Category Archives: 17. The Froogle Scott Chronicles

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 10: Reversion To The Mean

Van_house_price_1960_2012

Reversion to the mean

The most likely outcome of any bubble is a reversion to the mean — that is, a return to prices that reflect the long-run mean or average growth rate that existed prior to the bubble. As the various forces that helped inflate a bubble cease to exist (low interest rates, easy access to credit), or reverse themselves (speculative mania turns to fear), prices collapse. One or more external events may also play a role; however, bubbles always contain the seeds of their own demise. Market sentiment in its extreme form is the true creator and destroyer of bubbles.

Falling prices typically stabilize around the point where they would have been had prices followed the average growth rate rather than rapidly inflating and then collapsing. In the aftermath of a house price bubble, prices probably won’t return to where they were before the bubble — although they may temporarily overshoot to this lower level. They’ll likely return to where they would have been if there had been no bubble and they had continued increasing at the average rate of growth, a rate which is typically supported by economic fundamentals such as average household income, house-price-to-rent ratio, and the rate of inflation. We can see two historical examples of this phenomenon in the chart above — the Vancouver house price bubbles that peaked in early 1981, and in late 1994. In both cases, a half-decade later, prices had reverted to the mean.

I’m able to present a clearer picture of this pattern because I recently discovered some Vancouver house price data stretching back to 1960 (details below). Most commentators in the Vancouver RE blogosphere have been using the Real Estate Board of Greater Vancouver (REBGV) average price chart, which goes back to only 1977, at least in the publicly available version, or the Teranet house price index, which goes back to only 1990.

The current Vancouver house price bubble certainly looks epic, in both size and duration. Many people now believe that  a) the past decade has been a bubble, and  b) the top has been reached and the bubble is now beginning to collapse. If the current bubble follows the pattern of the two previous bubbles, collapsing prices should eventually revert to the mean.

What is the mean?

So, what is the mean, or average annual growth rate of Vancouver house prices, in percentage terms? Based on the data underlying the chart above, here are the numbers I’ve arrived at, which assume annual compounding. For calculating the growth rate of the current bubble, I’m excluding 2012, because it has the appearance of being the transitional year between rising prices and what could be a long period of falling prices — although no one can yet be certain.

  • 1960 to 2001, House Price Nominal:  8.33%
  • 2001 to 2011, House Price Nominal:  10.21%
  • 1960 to 2001, House Price Real:  3.62%
  • 2001 to 2011, House Price Real:  7.83%

‘Nominal’ means actual price — what someone actually paid at the time they made the purchase — and ‘real’ means actual price adjusted for inflation — that is, with the inflation component of the price in relation to a control or base year  factored out. The base year is 2002, in this case, meaning real amounts are expressed in 2002 dollars.

The distinction between nominal and real rates of growth would appear to be quite important to the analysis of Vancouver house prices. If we look at only the nominal rates of price growth, we see less than 2% separating the rate for all the years prior to the current bubble, and the rate for the bubble itself. Judging by growth rates alone, we might question whether much of a bubble exists. However, if we look at the real rates for the same time periods, we see a much different picture. The bubble rate of growth is more than double that of the years 1960 to 2001, with over 4% separating the two growth rates. That’s a major difference, especially given the effect of compounding over a number of years.

The reason for the seeming discrepancy between the nominal and real comparisons is that the period 1960 to 2001 includes the years of rampant inflation that occurred during the 1970s and early 1980s, an era when the annual inflation rate hit 14% and almost 13% in two separate peaks. That rampant inflation hasn’t been factored out of the nominal house prices for the period. By comparison, the period 2001 to 2011 has had stable and low annual inflation, around the 2% mark. For the bit of prognosticating I’m about to embark upon, I think it makes better sense to use real rates of growth, which remove the distortions caused by significantly different inflation rates, and which highlight price changes more integral to the housing market itself. Based on the data I’m presenting here, I’m going to use 3.62%, the real growth rate between 1960 and 2001, as the baseline for house price appreciation in Vancouver.

It’s worth noting that a real growth rate of 3.62% in excess of the rate of inflation is significantly greater than the 0.5% above inflation that I think Robert Shiller has demonstrated for American houses, long-term. (Feel free to correct me if I’m wrong about the details of Shiller’s finding.) In other words, even using the most conservative baseline for Vancouver house price appreciation puts us well beyond most other places in North America. That’s how Vancouver became the city with the most expensive residential real estate in Canada even before this latest bubble began to inflate in 2002.

Prognostications

There’s no guarantee that the current bubble will follow a pattern similar to the pattern of the previous two bubbles, or price bubbles generally, but if it does, this second chart shows some possible outcomes. The chart also shows that real house prices are currently 40% overvalued when compared to the 1960-to-2001 mean, and were almost 50% overvalued at the end of 2011.

Van_house_price_1960_2022_mean_reversion

  • Crash — Reversion to the mean takes 4 years, and occurs in 2015. Over the entire period, real price decreases 22.53% from $762,304 to $590,547. Nominal price decreases 17.11% from $921,625 to $763,939.
  • Current Trajectory — Reversion to the mean takes 7 years, and occurs in 2018. Over the entire period, real price decreases 13.92% from $762,304 to $656,215. Nominal price decreases 2.25% from $921,625 to $900,847.
  • Slow Grind — Reversion to the mean takes 11 years, and occurs in 2022. Over the entire period, real price decreases 0.71% from $762,304 to $756,856. Nominal price increases 22.00% from $921,625 to $1,124,654 (not a typo — read on).

These projections assume inflation remains stable over the next decade at approximately 2% a year. So a house price that remains constant in nominal terms from one year to the next has decreased in real terms by approximately 2%. In other words, the house has lost value because it hasn’t kept pace with inflation. Which partially explains the seeming anomaly of some prices decreasing only modestly, or in one case even increasing, while the bubble deflates — the modest decreases are added to by the loss against inflation, and the increase only keeps pace with the 2% annual inflation rate, whereas the mean line is increasing at 3.62% above the inflation rate. The other key factor is that the modest decreases and the increase take place over longer time periods than the decreases in the crash scenario, which gives the mean line, increasing at 3.62% annually (compounded), the chance to catch up to a more slowly deflating bubble line.

Almost certainly, the actual unwinding of this current bubble will not be as regular as any of my three posited scenarios. It will likely be a much more jagged affair, in what has traditionally been Canada’s most volatile real estate market. I’m not sure if the head-and-shoulders pattern from the stock market is truly applicable to real estate, but the two previous bubbles certainly have something resembling that shape. A quick, partial crash in the next two or three years, followed by a rebound (the right shoulder) as unwary early vultures pick up houses at what they consider bargain prices, certainly seems plausible — followed by a second leg down, perhaps less steep but longer, as that initial, relatively shallow wave of buyers exhausts itself.

One other interesting observation made possible by the second chart: from 1972 onward, Vancouver has experienced a closely spaced succession of residential real estate bubbles. For almost the entire 40-year period, a bubble has been either inflating or deflating, with only a couple of years during which the market actually closely tracked the mean. Which suggests that most Vancouverites have never known a stable real estate market in this city. They don’t know what one feels like. I haven’t studied the real estate markets of other cities so I don’t know if this is the norm or not, but I suspect in many cases it’s not. It may help explain the somewhat neurotic, love-hate relation many locals have with real estate. Like junkies, we’re either floating upward, or coming down hard.

Still too damn high

There is a crucial consideration that this technical analysis, such as it is, ignores. Even with a reversion to the most conservative long-term mean that can be extracted from the first 41 years of data, houses in Metro Vancouver will still be too damn expensive for average families. I think there might come a point when absolute or nominal prices become so overwhelmingly high that they break the model, even with a mean reversion. I wonder if Vancouver has gotten there. A growth rate of 3.62% above the rate of inflation is probably not sustainable indefinitely. Because it’s a compounding rate, that mean growth line is exponential, becoming increasingly steep. Like an aircraft, it may eventually stall.

The growth rate of Vancouver house prices has meant that when this latest bubble began inflating, it was inflating a benchmark house price in 2001 of about $350K, which was already the highest in Canada by a large measure. A reversion to the historical mean may not do it this time around. The entire housing market in the city may need a 50-year reboot that creates a new historical mean that’s a lot lower than the current one. Who knows? When the 1981 bubble collapsed, real prices were chopped in half, and nominal prices weren’t far behind. It could happen again. The worst of that earlier bubble was a quick, four-year spike and plummet, so far fewer people would have been affected than are affected now. The dimensions are so much larger this time that the results of a similar implosion truly would be spectacular.

One long boom?

A suggestion I’ve read on several occasions is that Vancouver has been in one long boom of varying intensity for several decades — certainly post-Expo 86. For perspective, I’ve taken the real growth rate for Toronto houses from 1966 to 2001, and from 1966 to 2012 — in other words, excluding and including Toronto’s own bubble — and applied them to the Vancouver chart, using Vancouver’s 1960 price as a starting point. The difference is striking. By Toronto’s standards, we’ve been in a bubble since 1972. I have my doubts that Vancouver’s real growth rate can continue to outstrip Toronto’s by a percentage point or more indefinitely. You’d think that Vancouver mean line would eventually have to lose some altitude. For that to happen, real prices would have to traverse the mean line and stay below it for prolonged periods. In other words, a true crash, and a permanent reassignment downward of the growth rate of Vancouver house prices.

Van_house_price_with_TO_mean

Plastic-folding-chair economist

In one of the early episodes of The Froogle Scott Chronicles I stated that I’m not even an armchair economist. Let me reinforce that now. I’m not even a plastic-folding-chair economist. I could well have made some blunders in my analysis. If so, I won’t resent having them pointed out by anyone with greater expertise in these matters.

Happy continued bubble watching to all…

About the data

Okay, so hold on to your shirts. The numbers for 1960 to 1973 come from an article that Ozzie Jurock published in the Calgary Herald: “Price rise history defies naysayers” (July 28, 2007). I consider the argument that Jurock puts forth in the article, regarding the financial return on houses, arithmetically far-fetched. However, I think the house price data is probably legitimate. Being the suspicious type, I compared the Jurock data to the other Vancouver house price data I could find, to make sure that it aligned reasonably, and for the years in common it does.

The numbers for 1974 to 2012 come from the Royal LePage House Price Survey, which is referenced by the Bank of Canada, and UBC’s Centre for Urban Economics and Real Estate, so I’m assuming the data is valid. I followed the BOC and CUER practice and averaged the prices for Royal LePage’s Detached Bungalow and Executive Detached Two-Storey categories, which probably approximates the REBGV’s Detached Benchmark category.  And I averaged prices for all municipalities in Royal LePage’s “British Columbia, Vancouver Area”.

The Jurock data continues to 2007, but beginning in 1974 it mixes houses and condos, so I switched to the Royal LePage data, which luckily begins in 1974 — although it is somewhat spotty in the earlier years.

This final chart shows how the various data sources align. For the REBGV Detached Average data, I harvested what I could from REBGV news releases. For years prior to 2001, I estimated prices using the REBGV Residential Average Sales Prices chart. All numbers are for December of each year.

As an additional check, I included the REBGV Detached Benchmark, and I also applied the Teranet HPI to the Detached Benchmark, using the 1996 benchmark price as a starting point. As you can see, all lines are strongly correlated, with the exception of the more recent years of the average line, skewed higher by the stratospheric prices at the top end of the market, and the more recent years of the Jurock line, which mixes houses and condos. Single family home and condo prices have increasingly diverged in recent years, so mixing in condos pulls the line lower.

In general, I find searching for Vancouver house price data on the web a frustrating experience. I’m not a conspiracy theorist, but I do get the sense the local real estate industry releases only the data they want to, and controls the vast amount of information at their disposal very carefully.

If anyone can point me to other sources of Vancouver house price data, I’d be most appreciative. For example, I haven’t been able to find the MLS HPI and average price data going back to 1980 that Ben Rabidoux, and Kevin at Saskatoon Housing Bubble, often use for their charts.

Van_house_price_with_data_comparison

Things can go missing from the web, so I’ve replicated the data from the Jurock article below. I’m assuming other commentators may want to include it in their own analyses. The year 1991 was missing from the data, so I averaged the prices for 1990 and 1992.

Year & Avg. sales price Year & Avg. sales price Year & Avg. sales price
1960  $13,105 1961  $12,348 1962  $12,518
1963  $12,636 1964  $13,202 1965  $12,964
1966  $15,200 1967  $17,836 1968  $20,595
1969  $23,939 1970  $24,239 1971  $26,471
1972  $31,465 1973  $41,505 1974  $57,861
1975  $64,471 1976  $68,694 1977  $64,556
1978  $66,243 1979  $70,888 1980  $100,087
1981  $148,860 1982  $107,829 1983  $114,618
1984  $113,722 1985  $112,737 1986  $120,035
1987  $132,658 1988  $160,375 1989  $209,670
1990  $230,641 1991  $237,921 1992  $245,200
1993  $279,800 1994  $305,600 1995  $309,500
1996  $288,200 1997  $287,000 1998  $278,600
1999  $281,100 2000  $295,977 2001  $285,900
2002  $301,500 2003  $329,500 2004  $362,800
2005  $395,400 2006  $482,000 2007  $540,100

In further communication after writing the above article, Froogle added the following thoughts:

- The e10 data still only goes back to 1960. If we had Vancouver house price data for the entire 20th century, what sort of trend line would emerge? That the average price for a house was only $13K in 1960 would suggest that the trend line was probably considerably less steep in the first half of the century.

- Did something start to happen in 1972 that has been continuing ever since, causing at least a portion of the baseline elevation? The thing that comes most immediately to mind is that the first of the boomers began hitting the earliest of the prime house-buying years. Forty year later, the last of the boomers, people our age, are perhaps now exiting the last of the prime house-buying years.

- Even bears would have to agree that the fundamental nature of Vancouver has changed. Not an “it’s different here” argument, but rather that Vancouver has shifted from being a resource-economy-based provincial outpost to being an Asia-Pacific-facing metropolitan region of a certain magnitude. World-class or global city? No. But certainly no longer a provincial backwater, either. Which means the trend line for house price appreciation for modern-day Vancouver should probably be compared to other cities of equal stature, not to earlier-times Vancouver.
—————–

Thanks very much for all this, Froogle Scott. Here follows my discussion. – vreaa

DISCUSSION:

Reversion to which mean?

Froogle Scott has sourced earlier price data, and given us a welcome analysis and discussion of the possible targets of a price reversion. The trend-line derived from data as far back as 1960, and the comparison with the long term Toronto price trend-line are healthy food for thought. If prices do ‘revert to the mean’, to which mean do we expect them to revert?

There could be arguments for the validity of any one of the following trendlines:

1. Trend-line determined by 2001-2011 rate of price increase (7.8% p.a. real)

2. Trend-line determined by longer-term 1960-2001 rate of price increase (3.63% p.a. real).

[2.5. Something in-between 2 and 3. More about this later.]

3. Trend-line determined by nominal prices rising at the same rate as long term wage inflation; little more than 0% real growth.

Trend-line #1 is the bullish case, where the very large annual gains of the last ten years continue indefinitely. By this logic, the current ‘correction’ in Vancouver RE prices would be argued to be over. We’d say at the outset that this represents particularly wishful thinking from those ‘long housing’, that 7.8%-real p.a. increases are preposterously large, and that we will soon find out that rate is far from sustainable.

The most pertinent debate that emerges from Froogle Scott’s analysis is whether we’d expect long-term support at the longer-term 1960-2001 trend-line, at a rate of 3.63% p.a. real. Even though 3.63% p.a. real growth rate may seem low to participants who are now accustomed to the 7.8% real p.a. increases of the last decade, I think we have to question whether a long term 3.63% rate is in any way typical, normal, or sustainable.

At what rate should we expect real prices in any given city to increase over the long-term?

Shiller’s very long term analysis suggests that housing prices should revert to long term means determined by long term wage inflation; by his findings, about 0.5% real growth.

Measures like income growth, population growth, and GDP growth are likely the best indicators of expected long term RE price growth.

“In Canada, as in other countries, movements in land and house prices over long time horizons are driven primarily by changes in population and per capita income. Over shorter horizons—a decade or less—house prices may outpace population and income in some periods and lag behind them in others.” – BOC Review, Winter 2011-2012

Here are some recent indicators of what rates of growth we can expect from these drivers:

Metro Vancouver’s population increased by 9.3% over the five years between the 2006 and 2011 census, an annual compound rate of 1.79%. (source: Statistics Canada)
From 1981 to 2011, the population grew from 1,300,000 to 2,313,000, for an annual compound rate of growth of 1.94%. (source: Metro Vancouver)

Median total family income in Vancouver increased from $62.9K in 2006 to $67.1K in 2010, an annual compound rate of 1.63%. (source: Statistics Canada)
Real income per person increased by slightly less than 1% per year in the 1980’s, actually decreased in the 1990s, and rose by 1.61% per year in the 2000s. (Source: Business Council of BC)

GDP in British Columbia increased from $197.0B in 2007 to $217.8B in 2011, an annual compound rate of 2.54%. (Source: BCStats)
GDP increased at annual rates of 2.12% in the 1980’s, 2.72% in the 1990’s, and 2.36% in the 2001-2010 decade. (Source: Business Council of BC)

Froogle surmises that 3.6% real p.a. growth is “probably not sustainable indefinitely”, and I would strongly agree. Why would we expect Vancouver RE prices to continue to increase at well above the current rate of inflation, at a rate greater than population growth, income growth, or GDP growth? Why should Vancouver RE prices continuously increase at greater than the rate of a city like Toronto, decade after decade? (Note that this is not a question about absolute price levels.. Yes, we can accept that Vancouver commands a ‘mild weather/beautiful vista’ premium.. but that premium is ‘priced in'; it explains why there may be a baseline difference in prices, not why prices should increase each year at about a 35% greater rate in Vancouver vs Toronto.)

The lack of convincing answers to these questions, as well as other factors concerning asset price bubbles that are mentioned below, lead me to believe that prices will go a lot lower than support determined by the 1960-2001 3.63%-real trend-line level.

It may be no coincidence that the nearby support as calculated using this 3.63%-real trend-line is also soon to be in the vicinity of the early 2009 price lows, those that resulted from the quick 15% pullback of 2008-2009. I have previously predicted there would be support at those levels for technical and psychological reasons (which technical analysis aficionados will know to be the same thing). I’d expect a temporary increase in buying interest at those prices, as it is likely that a group of prospective buyers will be expecting a floor at the 2009 lows. It wouldn’t be at all surprising to therefore get some support at those levels, and perhaps a bounce. This would result in the ‘right shoulder’ to which Froogle refers. I’d then expect that such support would fail in the months thereafter.

There are at least two other lines of argument that would suggest that price corrections are going to be more extreme than the worst-case 22.5%-drop scenario predicted by the 3.63%-growth trend line:

A. Fundamental analysis.
Prices in Vancouver have very clearly overextended from those determined by fundamental underpinnings. By price:rent and price:income ratios, Vancouver RE was two to three times overvalued at the peak. The average home price is more than 10 times the average income, where international standards judge 3.5 times average income to already represent an overpriced market. As Froogle puts it, even with a 22.5% drop, “houses in Metro Vancouver will still be too damn expensive for average families”. The thing is, no speculative mania ends with such a scenario. In fact, if anything, one would expect that the price correction will take values to levels where families can afford to buy. Long term sustainable prices should be at levels determined by rental yield, plus a modest ownership premium. Vancouver will never be cheap, but it will be a lot less expensive than two to three times fair value.

B. Sentiment.
Some people would be pretty miffed by a 22.5%-real price pullback. But ‘some’ and ‘miffed’ aren’t extreme enough words to herald the end of a decade long mania that has doubled or trebled prices. If such a modest pullback were to represent the end of the mania, that would mean that market participants would still have been rewarded with years of 3.63% per annum growth, over and above the rate of inflation. All this when fixed income rates have been very low. The point is, this would be a mere rap on the knuckles, and speculative manias always, always, end with holders being punished more than that. Manias resolve when speculation is completely ‘wrung out’, and a good proportion of participants are exhausted and disgusted. The bottom arrives with the proverbial ‘whimper’. After such a large and broad mania, sentiment will have to get particularly poor before we hit a final trough, and 22.5%-off simply won’t do the work necessary to achieve that goal.

Obviously, we can’t know with any certainty what trend-line we’ll revert to, or what the sustainable rate of price growth for Vancouver RE will end up being. Our best guesstimate is that Vancouver RE will find a long term trend-line below the 3.63%-real p.a. growth, but above the 0.5%-real predicted by Shiller. This still represents a very broad range, and consequently is not of much use in predicting price targets. Population-growth, income-growth and GDP-growth suggest that we’d quite likely reverting to a more modest 2%- to 2.5%-real long term growth in RE prices. That might not sound like much of a difference, the difference between 3.63% and 2%-2.5%, but it actually has profound effects on price targets: support determined by long-term 2%- to 2.5%-real growth would require prices to drop by about 55%- to 65%-real from current levels.

- vreaa

Postscript:

Caveats/Intricacies/Other:

(a) Whatever trend-line ends up being valid, we’d expect there to be overshoot to the downside to produce the final bear-market trough.

(b) Froogle asks in correspondence: “Did something start to happen in 1972 that has been continuing ever since, causing at least a portion of the baseline elevation?” We know that gold-bugs are going to be hopping up and down on hearing this question, eager to point out that Nixon closed the gold window in 1971. CPI began to rise at that point (see US chart below). But why should real prices start to rise at an even greater rate? The argument would be that there may have been hidden inflation for some assets. In other words, has there been a change due to ‘non-headline’ inflation of hard assets? This argument would still have to explain why prices have run so far ahead of rents.
Take a look at the 1972 effect on CPI in this US chart:
us national price index

(c) Concerning the argument that something may have changed about the way the world sees Vancouver; that Expo and the Olympics and other such forces moved Vancouver from a sleepy provincial port to a 3rd tiered city in global terms, and that such change merits RE price increases. If this were the case, why wouldn’t rents have increased at the same rate as prices, to reflect the argued increased desirability of the city?

(d) In the discussion of the 2010 ‘Fives Charts’ post at VREAA, commenter ‘Best Place On Meth’ stated: “I’m wondering if the entire past quarter century [of RE price growth] has been an aberration.” Indeed, it is even possible that the last half century could represent an aberration. Shiller would suggest that this could be the case (and would likely also point out that such periods of price distortion come and go over the centuries).
Did our bubble actually start much earlier than 2003?
Does the 2001-2012 spec mania action just represent the last two or three stages of a larger bubble blow-off, as the curve became steeper (2001) and steeper (2003) and steeper (2006; 2009-2011)?

Other articles pertaining to the trendline/price-support discussion include:

‘Five Charts: Predicting Future Vancouver Housing Prices’, VREAA, 11 Sep 2010

‘Vancouver Teranet HPI Trendline Analysis’, Jesse [YVRHousing] at Housing Analysis, 30 Mar 2012
Chart from jesse/YVRHousing’s article:
Teranet trend

Froogle Scott – “By systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

“Over the past few weeks I’ve had some interaction with two couples, both of whom are currently renting, and are contemplating house purchases. I’ve outlined the bear/bubble case for one couple, and hinted to the other couple, in more muted terms, that they could be buying at or near the peak. Everyone has been polite, but you can feel how uptight it makes people to hear these opinions. Including other people present at these conversations. It’s as if you’re the dinner party guest pushing your personal religious, political, or social beliefs onto others. It obviously makes people uncomfortable.
That’s the problem with the unbalanced and unethical MSM coverage of real estate in Vancouver. It conditions the vast majority of people to believe exactly what the vested interests want them to believe. And it makes people uncomfortable with legitimate and healthy debate. It’s all opinion, it’s all emotion, but by systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

Froogle Scott, at VREAA, 27 May 2012 12:31pm

Those of you who don’t already know Froogle’s epic Vancouver RE story are encouraged to check out ‘The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise’.

“Just had a switchover of tenants, nothing major to fix, but just the painting, cleaning, and dealing with general wear-and-tear chewed up all my spare time for a month and left me exhausted.”

“We’re landlords, and the tenants live beneath us in a ground-floor suite. Just had a switchover of tenants, nothing major to fix, but just painting, cleaning, and dealing with general wear-and-tear chewed up all my spare time for a month, and left me exhausted. The kind of thing realtors don’t mention when they throw around that “mortgage helper” catchphrase.
I can understand people not wanting to bother with running a rental suite. It’s certainly not the ideal situation. We’ll probably get sick of it eventually, and hopefully the numbers will work for us by then so we can look at other options.”

Froogle Scott at VREAA 13 May 2012 6:50pm

Read of earlier events in Froogle’s epic story here:
‘The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise’.

Froogle Scott – “Some interesting comments from our banker this morning. They’re wondering what might happen if prices go down 20 or 30 percent.”

“Some interesting comments from our banker this morning. My wife and I were in the bank switching our variable rate mortgage to one of the low fixed rate mortgages the banks began offering last week. (The switch is a bit of a gamble, but not one with a lot of downside risk.) Our banker said that because we have a good credit rating, we could also apply to have our HELOC credit limit raised and we’d be approved. But as of two weeks ago, customers with a ‘C’ rating, if they want a raised limit, must have their house reappraised, at their expense, and also provide a proof-of-income letter from their employer. I asked if this was because the bank was getting worried about house prices. Our banker said, “Yes. They’re wondering what might happen if prices go down 20 or 30 percent.” She then went on to say that my wife and I are among the few clients who have been significantly paying down the principal on their mortgage. A number of her clients have been “bumping up,” and she feels some of them could be caught if the market drops.”
“Interesting on several levels. The bank quietly enacting some defensive measures. Clients with good credit and steadily shrinking mortgage balances — i.e., ‘safer’ — invited to increase their credit limit. 20 or 30 percent – her numbers, the ones that I assume are circulating in the bank at the moment. Plenty of people still increasing their debt, fiddling while elsewhere Rome burns, assuming the flames will never reach them, or not even aware there’s a fire. As for credit rating, apparently all it takes to get on the bank’s shit list is a couple of missed credit card payments.”

– from Froogle Scott, via e-mail to vreaa, 24 Jan 2012

Interesting. Many thanks for the story, Froogle.
If prices do fall 30%, what’s to stop them falling 50%?
Do we expect there to be buyers stepping in at 30%-off levels given what such a fall is likely to do to wages, the economy, lending criteria, and sentiment? We will have lost all momentum buyers, of course. And would we expect value buyers to step in when prices, albeit lower, would still be significantly overvalued by fundamental measures?


PS: All Froogle Scott fans will be pleased to hear that he is, in his characteristic painstakingly thorough fashion, putting together an analysis of the actual cost of home ownership. He plans to share this with us soon. We eagerly await it.
– vreaa

The Disinvested – A Few Disparate Thoughts On The Vancouver Riots

by Froogle Scott, VREAA, 16 June 2011 -

Rioters = people less invested in a society, or at least capable of being less invested for an evening, when fueled with booze and testosterone.

Interesting that the typical riot shot or ‘riot pose’ adopted by the young male participants, is one with arms thrust upward and outward in a V, as if proclaiming some kind of victory, or drawing power from the carnage behind. Ergo, these are people who spend most of their time walking around feeling powerless?

The boutique and upscale display window, the BMW or Hummer, is the magnet for trashing, upscale consumer goods the key item for looting.

The riot appears to be a fun event for the participants, but also something that helps define them, assert their individuality — ironically, while part of a mob. The Canucks fail to make them feel good about themselves, so they take matters into their own hands. Surreal to see “Kesler” and “Luongo” and “Sedin” running around inside the Bay and outside smashing and looting. If the real Luongo can’t get it done, I’ll just do it myself.

A few disparate thoughts, perhaps held together by the notion of ‘investment’ — the various meanings of that term, the lack of it, and perhaps the distortion of its meaning by the broader Vancouver society. We feel invested if we own a house or a condo, or earn enough to buy $500 hockey tickets, or designer handbags and shoes, or fancy automobiles. As the society has become increasingly focused on consumerism and sensory experience, on houses and home renovation, and the price of admission to that society climbs increasingly higher, the notion of what constitutes a healthy society in which everyone can feel invested becomes increasingly murky.

I don’t think the rioters are ‘dispossessed’ in any real sense of that word, but I do think that a riot of disaffected, bored bottom-feeders in a consumerist hierarchy tells you something about the nature of the broader society.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9j: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9j: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[The final instalment of Part 9; thirty suggestions over 10 sub-parts. Download the collector's-edition pdf of the entire Part 9 here. Also available through the Froogle Scott sidebar. -ed.]

29. Think about what constitutes quality

Before our renovation, my wife and I referred to our house, somewhat affectionately and ironically, as “our East Van shitbox.” We seem to have stopped the practice, perhaps because the house doesn’t seem so shitboxy anymore. If I ask myself why it doesn’t, the thing that comes most immediately to mind is the dramatic transformation of the exterior. When we bought the house in 2003 it had outdated two-tone stucco, and junky, single-pane aluminum windows with skinny little frames. The overall impression was dreary and depressing, a remuddling of the way the house would have looked when first built — nothing fancy, but at least neat and solid, with fiber cement shingle siding (possibly asbestos-containing) and wood-frame windows. Now the house looks neat and solid again, and attractive, with wood siding and trim, and windows, which although vinyl, have beefier frames and nicely balanced faux mullions (those little rectangles in the upper part of the window). The curb appeal, to use a term favoured by realtors, has been greatly improved. I actually like looking at our house now, while being under no illusions that it’s anything more than an attractive little 1940s bungalow. That the exterior is what I think of first would seem to contradict everything I’ve been saying about the importance of foundations and systems, but there’s no denying the psychological and emotional impact of exterior appearances. Human beings are visual creatures.

I’d like to return to the comment Renting made about “a million dollar home in Vancouver [being] a piece of shit” (amusing in a surreal way, isn’t it?), a sentiment echoed by many commenters on Vancouver real estate bear blogs. It’s also a sentiment that exists among the broader population, perhaps owing to Vancouver’s widely publicized leaky condo crisis and the ongoing spectacle of entire buildings shrouded in tarpaulins, like giant crime scene victims. If we leave price aside, at the heart of Renting’s contention is the issue of quality. And quality in houses can be a tricky thing to define, because it can mean different things to different people, and can have multiple applications when talking about the seeming unity of a house.

Differentiating between quality of design, and quality of construction, can help clarify matters. Quality of design can be further broken down into aesthetic quality and functional quality (form versus function). Quality of construction can be broken down into quality of materials and quality of workmanship. If all four of these characteristics — form, function, materials, and workmanship — meet a good standard, that’s probably a good house, assuming the house has been well maintained, and the location is also at least reasonable. Erode any one of the four too much, or two or more of them somewhat, and that may be a house deserving of Renting’s description. But what, exactly, constitutes ‘good’? ‘Good’ is a highly subjective term, and one person’s ‘good’ may be another person’s ‘shit’.

Aesthetic quality is probably the most subjective of the four characteristics, and workmanship perhaps the least. The eye of the beholder has much to do with things. There are many forms of residential architecture, likely to appeal to or repel different people for different reasons. How does one compare the ornate turrets and verandahs of the late-nineteenth century Queen Anne style to the post-and-beam, mid-century modern, or either of these to a concrete condo or a vinyl-sided tract house? There’s such a difference of intention that comparison lacks enough common ground to be meaningful. We’re thrown back on to personal preference, which is fine, but it should be recognized as such. If we’re going to compare houses on aesthetic grounds, it’s probably more fruitful to compare individual houses within a particular form, having arrived at those forms that most appeal to us personally. A certain amount of objectivity comes into play when identifying the best examples of a particular form, and these more objective comparisons can be useful when it comes to making a purchase decision.

Aesthetic quality and functional quality can conflict. Some of us may love the way a stately Edwardian house looks from the street, but find the rabbit warren of little rooms inside quite unsuited to a modern lifestyle. The interior design of ‘ticky-tacky’ Vancouver Specials, and the older, rancher-style 1950s bungalows, makes very good use of available space, and facilitates good traffic flow patterns. These house are highly functional. However, for many Vancouverites — perhaps Anglo Vancouverites predominantly — Vancouver Specials typify lower quality, regardless of whether or not they are easy to live in and maintain, or are well constructed with good quality building materials. The main reason for this sentiment has nothing to do with quality of interior design or construction, but rather, lack of curb appeal. To many, these houses look like ugly, naked boxes.

By contrast, many people equate ‘character’ or ‘heritage’ houses, such as Swiss-chalet-style Craftsman bungalows in Kitsilano, with quality. They covet these houses and are willing to pay a handsome premium, even if interior layouts are less than optimal for current lifestyles and family configurations, and are difficult and expensive to reconfigure, building envelopes are sub-standard or failing, insulation and energy efficiency are poor, drafts blow in, and basements are low, dark, and damp, making for less than inspiring living conditions on the lower level. Prospective buyers, however, may be blind to these shortcomings because these houses have the architectural proportions and adornment, the ‘character’, the aesthetic quality, the beauty, that strongly appeals to them. In the minds of many, these houses hark back to an earlier time when things were better built — even if they may not have been any better built than more recent houses. It doesn’t matter. The patina of old wood, buffed by the hands and feet of generations, the quality of light through stained glass leaded windows, the muted gleam of brass doorknobs, gives many people that intangible feeling of solidity and security, of being connected with something physically and emotionally solid, with roots to a place, which in an increasingly mobile and globalizing society, and amid a built environment constantly in flux, can make people feel more psychologically and emotionally secure. You see yourself in a particular kind of house — getting back to that childhood stuff — and nothing else will do.


Swiss-chalet-style Craftsman bungalow, Kitsilano neighbourhood

Enter the heritage-style new house in Vancouver. Over the past decade, two styles have dominated new house construction in Vancouver: the boxy and unadorned new-style Vancouver Special, and the faux heritage house, sometimes built as a cleverly disguised front-and-back duplex. These new heritage houses blend aspects of different heritage architectural styles (which were often themselves an amalgam of even earlier styles) — the full two storeys of the Edwardian Box, the half timbering of the Tudor Revival, the roof brackets, tapered porch posts, and dentils of the California bungalow. A grab bag of Berelowitz’s “geegaws.” However, when it comes to materials, and workmanship, and building codes, these often spec-built houses are no different from the new-style Vancouver Specials they seem to be reacting against, or holding at bay. They’re the same house, with a different face. And they may be no better built, or even poorly built.

In 2003, when my wife and I were house hunting, we toured a heritage-style half duplex in Strathcona, one of Vancouver’s oldest neighbourhoods, traditionally home to immigrants and blue-collar workers, but now undeniably gentrifying. This house looked good from the street but up close it didn’t bear much scrutiny: outside, the corner of the foundation revealed badly honeycombed concrete; after we took off our shoes, we could feel screw or nail heads through the thin carpet; when sighting down the drywall I could see nail or screw pops were already starting; and an exterior deck on the upper floor used cheap 2×2 material full of knots, already cracking underfoot. Materials and workmanship were quite obviously crap. If these deficiencies were in plain view, what lurked beneath? And the tall, narrow layout enforced by the front-and-back duplex on a standard lot, meant small rooms, lots of stairs, and some awkward little spaces. The developer had approximated quality of a particular form, but profit-driven and sloppy practices in the other three areas — function, workmanship, and materials — betrayed a lack of quality.

I suspect that for many prospective home buyers, and especially inexperienced ones, the importance, awareness, or visibility of the four basic characteristics of quality in houses, and associated notions of good, from most to least, goes something like this:

1. form
2. materials
3. function
4. workmanship

So in neighbourhoods like Strathcona, and Grandview, which is perhaps also undergoing a certain degree of gentrification, and experiencing a spillover of younger Anglo buyers priced out of the West Side, the faux heritage house, sided and trimmed with wood, attracts a lot of interest. The houses sell at a hefty price, even if the rooms are not optimally laid out, and on close inspection by someone with a base level of knowledge, or just a sharp eye for detail, the materials are revealed as run of the mill — essentially, spec builder grade — or even cheap, and the workmanship is slapdash, almost guaranteeing additional problems beneath.

My suggestion for a revised order of importance of quality and associated notion of good might be:

1. function
2. workmanship
3. materials
4. form

First and foremost, you live in a house. You need it to work for you on a moment-by-moment basis. That’s function. You need it to be well-built, durable. That’s a combination of workmanship and materials, although I’d place the greater emphasis on workmanship. Middling materials used well probably trump higher-end materials use less well. And ideally, a house should in some measure appeal to your soul. However, this last characteristic is probably the most negotiable, and the most subject to change. And yet, ironically, it’s the one that probably most influences most purchase decisions.

You can play with the four characteristics of quality, and perhaps come up with others, ordering and weighting them in accordance with your own beliefs and values. And location, both general within a city, and specific, as in site influences, can outweigh or overrule any of these considerations. The key is to understand that ‘quality’ isn’t a single thing, that it’s made up of several components, and that no one component should blind you to the others. As for what ultimately constitutes ‘good’, while I think there are some standards that most people would agree on regarding durability (workmanship + materials) and function, each person probably arrives at his or her own definition of what ‘good’ means.

30. Take pause, and ask yourself what’s important

Once you start, it’s easy to get caught up in the house battle. One thing inevitably leads to another. You renovate part of the house, and the unrenovated part looks miserable in comparison. You decide to have a new bathroom fixture installed, or a few electrical outlets, and find out all the plumbing or wiring is shot. You want to rearrange a few partition walls but an old masonry flue is in the way. You remove drywall and insulation and discover water is seeping through the building envelope. You learn something about the seismic inadequacy of most houses, and decide you need to act. You see someone else’s fantastic new kitchen or bathroom or storage solution and — human nature being what it is — you want something similar.

What you come to understand about houses is that the battle is never won. With effort and expense you can gain the upper hand, but entropy is always at work — whether the house is a hundred years old, or new. You must continue to expend a certain amount of effort and expense to keep disrepair and disintegration at bay. But how much of your life energy and your life earnings do you want to consume in this pursuit? Many people find renovation, or woodworking, or home maintenance and repair, or gardening, rewarding and satisfying, and an excellent way of staying active. I count myself among these people, but there are also plenty of other things not related to houses that I want to do with my life. Over the last few years I’ve been out of balance, the house sucking up too much of me — unavoidable, perhaps, given the scope of what we did, and still plan to do, but perhaps that scope needs to be reexamined, or should have been examined in a more circumspect fashion to begin with. At the moment, we’re taking a much-needed break from major renovation. A financial break that allows us to pay down debt — the money associated with home ownership and renovation and what it’s doing to retirement savings in this city is a big problem — and a psychological break that allows us to rejuvenate by doing other things. One of the reasons for writing this series is to reconnect with my writing, which was shoved to the side during the three years of the reno. When I’m not writing, I’m not happy, as my wife could tell you.

And that’s what it’s really about. Happiness. Satisfaction. Feeling a certain measure of security and calm in an uncertain world. People who think buying, or building, or renovating a dream home will give them this happiness and security are wrong. Too many North Americans have internalized this fairy tale. A dream home won’t fix them, or their relationships. It may do just the opposite. Approached with prudence and an appropriate degree of balance, what a reasonable home can do — whether it’s a house or a condo or an apartment, whether it’s owned or rented — is provide a stable foundation for the life you’ve already worked hard to achieve.

Next episode

Part 10: “Doom Blogs”

My early mornings with coffee are no longer spent on RealtyLink comparing the relative merits and prices of listed houses to our house, and speculating how high the price of our place might climb. Now my early mornings with coffee become an inversion, reading the doom blogs and speculating how far the price of houses, our place included, might crash, and wondering if we’ll stay above water, in positive equity territory, or if the money we’re bleeding on the reno, chewing away at our equity, will be compounded with a crash progressively shrinking the amount there is to chew…

Financial details — our house

Asking Price: $355,000 Sale Price: $355,000

Down payment: $88,750 Mortgage (at purchase, Sep 2003): $266,250

—–
Many thanks for a wonderful ‘Part 9′, Froogle Scott. We remain very grateful to Froogle for using VREAA as a portal through which to release his writings. When we’re doing renos, or even considering them, he’s our go-to guy — our ‘meta-contractor’. And, we’re looking forward to the rest of his Chronicles… – vreaa

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9i: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9i: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

27. Make sure you’re on the same page as your partner

The renovation divorce is not urban myth — they happen. A friend of mine personally knows of two. My own feeling about renovation divorce is that the renovation is not the root cause of the divorce. Rather, a major renovation can act as a very effective stress test of a relationship, revealing any deep fissures that may exist, and splitting them wider. Or, conversely, it can serve as a grand diversion, a common purpose that occupies a couple, allowing them to avoid dealing with any issues in their relationship. A renovation, or the building of a new house, may even be undertaken as a symbolic fresh start. Once the renovation or house is complete, and the novelty wears off, the underlying issues crowd back in.

My wife and I survived our grinding, three-year renovation, and the upheaval of firing the first general contractor, battered but mostly intact. We each learned things about the other, and about ourselves. My transformation into Captain Ahab, monomaniacally pursuing his white whale, is a tendency I need to rein in. We adapted and made compromises along the way. But there were also nasty blowouts. Cooling off after these rough patches, I would reiterate to myself that the relationship was more important than the renovation. People are more important than things.

For couples considering a renovation for the first time, assume that you are not going to agree on everything. And assume that there are many renovation details that you don’t yet know about or understand that you are not going to agree on — decisions and conflict points that arise in the course of the project, once the pressure is on. In our case, one such decision was whether or not to spend an extra $15K or $20K on rainscreening and re-siding the house, once we discovered the original building envelope was beginning to fail.

As much as possible, partners should make sure they’re on the same page before embarking on the joint undertaking of a major renovation. A simple and well-known tool called ‘the project triangle’, explained in the next section, can give you an idea whether harmony or discord lie ahead, and allow you to work out differences in advance.

28. Fast, good, cheap — pick two

The project triangle illustrates the three basic characteristics of any project — speed of completion, quality of work, and cost — and suggests that realistically we can get the best of two, while the third characteristic will suffer. The overlapping areas in the diagram are the three different possibilities for any project.

For a major renovation, here’s how the project triangle can play out:

•    If it’s fast and good, like our reno once the competent general contractor took over, it won’t be cheap because you’re paying market price for a crew of true professionals. You may be willing to pay because you have a particular standard of quality in mind, and you don’t have the rest of your life to learn how to do the work well, and to do it yourself. You feel you are getting fair value. But does your partner have the same conception of ‘value’ that you have? Nothing causes more friction in couple relationships than money.

•    If it’s good and cheap, because you’re a skilled renovator and do large amounts of the work yourself, and act as the general contractor for the rest, there’s a high probability that you’ll be on the ten-year-plan, like our neighbours M and S. Some people derive a lot of satisfaction from an ongoing project that slowly comes to fruition, and may not mind living amid an ongoing renovation for years. Others may find that unacceptable. Or the demands of family life make it completely impractical.

•    If it’s cheap and fast, there’s a high likelihood that the quality is mediocre or poor, because it just isn’t feasible for one contractor or company to significantly and consistently underprice the competition, and beat them on completion dates, while maintaining comparable quality. You might get lucky from time to time, but on balance you’ll get what you pay for. And what you’re paying for, whether you understand it or not, is probably a superficial papering over of deeper problems, or something that’s going to fall apart, or look like crap in short order, or maybe even right away. Cheap and fast usually equates to quick and dirty, and there’s another little maxim about projects: long after quick is gone, dirty remains. What seemed cheap in terms of money will start to reveal itself as cheap in terms of quality. Which ultimately means it’s not cheaper in terms of money, because it will have to be replaced sooner.

The root of couple tension related to a renovation likely stems from two different renovation conceptions conflicting because they fall into different overlapping areas in the project triangle. Discovering this incompatibility before starting a renovation, and working to resolve it, can spare a couple a lot of grief. Resolving it requires that regardless of which of the project characteristics you value most highly, you have a shared definition of what you mean by each characteristic. Is $300K a reasonable amount to spend for what you want to do, or is that far beyond the bounds of what you’d ever consider? Is second-rate finish carpentry with joints that don’t always exactly meet not that big a deal, or does it make you cringe? Is three months of disruption the maximum you’re willing to put up with, or can you handle living in a renovation zone while you pick away at things for years?

—-

Coming soon: The tenth and final sub-part -
Part 9j: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 29 & 30.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you call Holmes. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9h: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9h: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

23. Start early on making decisions

Depending on the scope of a renovation, the number of decisions you have to make can be bewildering. Even with a general contractor and architect guiding you, choosing the various items can be stressful. Layout, style, colour, and materials for kitchen cabinets and countertops, wood and tile flooring, bathroom fixtures and tile work, style and materials for windows, doors, and associated hardware, trim work, lighting, paint colours, types and makes of appliances, and on and on. All of it needing to work together harmoniously. Partners needing to reach agreement. And all of it, unless you’re rich, with a price/quality balance to consider. As with the other construction industry professionals, working with an interior decorator or an interior designer could be well worth the money.

The stress of making all these decisions becomes much worse if you make the bulk of them on a just-in-time basis once the renovation is in full swing. On a rolling basis, the general contractor needs the renovation items ready to go — physically present at the job site on the appointed day — or the schedule will be derailed, frequently costing everyone, including you, time and money. So the general contractor will press you to decide. And decisions under pressure are often not the best decisions, unlike decisions made well in advance.

This part of the renovation should be enjoyable. It’s all about your personal or shared vision for your place, and the finishings you could be looking at and living with for years to come. Done well in advance, it can indeed be enjoyable. Leave it to the last minute, it can be stressful, unpleasant, and you can find yourself completely turned off the entire process, nauseated by the thought of racing around showrooms, looking at one more wall sconce, or tile or hardwood flooring sample.

24. What will it all cost?

The short answer is: a lot more than you want to pay.

Here are the approximate total dollar amounts for our renovation, and for those undertaken by M and S, and another set of friends in the neighbourhood:

• 2006 to 2009. Our place. A 1940s post-war bungalow, 1600 square feet. Renovation includes a new basement slab, a new building envelope and siding, all systems, new windows and doors, a new rental suite, and a new upstairs bathroom. $300K ($25K on work that had to be redone). We did a certain amount of work ourselves, including some excavation, seismic upgrading, insulating, painting, and closet shelving. The upper level, with the exception of the new windows and doors, and the new bathroom, is still unrenovated.

• 1998 to 2010. A 1920s builders special, 1800 square feet. Entire two-and-a-half storey house renovated, including a new basement slab and partial replacement of foundation walls, raising house, and all systems. New garage. Exterior landscaping. $398K. M and S — also with frugal Scottish heritage — did large amounts of work themselves, including wiring, insulating, painting, garage construction, and building a large, multi-level deck.

• 2010 to 2011. A 1950s bungalow, 2000 square feet. Entire upper level renovated. Renovation includes high-end custom cabinetry and built-ins throughout, all systems except for lower level electrical, new doors, back porch and stairs, exterior concrete stair well, and attic access and storage area. $200K. The lower level, with the exception of new windows and doors, is still unrenovated.

We all used different general contractors, and excluding the first general contractor we fired, we hired competent, ethical people who did good quality work. Our two sets of friends got competitive bids from different general contractors and construction companies. The general contractor who finished our reno was involved in the bidding on one of the other jobs, and his price was in the middle. Taking into account the amount of work done, the cost of renovation across the three projects is comparable, and I’m willing to venture that on a square-foot basis, it’s representative of the prices that the Vancouver renovation market has borne over the last decade. Approximately $200 per square foot for good-to-high quality but not luxurious work, or about the same as the cost of new construction of the same quality.

In M’s opinion, renovation can still save you money over new construction, or yield better results for the same money, although what price do you put on all that sweat equity? Here’s M’s summation of the accounting of their reno he sent me:

“So, there you have it. How to take a $266,000 house and in 13 years work it up to a total of $664,000. So, $398,000 on renos, and that doesn’t count the massive amount of sweat equity. But, that took a house that had one truly livable floor on which nothing had been done for 40 years (plus a dank smelly basement with one crappily finished 6’2” room, a corrugated-cardboard finished attic, moonscape backyard and a falling-down garage) and fully upgraded it to 2.5 levels with moderately high-end finishing throughout, well landscaped, with a modern garage. In comparison, I figure it would have been $500K plus to demolish and rebuild a slightly larger modern house from scratch. (I’m figuring 2500 sf @ $200/sf.)”

It’s possible to get things done cheaper, or get things done under the table, but cheaper is invariably cheaper. How much money did someone save if the basement drywall starts to grow mould, the thin wood siding or shakes start to curl, a plumbing joint slowly leaks for years inside a wall, the layout of a rental suite is akin to a rat maze, or the finishing is full of noticeable glitches?

If the Vancouver real estate and construction boom becomes a full-scale bust, renovation and construction costs, and the cost of wood, concrete, and other building materials, will certainly come down, perhaps significantly. However, the people who are the quickest to drop prices are those who are forced to: the mediocre, the outright incompetent, or the unethical, those who don’t have good word-of-mouth reputations. The best tend to keep working through a bust, if at reduced levels, and are still able to command prices closer to the peak prices.

[Further resources/reading]

BDC Construction Cost Index. Vancouver-based Butterfield Development Consultants’ free web tool for calculating cost per square foot for new construction. In my view, their estimated costs for single family home construction seem a bit on the low side.

Blue Ocean Construction FAQ.
Vancouver area construction company with estimates of construction costs. Estimates are a bit higher than BDC, and their residential renovation estimates are in line with what we and our neighbours paid.

Carson Dunlop Report Library: Home Improvement Costs. Toronto-based consulting engineering firm specializing in building inspections. Their estimated home improvement costs are probably based on the Toronto market. Vancouver prices are probably somewhat higher.

25. How can you save some money?

Here are some legitimate ways you can save money without compromising quality:

• Educate yourself. The more you know about houses, renovation, construction, design, and the various players involved, the more likely you are to make better decisions about how to spend your money.

• Buy the right house. For example, if you know you’re going to want more square footage than you can currently afford, limit your house choices to ones that are relatively easy to expand. Less future work equals less expense.

• Engage construction industry professionals. Yes, they cost money, but they can save you spending money on the wrong things, and they can make sure you get full value for the money you do spend. The money you save may not be at the time of the project, it may be all the future money you don’t have to spend fixing a botched job. On a large project, thinking you can save twenty or thirty thousand dollars by going it alone may be penny wise and pound foolish. Just make sure you find good people.

• If you really know what you’re doing, and you truly have the time and energy, you can do some or all of the work yourself. Or you can act as your own general contractor. Just be warned: most people overestimate their ability to be among this relatively small group. And depending on the size of the project, prepare for a lot of stress and exhaustion, and during the period of the renovation, no life. As a friend in Ontario commiserated with me: “It’s all-consuming.”

• Look at the big picture. If you intend to completely renovate a house and any outbuildings, and completely re-landscape the lot, and assuming you don’t have the money to do it all at once, block out the work and separate it into phases. You’re looking to streamline the process as much as possible by finding efficiencies. You’ll probably need the advice of construction industry professionals to get this right. Have a logical sequence mapped out, end to end, before smashing out that first piece of drywall.

• Spend money on the right things. Renovating doesn’t require you shoot the moon. Focus on things that will truly improve your day-to-day quality of life, because those are the things most likely to provide lasting value and make you happy. A well-organized laundry room, with an ample surface for folding clothes, or generous counter space in a kitchen, will probably do more to lower your stress and make you feel better about your surroundings than re-facing the front of the house in California stone. Really well designed and space efficient storage solutions are probably more important than exotic and expensive hardwood flooring, especially if you’re going to be neurotically concerned about preserving the flooring ever after.

• Curb your appetite for space. Many North Americans have become habituated to large amounts of personal living space. Far more than most of us need to be comfortable and happy. My wife and I live in the top half of our house, which includes a small rear deck, and a garden shed beneath the deck that we share with our tenants. There’s also a single car garage. In total, we have about 1100 square feet of built space at our disposal, and a yard. And it’s enough for the two of us. Our problem with space has more to do with decluttering, getting rid of stuff, and improving storage solutions, than it does with acquiring more space. A couple should be able to live in 1000 to 1200 square feet, and a family of four or five in 2000 to 2500. In many countries, including some rich and highly developed ones, those square footage numbers would be considered luxurious. North Americans will cite their lifestyles as the reason underpinning their need for space, and if those lifestyles include lots of entertaining, or hosting of large family gatherings, there may be a legitimate need for more space than what’s required for daily living. But does a lifestyle really require mounds of stuff, much of it sitting unused, taking up space, for much of the year? Are many North Americans using their homes as warehouses to store an ever-increasing and difficult-to-manage dead inventory of possessions? As a society, we can hold on to our consumerist and accumulative lifestyles, but doing so is almost certainly going to become increasingly expensive, and will further jeopardize the shaky financial healthy of many of us. Renovating, furnishing, servicing, and maintaining 1800 square feet is a lot less expensive than doing the same thing with 2800 square feet, or 5000. One way to mitigate the eventual need to downsize is to not unduly upsize in the first place.

• Communicate. If everyone is in the loop, costly misunderstandings are less likely.

• Think about timing. Maybe the height of a real estate and construction boom isn’t the best time to undertake a major renovation, or buy a newly constructed house. You’ll definitely pay more for a renovation, perhaps much more, during a boom, and quite possibly the work will be rushed and the quality inferior.

This comment, posted on Vancouver RE blog Housing Analysis, highlights a certain aspect of the problem:

patriotz said…

If anyone is wondering why Vancouver has such crap housing stock, just look at the graph. [Vancouver housing starts, 1980 to 2009, showing a history of boom and bust extremes. F.S.] Such wild swings in starts are not conducive to having a permanent, skilled construction work force. Instead the bulk of the housing stock gets built during boom times by dope-smoking hammer-swingers.

And as to who’s fault that is — it’s the buyers. It’s the buyers’ willingness to pay inflated prices for crap that is the root cause of Vancouver’s boom-bust RE cycles since 1980. (“Vancouver Housing Starts Falling into the Abyss,” Housing Analysis, 10:45 AM, March 10, 2009.)

26. Be careful with money

Perhaps so obvious that it doesn’t need stating. I think what I really mean is be careful with credit, be careful with debt. Because most of us, when undertaking a major renovation, aren’t paying for it with money sitting in a savings account, or by liquidating our silver holdings. We’re borrowing. And once you get used to the idea of borrowing, and writing large cheques against a line of credit, or some form of construction loan, your perception of dollar amounts may start to change. It may become easier to spend an additional five or ten thousand, or more, in the heat of a project when things crop up that obviously make sense in the context of the project, especially if those add-ons aren’t being paid for with money you’ve saved. There can be a tendency to ‘privilege’ your project spending, and spend in ways you might not were you to consider those additional items in isolation.

For example, if you’re spending $250K on a renovation, the difference between a new $500 light fixture for the living room, and a $250 light fixture, may seem trivial ‘in the greater scheme of things’. The $500 light fixture is spectacular and goes beautifully with what the newly renovated place will look like. The $250 fixture is pretty good too, just not quite as wonderful. They both provide an equivalent amount of light. You may ‘psychically devalue’ the two hundred and fifty additional dollars the wonderful fixture will cost you because it’s such a tiny percentage of the overall project cost (00.1%). However, what the difference is, is $250, whether the purchase is made as part of the reno or not. Multiply this psychic devaluing of borrowed money across a spectrum of project items and your eventual debt can really balloon. And even worse, each borrowed dollar costs you more than a dollar, because you’ll be paying interest on that dollar in addition to having to repay the dollar.

You might respond by saying, “Well, we’re going to have an iron-clad budget. Not a penny more.” And that’s fine and good, but unless you and whatever construction professionals you hire have an exceptional amount of foresight, and more than a little luck, it’s probably unrealistic. It’s the rare renovation that doesn’t uncover something that’s going to require you spend more. And you will have ideas along the way about how things could be even better, for the simple reason that you’re immersed in the reno, you’re thinking about it day and night. And it often is ‘cheaper’ to spend more now, than to spend even more later. So it’s going to happen. Just recognize when it’s happening, and think carefully about when it makes sense to say yes, and when it makes sense to curtail your appetite and ambitions.

As a possible corrective to the psychic devaluing of borrowed money, here’s something to consider. It’s been taking us about five months to pay off the amount of each cheque we wrote against our HELOC every two weeks during the height of our renovation. In other words, it’s taking us ten times as long to repay the money as it did to spend it. And that’s at an interest rate (variable) that’s currently below 3%. If interest rates rise, which they very likely will at some point, the payback period is going to stretch out even longer. Thank god our renovation, once it really got going, didn’t last that long. And thank god we stopped when we did…

—-

Coming soon: Part 9i: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 27-28.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you call the Movers. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9g: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9g: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

18. To be there or not to be there

Consider moving out during a major renovation, but try to stay close so it’s convenient to drop by the job site for meetings first thing in the morning, and for your own inspections at the end of the work day.

There are pros and cons to staying or leaving. If a renovation involves a complete gut of a house, you won’t have much choice but to leave. However, there are in-between situations in which the decision to stay or leave isn’t clear cut. We stayed in our house the entire time, because most of the work was on the lower level, and on the exterior, and we live on the upper level. But the renovation of the upstairs bathroom, the installation of new doors and windows throughout the house, and the associated interior trim work, required the renovation to come into our space for a period of time. And for a combination of reasons, we went for over a year without a furnace.

Living amid the pounding, shouts, dust, mess, screaming power tools, early starts, and the general torn-apartness of a major reno, all of it overlaying the ongoing demands of your regular life, is stressful. Although everyone understands the need for the crew to get full access to the areas under renovation, if those areas even partially intersect with areas in which you are still living, it feels like an invasion of your privacy. The longer it goes on, the more it can grind you down psychologically.

Moving out, if you have to pay rent, adds to the expense of the renovation. Perhaps you can stay with family, but prolonged cohabitation with people you’ve chosen to no longer live with can come with a host of familiar and unwelcome issues. If the renovation time line is repeatedly extended, as often happens, increasing tension between host and guest can result.

Think carefully about the specifics of any renovation, how it will impact your life, how long it is likely to go on (err heavily on the upside), and your tolerance for disruption and stress. The mental calculus becomes trickier as the number of family members increases. Paying rent to live elsewhere during the most disruptive parts of a reno — typically the earlier phases of demolition, foundation, and framing work — could be money very well spent. But it could also blow your budget. One option is phased renovation in which part of a house is always kept habitable and renovation-free.

19. Know your limitations and know yourself

This consideration is a big one. Many people overestimate their ability to do things themselves. They don’t understand the time and labour involved, often don’t have even the basic skills required, and perhaps most crucially, lack the foundational knowledge. Do It Yourself has become a mantra, heavily promoted by the consumer-oriented, big-box home improvement stores because they make a killing on the crowds flocking in every weekend, but for many people do-it-yourself can be a miserable trap.

The key is knowing your limitations and knowing yourself. If you’ve never done a particular kind of task before, the probability is high that you’re going to make mistakes. That’s the way we human beings function — we learn from experience, which means we do a lot of learning by making mistakes and then correcting them on subsequent iterations of a task. When it comes to renovating a house, the problem with this approach is that you do a number of the component tasks only once. By the time the task is complete, you’ve learned a lot and gotten better, but now all your glaring mistakes are there for you to stare at into perpetuity, or until you get pissed off enough and depressed enough about the results to either rip out your initial attempt and redo it with the benefit of your hard-won experience, or to pay a pro to fix it.

There’s also the issue of time and energy. I’m reasonably good with my hands, first started making things and building things as a kid, graduated to painting, wallpapering, and reglazing windows in houses owned by my parents, and worked as a junior employee in several different trades when I was in my late teens and early twenties, experience that included the foundation work and framing one summer of a 5000-square-foot house. So I have some skill and some experience, and I enjoy working with tools, and building things. But… I’m not 18 anymore, and I have a full-time desk job that I go to five days a week. What I found with our reno was that I was squeezing the work into weekends, and evenings when I was already tired from my day job, and I was getting physically and psychologically exhausted. I couldn’t pack endless wheelbarrows full of soil the way I could thirty years ago. Some jobs I could do as well as the pros, but it would take me two or three times as long because I lacked the speed that constant repetition brings, and I only gradually discovered some of the time-saving tricks. And I’d sometimes make elementary mistakes. Occasionally, I’d make a mess of something — for example, trying to parge the sides of our concrete front stairs, or that bête noire of do-it-yourselfers, caulking around a tub.

Our neighbours M and S have spent a decade transforming their 1920s builders special from a borderline tear-down into a beautiful house. I’d call M a very advanced do-it-yourselfer, with a knowledge of construction techniques and the anatomy of houses that probably puts him in the top 1% of non-professionals. He has completely re-wired their house, built-out an unfinished basement, and built a new double garage from the ground up — all the work permitted, inspected, and to code. He has some sage advice for prospective do-it-yourself home renovators, which I’ll pass along here.

• “If you have ever found IKEA furniture challenging to assemble, don’t think about fixing up a house! Similarly, if you are at this stage of life and don’t know a Robertson from an Allen key, or have never touched a power tool in your life — forget it. If you have the DIY gene, you will have somehow learned this stuff long before you can consider buying a house. If you don’t have the DIY gene, then you are asking for trouble.”

• “Sit back and look at yourself, and think about how you are with tasks and projects of any sort. If you like starting and doing things, but not actually finishing things, then you are a process person and if doing DIY are doomed to live in a place that will always have missing tiles, insulation hanging out, or some such. It will never be finished! (That may be fine for you — but your spouse WILL see things differently.) If you like getting tasks finished without caring if you do them well, then go get a job as a builder in Vancouver rather than doing a shitty job on your own place! However, if you like getting tasks finished, while also doing them well, then you are a good fit for a successful DIY-er (subject to the DIY gene above).”

• “Think about the time/skill/cost trade-off. If there is a task you don’t like (drywall finishing), or aren’t good at (plumbing, drywall finishing), then hire someone to do it. Fixing up a place is a long process — save your energy for jobs you can enjoy and do well, rather than spending miserable weekends on something, and a miserable rest of your life looking at the second-rate result you produced. Pay the pros to do the things you don’t want to do or can’t do well.”

I don’t want to come off as a total downer here, just as a pragmatist. If you’re determined to do significant portions of a renovation yourself, then go for it. To give yourself the best chance of success, get that foundational knowledge first, so you’ll avoid making basic blunders, and depending on the task, consider first doing a few test runs using scrap material.

Here are some things with skill levels that the average do-it-yourselfer can manage, and maybe save a bit of money in the process:

• demolition (assuming no hazardous materials are involved)
• digging and modest excavation
• basic seismic upgrading
• seismic securing of appliances and shelving units
• cleaning up and transporting materials to the dump (mundane, but can be a real money saver)
• insulating
• painting
• reglazing wood windows
• laying click-lock or floating flooring
• changing light fixtures
• changing door knobs
• changing taps and faucets
• installing closet shelving
• laying patio stones

And here are some things that require more skill and physical stamina than you might expect. Consider paying for a pro:

• painting (if doing large amounts)
• drywall
• building decks and fences

20. Get the right tools for the job

Some advice from neighbour M regarding tools:

“Get the right tools for the job — they exist for a reason and make your life easier and the end result better. Beg, borrow, rent, buy secondhand, re-sell when you are done — whatever you need to do, but don’t try to skimp and get by without the right tools. And if you are doing any significant amount of framing or finishing carpentry, that includes air tools. Until you have them, you cannot realize how much time they save!”

I’d second that. When I started the seismic upgrading I was doing the nailing of the structural connectors by hand. The heavy duty joist hangers I installed in one area required 3-1/2 inch nails, 22 per hanger. By the end of that little job, my arm was numb. Other connectors required that I swing a hammer in the restricted space at the top of the cripple wall, between joists. I could manage only a few inches of backswing because of the floor immediately above, so I couldn’t contact the nails with any power. As a result, I had to slowly tap-tap-tap the nails in, which took forever, and because of the awkward angle I quickly started to get wrist strain. I had the entire perimeter of the house to do, so I knew I had to alter my method. I’d heard about the pneumatic palm nailer, a compact air tool that fits in the palm of the hand, and allows you to drive nails in tight quarters. I did a little research, identified an appropriate make and model, and bought one for a hundred bucks. I borrowed an air compressor and hose from another neighbour. In short order I was creating a horrendous racket in the basement, installing structural connectors in a fraction of the time they’d previously required, and with none of the previous discomfort. My only regret was that I’d spent the better part of a day installing the heavy duty joist hangers by hand when I could have knocked them off in a couple of hours using the palm nailer.


Palm nailer

Don’t fret about the cost of tools, and don’t buy cheap tools. Cheap tools will only let you down, and are virtually worthless if you try to sell them used. Read online reviews to learn what brands of tools are reliable, and if the new price is more than you want to pay, look for them secondhand or on sale. Some good places to look for secondhand tools are Craigslist, eBay, garage sales, flea markets, thrift stores, pawn brokers, and ReStore (Habitat for Humanity stores). Some tool stores also have secondhand or clearance sections, but typically not the big box stores. Give yourself a bit of time. If you wait for the last minute to acquire a particular tool, the chances are you’ll have to pay full price.

21. Safety — you might need those fingers for your day job

Safety falls into two categories — avoiding accidents, and avoiding exposure to hazardous materials or conditions. For the do-it-yourselfer, inexperience can significantly increase the risk in both categories. If a circular saw kicks back is your thigh or trailing foot in the kickback path? If you decide to rip out some old ceiling tiles, do you know whether or not they contain asbestos? Leaping into home renovation projects without properly preparing yourself from a safety standpoint can have unfortunate consequences.

Power tools are obviously a major area for caution. I’ve developed the habit of always reading the instructions and safety warnings carefully before using a new power tool, and I review the safety material if I haven’t used the tool for a long period of time. A few years ago, I was testing a used table saw prior to purchase and picked up an innocent looking scrap piece of wood that was sitting on the table top behind the moving blade. No blade guard in place. In picking up the piece of wood I inadvertently made the slightest bit of contact between the wood and the blade. The wood and my hand were yanked suddenly toward the blade and I was lucky to be able to let go of the wood just in time. The table saw manuals I’ve subsequently read stress that you never pick up a piece of material lying on the deck of a table saw when the blade is moving. Inexperience.

Ladder safety is another thing to learn about. On the ground, not when you’re twenty feet in the air.

The right tools for the job include the proper safety supplies. Protective eyewear, a respirator, earmuffs or earplugs, and work gloves comprise a minimum safety kit. Forget those little white dust masks they sell in home improvement stores. They may be fine to use while sweeping out a garage or attic, but they won’t filter out any of the nastier things like asbestos fibers, or silica or lead dust. Get your equipment from a dedicated safety supply dealer. A half mask respirator will run you $30, will last for years if cared for, and if properly fitted is comfortable enough to wear for hours. You’ll spend a lot more than $30 for disposable dust masks over the same time period, for much less protection and comfort.

22. Hazardous materials — a big pain in the ass

Asbestos. Lead. Silica dust. There are definitely some nasties associated with renovation, and from what I’ve observed, the construction and renovation industry doesn’t always protect adequately against these hazards. As the homeowner, the ultimate responsibility for properly dealing with hazardous materials rest with you. If a demolition contaminates your house with asbestos, who’s going to continue living amid the contamination — the construction crew, or you?

Assume that any house built before the early 1980s contains at least some asbestos, and perhaps more than just some. Drywall joint compound (‘drywall mud’), vinyl sheet flooring and flooring tiles, ceiling tiles, and ceiling texture are just a tiny fraction of the 3000 building materials that commonly contained asbestos at one time, and these finished surfaces are some of the most common things to demolish or remove during a renovation. The breaking apart of these materials during demolition or removal is what can release asbestos fibers, which until that point may have been relatively safely contained.

Perhaps the best-known residential asbestos hazard is vermiculite attic insulation, asbestos-containing pellets that were sold under the brand name Zonolite well into the 1980s. The vermiculite, contaminated with asbestos, came from a mine in Libby, Montana, but was processed in plants all over North America, including one right here in Vancouver on Industrial Avenue. So there’s a good chance that a significant number of houses in the Lower Mainland have vermiculite sitting in their attics, perhaps hidden under subsequent layers of blown-in insulation. If you find yourself considering the purchase of an older house, a thorough check for vermiculite is something you should insist upon from the home inspector, or better yet, you should purchase a good quality respirator, learn how to check safely for vermiculite (basically, disturb as little as possible), and check yourself. Because it’s you and any other family members, not the home inspector, who are going to be living in the house. Well-contained, undisturbed vermiculite insulation poses a low health risk. But if a renovation requires removal of ceilings, or getting into the attic space, you’ll need to bring in a reputable hazmat company to remove the material safely.

Lead dust, created by sanding, scraping, or otherwise disturbing lead-based paint, and silica dust, created by sawing, drilling, grinding, or jackhammering concrete, or cleaning concrete forms, are two other hazmat concerns associated with renovation.

A bigger problem than the hazardous materials themselves may be our collective attitude toward them. Do-it-yourself renovators and professional construction crews both tend to be pretty cavalier when it comes to demolishing old drywall and pulling up old flooring. Why? I suspect because it’s easy to start tearing things apart, because we tend to be impatient and want to get on with the job, and because working the safe and proper way — performing proper hazardous materials testing in advance of any demolition, and bringing in a specialized hazmat crew if the results come back positive — is time-consuming and expensive. At $40 or $50 a sample, testing the multiple materials and multiple layers involved in a pre-renovation demolition can easily cost more than a thousand dollars. It did in our case. Demolition and disposal using proper hazmat procedures probably costs at least twice what it does to do it without following hazmat procedures. Safely and professionally removing vermiculite from the attic of a typical house can be a $10,000 job. So not surprisingly, there’s a temptation to cut corners, to push concerns about hazardous materials out of our minds, especially for some contractors during a construction boom, when securing the next big, lucrative job may be more of a focus than properly completing the one at hand. Many construction workers also assume, probably correctly, that they’ve already been exposed over the years, and again, it’s not them who are going to be living in the renovated house. This last statement isn’t intended to sound cynical, it’s just the reality of who has the most vested interest in your renovation and your health.

Hazmat abatement is a big, slow, expensive pain-in-the-ass most of us would rather not deal with. To which I’d counter, what dollar figure do you place on your lungs and the lungs of other family members, and if they become diseased, where do you buy new ones?

[Further resources/reading]

There are a number of good resources linked from WorkSafe BC’s hazardous materials page.

“Identifying Asbestos in your home”
. Short overview, from Jon Eakes’ web site.

“Overview: Vermiculite, Zonolite, Asbestos and your health”. Good overview, with Canadian perspective, from Jon Eakes’ web site.

“Lead in Your Home”. Free download of CMHC booklet.

“Avoid Risks to Children’s Health During Renovations/Energy Retrofits, Experts Urge”. Canadian Environmental Law Association, 6 Mar, 2011. Article and downloadable full report.

“WorkSafeBC cracks down on asbestos removal in demolitions”, The Vancouver Sun, 24 Mar, 2011. Story about unethical contractors evading hazmat regulations.

—-

Coming soon: Part 9h: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 23 – 26.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you call the Realtor. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9f: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9f: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

17. Seismic upgrading — the cheapest insurance you may ever buy

Before an earthquake, decisions about seismic upgrade requirements, including financing, are extraordinarily difficult. After the earthquake, every property owner wishes he or she had done more. — Charles Eadie, former Project Manager of the City of Santa Cruz Redevelopment Agency Downtown Recovery Plan

I went through the Loma Prieta quake in San Francisco in ‘89. A portion of the Bay Bridge collapsed, thousands of houses were shaken off of their foundations, and 63 people were killed. I toured a lot of the damaged areas. . . . I saw dozens and dozens of houses in Oakland that were just fine in most regards, except that they had moved laterally a foot or two and fallen off of their foundations. Many of these houses still had all of their windows intact and still had dishes sitting on the shelves. — Jim Katen, Associated Master Inspectors, Portland, Oregon

***
Note: I wrote this section on seismic upgrading before the recent earthquake hit Christchurch, New Zealand, and the much more massive earthquake and associated tsunami hit northeastern Japan. These recent events don’t really change anything I’ve written here, but they do suggest I may not be some kind of seismic survivalist nut. Earthquakes actually do happen, and they happen with more severity and more frequency in seismically active zones (like the one in which Vancouver is located). The results of the Christchurch earthquake do underline a couple of points I include below: unreinforced masonry buildings are often the most dangerous type of structure in an earthquake, and even if a structure doesn’t collapse in a earthquake, it may be subsequently condemned. An estimated 10,000 houses in Christchurch will have to be demolished. The earthquake in Japan provides evidence of something else: fires and tsunamis caused by earthquakes can be far more destructive than the earthquakes themselves. Seismically upgrading your house won’t do anything to help it withstand a large tsunami. Living on higher ground is the only defense. Even if a house is securely bolted to its foundation, the direct impact of a wall of water will smash the structure into kindling. However, anchor bolts and holddowns might prevent a house from being floated off its foundation if only a moderate amount of water and force were involved — say, farther away from a tsunami’s initial impact zone. Preventing fires caused by ruptured gas mains or exploding electrical transformers is beyond the control of any homeowner, but you can improve the seismic safety of gas appliances in a house by using flexible rather than rigid supply lines, and by strapping gas hot water tanks to the walls.
***

For the price of a granite countertop, some relatively simple seismic upgrades can save a wood-frame house from tens or hundreds of thousands of dollars of damage in the event of an earthquake. The upgrades might even save the occupants from serious injury or death, although in big earthquakes wood-frame structures don’t usually collapse completely, unlike old brick or unreinforced masonry buildings, which can. For the owners of houses along the seismically active west coast of North America, the issue is more one of establishing at least a basic line of defense against the potential for massive property damage, and increasing the chances that a house will remain habitable, as opposed to being condemned, in the aftermath of a major earthquake.

The bad news, in Vancouver, is that the City only incorporated the seismic requirements of the National Building Code in 1967 — well after much of the housing stock was built — and one- and two-family dwellings were, and still are, exempt from the seismic requirements in the code. For new home construction, the City passes the responsibility to the structural engineer, who must attest to the seismic adequacy of a design. There is no requirement for houses undergoing renovation to be seismically retrofitted, and the current requirements with seismic implications that do exist for new houses are fewer than those in west coast American cities.

The typical risk factors for an older Vancouver house — all of them present in our own house prior to the seismic upgrading we performed — are a house frame that’s not anchor bolted to the concrete foundation walls, corners of the frame that are not secured with holddowns, and cripple walls (the short walls extending from the foundation to the first floor) that lack shear resistance (resistance to lateral forces). The shaking of even a moderate earthquake can cause an unbolted frame to vibrate off its foundation. A larger earthquake can cause a frame that lacks holddowns to tip up as a unit, or the entire structure to slump to the ground in one direction as all the studs in the cripple walls go over like dominoes, imperiling any occupants on the lower level, such as tenants in basement suites. Cripple wall failure is what caused the partial collapse of this house in the 1989 Loma Prieta earthquake (the one that disrupted the World Series in San Francisco). The cripple walls were probably vulnerable because not reinforced against lateral forces, and were further weakened by large openings for two garages, creating what is known as a ‘soft storey’. With the weight of the house above, there’s just too little material in this wall to resist the side-to-side shaking of an earthquake.


Cripple wall failure during Loma Prieta earthquake

The good news is that significantly improving the seismic resistance of a typical Vancouver house isn’t that technically challenging or costly, depending on when you do the work, and assuming there are no problems with the concrete foundation. Incorporating seismic upgrading with a more general renovation is the most cost-effective and least disruptive approach. Anyone considering a major renovation, especially one that includes the lower level of a house, should take the opportunity to seismically upgrade while other renovation activities are ongoing. Unfinished or gutted basements or lower levels are ideal, because the frame is exposed, and installing anchor bolts, holddowns, various other structural connectors, and plywood shear panels is relatively quick, easy, and inexpensive. Five thousand dollars should cover it if a contractor is doing the work, and perhaps two thousand dollars if you do the work yourself. Two or three percent of the cost of a major reno. If the lower level is finished, seismic upgrading will require removing and later replacing at least some of the drywall, which increases the expense and effort somewhat, but not excessively.

Most advanced do-it-yourselfers can perform the work themselves, working from a ‘prescriptive plan set’ — structural engineering drawings that can be adapted to a wide range of houses. I’ve included a link to a City of Seattle web page below that includes a downloadable plan and other guides, and similar plan sets are available for free download from the Los Angeles Department of Building and Safety, and the Association of Bay Area Governments web sites. The City of Vancouver seems to be lagging in this regard, with nothing similar available, that I could find. As the Seattle site states, “These plans help homeowners with qualifying structures obtain the necessary building permit(s) more quickly and easily and eliminate the need to hire a design professional to develop drawings.”

Consulting a structural engineer may still be advisable, especially for houses with anything other than the basic rectangular footprint, or with large openings in the lower level, such as a garage door, double front doors or patio doors, or numerous large windows. The larger and more numerous the openings, the less the lateral resistance. Involving an engineer is also a good idea if you plan to remove interior walls to create larger rooms or an open concept layout — a popular approach to the renovation of older houses, with their numerous small rooms, but one that can reduce the overall seismic resistance of a structure.

Here’s a quick list of the six most basic seismic upgrades for wood-frame houses:
• Anchor bolts
• Holddowns
• Other structural connectors
• Plywood shear walls
• Reinforcing or removing masonry chimneys
• Restraints on hot water tanks
And here’s a picture of the cripple walls in one corner of our house, with various structural connectors in place prior to installing the plywood shear panels.


Cripple walls with seismic upgrading

In the aftermath of the Loma Prieta earthquake, a dramatic and accidental case history emerged from Santa Cruz, a city close to the earthquake’s epicenter south of San Francisco. Architect Michael O’Hearn was in the process of seismically upgrading two identical Victorian houses built side by side. He’d finished upgrading one house, and had just begun on the second when the earthquake hit. The upgraded house was virtually undamaged, and cost only $5000 to repair. The second house “came apart in four sections,” came off its foundation, and cost $260,000 to repair. (APA Homeowner’s Guide: Earthquake Safeguards).

One thing I wonder about with Vancouver Specials is how well they’d do in an earthquake. The partially collapsed house in the picture from the Loma Prieta earthquake is very like a Vancouver Special in its design, but with the addition of the under-house double garage, a feature most Specials luckily don’t have — garages or carports are typically located beneath a rear deck — although some do.


Vancouver Specials with under-house garages

Vancouver Specials gained additional headroom on their lower levels by extending their cripple walls to full height. My lay person understanding is that the taller a cripple wall, the more vulnerable it is to the lateral forces of an earthquake, although I haven’t had that particular point confirmed by a structural engineer. A crucial additional factor is the nature of the sheathing on the exterior of a house. Traditional 1×8 shiplap fixed horizontally to cripple wall studs (see the picture of our walls above) provides very little lateral resistance. And an outer layer of stucco or wood siding adds only a negligible amount more. Contrary to some popular opinion I’ve heard, stucco won’t ‘hold everything together’. By contrast, plywood sheathing provides eight times the lateral resistance of horizontally oriented shiplap (Residential Guide to Earthquake Resistance, page 109). It would be interesting to know how 1960s and 1970s Vancouver Specials were sheathed. If it was with plywood, or shiplap oriented diagonally, which provides six times the resistance of horizontal orientation, there’s probably less reason for concern.

One final note. Vancouver homeowners interested in seismic upgrading may find local builders and general contractors reluctant to incorporate the work in a more general renovation. The reluctance could be based on a lack of familiarity with some of the techniques, and anxiety about what this unfamiliar work will do to carefully calibrated schedules, in which all elements and effort requirements are well understood based on numerous previous projects. Homeowner concerns may be pooh-poohed, with terms like ‘overkill’ being tossed out. The homeowner may be required to stand firm.

I read somewhere that competent house builders understand gravity, and the physics of vertical load-bearing, very well, but they may be less well versed with the physics of lateral forces. In the Lower Mainland, the reason for this lack of familiarity is probably that the current building code governing single family houses don’t require much in the way of seismic provisions — exterior panel sheathing and anchor bolts look to be about it, from my observations, a structural engineer’s stamp notwithstanding. I’d suggest that the building codes don’t require much because unlike Seattle, San Francisco, and Los Angeles, Vancouver has yet to experience an earthquake of any significance. From the research I’ve done over the past few years, I’d say that Vancouver lags those other cities in addressing seismic deficiencies. As one example, Seattle has almost finished seismically upgrading its schools, whereas Vancouver has only recently begun. Human beings have an unfortunate tendency to discount the seriousness of a risk if there is no antecedent event in their personal history upon which to draw. The politicians and staff at city halls around the Lower Mainland, and the citizenry they represent and serve, are perhaps a little like homeowners who’ve never experienced a serious real estate downturn or frighteningly high interest rates. Until it happens to you, you can remain in optimistic denial.

[Further resources/reading, general]

APA Homeowner’s Guide: Earthquake Safeguards. Tacoma, WA: APA, The Engineered Wood Association, 1997. (Requires free registration).

Bay Area Seismic Retrofit. Includes a short video with a good visual demonstration of cripple wall vulnerability and seismic retrofit at 4:50 of “Dangers of the Hayward Fault”.

Residential Earthquake Retrofits. Good information posted by Bay Area structural engineer, Thor Matteson. Matteson has also written a book about shear wall construction.

“Vancouver’s Real Earthquake Risk: Fire”, Canadian Underwriter, Apr, 2001. Good general article that discusses more than just post-earthquake fire risk.

“School earthquake-proofing too slow: VSB”, CBC News, 27 Jan, 2011.

“B.C. vulnerable in giant quake: experts”, CBC News, 11 Mar, 2011.

“8,000 Vancouver buildings vulnerable to quakes”, CBC News, 17 Mar, 2011.

“Quakes can rock building standards; how will Vancouver fare?”, The Vancouver Sun, 20 Mar, 2011.

[Further resources/reading, advanced]

Residential Guide to Earthquake Resistance. Ottawa: Canada Mortgage and Housing Corporation, 1998.

Homebuilders’ Guide to Earthquake-Resistant Design and Construction. Washington: Federal Emergency Management Agency, 2006. (Free download).

Standard Earthquake Home Retrofit Plan Set. Seattle Department of Planning and Development, 2008. (Free download of plan set and various retrofit guides).

—-

Coming soon: Part 9g: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 18 – 22.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you call for the ‘dozer. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9e: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9e: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

14. Scrutinize

Even with the best people working for you, you still need to inspect the work closely, and regularly — ideally daily, so you catch any problems or issues before they magnify, or before they get covered over with subsequent work. Nipping problems in the bud is typically a lot less expensive and less time consuming than trying to fix them retroactively. And requiring that contractors or tradespeople fix deficiencies while they’re still working on your job, and before they’ve been paid — in other words, while you still have direct, face-to-face communication, and some leverage — is much more effective than attempting to call people back. Of course, some problems emerge only after the fact. Reputable contractors and trades will come back and fix problems promptly, and usually graciously. But even the best may need some nudging. In which case, persistence and psychological tactics may be required. After a year and a half of sporadically trying to get a tiling company to return to fix a problem, dealing primarily with the sales guy, I eventually phoned the owner and told him I was “frustrated and disappointed.” Translation: We’re no longer talking about the relatively minor fix. We’re now talking about your company’s reputation and what I may say to other people. That worked. Because they are in fact a reputable operator.

Scrutiny will also reveal, relatively quickly, when you don’t have the best people working for you. If you let people know, early on, that you won’t put up with second-rate work, you may see significant improvement. However, in the case of truly incompetent workers, you won’t, because they’re incapable of improvement, at least in the short term. In the case of unethical workers, you won’t, because they have no interest in improving. It’s not about the work, it’s about the money, and how quickly they can make it. In both cases you need to recognize you hired badly and act decisively. If you allow things to continue, and make excuses to yourself about why you shouldn’t fire someone, because you lack the courage to fire someone, the grief and the stomach full of bile will be all yours. Don’t do it to yourself. We learned the hard way that some people don’t deserve a second chance.

A major renovation contains hundreds of details. The average homeowner is unlikely to be knowledgeable about all of them, or even most of them. But if you look closely at things, from a variety of angles if possible, you really increase your chances of catching things, and progressively improving your eye. Something that doesn’t look right probably isn’t. Ask the question, diplomatically, and listen closely to the answer. It will typically be one of three types of response. Yes, you’re right, and we’ll fix it. No, even though it may not look right it is in fact right, and here’s the very specific reason why. No, even though it may not look right it is in fact right, and waffle, waffle, waffle. In the case of this third type of response you need to ask specific follow-on questions, again, diplomatically if possible, with the subtext being that you will no more put up with bullshit than you will second-rate work. If the waffling and lousy work continue, then it’s time to act decisively.

It is possible to be too picky. Our second general contractor, the competent, ethical one, told us about a former client who asked him if the crew would be vacuuming out the stud bays of newly framed walls prior to installing insulation. A certain amount of sawdust and wood chips, a known byproduct of cutting and drilling wood, typically collects in stud bays — that is, the spaces between the vertical 2×4 or 2×6 studs in a framed wall. A quick sweep to remove any significant accumulations is normal, but an archival level of dust removal is not. The sawdust and wood chips are harmless and are hidden forever beneath the insulation and drywall. However, the former client, even while admitting the request was probably unreasonable, couldn’t stand the idea of even the spaces behind the walls not being immaculate. The dust and chips might be hidden, but she would know. Our contractor explained that the project budget and schedule didn’t really allow for this level of obsessiveness. (He probably used a different word.) The client agreed, and spent the weekend vacuuming all the new framing herself.

15. Communicate

Asking questions, and listening carefully to answers, falls into the larger realm of communicating. Successfully conducting a major renovation, whether you’re acting as the general contractor, or whether you’ve hired a general contractor, requires a steady exchange of detailed information among a number of parties: homeowners, spouses or partners, families, neighbours if they might be impacted by certain activities, general contractor, trades, suppliers, architect, structural engineer, and inspectors. The general contractor is the communications hub, which is why they live on their cell phones and their pickup trucks are mobile offices. If you’re acting as the general contractor, that becomes your role, and a cell phone, something I didn’t have during our reno, is going to be very useful. There are going to be plenty of real-time decisions that need to be made, and if you’re unreachable, the decisions will often be made for you, sometimes not to your liking.

But communicating isn’t fundamentally about communications tools. It’s about ensuring, on a daily basis, that timely, complete, and accurate information is transmitted and received. And the basis for that requirement comes back to being informed. The homeowner is the decision maker, and good decisions require good information. So don’t be shy about asking lots of questions, well in advance of critical decisions, and asking that unfamiliar construction terminology be explained. Once you understand the terms, you’ll be able to use them yourself, realize the usefulness of a specific and succinct way of referring to a particular construction component or detail or process, and communication, especially over the phone, when you can’t point to things, will be much easier and more reliable.

Don’t assume your wishes will be known. You need to make them known, in concrete terms. Contractors and tradespeople have to keep moving. It’s how they make money. If the marching orders are vague or non-existent, they’ll take their best guess at what they think you want, or what, in their experience, makes the most sense. Better that they know exactly what you want based on detailed prior discussion.

Spouses or partners also need to communicate on an ongoing basis throughout a reno. You’re not going to agree on everything, but those disagreements need to be reconciled before you start issuing directives to a general contractor, or an architect, or tradespeople. Mixed messages from twin decision makers can be problematic.

16. Document everything as you go

Keep a good record of all renovation work. Save all plans, permits, invoices, and any other associated paperwork. Take before, during, and after photographs. Take photographs of walls after all systems work is complete, prior to drywalling.

A good record of a renovation serves several purposes. There’s nothing like a photograph of wiring or plumbing or gas lines to assist with subsequent maintenance, repair, or alteration, or to reduce the chances of hitting something vital when drilling into walls or ceilings to attach things. If you’re planning a phased renovation, photographs of underlying framing and systems can be very helpful to an architect, structural engineer, or general contractor working on subsequent phases, or to you, if you’re doing future work yourself. Old invoices serve as a good benchmark when assessing quotes for new work, or the cost of materials. If you resell your renovated house at some point, you can package everything in a renovation binder that illustrates and documents exactly what work has been done and at what cost — evidence to back up your claims about the house, and increase the confidence of prospective buyers. The package will also be very useful to new owners as they become familiar with the house. And before and after shots can be interesting and enjoyable to look at, a gallery of the possible, of dramatic alteration.

—–
Coming soon: Part 9f: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestion 17. Seismic upgrading — the cheapest insurance you may ever buy
Part 9 subsections are posted every Tuesday and Friday.
Read them before you try to bolt your own foundations. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9d: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9d: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

10. Look for the big picture

The mistake I made with our renovation was to leap in, rather than step back, take pause, and consider as many options as possible before making any major decisions. I recommended an initial job to my wife — redoing the drainage — that although reasonable enough in itself, was a decision made in isolation that closed the door on other options later. My wife and I should have talked to more people up front, especially construction industry professionals. I didn’t foresee the extent to which the renovation would evolve, and I didn’t have much of a plan. In short, I didn’t look for the big picture.

When we had the drainage redone, the drainage company, quite rightly, installed the perforated drainage pipe just below the level of the original basement slab, near the base of the foundation walls. The problem, I later realized, was that this initial decision married us to those foundation walls. And, as it later turned out, the walls have no footing beneath them, a footing being a horizontal expanse of concrete designed to displace the weight of vertical foundation walls (imagine an inverted concrete ‘T’), and a house above. No footing — common for houses in Vancouver of a particular age — means that adding additional weight, such as a second storey addition, is risky because it can cause a house to sink, or go off kilter, and therefore it’s not something a structural engineer is likely to approve. In our case, the problem was further compounded by the fact that the foundation walls don’t extend down to the hardpan, the hard-packed clay layer about two-and-a-half feet down in our part of Vancouver. The walls rest on material in the layer above — softer, more compressible, more water permeable brown soil.

The foundation walls also extended only an additional six or eight inches below the level of the original basement slab. What this situation meant when replacing the slab was that we couldn’t excavate very much soil beneath the house, and the new basement slab, although constructed to modern standards, is no lower than the old basement slab — and it couldn’t be any lower anyway, because of the height of the drainage pipe — leaving the headroom in the rental suite at around seven feet, a foot less than the standard eight.

A much better approach than the ass-backwards one I instigated would have been to jack up the house and support it on blocks, completely demolish the old foundation (slab and foundation walls), excavate down to the hardpan, pour a new foundation to modern standards, and redo the drainage at the same time. We would have had a full-height rental suite, and the option of a second storey addition at some future date. Despite that initial, fateful drainage decision, we could have gone this route, but it would have meant sacrificing a one-year-old, $11,000 drainage job, which wasn’t something we could stomach.

Prior to making any major, house-related decisions, even a casual chat with a competent construction industry professional could have alerted us to the issues.

Here are some similar ass-backward scenarios to avoid:

• Re-roofing a house to which you subsequently add a second storey.

• Painting a house that you subsequently re-side. (We caught ourselves out on this one as well.)

• Replacing windows and doors in a house that is then redesigned by an architect, which often involves changing the size and/or position of windows and doors.

• Replumbing a house and then later renovating kitchen and bathrooms, including moving fixtures.

• Finishing a basement and then discovering the foundation should have been moisture proofed.

• Drywalling a basement ceiling as part of installing a rental suite, and then discovering you should have installed soundproofing in the joist spaces above the drywalled ceiling.

• Doing some quick, cheap, do-it-yourself redecorating or light renovation upon first moving in — vinyl flooring or peel ’n’ stick tiles, cheap light fixtures, cheap kitchen cabinets, amateurish tiling and wood trim, and so on — which then looks tawdry in comparison to better quality work done later by professionals.

• Leaving an unused chimney or masonry flue in place, which sabotages floor plans and gobbles up precious square footage while you renovate around it. (This one we did get right, removing our unused masonry flue as part of our renovation, but we vacillated a lot over whether to take on the extra cost and mess.)

• Not doing any seismic upgrading while a house frame is exposed after gutting. (This one we also got right, at least to some extent. I discuss seismic upgrading in a separate section below.)

• Re-sodding a lawn, or doing other landscaping or making garden improvements, prior to exterior renovation work that involves large stacks of lumber sitting on lawns for weeks, and big, size-12 work boots tromping through flowerbeds. (Us again.)

Most of these mistakes would seem easy to avoid, but only if you are truly able to see the big picture from the start. In an unfamiliar realm, many of us can’t, not without first gaining some experience. In general, we tend to get embroiled in our lives, staring out at time horizons that vary from a couple of days to a few weeks. We often don’t know what’s really possible, or preferable, or what constitutes the most efficient use of time and money. We make decisions based on incomplete information, or an incomplete vision.

If my wife and I had made our initial job the search for a really good general contractor, and perhaps an architect, our renovation from earliest planning to final completion would probably have taken a year, instead of dragging out for three, would have been much less stressful, and would have added future possibilities rather than taking them away. All for about the same money, especially if you factor in the two additional years of rent we would have collected.

11. Find a really good general contractor, one you can trust

When it comes to general contractors, take what I’ve said about the importance of finding a good home inspector, and multiply it by ten. In Make it Right, Mike Holmes states, “next to you, the most important person in your renovation is the general contractor.” And he is right. If you do nothing else, do this one thing correctly and it likely won’t matter. Because you’ll have hired a really experienced person to do all the worrying.

We made what turned out to be a disastrous decision with the first general contractor we hired — and subsequently fired. We figured out fairly quickly how badly we’d gotten it wrong, and acted relatively decisively to remedy the situation, but not before we’d wasted $25K on poor quality work that had to be redone. We also lost $15K in rent we weren’t able to collect on the unfinished rental suite because getting rid of the first general contractor, and finding and waiting for a new one during the height of the construction boom, stretched out the renovation by an additional year. Dollars aside, our poor hiring decision added a huge amount of additional stress to an already stressful situation.

Conversely, when we found an ethical, competent general contractor, and he and his crew eventually went to work, nine-tenths of the problems just melted away.

How can a general contractor help?

• A general contractor will have a master plan in mind, and can see all the moving pieces and how they fit together: organization, scheduling, daily supervision and management, why it makes more sense, and is more cost effective, to do one thing before another or to do certain things together (sequencing). Based on plenty of past experience, a good general contractor can see three steps ahead, whereas a relatively inexperienced do-it-yourselfer, or first-time renovator, generally cannot. It’s the difference between driving a treacherous stretch of mountain highway the first time, versus the one hundredth.

• A general contractor is connected to a network of people in the building trades and larger construction industry. Our good, second general contractor told us that it had taken him twenty years to assemble his group of trades — framers, plumbers, electricians, drywallers, finish carpenters, painters, spray foam insulators, even the guy who specialized in laying vinyl on outside decks. He’d gone through a lot of unsatisfactory people to arrive at the solid group he can now call on. He also had connections to good structural engineers, and probably architects as well. As a homeowner trying to act as your own general contractor, you might have two or three word-of-mouth recommendations from friends and family — whose standards and requirements may differ from your own — but for many aspects of a large renovation project you may have to resort to the Yellow Pages, and perhaps querying companies on the Better Business Bureau’s web site. Not a very reliable method for finding good people. (The trustworthiness of the Vancouver BBB has been called into question. See the CBC link at the end of this section.) If you’ve encountered some of the mediocre tradespeople who are out there and operating, you’ll understand the trepidation I felt, the acid in my stomach, every time I had to open the Yellow Pages and roll the dice. And during a boom, it’s very hard to get any tradespeople, good or mediocre, to show up or take interest in your one-off job. Why? Because the general contractors and larger construction companies with whom the tradespeople have a longstanding business relationship are their first priority. And you can’t really blame them. In a notoriously cyclical industry, that’s where the best chance of steady work lies, or at least some work in the lean times.

• A good general contractor knows the local building code, and the inspectors. The inspectors know the general contractors, and the quality of their work. Good general contractors are going to have far fewer failed items on inspections, and far fewer challenges from inspectors over construction details that may be open to interpretation. Inspectors know good general contractors aren’t trying to evade building code requirements, and therefore the whole inspection process — which on a larger project involves multiple inspectors and multiple inspections — goes much more smoothly. There’s much less chance something will have to be ripped apart and redone.

• A general contractor has access to a greater range of building supplies, some supplies of better quality, and commercial supplies, not generally or easily available to the homeowner. Typically, general contractors deal with building supply companies and lumber yards, not with the neighbourhood Rona or Home Depot, although they may deal with the consumer-oriented, big box stores for certain items, or on an occasional basis for time savings.

• A general contractor gets building supplies, bathroom fixtures, kitchen cabinets, flooring, even appliances, at the contractor’s price, which can be anywhere from 10% to 40% below the regular retail price. Suppliers give this discount, again, because of a business relationship, one that equates to an ongoing volume of sales, and also because much of the time and hassle, the overhead, of dealing with the homeowner inexperienced in construction matters is absorbed by the general contractor, not the supplier. This discount is not going to be passed directly to you, but some of it can be, depending on the type of contract you have with the general contractor and whether or not the person is ethical. If a renovation contract stipulates cost of labour and materials plus a 15% contractor’s fee, a 20% contractor’s discount on materials still leaves you ahead ($100 x 0.8 x 1.15 = $92). What you have to watch out for is double dipping. The unethical contractor who gets a discount, charges you full retail price, and then adds the 15% contractor’s fee. Seeing the actual invoice from the supplier can help in this regard.

• A general contractor knows what constitutes a reasonable price, or at least the current market price, for subtrades like plumbers and electricians. This knowledge protects you from gouging — the inflated prices that some subtrades charge when dealing directly with homeowners.

• A general contractor knows what constitutes a reasonable standard of quality. With certain general contractors — the ones you want — the trades know they’ll be called on sloppy work, and may be risking future work if they let standards slip. Some tradespeople may be tempted to cut corners when working directly for homeowners, under the assumption the homeowner won’t know the difference.

If you really know what you’re doing, and you have the necessary time and energy, you can act as your own general contractor and probably save some money. For the other 99% of people embarking on a major renovation, finding a competent, trustworthy general contractor is absolutely the way to go.

[Further resources/reading]

Inspecting a House: A Guide for Buyers, Owners, and Renovators, by Alan Carson and Robert Dunlop. Toronto: Stoddart, 1999. Part Two provides a good overview of home renovation, and includes a section on the pros and cons of hiring a general contractor versus going it alone.

“Better Business Bureau accused of biased ratings”, CBC News, 23 Nov, 2010.

12. Consider hiring an architect and a structural engineer

Depending on the size or complexity of a renovation, or the existence of any special requirements, in addition to a general contractor, it may be advisable to engage a couple of other construction industry professionals: an architect and a structural engineer.

A good architect understands possibilities. He or she can look at an existing structure and see how it can evolve into something more usable, better suited to the occupants’ particular lifestyle, and more attractive to look at, both inside and out. Better traffic flow, rooms better sized for their purpose, more efficient use of space, better noise control and privacy, smarter storage solutions, better light (natural and artificial), better integration with the outdoors, exciting and interesting use of finishing materials and finishing details, and an overall harmonious feel, are all qualities that an architect can bring to a renovation. Attempting a second storey addition, or a rear extension, without using an architect or a designer, is risking joining the legions of the lumpy and the visually unappealing. Without an architect, your new layout may be less than optimal — or you may not even realize that moving a wall or two can make dramatic improvements.

We didn’t use an architect when we redid the layout of the rental suite, and we really struggled with the size and placement of the two bedrooms, and the bedroom closets. Partly owing to the City’s refusal to let us alter the size and position of two side windows, we were stuck with either one inappropriately large bedroom, or two small bedrooms. We eventually decided on two small bedrooms as the better choice from a rental return standpoint, and the result is reasonable, but not ideal. Once beds are in place, moving around the rooms is pretty tight. We also changed aspects of the overall suite layout several times, some of the changes mid-stream. Hiring an architect probably would have helped.

An architect, or the City, may require that you hire a structural engineer. You may want to hire one, regardless. Details like the placement of load-bearing walls, the adequacy of foundation support, the necessary size and placement of beams, the allowable span of joists, roof design, and in a place like Vancouver, seismic considerations, are all the purview of the structural engineer. The structural engineer is concerned with the skeleton of the house, the bones, ensuring that it’s strong enough to withstand the force of gravity acting upon the overall weight of the house and its contents, and additional loads like snow, and also the lateral or shearing forces of an earthquake, or depending on where you live, a hurricane, should one occur. Competent builders understand these issues as well, but the degree of specificity required, and the need to engineer an entire structure as an integrated unit, go beyond the expertise typical for a builder — especially for structures that are more complex.

An architect and a structural engineer don’t just disappear once the plans are drawn up. The architect, especially, often continues to act as an overall project authority, working with the general contractor to ensure that the renovation yields the intended results. And the structural engineer checks back at regular intervals, performing inspections to make sure the structural elements are built as specified. These multiple layers of oversight, and complementary forms of expertise, can go a long way toward avoiding the type of renovation and construction disasters we’ve all heard about, or personally suffered through.

Again, as with a home inspector and a general contractor, if you’re going to hire these professionals, it’s crucial that you spend whatever time and energy are necessary to find good ones. Don’t rush the decision as I did when hiring the structural engineer for our reno, and then spend the next six months or a year regretting it.

13. Get permits

People who don’t get permits, and attempt to evade city inspectors, aren’t screwing the City, they’re screwing themselves. Okay, there may be some small jobs that technically require a permit, where the hassle and expense do seem unwarranted, but for renovation work of any significance, getting a permit, quite apart from being the law, makes a lot of sense.

Permits and inspectors provide an important layer of protection against substandard or even dangerous work. Is unpermitted electrical work done under the table really a deal? Or a basement reno with incorrectly installed insulation and vapour barrier that breeds mould? While there are plenty of stories about obdurate, hair-splitting inspectors, in general they’re a reasonable bunch, and a valuable resource. Having an experienced set of eyes review the work as it progresses protects against ineptitude, or shortcutting associated with greed. During the early stages of our reno, the dialogue I had with the building inspector helped expose our first general contractor for the borderline conman that he was.

If you’re doing the work yourself, an inspector can answer questions in advance, before you do the work or commit to a particular approach. A reliable method for passing an inspection is to ask the inspector how the work should be done, and then following the instructions.

Permits, inspectors, and inspections are an interface with the local building code and the building by-laws. Building codes are not random assemblages of arbitrary requirements. They’re a living body of best practices that develop over time in response to increasing knowledge and experience. They’re not perfect. As I’ve already described, the leaky condo crisis in coastal BC is perhaps as much a result of previously inadequate provisions in the building code as it is a result of sloppy, profit-driven building practices. But past failures and inadequacies lead to improvements in the code.

Many tradespeople, general contractors, and other construction industry professionals won’t work on a job without the proper permits. Contractors who actively dissuade you from getting a permit are contractors to avoid. Under the guise of saving you money, they’re probably trying to get away with something — which could come back to haunt you, not the contractor.

Permits also provide a record that work was done properly and to code. This paper trail can help with the subsequent sale of a house — especially in a down market when buyers have the upper hand.

—–
Coming soon: Part 9e: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 14 – 16.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you call for the ‘dozer. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

8. Water — the enemy

Remember this mantra: Water is a house’s worst enemy. — Tom Silva, This Old House

Vancouver was carved out of a temperate rainforest. The forest is gone, but the rain is still here. It’s what keeps everything green and allows the remaining trees to grow large, but it also represents a constant assault on the integrity of houses. The frequency and duration of rain in Vancouver is the real problem for houses and wood-frame condos, rather than the total amount of rainfall. Instead of intermittent cloudbursts that dump a lot of water in a short time before the sun reappears, drying out everything, rain in Vancouver tends to be an all-day or all-week affair. Drizzly, misty, fine rain alternating with overcast skies means that buildings can stay damp for long periods of time, which coupled with mild temperatures is exactly what promotes mould growth and rot.

One way of looking at a house is as a water-resisting structure, or perhaps more accurately, a water-management system. Most of us would think first about the roof, but in some ways roofs aren’t the main problem. They’re specifically designed to resist and shed water, and if properly built and maintained, do their job well. Problems that do arise tend to be with roof penetrations for vents, chimneys, or skylights, and improperly installed or poorly maintained flashing and caulking. But everything’s exposed, so finding and fixing problems is usually straightforward.

If you’re buying a house, one thing to be cautious about is a roof with insufficient overhang — the part of the roof that extends beyond the house wall. Overhangs are important because they prevent water from rain and roof runoff saturating house walls and potentially working its way into the house. Deep overhangs are best. Anything less than a foot won’t be that effective, and even a foot isn’t that much. A roof with little or no overhang may once have had one, but poor maintenance of the roof allowed the edges to rot, and instead of repairing the damage, someone doing a quick roofing job just buzzed away the rot with a saw and re-roofed what was left. Be cautious about buying a house with a compromised or missing roof overhang. In subsequent years water may have penetrated the walls, and rot may have spread through the sheathing and framing. At the very least, rebuilding a roof overhang should be one of the first things you do.

Less straightforward are problems associated with water penetration through walls, through concrete foundations, and around windows and doors — the elements that along with the roof make up the building envelope. One of the veteran house builders who worked on our reno maintained that flawed building envelope design was at the root of the leaky condo crisis. A number of years ago, the BC building code and the Vancouver building by-law were amended to require that all new construction incorporate a vapour barrier on the inside of exterior walls — typically a layer of heavy poly between the drywall and the studs and insulation. The idea was to improve heat retention and energy efficiency, and protect the cavities of exterior walls from condensation, by preventing water vapour from warm interiors meeting cold exterior air inside the wall. However, no change was made to the code regarding the outside of exterior walls. A typical assembly remained wood siding or stucco over a single layer of black building paper over plywood or OSB sheathing. The result was that any water that made its way into a wall from outside, because of a leak, or wind-driven rain, or was present in the wall framing materials during the construction process, now became trapped behind the vapour barrier. Walls could no longer dry to the inside, and given the Vancouver climate, drying to the outside might not happen for days at a time. The veteran builder likened the results to “leaving wet salad in a polythene bag.” It’s why the exterior walls of thirty-year-old condos might be rotting, whereas wood-frame apartment buildings built in the 1940s or 1950s, or hundred-year-old houses, with plenty of air movement through walls that can dry to both the inside and the outside, might be virtually rot-free. (Although being dry because of draftiness isn’t really a solution.)

Once government and industry realized the problem, they came up with the response: the rainscreen, the missing half of the wall assembly equation. A rainscreen is a drainage and air drying layer immediately beneath the exterior siding that cuts off the passageway for water, and drains any buildup to ground. Drainage mat against concrete foundation walls is another development that serves the same purpose — cut off the seepage of water through the foundation and move it to ground. Several other factors contributed to condos rotting in coastal BC, including California-style architecture (flat roofs, no roof overhangs, architectural adornment) inappropriate for the climate. And I’ve omitted some of the more esoteric building science details, because I don’t yet fully understand them. However, sealing up the inside of exterior walls without considering the outside was probably the most egregious of various design issues.

If you’re house hunting, be alert for signs that water is causing problems for a structure. Check the exterior closely for spongy-looking areas, flaking or bubbling paint, or crumbling stucco. Understand that vinyl siding may be have been installed over the original wood or stucco siding, covering up evidence of rot. In preparation for a sale, a house may have been freshly painted, hiding signs of water incursion. Inside, look for water staining on walls, dark, discoloured bottom corners, and tiny black dots of mould. Again, take into consideration a recent paint job. Pay special attention to the basement or lowest level of the house. Spend lots of time there. Breathe in deeply while walking throughout. Does it smell musty or damp? Trust your nose. Put your hands on the walls, especially below the foundation line, where drywall may cover concrete. Does the drywall feel firm and dry, or damp with a hint of softness? If the basement is unfinished, look for white powdery marks on the concrete. This is efflorescence, the salts left from water that has seeped through the foundation and evaporated. It’s not critical if you intend to leave a basement unfinished, but a problem if you intend to finish a basement, potentially trapping moisture that had previously been able to evaporate. If possible, tour a house during a rainy period, when any signs of water incursion are likely to be most noticeable. One of the reasons the peak house selling season is during the months of good weather is that the various symptoms associated with a leaky building envelope are going to be much less noticeable. Lastly, make sure that as part of a thorough home inspection, the inspector goes over the house with a moisture meter.

If it becomes apparent that a house has been losing the battle with water? Flee.

[Further resources/reading, general]

“Weathering the storm”, The Vancouver Courier, no date.

[Further resources/reading, advanced]

“Understanding Vapor Barriers”. Building Science Corporation, 24 Oct, 2006.

9. Find a good home inspector

While learning the basics about a house’s systems is a good idea for any home buyer or homeowner, most people don’t have the time or the inclination to truly delve into the hundreds of details that these systems represent. And even if you do learn a lot from books, or other sources, it’s not the same as years of experience gained scrutinizing the inner workings of hundreds of houses. For that kind of expertise you need a good home inspector, or some other kind of knowledgeable construction industry professional.

During the height of the bidding war frenzy that gripped the Vancouver real estate market in the mid 2000s (with sporadic outbreaks ongoing), it was common to hear of people putting in over-asking offers without any subjects. In a more normal market, a typical subject would be the requirement of passing a home inspection. Incredibly, during this abnormal market, formulating a competitive bid might require that you waive the right to look closely at the most expensive thing you were ever likely to buy. Step in to a massive financial commitment, and do it blind. Foregoing a home inspection is risky behaviour, to put it mildly. It’s rolling the dice, with ten of thousands of dollars, or more, potentially riding on the outcome. In the subsequent years, some of these buyers will have discovered they’ve been burned. Basement walls full of mould, foundations crumbling, whole sections of house frame or roofs rotted out, failing building envelopes, plumbing and wiring systems at the end of their lives, plugged or non-existent drainage, even major structural deficiencies associated with unpermitted work. Big dollars to fix, and after spending those dollars, the house still looks the same on the surface. The stove is still harvest gold, the toilet’s still blue (which may be cool, depending on your aesthetic, but doesn’t do much for resale value), and 1970s paneling still prevails. You don’t feel any closer to achieving your vision for the house, but a big chunk of your budget is already spent. A good home inspection can save you a lot of grief by alerting you to expensive liabilities in advance, allowing you to make a more informed purchase decision, or avoid some purchases altogether.

Unfortunately, the story that’s been emerging in the last couple of years is that there are a lot of incompetent or even unethical inspectors operating. In Ontario, what regulation there has been of inspectors is toothless. British Columbia has only recently started qualifying and licensing inspectors (as of 31 March 2009), which means that previously anyone could hang out their shingle and call themselves a home inspector. And the barrier to entry may still not be that high.

Generally speaking, you shouldn’t use an inspector recommended by a realtor. Either the listing realtor, or the buyer’s realtor. Realtors on both ends of a sale only make money when they close a deal. Deals get closed when subjects such as home inspections are removed from offers to purchase. Home inspectors who find lots of problems with houses are themselves a problem for realtors who want to close deals and get paid their commission. As a buyer, if the problems are legitimate, those are the inspectors you want. Some realtors may be inclined to recommend a ‘realtor-friendly’ inspector with a reputation for passing houses that another inspector might fail. You need to ask yourself which inspector is likely to best serve your interests.

That said, when I asked a realtor during our house hunting in 2003 about a well-known local home inspector, he was scathing. In this realtor’s opinion, this inspector manufactured reasons for failing houses in order to generate additional business for himself. According to the realtor, he’d fail two or three houses, collecting his inspection fee on each one, before finally passing a house for a client.

As well, realtors who are interested in repeat business, good word of mouth, or surviving as realtors once a real estate boom has run its course, know better than to make a quick and easy sale by foisting a piece of junk on an unsuspecting buyer. You need to know whether the realtor you’re dealing with is ethical, or a quick-buck artist who’ll be closing up shop once the easy money is gone.

It’s hard to know where the truth lies. Do your homework. The time and effort required to find a competent, ethical home inspector is time and effort very well spent. And do it early, well in advance of any offer to purchase. Rushing to find an inspector while the clock is ticking on an offer makes it less likely you’ll find a good one.

[Further resources/reading]

Inspecting a House: A Guide for Buyers, Owners, and Renovators
, by Alan Carson and Robert Dunlop. Toronto: Stoddart, 1999.

The Holmes Inspection: Everything You Need to Know before You Buy or Sell your Home, by Mike Holmes. Toronto: Collins, 2008.

“Think you’re safe from problems when you buy a new home? Think again”, CBC Marketplace, 9 Jan, 2009
“Can you trust your home inspector?”, CBC Marketplace, 8 Jan, 2010

“Homeowners out thousands despite warranty”, CBC News, 16 Nov, 2010.

—–
Coming soon: Part 9d: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 10 – 13.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you dig up the foundations. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

4. Don’t mistake a tear-down for a fixer upper

As much as I dislike the notion of tearing down any house and sending its materials to a landfill, in some circumstances tearing down may make better financial sense than fixing up. Finances aside, many home buyers, with tastes and expectations formed by our culture of affluence, will judge the more mundane among older Vancouver houses completely inadequate by modern standards.

The line between a tear-down and a fixer upper is hazy, and changes with the market. In a rising market flush with ballooning home equity, speculation of various types, and large profits realized through sales, tearing down and building new becomes a more attractive and financially feasible option. In a falling market with shrinking home equity, speculation at a low ebb, people selling at a loss, and money generally tight, people are much more likely to mend and make do. But regardless of the particular market conditions, different people have different amounts of money they can bring to bear, different goals and aspirations, and different notions of what a house should be. One person’s tear-down can be another person’s fixer upper.

The key point is not to mistake what the majority of people would consider a tear-down for a fixer upper. If you plan to live in a house for twenty years, it may not matter, but resale considerations should factor in to most people’s purchase and renovation decisions. Pouring a lot of money into renovating a house of questionable value — for example, one with bad lines, a really small footprint, or small rooms that are hard to enlarge — is not a good use of renovation dollars. You may never get your money back out, or even a portion of it. And think how galling it would be to invest a lot of time, sweat, and money into renovating a place, only to have it torn down by the next buyer. I recently heard about just this scenario in a North Vancouver neighbourhood.

5. Don’t renovate

That’s right, avoid renovating or fixing up altogether, or at least keep it to a minimum. Some people enjoy renovating because they have the manual skills, the knowledge, and the time to do good quality work themselves, and they get a lot of satisfaction from the process. But for many people, renovating is a stressful, unpleasant passage they endure to get to somewhere better. Depending on the circumstances, the stress and unpleasantness can be extreme.

We bought our fixer upper in 2003 for $355K, and so far have spent another $300K renovating it. But we missed out on a well-maintained, attractive 1950s bungalow that sold in a bidding war for $402K. This bungalow is located on one of the nicest, traffic-calmed streets in the Grandview area we live in, has a big rear deck with a view of the mountains, a basement suite with a full eight-foot-high ceiling, and on the main level, well preserved oak floors, a stylish brick fireplace, and a kitchen with the original 1950s-style tiled counters. Not the ideal house for everyone, but it would have been perfect for us. And the $47K difference in purchase price now looks like a pittance compared to the amount of money we’ve spent renovating.

Of course, even a well preserved 55- or 60-year-old house is going to need some work. But I suspect the work in the case of this house would have been far less onerous, and far less expensive, than what we’ve done with our place. On the several occasions I’ve walked by this house in the intervening years, it doesn’t look like much has been changed. By all appearances, the owners just bought it, moved in, and have proceeded to live in it. Judiciously spending more up front may in fact be cheaper in the long run, and less stressful, than buying a place that seems like a deal, because the price is lower and “it only needs a bit of fixing up.”

If initially spending more isn’t an option, another way to avoid renovating is to accept less house. Instead of a detached, single family home, consider a well-built duplex, townhouse, or condo over a house, or choose a less expensive location. (For those aspiring to the West Side, know that the world doesn’t end at Main St.). You may feel that compromising in this fashion is not in the cards for you personally, but after weighing the alternatives, and costing out various scenarios, you may find that one of these compromises allows to you get into a home that doesn’t require significant work and further expense, which could be a better approach for you personally.

6. Educate yourself

So how do you know which houses warrant paying more for up front, and which are money pits masquerading as a deal? You educate yourself — before you start house hunting.

I suspect the people who won the bidding war for that 1950s bungalow had a very good idea about the relative merits of the house, and that knowledge and understanding gave them the confidence to formulate the winning bid out of nine offers. Which isn’t the same as saying that the house, in a more universal sense, was worth $402K in 2003, or is worth $800K now, in 2011. Just that the more experienced and knowledgeable you are as a buyer, the more likely you’ll be able to assess value in relation to current market conditions, and act accordingly.

Unfortunately, for first time buyers, the best teacher is experience. Having owned a house for seven years, and having gone through reno hell, we are now far more experienced and knowledgeable than we were in 2003. When Marco, the lead on the concrete crew that installed our new basement slab, was considering the house he eventually bought, he got the owner’s permission to dig a hole beside the foundation, so he could check if the foundation walls had a footing. No footing, no offer to purchase. How many first time buyers even know what a footing is, or why it’s important? How many would have the moxie to show up at someone’s house with a shovel?

What can you do to educate yourself? Talk to people who’ve bought, owned, sold, and enjoyed houses, and suffered through home ownership and renovation. Family members, friends, builders and tradespeople, architects, co-workers. Talk to landlords, and tenants in basement suites (who live closer to the heart of the matter). Most people enjoy talking about their houses, and you’ll learn a lot. Also, read. The Web has some fantastic resources, but ultimately books are a better bet. Information can be fragmented on the Web, and hard to find. Well-written, well-illustrated books about houses, renovation, and construction, are worth the money and the investment of time because they’ll be comprehensive, do a good job of explaining the technicalities, and organize the information in a logical manner.

[Further resources/reading, general]

Make It Right: Inside Home Renovation with Canada’s Most Trusted Contractor, by Mike Holmes. Toronto: Collins, 2006.

The Holmes Inspection: Everything You Need to Know before You Buy or Sell your Home, by Mike Holmes. Toronto: Collins, 2008.

I realize Holmes is a TV-star-contractor with a certain on-screen persona and shtick. White knight rides in and outs the bad guys, or at least their sorry handiwork. It makes for entertaining TV. Holmes also has his detractors and there’s some anti-Holmes backlash out there. None of that really matters when it comes to the books. I feel the books are pretty good, especially for the price, have solid information, are very well illustrated, and are written at a general level without dumbing things down too much or omitting important details. Whether Holmes wrote every word himself, or whether they were ghost written, or committee written, again doesn’t really matter. All that matters is whether or not they are good information sources for someone getting into the home-buying, home-fixing game.

[Further resources/reading, advanced]

Home Renovation, by Francis D.K. Ching and Dale E. Miller. New York: Wiley, 1983.

Canadian Wood-Frame House Construction. Ottawa: Canada Mortgage and Housing Corporation, 2006.

7. Bottom up, inside out

Think about houses from the bottom up and the inside out, not from the top down and the outside in.

What you can see when you look at a house online, or tour it in person, is relatively unimportant — at least from a financial standpoint — because it’s easy to get at and easy to change or fix. You’re looking at décor and finishings, and these are not the things on which you should primarily base your purchase decision. Typically, house flippers looking for quick profit are all about décor and finishings, because they can be quick and cheap to replace, and the shiny replacements can dazzle the inexperienced or the unwary. A new IKEA kitchen, fancy-looking countertops, and lower end stainless steel appliances can probably be installed for $25K, and will look good for a couple of years. How many flippers would spend that $25K on badly needed drainage and foundation work? They’d just sell the house in the summer, when it’s dry, and the unwary buyer is unlikely to encounter problems like a damp basement.

What you can’t see is typically the important stuff, the stuff that can do your personal finances grievous harm: the foundation, the drainage, the sewer pipe, the water service, the plumbing, the wiring, the gas lines, the furnace and heating duct system, the building envelope, the insulation, the attic ventilation, the frame, the roof. In other words, all the systems that in combination make a house habitable and comfortable to live in — or, if they’re compromised, less comfortable or even miserable.

Learn the basics of these systems. A damp basement, if not dealt with at the source, will rot any framing, drywall, or flooring installed over top of the concrete substrate. Old galvanized steel water pipes will be full of corrosion on the inside, and will progressively choke off the water pressure in a plumbing system. Before we replumbed, if a tenant turned on the water in the old rental suite, our upstairs shower dropped to a trickle. Do-it-yourself modifications and extensions to the electrical system may have created a fire hazard. After we’d gutted our basement in preparation for rebuilding the rental suite, I found a scorched patch on a stud beneath a wire that had obviously been overheating. I saw the same thing in my sister and her husband’s former house.

Beware of surfaces. Look deeper. Which isn’t bad advice for life in general. Metaphorically speaking, show up with a shovel.

—–
Coming soon: Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 8 & 9
Part 9 subsections are posted every Tuesday and Friday.
Our advice is to leave the tools in the garage until you’ve read them all. -ed.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9a: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Market participants, bull and bear, are all running around like chickens without heads. Folks who sold out are changing their minds and frantically buying back in. Even those taking profits are freaked out by the sums they are realizing. In this hectic environment, where do we turn for focus, for measure, for calming effect?… Who you gonna call?…
Well, he’s back: Froogle Scott has re-emerged bearing a comprehensive guide to being sensible about a vital aspect of Vancouver housing: ‘Fixing-It-Up’. Amidst the helicopters, the lawsuits, the line-ups, the panic-buying, it’s precisely what we all need to set our feet on the ground again. Those of you who don’t know Froogle, we recommend you put aside the better part of an evening and read through his Chronicles… the remarkable story of a Vancouver couple buying and renovating a Vancouver house. That’ll put the current episode into context, even though it also stands extremely well on its own. We’ll be posting ‘Part 9’ in 10 (yes, ten) sub-parts, over 5 weeks. It’ll also be available as a pdf download thereafter.

Froogle’s perspective stands in stark contrast to the prevailing fast-and-loose Vancouver RE ethos. He approaches houses as artefacts that matter to us as humans. He cares for quality, and is aware of history; he pays attention to the bones of houses and the souls of the people who use them.
We are grateful to him for sharing this all with us. We’re also very pleased that he continues to use this blog as a conduit for publishing his work. Here’s the first of the ten sub-episodes, Part 9a.
Careful with those powertools…  – vreaa

Part 9a: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Those fateful words . . .

My wife and I learned a lot of things the hard way during the renovation of our house. If we had to do it again, there are definitely some things we’d do differently.

Let’s assume there is a significant correction in Vancouver real estate prices over the next few years, or even a crash — similar to what’s happened in a number of American cities, and in a number of other countries. Let’s say it’s on the order of 35 to 50 percent, which would be huge, and catastrophic for a certain segment of those who currently own houses and condos. And yet, even with an event of this magnitude, the fixer uppers pictured above would still be in the $200K to $300K range. Add a 50 or 75 percent premium for a similar place on the West Side, like the Kitsilano house above — the cheapest house in Kits on the 31st of August, 2010, the day I gathered this sample of properties from RealtyLink. In other words, still expensive by national standards, assuming price deflation in Vancouver would be accompanied by some degree of price deflation in other large Canadian centers. In a comment on a local real estate bear blog, ‘Renting’ put it succinctly: “A million dollar home in Vancouver is a piece of shit. At 60% to 70% off it will still be a POS and will still be priced higher than buying a POS anywhere else in the world.” (“NYC Condos for 80% off,” Vancouver Condo Info, November 11th, 2010 at 1:57 pm. While I agree with the key point Renting is making about pricing, I don’t completely agree with his assessment of quality, and have more to say about it later.) The majority of new houses, or houses with good quality renovations, would still be in the $300K to $800K range, depending on the size and quality of the house, and the location. Still beyond the means of many people, especially if lending is tightened because of societal debt problems (Credit Crisis II), and wages stagnate because we’re in a recession. In the City of Vancouver, and the more expensive surrounding suburbs, the notion that prospective buyers currently sitting on the sidelines will just waltz into perfect houses in the aftermath of a crash probably isn’t very realistic. There would be a few, with large amounts of cash, for whom this could be the case. But for many, home ownership would still entail buying something sub-optimal and fixing it up — those fateful words…

Regardless of what happens with the local housing market, the character of Metro Vancouver’s housing stock is what it is. There are large numbers of older, smaller, tired, even dilapidated houses, with outdated décor and finishings. They were built in an era of more rudimentary building codes, in a time when basements weren’t designed to be lived in, when heating a house was relatively cheap, so building envelopes were less critical. Many of these houses have been ‘remuddled’ — made worse, and often ugly, by amateurish renovation and remodeling. Occupying the next rung up the property ladder are 1970s Vancouver Specials, but even these houses are now 30 to 40 years old, and will be starting to have the problems associated with age. Many people will find themselves considering houses that require a lot of work, not because they really want these particular houses, but because they want to own rather than rent, and it’s what they can afford.

With that in mind, I’ve compiled thirty suggestions for survival. (I wish there were fewer…) I’m not a renovation expert, but I am someone who, along with my wife, lived through a difficult renovation, and I have thought quite a bit about the process. I’m also drawing upon the experience of friends and neighbours who’ve undertaken majors renovations, and kindly shared a range of information, from practical matters to financial details.

I’m not trying to persuade people one way or another when it comes to buying or renovating a house. I’m sharing some insights that may make the process less fraught if you do embark on a renovation, or confirm you in your decision to avoid renovating, or perhaps even ownership, altogether. If you’re someone who intends to own a house eventually, in Vancouver or elsewhere, but you’re waiting until prices make more sense to you personally, you can treat the waiting period as a great time to learn at your own pace about houses and fixing them up, rather than acquiring information piecemeal in the panicky fashion I was forced into because I was doing it on the fly, mid-renovation. (Note to self: plan better next time. If there is a next time…)

First, some of the positives

When I look over the suggestions I’ve compiled here, it occurs to me that any sane person might run screaming from the prospect of undertaking a major renovation. It isn’t my purpose to scare people or turn them off. I’m trying to provide a realistic account of what it takes. And what it takes runs completely counter to the magic-wand renovations that happen in the space of a week on reality TV shows. Most of these TV projects are a combination of redecorating and light renovation, which is fine for what it is, but it distorts the true nature of major renovation — applying makeup versus major internal surgery.

My neighbour ‘M’, a renovation veteran along with his wife ‘S’, thought I should mention some of the positives, the reasons why some people are willing to undergo the difficulty of a major reno, and suggested some of these positives himself:

•    You’re preserving a piece of your city’s architectural heritage in an age of disposability, in which a knock-it-down, throw-it-up ethos, and bigger and newer, mask the often cheap and shoddy.
•    You’re preventing older and often superior materials, such as the dense, strong Douglas fir in the frames of older Vancouver houses, from being needlessly destroyed and dumped in a landfill.
•    You have the opportunity to control exactly what happens with your house, and you can ensure that everything is done to your specifications, and done right.

To which I would add:
•    Incremental renovation may allow you to afford the size and type of house you want, in the area you want. Even if house prices come down dramatically, a good quality new or fully renovated house may still be beyond your reach in the areas you favour. With a fixer upper, you may be able to at least gain entrance to specific neighbourhoods.
•    You’re going to learn a lot about houses, depending on the extent of a renovation and your involvement with it, knowledge that will serve you very well as a homeowner and home maintainer in the years ahead. If at some point you sell and buy a different house, you’ll really know what to look for the second time around.
•    You’re going to feel the satisfaction of creating something good, a feeling from which too many have become disconnected in a profit-driven world.

A word about condos and townhouses

My experience is primarily with detached houses, so that’s what I write about here. However, Vancouver is a city that has been rapidly and aggressively condo-izing — in the core, and in various pockets across the metropolitan area. For many Vancouverites, real estate prices, with or without a crash, dictate that home ownership means condo or townhouse ownership, at least as an entry point to the market, and often beyond. Although a number of my suggestions apply fairly exclusively to resale houses, some of them are also applicable to condos and townhouses.

1. Think about the renovation before you buy the house, not after

If you’re planning to buy a house, and your budget puts you solidly in fixer-up territory, prior to making an offer, you should think about the particular renovation possibilities and constraints that apply to any house you’re considering. If you’re planning a major renovation, you should find out what zoning and building code regulations apply, and how these might affect your plans. Over the years, many houses have had unpermitted extensions, additions, and large decks added, which increase the square footage of the house beyond the maximum allowable, or extend the structure too close to the property line. You don’t want to buy a house only to find out that your local building and development department requires you tear down a third of it as part of making any improvements.

Your forward thinking at this stage need only be general. Is the house easily and legally expandable? Is the interior layout reasonably close to one that suits your lifestyle, or will it require extensive, and expensive, changes? Are the house’s various systems — drainage, plumbing, electrical, heating, and so on — near the end of their life, requiring tens of thousands of dollars to bring them up to modern standards? More subtle and detailed renovation requirements will only emerge after you’ve lived in a house for a year or more, during all four seasons, and discovered the shortcomings that most affect you.

Thinking in vague terms about ‘fixing it up’ is risking disappointment, frustration, and expense. Much better to know in broad terms how you’re going to renovate the fixer upper you’re about to purchase, what the municipality will allow you to do, and roughly how much the renovation will cost. That kind of knowledge requires educating yourself, which you can do well in advance of entering the market, and probably getting expert help, which I discuss in more detail below.

2. Look for the lines

Houses are basically boxes, or assemblages of boxes, with roofs, if they aren’t flat, that are typically some version of a pyramid or triangular prism. Some assemblages are more pleasing to the eye than others. Learn about the most common styles of houses in Metro Vancouver — the Edwardian box, the Edwardian builder, the Craftsman, the California bungalow (Craftsman bungalow), the Voyseyesque cottage, 1920s and 30s builders specials, post-war and 1950s bungalows, 1970s Vancouver Specials, on so on. Go for walks in the neighbourhoods you’re considering and look at lots of houses — both fixer uppers and nicely renovated houses that appeal to you. Over time, your eye for the lines of a house, and for the lines of a particular style of house, will develop. You’ll be able to more easily distinguish the lumpish, the ugly, and houses with the distorted lines of poorly designed additions, from those with aesthetically pleasing lines, even if the lines have been somewhat obscured by the subsequent application of stucco, or vinyl or asphalt siding. Ideally, you want to get good at spotting the fixer upper with good lines, and good potential. This skill will allow you to quickly work your way through long lists of houses on real estate sites, and spot which houses may be modest diamonds in the rough, and which aren’t worth the bother. I say modest, because according to my architect neighbour, all the true diamonds in Vancouver have already been plucked, and fully renovated, and command full price.

An example of a modest diamond could be the builders special in the Willingdon Heights neighbourhood of Burnaby, the first house in the picture above. It holds good possibilities and would probably be a good candidate for raising, and pouring a new foundation, because in addition to creating a full-height lower level, raising would make it look more elegant, rather than top heavy. Our neighbours M and S raised their 1922 builders special, a house almost identical to the one pictured, and the result is very good. A rear addition can also be easily integrated with the existing roof lines of this style of house — as people on our block recently did with their builders special, again, with good results.

Compare these possibilities with the remuddled Lynn Valley house above, which would be hard to do much with, without significant alteration of the existing lines. Here’s a good example from another major reno that recently kicked off in our neighbourhood, a similarly proportioned house that’s hard to expand without radical alteration of the existing lines. In this case, the entire second storey had to be lopped off.


Altering a house’s lines

And then there are the outright bad lines. The East Vancouver house pictured below was listed in the fall of 2010 at $649K. The original house may have been a small cottage, forming the center portion of the current structure, with poorly integrated front and rear additions added later. The net result is a messy jumble with an unappealing roof line. Although it’s priced $50K higher than the Willingdon Heights house, it’s probably a tear-down (although the original center section may hold some heritage value), whereas the Willingdon Heights house isn’t necessarily.


Old house with additions

New houses can also have bad lines. For example, this Burnaby horror show looks like it was conceived by a first-year architecture student after a heavy night out at the campus pub.


New house, Burnaby

Paying for the gigantic twin pillars perhaps didn’t leave enough for twin stair railings. Might it be possible that, coming home drunk, one could fall from either the left or the right side of a set of stairs?

You can change the lines of a house, but it costs money — often lots of it — that could be spent on other renovation items, like systems replacement. Why not start with good lines, or easily expandable lines, to begin with?

3. Consider various styles of house

At different points growing up, I lived in a couple of hundred-year-old character houses in Victoria — one, a beautiful, half-timbered Craftsman (rented), the other Italianate. I always felt that if I eventually bought a house, it would be a character house that I’d fix up. I hated post-war bungalows, the kind that were covered with pinky-brown, beer-bottle stucco. Whenever I pictured one of these houses, it was raining, and the stucco was sodden.

Now the thought of renovating a character house, the ongoing maintenance burden, the heating bills for a large space, fills me with dread. I like looking at beautiful character renovations on the street, but I don’t want to own one. Or at least, I don’t think I do. Occasionally, when I go inside one, I’m struck by the sense of serenity and comfort.

My wife grew up in an early model Vancouver Special, probably built in the 1960s. Growing up, she hated Vancouver Specials — their depressing uniformity, their raw, immature, unadorned feel, the utilitarian approach to home ownership taken by their occupants, in her Trout Lake neighbourhood primarily other members of the Chinese community. Ironically, she felt these houses expressed a lack of community. In contrast to my feelings about stucco bungalows, my wife loved them. The Italians and Portuguese — around Trout Lake, more settled, earlier waves of immigrants — lived in the bungalows. With mature gardens, lower profiles, and less obvious uniformity, these houses felt cozy to her, more like comfortable homes.

In 2003, my wife and I bought a post-war, stucco bungalow. During our house hunting period I underwent some kind of conversion. I wanted a character house, quickly realized they were well out of our range, but also realized that I now liked 1950s bungalows. I’d come to appreciate their solidity, their low, horizontal lines, their quiet practicality. The one we bought is an early model, built immediately post-war, in 1946. I prefer the more generous, more spacious versions that evolved with increasing North American prosperity in the 1950s. However, I’m reasonably content.

The one type of house my wife and I agreed we hated, and wouldn’t consider, was a 1970s Vancouver Special, or any of the more recent variants. Now, seven years later, and in the aftermath of battling headroom issues in our basement suite during the renovation, the wheel has turned again. We might consider a Vancouver Special, were we ever to move. (I do have one reservation, which I explain in the section on seismic upgrading below.) The characteristics that originally made Vancouver Specials attractive to working class and immigrant families on the East Side, and elsewhere in the city, are still attractive today to an even more diverse demographic: maximum, or close to maximum, square footage for the lot size; open layouts; big rear decks, often covered; a full-height lower level, making installation of a rental suite, or setting up a separate area for teenagers, much easier; and a minimum of architectural adornment, which although bland, means less maintenance and upkeep. Add to these original enticements a price point that can be significantly lower than a renovated character house or a new house. For these reasons, Vancouver Specials remain popular, are shedding some of the stigma long associated with their utilitarian nature and prosaic form, and renovating them in interesting or unexpected ways has become somewhat trendy.

Lance Berelowitz, in Dream City, had this to say about Vancouver Specials:

“There is a certain irony in the fact that while the Vancouver Special has long been an affront to the Vancouver architectural establishment, that same establishment frequently finds itself designing and living in equally kitsch architectural clichés and is increasingly involved in replicating a new pseudo ‘Heritage’ aesthetic for housing. The pitched roofs, cutesy wood detailing and fake-traditional architectural geegaws are now the de rigueur language of contemporary residential design. It almost makes the Vancouver Special seem refreshingly honest in comparison.”


Classic 1970s Vancouver Special in the Renfrew neighbourhood, East Vancouver

The houses don’t change, it’s we who change. The way we see things evolves. The more you expose yourself to a full range of house styles, and analyze their benefits and drawbacks in relation to your particular situation, the more options and flexibility you’ll have. Most of us have emotional responses to different styles of houses, unanalyzed, probably rooted in childhood experience, and it’s often these emotional responses that drive our purchasing decisions, rather than a careful weighing of the appropriateness of this functional object we’re buying.


Some common Vancouver house styles, 1900 to 1980

[Further resources/reading]

To read more about Vancouver house styles throughout the 20th century, see the following:

Exploring Vancouver, by Harold Kalman (later with Ron Phillips and Robin Ward). Vancouver: UBC Press, 1974, 1978, 1993 (three editions).

British Columbia Houses: Guide to the Styles of Domestic Architecture in British Columbia, by Graeme Chalmers and Frances Moorcroft. Vancouver: UBC, 1981.

Vancouver and Its Region, edited by Graeme Wynn and Timothy Oke. Vancouver: UBC Press, 1992.

Dream City: Vancouver and the Global Imagination, by Lance Berelowitz. Vancouver: Douglas and McIntyre, 2005.

The Story of Dunbar: Voices of a Vancouver Neighbourhood, edited by Peggy Schofield. Vancouver: Ronsdale Press, 2007.

“House Special”, The Vancouver Courier, 11 Sep, 2009. Story related to Vancouver Heritage Foundation 2009 tour of renovated Vancouver Specials.

“Heritage tour of Vancouver Specials shows why they are special”, The Vancouver Sun, 5 Oct, 2010. Story related to Vancouver Heritage Foundation 2010 tour of renovated Vancouver Specials.

“Your Old House Encyclopedia”, Vancouver Heritage Foundation. Once it goes live, this will be a fantastic online resource for identifying and learning about specific styles of Vancouver residential architecture. The advertised launch date of summer 2010 has obviously come and gone. I sent the Vancouver Heritage Foundation an email asking when they expected the online encyclopedia to be available, and they told me Spring 2011. Nothing yet. If you’re interested, I guess the best advice is to bookmark the link, and periodically check back.

—–
Coming soon: Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 4, 5, 6, & 7
Stay tuned. -ed.

“There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Froogle Scott at VREAA 10 Feb 2011 1:44am“I’m halfway through the Vanity Fair article (“When Irish Eyes Are Crying,” by Michael Lewis [hat-tip to Nick for alerting us all to it -ed.]). Every couple of paragraphs I’ve been struck by the parallels to our situation here in Vancouver. Ireland is interesting, because in some respects it might be a better parallel for Vancouver than the United States. The US is such a vast economy, that even down on one knee, it’s still a heavyweight. Ireland is the provincial society that suddenly blew up grand — with a bad result. Something about that dynamic feels closer to home than what’s occurred across the entire US real estate market. Although BC is part of a much larger country, our geographic isolation, our relatively small population, our history of being outside the centers of power, does have an “Irish” aspect to it. And perhaps that isolation can lead to becoming ungrounded, or disconnected in certain ways. There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Thanks for the thoughts, Froogle, very interesting associations. We don’t have the overbuilding that the Irish had, but the fact that we are ‘insulated’, as you describe, may make us vulnerable to some of the same engines that popped their bubble. It is possible that, with a simple turn of sentiment & loss of imagination, we rapidly find ourselves less a cosmopolitan capital and more a medium sized provincial city with almost no discernible means of economic support. Another way in which we are ‘insulated’ is one which is, of course, common to all bubbles: statements like “All real estate is local” and “It’s different here” are used unconsciously by bubble-players to ‘insulate’ themselves from glaring external realities. When the history of our boom and bust is written (by you, perhaps?), we are sure that one of the most remarkable features will be how long prices chugged on up to more and more preposterous levels despite the glaring examples of bubble implosion all around. US, Spain, Ireland, etc, etc. All a testimony to the ability of the human mind, in particular the ‘group mind’, to ignore that which is inconvenient to face. -vreaa

While we’re partly on the subject of Ireland, ‘Charlie Mackay’ is a blogger who has archived quotes from their bubble. Take a look; Spot the similarities.
Here’s a nice one, from Sean Dunne, Property Developer, in 2006, just before their bubble imploded: “Every economist associated with every stockbroker in Ireland mistakenly forecast the end of the housing and property boom in Ireland”. They had been “vociferous and repetitive”, in the process encouraging outside commentators, including the Economist, the IMF and the OECD, to issue warnings about Irish house prices being overvalued. Well, “The hyenas have stopped laughing . . . each and every one of them was wrong. Instead, the price and supply of housing units has continued to break records.”
[For examples of quotes from Vancouver Sean-Dunne-equivalents (and a few 'hyena' naysayers), recorded here, in real time, while our bubble is actually still a bubble, see the 'What Bubble?' sidebar.]

“It’s been taking us about five months to pay off the amount of each cheque we wrote against our HELOC every two weeks during the height of our renovation. And that’s at an interest rate below 3%.”

Froogle Scott comment at VREAA 20 Jan 2011 8:34pm -
“It’s been taking us about five months to pay off the amount of each cheque we wrote against our HELOC every two weeks during the height of our renovation. And that’s at an interest rate (variable) below 3%.
Thank god our renovation, once it really got going, didn’t last that long. And thank god we stopped when we did…”

[Those of you who don't yet know Froogle Scott, check out the fascinating saga of his house purchasing and renos here: 'The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise'.]

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 8: Renovation Nervosa Finale

Brace yourself. On first reading Froogle’s latest episode, I found myself on more than one occasion spontaneously exclaiming out loud, or grimacing & ducking, or writhing in vicariously experienced psychic pain.
Boy, these guys went through a lot.

First thought: The vast majority of people that I know, myself included, are completely incapable of doing what Froogle and his wife did here. Their industry is remarkable, to do so much themselves, to be so thoroughly involved in the whole process.
Most mortal Vancouverites: “I notice a photo is hanging skew, I rise from the sofa and straighten it.”
Froogle Scott: “I rent a large rotary hammer drill to drill one-inch diameter holes fourteen inches deep in the concrete foundation walls.”
The result, of course, is that Froogle has ended up with a house where his sweat is quite literally part of the foundations, and that in itself is a unique reward.

Second thought: Froogle’s story is of a very, very diligent, meticulous, and industrious couple riding shotgun on the renovation of their house. One is amazed by the number of serious deficiencies they discovered in doing so. It leads us to consider how many homes in Vancouver have substandard, shoddy, or even dangerous construction because they were built for clients who were not watching as closely. Is such construction the norm rather than the exception?

Third thought:  By their estimation, Froogle and his wife got their renos done at fair prices, in ‘Vancouver terms’. Yet the numbers are still eye-popping. The story makes one consider how the construction industry in this city has become a hyper-efficient machine for extracting money from the banks of homeowners. This process has worked superbly up until now because homeowners always ‘knew’ that the projected future value of their house merited the renovation expenses. And there was also the additional perception of this all being somehow prudent, of it representing an ‘investment’ in one’s house (and by extension, in oneself). What could be more sensible? Use the house’s increasing value as a tool to improve itself! It seems so symmetrical, so right. This all made spending on renos that much easier.
Froogle (e08): “I’m secretly horrified. I can’t believe the size of the cheques we’re writing against our home equity line of credit. I’ve never seen or written cheques this large, with this frequency, in my life.”
Contractor (e07): “That’s what things cost now. The cost of everything is through the roof. Skilled trades are through the roof. But look at what you’re sitting on. You’re sitting on a property that’s probably going to be a million dollars in a few years.”
As a result, Billions of borrowed dollars have been injected into our local economy over the last ten years. It looked fine from the outside while the process continued. Now the money has been spent, but the debt remains.

Regardless of how the whole boom plays out, we’ll all remain indebted to Froogle for sharing his remarkable story.
As I said, brace yourself… – vreaa

Froogle and Froogletta Scott

Part 8: Renovation Nervosa Finale

Recap

Late November 2007. After fifteen months, our renovation has evolved from a start-and-stop, homeowner-managed undertaking into a bigger, more complex, increasingly expensive project run by a general contractor. The initial negotiation with Nick Costa, the general contractor, was a month of back and forth, during which Nick was difficult to pin down on numbers. Our subsequent reference check was more cursory than it should have been. My wife and I have some misgivings about hiring Nick, but we’ve put ourselves in a difficult position. Or, to be more accurate, I’ve put us in a difficult position by underestimating the scope of the work, and by overestimating how much of it we can reasonably achieve or contract ourselves, while still adhering to my ambitious vision for the renovation — all of this during a construction boom that makes finding and hiring contractors and tradespeople unusually difficult. With winter now upon us, we’re without a furnace, without insulation in the gutted bottom half of the house, and without a laundry. We give Nick an initial deposit of $20,000 on a $100,000 contract. We’ve spent an additional $40,000 on work outside the contract with Nick, so it looks like our initial estimate of a $100,000 total price tag is out the window.

We may have had our first encounter with the underground economy, when two young, inexperienced workers remove the masonry flue in the center of the house. We’ve had our first deficiency, when Dylan, Nick’s lead carpenter on our job, somehow forgets to install a strip of sill gasket between the bottom of the new central supporting wall and the new concrete footing. We’ve experienced our first attempted gouging — or at least, what feels like gouging — when Nick presents us with an add-on quote of $11,000 to remove the old basement slab and excavate a foot of brown soil beneath it, a job that has to be completed before any other aspect of the renovation can proceed. Eventually, we’re able to do the job for $3400 when we succeed in hiring Delmore, a concrete demolition contractor who uses a remote-controlled micro excavator to do the work. We’ve had our first casualty, when Leonard, the handyman we’d initially hired to help with the project, quits in anger, feeling we’ve usurped his role by bringing in Nick.

We’re learning about renovation and construction the hard way, and even harder lessons are still to come.

A disagreement, and more research

I call up the company that redid the drain tile the previous year and have them lay some more drain tile either side of the central footing, where water is collecting in the trench, and tie in the new pipe to the existing system around the outside of the house. As part of his contract, Nick brings in a plumbing company to replace the bottom half of the sewer stack, and rough in all the plumbing drains that will run beneath the new basement slab. Once the black ABS drain pipe is in place on top of the brown soil, the concrete crew is free to start work on the new slab. They’ll begin by laying in six inches of drainage gravel, which will allow sub-surface water to rise and fall without becoming trapped in soil immediately beneath the slab — the issue with the old slab. Pink styrofoam insulating board (R-10) will go on top of the gravel, with a poly vapour barrier on top of the insulation. Rebar, wired together into a mesh, and elevated a couple of inches, will sit on top of the vapour barrier. Four inches of concrete will then be poured, encasing the rebar and forming the new basement slab.

(Additional drain tile: $1166)

Excavated basement with section of plumbing drain

Nick and I disagree about the value of the styrofoam insulation beneath the slab. He thinks it won’t do anything, that “the ground is a natural insulator,” and the additional $1500 to install the styrofoam is a waste of money. Marco, the lead on the concrete crew, is adamant that slab insulation does cut the chill that occupants feel under their feet, but leaves the decision up to us.

The discussion goes around in circles for a few days. I find plenty of personal opinion on the Web arguing in favour of the insulation from both a comfort and energy-savings standpoint, but given Nick’s strong opinion to the contrary, I feel I need something a bit more solid before making a recommendation to my wife. I get back to my familiar 5:00 a.m. routine of scouring the Web for information. I’m becoming a little sick of conflicting opinion, and the difficulty of getting a straight answer, and the need to do panicky research under the gun. It takes a few frustrating mornings to find what I’m looking for, but then I do: a CMHC research bulletin that reports on actual tests done with temperature sensors “aligned vertically to measure the thermal gradient from the top of the slab through the insulation and into the soil below.” In a house with no slab insulation, the temperature just below the surface of the slab is only slightly higher than the temperature of the soil, and several degrees cooler than the air temperature in the basement. In a house with two inches of styrofoam insulation beneath the slab, the slab temperature is almost identical to the air temperature, and significantly warmer than the soil temperature. I report my findings to my wife, and tell Marco we’ll be going ahead with the insulation. It’s only a couple of weeks later, during one of my increasingly frequent calls to the building inspector, that I discover the current building code actually requires a minimum of two feet of rigid insulation running either horizontally or vertically at the perimeter of the slab. “To provide a thermal break,” the inspector tells me.

Hellhole

We discuss with Marco the band of soil that Delmore left at the base of the foundation walls as a precaution. Because the walls have no footing — they just end, not even resting on hardpan, but on the brown soil above — Delmore was reluctant to remove the last of the soil sitting against the walls too far in advance of the new slab being installed. Now that the concrete crew is nearly ready to go, the soil has to come out. We’ve kept a roll-off container for this purpose, and on the first weekend of December my wife and I get out the shovels and the wheelbarrow and go to work excavating the last of the soil in “the hellhole,” as we’ve taken to calling the basement.

It just happens that, weather-wise, this weekend is one of the most miserable of the year. We’ve been living without a furnace since April, and over the last month surviving off space heaters. We eventually borrow a good quality, oil-filled radiator from one of my wife’s brothers, which improves the heat situation to the point of being somewhat tolerable, but that’s after the weekend in question.

We work our way slowly around the perimeter of the basement, loading the moist, dense soil into the wheelbarrow. When the wheelbarrow is two-thirds full I run it up a plank at the back door, and around the house to the street, where I run it up another plank and dump it over the edge of the container. As I do this, heavy, wet snow falls from a sky the colour of sludge. The snow glops down on my toque and wool jacket, melting almost immediately and progressively working its way through multiple layers of clothing. Over and over we repeat the routine of loading and dumping the wheelbarrow, the volume of soil in the narrow band at the wall greater than we anticipated. I realize what a disaster it would have been to have attempted excavating the entire basement by hand. As we tread back and forth across the exposed soil in the basement it becomes mucky, water from days of rain forced up by the weight of our boots. We both feel murderous.

Soil dumped in the container

We finish sometime in the pre-dark of late afternoon, and retreat upstairs to hot showers — our one remaining creature comfort. I’m completely sodden, my clothes grimy with mud. After showering, we sit on the couch, both of us wearing thick sweaters and toques and wrapped in blankets, the hockey game turned up over the noise from a space heater, while we drink red wine to try to stay warm.

My jeans, post-hellhole

Dodging one bullet, getting hit by another

A problem arises — a significant one. The building inspector comes for a look and discovers that the foundation walls lack a footing, and don’t even extend down to the hardpan. Even though we’ve got the new central footing, which now provides excellent structural support to the center of the house, the inspector is worried that the house could subside around the perimeter, especially now that we’ve excavated the soil away from the interior of the foundation walls. He speculates that we may have to underpin the foundation walls by installing proper footings beneath them.

Underpinning would be difficult and costly, and time-consuming, because excavating beneath the walls to make space for footings could only be done in short sections at a time, to avoid the danger of collapsing a wall. Even for a small house like ours, underpinning could easily add $30,000 or more, and six weeks, to the reno. It would also risk disturbing the new drain tile around the perimeter of the house. Marco says they could do the underpinning, but shakes his head, his demeanour dark. “It would be a nightmare.” For that much extra expense and effort, it would make more sense to just raise the house and completely replace the old foundation. I point out to the inspector that the house hasn’t budged in 60 years, and that the structural engineer, when I asked him, said the same thing and wasn’t worried about the walls. The inspector isn’t convinced. The structural engineering drawings contain no details related to the walls. He tells us that the structural engineer will have to provide a revision that specifically addresses the walls, and sign off on their adequateness, before he’s willing to let work proceed.

I give TK (Tony Kwan), the structural engineer, a call and explain the situation. A lot rides on TK’s willingness to put his professional seal on what he’d previously stated only informally. I’m careful to hide my trepidation. We’ve come to understand that TK likes to make money, and if he smells fear he’ll no doubt sense an opportunity to extort more from us. So instead of asking, I tell him in a friendly and neutral manner that he needs to provide a revision, while subtly suggesting there was an oversight on the original drawings. And we need the revision right away. I’m relieved that he seems more interested in dismissing the inspector’s objections than in asking any further questions.

“The house been there 60 years. Your house is light, it’s all 2×4.” Then he stops himself, and briefly switches to his slower, more probing manner. “You guys going to add a second storey?”

I already know the answer to this question. “No.”

“Okay.” Switching back to Napoleonic mode. “I can do a letter. But no second storey. That might be too much weight.” No mention of any additional fee.

“Okay,” I reply. No problem at all. The disappointment at losing the option of a second storey — something I had been thinking about as a future possibility — is more than offset by vanquishing the spectre of underpinning.

A few days later I give the inspector a copy of TK’s letter, which states that underpinning is not required if there is no additional loading on the foundation walls. The letter will be kept on file at City Hall. The inspector somewhat begrudgingly approves a continuation of the work. At Marco’s suggestion, we also decide that the ends of the rebar forming the mesh that will reinforce the slab should be doweled into the foundation walls, providing a strong connection between the slab and the walls, and giving the walls some additional support. Doweling involves drilling a hole horizontally into the wall for each length of rebar, and anchoring the end of the rebar in the hole with construction epoxy. There will be a piece of rebar doweled every 18 inches on all four walls, so the dowelling represents a considerable additional expense, mostly because of the labour.

TK isn’t done with us, however. The following week Marco and his crew lay in and compact the drainage gravel, install the layer of styrofoam insulation, lay down the vapour barrier, and begin dowelling the rebar and wiring it together into a mesh. I phone TK to arrange an inspection. Both TK and the building inspector have to sign off on all the preparatory work before the concrete can be poured. TK asks what stage the work is at. I tell him the crew is well into dowelling and wiring the rebar. He asks me how thick the rebar is.

“10M,” I reply. 10M is about half an inch in diameter.

“What! 10M? Nobody uses 10M.”

“What do you mean?” Slab rebar isn’t even specified on TK’s drawings, and my understanding has always been that it’s optional. A good idea, but optional.

“It has to be minimum 15M. I won’t approve 10M.” 15M is about five-eighths of an inch in diameter.

A hurried round of phone calls ensues. From work, I phone Marco at the house and give him the news.

“What! That’s crazy. We’re three-quarters done. He’s crazy! This slab is already so overbuilt it’s ridiculous.”

Marco phones TK, and then phones me back at work. “Well, I talked to him and he’s not budging, at least until he comes for a look. It’s ridiculous.” By ‘a look’, I’m assuming TK means a site visit, each of which costs $250. And he’s unwilling to come the same day, claiming to be booked solid, even though he’s at his office, and his office is a five-minute drive from the house. “We’re going to have to pull out,” Marco says. “And it’s too late in the day to go to another site, so unfortunately I’m going to have to charge you for the lost time.” There’s not much I can say. The lost time ends up as an extra $400 on Marco’s next invoice. That evening, when I relay the latest developments, my wife is furious. From growing up in the local Chinese community, there’s something she recognizes in TK, and it’s not something she likes.

The next day the crisis resolves itself with some soothing talk from Marco, and some extra lubrication from our spiraling line of credit. TK agrees to a doubling up of the 10M rebar — a length of rebar doweled into the walls every 9 inches instead of every 18. This of course doubles the cost of the rebar work, but it’s cheaper than ripping everything out and starting again with 15M bar. Marco considers the whole thing lunacy. And TK gets to bill for an additional site visit.

(Slab preparation work: $6400)

(Additional rebar work: $2700)

Completed slab preparation work

Slicing concrete

One final job must be completed before the pouring of the slab can go ahead. I bring in a concrete cutting and coring company to cut an access door in the side wall of the concrete stairs on the front of the house, and to make a few other minor cuts in the foundation at other locations. Nick has recommended that we modify the layout of the rental suite by locating the new furnace and the hot water tank in the space under the stairs, rather than use precious square footage in the suite for a mechanical room. We like the suggestion and agree to it. Currently there is no wall between the space under the stairs and the interior of the basement because the original sheathing and studs, exposed to the humid soil under the stairs in the inadequately ventilated space, rotted away. Once a new concrete floor is poured under the stairs, and the wall is rebuilt, we’ll need the exterior access door to get at the mechanicals.

A worker shows up with a specialized concrete saw that has a circular blade about three feet across. He attaches the saw to the side wall of the stairs. The saw uses a wet cutting system, which sprays water over the blade as it cuts. The blade goes through the concrete like butter, and leaves a horrendous, gooey grey mess in its wake.

(Concrete cutting: $835)

Promise and possibility

The concrete crew pours the new slab on January 2, 2008 — the first working day of the new year. In the half dark of early morning the bulk of a concrete truck and a pump truck fill the back lane behind the house. The workers run a hose from the hopper at the rear of the pump truck into the basement. Once everyone is in place, the driver starts pumping the concrete. The crew moves quickly, one worker holding the end of the hose as the grey mix shoots out, Marco and the others spreading the mix with wide concrete rakes and trowels.

Pouring the slab

A few days later, my wife and I stand on the new slab. We feel we’ve reached a major milestone. The hellhole is no more. We stand in one corner of the basement, a smooth and beautiful expanse of new concrete stretching out before us, almost like the new year itself, full of promise and possibility. It’s been a grinding, stressful, sometimes brutal sixteen months to get to this point, but now we’re here and I feel that the worst is behind us. We’ve got a new, solid, clean, dry foundation upon which to build.

In a normal world, with normal people, that could very well have been the case. But Vancouver in early 2008 is not a normal world. It’s one in which people like TK and Nick Costa can operate and thrive. We just don’t know that yet.

(Slab pour: $7450)

The new slab

Shit

What follows is six months of shit. As a one-word summary of the Nick Costa experience, a little crude perhaps, but the most fitting.

There’s so much to choose from, I’m going to be selective and present just the most egregious incidents.

Dylan’s split personality

The flush beam and the joists. The amount of woe surrounding this portion of the construction is almost laughable — if it weren’t the key structural support for the center of the house.

As part of the new central supporting wall, Dylan and an assistant have installed a flush beam to create a seven-foot-wide opening that will eventually serve as the entranceway into the living room and kitchen. The ends of the floor joists at the center of the house rest on top of the new supporting wall, except in the area of the flush beam, where they are attached to the side of the beam with joist hangers.

At several points in this episode I’m going to be referring to this beam, the joists connected to the beam, and the joist hangers, so to help with visualizing this construction detail, I’ve included the picture below which illustrates using a joist hanger to attach a joist to the side of a beam.

Joist hanger used to attach a joist to the side of a beam

On one side of the beam, a headroom problem reemerges. Nick wants to run a single main trunk for the new heating duct system down the center of the suite, rather than split the main trunk into two parallel trunks running along the ceiling at the outer walls. Regardless of where the main trunk or trunks are located, it will involve running bulky, rectangular duct immediately below the joists. The duct will then be boxed in with drywall, creating what is called ‘a drop’. Drops are the often unsightly boxy structures typical of low headroom basement suites. They cover the various structural and mechanical components like beams, heating ducts, and pipes that run overhead. In full height basements, all this infrastructure can be gracefully hidden above a dropped ceiling, but we don’t have enough headroom to do that. Done badly, drops look terrible, and scream basement suite. Nick’s rationale is that walking under a drop incorporating both the beam and the main heating trunk at the central location will be far less noticeable than walking into an open concept living room and kitchen and having your eye drawn to a boxy drop running the length of the outer wall. My wife and I agree.

Unfortunately, the minimum vertical dimension for the main heating trunk, as specified by the heating company, is five inches. Add another inch for the drywall below the trunk line, and a slight gap between the two, and we now have a structure that extends an inch and a half below the city’s specified minimum headroom of 6’6” over 80% of the suite area and all exit routes. Nick’s solution is to cut a long, shallow notch out of the underside of each joist on one side of the beam so that in this area the trunk line can be moved up enough to meet the city’s headroom requirements. Cutting notches out of joists is dicey, given that they’re the structural members supporting the floor above — especially joists that are only 2×8 to begin with, rather than the 2×10 or 2×12 used in modern residential construction. Nick consults TK, who says that if we double up the joists by adding a new joist to each of the existing joists in the affected area, he will authorize a notch two feet long by one-and-a-half inches deep, and no more, in each joist pair. Everyone agrees on this plan of action.

Dylan does the work. When I get home and go downstairs to inspect, I’m dumbfounded. Dylan has doubled up the joists correctly, pre-cutting the required notches in the new joists, but in the existing joists he’s made a one-and-a-half inch vertical cut, then attempted to split out the notches horizontally. The result is atrocious. The splits are not a straight horizontal line, but instead veer all over the place, resulting in much more than one-and-a-half inches of material being removed from each joist, seriously undermining their structural integrity. And he didn’t do it with just one joist, realize that method was a failure, and then revert to the more time-consuming but proper method of making the horizontal cuts with a circular saw, finishing with a handsaw or a reciprocating saw those areas that couldn’t be reached with a circular blade. No, he mangled each existing joist in the same utterly moronic manner. There’s no way TK or the city inspector is going to approve this. There’s no way I’m going to approve it.

Here’s a picture of the beam and the attached joists. You can see just how much additional material the splitting removed by comparing the split joists to the pre-cut joists installed beside them, and by looking at the thickness of the little blocks of wood Dylan had to insert in the bottom of the joist hangers to allow the split joists to rest on something.

Split joists paired with pre-cut joists

I’m displeased. I phone Nick. He comes over. He admits that Dylan’s work is “a bit rough,” but doesn’t seem overly concerned. I tell him that we’re going to need to get TK back to assess the situation. If I had the experience then that I have now, I would have thrown Nick and Dylan out on their asses that very day. TK comes for a look later in the week and pronounces. The joists in question will now have to be tripled up with the addition of a third, properly notched joist added to each existing joist pair.

Drip, drip, drip

At Nick’s suggestion, we’ve decided to locate the new furnace and the hot water tank in the space under the concrete front stairs. In these little East Vancouver houses, reclaiming some additional square footage is always welcome. We’ve had Marco and his crew install a vapour barrier and a new concrete floor in what will become the mechanical room.

As the concrete floor cures I notice drops of water suspended from the sloping underside of the stairs, and dark patches on the new concrete floor. I assume that the water vapour given off by the concrete during the curing process is rising up and condensing on the cold concrete surface above. Eventually everything dries out and the space looks good. Because we’re adding the space under the stairs to the usable square footage of the house, the inspector requires that we insulate it, either with standard frame walls and fiberglass batt insulation, or spray-on foam insulation.

I’m down in the basement a few days later and have another one of those nasty renovation surprises. Drops of water are again suspended from the underside of the stairs, and new dark patches have appeared on the floor, beneath the drops. I watch as a couple of drops fall and are absorbed into the dark patches. It’s been raining for the last couple of days. I surmise that the drops aren’t condensation from the curing concrete, but rather rainwater making its way through the old concrete of the stairs.

More frantic research. Guess what? Concrete is porous. Between the grains of sand and cement that form the basis of concrete are thousands of tiny capillaries that water just loves to flow along. In fact, a phenomenon called ‘capillary attraction’ means that concrete acts like a giant sponge. In our case, the sponge is probably becoming saturated after a couple of days of rain hitting the top side of the stairs, and is shedding the excess water into the space below.

The amount of water isn’t huge, so I’m still holding out a shred of hope that it might only be condensation. The sun returns, and the space dries up. I get out the garden hose, position it outside the front door, and point it over the lip of the top step. I turn on the water and watch as it cascades down the stairs to the front walkway. Satisfied that this amount of water approximates a Vancouver monsoon, I go back inside the basement and look into the space under the stairs. Bloody Niagara Falls. So many drops of water that they’re forming into sheets and spilling down on the floor. I go back outside, turn off the water, and do a fair bit of swearing.

The space beneath the stairs

Solution time again. There’s no way we can install a new, $10,000, high-efficiency gas furnace and the hot water tank in this space until we’ve made it waterproof. It occurs to me that Nick, as a general contractor selling construction expertise, should have foreseen this possibility. Why had it been left up to the homeowner to discover the problem?

Despite the setback, we decide to persevere with the plan to locate the mechanical room under the stairs. Reincorporating the mechanical room in the suite layout would mean sacrificing the one decent storage room we’ll have, or changing from a two bedroom to a one bedroom unit, which would significantly impact the amount of rent we’ll be able to charge.

Nick’s solution is to paint the stairs with waterproof paint. Won’t the paint progressively wear off in the traffic areas? I ask. Sure, Nick replies, but you can just repaint when that starts to happen. I tell him that I’m going to explore other solutions. The problem with the stairs completely messes up the heating company’s schedule. They had been on the verge of installing the new furnace and duct system. The custom ductwork is sitting in their warehouse, ready to go. Now they’re on hold until we find an acceptable solution. My wife and I, looking forward to the resumption of heat, continue to freeze and huddle around space heaters.

One option is to get Delmore back, demolish the concrete stairs, and rebuild them with frame construction and plywood sheathing, including a waterproof, torch-on membrane immediately below the treads and risers of the stairs. We’d probably be able to save the new concrete floor, but the new drain tile, which runs around the perimeter of the stairs, would likely get disrupted as part of pouring new footings for the wood frame walls. It all sounds expensive and time consuming.

What we try first is a cementitious waterproofing compound that when applied grows microcrystals within the tiny capillaries of the concrete, progressively blocking them — or so the marketing literature states. The more water seeping through the untreated concrete, the better, because the crystals are water activated. A contractor shows up and applies the compound to the underside of the stairs — roof and walls. After a few days, the amount of water working its way through the stairs is significantly reduced, but not halted completely. I phone the contractor and tell him we still have a small, wet area on the underside of the stairs. He returns, applies more of the compound, which improves the situation further, but still a small amount of water is seeping through. And anything less than an absolute seal is no good. When I mention to TK the approach we’re taking he dismisses it. “That stuff’s no good for old concrete. It only works on new concrete.” I ask his advice and he suggests torch-on, or some other kind of waterproof membrane, beneath a protective cladding like tiles.

(Concrete waterproofing compound: $1000)

The stairs have now become a project within a project. With the addition of the concrete floor, the cutting of the access door, and the application of the waterproofing compound, we’ve dumped in enough money to this one piece of infrastructure that changing course and demolishing the stairs would be painful. We decide to persevere and my wife takes on the responsibility of finding a decent tiling company.

Short people

Dylan is tall, definitely over six feet, but he comes perilously close to joining Randy Newman’s ranks of short people (“Short people got no reason / To live. / They got little hands / Little eyes…”).

The joists in one corner of the basement need to be doubled up. This corner is where the stairs between the two levels of the house used to be located before they were removed, probably by the Portuguese brothers when they converted the bottom half of the house to a rental suite. When they closed up the opening between the two floors, they used joists that weren’t quite long enough to span the distance from the top of the outer wall to the top of the old central beam. The joists were probably scavenged from somewhere, and they got them cheap, or for free. Unfortunately, they were about six inches too short for their required purpose. To make them work, they had to run a horizontal 2×4 ledger under the joists at either end. One ledger was nailed to the side of the old central beam, and the other was nailed to the side of the double top plate — the stacked 2x4s — on the outer wall. The joist ends rested on top of these two ledger boards — an adequate solution from a structural standpoint, but an unsightly one because at the ceiling line the 2×4 ledgers stuck out from the wall and the beam. When Dylan replaced the central beam with the new central supporting wall he reattached the ledger as a temporary measure until the short joists could be paired with new, longer joists that would run from the top of the outer wall to the top of the central wall. Removing and reattaching the ledger at the central location had not been a problem because the temporary supporting walls were in place at the time, taking the weight of the joists overhead and the floor above.

The ledger at the outside wall is a different matter. Directly above it, in a storage room on the main level of the house, are two large, old-style, green metal file cabinets fully loaded with papers. A combined weight of probably a thousand pounds.

While discussing this portion of the framing with Nick I tell him about the file cabinets and offer to unload them and move them to another location upstairs. He tells me not to worry about it. They’ll install some temporary supports below the joists when the time comes to do this portion of the job. When that day draws close I remind Nick about the file cabinets and he again says not to worry. The day before Dylan is going to do the work, I tell him directly about the file cabinets and how heavy they are.

When I get home at the end of the day, the new joists are in place, paired with the short joists. But on the phone with Nick later that evening he reveals there had been a little mishap. (Why he tells me, I have no idea.) Somehow Dylan and Nick, who was there at the time, forgot about the file cabinets, or worse, are beginning to reveal intellectual challenges around subjects such as gravity, and physical properties like weight, and the load-bearing capacity of unsupported horizontal framing members. According to Nick, the instant that Dylan, standing directly beneath perhaps half a ton of loaded file cabinets, pried the ledger board from the outer wall all the joist ends in the area, with a horrendous noise, collapsed straight down about six inches, which would have put them close to the top of Dylan’s head. Nick grabbed a 2×4 stud and rushed over, and between the two of them they were just able to wedge the stud beneath one of the joists, and then quickly do the same with the other joists, preventing what might have been a total collapse, two smashed file cabinets sitting in the basement, a cracked basement slab, and a destroyed storage room floor. As it is, the storage room floor still isn’t quite right, feeling spongy and creaky underfoot, probably from the plywood subfloor being deflected and perhaps partially splintered when it was bent down by the weight of the file cabinets.

No doubt many of you have heard of the Darwin Awards. From the Darwin Awards web site: “In honor of Charles Darwin, the Darwin Awards commemorate those who improve our gene pool by (accidentally) removing themselves from it. The Award is generally bestowed posthumously.”

I’d say Dylan, aided and abetted by Nick, narrowly avoided becoming a recipient.

Once again, why?

In the previous episode, in reference to our eventual decision to hire Nick, I asked the question Why? I ask the question again, now in reference to continuing the relationship, as some of you are probably wondering why we allowed this circus to go on as long as we did. (Although, as a reminder, I have focused on the most egregious incidents, which has the effect of amplifying the horror.)

The short answer to Why? is that we don’t allow it to go on for very long. Although we hired Nick at the end of October, with the exception of the central supporting wall, his company doesn’t begin to do much work until early January 2008. On the last day of February, just eight weeks later, I phone Nick and tell him we don’t want to continue with the contract. Which is a polite way of saying, “You’re fired.” To which Nick casually responds, “Okay.”

The slightly longer answer is that we are quickly unhappy with Nick once work starts in earnest, and confront him on several occasions about the sources of our unhappiness. Workers absent for days with no prior warning, and lame subsequent excuses from Nick. Multiple blown appointments when Nick is “coming over in an hour,” then fails to show. Multiple breaches of the building code, including a single top plate rather than the required double top plate on the central supporting wall, and the attempt, which I quickly stop, to put vapour barrier directly against the concrete foundation wall, creating the perfect conditions for mould, rather than on the warm side of the new framing. Overall poor quality of framing. Nick’s demand for an early second draw — another $20,000 well in advance of the contractually-agreed-upon milestone, which is completion of the framing and the plumbing and electrical rough-ins.

Because of the overall slow pace, and the worker absences, we aren’t even close to reaching the milestone. I tell Nick flatly, “We aren’t giving you any more money. You need to reach the milestone, and the work has to be passed by the structural engineer and the various city inspectors before we’ll release any more money.” The real reason for the worker absences, I find out from Dylan and the other carpenter, is greed. Nick has eight different jobs of various sizes on the go, and five workers. This from a guy who solemnly stated he would never max himself out. Workers are continually being yanked off one job and sent to another — probably to whichever client is currently complaining the loudest — and as a result spend half their day driving around town.

There’s more, but that’s probably enough. However — in this slightly longer answer to Why? — through it all, Nick never stops being responsive. He’s a master at appearing at the precise moment my wife and I agree we’ve finally had it. Of somehow diminishing our grievances to minor hiccups, of displaying just enough construction expertise to make us think twice about giving him the bum’s rush. He has the con man’s silver tongue. But that’s not quite right. I google “con man’s silver tongue” to check my use of “silver tongue” in the context of con men, and discover The Ten Commandments of Con Artists, a list of con artist best practices attributed to a renowned, early-twentieth-century con man, Victor Lustig. Commandment #1 leaps out at me: “Be a good listener — the myth of the fast talking, silver tongued con man should be ignored.” In the previous episode, weeks before reading Lustig’s commandments, here are the first two sentences I wrote describing Nick: The following week I meet Nick Costa, the general contractor, for the first time. My initial impression is that he’s a good listener.

A shoelace snaps

A specific incident leads to firing Nick. It’s a relatively minor incident, but indicative of the core problem — and also the last straw.

As another way of conserving as much space as possible in the suite, we’ve decided that instead of swing doors, we’ll use pocket doors throughout. Pocket doors slide back and forth on an overhead track that runs above the doorway and inside the adjacent wall, thus requiring no additional space to open the door, unlike the common swing door which requires swing space into a room.

As part of framing the new suite, Dylan and another carpenter install a number of pocket door frames — prefabricated units that include a door frame and an adjoining section of wall frame that houses the pocket door when it’s open. In the master bedroom they do a sloppy job of aligning the unit with the 2×4 stud wall. Instead of the door frame and integrated wall section being directly in line with the stud wall, they veer out at a noticeable angle. A deficiency, which if left uncorrected will cause problems when it comes time to install drywall, and will cause the door to slide back and forth at a funny angle to the bedroom wall.

I have other deficiencies to discuss with Nick as well, and I phone him and ask him to meet me at the house. Together, we examine the misaligned pocket door frame and he agrees it’s misaligned and needs to be made straight. Luckily, the wall section of the unit hasn’t yet been glued to the slab, so correcting the problem should be easy. Nick assures me he’ll have Dylan and the other carpenter properly align the door frame.

When I inspect the results the next day I’m stunned. The unit is still misaligned, but now glued to the floor. Charles Bukowski: “…it’s not the large things that / send a man to the / madhouse…./ but a shoelace that snaps…” I’m in a cold fury. At the same time, in another, still rational part of my brain, I assemble these possible explanations for this latest piece of idiocy:  a) Nick forgot to tell Dylan and the other carpenter to properly align the door frame,  b) Nick lied to me and had no intention of telling them because he didn’t consider the misaligned frame a significant problem,  c) Nick did tell them, and they forgot, or  d) Nick told them and they ignored him, because they don’t respect him. The actual explanation for the misaligned door frame, and for the two dozen other things that have gone wrong, ultimately doesn’t matter. Only the results matter. And the results are shit.

This is the moment at which I fully accept what’s been a growing realization. The problem isn’t Nick’s overextended, second-rate workers. The problem is Nick’s third-rate management of his second-rate workers. The following morning I make the call and discontinue our relationship — or so I thought.

Hiatus

March and April 2008. We’ve gotten rid of Nick, but we still have no furnace, no laundry, and an uninsulated, gutted basement generating no revenue. We must keep moving forward, but we aren’t sure whether to revert to our initial approach of managing the renovation ourselves, or to go looking for a new general contractor. In the immediate aftermath of the Nick experience we don’t have much appetite to begin a search for a new general contractor, so although we know we’ll probably have to go that route eventually, for a while we try to move the renovation forward ourselves.

Our first attempt at making some progress is to contact the electrician and the plumbing company who performed the initial rough-in work in the basement. This work seems fine, and the electrical inspector has told us the electrician is reliable and does good work. My wife leaves a voicemail for the electrician explaining that we’ve parted company with Nick, but we’d like to keep him working on the job. The electrician doesn’t return the call. Months later, the electrical inspector tells us the electrician was conflicted about what to do, and felt bad, but ultimately came down on the side of Nick, because that was where future work was likely to be.

The owner of the plumbing company does return my wife’s call, and tells her he’s willing to complete our job, as long as it can be done on the quiet. He doesn’t want Nick finding out, which could jeopardize his business relationship. He says he’ll get back to us with some dates, but we never hear from him, and decide not to pursue it. It’s becoming obvious that we need to make a clean break from anyone associated with Nick.

We contact our builder friend, who’s working on the high-end renovation in West Vancouver, and ask his advice. He comes to the house to assess the situation. He considers the framing done by Dylan and the other carpenter “rookie stuff,” and the splitting out of the joist notches a farce. He and his crews have always prided themselves on the quality of their framing, but he admits they sometimes wonder why they go to the extra effort when so many builders get away with slapping together the frame of a house, and then quickly hiding all the deficiencies behind drywall. Our friend offers to give us the contact information for the framer and the drywaller on his current job, both of whom he considers excellent. As he’s leaving he looks up at the beam spanning the opening in the central supporting wall and notices something. He grabs a nearby stepladder and climbs up so he can eyeball down the length of the beam. “This beam’s sagging,” he tells us. I climb up and clearly see the slight sag. The beam has been in place only four months, so with time it could very well sag a lot more. Our friend asks if this is the size of beam specified by the structural engineer. I tell him that originally it wasn’t, a taller, narrower beam was specified, but Nick wanted space above the beam to run plumbing and electrical back and forth, so he negotiated a different shape with TK — less tall, but wider to compensate.

“Beams don’t work like that,” our friend tells us. “They get a disproportionate amount of their strength from their height, not their width. Did the structural engineer revise his drawings and sign off on it?”

“No,” I tell him. “My understanding is it was all done over the phone.” And TK’s English is hard to understand over the phone, and it’s quite possible that Nick didn’t communicate his intentions very well.

“Then this beam isn’t to spec. It’s going to have to be replaced with a proper sized beam.”

It’s starting

During this period, there are some other developments. At the end of March, I resign from the company where I’ve been working for the past three years to take a similar job with a different company. A co-worker at the first company made an identical move a year previous, and encourages me to join him at the new place. I’m initially reluctant, feeling some loyalty to the first company, but I’m worried about the company’s long-term viability. I’ve come to feel the company is badly mismanaged, and future bankruptcy is possible. The company has already been shrinking to survive, laying off a quarter of the staff the previous October — a stressful, unnerving event for a small, tightly knit company with a number of longstanding employees. I feel my position is relatively safe, however if the company does go belly up in a year’s time, I don’t want to be job hunting in the middle of a recession. I’ve been following the US economic news to some extent, not closely, but paying enough attention to know that things are not good south of the border. In fact, the US, in the first quarter of 2008, officially slips into recession. As I recall, there’s soothing talk around this time from some Canadian economists and politicians who would have us believe that a mysterious economic delinkage has occurred between Canada and the United States. The US economy might crash and burn, but somehow Canada will avoid being dragged down this time, perhaps by selling resources to the Chinese. This line of reasoning sounds like bunk to me. I discuss with my wife the various factors at play and she encourages me to make the strategic move from a shaky, small company, to a medium-sized company with sounder finances. I feel pretty good about my decision to change employers as the global financial crisis accelerates throughout 2008, and it becomes apparent that ‘global’ does include Canada, and that a five-alarm fire at your next door neighbour’s house can make your own living room a little warm.

It isn’t only mainstream media news stories about the US and Canadian economy that underpin my sentiments. For at least a year and a half, and perhaps longer, I’ve been soaking up opinions, claims, explanations, statistics, and dark predictions from the Vancouver real estate blogosphere. I don’t remember the exact circumstances, but I probably stumbled on my first Vancouver real estate blog some time in 2006, and it was probably the blog run by VHB, the Vancouver Housing Blogger. What I do know is that VHB and other local bloggers helped me think more critically and analytically about Vancouver real estate and about money. From the time we’d bought the house in September of 2003, I’d been telling myself, in a somewhat vague, uncritical way, that Vancouver house prices couldn’t keep going up forever, and yet every year, in startling fashion, they had continued to go up. Now I’d found an online community that was providing very specific and reasoned arguments why Vancouver real estate couldn’t keep going up forever, and in fact, was very likely to come crashing down. When I wasn’t frantically searching for construction information, my early mornings were no longer spent comparing houses and prices on RealtyLink to our own house. I was now a habitué of the ‘bear blogs’, or the ‘bubble blogs’ — “doom blogs,” as my wife called them. And in April of 2008, while we’re trying to keep our renovation moving ahead, come the first inklings that the doom bloggers’ predictions are starting to come true. There’s a sense that the bloggers smell blood. Through March, April, and May, Vancouver house prices stop rising, but perhaps more importantly, during what should be the prime selling season, year-over-year sales numbers plummet, and the inventory of unsold houses quickly swells, a reliable precursor to falling prices. The April 12th post on the blog Housing Analysis is ominously titled “It’s Starting.” The April 29th post is titled “Vancouver’s Next — Watch Out!” At the very moment that we’re drawing down significant amounts from a line of credit based on the unrealized equity in our house, there’s a good chance house prices could tank and that equity shrivel.

Seismic upgrading

Perhaps appropriately, the one portion of the renovation I do manage to move forward during March and April is the seismic upgrading — making the house more resistant to the forces of an actual earthquake, while pondering the possible results of a financial one. With the wood frame and the concrete foundation of the house fully exposed on the lower level, I take advantage of the opportunity to bolt the frame to the foundation, and install steel structural connectors in other locations, without having to rip off drywall and tear out insulation to do it. I also triple the studs at the corners of the house, in preparation for creating sections of shear wall — half-inch structural plywood nailed to the studs, and the top and bottom plates, of the cripple walls. In certain house designs, cripple walls are the short, exterior walls of the house that run from the top of the concrete foundation walls to the underside of the joists supporting the main floor. In Vancouver, where the mild climate doesn’t necessitate deep basements to protect against frost heave, the typical house of a certain age is basically a box from the main floor up, which sits on stilts or dominos — the short studs of the cripple walls — which themselves sit on shallow foundation walls. This design works well enough when bearing the vertical load of a house subject to gravity, but it’s inherently weak when it encounters the side-to-side shaking or shearing forces of an earthquake. Cripple wall failure is the most common residential structural failure in an earthquake. The ‘box’ portion of the house moves laterally as a single unit, collapsing the stilt-like studs of the cripple wall beneath it, and slumping to the ground. Not a pleasant thing to have happen to your house, and especially not a pleasant thing if there are tenants living in the space beneath the ‘box’ portion of the house — which will be the case with our suite, and is the case with the vast majority of basement suites in Vancouver. Attaching plywood to the cripple walls strengthens them enormously, allowing them to resist shearing forces much more effectively.

Seismic upgrading was another aspect of the renovation that Nick and I disagreed about. He maintained that unless you could establish a continuous load path — reinforcing every key connection point between framing members from the foundation to the roof — there was no point doing anything, because the earthquake forces would act upon the weakest link. He did agree with bolting the frame to the foundation. It’s true that establishing a continuous load path is the ideal situation, but Residential Guide to Earthquake Resistance, and various other sources I find on the Web, explicitly state that if homeowners do nothing else, bolting the frame to the foundation, and reinforcing cripple walls, can save a house, and its occupants.

Drilling hole for anchor bolt

The return of Nick

How does this happen? I don’t know… but it does.

Although we’ve broken off the contract, we have to settle on a final amount of money that Nick claims is owed in excess of the original $20,000 deposit. There are also some loose ends that need to be wrapped up. There are tools and supplies to pick up, and a portable toilet that has to be removed from the site. Not surprisingly, Nick doesn’t attend to these things particularly promptly. I phone him on several occasions to prod him into action. During one of these calls, I mention that the beam in the central supporting wall has sagged and will need to be replaced.

At some point, Nick phones us and asks for a meeting. He tells us that he wants to make things right, to deal with all the deficiencies, including the beam, at no cost to us. This last part is a bit of a laugher, given that we’ve already paid to have the work done properly. In fact, Nick’s own contract states that all work will be done in accordance with good quality standards, and in compliance with the applicable building code and related inspections, and “other authorities” (i.e., TK). You can’t charge clients to fix your own mistakes.

We agree to the meeting, but nothing more. Nick pitches his new line: he’s going to put his top guys on our job (thereby implying that we didn’t have his top guys before — in fact, as we’ll later find out, he’s fired Dylan). He’ll pay for a new beam and its installation, the tripling of the joists that TK has specified to account for the split joists, and the materials and labour required to fix a number of other more minor deficiencies. After the work is complete, we can decide if we want to continue with the contract or settle up and call an end. We tell Nick we’ll give him an answer in the morning.

After Nick leaves, my wife and I discuss his offer. We agree that it’s unlikely the leopard can so thoroughly change his spots, but there doesn’t appear to be much downside. I phone Nick the next day and tell him he can come back under the terms discussed once we get a revised beam specification from TK. I also tell him that every aspect of the operation — his “top guys,” the results of their work, and Nick’s management of the work — will be under a microscope.

Given his performance to date, Nick’s sudden eagerness to make things right is a bit puzzling. Perhaps he’s worried about his professional reputation. In hindsight, I wonder if the rapidly deteriorating economy in the spring of 2008, and in particular the rapidly deteriorating circumstances for real estate and construction, was causing his business to dry up, and that he saw our job as salvageable.

Shit 2

I ask TK for a revision of the structural engineering drawings, one with a new beam specification and detailed seismic upgrading information. We can’t simply revert to the original beam specification, I discover, because changes we made to the suite layout along the way mean the opening in the central supporting wall is two feet wider than indicated on the original drawings — something Nick either failed to take into account, or failed to communicate effectively to TK, and another likely reason that the installed beam sagged. We want to keep the wider opening, so we need a revised beam specification.

TK is very slow in getting to the revision. A couple of weeks go by, and we’re still waiting for what is probably 15 minutes of work for TK, and an hour for one of his assistants to modify and reprint the drawings. I begin hounding TK daily, and I suspect that at times he’s screening out my calls. I start phoning from different locations around my work place, and whenever I phone from a new number, he answers. My wife eventually loses all patience, and in a rage flies down to TK’s office, blowing in like a tornado and terrorizing TK’s dopey staff. Tellingly, they’re able to produce the revised drawings in about ten minutes. A cowed TK slinks into his office during this showdown. No questions, during this second meeting with my wife, about why we haven’t started a family.

(Revised drawings: $900)

I phone Nick with the details of the new beam, and around the end of May, his top guys start the work. Within a couple of days, the new beam is in place and the joists are tripled and attached to the side of the beam with joist hangers. The results seem better. However, when TK comes to inspect, he immediately sees something he doesn’t like. On the third joist added to each joist pair, the two cuts forming the notch extend slightly past each other where they meet — the result of cutting the notches entirely with a circular saw, rather than cutting them mostly with a circular saw and then finishing the cuts with the straight blade of a handsaw or reciprocating saw. The slight overcutting doesn’t seem that critical to me, but TK announces that before he’s willing to sign off on the work, four-foot-long plywood gussets — plywood cut to the shape of the notched end of the joists — must be attached to either side of each triple joist as an additional strengthening measure. He’ll need to do another drawing. I don’t know whether this latest pronouncement is a scam to further inflate his fees, or a legitimate requirement from a structural standpoint. Either way, we don’t have much choice but to comply if we want him to sign off.

After TK leaves, I discover something of my own that I don’t like. The joist hangers are triple-width, 2×8 joist hangers cut down in size to approximate a triple 2×6 hanger, necessary to fit the notched end of the joists. In preparation for doing more seismic upgrading work, I’ve been reading the literature from the structural connector company, and they repeatedly warn against making any manual alteration of their connectors. Each type of connector is specifically engineered for its particular purpose, with nail holes positioned in precise spots. Chopping bits off connectors, especially bits that contain nail holes, as is the case with the altered 2×8 hangers, can significantly reduce their load-bearing capacity, and is definitely bad practice.

I tell Nick about TK’s latest pronouncement. He thinks the gussets are complete overkill, but agrees there isn’t much choice but to comply with TK’s wishes. I also bring up the issue of the cut-down joist hangers and he agrees to swap them for properly sized triple 2×6 hangers.

TK produces the required drawing much more quickly this time — perhaps wanting to avoid any further encounters with my wife — and includes it in the price for the just-completed site inspection, which is covered under Nick’s contract. I phone Nick and tell him that I have the drawing and will leave a copy on the work table in the suite, which I do as soon as I get off the phone. I also remind Nick about swapping in the correctly sized joist hangers. “Don’t worry, I’ll take care of it,” he responds.

The following morning I discover another potential problem. Nick’s guys have used 1-1/2 inch long hanger nails in the ‘shear nailing’ locations on the joist hangers. 1-1/2 inch hanger nails — nails that are thicker and stronger for their given length than regular nails — are the correct fasteners to use for the nails that go straight into the beam (step 4 in the joist hanger diagram above). However, I’m almost certain that I’ve read longer nails are required for the shear nailing locations, where nails are driven in diagonally at a 45 degree angle, thus requiring greater length to properly penetrate the beam (steps 5 and 6 in the diagram). When trimming the joist ends to make room for the flush beam, Dylan had done a sloppy job, overcutting some of the joist ends by as much as an inch. There is very little wood inside the hangers on these joists. The combination of the short nail and the lack of wood allows me to reach up to a shear nailing location on one of the joists, and with almost no effort pull a hanger nail free. The nail isn’t biting into anything. It’s just there for show. At work later that day, I go to the manufacturer’s web site and confirm what I thought I’d previously read. In numerous locations in their literature they expressly state that hanger nails must not be used for shear nailing. Shear nails must be at least 3-1/2 inches long.

Sloppy trimming of joist ends

Volcano

I get home and go downstairs to check the progress. I have another one of those moments when I’m stunned by what I see. The plywood gussets have all been cut incorrectly. Instead of the sideways L-shape required to match the notched end of the joists, they’re straight strips. Several of them have been installed, with nails spaced every two inches as TK required — a crapload of nails over a four foot length — but doing absolutely zero from a structural standpoint, because they run above the notch instead of wrapping around it. The uninstalled gussets — now useless pieces of wood — are stacked on the work table, about six inches away from TK’s drawing.

The remainder of the joist hangers have also been installed — not the properly sized triple 2×6 hangers that Nick promised he’d take care of, but more triple 2×8 hangers with bits cut off.

I tear out of the basement and pound up the deck stairs to the phone above. For a fleeting moment, cresting the top step and crossing the deck, I have a strange, floating sensation, definitely out of control, but more, an almost out-of-body sensation, the sense that I’m not quite sure what’s going to happen next, that anything could happen. Thinking back, it’s perhaps not unreasonable to describe the momentary impulse as homicidal. If someone had been there to capture the instant with a camera, what would my face have looked like?

I get Nick on the phone. Six months of deficiency after deficiency, of ignorance of the building code, of ignorance of construction techniques in general, of garbage work, of repeatedly absent workers, of being manipulated, of being lied to, of worthless promises, of non-existent oversight, of having our hopes raised only to have them dashed, of moronic decisions, of babysitting incompetence, six months of rage, come pouring out like a volcano. Inside my chest a huge pressure accompanies the river of profanity I bellow down the phone. “DO YOU WANNA BE FUCKING FIRED?” Nick tries to calm me down, says he’ll come over right away. “YOU’RE GODDAMN FUCKING RIGHT YOU’LL GET OVER HERE RIGHT AWAY!” I rage on for about a minute, then slam down the phone as if trying to smash it right through the coffee table.

On the other side of the French door, in the kitchen, I see my wife’s alarmed face. Later, she tells me she’s never seen me that angry. Ever. Even though the doors and windows were closed, she tells me that the whole block heard.

I go into the backyard and take a number of deep, even breaths, feel the mild evening air flowing in and out of my lungs, slowly lowering my blood pressure. I go into the basement to await Nick’s arrival. By the time Nick shows up, about ten minutes later, I’m mostly back to normal. Through the front window I watch as he, and another guy, get out of Nick’s car. I don’t recognize the other guy, but I assume it’s one of his workers. Although it seems strange that one of his workers would still be around at this hour of the evening. As the two of them come up the walkway toward the house I can see the worker is really burly, with the body shape you get from thousands of hours spent pumping iron in a gym. I have to work hard to keep myself from laughing when I realize Nick, a deathly serious look on his face, has brought along a bodyguard.

Everything is weirdly cordial after the eruption. I shake hands when introduced to Nick’s worker. Nick makes some excuse for the screw-up with the gussets and the joist hangers and says they’ll be fixed. I then tell him about the problem with the short shear nails, and pull a couple free to demonstrate.

“Those are hanger nails,” he protests.

“Yeah, I know. But the company’s literature explicitly states you don’t use hanger nails in the diagonal nailing locations. They specify a 3-1/2 inch nail.”

Nick isn’t convinced, but tells me he’ll phone the company in the morning to verify what sort of nail should be used. Then he and his worker leave.

Shoelace 2

…it’s not the large things that send a man to the madhouse….

Nick’s mild protestation that “those are hanger nails” is what finally does him in. He’s completely sincere in that particular statement because at that moment that’s what he absolutely believes. And there are probably houses around Vancouver with the wrong sized shear nails in their joist hangers because Nick was the general contractor. Will those houses suffer structural failure? Probably not. But it doesn’t matter. I’ve finally realized that it makes absolutely no sense to be paying someone thousands of dollars to provide a service in which you have absolutely no faith. To feel that you have to double- and triple-check every decision you’re paying someone to make. To live with the constant anxiety that every additional piece of work someone does on your house could be damaging it even further.

In the morning Nick phones and tells me he’s spoken to the company and that I’m right about the shear nails. “I know,” I say. And then I tell him it’s over.

What happens the rest of the way

With the final departure of Nick, the high drama ends. Lawyers get involved, and on the advice of our lawyer, we eventually settle with Nick for an additional $5000.

(Nick’s settlement: $5000)

I keep plugging away on the seismic upgrading, and we hire a tile company to install a waterproof membrane and slate tile on the front stairs. The stairs end up looking really good, although ironically, appearance wasn’t the reason we undertook the work.

(Seismic upgrading, tool rentals and materials: $1360)

(Waterproof membrane and tiling: $4150)

Toward the end of summer, we have a bit of luck. While talking with a co-worker, my wife’s sister relates our renovation saga. The co-worker suggests getting in touch with her husband, a general contractor and custom home builder. She says her husband has spent an entire career in the industry, and is very focused on quality, and detail, to the extent that he sometimes drives his tradespeople crazy. This sounds worth following up. I check out the husband’s company web site, and I’m impressed, although I feel he may be out of our league.

Over the next month we have several meetings with Ray, and end up hiring him mid-September, 2008. His company is busy, finishing up a large project, and he won’t have a crew available until some time in the new year. But he’s willing to come in himself before then and do the work necessary to move forward with the installation of the new furnace and heating duct system, and to bring in his plumber to run the lines for the upstairs laundry. I assist with swapping in properly sized joist hangers, and with removing the incorrectly sized plywood gussets and reinstalling proper ones. One morning in early October my wife and I are standing with Ray in the basement when one of the heating technicians fires up the new furnace for the first time. The warmth wafting down from the newly installed heating registers overhead is intoxicating. Eighteen months without a furnace, and almost a year of humping bags of dirty clothes to the laundromat, have come to an end.

(New furnace and heating duct system: $15,000)

From this point forward, the renovation runs pretty smoothly. Because of last-minute add-ons to the big job they’re wrapping up, the crew doesn’t become available until the middle of March, 2009. I use the intervening time to complete all the seismic upgrading work in the suite, with the exception of attaching the plywood panels to the cripple walls, which the crew will do. In order to install pieces of seismic hardware known as a holddowns at the inside corners of the house, I rent a large rotary hammer drill to drill one-inch diameter holes fourteen inches deep in the concrete foundation walls. This job is sort of fun, but a bit stressful. After consulting with Ray, I also rip out those portions of the framing done by Dylan that are substandard — about two-thirds of it. Once the crew does start, progress is quick and the results are very good. Ray proves to be everything his wife, and his references, described: detail oriented, knowledgeable, responsible, and calm. In a word, professional. We discuss in advance various options for particular aspects of the renovation, agree on an approach, and then that’s what happens. Workers arrive at 8:00 am, work all day, and when I inspect the results at the end of the day, there’s significant progress and I don’t find anything remiss. And by this point I’ve developed a pretty good eye. I eventually stop checking if things are plumb, level, and square, because they always are.

The crew works steadily on our job for about ten weeks, and then more sporadically throughout the summer as they wait for my wife and I to do the insulation, including installing insulation in the ceiling for better soundproofing, and then later to paint the entire suite — portions of the renovation we do ourselves to try to save some money. In retrospect, the $1500 we save doing the painting, which takes five or six prime summer weekends, is a poor tradeoff.

Here’s a list of what the renovation includes, in the order that the work is done:

•    Removal of the old stucco siding and the old soffit under the eaves
•    Installation of new windows for the entire house (purchased from a company recommended by Ray, rather than the initial company we’d been dealing with)
•    Installation of a rainscreen
•    New soffit all around
•    Demolition of the rear deck superstructure, replacement of the old decking
•    Re-siding of the entire house with cedar
•    Suite framing, including plywood shear walls
•    Demolition of the upstairs bathroom
•    Replumbing of the entire house
•    Rewiring of the bottom half of the house, and installation of separate electrical panels downstairs and upstairs
•    Installation of new exterior doors for the entire house
•    Lighting throughout the suite
•    Insulating and installing vapour barrier in the suite and upstairs bathroom
•    Drywalling the suite and upstairs bathroom
•    Tile flooring in the suite, and tile flooring and shower surrounds in both bathrooms
•    Cabinet, counter, and cupboard installation in the suite kitchen and both bathrooms
•    Interior doors in the suite
•    Interior window and door trim for the entire house
•    Exterior concrete work
•    Suite appliances
•    New deck railings and stairs
•    Interior painting of the suite and upstairs bathroom
•    Exterior painting of the entire house
•    Hardwood flooring in the suite
•    Baseboards in the suite
•    Closet shelving and rods in the suite
•    Attic insulation increased to R50

Re-siding the house wasn’t part of our original plan. But once we gutted the basement we discovered that the building envelope — basically a couple of layers of building paper under the stucco — was beginning to fail and in places water was seeping through the shiplap sheathing boards. A new bathroom upstairs wasn’t part of the plan either, but we decide to include it once Ray explains that it’s much more cost effective, and less disruptive, to replumb both the downstairs and the upstairs bathrooms at the same time, rather than return to do the upstairs one at a later date. Besides which, both my wife and I really hate our old upstairs bathroom.

By our estimation, we rebuild about 50% of the house over the course of the entire renovation. We decide to leave the interior renovation of the top half of the house, with the exception of the bathroom and the windows and doors, until later. We could have moved into the rental suite for a period of time, and had Ray and his crew renovate the top half as well, but we’re physically and psychologically exhausted, and we’ve maxed out our line of credit. We need a break, and we need to restart the stream of rental income.

At the beginning of September, 2009, tenants move into the new suite, three years and one month after the previous tenants moved out of the old suite.

The final reckoning — sort of

After Ray takes over the renovation, the drama that does exist involves money, and the players are my wife, me, and our line of credit.

Ray and his crew are not cheap. The contract with Ray is straightforward. Rather than a set price, he charges the hourly rate that he pays his own workers, the invoice amount submitted by the subtrades such as the plumber and the electrician, the contractor price for materials (typically somewhat cheaper, and sometimes significantly cheaper, than the retail price), and then adds 15% of everything for his fee. This arrangement is spelled out in advance, written down on a single sheet of paper, and Ray never deviates from it for the entire duration of the renovation.

Ray’s two senior workers on the job, skilled and experienced guys, one of whom used to run his own construction company, are $65 an hour each. A more junior worker is $37.50 an hour, and a labourer $20 an hour. The senior workers also negotiate an hour of paid travel time a day, each, because they live in distant suburbs and could easily find work much closer to home. We’re not that thrilled about the travel time, and Ray understands and gives us a choice of using different workers who wouldn’t be paid travel time, but he feels that the two workers he’s recommending would have the best mix of skills for our job. So we agree. Although it’s September 2008, and the global financial crisis is in full throttle, with shocking news coming out of the US almost daily, it seems the market in Vancouver, at least for builders with good reputations, still bears a lot.

Earlier in the year, we meet and become friends with a neighbouring couple who live in their mostly renovated 1920s builder’s special about a block away. They’ve done a great job on their place, working at it on and off for the past decade, often by themselves, but during one phase, that included raising the house and pouring a new foundation, hiring a construction company. They tell us that when a construction crew is going gangbusters on your place, to expect invoices equaling about $10,000 a week. We’re shocked, but that turns out to be exactly what Ray and his crew cost us. During the initial, intense, ten-week period of work, Ray presents an invoice every two weeks, and the average amount is almost exactly $20,000. To begin with, I’m secretly horrified. I can’t believe the size of the cheques we’re writing against our home equity line of credit. I’ve never seen or written cheques this large, with this frequency, in my life. When we renewed our mortgage in October 2006, we had an outstanding balance of $193,000, and a home equity plan that allows us to borrow up to $375,000, including the mortgage balance. So initially we have up to $182,000 available to borrow for the renovation, which in 2006 seemed like a huge sum. Now, in 2008 and 2009, I’m worried it won’t be enough. And if it hadn’t been for our aggressive lump sum payments against the mortgage and the renovation costs throughout the 2006 to 2009 period, it wouldn’t have been. In fact, toward the end of the project, we had to use a smaller, personal line of credit to pay three of Ray’s invoices. By 2009, the bank probably would have given us an increased limit on our home equity line of credit, but that wasn’t something we were interested in, and the interest rates on the two lines of credit were comparable.

By the end of 2008 I’m worried enough about the economic crisis and the ultimate effect it may have on Vancouver house prices, which at this point have been crashing for six months, and credit availability based on home equity, that I seriously consider calling off the renovation, or postponing it indefinitely. We have heat, we have a laundry. Without too much additional expense and effort we could insulate the basement ourselves, and bunker down to weather the economic storm, focusing strictly on debt reduction. We wouldn’t have a rental suite generating income, just an unfinished basement beneath us, but we also wouldn’t be racking up tens of thousands of dollars of additional debt. I float the idea of putting the reno on hold with my wife. She understands the increased risk we’re now facing, but doesn’t want to lose Ray. We’ve been lucky to find him, and have already spent almost four months waiting for his crew to become available, not to mention the previous two years of grief, so letting him go now, without having the benefit of his services, would be painful.

We decide to stay the course. I do a little mental calculation that helps calm my nerves. My conservative estimate of the market value of our house before prices begin falling in 2008 is $700,000. Based on my reading of the doom blogs, a worst case scenario real estate crash in Vancouver might chop prices in half, which would leave us with a market value of $350,000 — which is almost exactly what we paid for the house in 2003, a year into the real estate boom. As long as our overall debt level doesn’t climb much beyond $350K, the possibility of falling into negative equity, and perhaps having trouble when it comes time to renew the mortgage in 2011, is pretty remote.

So, on the financial side, that was the line we drew in the sand. Very belatedly, we had a budget. Not a proper budget, with broken-down line items, and maximum expenditures for different components of the reno — we never had that — but at least a ceiling. And I think having that ceiling did put the brakes on when it came to contemplating renovating the entire house at one go. We decided to phase the renovation because of renovation exhaustion, but also because of growing financial prudence.

We didn’t keep a running total of the cost of the renovation as it was ongoing — although we should have. I had a rough idea, just by looking at the balances on the two lines of credit. But those balances were somewhat lower than the actual amount we spent because of all the lump sum payments we made along the way. I did realize at a certain point that our initial estimate of a maximum $100,000 price tag was laughably naïve. I only put together an actual accounting of all the money we spent on the renovation as a necessary companion to writing this series.

Here’s the breakdown of the costs after Ray took over, the per-episode totals, and the grand total:

Ray and crew: $161,000 (14 invoices)
TK final inspections: $525
New windows (materials only): $4800
Cabinets, counters, cupboards for kitchen and two bathrooms (materials and installation): $8445
Attic insulation: $1000
Tile (materials only): $585
Hardwood flooring (materials only): $2670
Blinds (suite only, materials and installation): $686
Suite appliances: $3000
Miscellaneous (tools, building materials, paint, hazmat analysis, mirrors, small bathroom fixtures, etc.): $3394
====================================
Episode 8 total: $232,066
Episode 7 total: $32,449
Episode 6 total: $32,572
Renovation grand total: $297,087

When I first tallied all the reno costs, I was somewhat dumbfounded by that grand total. I knew we’d gone well over $200K, had maybe spent $250K, but I certainly didn’t think we’d spent almost $300K. I’d moved a long way from that person in his 20s and 30s scrutinizing and researching every hundred-dollar purchase, grubbing around flea markets and the Sally Ann, to someone who could lose track of $50,000.

I began to worry we’d overpaid. And in a certain sense, like everyone else recently buying or renovating a house in the city with the most expensive real estate in Canada, and probably among the highest construction costs, of course we overpaid. But had we overpaid in relation to other Vancouverites? Our friends with the renovated builder’s special kindly shared their renovation numbers with us: $380K spent on renos over thirteen years, “and that doesn’t count the massive amount of sweat equity.” Other friends, less than half a block away, are just a few weeks into a complete top floor renovation, from the studs out, of their 1950s bungalow, a house about 25% larger than ours. Their estimated cost is $200K. And they’re not replacing the drainage, the basement slab, the furnace and heating ducts, the windows, or the siding — big-ticket items for us. So no, we probably didn’t overpay in Vancouver terms. But the question remains, just what are ‘Vancouver terms’?

The house looks great. We’re very happy with the results, if not the painful journey to get there. I just wish it hadn’t cost us $350K to buy, and another $300K to renovate, with another $60K to $100K we might spend renovating the upstairs kitchen and the remainder of the upstairs, depending on how ambitious we get with altering the layout. I’ll go even further, and say that it shouldn’t have cost us that much money to purchase and renovate, but that’s something I’ll discuss in an upcoming episode. Admittedly, we wouldn’t have spent as much money if we weren’t putting in a rental suite, with all the additional infrastructure required to created a completely self-contained second living unit. And even though that portion of the renovation is something of an investment, or a business undertaking, it’s an investment that’s going to take a long time to pay itself off. The $1300 a month rent we’re now charging is only an additional $700 a month on top of the $600 we used to charge, and in the process of rebuilding the suite, we had a 37-month interruption in the revenue stream. At $700 additional rent a month, it will take us 32 more months — until April 2012 — just to make back the lost revenue. If, at the outset, we’d had a more realistic idea of what the numbers were going to be, it’s perhaps not a venture we would have embarked upon.

I’d include before and after pictures of the outside of the house if I wasn’t trying to preserve a certain amount of anonymity. The anonymity has more to do with protecting the identities of the various bad actors I’ve described, than my own identity. If my identity is generally known, that’s one less degree of separation. What I can share is a before and after of the suite kitchen

Kitchen before

Kitchen after

Next episode

Part 9: “So You Want to Buy a House and Fix It Up? Ten Suggestions for Survival”

My wife and I learned a lot of things the hard way during the renovation of our house. If you’re planning to buy a house and fix it up, or if you already own a classic dump and you’re itching to start smashing out walls, here’s a list of ten suggestions that might save you some grief…

Financial details

From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.

2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250

2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670

2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171

2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825

2007
Mortgage principal: $183,063
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $49,410
HELOC interest rate: variable, at Prime.
2008 Property Assessment (estimate of market value on July 1, 2007): $639,000
Equity based on assessment: $406,527

2008
Mortgage principal: $173,171
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $61,161
HELOC interest rate: variable, at Prime.
2009 Property Assessment (estimate of market value on July 1, 2008): $672,700
Equity based on assessment: $438,368

2009
Mortgage principal: $160,929
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
Second mortgage principal (HELOC converted): 184,000
Terms: 5 year variable at Prime minus .20%, 13.5 year amortization, bi-weekly payments
HELOC Visa: $18,544
HELOC Visa interest rate: variable, at Prime plus 1.00%.
Personal LOC: $5,763
Personal LOC interest rate: 2.25% (promotional rate), 4.75% starting in April 2010
2010 Property Assessment (estimate of market value on July 1, 2009): $662,700
Equity based on assessment: $293,464

2010 (to 31 July)
Mortgage principal: $153,960
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
Second mortgage principal (HELOC converted): $176,565
Terms: 5 year variable at Prime minus .20%, 13.5 year amortization, bi-weekly payments
HELOC Visa: $23,319
HELOC Visa interest rate: variable, at Prime plus 1.00%.
Personal LOC: zero
Personal LOC interest rate: 2.25% (promotional rate), 4.75% starting in April 2010
My estimate of 2011 Property Assessment (estimate of market value on July 1, 2010): $723,000
(using REBGV’s July 2010 figure of +9.2% YOY for Vancouver East detached)
Total debt: $353,844
Equity based on assessment: $369,156

Spot The Speculator #2 – Renovators As Speculators – “That’s what things cost now. The cost of everything is through the roof. But look at what you’re sitting on. A property that’s probably going to be worth a million dollars in a few years. That’s the reality of Vancouver now, and the reality of construction and real estate.”

In the last episode of the Froogle Scott Chronicles ['Part 7: Renovation Nervosa Continued', VREAA, 20 May 2010], we hear of a remarkable exchange that took place between Froogle and his general contractor, moments before they signed an agreement to commence work on Froogle’s home. -

“We talk about the cost, and he agrees that it’s expensive. “That’s what things cost now. The cost of everything is through the roof. Skilled trades are through the roof. But look at what you’re sitting on. You’re sitting on a property that’s probably going to be a million dollars in a few years. That’s the reality of Vancouver now, and the reality of construction and real estate. If you can’t make eighty to a hundred a year in Vancouver right now you’re a loser.” I’m assuming he means eighty to a hundred a year in construction or real estate. Neither my wife nor I make eighty thousand a year, so if he’s speaking more generally, he either assumes we make more money than we do, or the remark is just indiscreet.”

[Note that the contractor is implying that it is worth spending what seems to be too much money simply because the market is going to continue to make homes worth more and more. -vreaa]

Froogle Scott has now forwarded to VREAA some germane comments that relate to this very process. He did so in response to the recent anecdote that described a local couple who had bought and reno’ed an Eastside house that they were now selling ['Spot The Speculator #1 - Speculation Disguised As Normal Behaviour', VREAA, 26 Jun 2010]. Here are his thoughts on the speculation inherent in many renovations:

“I think you can add major renovations and homeowner custom building to the list of seemingly normal behaviours that have a hidden speculative component. I suspect the renovation and building mania that has swept through numerous older and established neighbourhoods in the City of Vancouver, and elsewhere in Metro Vancouver, has been largely driven by the same belief that RE prices would continue that rich rate of annual increase. And I’m not referring primarily to flippers, but rather to homeowners, like my wife and I, and the couple in the Sun article, who intend to live in their renovated or custom-built homes for years. You are much more likely to spend big on renovating a place or building a dream home if  a) you believe the money you spend today will eventually be returned to you, perhaps with a premium, when you do finally sell,  b) the increasing market value of your home puts a large home equity line of credit at your disposal, and  c) you see lots of examples of other people undertaking major renovation and building projects in your neighbourhood.

This dynamic has been at work on Vancouver homeowners, perhaps without some of us being fully aware. After all, most of us want a nice place in which to live, and have aspirations for what that place should be. But have those aspirations, and the pace at which we can achieve them, inflated along with the annual property assessment? How many people would spend $200K or $300K of borrowed money renovating their home, or $500K or more building a custom home (in addition to lot price), if house prices were flat for years, or slowly grinding lower? I wonder what the renovation and custom build business is like in some of those US cities that have seen massive price drops?

There seems to have been a self-feeding quality to the Vancouver RE bubble (all bubbles, I imagine) that powered at least some of the unusual price growth, which if not exponential, has certainly had far too steep an increase to be sustainable. Because of that self-feeding quality the bubble is perhaps inherently unstable. In some respects, the growth of the bubble has been enabled by the growth of the bubble. It hasn’t been based on a commensurate growth of fundamentals such as wages, or rents, or GDP.

It’s a bit of a chicken and egg argument about how a bubble first gets seeded and starts to inflate, but to return to major renovations or custom building dream homes, here’s a self-feeding sequence for consideration.

1. As houses prices start to rise you get less for your money. Many first-time buyers are forced to settle for older, smaller, somewhat dilapidated houses that they plan to renovate over time. The “dump,” that Fricker refers to in the article. Or the place my wife and I bought in 2003.

2. Not content to live in a dump forever, you start looking at ways to renovate, and what it might cost. At the same time, you’re surprised by the big jumps on your annual property assessment, and start to consider the following, probably deeply flawed, bit of personal financial voodoo: assessment price – mortgage amount = the amount of money you feel safe borrowing to renovate. Because, you reason, you could always sell post-renovation and recoup your investment.

3. The bank offers you a HELOC with an attractive rate of interest based on the steeply increasing assessed value of your dump.

4. You pull the trigger on a major renovation financed using the HELOC.

5. At some point you decide to enter the move-up market, or the custom-build market, by using your renovated home as leverage. You put the renovated home on the market for a price that reflects the general price appreciation in the years you’ve lived in the place, plus the amount you spent on the renovation, plus whatever else your realtor thinks you can wring out of an overhyped market. In the case of the couple in the article, $270K > $899K. (Not to pick on them. All Vancouver homeowners are currently forced to maximize return if they want to make a move within the city, because what they take with one hand they’ll have to fork over with the other.)

6. Someone buys at your bubble price of $899K, or more if there’s a bidding war for a nicely renovated character home in an established neighbourhood. You pay a bubble price for a move-up home, or a lot and a custom-built home.

And so it goes, or so it has gone. I happen to agree with those who think the end of the bubble is upon us.

What gets lost in all of this escalation is that nobody really _needs_ a majorly renovated home, or a dream home. For decades many people in Vancouver lived quite reasonable lives in modest homes that they maintained and slowly improved over many years — sometimes themselves, sometimes by hiring builders or tradespeople. $50K would have been considered a lot of money to spend on a reno. More than the median household income in Metro Vancouver in 1991 ($42K, Stats Can). Now $50K gets you a renovated kitchen. But in 2006 that median household income in Vancouver was still only $55K and won’t be much different today. So has a significant reno/custom build contribution to the bubble been made possible by the bubble itself, and the huge increase in leverage it put into the average homeowner’s hands? And is there something inherently unstable about this situation?

I’d suggest that the bubble hasn’t just been about hugely increased prices for existing housing stock. It’s also been about increased prices encouraging significant upgrading of the housing stock which in turn has been an important contributing factor to ongoing price escalation. A supercharger effect.”

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 7: Renovation Nervosa Continued

Brace your floorboards and tighten your joists, because here’s the next episode of Froogle Scott’s story of the renovation of his Vancouver home. For those of you who want to catch up on earlier episodes, see here. We hope you enjoy Froogle’s ongoing account as much as we do. -vreaa

Part 7: Renovation Nervosa Continued

Recap
By September of 2007 the renovation of our house has been ongoing for a year, although it’s been more stop than start. We’ve replaced the drainage, gutted the bottom level of the house, engaged a structural engineer, and been issued the necessary development and building permits. We’ve already spent $30,000, close to a third of what we’re speculating might be a total budget of $100,000. A friend and I have made a good old mess of the basement slab by breaking a three-foot-wide strip of concrete the length of the house, and excavating a long trench, in preparation for a new concrete footing beneath a new weight-bearing wall. My wife and I have been managing and contracting the renovation work ourselves, often spending large amounts of time, and meeting with considerable frustration, in our attempts to hire contractors during Vancouver’s construction and real estate boom. I’ve now realized that my plan of doing substantial amounts of the work myself is unrealistic. It’s hard to do a full-time day job while also trying in the evenings and on weekends to advance a renovation project — especially one that appears to be evolving in scope from moderate to major. Fatigue is a definite factor. By choice, we don’t have a vehicle, which makes certain things more difficult. When I rent a wheelbarrow, demolition hammer, and fan for the concrete breaking, I use the wheelbarrow to transport the other tools from the building supply store — a fifteen-minute walk. When the first demolition hammer malfunctions, my wife has to jump in a cab to get a replacement. We’re losing rent every month the rental suite is out of commission. And there’s the small matter, with winter approaching, of no longer having a furnace to heat the house. I’m becoming more open to the idea of bringing someone in to help.
.
Leonard
Our first move in this direction is to hire Leonard, a handyman recommended by friends — the friend who helped me with the concrete demo, and his partner. Leonard is a lone wolf, mostly working unassisted, although he does have an electrician he brings in when required. My friend’s partner describes Leonard as “an unreconstructed alpha male.” Although I have some alpha traits myself, her description doesn’t immediately set off alarm bells.
….The plan now is that Leonard will frame and plumb the new suite, and the electrician will do the wiring. I still have some idea that we might handle the drywalling ourselves. We’re already in discussions with an energy retrofit company about new windows and doors. I show Leonard the suite layout, which has now become part of the engineering drawings and the city’s permits. He doesn’t spend much time with it, preferring instead to pace off the dimensions of the two new bedrooms, the orientation of their doorways, a central hallway, walking through different versions of an imagined suite. My wife and I had done something similar ourselves, the final placement of interior partition walls isn’t carved in stone, it’s a relatively straightforward space to lay out, and I appreciate that builders with experience get good at visualizing the end results. Even so, I’m made a little nervous by the thought of a possible altered layout existing in Leonard’s head, rather than committed to paper.
.
Slab decision
Before Leonard can begin, however, the foundation work has to be completed. In addition to the central footing, we’ve decided to replace the substandard basement slab. The demolition work for the footing has revealed the slab is only 2-1/2 inches thick, and was poured directly on top of brown soil, with no intervening moisture barrier or drainage rock between the concrete and the soil — typical of older houses that were never intended to have people living on the bottom level. The brown soil is damp, even at the end of summer after weeks of sunny weather, and in one spot a slender tree root has burrowed beneath the slab, all the way to the center point where we dig the trench for the footing. When we removed the old subfloor, the underlying 2×4 sleepers had numerous sections of rot where they’d been in direct contact with the slab. We could put in a new subfloor with various moisture-blocking attributes, but this approach is second-best because it doesn’t address the fundamental problem of too much moisture immediately below the slab. And reinstalling a subfloor would sacrifice the valuable inches of headroom we’ve gained by taking out the old one. The writing is already on the wall, or the floor, when we get a couple of days of rain, and I discover three inches of water in the bottom of the trench, indicating that the level of the water table during rainy periods is only a couple of feet below the surface. A new basement slab, with a moisture barrier and a good layer of drainage rock beneath, now seems imperative — at least to me.
….We’ve also made a decision about the chimney.
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Animal show
We go back and forth several times about whether or not to remove the chimney, or more correctly, the masonry flue, which runs from the slab to the roof at the exact center point of the house. The flue’s sole purpose has been to provide venting for the gas furnace and the gas hot water tank — the house doesn’t have a fireplace. But we no longer need the flue. The new, high efficiency gas furnace will vent through a pipe out the side of the house, and we’ve already switched to a new and bigger electric hot water tank that doesn’t require venting. And the furnace and the tank will no longer be located in the center of the suite, which was a terrible place for them from a layout standpoint. The flue also creates layout headaches, sitting right in the spot where we’d like to have a wide entranceway into an open-concept living room and kitchen. We’d love to have the flue gone, but it’s money we can spend on some other aspect of the renovation. My wife nixes the idea of me doing the demolition myself, and although I’ve been on the roof a couple of times, I’m not overly keen on clambering around up there with bricks. Taking the flue out also means bringing the renovation upstairs to some extent, and regardless of how well we seal up, probably creating a god-awful mess in our living area, which we’d hoped to avoid until later in the project.
(Hot water tank: $580)
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….Finally, encouraged by several different people who stress the long-term benefit, and the wasted space represented by an abandoned flue, we decide to accept the short-term pain and start phoning chimney companies. The familiar merry-go-round ensues, with contractors too busy, not interested in a small job, or not returning voicemail messages. We eventually hire a contractor who can’t be there to oversee the work himself, because he’s taking his first vacation in three years, but he’s confident that one of his lead workers can handle what is a straightforward job. I arrange to take a day off work so I can oversee the job.
….In the middle of September, the day for the chimney removal arrives. I’ve already done some preparatory work. In the office, on the main floor of the house, I’ve removed the drywall from two sides of the framing that boxes in the flue, pausing every few minutes to obsessively vacuum up the resulting dust with a HEPA vacuum, convinced that the dust is loaded with asbestos. Cutting the large rectangles of drywall requires going over and over the cuts with a stout Olfa knife, a time-consuming and tiring process. My biceps and shoulders are burning by the time I get each piece out. A saw would be much quicker, but create about ten times the dust. I’ve laid down cardboard to protect the wood floors, and along a runway to the front door. I’ve covered our desks and computers, and a bookcase, with poly, and also sealed off all the nearby doors. I’ve rented a Hilti chipper for breaking the mortar between the bricks, and a fan to vent all the crap that will no doubt be filling the air.
….The doorbell rings and two young guys are on the front porch, raring to go. The lead worker identifies himself, and after a brief consultation and a survey of the job, they get to work. The lead worker has an interesting way of tossing his ladder against the edge of the house roof and running up it almost simultaneously. Then running back down facing forward. A kind of Cirque du Soleil act. I notice his partner — who doesn’t share the lead worker’s lithe physique — is much more deliberate in setting the ladder and mounting it cautiously. They’re both cheerful enough guys, with lots of energy, and talkers. It emerges that the lead worker recruited his partner only a few nights previous, at the Cambie Hotel, a somewhat riotous drinking establishment on the periphery of the Downtown Eastside, with an outdoor patio popular with backpackers and young people traveling on a budget. When his partner is out of earshot, the lead worker tells me his partner was really shaking and gripping the ladder rails hard his first day on the job, both of them three storeys up, in a bit of a breeze, and hungover. “I could see sweat on his forehead! I don’t think he’s used to heights.” The lead worker is from the States, and his partner is from England. The English guy has been in Canada only three weeks, and makes some offhand remark about still needing to get his “hospital insurance” sorted out. They’re already smashing apart the flue, one guy on the roof, the other directly beneath him in the attic, being handed bricks, when it hits me that these two are probably working under the table, probably don’t have the necessary work permits, and if that’s the case, certainly aren’t covered by Workers’ Compensation, which could leave us liable if they have an accident. I’m not sure what to do, but they’re now both in the attic, hammering away with the Hilti chipper and a small sledge, lowering buckets of bricks through the attic hatch, the fan in the office below roaring, doing a reasonable job of venting the grey crud that’s sifting down from above. The thought of calling a halt, based only on suspicion, and setting the reno back a month while lining up another company, is extremely unappealing. Only one of the guys is wearing a mask, and it’s the cheapest and most ineffective type of white dust mask available, virtually useless even if worn properly, and he keeps pulling it aside to talk. I’m wearing a half-mask respirator, and I tell them that I have extra respirators if they want to use them. They initially decline, but after another ten minutes of eating dust from old mortar, which has a strange, slightly sweet, slightly rancid smell, in addition to the grit between the teeth, they take me up on my offer.
….I want these guys off the property as quickly as possible, so I decide to pitch in. My role is to run the wheelbarrow with bricks from the bottom of the front stairs, where they dump their buckets, to the roll-off container at the side of the street — and to check in to the office periodically to make sure they haven’t killed themselves.
….By mid-afternoon the last bricks are knocked apart in the basement and the flue is gone. The two guys have worked hard. Despite the fan, the office is under a layer of powdery mortar dust, like ash. I tell them not to worry about the clean-up, because I know the dust will have gone everywhere and I want it cleaned to my standards, which will probably take just as long as removing the flue.
….As previously arranged with the contractor, I give the lead worker a sealed envelope containing a cheque for the full amount for the job, which the lead worker will deliver to a member of the contractor’s family. The contractor was very specific about sealing the envelope — I’m assuming because he doesn’t want the two workers finding out what a small percentage of the take is theirs. I overhear the lead worker on his cell phone as he arranges to meet the family member, and asks if he and his partner can be given their most recent wages in cash at the meeting.
….We say our goodbyes. After their initial reluctance, the lead worker and his partner found the respirators quite to their liking, so I tell them to keep them. I also tell the English guy that he might want to get that health insurance stuff sorted out sooner rather than later, that if he breaks a leg on the job he could have a problem. They’re both in a good mood, already plotting the evening’s entertainment.
(Chimney removal: $2300)
(Tool rental: $100)
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Leonard gets to work
Throughout September, Leonard knocks off some small jobs in advance of the foundation work being completed. He moves the hot water tank from the basement to a shed beneath the back deck. The tank won’t be able to stay in the basement if we’re going to demolish the old slab. At my request, he gets some additional jack posts to strengthen the support either side of the central beam and posts, which will be coming out as part of the structural redesign to satisfy the city’s headroom requirements. He installs a Whirlybird turbine vent in the hole where the masonry flue exited the roof. And together, the two of us go to the building supply store to pick up various materials, including ducting and a vent for our range hood in the main floor kitchen. The range hood had vented into the masonry flue, but with the flue gone we need to install a new vent to get rid of cooking smells.
(Whirlybird, range hood vent supplies: $175)
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“This industry’s a nightmare”
The sales rep from the energy retrofit company is meeting with us the same Saturday morning that Leonard is installing the Whirlybird. I’m giving Leonard a hand, and running back and forth between the job outside and the meeting at the kitchen table. With the sales rep, we’re discussing replacing all the junky single-pane aluminum windows in the house with energy-efficient, double-glazed vinyl windows, and also getting new exterior doors, and increasing the attic insulation. My wife and I are not that enamoured of vinyl, but wood windows are three times the cost. And good quality vinyl windows aren’t cheap. The contract price for windows, doors, and insulation is $14,000, and most of that is the windows.
….We’ve had two or three meetings with the sales rep by this point, and our conversations have begun to range more generally over the whole business of renovation, construction, and the Vancouver real estate market. We’ve related our problems over the past year with trying to find and hire contractors, the difficulties of running the project ourselves, the increasing scope of the work. The sales rep relates some tales of woe from his perspective: the difficulty of finding and retaining good people, suppliers not delivering on time, customers changing their minds multiple times, the pressure that the boom is putting on everyone. “This industry’s a nightmare,” he says. It’s mostly my wife having this conversation, as I pop in and out. At one point, the sales rep suggests we should think about hiring a general contractor to manage the entire reno.
….Leonard and I head off to the building supply store. When we get to the ventilation section, Leonard begins loading the cart with duct and fittings that are four inches in diameter. During my research, I think I’ve read that vents for range hoods are supposed to use ducts that are six inches in diameter. I ask Leonard if this is the case. He smiles and looks down, shaking his head, while continuing to pull four-inch duct from the shelf. My alpha traits suddenly reawaken. Implying that I’m a dimwitted homeowner is not a particularly good client relations strategy. However, I’m not certain about the duct sizing, so I let it go. Although I do wonder why the store has so much six-inch duct and fittings sitting on the shelves.
….When I get back to the house my wife is still talking with the sales rep. She announces that we have a possibility for a general contractor. The sales rep has recommended someone, and while I’ve been at the store he offered to phone him and check his availability. My wife agreed and as it turns out, the general contractor is available. I’m not completely comfortable with the way things have transpired, but by this point I’ve accepted that the reno is a much larger project than I’d initially understood. It needs to be managed by someone who can bring the necessary skills, experience, and resources to bear — a general contractor with a crew, and access to the appropriate subtrades. So I’m willing to at least talk to this general contractor.
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First meeting
The following week I meet Nick Costa, the general contractor, for the first time. My initial impression is that he’s a good listener. We spend some time looking over the job, and I explain that we already have a contract in place for the foundation work, the energy retrofit work, and a new heating system. I explain the issue with the beam and the required headroom, and the proposed solution. And I tell him we have structural engineering drawings, and the necessary development and building permits. We discuss some of the specific details, and he seems to know his stuff. I also mention that we have a handyman working on the job and that we’d like any general contractor we hire to include him in the plans. Nick says Leonard could “maybe work on deficiencies.” This is the first time I’ve encountered the term ‘deficiencies’ in a construction context.
….When my wife gets home she asks what I thought of Nick. I reply that he seemed pretty good. That we could perhaps ask him for a quote on the remainder of the job. I also want to contact the builder who did a renovation for friends of ours a few years previous. Our friends speak highly of this particular builder, and specifically mentioned that he was honest. You could trust him.
….The one thing we can’t do is do nothing. The days are getting chillier. We need to get the foundation work completed and the furnace installed.
….(Nick Costa is not the general contractor’s real name. For reasons that will become apparent, I’m protecting his identity, and disguising or omitting details that don’t affect the essence of the story. All costs and renovation details are real.)
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Take this job and shove it
Now that we’re leaning toward hiring a general contractor, we need to think about how Leonard might be integrated into the ongoing work. At various points I’ve hinted to Leonard that we might bring in someone to manage the process. I’ve realized that Leonard’s one-man operation and working style are probably not a good fit for the size and scope of our reno, but more critically, they’re not a good fit with me. Based on the work Leonard has already done, I know there are going to be conflicts. Leonard will probably consider me picky, if he doesn’t already, and I already consider him too much of a cowboy: casual about the building code and permits, and not sharing my mania for detail. However, we like Leonard, and we admire him for not jacking up his rates to take advantage of desperate homeowners during the boom. He dislikes the gouging he’s seeing, and has chosen not to participate, although he easily could. Perhaps, if a general contractor were to oversee Leonard’s work, everyone could get what they want. But I was forgetting about the power of that alpha male thing.
….The final Saturday in September Leonard calls about something related to the job. I take the opportunity to tell him there’s a strong likelihood we’re going to hire a general contractor, and that we’re currently in discussions with one. I suggest that all of us could meet. Leonard doesn’t say much, his manner non-committal. It’s obvious he’s not happy. My wife winces at me when I get off the phone.
….A couple of hours later my wife is out, and I’m sitting in the house alone, at the computer, when the doorbell rings. I know immediately that it’s Leonard. I open the door and he’s standing on the porch, his face beneath his ballcap stony. He hands me an envelope. “Here’s my invoice.” He hands me the spare keys. “And here’s your keys.” And then he holds a business card in my face — “And here’s my business card that tells you I’m a general contractor too” — before whipping it away and stuffing it in a breast pocket.
….“It’s not right. I turned down other work so I could do your job and now you’re taking it away.”
….“We’re not taking it away. We’re just bringing in someone to manage the process. You don’t have to quit.”
….“You hired me. You didn’t hire me to work for someone else.”
….“Well, think about it. If you change your mind we’re still happy to have you work on the project.”
.“I don’t need to think about it. It’s not right.” Leonard turns his back and walks down the stairs.
….I close the door, a shitty feeling in my stomach. Leonard’s words sting. Although I also know it’s for the best. Leonard and I would have killed each other. My wife is quite upset when I tell her the news, and still feels bad two and a half years later.
….I am who I am. And Leonard is who he is. And my wife is who she is. People are who they are. And much of life is a continuous struggle, overt and covert, among warring personalities.
(Leonard’s invoice: $900)
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Quote and contract
Throughout October there is a protracted back and forth with Nick. We ask for a formal quote and are somewhat taken aback by the total price: $122,000. The quote includes the following work required to build the new rental suite: framing, plumbing, gas fitting, wiring, insulating, drywalling, finish carpentry, interior doors, hardwood and tile floors, lighting, new kitchen, bathroom, and laundry (cabinets, tile work, fixtures, and appliances), closet organizers, painting, a stone mantle for a gas fireplace, and blinds throughout the entire house. The quote does not include the foundation work, the new furnace and heating ducts, and the windows and exterior doors, which are contracts we’ve arranged separately. With the exception of the blinds, and extending the plumbing upstairs for a second laundry, the quote doesn’t apply to anything in the upper half of the house, or to anything on the exterior. $122,000, plus GST, for a new rental suite.
….I also speak with the builder who did our friends’ renovation. I tell him how we got his name, and he responds enthusiastically, recounting how much he and his crew enjoyed working for our friends. He’s apologetic when he tells me that he simply can’t take on any more work. He’s completely maxed out. And booking things a year in advance isn’t something he’s comfortable doing. He’s also moving away from basement renos, which aren’t his favourite. From this last piece of information I infer that in this current market builders with good reputations can pick and choose their jobs.
….My wife and I agree that $122,000 is more than we’re willing to spend, and we need to find ways of reducing the cost. The quote doesn’t provide individual item prices, however, making it difficult to know which items to target for cost reduction. As well, nowhere in the quote does it make clear how Nick is calculating his contractor’s fee. We get back to Nick and ask him to break out all item costs individually and indicate how his fee is calculated.
….A few days later Nick drops off a revised quote. He’s shaved off $5,000 from the total price, and provided individual item prices, but there’s still no explicit indication of how his fee is calculated. Is it a percentage? If so, is it applied to just labour, or to both materials and labour? I add up all the individual items in the quote and get a total of $103,000. The revised total price is $117,000, so we assume that the difference, $14,000, which works out to about 13.5% on everything — materials and labour — is the general contracting fee.
….We’re still having a hard time getting our heads around the total price. The individual item costs seem really high, especially the plumbing and the electrical work, at $8,000 and $12,000 respectively. And we’re uncomfortable about the lack of transparency regarding the contracting fee. My wife suggests we contact our builder friend who’s working on the million-dollar renovation in West Vancouver, and ask his opinion. I spend twenty minutes on the phone with him going over the various items in the quote. He agrees that the electrical is on the high side, but he considers the rest of the item prices fairly typical. New construction and renovation have just become very expensive with the real estate and building boom, and with the shortage of skilled labour in the lead-up to the Olympics. He also confirms that a typical general contracting fee is 15% to 17% on everything, labour and materials.
….We go to work on the quote, removing things we can do without (a built-in vacuum, an intercom), can do or purchase ourselves (window and door trim, closet organizers, painting, blinds, bathroom mirror, appliances, final cleaning), or handle under one of the other contracts (gas fitting). We email the revisions to Nick and tell him that we don’t want to spend more than $100,000. A week later he sends back a revised quote and a proposed contract. The total price is now $95,000 plus GST, which we’re more comfortable with, if still not exactly thrilled. However, he’s removed all the individual item prices, and there’s still no indication of how his contracting fee is calculated. I experience a tiny flare-up of anger.
….We tell Nick that the quote, now formalized as part of the contact, must have an individual price breakdown if we’re going to move forward. We also ask for three references. Nick tells us that for a fixed-price contract he doesn’t usually provide a breakdown, but he’s willing to do it. Another week elapses before the next revision of the contract arrives, the individual prices reinstated.
….In the interim, I’ve done some of my semi-frantic early morning research, and learned about ‘holdbacks’. Under British Columbia’s Builders Lien Act, property owners are required to hold back 10% of each progress payment to a general contractor as a pool of contingency money. In the event that the general contractor doesn’t pay one or more of the subcontractors or suppliers on a project, the subcontractors or suppliers can be paid from the holdback fund. If no problems arise, the holdback money is released to the general contractor 55 days after the contract is completed. I’ve also learned about the suggested scheduling of payments, known as ‘draws’, over the course of a project. Most of the sources I find state that an initial deposit paid to a contractor before work commences should be no more than 10% of the total project cost — a figure also corroborated by our builder friend. Nick’s payment schedule calls for a 30% deposit up front ($30,000), 30% after the drywall is completed, 30% upon delivery of the kitchen cabinets, and the final 10% upon completion of the project and passing of the final inspection.
….I don’t like the way the payments are structured, and I especially don’t like the honking big deposit. It all feels too skewed in Nick’s favour. I phone Nick and tell him that the most we’re willing to give him up front is 20%, and that the draws must be smaller and more frequent. And that the final draw must be 20%, not 10%. I ask how he feels about holdbacks and he says that none of his clients has ever required a holdback. Even though I’d like to use holdbacks, I let it go. My feeling is that the 20% final draw provides us with pretty good leverage should the work not be completed to our satisfaction. The contract and quote go back and forth a final time, and version #5 redistributes the payments into five equal amounts of 20% each. Nick also explains that his fee is built in to the individual contract items, and varies somewhat depending on the item, but averages out at around 15%.
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References
While Nick is responsive during the contract negotiation, he is less forthcoming with references. We have to prod him a couple of times before finally getting some names about ten days after we initially ask. One of his references is currently out of the country, although we’re welcome to contact him long-distance. Another owns a high-rise condo on False Creek that Nick’s company has recently renovated, and we can arrange to look at the work. And the third are a couple on the North Shore with a house where Nick’s crew is just wrapping up a medium-sized reno.
….I speak to the husband at the North Shore house. He’s pleased with the overall quality of the work, and praises the carpenter who would also be working on our place. However, he was upset on more than one occasion when the crew went missing in action for days at a time, with no advanced warning, and Nick wasn’t very prompt in returning his phone calls or providing an explanation. He eventually challenged Nick, complained about a lack of professionalism, and the situation improved. Enough so, that he would consider hiring him again. “But you need to keep tabs on him.”
….On the final Saturday in October we go to see the high-rise condo on False Creek. We’d expected to meet the owner, but Nick tells us on our way over that she’s out. We take the elevator to one of the upper floors and Nick takes us in. The place is very nice, the view spectacular. I spend a good amount of time looking closely at the joints in the woodwork, get down and inspect the grout in the kitchen floor tile, look at the finished edges of the drywall around the two-way gas fireplace between the living room and the master bedroom, and scrutinize a number of other small details where sloppy workmanship can become apparent. Everything looks good.
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Fateful decision
There’s still the third reference we could contact, but he’s in Europe, and the hassle of the time change, and calling long distance, isn’t that appealing. After leaving the condo, we’re walking with Nick through Home Depot. He’s offered to show us the style of vent he’s recommending for the range hood duct — which I’ve since confirmed is required by code to be six inches in diameter. Four-inch duct is for bathroom vents. “So, what do you think?” he asks, as we cruise the aisles. My wife and I, following behind, look briefly at each other, sort of nod, sort of wobble our heads a bit, sort of shrug a bit, the little micro-manifestations of weighing things, some of which are concrete, and some of which are intangible. The two of us are like the pans either side of old-fashioned scales, dipping back and forth before reaching equilibrium. “Yeah,” I respond. “We’re probably ready to sign.”
….Nick comes to the house the next day and we sit at the kitchen table and sign the contract. We also give him a cheque, written on our home equity line of credit, for the first draw. Before signing the contract, I ask him directly if he’s in danger of maxing himself out by taking on too much work. From my own days working for builders and tradesmen, I know they have to constantly overlap jobs, and have several things on the go, and several more in the pipeline, in order to ensure a steady flow of work and income for their crews and themselves. And the reference I spoke with has indicated this could be a problem area. “No, I’m careful not to take on more than I can handle.” I tell Nick that we understand there may be absences from time to time, but that the important thing is to communicate them in advance, to which he agrees. We talk about the cost, and he agrees that it’s expensive. “That’s what things cost now. The cost of everything is through the roof. Skilled trades are through the roof. But look at what you’re sitting on. You’re sitting on a property that’s probably going to be a million dollars in a few years. That’s the reality of Vancouver now, and the reality of construction and real estate. If you can’t make eighty to a hundred a year in Vancouver right now you’re a loser.” I’m assuming he means eighty to a hundred a year in construction or real estate. Neither my wife nor I make eighty thousand a year, so if he’s speaking more generally, he either assumes we make more money than we do, or the remark is just indiscreet.
(Nick’s first draw: $20,000)
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Why?
So after a month of negotiation and indecision we sign the contract. Neither of us feels quite right about the decision, but not wrong either. In hindsight, we can see that we rationalized away the feeling in our guts. We put our thumb on one side of the scale. There were a number of warning signs. The general contractor who is available almost immediately in the midst of a huge building boom. The contract numbers that appear and disappear and reappear. The mystery surrounding the contractor’s fee. The attempt to secure a large deposit up front. The long wait for questionable references — one out of the country, one not home (did she even know we were there?), and one with a decidedly mixed report. The focus on money (“eighty to a hundred a year”). But at the time we were less experienced as homeowners, and under pressure to make some kind of a decision. Nick was a convincing talker with confident, reasonable-sounding answers and solutions — suggesting the kind of expertise that we now felt was required. He was affable and easygoing, responsive to our demands, and we were in a bind — no furnace, no insulation in the bottom half of the house, the washer and dryer soon to be disconnected and stored in the garage, the scope of the project spiraling beyond what we could handle ourselves, and contractors of any sort very hard to come by. And in the fall of 2007, after four years of riding the real estate rocket, we’d accumulated $400,000 in equity. Nick’s talk of eventually sitting on a million-dollar property didn’t seem so farfetched. And both figures made the $100,000 price tag for the suite look modest in comparison — or at least manageable. Although as real estate bears will point out, those would be 100,000 real dollars, $100,000 in real debt, as opposed to 400,000 possible future dollars.
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Central footing
In early November the concrete contractor is finally available to do the central footing work. In preparation, Dylan, the lead carpenter Nick assigns to our project, and one of Nick’s labourers, remove the posts and the central supporting beam, the floor joists above now held up solely by the two rows of jack posts either side of the trench. The concrete crew brings in a pneumatic jackhammer to break apart the concrete pad that had supported the masonry flue, and excavates the small amount of remaining brown soil to complete the trench. Marco, the lead on the concrete crew, is a little leery of the jack posts, and recommends that we replace them with a couple of temporary 2×4 supporting walls. The additional expense is relatively minor, and somewhat offset by the rent we’ll no longer be paying on the jack posts. Because of the delays in moving the renovation forward, the jack posts have been in place for two months, costing us money. I’d thought we might need them for only a couple of weeks. I realize that using jack posts, instead of building temporary walls at the outset, was a mistake.
(Jack post rental: $500)
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The concrete crew builds the temporary walls, then removes the jack posts. They build the form for the footing, and place metal reinforcing bar in accordance with the structural engineering specifications. A couple of days later a concrete truck arrives first thing in the morning and the crew pours the footing. The work goes smoothly and when the forms are stripped we are left with a solid T-footing for a central supporting wall.
(Central footing: $2800)
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New footing for central supporting wall, with temporary walls either side
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Our first deficiency
Dylan and the labourer return and build the permanent 2×6 supporting wall on top of the new footing, and remove the two temporary supporting walls. The permanent supporting wall includes a ‘flush beam’ to create a seven-foot-wide opening that will eventually serve as the entranceway into the living room and kitchen. The ends of the floor joists at the center of the house now rest on top of the new supporting wall, where formerly they had rested on top of the old beam, or they are attached to the side of the flush beam with joist hangers. The wall looks good when I inspect it after work. The center of the house is now much better supported, and headroom is no longer an issue. Then I see an unpleasant sight: a roll of six-inch-wide sill gasket that Nick dropped off a couple of days previous, sitting in a corner, unused. Sill gasket is a thin, moisture-resistant foam strip required by the building code as a protective membrane between concrete and wood — in this case, between the horizontal bottom plate of the central supporting wall and the top of the footing. The sill gasket prevents any moisture that wicks up through the concrete from entering and eventually rotting the wood. Concrete and wood (unless it’s chemically treated) cannot be allowed to touch. It’s one of the basics of modern wood-frame construction — as I’ve recently learned from my reading. I get down on hands and knees and look closely at the point where the bottom plate meets the footing, working my way along a portion of the new wall, and confirm that indeed there’s no sill gasket between the two. Definitely an Ah, fuck! moment. The temporary walls will have to be rebuilt, and the central supporting wall at least partially disassembled, and the bottom plate lifted, so the sill gasket can be inserted. I phone Nick to give him the bad news. He comes over for a look and is obviously displeased. “They’ll be fixing that on their own time,” he says. Dylan shows up on Saturday and spends half a day making the fix. Our first ‘deficiency’. Not a good start.
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Between a rock and a hard place
We now hit a snag. We need to demolish the remainder of the basement slab, and excavate about a foot of soil, to make way for the drainage rock and the new slab. No other work can proceed until the old slab is out and the new slab is in place. For a month I’ve been trying to line up Delmore, the concrete demolition contractor my friend told me about — the one who uses a remote-controlled micro excavator to do the work. Delmore is willing to do the job, has come to the house for a look, and thinks it will take two or three days and cost about $3000. Unfortunately, he’s bogged down on his current job, which keeps growing in scope, and has been complicated by running into a hard, compacted clay layer. Every week I phone him to try to arrange a start date, and every week he tells me that it’s going to be at least another week. I’ve just about given up. Marco and his company aren’t keen to use their precious resources on excavation, although they say they will if they absolutely have to, while at the same time warning us that it might not be the most cost-effective approach. I also talk to the junk removal guy who took away the debris from the demolished sub-floor. He and his sons are willing to demolish and remove the concrete for $4.00 a square foot, but they plan to use sledgehammers. I’ve already tested that method, and I know how slow and labour-intensive it is.
….I discuss the predicament with Nick and he offers to give us a quote for his company to do the work. This job would be an add-on to the existing contract. He tells us that he can probably do it for significantly less than Marco’s company. Nick’s suggestion looks like a solution to a frustrating hold-up, so we tell him to go ahead and put together a quote. A couple of evenings later he comes by the house with the quote. When he drops it on the table we’re both stunned. $11,000. Payable in full upon acceptance, as stipulated by the contract. The remaining floor area to be demolished is about 700 square feet. Removing a foot of soil beneath means an additional 700 cubic feet. I’ve already calculated that it will probably require three 10-yard roll-off containers, a yard being 27 cubic feet. Nick has specified six containers in his quote. He justifies the six loads by telling us that excavated soil tends to fluff up. It does, but not to that extent, or so I feel. Although the excavation is more work than we want to tackle ourselves, it’s not a big job as excavations go. We tell Nick we’ll consider his quote, but that we’ll keep pursuing other options for a few days. There’s no way we’re giving him an additional eleven grand.
….I decide to give Delmore one last try. He tells me his current job is getting close to wrapping up, and he has a window of two or three days the following week in which he could fit our job. However, he’ll need me to assist — specifically, to run the gas-powered track dumper, or “buggy” as he calls it, from the basement to the container while he operates the micro excavator. “No problem,” I tell him, and arrange to take the time off work.
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Delmore to the rescue
The following week Delmore rolls up in his flatbed truck and trailer and unloads his machines — the buggy, and the remote-controlled Brokk demolition machine, which runs off electricity from a diesel generator. The Brokk looks like a tiny version of a backhoe, on two rubber tracks. It can be fitted with either a large, pointed breaker, for punching through and breaking apart concrete, or a bucket with teeth for lifting and excavating. Delmore manoeuvres both machines into the basement — the Brokk clearing the doorway by an inch — and we get to work. He tries the bucket first. He thinks the concrete may be thin enough that he can just crack it by bringing the teeth of the bucket down hard, and then lift the concrete in sections, working his way across the slab. Sure enough, this method works perfectly, the concrete coming up like pieces of ice on a pond.
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Remote-controlled demolition machine lifting sections of the basement slab
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As Delmore predicted, the breaking apart of the concrete goes quickly. What takes time is loading the broken sections of concrete into the buggy, and running the buggy out the door of the basement, around the corner of the house, and down the walkway to the flatbed truck. It takes me a while to get the feel for the buggy, which has two knobbed handles for individually controlling the tracks, a handle for the throttle, and another two smaller handles for raising, lowering, and dumping the load. Once I get comfortable with the buggy, we establish a good work rhythm with Delmore breaking apart the slab, the two of us loading the buggy, and me running the chunks of concrete out to the truck and dumping them. By mid-afternoon the slab is completely broken apart and the truck is fully loaded. There’s more concrete in the slab than the truck can manage in one load, so Delmore calls a halt for the day, and leaves for the concrete recycler with the first load.
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The buggy
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Getting instructions from Delmore
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The next day we load the remainder of the concrete on to the truck and begin excavating the brown soil. The routine is much the same, although I now use a flat shovel to clean up behind the excavating bucket, and instead of dumping chunks of concrete on to the flatbed, I dump loads of brown soil into a roll-off container. This part of the job is a lot more time consuming than the concrete demolition, because of the volume of material requiring excavation, and the capacity of the buggy — the equivalent of three regular wheelbarrows. Moving three wheelbarrows of soil at a time is much better than moving one, but it’s still a lot of trips back and forth. We also have to coordinate with the disposal company to make sure a fresh container arrives at about the time the previous container is getting full.
By the end of the third day we’ve excavated all the soil, with the exception of a narrow band of soil we leave around the shallow perimeter walls as a precaution. The job is complete. We even have some nice-sized boulders for the garden — “dinosaur eggs” that Delmore digs out with the excavator. When Delmore gives us his invoice we’re pleasantly surprised. $2300. The disposal company he uses is also more reasonably priced than the bigger outfit we’d used during the trench and chimney jobs. Nick doesn’t say much when he drops by to look at the results, but I can tell he’s a little taken aback by how quickly we got it done. And perhaps feels a little sheepish when I tell him the price. Delmore is definitely one of the heroes of our renovation saga. And in his own way, Leonard is probably one too.
(Concrete demolition and excavation: $2300)
(Three roll-off containers: $1100)
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Delmore’s dinosaur eggs

Episode 7 total: $32,449. Episode 6 total: $32,572. Running total: $65,021. Includes a number of smaller, miscellaneous expenses not listed individually in the episodes – mostly tools, small amounts of materials, and safety supplies.

Next episode
Part 8: “Renovation Nervosa Finale”
Things get much worse before they finally get better.
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Financial details

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From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.
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2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250
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2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670
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2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171
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2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825
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2007
Mortgage principal: $183,063
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $49,410
HELOC interest rate: variable, at Prime.
2008 Property Assessment (estimate of market value on July 1, 2007): $639,000
Equity based on assessment: $406,527

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 6: Renovation Nervosa

“His clothes are dirty, but his hands are clean.” Sweat pays you more than the dollars saved. You spend hours of your own time and effort, but what you get back is a sense of actually being part of your home. Doing imbues meaning. In this episode, our protagonist takes us on a tour of his home’s innards, and of the challenges facing those who try to do renos themselves, or even with the help of subcontractors. For those of us who enjoy sitting back in comfort and vicariously having the sense of being a good person doing sincere and honest work, could there be a better read than this on a rainy Easter weekend? Here’s a real treat from Froogle Scott. -vreaa

Part 6: Renovation Nervosa

Bleen
I don’t always walk the blocks of our Vancouver neighbourhood purely in the spirit of unscientific inquiry, as I do in February of 2010, when I count all the renovations and new houses. In our first years in the neighbourhood, as it starts to transform, I often feel not exactly envy, but anxiety that other people are getting on with things and we aren’t. When our second set of tenants moves out at the end of July 2006, the time has come to start doing something.
.When we bought the house it was our intention to fix it up. A 1940s workers’ bungalow, stuccoed-over and given an amateurish renovation in the late 1970s, and 1980s, by the time we move in, everything is worn, tired, and like the vinyl peel-and-stick tiles on the kitchen floor, and the cheap, dark-stained kitchen cupboards and cabinets, not that inspiring even when new. The original wood windows were removed and replaced with those nasty, single-pane aluminum windows that were all the rage in the 1970s, when heating a house, because oil and gas were relatively cheap, just meant cranking up the thermostat. The wood windows were repurposed, cannibalized and installed above horizontal sheets of plywood as a way of boxing in a small back deck. The resulting structure, stuck on the back of the house and clearly visible from a side street, resembles a funky, second-storey, homemade greenhouse.
….The deck is painted white, chocolate brown, and ‘bleen’. My wife and her sisters, as girls in the 1970s, came up with the name ‘bleen’ to describe a particularly noxious colour that pervades East Vancouver at the time, and can still be found if you cruise back alleys in 2010. A kind of unnatural green that suggests turquoise without actually being turquoise — not unlike the colour of public swimming pools, or the Crest mint toothpaste of the era. Bleen is a portmanteau word — blue plus green — but somehow bleen evokes and connotes so much more. Spleen, bleach, blech (for those of you who used to read MAD Magazine), chlorine, clean, it sounds like something that if drunk would cause violent vomiting. Bleen is more a state of mind than a colour. It stands in for ‘crap’. I painted my deck/house/fence this crappy colour because I’m not rich, because life is crap, because I’ll never be able to afford anything other than third-rate crap, so I’m going to revel in my crapdom, and force you to swallow it as well as you walk down the street past my house. Perhaps bleen is like East Vancouver’s visual equivalent of fado, a type of Portuguese folk music, which a friend, who’s traveled quite a bit in Portugal, explains is a kind of Portuguese blues. I’m Portuguese, so this is my fate.
….Strangely, in a certain light, a number of Vancouver’s new glass condo towers look bleen.
….I’m a little uncertain now what my original goals were for the renovation. I have a somewhat queasy sense that they were probably a lot more modest, and definitely a lot less expensive, than what they ended up being. To begin with, I thought I was going to do large portions of the work myself (utter madness, I now realize). I’m reasonably good with my hands, and in my early 20s I worked on two house-building crews, so I understand framing and how houses are put together. I’ve done lots of painting, and some carpentry, and drywalling, and roofing, and a fair bit of demolition. So I was all set, right? What I didn’t have is much of a plan (translation: no plan). Without consulting with my wife, I rip out the skanky wall-to-wall carpeting in the rental suite the day the tenants move out, and reveal a rotten patch in the subfloor. This act is akin to pulling the thread.
….My wife’s goal is clearer. She grew up a dozen blocks away, near Trout Lake, in an early Vancouver Special built in the 1960s, painted entirely bleen. Riding the #7 bus up and down Nanaimo Street and imagining the house she might one day live in, she used to look down the small slope into our current neighbourhood and think that her future house could be anywhere but on those dreary and depressing blocks. Cast back by fate and the realities of the Vancouver real estate market to those very blocks, for my wife, the renovation is simply about getting rid of the bleen.
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Bleen deck
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Pulling the thread
Shiplap — 1×8 boards — nailed to long 2×4 sleepers that lie flat on the concrete slab is what forms the subfloor in the rental suite. In the living room, it’s this subfloor that has rotted in a roughly circular patch about a foot across, allowing me to easily break away rotten bits of wood and place my hand flat against the cool concrete beneath. Everything is dry now, but obviously significant amounts of moisture have been trapped in this area at some point, allowing the rot to occur. A few feet inside the door to the suite is another soft spot beneath the vinyl tiles. I peel away the putty coloured vinyl baseboard in the living room and reveal black dots of mould. When we bought, the home inspector got some elevated moisture readings, and here’s the physical evidence that his readings were accurate. So now we have a decision to make. We can ignore the telltale signs of moisture intrusion — on balance, they aren’t that drastic — patch the subfloor where necessary, and get on with an overhaul of the suite. Or, based on the web research I do, we can address the moisture problem in a more fundamental way, probably by installing new drain tile around the perimeter of the house.
….Outside, I dig a hole a couple of feet deep and confirm that the house does have existing drain tile — old style, orangey-brown clay pipe laid in short sections, with small gaps between sections to allow ground water to seep in. By shining a flashlight into a gap I can see a silt buildup inside the pipe, the weakness of this old design. Over time the pipe clogs up, and ground water no longer flows down the pipe and away from the house. Instead, depending on how much natural drainage a lot may have — our lot is perfectly flat — the water sits in the soil surrounding the house and seeps into the foundation, because concrete is porous. When heavy rains saturate the soil, moisture migrates through the concrete foundation walls and the concrete floor slab. If a basement is unfinished, this moisture evaporates from the bare concrete interior surfaces. But if a subfloor, or carpet, or tiles, or drywall, or paneling have been installed over these surfaces, the moisture becomes trapped, providing ideal conditions for mould and rot. If you live in Nevada or Arizona, this process may not be an issue, but in Vancouver, a city built on the site of a cleared rainforest, it’s a significant concern. Modern drain tile minimizes the infiltration of the surrounding soil, and the risk of clogging, by using joined lengths of perforated PVC pipe, with the perforations — a series of round holes — oriented down, and the pipe laid in a gravel bed.

Clay drain tile, once manufactured nearby in Port Haney
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….In 1987, the City of Vancouver changed its building code to prohibit the common past practice of connecting the downspouts from roof gutters to the drain tile system. The problem with this approach is that during a heavy downpour roof water can overwhelm the drain tile and reverse the normal flow, forcing water out the perforations and into the surrounding soil, making the saturation worse, and potentially causing moisture problems for neighbouring properties, or even flooding. Changes to the residential built environment can disrupt old patterns of drainage. Infill houses are often bigger than the houses they replace, with greater roof area to collect water. New houses may be closer together, maximizing their square footage by swelling up to fill the lot. And increasingly, broad walkways, patios, decks, large garages, and parking pads are covering a greater percentage of the typical residential lot, making more of the land impermeable. As the built environment becomes denser, rainwater has fewer options for soaking into the ground, and must be more actively managed. As one way of addressing this increasing need to manage drainage, new construction now requires a two-pipe system: drain tile for foundation drainage, and solid pipe for roof drainage, both pipes emptying into a sump, which then feeds the city’s storm sewer.
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Renovation 101
This is all stuff I learn from my research. Over the next three years, as the renovation costs mount, and my faith in some of the people we hire evaporates, my early mornings will increasingly be spent scouring the Internet for information and guidance. Research, often last minute and panicky, aimed at making the most appropriate choice among an oppressive number of options, or aimed at spending money as wisely as possible, or in the case of bad hires, aimed at preventing the next rip-off or screw-up. Going into the renovation, I may have known a lot more about construction than the average person, but as I find out, there is a hell of a lot I don’t know, and trying to backfill that knowledge on the fly is at times acutely stressful.
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Drainage Blitzkrieg
I tell my wife that installing a new suite over a damp basement slab and foundation walls makes no sense. Mould will breed. Expensive new finishings will progressively rot. She agrees and we get quotes from drainage contractors. One guy smells of stale booze, and doesn’t get back to us for three weeks. Another offers to make the GST magically disappear — probably along with his company if there are any problems with the installation down the road. The contractor we end up hiring is at first reluctant even to price the job. He says that giving quotes in East Van is usually a waste of his time because people on the East Side don’t want to pay his prices. And they don’t want to pay for a permit. He won’t do any work without a permit. I assure him that we want everything done properly. Interestingly, his price isn’t that much higher than the no-GST boy — although neither quote is cheap. We opt for a two-pipe system, even though the building code exempts replacement drain tile systems from the two-pipe requirement. Once the trenches are dug, putting in a second pipe doesn’t cost that much more.
….The drainage crew comes in with a jackhammer, diamond saw, and wheelbarrows and removes the old concrete walkways around the house in preparation for digging. The next day the contractor brings in his mini excavator, which can just squeeze down the four-foot side yard between the house and the fence, and digs the necessary trenches around the house, digging out the old drain tile in the process. He also digs a deep trench through the front yard toward the sidewalk to uncover the sewer pipe and tells us they’ll replace the original cast iron pipe with a new ABS one “so we don’t have to come back in a year and dig up your yard again.” The contractor has already surmised that the cast iron toilet drains and main DWV stack (drain-waste-vent stack) inside the house will be on the renovation hit list, and eventually having new pipe all the way from the roof to the street is preferable to connecting new to old.
….We arrive home from work to find our house surrounded by trenches, berms, and piles of earth. Our lot looks like a World War One battlefield, although the onslaught feels more like a World War Two Blitzkrieg. The crew has forewarned us, and we’ve relocated most of the shrubs and plants from the front of the house to the back yard. The place is a mess, but it’s all over in about a week: gravel beds, pipes, sump installed, trenches backfilled and tamped. We’re left with a mangled front lawn, denuded topsoil, and no walkways, but a well-drained property.
(Drainage: $10,700)
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Finding contractors
Hiring contractors is proving difficult. Finding a drainage contractor wasn’t easy, and none of the concrete outfits we phone is interested in installing new walkways. One guy tells me that if I can build the forms myself he’ll place and finish the concrete, but otherwise forget it, he just can’t justify taking the time away from his bigger jobs. Olympic and associated infrastructure projects, concrete condo towers, and high levels of new housing starts are putting big demands on the local concrete industry. We eventually find an old-time Italian contractor who rolls up in his dilapidated pickup and tells us he can do the job.
(Concrete walkways: $2,000)
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….The contractor who does our drainage job goes from feeling East Van is a waste of time to telling me that our job led directly to three others in the vicinity — people living in the neighbourhood who saw our project ongoing and approached him, begged him in a couple of cases, to look at the drainage situation with their properties. Whether it’s the changing demographics of the neighbourhood, or boom-related desperation, apparently getting his price on the East Side is now less of an issue.
….We’re well satisfied with the first step in the reno, although writing the cheque is a bit painful. When record rainfalls deluge Vancouver two months later in November, and a violent windstorm fells thousands of huge trees in Stanley Park a month after that, we feel we’ve dodged a bullet. A woman I work with tries desperately to hire someone to redo her property’s drainage so she can sell the house in the aftermath of a marital breakdown. I give her the name of the contractor who did our job, but like everyone else she phones, he takes days to call back. When he does finally return her repeated calls it’s only to confirm he’s insanely busy and can’t possibly do her job.
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Lead and asbestos
My reading and research is causing me increasing worry about lead and asbestos. Most renovation web sites and books warn do-it-yourselfers against merrily ripping into walls and ceilings and old woodwork with demolition tools, especially in older houses. The danger is that you disturb old building materials and contaminate your home with lead dust from old paint, or worse, asbestos from any number of old building materials.
….Until the 1960s, it was common for paint to contain large amounts of lead, and it wasn’t until 1976 that the Canadian federal government limited the amount of lead allowed in interior paint to 0.5% by weight.
….Asbestos was originally thought of as a wonder material because of its heat- and sound-resistive properties, and structural strength. Until the early 1980s, it was used in thousands of building materials including floor tiles and tile adhesive, pipe insulation and duct tape, house siding, roofing felt and shingles, acoustical ceiling tiles, ceiling texture, and drywall mud. Perhaps most notoriously, until the mid to late 1980s asbestos-containing vermiculite pellets under the brand name Zonolite were used for attic insulation. The vermiculite came from Libby, Montana, but was processed in plants all over North America, including one right here in Vancouver on Industrial Avenue. Reading down a very long list of building materials that once contained asbestos, I conclude that with the right combination of timing and bad luck, one’s whole house could be made of asbestos.
….I contact a company that does hazardous materials testing and in January of 2007 a technician takes a variety of samples from all over the house — the white, plaster-like duct tape sealing the joints between sections of heating duct, drywall mud from the walls in the rental suite, floor tiles, ceiling texture, exterior stucco, and three colours of old paint, including the glossy, chocolate brown interior doors upstairs, and the linen closet shelves, which are bleen. The results aren’t terrible. Only the duct tape and the drywall mud contain asbestos. The duct tape is 60 to 80% asbestos, but that isn’t a surprise. More of a problem is the drywall mud, which contains up to 10% asbestos, because it’s spread throughout the entire suite. Undisturbed behind paint, it’s not an issue. But we want to tear out the walls. As for the old paint, the brown has a 3.49% lead content, and the bleen 8.26% — crappy and toxic — however both are upstairs and not part of the first phase of the renovation.
….The situation with the drywall mud puts an end to my weekend warrior aspirations regarding demolition of the old suite. A disappointment, but, safety first. We start looking for an asbestos abatement company that can do the demolition using the approved procedures.
(Hazmat testing: $1,100)
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Learning the hard way
2007 is the year I go from thinking we can manage the renovation ourselves, and do a significant amount of the work ourselves, to accepting that we need help. My wife recognizes this reality much sooner than I do. However, I’ve never met a brick wall that I didn’t enjoy bashing my head against.
….In March, I arrange for what City Hall calls “a special inspection”. We want to make the unauthorized suite legal, and according to the city’s Secondary Suite Program the first step is to invite in a phalanx of inspectors — building, electrical, and plumbing — for a look. They itemize all the things that are required to make the suite legal, and the results are packaged up in a letter sent to the homeowner by the city.
(Special inspection: $132)
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….When we get our letter it lists 41 code violations, 30 of which are electrical. The entire suite is on perhaps two electrical circuits, which may have been adequate for an unfinished basement in the 1940s in which no one lived, but is woefully inadequate for a self-contained, two-bedroom living unit with multiple appliances. When the tenants are still with us, the electrical outlet they use for a space heater in winter, and the outlet my wife uses upstairs for a blow dryer, are on the same circuit, as are half our lights upstairs — but no lights downstairs. Not surprisingly, this circuit frequently trips, knocking out our lights, and a couple of clocks that will once again flash 12:00 and have to be reset. Because there are no longer internal stairs connecting the two levels of the house, I have the peculiar joy, about once a week, of stepping out into the dark and the freezing early morning cold in my housecoat and rubber boots, feeling my way down the frosty and slippery back stairs, and fumbling in the dark with the key to the outer door of the lower level, so I can stare groggily at the unlabeled breakers on the electrical panel, trying to figure out which one has tripped — because they don’t give much of a clue from their appearance. Nothing other than the heater is affected downstairs, so the tenants have no inkling of this oft-repeated little ritual. I vow once again to label all the breakers, and once again, when the weekend rolls around with various other house-related tasks, I forget. I climb the back stairs cursing the Portuguese brothers who put in the suite, wondering if fado is also extending its tentacles around me, my affection for the East Van do-it-yourself ethos wearing progressively thinner.
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No going back
According to our special inspection letter, even if we change our minds about legalizing the suite, or about even having a suite, most of the items in violation must still be rectified because “they do not comply with the minimum safety standards prescribed under the applicable By-laws and Regulations.” So there’s no going back. The City now has us on their books.
….I’m not one of those people who automatically adopt an adversarial or crafty stance toward city inspectors. Building codes have developed over a period of many years based on often-unfortunate community experience. I want to make use of the inspectors’ knowledge. That said, when I look at the long list of requirements in the letter, and contemplate the dollar cost associated with each one, I understand why many homeowners with rental suites want to remain off the books. According to a City of Vancouver report, of an estimated 25,000 secondary suites in the city, only 20% are legal. It’s about money. If the homeowners were to spend the often thousands of dollars required to legalize their suites, they’d lose a significant portion of their mortgage-helping potential. We’re going legal because it makes sense as part of a more general, large-scale renovation — although this may be revisionist thinking on my part. Building a new basement suite would include rewiring it to modern standards, which would wipe out all 30 electrical code violations in the process. We’re also going legal because I am who I am (more on this later).
….One of the city’s requirements is that we deal with the ceiling height issue. We need to provide a minimum headroom of 6’6” over 80% of the suite area and all exit routes. Like many houses of its era, our house has floor joists that run from the outer walls to a central beam supported by posts. In the basement, the underside of this beam is only 6’2” from the floor. Even though I don’t actually need to, I automatically duck my head whenever I walk under the beam. I have quite a bit of back and forth with the building inspector about this beam. The nightmare scenario sketched out by the inspector is that a tall tenant is woken up by fire in the middle of the night, attempts to run out of the suite but smacks into the beam and is knocked out, and dies in a fire that would otherwise be survivable. Promising that we’ll only rent our suite to short people doesn’t get us very far. The solution is to create a section of “flush beam” by cutting the beam where it crosses an exit point, by cutting back the joist ends in the same area, by moving the beam up into the joist space, and by attaching the joists to the side of the beam with U-shaped steel connectors called joist hangers. The inspector suggests we may want to consult a structural engineer.

Central beam in gutted suite causing low headroom in front of doorway

The men in white suits
In April, the men in white suits arrive — not for me, although I suspect my wife is already starting to question the sanity of our undertaking. The white suits are the hooded disposable coveralls the crew from the environmental contracting company wear, along with full-face respirators. The crew seal up the entire ground floor, and install a large fan to create negative pressure by blowing air from the suite out an open window. The open window is fitted with a large sausage made of poly to catch dust and air-borne particles, with a small hole on top to allow relatively clean air to escape. We rent space heaters for upstairs because we can’t use the furnace during the demolition.
(Space heater rental: $145)
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The crew spends a week gutting the suite — the kitchen cabinets and sink, the bathroom fixtures and full-length, funhouse mirrors, the bars on the windows, the garish, crime-scene carpet in the bedrooms, the junky woodwork, the wall and ceiling drywall, the fiberglass batt insulation in the outer walls, much of it black with mould at the bottom where moisture has collected, and all the heating ducts. This final item prompts some discussion. Once the ducts are gone we won’t have any heat. Although the joints are wrapped in asbestos-laden duct tape, the tape is fairly inert and doesn’t pose a huge hazard if not damaged or disturbed. The ducts could be removed at a later date without much risk. We’ve already selected a heating contractor to replace the 50-year-old furnace, a new duct system is part of the work, and the weather’s quite mild — summer is on the way — so I give the go-ahead to remove the ducts.
….Once the gutting is complete and the suite is down to bare studs, the crew vacuums every crevice with an industrial-quality HEPA vacuum. A few items remain: the laundry facilities, the disconnected furnace, the hot water tank, the tenant fridge, and the subfloor and interior stud walls, which I plan to take apart myself so I can stockpile and reuse the wood. The demolition also reveals a nasty surprise. Where the concrete front stairs join the house, the exterior wall sheathing is heavily rotted. I can shine a flashlight right through gaps in the rotten wall to the space under the stairs. The space is full of black, rotted wood falling to the damp earth floor — the entombed formwork from when the concrete stairs were poured — and dozens of white spider egg sacs.
….With the back and forth of the demolition over, we get the front yard, still a mess from the drainage work, leveled and reconditioned with new topsoil, and re-sodded.
(Demolition: $7,800)
(Landscaping: $1,700)
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Rotted exterior wall sheathing where house meets space under concrete front stairs
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TK
“TK” is Tony Kwan, who becomes the structural engineer of record for our project. When he arrives at the house for the first meeting, I’m in the suite and he sees me through the curtainless living room window. He’s accompanied by a young woman. I watch as he marches up the walkway, around the side of the house, and in the door at the rear. He gives a nod and a grunt and starts looking around. No handshake or introduction. He spends about a minute strutting back and forth like a little Napoleon, staring up into the joists, looking at the support beam and posts, occasionally saying Mmnnn. I’m uncertain what role the young woman is performing. My wife comes down from upstairs and I introduce her to TK. I explain to TK the issue with the central support beam and the headroom and he tells me we should replace the posts and beam with a weight-bearing wall, with a flush beam over exit points. The weight-bearing wall will require a concrete footing be poured the entire length of the house, which will necessitate removing a three-foot-wide strip of the concrete basement slab and digging a trench down to the hardpan — the solid material a couple of feet below the surface soil. I mention that I have my doubts about the condition of the subfloor, and the quality of the old basement slab. With a dismissive wave of his arm TK says, “Take it all out.”
….“Take out the entire slab?” I ask.
….“That’s what I say. These old slabs are no good. If this is my house, I would take it all out.”
….TK tells us that if we want him to do the job we need to give him a $500 deposit. My wife reports later that when I go upstairs to write the cheque, TK immediately switches from directives about the house to questions of a personal nature. “Do we have any children?” “No.” “Why not? You should have a family.” We assume that because my wife is Chinese-Canadian, TK feels at liberty to make pronouncements about such matters. He quickly figures out that my wife doesn’t speak Chinese, at which point he and his assistant wander a few feet away and begin a hushed conversation in Chinese, interspersed with giggles, as they look around the gutted basement.
….TK is not our first choice. A friend of ours is a builder, who at the time is working on a million-dollar renovation in West Vancouver. He gives us the name of the structural engineer on that project, someone he highly recommends. I phone this engineer and explain the connection. He’s apologetic when telling me that he’s currently working seven days a week, as are most structural engineers in Vancouver at the moment, and he simply can’t take on any more work. He gives me the name of a former classmate who he’d recommend. I phone the classmate. Same story — way too busy to consider more work. I ask the classmate if he has a recommendation. He pauses for a moment, and then suggests I could try TK. Thinking back, there may be some hesitancy there that I miss because I’m feeling pressure — trying to manage the renovation from my work place, yet again running into brick walls trying to find and hire people during a frenzied real estate and construction boom, the clock ticking on a house with no heat.
….After one or two more disagreeable interactions with TK, my wife and I, by unspoken agreement, begin referring to him solely by his initials.
(Structural engineering deposit: $500)
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Do-it-yourselfers hit a wall
Over the spring and summer my fantasy of managing the renovation and doing a significant amount of the work ourselves persists. TK delivers the engineering drawings, which aren’t much more than the new suite layout I gave him, with some added technical specs for the weight-bearing wall and the footing, and his Professional Engineer seal. I’d asked for seismic upgrading information, because with everything open on the lower level of the house we have the opportunity to improve the earthquake resistance of the structure. One thing we discover once the drywall and insulation are gone is that there are no anchor bolts connecting the house frame to the foundation walls. The only thing holding the house on the foundation is gravity. Even a moderate earthquake could cause the house to vibrate off the foundation. The drawings do include some seismic information, but based on my close reading in the interim of Residential Guide to Earthquake Resistance, the information seems inadequate. However, time’s passing and the drawings are what I need to get the required development and building permits from the city — which I do get in June, but not before being initially rebuffed.
(Structural engineering drawings: $1,600)
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….Our proposed new layout includes moving and altering the size of two windows on one side of the house. A stern gatekeeper at City Hall’s Development Services informs me that this alteration is prohibited in houses with side yards of four feet or less, because windows provide a pathway for fire to spread to adjacent houses, so there’s no point even submitting the plans. Existing windows are grandfathered — even massive windows in front of sawdust-burning furnaces, I speculate — but altering a window constitutes a new window governed by the current building code. The only way we’d be allowed to make the alteration we’re proposing is if we also install sprinklers throughout the house, a retrofit that typically costs about $25,000, the gatekeeper tells me.
….We’re forced to junk the beautiful layout we sweated over, and do a quick revision that involves some design compromises we aren’t overly happy with.
(Development and building permits: $922)
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….Drawings and permits in place, I persevere over the summer months with what now feels like an official plan — or at least more of a plan than initially existed. I disassemble all the interior stud walls and neatly stack the lumber, orangey-brown Douglas fir, some of it free of knots. I remove the pink bathtub. I take apart the raised bathroom floor, constructed of 2x8s, and yank out the flexible bathtub drain pipe that snakes in the space beneath. I put on a half-mask respirator, goggles, and gloves, check my intestinal fortitude, and spend a day cleaning out all the rotten wood and spider eggs from the space beneath the stairs.
….Next is the subfloor. I use a flat shovel to pry up the sheets of 1/4-inch plywood the floor tiles are attached to, before going to work on the shiplap and 2×4 sleepers beneath. The pace really slows down here. The sleepers are spaced about a foot apart, and at every point where the shiplap crosses a sleeper it’s attached with two nails. Hundreds of connection points across the entire subfloor. The shiplap is springy when I try to lever it up between sleepers, and it tends to splinter at the first nail when I shove the pry bar directly into the connection point between shiplap and sleeper. I eventually give up on this method and begin using a circular saw to buzz through the shiplap at the mid point between two sleepers, walking the saw from one end of the house to the other. I can then stomp the short sections of shiplap, or come down on them with a long, straight wrecking bar, and they seesaw up on the underlying sleeper and pop loose. At this point, at my wife’s urging, I bring in a friend to help — the one who told me about fado. Together, we make short work of the subfloor, pile the cut-up shiplap on the patio outside, toss the long 2×4 sleepers to one side of the basement floor, and then relax with beers in the sunshine, feeling pretty good about ourselves. But it’s August 12th. Isn’t there some fable about the ant and the grasshopper and oncoming winter?
….I turn my attention to the now-exposed concrete slab. There’s also a brick chimney to consider, in the center of the house, running from the slab to the roof. After weeks of persistent phone calls, we’ve just signed a contract with a concrete contractor to do the central footing work, and perhaps install a new slab depending on what we decide, and paid a deposit, but we’re on a waiting list. The contractor isn’t that interested in doing the concrete demolition and excavation for the footing. He’d rather use his crew on the more skilled work of building forms, and placing and finishing concrete. I decide to tackle the demolition and excavation myself. I begin by installing two rows of jack posts to take the load off the central beam. Excavating the trench for the footing will require digging around the base of the posts supporting the beam, and likely destabilizing them. The beam and posts will be coming out, but I’m not prepared to handle that job myself. I order a large roll-off container, which a truck drops in front of the house, and rent a Hilti demolition hammer, a big fan, and an extra wheelbarrow. This time I need less urging from my wife to call upon my friend, and I’m also paying him because the work will be heavy and take a significant amount of time.
(Concrete deposit: $2,850)
(Roll-off container: $990)
(Tool rental: $180)
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….Along the way, I’ve been taking samples of newly uncovered materials to the hazardous materials lab, and nothing in these new samples is of concern, although concrete demolition does produce silica dust, which is hazardous to the lungs if you don’t wear a respirator. But finally here’s something I can bash the hell out of without turning the house into a toxic waste dump. I make a couple of test passes with a sledgehammer and the concrete breaks easily enough — it’s only 2-1/2 inches thick, poured directly on top of brown soil — but it breaks into small chunks and shrapnel rather than nice pieces you can just lift into a wheelbarrow.
(Additional hazmat testing: $297)
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….
My friend arrives on a Saturday morning early in September and we put on our protective gear and go to work. The plan is to break the concrete in a three-foot-wide strip the length of the slab, wheelbarrow the debris to the container, and then excavate as much of the brown soil as required to get to the hard ground. I’ve dug a test hole, and the hardpan is about two feet down.
….We work all weekend. Breaking the concrete is very slow going. The problem is that the pointed chisel on the demolition hammer tends to poke through the concrete rather than break it along a line. We soon figure out that we have to work an edge, and break away the concrete a little at a time. I now realize we probably had the wrong shape of chisel. Rather than a point, a flat, wide shape would probably have been more effective. Oh well — next time. If there ever is a next time. By the end of the day we’re wiped, but we have the concrete broken.

My friend with the demolition hammer
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….
Sunday is just grunt labour. First loading heavy shovelfuls of concrete debris into the wheelbarrows and walking it out to the container, and then digging, digging, digging. Load after load of the damp brown soil. Finally we start seeing the yellowy-grey hardpan. We leave a safe amount of soil beneath the post footings, and the larger concrete pad supporting the chimney. We don’t get the entire trench excavated by the end of the weekend, but we’re about 85% done. Near the end of the day, my friend makes a worrisome discovery at one end of the trench where it meets the concrete foundation wall. The foundation wall extends only 18 inches below the surface of the soil, it stops 6 inches short of the hardpan, and it has no footing — a horizontal portion of concrete — beneath it. Just an 8-inch-wide concrete wall that ends. From a structural standpoint, this is not good news.
….As we’re packing up for the day my friend says, “You’ve got yourself a big project here.” We both laugh, sort of. He’s already suggested hiring the handyman he and his partner have used for several jobs. And during a break in our work he tells me about a recent basement slab demolition he heard about in the neighbourhood. Apparently the owner hired a contractor who used a remote-controlled micro excavator to do the work — a demolition robot. The entire slab was out in a few hours.
….I’m starting to feel I need serious help — interpret that as you see fit.

Concrete broken for central trench
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Tarpits
Drainage problems, electrical problems, plumbing problems — the upstairs shower slows to a trickle if the washing machine is running — ceiling height and other building code requirements, asbestos and lead issues, foundation issues, rot, mould, seismic concerns, competing with all the other equity-swollen homeowners during a boom for contractors and construction industry professionals — these are the tarpits we aren’t aware of as first-time buyers taking an anxious 10-minute twirl around a 60-year-old house during a real estate boom, one of the few places we can afford in our target area that doesn’t look like total crap. Typically, these problems affect the things hidden from view, the various systems we rely upon to make a house function as a house, systems that are only vaguely understood, or not understood at all, by the average person. These are the unsexy but expensive things far removed from dreamy notions of granite countertops, stainless steel appliances, hardwood floors, and tasteful colour schemes that coordinate walls, window coverings, and upholstery. They’re the guts of a house, the organs, rather than the skin. And when they go wrong, the whole organism can go wrong. Most first time buyers really don’t understand the implications of those fateful words, uttered so blithely: we can fix it up.

Episode 6 total: $32,572. Includes a number of smaller, miscellaneous expenses not listed individually in the episode – mostly tools, small amounts of materials, and safety supplies.

Next episode
Part 7: “Renovation Nervosa Continued”
Animal show. Hellhole. No heat. Nightmare contractor. Bleeding money. And so on.
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Financial details

From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.
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2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250
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2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670
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2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171
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2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825
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2007
Mortgage principal: $183,063
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $49,410
HELOC interest rate: variable, at Prime.
2008 Property Assessment (estimate of market value on July 1, 2007): $639,000
Equity based on assessment: $406,527

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Raise or Raze Update

Inventory of new houses and major renovations

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Raise or Raze Update

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The next couple of episodes of The Froogle Scott Chronicles will cover our major renovation. The renovation was a big, three-year chunk of our lives during which a lot happened — both good and bad — so wrestling that amount of material into shape is taking a bit of time. In the interim I thought I’d give readers a quick update about some interesting things I’ve noticed recently in our neighbourhood.
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The first thing that caught my attention was that within days of completing my mid-February inventory of major renovations and new houses in the pocket of Grandview we live in, the inventory was already out of date. A couple of weeks ago, I heard the now-familiar bashing and crashing sounds of a demolition underway. A small one, a half block from our house, an old deck being ripped off the back of a 1920s or 1930s house to make way for a new addition, by the looks of it. A block farther on, the same story — another rear addition on a house of the same vintage. And a block in another direction, a huge, house-altering reno has just begun, judging by the two-storey-high scaffolding surrounding the entire house. I guess when you go to the effort of enumerating and categorizing things, you kind of assume they’ll stay still for a while. Well, I guess not.
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However, the other thing of note is what’s going on with a cluster of four houses I mentioned in the previous episode:
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I pass through a two-and-a-half block stretch where one house is being raised, another across the street is demolished and a new house is being built, and around the corner two houses are being totally transformed by the addition of second storeys.
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All of these projects were underway at the same time, and at various points you could say they were at roughly similar stages of completion. Two of the projects have been complete for a couple of months now, and the houses are occupied. But the other two appear to be stopped dead, within 80% or more of completion. The houses — one new, and one a major reno including a second-storey addition — have windows and doors in place, stucco and exterior trim applied, and with the exception of an exterior paint job, appear complete on the outside. Looking through the curtainless windows, I can see the interiors have all the drywall in place. But there has been no significant new work for weeks. It’s not a case of the finish carpenters, and flooring and tile and kitchen and bathroom trades, going in and out. These places appear stalled, and locked up. I might not have noticed so soon if not for the fact that one of these houses was definitely stalled for months during the economic collapse of 2008, and into 2009. It got to the point of being sheathed with plywood and covered with black building paper, and then nothing. It sat through an entire winter, and longer, while the rain and wind tore at the paper, stripping portions of it and exposing the bare plywood. When work recommenced, the first job for the crew was re-doing the building paper.
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There could be any number of explanations for what’s going on with these two projects, but the one that springs most immediately to mind is that the owners have cash flow problems. I don’t think most people would voluntarily choose to leave a nearly complete single family dwelling in a central Vancouver neighbourhood just sitting empty. How much money are the owners losing, daily, by doing this? Carrying charges on a construction loan or line of credit, rent to live elsewhere. It doesn’t make sense. If their finances are like the finances of most people living in this neighbourhood, they have some money, but not money to burn.
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I know the shocking speed at which our renovation ate through what we thought was a fairly good pile of credit. About ten grand a week for a three-man crew and materials, with various trades popping in and out to do their piece. And both of these projects are quite a bit more extensive than ours. It’ll be interesting to see what happens with these two places — I’ll keep readers of VREAA informed.
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Vancouver real estate appears to be giving mixed signals at the moment, at least in our little patch of paradise.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 5: Raise or Raze

The apparent Vancouver RE ‘boom’ has been based on the spending of imagined wealth. This has involved individual and group self-deceit. As a society, we’ve pretended that local homes are worth twice what they were a handful of years ago, and acted as though they were worth well above twice their value as defined by usefulness. Banks, just as besotted by the game as the rest of us, have allowed some of us to borrow vast amounts of money and commit to ‘buying’ at these fairy-tale levels, and the rest of us have then acted as though these transactions are indicative of true values. Some owners, based on the consequent newly imagined values of their houses, have in turn borrowed money from the banks, and spent it. Sometimes on frivolous toys, but, at least as often, on renovations, or the construction or purchase of new properties. And thus the game has perpetuated itself. The spending both directly and indirectly attributable to this charade is likely ultimately immeasurable. It has been so vast as to allow our economy to seem to weather a devastating recession. But almost none of the imagined wealth or the consequent spending is the result of actual productive activity. It is all the result of the spending of very large amounts of borrowed money.  When the game ends, and when our shared understanding of the value of housing returns to levels closer to the historic norm, the debt accumulated through this process will remain. As Bob Dylan says: “Statues made of matchsticks crumble into one another.”
In his wonderful fifth episode, Froogle Scott shares with us his careful observations of the effects of the boom on the houses in his neighbourhood, and describes the process whereby “increasingly massive war chests of home equity” are used to renovate and construct. He coins the henceforth indispensable term ‘Boom Box’ to describe the utilitarian houses that have been built in Vancouver in recent years. He explores streets, houses, and memories. -vreaa

Part 5: Raise or Raze

Renovation and construction mania
I walk around our neighbourhood taking inventory: renovation, renovation, that house raised and a new foundation poured, that one with a second storey added, and there, a house demolished — razed with a “z” — and a new house built in its place. In the six and a half years that my wife and I have lived in the Grandview area of Vancouver, there have been a startling number of major renovations, and demolitions followed by new construction. Weekday mornings, on my ten-minute walk to the SkyTrain station at Commercial and Broadway, I pass through a two-and-a-half block stretch where one house is being raised, another across the street is demolished and a new house is being built, and around the corner two houses are being totally transformed by the addition of second storeys. It’s difficult to find a block that hasn’t had at least one major renovation or new house built in the last few years, and on a number of blocks there have been multiple projects. A renovation and construction mania has seized the neighbourhood, and it’s still ongoing.
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An inventory
In February of 2010 I decide to do an inventory. My guidelines are simple. I walk all the blocks in the pocket between major streets where our house is located and count the number of major renovations and new houses that have completed since September of 2003, when we bought our house, or projects that are still ongoing. By major renovation I don’t mean new windows and doors, or a new paint job, or a new porch or new deck — and there are plenty of these more moderate renos in the neighbourhood, which I also count and include in a separate category. I mean houses completely gutted back to the studs, or exteriors completely stripped, or houses raised to allow a new full-height basement or ground level, or houses given a full second storey addition. Renovations that often render the original house unrecognizable. I also include obviously new, or newly renovated houses that probably were completed in the year or two before we bought. In other words, I’m doing a somewhat unscientific, anecdotal inventory of the effects of Vancouver’s eight-year real estate boom on one old, established East Side neighbourhood — a place typified for many years by hundred-year-old character houses, a number of them somewhat dilapidated, smaller, workers’ bungalows like the house that we bought, or Vancouver Specials, an earlier wave of replacement housing stock built from the mid 60s to the mid 80s.
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The pre-boom neighbourhood
Here are two current photographs showing the housing stock that comprised close to one hundred percent of the neighbourhood pre-2002, the year the boom started. The first shot conveniently captures typical houses from four different eras of Vancouver residential architecture. From left to right: a hundred-year-old character house, a 1970s Vancouver Special, two 1950s stucco bungalows, and a 1920s or 1930s builder’s special, a stripped-down version of the Craftsman bungalow.
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Four different eras of Vancouver residential architecture
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….The second photograph neatly lines up houses from different periods of more recent Vancouver residential construction. On the left is a ‘late model’ Vancouver Special from perhaps the early or mid 1980s, when builders were dressing up the basic design with features like split roofs and upper storeys with offset sides, just before Vancouver City Hall put an end to the style’s proliferation. The other two houses you could call new-style Vancouver Specials, or monster houses (although I call them “mini monsters” because you can only get so big on a 33-foot lot), or the term I like best, from the general contractor who eventually completed our renovation: “builders’ boxes”. The house in the middle was probably built in the late 1980s, or early 1990s, when terracotta roof tiles, light yellow vinyl siding above a brick half-facade, and rows of narrow windows was a common look. The house on the right, although it looks similar to a number of houses built during the boom, was probably built in the mid 1990s. A clue that it pre-dates the boom by a few years is the colour — pink, which has now given way to beige as the one-colour-fits-all choice of discount spec builders — and the curved bay windows, with the stepped detailing beneath, which were common around 1994, if my research on RealtyLink is anything to go by. The trend over the past few years is boxed-out bay windows, with flat undersides that run straight back to the house wall.
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Three eras of the Vancouver Special
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The inventory results
Here are the results of my inventory. Over two days, I do a block-by-block count, take a few photos along the way, and quit when my feet get tired.
•    60 blocks (the pocket formed by Commercial Drive on the west, Nanaimo Street on the east, East 1st Avenue on the north, and East Broadway on the south)
•    130 new houses (prior demolitions assumed — or actually witnessed — although in a small number of cases a lot never before built on may have existed)
•    100 major renovations
•    78 minor renovations
•    An unknown number of ‘hidden renovations’ — all those shiny new kitchens and bathrooms, and mortgage-helping rental suites, that from the street give no indication of their presence (even when I try, unobtrusively, to look in people’s windows). I know of four major renos in the neighbourhood that fall into this category, and I record them, but undoubtedly many more occurred over the last eight years.
….I do the following calculation on adjusted figures: the total number of major renovations and new houses (204), divided by the number of blocks (51), divided by the duration so far of Vancouver’s real estate boom (8 years). I exclude partial blocks where I counted houses on the far sides of the main streets that form the boundaries of the pocket, and I adjust for double blocks (count 2), and blocks-and-a-half (count 1.5). The result is an average of 0.5 major renovations and new houses per block, per year — or one per block every two years. However, on the 23 most active blocks, each with an above average total number of projects (5 or more), the average is 0.77 per block, per year — or one per block every 16 months. One major renovation or new house per block every 16 months may not sound like a lot, but consider this. Using VanMap, the city’s web-based GIS, I count all the lots on every block in the pocket, and calculate an average of 23 lots per block. If the rate of change on the most active blocks were to continue unabated, the housing stock on these blocks would be completely renovated or replaced in 30 years. Based on the rate of change for all the blocks that I walked, the entire neighbourhood would be completely renovated or replaced in 46 years.
….Forty-six years ago was 1964, about a year before the earliest Vancouver Specials were built. From a statistical standpoint, if the rate of change in Grandview during the current real estate boom had been ongoing since 1964, the only house that would still exist in the first picture of older housing stock above, or be recognizable in its original form, would be the second one, the Vancouver Special. If we consider the elevated rate of change on the most active blocks during the boom, every house in the first picture would be gone, or renovated to the point of being unrecognizable. Grandview’s streets would be ruled by houses like those in the second picture above, and the newer ones in the photographs below.
….I’m sure there are people at City Hall and the Land Title Office with the appropriate databases who could do this number crunching and analysis much more efficiently and precisely, but my roughhewn results probably wouldn’t differ much from their more precise ones when it comes to an overarching statement. Grandview, and other Vancouver neighbourhoods currently experiencing rapid change, have been profoundly affected by the real estate boom.
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My inventory map
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You would recognize nothing
Imagine a residential street, say the one on which you grew up, with every last house renovated to the point of being unrecognizable, or demolished and replaced with a new house, in a 30-year period. Put another way, you could leave home at 18, and come back in early middle age, and not have the slightest inkling you were standing on the street where you grew up. You would recognize nothing. It’s possible this imagined scenario could become real in neighbourhoods all over Vancouver. The current rate of change strikes me as disorienting. I remember visiting Vancouver in the mid 90s while living elsewhere for a few years, and my disorientation coming across the Granville Street Bridge and seeing all the green glass Concord Pacific towers for the first time. Whoa! Where the hell did all those come from? As if a squadron of alien spaceships had set down on the north shore of False Creek.
….The rate of change in many parts of Vancouver in recent years doesn’t feel human scale, and I think if it continues unchecked for a generation, it would be a bad thing for the individual psyches, and collective psyche, of Vancouverites. You can’t be constantly destroying and remaking your home without it messing with your head. When you can’t count on recognizing things, can’t count on things as fundamental as one’s home and its various touchpoints remaining relatively reliable and stable, the danger is that you stop understanding that certain things have a value that isn’t solely calculated by the marketplace, that certain things, although they may seem mundane, are worth preserving. You may grow up as someone who feels his or her own personal history to be disposable. Why get overly attached to anything if it could be wiped off the face of the earth tomorrow?
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The boom neighbourhood
Here’s a sample of renovated and new Grandview housing stock that in the last eight years has been replacing the old.
….The first shot is a row of four heritage-style duplexes — new houses designed to look like the more elegant of Grandview’s original single-family dwellings built a hundred years ago, and also designed to hide the fact that they’re front-and-back duplexes.  The fifth house in the row is an actual old house. City Hall encourages new house design that fits in with the existing streetscape. Given the rate of change suggested by my inventory, and the amount of demolition, on many blocks ‘existing streetscape’ is more of a conceptual notion than a reality. A friend of mine calls these “faux heritage houses.” I tend to agree. Are they really just builders’ boxes with an overlay of ‘character’? Somewhat cynical insta-heritage designed to entice the Anglo-Saxon demographic priced out of the West Side? They feel like a simulacrum of the old designed to make some of us feel better about the fact we’re progressively destroying that which is actually old.
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Heritage-style duplexes: one old house, and four new houses designed to look old
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….The second shot is a good example of the other type of new house built in Grandview during the boom — the naked builders’ box that does little to disguise its essential box-ness. Towering over the two remaining stucco bungalows, which have so far escaped the excavator’s jaws, it’s hard to argue that these new houses fit in with the existing streetscape. But once those last two survivors from the 1930s or 1940s are gone, and replaced by builders’ boxes, a new uniformity will be established. I’ve come up with another name for this style of house: boom box. Builders’ boxes built during the boom.
….Aesthetics is a personal matter. I find these boom boxes ugly, but others may not. Or aesthetics may not be a primary concern when selecting a house. And unlike the new-age heritage houses, I don’t detect any cynicism in the forthright utilitarianism of these structures. Much like the original Vancouver Specials, these houses maximize square footage for the price, and they work well for larger families. In Grandview, and East Vancouver in general, these are often longstanding Chinese-Canadian families with working class origins, often with three or even four generations living in one house (as distinct from the more recent, wealthier immigrants from China gravitating to the suburban municipality of Richmond). If you have an aged mother, and two or more adult children living with you, you need space.
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East Vancouver boom boxes: builders’ boxes built during the boom
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….And finally, a before-and-after shot of one of those renovations that completely transforms the original house.
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Before and after
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Where’s the money coming from?
The answer to this question is simple. For homeowners undertaking major renovations or demolishing and rebuilding: from the houses themselves. For developers and builders constructing spec houses (houses built with the speculation of finding a buyer): from the killing they made on the previous spec project. Once the real estate boom gets seriously underway in 2002, and prices keep cranking upward, the boom becomes self-sustaining to a certain degree. Owners of existing homes see their annual property assessment balloon, as if on steroids. After three or four years of these eye-popping increases they start to feel wealthy, and the bank agrees. Interest rates keep falling. In the aftermath of 9/11 rates fall to generational lows. In the aftermath of the 2008 global financial crisis, interest rates hit all-time lows. Over the past eight years, cheap money, and then incredibly cheap money, drive house prices into completely new territory — surreal territory in Vancouver, where many homeowners sit on increasingly massive war chests of home equity. Yes, it’s paper equity. Yes, it would shrivel in the event of a price collapse. But it’s paper wealth that’s solid enough for the banks to approve large home equity lines of credit secured by the houses, like the one my wife and I are given when we renew our mortgage in September of 2006.
….For many Vancouver homeowners, armed with these HELOCs, or with construction loans, it’s been time to spend. For builders, developers, and the various construction trades the only problem is the inability to clone themselves so they can take the money and complete the projects twice as fast, the demand is so great. Renovations that completely transform modest houses, often coming close to doubling the square footage. Tear-downs to make way for ‘dream homes’. Tear-downs to free up land for spec building, which can be more lucrative than custom building for a specific client. There’s no mystery about what’s at the root of the recent dramatic changes in Grandview, and in many other Vancouver neighbourhoods. It’s money.
….And, in many cases, the changing demographics associated with the money. The willingness to spend it. The longstanding blue-collar inhabitants of Grandview, the retired Italians, and Portuguese, and Chinese, the widows, are sitting on the same home equity as the more recent, white-collar arrivals, but they aren’t spending it. In fact, they’ll be sitting on even larger cash mountains, because they paid off their modest homes years ago. One hundred percent ownership. But these older residents achieved that ownership through years of grinding it out in tough jobs, and through financial prudence — like my wife’s parents, living a few blocks away, working nights in various restaurant kitchens, and the early shift in a meat packing plant. Scrimping, saving, keeping a lid on unnecessary expenditures. These are people constitutionally averse to dropping five or ten grand on granite countertops, or stainless steel kitchen appliances. (Will events in the coming years cause all of us to become constitutionally averse?) They’ve lived in their houses for years. They’re used to them the way they are. They aren’t interested in the stress and upheaval of a major reno. They’ve got the equity, but they need it to backstop their retirements, and to pass on to their adult kids.
….It’s the more recently arrived inhabitants, with years of earning potential still ahead, who are spending. White-collar information professionals who work their days at computer keyboards are supplanting blue-collar workers who needed to move all day long, use all the muscles in their bodies to earn a living. A younger generation, with English as their first language, and their labour more valued by society. Some of the new arrivals are real estate refugees from the West Side, where they may have grown up, or where they might have been able to buy in previous decades, and perhaps still aspire to live one day, and where the average house price is currently 1.5 million dollars. The new influx has a different relation to money, and debt, and the rapidly changing built environment of the neighbourhood is a direct manifestation of that relation.
….I’m going to leave discussion of whether or not Grandview is gentrifying to a future episode. Certainly, some of the elements of gentrification appear to be in place, but a number of local subtleties prevent a simple answer to the question.
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Shock and disorientation
Most of us have experienced the shock and disorientation of returning to a familiar place and finding it radically changed — never more so than if the familiar place is a house in which we grew up, and upon returning, anticipating that first sight, the feeling of reacquaintance, we find it gone. A bald, empty lot stares at us, or some new monstrosity. Something new always seems a monstrosity in our eyes. The alteration from the image in our mind, the feeling in our heart, at the very least feels like a breach of trust, and depending on how calamitous the circumstances, a violation, a kick that leaves a sick feeling in the gut. So imagine coming back to the familiar place and finding the entire block, every house, gone, or so changed that the block, the houses, might as well be gone. The one-time connection to you is certainly gone. Part of your personal history is effaced.
….There’s something very personal about demolishing a house, a home. It’s not the same as dynamiting an aging sports stadium. People can feel very strong connections to public structures, but they’re part of a communal connection. The spectacle of a half torn apart home is like a personal nakedness come upon, always a little unseemly. The emotions, the personal history, the tender or fraught relationships that the house has contained, and concealed, and protected from view, are rudely exposed. Like ghosts escaping into the ether, the long-hidden truths of past lives, having seeped into the walls over decades, now evaporate when exposed to air.
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Some East Vancouver ghosts

We don’t demolish our house. We renovate it to a degree that would certainly fit with my definition of ‘major’, with a final phase of the renovation still in the future. In hindsight, the financial wisdom of our choice may be questionable. For perhaps a third more money than we’ll end up spending once all phases of the renovation are complete, we could have demolished the house and built a new one. One with a full-height ground level, more square footage on the main floor, and a second storey that might afford a view of the mountains, at least when the leaves are off the trees in winter. And an increase in market value that could very well surpass the extra outlay upfront, although this last point is debatable, and dependent on what happens to house values in the coming years. But these are things you learn with experience.
….What I do know is that some ghosts would have been lost forever if we’d brought in the excavator and the forty-foot dump trailer and smashed everything to kindling.
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Homemade wine
The first ghost is a remnant from a wooden box of Zinfandel wine grapes — the box end with the producer’s colourful label. I find this board when I’m disassembling the framing of the bathroom in the old rental suite. Nailed between two studs, it’s serving as a piece of blocking for the shower plumbing. So along with their spouses, one or both of the Portuguese brothers, who put in the old suite in the 1980s, were probably makers of homemade wine. I know from my neighbour that the family used to run a bakery on nearby Nanaimo Street.
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Wine box end
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War bride?
The second ghost is fragile, a 3-inch by 4-inch scrap I find beneath attic insulation, a paper label clinging to the back of a board that along with a few other boards has been used to close off an attic hatch. The label says NOT WANTED, and a woman’s name is typed on it: Mrs. D.O. O’Malley. Although this ghost is the most recent I’ve encountered, it’s the oldest.
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Not Wanted label
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Some older readers may understand immediately the original purpose of this label, but it takes me a while to figure it out, and without Google, I might still be scratching my head. I assume “8/51” in the lower left corner is the date August 1951, which means the label comes from a time when immigrants arrived in Canada by ship, rather than aircraft. “Not Wanted” is short for “Not Wanted on the Voyage”, a designation given to things like steamer trunks and wooden crates that traveled in a ship’s hold because the passengers didn’t need them during their time at sea. Googling key parts of the address in the lower right corner — Canadian Civilian Repatriation Section, Sackville House, London, W.1 — unpacks the rest of the story.
….The Civilian Repatriation Section was part of the Canadian Wives’ Bureau, a department of the Canadian military set up in England and Europe to transport war brides to Canada where they were reunited with the returned servicemen they’d married during the Second World War. So Mrs. D.O. O’Malley may have been a war bride , although 1951 is late for a Canadian war bride. Most traveled to Canada in 1946, the year after the war ended. But the fact that it’s a woman’s married name that appears by itself on the label certainly suggests a war bride. And our house, a modest bungalow built in a working class part of town in 1946, certainly fits well with the theory of O’Malley the returning veteran, buying or building a new little house to bring his bride to. Somewhat inconclusive, but I’m happy to let elements of the mystery remain, at least for now.
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Childhood home
The final ghost is flesh-and-blood, and on a bright summer day rings the doorbell. Peter Chang is about my age and he tells us that he was in the neighbourhood and our house is his childhood home. We invite him in and give him a tour, or more accurately, he gives us a tour of the ghost house that hovers in his memory, superimposed on the one we’re all standing in. Peter is surprised by the attractive Douglas fir floors, probably the best feature of the house, which we had refinished just before moving in. The brothers (I’m assuming it was them) had previously butchered them, a do-it-yourself attempt at refinishing that left waves, and divots, throughout. Some things really should be left to specialists. But Peter had not even been aware that there were original fir floors. When his parents bought the house in the late 1950s, the wood had been entirely covered with battleship linoleum, and it stayed that way throughout his childhood and teen years.
….We spend an interesting hour listening to Peter’s details about the house and his family. They were the first Chinese family on the block. His father was no longer alive, and we get the sense he may have died prematurely. At a certain point Peter and his family had to ask the neighbours to stop giving his father bottles of their homemade wine. As I’d suspected, there was previously a set of stairs to the lower level, in the back corner of the house where there’s now a narrow bedroom on the main floor, and the laundry room directly beneath. As part of putting in the rental suite, the brothers obviously removed the stairs, and closed the opening, gaining a small room on each floor in the process. Peter and his brother used to go down this U-shaped stairway to the partially finished basement, where they spent hours with their chemistry sets. Until Peter mentions it, I’d totally forgotten about those childhood chemistry sets. The concrete front steps on the house were put in by Peter’s parents when the old wooden ones started to rot and became unsafe. The bright red that peeks through several layers of peeling and flaking grey paint is the original colour that the stairs were painted.
….We get Peter’s contact information. He tells us he has quite a few photographs we might find interesting. We intend to get in touch, although we haven’t yet. Peter’s visit is prior to our renovation, so if he comes back for another look, he’s going to be surprised again. But if we had demolished Peter’s childhood home, would he have had any reason to ring our doorbell, or the heart to?
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February 2010, Grandview
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Next episode
Part 6: “Renovation Nervosa”
I don’t always walk the blocks of our neighbourhood purely in the spirit of unscientific inquiry, as I do in February of 2010, when I count all the renovations and new houses. In our first years in the neighbourhood, as it starts to transform before me, I often feel not exactly envy, but anxiety that other people are getting on with things and we aren’t.
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Financial details
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http://vreaa.files.wordpress.com/2010/02/fsc_chart_e03.png?w=509&h=348
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From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.
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2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250
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2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670
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2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171
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2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 4: Raise or Raze — Prelude

Songs. Buildings. Food. Books. Houses. People. When we lose respect for things, our respect for each other is in jeopardy. During booms we see flagrant examples of misallocation of resources. Easy money fosters and rewards the ‘fast-and-loose’ mindset. People spend and destroy in ways that they wouldn’t during more measured, prudent, and thoughtful times. Individuals who would usually be careful may be lured into taking on debt, and spending, in ways that would be unimaginable for them under more typical market conditions. The result is wasted resources; both material and human. Can we be mindful users? -vreaa

Part 4: Raise or Raze — Prelude

……………………………………….TEAR-DOWN

No, the house depicted above is not that which belongs to Froogle Scott, but it is in his neighbourhood, and was demolished at the same time that he and his wife were undertaking major renovations on their East Vancouver house.

Next week, in episode 5 of our series, Froogle Scott will look at how the eight-year real estate boom in Vancouver, and the associated renovation and construction mania, have changed the face of his neighbourhood. This week, he offers the above photo-montage as a prelude to next week’s story. Click on the images for full size photos.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 3: Priced Out Forever? Vancouver Renters and Basement Suites

In other times, and other places, renting was and is the norm. But during the kind of runaway real estate boom that Vancouver has experienced, just about everybody who can buy, eventually does.  The cheap loans and social forces are irresistible. Ownership rates rise to record highs. The renter pool becomes more highly concentrated with vagabonds and the indigent. Renters become an underclass, targets of derision and subjects of pity. As with all things human and economic, however, once this process has moved as far as it can in one direction, the only way forward is for it to come back. There may well come a time when the renters rise up out of their basement suites; a time when renting comes to be seen as prudent, as sensible, as responsible, as trendy, as wise. -vreaa

Part 3: Priced Out Forever? Vancouver Renters and Basement Suites

Reality and fantasy
In the latter half of the 1980s I was a student at the University of British Columbia, augmenting my student loans by working part time as a bartender in one of the student bars. Behind the bar was also a food preparation area, where workers on the food side of the operation assembled light appetizers for the patrons. When business was slow, the bartenders and the food prep staff would chat, and over time we all got to know one another. One evening Mike, one of the food prep guys, told me that he and his mother had just bought a house on the East Side, traditionally the working class area of Vancouver. The house was close to the two-bedroom apartment I shared on East Broadway near Fraser, so when Mike described the house — two-storey, wood frame, peaked roof, about eighty years old — I could picture it exactly. I might even have seen the actual house with the For Sale sign on my walks through the neighbourhood.
…..Mike was a full-time employee, not a student earning a few extra dollars like most of us working in the bar, which meant that his path through life was set at a different tangent than ours. He probably made eight or nine bucks an hour, which wasn’t bad given that the minimum wage at the time was $3.65 an hour. The house he’d just purchased needed work, but Mike had some of the skills required to do it himself, and could learn more as he went. I remember the price he and his mother paid: $90,000. The rent for the two-bedroom apartment I shared — ironically, or portentously, above a realtor’s office in a building owned by the realtor — was $400 a month, utilities included. The view of the mountains from the high landing at the back of the building was stunning.

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My old digs on East Broadway

Twenty-two or twenty-three years later, in 2010, the anecdote I’ve just related would be pure fantasy. Someone doing the job Mike was doing might still be making only eight or nine bucks an hour. Minimum wage in BC has stagnated at $8.00 an hour since 2001 — a period of almost ten years without an increase, which also happens to coincide with the real estate boom. During that same time period, the price for a two-storey, wood frame “character house” on the East Side, even if it’s falling into ruin, has inflated to at least $600,000, and closer to $800,000, or more, if it’s in good shape or renovated. If someone working for minimum wage were magically able to bank every cent they earned toward buying that house, and assuming there was no mortgage interest, they’d need to work 100,000 hours, or 50 years, to pay for it.
…..If Mike and his mother held on to their house they will have done well. And perhaps Mike went on to a career in one of the construction trades, in which case he may have done very well for himself.
…..In the previous episode I shared some of the experiences and emotions associated with being a homeowner during the first few years of Vancouver’s real estate boom — a real estate lottery winner. Well, what about all those people who didn’t, or couldn’t, buy a ticket?
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The basement dwellers
For a sampling of Vancouver renters, I don’t have to look any farther than the people beneath the floorboards I’m standing on. When my wife and I buy our house in the fall of 2003, we inherit tenants — a single mother and her teenaged son. So we become small-time landlords without really worrying too much about what being a landlord might entail. We want the rental income to help with the mortgage, and we’ve bought a house with everything, including tenants, already in place. The rent charged by the previous owners is $560 a month, plus 40% of the utilities, and we leave it unchanged for the year and a half that mother and son continue to live in our suite. They are quiet and always pay the rent on time. On Sundays, when they return from Mass, the sound of the mother singing Catholic hymns, inexpertly accompanied by a small electronic keyboard, drifts upstairs. Not unpleasant. In hindsight, I realize we must have been a lot louder for them. At the time, the floor between the two units has no soundproofing. And I tend to be a bit loud.
…..The suite is 750 square feet, has two bedrooms, and isn’t really a basement, it’s ground level, or “garden level” as they’re called on Craigslist or in the classifieds, even if your house is surrounded by a smoldering junkyard. The city calls rental units in houses “secondary suites,” and generally turns a blind eye to the fact that the vast majority of them are put in without permits, which means they’re illegal. Ours falls into that vast majority.
…..When it isn’t raining, sunlight pours through the large, south-facing living room and master bedroom windows. It’s a decent, livable space, or potentially is. On the downside, the ceiling height is less than seven feet, heating ducts and a central supporting beam drop even lower in a couple of locations, the layout is terrible, the kitchen and bathroom are a garish mishmash of pink, white, and harvest gold appliances and fixtures, obviously salvaged from elsewhere, or like the rickety 1940s kitchen cupboards, moved piecemeal from upstairs.
…..These are details that somehow didn’t really register during our initial, somewhat anxiety filled walk-though prior to putting in an offer.
…..I learn from our neighbour that two brothers owned the house in succession in the 1980s, and these brothers put in the suite themselves. This is the classic East Vancouver way, because working class homeowners usually have limited amounts of disposable income, and often balk at the prices charged by professional contractors. But they’re willing to roll up their sleeves and do things themselves, and perhaps not be too fussy about the results.
…..In the suite, these do-it-yourself aspects are everywhere. One end of the kitchen cupboards is supported by bare 2x4s running from beneath the cupboards to the floor. Although quite the eyesore, I know better than to disturb these. The outer wall of the shared laundry room tilts at a bizarre angle. The furnace and hot water tank are in a makeshift utility room with flimsy walls made of that dark, ugly, 1970s fake wood paneling. In the bedrooms, lurid red and black carpet is stitched together in places like a mask worn by some horror movie killer. One entire half of the suite is served by a single heating register, so it’s always cold. The electrical panel is a Medusa’s head of snaking wires, making me shudder and mentally cross my fingers every time I see it. Frankenstein plumbing connects the laundry sink. And perhaps most strangely, the bathroom, which requires a step up — in the words of one contractor we’ll later hire, “a bathroom for dwarfs” — has walls entirely covered with full-length mirrors. This final detail I can’t fathom. Like a funhouse at the midway, or a brothel bathroom specially equipped for fetishists.

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The laundry room
…..So, yeah, the suite is a dump. Which is why, although we could probably squeeze $800 or $900 a month, we keep the rent low. It’s the right thing to do. And gouging can on occasion come back to haunt the gougers.
…..Romance enters the life of our single mother. She meets a man and after a few months of being wooed, gives notice and moves in with him. He owns his place, so our mother, assuming things work out, has left behind the life of the renter.
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Saving for a downpayment — frustration, expense, and exhaustion
Our next tenants are a couple, Amir and Sarah, who also stay for about a year and a half. We work hard to paint the entire suite before they move in, and get the living room carpet steam-cleaned, but there’s no redeeming the main traffic area, which stubbornly remains grey. Amir is pretty straightforward about the place and their motivations. He tells us that the suite “isn’t great,” but they’re willing to accept it in exchange for a lower rent because they’re saving for a downpayment on a place of their own. Amir is a bit of a negotiator. He doesn’t like the arrangement that involves paying a percentage of the utilities. He wants a fixed monthly amount that they can budget around. By this point, we have a pretty good idea of what the utilities cost over the course of a year, and after some thought propose a rent of $600 a month, everything included. It’s only later we realize Amir and Sarah run electric space heaters throughout the winter to make up for the deficit of heat. But I don’t begrudge them. The suite is cold. My only worry is fire.
…..Amir and Sarah are also quiet and always pay the rent on time. The only problem that arises is when the son of the woman across the street, someone who doesn’t even live in the neighbourhood, tells Amir not to park in front of his mother’s house. His mother is housebound and doesn’t own a car. Some homeowners, or relatives of homeowners, seem to view tenants of basement suites as second-class citizens who must always defer in matters such as parking. The city’s bylaw is pretty clear. Non-residents are prohibited from parking for more than three hours in front of any property, but residents are allowed to park “on their own street.”
…..From time to time, Amir and I talk about Vancouver real estate, and politics. He comes from a country where repression of personal freedom is standard practice. About a year after Amir and Sarah move in, in early 2006, they begin the search for a house. Their timing is somewhat unfortunate. The average price of a house in Greater Vancouver, driven by voracious demand, has just increased $100,000 in the past three months, to around $700,000.
…..Amir and Sarah get themselves a buyer’s realtor. Amir tells me that they like the neighbourhood, the location works well for both of them, and they are interested in a new, heritage-style house that is being built, and nearing completion, on the next block. Amir asks me what I think the list price might be. At least $600,000, I answer. A few days later Amir tells me that their realtor confirmed the asking price is going to be in the mid 600s. So the dream of buying in the neighbourhood is quickly extinguished.
…..What follows for Amir and Sarah is six months of frustration, expense, and exhaustion. Almost daily after work they spend two to three hours touring properties, prices and bidding wars forcing their search farther and farther east. Amir tells me that he’s unwilling to pay $40,000 over asking price — an amount by which they were recently outbid — for “an apartment.” I don’t blame him. And they don’t even really want a condo, they want a house. Amir tells me they’re spending a ton of money on gas to make these daily runs to the suburbs and back, and food, because they’re now eating dinner in restaurants along the way. And each additional month they continue to live in our suite is another $600 that could be going toward paying down a mortgage.
…..In June they finally manage to purchase a house — in Coquitlam, a suburb ten miles farther east than they wanted to be. Their first order of business is to spend more money and quickly make some modifications to the lower level of the house so they can use it as a rental suite.
…..And so ends the first era of our rental suite. August 2006. We’ve decided to leave the suite vacant for a while, so we can make some improvements. Amir and Sarah have been gone for only a couple of hours when I put on my work clothes, a dust mask, and a pair of heavy work gloves. I go into the suite and rip out the skanky wall-to-wall carpeting in the living room. I confirm that a soft spot I felt underfoot while painting is a rotten patch in the subfloor. Several of the vinyl floor tiles lift away easily, and beneath them the floorboards, and chunks of the underlying 2×4 sleepers, break apart and disintegrate in my fingers. Rot. Although dry now, there has obviously been significant moisture. I investigate further, and find that I can easily peel away the cheap vinyl baseboard, the underlying glue compromised by dampness. The wall behind the baseboard is speckled with black mold. The house inspector’s caution about his elevated moisture reading comes back to me. I don’t know it at the time, but this is Day 1 of what will be three years of an often difficult, often painful, and always expensive renovation of the suite and various aspects of the house in general. Three years before we will again see tenants, or a single penny of rental revenue. Had I known what lay ahead, I would have left that carpet exactly where it was. And perhaps suggested to my wife that we put a For Sale sign in front of the house.
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Four generations under one roof
Around the time that our rental suite becomes vacant I’m at a garage sale up the block from our place. I get chatting with the owners, Joe and Grazia, a retired couple who tell me they’ve lived in their house since the mid-1960s. The subject turns to real estate and the recent increase in the number of people living in their house. Joe and Grazia, and Grazia’s mother, have been joined by the couple’s son, his wife, and their young daughter. Six people. Four generations under one roof. And like our house, it’s a modestly sized roof. Their house is probably 1750 square feet, top and bottom. And like us, they have only a small, single-car garage.
…..Apparently Joe and Grazia’s son and his wife had been sharing a house in the suburbs that they co-owned with the wife’s brother, but the brother had wanted to sell because with the huge run-up in prices, and the favourable interest rates, he and his wife now had enough equity and additional financing that they could afford a place of their own. The finances of Joe and Grazia’s son and his wife still aren’t sufficient to do the same, so they’re moving in with the parents/in-laws while saving for a downpayment.
…..At this point, it’s been over two years since The Province’s hysterical headline about house prices going up by $222 a day. Except for a brief respite in the second half of 2004, the rate of increase hasn’t let up, and it won’t until the global financial implosion of 2008 — and then for only a year before rebounding at a similar rate. $222 a day is $80,000 a year. So Joe and Grazia’s son and his wife will have to save $80,000 each year just to keep up with the rate of increase. Each year, they’ll need to add that much additional money to their downpayment nest egg just to keep a mortgage at the same amount it would have been if they had bought the year before. The only people in Vancouver who can sock away $80,000 a year are the best paid C-level executives, financial elites who hail from elsewhere, or high-ranking gangsters or marijuana grow operators. At the beginning of 2010, I’m not sure exactly how long it’s been since Joe and Grazia’s household increased in size, but I notice that its youngest member is significantly taller than when I first saw her at the garage sale.
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It was all kids
One day I’m chatting with Grazia, out sweeping her walkway, and she tells me that years ago the street was “All kids. All kids running up and down every day.” The mature trees were recently planted saplings, and the sidewalks hadn’t yet been installed. She points to a large Vancouver Special nearby. “That house there, they had twelve kids.” Well, the neighbourhood certainly isn’t all kids now. There are a few around, but not many. Now it’s retired people like Joe and Grazia, Italians, and Portuguese, and Chinese who bought into the neighbourhood thirty and forty years ago, a few widows, or newcomers like us, professional couples without children, or with teenagers or adult children who’ve already left home. There are exceptions, but generally speaking the economics of the neighbourhood no longer support families just starting out — and definitely not large, working class families. The same thing is happening in all the old central neighbourhoods of Vancouver — in Strathcona, in Mount Pleasant, in Fairview, in Kitsilano. I wonder what it feels like for Grazia’s son to be priced out of the neighbourhood he was brought to as a baby, and in which he spent his entire childhood, and teenage years, like the trees, growing up. To perhaps be thought of by some as a second-class citizen in the neighbourhood with which his personal history is intimately connected.
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Getting crushed
So I don’t have to look far to find people whose dreams and aspirations have been seriously curtailed by Vancouver’s real estate boom. It’s not much fun being on the outside looking in. And then there are the marginalized inhabitants of the Downtown Eastside, and Vancouver’s homeless, whose dreams and aspirations aren’t just being curtailed, in many cases they’re being crushed.
…..During the mayoral campaign of 2002, Jennifer Clarke, the candidate for the Right, vows to retake the Downtown Eastside — which she inaccurately describes as an American-style “ghetto” — “one block at a time.” The image her rhetoric conjures is of a phalanx of developers and well-heeled West Siders, gentrifying stormtroopers, marching on the country’s poorest urban neighbourhood. The block-by-block rallying cry backfires. Instead of galvanizing voters it repels a lot of them, and is quite possibly the phrase that loses her the election. Left-leaning Larry Campbell, with his more nuanced approach to the Downtown Eastside’s undeniably severe social problems, wins the election in a landslide. But Campbell doesn’t last long. After a fractious three years marked by in-fighting and warring cliques within his own party, he pulls the plug on his tenure as mayor, announcing he won’t run again. A little over seven years after Campbell’s victory, to my eyes anyway, it’s Clarke’s vision that seems to be progressively winning out — one towering condo block at a time — even if Clarke herself didn’t win.
…..Along with the adjacent Gastown and Chinatown, the Downtown Eastside, with its hundred-year-old brick buildings, is the oldest part of Vancouver, and was once the hub of the city, but is now home to a large population of urban poor. It’s a political battleground for just about everybody, and reams have been and are being written about it, so I won’t go into great detail here (although I may in a future episode). The only point I want to make is that in the two years my wife and I lived in a brick loft on the border between Gastown and the Downtown Eastside, and in the six years since, an increasing number of large mid-rise and high-rise condo buildings have been getting built on the periphery of the area. These buildings I imagine as giants looming over the neighbourhood, or as those massive slab walls in 1960s cartoons or action movies, slowing moving inward, threatening to crush the trapped hero. Downtown Eastside residents and poverty activists are doing what they can to resist, but when I see what’s happening, quite literally, on the ground, I feel there’s a certain inevitability about the outcome.
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Are people really priced out forever?
Among Vancouver residents, only a recently awoken Rip Van Winkle could fail to understand that we’ve been experiencing the mother of all real estate and construction booms for the last decade — really, on and off since Expo 86, almost 25 years ago, the world’s fair that achieved its purpose of providing a giant, live-action, promotional brochure for the city. Expo 86 actually started out with something less than a world’s fair designation, but that little detail was brushed under the carpet by boosters at the time, and now seems largely forgotten. Living in the city, it’s possible to become oblivious to the growth and development, because it’s everywhere and it’s gone on for so long. Rapid change has become the norm, although for many of us it’s a disorienting and even upsetting norm. For many years, whenever my father visits Vancouver from Victoria, he always remarks on the number of construction cranes, and the number of expensive automobiles. The obvious money. (Or, perhaps, the less obvious debt.) These things leap out at him, and he’s coming from Victoria, the provincial capital, an affluent city of over 300,000 just across the water on Vancouver Island, with a pretty significant real estate boom of its own — not exactly a poor cousin.
…..I think the most pertinent question at the moment is this: Are we in a boom, or a bubble? Your answer to that question probably defines you as a real estate bull or a real estate bear. And the current gap in sentiment between the two is rather wide. It sometimes spoils family dinners.
…..To my mind, a boom is a period of intense growth, activity, and price escalation, with people falling over themselves to get a piece of the action, but it doesn’t necessarily entail a subsequent collapse, or bust. Booms are perhaps periods when rates of growth are warranted by underlying conditions or fundamentals (I’m not saying those necessarily exist in Vancouver). When the underlying conditions or fundamentals alter, the boom levels out, but it doesn’t collapse because the initial and ongoing reasons for the boom were legitimate. Think of New York City in the late 19th and early 20th centuries.
…..Bubbles on the other hand, by their very nature, containing the ingredients for their collapse. They may look exactly like booms, with all the same frenzied activity, but ultimately they aren’t warranted by underlying conditions or fundamentals. Perhaps they start as booms, but for a host of reasons mutate into something wildly inappropriate. I’m not even an armchair economist, but from just a casual perusal of charts of stocks and real estate values, the most likely outcome of a bubble is that values return — collapse rapidly — to more or less where they were before the bubble, or where they would have been had a more natural rate of growth obtained during the period in question. They do so because there is no underlying support for the level that values achieve during the bubble. At some point, everybody suddenly realizes that the emperor has no clothes. What precipitates this mass realization is perhaps a little mysterious. Like the signal telegraphed through a flock of roosting birds causing them all to take flight simultaneously. On the West Side of Vancouver, perhaps the emperor is any of the small, dilapidated, eighty-year-old houses on thirty-three-foot lots currently listed for 1.2 or 1.3 million dollars. Or the same sorts of houses on the East Side listed for $800,000.
…..If there is a bubble in Vancouver, when it pops the average house price could collapse, or perhaps slowly deflate, from its current level of $950,000 to something around $550,000 or $600,000, assuming a return to a support point implied by a more natural rate of growth. That’s a decrease of about 35% or 40%. An average house price of $600,000 is still very expensive, but townhouses, condos, the discount for living on the East Side, or the even greater discount for living in the suburbs, would all be subject to the same general decrease in price, to a greater or lesser extent. The result would be that large numbers of people who are currently priced out of the particular form of housing to which they aspire would be priced back in. No longer would young couples lusting for home ownership in Kitsilano have to make do with a neighbourhood like Grandview. And renters in the burbs could once again legitimately dream of a condo in the city. There are plenty of people sitting on the sidelines, gathering cash, hoping this is exactly what happens. I work with two of them.
…..I should mention that feeling oneself to be priced out also requires that you’re someone who wants to buy in. And there are various reasons why people may prefer to rent and not buy real estate at all. A footloose life style with the freedom to pick up and leave on short notice. The wish to avoid the never-ending expense and responsibility of home ownership. A dislike of strata council politics and the problem personalities who often seem to dominate. Or exorbitant condo fees. The conviction that your money can be better invested elsewhere. Or maybe you’re not paying rent at all. You’re an adult child living at home.
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Froogle calls a definite maybe
I don’t know what the hell’s going to happen. I hear interesting arguments on both sides. One thing that’s often absent from the arguments, however, is a time horizon. Maybe the bulls and bears will both be right. In the short to medium term, I wouldn’t be surprised by a fairly epic collapse of real estate prices in Vancouver, or a long grind downward over a decade. Goodbye paper equity. But what about in twenty or thirty years? Isn’t it possible that as power centers shift in the world, that as China perhaps surpasses the United States as the world’s economic behemoth, and other Asian countries continue to increase in economic clout, Vancouver, because of its geographic location and immigration patterns, might be hugely affected to the upside — that it could become an increasingly important player as the 21st century progresses? Manhattan was once an island covered with trees. Expo 86 and the 2010 Olympics notwithstanding, Vancouver is not yet a major player, as much as some locals fervently wish it were. But will that always be the case?
…..I don’t think any of us really knows whether Vancouver is experiencing a boom, a bubble, or a boom become a bubble. Having a strong opinion, and knowing, are not the same thing. If it’s a boom become a bubble, maybe values will only shrink to a support level warranted by an underlying legitimate boom, and who knows what that might be. But not as much of a collapse as an all-out bubble bursting. We will all find out at some point, maybe fairly soon, maybe not until a number of years down the road, where values really belong, and the answer could be surprising — for the real estate bulls, the real estate bears, or maybe both.
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Next episode
Part 4: “Raise or Raze”
I walk around my neighbourhood taking inventory: renovation, renovation, that house raised and a new foundation poured, that one with a second storey added, and there, a house demolished — razed with a “z” — and a new house built in its place.

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Financial details

From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.
.
2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250
.
2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670
.
2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171
.
2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 2: Up, Up, Up: Winning the Real Estate Lottery

Asset bubbles do most of their damage through the misallocation of resources. Money is directed to projects that would be deemed imprudent, or even useless, in more normal times. Human energies are distracted by the promise of easy riches. Young people who would have studied engineering become stock-brokers, or realtors, or construction workers. People who would normally be focused on their work, their family, their leisure pursuits, become distracted by their neighbour’s or coworker’s sudden, easily-acquired, life-changing wealth. Doctors reduce work hours and flip condos; Architects drywall or trade stocks; Teachers become roofers; Poets, landlords. Productive citizens cash out, retire early, and move away. What effect does all of this distraction have on our city, our society?  Froogle Scott generously shares his experience. -vreaa

Part 2: Up, Up, Up: Winning the Real Estate Lottery

Property assessments — the new scratch-and-win
In the three years following the purchase of our house in the fall of 2003, its assessed value increases by 72%, or almost a quarter of a million dollars. This windfall changes the way I think and feel about money. Had we bought the house fifteen months earlier, close to the beginning of Vancouver’s real estate boom, the windfall in the first four years of ownership, based on the July 1, 2002 assessed value, would have been a 119% increase, or $310,000. Opening the annual Property Assessment Notice feels like playing a scratch-and-win or pull-tab lottery ticket with which I don’t just win the maximum prize possible — I win a super-secret mega-prize that I didn’t even know existed. Each year I stare at the assessment number for a moment, almost stunned. How can this be? At this point, we’ve done little more than live in the house, collect rent from the basement suite, and make our mortgage payments every two weeks. We did replace the water service, the gutters, and the shingles on the garage roof — a total expenditure of about $5,000.
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Some perspective
To put these assessment numbers in perspective… For years my gross annual income moved up and down in a range between twenty and thirty thousand dollars, depending on whether I was a student and working part time, or working some job full time for awhile. After leaving home, I was a renter for twenty years, almost always with roommates or housemates, to keep costs down. I’m a lifelong public transit user who only sporadically owned cars for short periods of time — the cars always used, and often hand-me-downs from family. I have never purchased a new car. The things I do buy — books, music, clothing, tools, furniture — I often buy used or on sale. Along with my wife, who had a similar low-budget lifestyle throughout her 20s and early 30s, I love grubbing around flea markets, junk stores, used book and music stores, Sally Ann, Value Village, and other thrift stores, and discount or liquidation outlets. I was someone for whom spending five hundred or a thousand dollars was a big, big deal. But I also like quality, and hunt it out, which I’d say makes me frugal, rather than cheap. If you’re cheap, price is the only consideration, and even if you can easily afford to purchase something of better quality, you won’t.
….About ten years ago, at the age of 37, I belatedly started a career. My income, while still relatively modest by professional standards, jumped to a level it had never been at before. However, my frugal ways were now ingrained, and I didn’t alter my spending habits. My job working for a demanding high tech company also kept me very busy and I didn’t have much time or energy left over to consider doing something with the money piling up in my savings account. As the balance steadily increased so did the alarm among the tellers at my bank — the Main and Hastings branch of the Royal on Vancouver’s Downtown Eastside. (At the time, my wife and I were living in a loft apartment on the hazy borderline between Gastown and the Downtown Eastside.) The lineup at that particular branch was often long, and fairly evenly divided between people from Chinatown, which is immediately adjacent, a number of them probably merchants doing business banking, and Downtown Eastside residents, a number of them quite possibly dependent on various forms of social assistance. When the details of my account came up on the screen, I often noticed a strange wave pass across the tellers’ faces. The degree of deference with which I was treated, one that you might not expect based on the clothes I was wearing — not that different from those worn by the Downtown Eastside residents — subtly increased. Invariably, “Mr. Scott” was asked if he’d like to speak with an investment officer. I put them off. I couldn’t be bothered with the hassle at that particular moment. This behaviour was not very smart from a financial standpoint, but by being a micro-consumer for years, long before I had any idea that I might buy a house, I amassed a sizable downpayment without even realizing that was what I was doing.
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A third salary
At the time that we buy the house, my wife and I have a combined annual income of between $120,000 and $130,000 before tax. (Six and a half years later that figure hasn’t changed much.) So when the property assessment drops through the door in early 2005, after our first full calendar year of ownership, and shows an almost $90,000 increase in assessed value, it’s like being handed a third salary, a very good one, tax free, for the year. The local media are bursting with stories about the miraculous real estate gains in Vancouver and surrounding areas, the wondrous boom. There’s no land left. Rich foreigners, and rich retirees from Alberta and Ontario, are flooding in. “House Prices Going Up By $222 A Day!” The Province screams on its front page. Vancouver is the gateway to the Pacific. It’s a paradise, a world-class playground, with no winters, except on the much-hyped ski slopes. In short, Vancouver has it all, it’s perfect, the best place on earth, and who knows how high property values could go?
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A city of real estate junkies
I begin each day with coffee, sitting in front of the computer, combing through the listings on RealtyLink. The web site where I found our house now serves a new purpose. It’s the source of my daily real estate fix, the endless compare and contrast, the micro-calculations, that are entertaining and comforting if you’re on the plus side of the equation. I quickly figure out that assessed value and market value are two very different things. List prices are much higher than the most recent assessed values, and sale prices, after bloodthirsty bidding wars, even more distantly removed. Sale prices often outstrip assessed values by one hundred or two hundred thousand dollars, or more, especially on the West Side, and in other affluent parts of Greater Vancouver.
….One of my favourite games is to find a house similar to ours in the same real estate zone, compare features, and see how much is being asked. After all, using recent sale prices, this is pretty much what professional real estate appraisers do. This house has a fireplace, or a bigger garage, or a new deck. But it doesn’t have a basement suite. (When we bought, our realtor told us that a basement suite immediately adds $30,000 to the price of a house. It’s probably more now, as the necessity of having that mortgage helper increases with the increase in prices.) That house’s lot is bigger/smaller. (Lot size is a crucial component of price, because it dictates the maximum square footage of any house that can be built. And plenty of buyers in Vancouver are thinking of major renovations, or demolishing and rebuilding.) Or the kiss of death — the house is a “deal” because it’s on one of the three drag strips that slice through Grandview: East 1st, East Broadway, or East 12th. I find out that my secret, early morning vice is shared by all sorts of other people. We’re becoming a city of real estate junkies.
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More numbers
House prices take something of breather throughout most of 2004, which is reflected by the 2006 property assessment (covering the period from July 1, 2004 to July 1, 2005). The assessed value of our house goes up by only 10%, or $41,000, which in this rapidly distorting market feels like a disappointment. The increase is still equivalent to a third salary, but a smaller one. Maybe the market is starting to become rational. And really, the party couldn’t go on forever. But at the beginning of 2005 prices start rocketing upward again, as if someone pushed the nitro button. Between late 2005 and early 2006 the line of ascent becomes almost vertical. Like someone sprinting up the Grouse Grind, the steep hiking trail that climbs straight up one of Vancouver’s North Shore mountains, the increase in average house price eats up an additional hundred thousand dollars of value in three months. Renters trying to save a downpayment must feel suicidal, or murderous. When our assessment shows up in early 2007, it reveals a 24% increase and an astounding $109,000 in additional assessed value. Like being handed two salaries.
….These are the numbers for a very average little house in East Vancouver. Double everything for a nice house on the West Side. There are probably plenty of homeowners in Point Grey and Kerrisdale and Dunbar who see a $200,000 jump, or more, on their 2007 assessment. A one-year increase that’s more than the average price in many parts of the country at the time for an entire house. I imagine households across Vancouver in which residents are thrilled because they’re winners — unless, as renters hoping to buy, they’re not winners. News stories marveling at the boom abound, gobbled up by homeowners eager to read about their incredible good fortune. The BC Assessment web site is like a millionaires club, populated with real estate millionaires. According to The Vancouver Sun, there are over 50,000 of them in the province, most of whom will be in Greater Vancouver. At this pace, how long will it be before my wife and I become real estate millionaires? If the value of our house continues to increase at the rate it does during the 2002 to 2006 period (an average of 22% a year), the answer is: three years.
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Dream, dream, dream
Yes, I do understand these are paper gains. We’re fully aware that if we sell our house only to buy again in the Vancouver market we’d be no further ahead. In fact, the cost of selling, and moving, and buying — and the likelihood that we wouldn’t be able to avoid a bidding war the second time around — would put us considerably behind. But the wealth effect has nevertheless exerted its influence, at least on me. My wife is perhaps a little more grounded at this point in time. Neither of us has much of an inclination to try moving up to a better house, although my wife sometimes wistfully wishes we had a view. We don’t really think of our house as a “starter home”. We don’t have kids, and our starter home could very well be our finishing home. My day-to-day behaviour is still relatively frugal, but my dreams are starting to become a little more extravagant.
….I start to talk to my wife about the options, and possibilities, that the increasing equity in the house could represent. At some point in the not-too-distant future (ten years from now?) we could sell the house and cash out, using a third or half of the money to buy a place on one of the Gulf Islands, or on Vancouver Island, or on the Sunshine Coast, maybe as far up as Powell River. We both like Powell River, where, by Vancouver standards, they’re almost giving away houses. The remainder of the money we’d use to significantly beef up our retirement savings. We’d need to keep working for a time, or at least my wife would (the dream gets a bit bumpy at points), so finding a suitable position in her field would be a prerequisite, but periodically positions do come available in communities in these various areas. I could probably telecommute, or, as I half-jokingly suggest (but only half), I could retire early and, you know, write my novel.
….Or we could keep the Vancouver place, rent out the more desirable top half for the market rate, probably $1500 to $1700 a month, and use the basement suite as our Vancouver crash pad, for when we’d had enough of pine cones and sea breezes and needed a dose of the big city’s restaurants, shops, and other enticements. In this scenario we’d get another, smaller mortgage for an out-of-town place, and use the rental income to make some or all of the second mortgage payments.
….Or we could use the house to fund extended travel periods, renting out both halves and using the proceeds to go live in other places for a year at a time. Possibilities, options, flexibility. Ultimately that’s what money means to people. You can call the shots in your own life rather than have them dictated to you on terms you dislike. Money = freedom.
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This house is my retirement plan
Another, more sober line of thinking has us just staying in Vancouver, paying down the mortgage as quickly as possible, and switching from using the basement suite as a mortgage helper to using it as a retirement savings helper. My wife, who has spent her career to date in the public sector, has a pension. Working entirely for small to medium-sized private sector employers, I don’t. No pension, and only a moderate RRSP: $50,000 scattered across four different accounts, which I’ve mostly ignored, other than dumping in $5,000 to one or another of them before the annual contribution deadline. The overall total reduced by the $20,000 that I withdrew under the Home Buyers’ Plan, the maximum allowable at the time.
….At some point after these repeated years of property assessment increases and equity gains, I’m in the shower, where all big thoughts seem to come to many of us (perhaps the steam, and the isolation from the outside world, help release them from our tightly packed brains?). With a certain amount of gravity I think to myself, “This house is my retirement plan.” Although I’ve yet to discover him, über-blogger and personal finances guru Garth Turner, with X-ray vision that penetrates the walls of our house, fixes my cozy, pink, showering self with a withering and somewhat contemptuous gaze. Fool!
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Financial Details

From 2004 onward, all mortgage and LOC balances are as of 31 December of the year in question.
.
2003
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage (at purchase, Sep 2003): $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250
.
2004
Mortgage principal: $247,330
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2005 Property Assessment (estimate of market value on July 1, 2004): $420,000
Equity based on assessment: $172,670
.
2005
Mortgage principal: $201,829
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2006 Property Assessment (estimate of market value on July 1, 2005): $461,000
Equity based on assessment: $259,171
.
2006
Mortgage principal: $191,884
Terms: 5 year variable at Prime minus .75%, 25 year amortization, bi-weekly payments
HELOC balance: $4,291
HELOC interest rate: variable, at Prime.
2007 Property Assessment (estimate of market value on July 1, 2006): $570,000
Equity based on assessment: $373,825

.Next Episode
“What About Everybody Else? Getting Priced Out Forever”

In the latter half of the 1980s I was a student at the University of British Columbia, augmenting my student loans by working part time as a bartender in one of the student bars. . . . One evening one of the food prep guys — let’s say his name was Mike — told me that he and his mother had just bought a house on the East Side, the traditionally working class part of Vancouver. . . . I remember the price he and his mother paid: $90,000.

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 1: Greed And Luck

The 2001-2010 Vancouver RE market has affected our city profoundly, and touched many of us in ways that have changed our lives. We started collecting anecdotes here at VREAA out of a fascination for the personal and social effects of the boom.  A similar captivation has led a Vancouver homeowner to write of his own experience, and we are very pleased to bring you his serialized account, with its numerous anecdotes. ‘Froogle Scott’ will share his story of buying a house in Vancouver, and the journey that he and his wife have been on since that day in September 2003. In the first episode, we hear the story of the buying itself. Here begins one couple’s multi-faceted experience of this boom. -vreaa

Part 1: Greed and Luck

September 2003
My wife and I, first time buyers, purchase a 1940s stucco bungalow in the Grandview area of East Vancouver for the asking price of $355,000. This is about a year and a half into the current eight-year real estate boom/bubble. The lot size is 33 x 117, just slightly smaller than standard. The MLS listing gives the square footage of the house as 1860, which later turns out to be a 20% exaggeration. The house is only about 1550 square feet, split over two levels — the main floor, and a two-bedroom, ground-level rental suite. The rental suite is tenanted — a quiet single mum with stable employment and her teenaged son, who look at us with a certain amount of trepidation when we first tour the house. They needn’t worry. We’re happy to inherit good tenants, and do not increase their rent ($560 a month, plus 40% of the utilities) for the year and a half that they continue to live in the suite.
……. We avoid a bidding war because of the listing agent’s greed. She wants to sell the house to her own clients and pocket both ends of the commission (“double-ending”). So she doesn’t have an open house. And the home owners perhaps aren’t savvy enough to demand that she have one.
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Feeding frenzy
The very first house we look at, a beautifully maintained 1950s stucco bungalow with a full-height basement suite in the heart of Grandview, the house we still wish we’d been able to buy, is snapped up at the open house. Nine bids, and a sale price of $402,000, about 9% over asking. In hindsight, not a bad deal. But we’re newbies in the RE game, and our buyer’s agent, a personal friend, is unfortunately out of town that day. When we ask the listing agent if we can come back in the morning with our agent for another tour and to potentially put in an offer, he looks at us with amusement. “Sure. But the house will probably already be sold. Why isn’t your agent with you? Your agent should be with you.” The open house is a feeding frenzy. You can hardly navigate the rooms. A weird tension is in the air, people shooting covert glances at one another, as if to say: “Get out. This is my house.” We’re quickly getting the picture.
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Getting played
On RealtyLink, I find the house we do end up buying. The picture, which highlights a dark smudge beneath one of the front windows, makes the house look crummier than it actually is. Which is probably our first bit of luck. How many people took one look online, and skipped right over it? This time our agent is with us when we show up to tour the house. We see that another couple has already arrived ahead of us. We’d thought we were getting a private showing, but apparently not. The listing agent lets us in, and invites us to look around, but does little more, and then, somewhat unnoticed by us, slips away. A few minutes later my wife spots the listing agent and the other couple whispering together outside, and looking our way.
…….The house is solid enough, but everything about it is a little tired, and out of date. A 1940s East Van workers’ house overlaid with a cheap, do-it-yourself, 1970s facelift. Vinyl peel-and-stick floor tiles. Garish cayenne, and harvest gold, and pink kitchen and bathroom appliances and fixtures. A 50-year-old furnace. The do-it-yourself rental suite is dreary — poorly laid out, with a ceiling height of just under 7 feet. But we tell ourselves: “We can fix it up.” Famous last words.
…….Despite the shortcomings, of all the houses we’ve seen over the past few weeks, this one, with its good location, and comfortably within our budget, makes the most sense. With the memory of the one that got away still fresh, we decide on the spot to put in an offer, subject to a home inspection. But the listing realtor has disappeared. The three of us look all through the house and she’s not there. We finally go out to the street and spot her in the driver’s seat of her car, madly writing, the young couple sitting in the back seat, studiously ignoring us. All the windows up, doors locked.
……. Our realtor strolls over to her window and knocks on it. The listing realtor looks up, startled, as if caught in the act of doing something she shouldn’t be — which, we soon discover, is exactly the case. She hides whatever it is she’s working on, rolls down the window a crack, and screams at our realtor, “You’re trying to look at my offer!” A heated discussion follows between our realtor and the listing realtor while we wait a number of feet away beside our realtor’s car. We don’t really know what’s going on. Our realtor comes back to the car, pissed off. “We’ll have to put in the offer later,” he says.
……. It dawns on us that we’ve been played. The listing realtor purposely double-booked the showing so she could use us as a lever to force her own clients — the young couple — into making an offer. She insists she can’t take our offer at the moment, she’s required elsewhere, and will have to take it “later.” “Later” no doubt means after she’s got the owner to accept her clients’ offer. Yes, this sort of behaviour is against various rules of the real estate profession. But it doesn’t appear to have hurt this realtor. I continue to see her listed among Vancouver’s ‘top sellers’.
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There are no bargains
We go to see another house. A very nice, and large, stucco bungalow near a leafy park in the South Fraser Street area. I love this house. The rooms are big and open feeling. Everything’s immaculate. And the price is just within our budget — well, with a little stretching. But a large guard dog chained up in the yard next door barks incessantly the whole time we’re there. The barks seem to penetrate every nook and cranny of the house. I notice earplugs on the kitchen counter and think that the owner, a nice fellow and a realtor selling his own house, should have hidden those in a drawer. My wife isn’t keen. In a subtle way, she probes the owner about his reasons for selling. Could the dog be one of the reasons? The owner says no, but his face twitches just slightly. I’m disappointed, although I recognize the wisdom of my wife’s sentiments. There’s a reason this really nice house is a relative bargain, and those telltale foam earplugs are it. Outside my wife and our realtor both agree that the owner was lying about the dog. We leave and go for dinner at a restaurant.
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My cell phone doesn’t work
Throughout dinner our realtor works his cell phone, calling the listing realtor of the previous house multiple times. She won’t answer. She obviously knows his number and she’s ignoring us. A feeling of resignation sets in. After looking at numerous houses over a number of weeks, and finally deciding to put in an offer, it’s tough to be blocked out like this.
…….Our realtor convinces us that it’s still worth faxing an offer to the listing realtor’s office. The house may already be sold, but he’s seen a number of real estate deals fall apart at the eleventh hour. The fax will be time-stamped, and in the morning he’ll phone the head of the listing realtor’s office to complain about the treatment we received and if the house isn’t already sold, demand our offer be presented to the owner. We go to our realtor’s office and fax in an offer about 9:30 pm. Two thousand dollars over asking, subject to a home inspection, with a 48-hour time limit. Somehow we figure out that the husband of the listing realtor is also a realtor and our realtor finds out his home phone number. He phones it, gets the husband, and explains to him in a fairly forceful way that his wife better phone us. I’m starting to realize that our realtor’s belligerent side, which I had feared might be a liability, is actually an asset. The phone rings a few minutes later. It’s the listing realtor. Magically, her phone is working again. I’m not sure what she’s saying on her end, but our realtor keeps interrupting her, and repeating in a very loud voice: “IS THE HOUSE SOLD?” The conversation eventually ends. Apparently the house is not yet sold, but the listing realtor has told our realtor that, “Your people shouldn’t even bother. My clients have a hundred thousand dollars in their back pocket.”
……. My wife and I go back to the apartment we’re renting. The next morning, our realtor phones the head of the listing realtor’s office to make sure our offer has arrived, and that it will be presented to the owner. Perhaps more importantly, he goes back to the house and knocks on the door, and tells the owner that we’ve put in a cash offer of $357,000.
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Betrayal
We hear nothing, and two days later our offer expires. We’re bummed out, but we move on. As our realtor says: “Houses are like trains. There’s always another one that comes along.” We start the search again. One of the houses we look at during this period is another stucco bungalow, also listed at $355,000, a somewhat better house than the one we believe we’ve lost, but overshadowed by two larger houses on either side, one of them hideously ugly, and in a less desirable location, sharing a back alley with a busy part of East Broadway. When we’re down in the basement and out of earshot of the owner, the realtor, of the slightly frightening, glamour queen variety, whispers to us, “He’ll take three twenty-five!” The basement is dark, even in the middle of the day, and feels damp, and we’ve both lived in this particular neighbourhood before. We pass.
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There’s a hole in my pocket, dear Liza, dear Liza
Two weeks later our realtor phones. Are we still interested in the Grandview house? The listing realtor has phoned our realtor (on the explicit instructions of the owner, we later find out) and she’s interested in presenting a renewed offer from us. Apparently the young couple’s financing has fallen through. I guess there must have been a hole in that back pocket.
……. A little more hardened by this point, and wanting just the slightest bit of revenge, we offer asking price, rescinding the extra two grand we had previously offered. The owner accepts.
……. The home inspector gives the house a passing grade, although he tells us that he got an elevated moisture reading in the back corner of the suite kitchen and that we should keep an eye on it.
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Dumb, but lucky, and getting handed a house on a plate
If the timeline for buying a house had been solely up to me, we would have been quickly priced out of the market for centrally located single family residences. It would have been a centrally located townhouse or condo, or a modest house in the burbs. Only recently back from seven years in Ontario, with a much more sedate real estate market at the time, I was all about careful looking and comparing, taking our time, microscopic home inspections, lists of mandatory and nice-to-have features, researching neighbourhoods, becoming an expert in “the perfect mortgage,” and so on. I wanted a nice, hundred-year-old “character house” with maybe a bit of fixing up required. (Ha! I shudder at the thought now…) Growing up, I’d hated stucco bungalows. My wife, who’s lived in Vancouver all her life and grew up in a Vancouver Special, was a little more in tune with the reality of the RE situation, and gave me enough kicks in the butt to ease up my natural cautiousness and agree to pull the trigger.   So I wasn’t smart about timing. I was dumb, but lucky. And by trying to screw us out of the house, the listing realtor actually handed it to us on a plate — in the middle of one of the most incredibly overheated housing markets any of us have ever experienced.
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Financial Details
Asking Price: $355,000
Sale Price: $355,000
Down payment: $88,750 (25%, ergo, no CMHC insurance, representing thousands of dollars of additional cost)
Mortgage: $266,250
Terms: 3 year fixed at 4.00%, 18 year amortization, bi-weekly payments
2003 Property Assessment (estimate of market value on July 1, 2002): $260,600
2004 Property Assessment (estimate of market value on July 1, 2003): $330,500
Equity based on assessment: $64,250

Further episodes of The Froogle Scott Chronicles will be posted at regular intervals over the coming weeks. Comments are welcome below. – Froogle Scott & vreaa

Next Episode
In the three years following the purchase of our house in the fall of 2003, its assessed value increases by 72%, or almost a quarter of a million dollars. This windfall changes the way I think and feel about money.