MASTERWERKS LLC BUILDING SERVICES Custom Home Building, Transformations, Renovations
Thoughtful Analysis & Measured Advice
INFORMED OBSERVATIONS ON CURRENT HOUSING CHALLENGES AND OPPORTUNITIES
June, 2025
Time for a Shift in Mindset:
Cost-Effective Strategies Deliver the Benefits of New Construction
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If you follow these Perspectives, you likely share our conviction that transformation, as well as other revitalization strategies, often provide shrewd alternatives to expensive new construction homes. There are multiple reasons for this, not least the higher costs and interest rates prevailing since 2022. New homes in high-demand neighborhoods are frustratingly out of reach for many who can’t or won’t pay the price.
However, thanks to our team’s depth of experience and skills, we continue to find creative ways to meet the challenges of the moment, while addressing a wide array of individual situations and budgets. MasterWerks’ past Perspectives delve into different aspects of our thinking and methods, with insights about upgrading existing homes and properties while protecting the owner’s investment and setting the stage for a decent return. Over time, our clients’ resale numbers continue to validate our approach.
In this Perspective, we’ll briefly review the principles that undergird our work and share recent success stories that deploy our encompassing revitalization strategies, including a complete transformation, where our team built an as-new home by working with the existing foundation and framing, without incurring the off-putting costs of new construction.
Why Tear-down and Replacement Is
No Longer a Go-To Formula
In past decades, we saw plenty of teardown and replacement housing in Edina and adjacent desirable neighborhoods. However, that formula is not working as well in today’s market because the multipliers of high site costs, construction costs, and interest rates result in a prohibitively high mortgage payment. The average new construction home price in Edina is now between $2.2M and $2.3M—with builders frantically trying to lower the cost through various methods that ultimately lessen product quality—while higher-grade homes are typically priced at $3-$4M.
As a result, even relatively affluent buyers are left feeling frustrated with their options. In some cases, they are turning their attention to existing properties with renovation potential, some built as recently as the 2000s.
Smart buyers recognize that a pre-owned home, made newly relevant, can offer the advantages of new construction, at a far more affordable price. But unless their decision is informed by solid analysis and planning, the outcome may not deliver the hoped-for rewards in terms of livability and downstream return on investment.
Two months after we completed this transformation project, the owners had to sell their home because of an employment transfer out of state. They sold with just one day on the market, realizing a $350,000+ net gain.
First Principle:
Analyze Neighborhood Context with Care
Determining whether a home or property is likely to pay back the investment of reconstruction or another building solution starts with the surrounding context. That’s why we focus on Edina and adjacent inner-ring suburbs with a long history of offering safety, convenience, good schools, and moderate taxes. The land is already fully developed and stocked with aging mid-century homes, many in need of revitalization to maintain relevance.
Because these well-kept, charming neighborhoods have always been a magnet for upscale people, in past decades—when interest rates were low, inflation was moderate, and the housing market was more balanced—we observed a natural, organic revitalization process taking place. In many cases, site value had eclipsed structure value, giving rise to the era of teardown and replacement.
Now, however, current data about these neighborhoods can be summarized as: Lack of housing inventory is causing acquisition prices to remain high, inflation has significantly raised the costs of new construction, and interest rate hikes have aggravated the entire situation.
The result is a classic inflationary spiral, causing buying, replacing, and renovation patterns to stall even in these affluent communities. In a challenging scenario like this, transforming or otherwise modifying an existing home becomes far more viable than new construction.
However, even this generally commonsense direction must be pursued with great care. There are limits to how much money can or should be spent, depending on the individual home’s exact location within the neighborhood and anticipated price category or tier. The balance is delicate.
Second Principle:
Assess the Property’s Potential with Rigor
From an investment point of view, because every aging structure is a fossil of its time—which depending on condition and location may or may not be worth reclaiming—our analysis is extremely judicious, drawing on decades of expertise pinpointing, assessing, and revitalizing older properties.
Our team thinks in terms of elevating the specific property’s absolute potential within its targeted price category/tier, defined by the quantifiers of curb appeal, square footage, condition, finishes, and detailing, as well as location. As we work with the owner’s input, choices to restore the home’s relevance must not exceed what the top of that price tier will bear. Since new construction is the well-publicized catalyst that shapes people’s notions of relevance, we incorporate and apply those lessons with strategic vision, restraint, and economy.
The goal and outcome of our efforts is a more attractive, livable home that can compete with the features and benefits typical of new construction in its relevant category at a significantly lower price.
The Resale Power of Elevating
the Overall Look and Finish
With House A, the owners made negligible updates to how the home was originally built. In contrast, the owners of Houses B, C, and especially D made encompassing improvements, enhancing livability, functionality, and overall appeal, elevating their value to various degrees. These contrasting strategies yielded drastically different sales results.
House D shows the true potential of this strategy, selling for $1,255,000, a marked contrast with House A’s disappointing $513,000. While Houses D and B did particularly well, achieving above-list offers after just one day on the market, House C also performed quite respectably in terms of price and turnaround time. These outcomes point to the takeaway that the better the improvements—including quality level, completeness, and curb appeal— the greater the likelihood of return on investment for the seller.
Smart buyers recognize that a pre-owned home—made newly relevant—delivers the advantages of new construction at a significantly more affordable price.
These homes and sales results were pulled from the MLS to demonstrate qualitatively different improvement strategies in the local market.
They are not MasterWerks projects.
Third Principle:
Maintain a Timeless Design Aesthetic,
Prioritizing Curb Appeal
Although our team thinks creatively about revitalization strategies and building solutions, we advise against falling into the trap of mimicking current housing trends, because when fashions fade—and they always do—the house looks dated and loses market value. Design choices that negatively affect the home’s overall flow and appearance, idiosyncratic elements, and cost-cutting labor and materials all intersect, taking a disastrous toll on livability and future return on investment.
Intentionally, each of our transformed homes looks seamless and organic, as if originally built that way. Curb appeal plays a key role in our building solutions, because in image-oriented communities like Edina, the
more attractive and compelling the home’s exterior is, the greater its perceived desirability and value.
It takes imagination, vision, and design capabilities far beyond those of ordinary construction groups to shift an older home from builder class to architectural grade. The process stems from the ability to see possibilities and infuse detail, character, and sophistication, grounded in a deep understanding of market dynamics, economic reality, and value engineering. The outcome, a home that possesses an undeniable classic integrity, conveys the culture, taste, and substance of the owners.
By upholding a timeless aesthetic, steering clear of trends, and adhering to high quality standards, our transformed homes maintain their relevance for years to come.
Yet another full transformation, this home is now expanded by a second-floor addition enhanced by gable and dormers, an inviting entry with extended porch, and a new oversized two-story garage in an estate setting.
The addition of an extended porch, welcoming entry, and roof embellishments transformed this vintage 1960s “snout house” into an undeniable classic.
By re-pitching the roof and adding a gable and eyebrow, reconfiguring the window placement and size, and replacing the siding with new siding and stone, the overall design integrity and quality are dramatically enhanced, moving the home from builder-class to architectural-grade.
With this full transformation, inside and out, the exterior now features a strikingly altered roofline, added shed dormer, enhanced entry way, as well as new windows, siding, landscaping, and stonework.
This 1970s colonial suffered from deteriorated siding, serious drainage issues, and pedestrian curb appeal. The transformation includes an eve extension; front entry porch and windows; detailed siding, trim, shutters, masonry, and grading; complementary landscaping and corrected drainage.
The Great Mistake:
Improving the Interior But Ignoring the Exterior
The owners of these four homes, currently on the market, made the classic mistake of focusing their extensive improvement strategies almost entirely on the interior while failing to address exterior presentation. Without strong curb appeal, you lose the ability to jump to a higher price category and end up struggling to compete for top dollar against other ramblers or dated two-story houses.
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Notice the difference between these standard homes and our examples on the opposite page. By attending to curb appeal—without overshooting the mark—you capture the imagination of potential buyers and command a higher sale price. Appearances matter in aspirational communities, and curb appeal is the leveraging principle that enables sellers to compete with new construction at the top of their relevant price category.
Understanding the Advantages
of a Revitalized Home
By definition, a property that is a candidate for revitalization is a diamond in the rough: well-located, with solid foundational and structural features capable of supporting a thorough, thoughtful transformative process.
The goal is to transform the existing structure as necessary, inside and out, turning it into a desirable, as-new home for those who can’t or won’t purchase new construction given rising costs, higher interest rates, and in some cases, awareness of environmental impact through increased waste and energy demands. (Occasionally, clients come to MasterWerks with a specific property they are considering acquiring, in which case we vet its viability.)
Once our team has developed an inclusive plan, we typically begin by conserving as much of the structure and systems as deemed practical, setting the stage for substantial savings. If necessary, we replace windows and mechanical systems—electrical, heating, ventilation, and air conditioning (HVAC)—as well as cabinetry, appliances, and other finishes such as tile, trim, and flooring, with high-quality new components. We often reconfigure floorplans to enhance flow, functionality, and livability. In some cases, we add to the structure as needed for better flow and function, as well for porches, decks, and expanded garages.
There are no cookie-cutter solutions. The work we perform is entirely driven by the individual owner’s dreams and desires and the property’s unique aspects: the land, the original structure’s underlying strengths, and its overall improvement potential.
The outcome of our efforts is always an attractive, livable, well-located home that can compete with the features and benefits typical of new construction in its category, at a significantly lower purchase price. For smart, cost-conscious clients who want new construction caliber and don’t want to spend additional time or money on making upgrades, this transformative approach can be an ideal solution.
Originally built in the 1980s, this thoughtfully redesigned, “as-new” kitchen with Energy Star appliances now opens into a light-filled dining and living area with adjacent half-bath and mudroom.
Understanding How Our Approach Stands Apart from Ordinary Merchant Builders
When our team implements a transformation strategy, we think in terms of engineering actual economic value per square foot. Our approach is highly selective and analytical, and all improvements are thoughtfully planned with an eye to becoming best-in-class within the anticipated higher price category. We want a superior outcome that serves the owner over the long-term and is a source of pride for our team.
MasterWerks also stands apart by implementing a completely transparent billing process. We charge a straightforward fee for managerial services. Invoices from our trade partners are reviewed and then passed directly to you with no markups. You see exactly what you’re paying for and how much you’re paying.
We know that major factors like excellent design, materials, and workmanship do cost more but far surpass corner-cut, price-driven, lower-cost options in terms of livability, durability, and overall appeal—which can radically improve downstream ROI.
Achieving an Artful, Livable Home
in Challenging Times—Affordably
Strategic transformation is our team’s most powerful building solution, resulting in well-located, desirable homes, with appropriately calibrated features and benefits. They are substantially more affordable than new construction, while delivering similar benefits.
These homes are ideal for discerning buyers and owners who understand the value of a well-made, complete environment that’s live-in ready without additional investment in the near-term. And because the homes are shrewdly built to compete with the best-in-class in their price categories, they prove their worth again when time comes to sell.
MasterWerks transformed this entire home down to the framing, including new energy-efficient windows and Energy Star mechanical systems. High-end finishes and attention to natural light enhance the flowing floorplan.
A Successful Example of
Strategic Transformation
After purchasing this solid, but dated, mid-century colonial for $900,000 in 2019, the owners worked with MasterWerks on the 2023-24 design transformation. We dramatically improved the curb appeal with a new façade, siding, trim, roof, and landscaping. We also made substantial interior upgrades, including a new kitchen, mudroom, pantry, and family room, with enhanced overall flow and function. Their added investment came to $650K.
Although the home is not currently on the market, on a lark the owners agreed to a one-time showing for an interested party. They then received an offer for $2,550,000—a net gain of $1M if they decide to accept. But if they decline and stay put, they’ll still be rewarded with serious economic peace of mind. That’s what we call ROl.
As for the would-be buyers, there are solid reasons for their offer. The site alone, in today’s market, would cost $1-1.1M. If a comparably sized 5,100-SF new construction home were to be built on the site, it would likely cost $433 per square foot for lesser quality and would probably price between $3.4 and $3.6M. That’s $900,000 above their $2,550,000 offer.
That means their offer represents a substantially more affordable alternative to a new construction home with most of the same benefits. This transformed home is beautifully sited, with a handsomely updated exterior, modern upgrades, and similar features and finishes to a new home, with no need to reinvest or make changes in the near term. In essence, they could move in, enjoy their home, and get on with their lives, without additional hassle. That’s why move-in ready homes of this caliber sell quickly, often with multiple offers.
In summary, if the offer is accepted, the sellers get a windfall, the buyer gets a deal, and everybody wins.
Renewing Relevance:
The Goal of Each MasterWerks Reconstruction
All housing is a fossil of its time, reflecting the lifestyle amenities, features, and utility of its price category at the time of inception. Time is the enemy as technology changes applications and equipment, and fashion-driven tastes demand changes to features and amenities. In essence, society’s constant desire for new-and-improved amplifies the fossilization process.
As houses age, they become less desirable for upwardly mobile buyers in pursuit of new-and-improved environments. Since houses are physical assets, they are actually depreciating or wasting assets beset by fashionable, functional, operational, and economic obsolescence. Without intervention, the house’s structure value declines until it is eclipsed by site value and becomes a teardown.
The renewal of relevance is the basic strategy of altering that wasting trajectory, arresting and reversing it by preserving and leveraging the house’s economic value through an organized process of improvement. The improvement process can take a number of forms depending upon the house’s physical state, location, and potential for reconstruction, transformation, retrofitting, reconditioning—or in extreme cases—replacement. Each is a different approach and strategy devised for specific situations designed to deliver meaningful results and returns.
In essence, relevance is a managed housing improvement strategy designed to enhance livability and economic value, ensuring investment potential. It is, frankly, outside the bailiwick of typical building/remodeling operations, but it is a process that MasterWerks has mastered.