Entries by Tedd Benson

Oh boy. The "housing sector" has been both receiving and delivering really bad news for the past few weeks. Every day seems to bring yet another body blow. One our economy's usually strongest pullers is now beaten to a bloody pulp and just can't get up. In this NYT report, we are told that homes will possibly no longer be a source of wealth creation, which is quite a problem because homes have been a fountain of cash, sprinkling life to a myriad other economic sectors.

Home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.

The wealth generated by housing ... did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

More than likely, that era is gone for good.

The dire implication is that homes will just be homes and there will be great suffering if they will never again be useful as ATM's.

In a Monthly Review article, Rick Wolff suggests that the whole "homeownership religion" was always a bit of a sham because it was propped up with subsidies and encouraged very long term debt that had not historically been a part of the American economic system until very recently.

To see the systemic problems of the US housing industry, consider its basic economics. The "American dream" of owning one's home was never affordable to the vast majority of US families because the wages or salaries paid by their employers were never enough. To realize the dream therefore required borrowing. However, because working families had insufficient wages and salaries and no accumulated wealth,.. private banks rarely lent to them. The vast majority of them, not merely the poorest among them, were too risky as borrowers
(A) ..."solution" was found... The government would subsidize and guarantee private banks' loans to millions of homebuyers. This solution boosted profits in private banks' mortgage loan business. It indirectly subsidized all the industries producing for private homes. Yet it did not raise wages and salaries (something capitalists opposed). Many US workers became homeowners with large, long-term mortgages, making them more dependent on keeping jobs, not offending employers, etc. That experience also prepared workers to accept credit card, student loan, and other consumer debts. Expanding debt became the way most Americans bridged the gap between their incomes and the "good life" relentlessly advertised by capitalists needing buyers

The US housing industry's basic problem is the system in which it is embedded... Over the last 75 years, US capitalism has bridged that gap by means of private credit guaranteed and/or subsidized by the government. This system provides incentives as well as opportunities for excessive home prices, diminished wages and salaries, and excessive quantities, risks, and costs of housing credit. The last 30 years have seen all three phenomena converge into a systemic crisis.

Like the changing of seasons, and night following day, housing has long been propped up on the unquestioned belief that homes will always increase in value. When the props fell out of that particular structure of shared belief, a tidal wave swept in and took away zillions of dollars that only existed because we told each other so.

Props gone; faith gone; money gone.

What's left? The house. Even as people are absorbing their losses and the economy searches for some other kind of savior, it is dawning on homeowners that they still have something that's pretty important, as David Streitfeld reports in a NYT article about July's terrible housing sales figures:

His house, (homeowner Jimmy Penz) knows, is “an illiquid asset, a long-term asset, something I won’t be able to tap in for cash. But we chose a place we’ll be able to stay for a long time, to ride out any trouble.”

Once upon a time, before everyone from the banks to the buyers to the sellers got greedy, that was how everyone thought about the housing market. And however bumpy the path, that is once again the market’s future, said Mr. Kelman of Redfin.
“It’s not the apocalypse,” he said. “People will buy homes when they need to move or want the house, not when they want to make money. There will be winners and losers — not just, as in years past, winners and bigger winners.”

While everyone seems to be searching for a silver lining, including me, these articles are peppered with phrases like, "truly gut wrenching," "gruesome," “even more breathtaking," "unprecedented," and many foreboding indications that it could get worse, such as: "If unemployment goes higher than 10 percent, then the housing market is really looking at trouble."

Joe Nocera, in his Talking Business blog, even mocked the spokesperson for the National Association of Realtors, Lawrence Yun, for trying to put a positive spin on a very negative situation. He wondered "what they're smoking over there." All Mr. Yun said was that "Given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly.." Still, Nocera picked that comment apart and did his best to explain why our situation is really, really bad and may never get better.

For millions of homeowners stuck "underwater," for millions more who have foreclosed, and for people who are suffering everywhere because this housing situation has drained all vitality out of our economy, Mr. Nocera's analysis has the depressive ring of truth. There's no way to make this picture pretty.

I'd have ended this post that way, but my day and attitude was just brightened. I just had a chat with prospective clients who want to add on to their small home. Their upbeat attitude was infectious. Their two young sleeping boys are beautiful and heartwarming. They hope we can build a good quality house they can afford. I looked at this family and I could feel their excitement. I couldn't help but hope for their dream right along with them.

They tell their story of rehabbing a rough, small cabin into a more-finished small home. They're proud of their work and the result. It works, but it's very small for their growing family.

They would like us to build an addition that would provide an open living area on one level and several bedrooms on the upper level. It's a simple concept, and they say several times that what they are after is a home that is well-built, well-insulated and functional. "Nothing fancy," they say, "We just want a good quality home for our family. And we definitely don't want it big. We don't want to have to call people to dinner with a cell phone. It would be better just to be able to say 'dinner's ready.'" All I do is smile. I'm sold.

I didn't stay in the room long. I was just there to introduce myself. Bill Holtz, one of our architects, was there to work through some design ideas with them.

But in the space of a few minutes, they made me happy. I can't fix the decades-long misguided and greedy machinations to pull money down from housing every which-way from Sunday. And I can't fix the rotten economy that resulted from all of that. What I can do is help our team continue our efforts to make our homes better and more affordable. This lovely couple and their two boys were a refreshing reminder that homes matter in the lives of people and that we can make a difference.

I'm in the homebuilding business because I believe better quality homes are an important aspect of making this world a better place. My associates in our company share my interests and passion. I know this because I'm pulled along by their energy and ideas as much as I pull things along myself. There are two quotes carved into beams in the main entry of our Walpole, NH facility that reflect our company's view of the ultimate value of good homebuilding. The first is a classic one from Winston Churchill:

"We shape our buildings; thereafter they shape us"

The other one is less known, from Confucious:

"The strength of a nation derives from the integrity of the home."

It's hard to imagine that Churchill hadn't read Confucious. With different words, millenniums separated, they said much the same thing. Whether in the personal, national, or societal context, buildings are a reflection of the people and culture from which they arise. We build not just with tools and skills, but also with collective values, beliefs and societal baggage. Buildings may look like just an aggregation of materials formed into shelter, but their dynamic impact is profound, deep and generations long--for better and for worse--on its inhabitants, its community and our ecology.

Where and how we build matters. What we build matters. What buildings give and take matters. Durable, functional, beautiful and sustainable homes are essential ingredients of a strong and lasting civilization. We're going with Churchill and Confucious on this subject, and will spend our careers trying to prove that good buildings can have an important, positive and powerful influence now and into the future.

For the last few months, the New York Times has been running a series of essays about homes and home life, called "Living Rooms." Naturally, I've been a very interested reader, hoping mostly that the reporters would generally conclude that homes matter more than most people realize and much, much more than the wreckage of the past few decades of flim-flam, hyper-inflating, flipping madness would indicate. The series has been uneven, but not disappointing. And if nothing else, it's been good to read about housing in the mainstream press for some other reason than it being the cause of our economy's woes.

In the introduction to the series, the editors noted that home making has essentially been in our DNA from early in our human evolution, but the nature of our dwellings are constantly changing, as society changes; as we do.

Many animals build shelters, some of them dazzlingly efficient and complex, but only humans design homes that thoroughly reflect the architecture of their lives, families, work — even their thoughts. The home has been central to human existence since the Paleolithic age: recent archaeological work in Israel has found evidence of domestic order — food preparation here, beds over there — dating from around 100,000 B.C.E.

But amid such consistency, there is constant change. A century ago the kitchen was a lowly service space relegated to the back of the house, or to a separate building altogether; today it is the center of home entertainment. We used to talk about our houses as islands of financial security; now we worry about them being underwater.

In the first series essay, The Other Real Estate Value, Winifred Gallagher wrote about recent attitudinal changes regarding what a home is for, and just what sort of security it should provide. Easy mortgages got way-too-many people playing the risky building speculators' game, and scams just don't work when the number of players exceeds the number of victims. So the game itself came apart and brought a whole lot of our economic vitality down with it. In the process, the idea of home itself paid a price, as the whole premise of the subprime debacle took a toll on the more important real estate values.

(The shaky economy) ...changed the home from a haven into a commodity: a bargaining chip in an increasingly uncertain world. Not so long ago, your house or apartment and its network of neighbors, shops and services supplied a feeling of belonging and stability that anchored you in life’s shifting currents. Now, a sense of security increasingly means selling your home, not staying in it.

But Gallagher is convinced none of that is true. The real value of a home is in the experience of lives lived there. Houses become homes and homes become places that inspire lifelong memories as the homes we inhabit, over time, begin to inhabit us. You know this from your own memories and experiences and I do too, but it's good to be reminded.

Like the old song says, there’s no place like home, not because of the real estate, but because of the sense of shelter and nurture that it provides. This deep, wordless experience can’t be manufactured in an instant but develops slowly, one birthday party, convalescence, Thanksgiving and cup of tea at a time.

Jayne Merkel wrote two enlightening essays about our changing attitudes regarding home size, which is actually a study in a shift in what is understood to be necessary and sufficient. Her titles, When Less Was More and When Less Was No Longer More are hung on Mies van der Rohe's famous phrase, "less is more," which defines beauty with simplicity and wealth with satisfaction, not unending accumulation. In the years following WWII, America was expansive, growing and positve:

But when it came to their houses, it was a time of common sense and a belief that less truly could be more. During the Depression and the war, Americans had learned to live with less, and that restraint, in combination with the postwar confidence in the future, made small, efficient housing positively stylish.

Average houses were less than 1000 square feet. The big architects, like Frank Lloyd Wright, bought into it and were designing homes for wealthy people that were a tribute to that smaller scale. Small homes were easy to build, easy to maintain and their mortgages could be paid off in only a few years. By living with less, full ownership was quicker, and upgrades, additions and remodeling could happen over time, without loans, and targeted to what was truly needed and desired. Lots of the post war tract homes weren't particularly great in their initial construction, but they were commensurately cheap and left plenty of possibility for changes and improvements.

The modesty and optimism of the "Less is More" idea helped to create the unbridled wealth that was later its undoing, as Merkel reported in her second essay. The Postmodernism of the '80's and '90's was a look backward to various historical styles, but it was more about pretense than authenticity, making for thin facades of show and appearance inside and out.

The interest in old buildings also failed to have much influence on houses in new suburban subdivisions where most new housing was being built. These had always aped historical styles and fresh ideas from famous architects about how to use those styles in different ways had little impact. Home builders might add a new stained glass window or beveled glass door, like those in old urban houses, but the quality of construction, design and materials did not improve. Customers preferred specific features, like hot tubs and decks, and prized “curb appeal” and more space above all else.

As I have said in earlier posts here, many of these grand appearing homes are no more than miners's shacks dressed up in plaster and amenities. There's no restraint or "enough" in what has become known as the McMansion or "Executive" design style. Like gaudy, fake jewelry, it's a celebration of excess, and its illusions are similarly transparent. American homebuilding has been too much defined by this wasteful and fraudulent design and building approach. Finally, it is being its own kind of emperor with no clothes. It wastes resources and feeds dissatisfaction. When more is the goal, more is never enough.

As Merkel summarizes,

...a desperate desire for more of everything led to out-of-control consumption that bloated home sizes, deflated savings accounts, and distorted the American economy for the next 20 years.

Joan Dejean wrote about rooms in her essay, Who Lives in This Room? For the wealthy, display has often been the only function of many rooms and while they are showing off space, furniture, art and possessions, the real purpose has historically been about showing off social position. Lest we forget, that remains the purpose of much of home design. It begins with "curb appeal," includes useless entrances and various unused spaces.

As Dejean points out, very little living goes on in a lot of living rooms. If you could build new walls around the space that people use instead of the home they currently live in, the resulting newly defined living space would probably equal the 1950's standard of about 1000 square feet. Want to save money? Shed ego.

I think I enjoyed Allison Arieff's essay the most, if only because it confirmed an encouraging trend we are seeing. In Home For Life, she writes that people are waking up to what is important about a home and they're actually asking for it and investing in themselves instead of some vague prediction about a future buyer.

At what point did the house become more about the future tenant than the current resident? It’s hard to trace the moment, but let’s hope it’s passed. Because for too long, home design has been hijacked by the allure of resale value. Maybe now we can begin again to think of our houses not as investments but as homes.

..Now we need to think more sensibly about building houses that people want to stay in.

I'm happy to say that we are hearing precisely this message from our clients. They aren't talking about resale; they're talking about what their home needs to be to serve their needs and they want good design, good engineering and high performance level of energy efficiency. Underlying these priorities is a common comment from our clients (young or aging) that "this will be our last house." Undoubtedly, that's an attitude that concentrates the mind toward good decision making.

Arieff goes on to quote a 2009 Builder survey that revealed a growing preference for smaller homes:

“...unprecedented housing bust, which brought about the largest loss of home equity in history has fostered fundamental attitudinal changes in new-home prospects…. The desire for a McMansion seems to have been supplanted by the desire for a more responsible home.”

Glory be.

For millions of Americans, the idea of owning a home morphed from boon to bane as the dream of having one's own home turned into a nightmare of debt. Traditionally homes have not only played a critical and positive role in the experience of living, they have also been a primary repository of personal financial equity--both the mattress and the wad of money beneath. But as the inherent monetary value of "homeownership" has been systematically rejiggered with tax incentives and lending gimmicks, even the home's sacred purpose has been demeaned. A place that mostly represents a mountain of personal debt can't also be an oasis of comfort and security.

Christopher Papagianis and Reihan Salam wrote about the effect of the errant subsidies and financial strategies in a recent editorial in the National Review, entitled We Can't Afford this House. As Papagianis and Salam point out, political consensus in American policymaking always seems to favor housing, but it's a knee-jerk political bias that's now proving to be destructive for both homeowners and the country.

"The political case for federal intervention was (historically) strong. Americans had come to believe that homeownership was essential to economic security and that it made for better citizens... The high down payments and short-term mortgages meant that households all over the country held a significant amount of equity in their homes just a few years after buying them. In some cases, the value of this equity grew as the value of the home appreciated. These capital gains, in conjunction with the forced savings of mortgage payments, meant that millions of families had assets they could pass on to future generations.

The formula, however, changed dramatically at the end of the 20th century. From 1994 to 2005, the homeownership rate reached record highs, thanks largely to innovations in the mortgage-finance market that reduced down payments and minimized equity. This shifted the basic wealth-building proposition of homeownership away from savings to an almost exclusive focus on capital gains. Average down payments fell, reducing the savings required to 'get in the door.' More significant was the rise of mortgages that involved no forced savings: the interest-only loan, in which no equity is built because the principal is never paid down, and the 'negative amortization' loan, in which payments are so low that they do not even keep up with the interest, leaving homeowners more indebted, rather than less, each month."

I'm a homebuilder and therefore no fan of the difficulties besetting our industry. It would be better for my associates and me if there were more homes to build and we could return to the problems associated with too much demand. But despite my self-interest, I've come to believe that artificial stimulations of the market are often wrong, having unseen, unintended consequences.

Messing with housing so that money flows better in the economy may seem like an obviously good thing, but it's not so good when it doesn't actually improve the lives of the human beings living in the homes. Owning a home is different than occupying it with a debt so big that the home owns its "owner." Papagianis and Salam suggest blind subsidies don't recognize the distinction:

"One effect was to reduce the social benefits of homeownership, because the benefits are a product of equity and not of the mere fact that a contract has been signed and a mortgage taken out. The relationship between homeownership and social goods had been misunderstood: The traits that enabled households to build up the savings necessary for significant down payments — hard work and the deferral of gratification — were misattributed to homeownership itself."

The dream of freedom and equality in America and the American dream of owning a home have long been intertwined. The latter has been considered visible evidence of the former. It started in the early years of America as the Colonists eagerly acted out their independence by working like slaves. "By dint of severe effort," they literally built better lives for themselves from the raw wilderness. The triumph of individual liberty became nearly synonymous with the triumph of hard work and sacrifice.

The American experience became a fundamental American value: freedom was given, but a better quality of life was earned.

There were lots of ways to earn a home, but mostly it meant working, saving and deferring gratification. Most of the original American homes were earned with brute labor and relentless patience, often requiring several generations to complete. Those homes may have taken quite a while to finish, but during the entire building process, the buildings were very often 100% owned.

In the 19th century, local "Building and Loan" associations developed to help people finance their homes. Many of today's banks trace their roots back to local, and informal, home mortgage groups. Usually, the loan amount was based on a large amount of the construction having already been completed, or a down payment would be required that might have been as much as 33% to 50% of the building cost. That looks onerous by today's standards, but the banker/friends perhaps knew the home wouldn't be a personal benefit if it took more than it gave.

Those early banks were community-based and personal. You could borrow money based solely on your good reputation, your character and your integrity. Though that kind of banking may seem ancient and unreal, I'm thankful to have been the beneficiary of it. In 1980, when I went to talk to my banker about the process of getting a loan, he gave it to me on a handshake, without plans, without an appraisal, and without site inspection. I told him I had the foundation in and capped and had the material for the structure. I needed money to do the rest. He asked how much. I said about $30,000. He said fine and I could start drawing on an account the next day. The amount I guessed didn't finish the house, but it got me in and my banker was pleased with how the money was spent, even though his loan didn't result in a completed collateral. It took another five years to finish the house, but I did it slowly as I could afford the materials or pay for the work.

In a way, my informal mortgage for an incomplete home was similar to the small and incomplete tract homes returning veterans of WWII were able to purchase with friendly loan arrangements. It was an affordable good start, but the real value would be in the improvements and additions that would happen over a period of many years when they had better financial ability to make the improvements and build additions.

Among our clients, some of my heroes are those who have purchased from us only the building's shell or even just the core structure of a larger planned building. They thereby made the initial building livable on the smallest amount of money possible and finished it slowly, as they could do the work or afford to hire the construction out to others. They simply substituted deep debt with a good plan and patience.

If we want to encourage homeownership, we're going to have to find a better way, one more in tune with the values of our country's heritage and especially more sensitive to the reason and purpose of homes. If a home doesn't improve the quality of the lives within, its service is negative and that's a tragedy no matter how well money is flowing in the larger economy.

Driving home from an out-of-state site visit, I found myself half-listening to a disturbing report on a Massachusetts NPR station about sexual and human trafficking in the Boston area. It's one of those subjects about which people (like me) often prefer to have one's head in the sand rather than really hearing the seamy details. Sometimes ignorance and denial are the easiest way to cope with the dark and sordid stories from the world around us. I know I'd care if I knew, but I don't always want to know. It's not a proud ambivalence.

And so, as the in-depth report was playing on my car radio, only little bits of the tragic story were leaking through to my consciousness until one comment jolted me to attention. You can hear the full story for yourself, but there's a particular aspect of this human trafficking investigation that connects to our homebuilding issues.

If you want to enslave people for labor and prostitution, it is best to have a legal front for the operation. Massage parlors have played this role, but they've become transparent. The new human trafficking front are nail salons. According to the report, "the nail salon business is flourishing nationwide." This is one of the main reasons why Massachusetts licensing for cosmetology shops, which includes nail technicians, is up 39 percent over the last two years. Of course, most nail salons are legitimate, legal and clean, but too many others have become a venue for the vile.

If you're up to no good, why is the nail salon front a good choice?

"To open a nail salon," says Weber, "You first have to have a manicurist license and that is the license that requires the least number of hours to open. That's a hundred-hour program. Then you have to have the occupancy permits from your locality and you have to have us inspect it. So the reason in part for the proliferation is it's the easiest way to get into business." (Italics are mine)

There you have it. If you are the wretched of the earth and have aspirations to enslave immigrant girls, start a nail salon to hide the criminal actions because it's so easy. What's the definition of easy? Only one hundred hours of training. Hair styling and even barbering require at least ten times more formal training. Many states require the completion of a two year program and an apprenticeship for the right to clip someone else's hair.

I'm sure you see where I'm going. If a program that requires only one hundred hours of training is an easy path for criminals, what does that tell us about the expectations we should have relative to the requirements to get into the business of homebuilding? The right answer is not the reality:

Professional training requirements to cut hair: 1000 hours of training
Professional training requirements to manicure nails: 100 hours of training
Requirements training requirements to build homes: 0 hours of training

Zero!

In addition after the training hours for hair or nail professionals, you have to pass oral, written and practical tests to get a license. In the states that require building contractor licensing at all, the test is usually open book, with little or no time constraint. If you can read, you can pass the test. Seventh grade tests are harder.

It's embarrassing. The industry of which I am a part sets a worse standard of preparation and training than a business that has become the magnet for low life because its standards are so low.

The implications are awful. If you couldn't pass the nail technician test, you could still become a professional builder or trade specialist. You couldn't file peoples' nails, but you could frame their house or shingle their roof or pour their foundation or even be in charge of the whole operation. If you don't have the diligence, intelligence or skills to cut hair, you can still build homes, whether you know how to do it or not, and whether your intentions are good or ill.

This is not a fun subject for me. I'd like to be prouder of our industry. I wish I weren't writing this.

For the last fifteen years, we have had the benefit of hosting interns from building professional schools and training programs from France, Germany and Switzerland. We have one intern from France and one from Switzerland with us right now. Typically, they come to us toward the end of their training and are in their late twenties. Many of them started their training in their teens and had been in formal school and apprenticeships for as many eight or ten years. These aspiring young builders are humble and hardworking, full of pride because of their discipline and good training. They also typically know what they don't know and are avid learners.

As a part of their internship with us, most of the European training programs require them to write a thesis that relates to their work with us. To become a professional builder over there, these guys essentially will have the equivalent of a Master's degree in building.

I have learned from these interns what building training ought to be. If working on nails requires one hundred hours and hair styling one thousand hours, then building homes--driving nails--ought to require ten thousand hours.

Homebuilding may not be rocket science, but it IS building science and we're not just selling it short, we're diminishing the expectations to the point where if there are good building outcomes, we should be surprised. Our industry has done nothing to demand or ensure better results. Instead we've essentially invited anyone and everyone to join the building ranks no matter their skills, no matter their understanding of building technology, and no matter their motivation.

This is our shame. And if the nail salon story tells us anything, we should know that our low professional standards are an open invitation to humanity's worst inclinations.

It's way past time for our extremely critical industry to raise our professional standards, at least above nails and hair.

As a not-so-small homebuilder with a considerable stake in the matter, it's a little weird to see housing so often headlined as a major economic indicator. It's hard not to self-reference and feel personally involved, if not responsible. This long recession, which was caused by financial shenanigans in the housing sector, is still greatly measured and forecast on the basis of the erratic, distressed metrics coming out of our stumbling industry.

As the news of the past four or five months has bounced back and forth, so have I, making me variously the potential victim, victor, villain or beneficiary, whichever way the previous month's housing report suggested. News about the economy is lockstep connected to housing news, which I knee jerk into a news forecast about my business, which affects my attitude for the day and plans for the future. Like I say, it's weird. I know it's not rational.

And so, I had a bad morning last week. I woke up feeling pretty good, grabbed a cup of coffee and got online to check the headlines. Immediately, I had a deep, sinking feeling. It's not that I expect to find good news on the front page, but this one looked like the doomsday report for housing, for my business. Real bad. Yes, it was about me.

Here's the headline and the first two paragraphs. You don't need to read further into the article to get the point. In three short sentences, it would be hard to string together more negative modifiers and phrases. The highlights are mine.

U.S. New Home Sales Drop 33% in May

The new housing market has never been this bad, at least not since the government started tracking such things in 1963.

Outdoing even the pessimists’ expectations, sales of new homes declined by a record amount in May to a new low. The dismal data, released by the Census Bureau on Wednesday, followed a disappointing report on sales of existing homes earlier in the week and added to growing concerns about the strength of the economic recovery.

It sounded like the end of the recession and the beginning of depression. Emotional, economic; the whole deal. Woe unto us! Woe is me!

But wait. Let me wake up from that nightmare and unwind the rationale of the connections between the person, the business, the industry and the economy. Does any of it make sense?

First, as much as I often take my work pretty seriously, I do know that I am not my business. My life has more dimensions than my professional occupation. There are many people in my life (including associates, colleagues, clients and friends from my business connections) who are far more important than the achievements and challenges of our building company. I'm lucky enough to love my work, but at the end of the day it doesn't define me and I don't define it.

Good. That's one easy disconnect. With one big counterclockwise turn of the screw, depression of the emotional kind can be avoided. No success at work doesn't also mean no satisfaction, health or happiness.

Next, our business is not a mirror of--or a cog in--the homebuilding industry. Its ups and downs aren't automatically ours. We alone are in charge of our fortune or failure. We are not in the thrall of trends, data and forecasts beyond those that we create and directly affect.

I've been in business over 35 years and have learned that the landscape we work within is constantly changing. Constant innovation and creative adaptation is the key to our survival and success, not leaping onto the bandwagon when the going is good or acceding to the collective retrenchment when times are difficult.

Things will rarely be as good or bad as they seem because both are tempered by our own vision of a company that ought to be just as sustainable as our buildings. Like our buildings, we need to be as strong in the wind and rain as we are in the calm sunshine. Like our buildings, we may be built in good weather, but it's critical to be designed in consideration of the worst possibilities.

We are of course buffeted by what happens in our industry and with the economy, but our fate is not completely foreordained by the rank stupidity and overreaching that has caused so much trouble "out there" in the past few years. From our self-determined perspective, we're certain our values and sense of mission and purpose can always help us create a destiny of our own.

So that's the second big, healthy disconnect. It may be comforting to be a part of an extended industry, but industries have no brain or soul and are not usually a great thing to hitch one's wagon to. If we see ourselves as neither victim nor beneficiary of the homebuilding industry's gloomy or good situation, we are free to set our sights as we wish.

Finally, and most important, the homebuilding industry should not be seen as a bellwether of the economy. Among the good things that may come out of this recession, one of the best would be a realization that homebuilding's metrics shouldn't be seen as a singular driver or restraint for the economy at large. Its significance really ought to be knocked down enough notches so that its impact isn't too significant to allow for ebbs in a natural cycle.

The opposite viewpoint is what got us into this mess. On the excuse that more new homes and more homeownership is the key to a robust economy, a Pandora's Box called "No Constraints" was opened. Common sense, honesty, integrity and all good intentions were trampled by the stampede looking for action and opportunity, all for the sake of the supposed virtue associated with growing the economy.

The free-for-all arising out of the delusion that more homes is always a better thing not only created the sub-prime mortgage Kool-Aid, it also caused tens of thousands of inferior homes to be constructed. Homeowners over-committed for homes that were overpriced and under-built.

The truth is that the homebuilding industry has a limited capacity to build good quality homes. In truth, good homes can't be built by uncaring, untrained labor. In truth, many of the industry participants who have disappeared in this recession leave it healthier for their absence. The obvious truth is that no industry is good for people or the economy if it over-extends its capabilities to the point of becoming not good at what it does.

At the height of the boom-building years, our industry tried to build almost two million homes a year. We have nowhere near the ability or the infrastructure to accomplish that without extreme compromise. Junk was built. We are on track now to build about one third that amount, depending on many factors over the next two quarters. That's not very many, but from what I'm seeing the quality is good. Homeowners are being more sensible about what they want and builders are applying their best skills and most creative efficiency. Quality is up, cost is down.

Homes should be built to improve the quality of lives, not to stimulate the economy. By focusing on attributes to enhance living and building quality, the environment and the economy will have better long term benefits, but we have to stop using housing and our economic issues as if they exist for the same temporal considerations. Juicing the economy in the next quarter has nothing to do with homes that should be built to be a benefit to its inhabitants, to its community and to our society as a whole for many, many generations.

Now the whole thing is unwound. Let's read the headline again:

U.S. New Home Sales Drop 33% in May

That's not so bad. It's not about me, not about my company, and it just might be suggesting that an industry is being decoupled from the economy, allowing greater focus on our mission to build affordable homes that really contribute to our becoming a better civilization.

A friend sent me a link to a story about "The Greenest Home in America." Naturally, I was interested. But the second sentence assured me it wasn't true: "The home, which is being constructed in Portola Valley, CA will be over 5,600 square feet..." I read on and was impressed with the owner's commitment, but he fell off "The Greenest" pedestal by first deciding to build so much living space for so few people.

People who can afford it will almost always build larger homes than they really need. Too much money leads to too much building, which then makes it much harder to also create a home that is the paragon of green and sustainable. You can't buy your way into the green pantheon because it's more about absence than existence. You don't buy the absence of space, things and amenities; it's a free choice that's about priorities and appropriate values. You can't buy green without being green. You can, however, be more green by being less wealthy, thereby replacing free choice with no choice.

It would be possible to make a Hummer a hybrid, but it would never be "The Greenest Car in America." The very Hummer idea is too wrong to ever be turned into an environmental virtue. A 5600 square foot home may be a nice thing to have, and I certainly applaud the effort to make it greener and more sustainable, but the greenest home in America? I don't think so.

Our Unity House was an effort to build a home that was as green and as energy-efficient as we could manage with our resources. It earned a LEED Platinum rating and proved our intended Net-Zero performance. It's a very good prototype for green, sustainable building, but we didn't have the chutzpah, the arrogance, or the ignorance to make wild claims about it. In fact, one of our goals was to make a prototype of a type of building that ought to become standard. We wanted it to ultimately be unremarkable.

At about 1900 square feet, Unity House is nearly a third the size of the Portola Valley home. We achieved this even though, as the on-campus home for the Unity College president, it expands weekly to become a 30 student classroom, and several times a year it morphs into the meeting area for the college board of directors. We devised movable and demountable partitions to allow the building to flex instead of requiring it to grow.

Unity House has essentially the same type of green strategies, materials and energy efficient lighting as Portola Valley, but it has less of everything, which adds up to much less embodied energy in the building and much less energy demand from the building. Less begets less.

To provide heating and cooling (mainly cooling) for the Portola Valley home, they used a geothermal heat pump system and had to drill down 250 feet for the closed-loop water supply. The big building needed big geothermal cooling/heating capacity. That's a lot better than resorting to a fossil fuel solution, but it's very expensive to install and requires extra energy to propel the pumps and multiple circulators needed to keep the water flowing in and out of the ground. Geothermal heating and cooling is a good alternative, especially when the loads are relatively high, but its initial cost and on-going energy consumption are significant issues.

Because the Unity House is so much smaller, as well as being highly insulated and well sealed, we were able to use an air source heat pump system. Air source heat pumps are less than a third the cost of geothermal systems and use much less energy to operate because they don't require big pumps and multiple zone circulators. Unity House heating and cooling loads were small enough to make a simpler, less expensive, and less energy-intensive air source system possible.

Even to the wealthy owners, the accounting of the energy loads on the Portola Valley building must have been a little bit shocking. To keep it powered by the sun instead of grid electricity, they installed a 21 kilowatt photovoltaic system. That's an industrial sized solar array. It would typically have an installed cost of around $170K - $200K. We've built entire houses for less.

In comparison, Unity House needed a 5.2 kilowatt system, which was actually a little disappointing. We had originally estimated that 4 kilowatt system would suffice, but later calculations caused us to increase the size to ensure that our energy needs could be supplied by the sun, not the grid. We did make it to Net-Zero; therefore producing more energy than we used in the first year, but the margin wasn't excessive. We needed 5.2 kilowatts.

While I'm proud about our accomplishment, I'm even more determined to do better the next time. I'm sure we can. But compared to the "Greenest Home in America," we did great. Unity House is one third the size of Portola Valley, yet uses one quarter the amount of energy anticipated by the Portola owner--stats made even more impressive given that Unity House is in the grey, cold interior of Maine and the Portola Valley house is in the sunny, balmy, San Francisco Bay area of California.

So does this make Unity House "The Greenest Home in America?" I don't think so.

This is a subject about which we should all be humble.

Most of humanity doesn't choose the absence of dwelling space, modern amenities and stuff; they live without all of that by dint of the fickle hand of fate. Their stalwart accommodation to their rude conditions makes our attempts to be green and sustainable laughable in comparison. You want green? How about a home built from the mud over there and the branches and leaves from the trees overhead? You want energy efficient? How about zero fossil fuels ever used for heating, cooling and cooking?

If we want to engage in a green contest, we'll find it pretty difficult to compete with those who don't need, don't desire and don't expect. Everything they build is LEED Platinum and Net-Zero. And we're now coming to that game burdened with our considerable lifestyle-expectation deficits. We can't win, but for the sake of all that is right, we must keep at it with dogged determination...and humility.

It's ironic, if not a perverse lie, that BP's ad campaign has promoted them with the tagline, "Beyond Petroleum," for the last ten years. They wanted us to believe that had some kind of bigger, better vision; that they were perhaps the only oil company with a green, fossil-fuel-free plan for the future. We know now that if they are "beyond petroleum," it's only because their mission is for the money that's made beyond the short-cuts and compromises that lead to worker safety and eco-catastrophe risk-taking. They did what they did because it was a gamble that had paid off in the past. But this time they rolled the dice and lost. At this moment we are all fully aware that everything about BP is of, for, and by petroleum. They are fully immersed in it while an entire world watches anxiously and helplessly while they foul the Gulf of Mexico with their gusher.

When Congress passes the next weak, rear-view-mirror law in an attempt to prevent this from happening again, I think they should also enjoin BP from ever using the "Beyond Petroleum" ad words again.

And then it should be adopted as America's slogan. It's time for all of us to get committed to a world Beyond Petroleum.

Unwittingly, BP has shown us the path by which we can rapidly find better energy solutions than petroleum. As soon as you realize that the most critical factors in energy cost-benefit analyses are not dollars, the equations solve differently right away. When you factor in ruined ecosystems below and global warming above, the bottom line says that we should do all we can to leave petroleum behind immediately.

The vanguard of America's Beyond Petroleum movement must be in how we make new buildings. It's the lowest fruit to pick, the easiest thing to do. Buildings are inert. They don't travel down roads or fly through the air. Buildings should become the first fuel hogs to get off the habit. Using our short-sighted, monetary-only cost benefit calculations, we've allowed our buildings to act like high-powered, resource guzzling beasts. It's time to reset our priorities, reconfigure our cost-benefit equations, and eliminate the fuel pipes from our homes. Our excuses for not solving this problem are getting lamer every day as we watch a desperate reach for diminishing oil reserves come out in uncontrolled torrents of ooze from a broken pipe.

In my last post, I was trying to make the argument that all new buildings need to have deep heating and cooling reduction as a primary requirement. It is clearly time to recognize that making buildings that have little or no energy demands is as important as structural integrity and good design. Now our company is making the commitment to walk that kind of talk.

The dream of a more energy independent future will require investments. It won't come free; we have to create and deploy the means of achieving it. If we do nothing, we'll keep paying with short term financial and environmental costs, and continue darkening our long term prospects. If we invest in the right things, we have the ability to dramatically reduce our monthly energy costs while simultaneously becoming a part of the solution to the long-term environmental problems.The nice thing about this kind of stark choice is the clarity of it:

--Do what we've always done = continuous financial cost and looming environmental tragedy.
--Do all that we already know how to do right now = real financial savings and hope.

As a builder, I've spent my entire professional life working with determination to stand on the right side of that line in the sand. We've always been dedicated to passive solar design, high levels of insulation and tight enclosures. Our company has built many hundreds of well-designed and nicely crafted energy-efficient homes. They are our history and our legacy and give us much to be proud of, and we are.

But we're not satisfied.

Therefore, we have decided that it's time to "up the ante" on our building insulation. Our new standard wall insulation will be R-35. Since it also has our Open-Built system built-in, we are calling it the OBPlusWall.


As you can see by the illustration, it's a relatively uncomplicated build-up. We're using I-studs with advanced framing details on 2 ft. centers. The cavities are filled with "dense pack" cellulose, which gives us an environmentally benign and very tight and effective system as Paul Fisette (Building technology expert and professor at UMass/Amherst) points out in his report, Cellulose Insulation--A Smart Choice:

"The common standard by which insulation is measured, R-value, is the level of resistance to heat flow. R-value measures conductive resistance – the ability of a material to impede the flow of heat along the continuous chain of matter that makes up a solid material. Most of a home’s heat is typically lost through conduction. Cellulose is not unusual in this regard. Like many insulation materials, it provides an R-value of approximately R-3.5 per inch of thickness. But, air leakage through cracks, voids, and gaps is important, responsible for approximately one-third of an average home’s heat loss. Cellulose is a superb air-blocker. Heat and comfort are also lost through convection; when drafty currents of air within the house, wall cavities or attics, move heat to other locations. This is technically different from air leakage where the heated air mass is actually expelled from the home. Tightly packed cellulose provides a thermally efficient, cost effective, and comfortable solution."

Along with the wall system upgrade, we will be doing parallel thermal performance improvements to our roof insulation systems, and we'll specify higher performing windows and doors. Using the advantages of the precision that comes from CNC cutting, the control achieved in off-site fabrication, and special gaskets to seal between elements during site assembly, we'll be able to achieve extraordinary energy performance on EVERY project. Of course, we can dial the insulation levels downward or upward, depending on climate, building size and other factors, but the constant goal is our intention to reduce energy requirements to a bare trickle.

The total improvement we are now committed to should make most of our homes (especially those that are 2500 square feet or less) Net-Zero capable. The trickle of energy they will require for heating and cooling will make small air-source heat pumps-- or even ductless mini-split heat pumps--practical. We can leave oil and gas furnaces behind. To power the electric energy needed for the heat pumps, our clients will be able to use reasonably-sized PV arrays and net-metering to potentially eliminate heating and cooling costs altogether.

It is time to take our homes off the list of things that drain our energy resources. A home should be a special place where people find renewal, comfort, security, and the intimate interaction of their closest and most loving relationships. One of our most important tasks is to find ways to make that sacred place positive in all respects, including its energy resource and environmental impacts.

And so we are proud to announce our OBPlusWall, a new standard for building insulation. We hope the homebuilding industry will join us in the attempt to create energy independence for our homes.

I'm about to propose an additional principle to the ancient architectural "Triad" asserted by Vitruvius over 2000 years ago. It's a little like adding to the Ten Commandments, so the audacious idea deserves at least a little introduction and explanation.

I mentioned the Vitruvian legacy in my last post. His philosophy and writing from just before the 1st century have had an overwhelming influence on architecture since the time of Christ. Vitruvius's Ten Books of Architecture were the "original" (and only surviving) architectural treatises for a full 1500 years, when they were revised and updated by Alberti in the mid 1400's. A hundred years after Alberti came the Four Books of Architecture by Palladio, whose own practices and designs were also indebted to Vitruvius. And now, 500 years after Palladio, there aren't many architects who can even claim to be standing on the shoulders of Vitruvius, Palladio, and the ancient architects; instead, much of of modern architecture remains in their shadow, still struggling to achieve formulations, methods and patterns as enduring and effective.

Biomimicry in architecture sounds like an edgy new idea, but over two millenniums ago, Vitruvius saw it as a basic characteristic of any architectural practice. He said that building design should always be an imitation of nature, which is why his study of order and proportion led him to investigate the proportions of a human body and to develop an understanding of the geometric foundation of nature's patterns. After all, our need for shelter doesn't separate us from nature, but rather comes from the same requirements and instincts that are common to all species. In the most primal sense, our homes are our nests, according to Vitruvius, making us all the more integrated with birds and the bees and the natural world around us.

When Vitruvius said that building architecture should strive toward the three goals of his Triad, he was also trying to describe what should arise from our natural instincts. To repeat them again here, they are (in Latin) Firmitas, Utilitas and Venustas, or strong, functional and beautiful. It's hard to argue with the simplicity and the obvious benefit of those three equally important objectives, but it also suggests an ideal that makes perfection elusive. Something could always be little better. It's the pursuit and balance of the Triad's imperatives that's important. There isn't a summit on that path.

While the Triad is as true and useful today as it was then, I'll submit that it's harder now to comply with the principles when each of the issues have been complicated, ironically, by our increased comforts, technology and knowledge.

Strong is now an entire science and a whole professional practice unto itself. Structural engineering makes what is and isn't strong both very finitely definable, but also more easily undermined by mistakes or poorly executed details. Vitruvian strong might have been a bigger rock; strong today might be a series of weld joints or rafter ties with critically placed screws or nails. Strong today is also constantly being redefined as our bigger and more complex buildings have to ward off the most challenging slings and arrows of nature. Building engineering requirements are always catching up with the lessons from the last horrific hurricane or earthquake. The good news is we can calculate with some accuracy exactly how strong buildings are, but the bad news is that there's usually a worst-case scenario for which even the best buildings aren't prepared. In any event, engineers are in charge of firmatas. It isn't overlooked.

Beautiful has never been an objective evaluation, but it's always been easier to understand when the vernacular variation of individual buildings is intended to assimilate into--rather than disrupt--the local architectural character. On the other hand, we now have whole sections of the country in which some architectural disruption is warranted. Vitruvius and Palladio could never have imagined the repetition of banal design that would come to so dominate a country's landscape. Beauty is a tough dictum when ugly is so dominant in the psyche of designers and consumers alike. To sort it all out, we now have "Design Review Boards" to dictate what is acceptably beautiful. But most of us think we know venustas when we see it. We long for it, and know we're struggling to raise that standard.

Functional is a relative consideration at best, because at the extreme excessive end of the spectrum, it's hardly rational. Must we design to accommodate 20 seat home theaters, an extra steam shower and a place to put fifty pairs of shoes? The obvious answer is that what functional means is defined by the owners and occupants, but sometimes one wishes there were limits, especially when these "requirements" compromise the quality of the building itself, with less consideration given to venustas and firmatas. Needs, desires, culture and economics all wrangle over what is meant by utilitas.

The passage of time is always kind to what is true and right, and has therefore confirmed the usefulness of the simple principles in the Triad. Despite our advancements and excesses, attention to those rules still makes buildings better. But to address the issues arising from our contemporary lifestyles, it seems that the Triad is now incomplete. Were they here, I think Vitruvius and the ancients would be quick to agree.

For all of the centuries that preceded the industrial era, nearly every building would have been LEED Platinum and Net-Zero. They were inherently recyclable, biodegradable and sustainable. The construction materials were natural and mostly came from the local area. There weren't a lot of other options. In the winters, the buildings were expected to be cold; in the summers they were often hot; sometimes the temperature was "just right," but no one expected their buildings to stay at consistent temperature year round. That kind of comfort hadn't yet been invented.

It took the revolution of our industrialized civilization to create the technology and the lifestyle that caused buildings to be not energy efficient and not sustainable. We created the means and the demand for full-time, year-round, constant living environment temperature control. The cost of that kind of comfort, however, is too high. It has required too much consumption of a finite energy source and too much fouling of our planet. For the sake of comfort, we spend too much money, use too much energy and ruin the place where we live.

There's an alternative. We can design and build homes and buildings of all types in which the heating and cooling loads are tiny enough to eliminate our dependency on fossil fuels. By making the demands small, we can use very simple and small electric heating and cooling systems and then offset the small amount consumption with relatively small PV arrays. Energy independence is really that simple and is practical now. It only requires that our buildings have more and better insulation, and a tighter, more diligently sealed envelope. The necessary building materials are off-the-shelf and mostly low-tech. The building science involved is well-researched and the information is widely available. All that's left to make zero-energy buildings the new normal is to make it a top priority in all building design and construction.

Therefore, I humbly suggest that we add Parsus to Firmatas, Venustas and Utilitas. Our word parsimony is formed in part from parsus. It means thrift, frugality and extreme economy, and when applied to energy efficiency instead of money, the stinginess connotations are only virtues. Parsus deserves to be elevated to the Vitruvian platform. The Triad should become a Quatern.

We really don't have a choice. Our lifestyle is unsustainable unless we reset our priorities and make radical energy reduction an inviolate objective for every building. We have to do what we can do. We can make buildings that don't guzzle energy and trash our planet. An equal commitment to Parsus would make Vitruvius proud.

The Quatern: Firmatas, Venustas, Utilitas and Parsus.

Last week our company announced two big advances in our products and services: the 3BMatrix™ and the OBPlusWall™. They both will help us achieve our on-going, decades-old goal to build high quality, high performance homes at more affordable prices.

For this post, I'll try to explain why we developed the 3BMatrix system and how how it works.

With credit to Vitruvius's famous triad*, I believe that good architecture (beauty) is an essential ingredient in quality (functional and durable) homebuilding. As a builder, my criticism of the typical American home has usually been focused on the low standard of construction. But I'm equally critical of the low standard of home design that permeates our landscape. Bad design--really the absence of design in most cases--is just as responsible for turning the American Dream into a nearly disposable commodity.

In fact, the early demise of far too-many homes probably stems more often from bad design than from bad building. In production home communities, mind-numbing repetition is compounded by a complete lack of site responsiveness or vernacular expression. With only a few designs to deploy, the home designs that are conceived to work for everybody are visually exciting to nobody. When things in these kinds of homes start to go bad or require change, their occupants too often don't see them as worth maintaining or renovating. The homeowners' abandonment of care quickly turns houses into shacks and entire neighborhoods into slums. Therefore, a key aspect of sustainable, higher performance homebuilding is that the buildings themselves must have character enough to be seen as worth caring for..

This requirement demands that good, individual design somehow must become a part of the process by which homes are conceived and built. There must be a better way for production builders. They are still building most of America's homes. Unfortunately.

There also needs to be a better way for people who are seeking to build a new home on their own, but don't have the budget to hire an architect. The typical solution involves the search for the perfect plan by sifting through the many thousands available through home plan websites, books and magazines. (one company claims to offer 27,500 house plans). If the perfect plan isn't found, it is usually possible to get some customization through the plan company or by simply asking the local builder to make the changes, if they are minor. This process obviously works for many people or there wouldn't be so many plan companies competing for the business.

There's a flaw in both of these approaches: there are no generic people. The needs, tastes, and desires of those who plan to build a new home have infinite variation. When meeting that individual level of customization is added to the just-as-infinite varying opportunities and challenges posed by the building site climate, orientation, terrain, and regional building context considerations, it becomes obvious why it is usually difficult to find a preconceived plan that is perfectly suited to the homeowners and their situation.

The new Bensonwood Building Block (3B) Matrix is a part of an alternative solution to the problem. Instead of focusing entirely on an individual house plan, we have created a group of building blocks with pre-conceived connections and engineering that literally have thousands of configuration possibilities. Our full library has many hundreds of building blocks, but for this beta launch, we have designed three separate series, each with around 25 or 30 building blocks. While we will ultimately be offering at least four "standard" plans in each series, the intent of each matrix is to have wide-ranging capacity to meet client needs, while also connecting the building specifically to the site conditions.

Like Legos, the system is based on an underlying 3D grid. All the building blocks fit with particular connection rules and a software automation process, allowing the addition or subtraction of blocks or their elements to be efficient, while retaining the appropriate construction information.

Each matrix family is planned for a wide range of preconceived outcomes, as well as possibilities we're sure we haven't considered.

All the families start with a base volume and can grow along their volume or adjacent to their volume. Each matrix series also has selected pieces, components or elements that can enhance the space or the building character.
Each matrix series has its own capacities and limitations.
Every component, element and block** (see definitions, below) have "fixed and variable" options, allowing for customization of things like window locations, roof overhangs, material choices, finishes, etc.
The 3BMatrix library is paralleled with a library of floor plan patterns, living spaces and living space combinations. The floor plan library has both individual rooms and combinations of rooms or living areas that make up larger spaces. We have kitchens, bathrooms, bedrooms, master bedroom suites, entry patterns, open living area patterns, etc. The design grid ensures that the 3BMatrix and the floor plan configurations and details are compatible.

The process of shaping the floor plans from the library and combining building blocks allows us to find solutions to even very unique situations quickly. After assembling the plans and blocks, we still may need to customize the floor plan details somewhat, but we will likely have reduced that effort to certain areas and details. It saves a lot of time.

Instead of giving them individual names, we named each matrix series after villages. It was a way to suggest how much variation in shape, style and appearance we know can be derived from the chosen building blocks and our plan library. Other matrix series will be suggested in the future. We decided that three was enough for now. They are Hartland, Greenfield and Fairview. If we were Toyota (without the defects!), Hartland would be our Camry; Greenfield our Corolla and Fairview our Prius.

Hartland is based on a two story volume; the others are a single story. The smallest plan in the Fairview group would be under 700 square feet, while the largest in Hartland could easily be over 4000 square feet. In general, style is flexible in all three series. By changing windows, roof overhangs, trim treatments, etc., all three can lean toward contemporary or be developed into conventional styles.

The Fairview is somewhat radical in its design approach and is all about energy efficiency. The idea in the design layout is to separate the utility functions from the living areas, creating a band of heavily focused mechanical areas on the north side and opening up the primary living areas to bigger volumes, light and sun on the south facing side. It also creates a broad roof expanse for potential PV area and solar hot water. The design concept was derived from our Unity House, which achieved Net-Zero performance and a LEED platinum certification. All the homes in our Fairview series are capable of performing those feats again. Like the Prius, the Fairview has unique aspects and features for the benefit of increasing energy performance. It gives up formality and space in certain areas in exchange.

In a way, revealing the 3BMatrix is a little like revealing the "man behind the curtain." We've been designing on our grid for at least 15 years, which has given us time to build up huge libraries of both 2D and 3D blocks, elements, rooms and patterns. By distilling them into more discreet groups, we hope to increase the ease of building up customized whole house solutions, while also decreasing the cost of both designing and building them.

As we try to perfect this system and process, we have future goals.

First, it would be great if we could open the system up for use and interaction by other designers or even the clients themselves. We are working with a CAD software developer on the idea, but it is far from being fluid and practical at this point. The real efficiency isn't just in creating the design, but in automatically having all of the construction information right down to the trim details, and then being able to directly relay that information to CNC equipment for cutting and shaping. That's the way it works within our in-house program, but the software aspect alone is too big and complex to share easily.

Second, we'd like to be working with other builders, architects and suppliers to spread and share the development of building blocks and plan details within a grid and matrix concept. We'd welcome the partnerships. It would be a dream if even production builders could achieve their building efficiencies without resorting to the endless duplication of dumbed-down designs that compromise performance. This is the type of system and technology that could be a real solution for improving the average American Home.



*Among many other things, Vitruvius is famous for his assertion that a building must exhibit three essential qualities: firmitas, utilitas, venustas — that is, durable, useful, and beautiful.

**A Few Definitions:

Off-site fabrication: We cut, shape and assemble construction components, elements, blocks and modules in controlled conditions away from the building site. It's not "pre" anything. It's just fabricated. We don't say that windows, cabinets and equipment are prefabricated. They are just fabricated, or manufactured, as more complete products.

Component: parts, pieces and various materials are aggregated into assemblies or products that have added value, but are still substantially incomplete. A window is a component, as is a framed wall or floor section.

Element: When several components and additional parts and pieces are assembled together to make the construction unit more complete. A wall with windows, insulation and siding installed is an element as is a closed roof or floor assembly. Elements are typically panels.

Building block: When the elements are assembled into a three dimensional building assembly. A dormer is a small building block. An entire building bay, extension, porch or room addition are larger building blocks.

Module: A building block with finishes and mechanical systems completed and installed off-site

Reading Michael Lewis's new book, The Big Short would have been fun if it were fictitious. It's fast moving, well written, and full of colorful characters who play out bizarre roles in a tale that should have had a kind of philosophical Orwellian foreboding. Instead, it's about how and why the market crashed in 2008. If you want to know how we got into this awful economic quagmire, the story told in The Big Short is as good an explanation as I've read.

The explanation, in short: left to their own devices, there are lots of selfish, greedy people out there who lie, cheat, and steal. They have no trouble taking away all the money, along with the humble dreams, of millions of innocent, trusting, vulnerable people.

In this tale, both the heroes and villains are villains. The hero-villains are smart gamers; the villain-villains are clueless corporate stooges. They're all greedy, duplicitous and amoral. Because money is the only game, nothing else matters even when they know it should. One of the characters, Michael Burry, sums up what should have been a moral dilemma quite nicely:

"I have a job to do. Make money for my clients. Period. But boy it gets morbid when you start making investments that work out extra great if a tragedy occurs."

Then he did just that, and made very large and explicit bets against subprime mortgage bonds. He knew enough to bet everything he had on the calamity of others and he won the bet.

So, on one side were all the financial houses that originated the subprime mortgages, the firms that packaged and sold the subprime mortgages, the fund managers who invested in the subprime mortgage-backed bonds and the agencies that rated the subprime mortgage bonds. On the other side were the guys who figured out not only the likelihood of failure, but how to increase the likelihood of failure. It was a gargantuan stakes financial shootout in a wild west cowboy culture with no rules and no sheriff.

Again and again, I found myself reading passages twice and thinking, "This can't be legal. Why is this allowed?"

Apparently, it's not. The sheriff finally showed up--even if a couple of years late--and has been investigating the crime scene. Finally, the Securities and Exchange Commission is charging Goldman Sachs with fraud. I've read numerous articles about the indictment just trying to find some hope that the indictments will stick. Late yesterday, the NYT reported that there is strong evidence that the top executives of Goldman were personally overseeing the mortgage department and won't easily be able to blame their racket on lower level staff. Good. I hope they nail 'em.

As The Big Short makes clear, this kind of internal dealing wasn't limited to just one company. There was double-dealing and lying going on everywhere. It's how they roll.

These guys were essentially both mixing the toxic Kool-Aid and then making bets against the health of those who drank it. That's dark and evil behavior, and I do hope there are consequences. There would be few tears if those bankers would come to learn the real meaning of the suffering caused by their "Bet against the American Dream," (from the title of a song commissioned by This American Life.)

Our tears are for the pawns in their game.

We cry for the millions and millions of lives have been disrupted or turned on end so that a few bankers could show all aces and cash in big.

We cry for the people who lost their live savings and their homes; for the formally middle class, now learning to live in poverty.

We cry for the millions of good people now out of work and running out of hope.

Our tears are for those whose innocent pursuit of the American Dream turned into their worst nightmare.

Our tears are for many hard working small business owners whose good enterprises are now shuttered.

I cry for the difficulties in my industry and my own business; for all the good craftsmen and builders whose noble profession was sent to ruins by an evil racket; for my associates whose jobs are much less secure and who rightfully worry about our ability to weather this calamity.

I don't like vengeance, but I do wish those gaming bankers would come to know what is like to not be able to pay basic bills, or where their family will sleep tonight, or where the next meal will come from. I want them to sit down with some of the families whose lives they have ruined and hear first hand about the emotional, physical and economic damage they've done.

In that setting, I'd like them to explain themselves.

Here's the rest of the story I alluded to in my last blog, Affordable Home.

By at least a relative measure, with the project I reported on and others we have been doing recently, our company has essentially marked the achievement of an objective set at a company "Seamless Summit"** in 1982. We set a goal to advance our skills and capacities to a level that would bring us into regular work on the very best homes being built in the United States. At the same meeting, we agreed that our ultimate goal was to use the innovations, advanced capabilities, production efficiencies, and knowledge we hoped to gain doing higher-end projects back to the building of high quality affordable homes.

At the time, most of our building projects involved affordable homes. The houses we were working on then were typically simple and small. Many--if not most--were built for Do-it-Yourselfers (DIY), who usually had far more energy and determination than dollars. Our timberframes made for a perfect way to collaborate with DIY'ers because the frame and enclosure completed the most difficult and time consuming part of the project, giving them an ability to use their sweat equity in the areas in which there was less risk, less requirement for builder knowledge, and less physically demanding work. These kinds of building projects were good work, and fun. It was very rewarding to help people build high quality homes that might not have been possible without the support and value we provided

But there was a problem. We weren't making any money. It's hard to run a company on perpetually empty coffers.

Since the early 1970's we had been concentrating our efforts on the revival of timberframe construction. We had developed methods and details that made our buildings some of the most energy-efficient homes being built at the time. Our revival of an old craft wasn't intended to take homebuilding backwards; rather, it was our attempt to develop a new and better approach in which durability and high performance were inherent in the basis of our system: timber "furniture" wrapped with a high tech insulation blanket.

In this, we had been successful. The timberframe revival was starting to get some traction. We had demonstrated that it was a good alternative with unique attributes. Still, we worked in the margins of visibility and viability. We realized that we needed to bring our work into the daylight and prove its merits in every aspect or it would become yet another alternative building method that couldn't find its way into the mainstream. We came to the conclusion that if we were ever going to earn real and steady paychecks, we'd have to earn it by bringing a higher degree of perfection to our finished products. Our homes needed better design, better engineering, and more refined solutions for the integration of mechanical systems and interior finishes.

At a time when we were incredibly weak and our future looked dubious, our Seamless Summit resulted in a strategy to go on offense instead of defense. We determined to improve our craft skills, enhance our design capabilities, get serious about engineering, and develop more capacity and efficiency to allow us to take on larger projects. While we were nearly desperate to earn more money, we knew we could only get there by providing more value.

It seemed like a slow road, but the advancements came steadily. We learned how to do more complex buildings, our tolerances tightened, our designs became more sophisticated, and the engineering more rigorous. During that period, I wrote my second book (The Timber-Frame Home: Design, Construction, Finishing) to try to bring better understanding about timberframe construction to both homeowners and professionals.

Within five or six years we had turned things around in our favor. Our expanded capability and capacity won contracts to design and build bigger homes, with bigger budgets, for clients who had higher expectations. We were then able to pay real-world wages and also invest in better tools, facilities and training. The business stress shifted from survival to execution, which were just the sort of challenges we were hoping to face.

Meeting the challenges of high-end building eventually became standard fare for us. We developed a reputation for integrating the best qualities of design, engineering, craftsmanship and high performance. Over the last 20 years, this type of work has taken us to almost all 50 states, Canada, and a few overseas locations. I featured a selection of our projects in my 1998 book, Timberframe: The Art and Craft of the Post-and-Beam Home.

By the middle 90's, we were already talking about the second part of our Seamless Summit objectives. Were we good enough, efficient enough, innovative enough and adaptable enough to bring all the we had learned and developed back to the arena of affordable homes? Since we also didn't want to compromise the critical elements of our standards, moving down in the market was much more difficult than moving up. We could have done it years ago if we were willing to lower the standards of structural quality, design quality or energy efficiency, but then it wouldn't be us.

But now...finally, we are closer than ever to the goal we set so many years ago. Our homes are not cheap, and I wouldn't want to pretend that was so, but we now have our costs down to the point of being competitive or less expensive with the site built alternative, while offering a higher standard, and delivering the finished product in less than half the time. My last post was a story about the least expensive turnkey home we will have built since the early 1980's. It's small, but it will be extremely well-built and energy-efficient. It will also have a beautiful interior space with a wonderful open volume. There are fewer timbers, but it will contain the quality standards of numerous timberframe craftsmen and that's saying a lot.

It's not the end of the road, but I'm very encouraged. We have more projects like this coming up and I'll tell their stories in the months to come.



**In the middle of our original shop there was a big steel and cast iron wood furnace I had salvaged from the basement of an old home. It devoured our wood waste and in return kept the entire shop pretty warm, but perhaps more importantly it served as the location for all of our informal gatherings and company meetings. It was our hearth and heart.

Above the door of the furnace, the name "Seamless" was embossed in the casting. We assumed it was the model name and that a unit that was somehow seamless must have been seen to be an advantage over one that was not. But since several weld seams were visible in the steel section, we never figured out exactly what "seamless" meant to imply. We just knew it kept us warm and close.

Many of the milestones of our company history began at the Seamless. It was there that we celebrated events and achievements large and small and it was there that we settled our disagreements and managed to come to consensus on matters large and small. The gravitational pull of the Seamless was powerful enough that we often met there even in the warm months when there was no radiant heat--just a big, ugly furnace, and habit.

When we added a big wing to the shop, the Seamless could no longer keep the entire space warm. Since it was also a bit of a fire hazard, we moved it out and replaced it with a wood gassifier which fired a boiler for hydronic heat. The heat was better and more efficient, but Seamless was gone and sorely missed.

The loss of Seamless happened about the same time as the installation of our first computer network to connect our workstations and store our files and information. We were early adopters of computer technology and were already suffering from data loss and disconnected computers. Finally getting networked was a big deal. Of course, the network needed a name. Let's see, it's supposed to link us together and a keep us connected, right? Of course--easy.

It's called Seamless.

Once again, bad news begets good news.

For homebuilders, the latest news couldn't be worse.

Sales of new single-family houses in February 2010 were at a seasonally adjusted annual rate of 308,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.2 percent (±15.3%)* below the revised January rate of 315,000 and is 13.0 percent (±12.2%) below the February 2009 estimate of 354,000.

Each successive month has been setting a record for being the worst annualized monthly sales numbers for about 75 years. In better times, these numbers were three or four times what we have seen in than these last few months.

It's tough times in our business. What's a homebuilder to do?

What we are doing is learning and changing at a very rapid rate. Like any species or organism catapulted into a new environment, the laws of the jungle are simple: change or fade away. So we are paying very careful attention to what is wanted and needed by those homebuyers who remain in the market. That's where the good news comes in. People now want homes that are smaller, better and cheaper, and we can do that. The first two aspirations are our sweet spot and the third one suits us fine, as long as all our better building standards are accounted for. The challenge is a good one, and we think we're measuring up.

The home under construction in our shop this week represents a great milestone for us. We are building a complete turnkey home, including foundation, excavation, fixtures and good finishes for about $150K.



The home has about 1000 square feet, on one level. The living area and the bedrooms have cathedral ceilings. The area over the bath and central closets has a flat ceiling with access for storage and mechanical systems. This home will be full of natural light and will have a grand volume in the public area.

Shed roofs over the windows will help to provide summer shading and their brackets help to break up the facade. The home is simple but still has some nice features and will be extremely tight and energy efficient.

How do we give high quality and low cost at the same time? Our shop conditions are the key. Most of the cutting and shaping is automated and extremely accurate. We simply have to assemble the individual elements and components in the most efficient manner. With our offsite building system, we have a parallel fabrication process instead of the linear system that must be adhered to on site. We can do many things simultaneously, which cuts down on time and costs. The walls elements are framed, sheathed, insulated and have their windows installed in the same day. We then can apply both interior and exterior finishes at the same time, working both inside and out, while always being indoors and in "good weather."







While the walls are being built, the roof panels are also being built in a different shop area. The sheathing and interior drywall will be applied, insulation (dense-packed cellulose) will be blown in.


Meanwhile, we are also preparing the interior partitions and trim, cabinets, etc. When the home goes up in a few weeks, it will happen very quickly. The enclosure will be complete in a few days and the home will be completed in a few weeks afterward.




So, how do we survive in this economy? Simple. Compress time and cost. Enhance quality.



I'm proud to have this excellent example of how our company is proving itself to be a "complex adaptive" survivor in a tough economy. It's also exciting because it represents fulfillment of a company goal established almost 30 years ago. I'll say something about that in my next post.

I'll also show more photos when the house is raised and assembled on site.

I've spent a lot of space in many posts here in criticism of the homebuilding industry and of the financing institutions and of their mutual cowboy risk-inherent tendencies. When homebuilding is seen as a primary economic stimulant, bad judgement and greed are confused with smart business decisions. It seems wisdom and restraint are in short supply in the times they are needed most. To paraphrase Upton Sinclair, it is difficult to get businesses to understand something when their potential growth and wealth is dependent on their not understanding it. Or put another way, when the plundering is good, the philistines among us are exposed.

But the philistines are nothing without willing victims. In truth, it is the consumers who most decide what happens with homes and homebuilding. When our consumers tell us they want bigger more than they want better, square footage goes up and construction quality goes down. When they like luxurious bathrooms, every home has a spa. When they like granite countertops, the quarries work overtime. Market trends redefine what value means on a regular basis, but it's rare when American consumer biases are more than skin deep. The industry responds by accentuating the current superficial value trends and sacrificing what isn't seen or appreciated. As minimal as they are, its fortunate that building codes save both consumers and the industry from truly disastrous tradeoffs.

If better homes are going to be built on a regular basis, the only real hope is by way of more discriminating homebuyers. As the insane bubble years spawned idiotic behavior, the recession is causing homebuyers to have a new wave of rational thinking and increasingly restrained desires.

If our 2010 clients are an indication, the current consumer trends are encouraging. These points are connected; one quality imperative leads to another and they add up to important contributions to what I call the New House Rules:

1. A home is an investment...in your life.

In this economy, people aren't buying or building a home to flip, so they're buying a place to live. Decisions about their home are now calculated on what is important for their quality of life, not every whim and wish.

2. The American dream is a verb, not a noun.

It's about working, earning and building, not getting something for nothing. Future homeowners have come to their senses and realized that the American Dream is not the right to immediately have the home of their dreams, but the right to work toward the home of their dreams. They are willing to build in several phases or put off finishes and amenities to get the home built right in the first place.

3. Build small, live large.

They want their homes to be smaller. A few years ago, the standard size seemed to be well above 3000 square feet. Now people want their home to be smaller and less expensive to support in terms of energy and maintenance costs. The average home size for our customers is dropping to 2500 square feet. The next home in our shops will be around 1000 square feet.

4. Avoid using your mortgage for expensive fluff.

Our customers are interested in the quality of the building itself and are willing to compromise otherwise expensive millwork, fixtures and finishes to put more of their financial resources into durable structure and energy conservation. For the first time in my building career, I'm seeing people choose lesser quality in finishes and amenities to get more quality in structure and insulation. It's my dream come true.

5. Mortgage your house, not your life.

Our clients are figuring out how much they can afford and they're not willing to spend a dime more. In the boom years, it seemed that all budgets were flexible. Many clients would spend way beyond the original budgets as they made changes and upgrades through the building process. The new normal is for fixed budgets, with few, if any changes, and no upgrades. Building budgets mean something again as people are unwilling to risk the possibility their income won't easily cover the mortgage payments.

6. Invest in what you need, pay for what you want.

Some of our customers are simply putting off the installation of fixtures and finishes until they can pay for them out of pocket. It's a sensible scheme since there are many things that go into a house, from appliances to light fixtures to carpets that don't last nearly as long as payments on the mortgage. Over 30 years, a $300 light fixture would cost almost $850 on a typical current mortgage. What are the chances that light fixture would still be in use?

7. Fat is hot. And cool.

Good structure and insulation requires walls that are fatter. For a long time, our minimum wall has been 6 inches thick. With high density insulation, we've been able to achieve between R-22 and R-26 with this thickness. But more is better and we are now building most of our homes with an R33-35 standard and a wall thickness that's closer to 9 inches. Still, some clients want more, so we have projects with walls that are 12 inches and even 16 inches in thickness. Our clients are investing in the real comfort that comes from shelter from the heat and cold with minimal or no expense.

8. Do some work yourself.

Especially with finishes, our clients are choosing to work on their homes in the building process to save construction costs. They are willing to paint, put down flooring or carpet, tackle landscaping projects, and sometimes much more. "Do it yourself" (DIY) homeowner involvement in homebuilding represents both true savings and an opportunity for people to be intimately connected with the making of their living environment. A home should adapt to those who live in it, and the beginning of adaptation is for homeowners to have experience and knowledge in making and remaking the space they dwell in.

This economy is a hardship on many, but these New House Rules are better than the rules that steered us to the waste and excess that ran rampant in the boom years. I had hoped that it would be a vanguard of well-intentioned homebuilders that would lead us to a better standard of homebuilding, but we can only do so much. The real path to affordable, sustainable homebuilding is through the adjusted aspirations and attitudes of our clients. As homebuilders, we need to be able to deliver on the the new requirements, but it is our customers who truly pave the way.

In this economy, any way in which jobs are lost is a shame. On the other hand, it is pretty clear that this "great recession" has been both destructive and cleansing. It has not been kind to bad ideas and narcissistic indulgences. Jobs that were buoyed by lavish habits and idiocy were always at risk.

Hummer is bankrupt. The Hummer idea was always bankrupt; it just took awhile for its physical manifestation to drop off the cliff with it. Actually, it probably was never an actual idea. It may have been more of an observation: when fuel is cheap and wealth comes without effort, people will buy really stupid things.

If nothing else, the Hummer is stupid. It might have been pretty good as an open truck in a desert battlefield, but it's nearly useless as a work truck: too high for hand loading and too hard to maneuver in real work situations. It's not good for suburban human transport for the same reasons. Its bigness begets uselessness. It also must be the worst 4-wheel drive vehicle for actual 4-wheel drive situations. It's too heavy, too wide and too unstable. I had an encounter with a caravan of Hummers on an old mining road in Moab, Utah. I was on a bike. I passed them about mid-day and then came upon them hours later after I doubled back to go back to town. They hadn't gotten far because two of their vehicles had faltered, hung up, and were broken down. Like me, a similar caravan of Jeeps had driven around them, no doubt wondering as I had, if they knew how silly they looked with all that money and metal, but no useful vehicle; no common sense.

But the foolishness of the vehicle is only half defined by how useless it is; the real highlight is its fuel inefficiency. It had to have been made to maximize fuel consumption, or it wouldn't be so bad. Its drivers say they average about 10 mpg, so we know it's commonly much less. Because it has a gross vehicle weight rating over 8500 lbs, the US government does not require it to meet federal fuel efficiency regulations. Its excess was even subsidized through a business equipment deduction that many wealthy people used. The recent bankruptcy therefore ends a loophole in which excess-seeking people could essentially purchase a bigger hose to ensure that they get their fair share of the fossil fuel sucking binge.

Oh yes. Hummers are also ugly. It's ugly like mutations are ugly; like bad manners are ugly. It's like when the lack of consideration, refinement, scale and proportion are all mixed together, they will surely produce ugly. It's an ugly that is far more than how it looks, because the very worst part is what it intentionally projects. What it means is, "I don't care about the rest of you. I'm going to get mine."

Therefore, except for the jobs that are lost in its downfall, I say good riddance to the Hummer. May its demise usher in a new era of sanity and improved attitudes.

But that's about cars and everyone knows I don't have much appreciation for cars, and that this blog is not about cars, so what's my point?

It's about McMansions. Everything I just said about Hummers is also true of huge, gaudy homes, which are widely known by that well-defining, sarcastic appellation. Although McMansions don't have a singular aesthetic outcome, as Hummers do, we all know them when we see them.

McMansions are also bankrupt. It's not in the news because no single builder is going down with the sinking McMansion ship. But for all intents and purposes, they are gone. Ask Toll Brothers.

Except for the jobs lost in the process, the loss of McMansion building is a very good thing.

Like Hummers, McMansions aren't being built because they were always a stupid and wasteful idea.

Like Hummers, McMansions don't perform their function well; they do it worse. They make comfort and security harder. It takes extra effort to live in them; and effort to support their daily demands.

Like Hummers, McMansions require very big hoses of energy; they suck it with profligate abandon.

Like Hummers, McMansions were made possible by easy financing and tax loopholes. In the real world, they are senseless.

Like Hummers, McMansions are ugly in that same out-of-scale and out-of-proportion way, and they also are ugly in that same mean-spirited way.

And so it is that good news is bad news when a better economy and lower fuel costs spawn human excesses that reveal the worst in us; and bad news is good news when tough times bring out our ability to be frugal and judicious.

If only good news generated as much wisdom as bad news, a sustainable world would be closer at hand.