Tuesday, October 21, 2014

How Green is Your Valley?

Homebuilders and homebuyers are odds. The political and “moral” push to design and construct “green” homes has now forced homebuilders in many communities to throw their collective hands in the air and say, “Damn the economics, full steam ahead.” For many, this will require substantial changes in how they design, build, and market these environmentally friendly homes to a skeptical and often disinterested homebuyer. For others it may put them out of business (HERE)

Most buyers want what I’ve been saying for years: They want the biggest home, on the biggest lot, they can afford—period. I realize this is open for significant debate, but most housing growth is still in the suburbs and will be for the short and long term. It is the detached single family home that the buyer wants. And if it’s a choice between an extra bedroom, or a photovoltaic roof top electrical system – the building industry is finding that the bedroom wins.

For the last few weeks there has been an interesting series in Builder Online on the acceptance and costs of building green homes. They found that in some instance the costs of building green can add more than $150,000 to the cost of a home. These costs are for solar thermal and PV systems, more efficient equipment, tighter homes, and insulation. Some of these systems and building standards are even mandated under many state laws.

Most new homebuyers are interested in the following in order of important:
  • Location (city, neighborhood, schools, culture, etc.)
  • House Cost
  • Debt Cost
  • Maintenance Cost
  • Affordability – the blending of the three
  • Design and Layout
  • Environment

Yes, like it or not, in my opinion, the last and least important is environment (HERE). Buyers will say they value these elements of a house: Energy Star ratings for appliances, windows, and certifications as important to their decision, but most buyers expect the home they buy will be energy efficient (insulation, windows, water heater, etc.), the heating and cooling the state of the art, and appliances will not waste energy (i.e. dollars). They do not expect to pay for these as extras.

We are heading for a time when new homes will essentially be cost free for electricity. Solar PV systems (with battery type storage systems) will become ubiquitous like modern HVAC systems, and as the two become better integrated, homes will essential become zero electricity users. Cost of heating will drop with better design and insulation (and cheaper natural gas). The issue is always how much will the buyer pay to reach these levels – they do not see these as trade offs.

What is more critical is the quality of the construction itself – not the whistles and bells. Better insulation and moisture control reduces everything from nail pop in drywall to cracks in drywall and moldings. These are actually more for the builder themselves than the buyer – call-backs and repairs are very costly.

One of the problems at the moment is the velocity of new home sales is still slow. This is due to many factors from student debt, costs of down payments, and very high cost of new homes. If the demand were higher many new products would literally hit the street. Competition and markets would bring these new products to the industry.

We will see substantial changes to the “green” side of the housing industry, they may not be flashy but they will save the homebuyer money in the long term. But one thing is for sure, the basic home will be more expensive.

Stay Tuned . . . . . . . .

Tuesday, October 7, 2014

SMASHING URBAN VIDEOS

Urban videos are the rage and some of the people doing the work are just amazing and outstanding. One of the best I found is Hal Bergman –photographer and video maker.


Here are a couple of his finest on California, Paris, London, and the last a compilation.

I apologize for not having all the videos through YouTube but Google has this thing about only using their tubes on blogspot - so to speak. The Vimeo version are all HD and wonderful, just click on the URL or the title and it will take you there.


California

YouTube – low res.










Friday, September 26, 2014

Rooftop Salad


When I was a kid one of the most popular songs was Up On The Roof, by Gerry Goffin and Carole King. The Drifters released the best version of the song in 1962 – fifty-two years ago. For a kid in the Midwestern suburbs with absolutely no knowledge of urban living, I looked at the roof of my house and couldn’t understand any of it. Steeply pitched, shingled, I imagined trying to sit up there and “get away from the hustling crowd,”—whatever that was. Confusion until all was revealed in watching West Side Story – “So that’s what they meant!” by “up on the roof.”

Roofs have been in the news a great deal during the last decade. One idea was to paint them white which would reduce the heating effects of the sun during summer. Another was to cover them with solar panels thus helping the planet and the building owners pocketbook at the same time (thought fire departments have great concerns over accessing a burning building and trying to get through hundreds of those aluminum panels).


The “Green Roof” movement also comes to mind; just put plants all over the roof and great saving will be yours and the planet will be protected. There have been reports of collapsing ceilings when planters freeze up and become incredibly heavy boxes of solid ice, so the savings become questionable if the structure of the building needs beefing up for that roof top garden. And don’t even mention the costs of maintenance. Plants will grow and will in time need to be replaced, a very expensive proposition.

But there is now an effort in dense urban areas to place greenhouse farms on these roofs. An aerial view of any major city shows hundreds of thousands of square feet of empty rooftops just waiting for entrepreneurial gardeners to seize the roof—so to speak.

What is driving these opportunities is the high-end value and quality of the agricultural products. Most restaurants demand the best produce and these rooftop farms, through their controlled environments, provide produce that exceeds traditional produce grown on old fashion truck farms. And when the costs of preparation, pest controls, and transportation come into the equation these operations begin to look better and better—and profitable.

As in any industry there is a learning curve, and as more employees learn the rooftop gardening trade they will seek out more roofs and expand the market.
Less water use, higher densities of planting, high-end organics, minimal or no pesticide use, the ability to use the building’s excess heat during winter, and provides an insulator during the summer and winter. Even more importantly food is grown within the market itself, sometimes as in the case of the Whole Foods Store in Brooklyn, that market is right down stairs.

What will change is that many future urban buildings will be built to use the rooftop as an integral component of the design. It is easy to imagine the vertical mixed-use project taking the final step of using the roof for agriculture. The new urban building could be retail on the ground floor, offices on the next three or floor floors, multiple residential floors, and a farm on the roof.


Stay tuned . . . . . . . . .

Tuesday, September 16, 2014

The Train To Nowhere

We were having dinner with close friends the other night. They are an extremely successful couple, now retired, and have seen more of the world than any other person I know. They like us, have jumped on and off trains, and boats, and trains all around this world (though they have gone a lot further and to places my wife says, “in your dreams.” The surprising thing was that we all came to the conclusion that Governor Brown’s high speed train is not just a joke but insanity.

“Put the money into the regional transits, like BART,” he said. “Put it where it would make the most sense. The freeways are becoming a joke around here – make these trains work, not make it easier for folks in LA to escape.” There’s some truth to that I think.

The infrastructure of the Bay Areas rapid transit is now more than forty year old. New rail cars are being added; it will finally reach San Jose in a few years; and may extend into the eastern outlying suburbs during my lifetime. But put fifteen or twenty billion into it and real money will grow from these roots extending out into the hinterlands—just like it did forty years ago.

High-speed rail is cool. I took it from London to Milan last year. It’s a wonder. And it’s also a wonder how those European economies paid for it. Probably sold the same bonds to the Chinese the Californians are getting ready to sell. It isn’t a question of spending billions of dollars, California will do that anyway; it’s where it’s spent.

People will live where they want, and it is usually driven by costs and value and fear and traditions. They may want to live in their old neighborhood but work forty miles away; all the urban planning and silly state laws won’t change that. The basic twenty-first urban planning is done in most American cities; we are now into the fifth and six rings of outward development surrounding cities. Serving and interconnecting these rings with each other and to the old urban core are what needs to be done. Not build tracks in the middle of nowhere hoping that money will be found to connect them eventually to where the people really are. Governor Brown can create one of his fantasies and in the end it will all turn out just right. Maybe we can use it to bring water from Canada—not that’s an idea.

Stay tuned. . . . . . . . . . .

Tuesday, September 9, 2014

To Buy or Rent—Now That Is a Question


I remember when I was in my late twenties the one thing I wanted most was to own a home. My wife had always rented so she, while understanding, was somewhat ambivalent. I persisted and just after we turned thirty we bought our first home in… San Francisco. Yes, the small town on the west coast where home price are now totally and completely nuts. In fact the home we purchased in 1979 was recently sold for 11.66 times the price we paid—yes, totally insanity. (In fact, no improvements have been made to the house since we sold it in 1990, now that’s sad  on many levels.)

But we, like millions of other across the United States, have weathered the ups and downs and the vagaries of the housing marketplace and survived, and most have prospered. Much of our collective net worth is in that humble assembly of stick and stucco. Our hopeful retirement fund is not in some stack of bonds and stocks, but covered by a new composite roof. Such is the state of the financial world in the United States. Much of the rest of the world is confused by this American institution—considering that to pay rent is the norm—not home ownership.

So why aren’t home sales bursting through the roof? There are more potential buyers out there than at any time since the years following World War II. They are wealthier (or have access to family capital), they find that interest rates are incredible low (more than half what we paid in 1979), and depending on the region, reasonably priced.

Some say it’s the amount of debt that the under thirty crowd carries over from college. This may be true. Some say it’s the fear of what they and their families have just gone through during the Great Recession; this may also be true. And some say the culture has changed, ownership means being tied down, beholding to a bank and to sticks and bricks. This may also be true. My guess is it’s all of these and more.

There are changes in automobile ownership; reports are that some in the younger generation are opting out of buying a car. They rent one when they need one—other than that they take the bus or the train. For some this is a smart move—we all certainly know the costs of car ownership. In fact there is a growing trend of renting everything among the youth—thus reducing the baggage that we older types carry around with us. They may be into something here, but this also leads to not saving. And not saving leads to having little left at the end of the month and the end of the year, and most especially the start of retirement.

It is very hard to put your finger on the problem, as this Wall Street Journal article on renters pointed out yesterday. There it is stated that the real reason for not purchasing is lack of money (down payment), income, and debt. I’m shocked; in more than thirty years the reasons for not buying a home are exactly the same reasons we were faced with. Much of what happened in the Naughty Aughties when the government, banks, and builders foolishly messed with market forces and over built, over lended, and then over extended themselves and came very close to collapsing the economy, is now being averted. Steady pacing of construction, more prudent lending, more stringent controls for loan qualifications, and renting will do more to quite economic fears than any government program.

Stay tuned . . . . . . . . .