2018 - the prediction review edition.

This is the post where I review specific predictions made last January. One of my personal favourites. My track record for 2017 was terrible, in 2018 my guesses were more on target. 

1.  City review of infill building guidelines will be difficult and controversial.   

- inconclusive.  The city didn't do that much here. It released a revised rcg set of rules but this was minor tweaking.  Other changes that would apply to larger zones were delayed or not forthcoming to the public.   

2.  Killarney land prices will moderate or drop slightly in 2018.   

- I was right up until the latter half of the year.  Prices did moderate and then dropped tremendously, probably by $100k.  A few motivated sellers got absolutely schooled by the market.  It was interesting and painful to watch ignorant realtors and intransigent and greedy sellers chase the market down. Lots of lessons here about educating yourself on how to operate in a market.   

3.  The spring Market will be very busy

- the all important spring market was a dud. The weather was awful until May and then market conditions softened due to other factors.  I was way off on this prediction. 

4.  Government meddling will negatively impact the market for Calgary real estate.  

- did I even need to make this prediction?  It is an unfortunate reality that every year the government causes a lot of harm. 2018 was the worst year I have ever seen for government policy, the lowlight being mortgage policy for Toronto being applied to hammer provincial markets barely recovering from the past recession.  While my prediction was correct, this is one I wish was wrong.  This year it seemed that every level of government was doing its best to harm small business, especially the key Alberta industries. 

2018 year in review - the business

2018 was an interesting year, very favourable (with the usual caveats, more on that later), and we still look at 2019 with some optimism. Here are the highlights.   

1.  Volume of building was up, seven homes were either finished or started during the year.  That is my most productive year to date. 

2. Completion of the Live33st.com purpose built rental.  This six suite rental project was a tremendous effort and could feature its own website (and it does www.live33st.com) to tell the complete tale. Nothing more to say here other than it was a humbling experience to get it built and financed, and many lessons were learned.  Will it ever get repeated?  Hard to know. 

3.  The market really changed in the latter third of the year.  Ouch.  I feel for the business owners who are experiencing terrible personal losses and hope they can recover.  

4.  Oversupply is a real problem, costs went up a lot to build, and land prices actually started to adjust faster than in prior downturns. 

5.  I rediscovered how much leverage can kill a home builder and fortunately steps taken in 2017 allowed me to survive that part of the business cycle in 2018.  Leverage utilized was applied very carefully at the right time, in the proper amount, and invested cautiously.   

6. Once again my network of supporters, suppliers and contractors came through.  Like they say, your network is your net-worth.   

2018 leaves me with a lot to be grateful for and plenty of opportunities to improve.  2019 is a real puzzle. Let's get to that in a future post.  

The year ends and the finsihing begins. A fitting conclusion for 2018.

If you don’t like it change it.

One of the many lessons of custom home building. If you don’t like the way an installation is progressing, act decisively as early as you can and change it. This is particularly true when translating drawings into a three dimensional structure from a computer screen.  It is always easier to step in and change something sooner than leaving it and having to tear something out and cause other collatoral damage with a late stage correction.  

Earlier fireplace framing wasn’t to our liking. Version 2 is better.  

Finishing is starting - Richmond project

With walls primed, the door and trim package dropped off and the crew hanging doors, we’ve officially started the finishing stage.  This is a nice phase to be in with a mild start to early winter a lot of outside work was done. Once the cold temperatures really hit we will be solely focusing on interior work, warm, dry and well lit.  

We will feature a black hardware package in this project rather than the usual satin chrome.  Looks good so far.  

Pre Christmas paint job

Unseasonably warm weather and the siding crew was able to finish coat the paintable siding material.  That means it was somehow easier to work outside in mid December than early October.   It is great to work with guys that are flexible and opportunistic enough to take advantage of the weather windows. 

Wet paint drying nicely at 9 Celsius December 17 th.   

Taping phase

With both houses wall board complete, the tapers have completed two of the first taping  steps.  More progress will hopefully lead to both houses being ready to prime at the end of next week. 

The irrational and delusional decision making of the greed addled mind of the Calgary land seller

Land speculation is a hobby in Calgary, particularly in the areas of major urban renewal, and of the areas I monitor, Shaganappi is currently the epicentre. Land owners appear to lose their mind when they perceive the value of land has gone up, and the greed tinted madness really exhibits itself in the irrational asking prices of property listed on the local MLS.

There are very few buyers out there looking to assemble large multi family parcels in the inner city. Of those, Truman is the company most capable and willing to building large condo buildings in this area. One would assume that Truman is fairly shrewd when it comes to acquiring large groups of lots in order to assemble them into something big enough to develop. Truman must have a clear idea of what it can afford to pay for land given the massive holding and upfront cost of starting a big project. Our case study today is a recently listed lot that came onto the market at an utterly delusional $1.5M. While the lot is a good one, there is zero chance of this selling at any value remotely close to the list price.

Here is one of the most over priced lots ever to hit the MLS.

Truman recently publicized its holdings in the area. It has a very interesting and significant position on 33 St adjacent to the LRT station (its own unique development debacle tale of woe), and along 14 ave. What will be the fate of this lot? Will the seller come to his senses or will the delusional greed factor continue to guide his decisions?

Truman has more that 18 50 ft lots in the Shaganappi area, this is a massive investment in land and the holding cost is enormous. Does Truman want any more land in this area?

Pushing the envelope gets rndsqr targeted by the do gooder nimbys

Rndsqr is breaking new ground in its multifamily push into larger projects.  It hires great architects and the conceptual work often gains national attention.  It also raises the ire of the local nimby's, a pox on our fine communities. Everything Rndsqr does that goes beyond the typical condo building in Calgary seems to get appealed.  The crew over there must be exhausted by the endless costly battling at the appeal board.  The latest victim is the courtyard 33 project, one I really want to succeed. The nimby nonsense is now published at the appeal board for those who wish to browse the lengthy appeal paperwork. 

One of the few benefits of the appeals process is the appellant must publicise their names and addresses along with their written appeal. Many of them are just ill conceived nonsense and get tossed on jurisdictional grounds. You’d be surprised how unprofessional and amateurish appeals have successfully scuttled major projects such as courtyard 33.  Let's hope this round of the battle goes to Rrndsqr.   

Hi Stacy, your appeal is nonsense.  Please stop now.  

Drywall stage

No step in the process impacts the interior as much as when the wallboard is hung. The volume created in the main floor is exceptional.  

One side hung and the other being delivered.  

Insulation is complete

For the Richmond semi we are investing in considerably more sound wall insulation as a means of ensuring our future clients will have a better experience living in the homes. Sound mitigation is a tough issue. Basically any sound transfer is a failure in the perspective of our buyers.  They want a home completely removed from any neighboring noise. Having the crews on site actually detail the middle wall properly is an issue.  Despite the lab results on these wall assemblies, the actual practice of how the houses are built leads to inherently flawed sound mitigation.   I can only imagine how shoddy other builders sound performance must be vs the wall assembly we are using now.  On the main floor there are 4 stud framed walls, each cavity is filled with roksul and each of the four walls is detached from the next.  Various layers of drywall are used to prevent sound and fire transfer.  Once this wall is complete we will perform some tests to see how we’ve done.   

Sound insulating wall is going in.   

New additions to the fleet

It was time to once again swap the construction truck in for another and also the long overdue snow blower was selected.  

Best truck yet with ample gadgetry.  

Finally decided that shovelling sucks.  This machine is fantastic.  

Osuman is back

My favourite painter is Osuman.  He’s a hard working guy and isn’t afraid of sharing an opinion on bad builder tactics.  He’s got a lot of experience so I tend to listen to what he says, plus I don’t want to get on his bad side.  

I ordered some paint matched to the graphite color of the window frames. He’s rolling them in our newly cleaned garage that also functions as a work shop.  This will be an interesting exterior detail we will install soon. 

Osuman is applying the graphite tinted paint.   

Spray foam install

The Richmond project is a rare attached garage model for me to undertake. We’ve decided to spray foam the garage ceiling to seal out vapour from the garage and to make the upper floor warmer.  This uses a lot of foam but the job is at least easy to do when it is completely accessible.  

Garage spray in progress  

The dropped ceiling used to frame the main duct runs is now fully encased in foam

Hard to seal joist butt ends are foamed against the rim board.  Many hard to insulate areas are done this way on the lower levels.  The skylight frame is also foamed.  

Preboard phase

the trade installations are wrapping up at the site. Electrical, plumbing, gas, building, development permit inspections are complete and we’ve got vacuum roughin ongoing.   Preboard phase is one of the largest construction milestones. 

Ready for insulation.  

Olympic bid vote day - what to do?

With bid plebiscite day quickly approaching there seems to be a really unpredictable mood within the city. There are hard core elements both for and against the bid, and it seems like this issue has galvanized the large and growing curmudgeon contingent in this city like no other has before. The angry middle aged white male, the demographic most able to fund this type of non-core service, really detests the IOC, mayor, and, for lack of a better name, the ‘elites’ that drive and benefit tremendously from a taxpayer funded largesse such as an olympic games.

On the other hand, the use of the games to leverage other investments in infrastructure and to access pots of money the feds have but otherwise would not bestow on Calgary is really attractive. The games could help overcome the economic morass that we have suffered through since 2014, and there is a strong sentimental attachment to reliving hosting the games, the glory of ‘88 and other such nonsense.

The no side has a counter argument to every possible benefit the yes side put forth, and we move from point to counterpoint, while both sides release economic information or ‘weaponized disinformation’ depending on your point of view. The reality is the two pieces of most needed infrastructure, an airport train connection and a new sporting arena, remain unfunded. Is it worth pursuing a games when much needed infrastructure wont be catalyzed by the games?

Tough questions, and I don’t know for sure how to vote. Currently leaning yes just because I don’t want to vote against my home town. May have to hold my nose while casting the ballot, a familiar experience.

The ‘olympic’ saddledome, a Calgary icon. Still a great place to watch a hockey game, but an archaic venue. Will the most loved legacy from the 88 games need to be bulldozed?

Advantages of being a construction pack rat

Following the engineer inspection of the tall wall install, a metal strapping detail was required.  Remarkably, in 2013 I had a project where two spools of the heavy gauge strapping were needed for the cantilever reinforcement.  Only one spool was ever used and I was left with a full roll.  This went on to occupy space in my garage and eventually in a closet in my house for 5 years until it was called for re use.  Countless occasions had passed where I had cursed the existence of the strapping and vowed to toss it in the trash.   My wife also had cursed me for permanently warehousing this strapping, especially once it appeared in her closet.  The reason why the strapping was relocated from the garage to the closet is lost to me now, but I remain pleased that the hoarder tendency finally paid off. 

The strapping is unfurled.  

And the strapping is finally repurposed on a new building after 5 years of hoarding.  

Garage slab prep

the prep crew arrived to prepare the garage slab.  This was a multi step process, first we scraped the fill to the proper height. Next we augered middle support holes.  Gravel was distributed and compacted.  Styrofoam and rebar applied.  Finally, as a cost saving measure we installed the network of pex pipes to allow later install of slab heating. 

Ready to pour

Window progress.

The machine was back to make window install possible.  Many of the larger windows are very heavy when assembled so come with the glass out and are site glazed.   

Large windows going in. One of the many benefits of new construction vs renovation.   

Once the frame is in place the window company can come back and install the glass. 

Hopefully the next blizzard will come after the windows are installed and we won’t have to shovel out the master bedroom floor.   

Post blizzard cleanup

With Calgary thawing out from a massive early season blizzard, we can report some ongoing progress at the Richmond site.  

Windows are delivered and ready to go, and the plumber is working on the drainage network.   

Fortunately we had most of the membrane and 2/3 of the shingles installed the day before the blizzard.  The warm days later in the week have resulted in a massive amount of meltwater draining off the back of the roof rather than soaking the inside of the framing.  This is a nice advantage of having familiarity with the trades as they can offer me a little better service and flexibility.  

The all Albanian crew is on site to clear off the flat section of roof so it can dry out and the torch product be installed later. Windows are ready to go in.  

Too early for the year in review summary post?

By the end of the third quarter of 2018 it seems like the story of the year could already be written. A Slow spring market, rising mortgage rates, punishing cost increases, terrible mortgage policy where the wagging tail of Toronto determines the fate of the western Canadian dog, and a NAFTA and pipeline fiasco with a net of blame so wide that hardly anyone escapes its shame are 2019 lowlights.... where are the highlights? The desire for government change is palpable among my industry contacts, but little respite is on the horizon from the people in charge and the incredible damage they do.

How these societal conditions are impacting the inner city housing market is much more clear than it was during the optimism of late 2017.  A fair bit of supply has come on the market and sales have slowed.  Building material cost increases have been significantly higher than expected and many builders are feeling the squeeze of stale inventory and poor margin.  I toured a $1.2M showhome that featured, much to my horror, basic carpeting upstairs and low end master bath fixtures.  This stingy spec list is a reflection of cost increases elsewhere.  Somehow I was able to put together a similar house with hardwood floors everywhere, nicer appliances and fixtures, and air conditioning and infloor heating operating for $400k less. I must be a building genius.  Land sales have really slipped as well and are not likely to recover unless sentiment swings the other way, which, based on recent observation, it can quickly.  Let’s hope the land sellers get a little market discipline too.  

All of this sounds like it is a great time to buy a house by locating the nearest desperate home builder and making a lowball offer on an unsold show home. The problem with this strategy is it will be hard for a bankrupt builder to provide much after sale support. Any buyer who enters into this sort of arrangement should be extra careful their new house was built well or be prepared to be responsible for dealing with the consequences.  Remember the false government security blanket of a mandated insurance program masquerading as a warranty will do little to deal with the imperfections in a newly built home.

2018-19 could be a hard time for builder survival and the intense competition should shake out the weaker players.  I’m wishing this year would be over and we could celebrate New Year’s Day instead of thanksgiving!