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Sunday, January 26, 2014

Huge New Old House article in the WSJ

Couple of notes of interest regarding this article.
  1. Seems like we have now come full circle - these same articles were being written in 2005/6/7.  
  2. The volume of articles on homes, home designs, home sizes, etc… has exponentially increased over the last 3 months.  Big homes, small homes, old homes, new homes.  All good news for us whose approach is typically validated by these articles (in fact, half the time I think they are inspired by our approach, ideas and homes).
  3. Once again, these articles - including the one in the Times yesterday - feature projects with large budgets, and tremendous sq ft costs.  I mean, $300 to $500 a sq ft at a minimum for these babies, not including architecture, land, permitting, landscaping, and a ton of other costs.  I've said from the beginning that building nice stuff at big budgets is easy.  Try doing it affordably if you really want a viable business.

So for me, the validation of this article mostly centers around how affordable our offerings are - land, design, transaction costs, money costs, holding costs, and construction for under $250 per sq ft for our smaller homes and under $210 for our bigger homes.

It's really quite simple how we do it - simple vertical integration - cut out the middle man, sell direct to the consumer.

No percentage architect fee, no contractor markup on our new homes, no real estate fee.  Any team less cross-talented could easily charge another $70k to build homes like we do and would be in no way over charging or lining their pockets- they would just be paying a lot more middle men than we do, and along the way, creating many more opportunities for mis-communication amongst the team and fractionalization of the project.

I just ran across a new old home in Stone Ridge the other day - pretty nice house, but at $499k for 2000 sq ft, all I got to say, is good luck with that.  But I'm not going to say he's being greedy, just less 'in-house'.

To us, affordability has always been the key, and we reversed engineered a product/home at different price points that attempts to match affordability and value perfectly.  Never suckered in that all bells and whistles are made the same or worth the extra cost. 

Alarm systems yes.
Low heat alarms yes.
Spray foam insulation yes.
On demand hot water heaters yes.
Simplicity and restraint yes.

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