We are already observing a pre Christmas rush as the trades attempt to meet holiday deadlines. It was a year where understaffed crews took on additional work (or at least promised to) then met with supply chain challenges. End result is a lot of work being pushed out and the trades working seven day weeks. Despite all this we were able to get a house finished to that 99.9% level and a second only weeks behind. I will post a few more photos of the parkdale project, it looks great.
Notable sales
Theories abound regarding a recent sale. It must be a straw man mortgage fraud case, drug money laundering, and so on. Who can explain a sale where the fundamentals don’t apply? I’m struggling with the math on this one.
Warm November hot market
Signals of a hot market getting hotter have been observed. Huge interest is showing up for any bungalow rehab opportunity and multiple bids being placed is common. It seems like there isn’t much inventory of homes available for the fix and flippers to flip. Same issue with infill lots coming to market at reasonable prices, they are selling quick. I feel this optimism is a bit much considering how hard it is to actually finish any project, and how costly the materials can be to source. All of these sales now are homes that will need to be completed and resold in 2022, does this suggest the market jumps up a bit in the spring as these high cost projects come to market with big price tags? Looks to be so.
What happened here? Almost 80 k over asking. I liked this project as well. A solid rehab and a very livable up down unit. But what I don’t like is throwing another 100 k at this renovation and if you can even do it for that suddenly the numbers don’t look as attractive.
More market reversals
A few years ago the townhouse market was in the toilet, to put it kindly. The slow sales, depressed pricing, and too much over building really killed the allure of this business for me. I may have also said something regarding how the city comes down hard by throwing or imagining every possible costly and pointless regulation on the builder of townhouses. So what has changed? All the builders jumped hard back into the rc2 business of semi detached housing and costs to build went up so much less townhouses were started. And the townhouses that were started were mostly directed at the rental market. Supply went way down, and now the market is much better. The market knowledge you need to have to operate here is crazy. It is like niches within niches and timing and momentum. Tricky time to be a builder and every little piece of the job is costing more, more, more.
A sellers market in townhomes ? Almost 3x the sales volume from 2018 year to date ? Half the historic inventory. Just a wild market.
Massive 247% year over year changes in the economy and commodities.
As we reach the final two months of 2021 the market display incredible year over year data points. These indicate not just a change in trend, more like a completely new arrangement of the economy. Of particular note worthiness is the price of western Canadian select, aka oil sands product. The combo of much higher prices for the product and better shipping options from enbridge line 3 (even better by 2023 when transmountain pipe comes into operation) could mean a large reduction in the WTI discount that plagued the producers for years. What does this mean for the calgary economy? It certainly means companies like Suncor are erasing costly loans and paying large dividends again. More provincial revenue is likely to assist with major deficits due to Covid and overall government high cost of operation in Alberta. House prices in calgary are a fraction of the cost to find shelter in the larger cities and it does appear there are plenty of opportunities to find work. Calgary also has a massive amount of new purpose built rental apartments compared to the places like Vancouver that have rent control and huge obstacles to permitting new construction. All of this points toward a healthier society more able to grow because the fundamentals are in place to support it. Overall energy ignorance and woke policy is meeting reality of supply constraints and this does put Alberta back on the map as somewhere to invest after the huge rut we’ve been digging out of since 2014.
247% increase in price year over year. Eventually this massive change will impact the calgary housing market, arguably it already has.
Further comment on policies that harm development related to setbacks and massing
First of all we need to go over the math equation, it is something like this for inner city properties with old houses on them (and particularly really old, end of life homes that are either condemned or close to it). Land Value or purchase price = current property value - asbestos remediation - cost to demolish/permit/financing penalty or premium on raw land deals.
However, the issue of the property next door and its value comes into play as well. Contextual rules dictate making a lot of concessions when designing new housing among old housing. The most damaging is lengthy front setbacks, because to be contextual to these setbacks, the backyard space can be really diminished. this leaves a property with longer front yards than rear yards, far from ideal. In the case of a project I built some years ago, both sides of my site were still ‘littered’ to put it kindly, with the original shacks. These were tiny, cottage style homes (in rough shape too). These homes had no value, the land contained all of the value.
In permitting, my project was pushed back farther than ideal from the street, and other efforts were made to lower the appearance of the units (roofline, massing, etc). I still had nice units to build, but not as easily had these contextual issues not been at play. Fast forwarding to the future, which is now, and one of the neighbouring parcels has been developed. Now they’ve benefitted from being positioned beside a new build, and were able to creep the building significantly forward from where otherwise they’d have been able to. Now my building doesn’t look like it is at the right setback, which I find to be really aggravating. It would have been better for the two new builds to line up a little closer toward the street and had a more cohesive landscape plan.
The lesson here is the city required too many contextual concessions on a street where likelihood of development was very high to the context of the existing houses. We have seen now that the end of life home to the left was gone in a couple years. Why then was there any need to be contextual to this home while it existed?
My perspective is contextual rules should be modified when new, high cost development is proceeding against very old homes of no economic value. The permitting should recognize development pathways that are likely and plan for the future when dealing with massing and setback details. This is particularly acute in RC2 and RCG zones where extremely different massing are required to allow development to proceed.
The photo does not show front setback well, but the new building is quite a bit forward of my building that was constructed a few years ago. The massing is not very consistent either. My building should have been permitted with a broader perspective that more development was coming, and the homes on either side were not going to be there, thus contextually are not relevant to new build permitting.
Some stuff I’ve been working on
I made a conscious effort to design homes to fit in with the contextual stream to save time and cost. Another benefit may be to avoid the toxicity of fighting with neighbours, communities, etc regarding differing views on development. Sure, some people will oppose just about anything, but if you do a detached dwelling that meets all the contextual rules you should be swimming with the current. A permitted use project is quite unappealable as well if some person should decide to pursue that route. I don’t enjoy funding a legal battle at the appeals board, nor the time and energy wasted to do this. The key to sticking to a highly marketable permitted use is land selection, the design brief to your design team, and knowing your end product. All of this stuff I’ve now got a fair bit of battle scars from time spent in the trenches on a broad portfolio of work. This is a snapshot of an upcoming Inglewood project I hope to submit soon. I’m way behind on this one (mostly my fault) and have wasted a lot of carrying cost and opportunity cost value. Hopefully I can get approval in a reasonable period and a good spring start on the excavation.
Current state of affairs this will fit nicely into this community and be a highly marketable home for me to sell.
Land is back up to all time highs ? Looks to be so.
A few pretty pricey land deals have been registered lately. At these nosebleed levels do the deals make sense ? The lots are priced for perfection meaning nothing can go wrong with the build cost and margins could be thin. It depends ultimately what pathway is chosen to develop the land but the cost is certainly defined up front for the biggest single input. It does seem that during the summer there was quite a bit of better buying opportunities and into the late fall it has picked up. I’m not buying right now for sure. Also the premium Altadore type locations have increased more than other neigbourhoods.
Tile progress
Tile install is up there among my favourite stages of the project, better even than a demo! Have some interesting hexagonal tile in bath 2.
Nice hex
Another demo
Have to admit this one felt pretty good. I didn’t need any late night calls that some unwanted tenants had decided to break in and have a campfire. A good demo always feels like you’ve achieved something related to your project. You’ve really not, a demo is less than 1% of what a project is, maybe 0.1%. But it is a great 0.1!
What a remarkable before and after. There was a crazy hedge perimeter on this site that was completely overgrown and sadly the single tree was a mountain ash and got removed. Some trees need to be planted on the two city owned boulevards as well as my site, but for now the access is very unencumbered.
comment on the peculiar behaviour of property sellers
I sort of have a long and sordid history with an adjacent property of a plot I used to own, none of this fills me with tidings of joy. I had the land next door to this house and was in the midst of a tricky fourplex DP creation with the design shop. It seemed that meeting the neighbours and getting them on board would be a valuable tool in community engagement and placate the planner that the requested relaxation was known to the neighbours. The owner of this property I couldn’t even get to answer the door. I recall banging on it and seeing movement inside but the guy inside wouldn’t answer. I guess he thought I was selling girl guide cookies, or religion. I tried various techniques to get his phone number or converse with the owner, but was unsuccessful. I later told the planner that the neighbour ‘did not object’ to the relaxation requested. I guess that was sort of mostly true-ish, and I did get the DP relaxation and a really great DP design approved.
Once the market shifted down, I lost interest in the multi family building market and it appeared that parcelling 4-5-6 lots on this block could be created and then sold to the local development corp that owns a dozen or more lots in the area. And these 5 lots in a row were far superior to what the developer owned and all zoned MC2. I had no luck getting the neighbours to agree to list the homes together, but what happened is three or four of the lots found their way onto the MLS anyway. One was priced super high by some madman who could not be reasoned with, one was court ordered into foreclosure due to a divorce, and this third one just sat on the market, way over valued but the stubborn seller wouldn’t budge. Well, he finally budged, but not by much. I heard it was owned by two brothers, one of whom lived there. Lets just say the house is a junker, to put it kindly. I assume they inherited this house, one brother ran it down into the standard it is found today while living rent free, and the other wanted to cash out. The first brother maybe wouldn’t sign the listing agreement unless he put an unrealistic price on there, thus guaranteeing it could not sell. Maybe now it is uninhabitable and they both want to sell with a touch more motivation.
I guess after 900 days on the market maybe consider adjusting the price. that is some stubborn seller behaviour right there.
A big time Alberta rebound, is this it? (part 2)
This is a follow up post of the same title only the date is different (March 2021). Here we are at the end of September, and the summer building season is sadly coming to a close. There are more signs of a major rebirth of the energy industry and the Alberta economy in general. After a period of disaster capitalism, limited investment, terrible sentiment, and other supply chain fiascos, who’d have thought that we’d emerge from a never to end pandemic and find out that energy is important? Nobody but Eric Nuttal who runs the NNRG etf, a darling of the sector. Full disclosure, I have some peanuts sprinkled into this one myself.
Alberta gets ridicule from the rest of Canada for the usual tropes, but accolades from true outsiders who label Calgary among the worlds top 50 cities, which is a really amazing award and achievement. Best place to live, lowest cost (but rising) cost of living, attainable real estate, lots of empty jobs and downtown office buildings too. Are we onto something here, maybe a major upturn in the fortunes of Alberta and another run at an energy boom that even the Liberal government cannot ruin (thanks Enbridge for buying the MVP of the Texas coastline)? Take a look at what was commonly known as the worst run energy company in the sector, one that had to hide its shame of its ridiculously compensated executives by skipping town and changing its infamous alias.
WTI - $74 Brent - $79 Gas $5.84 WCS $63 - Line 3 opening October - shrinking differentials. Massive provincial deficit shrinking too. Overrun AHS is the challenge of our society right now that cannot be fixed by any sum of money. How will these indicators change for the next half year?
Ovintiv? is on a tear, has there been a better performer since the bottom? Too bad it left town and took the employment and office space use with it to Colorado. What a difference a year and a half makes for OVV.
Kitchen building
Progress at the parkdale project has been brisk with availability of the finishers and kitchen crew to work on each side. It was like an accidental ballet choreographed so nobody stepped on each other or delivered material in a way that constipated the entire exercise. Definitely a rare occasion where everything went just right and both crews put in some long and productive days doing what they are best at. This means we arrive at paint and tile stage sooner then I had expected. Will we give back the days saved as we await the next stage of the build?
Almost ready for paint and countertop
Hard to get stuff, cont’d.
Encountering a situation on the job site that you can’t get essential products is now commonplace. Previously the supply chain on these products was almost perfect. You could get anything from stock and if there was no stock they’d bring it quick so you’d rarely face a holdup. At this time, giving anyone a fixed price job and a finishing time guarantee is totally foolhardy. I certainly won’t be entertaining any deals like that. It just takes a few material delays to have all the dominoes fall, even if you have reliable labour, which is a second but equally intransigent dilemma. A recurring problem has been the specialty makers of coatings or chemicals like acrylic stucco. With no stock you can’t complete essential work and it makes a big problem at the site. With our limited warm season these delays can make for big problems. It seems like the response is always the same, issues with production at the factory in the states. This is what happens when very little is actually manufactured in Alberta.
Roofer can’t roof because he has no shingles. Stucco guy can’t stucco because he’s got no acrylic. Windows taking forever. Hard to get stones for the outside. Concrete company short on mix. Metal products having major cost increases that compound on themselves. All of this makes for a huge problem when it trickles down to the job site where we live.
Playing with fire, in this case water.
Had to dig up a city water line that couldn’t be shut off due to a failed valve. Was particularly aggravating to incur the effort and expense to deal with failed city infrastructure. Despite that it was an interesting adventure and one I knew that eventually I’d have to face. You can only buy so many hideous old shacks before you unearth a gremlin. Luck was on our side with a trench filled 9 ft down with pea gravel and soil conditions resistant to caving in. We were also blessed with the best equipment and operator to do the job. Another lesson in network equaling net worth, for me it is more network = get it done easy and quick.
Trade secrets involved in shutting off the pressurized water line with no means of shutoff upstream.
hardship with grades - designed to fail by intent, by accident, or lack of knowledge?
Often the builder will struggle with grades, this can be self imposed (too high of a roof peak pushes the basement down into the dirt), or due to site condition (natural slope of land). Fighting grades is not a winnable scenario unless massive remedial action is taken. I have been the unfortunate holder of the wallet that has funded such conflicts, and I won the grade battle by losing the cash war.
I wonder if the grade issues you see on site are just poorly designed by someone without enough practical site knowledge, or is it an accident? Did the builder knowingly enter into the project satisfied to manage the grades during the build? If so, this is essentially deferring the problem into the future, yet as the building progresses, it gets continuously more difficult to fix the grades. There are work-arounds to being too low in the ground, but they will be hard, painful, and above all costly.
Here we have a new basement that is ready to pour. The red line is a demarkation of the ‘no wet’ zone. Moisture, dirt, etc, may not sit higher than the red line in order to create a moisture defensible wood structure. The top of the red line also represents the bottom of the stucco drip flashing, or siding, depending on what is used. I dont know of an exterior cladding that can be immersed in wet dirt, thus the grade of the sideyard needs to be a few inches below the red line, preferably that part is gravel, then a landscape fabric, then the dirt starts. The blue line represents the typical adjacent backfill height given existing grades as they pre-existed the project. Clearly this basement cannot be backfilled to the blue line because this results in wet dirt sitting against the wood structure, the grade is above the level of the flooring on the main level of this house.
Solutions are not great here. First of all, a taller concrete basement wall could have saved a lot of grief. That is the first change I would have advised, up front, as soon as the survey marks indicated a cut of 3.1 m, which is too tall (122 inches) and exceeds the height of the formwork. The cost of taller (10 ft) concrete walls is significant, but they are quickly done up front, and allow a much higher safe backfill level. The second option is to build a wooden retaining wall all along the 50 ft length of the house (and beyond to the garage location ultimately). This could be done in combination with a new fence right on the property line. This will be way more expensive and harder to do than taller concrete walls. Another issue is the disturbed ground of the excavation is a terrible place to be building a permanent dirt retention structure because it is settlement prone. Augering and grouting in support posts for a retaining wall in a 4 ft narrow sideyard with unstable fill is not easy whatsoever either.
The second problem is the height of land increases toward the lane, where the garage is. the garage pad will be significantly above the house, making for a much more costly garage pad structure. It makes sense that the back wall of the garage acts as a retaining wall (i.e has frost wall), with stairs down to the yard, and then the wooden retaining wall along the fence line continues to the garage, creating like a deeper but flatter back courtyard. All of this is costly work with equipment, lots of materials and effort, just to create the approximate condition that would have been already freely available on a flatter lot. The garage pad may end up being poured more like a foundation wall than a floating pad, with significant cost and multiple pours to complete that work.
It goes without saying that I looked at purchasing this property and another similar one on the same street, but I didnt bother. The purchase price wasn’t enough in my view to overcome the brain damage likely inflicted upon the builder to deal with the earthworks. There is a good likelihood that the cost to fight the grades will be substantial but the value created by winning the battle negligible. This is certainly an un-winnable fight from the value creation perspective. This project is just beginning so I will take a look at it once it is all resolved to see what they end up doing. Hopefully they have a good strategy to manage these grade problems (not really seeing evidence of this thus far), and a large wallet (remains to be seen for sure but what builder wants to waste a bunch of money). If not, they will be on the receiving end of a brutal construction learning experience.
Making a floor hole Q and A.
Had to patch a large hole in the floor we intentionally cut. And why do we do this?
q - what is the hole for?
a- to load drywall
q- why not use a door or window
a- not big enough. We use 54 inch drywall
q- why is the drywall not smaller
a- less joints less taping and sanding better finish
q- who carries in the drywall and why can’t they do it themselves
a- they’d butcher it. Hack up the floor and make a patch very hard. Better to feed it to them the way I want it done
q- is this the easiest way to get drywall into the basement? Isn’t there wires and plumbing
a- see answer above. You’ve got to cut the hole smart. Reserve the pieces in such a way it goes back together with glue and screws so no squeek later.
Ready to patch. Blocking and glue everywhere
Just like that. A hole in the ground is a major safety issue. I fixed it as soon as I could. Drywall boarders we’re just a few hours behind me and I didn’t want them in the area of the patch until it was 100%
More comments on specifications and building standards
Nothing is more enlightening than an apples to apples comparison among similar products to inform the mystery shopper, in this case, me. And what am I looking for? Is it any of my business to be some hell spawned secret Santa ruthlessly disparaging other builders’ work? Can’t seem to help myself either from doing this. Killarney is ground zero this year for observing construction specifications because without exaggeration there is a semi detached building (or three) underway on every block in this community (which is why I abandoned building here, and good riddance, a rare instance of some wisdom gained and applied from many years of building). Fertile ground to analyze quality, craft, and materials on essentially identical projects at all stages. I’m seeing a disturbing trend of turd like specs being masqueraded under a veneer of phony farmhouse newness. It is like a builder has an internal radar to costcut any item he believes the home buyer won’t know to look for. I don’t believe this is a healthy approach to creating a happy client. It helps to not care about that outcome when putting together the specs package.
This is the sticker you won’t see on many window packages because it isn’t indicative of a cost cutting approach to specifying an impossible to fix component of the new house.
Threshold of a character home
I have purchased a lot of inner city homes and the only way to deal with each of these homes has been demolition. What happens is these small, old, nasty and barely habitable shacks end up in the landfill. That is a sad loss of what was once raw natural resource manufactured into building product. However the homes are not saveable for so many reasons, reasons which are well documented in other discussions. A possible pitfall of making the types of purchase decision that I need to make at the speed I need to make them is you could land on some sort of black swan property. That’d be some historic designation or land use rule that won’t allow you to demolish the house on site. That is a real potential home builders nightmare to get stuck drastically over paying for a land deal where you can’t build anything on the land. In the case of a recent land purchase, the lot in question was located in a direct control zone which is a complicating factor. Studying the zone it was noted the older homes were identified as potential ‘character’ homes and there were rules in place to incentivize preservation. I felt the rules were not that well crafted. For example in the rowhouse zone you can’t save the existing old building which is centred on the heart of the buildable area. Regardless I bought this house anyway and pursued a ruling from the city on the character status. This was received today so we have the go ahead for some serious design work.
Character or just old. The interior lacks character to put it politely. I’ve declared the house to be condemned. It will come down soon.
Project neglect leads to zero project momentum
Semi detached update. Not a lot. Everyone is busy. If you are a good trade you are in demand right now. We’ve been focusing on other builds and letting this one languish. There are some good project management lessons here. A lot of what these builds are relate to momentum. With good momentum the project partly steers itself. Once it stalls it take a lot more management effort it boot it back up.
Garage framed, sidewalks poured, electrical started. This one got some momentum after languishing in project management wonderland. I like what I see from this build. Sound fundamentals lead to great detail opportunities. Totally changed the plans for the basement after I saw it in real time and space vs what the plans offered. I’m really enjoying building this model for the second time.