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Highlights From This Year's Bala Awards

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | April 4th, 2014

Every year after the judges for the annual Best in American Living Awards (BALA) complete their work, they outline what they see as the latest trends in residential design.

BALA recognizes the best that builders have to offer -- in all types of houses, from single-family to mixed use, multifamily to remodels -- and in all price points, from the most expensive custom homes to far more reasonable condominiums and apartments, in all parts of the country.

It's a tough contest to win. But the builders, architects and previous winners who make up the jury of their peers have a reasonably easy time reaching a consensus. After all, the best work always rises to the top.

Competitions like this are important because production builders are mostly followers who tend to imitate the industry's few true leaders. So today's standout design trends are often incorporated into the mainstream. Not immediately perhaps, but certainly by the time old models are tossed aside and new ones are introduced.

"The BALA winners always redefine excellence in the homebuilding business," said Victor Mirontschuk, the New York architect who chaired the latest contest.

In that regard, housing is a lot like high fashion, in that what the judges liked this fall is likely to be what homebuyers see next spring.

So, without further ado, here are the latest trends -- some new and others timeless.

-- Kitchen features. This room tops buyers' priority lists, year-in and year-out. Last year, mega-islands were popular, offering areas not just to prep a meal but also to socialize at a bar-top setting. This year, as in previous years, Carrara marble countertops, cooking hearths and intricate light fixtures were prevalent.

White on white also is big. "We're back to white everything," said one judge. Flooring, backsplashes, counters and appliances are lightening up, and layering white on white is a new approach. So are shiny-surfaced appliances, backsplashes, countertops and glass walls.

-- Specialty lighting. Lighting offers a great opportunity to add texture and color to any room. Natural lighting is paramount, but on top of that, specialty fixtures help set the mood. They can also add drama, highlighting design aspects such as a tray ceiling, and are often works of art in their own right.

Lighting is also being paired with wood ceiling details to further enhance the room's design and create a feeling of warmth.

"It used be an afterthought," said one judge. "But people need more lighting, a lot more of it. And it is being used more creatively."

-- Bathrooms. Baths this year are becoming more compact while maintaining an open feel. To do so, the best designs are eliminating walls, adding transparent glass enclosures and reducing the amount of unused floor space between fixtures.

At the same time, dual master baths seem to be the rage, even in smaller spaces. They are glamorous yet entirely functional, clean and simple. Often, they have a shared shower.

-- Bold exteriors. Bold colors can now be found outside, further enhancing curb appeal. Other features, such as a mix of cladding materials, doors, windows, porches, shutters or trim, add an extra layer of drama.

Color, finish, fixtures and lighting are also being used to give houses a more modern flair while still maintaining their historic integrity.

-- High-quality detailing. Regardless of a home's size, owners expect detail that speaks to the home's architecture. But these elements must be of appropriate scale and in relative proportion to the overall design. Otherwise, they detract rather than add.

-- Ceilings. With material and design choices, ceiling treatments can change a room's feel. Color, for example, can add warmth or excitement, while tray ceilings, barrel vaults and coffers add depth and texture.

When there are fewer walls, ceiling treatments are a good way to define living spaces.

-- Outside in. In a trend no longer limited to warmer climates, lines between the interior and exterior are even more blurred. Movable glass walls, gourmet outdoor kitchens and interior courtyards all add more everyday living space.

-- Courtyards. Here, the proper scale is key. But for single-family houses, they provide privacy and, when shifted to side yards, add to living space. In multifamily properties, interior courtyards are used to showcase such amenities as pools and firepits.

-- Multitasking. Not so much this year, but in previous contests, flexible floor space with multiple master suites -- one on the first floor, or as an apartment or cottage on the property -- were popular. Universal design elements that make life easier for live-in grandparents, or for the owners as they age, were also popular.

"We saw those everywhere," said one judge.

As in previous events, specialty rooms were part of many winning entries. Even in the most modest houses, there was some sort of outdoor fire feature so the patio could be used year-round in most places.

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Financing High-Performance Housing

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 28th, 2014

Research continues to show that while homebuyers prefer environmentally friendly houses, they don't want to pay extra for the features that turn the typical home into an efficient one.

One option, the so-called energy efficient mortgage, has failed miserably at allowing buyers to finance the cost of energy-related improvements. Although the loans have been on the books for decades, few lenders offer them because they are just too cumbersome to originate.

Thus, buyers of today's high-performance houses have had to either come up with thousands of dollars in cash to pay for the energy extras they crave -- geothermal heat pumps, perhaps, or triple low-emissive windows -- or pass on them.

In short, they've been punished rather than rewarded for wanting to go green.

But now a Salt Lake City-based lender believes it has finally cracked the code when it comes to lending on energy-efficient houses.

The SecurityNational Mortgage Company, which has 77 branches across the country, has come up with a method for recognizing the value of energy improvements such as solar panels and rainwater runoff collection systems. It is positioning itself as the nation's premiere green lender.

In partnership with Green Energy Money (GEM) of Austin, Texas, SecurityNational is set to launch a massive high-performance pilot program with a goal of funding 10,000 energy-efficient homes by the end of next year. The partners are currently seeking builders in California, Illinois, Arizona, Colorado and Maryland to participate in the effort.

The lender has funded some $20 million in sustainable construction since the last part of 2013, and has $200 million more in the pipeline, says Teresa Lopez, a 25-year mortgage business veteran who spearheads SecurityNational's green lending program.

"We're not interested in doing one deal here and there," says Lopez. "We want to prove the marketability of our process and get all the systems and standards in place so we can go national. Our belief is that there is a lot of pent-up demand."

Lopez says she has spent the last 15 years trying to figure out how buyers can show how the present and future value of what they will save every month in energy costs justifies the higher price they have to pay at closing.

Over that time, Lopez has made herself into a recognized authority in the often gray area of green financing. She has developed new financial mechanisms, loan products and valuation methods designed to meet the growing need for financing sustainable upgrades.

The "key to the kingdom," as she calls it, is in the appraised value. Even today, when more and more builders are able to produce houses that cost little or nothing to operate -- and sometimes generate excess energy that can be sold back to the utility -- appraisers have been slow to identify the value that energy improvements add to a property's overall worth, now and in the future.

Appraisals have always been "the biggest roadblock," say Lopez and others in the green building movement. But GEM, a company Lopez built as part of her quest to find the Holy Grail of green financing, facilitates the process with an appraisal that recognizes and quantifies the value of features such as solar heating and water, geothermal heat, rainwater harvesting, energy-efficient building materials and electric vehicle stations.

According to Lopez, GEM's proprietary green appraisal rating system standardizes the connection between the popular Home Energy Rating System (known as the HERS index) and 18 energy-rating systems and building codes. The result captures the monetized value that lenders require to back high-performance construction -- or even remodels.

In layman's terms, Lopez says that "GEM has developed a method for green appraisals that support the valuation process. Our process facilitates a green appraisal that maximizes the value of your investment. It makes it possible for appraisers to fully recognize the lower maintenance costs and reduced operating expenses of an energy-efficient home."

Under the GEM system, builders will be able to submit measures and costs for green upgrades, absorb the capital outlays necessary to purchase and install the upgrades and then get their money back in higher prices that can be justified by a green appraisal.

For their part, appraisers will receive consistent, certified building audits that include the relationship of the upgrades to utility reduction, as well as building performance data and predicted energy costs. And homebuyers will find a more streamlined loan process.

"We hope our methodology will be quickly adopted and standardized nationally," says Lopez. "Many appraisers just don't know how to quantify or analyze high-performance building."

Only time will tell whether GEM will achieve critical mass. The goal of 10,000 houses seems to be a long shot. But the company is busy training appraisers and developing an accredited continuing education curriculum for the profession.

Until change works its way through the system, here's what you can do now to get an appraiser to recognize the value of your energy improvements:

-- Data. Give the appraiser the supporting information he needs -- cost and estimated energy savings -- to justify a higher appraisal. List the energy improvements by make and model number, and if possible, provide a before-and-after scenario of projected savings for a 12-month period.

-- Rating. Obtain a HERS rating for your home. There are other acceptable ratings systems -- LEED, for example -- but HERS is the nationally recognized method for inspecting and calculating a home's energy performance.

-- Credentials. Be sure the appraiser has the skills and experience to judge green construction. If the appraiser is not green-educated, says Lopez, you have the right to ask for another.

-- Builder. Pick a builder who is trained and certified in high-performance building.

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What's in a Name? Everything

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 21st, 2014

A rose by any other name may smell as sweet. But would the Highlands of Olney sell as well if it were peddled as Barry's Neglect? Or Shepherd's Misfortune?

Probably not. And therein lies the reason most builders think naming their subdivisions ranks up there in importance with high-quality construction. They also find the chore to be a traumatic event that one builder once compared to "trying to name your firstborn."

Now there's a bit of science that shows just how much a couple of key words can add to the typical developer's bottom line. Not just any two words like "valley" or "mews," but the old standbys "country" and "country club."

According to a study by two researchers at the University of Georgia, homebuyers pay an average of 4.2 percent more when the development has the word "country" in the name. And if it has the term "country club" as part of its name, buyers will pay 5.2 percent on top of that.

That's a total of almost 10 percent more that people are willing to pay for the prestige associated with the term "country club."

A joke? Hardly. The study, the results of which were published in the Journal of Real Estate Research, is a serious investigation of sales in the Baton Rouge, La., area over 15 years. It carefully controlled for such variables as location, number of bedrooms and bathrooms, and days on the market, among others.

"This is the first study to find through empirical research that buyers are willing to pay more for certain property names, with all other attributes of a house being equal," the paper said. "In fact, buyers of more expensive houses may be willing to pay more for a name that conveys prestige than they are willing to pay for a good school for their children."

No wonder, then, that the naming process is often a psychodrama, with builders and their marketing teams becoming more hung up over what they will call their communities than they are over the copy for a $10,000, full-page ad in the local newspaper.

But there is no tried-and-true naming method. The Fifield Cos. took an interesting approach in naming K2, its new 34-story apartment tower in downtown Chicago. K2, in Asia, is one of the tallest mountains on Earth. The Chicago building, while certainly not the tallest in the city, will have "the highest level of amenities, architecture and finishes," the developer says.

K2 is also one of the most difficult peaks in the world to climb -- it has the second-highest fatality rate -- and the building was one of the most challenging financing deals the developer had ever put together. It took a consortium of five commercial banks to fund the project.

Less imaginative builders resort to the old standards -- station, park, commons, woods, village, farms, hunt, square and gardens. Some look to history for a name, while others use location or a characteristic of the property. A few pick a name that immortalizes themselves or their loved ones.

Reston, one of the country's original "new towns" in Virginia, takes its name from the initials of its founder, Robert E. Simon, as in "RES-town." The Irene, an apartment building in Chevy Chase, Md., was built by Abe Pollin, who went on to own Washington's professional basketball and hockey teams. Pollin named the building after his bride. The nearby Elizabeth also was named for its builder's wife. Glad he didn't use the more familiar form of her name, though. Somehow, "I live at the Betsy" doesn't sound nearly as chic.

Then there are the guys who -- no kidding -- have named one project after their wives and the next after their girlfriends.

Simplicity often rules the naming process. But sometimes the simplest name doesn't work. For example, a place that was originally called Crimson Oaks had to change its name to Crimson Oak when it was discovered there was only a single oak on the property. Hey, the tract wasn't exactly wild with foliage in the first place. But Orchard Pond never did have a pond.

Speaking of change, one builder changed the name of his northern Virginia project several times while his marketing materials were at the printer. It went from Chip 'N Dale to Valley View Estates to Heritage Valley.

Name changes sometimes do wonders for a project. While named Andrews Manor, a town-house community near Andrews Air Force Base in suburban Maryland was a slow seller. But as Canterbury Court, which it later became, it really took off. The builder's ad agency swore the name was the only change.

Other times, though, nothing works. Levitt and Sons was wildly successful with its Levittowns in New Jersey and Pennsylvania, but a project in Maryland had four names in five years. According to the company, each name corresponded with a different section of the project, but truth be told, the company couldn't sell its upscale houses at that location and kept changing the name to boost sales.

Of course, a community's name should meet certain criteria. One is that it should be easy to pronounce, which is where a New England-bred developer who prided himself on building authentic colonial houses went wrong. For one of his projects he picked the name Falmouth, which is pronounced "fall muth" in Massachusetts. But locally, the community became known as "foul mouth."

The name of a community also should be able to stand the test of time by remaining descriptive as the place ages and matures. Thousand Oaks failed that test early on. There may have been 1,000 oaks at the site before the builder broke ground. But after he completed the project, the number of trees left standing -- not just oaks, but trees -- could be counted on one hand.

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