making them stand out as a bit different looking than conventional homes. This, I believe, is a big deal because not everyone is ready to go live in something that doesn’t look like what they think a home should look like (traditional architectural styles).
Each of the showcased projects have their own unique design challenges and each has its own solutions for the challenges. What they all share in common is the same bench mark model known as the “PHPP” (passive house planning project). This is an energy modeling program developed by the Passivhaus Institute. The Passivhaus Institute was founded in 1996 in Darmstadt , Germany by German physicist Wolfgang Feist. Thousands of homes have been constructed using this standard all over Europe . In April of 2007, The Passivhaus Institute of the United States was founded by Katrin Klingenburg and Mike Kernagis, both of which are co-authors of this book. The homes showcased in this book are the beginning of what will surely be many more homes built to this standard here in America . These homes probably will not end up being the mainstream choice in housing anytime in the near future. They will, I expect, have some important influences as to what we do and how we do it though.
Because passive home design generally starts by orienting the long side of the structure with all or a least most of the glazing facing within 30 degrees east or west of due south, typical subdivision lots can present a bit of a challenge. On the other hand even if you have a lot which will allow for the proper solar orientation, having views other than due south can also be a problem. If you buy a lot that has a view you will pay extra because it has a view. Therefore, having your designer tell you can’t have windows facing the view probably won’t be acceptable. Until we change the way we layout our subdivisions to lots with views facing due south, solar orientation will likely be the least used aspects of passive house design. Tighter envelopes with more insulation and high performance doors and windows will most likely be one of the most considered aspects in the design of new homes and retro fitting of existing homes.
Incorporating as many principals of passive design as practically possible can help minimize heating and cooling needs of a home. The use of high efficiency lighting, equipment and appliances can also help reduce the energy needs for our homes. These are the necessary first steps towards building a self-sustainable home. At this point we have what is known as an energy efficient home. If we add an active solar PV array or a wind turbine that will provide over the course of a year an amount of electrical power equal to the yearly needs of the home, we will have what is called a “Net Zero Site Energy Home”. The term net zero takes in to account the fact that there will be parts of the year where you will not be producing enough power for your needs and therefore need power from the grid. At other times of the year you will produce more power than you need thus putting power back onto the grid. Once energy debits equal energy credits you have net zero energy usage. If you upgrade your energy system so that you produce enough energy to supply all the needs of the home and the amount of energy required to get it from the source (the power company) to your home you will have what is called a “Net Zero Source Energy Home”. If you have the financial ability and are concerned about global warming, then you can build a system which produces approximately double what you need. This would give your home the classification of “Plus Energy / Carbon Neutral”. Every KWH of electricity produced from fossil fuels produces 1.5 lbs of CO2 which is released into our atmosphere. For every KWH we use, 2.2 KWH are lost in the creation and transmission of that power. The more power created from clean sources such as solar, wind or geothermal energy sources, the less we need to burn fossil fuels for the creation of electricity.
All in all I believe we still have a ways to go before we will see the majority of us building and living in self-sufficient homes. On the other hand, I do see us benefiting greatly from the advancements as a result of those individuals and organizations that have dedicated themselves to showing the rest of us what we can achieve inside the restraints of our financial ability. It’s still pretty expensive to do all the right things and produce the ideal home. We are learning how to reach our goals for less as our technology evolves. The federal government is subsidizing, via tax credits, the costs related to energy efficiency and “green” construction. The more the cost of energy keeps going up the more affordable energy efficient or sustainable housing becomes. The more and more people we get buying into the technology, the more the costs of producing these homes comes down as well. Once that happens, energy efficient self-sustainable homes will be as common as cell phones. You just won’t have to replace them every 2 years.
By the way, if your still worried about global warming and your carbon footprint, I suggest you plant a few trees on your property. This will give you “carbon credits” as the trees will take the CO2 that you are producing and remove the carbon; thus releasing oxygen back into the atmosphere in its place. Just be careful not to plant them in front of your PV array as that will screw up all the mathematics that got you to the status of responsible world citizen in the first place.
The mess we are in today started well before last year, and what I’ve got to say today has been building up inside me for just as long. From the time I was a young boy I have heard the phrase “The American Dream”. The American dream is to own your own home. It’s not that people in other parts of the world don’t want the same thing; they do. But unlike other places in the world, it’s in this unique place we call America where you can make that dream come true. Another phrase I used to hear a lot was “You can’t go wrong investing in your home”. Homes were considered good long term investments for the average person. Home prices, unlike the stocks, just gradually increased a little each year. Home values might even hold still for awhile during economic downturns but never really loose value. You found yourself a steady job. You saved up enough money for a down payment (usually around 20%), and bought a home. You raised your children as you paid off your loan, and by the time you retired your largest single monthly living expense was paid off. Of all the things you might have to worry about in your retirement years, having a roof over your head wouldn’t be one of them.
I have been in this business since the mid seventies. It was about this time that the baby boomer generation started buying homes. Demand started going up, and so did the price of a home. It was a good thing. More demand meant more homes needed to be built, so more people were put to work building them. Housing represents one fifth of our GDP. In general, when housing is doing well; America is doing well. With the exception of a couple of hic-ups in the early eighties and early nineties, housing continued its upward climb. No doubt about it, housing was getting to be a really good place to invest money.
This made the housing market more and more attractive to investors looking for more than just a place to retire. More like a means to retire would be more accurate. By the late nineties home prices were increasing rapidly. So rapidly that one could buy a home in a new subdivision from a developer before the house was actually built. And then, without ever making a single mortgage payment and before the house was built, resell the home to somebody that actually wanted to live in it, making anywhere from fifty to a hundred thousand dollars profit, Thanks to creative financing there was no shortage of buyers looking to take that home off your hands. Before we knew it the housing market started looking more like the stock market. That in my opinion was not a good thing. People’s homes are a part of their security, and that’s not something you should be gambling with. Having a place to live is a necessity, and gambling with your home, whether its Vegas or Wall Street, is not.
Personally I look at the house flippers no differently than I do ticket scalpers. They do absolutely nothing to increase the value or quality of the product other than make it cost more. It was no surprise to me when the housing bubble burst, and I’m a far cry from being an expert on economics. All pyramid schemes eventually collapse leaving the early players with all the money and the new comers the privilege of providing it for them.
I know that a lot of these investors (flippers) got caught with their pants down. They found that the house that they had bought they could neither sell nor make the payments. I don’t feel bad for them. After all it’s just business right? They gambled and they lost.
I do feel bad for all those people who now owe more on their home than it’s worth. I feel bad for all those who were led to believe they could qualify to own a home when they really didn’t. And as a result, it’s been taken away from them. It’s these people that were pursuing the American dream and instead found themselves in an American nightmare. They are the ones who initially paid for the greed of the speculators and sub-prime lenders.
Now we are seeing the effects ripple through the rest of our economy leaving few Americans unaffected. Some of us will loose more than our houses. Many of us will loose our jobs and our ability to provide for our families. How could we have let this happen? When it comes to how involved the government gets trying to control or regulate the free market, I lean towards conservative views. On the other hand I also believe that part of the function and responsibility of our government is to protect those things that are important to its people. Seems to me if we can protect the bald eagle and other endangered species because it’s the right or responsible thing to do, then how about the American dream. Achieving the American dream was, is and always should be the reward for hard work and determination. That’s just one of many reasons why one should be proud to be living in America , and its why people from all over the world want to come live here as well. This is part of what made America great, and its hard work and determination that will help keep it that way. We need to protect the American dream. It’s too important.
On a final note- I was just thinking of a phrase that I used to hear and or see on a daily basis. You don’t really see it that often anymore but it used to be the equivalent of saying; this is the best there is and you won’t find anything any better…That phrase was ”Made in U.S.A.” I sure would like to start seeing that again more often. How about you?
Out with the old and in with the new! Every so often what we do and how we do it has to go through changes. It’s the evolution of our work environment. If you look at all the new ways we can accomplish the same old goals, it becomes evident that its time to ask if we should continue to keep doing business the same old way.
For many years now, the norm for a company to function effectively was that all the employees would be put together in an office building where they could interact with each other and accomplish the work at hand. This may still be true for some kinds of businesses but no longer remains true for all businesses. Being together physically isn’t always necessary. Sometimes being together virtually is just as good. Technology has provided us with new tools such as video conferencing and the ability of more than one person to work on a document at the same time and from any place in the world. We can literally do business anywhere from anywhere. Getting hard copy information too large to fit in your fax machine via next day air delivery used to be impressive. Today it’s a right now, no waiting till tomorrow, across the internet information transfer. Why put off till tomorrow what you can get accomplished today.
Do we really need to get in our cars each morning and drive to the office? Do we really need to even build these buildings then spend incredible amounts of our resources to light, heat and cool them when we can just as easily accomplish the same work without ever leaving our homes? If installing solar collectors on your office building is considered the “Green” thing to do; then not having the office building at all would be even greener; wouldn’t it? You can actually save your company a lot of money by doing something that will contribute to saving our environment. That sounds like a win-win solution to me especially since doing the right thing usually costs more not less.
The way employees are compensated needs to change as well. Paying someone just because they show up is not cost effective. Paying them for what they do is. I’m sure there are a number of people who won’t like this method, but giving away money without getting anything back in return isn’t considered good business.
I think the time has come to say good bye to the office building and say hello to the home office. We can become more efficient, increase our profitability and have a better quality of life. It’s good for us, and it’s good for our planet. Maybe its time we “just do it”.
Oh, by the way, it just so happens one of my specialties is incorporating home offices in my designs. Just give me a call and I’ll be happy to help you out. I work from my home office and I know what I’m talking about
I have been involved in the housing industry since 1975 and have experienced the ups and downs in housing first hand. It’s a lot like riding a roller coaster. You have to depend on the momentum gained from the peaks you attain, to get you up the next hill. That is assuming of course, that the next hill isn’t too high. This pattern of up then down again in housing repeats itself approximately every eight to ten years. Each time we hit the low points, some of us are left along the side of the road. This would be the business version of Darwin ’s concept of natural selection, or as Herbert Spencer would say, “survival of the fittest”. In the past, the down periods of the housing industry meant that there were still projects to be done but just not as many. In the past when the stock market was down, there would actually be an increase in remodel/addition projects. When the stock market wasn’t doing well people would invest in their homes (once considered a safe place to put your money). This time is different. Trying to make predictions about the future of our industry based on the past will be a bit difficult. The only thing I can say for sure is that if it takes too much longer I’m afraid there will be a lot more than a few of us left beside the road this time.
I read an article this morning that said one in every seven mortgages today is upside down, meaning they owe more than the property is worth. Many of those people are expected to simply walk away and give up their homes. The other six have seen a substantial reduction in their equity and there is no guaranty they won’t loose any more value. I also read that even though there are loans to be had, the qualifications to obtain them have become a lot steeper. As a result, we are not seeing very much activity in the remodel/addition or new home arenas despite the fact that material and labor costs are down.
In order to win a competition there must first be something to compete for and right now there isn’t much work out there to compete for. So being good at what I do, and offering my services at a competitive price, will not play a significant part in insuring my survival in this weakened economy. For now however, what’s important is finding a way to survive until the economy recovers. It will be my ability to reinvent myself and reapply my strengths and talents in new ways, creating new opportunities that will allow me to survive. Now all I have to do is just find a need and fill it. Sure sounds simple doesn’t it? I feel so much better now.
Trying to sell a home in today’s market can be a bit challenging. First off, there is a lot of competition, and secondly, home values have dropped significantly. Here in the Bay Area where I live, values have dropped an average of 46%. In the past, doing things like cleaning up the front yard, painting inside and out, refinishing the floors, or even investing in some new fixtures and appliances could be enough to make the home more attractive to potential buyers. However, spending thousands of dollars to do all of these things, when you have to sell at a discounted price, may not be practical in some cases. This is especially true for older homes. After all, you are competing with a lot of newer homes; ones that probably don’t need as much attention to make them more sellable.
One would like to think that since you are selling your home for almost half its previous value, it should be perceived as a good deal. Not so if you are competing with newer homes. Newer homes have the advantage of being designed to incorporate the kinds of features that today’s home buyers are looking for. Successful developers have always done this. What home buyers were looking for twenty or thirty years ago isn’t quite the same as what they are looking for today. This can put you at a disadvantage. If what you are selling doesn’t have the features the buyers are looking for, then spending lots of money making it look nice won’t change a thing. You might be saying to yourself, this home has really great potential; they’ve got to be able to see that. You’re right! They’ve got to be able to see this potential.
When you live in a home for awhile you start formulating ideas on how you can fix the things that you see as shortcomings of the home. The longer you live there; the more you see. The prospective buyers might only be there for only a few minutes, especially if it appears the home doesn’t have what they are looking for. If you don’t provide them a way to see what you know is a good deal, they will be out the door and on their way to look at the next house on the list. So let’s be sure they see the “potential” of you home.
Here’s how you do it.
I did a design for a young couple who owned a small older home. The home was located on a nice size corner lot that just oozed with potential. The home had only two bedrooms with one bathroom and a detached garage/workshop. My final design doubled the size of the home and included a new larger kitchen with a walk-in pantry, breakfast nook, a great room, a new master suite, a guest/study, powder room and a nice size laundry room. This home had all the things they wanted and needed. It also was going to be the kind of remodel/addition that would require they move out so the work could be done. At this point in time there were lots of homes on the market most for many months even after dropping the price more than once. There were some really good deals to be had and they found a home that met their needs for a very good price. All they had to do was sell their house so they could buy the other house. Then they would only have to move once instead of renting a house until they could move back in to their remodeled home. Having a small child and expecting their second child at the time made this prospect even more attractive to them. As I said before, houses were sitting on the market for months and prices were dropping. They decided to give it a try anyway. A real estate agent was hired, and my plans for our rather aggressive remodel/addition were left on the kitchen counter to be seen by the prospective buyers. What happened next was amazing. The house was put on the market on a Thursday. By the weekend there were three contractors bidding against each other, and on Monday they had a buyer who had agreed to purchase their home for $50,000 more than they had asked. After the remodel was completed I drove by with my camera to get some pictures for my portfolio. There was a real estate sign in the front yard with a little sign attached to the bottom of it that said “SOLD”.
You don’t need to spend the money to have a complete set of construction drawings done to be able to show someone what can be done with the home. You can have design sketches done for the cost of painting the house or possibly less In the end having an attractive price might get someone’s interest, but it’s the homes perceived value that’s going to close the deal. Don’t count on them figuring that out in the few minutes they are there, show them.
I have been asked the question over and over again. “What kinds of things can I do without getting a building permit”. I would love to have one simple answer to that question, but I can’t. You see, first I have to know where we are since the requirements change from place to place. Each local jurisdiction has its own requirements, and some places are more restrictive than others. In general, permanent structures more than 100 square feet in area or more than six feet high need to have a permit. Retaining walls more than 3 feet high need permits as well. There are limits to how much dirt you can move around your property before you are required to get a permit. If it involves pipes, ducts or electrical wiring, you can count on it. Don’t make assumptions. Ask some questions before you start. Although you might consider replacing those old single glazed windows with new dual glazed windows, a maintenance project, your local building department most likely won’t.
Your first stop to acquire the information as to what you can or cannot do is not the building department. The building department controls how things are constructed in order to insure public health and safety. Before you can go and apply for a building permit you need to get approval from the planning department. Building departments across the country are fairly standardized, as most have adopted the International Building Code with a few modifications to address the environmental conditions of their location. Planning departments, on the other hand, are concerned with what kinds of things are allowed to be built, where they are allowed to be built, and what they will look like when finished. .This can include even the colors.
Planning departments can be very different from each other. Things you can do in one location may not be allowed in another, and this can even be two different locations within the same city. If you live in a community that has a home owners association, you will need to go there first. The planning department will not give you permission to apply for a building permit until they see your approval from the home owners association. You might not need a permit from the city to paint your house, but if you belong to a home owners association you will still need their approval first. Depending on what kind of project you intend to do may involve other governing agencies as well such as public works, environmental health, & the fire district to name a few. I have had projects that required review and approval of the department of fish and game and even the coastal commission. Mowing your lawn is still a pretty safe activity, but washing your car in your driveway is not allowed in some communities. Make no assumptions. Ask the questions before you do anything.
Doing projects without a permit can be very costly, as they will still require you to get a permit after the fact at usually double the cost. At the very least you will have to take apart portions of the construction so they can see how you did it, and you better hope you did it to code. The situation gets even worse with time because you will be required to comply with codes that are current at the time of the permit application not at the time it was constructed. This means that even though you may have built something that complied with codes at that time, you may have to tear down and rebuild to newer more restrictive code requirements. This of course is assuming that what you did was even allowable in the first place. Remember the planning department? If you build something that’s not allowed, you will be required to remove it completely.
Finally you need to think about what happens when you decide to sell your home. Having to disclose that certain aspects of the homes construction were done without permits isn’t exactly a big plus when it comes to determining it’s value. Permits take time and cost money. Not getting a permit when you should have will cost you a lot more time and a whole lot more money.
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