Wednesday, July 29, 2009

To Buy or to Build? The truth about the REAL cost of a home

For years I worked in Architecture firms designing things for other people. Eventually you become numb to the fact that a $1.19 duplex receptacle will cost you about $250 to install in the world of commercial construction. If that same receptacle is installed as the result of a change, then you are probably looking at about $500 instead of $250. It seems pretty crazy, right? Well, that's how business is done in the world of construction and Architecture. Now obviously, you are not paying $500 for an outlet. You are paying about $10 for the outlet and about $490 for Construction Supervisors, Administrators, Insurance, Overhead, and Profit. And the bigger the project, the more Overhead and Expenses get built into the costs.

So if you buy a home, then what are you really paying for? Are you paying for the cumulative cost of goods and services in the house, or are you paying for an arbitrary price based on intangible factors? To put it another way, if you buy a house that was built in 1969 at an original cost of $14,000, then where is the justification for a price tag of $450,000? Some would say that the appreciation is based on the price adjusted for current inflation. Some would say that you are paying for the dirt and the locational factors. I say that if you are buying a house that someone else has built, then you are likely OVERPAYING (obviously this would not apply to Foreclosures). If you don't believe me, take a look at your home owner's insurance policy and look at the listed 'replacement cost' for your house. Chances are that the replacement cost is well below what you would sell your house for. Which brings me to my point. If you pay a premium to buy a house that someone else has built, then why not build your own house?

Let's examine this question a little more closely. When you purchase an existing home, you are not paying for the sum of the parts. You are paying to purchase the completed item which is usually greater than the sum of the parts. This is because there is alot of time and labor that have gone into the construction and maintenance (and maybe even renovation) and the Owner wants to be compensated for that beyond the cost of the materials. You should know that location doesn't factor into this comparison because the dirt is the dirt whether you buy or build. The land costs should be the same regardless.

Now let's talk about building your own home. You find a nice lot in a neighborhood that you like and you find an eager young Architect to help you out. Let's just say for argument's sake that you find an Architect who is keen on designing you a great place for about $20,000. Younger Architects will likely take on challenging commissions like this if the project presents a good design opportunity because they can usually lead to bigger and better commissions if they do their job well. So your Architect works with you on the Design and finds some creative ways to save you some money (Architects are very good at this; trust me) . After a few months, the Architect helps you get some bids from some contractors and you examine the costs.

In this scenario, you are shown the value of each trade line by line, like a menu. You can see where each dollar is going and you can choose how much or how little you want to allocate to each area. For example, if those solid maple kitchen cabinets are too much, then you can go to particle board bases with solid wood fronts. The bottom line is that you have more control over the costs and you are only paying for the actual goods and services required for the construction of your house. Also, if you are obsessed with value, you can also oversee all of the work yourself (get rid of those GC fees) and even perform some of the work if you are handy (things like painting and tiling are always pretty straight forward). At the end of the day, you will end up with a house that is probably more valuable than what you paid and will also have something unique as opposed to a cookie cutter builder's house.

So if you have the time (and the stomach) for a unique experience I suggest building your own place. Not only will you be able to say that you helped in creating your own home, you will have invested your money in something that can only appreciate. And that's just good business.

Monday, July 20, 2009

Even a Garbage Can Wants to Be Something

As you may have suspected, my wife and I are partial to supporting companies that produce well designed items. As my wife has officially entered the 'nesting' phase of her pregnancy, she continues to diligently seek out baby products that are 'green', modern, and functional. This has lead to conversations about Scandinavian baby bouncers, 600 thread count baby sheets and strollers that require the processing of loan applications. But the latest request even has me questioning the value of great design. Yes people, my wife has requested that we purchase a VIPP Stainless Steel Pedal Bin for the containment of diapers.

Now, I had never heard of a VIPP Bin, nor did I know (or want to know) how much this thing costs. She assured me that it would hermetically seal in the diaper odors and unlike a normal plastic diaper genie, it would not absorb any of the smell. This was due to a very high grade stainless steel construction, which has been done by hand since its invention (somewhere in the middle of the 20th century). My wife then went on to very passionately tell me the story of the family that invented this bin and how it was a great icon of modern design that was originally intended to hold hair clippings from a beauty shop. She also threw in that we would have this trash can forever since it can stick around long after the diapers have gone. With all of this information in hand, my wife assured me that this can was a bargain even at double the price (given its pedigree and all).

When I could no longer stand the suspense, she then told me how much this lovely can would cost us. An affordable luxury at $324.

Now, I am a very pragmatic person. I will certainly support design when the design warrants it. But somehow, I could not get my head around a $300 trash bin. So, when my wife and I are at an impasse, we did what we often do. We struck a deal. The deal was (is) that we would get together a pile of items to sell on EBAY and if we could raise the money from the sale of random unwanted items, we would buy it. If not, we would stick with the ever affordable, Diaper Genie. I felt that if the Gods of Design wanted us to have this bin, then they could surely find someone to cough up good money for our old watches, luggage, books, and costume jewelry. I guess we'll see how it ends up, but let this be a lesson to you all. When designed well, even a Garbage Bin can be Something.

Thursday, July 16, 2009

A pause for Julius Shulman

If you have never heard of Julius Shulman, you have likely seen at least one of his photographs in your lifetime. His most famous shot features one of the Case Study Houses hanging off the edge of a cliff in Los Angeles. The house is by Pierre Koenig and it is immortalized in Shulman's black and white photograph where a pair of ladies are sitting on the sofa seemingly suspended over the lights of the city below. The amazing thing is that the shot never really happened like that. Shulman made the shot from two different shots: one of the city below and one of the house. In the days before Photoshop, you had to see the shot you wanted in your head and then capture what you needed to make it.

Shulman was famous for the capture. He earned the nickname 'One Shot Shulman', often getting what he needed in only one take. I was reading a short obituary on the LA Times web site and they had about 20 pictures or so spanning Shulman's career. I was taken by one picture in particular of Shulman setting up a shot on the front lawn of a ranch house. He is standing there positioning his camera at the proper angle for his shot and he's got all of these plants set up around his lens. There are at least three potted plants and another huge branch strapped to a wooden bracket. The thing that struck me was that Shulman was creating an artificial view to better frame the building. Having seen literally hundreds of his photographs, it never struck me that what I was looking at was constructed. It always seemed organic. I guess that was what Shulman excelled at. He saw the shot and did what he needed to do to create it.

It is likely that in a few news cycles no one will be talking about Julius Shulman. Fortunately, he has left us with a remarkable portfolio of work to reflect upon for years to come. What will always stay with me is the purity of how he saw the world through Architecture. His photos made every place look special or important. Trust me, it's not easy to do. As we look at our generic landscapes of big box stores and chain restaurants, I wonder whether or not we have lost that lens that makes places special. I certainly hope not.

Thank you Mr. Shulman for memorializing so many great places and memories. If a picture is worth a thousand words, then you are certainly one of the most prolific authors in history.

Wednesday, July 15, 2009

Why Design Matters - Part II

As I write this, I am reminded of something I saw on EBAY this morning. A 1992 Ferrari F40 was selling for $619,000 with many models above $500,000. And these are USED! I thought that was a fitting intro for my thoughts today about the value of Design. In my last post I discussed why a house that is considered is not only worth more, but it also makes you feel better. Today I want to discuss how great Design can be the Blueprint for a successful business transaction. Whether that transaction is selling your house or staring a company, Design Matters.

Let's take a look at the Ferrari once more. Now, I would never buy a Ferrari, because to me, a car is just about getting from A to B. But I can certainly look at a Ferrari and recognize that it has been designed both a vehicle and a work of art. Anytime I have been in my car and pulled up near a car of this magnitude, whoever I am with always says something like "Hey, check that car out!". Now I would suspect that most people couldn't tell a Ferrari from a Lamborghini from a Lotus, but I have never been in the car when someone was excited to see a Toyota Camry or a Chevy Malibu. This is because the Design of those vehicles is driven by cost and ability to be mass produced. My point here is that when producing great Design is the driver, the result is usually something that is elevated beyond function alone. It is this elevation that often justifies the higher price tag than something that just serves the purpose.

Let's switch gears to another company that understands this: Apple. By putting Design first, they have carved out a product line that is more than twice as expensive as their respective competitors. Yet despite the big Recession, consumers are actually buying more Apple products this year than last. Does that make sense? Absolutely. Apple offers each customer the ability to be on the cutting edge of both technology and Design. While other stocks have lost up to 90% of their value, their stock is actually holding its value. I could talk about many other companies that embody these virtues, but I will save that for another day. The only thing I will say is that next time you are waiting in a really long line for a Burrito or a Mini Cooper, ask yourself what it is about the product that makes you want it. You will find that the answer to that question is in the details. All of the details of whatever it is that you want, have been considered and thought about. Do you know who thinks about these details? Designers.

I will end today with some thoughts about your house. If you are one of the people who has been affected by the unprecedented destruction of personal wealth in the last 24 months (i.e. the value of your house has fallen significantly) then I will give you this advice. Consider the details of your house. Does your huge walk in closet have a cheap wire shelf around it's perimeter? Is your study just a room called a study, or does it have well constructed milllwork built in to the space? Does your living space have wall to wall nylon carpeting that not only traps germs and allergens, but also makes you sicker? Ask yourself why your house is better or worse than your neighbors house. Is your house a cookie cutter model or has it been designed to serve the needs of living? I can tell you that the latter types sell MUCH faster. Design Matters.

Tuesday, July 14, 2009

Why Design Matters - Part I

I don't know how many people have gotten tired about hearing about the crisis in the housing market, but I certainly have. The destruction of personal wealth, the larger recession, and the overall joblessness of the entire country have all been attributed to the burst of the great housing bubble. Although I could talk about the 'bubble' for days, I will try to keep my opinions down to a minimum and just offer these two words in response to all the doomsday prognosticators: Design Matters.

Now while this may be apparent to some, it is clearly not a phrase that most people have adopted. The bulk of residential development and construction in this country is done by people who have limited Architectural or Design experience and replicate typical 'models' driven by the short list of consumer's 'wants'. This has led to many developments of large homes (often called McMansions) where quantity clearly trumps quality. If you don't believe me, you can go find such developments and see that the material on the front of the house is usually abandoned for the other three sides. You can see the use of lesser quality materials without even going inside; windows with false mullions (I love the look of a good snap on plastic mullion) vinyl siding, asphalt shingle roofing, and in some cases, fake stone veneer. Although these houses are often in the 'Colonial' style, I'm sure the Colonists would laugh at our abuse of the term. In a recent issue of Dwell Magazine, the editor referred to this type of construction as 'historical fiction' (brilliant).

Without going in to further detail, I can tell you that it was no surprise to me that these types of homes have recently lost a good portion of their value. I want to talk a little bit about this, as it touches many areas that affect most people's lives. These areas include happiness, spirituality, and wealth.

First, let's talk about happiness. Modern Homes that have been Designed, provide for a wealth of activities and use the house as a functional tool to assist you in your life. Remember that old image of the ironing board that folds down from the wall and goes away when you are done with it? That was easy and out of the way. I have never seen a McMansion with a built in ironing board. I think this is because the builder wants to give the illusion that the Masters of the house don't have to do any work in their castle. Well, I don't know who's going to clean that huge window in the two story entry foyer, but I can assure you it's not going to be the builder. In contrast, Modern Homes are typically built to a human scale and Designed to be easier to maintain. Compact floor plans that have clear circulation patterns and better materials are much easier to clean and use than their Merchant Builder counterparts. There is a whole movement about this called 'The Not So Big House', started by an Architect named Sara Susanka. There is also a great book from the fifties called "The Guide to Easier Living" by Russell and Mary Wright. I don't know about you, but if I could Design myself a house that would reduce housework and provide a richer living experience, it would certainly make me happier.

The next area I want to touch on is Spirituality. Without getting into a religious discussion, let's just say that Spirituality is however you connect with the forces of Nature or the Universe (whatever you consider them to be). Personally, I feel very strongly that there is a grand design to our environment and I want to live in a place that connects me to it. I think a house should respect and reflect its site, take advantage of natural light and wind, and be constructed in a way that does not disrespect the earth. Having a home like this will not only make you feel better about being in it, but it will also reduce your costs to heat, cool, and illuminate said dwelling. Which leads us to our final topic: Wealth.

Nothing makes me madder than watching economists talk about the housing bubble as though it were the product of economic forces. Wrong! The housing bubble is the product of bad housing that people overpaid for. Florence Knoll said that "Good Design is Good Business". I think Apple would agree with statement all day long. So here's the deal: if you want your house to be worth more money or if you want to start a company that is successful: Invest in Design. Whether that means bringing in an Architect or Designer to improve your space or hiring a Graphic Designer to make you a great web site and Identity system, the rules are the same: Design Matters. Still not convinced? In my next post, I will show you a number of examples of how smart companies use Design to build great products and HUGE fortunes.

Thursday, July 9, 2009

Design and Architecture

As I mentioned in my last post, anything can be designed. In my opinion, the words Design and Architecture mean the same thing. It has been a long standing misnomer that the word 'Architecture' has to do only with the work of Architects, but in fact many of the greatest 'Architects' were actually 'Designers'. The easiest (and best) example of this would be Frank Lloyd Wright. Now while I admire his work in Buildings, his collective portfolio is far more impressive when you consider the breadth of his influence. Whether you are talking about the furniture he designed or his graphic arts influence (from fonts to rendering style) no one can deny that his perspective on the world extended beyond the bricks and wood of his structures. Today, we have separate occupations for graphic designers, industrial designers, textile designers and pretty much any other kind of designer you can think of. However, it has always been my experience that the best designers (and architects) are the ones who look beyond the specific thing they are designing to how it will apply to the greater whole of the world.

Further evidence of the symmetry between 'Design' and 'Architecture' has to do with the tools that are used to employ both. These tools include things like composition, scale, texture, harmony, and detail. Now while these words are very common in Design, they are also common to other areas such as Art and Music. This is why Michelangelo could paint the Sistine Chapel and design the Campodoglio. Almost every creative discipline is linked through these common tools. Of course, there are those who seem to be born with an innate understanding of Design and there are those who work at it tirelessly. I think the verdict is still out on whether or not you can learn to be a great Designer. We will leave that conversation for another day.

For now, let us go forward with the understanding that Design is in everything and that anyone can create a work of Architecture and that the two terms are not exclusive. Once you understand this, you can literally create anything.

Tuesday, July 7, 2009

Intro to Life and Architecture

The term 'Architecture' has alot of different meanings today. Most people would say that it relates to the design of buildings. Although not incorrect, Architecture actually relates to the design of everything. Just as you can design a house, you can also design a meal, a political campaign or a Halloween costume. For our purposes, we will focus on the discussion of everyday topics with the intent of designing a better lifestyle and hopefully passing along some good wisdom in the process. Also, if you have any suggestions for topics, or questions about a certain area, please do not hesitate to drop me a line.