Author Topic: Stacked Single Family Home  (Read 619 times)

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Offline Omni

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Re: Stacked Single Family Home
« Reply #15 on: March 23, 2018, 11:24:47 pm »
Tim said specifically the $500K was labour and materials.  It does seem high though.

At current rates 500k would build you ~2500 sq.ft. in Victoria BC, which is a bit of a booming market. That doesn't include the land purchase of course.

Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #16 on: March 23, 2018, 11:31:22 pm »
I know we're getting off-topic from my OP but that's ridiculous.  If the price doesn't include land or permits, how do other cities manage to sell houses for under 500K and not lose money? 

What is it about labour and materials that's so expensive here?

Offline TimG

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Re: Stacked Single Family Home
« Reply #17 on: March 24, 2018, 12:27:54 am »
I know we're getting off-topic from my OP but that's ridiculous.  If the price doesn't include land or permits, how do other cities manage to sell houses for under 500K and not lose money?
I link to back up my claim:
https://www.vancouverhome.builders/how-much-cost-to-build-house/
Quote
The average cost to build a house can range from as low as an average of $200,000 to $350,000 for a 1000 square foot home to double, triple or even quadruple that amount. An average sized 2500 square foot house, for example, will cost anywhere between $500,000 and $875,000 to build based on these price considerations. Higher end finishes will increase the price dramatically.
The house on my block is at least 2500 sq ft. 
Note that someone building an entire neighborhood of similar homes would have significantly lower costs per home.

What is it about labour and materials that's so expensive here?
I heard that 25% of cost of a home are various permits and inspections. It is not clear how much of that 25% is useless red tape and how much is necessary (i.e. inspecting electric work). Labour is also costly because you need local skilled workers (25-50/hour). In countries with cheaper workers the labour would be cheaper. 

That said, buildings are a depreciating asset like a car. A new one costs 500K but a 10 year old building is only worth 300K and a 40 year old one is 30K.
In markets with cheaper housing most of the sale will be for old homes.
« Last Edit: March 24, 2018, 12:32:11 am by TimG »

Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #18 on: March 24, 2018, 01:03:40 am »
I link to back up my claim:
https://www.vancouverhome.builders/how-much-cost-to-build-house/The house on my block is at least 2500 sq ft. 
Note that someone building an entire neighborhood of similar homes would have significantly lower costs per home.
I heard that 25% of cost of a home are various permits and inspections. It is not clear how much of that 25% is useless red tape and how much is necessary (i.e. inspecting electric work). Labour is also costly because you need local skilled workers (25-50/hour). In countries with cheaper workers the labour would be cheaper. 

That said, buildings are a depreciating asset like a car. A new one costs 500K but a 10 year old building is only worth 300K and a 40 year old one is 30K.
In markets with cheaper housing most of the sale will be for old homes.

I'm not disputing what you say because reading the words everything you say makes sense, but what is it about the brand new house in Kamloops in the link below that can sell at a profit at $350K for close to 1500 square feet? 

Are labour and materials and permits THAT different in Kamloops?  Or in Chilliwack 3 years ago when houses were selling for that much brand new?

https://www.realtor.ca/Residential/Single-Family/18751124/167-1850-HUGH-ALLAN-DRIVE-Kamloops-British-Columbia-V1S0C8

ETA - I realize the square footage is smaller, but assuming a profit at $350K, the difference would still be considered in the difference.
« Last Edit: March 24, 2018, 01:05:23 am by BC_cheque »

Offline TimG

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Re: Stacked Single Family Home
« Reply #19 on: March 24, 2018, 08:13:52 am »
ETA - I realize the square footage is smaller, but assuming a profit at $350K, the difference would still be considered in the difference.
A quick look at google street view and you can see that house is one of an entire neighborhood of identical houses. A developer building multiple identical houses saves money on architects, permitting and materials. Labour is also likely cheaper because the developer can set up an 'assembly line'.

Offline msj

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Re: Stacked Single Family Home
« Reply #20 on: March 24, 2018, 10:41:27 am »
Damn, msj, I used to think you're a pretty smart guy.  You don't know what developer greed means even in the context of 'wanting to maximize profit'?

Duh, I guess I just expect greed to, you know, duh, be in conflict with a buyers’ desire to minimize costs. 

To the extent that it is not is because of cheap money and an irrational debt bubble for which I will appluad those who are shown to be left with a bathing suit on when the tide goes out. 

Quote

And I'm not talking about prices of homes.  Even if the bottom falls and housing prices fall 50%, I think this idea makes sense given the limits of land and population growth in major cities.

Ever been to Hong Kong? Or any other major city? 

HK is about 2,700 square km and has a population of about 8 million.

Metro Van is about 2,800 sq km with a pop of less than 2.5.

Lots of room left if people choose their councils carefully.

Quote

There will always be people who insist on having a lawn and they can buy their houses and do all the upkeep that comes with it.  This concept is for people who want all the benefits of a condo as well as a house and are willing to pay a little less and have a middle ground.

I don't blame developer greed because that's what any company is supposed to do, but maybe non-profit or government agencies can take on the task of building these structures. 

I honestly think single family units in urban centres are a waste of resources.


If only city councils had any control over the zoning of property in their own jurisdictions..... but, duh, what do I know. 
« Last Edit: March 24, 2018, 10:43:08 am by msj »
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Offline kimmy

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Re: Stacked Single Family Home
« Reply #21 on: March 24, 2018, 10:50:35 am »
I saw the thread title and immediately thought of stacked shipping container homes, Kowloon Walled City, and futuristic dystopian slums. That took me down a rabbit hole that lasted nearly an hour.  Did you know that Kowloon Walled City had a population of somewhere in the neighborhood of 2 million people per square kilometer at its peak?

The idea would be to have multi-family units of 1800-3000 square feet on top of each other, priced above condos but less than houses.

As for this...  given the competition for housing, it seems unlikely that these would stay affordable for long, even if they were intended that way. 

 -k
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Offline SirJohn

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Re: Stacked Single Family Home
« Reply #22 on: March 24, 2018, 10:53:58 am »
As for this...  given the competition for housing, it seems unlikely that these would stay affordable for long, even if they were intended that way. 

 -k

Isn't this just a duplex or triplex? They're fairly common around here. Don't they have those in BC?
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Offline SirJohn

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Re: Stacked Single Family Home
« Reply #23 on: March 24, 2018, 10:58:09 am »
At current rates 500k would build you ~2500 sq.ft. in Victoria BC, which is a bit of a booming market. That doesn't include the land purchase of course.

I paid $500k for my house three years ago. And that includes the land of course.
It does not cost $500k to build a house. If you watch the US channels on homebuying you can regularly see nice homes of 2500 sq feet going for $200-$300k, including land.

Further, to indicate how the cost is in the land, take a look at the cost of houses in rural areas or smaller urban areas. They're far, far cheaper.  Wanna buy a house in Timmins?  https://www.royallepage.ca/en/on/timmins/properties/
« Last Edit: March 24, 2018, 11:01:04 am by SirJohn »
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Offline msj

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Re: Stacked Single Family Home
« Reply #24 on: March 24, 2018, 11:07:12 am »


That said, buildings are a depreciating asset like a car. A new one costs 500K but a 10 year old building is only worth 300K and a 40 year old one is 30K.
In markets with cheaper housing most of the sale will be for old homes.

Hahahahahahahha.

Had a client who sold a rental property last year come in.

I worked out all the numbers and presented them with their tax bill for which they were shocked.

I reminded them that over the years I explained why they should NOT take CCA (tax depreciation) on the building  since they are only saving tax at 20%/25% rates on that deduction. If the property goes up in value and we need to recapture that CCA then it is possible that they will pay tax at 28 or even 31%. It was right there in my notes going back several years.  I know how to CMA.

[ETA: land is never depreciable, only the buildings/equipment are depreciable at set rates]


Sure enough, they sold one year prior to retirement, meaning they both had their employment income etc so they had to pay tax at the rate of 31%.

In the end it is only an extra $1,000 or so of tax and presumably they had the benefit of the tax savings over the years (which were squandered) so its not like a big deal.

So this idea of non-depreciating buildings is kinda funny. 

Although I will note that one client had a terminal loss on their rental property because the value decreased so much that they could take that deduction. This is where the proceeds of the sale allocated to the building is below the original cost of the building. 

In this case they had a terminal loss on the building, a capital loss on the land, and a capital loss on the bulding (denied by rule bcause you cannot deduct capital losses on depreciable assets).

Alberta, that property is in Alberta so of course it happened. 


« Last Edit: March 24, 2018, 11:10:50 am by msj »
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Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #25 on: March 24, 2018, 11:41:34 am »
Hahahahahahahha.

Had a client who sold a rental property last year come in.

I worked out all the numbers and presented them with their tax bill for which they were shocked.

I reminded them that over the years I explained why they should NOT take CCA (tax depreciation) on the building  since they are only saving tax at 20%/25% rates on that deduction. If the property goes up in value and we need to recapture that CCA then it is possible that they will pay tax at 28 or even 31%. It was right there in my notes going back several years.  I know how to CMA.

[ETA: land is never depreciable, only the buildings/equipment are depreciable at set rates]


Sure enough, they sold one year prior to retirement, meaning they both had their employment income etc so they had to pay tax at the rate of 31%.

In the end it is only an extra $1,000 or so of tax and presumably they had the benefit of the tax savings over the years (which were squandered) so its not like a big deal.

So this idea of non-depreciating buildings is kinda funny. 



You're looking at it just from a tax-accountant point of view and leaving out a lot of other pertinent information.  Tax Shield alone doesn't give the full picture, you have to look at net annual casfhlows and appreciation of the asset as well.





So this idea of non-depreciating buildings is kinda funny. 


I'm pretty sure he was talking only about nominal rate of return.

Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #26 on: March 24, 2018, 11:44:15 am »
Duh, I guess I just expect greed to, you know, duh, be in conflict with a buyers’ desire to minimize costs. 

To the extent that it is not is because of cheap money and an irrational debt bubble for which I will appluad those who are shown to be left with a bathing suit on when the tide goes out. 

Ever been to Hong Kong? Or any other major city? 

HK is about 2,700 square km and has a population of about 8 million.

Metro Van is about 2,800 sq km with a pop of less than 2.5.

Lots of room left if people choose their councils carefully.


If only city councils had any control over the zoning of property in their own jurisdictions..... but, duh, what do I know.

I've never been to Hong Kong but I've been to London and New York and I didn't see too many single family units near the city, which is precisely my point.

As for the city councilors, there is talk of banning 'donations' to their campaigns so while they do play their role, they are ultimately colluding with developers. 

The flip side of the argument is that without donations incumbents will always have the upper hand. 

Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #27 on: March 24, 2018, 11:47:43 am »
Isn't this just a duplex or triplex? They're fairly common around here. Don't they have those in BC?

We do have duplex and triplexes.  Even fourplexes, but I was talking about a different concept all together.  Something between a house and a condo.  Multi units, but not tiny in size.  I only brought up the 3 or 4 storey issue because Impact was talking about the costs of elevators.  I added that zoning would also be easier for 3 or 4 storey because they could be in more residential areas as well as major roads.

Offline BC_cheque

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Re: Stacked Single Family Home
« Reply #28 on: March 24, 2018, 11:49:37 am »

As for this...  given the competition for housing, it seems unlikely that these would stay affordable for long, even if they were intended that way. 

 -k

True, but relative to whatever the current market is at the time, they'd always be somewhere in between a detached house and a smaller multi-family.  That's the alternative I wish to see more of.   Our only two options seem to be single family units or tiny little townhouse or condos.
« Last Edit: March 24, 2018, 11:51:24 am by BC_cheque »

Offline ?Impact

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Re: Stacked Single Family Home
« Reply #29 on: March 24, 2018, 12:01:09 pm »
I've never been to Hong Kong but I've been to London and New York and I didn't see too many single family units near the city, which is precisely my point.

I find it interesting that the [predominant] type of housing is very different between cities. Some of that is regional (east coast, west coast, southern, etc.), but much of it is fairly local to a city. There is certainly an effect on population density, which might drive the growth of the city; but there is also a change over time in housing types which might be a response to growth.