Odd Homes Built of Tires and Trash Lure Environmentalists, Turn Off Bankers

March 19, 2010 11:00 PM

Builders/owners of eco-friendly homes can't refinance in the new, tighter credit market simply because there is a lack of appraisals for comparable homes. I've long been a fan of unusual homes, especially artsy/organic-looking ones. A common theme is "off the grid" energy-efficiency and natural climate control. Sometimes, they are extremely creative, totally trippy, or even oddly pretty . And sometimes, they are absolutely stunning.
posted by janetplanet (22 comments total)

No surprise. Almost all of the homes built in the housing boom of this decade look like someone just checked a random list of features which added up to a target sale price. Often the HOA won't let you put up solar panels because they're "ugly."
posted by RobotVoodooPower at 11:28 PM on March 19, 2010 [1 favorite]

The "unusual homes" that you linked to is located in Lamy, New Mexico and was dubbed the "Flintstone House" by crews of the Santa Fe Southern Railroad. The original owner (Norah Pierson, proprietor of The Golden Eye in Santa Fe) hated that moniker. While she has passed away a few years back, I don't believe this house is in foreclosure.

And if you are in the neighborhood, please visit my friend Mike's 1940's dining car, The Lamy Station Cafe.
posted by jabo at 12:34 AM on March 20, 2010

Builders/owners of eco-friendly homes can't refinance in the new, tighter credit market simply because there is a lack of appraisals for comparable homes.

Which should tell you that real estate values are significantly speculative.

If the only way you can appraise property something is by direct comparison (if you can't genuinely figure out some sort of practical utility value at a minimum), then I'm not sure you're really doing appraisal.
posted by weston at 1:29 AM on March 20, 2010 [7 favorites]

Earthship. Do want. If only they could build them in Japan.
posted by snwod at 2:52 AM on March 20, 2010 [1 favorite]

With the green carpet, the Xanadu house looks like the worlds coolest indoor mini golf course.
posted by doctor_negative at 3:03 AM on March 20, 2010

The Bart Prince house is indeed "absolutely stunning." But I have to wonder where all that gorgeous wood came from.
posted by Faze at 4:42 AM on March 20, 2010

If the only way you can appraise property something is by direct comparison (if you can't genuinely figure out some sort of practical utility value at a minimum), then I'm not sure you're really doing appraisal.

With some appraisers, we're just happy if they show up to the right house.

Real estate appraisals tend to be quick and dirty things. Everyone wants it done as quickly as possible and nobody wants to pay any more than they have to. Is it any surprise that they're unequipped to deal with unusual spaces?
posted by dinty_moore at 5:39 AM on March 20, 2010

Appraisers and loan agents aside, I'd have to do some serious research before buying a non-traditional hippy house. I've worked with traditional building materials and techniques most of my life -- I can evaluate a stick-built or concrete house's quality easily on my own. Some sort of sprayed ferrocement organic thing, maybe with haybales underneath? I don't know enough to assess it's quality accurately and easily without first doing a lot of reading and talking with builders. Even then, I'd be shy about paying a lot, wanting to keep more in reserve to deal with potential problems that might come up.

So that's going to play out in non-traditional house values, too, I suspect. If a person who is as friendly as I am towards oddball architecture doesn't actually see it as raising the value of a house, good luck convincing a mortgage broker that it is worth a premium.
posted by Forktine at 6:15 AM on March 20, 2010 [2 favorites]

If the only way you can appraise property something is by direct comparison (if you can't genuinely figure out some sort of practical utility value at a minimum), then I'm not sure you're really doing appraisal.

If the owner were seeking to borrow utility and secure the loan with the house, your method of appraisal would make sense. The borrower is trying to borrow money, though, so the relevant question is how much money will be provided by a sale of the house if the borrower defaults.

In any event, this is very often how appraisal works. If you were tasked with appraising a can of olives, you'd be crazy to sit down and engage in some kind of Platonic inquiry into the essential utility of olives and then somehow try to assign a dollar value to that. Instead, you'd just go see what olives sold for.
posted by planet at 7:15 AM on March 20, 2010 [4 favorites]

Wayne Coyne is in the process of remodeling a home in Oklahoma.
posted by Sailormom at 7:31 AM on March 20, 2010

Appraisers and loan agents aside, I'd have to do some serious research before buying a non-traditional hippy house. I've worked with traditional building materials and techniques most of my life -- I can evaluate a stick-built or concrete house's quality easily on my own. Some sort of sprayed ferrocement organic thing, maybe with haybales underneath? I don't know enough to assess it's quality accurately and easily without first doing a lot of reading and talking with builders. Even then, I'd be shy about paying a lot, wanting to keep more in reserve to deal with potential problems that might come up.

I just watched a David Suzuki CBC thing about eco home building and they showed a packed earth house where they demonstrated the resistance to water erosion by aiming a high pressure hose at it for about 30 seconds. I realize it was TV showmanship but I hope that nobody watches that and thinks it proves anything.
posted by srboisvert at 8:08 AM on March 20, 2010

planet : If the owner were seeking to borrow utility and secure the loan with the house, your method of appraisal would make sense. The borrower is trying to borrow money, though, so the relevant question is how much money will be provided by a sale of the house if the borrower defaults.

That makes a lot of sense, but the two (in the case of housing) ideally come out relatively close. On the assumption that you need to live somewhere, the cost of rent in an area often comes out +/- 50% to a typical monthly mortgage. So that right there gives you the core "utility" price.

The problem with many of these "alternative" houses, however, involves unknown long-term costs possibly offsetting an apparent economy of short-term ones. As Forktine points out, how long will a limed bale of straw really last? How much higher risk of nasty mold do you have in an ultra low air-exchange house? Will those solar cells actually go net-positive before they die, or will some cool new tech make them hard-to-dispose-of electronics waste next year? Saving 10k/year in HVAC and electric costs sounds great, unless the house becomes uninhabitable in under 30 years.

Personally, if building from scratch, I would go for an "Earthship" type house, because I view my house as my home, not as an investment. Buying an existing construction, however, you really need to consider at least near-future expenses; for my current place, it desperately needed a roof, and we got that knocked off the price (well, part of it - We went for exactly the topic of this FP, a modern recycled roofing material that looks great and supposedly has a 100+ year lifetime. This did, however, cost about twice as much as going with standard architectural shingles).
posted by pla at 9:18 AM on March 20, 2010

someone just checked a random list of features which added up to a target sale price

Coincidentally we had an appraiser in our house yesterday (mortgage refinance), and that seems to be exactly how it works.

Among other things, the valuation of our house apparently differs significantly depending on whether we call a particular room the "living room" or the "great room," or another the "library" or "den" or "home office". There was also much discussion of whether we have a dining room or just an open-plan extension of the living, er, great room that happens to have a dining table in it.
posted by ook at 11:36 AM on March 20, 2010

Obligatory.
posted by keli at 11:41 AM on March 20, 2010

The greenest building is one already built. If you really want to live in a green house, rehab a row house in the inner city, don't build a super efficient one out in the middle of nowhere.
posted by octothorpe at 11:51 AM on March 20, 2010 [5 favorites]

I can't refinance because my home value depreciated by $25k due to the foreclosure crisis. I can't even get an equity loan.
posted by sciurus at 12:18 PM on March 20, 2010

octothorpe's point is very valid. I'd add to that, use reclaimed wood for your "new" floors. I'm biased as I've spent years renovating the old look back to our 100 year old apartment in the inner city, and we did it with used wood, used bathtubs, toilet and sinks, old wallpaper, reclaimed doors and wood panels, a window from 1910 and funky glass from the 1960's that separates a room from the stairs, and even the staircase itself comes from a torn-down building in Copenhagen, and its furnished with stuff we've found on auctions. There's even reclaimed floor-tile in the hallway from a torn-down building. The new things are in the kitchen where we've gotten energy efficient appliances and new cabinets, but we could have gotten used cabinets in theory, we just never found any that fit. Luckily there are places in both Copenhagen and Malmö that sell things saved from buildings that were about to be torn down where we could find all of our stuff. This way, I could have my merbau kitchen floor and counter-top and not feel guilty about it.
posted by dabitch at 1:02 PM on March 20, 2010

For anything to do with houses, anything that veers from a fairly narrow concept of "normal" seems to cause problems. The hot-water heating system in our house is one of my indulgences - over 20 years I completely re-piped it in copper, pressurized it, and managed to score a modern gas boiler for free from a demolition. But when it came time to renovate the house, could I find a designer/contracter who would quote on adding some rads for the new area? Nope, they either walked away, or gave me some absurdly high quotes. After two years I finally found a hydronic designer to give me a permit-ready set of drawings, and I'm doing the work myself, with just some token work by a plumber, so it at least appears that a tradesman worked on it..

In other news... residential real estate is currently going nutz here in Toronto. My friend inherited his mother's 2-bedroom '40s house - nothing special, and any new owner would just knock it down. It went on the market for $650k, and sold quickly for $730k. It seems there's still pent-up demand, but there's also a tax on new houses that comes onstream in July.
posted by Artful Codger at 3:04 PM on March 20, 2010

If the owner were seeking to borrow utility and secure the loan with the house, your method of appraisal would make sense. The borrower is trying to borrow money, though, so the relevant question is how much money will be provided by a sale of the house if the borrower defaults.

Which again seems to me apparently more a question of market speculation than value appraisal.

f you were tasked with appraising a can of olives, you'd be crazy to sit down and engage in some kind of Platonic inquiry into the essential utility of olives and then somehow try to assign a dollar value to that. Instead, you'd just go see what olives sold for.

Sure, that's more convenient, and if you have enough sales data, that's a great shortcut. I think the problem I have here is the idea of an ostensible professional just being stymied by the lack of something comparable on the market. I'd expect them to be able to say "all right, maybe there's not much like this out there, but it's got x amount of square footage, n rooms, m, baths, and I guess I'll dig into the construction details, maybe call some experts, get an idea of how that affects the expected lifetime and maintenance and utility costs of the home." Instead it sounds like we've got a professional class charging $200-$500 for a walk-through and a database lookup.
posted by weston at 3:52 PM on March 20, 2010

Which again seems to me apparently more a question of market speculation than value appraisal.

An appraisal is an estimate of what something can be sold for, so yes, it's speculating on the market.

Sure, that's more convenient, and if you have enough sales data, that's a great shortcut.

Shortcut? What more reliable way can there be to determine what something will sell for than to look at what comparable things have recently sold for?
posted by planet at 9:49 PM on March 20, 2010

What more reliable way can there be to determine what something will sell for than to look at what comparable things have recently sold for?

How well did that work out for appraisals done in 2005? I'd say any lenders or investors who cared about accurately estimating values might have done well to consider utility-focused valuations like careful rent analyses as at least a part of their appraisal.

As the last three sentences of my last comment indicate, though, my bigger beef is with the idea an ostensibly professional class should be utterly stymied in their ability to make the very comparisons you're talking about by an unconventional construction technique.
posted by weston at 3:38 AM on March 21, 2010

One of the problems is that there is no accurate way to know what a house will be worth in the future.
You can look at likely rent over the lifetime of the house, evaluate expenses and then do a discounted cashflow analysis. The problem is doing those rent estimations. All your data is from the past by definition. A valuation of the "utility" or of the future rent of a house in Detroit in the 1950s or in NYC in the 1970's would be just as wrong as one based on current prices. It is easy to see why, you're either using current sales prices or current rents.

Of course you could develop a macroeconomic model to predict future rents and sales prices based on local economic factors, but all this really does is obfuscate your reliance on past data to predict the future.

As with so much in economics, you can never get enough data. Let's say you have 50 years of data on American wages and salaries, and that you use this to calculate future rents based on extrapolation. The problem is that those 50 years do not all cover the same economy. What you actually have is 50 datapoints all of which are actually drawn from different underlying distributions (because the economies in 1958 and 1998 were totally different).

It pains my poor quant heart to say it, but the best of the worst of the methods we have for estimating the future value of any property is the current price. The fact that this is highly unreliable is just too bad, short of reversing entropy and the arrow of time there is nothing else to be done.

Remember also that value and price are different. Value depends on the person, price just depends on the market. The bank (whose opinion is the only one that matters when it comes to an appraisal done for financing) does not care about the differing values that the owner, the owner's kids, or local historians place on the property. They only care about the market price that they could obtain if they had to foreclose and sell.

As to the reluctance of buyers to buy houses built with unusual construction methods, this is to be expected. Millions of American houses have been built with wooden framing construction for generations, everything that can go wrong to them has and the probabilities and preventative measures are well known. They have passed the harshest engineering model of all, the real world.

Will rammed earth, or cobb, or fairy dust reinforced tires stand up 50 years? Well, probably yes. Are there millions of such houses standing around that actually have lasted that long? No.

Many people have all or most of their capital in their primary residence, no-one wants to gamble that.
posted by atrazine at 6:50 AM on March 21, 2010