Comment of the Day: The High Cost of Building Small

COMMENT OF THE DAY: THE HIGH COST OF BUILDING SMALL “As a homeowner in the Heights I agree that scale is a factor in new construction but I would like to point out one important financial reality. It is next to impossible to finance the new construction of a smaller home. Given that the average lot costs $250,000 and the average cost to build new is another $135 per square foot, a new 1200 sf “Bungalow” will set you back $412,000 plus. You are now sitting in a new bungalow with a total cost of $343 per square foot. The average appraised value of homes in the Heights is around $200 – $225 per square foot. Banks will not finance this project unless you make up the difference in cash, so your looking at bringing $162,000 to the closing table plus a 20% down payment. Hopefully the HAHC realizes this reality and continues to allow larger homes to be built. There has to be a happy medium square footage wise. It is also important to point out that it is not cheap to do a major renovation to an existing bungalow. If you want to redo the plumbing, electrical, insulation, sheet rock etc you soon find yourself spending more for the renovation than you would spend on a new home. Many of the “remodels” are simply saving the studs and the sub floor, I don’t see the value in such a “preservation”. And once again, the banks simply will not finance a project that is not in line with the local comps.” [chester, commenting on Big Changes for Houston’s Preservation Ordinance? Mayor Parker Wants a Temporary Ban on Those 90-Day Exemptions]

7 Comment

  • I hear you.
    This is why individual homeowners (with vision but not a bottomless cash-pool) move out of town. Houston has made it too expensive to “homestead,” so to speak: To own a place, build, create & improve upon it as one’s means allow.

  • You don’t have to go larger to keep your price per square foot in line. The other, more common option, when regulations don’t intervene, is to cut back on the land per unit, holding dwelling size the same (i.e. densify). Enter the townhouse.

    That sais, historic preservation is a worthwhile public undertaking, but how you do it is critically important: preservation should be done on a building-by-building basis, not on a district basis. If it’s contributing preserve it, if it’s not let it reflect the tastes, styles, and spirit of the era in which it was redeveloped or rehabbed. A diversity of housing types, styles, and dates of construction are what make makes many a historic areas unique and interesting. Small scale individualistic organic change is key. Everything looking the same, being made to conform, being “in harmony”; that’s not preservation, that’s a tract suburb. In this sense, historic districts destroy the spirit of the place they try to preserve: it’s as if people want historic areas to become like the suburbs they fled, just with a cutesy facade. Better to preserve both the spirit of the place and its bricks and mortar by focusing on strengthening regulatory efforts on contributing resources only.

  • I agree that saving the subfloor (if the house even had a subfloor; most bungalows do not) and studs is not at all a “renovation” or “preservation.” Somewhere along the line, the fact that you are supposed to keep the facade of the home got lost.

    What I don’t like about this quote is that it perpetuates a common misconception about the condition of older homes in the Heights. There is a belief that all homes in the Heights need new “plumbing, electrical, insulation, sheet rock etc” and this is not true at all. The majority of the homes in the Heights have been consistently lived in for the last 80+ years and over this time have had many updates. Sure, many aren’t as fashionable as new (and wealthier) owners may want but all the really need is new countertops and cabinet fronts.

    Many of these smaller homes were purchased in the last decade by young professionals, who lived in the 2/1 or 2/2 floor plans, renovating as they went and eventually adding on when they had kids or wanted a home office. These houses are on the market and can be purchased and lived in with no work needed.

    I think the discussion shouldn’t always have to revolve around how much work it takes to live in a bungalow. It’s a myth.

    As far as the HCAC’s plan- about time “no means no.” This doesn’t mean condemned buildings are going to be left standing and there will be no new development. It means some of Houston’s history will be out of the hands of the profit-at-all-costs builders. In most other cities, property values in protected districts are higher than other parts of the city and the Heights will not be an exception. If we keep losing old and building new at the current pace, it’s going to be foolish to keep calling it “The Historic Heights” and then it’s nothing but another West U.

  • I’ve renovated three homes in Montrose since 1994. All were renovations that cost the same as the purchase price of the house. I found great local lenders that understood what I was doing. The key was finding an appraiser who knew the area and understood how the improvements would work with the specific property.

  • You need to find a better builder. $135/sq.ft is STOOOOOPID high.

    You could line a 1,200 bungalow out for $80-$90/sqft.

  • Finally, someone that understands a key component to the ongoing argument over land use in the Heights- ECONOMICS. Most people have no idea what a big deal (in terms of time and money) it is to do an “in code” renovation that meets current buyer needs in terms of design and finishes. The same goes for new constuction. The $135/ft estimate should be considered light for the quality expected by most of today’s buyers. No respectable builder would build in the Heights for $80-90/ft! Chester’s comments speak directly to the issue of high density construction. If we have to build out 5000-6600 lots with small houses- no one but $MMairs will be able to afford (and qualify for loans) to live in the Heights- and people with money don’t want small houses! This justaposition of people with money (who are used to getting what they want) is what’s killing “have-not” protesters. It will be interesting to see how this plays out in the current political and economic climate.

  • JJ,

    I would argue that Tricon Homes, if they are not the number one builder in terms of number of units in the Heights, they are definitely in the top two. Since the 90′s they’ve built over a hundred units a year, with the majority of them located in the Heights. If you think their construction costs even sniff $100/sqft, you simply do not know what you are talking about. I sell land for a living to top builders in town, and work for a home building company that builds from the $150′s to $1.8M. A $1.8M house in Memorial will average $120/sq.ft in direct costs for construction. Are you trying to say that it costs more per square foot to build a bungalow with siding in the Heights than it does a brick/stone mansion in Memorial or River Oaks?? If so, again….go find a better builder cause you’re getting ripped off.