Cost of Ownership – Total Monthly Housing Costs

Cost of Ownership – Total Monthly Housing Costs

Principal + Interest + Taxes + Insurance (PITI) – that’s been the standard way of defining monthly housing cost and often been a factor in determining how large of a monthly mortgage payment you can afford. Today’s historically low mortgage interest rates in many areas have made purchasing a new entry-level home on par with renting:

Example PITI Housing Costs

(Click on image to enlarge.)

Of course, a higher initial down payment reduces the Principal + Interest portion, and if you are fortunate enough to have 20% of the purchase price available for a down payment, you can finance the home through a conventional mortgage, at an even better interest rate, and with no mortgage insurance premium. You can’t do much about your Taxes (sigh). But your choices can certainly impact your homeowner’s Insurance costs. New construction homes are often rated differently and are less expensive to insure because they are less likely to have issues and claims.

Likewise, because the roof is new, it is usually rated more favorably reducing your premium. Impact-resistant roofing products can further reduce insurance costs in hailstorm-prone markets. If it adds $6 per month to your mortgage payment to upgrade to impact resistant shingles, but having those shingles saves you $200 per year on your insurance, that’s a win! Fire and security alarm systems can save you money on insurance premiums, with deeper discounts if they are monitored by a third-party.

Photo: Atlas Roofing – Class 4 Impact Rated StormMaster® Shake Style Shingles

Sample Shingles
Still PITI is incomplete without “U” – Utilities should be factored in to provide a truer picture of your total monthly housing costs. It may be possible that spending extra money up front on energy-efficient construction nets you lower monthly housing costs. Assuming 5% mortgage interest rates, spending $8,000 more for energy efficient upgrades adds about $55 to the monthly mortgage payment. If those energy saving measures are projected to save that much or more on your utility bills, spending a little more now for energy efficiency can be one of your best investments. And with energy costs likely to rise in the future, that investment performance will only get better!

Built to the current energy code in effect for your location, most new homes today are more energy efficient than resale homes. Still, the energy code is the minimum; high-performance building products and systems can dramatically cut your energy usage. While there is no single “best way” to achieve an energy-efficient home, many approaches deliver outstanding results and may provide other benefits as well.

Building systems. Insulated Concrete Forms (ICF) are commonly made of two “skins” of insulating foam, stacked in place, and filled with concrete and reinforced steel. The resulting 9- to 11-inch thick exterior walls deliver superb energy performance as well as creating an extremely strong home, which is better able to withstand natural disasters. Design Basics offers more than 125 home plans for ICF construction. Structural Insulated Panels (SIP) are typically made from two “skins” of OSB or plywood that sandwich a thick slab of insulating foam. SIPs can be used for roofs as well as exterior walls to create highly energy-efficient homes, which are also stronger and safer than most traditionally built homes. Design Basics currently offers 50 plans for SIP building. Please note that Design Basics can adapt any of our home designs for ICF or SIP construction.

While the elevation remains the same, the exterior walls on the floor plan (below) appear thicker on an ICF plan. Varying from 9 – 11-inches thick, ICF exterior walls are 5 to 7 inches thicker than the 2 x 4-inch exterior walls of the typical home.

Cotter - #42031 ICF

Example ICF construction.

ICF Installation
High-performance insulation. It costs a lot to keep your home cool in the summer, so the goal is to keep as much of that conditioned air inside your home as possible. High-performance insulation seeks to 1) eliminate air leaks, and 2) slow the transfer of outdoor temperatures through your walls. There are numerous approaches and products available to accomplish this, at different price points. Talk with your builder, as she or he may have a preferred solution. Similarly, better energy-rated windows and doors may be part of your solution.

HVAC systems. You may pay a lot of attention to the efficiency rating of traditional furnaces and air conditioner SEER ratings; or, a heat pump may be a more efficient choice. Yet often overlooked is the fact that a surprisingly high amount of conditioned air can leak out of your home’s ductwork, so ask your builder or HVAC contractor about the steps taken to seal the ductwork. Also, if your home will be built with one of the building systems or high-performance insulation, the heating and cooling equipment needs to be sized appropriately. A rule of thumb such as, “one ton of air conditioning for every 500 square feet,” may work in determining the size of air conditioner for other new homes in your area, but may be too much for a tight, energy efficient home, causing your system to cycle on and off quickly and inefficiently. Even the ductwork should be sized differently for a high-performance home. An alternative, geothermal heating and cooling is very energy efficient, taking advantage of the earth’s relatively constant ground temperature below the frost line to keep your home comfortable.

PITIU. It is rooted in a number, but it means so much more! You can’t measure the worth of added protection for your family and cherished belongings provided by alarm systems, or the environmental impact of roof shingles that don’t end up in a landfill after hail. And that energy-efficient home? Your home’s lower energy use will keep tons of greenhouse gas emissions out of our atmosphere every year.

Looking at total monthly housing costs and investing a little more up front can give you improved cash flow, a better home, and bragging rights!

Next time: Replacement and Maintenance Costs

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Design Affects Cost – Value Engineering

Design Affects Cost – Value Engineering

Surging lumber prices have added an estimated $14,000 to the typical new home in just the last four months according to the National Association of Home Builders. While builders can do little about fluctuating materials costs, value-engineering the home – balancing livability and style with functional aspects and cost – helps with affordability. Yet many aspects of value engineering aren’t obvious​ or readily recognized. For example, roofing contractors typically charge more for more complex or steeper roofs.

The one-story Calverton (plan #8530), at right, was designed with 8:12 roof pitches, primarily for aesthetics. Reducing the roof pitch to 6:12 would likely reduce the cost of the home, but also make it appear smaller. 

Calverton - #8530 roof pitches
Foundations. A simple foundation with minimal corners saves money. Not only is your foundation contractor going to charge more for every corner, those same jogs often incur additional material expenses in terms of siding, roofing, and waste as well as labor costs for trimming out the additional corners. As compared with the original Tollefson (plan #6731), at left, the added 78 square feet of living space offered in the Tollefson II (plan #42152), at right, is very inexpensive.
Tollefson - #6731BL
Tollefson II - #42152

The Cedar Hill (plan #42435) has a straightforward foundation. It also takes advantage of cost savings afforded by using readily available, standard building materials. For example, all windows (except transoms) are the same size. Joining two windows together, as in the front Suite 2 and Bedroom 3 saves money by only cutting and trimming around one opening in the wall. (The windows were split in Suite 1 to provide a second bed headboard wall option.) All interior passage doors are 32” wide (except for the double doors into Suite 2). Though the Great Room will probably continue with the same flooring as the kitchen and eating area, if carpet were chosen, a single 15-foot wide roll would eliminate seaming labor and cut-off waste.

Cedar Hill - #42435
Cedar Hill - #42435
Structural Materials. Traditional dimensional lumber floor joists can be considerably less expensive than either I-joist or truss floor systems but can’t achieve the same span lengths. And many items covered in previous posts in this series such as designing to minimize costly structural members, materials used, and ceiling details are common areas to address in value engineering. Furthermore, your preferences such as having a simple rectangular island as opposed to an angled island; a flush snack bar rather than a raised island bar; or selecting a single wall oven plus range rather than double wall ovens all address affordability. When your plans call for a value-engineered approach, look to our plans for solutions that don’t compromise on aesthetics and marketability!

Look for our next blog post series as we explore other topics that affect your cost of home ownership!

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Tailoring Solutions for You – Design Basics’ Concierge Service

Tailoring Solutions for You – Design Basics’ Concierge Service

Adding new home plans to your portfolio is risky. Will the design attract buyers? How much will that home cost to build?

Design Basics’ Concierge Service is designed to help you minimize such risks. We know what is selling in terms of home design. Based on your goals (e.g., affordability); restrictions (e.g., 40-foot maximum building widths); and target market or specific customer needs (e.g. multi-generational households); we can recommend popular home designs that improve your odds of success.

After discussing what you are looking for in a home design, we’ll research our entire library of home plans to recommend top designs that meet your needs, saving you time! While it is easy for everyone to search home designs on our website, with heightened knowledge of our plans and search methodologies, our plan specialists often identify ideal home designs that may otherwise be missed or overlooked. In addition, we may recognize that a certain plan, with minor modifications, might be exactly what you are looking for.

What is the value of working with a plan specialist? You may have the requisite accounting knowledge and software, but you work with a CPA. You might be tech-savvy, but you hire a website design company. Residential design is a similar specialty. Is that neat amenity a fad, or destined to become a “must-have”? Was the home value-engineered, helping with your budget concerns? Our plan specialists are your home design consultants, tailoring recommendations and solutions based on your situation and needs.

Upon request, we can even review your existing design portfolio to identify gaps and opportunities we feel could be better addressed through design to help you sell more homes. Over 60 million Americans live in multi-generational households. Which of your home designs address this market’s needs? You have four one-story homes, which account for half of your sales, yet they all have “snout” garages and the writing is on the wall – several new neighborhoods are requiring flush or recessed garages.

Kickstart Your Neighborhood℠

Design Basics is a builder-oriented home plan design firm. With our Kickstart Program, you can get up to five sets of construction drawings for estimating purposes per year for just $100 each, including the corresponding elevation and floorplan presentation artwork for marketing. You will also enjoy plan and product discounts, FREE upgrades, and more!

Neighborhood in a Box®

Our Neighborhood in a Box Program can save you 50% when buying four or more home plans! Choose from pre-configured neighborhoods or build your own when you choose from over 1,300 designs.

Builder Plan Sets

A great floor plan with multiple elevations. Create a cohesive look for your neighborhood with builder plan sets at a discounted price.

Multi-Elevation Plan Set

Sample Builder Plan Set (#42376)

In addition, our home plans can be licensed for construction on a single-build or unlimited-build basis. Your plan specialist will be happy to discuss ways to get the most for your home design investment. Contact us today about our individually-tailored Concierge Service: 800.947.7526

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Design Affects Cost – Size Matters!

Design Affects Cost – Size Matters!

It may seem obvious that the larger the home, the more it will cost. But there are other factors that affect the cost.

Single-story vs. Two-story. Single-story homes typically cost more than two-story homes of the same square footage. The Bonham (plan #42239), below left, and the Moss Bluff (plan #43013), below right, are about the same size in terms of square feet. Both have relatively economical gable roofs and the same size two-car, front-entry garages. But the Bonham has a more expansive, costlier roof than the efficiently stacked Moss Bluff plan.

Bonham - #42239
Moss Bluff - #43013

The Bonham also has a much larger, more expensive foundation with considerably more steel if building on a basement. And being 16 feet wider and 26 feet deeper, the Bonham (below left) will require a larger, more expensive home site on which to build than the Moss Bluff (below right).

Bonham - #42239
Moss Bluff - #43066

Split-Entry Design. Generally focused more on affordability, split-entry designs can be the least expensive to build. For the Dane Mills (plan #35084), costs are reduced because the garage occupies what would have been much of the basement.

Dane Mills - #35084
Dane Mills - #35084
Dane Mills - #35084

Multi-level and 1-1/2-Story Designs. Similarly, many multi-level and 1-1/2-story plans offer good affordability. The Tillamook (plan #43038) has the garage and family room at ground level, so when building on a basement, it’s like a split entry – you go up a half flight of stairs to the kitchen/dining/bedroom suite, or down a half flight of stairs to the basement, which is under that portion of the home. Positioned above the garage, the secondary bedrooms and bath are less costly to build as in a two-story home.

Tillamook - #43038
Tillamook - #43038
Tillamook - #43038

Join us next time as we look at the cost savings achieved through value engineering.

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Cover Image: Cherry Gables – plan #42441

Beauty is Within

Beauty is Within

Aesthetics and Livability

Let’s look at a few of the sometimes overlooked or underappreciated floor plan design factors that drive cost.

Staircase - Grand Manor #9286Staircase design, construction, and materials run the gamut of pricing. One guideline often used relates to the staircase’s public visibility – the more prominent the staircase placement, the more attention it usually gets. In some homes, the staircase is a signature design element; in others it is primarily functional. Simple and straight is the least costly staircase design, but that layout doesn’t work for some home designs. U-shaped staircases and L-shaped staircases with a 90-degree turn are also common but require a landing, which adds some cost. Flared and curving staircases can be stunning but are expensive.

This elegant staircase (at right) is from the Grand Manor (plan #9286).

Staircase finish materials can have a large impact on the staircase cost. Having a wall on either side of the staircase is less expensive than a railing with balusters, cables, or glass panels. Carpeted stairs are usually less expensive than finished woods, Corian, stone, or glass. Regarding steps leading down to a basement foundation, if there is a door at the top of those stairs, they need not be carpeted.

Stair Carpeting

“Waterfall” carpeted steps are less expensive than “cap and band” carpeted steps.

Ceilings. Most new homes today feature 9-foot tall ceilings on the main floor, though some rooms may have even higher ceiling for dramatic effect. Those 9-foot ceilings make rooms appear and feel larger, but the longer framing lumber and larger sheets of drywall mean homes with 9-foot or taller ceilings will cost more than if they were built with 8-foot tall ceilings. Detailed ceilings (e.g., boxed, trayed) look great, but add expense as well. And even though cathedral ceilings may follow the home’s actual rooflines, they are considerably more expensive than standard, flat ceilings.

Ceilings are truly special in the Westcott Manor (plan #9171). There’s the Family room’s cathedral ceiling as well as cathedral ceilings over the tub in the suite bath and over the sink area in the compartmented bathroom shared by Bedrooms 2 and 3. Bedroom 3 also has a ceiling that slopes to 11-feet high in the center, as does the suite’s tray ceiling. 

Westcott Manor - #9171

Natural Light. The physical and mental virtues of our exposure to natural light are well-documented, but there’s a cost to having larger or more windows in our homes. You may notice that some Design Basics’ home designs have the suffix “BL” (Better Living) following the plan number. Looking carefully, you’ll see additional windows on those home plans. Take the Cavanaugh plan for example. The BL version of that plan shows added windows in several rooms. Importantly, those windows are on other exterior walls, providing natural light from another direction, which is especially appreciated if the only windows in that room faced north. Additionally, having windows on two separate walls allows for natural cross ventilation of those spaces, improving the flow of fresh air in your home and those breezes make it feel cooler on warm days, so you may not feel the need for turning on the air conditioner.

At left, the Cavanaugh (plan #8540), and the Cavanaugh BL version (plan #8540BL) at right. Notice on the BL version the added windows on the right side (eating area and den), plus an additional window in the Suite bedroom.

Upstairs, both bedrooms gain windows on the outside walls in the BL version of the plan. There’s even a window to brighten the optional expansion area in the BL design!

Cavanaugh - #8540
Cavanaugh - #8540
Cavanaugh BL - #8540BL
Cavanaugh BL - #8540BL
First impressions matter.

The Durango (plan #50020 below left) impresses, with its dramatic, curving, window-lined back wall and radius peninsula kitchen. It also costs as much to build as the larger Durango Point (plan #50043 below right) that provides a more spacious eating area.

Durango - #50020
Durango Point - #50043

Arches and columns can add distinction – and cost. As seen in the Murnane Manor (plan #42156), arched openings line the home’s front entry, with arches on either side of the formal dining room resting atop columns. Echoing that theme, arched recesses for a hutch space and display niche add further “Wow!” It’s a matter of your investment priorities, the look you’re after, your budget, and how you want your home to live.

Murnane Manor - #42156

Rear Entry Foyer. For homes with attached garages, we go in and out of our homes through the garage over 90% of the time, and that rear foyer entry has become a design focal point. Facilitating how people actually live in their homes, top rear foyer designs will provide a place for coats, a bench for tying or removing shoes, and a drop zone for organization and minimizing clutter. These must-have amenities do add to your home’s price, however, compared to dated home plans where a laundry/mudroom is your entry from the garage. Laundry rooms are a top priority among new home buyers, they just need to be elsewhere. Those laundry rooms are also an expense consideration, especially because laundry room amenities may add to your home’s price twice – the cost of the amenities themselves, plus they often require a larger space, increasing the home’s square footage.

Locklear - #42074

The Locklear (plan #42074) presents an accommodating rear foyer with drop zone, bench topped by lockers or cubbies, and coat closet. The laundry room is separate and provides storage, hanging, folding counter, sink, and window, all of which add to the home’s price.

Bathrooms can have a significant impact on your new home investment. The Cedar Ridge’s (plan #42434) Suite 1 bathroom is accessed via a pocket door, which costs more than a hinged door, but eliminates the door swing conflict potential for someone standing before the first sink. It also has the expense of an extra wall and door to enclose the toilet area, which many buyers value. Three-foot by five-foot showers are pretty much the minimum size today in suite bathrooms. Fortunately, that’s a standard size for shower pans, eliminating the expense of needing a “job-built” shower. An alternate layout loses the private toilet area and some linen storage in favor of adding a soaking tub (and some expense).

Cedar Ridge - #42434
Cedar Ridge - #42434 alt bath

Fireplaces. As shown in the Moss Bluff II (plan #43066 below left), fireplaces positioned inside the home avoid the expense of having to trim around the bump out of a fireplace on the outside (example Portsmouth – plan #8638 – images below right). In addition, the dining area cantilevers (extends beyond) the foundation, avoiding an expensive foundation jog. And the large walk-in pantry provides the kitchen storage you want cheaper than adding expensive cabinetry.

Moss Bluff - #43066
Portsmouth - #8638 Elevation
Portsmouth - #8638 ML

Next time we dive deeper than the obvious when we address how the type and size of home influence its price.

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Cover photo: Perrypointe (plan #56399)