Stop Building for Resale. Start Building for Life.

00:00:05:05 - 00:00:35:18
Sara Gutterman: Hello and welcome to The Valuation Metric, a podcast about the risks, rewards, roadblocks and revelations reshaping the way that we measure works. I'm your host, Sara Gutman, CEO of Green Builder Media, North America's leading media company focused on green building and sustainable living. For decades, we have relied on blunt metrics. Price per square foot. First cost short term returns to define value across our economy.

00:00:35:25 - 00:01:05:26
Sara Gutterman: Those metrics have shaped our financial system, what companies reward, what we build, and how we define success. While our awareness of wellness, safety, security, and independence has evolved, our metrics largely have not. And we're living with the consequences an acute affordability crisis, escalating climate risk, growing health concerns, and basic necessities like housing and food moving further out of reach.

00:01:05:29 - 00:01:47:27
Sara Gutterman: My guest today represents a fundamentally different way of thinking. Nick Fazli is the director of sustainability for a House, a company that has spent decades designing homes around longevity, performance, resilience and human well-being. Long before those ideas entered the mainstream conversation here in the US prior to joining House, Nick led sustainability and environmental, social and governance, or ESG strategies across a range of organizations, giving him a unique perspective on how values translate into long term business value.

00:01:48:03 - 00:02:21:23
Sara Gutterman: In this conversation today, we're going to explore the difference between value and values and why that distinction matters more today than ever. We'll talk about what changes when we stop optimizing for lowest upfront cost and short term returns, and instead design systems and valuation frameworks for long term performance, trust, and stability. Because if we want different outcomes, we have to change the metrics that drive our decisions and determine what we reward.

00:02:21:25 - 00:02:25:07
Sara Gutterman: Hi Nick, welcome to the valuation metric.

00:02:25:10 - 00:02:49:17
Nick Fazli: Hi, Sara. Thank you for that kind doz. Kind words and a glaring introduction. I really appreciate the invitation to join you today. It's a pleasure to be here, and I'm grateful for the chance to share a few thoughts with you and your audience. You've created a thoughtful platform around sustainability, housing, and long term value, and it's my honor to be part of this conversation.

00:02:49:18 - 00:02:52:14
Nick Fazli: I'm looking forward to our discussion today.

00:02:52:16 - 00:03:29:26
Sara Gutterman: Wonderful. It's a pleasure to have you here. You've spent much of your career leading sustainability and ESG strategies and business settings. ESG is a powerful example of what we talk about on this podcast, specifically how companies connect value and values moving beyond a single bottom line focus that is based solely on profitability. So for listeners who may be a little less familiar with ESG or they've heard about it frankly, in a context that maybe isn't completely positive.

00:03:29:27 - 00:03:37:01
Sara Gutterman: Can you explain what it is and how it offers a fundamentally different valuation lens for the economy?

00:03:37:04 - 00:04:08:02
Nick Fazli: Yeah. Sara, I'd explained, yes, she has a more complete way of looking at business performance. It asks, beyond quarterly earnings, how well is a company managing the environmental, social and governance issues that shape long term success? So that includes things like energy and resource efficiency and employee safety and culture, and things like supply chain integrity, product responsibility and the overall quality of leadership and oversight.

00:04:08:04 - 00:04:40:09
Nick Fazli: What makes ESG different is that it broadens the lens. Traditional economics often ignores real cost and risks until they become expensive. So yes, she tries to bring these factors into view earlier. It helps companies and investors think more clearly about resilience, trust, durability, and long term exposure, not just the near term profit. So to me, yes, she is not about replacing financial performance.

00:04:40:10 - 00:04:50:28
Nick Fazli: It is more about improving decision making by connecting value and values in a way that is much closer to how the real world actually works.

00:04:51:00 - 00:05:07:02
Sara Gutterman: From your perspective, then what's the difference between value based decision making and values based decision making? And why is that so important for companies to blend the two to optimize long term success?

00:05:07:05 - 00:05:34:27
Nick Fazli: I think of a value based decision making as asking what creates durable economic value. Okay, now values based decision making as to what kind of company do we want to be while we create the value? So one is usually framed in financial terms. The other is framed in ethical, cultural or human terms. But the best companies understand those are not competing ideas.

00:05:34:28 - 00:06:07:09
Nick Fazli: They reinforce each other. So when companies blend the two, they make better decisions. They're less likely to chase short term wins to create long term camps that create long term liabilities. And frankly, they're more likely to invest in trust, quality, employee well-being, and resilience. In my experience, values without business discipline can become slogans, essentially, and value creation without values can become extractive.

00:06:07:11 - 00:06:12:05
Nick Fazli: The real opportunity is in combining the two of them together.

00:06:12:08 - 00:06:32:20
Sara Gutterman: Now, critics argue that ESG frameworks and strategies, and particularly reporting, are overly complex and in some cases, opaque. How do you respond to that concern, and can you share some examples of companies that are doing ESG very well? Both in terms of transparency and outcomes?

00:06:32:23 - 00:07:00:24
Nick Fazli: You know, I think that criticism is fair to a point, because ESG can become too technical to fragment and to full of jargon. But I also think that is not the answer. The answer is not to dismiss CSG altogether. I think the answer is to do it better. So good reporting should be understandable. It should be decision, useful and tied to what is actually material to the business.

00:07:00:26 - 00:07:31:03
Nick Fazli: It should explain where the company has a risk, where it has opportunity, what it is measuring, how it's progressing, and frankly, where it still has work to do. Okay. It's not complete. The company is doing this well, in my opinion, are usually the ones that avoid the what I call the green gloss. They focus on clarity. They define the metrics clearly, connect disclosure to strategy, and are honest about progress and gaps.

00:07:31:04 - 00:07:55:00
Nick Fazli: Specifically gaps. Because there's going to be. And to me, the strongest examples are the companies that don't just publish a report, they actually embed sustainability into operations. Right. Capital planning, production design and governance. These are all different components that makes you business successful. So that is when transparency starts to produce outcomes, not just paperwork.

00:07:55:02 - 00:08:13:06
Sara Gutterman: Imagine for a minute, Nick, that I'm the CEO of company, and I'm skeptical about sustainability in a business perspective and ESG. So make the business case for me. Why is ESG not just defensible, but a winning business strategy? And how do I do it?

00:08:13:09 - 00:08:38:18
Nick Fazli: This is a situation I run into quite often, actually. So if I were to talk to a skeptical CEO, I usually start here. I said, ESG is really about running a smarter, more durable business. So it helps you identify inefficiency, right? It's regulatory exposure, supply chain risk, workforce issues, things like reputational vulnerability and changing customer expectations before those things become expensive.

00:08:38:19 - 00:09:04:18
Nick Fazli: That's what the issues about so is as at its best, you can say she is not charity and it's not a side program, right? It is disciplined risk management and strategic value creation. Companies who see it that way will be able to leverage it best. As for the backlash, I think if she became politically charged because the term turned into a proxy of much broader cultural and political debates, right.

00:09:04:19 - 00:09:36:11
Nick Fazli: And in some cases, the language around it became abstract or moralizing, which made it easier to caricature. Right? So I think the way forward is to get back to plain language and practical outcomes. Things like lower energy costs, safer workplaces, stronger governance, more resilient products, things like better long term performance. These are things when we talk that way, the conversation becomes much more grounded and much harder to dismiss.

00:09:36:13 - 00:10:23:18
Sara Gutterman: Yeah, it seems that right now a lot of executives and board members and even elected political officials, when you talk about these same concepts in using words like risk reduction, enhanced brand reputation, optimized sales performance, resiliency, those terms are resonating and they're not as politically charged. And you know, they have a pathway forward. So beyond what you just said, you know, kind of talk a little bit more about that in terms of how we can move the conversation from something that is very polarized back to these fundamentals.

00:10:23:20 - 00:10:51:29
Nick Fazli: Yeah, I mean, I assume even by things like looking at housing costs, energy costs around financial stability, things like that. So I think for individuals and communities, to be honest, she shows up in a very practical ways, right? Its effects are whether the air inside our home is healthier, right. It affects whether the energy bills unmanageable, whether there are or not, whether neighborhoods are more resilient to heat or outages, whether workers are treated to treated fairly.

00:10:52:06 - 00:11:16:21
Nick Fazli: And these are concepts that, you know, allows us to be working in the area, in the environment where safer and more durable, right in where we live. So when she's done well, it's not abstract at all. It changes the lived experience, right? Affordability is going to be a real important part of that. Too often we focus only on the first cost and ignore the total cost of living.

00:11:16:22 - 00:11:48:11
Nick Fazli: Obviously a better built, more efficient, healthier home. In my opinion, cost may cost more upfront, but if lowers utility bills, reduces maintenance, improves comfort, performs better during disruptions, then that creates a real financial stability over time. So sustainability is not just about things like environment. It's also about lowering the long term costs for people, which kind of goes to your answer of where the value of this storyline is when we talk about ESG as a strategy.

00:11:48:13 - 00:12:14:29
Sara Gutterman: Yeah, I love how you've tied ESG to real world outcomes for people and communities. And then you've also talked about how ESG strategies impact affordability. I want to tie that back to Rebuild Media's cognition. Smart data, which clearly shows the younger generations in particular, are expecting companies to play a meaningful role in addressing climate change and social challenges.

00:12:14:29 - 00:12:26:04
Sara Gutterman: From what you've seen, how do expectations differ across generations, and what are people really asking companies to do differently again, from your perspective?

00:12:26:06 - 00:12:52:03
Nick Fazli: So, Sara, younger generations tend to be more explicit about what they expect from companies. They want more than just a polished statement. What they want is they want evidence that a company is taking real responsibility for things like climate, human impact, transparency and fairness. Okay. Older generations like myself, with the white beard and the glasses returned to express it differently.

00:12:52:05 - 00:13:19:19
Nick Fazli: We think that the concern is broader than people sometimes assume, right? Most people in that case, regardless of age, want companies to be competent. They want them to be accountable and align with real world needs. So in housing, the disconnect is, I my opinion, pretty dramatic. The market still tends to reward what is easiest to count on day one, which is price per square foot, right?

00:13:19:21 - 00:13:45:05
Nick Fazli: Visible finishes and upfront cost. But the homeowners their experience value they experience value very differently over time. They care about comfort, quiet things like indoor air quality, lower electricity bills, gas bills, water bills, durability. You know they want the lights to stay on when power goes off in the grid. They want healthy materials in their homes so kids don't have problems bathing, right?

00:13:45:06 - 00:14:14:12
Nick Fazli: Going to sleep at night with sleep apnea. These are things that the home continues to perform in their opinion, needed to perform well yesterday after they were on it about it. So it's not, you know, starting in a one and done. So the gap is that many of the things people actually live with every day are still undervalued because they don't show up clearly in additional housing metrics.

00:14:14:15 - 00:14:46:20
Sara Gutterman: So that's a nice dovetail into my next question, which is specifically about housing. Here in the US, we've historically measured housing value using price per square foot and first cost. Or we have at least since the SNL crisis in the 80s when Wall Street came into housing and and have implemented this price per square foot metric metric at scale because it fit into spreadsheets, and it was easy to compare homes based on what they cost today and how big they are, basically.

00:14:46:22 - 00:15:23:10
Sara Gutterman: However, a house approaches housing from a very different angle. Psychosis houses a Japanese based company with a different ethos and ethic. Let's say that is very Asian and is different from the US. And specifically psycho House integrates values like longevity, harmony with nature, human well-being, and other Japanese philosophies into how value is created in the homes and the communities that you're designing and building.

00:15:23:10 - 00:15:38:05
Sara Gutterman: You're in the US. So with that in mind, where do you see the biggest disconnect today between what the US market measures and what homeowners actually sell you over time, and really what we should be measuring?

00:15:38:07 - 00:16:01:29
Nick Fazli: Yeah. So I think the conversations are on how to remove sustainability from being treated as a feature to being more of a foundational principle in our business, everyday life. And I'm fortunate that I've, you know, been given this opportunity to work with a great company, Alexa, who has this type of ethos in their, you know, core. So we're not really trying to build it.

00:16:02:01 - 00:16:30:23
Nick Fazli: We're trying to implement it in that sense, which is very refreshing, to be honest with you, working with an American company or a company in US. So what needs to change in our metrics is support that shift. That's really the question I want to try to respond to. We move sustainability from what I call feature to foundation. When we stop treating it like an optional add on and start treating it as it's part of the basic definition of what we call quality, right?

00:16:30:24 - 00:16:55:24
Nick Fazli: So high performing home shouldn't be seen. And this is the kind of homes that we try to build in house has a premium. It should simply be what a well-designed home is. Correct? Now that means designing the home as a system from the beginning. So the enclosure, the mechanicals, the neck, energy, indoor air quality, water materials, resilience these are all working together as a system.

00:16:55:25 - 00:17:21:03
Nick Fazli: They're not individual features, which typically the US building builders try to market these to their customers. The metrics have to change as well to support this type of shift. We can't just measure first cost as a square footage for and cosmetic upgrades the value they bring to the conversation in a, you know, model. For example, we need metrics that better capture operating cost.

00:17:21:04 - 00:17:46:06
Nick Fazli: They capture comfort, health, they capture durability, carbon performance, and resilience over the life of their home. Because if you measure the wrong things, essentially you, you're incentivizing the wrong outcomes. Correct? One feeds into the other. So something that happens to often in the building industry, we really want to change that. I know we've talked about being disruptive. We'll get to that.

00:17:46:06 - 00:17:52:08
Nick Fazli: But that's really the core principle behind that reason why.

00:17:52:11 - 00:18:16:11
Sara Gutterman: So there are other production builders, some who are your competitors? Some are who are your peers and colleagues that would say, we can't think about homes as integrated systems where net zero energy, high performance envelopes, clean energy, healthy endure environments and resilience are built in from the beginning because it's too expensive and we just can't afford to do that.

00:18:16:12 - 00:18:38:16
Sara Gutterman: Which, of course, our answer is, well, actually, you really can't afford not to do that anymore because that's what homeowners want and expect. It's where codes and regulations are heading. But what would you say to them from a pure execution standpoint and help them understand that that old way of thinking is really defunct and it's not applicable anymore?

00:18:38:18 - 00:18:47:06
Sara Gutterman: How would you get them to understand the importance and the urgency of of this transformation?

00:18:47:09 - 00:19:22:22
Nick Fazli: I think it starts with, you know, the dialog starts with our customers understanding what they want, right? So if you if you're designing for decades instead of the next resale cycle, that's really the point. You make very different decisions. You think more carefully about materials, things that age gracefully. You think about assemblies that stays durable, right? Systems that can be maintained or upgraded intelligently, and construction quality that prevents failure rather than just fighting it cosmetically, which happens quite often with the builders nowadays.

00:19:22:25 - 00:19:40:14
Nick Fazli: Customers see through that. You know, this is also a shift in the conversation from appearance to stewardship, right? So you don't want to talk about, hey man, this is a great looking home. But rather I'm proud to have this, you know, be a part of this home. It's my it's my legacy. Right. This home is part of me.

00:19:40:16 - 00:20:01:03
Nick Fazli: At home is not just a transaction anymore. In that situation, right then it becomes a long lived asset that shapes your daily life. So when you design with that mindset, then that's what I tell you about the builders. If they're looking at advice, you naturally prioritize craftsmanship, longevity, adaptability, and a deeper relationship between the home and the people who live in it.

00:20:01:03 - 00:20:07:26
Nick Fazli: And that ultimately resonates with your customers. And they'll buy your homes. Simple.

00:20:07:28 - 00:20:33:03
Sara Gutterman: Let's shift gears a little bit and talk about resilience, which seems to be top of mind for everyone, whether those are business executives or builders or developers or homeowners or certainly insurers and lenders. I talk a lot about resilience in the context of homes, but I'd love your broader perspective. How should we be thinking about resilience at a systems level within our economy, our infrastructure, our communities?

00:20:33:03 - 00:20:40:22
Sara Gutterman: And what are we missing when resilience is excluded from financial and investment strategies?

00:20:40:25 - 00:21:22:10
Nick Fazli: No, I like the way you frame that. I think resilience does have to be understood as a system property, not just a product feature right at home level. What that means is comfort and safety during extreme weather or grid disruption, right? But more broadly, it also means how your infrastructure holds up. We've had a number of conversation around that with other builders in your in your sessions that you hold, how supply chains recover from that, those types of disruptions, how communities absorb shocks based on their resilience and coming back, and how ultimately financial systems price risk before it becomes a crisis.

00:21:22:11 - 00:21:49:17
Nick Fazli: Right. That to me is also very important. So when resilience excluded from this investment strategy, what we're doing is we're creating a false picture of value. We underpriced fragility and reward over reward short term efficiencies that may fail under stress. So that eventually shows up, in my opinion, as an uninsured losses, stranded assets, service disruptions and impacts your health.

00:21:49:17 - 00:22:17:22
Nick Fazli: And ultimately the cost goes back to the public, right? It's a public cost. So in other words, we still pay for the risk. We just pay for it badly, right? So instead of thinking it through, we're paying to it in a reactive way. So building resilience into planning and capital allocation is not my opinion, not a luxury. It is one of the clearest ways to protect the long term value, which is our home and our assets that we build.

00:22:17:24 - 00:22:50:20
Sara Gutterman: As you know, we are working with the insurance sector to try to get them to change their actuarial equations in the way that they calculate risk for homes and communities and the built environment. Are you finding in your work at Sarkozy House that the insurers, the lenders, the different stakeholders in this conversation are open to that fundamental transformation?

00:22:50:20 - 00:22:59:13
Sara Gutterman: Or are many of them still functioning in the same old modus operandi that has gotten us here?

00:22:59:16 - 00:23:18:25
Nick Fazli: I think there's a level of complacency, and then there's a level of urgency, to be honest. So the complacency is let's keep it the way it is. Things will turn around. The urgency is we have an opportunity. Things are changing, you know, whether it's through crisis or through manmade crises or nature may crisis. We need to respond to that.

00:23:18:25 - 00:23:50:00
Nick Fazli: So let's come up with better ways. So they see an opportunity there. So but I think we need to communicate. Start by communicating sustainability in a language that is grounded, practical and relevant to people's actual lives. It starts there. Right? To often I think the messaging is either too technical or to the logical right. And this goes for our supply chain working with insurance companies, bookers, etc. most people are not looking for a manifesto, right?

00:23:50:01 - 00:24:20:04
Nick Fazli: That's how it comes across. Sometimes they want to understand what the issue is, why it matters where the trade offs are and what better performance looks like, frankly. So the messaging has to become more concrete, right? In my opinion. Talk about healthier Ohm's law bills, things that resonate with the average person, fewer failures, you know? And for our folks who help us sell our ohms and a part of the supply chain, talk about having building stronger supply chains, essentially.

00:24:20:05 - 00:24:46:21
Nick Fazli: Right. Better risk management. Insurance companies love that term, more durable products, right, with our suppliers and better long term returns, which the customers benefit from. And just as important, in my opinion, to be honest, is about complexity. You know, be honest about that. So not go around over claiming things right that this is just like everything's going to get fixed because we throw sustainability at it.

00:24:46:23 - 00:25:10:23
Nick Fazli: Trust is built when people feel they are hearing something real, not something packaged. Right. So once the conversation gets back to the fundamentals and outcomes, and a lot of the political heat starts to fall away, and I think that's when you get the this broader cooperation and collaboration between the supply chains making an impact.

00:25:10:25 - 00:25:47:27
Sara Gutterman: That's it's such an astute comment because all of these topics sustainability, ESG makes sense on so many levels. Yet a lot of the pushback seems to be rooted in ineffective or misaligned messaging. And when we can communicate these ideas in a common language using words and execution strategies that align regardless of political inclination or, you know, any kind, anything that would divide us if it provides a way of Hathaway to gain traction and build trust and move past that divisiveness.

00:25:47:29 - 00:26:02:25
Sara Gutterman: But if we are successful in shifting away from these short term metrics, what would look different in our economy, in housing, in the way that people experience stability and opportunity?

00:26:02:27 - 00:26:26:13
Nick Fazli: So, Sara, if we really shifted away from short term metrics, I think we would start building a much more durable economy, one that then could reward quality, resilience, stewardship, and really long term productivity instead of just speed and extraction, which is what we're operating with. The industry has been operating on for hundreds of years. Capital would then flow differently, right?

00:26:26:14 - 00:26:53:22
Nick Fazli: So companies would invest more in workforce development hopefully. And infrastructure product durability becomes attractive. Is not a four letter word risk reduction and become become something of a, you know, value at that comes in. Those things would be more visibly connected to create that value that right to for from a value creation perspective in housing, this concept would be transformative.

00:26:53:23 - 00:27:36:25
Nick Fazli: If we can do it right, we would place much more emphasis on lifetime performance, operation, operating affordability, indoor health and resilience, and neighborhood quality. These become the narratives instead of cost and other trendy words that typically are not negative into our industry. And to wrap it up for people, that would translate into that. This would really translate to greater stability for most people because things they rely on every day, like homes, utilities, transportation, local infrastructure, they all would be designed with a longer horizon in mind as a result.

00:27:36:27 - 00:27:44:06
Sara Gutterman: Nick, what role does AI digitization and enabling technologies play in this transformation?

00:27:44:08 - 00:28:19:11
Nick Fazli: I think, to be honest with AI is is somewhat a double edged sword. So to some people it seems like a it's a tool that will replace what we use labor or thought process to others. It's just, you know, the next best thing since sliced bread, they could streamline their workflows. They could I could help them with their business activities, allows the small builders to do a lot of different things that they don't really have the resources to do.

00:28:19:11 - 00:28:37:25
Nick Fazli: So AI is just a tool in my mind. It's just like a hammer or a screwdriver if you use it right, it could be very productive. And if you don't, it's another item that sits in the chest box and it's useless, right? So it doesn't really do anything. So if you look at it from that perspective, I think it's rather benign.

00:28:37:27 - 00:28:54:23
Nick Fazli: But again, this is one man's opinion. So I'm not going to assume everybody thinks the same way. There are people who think it's the end of humanity. There are others who think it's just going to be the, you know, the best thing, like I said, since sliced bread. So I happen to fall somewhere in between. It's like any other technology.

00:28:54:24 - 00:29:12:05
Nick Fazli: You have to be able to use it well. And I think housing industry has shown they have the propensity to find creative ways to use it. And from what I've seen in the conferences and talking to different people, it's been a useful tool for them. So I look forward to growing in our business.

00:29:12:07 - 00:29:23:08
Sara Gutterman: Agreed. All right, Nick, I've got two final questions that I ask all of my podcast guests. First, when you hear the phrase value per square foot, what does that mean to you?

00:29:23:10 - 00:29:53:06
Nick Fazli: So that's a that's a great question. I think per square foot is actually a very useful idea, right. Why? I think because it starts to move the conversation in a much better direction. For a long time, the housing market has been already focused on cost per square foot, which is really a short term metric we've gotten throughout this podcast talked about the value of owning a home over time, and that's really, you know, looking at the overall system that way.

00:29:53:09 - 00:30:16:01
Nick Fazli: So it tells you something about the upfront price. If you just look at square price per square foot, but not really enough about how the home actually performs or what it delivers to the owner over time, right? So when I hear value per square foot, frankly, I see it as an important step forward. It may not be something that captures everything on its own, but it does bring.

00:30:16:04 - 00:30:38:07
Nick Fazli: You know, start the process of disrupting an old narrative. And I think it opens the door to a much richer one. And as a consequence, because the square foot is not just a unit of space, it's a unit of lived experience, I can tell you it can deliver comfort, health, durability, things like lower operating costs, resilience, better indoor air quality, and overall quality of life.

00:30:38:08 - 00:31:05:04
Nick Fazli: So to me, value per square foot is much better framing than cost per square foot. When you look at the unit of space that way, as opposed to just, you know, some, some metric. The real opportunity is to keep expanding that idea. So we are not asking what each square foot cost to build, but what each square foot is worth over the life of the home.

00:31:05:06 - 00:31:28:03
Sara Gutterman: I love how you've articulated that. So let me ask a follow up question. That is not my final question, but I'm just dying to know. So you are a director of sustainability and one of the world's most respected builders. Can we do it? Can we change the valuation metric here in the US, at least from price per square foot to value per square foot?

00:31:28:05 - 00:31:51:21
Nick Fazli: So I think we can I also I hope we can because that's definitely one of my big pet peeves. However, we have to do it in a way that the industry comes to you, right? So to me, it's more like like I said, you cannot create a manifesto around these things because if you have this transformative idea that people have to gravitate to it, right.

00:31:51:23 - 00:32:22:23
Nick Fazli: And this is includes a very established industry that is never changed over 100 years. So to me, the conversation should be how we can bring these two together, like the discussion around value and values, how we said they are complementary. I think the cost per square foot is not going to go away, but what's going to matter is because we want to sell homes, we're builders, and our audience is demanding that level of scrutiny around what is the value of this home to me over time.

00:32:22:25 - 00:32:43:27
Nick Fazli: They're bound to look at it from that perspective, and we better have a good answer for that, right? So I wouldn't abandon the upfront metric that the industry has lived and breathed for hundreds of years. But I would say we need to. It's time that we wake up and complemented with something that really our customers are asking, and that is the value per square foot concept.

00:32:43:29 - 00:33:22:10
Sara Gutterman: Yeah, I agree entirely. I think that this has to be an end proposition. We're not asking anyone to sacrifice profitability or business success or business growth for, you know, to incorporate these other elements. It actually becomes a very complimentary and valuable process for everyone, where when we lay out that value proposition for everyone along the value chain, whether it's builders, developers, homeowners, home buyers, lenders, insurers, appraisers, utilities, municipalities, everybody benefits with this shift.

00:33:22:16 - 00:33:43:28
Sara Gutterman: And I know that we've talked with a lot of the production builders and the leading builders of America, that group that that consists of a lot of the the highest volume production builders that say, well, look, we can't ignore entry costs because if people can't afford to get into homes, then it doesn't really matter how we're lowering operating costs as they can't only in the first place.

00:33:43:28 - 00:34:23:02
Sara Gutterman: But I think that, you know, my counter to that is that if we do this the right way, even at the entry level, those, let's say first time buyers can access down payment assistance and creative mortgages. That actually unlocks buying power. If you're a first time buyer and you're getting a mortgage that includes energy efficiency, electrification, resiliency, solar plus storage upgrades into the home in a way where it doesn't come out of the builders profits or pocket, and it gets incorporated into a mortgage where that monthly mortgage payment isn't increasing on a monthly basis, but actually staying the same.

00:34:23:04 - 00:34:47:18
Sara Gutterman: Yeah, you're getting lower operating costs, lower utility bills, lower insurance premiums, better durability. All of a sudden you're unlocking $50,000 and up from buying power. Think about how much more of a homeowner you can get with an additional $50,000 or $80,000 or whatever that number is. So it really becomes very virtuous cycle and a valuable, valuable proposition for everybody.

00:34:47:21 - 00:34:50:23
Sara Gutterman: So here's my last question. Oh, sorry. Go ahead.

00:34:50:24 - 00:35:13:07
Nick Fazli: No, no, I was going to say I totally agree with you. I think that is the challenge that I'm taking on from my perspective is we can always talk about sustainability for the very expensive homes. It's a luxury item, right? You can build it. Very nice. You know, $2 million house that has all of the features. We talked about indoor air quality, resilience better this better than material.

00:35:13:08 - 00:35:34:11
Nick Fazli: But it really shouldn't be the domain of the affluent right. So it should it should be. The principle is really, as you correctly stated, resonates and should resonate with the average home buyer. It is more of a mindset. Like you said, the demographic is very important because that's what you know, that demographic wants to buy their home that way.

00:35:34:12 - 00:35:50:26
Nick Fazli: And it's not a question of can I afford this? Like, I don't want to buy a house if it's not that right, I rather rent. So then by a crappy piece of property that, you know, I know it's just going to fall apart on me or not have any of these resilience features or the sustainability or features that we talked about.

00:35:50:26 - 00:36:01:23
Nick Fazli: So. So to me, it's not a luxury item. It's like I said, it's we want to make it into a core package, part of your everyday experience. The your first home that you buy. Essentially.

00:36:01:26 - 00:36:41:07
Sara Gutterman: Absolutely. Well. And of course, there's the argument that it's the families and individuals that are at those entry level home price points that actually need energy efficiency, lower operating costs, lower insurance premiums the most. They need those things more so than the folks that are able to to buy those $2 million homes. So my final question to you is, what is one specific thing that our listeners, whether their business leaders, building professionals, consumers, one thing that they can do today that would fundamentally change how they think about without.

00:36:41:09 - 00:37:16:06
Nick Fazli: I would say, Sara, I would encourage your listeners to ask one better question before making any decision. And that's just not just what does it cost today, but what value is it, create or destroy over time? Okay, this is what should be asking that one shift changes everything. If business leaders and builders and consumers consistently ask that question, then they will start seeing energy, durability, resilience, health, things like maintenance and and trust very differently, right.

00:37:16:12 - 00:37:46:24
Nick Fazli: It moves the conversation from first cost towards total value. And once you begin to think that way, I think a lot of decisions that seem expensive start to look really wise. Right. And a lot of decision does seem cheap, start to look very costly. So Sara, with that, I want to thank you. I've really enjoyed this conversation. I appreciate the opportunity to share these thoughts with you and your audience.

00:37:46:26 - 00:37:57:19
Nick Fazli: These topics matter deeply to me, as you know, and I'm grateful for the work that you're doing to create space for conversations like this one. And thanks again for having me.

00:37:57:21 - 00:38:33:08
Sara Gutterman: Well, Nick, thank you. I truly appreciate your perspective on how we need to rethink value, because if you've taught us, you know one thing today, it's really that realigning our metrics shouldn't be scary. It's really about, you know, creating more value, health, resilience, stability and trust so that we can unlock a very different future. So to our listeners, if this conversation has challenged you or inspired you or made you rethink the metrics that you rely on, please share it and join us for the next episode.

00:38:33:08 - 00:38:53:27
Sara Gutterman: Thank you for listening to the valuation metric. Again. Thank you for being here. Nick is always a pleasure to have a conversation with you. Thanks for your leadership and Sui House. And until next time, I'm Sara Gutman reminding you that when we measure what matters, we create things that truly are meaningful and that last.

00:38:53:29 - 00:39:05:01
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