Flash Value

Heard an interesting tip about a former builder who experienced much success in the San Antonio region. The builder was Fox & Jacobs who eventually sold to KB Homes. He experienced so much success because of his self-coined term flash value. He would basically strip down his homes to the bare essence in the planning stage. He would include the basics like roof, foundation, electrical, drywall, plumbing, HVAC, etc. Then he would take the remaining finish-out items and work formulas to derive a quotient that he would call flash value and it worked like this. Let's say that crown moulding costs $2.50 per linear foot to install and paint. Now let's say that the general public liked crown molding so much they would pay $4.00 per linear foot for the end product. He would take $4.00, divide by $2.50 and arrive at a flash quotient of 1.6. Let's now say that hollow-core doors cost $135 and solid-core doors cost $175 each. If people generally didn't care and were willing to pay a max of $175 per door but their major concern was the rest of the home; then he would assign a flash quotient of 1.3 to the hollow core and 1 to the solid core. He would continue to do this for all finish-out type items in the house and develop a stack ranking of the best-returns of investment for the money and for the same price would continually modify and improve his products. His success speaks for itself and he was able to deliver a better product than his competition in the field. No matter the business, this is a simple and effective way to not only deliver what your customers want, but do it better than anyone else.

Never Been a Better Time to Buy

The Fed just announced another 3/4% cut to the Central Bank Rate making it now 6 cuts in 6 months. They are doing this to stimulate financial markets but already announcements have been made by commercial banks that their lending rates will fall to just above 5%. This will in-turn mean that you can take advantage of this incredible time as a buyer. Right now, there is oversupply in the housing market which means there are deals to be had. If you couple that with the fact that the lending rate is so low this translates to being able to afford more home for your hard-earned dollar. If you are considering building a home- even better. When you build a home, you should end the process with a certain amount of equity. The economics are simple when you start thinking about leveraging dollars at a reduced amount from the bank, having instant equity and being in a buyer's market. This market should recover and when it does expect rates to go tick back up.

New Housing Trends

I think I have enough information from the builder's conference I attended last week to blog for the next few months. One thing I thought you would find interesting was a session we had from a prominent architect in the Denver area discussing new housing trends. Among some of the things mentioned:
Project rooms-an oversized utility room that serves as an area for more than just the wash to get done. These areas can contain a place to do laundry, lockers for the family, mud sink, desk area and plenty of cabinet space for storage.
Hearth rooms-a smaller room with a fireplace to get away for quiet reading and reflection.
Command centers-a small built-in desk area seperate from the study with space for paying bills, checking emails, dropping-off mail and keys. This space is normally located right next to the kitchen.
Return to main-floor living-having the majority of your home located on the first floor.
No more formal living-considered a wasted space with today's modern families, this trend is continuing and rarely found in new home design anymore.
Wine cabinetry/wine rooms-more and more people are discovering wine and technology has driven the price down on dual temperature controlled wine refrigerators. These refrigerators have caused people to build around them and have cabinetry dedicated to additional bottle-storage. Plus it is a very cool look.
Outdoor living-a growing trend in Texas but nationally as well. This is basically an oversized patio with fireplace, outdoor kitchen, grill, television and sometimes sink. This is a great cost-effective way to extend square footage of living space.