Hard to get hardwood

Here is a photo of a last possible second delivery of hardwood being loaded into my truck. This hardwood wasn’t actually mine, it was for another builder who’s possession date came and went a month ago. He didn’t get the hardwood and was forced to substitute. We ended up getting his. Whenever ours gets shipped someone else will get it. Giving fixed possession dates is another contractual error we’ve got to avoid in future. It is too difficult to meet optimistic or even realistic timelines.

What a relief when this showed up.

The next move in inner city land value is…down

2022 UPDATE- relisted at 799, I sort of figured this listing at $1.15m was a troll from the seller. He is still trolling me at 799, just somewhat less successfully.

I’m going to make an early prediction and that is the overheated land market goes down in the inner city. While cheap government manipulated interest rates remain low, the cost to build is getting too high in monetary terms and builder hardship in getting work done. This means risk is up and it isn’t a good time to overpay for land. Better to wait and have an opportunity to buy similarly overpriced land in another year when perhaps the commodities cost drops or somewhat normalizes. Our realtor friends like to downplay the true carrying cost of their overpriced listings because they market everything falsely as ‘revenue’ producing ‘holding’ property. A hilarious instance was noted recently where the land is supposedly valued at $1.125 million and it is claimed it produces $2k per month rent. In what world is that reasonable?

Revenue potential and the tenant wishes to stay. That’s a great deal for the landlord. The landlord can continue to subsidize the tenant by the $4k month difference between the rent and the cost to own the house. In realtor world this makes sense. In my world this is perhaps the worst land deal I have seen in 2021. Does that indicate a market top when you see outlandishly terrible deals? I think so. Also this awkward shaped lot isn’t great for redevelopment anyway. I’d not even buy this at 50% or its asking price.

Raspberry market update

Through the middle of may the raspberry canes are coming along very nicely. Even nicer than the raspberry canes was the first five months of the housing market. Many eyebrow raising sales were featured here over the past couple of months. Here are some observations

Inexplicable (to me) sales of inner city property that I think have poor outlook for future value - not to disparage someone’s dream home but I saw too many sales of houses that I’d stay far from. Houses that have poor future development potential have sold for really strong numbers.

demand is strong but supply is massive - so many investors are using 2021 to purge the flock of their worst, run down or worn out units. Other sellers are people that have needed to move for personal reasons for the past five years but held on stubbornly. So strong is the cult of real estate that most people assume price growth when they buy a property and it forms part of their identity. They can’t then sell at a loss for reasons like pride or whatever. Some of them are now finally able to move on with their lives by dumping a property into a sellers market.

the biggest factor is it is really irresistible to buy an asset with leverage, even one that comes with upkeep and ongoing taxation, when borrowing is done at suppressed money cost vs the real interest rates. We’ve entered into some serious inflationary pressure yet why not buy if you take on a loan at 1.5%. It is really cheap to make a payment on an expensive home with these rates.

new build prices are higher than ever before so old houses have more component value. At this point everyone has heard about lumber prices but it is also copper, plastic, metal and virtually everything. Buyers want to jump in the market because new prices have to escalate, possibly by a lot.

so it appears we have a market with pent up demand from the last few years which weren’t great for sales volume, and are adding fuel to the fire by pulling forward future demand into today with cheap money. The end result is the hottest market in calgary since 2014 or even longer. Another factor is prices are simply lower in calgary than other similar cities and calgary offers a pretty good lifestyle vs much of Canada.

the danger with all of this market activity is a lot of these buyers of older homes may not know how scarce manpower is and how costly major rehab work will be. I can see how many buyers will jump in and buy something and only later find out that the repairs needed were not scoped out properly by them and their helpful realtor pre purchase. To get the house fixed to a level they’d be comfortable is probably why someone such as myself would pass on a lot of these ‘deals’. With a real reno budget realized the end value is too low, so the purchase price needed to be discounted more to provide more room to pay for repairs. Then there is a six month period of stress and hardship to factor in too. And real cash is needed to fund repairs, not the banks credit line.

despite all of these factors, it is more fun to operate in a good market than a slow or declining market that we’ve been in now for years. Where the market goes I don’t know but I remain upbeat. The high cost to build now should trickle down to those five year old infills and support some appreciation. Land values are overheated and the builders are still bidding them up. Shortages are reported for many products meaning less homes are going to be built than otherwise would. This also suggests building, for those that can finish a job, will have a good buyer pool.

Expect another raspberry update when the fruit is ripe and the summer market is tapering out!

Nice looking raspberry cane growth in may.

Progress on multiple fronts

Lots of headwind on getting anything done is how I describe the calgary construction environment. Despite this we are pushing on at all phases of construction. The bungalow is proving to be the easiest by a huge margin, and the newer semi detached is moving based on some grit and some preparation.

Starting tile in Inglewood.

Property sales at values that simply boggle the mind

Not sure that ‘boggle’ is in the dictionary.

edit - it is. To astonish or overwhelm the mind when trying to imagine something.

Well consider me truly boggled. On occasion you see a property sell and you think that the seller was an absolute genius or the buyer needs sent to a Soviet style gulag for real estate re-education. A classic case is property that is heavily impacted by its location adjacent to a major negative, like a highway sound barrier wall. Most buyers would see something like that and pass on the opportunity. Some buyers would consider it at a huge discount. Apparently ‘A’ buyer felt it was a good deal and paid almost asking. If you asked me, and nobody does, or cares what I think, that property valuation should be vastly lower than what we see it transact for. The future potential for development is absent, and the price to earning ratio as a rental too out of whack to consider. What does that leave other than owner occupied? Have we now printed so much money that some buyers would prefer to throw money at any property just to get rid of cash?

Well and truly boggled I am.

My least favourite lot has been sitting on the market for years

Here is another noteworthy infill ‘opportunity’, emphasis on the quotation marks. This lot has been gathering dust on the mls based on two factors. Most obvious, the ludicrous valuation. Second, the hideous overhead hazard issue. Nobody will want to buy this and take on the liability that is built into it. Even worse is the liability is on the neighbouring side. That creates another problem in dealing with someone who may or may not be cooperative, yet cooperation is imperative to resolving the problem. Solving the hazard isn’t a value add for the builder it is more like a large cash transfer to the adjacent property in the form of necessary improvements. There could be a price that this makes sense to consider, but that price is way less than the seller would want to hear.

This slanty block wall is ready to fall over, but when a builder wants to cut a 9 ft hole immediately beside it (actually under it is most likely) this becomes a profoundly dangerous problem. What the solution appears to be is to remove the wall and regrade the side yard lower to the neighbors house. Then put in the new house basement walls. Then rebuild a very expensive retaining wall while an 8 ft access corridor exists between the houses and fill in both sides. How do you build a retaining wall against newly disturbed soil that is way deeper than the base of the wall would be? And then fence and landscape the area from the new retaining wall back to the existing house. Let’s throw out a number to do this $30k-$40, more? Given the pitfalls and headaches with this process, the time and effort involved, most builders will pass on this site and find a better lot elsewhere. Will this land ever sell?

Builder woes, how to throw money in a hole to make problems go away

When we build a house we like to use painful past experience to guide current practice. Except for those times when we don’t. Once unleashed, the inertia of the permitted, surveyed, excavated, engineered and pre ordered project is pretty hard to unwind. In that scenario it is often best to throw the money at the problem to make it go away permanently than to try half assed manoeuvres to defer the problem to a later date. The strategy to defer, delay and procrastinate will only snowball the problem making later fixes worse, more costly and more awful to deal with. The art is to know what do, who to call, how much to pay and precisely what the prescription is to leverage the most pain relief. This is the pulling off the bandaid approach to construction. When basement building, the key is depth of cut and grading. The situation faced was overly deep excavation created by pushing the building too deep in the ground to make the roof peak fit. The consequence was the top of wall being too low, and the sides of the excavated hole being unsafe, and the basement slab being so deep it can’t gravity drain. The solution was over height forms (large $), Shotcrete shoring for safety (large $), and lift station for the basement fixtures (large $). All this makes the builder toss an extra $15k into the hole. That hurts the budget vs a comparable home built by a smarter builder that would look identical but avoid $15k in unwanted expenditure. In our defence, none of this background fiasco slowed the project, decisions were made and the remedy work expedited in advance of when it was necessary. And nobody was at risk of being injured at the job site. Relearned lessons and more painful experience for the builder on basement building.

Passed inspection at the cash filled hole. Ready to frame to support the walls and then backfill.

Calgary…cheapest houses in the world ?

https://www.westerninvestor.com/news/alberta/calgary-world-s-most-affordable-city-for-housing-u-k-study-says-1.24304783

this post contrasts with some previous comments about the market overheating and a huge run up in costs to build. Examining the methodology of this study shows it is a little more bogus. It compares 1 bedroom condos across the entire world. That isn’t the most popular type of housing in calgary and prices of condos are down based on local market conditions. Regardless of our opinion on this study, being ranked #1 in any world wide study is really bizarre.

I’d like to see a better study done with more categories of housing included. 1 bedroom condos are similar everywhere, houses are totally different, so the comparisons will be less legitimate.

A greedy market, time for a pullback?

In today’s example It appears our brief lived (to date) sellers market has become a little greedy and this is a strong signal (to me) that a pullback is likely near. Price expectation from the seller ramps up so much faster than what new construction buyers are willing to pay for. Input costs are way up like never seen before. Now is simply not the time to overpay for b- land in the inner city. realtors and sellers, sure they can price a property at whatever they want to, but this property was $150k less a year ago. Is the market so different? Are the fundamentals that much better? To answer my own question, no, and some of the fundamentals have really soured on the building end for key inputs. Doubt this one sells without major reductions but it is noteworthy nonetheless.

Attention Builders and Investors*** if you buy this property you should immediately seek professional help. Following this you will be better able to make sound business decisions.

In praise of old concrete

Why don’t more old abandoned houses in calgary fail and topple over as they seem to in other jurisdictions? The main reason I think is the foundation integrity. The craftsmanship and quality of the old concrete is often amazing, in fact it can be perfect after 50,60,70 years or more. Being a deep frost region which you’d think would fracture the walls (doesn’t seem to though), also featuring a lot of glacial till soil that drains well, the thick and extremely hard concrete seems to last indefinitely. Unfortunately the concrete may be in good shape, but it is always in the wrong location on the lot, too small, and just overall a problem to get rid of. A good example is the Inglewood basement demolition project. Concrete is in perfect condition indistinguishable from the day it was mixed and poured which is really remarkable.

This is a golden oldie, but its life cycle is over as of today.

Construction infants

a general sense of infantile helplessness occurs on occasion at the job site. Where’s the power, why’s the power not working is typical. The expectation appears to be the builder has nothing but time to visit the site and take care of everyone and everything. What is the work around here? Have a site nanny? Right now we are lacking the budget for a site nanny and need to rely on tradesperson independence occasionally.

Why is the heat not on? Why is the breaker tripping? Perhaps whoever kicked out the wire should have mentioned it.

Inner city design challenges among many projects

If you take a single good design and many different builders construct it in the same areas at the same time, does it remain a good design? More needs to be done to distinguish between ourselves I think.

Lol.

The context is now new in many old areas

We have all heard the shrill cry of ‘character’ as an encompassing phrase to justify any anti development position, however spurious. ‘Character’ in the discussion of an infill project is akin to Maude Flanders entering the scene exclaiming ‘would someone think of the children’, everyone feigns attention, then disregard the speaker, and carry on. Yet many locations have now passed a significant turning point, where newly built homes are the dominant context, due to so much building over the past decade that choice locations are becoming built out. And this can happen fast, enough turnover can occur overnight to overcome the context created by a pre WW1 streetscape. An interesting case study is found on the Inglewood street of 7 avenue. In the past three weeks, three homes have changed hands, into the clutches of the greediest and most ruthless of developers. And what of the character value of the three recently sold homes, homes soon to be demolished. Well, they dont amount to even a bag of dogshit combined and soon will be resting in peace at the local dump. Back to what is now contextual. On this block, only one of 15 properties will be original once the three new properties are built on, and the two under construction already are complete. That means the character on 7 ave is of new homes. The single prewar bungalow is out of context, representing a character that no longer suits the streetscape. Maybe someone should buy it and contribute further to the character of the community.

Here is a collage of the existing 7 ave streetscape. All of these are builder owned.

Jayman net zero show home impresses

Not often will you hear gushing praise on this site. Jayman calls it a Quantum leap in building performance, and I’d agree. This is a comment from the company

We have redefined the science of home building, combining healthier, smarter and more energy efficient homes than any other on the market. Jayman prides itself in our award winning designs and professional customer experience. We are leading by example in Canada. Through the science of home building we are at the goal of net zero by 2050, today. Now that’s a Quantum Leap

Home building certainly has some dinosaur-like elements in the way things are done, often this is because it has always been that way, and the industry resists change like a plague. Sure, I may be a cynic on some of these green performance prototypes you see in Dwell magazine. A 10,000 sq ft mansion in some estate area, with a huge budget is accompanied by a fleet of solar panels and a Tesla, and suddenly it is green. We forget the embodied energy and resources that created those products. You’d need a dozen planets to create a world where everyone can live in that manner. The Jayman net zero project distinguishes itself in a few ways, first, it is at least attainable, bordering on affordable for many. Second, it fits among the standard sized lots that are common in new communities, and third, it can be scaled, unlike a euro-spec passive home that overlooks a beach in Malibu with a construction budget of $1500/sq ft.

Can Jayman drag the rest of the industry along with it to meet some stretch goal net zero standard to be imposed on the entire industry in a few years? Or will we all pack up our tools and just buy a Jayman built house? I guess if Jayman comes to the inner city the rest of us can seek out other work. The ruthless efficiency and cost control that goes into a production built home is beyond what fits into the infill communities. Still, many lessons can be learned from this net zero, grid connected, electrified, non gas show home.

Air source heat pump and water tank, solar setup, it is all here to be toured at the Jayman show home in Seton.

Radon, years later, what happened?

Regular readers may recall the battle against radon, and high prices too. Well, years later, where are we? Is the spouse still happy? Or has this radon issue sort of faded away into the background, along with the nasty gas itself? I’m still monitoring daily, with uncalibrated equipment that appears to be legit, an install that was farmer fixed on the cheap by myself and a friendly plumber (and amazon).

It appears the war on radon has been won. Currently sitting at 18 Bq/m3, which is below the margin of error for the measurement device, which I find to be highly suspicious and dubious. What benefits has this install accrued with the spouse? Whatever they were, they’ve since dissipated, along with the radon particles, into the ether. Now she’d like to move. That’d require a new install and repurchasing the same equipment. Not sure that is a good idea.

Aerobarrier install

We were the beneficiary of an Aerobarrier install at the project site over the weekend. What does this mean? Well, we pressurized the houses, put a powerful fan on the door to blow air inside, and sprayed an aerosol like caulking around the building. This pressurized caulking acts as a vigilant sealant, seeking out and destrying any air leaking through the poly vapour barrier into the walls or attic space. This becomes like an airtight drywall approach, where the drywall helps to bond with typical leakage zones, preventing unwanted humidity from escaping in winter. Given our cold climate, this is a way to dramatically reduce what I call ‘fugitive’ emission of humidity into the attic, which can then condensate or frost up and cause moisture problems later. https://www.aerobarrieralberta.ca is a link to more video on the process. No doubt Mike Holmes and Matt Risinger approve of this process and enjoy sponsorship from the manufacturer. The rest of us pay for these procedures. Are they worth it? Well, that is a complex question. It is an investment in efficiency, and also in reducing problems that are really difficult to resolve. We have a climate where all homes could benefit from the use of an Aerobarrier process to seal the vapour barrier moreso than perhaps anywhere else on the continent. With the movement toward greener building finally going mainstream 15 years after I built my first house, perhaps the time is now to increase the specs on what we can offer our clients? Well, if you can afford $50 for a piece of OSB you can afford meaningful improvements in air tightness as well.

0.5 ACH50 is a tough bar to reach. Mortals with a caulking gun and some poly cannot eliminate the thousands of tiny leak zones that add up to a major leakage problem. Thus Aerobarrier to the rescue.

$800k for a tear down property - why the R1 communities need some regulatory change

Why have I never built a house in Elboya (and a lot of other similar Elbow River areas)? Well, number one is the ridiculous land value expectations. Like $800k for a property on a typical 50x120 ft lot, that prevents a person from dabbling in the business. That is some serious money and I don’t believe the amenities/location/quality of the Elboya community justify such a sum. Plus I haven’t been in the business of building $2M houses, there aren’t always a plethora of buyers. I think a 50x120 ft flat lot with a lane accessed garage isn’t necessarily special enough to warrant the asking price, and the regulatory system is too rigid and archaic to allow any creativity on what can be done to create more viably price homes.

Based on some published reaction to the new Guidebook For Great Communities, http://calgaryguidebook.ca shown here, the general reaction to any change to the R1 communities will be met with a lot of resistance. This isnt a battle that interests me participating in, but I’d take sides with the city here. I dont think the R1 communities really have a ‘character’ worthy of preservation. These aren’t heritage homes, the one highlighted today is a total junker. If an area is so special that its land use needs to be frozen in time, then shouldn’t the individual homes be architecturally significant and worthy of protection? To me, a place that has character is somewhere you’d bring out of town guests to while they are visiting Calgary. These areas include the Riverwalk to the Peace Bridge, the 17 ave SW commercial district, and some of the great natural areas like Fish Creek or the Paskapoo slopes erratic trail. Not a 50’s era subdivision with a bunch of remnant bungalows with curly roof shingles.

Character is typically a NIMBY tool to protect established interests, in Calgary it is a tool to ring fence desirable areas and entrench class based divisions. The less dense areas are demanded protection via use of municipal powers to enforce a non-existent contract between the planning department and land owners who want to keep things exactly as they are, regardless of societal interests. I think we need a higher bar to determine what has character and needs real protection, and what is just a bunch of people who dont want anyone to park in front of their house.

At $800k, you can be confident that I am not a buyer of this one.

More on the brewery lands - who, what, when, where how?

Some more interesting info regarding the brewery lands redevelopment. The developer appears to have hired some significant expertise to assist it in community engagement and design. They are leading off with the possibility of a linear park creation. Who could possibly oppose that? Good strategy here, get the masses intrigued with a little park creation promise, and then roll out the rest of the project in stages. I’d like to see this get started sooner than later with detailed presentations and a rezoning or land use change application, and a build out schedule. That is a lot to ask, surely this will be a multi year affair, and breaking ground can’t really begin for considerable time. Note the proximity of my upcoming build. When I purchased property nearby I had no idea plans for the brewery lands were moving forward this soon (after some false starts and media stories related to preservation rulings by the province). Securing a project this close to what could be something really unique and special is a major bonus, if it proceeds. Every builder likes to ride the coattails of a major developer, even better is taxpayer largesse on connectivity (high profile pedestrian bridges), parks and landscaping improvements. All of this could come to inglewood?

the brewery lands encompass a huge amount of land, the largest parcel that could be developed in Inglewood, for perhaps, forever? This is a really interesting project. Driving around the area it is so inaccessible that by car you don’t get much of an impression on what this land means to the community, or what the possibilities are. The hiring of professional design companies lends a lot of credibility and creative talent to what can happen to this land. Can we hit the FFWD button on it?

Inglewood Brewery Lands Redevelopment - what do I think?

https://www.breweryraillands.com is a link I recently stumbled upon on twitter. What do I think of this? Well, first of all, I am cautiously optimistic, but if it proceeds I’d be ecstatic. The developer behind this hasn’t exactly hit a home run regarding the Westbrook station redevelopment though. Putting it mildly, the weed carpeted Westbrook lands continues to hurt the Killarney motherland. What was once looked upon so optimistically has brought forth our inner cynic, at this point, we have no idea when/if/ever this land will be developed, and until it does, a westside inner city regional centrepiece remains derelict. Derelict yes, but this pales in comparison to a really derelict site, the Inglewood brewery lands, with a history that extends back to the late 1800’s, that is some serious Calgary heritage. Matco is saying all the right things;

A 20-acre compact, livable, mixed-use and transit-supportive redevelopment where leading-edge anchor institutions, urban light industrial businesses and employment clusters support new urban housing

This development proceeding would be excellent for my operations, as I have essentially rolled the dice on Inglewood as a great place to be (which it will remain even if the brewery lands development does not proceed). However, in a spread out city with a dearth of heritage buildings, and the character that comes along with it, this project could be a boon to the heart of Inglewood. Inglewood has a gritty urban feel in some of its alleyways and an abundance of old brick and sandstone accented low rise buildings. Restored brick buildings in the brewery area would be fantastic especially a mixed use new/old employment centre 200 m walk from my project site, along with new urban housing. To me ‘new urban housing’ means condo lofts and townhomes, exactly what I am not going to be building. All that the more dense new building will do is make detached homes all the more precious and unique.

An aerial view of the brewery lands and the rail yard beyond. Imagine this area landscaped with the treed canopy as in the background of 10th and 11th avenues. And some of the industrial metal siding stripped off to reveal century old brick facades, with new buildings sprinkled among the dilapidated parts containing housing, jobs, and shops. that is really exciting. Even better would be a pedestrian connector to a new train station if the green line is built. Who will pay for all of this? I’m guessing Mrs. and Mr. Taxpayer will have to ante up or it can’t be built by the private sector.

A big time Alberta rebound - is this it ?

Look how the tables (literally - the charts) have turned over the past year. And market sentiment is totally different when reviewing some posts I made last March. Q2 2020 was absolutely hideous for Alberta but Q2 2021 is a different story. The Canadian dollar plunged to 0.68 cents USD, now we have breached 0.80, a major 12 month turnaround for a country reliant on imports for many essential products.

The energy industry went through some surprising consolidations and the outlook is much brighter. Companies facing collapse are now market darlings. All the key commodities I look at, lumber, copper, etc are huge industrial moneymaker (while the builders are getting screwed for sure and it hurts, at least the economy can overall improve).

Perhaps the biggest change is the advent of vaccines. While the country is performing poorly as a whole in acquiring supply, the market is now forecasting abundant doses, likely enough to inoculate everyone by fall. And since government debt appears to not matter to anyone we’re debasing our currency into prosperity and driving up the price of housing and hard assets everywhere with cheap loans.

what does it all mean? Nobody knows but we can keep on building until we run out of lumber!

Straight up from below 69 to 80.