The 20K House is Bullsh*t

20k house
Two Rural Studio Houses recently built in the Serenbe Neighborhood near Atlanta for $135,000.

Fast Company put up a story that won’t go away.  This sloppy clickbait piece does not help the cause of building housing at a price that working people can afford.

Here is the FastCompany piece: It costs $20,000 but it is nicer than yours

Here is a local piece From Arts Atlanta that puts the cost of building two of the $20K houses at  $135,000

So what’s the deal?  The folks running the Rural Studio in Auburn University’s Architecture Program set a goal of producing a house with a mortgage payment that someone living on Social Security in Hale County Alabama could afford.  That’s how they arrived at $20,000 as the price of the house.  The target price.  The aspirational price. The price they hope to someday achieve.  They have not done it yet.  Not once.  It would be good to refrain from giving people the impression that they have delivered the house for $20,000, if in fact they have not. Link to the Rural Studio 20K House

What they have managed to do is generate a lot of press that give the casual reader the mistaken idea that the 20K House actually only costs $20K and the Fast Company piece is just the latest bit of lousy fact checking to reinforce that misconception.  Their idea is a well-intentioned one with a couple of important missing pieces. The Rural Studio site breaks their aspirational $20,000 number down into $12,000 for materials and $8,000 for contracted labor and profit.  Houses and mobile homes for that matter in Hale County need a municipal sewer connection or septic tank and a municipal water connection or well.  The cost of drilling a proper cased well, installing a pump , and building a septic system in Hale county is between $12,000 and $15,000. So even if $8,000 is enough to cover a builders labor cost, workmans’ comp. insurance, general liability insurance, office overhead, and profit on the house (and it isn’t) the project is $12,000 over the aspirational $20K budget if the homeowner does not have to pay for the land it will sit on.

An important lesson to teach young Architects in any studio course is that you should not leave large numbers out of a building budget.  Math is unforgiving and cannot be erased with good intentions or a lot of PR.  Maybe there is no such thing as bad publicity.  If that is true, I guess the Rural Studio Folks won’t mind this blog post.

 

 

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34 thoughts on “The 20K House is Bullsh*t

  1. Matt Boulanger March 24, 2016 / 12:50 pm

    After checking this out before I’m pretty sure the picture they use shows TWO of these houses anyway.

    • rjohnanderson March 24, 2016 / 1:23 pm

      Yes. Two houses. $135,000 divided by TWO houses is $67,500. That is not $20,000. Not even close.

      • ka thy May 28, 2016 / 4:42 pm

        yes i know it is b.s.

  2. Dhiru A. Thadani March 24, 2016 / 1:16 pm

    John
    I can always trust you to clarify the issue succinctly, and tell it like it is.
    Thanks

    • rjohnanderson March 24, 2016 / 1:24 pm

      I think we can blame my lack of formal education and impoverished upbringing.

  3. Kat March 24, 2016 / 8:46 pm

    I particularly love the artsy and pricey interior design. Affordable housing dressed up in designer duds, probably worth more than the building itself.

  4. L. McAlister March 28, 2016 / 6:38 pm

    What part of ‘ongoing research project’ isn’t registering with you? They haven’t exclaimed ‘we’ve done it!’. They announced that these 2 houses are completed and they are working toward making everything fall into place (codes, mortgages, inspections, etc.) so that they can be built for 20K, in the future.

    • rjohnanderson March 28, 2016 / 8:13 pm

      That ongoing research project part certainly registered with me. I keep hoping that their ongoing research will reveal that they have left out several very large line items out of the budget. If you spend $12,000 on materials $8,000 must be enough to cover the contractor’s labor, overhead and profit for the simple reason that $8,000 is all they have left out of the aspirational $20,000 budget.

      • Bhagavan April 12, 2016 / 1:09 pm

        John, I agree with you on these costs for conventional building. To build these we need to think out of the box. Cluster the homes so they can share land, well and septic. Build many at the same time so you can buy materials cheaper. Shop for deals on materials. Let the owners do some of the unskilled labor. Find interns who won’t require pay. Banks won’t touch this but $20000 isn’t a lot of money and could be financed another way, possibly with grants from those who want to see this kind of building done.

      • rjohnanderson April 13, 2016 / 4:20 am

        Sure, My frustration with the good work of the Rural Studio is the way this effort is being promoted. Considering the $20k number to be aspirational and teaching young Architects to ignore real costs for construction.

  5. James Morrow April 11, 2016 / 5:20 pm

    sad

  6. Lary Alan Waldman April 12, 2016 / 5:59 am

    It would be far better to abandon this course and just let people live in the street’s, don’t you think?

    • rjohnanderson April 12, 2016 / 6:34 am

      Not really. But it would be a great step forward to teach young Architects reliable math. Plenty of room to improve the course with straightforward budgeting and transparent communication.

  7. Chris Wood April 13, 2016 / 5:49 am

    Hmmm…. I didn’t see anything that stated untruthful things. I understood exactly what they were stating in the article. They were discussing building a house for the cost, not land etc. I’m not sure how you decided this was a b……t article. Reading comprehension a little lacking I guess.

    • rjohnanderson April 13, 2016 / 2:25 pm

      My comprehension is fine. The houses in Serenbe cost $135,000 for two. The notion that a house with $14,000 in material costs will end up costing $20,000 when you add in labor, overhead and profit is a problem.

    • Julia Monzingo April 14, 2016 / 9:02 am

      Chris Wood, I too understood it perfectly. I knew they were just talking about the cost of the house and nothing else. I also understood that they said they were working toward a $20,000 house, but had not achieved it, yet. And, BHAGAVAN was correct when he said costs could be saved with land, sewer, water sharing. I think it’s an absolutely great way for low income families to live. My brother actually built my mother a two story barn with the same materials I am seeing here. It’s huge and only cost $50,000 in materials, with a cement floor. It looks wonderful. Now, if it were to be constructed as a home, interior work would have to be done, costing approximately another $50,000 for sheetrock, wiring, plumbing, etc., but it would still cost much less than the traditional home per square footage. I have researched this long before I read this article. My husband and I are definitely going to be building a warehouse home with the materials you see in these pictures of the tiny houses because it saves a fortune over wood. That was a hard decision for me to make because I am a woodworker. I’ve built sheds and decks and houses, but money talks. I can have more house for less money. Just sayin’…….

      • rjohnanderson April 15, 2016 / 9:38 am

        Since when is the labor, overhead and profit required to build a house not included in the cost? Even if you buy the bullshit argument of the $20k number being “aspirational” the Rural Studio folks maintain that the $8,000 left after you pay $12,000 for materials is enough to cover the builder’s labor, overhead, and profit. It is not. Teach this kind of sloppy thinking to young Architects is irresponsible.

  8. Tammy Socher April 21, 2016 / 2:11 am

    Everybody has stuff–none of these tiny model homes have any room for clothing, books,toys, etc. Just pristine shabby chic decor. And it cracks me up when people say you can use interns for free–we used to call that slave labor! If you figure free labor as part of your cost,surely that’s cheating!

  9. Tasia April 27, 2016 / 10:36 am

    Habitat for Humanity seems to build….with help from volunteers and sweat equity….

    • rjohnanderson April 27, 2016 / 11:53 am

      Certainly. But Habitat is not teaching a studio on affordable housing, training young architects how to keep track of the cost of construction (and then leaving out numbers).

  10. Rebecca Boren May 19, 2016 / 9:24 pm

    It’s good to have your corrective to the overly rosy description in the article. But your repeated criticism of the failure of the budget to allow enough for building costs ignores the fact that the article itself acknowledges that $20,000 is not turning out to be enough to pay livable wages for workers. BTW One of the things I liked best about the presentation of these home was the quality of finishes (excepting the rotting cupboard). Just because a person doesn’t have a lot of money, doesn’t mean one wants to live in a shoddy looking space. That’s the sort of thinking that dooms affordable housing projects.

    • rjohnanderson May 20, 2016 / 5:23 am

      Auburn University’s Rural Studio is part of the university’s Architecture program. The studio is training young men and women to be Architects. Architects should, in my view have basic understanding of what goes into a construction budget and what goes into the program for a building they are designing. Architectu students engaged in the $20K House project are being trained to leave out large pieces of necessary work from their budget.

      • Mel May 21, 2016 / 12:15 pm

        Isn’t that the truth? We have two building in the small town where I live “designed” by this group. An up-side down top (trough roof is the real term) on a farmer’s market lets in rain and sun…certainly a bad design for a farmer’s market. A huge metal sign, and I do mean huge, about 40 feet in the air and huge letters mounted on fencing wire, is another poorly “designed” entity for a RURAL, made mostly of wood, building. There’s no telling the cost of this monstrous sign, and it was all TAX dollars used. A 5 x 5 bathroom’s walls was painted BLACK, contributing to the smallness of it. An iron (not stainless steel) sink was “designed”; now that sink is rusted and NASTY-looking. What happened to basic understanding in design?

      • Pete May 23, 2016 / 11:31 pm

        You know – if Amazon.com followed your advice, we’d never be the size they are now.

        You want to fill these future architects with a bunch of your preconceived notions as to what constitutes a basic understanding of a construction budget? You know – real breakthroughs come with big goals, whether they be constraints, moon shots or adversity. You can’t fly. You can’t go to the moon, you can’t build a house under $20k. The only part you got right – “They haven’t done it yet”.

        Seems you’re one of the naysayers that entrepreneurs, adventurers and explorers are told not to listen to. There’s a good reason for that. Maybe go out and see what they’ve done – and perhaps bring some of your infinite wisdom to the problem. You may learn something yourself, and may actually help them too. Everybody wins.

        Or sit back and take pot shots at somebody else’s goals and dreams. I guess that’s easier and makes you feel bigger huh? Or perhaps target your rant at the press – not the people trying to change things.

      • rjohnanderson May 24, 2016 / 5:21 am

        Pete, if an Architect told you that the building they had designed for you will cost $20,000 and they neglected to tell you about a number of things you will have to pay for, would you consider that to be great innovation? The $20k house story keeps getting written as if they have met that budget. Their premise in setting the $20k number is badly flawed because they have left out significant pieces of scope.

  11. richcomo May 27, 2016 / 9:05 am

    The great thing about these homes is that they have both the dreamers and pragmatists talking (and shouting at times). Both are needed.

    A lot of local governments are looking at the various costs you are talking about that aren’t included (land, utility hookups, permitting) and looking at alternatives to make them more affordable without eliminating or ignoring them. Some options include land trusts (land isn’t sold to the buyer) and bond financed hook-ups (hook-ups are assessed as a tax on the property over 20 yrs). Shared infrastructure and construction is the only real way to quickly build affordability. I’ve even heard the idea of shared geothermal fields or condensing units for closely situated homes.

    Thinking aloud, I wonder what the cost per unit would be to construct affordable condo blocks with similar design constraints. There could still be plenty of low skill (self-help) labor that could be contributed on interiors. The infrastructure would be shared cost spread over the number of units and could still fit into a land trust model to reduce the upfront cost of development by building on donated or tax-foreclosed land. The per unit cost of insurance, maintenance, heating and cooling is typically lower. With recent adjustments to the way condos are underwritten, they are also much more secure assets for the banks making the loans.

    • rjohnanderson May 27, 2016 / 9:40 am

      The houses are swell. Teaching Architects to ignore costs while celebrating the effort to build affordable houses for folks in Hale County, Alabama is not swell. My frustration with the Rural Studio Program and all the ClickBait coverage it generates on the internet is the way that unrealistic expectations are set in the minds of people with shitty math skills. It is juvenile and irresponsible for a College of Architecture to start with the $20,000 number (because it is what people on social security in rural Alabama can afford), deduct the $12,000 – $14,000 in material costs from that budget number and grandly assert that all of the other costs will somehow be magically covered with the remaining $6,000 -$8,000. Auburn University is training people to become Architects. With this program they are providing young Architects with a delusion that they understand the constraints and opportunities of designing and delivering affordable housing as long as they leave out significant costs. This would be similar to encouraging Architects to design condominiums as an affordable housing solution without telling them that their insurance premiums will be 8 to 10 times higher once they design condominiums and that insurance will need to be in force for 10 years.

    • richcomo May 27, 2016 / 10:05 am

      I was about to include the question, “Why the focus on mortgages and buying affordability versus simply affordability?” I figured that was a topic for another time, but then is saw your post “Building Houses or Condos for Sale? Bad Dog Ginger!” I agree 100% from an investor perspective, but investor money goes where returns align with the investor’s goals. That alignment isn’t usually in small unit affordable housing. It is why the current housing boom is in urban areas where “boomers are leaving behind large homes and moving toward high amenity density and smaller upscale units.

  12. Mari May 27, 2016 / 4:34 pm

    I love how figuring in the LABOR is sort of kinda!..how completely humiliating to the fine men and women who do carpentry, electricial, plumbing etc…glad the Architect students give us an after thought concept…sheesh

    • rjohnanderson May 27, 2016 / 5:07 pm

      It’s not the student’s that I worry about, but the instructors. Labor, insurance, workers’ comp, and some profit for the builder all in $6,000 to $8,000 is just not realistic.

  13. Daniel Ouimet May 29, 2016 / 12:39 pm

    Hey everybody! Being a contractor/artist on Vancouver Island I understand and sympathized with both parties. Of course these articles and TV shows try to tell you that you can build for less. Well, usually less is less. There is so many factors to consider and I strongly believe that anybody interested in building such housing will consult with a reputable builder. I myself love the idea and help facilitate the trend of alternative construction. I also know my materials and respect building codes.
    Daniel Ouimet, New Vintage Renovations (.com) and Chantecler Artisan (.com)

  14. Rikki June 3, 2017 / 11:12 pm

    This logic is ridiculous to me. Of course they are not saying that you’re going to have a $20k mortgage. Of course there is going to be land improvements costs, utility installation costs, etc. The point is having a mortgage under $80k is much for affordable than having a mortgage of $200k. I absolutely understood that the article meant only the cost of the house portion. If I could get a house for $20k, pay another $20-$60k in making the land/ lot livable, I’d be a very happy camper. Stop trying to stomp on people who are trying to help others.

    • rjohnanderson June 3, 2017 / 11:22 pm

      If you are teaching young Architects about the cost of housing, I think it would be reasonable to teach them about all the costs. To say the house you build costs $20,000 when it does not would indicate that you either don’t know your numbers, or you are are not telling the truth. As for stomping on other people who are trying to help a new crop of Architects by teaching them lousy math skills, well I really don’t see a problem. I wrote a blog post. They are tenured faculty at a respected university. My critique has not caused the to break stride. They have not been stomped. The continue to operate under the banner of the mythical $20K House.

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