GREEN BUILDING? DON’T BANK ON IT

GUEST POST BY DELLA HANSMANN

Last Tuesday, Denise posted about how she and Doug are planning to apply the Goldilocks Principal to their building time line.

Rather than build their new home and move into it directly from their existing house in Madison, they are planning to sell their current house and seek  small interim shelter  through the construction phase before they move into their new home.

This is a great strategy for paring down the design to essentials, but it has another very important benefit.  By selling their house before they start to build, they will have the capital  for their eco-dream home without a bridge loan or mortgage.  I am an architect (in training) not a finance expert, but I do have  strong feelings about banks and the building industry.

...A typical American suburb (photo credit http://www.futureatlas.com/blog

Boring American Houses … available by the millions

McMansions  = banal design.

The company I work for, Whole Trees Architecture and Construction, recently hosted a young Italian architect.  Over a bottle of wine and a plate of pasta carbonara, he asked us why all American neighborhoods seem so generic.

It’s not that we have no taste, I explained.  It’s simply that we move around too often.  Americans almost never buy a house “for life,” so we’re afraid to build the kind of  space we actually want to live in.  We’re driven by the almighty power of “resale value”.   Both new construction and remodeling are completely dominated by the latest hot-button trend for an under counter “drinks fridge” or white tile bathroom.

...current kitchen

Doug and Denise succumbed to this pressure when they fixed up their fixer-upper.  Because they were planning to move soon to their land, they got talked  into granite counters and oak cabinetry as well as a master bathroom.  There’s no question some of these new features are pleasant, but none of it references their style or lifestyle.    And that granite counter … its a constant pain to clean.  Will it help sell the house?  Remains to be seen.

The Bank’s Perspective

Bank-financed homes (read, most homes) are the extreme example of  this “Granite Counter Problem.”   Bank loan officers do not care about design or good taste.

No, their employers expect them to promote the easy and profitable turnover of  housing stock.  They think that means the most generic house possible.  [Yes.  I’m dissing the American mortgage system and not even talking about the housing crisis.  Well, folks, the banks are responsible for a lot of bad things, all at the same time.]

...Could this be a bit big? (photo credit http://www.flickr.com/photos/auntylaurie/2591629570/

But who is going to live in these blah-built houses?   Who will wake up within these over-sized walls, raise children, entertain friends and follow their dreams in Pine View Hills (sorry, no pines and no hills) Floor Plan 228-b?  (Hint: It’s not the loan officer.)

Why are we letting bankers (of all people) decide how we live?

Whole Trees Case Study

Sadly, we often do because we don’t have an alternative.    This is something I ran into in the course of my design work.  Last summer a woman came to us for a very small house design.  She wanted to build a small retreat in the woods on land she had recently acquired.  Her goal was a cozy, open feeling with a minimal bathroom and a single bedroom.  She’d given the plan a lot of thought, and we soon designed a little gem  for her.  We worked up the full drawing set, which she took  to her bank for financing.

Full stop!   The bank couldn’t find any “comparables” with only one bedroom, was uncomfortable with the green building elements and flatly refused to finance the project.

Our client was heartbroken.  We approached several other banks and heard the same thing from all of them.  At the height of the housing crisis when every news station in the country was decrying the glut of over-large homes on the market, no bank would consider supporting this small one.  (Oh there, I did mention the loan crisis.)

In the end we were able to re-design the house, adding a loft “second bedroom” over the first thus satisfying the bank’s paper requirements.  The end result was to make the space larger and more expensive – this will increase her mortgage, taxes and the space she must clean —  all directly contrary to her desires for her house.

Building without a bank frees you from the conventional thinking that goes hand in hand with conventional financing.

...This 784 square feet was the owners' choice, not the bank's.

You can have anything you want.  You just can’t have everything you want.

So starting with what is probably a smaller amount of money to spend on your new home can help reign in your own plans, and that’s a good thing.

Studies have shown that when people pay for things with credit cards versus cash, they spend more extravagantly and tend to forget their purchases more quickly.  I would bet that the same applies to a mortgage loan versus your own savings.

Banks are infamous for urging people to go to the upper limit of their loan eligibility and take out larger mortgages than they really want or need.  This fuels house inflation on every level … something you want to avoid when building green.

Saving for and paying for your construction costs up front is a constant and visceral reminder to make your design choices wisely.   While you’re weighing the need for (say) an exercise room in your house, think about average cost per square foot, if it will require changing the footprint of the house, what additional electricity and plumbing needs it might have … and the extra “stuff” you’ll inevitably fill it with.  Then balance that against the cost of joining a gym, buying a used bike or just walking Fido more often.

...Also not bank approved.

The easiest and cheapest way to make your house more sustainable is to make it smaller, and the best time to change the design is in the conceptual stage.  The cash-up-front rule reminds you to really think all your choices through and weigh them against each other.

In the end, not only will you have a smaller house, more perfectly tailored to your needs, but you won’t have decades of mortgage payments tying you to a lifestyle you might not prefer and may not even be able to maintain.

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6 replies

  1. I was amazed at how huge America was when I moved there for two years from England but also amazed at how similar the houses were when flying over the continent. I now live in Latvia and sometimes McMansions get built here too, as owners bring in materials from the States, so depressing. It is also scary to see the kitchen so similar to the one we had in Colorado.

    My husband and I often remarked on how much choice there is but only if that is what you wanted, if you wanted anything slightly out of the ordinary it was hard to find or excessively expensive. A free country? Not very! A country dictated to by advertising as well as the banks. Free if you have money and health.

    I admire what you are trying to do, maybe you should look at trying to generate your own capital for the building of your small projects. Surely there are people who would like to invest in that kind of thing?

  2. Hi Joanna,

    Pete Seeger recorded a song in 1963 you probably know called “Little Boxes Made of Ticky Tacky

    Little boxes on the hillside
    Little boxes made of ticky tacky
    Little boxes on the hillside
    Little boxes just the same
    There’s a green one and a pink one
    And a blue one and a yellow one
    And they’re all made out of ticky tacky
    And they all look just the same

    I’m afraid the only thing that has changed is that now all the houses are shades of tan and they are not little. (and now a lot of them have for sale signs that are gathering cobwebs)

    Denise

    Denise

  3. Wow – outstanding post! I’m new to your blog, but have found this to be a wealth of knowledge and resources. I’m definitely inspired by the work you’re doing, and am glad you share your experiences here. I’ve already learned so much!

    I too struggle with the question of ‘who would want to live in these McMansions?’.. but sadly, no matter how much us like-minded folks dislike it, it seems pretty clear that the vast majority of people actually *do,* in fact, enjoy those houses, for whatever reason. If they didn’t, they wouldn’t sell, which in turn fuels the resale value ‘fear factor,’ and the bank’s insecurity. On the contrary, if you build a truly unique, custom, craftsman home and ever need to sell, you’ll have to find another kindred spirit – someone from within our circle who appreciate and resonate with that specific design character enough to buy it. Unfortunately, I think we’re still the minority – by far. No matter what I *wish* the market was like, I’m afraid the vast majority still want some variation of beige and granite.

    For whatever its worth, another thing I often ponder is the fact that a well built home should be able to serve several generations of owners – not just one. If this is the case, then building a home that is perfectly suited to a single homeowner’s desired design goals runs the risk of falling short in future generations that seek to modify, update, or improve it to better suit their own functions and tastes. Especially if 8 out of 10 in the market prefer beige. If a new home isn’t flexible, simple (generic?) enough to accommodate change over time, by a diverse range of homeowners, it runs the risk of neglect, or even demolition – no matter how much it goes against our own aesthetic grain. Even if it was the greenest home in the state when it was built… if it can’t evolve over time to suit the needs of many future generations, and gets demolished by a future owner 50 years from now who doesn’t appreciate that individual, client-specific design aesthetic – how green is that?

    I’m not saying these things with any authority whatsoever – and again, the fact of the matter is, I detest the homogeneous and boring nature of suburban America, and I agree with your assessment. I wish everyone could build a custom crafted home with all manner of eco-friendly features. But as I contemplate why things are the way they are.. and why more people don’t build homes like that… and what it would take to turn that ship around.. these are the mental roadblocks I run into.

    What do you think? How do we balance uniqueness with design integrity that will be flexible enough to suit generations to come? How do we accommodate a client’s specific design taste, while also being mindful of the next 200 years of occupancy as the home evolves to suit a wide variety of design tastes and performance goals? Most importantly, how do we make these homes more attractive to a much larger market, such that the bank wouldn’t need to be so insecure about financing it, because of the (often justified) fear of lower resale value?

    I don’t have any answers.. just lots of questions =) but this post really got me thinking, so I couldn’t resist posting a few thoughts.

    Thanks again,
    Jon

    • Jon,

      Wow, thanks for that detailed comment. You raise some excellent points – and I agree that sustainable building should mean building to last as much as it means eco-friendly materials or energy efficiency.

      I definitely think its very possible for custom built homes to be too person specific. For example, my aunt and uncle lived for several years in a house which had been designed for a very interesting (eccentric) couple who designed the entire space around a triangular living room three stories high and none of the bedrooms had walls – just railings overlooking said living room. It was architecturally beautiful but not easy to live in … and they don’t live there anymore.

      Still I’m not really talking about building all your doorways too 5’9″ if you happen to be of short stature. What I’m advocating is that when people design and build for themselves (as opposed to buying) they make choices based on their actual lifestyle. Good green design is fundamentally good design and design is always specific.

      I think this might need to be subject for a post of its own, in fact. Thanks so much for sharing your thoughts.

      Della

    • Michael,

      Ain’t that the truth? Although that only makes me think people today can have lots of different colors of cars … as well as very different makes, models and designs. Perhaps its time we applied the same freedom of choice to our theory of house design.

      Della

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