Category Archives: Construction Costs and Financing

The Costs of Remodeling these days: a Grab Bag of Info!

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We’ve had many calls over recent months asking what things are costing these days. So we thought we’d just put some information out there for general knowledge!

Costs of building a new home can run from $140/sq ft. for a bare bones, not-much-in-the-way-of-finishes simple structure; to $200 for something a little more interesting; to $300 for a house with nice finishes (think stone counters, built-ins, nice tile)…the likes of which you see in our portfolio.

For remodeling, we prefer not to use square foot costs, as these numbers are subject to the kinds of spaces as well as the overall square footage. Costs per square foot can be lower if averaging over a greater area of work. So we prefer to do our rough pricing by space. Here’s a range:

Kitchens: $60- 80k for a small to mid-sized total remodel including new sheetrock and lighting.

Baths: $25 – 40k depending on the size and how many fixtures.

Living areas/bedrooms/non-plumbed spaces: if new windows and trim, and perhaps refinishing floors, and some new lighting: this cost might be between $10 – 30k /room.

Finishing an unfinished basement: figure on about $130 – 150/sf. This would include insulating the walls, a bathroom, windows.

Additions: for the shell, (i.e. not including the kitchen inside it!) plan on about $150/sf.

These are very rough numbers to plan your budget with. Other costs must be considered:

Tax on construction (9.5%)

Design fees (we bill hourly for architectural services) and permit fees.

Large appliances (owners get the best pricing when they buy their package of appliances from a dealer)

And other elements of the construction that might impact the house: siding patching and painting, hardscaping/landscaping etc.

Hopefully this will give you some idea of the costs involved. It’s expensive, but every single one of our clients has told us that when all was said and done, their remodel was totally worth the cost and effort, and has enriched their lives.  It’s a thrill to hear, and why we love what we do!

CONSTRUCTION METHODOLOGY & COSTS CONTROLS

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People have asked us what are we doing differently in the recession?  Our biggest change is in reducing costs by controlling costs.  From initial design through move in, cost often is foremost in our clients’ minds, therefore we have changed the way we build to reduce costs. Many clients come to us because as both architects & contractors, we can design more closely to a client’s budget than most.  We have found we can also stretch this budget by managing the construction process a little differently.  Where previously our in-house crews did all the construction work except for certain highly specialized work, we now subcontract much of the work while still providing close management of time and quality.  The subcontracting provides good cost control because these tradespeople are expert at one thing, such as framing — that’s all they do!  But an all around carpenter can not be the fastest (thus least expensive) at everything, such as framing and finish carpentry and demolition, etc.  So we now often subcontract these phases of the work.  How much we can subcontract depends on how the project is designed.  We try not to let the cost controls dictate the design, because it’s the design our clients will be living with day after day, year after year, but costs do affect design, just not control design.  We work to find the right balance from the beginning and still create great spaces to live!

Good Design Proves Its Value!

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Unfortunately one of our clients had to sell their house and they were concerned that in this recession they would get far less than its real value. However, that was not the case – read their note below!

 “A selling point to future customers could be that despite the depressed market, our house sold the day it was listed. Our agents were quite relieved since they thought it might have been overpriced because of some fire sales in the neighborhood but felt base on the style and quality of the finishes we should list it at the full price we received. The sale of the house has helped reestablish the market in the area.”

Square foot costs – new construction vs remodeling

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We had an inquiry recently:

“As a homeowner trying to make some very important decisions about what to do with our housing situation, we just feel so lost and overwhelmed at the same time. Many of our decisions have to do with costs and what we can afford.

We are considering a remodel of our house, but, we are also looking into the possibility of building a new house. Is there a difference in the cost (per sq/ft) between the two options?”

Our answer:

“This is a seemingly straightforward question, but unfortunately, the answer is not so straightforward. In remodeling versus new construction, a sq.ft. to sq.ft. comparison doesn’t really work and there are numerous reasons for this. When we have clients faced with similar situations, we work with them to determine what is best for them.

In a remodel for instance, some areas will have higher costs since they will be more affected, while some areas have lesser costs. And there’s the axiom that kitchens cost more than bedrooms. So a square foot price for a remodel will have different values for different work, depending on what is being remodeled.

Sometimes with an existing property, it may be best to have some remodeling and then an addition or two. If there’s an addition involved, that’s another pricing.

The size of the addition or remodel will affect its price too, as there is an economy of scale — more work costs less per square foot. The quality of the finishes will also affect the price — for example, granite costs more than plastic laminate, clear fir trim costs more than painted trim, etc.

When building new, a new house, sometimes one can not build on the same “footprint” as the old structure because zoning laws have changed and now they will get less space than what they expected, or they will have to set back further from the view or property line. Or perhaps it’s an environmentally sensitive area and new construction is limited.

There are many things that affect such decisions, whether to build new or remodel, and many things that affect the overall cost. A simple square foot price where one size fits all can be quite misleading.”

Energy Tax Credits for Building and Remodeling

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The American Recovery and Reinvestment Act has created energy tax credits, which are different than tax deductions in that they apply directly to reduce taxes. The broad categories for these credits are: Building Envelope, HVAC systems and Renewable Energy.

“Building Envelope” refers to items such as roofing and insulation, windows and doors. The credit for these items is 30% of the cost of the product, excluding labor, with a maximum of $1,500 for all improvements combined.

HVAC Systems cover wood stoves and water heaters along with traditional HVAC systems. You can receive a 30% credit of the total cost of the materials and labor under this umbrella with a maximum of $1,500.

Under the “Renewable Energy” umbrella, there are many avenues where you can take advantage of the substantial energy credits in this arena. This covers items such as photovoltaics (solar electric panels), wind energy, fuel cells, solar water heaters and geothermal heat pumps. These credits act differently than the two stated above as you receive a 30% tax credit of the total cost of the items, which includes the cost of the product and labor, with no maximum; any unused credit may carry over to future tax years!

The architecture of our new home project on Camano Island (www.ctabuilds.com/camano.html) utilizes large South facing glazing to take advantage of solar gain, utilizes a geothermal heat pump and is additionally prepped for future photovoltaic arrays on a specially designed flat roof section.

For more information on these energy tax credits, please visit: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Life in a Construction Office’s “Back Office”

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One thing you have to love when you work in a general contractor’s office is paperwork! It’s at every turn of every day and it’s all to protect our clients and get it right!

Entering a simple payable invoice to a Subcontractor that provided cabinets to one of our jobs includes two sets of paperwork and two people to check over the invoice for accuracy of what was ordered versus what was delivered and how that works with the budget that was allowed for the purchase.

Although we have the most up-to-date accounting software, it’s these double-checks and excess of paperwork that we sift through every day that our clients never see, but benefit in the end. It’s always the goal of the office to work in the background of our jobs, to ensure accuracy in the billings that our clients receive on a monthly basis and help with the flow of information from the office to the field, and ultimately, to our customers.

It’s really a great and unique view into the construction process that I receive by working in a construction and architectural office. Through invoices, billings and payroll, I get to see the progression of our client’s project come to fruition through a different set of eyes than our clients see and that our carpenters see.

The best part of all of this paperwork and system of double-checks is communicating with our clients and ultimately, being able to stop by the jobsite and see what our great team of carpenters and architects have designed and built! It’s one thing to see an order of cabinets on a payable invoice, and an entirely different thing to see them set into place in a beautifully efficient and functional kitchen.

Ways to Get Your Remodeling or New Construction Project Built and Save Money

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Although prices have come down in the recession, many of our incomes have too. So I thought it might be interesting to mention how you can save some money in a remodeling or building project and the ramifications of that. In a nutshell, here are my thoughts on this process. In another blog, if there’s interest, I’ll talk about each item in more detail.

Here’s a review of our experience as both architects and contractors in the Seattle area, where we are a design build firm. There are several ways to construct your project, whether it is a remodel, addition, or new house — once you have plans and permits, of course:

1) Build it yourself — this is the most fun and least expensive, but takes a lot of time of course, plus patience and skill; if you don’t have the skill, you can always hire a good carpenter to work along side of you and teach you — this is terrific — it’s really a lot of fun and satisfying to do this — and it’s good excercise! You can hire your friends to help (we could even coach)! Often the building inspectors are more helpful than not when an owner-builder is in charge. Your only worry is making sure no one gets hurt, because you could be liable (someone getting hurt includes visitors to the site).
2) Be your own contractor — this is the most reasonable for many people, but still you need to have time and patience; however, you can expect to save 30% or more on the cost of a project; the biggest hurtle is finding the right (meaning competent, honest, efficient, and dependable) subcontractors to do the work; again, it would be helpful if you had an ace carpenter to lead the effort, and you still have to concern yourself that you and the subcontractors have insurance in case someone gets hurt, whether a worker or a visitor.
3) Hire a construction manager — here you are hiring someone to manage the process, to oversee the builders, and to a greater or lesser degree (depending on your arrangement) they will find, hire, and manage the vendors and subcontractors. You can pay them hourly or any other arrangement you might make. They are like a building contractor but don’t take the responsiblities. Again, you want to make sure you’re covered if someone should get hurt.
3) Hire a general contractor — this is the easiest and usually the safest route, although it can be difficult if you have not done your homework in choosing the right contractor. This involves more than just getting prices, such as checking with the architects and owners of past projects for competency, timeliness, neatness, and dependability, along with verifying the licensing & bonding history of the particular contractor. A good contractor is worth a lot, and goes a long way to ensuring a well built project that will be what the architect had in mind, and will last years and years.

Now having said all that, let me emphasize the importance of having design drawings and permits in hand! Starting construction without having thought through all the design and construction details ahead of time is a sure recipe for delay and frustration. Unless you are familiar with local building codes, permit requirements and building practices, it is advisable to at least hire a design professional to prepare design and construction documents to obtain the building permits you need and outline the building basics. Of course, you will also benefit by this person’s expertise in design: an experienced architect or designer will bring valuable insight on the overall project — well worth the cost!

Building Costs & the Recession

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I think this a good time to build or remodel as prices are the lowest we’ve seen in the 20 or so years we’ve been here doing Design Build in Seattle!

We’ve been told by our largest lumber supplier that construction material costs are at 1986 levels! Well, I don’t know about that, but I do know that for lumber we are paying 30% less than last year and about 40% less than 1-1/2 years ago! Further, we are getting some of the lowest estimates from our subcontractors we’ve ever seen. And then there are tax credits – credits for energy saving materials such as insulation, doors & windows, upgraded heating/cooling systems, etc. And really interestingly, you can get a 30% federal tax credit for renewable energy installations, such as solar electric (photovoltaic) or small wind turbine systems. Add to this that the state has authorized utilities to buy back your excess generated power at rates higher than they charge, and you can pay for your system sooner than later. These incentives, coupled with ridiculously low interest rates (we’ve seen clients obtain financing at 3.75% and 4.25% for their projects or refinances), make this a incredibly good time to build or remodel and save money.

For me anyway, putting money into my home is one investment that I can always enjoy because I live with it every day. It doesn’t go away like some other investments have!

Shall I buy a new home or remodel?

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Or maybe I should tear it down and start fresh?

A process to help decide…

When your home is too small for you, or no longer suits your needs or wants, or you know it needs some work, most people think about whether it’s best to remodel, put on an addition, or buy a new home. It is often the first question to come to mind. And it’s a good question too, because remodeling is not cheap, and when one compares the costs of a major remodel and how much you may have spent purchasing your home, sometimes it can cost as much or more to remodel than it did if you purchased the home ‘way back when’!

Initially, to answer this question, one must understand the feasibility and costs of remodeling or adding on, i.e. what are the potentials of the house? What are the costs of the necessary re-construction? If the house’s location is good, and the potential to reconfigure it can produce something wonderful, something that meets your needs and wants, and the added cost is equivalent or less than buying another house (which you must consider may need work itself!), then it certainly makes sense to remodel or add on to what you have instead of buying that other house.So a formula to keep your house and fix it: your house + work is equal or less to new house + work.

The challenge here is to figure out if the new work to your house will get you what you want. Often homeowners are in the position of not being able to see the ‘forest through the trees’.This means that homeowners are often so close to the problem that they can’t clearly see the options; or, they may see so many options they can’t decide on how to proceed.

Ideally one would approach this as any other problem: lay out the issues, brainstorm on the problem, and then come to a solution. In building and design this works by:

  1. measuring and drawing the floor plan(s) of the house on the site (all to scale);
  2. researching the zoning codes to see how these might limit or enable what you might propose to do;
  3. understand the structure of your building and how it affects what you can reasonably do;
  4. re-work the floor plan(s) to get what you want – ideally, you will come up with several options;
  5. understand what these reworked plans will look like from the outside; and
  6. finally, take this work to a reliable contractor who can rough price it and talk to you about construction feasibility.

If you get stuck in this process, which can certainly happen when you’re trying to do everything yourself, a professional designer can help guide you through it; and in fact should be able to come up with options and prices much more quickly because their experience and expertise. This means that they might be able to see potentials you don’t see, and will more intuitively and quickly understand the ramifications and costs of making changes. This is no different than going to a lawyer to help you with your will: if it’s easy, you can do it yourself; if it’s more complicated, you are far better off with an attorney at your side.

However you may choose to go through the process, once you have this information in some sort of tidy package, i.e. when you know what you can do and how much it might cost, along with how long it will take, you can then go back into the market place to see what’s available to purchase and how that compares to your old house all fixed up! Now you’re finally in a position to make an informed decision.