Project Delivery

It's a question of culture.

To fulfil the American Dream of home ownership we

• make financing available to everyone, even to those unable to repay, and
• build to the minimum standard to provide collateral to the bank.

As a mobile society in which we constantly move onward and upward, we have no interest in a higher standard because we hardly ever stay in one place long enough to realize its benefits or to "cash in" on the payback. The next house we move to will in all likelihood not have those features either, so what the hell.

We also like and want a "good deal." If we have happy hour, two-for-one drinks and meals, discount coupons, and special "new low rates," offers of "free" goods and services, magazine subscriptions, why not also cheap houses? We want the highest performance for the least expense, the most show for the money, the biggest bang for the buck, even if it is short lived. The only one who really cares is the bank that must resell the property when we default. When our buildings become old, are no longer fashionable or components wear out and no longer satisfy us, there is always something better. We can always move on, spread out, cut down more forests, drain more wetlands and continue the American Dream and never look back. Our appreciation for value and our architectural heritage is on display in our inner cities and in the remnants of ornament in museums.

1. Should the US be moving towards UK's direction of recording building specifications with the land titles? Would this improve the issue being discussed here? (could this foster improved database for comparable analysis or replacement cost estimation strategies)

2. Should lenders be considering property operating costs when determining the borrowers ability to repay the mortgage? (should a Passive House score you better than code minimum design)

3. Should other comparable properties on the market (and their list prices) be considered when analysis of market value is performed? Should replacement costs be considered?

Let's try to break down the complexity of real estate and value. When considering a house, you are buying a property and a structure. The cost of construction and materials is fairly constant across the country, but the "area" makes all the difference in the price of the property. A 2 bed house on the beach might be $500,000, but in rural Alabama the same house might be $50,000. The appraisal forms I'm used to seeing don't separate the value of the land from the value of the structure and I think this is where the problem begins. They generate a cost per sf based on the average cost per sf of the "comparable" houses in the area. This cost is further modified by a very short list for upgrades that generously reward the owner with a 25% upgrade of the installation value. The reason why this is important is because the structure is what we design and build, but the dirt is the "area". Improving the structure is what adds value, not improving the shape of the dirt. This allows us to measure merit on an apples to apples basis by eliminating the wild card, the land or location. It also let's a buyer see if they are paying a premium for land (location) or structure (quality).

During the height of the building boom, 82% of single family homes built were spec houses. How many of these do you think were made of top of the line materials and had more than 4 corners? Spec builders will always dominate the market, but they are forced to compete at the lowest common denominator. The bank will only make a one size fits all loan because they think there is only one kind of house, 82% of all houses built. The McMansion is the result of sq footage being more important than anything. A result of land and structures being valued as if they were one item. I think appraisers should be former builders and truly understand how to "see" a structure's value after bidding in the real world. They should recognize a structure that is more expensive like they had to price it to build.

Leading up to the crash, we saw property values skyrocket. People who did nothing to improve their homes saw as much as 2x the value in less than a decade. Why did we reward all these people that did nothing? Houses doubled in value with no addition of actual goods. A modest rise in value due to locale/inflation does make sense, but double in 5-6 years like in CA? Because of the Walmart mentality of selling as low as possible by building high volume, we saw a market flooded by the lowest possible quality and the highest possible quantity.

It will take forever for us to recover from this property value crash if we continue to encourage the Walmart model. We don't need more cheap boxes, but we do need more value before construction numbers make sense. The current model doesn't reward value without lots of volume, catch22. Renovating is one way of not adding units, but adding value. If we reward people for putting expensive, tangible goods into a structure, then that property will now have valued goods worth seizing and selling. When the cookie cutters stacked up, they were all made of the same cheap stuff, no matter how big. How many of the cheapest toilet do you need? Without a variety of value levels, the economics of an industry becomes stagnant and vulnerable. All of your eggs are in one basket.

There is an assumption of better value when you hear Gucci, as they have proven their worth on the free market. Like all other commodities, there must be recognition of an individual product or company's success in the free market. A custom, handmade Martin guitar costs as much as $20,000.00+, but a mass produced Fender is $200.00. Mass produced homes are less desirable in all markets. Sales records show the most repetitious cookie cutters sell for the least (part of their formula), making my point that mass produced items are less desirable and should not be valued the same as unique items. In our system the item with the lowest price sales history is averaged by all the rest when valued, creating false worth for minimal effort. Again, why build better? Where's the incentive?

If an Architect's houses sell for top dollar consistently, then their brand should be more valuable. A Builder or Owner applying for a loan using unique plans from said Architect, should have their project valued according to that Architect's comparable sales, not everyone else's average in the area. This is like valuing each new product by BMW as if it were a Honda, giving the brand's sales history no credit. Why should my handiwork be brought down to the level of a plan book box with an unknown designer? That's insulting! You level the playing field for the locale by separating the structure's value from the land. This way an Architect isn't penalized by their area, but are measured for their work and can therefore benefit from their reputation anywhere they design. If this concept applied to builders in the form of a "builder (credit) score", I'll bet you see a huge shift in quality when cheap box builders start getting scored at the bottom of the scale. When they go to get a loan, the loan value is based on personal merit, their own sales, their "builder score". How more accurately could the bank's safely lend money than to judge the builder by their work and not an "area"? Selling as many of the cheapest houses would no longer be rewarded and hiring the most successful Architect would be! 

1. Should the US be moving towards UK's direction of recording building specifications with the land titles? Would this improve the issue being discussed here? (could this foster improved database for comparable analysis or replacement cost estimation strategies)

2. Should lenders be considering property operating costs when determining the borrowers ability to repay the mortgage? (should a Passive House score you better than code minimum design)

3. Should other comparable properties on the market (and their list prices) be considered when analysis of market value is performed? Should replacement costs be considered?

Let's try to break down the complexity of real estate and value. When considering a house, you are buying a property and a structure. The cost of construction and materials is fairly constant across the country, but the "area" makes all the difference in the price of the property. A 2 bed house on the beach might be $500,000, but in rural Alabama the same house might be $50,000. The appraisal forms I'm used to seeing don't separate the value of the land from the value of the structure and I think this is where the problem begins. They generate a cost per sf based on the average cost per sf of the "comparable" houses in the area. This cost is further modified by a very short list for upgrades that generously reward the owner with a 25% upgrade of the installation value. The reason why this is important is because the structure is what we design and build, but the dirt is the "area". Improving the structure is what adds value, not improving the shape of the dirt. This allows us to measure merit on an apples to apples basis by eliminating the wild card, the land or location. It also let's a buyer see if they are paying a premium for land (location) or structure (quality).

During the height of the building boom, 82% of single family homes built were spec houses. How many of these do you think were made of top of the line materials and had more than 4 corners? Spec builders will always dominate the market, but they are forced to compete at the lowest common denominator. The bank will only make a one size fits all loan because they think there is only one kind of house, 82% of all houses built. The McMansion is the result of sq footage being more important than anything. A result of land and structures being valued as if they were one item. I think appraisers should be former builders and truly understand how to "see" a structure's value after bidding in the real world. They should recognize a structure that is more expensive like they had to price it to build.

Leading up to the crash, we saw property values skyrocket. People who did nothing to improve their homes saw as much as 2x the value in less than a decade. Why did we reward all these people that did nothing? Houses doubled in value with no addition of actual goods. A modest rise in value due to locale/inflation does make sense, but double in 5-6 years like in CA? Because of the Walmart mentality of selling as low as possible by building high volume, we saw a market flooded by the lowest possible quality and the highest possible quantity.

It will take forever for us to recover from this property value crash if we continue to encourage the Walmart model. We don't need more cheap boxes, but we do need more value before construction numbers make sense. The current model doesn't reward value without lots of volume, catch22. Renovating is one way of not adding units, but adding value. If we reward people for putting expensive, tangible goods into a structure, then that property will now have valued goods worth seizing and selling. When the cookie cutters stacked up, they were all made of the same cheap stuff, no matter how big. How many of the cheapest toilet do you need? Without a variety of value levels, the economics of an industry becomes stagnant and vulnerable. All of your eggs are in one basket.

There is an assumption of better value when you hear Gucci, as they have proven their worth on the free market. Like all other commodities, there must be recognition of an individual product or company's success in the free market. A custom, handmade Martin guitar costs as much as $20,000.00+, but a mass produced Fender is $200.00. Mass produced homes are less desirable in all markets. Sales records show the most repetitious cookie cutters sell for the least (part of their formula), making my point that mass produced items are less desirable and should not be valued the same as unique items. In our system the item with the lowest price sales history is averaged by all the rest when valued, creating false worth for minimal effort. Again, why build better? Where's the incentive?

If an Architect's houses sell for top dollar consistently, then their brand should be more valuable. A Builder or Owner applying for a loan using unique plans from said Architect, should have their project valued according to that Architect's comparable sales, not everyone else's average in the area. This is like valuing each new product by BMW as if it were a Honda, giving the brand's sales history no credit. Why should my handiwork be brought down to the level of a plan book box with an unknown designer? That's insulting! You level the playing field for the locale by separating the structure's value from the land. This way an Architect isn't penalized by their area, but are measured for their work and can therefore benefit from their reputation anywhere they design. If this concept applied to builders in the form of a "builder (credit) score", I'll bet you see a huge shift in quality when cheap box builders start getting scored at the bottom of the scale. When they go to get a loan, the loan value is based on personal merit, their own sales, their "builder score". How more accurately could the bank's safely lend money than to judge the builder by their work and not an "area"? Selling as many of the cheapest houses would no longer be rewarded and hiring the most successful Architect would be! 

1. Should the US be moving towards UK's direction of recording building specifications with the land titles? Would this improve the issue being discussed here? (could this foster improved database for comparable analysis or replacement cost estimation strategies)

2. Should lenders be considering property operating costs when determining the borrowers ability to repay the mortgage? (should a Passive House score you better than code minimum design)

3. Should other comparable properties on the market (and their list prices) be considered when analysis of market value is performed? Should replacement costs be considered?

Let's try to break down the complexity of real estate and value. When considering a house, you are buying a property and a structure. The cost of construction and materials is fairly constant across the country, but the "area" makes all the difference in the price of the property. A 2 bed house on the beach might be $500,000, but in rural Alabama the same house might be $50,000. The appraisal forms I'm used to seeing don't separate the value of the land from the value of the structure and I think this is where the problem begins. They generate a cost per sf based on the average cost per sf of the "comparable" houses in the area. This cost is further modified by a very short list for upgrades that generously reward the owner with a 25% upgrade of the installation value. The reason why this is important is because the structure is what we design and build, but the dirt is the "area". Improving the structure is what adds value, not improving the shape of the dirt. This allows us to measure merit on an apples to apples basis by eliminating the wild card, the land or location. It also let's a buyer see if they are paying a premium for land (location) or structure (quality).

During the height of the building boom, 82% of single family homes built were spec houses. How many of these do you think were made of top of the line materials and had more than 4 corners? Spec builders will always dominate the market, but they are forced to compete at the lowest common denominator. The bank will only make a one size fits all loan because they think there is only one kind of house, 82% of all houses built. The McMansion is the result of sq footage being more important than anything. A result of land and structures being valued as if they were one item. I think appraisers should be former builders and truly understand how to "see" a structure's value after bidding in the real world. They should recognize a structure that is more expensive like they had to price it to build.

Leading up to the crash, we saw property values skyrocket. People who did nothing to improve their homes saw as much as 2x the value in less than a decade. Why did we reward all these people that did nothing? Houses doubled in value with no addition of actual goods. A modest rise in value due to locale/inflation does make sense, but double in 5-6 years like in CA? Because of the Walmart mentality of selling as low as possible by building high volume, we saw a market flooded by the lowest possible quality and the highest possible quantity.

It will take forever for us to recover from this property value crash if we continue to encourage the Walmart model. We don't need more cheap boxes, but we do need more value before construction numbers make sense. The current model doesn't reward value without lots of volume, catch22. Renovating is one way of not adding units, but adding value. If we reward people for putting expensive, tangible goods into a structure, then that property will now have valued goods worth seizing and selling. When the cookie cutters stacked up, they were all made of the same cheap stuff, no matter how big. How many of the cheapest toilet do you need? Without a variety of value levels, the economics of an industry becomes stagnant and vulnerable. All of your eggs are in one basket.

There is an assumption of better value when you hear Gucci, as they have proven their worth on the free market. Like all other commodities, there must be recognition of an individual product or company's success in the free market. A custom, handmade Martin guitar costs as much as $20,000.00+, but a mass produced Fender is $200.00. Mass produced homes are less desirable in all markets. Sales records show the most repetitious cookie cutters sell for the least (part of their formula), making my point that mass produced items are less desirable and should not be valued the same as unique items. In our system the item with the lowest price sales history is averaged by all the rest when valued, creating false worth for minimal effort. Again, why build better? Where's the incentive?

If an Architect's houses sell for top dollar consistently, then their brand should be more valuable. A Builder or Owner applying for a loan using unique plans from said Architect, should have their project valued according to that Architect's comparable sales, not everyone else's average in the area. This is like valuing each new product by BMW as if it were a Honda, giving the brand's sales history no credit. Why should my handiwork be brought down to the level of a plan book box with an unknown designer? That's insulting! You level the playing field for the locale by separating the structure's value from the land. This way an Architect isn't penalized by their area, but are measured for their work and can therefore benefit from their reputation anywhere they design. If this concept applied to builders in the form of a "builder (credit) score", I'll bet you see a huge shift in quality when cheap box builders start getting scored at the bottom of the scale. When they go to get a loan, the loan value is based on personal merit, their own sales, their "builder score". How more accurately could the bank's safely lend money than to judge the builder by their work and not an "area"? Selling as many of the cheapest houses would no longer be rewarded and hiring the most successful Architect would be!