Remodeling or Building? The Time May Be Now.

Owners,

It might not be a newsflash, but the construction industry is slow, and the Wall Street Journal points out that you might be able to get more for your renovation or construction dollar now.

The article includes some good tips for saving money on your renovation or build. While most of these ideas will save you money in any market, the current climate may yield especially low prices and high values:

1. Get multiple bids
2. Don't select on price alone, check with the Better Business Bureau and references, and be wary of bids that are "too low."
3. Confirm that the builder has experience with your project type, i.e. compared to new construction, renovation is a different animal
4. Ask for a discount, but be prepared for a "no"
5. Apply for available tax credits, especially for energy efficient improvements

Be aware that the biggest hurdle your project will face in the current economy is financing. Determining a realistic budget upfront is paramount.

Despite the slowdown, the best designers and builders may not be discounting prices much or at all. This does not mean you are not getting a value from them at this time; think: exceptional quality and attention. During the boom, a firm might have tackled a dozen (or more) jobs at once, but now they may only have a couple. This means, when you call or ask questions, you will be heard.

If you are unsure of the steps you need to take, the best place to start might be to speak to an architect or designer. Their network and connections should help you navigate your project successfully.

For more information on available Energy Efficient Tax Credits: click here.

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Andrew C. Wilson is an architect licensed in Illinois and New York, a LEED accredited professional, and principal of [1016] Architecture in Chicago.

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Combining Architecture and Real Estate Services

Finding and Renovating a Dream Home: A Case Study

About six months ago, while in the middle of a search for a new Chicago home, a (then potential) client approached [1016] Architecture principal Josh Canale, concerned about the quality of service he was experiencing from his buyer's agent.

Josh offered some house hunting tips from an architect's perspective, such as these and these, and the client nodded and said thanks.

Apparently, frustration continued to mount, because after several weeks, the client contacted [1016] again, this time for real help. The services and advantages that this client experienced with us en route to a dream home show the value of [1016]'s full service model, including:

• Representation in the buying process by [1016] Principal Josh Canale, a licensed real estate agent with Chicago architecture, building code, and zoning ordinance expertise
  
• Full market data research support via our collaboration with Jameson Real Estate
  
• On site design collaborations allowing the client to envision what each potential property could become, rather than being bogged down by what it was
• Increased leverage at the negotiating table due to full knowledge of code and zoning issued of desired improvements
  
• Multiple offer negotiation assistance
  
• Closing administration and assistance
  
• Documentation and measurement of existing conditions of purchased real estate
  
• Execution of design and permit drawings including client design review packages, sign offs, and professional certifications
  
• Acquisition and expedition of required building permits via City Hall
  
• Recommendation of multiple, qualified General Contractors for the renovation work
  
• Pricing evaluation and negotiation with various contractors, ensuring maximum value for the rehab expenses
• Potential discounted building supplies via [1016]'s trade relationships with well-known suppliers resulting in further savings
  
• Construction observation service to help make sure the design is executed correctly
  

In short, we helped the client obtain a "not-quite-perfect" condo in a great location at a great price, then, with the vision for the property already discussed, assisted with the execution of the renovations to make it exactly what the client wanted. This particular property wasn't in need of as much work as a Chicago fixer-upper or foreclosure, but we can help with those, too.

For this busy client, the continuity of a single point-of-contact and combined [1016] real estate/architecture expertise provided value in addition to straight discounts via negotiation and trade pricing. [1016]'s interest in the overall success of the project, including quality, budget, and schedule, did not end at the closing table like a typical real estate agent: we serve our clients to the end of construction.

For private clients and potential real estate investors, [1016] is more than just another architecture company, and Josh Canale is more than a typical real estate agent. Better service on both fronts comes by combining expertise.

Even if you don't require of all of the services in this case study, you can benefit by contacting [1016] Architecture to discuss your project, or fill out our contact form.

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Chicago Home Prices: A Moody Crystal Ball

Want to look into the future of home prices in Chicago? From Forbes.com

"Moody's Economy.com provided Forbes with a housing price forecast for the country's 40 largest metropolitan statistical areas (or metros)--geographic entities defined by the U.S. Office of Management and Budget for use in collecting statistics. The forecast predicts the percent change in home prices over one year, three years and five years, using data from the S&P/Case-Shiller Home Price Index. In the MSAs for which Case Schiller does not publish numbers, Moody's used a weighted average of metropolitan divisions within those areas.

Chicago, IL

Percentage Change:

1 Year, 2009: -16.31%

3 Year, 2009-2012: 1.49%

5 Year, 2009-2014: 14%"

Full Forbes story: click here.

So, on a metro area level, this calculation estimates that it will take five years for median home prices to get back to January 1, 2009 levels. Doesn't really sound exciting, but this is a macro indicator. Obviously, each property needs to be considered independently within this context. If you are in the market, your buyer's agent should be able to help you determine this. Check out this article with our Top Five Tips for selecting a buyers agent, if you aren't working with one already.

Price vs. Value
More importantly than price, however, is value. In other words: is any given purchase a good deal? or: Is the Chicago market still overheated?

Inside the Brackets believes the best way to understand housing market value is relative to median income (HP/MI ratio). This ratio tracks the comparison of housing prices in a given area to how much people typically earn there. Each area has a historical norm, and some are more stable than others. Especially when compared with other large metro areas, Chicago's historic ratio has been relatively consistent, with little volatility.

According to the New York Times, Chicago's historic norm for housing costs around 2.0 times median income. As of April 2009, this ratio sat at 2.5 according to this Interactive graph. The exact numbers are of relatively minor importance, the true meaning of the stat is the ratio.

What does this mean?
With an HP/MI at 2.5 in April, this meant housing prices would have to fall about 25% to get back to historic value levels (assuming negliegable income growth). If prices "only" fall the Moody's projected 16% this year, it means housing (in aggregate) still will not be as affordable as it usually is in Chicago.

So, even though Moody's projects a market price bottom in the next 12-24 months, value indicators like HP/MI may still indicate that prices are a little high historically. This only serves to reinforce the importance of evaluating the individual property and opportunity it presents within the market. In other words, even though prices are down, you can't just pick a house at random and get a great deal (a/k/a value).

What can you do?
During times like this, people who make careful purchases will come out ahead in the long-term. People who make careful purchases, as well as careful improvements to a property, will come out well ahead.

1. Get a buyer's agent who knows your market to help you determine a home's real value.
   
2. Invest wisely in properties where you can add value via appropriate improvements.
3. Keep in mind that even though it's a buyers' market, it's still not like shooting fish in a barrel.
   

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Architecture and Real Estate

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On the River 2009

Last month, [1016] Architecture was one of many great sponsors of On the River 2009 in South Bend, Indiana. The event was a huge party thrown on a riverfront urban lot which was converted into a beach by 18 truck loads of sand. This year, over 3,000 people attended, and all proceeds benefitted the South Bend Center for the Homeless.

Check out some of Matt Cashore's photos of the festivities and consider attending this great event next year.

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New [1016] Website

The newly redesigned [1016] Architecture website was launched today.

Check it out: [1016] Architecture

The new site was built around the following four goals:

1. Make it easier for all visitors to understand the client types we serve
2. Make it easier for potential clients to discover if we have services that fit their needs
3. Stress the value of integrated real estate and architectural services
4. Facilitate simple, free consultations and project inquiries

Let us know how we did. Comment below or send us an email.

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