Tag Archives: RE_ATM

BOC Raises Rates By 0.25% – “Housing activity is declining markedly from high levels, consistent with the Bank’s view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010.”

Okay, we agree, but now what? ‘Policy stimulus’ has sucked forward demand from the future. In the Vancouver RE market, this has been happening steadily for the better part of a decade. The super-cheap money of the last two years simply fueled the final frenzied blow-off in the process. We now have less demand, high inventory, rising rates, and prices still in the stratosphere, gasping for oxygen. This can only result in ongoing price drops. We seem to have peaked in May [2010]. – vreaa

From the bankofcanada.ca 20 Jul 2010

“The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent.”

“Housing activity is declining markedly from high levels, consistent with the Bank’s view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010.”

“I have often wondered how many of the locals are genuinely well-off and how many are just indebted to their eyeballs.”

Agreed. Debt is invisible. And knowing the actual numbers would be fascinating. As it is, the best we can do is patiently wait, and see what happens when the tide goes out. -vreaa

Jon B at greaterfool.ca 11 July 2010 11:28 pm

“Cruising the streets of Ambleside and Dundarave in West Van I have often wondered how many of the locals are genuinely well-off and how many are just indebted to their eyeballs. It would be very interesting if one could identify the true ratio.”

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.”

“This weekend, using the equity of their Commercial Drive property, they purchased a $1.7 million house in Mount Pleasant area after looking at it for an hour.”

Leverage. Works great on the way up; Not so great on the way down. If this couple, who appear to have ridden one property up, now ride two properties down, they will very rapidly obliterate their paper gains. -vreaa

Game_Over at vancouvercondo.info 26 May 2010 11:45 am

“My fiance’s co-worker has a home near commercial drive with a laneway house on the lot. They rented out the main house and lived in the laneway house for years. This weekend, using the equity of their commercial drive property, they purchased a 1.7 million dollar house in Mount Pleasant area after looking at it for an hour. Naturally my fiancee respects this persons real estate savvy as he has been so successful in the past.”

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.
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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.
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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

“My father is now in an old folks’ home, and, due to some poor choices, there is still mortgage owed on his property. My idea is to build the biggest house possible with 3 suites possibly 4 with the laneway house. The only issue is we don’t have that much money to build at the moment.”

Points that arise from this anecdote: Retirees have mortgages too. A good number of Vancouverites have a lot more than their entire net worth tied up in RE. Amateurs are still attracted to the idea of developing or landlording. -vreaa

instigator at RE Talks 22 Apr 2010 10:08 am

“Nanaimo & E 4th. To build or Sell: Predicament. Well my father is now in an old folks’ home, and, due to some poor choices, there is still mortgage owed on his property. My sister is currently paying the monthly payments. The house is very old, over 70 yrs, and could be called a character home but we all know character home designs are usually out of date with modern living and just not as efficient. Pretty much the house is not in the best shape either. My mother who is divorced from my father wants her (us) to sell the house then take the money and buy a townhouse or apt. in burnaby near metro for sister. I own 2 but not in Vancouver.
My idea is to build the biggest house possible with 3 suites possibly 4 with the laneway house. The only issue is we don’t have that much money to build at the moment unless I liquidate one of my other properties.. or unless I can get a LOC on the one property I don’t have a LOC on. I figure I can build a brand new but nothing fancy or luxurious home. No granite no special tiles or hardwood. Just basic stuff.
What do you think is a good selling price for a new home in this area? I’ve heard of new homes selling for over a million just because they are new in Vancouver. My reasoning is that for a bit of work in construction the profit would be way more than just selling the house as is. Anyone have any advice?”

“Dream House” Urgency; Overextended Buyers; Grow-op Jeopardy; Unaffordable Renos; Price:Rent Ratio 400:1 – All in a Single Anecdote

We are in agreement with oldtimer at VREAA 8 Apr 2010 9:22 am

“Sometimes people are willing to ruin their lives on a whim. Case in point, a couple who were determined to buy their “dream house” before they were forty. They purchased the house next door to mine in Arbutus [Vancouver Westside] for $834,000 three and a half years ago [2006]. It was superficially updated but, as I told them, it had been a massive grow-op, plumbing removed, vents put in weird places, wiring screwed with. They checked with the police who verified the grow-op status but bought the place anyways. After spending over $100,000 to remediate (and that didn’t include a new kitchen) they finally went bust and the house was sold last summer for about $950,000. The new owner tried for three months to rent the place out and didn’t succeed until December (rent – $2,500). This is what I consider to be a sign of the insanity of Vancouver’s real estate market.”


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

Yaletown Penthouse Foreclosure – “How is it possible for this guy to be in foreclosure if the price has tripled since he bought? Couldn’t he just sell the place, pay off his mortgage, and still have a few million left over? The answer: HELOC.”

This from Anonymous at robchipman.net 25 Mar 2010 11:56 am

“I have a friend who rents a Yaletown condo. He told me that the guy who owns of one of the penthouse suites is being foreclosed on. Now, this is no ordinary penthouse: 3 levels, multiple rooms, 360 views, spectacular. Bought in 2002, it has since tripled in price. Don’t know exactly how much it’s worth, but it’s in the multiple-millions. So, how is it possible, I asked, for this guy to be in foreclosure if the price has tripled since he bought? Couldn’t he just sell the place, pay off his mortgage, and still have a few million left over? The answer: HELOC. This guy managed to squander several million dollars of a home equity loan in a few short years, and now has nothing to show for it (all of it, incidentally, likely insured by CMHC).
This kind of story goes a long way to explaining the faux wealth in this city – no industry, low wages, yet everyone has the appearance of wealth. And although this is just one anecdote, that stats show that BCers are more heavily in debt than any other time in history, i.e. this is not an isolated or rare occurrence. We will be hearing many more of these stories in the coming months; it’s going to be ugly.”

Overstretched; Living In Debt… And We Haven’t Even Started To Crash Yet.

pricedoutfornow at vancouvercondo.info 26 Feb 2010 9:43 am“I went to an Olympic event yesterday and happened to hear some people behind me talking. They were from Nova Scotia, the person said “We’re never going to do this again, so we’re spending like there’s no tomorrow, really racking up the credit card! But it’s a once in a lifetime opportunity, so why not?”

Vansanity at vancouvercondo.info 26 Feb 2010 10:33 am – “I know tons of people doing exactly that! They’re partying hard and the common theme amongst them is that they’re not going to worry about what their credit card statement looks like until its all over! It should be interesting to see the debt figures come up a few months from now. Also, I know someone who recently bought a home and is now $700k (+) in debt. His family income is somewhere around $100-125k per year. Couple kids, $3,000-$4,000 per month on house costs. Financial stress, mental stress, physical stress… sounds like a great plan. I should mention that they both came close to losing their jobs sometime ago. I’m so happy I’m not living “house poor”. We’re planning our vacations for the year, looking at 4-6 weeks away, Europe, Hawaii and Jamaica, few trips to Vegas in between to maintain the tans. It’s really rough being a renter.”

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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https://vreaa.files.wordpress.com/2010/02/fsc_chart_e03.png
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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

Housing ATMs In Vancouver – “The number of times I’ve listened to individuals discuss how they’ve magically turned their ‘paper gains’ into ‘expensive toys’ is quite unnerving.”

This from advar at RE Talks 24 Feb 2010 2:49 am

“I cannot help but shudder at the prevalence of this particular disposition [to spend personal residence paper profits by taking loans]. Amongst my colleagues at least — well educated people even. The number of times I’ve listened to individuals discuss how they’ve magically turned their ‘paper gains’ into ‘expensive toys’ is quite unnerving. HELOCs are tantamount to the discovery of Shangri-la it would seem. Anecdotal I know. But from where I’m positioned, it’s ubiquitous, and it’s frightening.”

“Debt is invisible but your beautiful home and toys are there for all to see.”

This gem of a bubble quote from Krashproof at greaterfool.ca (12 Feb 2010 6:44 am). We couldn’t resist archiving it. –

“Debt is invisible but your beautiful home and toys are there for all to see.”

“As an accountant I see lots of financial information. People who earn $40k per year shouldn’t have $700k in debt. They’ve taken out mortgages to buy principal residences, and then added a couple of rental properties for good measure.”

From anonymousAA at vancouvercondo.info 9 Feb 2010 11:10 am

“It’s tax time, and as an accountant I see a lot of financial information. I really don’t like what I’m seeing. Excuse me, but people who earn $40k per year really shouldn’t have $700k in debt (and that’s just the mortgages!) And it’s not just one or two clients, it’s quite a few. They’ve taken out these mortgages to buy principal residences, and then added a couple of rental properties for good measure. Ever get that sick, worried feeling in your stomach? Yes, this would be one of those times.”

Victoria – “And you think we have not created a casino mentality?”

This anecdote is third hand. It comes from a speculator in Victoria, and has already been headlined at greaterfool.ca, and commented on, there, by Garth Turner. It deals, however, with a sentiment that is so seminal to the Vancouver bubble that we have felt moved to archive it here. -vreaa

“I bought a new condo, 2000 sq ft, facing the ocean on ocean frontage in 2007 for $1,200,000 A rental agency has advised me not to take short term tenants since possible damages to the condo may deflate the value. I partly financed by taking a conventional mortgage on my present home property for $875,000 prime minus .69%. Current rate is 1.56%. My home property is appraised at $1,700,000 (2007).(Prime ocean front). I rejected an offer of $1,600,000 in 2008. The market is firming up again in the Victoria area. We intend to move to the condo when the house is sold. My question: I would love to deduct the mortgage interest on the condo! How can this be done?”

[Garth Turner comments – “Just to put this in Dick-and-Jim terms for the feds: Guy with inflated property borrows 50% of its value to buy a spec property with 72% financing. He is able to get a mortgage at 1.56%, which is the current rate of inflation, which also means the money is free. Guy is a tool. His action serves only to pump up real estate values further, thanks to absurd interest rates, orchestrated by the Bank of Canada. He now wants to deduct the interest on his free mortgage money from his taxable income, which means other taxpayers (who don’t have $2.7 million in real estate) would pay half his costs for him. And you think we have not created a casino mentality?”]

“How much do your neighbours owe on their mortgage?”

Many Canadian home owners have borrowed money against the increasing market prices of their homes. These title search examples are from Toronto. We’d expect there to be many such examples in Vancouver. -vreaa

From the Globe and Mail 28 Jan 2010 1:16 pm

No. 17
Purchased by Dave and Chloe in January, 2004
Paid: $1,284,912
Mortgage: $300,000 (five years, 4.89%)
In 2009, the couple took out a second mortgage for $600,000 (“on demand,” prime plus 7%)

No. 37
Purchased by Rebecca and Domenic in December, 2006
Paid: $1,129,948
Mortgage: $730,000 (five years, 5.25%)
In 2009, the couple took out a second mortgage for $500,000 (“on demand,” prime plus 6%). A third mortgage was secured in November, 2009, for $580,000 (“on demand,” terms unknown)

No.18
Purchased by Geoffrey (all names have been changed) in April, 2004
Paid: $1,440,059
Mortgage: $1,275,000 (five years, 0.24% below prime)
Monthly payment: $6,555.17
In 2005, Geoffrey took out a second mortgage for $4 million (five years, prime plus 5%), secured by 200-plus acres of property north of Toronto.

“They went to the ‘RE-ATM’ to do repairs, but only spent half the money on fixing up the house.”

These responses came to a vreaa request at RE Talks (22 Dec 2009 10:32 am) for stories about Pre-2000 owners who have borrowed more against their holdings as prices rose.

Danigirl 22Dec 2009 12:36 pm“I knew one person (closely) who increased his mortage every time he re-mortgaged, for at least 2 go-arounds I am aware of. I believe he even broke the mortgage once in 2005 or 6 under the guise of “getting a better rate” and “just happened to consolidate” some debts into the mortgage at the same time. My best guess, he was going backwards close to 20K a year for at least 5 years, and figured that’d all be fine because he bought his house 20 years ago and, it covered the debt. On paper it did, but, he was mining his equity out far, far faster than it was re-growing.”

underdog 22 Dec 2009 12:54 pm“I have a neighbour whose rental in Surrey was discovered being used for a grow-op about 18 months ago. They went to the ‘RE-atm’ to do repairs, but only spent half the money on fixing up the house. Since the husband was laid off from the construction industry, the rest was used to ‘supplement’ income. Talking with the tenant, the house was ‘assessed’ again 7 months ago and another equity withdrawal was made, ostensively to do more repairs on the garage/deck. The repairs they did were laughable (not hard to see why the husband is still out of work if his trade is construction) and everything done on the cheap. The tenant says the landlord was going on about how times are ‘tough’ with the husband out of work. Three weeks ago the tenant was advised they wanted to set up another assessment for another ‘withdrawal’ on equity. Landlord is hoping home values (withdrawal limits) have gone up. My understanding is they bought the place for $200,000 and comparable homes in the area are now selling for $475,000. Tenant says landlord seems to think bank should be appraising at $500,000 – $520,000, so I suspect they have maxed the home atm to the $475,000 amount – at the very least. Tenant also commented that landlord was convinced that rates would not be going up for a very long time. I’m willing to bet they are the equivalent of a 0/35 borrower right now.”

canadian 22 Dec 2009 2:44 pm “I know this family, bought a mega-mansion and a rancher since husband is in mortgage industry and seems to making a huge moolah. Moved to mega mansion and rented both rancher and their old house. Come on, who sells real estate in lower mainland? It only goes up! They saw me as some kinda alien with 3 horns and 1 eye when I spoke my mind out about why I am not buying. Just a year ago – the hubby had a constipated look on his face – as everything was not going as per his plans. Now it seems that the valve down there has been opened good by Carney-Flaherty-CMHC trio, so he is back to his standard rumblings about how [price drops] would never happen here. He gave me that “35% drop? are you crazy” look. “