“Alexis Lum is building a laneway house in his parents’ backyard for three reasons: It’s more affordable than a two-bedroom apartment; he can rent it out if he decides not to live there; and he can have privacy and independence from his parents, while being close enough for regular family dinners.”
“I do love mama’s cooking,” he said, adding that he’s sharing the investment with his brother, Antoine, 31. Lum, 28, is a French secondary school teacher at Southpointe Academy in Tsawwassen.
Lum’s situation is pretty typical: laneway houses have been allowed in Vancouver since 2009, and usually they are built as a way for parents to help their adult children get into the pricey Vancouver housing market.
Lum grew up in the Dunbar house behind which he’s now building the laneway house for about $270,000, and he’s really excited to get the keys.
“I love it. It’s absolutely fantastic — it’s a beautiful, small house,” Lum said of the two-bedroom home in his parents’ backyard.
Michael Lyons, vice-president of marketing for Smallworks, a builder of laneway homes in Vancouver, said that at least half of his customers are building these small houses at the back of their lots for the next generation.
“They can’t afford to buy in the neighbourhood where they grew up. People want to stay close to their family,” he said.
The cost to build a laneway home averages between $250,000 and $270,000; that price includes preconstruction costs of $11,500, excavation and site work of about $30,000 to $35,000 and another $175,000 to $200,000 for the construction, Lyons said. “By the time the dust has settled, you’re in the $250,000 to $270,000 range.”
“With the benchmark price for all residential properties in Greater Vancouver sitting at $679,000 and housing affordability a significant problem in the Lower Mainland, a laneway house could be considered a bargain.”
“We made a decision to support laneway homes as a way to make home ownership more affordable and also to build up the city’s rental stock,” said Colin Lawrence, mortgage development manager at Vancity.
The next generation can get the financing themselves and pay the mortgage, Lyons said, adding that right now a laneway house adds about $300,000 to the value of a property.
For homeowners looking for rental income, a laneway home would also be a good investment.
The mortgage on $250,000 would cost about $1,200 a month, Lyons said, but laneway homes can rent out for as much as $2,000 a month on the west side, or $1,700 a month on the east side.
“Basement suites are renting out for $1,600 or $1,700 a month for a two bedroom on the west side of Vancouver,” he said. “It’s not surprising that a detached house — where you don’t have to live below someone with their kids running around or playing piano above your head — would rent for more.
“You’ve got lots of light, you’ve got two floors and you’ve got two bathrooms. Of course it’s going to be valuable.”
– from ‘Laneway eases path to ownership’, Vancouver Sun, 7 May 2012 [hat-tip Yalie at vci]
All part of the ‘This Is Vancouver; Accept Less For More’ ethos.
We dare anybody to attempt to justify the $270K cost for that structure, sans land costs.
Entire actual houses cost that or less all over the continent.
We’ve collectively gone completely insane.
Group hysteria. Emperor. Clothes.
And it goes without saying that the vast majority of these 500sqft structures will be built with ‘equity’ ‘extracted’ from the fantasy value of the main house, via HELOC.
“Adds about $300,000 to the value of a property”?
Let’s talk once “the dust has settled”.