Several years ago a guy and his wife walked through an open house I held for a property we’d developed and were working on selling.  The house was an open loft-like home with a green roof.   It was really cool, and they liked it.  At the time it wasn’t right for them, but we exchanged numbers and stayed in touch.  

About a year after that Franco asked me to work with one of his classes at Drexel, where he teaches.  I was happy to do so, and enjoyed the process very much.  In the class, we worked with students to identify various “green” measures (everything from insulation to flooring) and evaluate and model what mattered.  It was a daunting task in many ways - most of the experts in the field aren’t really very good at this yet. 

During that class, where I probably learned more than anyone, Franco and I started thinking and talking more-and-more about doing a house for he and his wife Sharon and their two kids.  I had never worked with a client before, having done more speculative development projects where I called all the shots (for better and, at times, way worse).  The idea of a design-build project appealed to me, especially for clients as cool and receptive to sustainable design ideas as Franco and Sharon.  The timing wasn’t quite right, but we both agreed that when the time was appropriate, we would work on this together.

Fast-forward to about 6 months ago, and we re-initiated the talks again, but this time more seriously.  We discussed everything from new construction to “container houses” to rehabs.  We discussed areas of the city, costs, how to get construction financing, contractors, real estate agents … you-name-it, we discussed it.  And all for good reason.  Though not doing it speculatively, we were undertaking a development project.  To do a project right, there are many, many variables that have to be considered.  We considered them.  

After a false start or two (an initial offer on a rehab house fell through), they made an offer on a home on S. 13th street, in Philadelphia, near Passyunk.  It’s a great, tree-lined street with lots of parks nearby, close to the subway on Broad Street, and with lots of hip new restaurants opening up in the area.  

The house is a 3-story home in need of fairly serious rehab.  Over the course of the past 60 days or so, I have worked with Franco and Sharon to first imagine the completed home, and then price its development (both labor and specs), and then re-imagine and re-price it a time or four as we worked through a very laborious construction loan process, called a 203k loan.  The 203k aspect of this project probably requires a post or 7 all to itself, but let’s just say that it was a challenge for all involved.  Ultimately though, they closed on the home yesterday.  

The design plan isn’t quite as grand as once imagined and our nerves are a bit more frayed than we’d like, but I just received a text message from our contractor that he has a demo permit in hand.  Work will, at last, begin in the morning to first deconstruct, and then reconstruct, this home from its current state into something we all can be proud of. 

For the next several months I will continue working with Franco and Sharon and Paul (the contractor) to manage this project and various design elements (with significant assistance from an architect).  Developing a property is a constant juggling act of finances, design, sustainability, timelines, and other restraints.  The end product must touch on each of these (and several other things, too) to be successful. A great-looking house that is too expensive:  failure.  A bad looking house that is affordable: failure.  For it to work, all of these various parts must be the best they can be within the context of the overall limitations (budget, scale, etc.).  That’s not easy to do, but getting the most you can out of whatever limitations you face is the challenge, whether a project be a rehab of a home or a new office building.  

Enjoy the weekend!

If it does, in fact, get more expensive for people to borrow for expensive homes because the government stops insuring these borrowers, I think it will ultimately be a good thing.  There will be a fair amount of pain in the short-term, and it really stinks for people that currently own homes that were federally insured.  It stinks because the value of their homes has been, in essence, propped up.  

Take that financial support away, and a $600,000 loan goes from costing $3,221 a month to $3,597 per month (jumping from 5% - 6%, as the article suggests).  Think of it another way, and it may seem even more significant.

To keep the same payment (around $3,220 a month) with the higher rate of 6% the mortgage amount would need to drop from $600k to $540,000 - a drop of $60,000 or so.  Now, assume that the buyer had put 5% down in both cases.  At a $600,000 value the value of the home was around $630,000.  In the new scenario, for a person with the same monthly budget, the corresponding value of the home would drop to around $567,000 - that’s over $60,000 - and a 10% drop in home values for people selling their home.  

So how could I say this is a good thing?  Well, in the sort-term it is certainly not, at least for the sellers, Realtors, and others whose take is tied to value.  However, over the longer term, once the value of the homes stabilizes, I do think that this approach serves to make homes more affordable and removes the government from at least one tier of mortgages.  Without the endless array of regulations regarding government-backed loans, the cost to borrow would increase, but (presumably) some of the mindless regulations currently in place may be reduced. 

Of course, thinking a step or two out, one might rightly wonder if this will lead to lenders on big ticket loans - without as many restrictions placed on them by the government - taking larger and larger risks and creating another toxic lending environment.  Sadly, that may well be the case, but we’ll have to see.

Short of that, I think that I think that this makes some sense.  How about you?

Saw this little gem in Hermosa Beach.  I was a little surprised, upon closer inspection, to realize that the cladding was wood.  From a distance I thought it was something else.

Recently I was in California.  These photos are of a renovated warehouse that is now a bar and restaurant.  I thought it was very well done.

Also from Mesh Architecture http://www.mesh-arc.com/ — really nice renovation.  Love the modern and rustic combined.  Easy to do, affordable, and great looking.

Anyone else like this as much as I do?

meumoleskinedigital:

Courtyard House, Williamsburg - USA

by MESH Architectures

ofaquarius:

long beach island, nj

(Source: measureiinlove)

Steve Glenn, founder of Living Homes, talk about Prefab, sustainable design, and more.  If you’re interested in Prefab or wondering why it matters, he explains it very well.

Curious how a modular home gets built?  Check out this video.  

Here are two recent slides from the FHFA real estate index recently published.  If you care to see the whole report and/or specific areas, check out their site.

This is a classic glass half full or half empty discussion.  On one hand the market is clearly sputtering and struggling.  On the other it has improved quarter to quarter fairly significantly from the 3rd quarter of 2008.  We’re a long way from having to worry about it, but, historically, when improvement is up 10% or more, watch out … a significant fall off isn’t far behind.   Ah, that would be a nice thing to have to worry about. 

This past weekend I finished a book a friend suggested, “Confessions of an Economic Hit Man”.  In it the author, John Perkins, tells the story - mostly his own - of how the International Monetary Fund (IMF) and World Bank (and others) worked with and seemingly for Halliburton, MAIN (which is now defunct but was the company he worked for), and many other similar companies to load third world nations with debt that the lenders (The US, IMF, World Bank, etc.) knew would never be repaid.  These loans were made on the basis of what the author did for a living - wildly optimistic, some (he) would now argue fraudulent - projections of economic growth based upon the work they were lending for in the first place.  It was a very self fulfilling cycle for those involved, and it left messes all over the world.

Indonesia, for instance, would be projected to grow at say 30% a year for 20 years if they accepted the loans to then hire MAIN (or Halliburton or similar engineering firms) to build them infrastructure.  Typically this included bridges, roads, a larger electric grid, etc.  In almost all cases, according to Perkins, these projections were wildly creative.  His quick career advancement was based in large part to his ability to constantly deliver what everyone wanted: “research” to support that Indonesia, Panama, Iraq, _____, could pay back the loans once their nation had the necessary infrastructure in place.  In actuality the point wasn’t to build the nations as was claimed but for them to default on loans or at least be highly dependent upon further generosity by the institutions and the US.  In exchange the US got oil, political clout, control, access to cheap labor, tremendously large paydays for engineering companies like MAIN and Halliburton, and oil (yes, I know I already mentioned it).

I am not here to debate the validity of all of his points, many of which I missed, but the larger ones I certainly hit on.  It is a worthy read, an interesting layer on history, and, at least in my mind, at least partially and disturbingly accurate.  It is my personal sense that especially towards the end of the book the book loses steam and he gains it.  For me this is where it suffers a bit, but this is not meant as a book review.  

Regardless of how much credence you choose to give the book and argument, there are two fundamental points that are hard to miss: oil and debt.  In it we (the US) are hunting, among other things, for oil.  Our weapon of choice is debt.  The name, “Economic Hit Man”, alludes to this.  We used fancy titles to load countries up with debt to gain access to oil, the story goes.  That this debt led in many cases to civil unrest, a dramatic rise in the disparity between rich and poor word wide, and the rise of religious extremism and its nasty cousin terrorism seems pretty clear, and is argued well.  

For all the talk of a green movement now and the need for the US and other nations to be less dependent on oil economically, politically, and certainly environmentally, this book really drives home a point that sometimes gets lost.  There are incredibly effective, remarkably profitable, and long embedded forces in the world and especially our country that won’t let this happen.  The interdependency of the world’s economies is due to many things, but perhaps nothing as much as oil and debt.  Neither is going away anytime soon as I am sure that the tactics people in power are using are far more advanced then described.  This book was written mostly about events from the early 1970’s - 1992 or so.  Yet it is not dated. Much of what you read about daily has its roots in these events - especially in the Middle East.  

In reading the book and considering the implications of massive amounts of debt on people around the world that couldn’t afford it and never benefited from it, I also couldn’t help but think of the situation that the US and many other nations are going through right now.  At some level you have to wonder if these tactics that worked so well around the world weren’t applied - knowingly or not - by mortgage bankers and lenders in the US to folks in such remote places as Arizona, Florida, and Detroit.

Perhaps this is a stretch, but, honestly I don’t think it is.  The mortgage crisis in the US is a whole other story for another day, but as I read this book it was hard not to think that the EHM’s, as they were called, eventually set their sites closer to home.  

In housing there are two fundamental topics these days: green and debt.  Everyone wants their home to be more green (they should, US homes consume 40% or more of the US energy needs), and almost everyone is suffering from deflated housing values, foreclosures in their neighborhood or worse, and all of the inherent offshoots of these issues: an inability to move or relocate easily, lack of consumer confidence, high unemployment, etc.  ”Confessions of an Economic Hitman” isn’t about houses, and it isn’t about building more sustainable homes, but drawing connections isn’t hard at all. Our country, like Panama, Iraq, Indonesia, and many others got loaded up on way too much debt based upon projections for the future that never came to pass. At the same time, we are as dependent on oil, and in many ways I fear more, than ever.  There are a few bright spots in our nation and world’s movement to be less dependent on oil, and awareness is one of them.  Awareness, though, doesn’t change much.  

The reality is it isn’t all that hard to build very energy efficient homes.  People, builders, and architects can do it, if they try.  I, for one, am unaware of a more important place for people to make a difference in the environment.    As I said above, about 40% of American energy use is from homes.  In Germany, and even here in limited cases, Passive Houses are a reality.  Passive homes use very, very little energy.  They may not be for everyone, but the current standard should not be either.  What is the exact number? I don’t know.  What I do know is that almost all new houses have close to know real effort spent improving upon this, and that older homes are typically far worse.  If the average is 40% of energy use, what are the real energy hogs using?  What percentage are McMansions using?  How about homes that are 150 years old?  Wasted energy costs money, feeds pollution, contributes to the strengths of people and nations that you’d prefer not have it, and generally endangers the world.  

Our goal is to eventually get to net-zero energy for our homes.  Through proper insulation, solar as appropriate, and geo-thermal it can be done, and we will do it. You don’t have to build new to benefit from this.  For renovations of older homes the improvements that can be made are tangible and important, and the resources saved by not building new are significant and worthwhile.  If this is something that interests you let’s talk.