Greens may dominate paint firms’ lists of the hottest color of the year, but neutral colors still reign for the largest buyer pool. Eighty-one percent of interior design experts recently surveyed say whites and creams are the best colors to use when selling a house in 2022, according to the Paint & Color Trends 2022 Report conducted by Fixr, a home improvement resource.
“Whites and creams make a neutral, clean, fresh backdrop for many rooms,” according to the report. “You can still include color in your textiles if you want to add personality to the space, but it can make it easier for prospective buyers to see their own furnishings in a space when looking at a white or light-colored wall.”
On the exterior of homes for sale, white is the most frequently recommended color for the second consecutive year, according to Fixr. White received 58% of the vote from designers this year. Off-white also has increased in popularity, nabbing 41% in this year’s survey.
“White and off-white can both make a home look fresh, clean, and new regardless of age,” the study says. “These colors have nearly universal appeal, helping improve the curb appeal of a home and making it more likely to sell in a timely way.”
The kitchen is the heart of the house where everyone congregated during the pandemic, and it’s still the go-to room for multiple functions—that means it keeps changing.
White still reigns but color shows up in cabinetry, appliances, and countertops.
Lighting is now in layers rather than a trio of pendants above an island.
Steam ovens are the hottest new appliance.
The kitchen became an even more significant heart of the home during the pandemic as the focal point for gathering, working, entertaining, and, of course, cooking, says Joe Fava, CEO of Fava Design Group in Miami. Now, homeowners are putting more into their kitchen space—literally. They’re buying larger refrigerators, freezers, and sinks, and second dishwashers and ovens, he says.
Homeowners are entertaining and cooking even more at home, and the price tag reflects their exuberance. Those who can afford to do so spend upwards of $100,000 on kitchen upgrades. But your clients don’t have to pay that much to get a kitchen they love. Much smaller, less costly improvements can make any kitchen more appealing. Here’s how.
Think color. Kitchen colors are changing. Although white cabinets remain the most popular choice, according to the Houzz design site, the trend is moving toward additional color and warmth to give the room more personalized, says designer Kristie Barnett of The Decorologist in Nashville. Medium green cabinetry is becoming popular, as well as dramatic quartzite countertops and backsplashes. Some reflect hues as vivid as purple, says Fava.
The use of green is part of a bigger trend dubbed “forest bathing,” which means being surrounded by natural materials and spending time among nature to calm oneself, which the Japanese call shinrin-voku. If you can’t walk in a forest, some say bringing the colors in can help destress. The nature-inspired shades and textures are turning up in unexpected places like cabinetry, appliances, and hoods, says J.T. Norman with Kitchen Magic in Nazareth, Pa. For example, Fulgor Milano’s “Sofia” professional range door color kits offer six matte and glossy hues.
Think wood. In addition to color, wood veneers are also in vogue as part of the forest bathing trend, says Fava. “Clients come to us with an interest in a warmer aesthetic of a wood veneer in anigre, an exotic wood, or sometimes a lighter wood color.” The younger generation is more interested in sustainable materials and designs than older clientele, he says. Because of the wood veneers, some cabinets no longer require hardware and depend on a touch latch to open and a button to close. But for those cabinets that use hardware, they’re showing up in a variety of metals: gold, champagne, matte black, and rubbed oil bronze. Norman is seeing more greiges or warm brown and taupe tones returning as part of this outdoor vibe.
Light in layers. With advancements in LED technology, new lighting options continue to roll out, according to kitchen designer Mick De Giulio of de Giulio Kitchen Design in Chicago. “You can now incorporate small, beautiful lights in colors that range from 2700 to 3000 Kelvin—warm to cool—and layer different effects throughout any room,” he says. In a kitchen, De Giulio likes to use lighting to outline a room’s features—floor toe kicks, cabinets, backsplashes. For more decorative purposes, he may add wall sconces or a linear fixture above a kitchen island. Recessed cans have gone out of style because they make a ceiling look cluttered.
Consider simpler but varied cabinets. Cabinetry is going in a few different directions. Some are taking cues from European-inspired design. Elmwood recently introduced a collection called “Renaissance” that offers a choice of metallic paint hues in gold, silver, copper, all inspired by the continent’s great palaces. Simpler, more modern is also in, which means less maintenance is needed, says Norman.
Architect Eddie Maestri of Maestri Studio agrees and sees fewer Shaker boxes and more taupe-gray color of the wood and other colors if the kitchen is traditional. In his own kitchen, he used brass for upper cabinet doors and black walnut for lower ones.
Cook healthier and smarter. Some homeowners consider a steam oven today’s “it” appliance choice because allows for healthy cooking. Fulgor Milano’s 30-inch model allows optimal vitamin retention and flavor and works as a steam, convection, and combi-steam cooking unit. Smart appliances that can be paired with a smartphone via download apps are also desirable among homeowners. Smart refrigerators, for example, alert homeowners when they’re low on items so groceries can be ordered. Smart ovens can be turned on via an app to preheat even when homeowners aren’t home, says Norman.
Try larger flooring tiles. Fava is using more large-format porcelain tiles in the kitchen today—as big as 30 by 60 inches instead of plank styles, which, he says, “have seen their day.” Norman also likes larger tiles but in luxury vinyl that better mimics wood. Maestri steers clear of hardwoods and prefers “statement” tile in concrete, depending on the house, he says.
Go seamless with the backsplash and countertop. The same material is being used for both areas to offer a less choppy, seamless look, says Norman. He favors quartz. Maestri likes this approach, too, or using two similar designs in quartzite, marble, or certain granites.
Double the island. One island is considered great, but now two are twice as good (if there’s room). “It’s a twin to the existing island,” says Norman, whose clients are willing to take down a wall to make it feasible. Instead of using the same island, Maestri might include a design that resembles furniture, which can also function as a barrier between a less open kitchen and adjoining living space.
Barbara Ballinger is a freelance writer and the author of several books on real estate, architecture, and remodeling, including The Kitchen Bible: Designing the Perfect Culinary Space (Images Publishing, 2014). Barbara’s most recent book is The Garden Bible: Designing Your Perfect Outdoor Space, co-authored with Michael Glassman (Images, 2015).
While strong homebuyer demand and inventory shortages will continue into 2022, the housing market is unlikely to repeat this year’s dizzying heights, in which existing-home sales reached their highest point in 15 years with an estimated 6 million sales. Slower growth in home prices, decelerating inflation, and multiple interest rate hikes by the Federal Reserve could contribute to a more normal housing market in the new year, National Association of REALTORS® Chief Economist Lawrence Yun said Wednesday during NAR’s virtual Real Estate Forecast Summit. Yun presented a consensus real estate forecast based on a survey of 20 leading economists.
For 2022, the group of experts predicts that annual median home prices will increase 5.7% and inflation will rise 4%. “Overall, survey participants believe we’ll see the housing market and broader economy normalize next year,” Yun said. In addition, Yun expects existing-home sales will decline to 5.9 million in 2022 and housing starts will increase modestly to 1.67 million as the pandemic’s supply chain backlogs subside.
Housing affordability remains a concern. Even if the market begins to settle down, affordability issues likely will continue to dampen homebuying prospects for many would-be owners. Housing affordability had already reached crisis levels before the pandemic added to the strain, said Todd M. Richardson, general deputy assistant secretary at the Department of Housing and Urban Development’s Office of Policy Development and Research.
However, the Biden administration’s Build Back Better plan offers several programs that have the potential to increase housing access for all. The bill provides $10 billion in down payment assistance for first-generation home buyers, $24 billion for housing choice voucher rental assistance, and $15 billion for the Housing Trust Fund to build and preserve over 150,000 affordable homes for low-income households. “Our programs are about unlocking possibilities,” said Richardson. “Support is needed most for housing in low- to moderate-income communities.”
Manufactured housing offers a potential source of inventory that could help ease the housing crunch. Affordable entry-level homes continue to be among the units in shortest supply, and modern manufactured housing—with its high-quality factory construction and lower per-unit cost—could help fill in some of the gaps, said Lesli Gooch, CEO of the Manufactured Housing Institute. In addition, manufactured homes could offer wealth-building opportunities for buyers. “Research by LendingTree shows that, from 2014 to 2019, the median value of manufactured homes increased by 40%—six points above site-built homes,” said Gooch.
Naa Awaa Tagoe, acting deputy director at the Division of Housing Mission and Goals at the Federal Housing Finance Agency, seconded the call for more affordable housing and shared her agency’s strategies in 2022 for increasing equitable access to homeownership and rentals. Appraisal efficiency, small-balance mortgage purchases and refinances, and low-income housing tax credits are among the division’s top priorities for 2022, said Tagoe.
Regional differences could affect the housing market. Housing prices are likely to moderate nationwide, but regional variation could occur in 2022. Overpriced areas with lower predicted population growth will experience a greater slowing of prices compared to those with higher predicted growth, said Ken H. Johnson, associate dean of graduate programs at Florida Atlantic University. “Everyone will experience moderation, but there will be differences,” he said.
Strong building starts in the suburbs could be good news for first-time buyers. Businesses are competing for workers right now, said realtor.com® Chief Economist Danielle Hale, and that means buyers could have more flexibility in choosing where they live. In contrast to Yun, who saw “hidden gem real estate markets” in the South, Hale counseled would-be buyers to look further north. “The Mountain West, pockets of the Northeast, South, and Midwest are all locations where affordability creates incentives,” said Hale.
Demographics offer insight into the future. Jessica Lautz, NAR’s vice president of behavioral insights and demographics, offered highlights from the 2021 Profile of Home Buyers and Sellers, noting several demographic trends that will continue to affect the housing market into 2022 and beyond:
Baby boomers want to age in place and will continue to hold onto their homes, contributing to the ongoing inventory shortfall.
Millennials are the largest generation of potential buyers, but they face significant headwinds, such as low inventory, high prices, and student loan debt.
A drop in the birth rate to a 100-year low could contribute to continued stagnation in the market: The birth of a child is often a motive to buy, and a child moving out is often an impetus to downsize and sell.
Commercial offers opportunities for growth. Commercial experts on the panel offered their predictions for 2022:
Multifamily: Rents will likely continue to increase, though part of that accounts for a continued correction from the declines in 2020. Rental units, like single-family homes, are in short supply, and ramping up construction could alleviate some of the strain.
Industrial: Despite a drop in cap rates, industrial will continue to thrive, with retailers leasing more warehouse space to hold inventory and manufacturers increasing production in the U.S.
Retail: Brick-and-mortar stores will attract foot traffic with innovations such as livestreaming of products, custom concierge services, and curated local offerings.
Hotels and lodging: Hotels will continue to struggle with a labor shortage that is affecting capacity. The industry needs to get out the message that hotel jobs are steady, provide good pay, and offer upward mobility.
Office: This sector is still in the middle of its recovery. The stage is set for growth in the second half of 2022, with central city cores emerging as important hubs for workers commuting from greater distances.
House hunters will likely wonder about the age and upkeep of certain big-ticket features in a home like the roof and HVAC system. But they will also likely be interested in just how move-in ready the home is. Sellers can take on some prep work to get their house move-in ready to appeal to the largest buyer pool.
HomeLight, a real estate referral company, recently interviewed real estate agents to list some of the top remodeling projects before selling a home. Some of the projects that topped their list:
1. Painting
Average project cost: $954 to $2,893 (depending on location, paint type, and labor)
Stick with neutral colors throughout, like whites, beiges, or soft grays. “It’s fine when there’s an accent wall or whatever; that’s different,” MaryBeth Harrison, a real estate professional in Dallas, told HomeLight. “But when every room’s a different color … that’s cheap to fix with paint.” More than half of real estate professionals surveyed by HomeLight said they advise sellers to paint their interiors before listing. Some of the most popular colors: Sherwin-Williams Agreeable Gray and Benjamin Moore’s Revere Pewter.
Real estate pros may be more likely to recommend this house project if the home has several different kinds of flooring throughout. A more uniform flooring look—one or two types—can be more appealing to buyers. Real estate pros say that many buyers may expect hardwood floors or premium vinyl. But not all carpeting has to go. However, many real estate pros do suggest removing any dated carpet, like those in bright colors, as well as any stained or worn carpet.
3. Brighten the kitchen
Average project cost: $382 to $1,064 (depending on equipment and labor); $2 to $20 per piece of hardware
White-colored kitchens remain the most popular. They can brighten the look of the space. “What the buyers are looking for today is white and clean—they just want clean,” Harrison told HomeLight. “It doesn’t have to be stark white. But they just want a clean palette.”
Dated kitchen cabinets can be painted by a pro for a quick fix. If the kitchen has other colors throughout, real estate pros recommend painting the walls white to try to brighten the space. Also, kitchen cabinets can get an upgrade with new hardware, such as hand pulls.
4. Replace dated countertops and appliances
Average project cost: $40 to $100 per square foot for new countertops (depending on material); $1,360 to $19,050 for appliances
Dated appliances and countertops can turn off buyers. If replacing the countertop, Harrison suggests a bright, monochromatic look, such as a gray or white countertop made of granite, marble, or quartz. Butcher block countertops could be a more cost-effective option. Harrison advises against brown or multicolored granite, which she says can date a home. She also recommends not replacing a countertop if the rest of the kitchen has not been upgraded and is dated. New countertops will look out of place.
5. Hire a professional cleaner for your bathroom
Average project cost: $70 to $85 per hour for a professional
A thorough cleaning of the bathroom can make a big difference, and often a professional cleaner can do the most thorough job. Pay attention to tile grout lines and any signs of mildew.Source: “What to Remodel Before Selling Your Home: 9 Light-Lift Projects,” HomeLight.com (Nov. 1, 2021)
Creative, custom lighting in a home is easier to achieve than ever. Light strips are an affordable way to personalize and liven up a space. Here are some popular options homeowners might consider.
App-controlled light strips have become a trendy, stylish addition to home interiors, commonly installed above or below cabinets in the kitchen, behind a TV or bar area for entertainment, around tray ceilings, mirrors, and artwork, on shelves, and even around desks and monitors. But homeowners should consider their light choices carefully to avoid clashing colors or overstimulating effects.
When it comes to brands, Philips Hue is the most popular choice. These strips can be paired with bulbs to create entertainment areas. When paired with a bridge and the Hue Sync app, they can be connected to a TV and fill the room with color that matches what is shown on the screen. They’re also the most expensive light strips—the starter kit is 80 inches long and costs $80.
Knowing what’s available in smart-home technology is a value-add for agents selling new and existing homes. Check out more articles from my Ultimate Smart Home series.
If you’re handy with soldering, you can make your own with LED strips and a compatible controller unit. But for the purposes of this article, we’re going to focus on options that can be used out of the box and bought from major retailers including Amazon.
Other popular light strips options include:
AduroSmart: 120 inches for $60 ($6/foot), they can also connect to Hue Bridge. Slyvania: 72 inches for $35 ($5.83/foot) extensions are 48 inches for $18 ($4.50/foot). Sengled: 196.8 inches (16.4 feet) for $30 ($1.83/foot). LIFX: 80 inches for $90 ($13.51/foot), extensions are 39 inches for $30 ($9.23/foot). TP Link: 79 inches for $70 ($10.64/foot), extensions are 39.6 inches for $25 ($7.57/foot). YeeLight: 78 inches for $40 ($6.15/foot). Govee: 196.8 inches for $20 ($1.22/foot). RGBGenie Power supply and controller $69. Pair with any LEDs, such as LE’s 196.8-inch strip for $13 ($1.83/foot).
Each of these options connects directly to both SmartThings and Hubitat home hubs. Sengled also has its own hub that, when used with its app, has additional modes built in, similar to Philips Hue.
Smart light strips can easily be controlled via an app on your phone, voice assistant, a Philips Hue remote, or Lutron Aurora, which is a part of the Friends of Hue program.
Some strips have more advanced options for control that require replacing switches, including the Lutron Pico remote, which can connect via a bridge to Hubitat hub, an Inovelli Red Series switch with scene control, a Brilliant Controls panel, or RGBgenie wall controller. These solutions provide great control over the light strips right at the wall, allowing anyone—including guests—to change the color, brightness, or quickly turn them on or off.
New home construction fell modestly, 1.6% in September from the prior month, but the year-to-date activity is solidly higher by 17% compared to 2020 and by 23% compared to the pre-pandemic year of 2019. More housing inventory will therefore steadily emerge. Newly constructed homes are generally larger in size and more expensive than existing homes, and not geared toward first-time buyers. Nonetheless, more supply of these homes allows trade-up buyers to make their move and in the process place their previous homes on the market. In addition to construction, more inventory will appear as the mortgage forbearance program is winding down. The current mortgage default rate of at least three months is running high at 3.5% compared to less than 1% before the pandemic. However, foreclosures have been at historic lows so far due to the forbearance support. The default rate will certainly fall as long as the economy continues to generate jobs, but the end of the federal support program inevitably means some homeowners will need to sell. This will be another source of housing inventory.
The listing count across the country is still below one year ago and near record lows. Based on increased home construction and from the ending of the mortgage forbearance program, more inventory will appear next year compared to this year.
Water is not always our friend. Sure, we drink it, swim in it, and need it to survive, but when it comes to homes, it can destroy the foundation, says home inspector Thomas Dabb of Immaculate Home Inspections in South Orange, N.J.
Water can enter a home from the exterior and interior, so buyers and homeowners need to keep their eyes open for signs of its presence—or worse—its damage.
The good news is that there are many experts available to spot and diagnose a problem and suggest the best fix. Water expert Steve Barckley with Exceptional Stone Products in Livingston, N.J., believes that homeowners should start by doing everything possible on the outside of the homes to correct problems and divert water away from a foundation.
Share these seven solutions with clients to help them minimize a foundation’s damage in various scenarios.
1. Improve grading. The slope of a property may direct water toward the base of a single-family house or multifamily dwelling rather than away. Cracks or openings in the foundation then allow it to enter, as well as through higher-level walls, the roof, and other entry points. Fix: “Be sure the grade slopes away from the house,” says Bill Coulbourne, a structural engineer whose eponymous company is near Annapolis, Md. A berm of soil or a swale with planting can prevent water from making its way to a foundation, says Cary Jozefiak, a home inspector with HomeTeam Inspection in Chicago. Caveats: This approach requires periodic maintenance to be sure the berm doesn’t erode. “It also needs to be directed so water doesn’t move toward a neighbor’s property,” Coulbourne says. Using a French drain to allow water to dissipate slowly from near the foundation into the landscape is more environmentally friendly than introducing it into the street to wash away, says Barckley. French drains also require some preventive maintenance to avoid clogging, Jozefiak says.
2. Waterproof a foundation. Keeping the foundation dry will prevent moisture from accumulating on the outside or entering inside. Fix: If wet, the best fix is to waterproof the exterior perimeter and interior walls of a basement or crawl space to prevent capillary action from building up, says New York City architect Victor Body-Lawson of Body Lawson Associates. “What we try to do is create an envelope around a building so water can’t enter through its skin, sometimes with a rain screen that drains water down and out to a storm drainage system,” he says. A sump pump will help if there’s moisture and water inside. It must drain far enough from a house, so water doesn’t recycle back inside if the property slopes or there’s an opening. Home inspector David Rose of Astute Home Inspections in Plainfield, N.J., suggests the drain be at least 5 feet from a house. A backup battery will prove useful if power fails.
3. Install gutters and downspouts. Water flowing off a roof will land near a house and possibly cause damage over time. Fix: A good line of defense is to have both gutters and downspouts installed around a home or building’s perimeter. The downspouts should extend far enough to carry away the water rather than have it sit near a foundation. Jozefiak recommends six feet away from a house. To keep gutters and downspouts functioning, they must be cleaned. How often to do so may depend on the trees near a house, Coulbourne says.
4. Keep large trees and bushes away from a house. Tree roots and other plant materials try to grow toward water, which can destabilize a structure and penetrate foundations, says Rose. Fix: If large trees already grow near a house, check that plumbing lines are free, and confirm there aren’t foundation cracks. If problems arise, the tree may need to be taken down or bushes transplanted, Body-Lawson says. Sacramento, Calif.-based landscape designer Michael Glassman suggests consulting a licensed arborist to check roots, stability, and if the tree should be removed. “The best time to remove trees is in winter when they are dormant,” Glassman says.
5. Don’t ignore diagonal cracks. Movement, temperature changes, and time may cause foundation cracks to develop. But large diagonal ones require attention from a structural engineer to avoid bigger issues. “Visual clues appear before structural inadequacies do,” says Madison, Conn.-based architect Duo Dickinson. Among the problems are moisture and salt destroying anything made of steel and non-pressure-treated wood, which may rot, Dickinson says. Fix: Cracks suggest settlement and send a red flag that something might be wrong with a foundation, says Body-Lawson. “It might have sagged but it may not deteriorate further. However, if it continues to do so, the foundation needs underpinning.” Cracks that appear in foundation walls due to settlement may be visible in a first floor’s interior, too, says Coulbourne. Hairline cracks are common, but when it’s a quarter-inch in width and V-shaped, it may indicate pressure on an exterior wall.
6. Check for significant leaks and stains, especially efflorescence in a basement. “An unfinished basement is the best basement because it’s easier to see problems,” says Rose. Fix: When a basement is finished, experts recommend looking for clues. For example, a rust color that shows through paint can be a sign of moisture, says Barckley. Efflorescence—white powder left behind from minerals in water—may also appear. Coulbourne says that mold is another indicator, most likely visible at the base of a wall where moisture accumulates. Use your nose, too, he says. “If you walk into a damp basement, you can smell that,” he says. Sometimes areas covered over need to be checked. For example, Rose may pop open ceiling tiles to examine what’s behind them.
7. Learn why interior or patio floors may slant. It could be that a house is settling, which happens over time, says Body-Lawson. “Old houses may sag a little and then stop,” he says. But if the floor or patio was level and now slants, it might be time to hire a structural engineer, says Jason Chang of Jersey Inspections in Verona, N.J. Fix: Floorboards, tiles, and carpet can be picked up, joists shimmed, and a new layer installed, says Body-Lawson. If water gets under pavers outdoors, they may need to be taken up, the pitch of the patio checked, a membrane or drainage system installed, then pavers put back, Jozefiak says.
Barbara Ballinger is a freelance writer and the author of several books on real estate, architecture, and remodeling, including The Kitchen Bible: Designing the Perfect Culinary Space (Images Publishing, 2014). Barbara’s most recent book is The Garden Bible: Designing Your Perfect Outdoor Space, co-authored with Michael Glassman (Images, 2015).Comment
With more time spent on activities in the home, flexible design is becoming increasingly important to homeowners. Also, they want to bring more outdoor elements inside. These are among the latest home trends, according to Houzz, a home design and remodeling resource. Houzz researchers identified the top emerging home design trends based on search insights from homeowners and home professionals at its site.
Here’s an overview of the five emerging trends Houzz identified in its report, 2021 Houzz Emerging Home Design Trends:
Dedicated activity spaces
Homes are being used for a greater number of activities as well as for entertainment. As such, Houzz identified growing interest for art studios, an increase of nearly 10 times over the past year, as well as home bars and wine cellars, home theaters, gyms, and offices.
The outdoors head indoors
More homeowners are seeking to tie their indoor spaces to the outside with more greenery and nature. Site searches for artificial plants and trees as well as indoor pots and planters are up significantly over the past year, according to Houzz. Also, the color green is offering that nod to nature, with a significant uptick in searches for green kitchen cabinets, bathroom tile, accent chairs, and bedrooms. One in five homeowners recently surveyed are opening up their kitchen spaces more to the outdoors, such as with slide-away panels.
Living room updates
As more people sheltered in, they gave their living rooms a refresh. Searches for living rooms are up 52% compared to a year ago. Accent pillows and home accents have seen the biggest increase, along with abstract paintings, display shelves, and slip or chair covers.
Flexible design
Homeowners are seeking flexibility in how they use their space. As such, TV armoires with pocket doors, queen-sized Murphy beds, and nesting side tables, which all can increase the uses for a room, have jumped in popularity. Swivel accent chairs and daybed sets are also being used to create flexible rooms. (Read more: Designing the Perfect Pop-Up Office)
Luxury fabrics, materials, and colors The Houzz survey identified that fabrics, materials, and colors are going “glam” with more searches for velvet, gold, and crystal.
Swimming pools in all shapes and sizes
Interest in swimming pools has surged during the pandemic. Searches for swimming pools and pool houses more than doubled in the second quarter of 2021 compared to a year earlier, according to Houzz. Homeowners are showing an interest in a variety of pool styles, shapes, and designs. For example, searches for pools with water features are up the most, as well as rectangle, lap, infinity, plunge, and geometric pools.Source: “2021 Houzz Emerging Home Design Trends Report,” Houzz (Aug. 18, 2021)Comment
With inventory still low, more home buyers look to plan B: new builds. But that, too, has become tough with land and labor growing scarcer and supply chain struggles lingering. Help clients navigate alternatives.
Material and labor shortages require longer wait times.
Prefab, spec, and pre-designed plans can help curtail long time frames.
Building codes and the property’s topography should be thoroughly assessed to avoid setbacks.
As the pandemic housing boom continues, many buyers are still losing out on homes as they go up against higher bids. Some are now seeking out land and new construction to get the home they want.
But this strategy has its own set of peccadillos, including a shortage of buildable sites, which associate real estate broker Kim Cantine, with Halter Associates Realty in Bearsville, N.Y., says is not brand-new. “My area is experiencing its fifth year of low land inventory,” she says.
Land prices have also climbed and are experiencing bidding wars, Cantine says. To cope, some home buyers look to the popular 1980s alternative of tearing down a house to build a new one, says Ben Brittingham, vice president of marketing and sales with MN Custom Homes in the Seattle area.
However, that’s not a solution either since builders, architects, and contractors are swamped with requests, and building materials and appliances are priced higher and are frequently out of stock. Those performing the work can charge more or take only jobs they prefer.
What’s a frustrated buyer to do? Real estate agents and brokers can enable them to explore all options and find a big dose of patience.
Buy a Stock Building Plan
One way to shorten the new construction process and pare costs is to go with an existing house plan, a process like buying off the shelf rather than developing a custom plan. Tim Bakke, director of publishing at The Plan Collection, a 30-year-old company that now has more than 22,000 plans in its inventory and continues to design new ones, says a predesigned plan can shave a few months off the process and cut the design cost by at least $7,000 to $8,000, depending on the complexity and cost of labor.
Though the design won’t be custom, choices are sufficiently varied in number of bedrooms and bathrooms, style of layout, number of levels, amount of outdoor space, and many other features. The exteriors are also diverse, from the popular modern farmhouse look to more traditional Tudors and Colonials. One drawback, Bakke says, is that substantial changes, such as structural walls being moved, can’t be made without incurring added costs. But if a buyer thinks they may want more space, Bakke suggests starting with a larger footprint to have square footage to manipulate.
Build Custom
Hiring an architect or builder to design a house from the ground up is a major undertaking that requires making countless decisions, such as the size of the kitchen, height of ceilings and windows, number of bedrooms and bathrooms, type of doorknob, and even width of hallways. The advantage of this route is it gives homeowners more of what they want for their budget. “They can put solar panels on the roof to lower costs and make it passive and environmentally friendly, for example,” says Los Angeles–based attorney Robin Finch, a real estate partner at Greenberg Glusker.
The downside to building custom is that the process takes typically three to six months for the design, time to secure permits and approvals, and, depending on the size of the project, 12 to 16 months for building under normal non-pandemic conditions, says architect Victor Body-Lawson of Body Lawson Associates in New York City. Costs are also generally higher: The architect often charges a design fee (4% to 10% of construction costs) and a 10% contingency fee. On top of this, materials and appliances have jumped by as much as 20% per month in the current frenzied climate, he says.
Go With a Spec Home
Buyers have another possibility—selecting a house that a builder is constructing or has finished as a stand-alone residence or perhaps as part of a development. Depending on when clients buy affects how many choices they get to make, says Brittingham. If the house is finished, they buy what the builder has selected. But if framing has just begun, they may be able to make choices in such categories as tiles, countertops, vanities, flooring, cabinets, lighting, and more. Some builders offer choices at different price levels, such as laminate at a certain cost or pricier marble at a higher cost.
One distinct advantage is that the price point may be 10% to 20% less than a custom home because of economies of scale—though this is not guaranteed due to COVID-19, says Brittingham, whose homes average $2 million to $6 million.
Think Prefab
Prefabricated home options have increased, with more companies building houses in a factory, says Sheri Koones, author of several books, including Prefabulous and Sustainable. Many of these companies are seeing great demand, including for houses to help house those experiencing homeless, she says.
Because of the building boom, the supply chain for this sector has been disrupted, too, says John Colucci of Westchester Modular Homes in Wingdale, N.Y. “We are not only paying top dollar for materials, but the lead times have created a slowdown. That being said, modular is still faster than stick building since we managed to keep our labor. We are all so busy, but some would-be customers are sitting on the sidelines,” he says.
Factors Home Buyers Should Weigh Before Proceeding
How much will a house cost? Buyers must be realistic—they should budget 15% to 20% more than they expect the house to cost, especially as COVID-19 has increased costs of materials, appliances, and labor, Bakke says. When a mortgage is needed, Bakke says, it’s wise to remind buyers to consider the rule of not spending more than 28% of their monthly gross income. Others think the percentage should be based on overall life goals, which is why consulting a financial planner is wise. New construction requires a construction or bridge loan that converts to a traditional mortgage when the house is completed.
How much square footage is needed? Figuring out size can be tough in the abstract. Some 2,500-square-foot homes, for example, seem larger than others, which often depends on the amount of hallway space, height of ceilings, windows, and light. It’s best for buyers to walk through existing homes to get an idea and list which rooms they want and dimensions. Architect and author Sarah Susanka started her “not-so-big house” movement decades ago to emphasize the importance of having every inch count and spaces do double duty, which may help cut costs.
Homeowners should also bear in mind that square footage is the single biggest driver in determining building costs, says Bakke. The cost varies widely in different parts of the country. According to 2019 U.S. Census Bureau data, the median price per square foot for a contractor-built single-family home was $114, but these days many cite higher prices of $300 to $400, and in certain cities like San Francisco and Boston they may rise to $600, says Madison, Conn.–based architect Duo Dickinson. Finishes also affect pricing.
How much detailing is included in a plan? After interviewing two or three architects or builders to design the house, home buyers should check references (like from a local American Institute of Architects list), licenses, insurance, and referrals and decide—or go with a design from a plan company. It’s critical to read the plan to be sure everything is included and in the right place, including windows, electrical outlets, roofing trusses, stairs, doors, and plumbing. A bank may need detailed construction drawings and a site plan, according to Bakke. If a buyer doesn’t understand how to read a plan, suggest they learn from sites such as The Basics: How to Read Architectural Plans.
Why is the site key? The spec house builder will have vetted the land choice, but a custom house requires a buyer find a suitable lot. Not all lots—even those that are the same size—meet that criterion. Some require trees to be removed, septic systems and power lines to be added, and soil to be tested, says Dickinson. Body-Lawson says the geological makeup should be studied because it may cost more to excavate a rocky or wetlands site, if allowed. Information about the area’s broadband capability is important, particularly as many people work from home.
A professional on the team also needs to check town rules about land records to be certain there are no outstanding liens and to know the setback limits. These days, some information can be gleaned from aerial photographs and mapping systems that a building department usually has, says Dickinson.
To curtail costs, Body-Lawson recommends that homeowners try to buy undervalued land, which may mean a site farther from town or with fewer features on buyers’ wish lists—such as a chance of forgoing mountain views. They should also avoid overbuilding for their area, since prices may not continue to rise.
Why secure multiple bids? For the actual design, the buyer should secure three bids that compare apples with apples. Bakke says any contractor or builder hired should have experience in the homeowner’s area, so they understand the topography and local building codes. Sometimes, a bank may ask a builder to complete a review application to be sure the person is licensed and insured and has a history of successfully completing projects, Bakke says.
Take Time to Draft a Detailed Contract
With so many details to consider, and so many different work crews involved in the process—including subcontractors and landscapers—it’s critical that a homeowner have contracts with all those involved, which a real estate attorney should review. Los Angeles–based attorney Robin Finch of Greenberg Glusker suggests bringing in an attorney early in the process, even before land is bought.
The contract should specify the amount of the down payment, how much to pay at specified time periods, how to handle change orders, the amount to hold back until everything on the punch list is completed satisfactorily, for what reasons a contract can be cancelled, and for how long a warranty guarantees work such as a house settling, says Ann O’Connell, an attorney and legal editor at Nolo, a legal publisher of books and software based in Berkeley, Calif.
At the same time, these tough COVID-19 times require flexibility, says architect Katy Flammia, design director of the Hudson, N.Y., office of New York City–based Spacesmith, an architecture and interior design firm. “We’re finding with construction that it’s almost impossible now to establish construction costs, which we used to keep the design within our client’s budget. What our clients could buy a year ago is different than what it costs now, and we’re seeing almost weekly price increases,” she says. Furthermore, she cautions clients to be flexible. “They may want to have a list of alternates in materials and scope, and even construction method alternates such as prefab components,” she says.
Some of the former ways that homeowners could protect themselves in their contract may no longer be included. Because of COVID-19 work delays, shutdowns, and price increases, it may be impossible to convince an architect and general contractor to agree to include financial penalties, known as liquidated or punitive damages, if someone gets sick and is off the job for a while or if prices rise higher than they expected, Finch says. So much is market driven, she adds. To resolve any potential problems on either side, it’s best if mediation can be stipulated as a recourse rather than litigation, due to lawyer and court costs and time, says O’Connell.
What About Those Rising Lumber Prices?
Lumber prices—plywood, hardwood, and softwood—have soared across the board. In fact, costs are up 130% since the start of the COVID-19 pandemic more than a year ago, adding $30,000 to the price of a new home, according to the National Association of Home Builders.
Because of the prices, as well as significant shortages, many architects, builders, and home buyers are asking two key questions: How long will the surge continue and why did it happen in the first place? Tony Uphoff, president and CEO of Thomas, which provides analysis and tools that reflect the buying process, says his company data shows a steady surge in sourcing activity for lumber over the last year.
“The situation,” he says, “has been long in the making. As a country, we have relied on Canadian forest lumber whose supply has diminished in recent years.” Part of the problem is also due to tariffs going up, which resulted in further withering demand in the U.S. due to the increased prices. As a result, Canadian mills began to shut down locations to protect themselves against lost revenue, he says, adding, “This initial step was magnified as we entered the early stage of the pandemic. Then, with many working from home, they began to evaluate their living quarters. Some sought more space, which drove a spike in residential housing prices and new construction. And many already owning a home spent more time and took on more projects.” The upshot, he explains, was “exacerbated demand on an already fragile lumber supply chain, which drove prices to an all-time high.”
And there’s more, he says. “The continued result is that some builders are pausing their work on new construction projects due to the high lumber prices. Other construction companies report that even at high prices, they are having difficulty sourcing supply through their established supply chains.”
But some good news has been emerging for several weeks. Sawmills have increased output over the last year and another increase is expected, according to Alex Hickey in her “Morning Brew” report. Most recently, prices started to fall, though what will happen over the long term is anybody’s guess. Homeowners and the professionals working on their homes are wise to keep an eye on prices and anticipate a possible seesaw effect, especially as COVID-19 numbers ramp back up.
Barbara Ballinger is a freelance writer and the author of several books on real estate, architecture, and remodeling, including The Kitchen Bible: Designing the Perfect Culinary Space (Images Publishing, 2014). Barbara’s most recent book is The Garden Bible: Designing Your Perfect Outdoor Space, co-authored with Michael Glassman (Images, 2015).
