PRICING HOMES TO BUYER'S BUDGETS

On Pricing

 
Buyers want to know the cost. One of the first questions asked is: I love the idea, but can I afford it? For almost everyone, the answer should be yes.

In our theoretical model, we talk about an average or median price. We emphasize the word average because this means something very different than minimum as one blogging critic who was not paying attention assumed. The minimum price may be a compact apartment priced at $60,000 and the maximum a $10-million mansion. Range is determined by who needs what.

This median or average price is only useful for planning purposes - to enable one to get a sense of the numbers. The actual average will be dependent on the regional market for the particular project. And of course, it will be priced in the national currency, where we use the more vague term dollar, which could mean US, Australian, New Zealand or a number of other countries.

Open market home prices will be determined by comparable market values for the region. It is likely that over time, VillageTown homes will resell for a premium over nearby communities because of the amenities, Legacy Fund and lower cost of living. However, the organizing company's job will be to set the price the new homes so they sell rapidly, but not so low that speculators who have no intention of living there sweep them up. It is important that the founding villagers have a long-term commitment to living in their village.

Parallel market home prices will be determined by average income of the target market. These homes, which include the free-base artist guild homes, may number as much as 25% of the total units build. Their pricing is determined by what is affordable within their selected, restricted market. How ownership is structured for these units is determined by balancing the VillageTown intent with applicable law, to avoid the risk of running afoul of anti-discrimination laws.

In each village, it is expected that homes and workplaces will be priced by the organizing company based on location (which village and where in that village), footprint (the amount of land required), square feet or square meters for the basic shell, floors, roof style, door and window style, finish and amenities. In this way, buyers will be able to tailor homes to fit their budget.

The wider range of pricing is achieved in part by size and amenity. One affluent buyer may spend more on a luxury kitchen than another buyer on a tight budget may pay for a complete home. Housing needs tend to vary by country. In warmer climates, some homes may have open courtyards or actively used roof gardens. In Europe, many families happily live in apartments - one or more per floor. In New Zealand, Australia or America one would expect the standard home to be a three-story attached home with the third floor optionally an empty shell for future expansion.

To explain this latter feature, because the village will be treated similar to a historic district when completed – meaning no further structural additions or conversions – buyers who typically would add on as they can afford it, instead are encouraged to purchase the largest basic shell they anticipate needing, and finishing it later. For example, they may purchase a three story shell, where the upper one or two floors are completely unfinished with only street facing windows and stairs leading to an empty floor. Relative to the total cost, cost of exterior walls is not that significant, but it allows expansion later as the buyer’s budget allows.

Early on in a project, variables such as the price of the land, infrastructure development and cost of construction will be estimated and set by the organizing company. It is hoped pricing will be provided by an on-line price calculator that allows the buyer to put in their specifications to calculate what they want and can afford. Similarly, when the mortgage financing is in place, it is hoped the on-line system will provide a finance calculator to specify the maximum mortgage for which the buyer qualifies.

The Village Town is not for everyone, but it might be for you.  Let me know when you are ready to build one in Eastern Missouri.