When was the last time your company built a house that you could afford to own? For many custom builders, it is not an idle question. Not because custom building pays poorly, but because the custom home market has shifted upward. Across the country the high end just keeps getting higher, with architects and builders producing houses at sizes and costs that sometimes even they can’t quite believe. And while the ceiling of the custom home market seems to have lifted clean off, the floor also has been quietly rising. Land is ever more expensive and harder to find. Production builders have stepped up the competition, both for buildable lots and for clients. In some areas, the time and expense of the permitting process have become prohibitive for those building anything less than a housing development or a mega-house. As a result, those traditional mainstays of the custom building business, the merely well off, increasingly find themselves priced out of a new custom home.
Or perhaps they just think they are. Partly to blame is what we might call “the myth of underbuilding.” When land cost rises, the scope and cost of improvements tend to rise accordingly. A $250,000 structure on a $200,000 lot may provide exactly what a client needs in a house, a neighborhood, and a budget, but the combination seems to violate an unwritten code. Why? Americans appear generally to want all the house they can afford, and more. But fear plays a part, too. Underbuilding a lot or neighborhood, clients are given to believe, is an investment error they will rue at resale time. Potomac, Md., builder Guy Semmes witnessed this theory in practice when one of his clients aimed below what has become the standard spec for the neighborhood. “When the bank saw them putting in Formica and less-than-ambitious sanitary fixtures,” Semmes says, “it balked.” Semmes went ahead and built the house as designed, but only after the owner found a more open-minded lender.
San Diego architect Taal Safdie tells her clients to ignore simplistic property-to-improvements formulas, which cannot factor in the beauty, build quality, or functionality of a house. And none have regretted building to their own standards rather than to those of an imagined future home buyer. “Some of our clients who have built houses most particular to their lifestyle, and took that risk, have done best,” she says.
It might seem strange for any business to urge its customers to spend less, but architects and custom builders do it all the time. Safdie says her favorite type of project is the kind “that’s making you use your imagination to make the money go the farthest.” Wisconsin builder Dave Wallin speaks for the many custom builders who prefer projects that are beautifully designed but modest in scope. “I’m not interested in building mansions,” he says. “Personally, I like small homes. That’s the way to go, for me. Make them comfortable and nice and cozy. That’s what keeps me interested in the business.” Wallin works in a rural area that is only now beginning to feel development pressure—and a corresponding rise in land prices—from nearby Minneapolis. But custom builders and architects in red-hot markets, too, take special pride in projects that make the most of limited resources.
Landing such projects and bringing them in on budget requires a different approach from the houses many custom home professionals have become accustomed to. The first task is to persuade clients with production-house budgets that they can afford a custom home and that the results will be worth the extra effort. Delivering on that promise requires higher per-square-foot levels of attention from the architect, input and flexibility from the builder, and self-discipline from the owner.
“You have to be very linear, especially when you’re building small,” says Belfast, Maine, architect Dominic Mercadante. That means looking for savings a bit at a time, in every phase of the project. “It’s really making choices incrementally. There’s usually nothing you can remove that’s going to take $4,000 out of the budget.” Mercadante’s high-end clients come with “a bigger list of carved-in-stone wants: I want this sink, this range, this faucet set for the powder room.” Tighter budgets require that owners prioritize their wish list. Mercadante likes to concentrate his clients’money in the things they will see—or touch—the most. “You decide where the eye wants to rest and you make that a feature,” he says. “Anything that’s tactile, that you as an owner are going to touch, is not somewhere to save money.” For door hardware and frequently used items like the kitchen faucet, “You want something that’s going to feel solid in the hand.” The result is a mixed spec—combining luxury materials with more everyday stuff—that can be more appealing than a monolithic application of even the costliest products and materials.
Balancing priorities in this way depends on nailing down choices early in the process. To clients shopping for plumbing fixtures or ceramic tile, contract allowances can feel restrictive and arbitrary. It is all too easy to blow the budget piecemeal on a series of seemingly insignificant upgrades. Putting all the product selections on the table at once allows owners to make informed tradeoffs, accepting, say, linoleum in the guest bath and plainer lighting fixtures if doing so gets them a granite counter in the kitchen. It is here, says San Diego builder Ken Miner, that an experienced builder can provide an essential reality check. For architects, he says, “It’s easy to get caught up [in the design process], and before you know it, [the owners] can’t afford it. I think it could make a significant impact if you brought someone in early.” Miner admits, “It takes a lot of trust to just open up your checkbook to a contractor and say, ‘Go for it.’” But in projects that call for creative cost savings it may be a wiser course of action than putting plans out to bid, as architects who have worked with Miner have learned. “If they’re detailing something that’s expensive or hard to accomplish,” he says, “often I can alter the process and get the same look [for less].”
As in nearly every aspect of custom building, the client holds the key, and those who value square footage above all else will opt for a less intensive approach. “There is a large segment of the new-home market that just wants to say, ‘I want the A model,’” says Silver Spring, Md., custom builder Kelly Vogan. Making that one big trade-off—ceding control over design and, perhaps, location in exchange for predictability and a long list of features—surely saves time and effort. The custom route demands a longer attention span, greater flexibility, and the discipline necessary to balance a long series of smaller trade-offs. But the returns on that added investment of time and energy are substantial and can continue to accrue for generations. And while the market sometimes seems to have drifted off into the stratosphere, the case for such a house remains as strong for owners at the lower end of the custom spectrum as for those at the top. Architects and custom builders owe it to their clients, and to themselves, to make that case.
Field Study
Heightened Interest
Family Plan
Classic Case
Tree House
