Trash. Cheap to dump but expensive to fill

A recent journey to the dump left us 1.5 metric tons lighter and with a clean job site too. In exchange we had a bill for a mere $130 for the pleasure of dropping that hefty load of crap. But what was the true cost of the garbage? It represents the off cuts of perhaps $50,000 of useful raw material, plus the associated packaging and debris. What would be interesting would have been to have weighed all the delivered product to date and then take the 1.5 ton of trash as a % of the total. Have we installed 15 ton of product, or 30? If we spent 50k on stuff, and it weighed 30 ton, that indicates the trash value would have been $2500. The stuff inside the bin, particularly the engineered product off cuts and the wood waste was really valuable. Of course once cut, the bits left over are nothing but pricey trash. Despite the reality that the stuff in the bin is in the bin because it is useless enough that someone wants to pay to get rid of it, it still hurts a lot. Is there some way to reduce wastage, deliver precisely sized material so cuts are eliminated, recycle more, or burn clean wood? Perhaps there is but those tactics will be less satisfying that dropping off a heavy load at the dump and leaving an empty bin behind to refill with trash from the next stages of the build.

1.5 ton of trash slides out the dump trailer. It cost us likely a couple thousand to fill the bin, but only $130 to dump it. Is it worth the time, fuel, effort and cost to have a truck and trailer just to be able to haul around some trash? Bin rental and hauling can add up to be a serious cost by the end of a project if not managed carefully. The builder will end up hauling air to the dump when it is filled poorly, or losing valuable material that should never have been trashed in the first place.

What I would like to build but can’t due to ‘bylaw regs’

First of all I’m in a good place right now, doing the projects I want to, where I want to do them, working with people I like, with a massive pipeline of product in planning. Beyond this, I seem to be continuously stymied by what is possible, given enough energy and battling (which I actually lack the stomach for), and what seems undoable. I’ve also been looking into the past more and more for inspiration of what worked before, endured, and thrives in the calgary climate, which is incredibly harsh and damaging to wood structures. The past contains a practical element of grace and simplicity, and never relied on tech or wonder products to combat the elements. Until such time as a new building bylaw is created that is far more permissible, anything other than the building types we know today (singles, semi, townhouses) is a big costly gamble.

New project

Is it just short attention span or getting bored with the same old thing? So much of a calgary project is driven by compliance and rules and fees and bureaucracy. The city falls short of recognizing that adding process is just layers of busy work that adds zero to project quality. We’ve been looking to do something different for some time. Will the peripheral communities offer a greener grass for us to develop? Or will it be more difficult?

Will Calgary affordability decline along a similar path of the key Canadian cities?

First off, I believe the answer is no. The distinguishing feature between Calgary and the other markets is how much product has been able to be built and how responsive the building industry has been (in the past) to demand. Add in a lesser amount of power and political control via the NIMBY crowd, less natural constraints (like oceans), less foreign money laundering distorting prices, and a municipal government that can actually get projects approved in a reasonable (more or less, some of the time) pace, the Calgary market is just different. Historic wage strength has always been on the side of the buyer, and material cost (in the past), also helped affordability tremendously. The recent trend toward massive construction of permanent rental housing also can act as a pressure relief valve by opening more supply and loosening up vacancy among existing rental stock.

Headwinds to Calgary affordability include the hot 2022 market, rising seller expectations that their home is a gold mine, labour and material shortages, and momentum of being inside a hot market, attracting a lot of out of town investment (Ontario) dollars. This plus rising mortgage rates may temper the amount of building that can be done, but dampen price increases simply because the payment will rise along with bond yields.

All of these factors I believe will nullify ongoing major price gains, particularly rising interest rates. What is a bit of a wildcard is the ambitious asking prices that homes are being listed at. As we are now in the midst of a hot selling season, homes are being listed at very high asking prices, that appear to not reflect fundamental value. Do balanced conditions await the future Calgary market?

Is this a sign of affordability issues to come? Or an outlier?

Craziest home building story ever posted to all major media outlets

It is hard to let this one go without comment. A builder allegedly neglected to take out building permits on a couple projects, then finished and sold most of the units. How this passed through the various responsible entities that process deals I have no idea. The paperwork requirements are significant and hard, at best, or impossible to overcome without agreement from various government departments. The worst case is these homes would have to be torn down because no engineer would be inclined to offer as built drawings of concrete and rebar installations. No inspections can realistically be done for plumbing and electrical in completed homes. The city can get very tough when it is publicly made to look foolish in the media, although how can city inspectors inspect a house they never were invited to attend?
Another bothersome issue with these alleged scammer builders, they buy and build on property which takes away opportunity for legit companies, driving up land value. Do these alleged scammers collect gst on sales and then flee? How cheap can you build if you don’t have to pay for permits, warranty fees, engineers, inspections, and suffer procedural delay? How many corners can be cut when building? This is a story that will spawn a lot of rumours and gossip among the builders for years to come. Hopefully no home buyers are put in awful positions due to the actions of the alleged scammers.

Fees in Toronto

Was browsing a proposed fee schedule for builders in Toronto. The cash requirements to do business there are simply massive. Imagine a fee of $460k to build a fourplex. Talk about risk and carrying cost on top of everything else that goes into building infill houses. At this level of fees, you’d wonder what value the city provided to justify the cash windfall. Will developers abandon the city? The city employees behind this fee structure must be really disconnected from the building industry if they believe these large fees can be absorbed. Hopefully these fee ideas are not a contagion adopted by city hall in Calgary.

Tough year for pace of work

It is always a relief for the builder to get out of the ground, that means concrete walls, inspections, subfloor install and finally dirt backfill. This puts us right at the stage where everyone else is, paused and needing framing labour. Perhaps the highest demand trade right now, the framers are super busy. This makes it really tough to get to the portion of the build where control of the schedule is more within the power of the builder. So we will play the start/stop game for a while, until we can get to lockup.

progress

some amazing production from a grade A level crew. to go from a hole in the ground to stripping off forms in 5 days, to having a sub with the confidence to order concrete for delivery before the form work has started. it is no exaggeration that a lesser crew could have doubled or tripled, the time on site, more cost, risk of problems, and delays would be certain.


Is anyone willing to roll the dice on a potentially contaminated site?

edit - November update, this one was posted as sold I would love to know the terms of the deal and the assumptions made regarding liability of potential contamination from the old gas station

I believe the standard contract requires disclosure of material defect in a property. A pretty significant defect would be contamination from the former gas station next door to your project. Should a property such as the one shown below even be allowed to marketed without a phase 1 or 2 assessment completed? I’d argue no. For the listing realtor to say they don’t have any environmental reports yet wants to sell anyway should create a serious liability for defect related compensation. But does it? If this property sells to someone and contamination is found, what happens next? While I believe this property is currently untouchable, if I did own it, I’d probably commission a drill crew to take soil samples to at least provide some information. If that sounds like no fun and expensive, you’d be correct. At that point you’d offer some certainty on a major deal breaker. Right now is there a buyer for this land?

Time to do something

In the tricky world of real estate development it is best to make the best call given the info you’ve got, and try not to look back with the benefit of hindsight. Always, there is some item that comes up that is sort of like ‘had I known x I would have done y differently’. In this instance, I have a house and I have been wanting to build on it for years. However, there was always an issue or something came up and it got pushed back over and over. The carrying cost on this land has been enormous and it is now vacant and ready to go. The first call is to proceed to demo, and then subdivision. I will start the wheels in motion on that and see where the process leads.

RCG rezoning, the never ending saga, the most politicized ongoing crapshoot in Calgary infill development

Edit - this post is getting very dated and lots of Rcg policy is more permissive as of 2024. Will leave the post up as is permanently and won’t revisit the content

When the former council introduced the RCG zone (the rowhouse zone), it was a patch, or a workaround to the archaic and inflexible land use bylaw that controls redevelopment in the infill areas. Lacking the means or political will to do the work of creating a new bylaw, the RCG chapter would at least become a meaningful stopgap measure until such time (a decade or more) that the new bylaw could be crafted. While flawed, because each land use change for the tiniest lot needs a vote by the full council and mayor of the day, instead of being approved based on criteria created by the planning department, it was a quick fix to introduce a ‘built form’ that the R1 and R2 areas could not. The outcome, years later, is more like a perpetual battle of urban planning guerrilla warfare, where the side of ‘goodness’, the anti development forces, line up and do battle against the evil developers, in front of the power brokers of council. It has now degenerated such that the same tropes are dredged out each application, anti-rcg bingo can be played in advance of reading any public submission. This is all tiresome to the max to any jaded industry member. After enough applications, the votes of each on council can be predicted in advance, most of the time. For applications where the locals can come up with a critical mass of petitions, letter writers, and hearing presenting attendees, some on council can be unreliable voters as they become inclined to forget policy and are swayed by emotional argument. Situations where the applicant has zero certainty on the outcome occur. A recent Killarney vote followed the script and resulted in an 8-7 vote in favour of the applicant. Notably, Councillor Walcott showed a willingness to vote against his own constituents to support the RCG file. That was somewhat of a surprise given the volume of voters that will remember this come election time.

The solution needs to be a broad policy backed by a new bylaw. The RCG (actually rowhousing) needs to be allowed everywhere, fairly, distributed in each infill community, or nowhere. At this stage of society and its need for housing, particularly affordable ground oriented rental that isnt in sprawl areas, it seems unfair to politicize this type of development. The more politically powerful communities put up a better defence and this will create areas where the old land use patterns are frozen in time, while the ‘go zones’ become chronic construction sites, with the associated noise, mess, and hassle. The city planning department favours moving on from the rigid hierarchy of the R1, R2 style and go toward ‘something else’. This would merge the zones into a built form based regulation of housing intensity. I favour this option, but not the amount of time and energy it takes to get there. Is there another temporary stopgap measure, such as simply abandoning the R2 and RCG zones, and combining them into a new, more permissible class?

This was a really tight vote. Often these pass 12-3, where a few predictable members vote against any change in land use. I don’t see why a small rowhouse file should be voted on by the full council anymore. this is a 50 ft war reminiscent of the old secondary suite battles that took a decade to fix.

Inglewood brewery lands update

update - there is a downloadable file from the applicant that contains 50 plus pages. Check it out for exceptional historic details, green space drawings, and an engagement timeline. It sounds like a year long process until the final public hearing early 2023.

After much anticipation, information on the brewery lands is now available. sounds like a big launch in March of some engagement and filings already made at city hall. That’s great news. So much potential and the market is maybe even good enough to sell a huge project like this too.

https://mgcp03.engage.squarespace-mail.com/r?m=620ee187e8e0c66cea9120ca&u=https%3A%2F%2Fwww.BreweryRailLands.com&w=611fd8b3ecdf6c512c9e298f&l=en-US&s=DEj7kg9fX1UxsHMvgKoqH9Md3JA%3D

Notable sales and advanced math

Noted a few more noteworthy sales, some defying my math skills. For most of these sales you’d like to meet the buyer and learn from their assumptions. Past experience suggest some of these deals will prove disastrous. Past experience can be wrong too. This buyer may be a real estate Nostradamus and in a year we will be commending him on his real estate wisdom. Offering 140 k over the list price (which seemed realistic) couldn’t have been the easiest thing to do without a matching confidence in market outlook and builder capacity. I lack both characteristics relative to these buyers. What do they know that I don’t? The current mantra is ‘out of town buyers from Ontario’, ‘market will rise 20%’, ‘oil is going to $200’, ‘interest rates will never go up’. All of this cannot be true because these prophesies will shift market conditions but result in a feedback reaction to revert to the long term trend. Anyway it is interesting to watch.


thoughts on revolutionary new construction products, techniques, and systems

The industry is filled with innovation, the home builder, looking for an edge, may be seduced by revolutionary products that appear, surficially, to ease a pain point, save time, lower cost, perform better, ‘green’ it up, reduce waste, and so on. My experience of these, sadly, do not often concur with the marketing material promises. If the new product is so good, why was it not developed many years ago and already become a standard practice? If the new and improved product currently holds a fraction of the market share, but was truly better than the conventional approach, it’d be subject to mass adoption in a hurry, and by now be the status quo. Here is a series of comments on why these products fail to deliver;

  • cost savings - these do not materialize vs standard techniques that have been optimized over decades of installation. standard techniques can be so perfected there may not be some ‘revolutionary’ new process that can be measurably better.

  • ancillary benefits - the new product comes with bold claims of savings or economies down the chain, however, the person making the pronouncement of savings does not actually have real data on what the savings are. Thus the savings are overstated and cannot balance out the higher cost new product

  • time savings - same as above, except trade cash savings for time savings. the proponent of the new technique isnt aware of how quickly the work can be done using standard methods. if they knew more about how the schedule looks, they’d see there isnt any real saving of time, and often the new technique can take longer

  • overhead - the new technique has more overhead, factory production, modular, more shipping, more craning, premium materials embedded, higher cost and lack of scale. the standard technique is so optimized it allows that business to pass on less cost to the builder

  • overstated performance - the bold claims of improved performance dont live up the billing, or they don’t appeal to the market so the performance could be better, but the standard technique was already performing well enough that it was never a problem.

  • unfamiliarity - some training or teaching is needed to execute the new techniques, and it does not appeal to those who’ve perfected a different craft and are hesitant to invest in a new way

  • patent costs - royalties, tributes, marketing fees, etc, there are often costs with the new product that go to its inventor. the standard technique is not proprietary so anyone can use those methods or materials free of charge.

  • intangibles - the new product comes with it intangible benefits that don’t delivery tangible results, other than ‘good feelings’ or ‘green credibility points’.

  • benefit recipients - if the new system is beneficial, the builder, who is paying, may not actually receive a share of the benefits, but has to pay the higher cost up front.

  • risk - the builder may have a risk averse perspective on the new product

  • relationships - the builder has a long standing deal with the old guard, and isnt interested in a change that could harm pre-existing relationships.

  • only works in exceptional circumstances - where the new products can win is far from labour centres (rural) in a hard to get location, where extreme performance counts (net zero etc), or when budgets are so high that cost is less of a factor than branding, prestige or pace. I don’t encounter these circumstances routinely, in fact I avoid these situations. If a product only works if it needs to be deployed in a special circumstance, it wont reach mass adoption, even if it is better.

Given all these legitimate reasons to fear change, a new product has to overcome significant inertia of how homes are currently built, to gain any market share from the tried and true operators. Some of the dominant players may possess a level of business mastery and optimization that offers them the greatest defence of all against new competition, $.

Market has moved…and left me in the dust.

I used to curate the odd notable sale. Now the notable sales are posted daily, so they aren’t notable anymore. This indicates a market that has moved very quickly, and in the process left me behind. I don’t think I’m the only one that feels this way regarding market risk and overvaluation of land. My builder friends are sending back comments like ‘omg, wtf, crazy’. I have a definite sense of dread and dejavu on the market. Land has reached tops before, but the materials are now obscene with some products being 6x their former price. I don’t see retail buyer willingness to vastly increase their budget, but, it does seem the Ontario and BC FOMO real estate contagion is now impacting the Alberta market. From their perspective, Calgary is a cheap bet. I don’t need to be right but I do need to survive and I’m taking a wait and see approach on these crazy math land deals. If housing prices for finished models goes up 10% in 2022, and stays elevated, then the game really has changed and I will revisit my strategy. My Bridgeland and Inglewood projects literally cannot be touched by todays builder from a cost perspective. A true luxury in this market is the ability to site on the sidelines and focus on execution of the pipeline rather than being desperate and making a huge mistake.

How I got my permits for a new custom home in a historic infill area, quickly

“EDIT - a lot of the work is a credit to the design shop, they did a good job. It is their knowledge of the local customs that greatly smoothed the process. I may have steered the ship but I didn’t do any heavy lifting on plan prep. Despite this I have a lot of pre construction service embedded in the job, so much that I could hardly afford to pay a professional person to do it. Starting projects always reminds me how much work it is to build one single home, I’m impressed by teams that can do dozens of builds per year”.

This is not a post to describe how smart I am, though I have learned a few things from 25 successful custom infill projects (while suffering a fair bit of trauma along the way). How was I able to get a released development permit in under a month (for a full 2700 sq ft house and detached garage), followed by a comprehensive building permit in around three weeks? Horror stories abound in the industry regarding the DP side, where permits get tied up in purgatory for years. We deployed a few tactics for sure, and what we did worked. That in itself is quite impressive to me. Often even when you (as the applicant) do the right thing, you can end up eating a hammer. This time we breezed through to approval without having to incur cost for changes and delay. Time value of the delay hits home big time, I have huge overhead costs on my land inventory which runs into an opportunity cost on trapped dollars, that hurts when, self employed, you don’t take home a biweekly paycheque when projects go over time. Other fringe benefits abound with this project, first we didnt have to pay an offsite levy, generally that is $5k on my typical project, nor do we get hit with asphalt degradation which can be another $3-5k. The additive value of the stamped permits also have increased its value from raw land, to a turn key development site, in exchange for around $16k in design, DP and BP fees, warranty and filing cost. All of this is starting to feel really good, because my $400k empty lot is in a coveted area, extremely appealing, and fully in my control as the builder.

Here are the tactics used to accelerate the permits and avoid vast pain at the development stage:

  1. contextual route - the discretionary permit path simply adds more review time at the city. we made the conscious decision to stick into the box set out by the contextual approach. that meant all setbacks, heights and coverages hit the mark, boxes are ticked by the planner and we move on.

  2. permitted use - the submission of a project in the ‘permitted category’ facilitates a pathway to ‘yes’ that needs less advertising to the general public, a major time saver on this one. No need to advertise approval because the permitted use is ‘not appealable’. Another benefit of the plan from the outset, it didnt get appealed. Often a neighbour will not like the project you are planning and file an appeal. That is tough issue because you must hire a lawyer, wait for a hearing, and so on, that cost is very large and potentially deadly to the project.

  3. no errors of substance on the DP submission - avoiding using up the planners time on issuance of a lengthy bylaw check and detailed team review where many issues come up that are our fault. A common issue is calculating the site coverage, somehow the math is different depending on who does it. No relaxations means no haggling over bylaw interpretation either.

Next up was the building permit stage. This is simply an easier process, if you have the right files (all of them and there are many), you get approved. The right engineer helps smooth over any hurdles and engaging the consultants early (once your DP is nearing readiness), you can actually shave weeks off the overall process. that means sequential work is happening on the BP while the DP is in pre approval. You can commission the technical files once you have certainty that the project will be a ‘go’. I was able to reduce the time from DP approved, to BP ready to file (I narrowed that gap massively). More specifically;

  1. relationships - be on a first name basis and have the cell number of the key 3-4 parties you need to hire to get the BP assembled. All of these consultant types delivered my needed files in reasonable time. Will detail below what those are.

  2. structural drawing package (roof and truss) - this is the bottlekneck of the industry. The staff at the lumber yard are inundated with work, and they can’t get to your drawings fast enough to turn them around. This has been a challenge now for years, and recently become acutely problematic. I don’t get it, the one truly white collar job in a blue collar business and it is the slowest? This is work that can only be done with proprietary software by the dealer, no shortcuts (we looked into it). Here is where we leveraged some relationships to have ours done with haste. Thanks Wade.

  3. Energy model, hydronic, engineer - sure the hydronic drawing is a quick one, and the energy model is software driven using the inputs we recycled from the last job and can be done in a week. Repetition helps here by having standard furnaces, water tanks, HRV to draw from. The engineering, I would say, is sort of boilerplate (if the project is not unique or diverging from normal practices). You get lateral stability drawing, footing detail, pad sizing, rebar drawings, and a tall wall wood spec in short order from the engineer (if you have a contextual like building, I’m afraid boutique architect will not help here, but the right draftsman will).

  4. reaction time - the BP plans examiner called me to iron out some details and notify me that I was missing a page or two. That helped and lot and I immediately prioritized the gaps. My turn around time on the details missed was over a week. I could have had the BP in less than two weeks had I been ‘perfect’ on my submitsion

  5. ownership of the vista system account - the city created the online submission system, and the builder must maintain access and know how to use it to submit files, link all the sub contractor licences to the file, and fund the BP. As the builder, I have taken on this task rather than delegate it to someone else, because #4.

This was the best process I have encountered, the fastest, and most scaleable of all my builds to date. There is some compromise and tough decisions made at the beginning, but the avoided brain damage is simply priceless. To be able to go from raw land to owning a permit in two months gives me the sense of control that I crave over any project. The quick permit ‘de-risks’ the build, saves me a full season, and allows me to schedule the upcoming project with confidence that I already ordered the windows and am working on the appliances, before we put a shovel in the ground. Good news for sure.

Plenty of deals falling out of contract… why

I’m going to go ahead and make the assumption that the typical entry level home buyer should avoid buying a 110 year old house. The likelihood of a few gremlins covered by paint before the sale is ‘fairly’ likely in these deals. Are buyers rushing out and getting these under contract with an inspection condition, paying for a inspector to come and then getting a horrific report and backing out of the deal? If someone is buying a place like this and needs an inspection, they already are demonstrating that they aren’t equipped to own a 110 year old house. Anyone owning a house that old needs to be able to operate and maintain it on their own otherwise the cost of living there will be too great to justify the purchase price. These ancient homes may make sense if the price of entry is low enough that funds remain to pour ample major rehab and end of life replacement dollars into the structure. However they aren’t as the homes tend to trade well above land value right now. I guess my point is if the house is cheap enough that you get it free with the land, then maybe it is a cheap futures option on land speculation and a house hack that lets someone live for free. More likely the house is just a money pit and endless energy drain for a new buyer. A buyer who stretched to get a house wants to live trouble free for a few years and rebuild their savings. In a 110 year old house is that likely ?

Labour increases, who is to blame?

I received another labour price increase contained in an estimate for an upcoming job. I’m not exactly sure the source of the increase, just the amount, which is 50%. Is this routine inflation, or the additive sum of a bunch of years where there was no labour change at all. How much of the labour change is passed onto the guys vs retained by the owner? A lot of questions but few answers. Is there a substitute or a different contractor I could use? Perhaps, but my loyalty to certain trades is very deep, into its second decade. The root of our problems in society appears to lie with the financial system and credit explosion of money creation by the banksters. Each person has to make a conscious decision to be victimized by the bad actors in the financial system or to attempt to work it to their advantage, which is what I do. 2022 does seem to be the time when the past decade of bad governance is really hitting home.

Open house Sunday

Sunday afternoon will be a open house at the parkdale project site. It looks great with the furniture. Nice park and skating rink across the lane too at the community centre. Parkdale is one of the premier places to live in NW Calgary, close to everything and easy access to the mountains.

Already a great start to ‘22?

It does appear that I’m closer now to the end of my building career than the beginning. If market action dictates I won’t build then I don’t have an issue hanging up my contractor licence. What is more likely is the madness ends and there will be opportunities galore to come at an unknown future date. Will keep some powder dry.