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.

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

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Cost of Ownership – Total Monthly Housing Costs

by Michele Weaver | Aug 31, 2020 | HER Home

Principal + Interest + Taxes + Insurance (PITI) – that’s been the standard way of defining monthly housing cost and often been a factor in determining how large of a monthly mortgage payment you can afford. Today’s historically low mortgage interest rates in many areas have made purchasing a new entry-level home on par with renting:

(Click on image to enlarge.)

Of course, a higher initial down payment reduces the Principal + Interest portion, and if you are fortunate enough to have 20% of the purchase price available for a down payment, you can finance the home through a conventional mortgage, at an even better interest rate, and with no mortgage insurance premium. You can’t do much about your Taxes (sigh). But your choices can certainly impact your homeowner’s Insurance costs. New construction homes are often rated differently and are less expensive to insure because they are less likely to have issues and claims.

Likewise, because the roof is new, it is usually rated more favorably reducing your premium. Impact-resistant roofing products can further reduce insurance costs in hailstorm-prone markets. If it adds $6 per month to your mortgage payment to upgrade to impact resistant shingles, but having those shingles saves you $200 per year on your insurance, that’s a win! Fire and security alarm systems can save you money on insurance premiums, with deeper discounts if they are monitored by a third-party.

Photo: Atlas Roofing – Class 4 Impact Rated StormMaster® Shake Style Shingles

Still PITI is incomplete without “U” – Utilities should be factored in to provide a truer picture of your total monthly housing costs. It may be possible that spending extra money up front on energy-efficient construction nets you lower monthly housing costs. Assuming 5% mortgage interest rates, spending $8,000 more for energy efficient upgrades adds about $55 to the monthly mortgage payment. If those energy saving measures are projected to save that much or more on your utility bills, spending a little more now for energy efficiency can be one of your best investments. And with energy costs likely to rise in the future, that investment performance will only get better!

Built to the current energy code in effect for your location, most new homes today are more energy efficient than resale homes. Still, the energy code is the minimum; high-performance building products and systems can dramatically cut your energy usage. While there is no single “best way” to achieve an energy-efficient home, many approaches deliver outstanding results and may provide other benefits as well.

Building systems. Insulated Concrete Forms (ICF) are commonly made of two “skins” of insulating foam, stacked in place, and filled with concrete and reinforced steel. The resulting 9- to 11-inch thick exterior walls deliver superb energy performance as well as creating an extremely strong home, which is better able to withstand natural disasters. Design Basics offers more than 125 home plans for ICF construction. Structural Insulated Panels (SIP) are typically made from two “skins” of OSB or plywood that sandwich a thick slab of insulating foam. SIPs can be used for roofs as well as exterior walls to create highly energy-efficient homes, which are also stronger and safer than most traditionally built homes. Design Basics currently offers 50 plans for SIP building. Please note that Design Basics can adapt any of our home designs for ICF or SIP construction.

While the elevation remains the same, the exterior walls on the floor plan (below) appear thicker on an ICF plan. Varying from 9 – 11-inches thick, ICF exterior walls are 5 to 7 inches thicker than the 2 x 4-inch exterior walls of the typical home.

Cotter – Plan #42031

Example ICF construction.

High-performance insulation. It costs a lot to keep your home cool in the summer, so the goal is to keep as much of that conditioned air inside your home as possible. High-performance insulation seeks to 1) eliminate air leaks, and 2) slow the transfer of outdoor temperatures through your walls. There are numerous approaches and products available to accomplish this, at different price points. Talk with your builder, as she or he may have a preferred solution. Similarly, better energy-rated windows and doors may be part of your solution.

HVAC systems. You may pay a lot of attention to the efficiency rating of traditional furnaces and air conditioner SEER ratings; or, a heat pump may be a more efficient choice. Yet often overlooked is the fact that a surprisingly high amount of conditioned air can leak out of your home’s ductwork, so ask your builder or HVAC contractor about the steps taken to seal the ductwork. Also, if your home will be built with one of the building systems or high-performance insulation, the heating and cooling equipment needs to be sized appropriately. A rule of thumb such as, “one ton of air conditioning for every 500 square feet,” may work in determining the size of air conditioner for other new homes in your area, but may be too much for a tight, energy efficient home, causing your system to cycle on and off quickly and inefficiently. Even the ductwork should be sized differently for a high-performance home. An alternative, geothermal heating and cooling is very energy efficient, taking advantage of the earth’s relatively constant ground temperature below the frost line to keep your home comfortable.

PITIU. It is rooted in a number, but it means so much more! You can’t measure the worth of added protection for your family and cherished belongings provided by alarm systems, or the environmental impact of roof shingles that don’t end up in a landfill after hail. And that energy-efficient home? Your home’s lower energy use will keep tons of greenhouse gas emissions out of our atmosphere every year.

Looking at total monthly housing costs and investing a little more up front can give you improved cash flow, a better home, and bragging rights!

Next time: Replacement and Maintenance Costs

For more resources on thoughtful design and products:

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Browse our Her Home™ Magazine
Thoughtful Design Concepts

Atlas Roofing Photo Courtesy: An Independent publisher, not an Employee or Agent of Atlas Roofing Corporation.
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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

Tailoring Solutions for You – Design Basics’ Concierge Service

by Michele Weaver | Aug 18, 2020 | Problems Solved

Adding new home plans to your portfolio is risky. Will the design attract buyers? How much will that home cost to build?

Design Basics’ Concierge Service is designed to help you minimize such risks. We know what is selling in terms of home design. Based on your goals (e.g., affordability); restrictions (e.g., 40-foot maximum building widths); and target market or specific customer needs (e.g. multi-generational households); we can recommend popular home designs that improve your odds of success.

After discussing what you are looking for in a home design, we’ll research our entire library of home plans to recommend top designs that meet your needs, saving you time! While it is easy for everyone to search home designs on our website, with heightened knowledge of our plans and search methodologies, our plan specialists often identify ideal home designs that may otherwise be missed or overlooked. In addition, we may recognize that a certain plan, with minor modifications, might be exactly what you are looking for.

What is the value of working with a plan specialist? You may have the requisite accounting knowledge and software, but you work with a CPA. You might be tech-savvy, but you hire a website design company. Residential design is a similar specialty. Is that neat amenity a fad, or destined to become a “must-have”? Was the home value-engineered, helping with your budget concerns? Our plan specialists are your home design consultants, tailoring recommendations and solutions based on your situation and needs.

Upon request, we can even review your existing design portfolio to identify gaps and opportunities we feel could be better addressed through design to help you sell more homes. Over 60 million Americans live in multi-generational households. Which of your home designs address this market’s needs? You have four one-story homes, which account for half of your sales, yet they all have “snout” garages and the writing is on the wall – several new neighborhoods are requiring flush or recessed garages.

Kickstart Your Neighborhood℠

Design Basics is a builder-oriented home plan design firm. With our Kickstart Program, you can get up to five sets of construction drawings for estimating purposes per year for just $100 each, including the corresponding elevation and floorplan presentation artwork for marketing. You will also enjoy plan and product discounts, FREE upgrades, and more!

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Our Neighborhood in a Box Program can save you 50% when buying four or more home plans! Choose from pre-configured neighborhoods or build your own when you choose from over 1,300 designs.

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A great floor plan with multiple elevations. Create a cohesive look for your neighborhood with builder plan sets at a discounted price.

Sample Builder Plan Set (#42376)

In addition, our home plans can be licensed for construction on a single-build or unlimited-build basis. Your plan specialist will be happy to discuss ways to get the most for your home design investment. Contact us today about our individually-tailored Concierge Service: 800.947.7526

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Design Affects Cost – Size Matters!

by Michele Weaver | Aug 18, 2020 | HER Home

It may seem obvious that the larger the home, the more it will cost. But there are other factors that affect the cost.

Single-story vs. Two-story. Single-story homes typically cost more than two-story homes of the same square footage. The Bonham (plan #42239), below left, and the Moss Bluff (plan #43013), below right, are about the same size in terms of square feet. Both have relatively economical gable roofs and the same size two-car, front-entry garages. But the Bonham has a more expansive, costlier roof than the efficiently stacked Moss Bluff plan.

The Bonham also has a much larger, more expensive foundation with considerably more steel if building on a basement. And being 16 feet wider and 26 feet deeper, the Bonham (below left) will require a larger, more expensive home site on which to build than the Moss Bluff (below right).

Split-Entry Design. Generally focused more on affordability, split-entry designs can be the least expensive to build. For the Dane Mills (plan #35084), costs are reduced because the garage occupies what would have been much of the basement.

Multi-level and 1-1/2-Story Designs. Similarly, many multi-level and 1-1/2-story plans offer good affordability. The Tillamook (plan #43038) has the garage and family room at ground level, so when building on a basement, it’s like a split entry – you go up a half flight of stairs to the kitchen/dining/bedroom suite, or down a half flight of stairs to the basement, which is under that portion of the home. Positioned above the garage, the secondary bedrooms and bath are less costly to build as in a two-story home.