Friday, August 17, 2018

Remodeling? Trendy is Short Term

I see many remodels happening out there. Many homeowners are flush with equity as our market has been solid for a number of years. Personally I have been taking care of some deferred maintenance on my own home. We recently painted our house which it really needed. We are also going to do some light remodeling.

I believe it is wise to be very cautious remodeling to trendy styles unless you are remodeling to sell or you tend to remodel often. Trendy is just that, a trend and trends change rapidly. The style market doesn't care how much you spent on that carpet or flooring, like all markets it is cold and unconcerned with your wallet or feelings.

If you are remodeling for the long haul, sticking to classic and timeless never hurts. The flashy color schemes and cabinet styles of today will look dated in a decade. Sometimes styles come back and sometimes they go away for ever. I don't think those 1980s parachute pants are ever coming back ;)

For those old enough to remember, the 1970s was the era of 'wall to wall' carpeting. Many homeowners carpeted over their beautiful hardwood floors to be in on the trend. Wall to wall carpet was sold in new homes as a positive feature when in reality it was a cheaper solution for the home builders. As we all know now, wood and wood laminate surfaces have been back in style for quite awhile and are likely to remain so. They also never really went out of style even in the 70s.

Think about enduring styles that never seem to go out of favor when remodeling your home for the long game. Trendy works very well for someone trying to sell, but trendy can fade away in short time. That parachute pants craze only lasted a couple of years, but everyone remembers them, for better or worse, mostly worse.

A few tips for maximum enjoyment and timeless style. Generous use of wood or wood laminate surfaces and don't skimp here. Don't use the cheap $1.29 a foot garbage. Step up to at least the $2.50/foot grade and preferably the best laminates are closer to $5/foot, the install labor is about the same for cheap laminate as it is for the good stuff. Avoid trendy wood patterns as that will look dated as well. remember the parquet floors of the eighties? Those are always in fashion on the basketball court, not so much in your home. Bamboo has been trendy but what will you think of it in 2025?Large area rugs rarely go out of style as long as they are in the classic vein.

In the kitchen white never goes out of style, especially here in the Pacific Northwest. White in the kitchen is actually coming in as trendy at the moment, but even several years ago when dark woods were the rage a white kitchen was still good. White is light and bright and most people prefer a bright kitchen.

In general light and bright is ideal in a home. An exception would be a classic 'library' style den or a movie room. Dark rooms are not inviting in any era.

Minimalism is always in fashion. Clutter is always clutter and few people want to living in a packed junk store. Having lots of 'negative' space gives the mind a chance to relax and relaxation is typically a good element of design for a home.

For the interior walls light and bright and neutral rules the day in any era. Off whites, taupe, or gray is always in fashion. Remember trendy comes and goes, but some things are always OK. In the late 1980s the rage was mauve and burgundy in the home. It was every where. But it went out of fashion and has not returned to favor some thirty years later. When I see a home with mauve and burgundy I immediately think of 80s "hair" bands like Twisted Sister and holy cow this place is dated. In all fairness the mauve and burgundy fad was a heck of a lot better than that 70s avocado and bright orange nonsense!

So in closing think about what you are trying to do. If you are remodeling with the intention of selling or remodeling again a few years, then hitting that latest fad in trendy home decorating is fine. If you are remodeling the home you intend to stay in for awhile stick to the classics and the timeless favorites because timeless is exactly that.

Friday, August 10, 2018

Kirkland Tower is Underway

After breaking ground in June and erecting a 'coffer dam' last month, Kirkland began digging a 30 foot hole in the ground this month. Over the next several weeks the crews will pour concrete into what will ultimately be a couple of levels of underground parking and other underground infrastructure for two new buildings on the Vancouver Waterfront. A tower crane should be erected shortly thereafter to aid in the construction of this exciting property.

Rendering from Kirkland website
Kirkland Tower is a 12 story residential building that will have 40 luxury condos with 1, 2, and 3 bedroom floor plans. The tower will be erected immediately adjacent to the new Indigo Hotel which will be an 8 story open atrium structure. The Kirkland condo owners will have access to some of the hotel's amenities and that is a unique arrangement here in America's Vancouver. 

Although Kirkland Tower is far from the tallest building planned at the waterfront, it is the tallest one so far under construction. The 12 story Timberhouse project has not broken ground yet. I wrote an article a few weeks back, about the potential value opportunity to buy a condo downtown as these new condo units start coming online over the next few years. Even waterfront properties further upstream such as the units in Columbia Shores may be vacated to take up residency in the new Waterfront Project.

11th Floor View, Kirkland website
Kirkland's website has renderings and other tidbits about the development including a view shot from every floor in three directions. This view is listed as the North View from the 11th floor. This viewpoint will offer a cosmopolitan view of downtown and even Mount St. Helens.


Although I don't see a glut of condos coming so long as the economy continues to chug along at a healthy clip. New jobs and higher pay will lead to real estate mobility and that leads to the move-up market enjoying success.

Rendering from Kirkland website
The waterfront properties such as Columbia Shores has always been hard to get as there are few units right on the water. The massive Vancouver USA Waterfront will add units to the list. Those looking for both an urban experience and a waterfront experience can do it all on the new waterfront. 

Although these condos at Kirkland are likely to be very expensive, other projects in this massive $1.5 billion development will be priced a little more in reach of upper middle class earners. Condos already built in developments such as Vancouver Center, may become available and some of those units are well priced especially in Vancouver Center 3 which overlooks Esther Short Park.

Things are looking up here in America's Vancouver and the real estate market is moving with a roar, particularly with these high density projects underway. 

Friday, August 3, 2018

Why Price per Square Foot Rarely Matters in Residential Real Estate.

So often I hear clients talking about the price per square foot on a residential listing. I even hear real estate agents talking that up. Why is this house $200/sf and this other one is 180/sf? Sometimes people are adamant about not paying more than "x" per square foot. My friends, in residential real estate, the price per square foot rarely matters as a comparative value. There are way too many other variables that affect the value of a residential property. Any property actually, but in residential there is a broad range of variables. The only time that price per square foot can really be comparative is if all other variables are identical or near identical.

For example to use the cliché of apples and oranges why is this Apple priced at 1.48 per lb and this Orange is .99 per lb? Why is a Red Delicious $2.99 per lb. and a Granny Smith is $1.99 per lb. Apparently Red Delicious Apples are in higher demand!

Well friends the only time this price per foot stat really matters is when you have two houses in the same neighborhood, same floor plan, same condition, same upgrades, hell, right next to each other in fact. Then if one is priced at a higher amount, you have to ask, why?

I think price per square foot is the most abused statistic in residential real estate. Ranch homes are always going to have a higher price per square foot. Small homes in expensive gated communities will have a higher P/SF than a large spacious home in a run down neighborhood. A brand new home will cost more per foot than an old house. Homes on acreage will often cost more because the land value is higher.

One simply cannot make any prudent decision based on price per square foot unless all these other variables match. Since that almost never happens, then we have to look at those other variables. In the end what really matters for a person buying a home that they intend to live in, is this: Do you like the house? Does it do what you need it to do? Can you afford it? If you answer yes to these, then you're done, pull the trigger and write it up!

Don't get caught up in price per square foot. I sold a 720 sf house last year for $255k all cash. It was nicely remodeled but nothing over the top. That is $354/sf. I sold a 4200 sf mansion with a breathtaking view of the Columbia River for 750k around the same time. That was only $179/sf and the house was decked to the nines with top grade trim, marble, soaring ceilings, the whole bit. Why such a dramatic difference. Simple, lots of variables. There is a massive demand for smaller affordable homes. Far more buyers than sellers. In the high end the opposite is true. Furthermore, there is a bit of the economy of scale when building a large house. Neighborhood plays a role as well but when comparing a very large house to a very small house you cross one of the rare times that location is not the number one variable. Demand is the number one variable here. When comparing similar homes across neighborhoods, location resumes its role as the primary variable driving values.

A 2000 sf home on a 10k lot next to a railroad yard might fetch $150/sf and the exact same house a few miles away in a nice neighborhood with a view might fetch $225/sf. Do not let the price per foot trap keep you from getting the right house. Understand that smaller one level homes will almost always have high per foot costs and larger homes on a small lot will have lower per foot costs. Here is a simplified example of why this is the case. Let's take a lot in a neighborhood that is 8,000 sf and fully ready to build. The city says the builder can put any house between 1200-2400 square feet, one or two levels. The following is an oversimplified hypothetical scenario:

The lot is 100k and the development costs (underground infrastructure, city required appurtenances, fees, permits, etc) are 35k. The builder is into this deal 135k before the first nail is hammered. The physical structure cost will vary depending on size and design dynamics. The landscaping and other costs will be more or less the same regardless, lets say 10k. So the hard costs fixed are 145k. Lets say the 1200 foot ranch costs 100k to build. That puts the net cost before marketing and other post build expenses at $245k Let's say the builder budgets 15% for marketing and other costs of sale (real estate commissions, taxes, staff, ads, etc). That makes the total cost of goods about $282k. Let's say builder makes a 10% profit. That makes the 1200 foot ranch home $309k. Now the same scenario with a larger and slightly more expensive 2400 sf two story trimmed out the same might cost 165k to build. Now the builder has a total cost of goods at 360k and a sales price at $395k. The cost per square foot on the ranch is $258/sf where as the equally built and trimmed 2400 foot home is only $165/sf.

There are many costs that are more or less fixed regardless of what type of house is put on the lot so the larger house is less expensive to build on a per/foot basis. The builder however makes only $28k profit on the little house where as he makes $36k on the larger house. The builder has a finite amount of land with which to build so he wants to maximize profit and thus larger homes become more profitable despite having a lower cost per square foot. The lack of new small homes puts even more pressure on the resale market for small homes and that is why you might find a 1940s 720 sf house at $354/sf.