Saturday, September 1, 2007

Thinking about building a house? Why you should hire an architect...

(Brendan)
This post came about from a number of recurring experiences:
  • Discussing our new home with people and having to explain that you don't have to be affluent and independently wealthy to hire an architect
  • Driving anywhere and looking at suburban and exurban home developments
  • Reading about declining home values over the past few months
  • Living bad design (whether at work, at home, on the web, in a book, anywhere)
While the American Institute of Architects doesn't keep figures on the percentage of homes that are custom designed by architects, I'm going to go ahead and guess that it's somewhere in the neighborhood of 2%. It may be even less than this estimate. We all know just by driving around that developers design the vast majority of all newly built homes; you know, you buy a lot in a new development and then pick from a small set of prepared home plans, and hopefully every third or fourth house doesn't look identical. While developers no doubt make up most of the new home construction in America, you also have your custom design/build firms, which will custom design a home for you, but are not architects. These homes typically make up the higher end developments that don't require stock home plans, and usually manifest themselves as larger, more decked-out (better materials and amenities) versions of the same stuff you see in the lower-end developments. Probably with lots of beige. Whether it's stock home plans, or custom design/build, most of suburban America looks like this...

Why is this the way things are? Of course it's because it must be cheaper. After all, we all can't afford some fancy schmancy architect to design our home. In order to allow more people to afford to build a home, you need to cut out the middle man (the architect) and get a catalog of prepared, pre-inspected home plans that people can choose from, which saves money (the fees for the architect). And it's even better if you can have the same company design the development, the home plans, finance the homes, and build the homes, because that streamlines the process and has to result in cost efficiencies. Right?

In my experience, and in my opinion, the answer is "no." Much of what I have written in the preceding paragraph seems to make intuitive sense. But reality is far different. Having a developer provide home plans and serve as builder and financer often can result in cost efficiencies... for the developer. There's no real incentive to pass on cost efficiencies to the consumer buying the home; even in a market-driven economy I think the complexity of the homebuilding process and the uniqueness of each housing situation are confusing enough that developers and builders can reap quite a bit of cost benefits without passing it on to the consumer.

Hiring an architect not only does not need to cost more money, it should in many ways save money. Think of it this way, let's say you have a budget for building a home, and that budget is hypothetically $250,000. You can take that money to a builder or developer, sign on the dotted line, and they will be perfectly happy to provide a home like those in the pictures above. Certainly it suits many people just fine. But, let's say you would like something different, something more in tune with the way you live, more personal (and better designed). Take that same amount, $250,000, and lop off a portion of that for the architect's fee. I guarantee you will get a far better home for the remaining money with the design of an architect than you would get for the full $250,000 for the builder or developer. Not only this but:
  • An architect can monitor your budget with an independent eye from the builder, and ensure you are getting the most from your money, even negotiating better prices
  • An architect's design can reduce energy costs and home maintenance costs, saving you money over the long run
  • An architect can spend time fully developing your ideas, avoiding changes along the way (and each change costs money)
  • An architect can work with you to accommodate various payment methods for their fee, such as a negotiated lump sum that you add into your mortgage, or a payment plan, or any number of different options
  • The value of your home will be instantly higher from the moment construction is finished, giving you more equity
  • A well-designed home, rare as they are, is going to have a higher re-sale value and sell more quickly
Tack all this on to the fact that there are design intangibles that simply can't be accounted for in dollars that add to the livability of the home, such as the use of natural light, the design for the way your family lives, attention to detail, etc.

This would all be a slam dunk if there weren't real impediments to having an architect design your home, but there are. The biggest I can think of is land. Developers make money because they can afford to buy large parcels of land and then turn around and sell it to others. There's a certain amount of capital necessary to secure land that is free of the strings attached to developers, such as going with their home plans or financing. We were able to find a lot in a development that was "open builder" (i.e. we could hire any builder we wanted, there was no connection to the development owner) and "build to suit" (i.e. we could use any home plan we wanted as long as it met the reasonable covenants the neighborhood has and the plans are approved by the neighborhood architecture committee). Obtaining a lot like this allowed having an architect design the home to become a reality.

For more info on architects, go to AIA.org. Or, for some stories on how architects can assist in designing high-quality, affordable homes, see: here, here, and here. Just an example from one of the stories; here's a home an architect designed for a Biloxi, Mississipppi family who lost their home due to Hurricane Katrina. This home cost $115,000 to build!

3 comments:

Allison Koop said...

I must say, this surpises me yet seems sensible. And gives me hope since I am destined for poverty. You're right, the developer has no incentive whatsoever to pass on the savings to the consumer if the consumer already believes they are getting the best deal. Very sneaky.

Sirach21 said...

So I realize this is a really old post, but I definitely agree with the value of good design. Amanda and I have been discussing our "next step" for when we outgrow the townhome, and we've both agreed that we don't want a generic suburban house. We're thinking either building new or buying one of the many distinctive homes in one of the nicer neighborhoods of St. Paul or Minneapolis (Highland Park, Grand Ave, Page, Tangletown, etc). The thought of living in a generic Woodbury or Maple Grove McMansion for the rest of my life makes me slightly ill.

Brendan Koop said...

That should make you ill. Sounds like you have the right approach. If you build, there's many nice lots up by us, and nobody's going to be buying them any time soon! :-)