Pulling the Plug

After a few more attempts to find a financially sound way to get our house built we have decided to put things on permanent hold.

The biggest issue all along has been the gap between the cost to build the home versus the appraised value. Even after several rounds of redesign to cut costs we could not get the design to be within $100k of the the appraised value. We had problems at both ends of the gap. The appraisals were lower than reasonable (in our opinion) because there were so few single-family home sales in the area so most of the comps were in much less desirable areas outside of Germantown. But we were also trying to build something that was at a higher quality standard than any of the infill construction even in Germantown. Even though we were not planning to resell the house any time soon, it still didn't make sense to us to buy something that was immediately valued at $130k less than our purchase price.

Of course it didn't help that the real estate market collapsed during all of this planning. At the same time that our appraisals going down we also had the banks requiring a much larger deposit in order to get financing, even when banks were willing to discuss financing new construction.

There were other problems along the way. One issue was that the pre-fab factory that was planning to build our modules closed up due to the crash of the home-building industry. We tried to get the Hive design constructed as a site-built home but we ran into a quagmire of problems with trying to sort out logistics once the home was no longer a turnkey product that we were purchasing from Hive.

Right now it appears that we are making the right decision at least from an economic standpoint. We are now renting a nearby loft that is larger than our planned home and much nicer but our rent is much lower than our mortgage would have been had we built the house. And just in the past month or two we have seen much bigger drops in the neighborhood real estate prices as more developers try to move unsold inventory and more flippers try to unload vacant homes.

We still own the land and it is not a real great time to sell real estate so we will hang onto it and see if market conditions change for the better. But I am not optimistic. The clowns in Washington are doing exactly the wrong things to actually improve the economy.

On Again?

Looks like things are tentatively moving forward. A minor redesign, a few cost reductions, and a possibility of financing means that the stars may align for us soon. One good thing about trying to build during a bad real estate market is that everybody gets much more cooperative. We should know within a few weeks if it will work this time around.

Patience

Time to sit and wait. Even with all of the construction activity and the apparently strong market for townhomes, lofts and flats there have been no recent home sales in the Germantown neighborhood. There are few houses on the market now that should sell for prices that would allow our appraiser to get the comparable sales that we need in order to get our house accurately appraised. Until that happens we will just keep the grass mowed and hope that the city does not place any more restrictions on what we can build on our lot.

Disconnect

I thought it would just be a formality, but now the bank has appraised our planned house for much, much less than it will cost us to build it. The low appraisal was blamed on the lack of single family comps in the neighborhood. Most of the recent construction and sales have been condos and townhomes. Many of these townhomes have even been much more expensive than our planned home, but that does us no good for appraisal comps.
Now it is time to rethink the game plan. Do we shop around for a more willing lender with a more sympathetic appraisal (probably not too smart) or do we somehow find a way to cut our construction cost by over a third so that the budget will be within the current appraisal?
As much as I would like to forge ahead with the current plan we are getting a clear message from our bank that this house on that lot at that price is not a good investment.

Almost There

We have been sorting out some details on the house before we actually sign the contract and start construction. It looks like we are getting to the end of this part of the process. All of the lighting and plumbing fixtures have been selected. Floors, cabinets and railings are finalized. Now we are just waiting for the bank to sign off on an appraisal so that they will give us the loan. The we will be in business.

One minor glitch with the windows. The house was originally designed for Pella Architect Series windows. We decided to save some money by switching to the ProLine series when they came out with a black framed version. Unfortunately we just found out that not all of the sizes that were originally specified are available in the ProLine series. A few adjustments are being made to the elevations. Hopefully it will be very minor.

Here is a cool video of another Hive Modular home being set. If all goes well we will be setting ours in just a couple of months.

Flooring Options

We have the flooring choices narrowed down to 2 finalists: bamboo and ash. They both have their good points.


The bamboo is really tough and installs easily. The color is fairly uniform so it should look good with all of our modern stuff.



The ash should come in close to the same price but will make for a dustier install. Nice thing is that the floor will be smooth after the finishing without those little grooves that separate the prefinished boards on the bamboo. We can also stain it to get the color we want.

More Landscaping Ideas

Another Rosenlof|Lucas design at a Hive house in Minneapolis. Our front yard is much smaller than this, but I really like how the landscape design works with the geometric style of the house.