Cost of Ownership – Resale Value

by Michele Weaver | Sep 14, 2020 | HER Home

When looking at your new home investment, one of the considerations is future resale value. Buyer preferences change over time, and the farther out your time horizon, the less confident you can be in a design, amenity, or product’s future popularity.

Americans live in their homes an average of 13 years, according to a study cited in a January 2020 article from the National Association of Realtors. So, here are three plans: a hot new design and two similar size plans that were new and popular years ago:

More than 25 years ago, the Orchard (#2818) was a top-selling home plan. The bedroom suite bathroom’s twin boxed-out windows and whirlpool tub have fallen out of favor with most buyers. Twenty-four-inch wide bathroom doors, a 4-foot shower and 6-foot walk-in closet don’t excite most of today’s buyers. The peninsula kitchen is fairly closed off; open to the entry is a formal dining room; and you enter through the laundry room coming in from the garage—all issues which may depress the home’s resale.

(Click on the images to view larger.)

Though it’s had several birthdays, the Leftwich (#29300) plan is still quite popular today and illustrates some evolving buyer preferences. It is an open floor plan with an island kitchen that flows freely into the eating area and family room. Compared to the Orchard, the Leftwich’s bedrooms are slightly larger and the closets are significantly larger. Plus, there is a rear foyer entry from the garage with separate laundry room.

(Click on the images to view larger.)

The Teglia Farm (#42482) is a brand-new plan that is already getting a lot of attention. Embracing the shift to value engineering, this design’s foundation has minimal jogs to keep costs down. In its kitchen, the island has back-to-back base cabinets for added storage, and the expected walk-in pantry. Without the limitation of walls, the dining area can temporarily expand into the family room for big holiday meals. There is a 5-foot shower in the bedroom suite and its walk-in closet enjoys a convenient connection with the laundry room. Flexibility is illustrated by the buyer’s choice – walk-in closets for Bedrooms 2 and 3; and, something neither the Orchard nor Leftwich have – a powder bath.

(Click on the images to view larger.)

Market Shifts, Trends, and Fads. Shifts in buyer expectations are the most pronounced and universal – having significant impact on a home’s appeal and resale value. There has been a shift away from formal dining rooms as we have become generally more causal, preferring usable space in our homes. Value-engineering is expected. What was an established trend, fueled by the 2020 pandemic, accommodations for working from home have likely become a shift for buyers.

Trends are obvious departures from the past and tend to address an existing problem or issue but are not as widespread as shifts. Seventy-eight percent of American adults don’t bathe (they shower instead) and among those who do like to take a tub bath, most use the tub only occasionally. A decade ago, some Realtors were telling us that no tub in the owner’s bathroom would hurt resale. Today, most buyers shy away from a home without a larger shower in that bathroom and feel a tub is waste of space…they don’t want to have to dust the tub!

The 25-year old Orchard still has good curb appeal, but the combination of obsolescence and lack of current, in-demand amenities hurts its resale value. It likely also has dated finishes and products. The Leftwich design speaks more directly to today’s buyers, but still its kitchen pantry cabinet and “snout” garage don’t work for some buyers. The Teglia Farm embodies many of today’s buyers’ preferences. So, 13 years from now, which of those designs would you want to be reselling?

Beyond design, resale should be a factor when making other choices. You choose to add the builder’s “first impressions” option package, with the beautiful front entry door, tapered porch columns, and attractive garage door. Not only will you appreciate your home’s curb appeal every time you arrive home, so will prospective future buyers. In fact, a study by Therma-Tru found stylish entry doors could increase a home’s perceived value by an average of 4.2% or $18,750. What about some extra-cost options that aren’t so easily appreciated? You opt for the builder’s “energy investment option.” Behind the walls, that high-performance insulation is a hidden asset. But you can show your lower utility bills, effectively bolstering your home’s resale value. Know that when a home’s price is higher than expected, buyers will look for the reasons why it is worth more. Contrast that with a home that has a lower-than-expected price. People looking at that home focus on the negatives – what makes it cheaper.

Next time…Offsetting Home Ownership Costs

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Thoughtful Design Concepts

Cost of Ownership – Replacement and Maintenance Costs

by Michele Weaver | Sep 7, 2020 | HER Home

Last time we looked at PITIU (Principle, Interest, Taxes, Insurance, and Utilities) as a truer definition of total monthly housing costs. But if you’re also considering a resale home, there are other costs that need to be figured in.

Replacements. How would we expect the resale and new homes to compare, replacement cost-wise, over the next 10 years? A May 24, 2019, article in U.S. News & World Report identified the life expectancy of several key products in the home. We’ve added average quality product pricing to come up with the following:

Replacement product costs for the resale home come in at $22,500 higher, which equates to $187.50 per month on average more. Now, not every one of those items may need to be replaced on the resale home within the next 10 years, but the likelihood of needed replacement is much higher for the older home.

Maintenance costs are likely to be higher for the resale home. From repainting a few rooms to having the carpets and air ducts cleaned, there may be costs you incur soon after moving in. More expensive projects will probably occur much sooner as well, such as exterior painting or cleaning/sealing/staining the deck. Maintenance ignored will hasten even more expensive repairs, such as redoing concrete driveways and sidewalks or rebuilding a wood deck. Of course, you can save some of the cost by doing these things yourself – if you have the expertise, tools, and time.

Sherwin-Williams’ Harmony® paint contributes to cleaner indoor air quality by reducing VOC levels from potential sources like carpet, cabinets and fabrics. Harmony paint also works to help rooms stay fresher, longer, with odor eliminating technology that breaks down unwanted household odors. Photo courtesy: Sherwin-Williams

Your style. Then there’s the combination of your tastes coupled with the obsolescence inherent with a resale home. The previous owners may have loved those trendy light fixtures. You think they’re gaudy. Same goes for the bathroom mirrors. That big, deep, built-in entertainment center may have been perfect 20 years ago. Now it’s wasted space. The interior was repainted just before putting the home on the market – but mauve just isn’t your color. Yes, you can put up with these shortcomings for a while but compared to selecting what you want and having everything brand new, there are very real costs to settling for someone else’s choices. Plus, while something like changing out bathroom mirrors may be a project you can tackle, other projects may necessitate hiring professionals. You want to open the kitchen to the eating area and family room, but is that a load-bearing wall? Worse yet, it may be pretty much impossible to accomplish some tasks. So much for the 8-foot high basement ceiling you wanted.

Most of us need to be budget-wise when considering buying a home. When looking at the monthly housing budget, we start with PITIU. But if you are considering new construction and resale homes, product replacements, maintenance and repairs, and updates that correspond with your preferences, have to be included when calculating the monthly housing budget for pre-owned homes.

Next time we look at resale considerations when building new.

For more resources on thoughtful design and products:

View other articles on our blog
Browse our Her Home™ Magazine
Thoughtful Design Concepts

Bathroom Photo: Courtesy of Artistic Tile
Ceiling Fan and Bedroom Photos by Renee D. Calvin Photography.

Cover photo: <a href=’https://www.freepik.com/photos/people’>People photo created by freepik – www.freepik.com</a>

Beyond Dollars – The Cost of Home Ownership

by Michele Weaver | Sep 4, 2020 | HER Home

Thinking about the cost of home ownership often resides in the “left brain,” which is associated with information, rational thinking, and analytics. Yet we feel other, very real costs, expressed in terms such as happiness/frustration, contentment/disappointment, or confidence/anxiety. Closely related to cost, William Poundstone points out in his book Priceless, “Though a price is just a number, it can evoke a complex set of emotions.”

The cost of home ownership is more than what we pay in mortgage payments, utilities, maintenance, and repairs. What is the value of living in your dream home? A kitchen in which you can create masterpieces, enough storage that you can feel organized, and outdoor living space that’s fun for everyone?

Yes, we look at costs in terms of dollars. In lieu of the standard shower in the bedroom suite bathroom, the spa shower costs $3,000 more, about $16 higher per month in a 30-year mortgage at 5% APR. But your right-brain (feelings, emotions, story) reminds you that every day you’ll use that shower. It might be that you enjoy taking a hot, relaxing shower. It might be that you want to use the body sprays for an invigorating shower. It might be that you just don’t want to bump your elbows into the sides of the standard-size shower when washing your hair. How would that spa shower make you feel physically? How would it make you feel about yourself? Then there is its impact on resale – a future buyer may fall in love with that spa shower, the amenity that gets you a quicker sale at your full asking price.

The spa shower you want might be what clinches your home’s future resale!

Whether we were forced into it or leapt at the opportunity, many of us got to experience firsthand the “joy” of working from home during the 2020 pandemic. Suddenly, we had a new appreciation for home office design. Size, location, privacy, natural light, storage, workspace, seating… even the trek to the bathroom all took on new meaning. Companies discovered some underappreciated benefits of having employees work remotely, too. Now, whether full-time or a couple days per week, millions more of us have jobs working from home. But at what “cost”? For our happiness…our sanity…our productivity, this may mean remodeling or even buying a new home, designed with the amenities and solutions for working from home we need and want. There are a few silver linings, such as the potential home office tax deduction, reduced commuting time and expenses, even “going to work” in your comfortable yoga pants. How do those things factor into the cost of home ownership?

Many of those same issues can be applied to home schooling. At the time this is being written, the jury is out on whether schools will return to their pre-pandemic “normal.” Some have already announced a remote or a hybrid approach, going to 2 or 3 classroom days per week, and issuing laptops or tablets to students for learning/studying at home.

Flex spaces perfect for working from home/schooling from home became the new must-have amenity with the pandemic. This flex room with a wall bed is perfect for guest space and/or working/schooling from home. (Photo: Closet Factory)

If you have the time, the know-how, and the tools, you may be able to tackle costly maintenance and repair projects inherent in older homes. What is your time worth? If you lack the know-how, what’s the cost, in terms of time and frustration and money, of doing that repair twice? New homes give you back time, like not dusting the whirlpool tub you never use. Staying put, doing nothing seems safer, because we don’t often consider the high costs associated with inaction.

On May 15, 2020, Seth Godin’s blog read, “The cost of something is largely irrelevant, people are paying attention to its value.” Once we learn to value how a new home can enrich the lives of everyone in our household, positively affect our health and our outlook, even grant our desire for enhanced livability and style, we can take a holistic look at the total cost of home ownership.

For more resources on thoughtful design and products:

View other articles on our blog
Browse our Her Home™ Magazine
Thoughtful Design Concepts

Wall Bed/Flex Room Photo: Closet Factory

Cover Photo: <a href=’https://www.freepik.com/photos/coffee’>Coffee photo created by user18526052 – www.freepik.com</a>

Design Affects Cost – Value Engineering

by Michele Weaver | Aug 24, 2020 | HER Home

Surging lumber prices have added an estimated $14,000 to the typical new home in just the last four months according to the National Association of Home Builders. While builders can do little about fluctuating materials costs, value-engineering the home – balancing livability and style with functional aspects and cost – helps with affordability. Yet many aspects of value engineering aren’t obvious or readily recognized. For example, roofing contractors typically charge more for more complex or steeper roofs.

The one-story Calverton (plan #8530), at right, was designed with 8:12 roof pitches, primarily for aesthetics. Reducing the roof pitch to 6:12 would likely reduce the cost of the home, but also make it appear smaller.

Foundations. A simple foundation with minimal corners saves money. Not only is your foundation contractor going to charge more for every corner, those same jogs often incur additional material expenses in terms of siding, roofing, and waste as well as labor costs for trimming out the additional corners. As compared with the original Tollefson (plan #6731), at left, the added 78 square feet of living space offered in the Tollefson II (plan #42152), at right, is very inexpensive.

The Cedar Hill (plan #42435) has a straightforward foundation. It also takes advantage of cost savings afforded by using readily available, standard building materials. For example, all windows (except transoms) are the same size. Joining two windows together, as in the front Suite 2 and Bedroom 3 saves money by only cutting and trimming around one opening in the wall. (The windows were split in Suite 1 to provide a second bed headboard wall option.) All interior passage doors are 32” wide (except for the double doors into Suite 2). Though the Great Room will probably continue with the same flooring as the kitchen and eating area, if carpet were chosen, a single 15-foot wide roll would eliminate seaming labor and cut-off waste.

Structural Materials. Traditional dimensional lumber floor joists can be considerably less expensive than either I-joist or truss floor systems but can’t achieve the same span lengths. And many items covered in previous posts in this series such as designing to minimize costly structural members, materials used, and ceiling details are common areas to address in value engineering. Furthermore, your preferences such as having a simple rectangular island as opposed to an angled island; a flush snack bar rather than a raised island bar; or selecting a single wall oven plus range rather than double wall ovens all address affordability. When your plans call for a value-engineered approach, look to our plans for solutions that don’t compromise on aesthetics and marketability!

Look for our next blog post series as we explore other topics that affect your cost of home ownership!

For more resources on thoughtful design and products:

View other articles on our blog
Browse our Her Home™ Magazine
Thoughtful Design Concepts

SIP, SIP, Hooray!

by Michele Weaver | Jul 27, 2020 | HER Home

We have been looking at the fallacies of comparing new homes on the basis of “cost per square foot” because it’s nearly impossible to get an apples-to-apples comparison. Here we look at another apples-to-oranges comparison – building your home using structurally insulated panels as compared with traditional stick-frame construction.

Structural Insulated Panels (SIP) are most often made from two “skins” of oriented strand board (OSB) sandwiching a thick slab of insulating foam. SIPs can be various sizes, from smaller panels that can be set in place by two people, to larger panels set in place with a crane. SIPs are used for roofs and exterior walls to create highly energy-efficient homes that are also stronger and safer than most traditionally built homes.

There are minimal design limitations with SIPs and most existing home designs can be adapted for SIP construction. SIP roof systems create natural design opportunities, such as cathedral and sloped ceilings.

For Example: Design Basics’ Kendrick plan (#8532SUL), adapted for Insulspan® brand SIPs, offers dramatic amenities not found on the conventionally framed Kendrick plan including sloped ceilings for much of the main floor plus a 262 sq. ft. loft overlooking main floor entertaining.

Energy Efficient. One of the primary ways homes lose energy are air leaks (how “tight” a home is). On a cold winter day, you pay a lot of money to heat the air in your home, only to have most of that “conditioned air” leak out within an hour! Since the air pressure inside your home has to equal the air pressure outside, the warmed air that leaked out gets replaced by cold outside air that leaks in. By their very nature, the panels used in SIP construction create a very tight home with minimal air leakage.

Insulation is designed to minimize the other primary reason for energy loss, conduction, heat transfer through walls, windows, the roof, etc. Fiberglass is the most common insulation material used in homes and can work well, but some wall cavities are challenging to fill completely, particularly around plumbing and electrical. Many traditional insulation products also tend to settle, leaving a gap at the top. Such challenges potentially leave voids that show up in your home as “cold spots.” Also, with conventional framing, the wood studs, typically spaced 16 inches apart, are quite poor insulators. Exterior wall and roof insulation’s effectiveness is measured by R-value. SIP manufacturer Energy Panel Structures reports that a conventional 2×6 framed wall filled with R-19 insulation actually delivers an R-value of 13.7, 80% poorer than a comparable SIP wall, which achieves R-24.7.

Green. Since SIP constructed homes use considerably less energy than traditional construction, SIP homes are inherently environmentally responsible. And because SIP panels are precision cut and delivered to the jobsite, there is considerably less jobsite waste from building your home that ends up in a landfill.

Stronger/Safer. SIP constructed exterior walls and roof panels are fully covered in OSB – on both sides. This makes for an extremely strong wall and roof system, better able to withstand high winds and flying debris. SIP manufacturer Enercept claims that SIP constructed homes are 2-1/2 times stronger than conventional, stick-framed buildings.

The home at right (Greensboro – #2326) was built using Insulspan SIP construction.

Cost. A SIP constructed exterior wall and roof package will probably cost more than conventional construction for the same home. How much more depends on many factors, including the complexity of the home’s overall design. Partially offsetting the higher initial cost of SIPs are reduced costs for site labor, waste disposal, and a smaller, less expensive HVAC system. There also may be tax credits offered to both the home builder and the homeowner for building with SIPs. Then there’s the ongoing utility savings and you may enjoy lower homeowner insurance premiums. Finally, there is the added resale value of a super energy-efficient home.

What does building your new home with SIPs say about you? That you care about a quieter, healthier home for your family. That building a stronger, more comfortable home were high priorities. That doing your part to protect our environment and being kind to Mother Nature matter. That you wouldn’t settle for less than building an energy-saving home with lower utility bills.

View dozens of homes designed for SIP construction on our website. Design Basics can also adapt our other, stick frame home plans for building with SIPs.

SIP Resources:

Insulspan
Enercept
EPS Buildings
SIP Construction
Structural Insulated Panel Association – SIPA

Cost of Ownership – Resale Value

Cost of Ownership – Replacement and Maintenance Costs

Beyond Dollars – The Cost of Home Ownership

Design Affects Cost – Value Engineering

SIP, SIP, Hooray!

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