Monthly Archives: July 2009

How to Build in a Recession: #4

My last posts about building in a recession (#2and #3) probably sounded a little extreme, but I really believe there’sa similar model that ought to be available to anyone. We need to give primacy to what truly matters in homebuilding and also find a way to give people an opportunity to get what they want and need in a way that suits their abilities and financial constraints. One of the problems ourcountry needs to overcome is the prevalence of low-quality, poorly-performing homes that are also the biggest investment in the lives of most of our fellow citizens.

But first, why do people submit to living in junk?

It has probably always been so, but it’s still somewhat depressing that otherwise smart people can act so stupidly. Bernie Madoff’s victims wereeager to believe that one genius guy had figured out how to continuously make money at a constantly generous rate, when all other investment possibilities fluctuate rather erratically. Hundreds of thousands of adult Americans were duped into buying homes they could notpossibly afford, apparently happily jumping to the conclusion that it was their good fortune that the rules they learned in 4th grade math were no longer applicable in their personal case. Snake oil, in all its forms, sells well.

Cheery bunkum finds quicker believers than hard truths.

The people who build most of America’s homes are no different. Part of me has wanted to think they are devious characters, but I’ve come to theconclusion that most of them have made a similar leap of blind hope. When the framing lumber is dropped off on the building sites, they have convinced themselves that underpaid and under-skilled people will still work with enough motivation and care to make a decent building. They aresure that stick framing is so easy nothing serious could go wrong and if there are oversights or mistakes, the structures are probably over-engineered anyway. They have further convinced themselves that theyare doing the right thing because low cost is the critical factor, not good quality.

Besides, America’s homebuilders have come to understand that consumers really only care about appearances and amenities. It’s cheaper to be fooled than to require authenticity and substance. Nobody wants to pay for mundane elements like foundations and frames and insulation, which are like the hard truths; boring and inconvenient. What people are willing to pay for is the cheery bunkum. Houses are all too often built to minimum standards under conditions that cause them to be even worse than that; defect-ridden underpinnings clad in faux siding and flimsy roofing, but with complex-looking fake rooflines, containing four-headedshowers, plush carpets and cavernous, chandelier-bedecked entries.

In the end, though, the illusion of wealth and comfort can come at a very high price. The Wall Street Journal recently ran a story about serious problems in new homes built during the housing boom. The story, “CrackedHouses: What the Boom Built,” reports that “hundreds of thousands of people from California to Georgia say their almost-new homes need costly repairs because of construction defects. The furious pace of homebuilding from the late 1990s through the first half of the 2000s contributed to a surge in defects, experts say. It caused shortages of both skilled construction workers and quality materials.” In some cases,the cost of repairs is more than the houses would be worth on the market, but it’s often the case that repairs aren’t practical at all because the defects are at the foundation level. One man said the lossesrelated to his defective house were worse than his retirement income losses in the stock market.

In contrast to that story, a few weeks ago I did an informal assessment of an old house in a nearby town that is scheduled for demolition. I wasasked to help determine how much of the building might have value as salvage. Often old homes have structural parts that can be used again, so it was a good question and an admirable goal. Due to some unusual circumstances, the house has not been occupied for 30 years. It is very weathered and is almost devoid of mechanical systems, as it doesn’t evenhave indoor plumbing. The new owner assumed its long abandonment condemned it, but I found that not to be the case. It is actually in great structural condition. Although it was built in the post Civil War years (1860-1870) and had been completely unoccupied for three decades, the original building is strong, straight and true. The roof didn’t leak; the foundation didn’t yield and the critter damage was minimal. So, one hundred and fifty years ago, they could build so well that a house could survive over 120 years of use, then fall into complete abandonment for another 30 years and still be structurally sound and secure; yet today, houses are being built and sold that are challenged to survive even their first 30 years.

These contemporary standard houses aren’t very different than a Bernie Madoff scam. In both cases, what appears to be a reasonable investment is actually missing the very essence of what it is supposed to be. A financial investment is supposed to be invested in something; a house issupposed to be a structure, not a teetering theater set.

When will we stop falling for cheery bunkum? Perhaps never, but at leastfor awhile, I think people will be more attuned to search for real value in their investments, whether in the markets, or in real estate, or in anything for that matter.

This, then, is a good time to promote what I think is the right way to build, whether in a recession or a boom. It begins with rethinking our image of what a house is and how homebuilding should therefore unfold.

As described by Stewart Brand in How Buildings Learn, a house appears to be one thing, but it is better understood as layers of elements that live in time differently. The right way to design and build is to acknowledge the different cycle times, allowing the buildingto be more easily upgraded and changed to meet its maintenance challenges and adjust to the needs and desires of its inhabitants. Stewart called the layers the “Six S’s”

Seen this unique way, only the site itself is ultimately permanent, but the man-made structure which is attached to that piece of the earth ought to be proportionately durable. Therefore, the underlying building structure should be built tolast centuries. Protecting the structure is the exterior skinof roofing and siding. This also should last a long time, but it’s likely to need maintenance or alteration every 50-75 years. The interiorfunctioning of the building is defined by the space plan,which is the organization and partitioning that delineate and separate the public and private living areas. The specific plan and rooms are really just a prediction about what will work best and who will live there. Properly built, the space plan should be more mutable and flexible, allowing the occupants to adjust the original prediction more easily as the ever-changing dynamics of their lives suggest and require.Think of this as a 10-20 year cycle. Services are the various (and increasing) mechanical systems that deal with everything from low voltage entertainment systems to heating and cooling equipment.Some of this stuff is almost as permanent as the structure, but most ofit should be designed to be upgraded and changed, allowing for new technology and shifting needs. Service systems should be considered to have a 1-15 year life cycle. Finally, there is the stuffof our lives: furniture, equipment, art, books, etc.; all the various baggage of our complex lives. Stuff churns daily, monthly and only occasionally sticks around for as long as the space plan.

Brand’s numbers and organization are a little different, but the conceptholds. What we have concluded as we have embraced the truth of it is that long term elements and short term elements should not be entangled.Wires and pipes shouldn’t cut and worm their way through the structure.They should have their own space, which doesn’t affect the structure and gives access for inevitable changes. Similarly, the interior space plan shouldn’t also have long term requirements because it more likely needs to change in time. This kind of thinking has led to what we call “Open-Built,”which is a complete system of design and building, intended to give predominance to a high performance building shell, with interior systemsand finishes and exterior cladding that can be installed or uninstalled as needed, as the life of the building plays out from its original construction through all its future mysteries and adventures.

We have based our business model on this concept. How does it relate to building in a recession? This method of building is perfect for owner-builders who hire us to design and build on their behalf. What we actually do in many cases is simply build the high performance building shell, giving our customers themselves the opportunity to manage or execute the exterior and interior finishes and mechanical systems. It also allows buildings to be finished incrementally, as owners can affordit. This is exactly what I did on my own house as described in How to Build in a Recession #3. I think everyone should have the optionof building and financing slowly, if they so desire. It’s the best way to get what you need and want, paycheck by paycheck, rather than with the expense of a multi-decade mortgage. It also puts first things first and leads to the high quality buildings which are the ultimate blue-chipinvestment.