We're having a couple of murals painted on some outside walls we have, next to the stairs down to the basement. I'll post more about them when they're done.

One of the artists is a graffiti artist. He asked for a list of ideas we had, or things that mattered to us, and he incorporated some of them into the mural. One of the suggestions was a pair of aces. Here's what he painted:



It turns out he isn't a poker player. Go fig.

Luckily this is a problem that is easily fixed.



I'm just glad he wasn't carving a bas relief.

We had a guy from Solar City come and give us an estimate for putting up solar panels. He spec'd out a 9.23kW system based on our available roof space and the utility bills for the last year.



The first question to ask is, does it make sense to get one. The answer is pretty clearly yes. There are two reasons. The first is the tiered rate structure of energy prices in California. The first few watts you buy in a month are cheap and regulated to be that way, and solar can't compete with that. However, the more you buy, the more expensive it becomes, and solar is cheaper than the high end. At about 1700kWh/month, we're well into tier 5 territory.

The solar salesdroid included a bunch of documentation showing why solar saves you $$. It's a little hard to work out just how much of a benefit accrues, though, because they make a lot of assumptions. First, they assume that energy prices will increase at 6% per year. The average increase over the last 30 years in California is 6.7% per year, so 6% seems reasonable. Also, because the lower tiers increase much more slowly than that, the upper tiers have to absorb the difference and so may increase faster. That's a lot faster than inflation, though.

They also assume a 4.5% annual discount rate to account for spending all the money up front, which is surprisingly forward-thinking of them (though see below). Finally they make some assumptions about how fast the panels will degrade in quality (.5%/year), which I don't know how to evaluate. The warranty on the panels guarantees that they won't degrade more than 1%/year for 25 years. Here are the assumptions:

• ASSUMPTIONS
  
• Array Locations [1] South Roof [2] West Roof
  
• Panel Orientation [1] 180° [2] 260°
  
• Panel Tilt [1] 22° [2] 22°
  
• Average Daily Sun hours 5.3
  
• Shading [1] 88 % [2] 90 %
  
• Annual PV Output Degradation 0.50 %
  
• Federal Tax Rate 28.00 %
  
• State Tax Rate 9.30 %
  
• Electricity Rate Escalation(%/Year) 6.00 %
  
• Discount rate applied 4.50 %
  
• EPBB Design Factor 92.14 %

Under all those assumptions, it would take about 11 years to pay itself back. The system would cost $70,360 minus a state rebate of $12,573 and a federal rebate of $2000 for a total of $55,787. They include a super fishy graphic of total value of the panels which implies that paying $55.8k for solar panels increases the value of our house by $86k based on some study, and that the panels would hold that value for the next 30 years. Yeah, I don't think so.

The other option is to lease the panels, with an option to buy at the end. It costs $250/month, increasing by 3.5% per year. The nice thing about this is that it immediately saves more than $250 worth of electricity -- it looks like it will save about $300 (net $50) using my math, or $110 using their math which I don't understand at all. So as long as energy costs pace inflation, this is just free money every month. As they helpfully note, ROI: infinite!

For comparison with outright purchase, they have a net present value calculation that assumes that you exercise the right to buy at the end of the lease for $39k. However, their discount factor is 8% per year! Why are they using 8% here and 4.5% above? To make the lease look better. That $39k in 15 years is just $12k in today's dollars if you discount by 8% per year. And note that in today's dollars, the monthly price is going down every year -- up by 3.5% but down by 8%. So they calculate the total cost of ownership at $43.6k in today's dollars and get to claim that's better than the $58k up front. Check out this unbelievably optimistic graphic about the value of buying solar panels.



Over $300,000! I'd be a fool to turn this down!

I think the main question is this: how much will the solar panels be worth in 15 years. If they will have significant value, which they might because of rising energy costs, then purchasing is better because you will own them for less money than the lease option plus buyout (as you would expect), even in today's dollars, if you use a reasonable discount factor like 4.5%. However, if they will not be worth much because, say, the technology has gotten much better or someone invented cold fusion, then leasing is better because you've spent less money for something you don't really want.

So I would say that leasing is lower risk -- your only real risk is that energy prices will drop enough that you're losing money on the panels every month, which seems really unlikely in the next 15 years. Then you can decide whether to buy or not. However, if the panels really are a good investment, then you are missing out on that value. With the purchase of the panels, in 15 years you end up with something of uncertain resale value but still producing good energy, and you're exposed to technological uncertainty. Given how hard they were pushing the lease option, I have to think it's too good a deal for them to be a good deal for me. :) (He did explain that the federal tax discount is capped at $2k for individuals, but is uncapped 30% of the cost for corporations who run green energy, so owning the lease is valuable to them in a way it isn't to me. There may be some accuracy in that.)

So... time to get out the crystal ball? Solar technology hasn't improved much in efficiency in the last 30 years, but there are a bunch of smart silicon valley people working on new technology now. Are they going to change the game? Is it worth waiting for?

And are the misleading (or just optimistic?) estimates and sales tactics of Solar City bad enough that I should actively prefer not to do business with them?

We bought a house today. And decided not to build a house after all.

This was a big decision, and a very painful one. We were still excited by building a house, though less so than we had been. But it was so expensive we just couldn't make sense of it.

The estimate from the contractor is well above $600/sqft for a house without top end finishes. We asked a separate cost estimator to look at it and she said it would cost over $600 per. We were about to have another contractor bid it out, and they said they might be able to get it down to $580 per, if we were lucky. And that doesn't count the substantial expense involved in grading and the 400 foot driveway, and landscaping, and so on, that comes with an unfinished plot.

Compare that to buying a house. We just bought a fairly nice, large house in Los Altos for about $540/sqft, and that came with land beneath it. If you subtract out the value of the land based on a recent sale of a nearby plot, the value of the house itself appears to be $340/sqft. With arguably nicer finishes in the kitchen and common areas than we would have had.

Now, I'd definitely prefer to build the house to owning the one we bought, all else being equal. It would have a better layout and be in the style we want, and would be on a lovely piece of orchard that has good memories for me. Those are all worth something fairly substantial.

But do they justify doubling the cost of the house, and more? Sadly, it's not all that close. We tried really hard to make it make sense, but in the end, we decided that it just doesn't. So we're tabling the project for the foreseeable future.

We do this with mixed emotions. Happy at the new house, sad that our plans are not happening, definitely grumpy about the sunk cost in the architects and planning, and still processing all this. It's been a strange couple of weeks, thinking about these issues, then seeing a really great house, and now moving soon.

Crazy.

We've always planned for a clay tile roof, probably red. The best thing would be to reclaim tiles from somewhere, and our contractor has found a nice lead.

There's an old tuberculosis sanitarium in the Sierra foothills. In 1971 it was taken over by the United Farm Workers, and new they want to renovate it to turn it into some sort of learning center named after Cesar Chavez.



Apparently they have decided to get rid of the roof tiles, because they can't match them. So we may buy them. We haven't discussed price yet, so we don't know how reasonable they will be. But we do like them, and like that they have some historical interest. Plus -- sanitarium! How awesome is that?

A couple of weekends ago, we went door shopping in Santa Fe and Taos. It turns out there is a thriving business in reclaimed doors there. Buyers go to Mexico and India and Indonesia and buy the doors out of old buildings, and bring them here. Strangely, most of them are just stored outside in the snow. The store owners claim that it won't hurt them ("They build ships out of this wood!"), but somehow that's hard to believe.

So we looked at doors and other decorative bits, and tromped around in the snow. It ended up being an entertaining outing, though by the end of the day we were all a bit tired of it.

The first thing we had to decide was where we might put reclaimed doors. We decided not to buy them for exterior doors, since those need to fit tightly, and it's expensive to made something a little funky work. It turns out that these doors aren't really more expensive than buying a new solid wood door, but there is some extra expense in installing them if you have to do anything complicated. Here's where we're thinking we might put interesting doors:



We decided not to put any special doors upstairs. We could have them at the entrance to our or Jackson's bedroom, but it didn't make sense to me to put something we don't want destroyed into a toddler's room. Look, crayon on the antique door from India! I don't think so.



We thought these copper doors were really cool, but we don't really have a place to put them. Actually, that was true of a ton of things we saw. Awesome, but unfortunately awesome is not enough. It also needs to work in the house. We did have a pretty extensive discussion of ideas on how we might use those. What if we mount them on other doors... what about putting them on the wall on the other side of the kitchen as decoration... etc. But none of it really makes sense.

The backs the doors were interesting, as well. The back of the copper doors was unfinished: you could see the large nails holding on the copper, hammered flat against the door. Many of the mexican doors had backs that looked like a ladder. So it turned out we need to pay attention not just to how the doors look, but how they will look open or closed and from each side.



We did find a set of doors that we really liked, though. There are 20 of them, in various sizes, that all came from the same building in India. We aren't fans of the glass at the top; we'll replace that with something else if we do decide to get these. It's nice that they match, but it's also nice that they come in different sizes, since each of those doorways has different needs in terms of door sizes.

Anyway, who knows if we'll actually end up getting any of them. Shipping them is really expensive, it turns out, especially the Indian doors which are in Taos. For some reason, shipping from there is substantially more expensive than shipping from Santa Fe. It might almost be worth it to take another trip out there and haul the Taos doors down to Santa Fe and ship them from there.

We went window shopping this week. Windows are surprisingly expensive. Actually, given that everything is expensive when you're building a house, I wonder when I am going to stop being surprised.

We went to two places with one of the architects, our interior designer, and our contractor. The first place is a custom windows shop in San Carlos called Brothers'. They do really lovely work.

We're going with simple European style windows, somewhat like this example from the Brothers' gallery:



Except with no shutters -- we're more likely to have shades or nothing, depending on the window.

As with everything, there is an amazing wealth of choices. Do we want wood frames, or metal clad frames? Pine, fir, mahogany (and which kind?), FSC certified or not, stain or paint, colors, and hardware. Oh my lord, hardware. You can spend an infinite amount of money on hardware, and the bewildering array of options is stunning. I plan to delegate all hardware decisions to the interior designer or Katy.

The visit itself was fun. We discussed muntins or the lack thereof, since we generally won't have them. We talked about glass, and whether we wanted laminated or Low E (the Brothers' guy, who is one of the brothers, was very pro laminated -- the next person we talked to was very down on laminated), and the pointlessness of argon in double pane windows (apparently it leaks out in a year or so). And we took a tour of their shop, which was lots of fun.

We also considered maintenance. Exterior wood needs a certain amount of love -- it needs to be repainted or restained every few years. Exterior metal is much more forgiving, though it also needs new paint periodically. We're trying hard not to pick things that look nice but that will be annoying in the years ahead.

After Brothers', we headed over to a shop that sells factory windows, mostly from Lowen. They are perfectly nice, and substantially cheaper than custom windows, so we'll probably go with them. On the other hand, the sales guy said that 90% of their orders are of metal clad windows, so if we want actual wood, they may not be the best option.



It feels like there are an arbitrarily large number of decisions like this that need to be made. Each of them seems like you could delve really deeply, as well. It's hard for me to figure out the right level of attention for each of them. I don't have time to become an expert on them all, but I also don't want to make a snap judgment just to have a decision made, especially since the dollar amounts are large. On the other hand, I'm pretty sure I won't really notice lots of these details after a year or two.

A feature of the Los Altos Hills new construction permit process is the various committees that have a say in what requirements you have to build a home. The most recent one that we've heard from is the Open Space Committee.

This committee recommends open space easements on properties to reduce impacts on watersheds, and to allow wildlife to get around the town, a nice feature of Los Altos Hills being that there is wildlife. Here's what they proposed for us.



The proposed easements are the hand-marked shaded areas along the top and right of the map.

Those would generally be ok -- most of them are withing the setbacks along the property edges anyway, so they would only affect fencing and not buildings -- except that the lot that we're building on is not the lot I will eventually own. I'm only getting the bottom half of the lot. One possible division is this:



You can see that a large percentage of the proposed easement is along lot A, which will belong to my uncle. He is, reasonably, not very excited about having easements put on to his property for a building on a different piece of property.

We approached the city about this, explaining the issue, but their position (also reasonable) is that they can only act within current reality, not what we claim we plan to do in the future. So our permit request is on hold until we move the lot line.

We had been putting off doing to lot line adjustment for a few reasons: first, it's sort of a pain to deal with. Second, moving the lot line resets the basis for property taxes, which is annoying because the lots are both at a low basis, and this will trigger a significant increase in property taxes. But on the other hand, we have to do it eventually anyway, so it might as well be now.

Apparently getting a lot line change approved will take only a few weeks once we submit, so it shouldn't affect the planned april construction date. If we were to do a subdivision instead, it would take something like 8 months, which is much less good.

This is the second committee that has had something that they could require from us. In neither case did we have any idea something was coming. I wonder how many more of them there are...

Part of the process of getting permits for a house is setting up story poles. These consist of a few pieces of wood that outline the walls of the house, and some orange netting that shows the roof line. The idea is that it is easy to see exactly from where the house can be seen.

Our story poles are up. This view is from the front of the house. The tree on the right is going away before the house actually gets built.



Apparently the strange ratio is a bit of an illusion. The grading hasn't been done, and the thinness of the wood means that this house looks very tall and spindly. Our architects assure us that it won't feel that way when it's actually built.

This next view is from my uncle's deck. You can see exactly how we will show up in their view. My aunt commented that now they know where to plant trees.



Various members of the LAH planning committee will come by and look at the house, presumably from various vantages, and will also make sure no neighbors are unhappy with how we're impacting their view. The only ones who really will be able to see us are my relatives, and they had better not complain, so I'm not worried about that.

Oh, and here's a gratuitous shot of the orchard (and my uncle's stable), because it's so rare to see something that looks like fall in California. Spring and fall are beautiful in the orchard. Winter is less nice, though.

We sold our house today, woo.

The open house was this past Sunday. It was a perfectly clear day, which is really good when the biggest selling point of the house is the fabulous view. Here's the view from the living room on Sunday:



Here's our lovely real estate agent in front of the view of Oakland from the deck:



One of the offers was below asking. Our realtor referred to that as "an East Bay offer", opining that the agent didn't understand peninsula markets. The others were all above asking.

Interestingly, the offer we accepted came with an unusual document: an NDA that forbids disclosure of the offer details until escrow closes. So I can't actually post what we got for the house. I've never heard of such a thing, but our agent said that it was, while still rare, becoming more common. It's pretty irrelevant when the offer gets accepted, since it will all become public in a few weeks, but I suppose it provides some privacy protection if the offer doesn't get accepted.

Mostly, I'm relieved. I would have been happy with the asking price, but getting substantially more is obviously much better. I guess the housing downturn didn't hurt too much this time. Not that I know what it would have gone for without the downturn, but it went for enough more than I bought it for that I can't imagine it hurt too much.

And now we have money to build the next house!

Because having a baby isn't enough stress, we decided to move. We'll be moving to a Mountain View rental (right off of Castro Street) next month, and putting our house on the market immediately thereafter.

Why would we do such a thing? Actually, I'm not totally sure right now... but there were two main reasons.

First, being in flat Mountain View is vastly preferable to being in hilly Belmont when you have a small child. Being able to walk out the front door with a stroller and go to a nearby park or restaurant or what-have-you is a big win. Plus we'll have a yard with grass to play on, as opposed to our current hillside with deer to look at. Playing > looking. We'll definitely miss the view though.

Second, I'm concerned about the housing market. We're going to be investing heavily in bay area housing when we build our house -- it seems somewhat prudent to get some of our money out now. Plus it will be handy to actually, you know, pay for the next one. We're already a little too late, though -- jumbo loans just got really expensive, which is obviously bad when you're selling a $1M+ house.

What's really irksome is that if housing prices are dropping, and the house building business in particular is drying up, why am I not seeing that reflected in the price to build our new house? The bay area is special, yes, but I was hoping for at least something.

Current plan: move early September, sell the house in late September, baby in October, new house construction in April. This will be the Year of No Sleep, I think.