the squallco development blog.

The Relative Frequency of Real Estate on Google Trends

Fri, 18 May 2012 15:48:00 -0400

The Relative Frequency of Real Estate on Google Trends:

Check this link out. I find it fascinating to see how chatter - for the purposes of this graph, search - changed as the market did. A score of 1 is average.

Web Search and Real Estate

Fri, 18 May 2012 10:07:11 -0400

I am in the process of re-activating my Pennsylvania real estate license, as well as getting my NJ one.

While I am and will remain primarily a developer, there is a good deal of value for me personally, and, I think, for clients in working with someone like me on various transactions. Investors and other developers may top this list, as I am in-tune with a large number of potential project properties everywhere from Philadelphia to Long Beach Island, and points in between. I also have the real-world experience to help clients understand potential pitfalls, costs, and real market value that other agents may, but may not, have. For some clients, there will be the opportunity for me / us to offer a truly integrated real estate experience, as I’ll be able to assist them in everything from acquisition and analysis to design + build and, eventually, their sale. Sort of like the Property Brothers TV show, without the brother.

This post isn’t really about all that, though. It is about real estate search, technology, and how people find real estate and the professionals they work with. Traditionally, a broker had agents. They ran ads in the local paper, held open houses, and the agents sat in the office, waiting for a potential client to come in, looking for a property. While all of that still happens, more-or-less, I believe it is a far smaller and less significant aspect of the real estate search process than it once was.

The change is obvious, yet elusive. People clearly go online now to search for real estate, even when (perhaps especially when?) they have a Realtor. Where do they go? How do they choose a property they want to see? Who do they call to actually see it?

There was a time not very long ago that Realtors controlled what a client saw. They had access to the MLS, and before that to the paper listings in the office. This meant that they controlled the information. The client had little control of what they saw or knew about a home or the market in general. All of that has changed.

With Trulia, Zillow, Realtor.com, Loopnet, etc., almost all information is more transparent than its ever been; and that trend is only going to grow. Realtors no longer control information. In fact, clients don’t only need them less for ever for information but, in many cases, are better able to search out and research what they want than a Realtor. With their control of information gone, the only thing that Realtors control is access. Without them, it is very hard or impossible to see a home listed on the MLS. To gain access - to actually see the home - you need a Realtor. Naturally Realtors will continue to protect this moat, without it their existence would be in question moving forward. This is a statement of reality, not criticism. Good Realtors offer a good deal to their clients that online search does not. Everything from contracts to negotiations, to local market knowledge and due diligence are immensely important to a successful transaction, and the Realtor’s role in all of this should not be diminished.

Yet, it is still true that one of the agents’ prior roles has diminished quite a bit. As I entertain various marketing options myself - everything from Trulia and / or Zillow ads to Google AdWords - I am thinking more about how people actually search, and who they choose. As a Realtor, both Trulia and Zillow allow you to pay for placement next to listings. So, if a person searches for homes in Chicago under $400,000, a Realtor can pay to highlighted next to the listing. That does not mean they are the listing agent - far from it, to the chagrin of many listing agents, too. I have no objection to this process, and think it’s interesting and potentially useful.

I wonder (and need to research) what the click-through rate is, and, more importantly to gain a sense for how many of these agents actually end up working with the client. As Chris Dixon has pointed out (about search in general, not real estate in particular), Google has been so successful because people tend to search Google with the intent to purchase. Unlike ads on Facebook, for instance, where people see ads when they are not necessarily looking to buy anything, if someone searches for “baby cribs” on Google, there is a fairly good chance that they actually want to buy a crib. This is valuable to advertisers, and one of the reasons that Google mints money.

At any rate, I think the same logic applies to Trulia and Zillow. If someone is on the site there is a pretty good chance they are interested in real estate. Of course, since both sites are well done, there is certainly a level of window-shopping from people who just like looking at real estate, and are not necessarily interested in buying or selling. The actual percentage, I am not sure. Regardless, the question becomes where a Realtor should spend their marketing budget and what value-added services they can add to their client’s process to make up for reality that most clients are going to search on their own anyway. Most people do not trust Realtors to find them what they want. They are going to go online and find what they want, and email their Realtor those addresses.

Where are they going? Logic (interested in comments and insite from others here) would dictate to me that a specific search site (again, Trulia, Zillow, Realtor.Com) is probably many people’s choice over Google or other search engines. In fact, this brings into question Google’s overall dominance in search, as specific portals chip away at their long-time dominance.

If we assume that a person heads online to look for homes, where do they find the Realtor they actually work with? That is my question. I have some thoughts, but I hope to find some Twitter replies, comments, and to do some of my own research to better understand this process and the thinking behind it. I will post again on this general topic, as it is one I am thinking more-and-more about.

Have a great weekend.

Demographics ...

Thu, 17 May 2012 11:16:24 -0400

Demographics ... :

This article from the NY Times seems like it could be an awfully large smoke signal. Things are changing. What will it mean?

What Developers Do

Tue, 08 May 2012 12:37:31 -0400

I am not an architect, but I have a heavy hand in design of our projects. The final version may be drawn up by an architect or one of our draftsmen, and it is certainly a collaboration, but in the end my design input is significant.

I am not a builder, but I hire and manage contractors for projects, working with them on budgets, on-site decisions, and everything they do. I have developed relationships with people I trust in several areas, and in several categories. Finding good people in any business is hard, but years of practice has made it easier.

What I am is a developer. I find projects that have some appeal, look for a design inspiration that could allow them to be something special, find a way to finance them after first analyzing them, understand the market limitations, bid the jobs, pick the contractors, get the permits in place, market the finished product, and hope to keep all of these parts oiled and moving. When one part slows down, they all do. It happens, but I try to keep it from happening (also, it recently happened, but I’m trying to get things smooth again). Frequently, when I read an article about Hollywood I think that developers are similar to producers. I used to not really know what producers did, but now it seems similar: everything, but not any one thing exclusively. For whatever reasons, people seem to have a hard time understanding what developers do. So this is a little about what I do. (Also, we offer design + build consultation, where we do all of this that we normally do for ourselves, but for a client.)

Still not great, but stepping in the right...

Tue, 08 May 2012 12:09:49 -0400

Still not great, but stepping in the right direction.

bijan:

via barackobama:

Holler for 26 straight months of job growth.

what he said.

cabinporn: Whangapoua Beach House on Coromandel Peninsula, New...

Thu, 03 May 2012 07:24:56 -0400

cabinporn:

Whangapoua Beach House on Coromandel Peninsula, New Zealand. Designed by Ken Crosson of Crosson Clarke Carnachan Architects.

Submitted by Nick Wallen.

Stocktwits, Trulia, and Search and Results

Wed, 02 May 2012 12:45:41 -0400

Over the past few weeks I’ve become fairly obsessed with Stocktwits. It’s not that I am a big trader, and I am very far from an expert. However, I find the social aspect of the site - and the concept that you can sort through lots and lots of noise to find a few people to align your thoughts with and flush out investment ideas - brilliant and inspiring. It is the single best real use of Twitter that I have discovered.

Their founder, @howardlinzon, is a great twitter follow even if you’re not a big investor. Anyway, they recently came out with a heatmap that allows you to graphically see what people are tweeting and talking about. The basic idea of this is that if people are talking about it, that volume of conversation may lead to something. In their case it is a change in stock price, but this idea is brilliant. I don’t know that this is an entirely new concept, apparently the basic idea that “noise” leads to trends has been kicked around by social psychologists for decades. But, I think Stocktwits hits just the right tone of serious and irreverent, and that heatmaps is a very interesting thing. What it means I don’t know yet. I’d be very interested (as I am sure lots of people would) to discover the results of stocks that have had elevated chatter. That could be very interesting, and perhaps profitable, too.

I have also been thinking more about this type of thinking as it could be layered on other topics - notably real estate. I dug around a bit, and it seems like Trulia is poking around at this: http://www.trulia.com/explore/ - but, in my limited search, it seems like searchpath isn’t available yet and hindsight seems to have very limited data (I tried a few zip codes and got no results). Anyone know of any other companies with accessible tools like this for real estate - something that displays that number of searches being done in a given area? Or do you know about any interesting studies about the affects of search to results? I’d love to hear what you think or know about this.

Revised Website

Wed, 02 May 2012 12:25:40 -0400

Yesterday we re-launched our website. Check it out at www.squallco.com. The main reason for doing this was to better incorporate other work into our site. When we designed the site a few years ago, it was geared almost entirely to LBI and the prefabs we designed with Steve Midouhas. While that is still a prominent aspect of our site and plans, we also have broad experience in a variety of other development styles and design + build. Quite frankly, we were limiting our marketing scope for no real reason. So, while there is some more that will be added over the next few months to the site, I think that the new site more fully articulates what we’re working on and what we can do with our clients. Let me know what you think.

nevver: The Boat House Love this.

Fri, 18 Nov 2011 08:03:20 -0500

nevver:

The Boat House

Love this.

Lighting Options and Energy Savings

Tue, 15 Nov 2011 10:47:53 -0500

Recently, in addition to working with Joe on HVAC and insulation options I have spent time considering various lighting options. Ultimately we want to get the Lambertville house, and others that SquallCo creates, to be very energy efficient. There are two main motivations for this: ongoing operating cost and carbon emission reduction.

The options for light bulbs have gotten more complicated over the past several years, but that is a good thing. The traditional 100 watt incandescent bulb is being phased out by CFL and LED bulbs that can save around 75% in energy use and costs compared to traditional bulbs. There are also halogen incandescent bulbs that are about 25% more efficient than other traditional bulbs.

It is clear that using the newer technology in bulbs is an obvious choice. Though they are more expensive, the operating expense is considerably less. They last longer, cost less to use, need less energy, and have significant environmental benefits.

There are, however, some negatives. CFL’s are essentially fluorescent light. While there are options on the market that are less harsh than others, and shades, etc., can help mute the bright light, they don’t create the greatest quality of light for some applications. Most of them won’t dim, either. LED’s are considerably more expensive than either halogen or CFL’s for both the housing and the bulbs. They do last longer, emit nicer light, and can dim; but the upfront cost (while expected to come down over time) may be prohibitive for many homeowners or builders.

To better make the choice, I started thinking about how much energy lighting uses in a house. There are varying opinions on this, but the general consensus seems to be around 10-12% of total energy consumption in a “typical” home is used for lighting. I am sure that this can and does vary significantly by region, home design (daylighting can basically eliminate the need during the day in many areas), and personal usage. However, in terms of rank-order, lighting seems to clearly lag behind heating and cooling (combine for a whopping 46% of total energy usage / cost), water heaters (14%), and appliances (13%). In fact, if you look at the government data on this, you could reasonably determine that lighting isn’t all that significant in the overall effort to reduce energy use and expense.

Given that the average US home spends around $3,500 a year on energy (again, this obviously varies greatly), the typical portion of someone annual bill for lighting is around $350. Optimally, if you used all LED or CFL lights and saved 75% you would reduce your lighting cost to +/- $87.50 annually and save around $262 per year. Over 10 years that’s $2,625. For many people already living in a home, switching out light bulbs is probably the easiest way to reduce their CO2 footprint and reduce their costs. If you’re building a new home or gut-rehabbing an existing house, lighting probably isn’t as large of a concern, relative to other improvements that can be made. At the same time, it’s relatively low hanging fruit to reduce costs and consumption, and well worth the time to get it right.

My research in this is not-yet-complete. But the synopsis is that CFL’s with some exceptions that I need to better understand, don’t offer the quality of light that I want and that LED’s can be very expensive - perhaps too expensive to do in mass. This post has already gotten too long, and I have more research to do anyway. On my next post on this, I’ll breakdown the costs of CFLs and LEDs and try and articulate my philosophy and which to use where.

Increasingly my thinking is that the right approach may be to combine halogen (-25%) with CFLs and LEDs (-75%) in the home based upon areas of usage. I am not sure that the “bang for your buck” is good enough financially (LEDs) or aesthetically (CFLs) to only use either. I’ll post again later this week as my thinking on this evolves.

More shots from the finished home.

Fri, 11 Nov 2011 10:28:00 -0500

Classic white subway tile

Bamboo hanging vanity

Mosaic penny tile

MR-16 LED recessed lights

Slate in the foyer

Cork floor in the kitchen

Stairway to heaven (deck)

The view from deck

More shots from the finished home.

Some shots from the finished home. Quite a transformation.

Fri, 11 Nov 2011 10:23:03 -0500

Living and dining rooms

Foyer

Translucent floor panel

Skylight with exposed joist

Translucent floor panels

Original hardwood

Exposed brick

Travertine

Some shots from the finished home. Quite a transformation.

A few shots from the demo portion of the project.

Fri, 11 Nov 2011 10:16:19 -0500

A few shots from the demo portion of the project.

These are a few photographs from the start of the Montalto home...

Fri, 11 Nov 2011 10:11:59 -0500

Living Room, Before

Stair, Before

Bedroom, Before

Hallway, Before

Bedroom, Before

Pipes, Before

These are a few photographs from the start of the Montalto home renovation project. It was disgusting to the point that I would literally come home and shower after being in the house for 10 minutes. The stench was awful.

Photo

Wed, 09 Nov 2011 10:35:40 -0500

Insulation Cost/Benefits

Tue, 08 Nov 2011 10:02:11 -0500

The Lambertville house needs literally everything. One of those needs is insulation. With demo done, we have a house down to the studs that is, more-or-less, an open slate. Putting it back together is an interesting and challenging exercise in design, both functional and aesthetic. Behind our old plaster and drywall walls were old balloon framing and some old-school insulation: bricks, straw, some fiberglass batt insulation from a previous owner’s partial renovation, a baseball card and a bra.

Now that the bricks are stacked outside for a currently unknown future use (any ideas?), the baseball card (Ed Charles’ rookie) valued at $3.25, and first estimates gathered for insulation options, the evaluation of insulation options can begin. Among those options are: closed cell soy-based spray foam, open cell soy-based spray foam, and eco-touch (or similar non-toxic batt insulation. For budget reasons we could do a combination of two options, too (closed cell on the ceiling / open cell on the walls, closed cell on the ceiling, batt on the walls; etc.).

I know a little about this stuff, but to better understand the options I am working with a mechanical engineer, Joe (I met Joe through the @digsau softball team a few years ago). To better evaluate HVAC options, insulation, and windows, Joe modeled energy performance with a variety of combinations of insulation, windows, and HVAC systems.

While there is a good deal to evaluate - everything from R-values to cost to toxicity - the following chart from Joe’s report summarizes the various r-value qualities of some of the options:

Because r-value is measured by inch of insulation, the depth of a wall or rafter has a large impact on the overall r-value of the section. In our house, filling the roof rafters with closed cell would result in a total r-value of around 48. Compared to the r-19 gained by using typical batt insulation, that is a significant difference. In the walls, using closed cell will result in R-19, where open cell would lead to R-11 and batt insulation R-7.5. From a sheer r-value perspective, closed cell is the best option. It also is inhabitable to mold and bacteria and adds structural strength to the house.

On the surface, this is a great solution. Digging a little deeper though, how much does it matter? Joe further quantified the differences here:

The thing that jumps out at me, and that I’m following up with Joe on, is that I am surprised that the roof insulation upgrade does not result in a more tangible improvement. I am not yet sure why this is. Obviously heat rises, and my assumption has always been that improvements to the ceiling r-values have a big bang for your buck. In this case, that does not seem to be so clear. There is significantly more wall volume than roof, so my thinking is that must be what drives it, but I’m just not sure yet. Overall, spending the additional money on all options would result in operating costs of +/-$1,200 / yr. compared to about $2,000 annually with the base case assumptions, according to the model. While I don’t know yet how much we’re talking about, there is also an environmental benefit in reduced carbon emissions from lower loads in the heating and cooling system.

So, what is the true cost/benefit of the upgrades? At this point I have incomplete estimates for various aspects of the base case vs. the upgrade options that were modeled. In reality I may never know exactly, and I am okay with that. The goal isn’t to split every hair, but to make a good decision based on tangible evidence, and not just what salesmen suggest or whatever is in sale at the supplier.

That said, I know enough from previous projects and from the estimates I do have for various upgrade options to have a sense. Assuming you were to do every option detailed, and that you did, in fact, save $800 per year, what is that actually worth?

Using some rough numbers and admittedly incomplete analysis, if you wanted a 5% per year return on your capital improvement investment, the improvements would need to cost $16,000 more than a base case scenario (you have to spend something - the house needs all new systems). The systems in question are insulation, HVAC, and windows. I do think the upgrades would cost around $16,000 more than the base scenario, and that the return, roughly speaking, is 5%. If you were to invest $16,000 and get a 5% return that would commonly be pretty acceptable, especially now, but what about in this case? When the time comes to sell the home, can we get that money back? Would someone pay more for the savings compared to other homes that they could buy? Some people will, for sure; but many will never care.

Though this exercise isn’t just about money (I knew coming in that closed cell insulation and better windows would cost more), it is, obviously, a factor. As with everything in this process, there is a constant give-and-take between function, budget, and aesthetics. The answers aren’t always obvious, but I am committed to making decisions, and not just following the crowd in development.

There Seem to be Weeds in this Blog ...

Tue, 25 Oct 2011 11:28:52 -0400

I have been a little negligent in my blog posts lately. I hope to change that. While things may have seemed to die down a bit, the reality is they’ve actually been going in the other direction. Between managing a gut-rehab for a client in Philadelphia, to starting work on a gut-rehab development project and sub-division in Lambertville, NJ, to working to develop clients in LBI, I just haven’t stopped to blog about any of it lately.

In a lot of ways the Lambertville project feels like it deserves its own blog, separate from the SquallCo one you are reading. I’m toying with that idea. One of the house-specific blogs that I like include chezerbey.com. It’s a good blog and a great renovation. I have toyed with aiming in that direction for the Lambertville project. In the short term, I may just keep it here, and potentially migrate to another dedicated site sometime soon. TBD.

Later this week we will finish up the consulting / project management project in Philly that I’ve been working on since the Spring. The before-and-after photos are pretty dramatic, and I’ll post them soon, too.

I’ll be back, sooner than later.

"Life starts all over again when it gets crisp in the fall."

Wed, 05 Oct 2011 08:09:14 -0400

““Life starts all over again when it gets crisp in the fall.””

- F. Scott Fitzgerald, The Great Gatsby

(via)

Sweet house being built on Holgate.

Fri, 05 Aug 2011 13:45:01 -0400

Sweet house being built on Holgate.

Here is one of their planters. It reduces overflow into local...

Wed, 27 Jul 2011 10:22:43 -0400

Here is one of their planters. It reduces overflow into local rivers while greening the neighborhood. Win/win.