Housing is Broken
The process of getting a house is totally busted.?
More busted than it was just a few years ago, and it?doesn’t show many signs of mending itself.?
We’ve been building HUTS (and continue to improve HUTS) to define a better process to get a home. Second home. Primary home. Investment property. Affordable home. Whichever. Not just making it possible, but maybe even fun.
If you’re on this email, you’re among our big and growing audience that's probably come to the same conclusion: the options for how to get a home of your own are not any good, particularly in a country or rural setting.
You have a clear vision for what you have in mind and stable enough finances to conceivably pursue it. But, there’s a Ninja Warrior-style obstacle course in your way that you need to duck and dive through to get a house in today’s broken market. You’ve tried to walk this greased-up balance beam:
Option 1: Find an Existing Home
Great, seems easy enough. Look online and find a house that works for you among the many listed on Trulia or Zillow.?
What’s this??The properties are?getting aggressively bid up by other buyers, rendering the list price essentially pointless??
Must be a hot, spicy market!?
Partly, yes. There are many other individual buyers you’re competing against. But the dominant forces at play are institutions, not individuals.
On the supply side, increasingly restrictive local governance nationwide - paired with rampant NIMBY-ism -?has stalled new non-luxury housing construction. That's directly lead?to a 4 million home shortage nationwide. And growing. Rapidly.
On the buy side, you’re competing for a limited supply of existing homes against the crevasse-deep pockets of private equity firms and other shadowy pools of capital. For the last couple years, they’ve been snatching up as many single-family homes as possible, bidding them up by 10%, 20% and more. In the process, they’re knocking everyday buyers off the playing field while focused on the buy-and-hold long game. They’ll make up their over-payment within five years through appreciation and are covering their costs by renting to the very people they outbid.?
In many of the regions we focus on, it’s you against several voracious publicly-traded housing vampires with literally trillions of dollars in their war chests. They’re building a permanent rental class that will deliver billions in passive income into their coffers, cash that would have otherwise contributed to everyday peoples’ stored equity.?
Let’s say you manage to grab a somewhat reasonably-priced property. Awesome, congratulations! If it’s in a semi-desirable market, the fact that it was overlooked by private equity’s Sauron eye and wasn’t bid up to the Himalayas by other individuals probably means it needs some renovations. What’s behind those walls? Who knows!?
But, if the house was completed sometime during one of America’s fastest and loosest residential building booms, it’s likely leaky, drafty, inefficient, built under weak or non-existent code, and was pretty crappy the day it was built. Periods like 1875 to 1899. Or, 1945 to 1972. Or, 1987 to 1999. Or, 2002 to 2007. It likely needs some electrical, plumbing and light structural issues sorted out, all of which any local contractor just won’t be able to bid even remotely accurately until the interior is stripped back and you’re already committed. It is very common for even well-defined and well-managed renovations to run 50% or more over budget.
Option 2: Hire a Traditional Residential Architect
If you’ve been following along, you know many of us at HUTS are designers and we care deeply about design. We love architecture. We care deeply about the detailing of buildings, their “constructability” across landscapes, crafting special moments in homes, and delivering the most beautiful properties that our clients’ budgets / municipalities / lots can support.??
Most of our team received advanced degrees in architecture from prestigious universities and have cut our teeth with Pritzker Prize winners and celebrated architecture firms around the world. Architecture is awesome! Collectively, we’ve spent something like 100 years working on high-end residential design. That’s needed experience to grasp some of what’s going on in housing design.
But, if the challenge is to rethink how beautiful homes are delivered,?"architecture practice"?can't possibly be?the instrument to solve it.
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Much of the home design and construction trade’s business model is tied directly to client budget. If you spend more as the client, the architect gets paid more as a percentage. That doesn’t really jive. In almost every case, that puts the architect and client’s goals at odds with each other, especially when it’s not a blank-check custom home. Too often, I’ve heard residential architects (always after a couple drinks) say that their real job is to get clients to spend as much money as possible. Yuck.
What would it look like if the client was empowered to make key decisions on their home design, but not bogged down with having to make all of them? What if we didn’t pretend every single part of every new house was totally bespoke, but instead recognized that there are efficiencies in utilizing repeated patterns and readily-available materials? And we passed those efficiencies on to the client so they have more money on hand to outfit and enjoy their home? And, what would a model be where the house designer / developer’s goals were actually in sync with the client’s??
When the goal is to get a wider group of people into a beautiful home that’s unique to their land and lifestyle, the approach just can’t be to get them to spend as much money as possible along the way.
Option 3: Traditional Home Developer
In many markets, large tract home developers are ubiquitous and synonymous with “new home.” That’s bad. I won't?name names here for legal purposes, but imagine big companies with names that rhyme with “Hole Brothers,” and “Tryin’ Homes.”
These guys build really big, really flimsy structures with the intent to sell them before they’re completed, leaving the pre-sale buyer to deal with the issues after move-in. Leaky / inefficient homes with cheap windows and doors. Poor insulation and bare-minimum wall and roof assemblies. All of this makes for a very expensive house to heat and cool, no matter what part of the country you’re in, but especially in higher altitudes, on the coasts, pretty much any region with seasons. So, probably where you live.
Their goal is to maximize the total square footage on a lot at the absolute lowest construction cost per square foot. That is a direct contributor to a national issue that we call “Home Creep.” In 1960, the average square footage per inhabitant of a new home was around 325 square feet. Have 4 people in your family? That would've been around 1300 SF, plenty of space if it’s well-planned. Today? With the help of “Hole Brothers” and “Tryin’ Homes,” that figure is creeping up to more than 900 SF per person on average. That same family of four can expect new construction options that are +/- 3600 SF total, with a couple extra living rooms, weird giant bedrooms, and a bunch of other carpeted rooms that need to be conditioned. Built for $200 / SF, sold for $600 / SF - a $2.2mm headache with the stylistic shelf life of fidget spinners.
Hello, HUTS!
I get it, this is long, cynical and painted with broad strokes. Is it all so bad? No, there are some really interesting new approaches to housing design and delivery popping up, and we are always learning from and seeking to collaborate with responsible practitioners. But, generally, the state of housing sucks. So, the question is, do we have something better??
Simply put? Yes.
In the near future (now?), one of the best ways to get a beautiful, appropriately-sized home that is timeless and contextual will come from buying a piece of land in an area you adore and developing it yourself. In small towns. In rural areas. With remote work, self-driving cars, sharing economy, these wonderful places that are becoming attractive to a wider (and more mobile) swath of folks.
But, hold on. You're not a sustainable land developer with deep home design chops. Right?
You're a programmer, or a waitress, or a dentist, or a surfer, or a clothing designer or an attorney or a restaurant owner or a retiree.?
You have clear ideas on what you need, ambitions for what you want, and a budget in mind (that maybe accounts for?some rental revenue), but going from that dream of "getting a house" to making it real is a deep river to ford.?
That’s where HUTS comes in.
At HUTS, we often say we have two sets of products. First, our Standards - a design product - that can be modified to fit your unique lifestyle and parcel conditions. Second, our very important Development sequence - a process product - a well-defined and tested methodology for how to efficiently go from raw land (or an undeveloped parcel) through all of the steps of development. Our process is the answer to questions like:
We've worked hard to not only answer them, but deliver solutions to them, for all kinds of real people.?
Maybe it's the future for how all homes are delivered. Or, maybe it's how your personal home dream becomes a reality in the next year.
Either way, we’re excited to hear about what you have in mind for your place. And maybe we can help making the process of getting there suck less and, maybe, have some?fun along the way.