Sunday, June 21, 2009

What the New Home Buyer Wants-From BuilderOnline

Even as we worry about today, researchers, community planners, and pollsters are probing consumer demand to predict what they will want tomorrow and the definitive answer from those presenting their findings at the Pacific Coast Builders Show is something different.

The current economic situation has triggered a shift in people’s values from an era of indulgence to one of responsibility, trend tracker J. Walker Smith of Yankelovich said Thursday morning.

That translates to the home-buying consumer as a desire for homes that fit but don’t exceed space needs, are greener, and that are part of a community. It doesn’t mean that buyers are dour, though, he said. Instead, it means the opposite, because the more anxious we get about the economy, the more we look for the bright side of things, according to Smith.

It’s up to home builders to tap into those traits to find a market. “They (builders) have got to be the the voice of optimism for consumers,” Smith said.

Buyers are also looking for homes in a walkable environment with most of their daily needs met in a small footprint. That setting could be urban setting or “suburban-urban," which would be a new development that's not within an urban core, but does include some of the characteristics of a city in a planned community. “We have structurally overbuilt the wrong products in the wrong locations, delivering what the market doesn’t want,” said Christopher Leinberger, a land strategist, developer, and author of “The Option of Urbanism: Investing in a New American Dream."

Leinberger said he thinks there’s pent-up demand for walkable urban product, but concedes the industry hasn’t solved the difficult equation of building them. The infrastructure is costly, he acknowledged, but the final product does command higher prices.

In terrms of the suburban-urban model, master plan communities with urban touches in the form of town centers with grocery stores, restaurants, and retail stores nearby have boosted sales in Newland Communities’ projects as consumers look for convenience and bargains. “Consumers are adapting (to the new market),” said Malee Tobias of Newland Communities. “They are shopping even smarter than they ever did before.”

She also pointed to a new trend called “hiving," which means poeple are spending more time socializing within their community, with neighbors, and hosting events at home rather than driving distances for entertainment. “Entertaining at home is one thing they are not cutting back on,” Tobias said.

Friday, June 19, 2009

The Unrealized Value of Owning a Green High Performance Home.

From Tony Marnella's Blog at

I wrote back in January about the behind the scenes inspections and testing that the green high performance homes get that many don’t know about or if they do, don’t appreciate the intensity of them. Since we continue to hear about Buyers wanting the “Best Deal” or the “Best Value”, it occurred to me that the Value of these homes is also not being realized.

For instance, 100% of the homes we build here at Marnella Homes are built to the Earth Advantage/Energy Star “Gold” level. Our homes are extremely well sealed and with blow-in insulation achieve a very low leakage rating. Also, with our 95%+ HVAC systems, fully sealed ducting and all inside the home in conditioned space. Our home owners save on average $40 – $50 a month in our 1400 – 1600 sqft homes over a similiar sized code built home.

Home owners have been sold over the years all the features that builders put in and are told how great they are and sometimes even how many years the home owner will receive a payback from these features. What so many times doesn’t get either explained or truly appreciated by the home owner or buyer is the value of these features. We took on the venture of Green performance building with the “What’s in it for me” approach. Thinking just selling features to someone who doesn’t know much about the industry will tend to make their eyes glaze over. So, we have tried to show our home owners and buyers “what is in it for them”.

In the case of a monthly savings, this is a direct savings over what they would be paying for utilities at any other new code built home. Plus, even with many builders getting on the green built performance band wagon most are doing just the minimum to get their homes certified so, we are outperforming most builders in our area. This is money that can be for that massage every month, the manicure, dinner, a movie with the family, a ski lift ticket in the winter, etc. So, many things that these homes make easier to afford. Because, isn’t the old saying, “a penny saved is a penny earned” more relevant today than ever before in our life time?

Now that I have addressed the actual savings, let’s look at the added value. Using the $40 – $50 a month in savings, at today’s interest rates that is about $8,000 to $10,000 in additional value to the home. Of course, our lenders aren’t going to let you borrow more because we can show the energy savings, but wouldn’t it be great to know that you have built-in additional financial strength due to the lower monthly cost of home ownership? I do believe that some lenders will eventually see this value and want to work with builders like us once this resonates with them. However, I am not holding my breath for this to happen anytime soon.

Lastly, now that real estate has moved back to a more traditional style of ownership, I feel that the long term value that these homes offer is also important. Energy costs are going to continually rise so, in 5, 7, 10 years or so when we sell our homes doesn’t it seem that it will be a added value to your buyer that your home saves a considerable amount in monthly utility costs over the resale homes that will be on the market at the same time? I think it should now and most assuredly then.

So, buying a home isn’t just the countertops, the carpet and appliances. Sure those are the features that you can see, feel and touch, but don’t over look some of the most important features that truly create the “value” in your home. You can always change your carpet, appliances and countertops, but it tends to be a little harder to retrofit a high performance HVAC system inside your home in the conditioned space if you are replacing a traditional system it’s not very easy to go back and effectively caulk and seal up a home that is already completed.

Please share your comments. I would like to hear from you.

Saturday, June 13, 2009

Renovation Junky

Here's a fun, new site for renovation ideas and information:

Thursday, June 11, 2009

Building Products Top 100 List-53 Are Green Products

Thursday, June 04, 2009

When Your Contractor Runs Out of Money

I have gotten numerous calls over the last few weeks from homeowners whose contractors have run out of money. Either the contractors tell the homeowners that they are unable to continue, or warning signs occur. The contractor starts asking for payments ahead of the work, he presses you to sign new contracts or change orders for additional work, subcontractors start to complain that they aren't being paid, or he just disappears.

The homeowners are frantic and they ask me what to do. The contractor hasn't quit, but they are stuck.

First of all, I would recommend confronting your contractor and asking flat out if he or she is having cash flow issues. Contractors frequently apply funds to previous job, subs or suppliers, and in this economy, they are getting caught short. If the contractor is honest and tells you the truth, it may be worth your while to advance some money to the contractor or pay extra and ask for some extras. It may save you money and aggravation to pay your own contractor a little more to get the job done.

Second, do not just terminate or fire your contractor. If you do, you run the risk that your contractor may bring an action against your for breach of contract. Go back and read your contract and see if there are any clauses that address bases for terminating the contract.

Instead, write a demand letter to your contractor. In it, state that you are proposing a schedule for completion and payments to serve as an addendum to your contract. If the contractor does not agree to your proposed schedule or suggest one of his own, then you can state that he will be in breach, and you will "mitigate your damages" (reduce damages) by hiring another contractor to complete the job. That way, the contractor will be the one who is in breach.

A note to contractors: I represent contractors and construction companies and I am sympathetic to your situation in this economy. That said, it is better to be honest with owners and try to work things out then to disappear or keep asking for more money. Now is the time to fess up and ask for additional funds to complete the job. It may maintain the good will you have generated and result in more work from referrals in the future.