How do they do townhouses everywhere else ?

There is a vast history of townhouse building, but most interesting are the southwest style bungalow courts and contemporary desert masterpieces of the American southwest. All the advantages here are shown in recent projects - lower land cost, larger sites, lower construction cost, drier weather, more focus on design and less on compliance. The end result is some fantastic townhouse projects.

unhinge'd or cringe'd - the RCG rezoning debate facing calgary

Yes, I have posted a few disparaging comments on the quality of ideas of the opposition to allowing some townhouse development to creep into the formerly untouchable areas. The Calgary R1 communities, those places of such world renowned character, that tourists flock from medieval European cities to tour the masterpiece of community design where the bungalows were built on grid streets in 1959 with one bathroom for the expanding boomer family to share, and mighty eight foot ceilings covered in asbestos blessed drywall compound remain standing to this day, historic you may call these homes, irreplaceable character even. And lots of parking on city streets, so building garages to house cars, despite enjoying 50 feet of laneway frontage, was not needed. A lot of traffic these days to the website, but not comments, almost as much traffic as building townhouses may create in the precious enclaves of detachedness and empty streets.

I guess most RCG revolutionaries visit here, thanks google, then cringe, and flee to more pleasant sites, like Facebook, or Nextdoor, where likeminded gatekeeper types plot strategy against the hated mayor and her so called hateful 8 group of progressives. The most recent delay tactic to host plebiscite at the end of 2025 has failed, so it is actually looking fairly positive now that the April 22 vote passes to enable the evil profiteers among us to plan and build some townhouses, in a somewhat less risky marketplace. My greatest disappointment is the conservative slate, how anti business and pro detached housing they are. Why can my supposed allies on the right not reconcile with the need for some townhouses? Why are their ideas on supply and built forms so antiquated and inadequate. These are the unsolved mysteries lost among the politics of the RCG debate.

Fireplace wrap up at the renovation

We were finally able to finalize the fireplace and grout the tile, counters installed and gas connected. If that seems like a lot of work to do a fireplace then you’d be correct. The recent trend toward electric fireplace has always looked too cheesy to me so I’ve avoided it. But the cost to do the real thing is substantial.

More fun with lights

A typical process is to make a list and visit the lighting store and put together a selection package. In this instance, having a unique renovation, we flipped that process around and had the light store owner visit my site to come up with a list of suitable lights. I like this a lot because I was able to leverage the knowledge of stock and appropriate lights from the source of the greatest expertise. A few weeks later and the lights are going in and we can enjoy one of the more fun parts of the process.

A never ending chronology of screwups

Sometimes you just have to relax and enjoy the endless small screwups that add a little vitality to the building experience. A typical villain in these affairs are the Drywallers, and everyone who comes after them and doesn’t notice obvious flaws, including the builder. In this case the plug is buried and the paint and baseboard is done. So one little oversight of not cutting out the plug results in a bunch of mess and paint repair problems at the end. While this should have been caught earlier it really isn’t visible to someone who isn’t consciously looking in just the right spot.

Are the supply chain woes ancient history for the builders?

A few years ago we had ordered up appliances, size specific, for a project. Those never arrived and we scrambled around to buy display models from whatever hardware store had them. This was a costly hassle, and a year or so later after the houses were completed the appliance dealer called me and announced the appliances had arrived. I had them shipped to a secure place and paid the bill so we could have a spare set for emergency use. This was another instance among many of hoarding behaviour by desperate builders. Yesterday we installed the last of the appliance hoard, and we enjoy a more spacious garage too as our hoard has diminished to just random hvac duct components and some tiles. I hope we never again face the impossible challenge of unavailable critical parts and the supply chain has healed itself. Ordering lately has been good, the problem now is the price. The builder gets so much less product for every dollar invested in the build. The legacy of the supply chain fiasco is now everything costs more so everyone has to pay more for the same house.

Leathered quartz install

We were able to latch onto a new slab product that shows a really nice texture but has that impervious quartz property of being a durable and low maintenance surface. We are definitely a big step closer to interior completion on this renovation

Showhome about to open

Stagers arrived today to set up the house and I’ve been working through some details as well. Current inventory in the market appears to be very low, so we are listing in advance of the classic ‘spring rush’. The project was efficiently run, and is now approaching the end of month 7. What I find fascinating is we are basically 200 days into construction from a hole in the ground to an operating show suite. Backing out holidays and Sundays, we need to finish more than 0.5% of the build per working day (for each house), through all weather conditions. It is a tribute to my professional and skilled trades that this is even possible to conceive of being achievable to finish that much work. Looking back there were days where I had 5-6 crews on site and significant orchestration to referee this chaos was needed. Plenty of construction lessons learned as we navigate these tricky schedules.

Radical transformation via the major rehab

While we are still grappling with the typical regrets about not doing a full demo and starting over with a larger footprint, the rehab is coming along well. Huge gains can be realized in these old houses by a little bit of framing and rework of whatever bad ideas were incorporated into the original design. After the changes are made it can look like it was meant to be from day one, in this case 1959. This stairwell has been subtly modified and fixed to create more light, equal treads, and finally new railings where there used to be walls. All of this adds up to a big impact and also quite a bit of work and expense.

More unhinged commentary on RCG city wide rezoning in Calgary from your friendly builder

April 22nd, 2024 is shaping up to be D day on the RCG land use issue facing inner city Calgary when the only voters that actually count (the Council + Mayor) will cast a deciding ballot. I am sure the self appointed neighbourhood activists are marshalling support now while creating TED-talk like powerpoint slides to illustrate the profundity of their ideas against the evil townhouse developers. For insight into the minds of this cohort of society, all one needs to do is browse the Nextdoor app and scroll among the comments related to any development issue.

While it may appear unfair to post derogatory commentary on the quality of ideas put forth in opposition of infill townhouse development in the RC1 and RC2 areas consider it this way. Are the infill developers experts in dentistry and piloting airplanes? Do the developers comment on performing root canals and landing jets? However, in these development matters such as townhouses and affordability, the greed-addled developer is viewed as a biased and self serving entity, while the frozen in amber zoning advocate is a kindly matron of community character and family values. Here is a brief update on the zeitgeist of those opposing the city led land use change to RCG;

  • community members have expertise the planning department cannot possess - Mr. Jones has lived in his neighbourhood for 35 years so nobody can match his understanding of the fine grained urbanism of a street of homes. Mr. Jones term of residence has currency in his weight of opposition to any redevelopment which is based on the unique character and quality of the area. The local councillor needs to vote for Mr. Jones - If Mr. Jones emerges as the loser of a housing decision, then the democratic process is flawed. Mr. Jones needs to continue to benefit from zoning regulations - Mr. Jones’ financial plan depends on continually profiting from housing scarcity. Mr. Jones should not participate in offering housing solutions - Mr. Jones wants housing built, but it should not come at the expense of his tranquil enclave of detachedness, and sprawl is a good response to growth. Lets rebut this a little;

    • There is no expertise here that a city planner cannot comprehend - Mr Jones lives in a community with ‘park’ in its name, like Glenmore Park, Chinook Park, or Rutland Park. These communities are all from the same era, planned in the same way. There is no profound unique character justifying conservation, these communities are all similar, and contain detached homes. City Planners are smart enough to determine how townhouses can fit among 50’s bungalows and contemporary mansions.

    • Term has no currency - Mr. Jones has lived there so long that he suffers from a delusion that he has earned a degree of deference from society in land use decision making. Actually, the likelihood of him continuing to live there is annually decreasing dramatically, not increasing. Those that wish to move into the area in new housing that is yet to be built are the people that will be residing there for the next decades, long after Mr. Jones has vacated, and sold to a developer. Why would the opposition to redevelopment put forth by Mr. Jones (who has been comfortably housed for decades) matter more than a massive societal need for new supply? Mr. Jones enjoyed a great run of using regulatory power to keep out infill development, but the run is over now and it is time to rebuild these older, small homes occupying the best land in the City, and townhouses need to be part of the menu.

    • Council cannot vote for Mr. Jones self interest - Each community has a Jones, such that there will always be a voter that wants no infill townhouse development. If Council agrees with the populist angst against townhouses, then townhouses will remain illegal to build in the best locations where townhouses need to be built. The outcome will be…a housing crisis. Is that not what we have today? Council needs to exercise wisdom to do what is needed, not what is wanted.

    • Regulatory profit seeking is a poor means of managing ones personal financial affairs - The planning department cannot be used as a way to create scarcity so an entrenched minority can enjoy escalation of property value. This comes at the expense of basically everybody else who has to take on massive debt to buy overpriced housing, or faces horrible housing options. Individuals who base their personal financial success on sitting on the couch and having the house value escalate are enjoying a type of regulatory profit capture that doesnt need to exist. Mr. Jones can do what anyone else needs to do and find way to earn money outside of tracking MLS price appreciation from his enclave. The planners owe no debt to Mr. Jones and his retirement program.

    • Mr Jones is not presenting a viable pathway to housing solutions - There are not any great housing solutions for affordability, only tradeoffs. What perpetuates the problem are people like Mr. Jones that oppose townhouses because they feel they rent or sell for too much, but then only wish to allow new detached homes to be built that are vastly more expensive than townhouses. Somehow, they only see more detached homes as a way to solve the housing crisis. Unfortunately the housing industry is better at selling high margin luxury product than low cost entry level product, and the CREB stats typically portray massive low end demand, and an abundance of high end supply. The mismatch of housing cost vs the financial capacity of those underhoused is not going to be solved by RCG zoning. A good tradeoff will be enough market supply so that income earners can find housing without entering a bidding war, while city resources are spent to house those that would otherwise be homeless.

    In the marketplace of ideas, you don’t hear much from the developers. These are solitary types that tend to be pretty busy building stuff, and are disinclined to monitor the political fray. Developers make tough calls on investment decisions, and feedback is merciless. Through this crucible of personal risk, and pressure of executing infill townhouse projects, the developer gains a level of insight and expertise that is unique. I’d like to hear more developers commenting on development issues to hopefully create more cover for the politicians to enable and de-risk infill development. Without the developers, the current ratio of 88:12 sprawl to infill will not change to be more balanced.

2023 year in review, briefly...and a bit about 2024

Trying to avoid a dramatic novel here. 2023 was a good year to be a builder. As I promised at the end of 2022, I finished seven homes in 2023. Should have been nine, but you can only do so much. I think the continuous and unrelenting focus on creating value through infill development as my strategy is working. It lends a focus to decision making that is otherwise absent without this overreaching statement, basically, it makes it easier to decide what direction to pursue in a field where there is countless options.

While seven completions sound good, note, that not even one of them was started in 2023, this was all carry over stuff. The three starts in 2023 were not able to get finished, this is like a troublesome hangover. If every project takes longer, then the way we calculate yield is divided by a number greater than one. That makes performance much worse, of course, I am in no way suggesting I advocate a start in January, that is tough way to launch a build, just to complete in the same calendar year.

With seven completions, how much is the finished value of these homes, and what is the amount of input in terms of land, material, and labour? Does that even matter since I had no equity stake in one of the builds, and that none of them were for sale or sold, which was also a remarkable occurrence? Regardless, it looks like the value of completions was a little over $5,500,000. That is some serious value creation, from empty holes in the ground to occupied homes. And I am definitely not saying I was able to do this alone, there was a support network of many guys who brought their expertise and skill to the job sites. The only sale I had was my own house I built in 2014 and sold in spring, and that one doesnt count toward my summary of work done in 2023. What was ridiculous about that 2014 build is that it sold basically inflation adjusted for much less than its value in 2014, and that is disappointing given how much tax, insurance and debt service that house ate up for eight years, and how much more the cost to complete that same model would be today.

People get really worked up about that bogeyman ‘property values’, particularly when discussing infill townhouses. What they should really be concerned about is how little actual appreciation their property has experienced adjusted for inflation. I’d say most houses just match inflation and sometimes fare worse, particularly when you include the repairs, tax, insurance and those costs can be at minimum 1% of the property value each year. In a low inflation environment maybe 3% annual price growth is ok, but since 2020 we have had more like 20% inflation. The declining purchasing power of wages is now the defining characteristic of this era of horrible governance we suffer from in Canada.

Being so occupied in 2023 with finishing houses, I didnt really get a chance to fully permit a couple of townhouse projects. There was so much uncertainty in what type of model to design, land use changes, finding the right consultants, it just took a lot of time and delay after delay was observed. Now I will suffer from some real lag between 2023 and 2024 projects. This is pretty bad management, and I dont even know when I can break ground on my next townhouse projects. Maybe I should take some time off this summer! The good news about these townhouse projects, is that I have little exposure to the crazy volatility of the market. If prices go up, go down, stay flat, that is ok for me. The key as always is the refinance at the end, it didnt work out well for the 2023 townhouse project, but we are pursuing the 2024 projects in a way that the CMHC will like better. Having the federal government control financing for all new construction in Canada is just so utterly unappealing to me, it is the antithesis of how a market should function. Why do we need these banks if they are allergic to financing developers? With the privilege of money creation should come the responsibility to issue it to perpetuate a multi family construction housing stock in desperate need of new supply. Instead we have to beg the feds for debt?

In other, happier news, the inner city building association is tackling the intransigent departments that make building harder than it needs to be. Just before Christmas word was circulated that we can change the surface improvement process, notably the sidewalk replacement issue. This is a major feat and worthy of commendation. If key individuals dont invest major energy in these process improvements, they wont happen, and the biggest beneficiaries are the freeloading builders that don’t even participate. Regardless, this is a huge change for the better.

We are well into January as of this post, and I am wrapping up a couple of nice large detached homes in the SW, and considering my next move. 2024 is looking to be a good year, and Calgary could see significant land use bylaw changes, like a blanket RCG townhouse land use across the inner city. I welcome these changes and look forward to new opportunities to create value, and execute on my townhouse visions. Sean

2023 prediction review edition

It is that time of year again to review my predictions from last year, and see how I did as a market Nostradamus, or is it a market Nostra-dumbass. Lets take a closer look at my predictions;

  • less volatility - land, labour, interest rates, commodities, bankster rug pulling, in all of this I think we will find less volatility than over the past two years.  This doesnt mean low volatility, just lesser craziness than before.

I was largely correct here. The volatility in Calgary was fairly low, especially relative to other years. Supply was limited likely due to home owners having fewer good options to move or enjoying the last years of their cheap debt before they adjust upward to market rates.

  • infill home values flat by year end - I am going here with a prediction that prices of Calgary infill housing will go up and down a bit over the year, and end up fairly close to even.  Too much rate hike headwind, which hasn't really percolated throughout the economy yet to foresee price gains, yet lots of demand and lower supply than average to set a price floor.  plenty of price increases on inputs are pre-destined, unfortunately, making it expensive to build, also an apparent lack of good land listings on the MLS.

On this I was wrong. Or was I? It depends on what metric you choose. If you look at condos, the price and sales value was up a lot, same with townhouses. This is partly based on what quarter of the city you are looking at too. The stats package of the overall market showed a 10.4% increase according to CREB, while some townhouse and apartment prices are up around 20%. Yet the median price is only up 4.21%, which is much lower than the overall market suggests. In the future I need to be more specific on my predictions. One alarming stat is the inner city semi detached market has a large standing inventory. Yet another reason I truly detest that segment of the market. Also I recently found out that 61000 people moved to Alberta in q3 2023, that is a lot of demand for housing putting a strain on the market. For sure this accounts for price growth pressure, and we don’t know if this population influx is sustainable or not.

  • a year of finishing - fingers crossed this is correct.  I need to finish seven houses, and start two, plus start another large rental project, and

Here I was correct for sure. I did finish 7 houses, spread over 3 projects, and a couple basement suites as well. I did start three single detached houses, one being a full Reno, and those are all close to complete. I didnt get to start another rental townhouse project however.

  • effectiveness of the inner city builders association - many upcoming complex and difficult negotiations need to take place, the association will draw from its strength of membership to tackle these.

Here I was correct. The association is doing great work, and as we approached the year end word spread that we are going to see a major change in one of the many really awful issues related to sidewalk repair and replacement. This could be the latest and most massive win for the builders!

Overall my predictions for 2023 were pretty good. It is also a year where the predictions I made had a fairly high degree of probability of actually taking place. I don’t think I’m going to do a 2024 prediction issue, as I truly don’t know what is going to happen. I am not even sure what I am going to build because I have been too busy to get my permits in order and likely will suffer from a development lag. Maybe my 2024 prediction is to take more much needed time off.

What portion of costly component upgrades does the new house buyer actually appreciate ?

This topic is in the realm of how much energy and investigation would you need to perform to even approach an answer with any degree of confidence? In general, the new house shopper visits a bunch of show homes and likely chooses the combination of location, price and attractiveness of the house best suited. Each house is different, regardless of the veneer of homogeneity created by the newness factor and that each house has a ‘warranty’. Each builder has incorporated into the house an endless variety of feature and upgraded components. I’ve seen the inner city projects now in an apparent arms race of how many costly luxury products can be incorporated and how high the asking price can be pushed. Contrast this with show homes I’ve seen in sprawl areas where the builder hardly wraps the bathtub with more than a single row of cheap tile. Some standalone items can be really expensive like a tub filler, or a light fixture. Others are layered in and installed in a way that cannot be changed. For example house with multiple sinks for the kitchen, bar, laundry and prep room. Those sinks can be 3/4/5 hundred or even 1000 dollars each. And they are under mounted in a polished quartz slab, not changeable at all. These components really increase the cost to construct, and can be cut from a budget to make the price of the house more attainable. Does the buyer who shops these houses notice, appreciate and add up the different specifications in the houses they visit in a way that differentiates certain homes over others?

I’d like to think the house shopper is pretty savvy, but I suspect they may often like what they see, but not be really aware of the cost of the components. It needs to be the job of the agents involved to highlight these items, often the selling agent is not on site, or the buying agent has no knowledge of material costs. Does the builder need to put a price tag on the show home to show how all the individual bits add up to the asking price in a seven figure spec home ?

A pre Christmas finishing gift for the builder

Hardwood floors, tile, countertops, kitchen. All of this lined up to complete before Christmas. This is like a nice gift for the builder to see a bunch of the good stuff go in all at once. I suspect that this stage of the project which represents 1/10 of the build by time and effort equals 90% of what interests aspiring builders out there in becoming a builder. I think a better approach is to find more satisfaction in the early stages where the going is really tough and to line up a bunch of small wins.

Inability to stay on any sort of schedule - who, what, why and how

I’ve noted over the years a significant degree of time losses following the drywall stage. Sometimes even the drywall stage, but that is a different story. Post drywall delays are debilitating on my construction momentum. The inability to get through the next couple stages is resulting in delay of about a month. Culprits are fuzzy completion dates, inability to commit to starts, slow delivery, poor cleanup efforts slowing turnover to the next stage, and busy crews. Rolling over from one delay to the next is costing me week after week, pushing out tile and electrical final work, even impacting delivery date for concurrent shop work booked in advance for delivery to site and not flexible. Part of the answer is much clearer expectations from us as the builder to compel crews to deadlines. I need these guys to prioritize my schedule over their internal schedule. The incentive structure on these parts of the build is totally misaligned with my interests and costs not decisive factors in trade performance and payment. This is the construction conundrum of the era, perhaps every era!

Product change - lacquer to water base

Switching from lacquer to water base product is a long time in coming to the market I am familiar with. the quality of the lacquer finish is very good, that is a certainty. It comes with too much volatile vapours, toxic, flammable, dusty, and nasty. The quality of the water base products seems to get better all the time, it seems like it is plenty good enough for the most part to use exclusively. One exception appears to be the priming of raw material, as the water base primers can cause some swelling of MDF materials, and clear coat of stained wood. This is a major reduction in lacquer use, a solid leap forward. The water based product tradeoff to me, even if the finish isnt as good, is so worthwhile. Lacquer is some of the worst product with the most risk. Let’s all get rid of it or mostly get rid of it. Over time the water based stuff will become indistinguishable from lacquer, or lacquer will be regulated into professional spray booths where it can be managed safely.

if it is dog friendly product, that makes me happy too. That is a freshly sprayed door sitting next to our friendly beast and we dont share exposure to chemicals that are not good for anyone.

The most disingenuous untruth commonly marketed in housing today is…

That net zero passive house, euro spec, Swiss German style, beyond step code type of housing is only ‘marginally’ higher cost than conventional housing. The reality is a lot of these projects are unlimited cost art projects, or secondary vacation homes for warehousing wealth and only inhabited for a few weeks of the year while the owner visits exotic markets like Whistler or Aspen. The massive embodied energy involved in fabricating the components brought to site from foreign lands is unlikely to be factored into the environmental equation. Some of these projects will feature kitchens that cost as much as entire homes elsewhere in lower cost communities. These homes are the equivalent to a Ferrari with an added battery pack so they can use less gas yet offer the same performance as an older gas guzzling model. The green features incorporated are as much egotistical hubris to compensate for the true impact of building somebodies third vacation home as a meaningful demonstration of decarbonizing housing. This type of work has almost no commonality with conventional budget based housing to supply to the broader society, it is much closer to commercial construction found on a publicly funded institution like a research lab or art museum. The wages and consultant expense to design and execute these homes can exceed $1000 per square foot, and only the finest and best available craftspeople can attempt them. This offers very little as scalable lesson to the broader housing industry.

don’t do development dabbling dilettantism

Survival instinct number one for all my builder friends. A pretty rendering created for marketing purposes on a crappy location doesn’t make a good project choice. Rewarding a speculator makes no sense, do the work yourself that the speculator wants to capture as easy money. There is no value left to be created when a speculator just gets a development permit passed. They unfailingly believe they are entitled to a significant share of the value created by the massive undertaking of investing in actual site work. I wouldn’t buy this property if it was the last site in the city remaining for me to build on. Fortunately at this moment I have plenty of better opportunities than this. The general consensus is the land valuation promises of these realtors is super bloated, they even acknowledge it privately.