The Owner Builder Exam

This post is based on the information gathered and tireless work done in this area by Marko Juras.

Each year Rich Coleman – our Minister Responsible for Housing – pens a letter to BC Housing laying out their mandate for the year.   Last year he reminded them that as a public sector organization, they were bound to the Taxpayer Accountability Principles which state that their actions should be consistent with government priorities and be executed efficiently to respect the taxpayer’s dollar.  Unfortunately it seems like that letter fell on deaf ears.

You see, BC Housing has a department called Licensing and Consumer Services (formerly the Homeowner Protection Office) that amongst other things administers residential builder licensing.  For a builder to get licensed they have to show experience in building and continue to receive training (such as on this arduous Caribbean cruise) to maintain their licenses.  An exception to this has always been individuals building for themselves – the owner builder – who merely had to pay BC Housing for an Owner Builder Authorization.  In the last 15 years, some 45,000 people went that route in BC.

Clearly the idea that that many people could build their own home relatively unmolested by the government could not stand, so last July BC Housing introduced the Owner Builder Exam. This 100 question exam requires 70% to pass, and you only get one attempt for your application (you get a partial refund if you fail but then you have to re-apply).  BC Housing justifies this test saying it protects the consumer, helps owner builders expand their knowledge base, and creates a more level playing field.   This sounds great, other than the fact that it is complete and utter nonsense.   Let’s examine these justifications in detail.

“I’m paying two mortgages and ready to build but cannot proceed as things have changed with the HPO application.   I do not have the financing to build and pay a contractor $100k+ just to manage all the tradespeople for me.”

Protect the consumer.  For the consumer to be protected, the consumer must have been harmed to start with.  The Homeowner Protection Act already makes the owner builder responsible for construction defects in the home for a period of 10 years, similar to third party home warranties.  This means buyers of owner built homes are already protected as well as any buyer of a new home.  In addition, BC Housing does not cite a single instance of any harm that has befallen the consumer from owner built homes.

To dig further into this, a freedom of information act was submitted on December 6, 2016 requesting the number of owner built houses constructed and sold, as well as the number of consumer complaints received about owner built houses from January 1, 2010 to June 30, 2016.   Here is the response and the results.

Several things are clear from this data.

  1. Compared to the applications to build, there are only very few applications to sell owner built homes.  So either there are massive number of illegal sales (extremely unlikely as that is trivial to detect through the land title office and fines for sellers and realtors are huge) or owner builders tend to build their dream homes to live in long term.
  2. BC Housing has no record of complaints so it has no basis to surmise there is any problem at all with owner built homes.  Given they aren’t doing their jobs to justify new regulation, let’s see if we can find any evidence of widespread problems with owner built houses.  According to this recent article, there were only 2 court cases related to owner builders in the last two years, and the first case where a buyer successfully sued an owner builder based on the statutory warranty was in early 2016.  Meanwhile according to BC Housing, 0.2% of homes built by licensed builders result in complaints (that would have been about 23 complaints in 2016).
“I am a recently retired senior who has always planned on building a home for my wife and I when reaching this stage of our lives. This could effectively kill the dream for ourselves and many more good hardworking folks.”

If people are building homes to live in long term they are unlikely to cut corners and compromise quality during construction to start with.  Even if they wanted to, building a house already entails layers upon layers of checks and balances to ensure that they are built properly.   All the drawings have to be drawn by a designer or architect and engineered by a structural engineer and then double checked by city inspectors.  Structural engineers also typically make 4 to 5 site visits to conduct onsite inspections and building inspectors check every stage of construction to verify it is being built to the plans and to code.  Even if they had motivation, it would be extremely difficult for any owner builder to build a defective or sub-par house.

Help owner builders expand their knowledge base.  Owner builders may not have a construction background so on the surface of it, this seems like a worthwhile goal.   Unfortunately the exam does absolutely nothing to help the owner builder. Here’s why:

“I had been in the building trade for over 40 years and I find the exam hard. The average joe may not have a chance.”
  1. BC Housing has not provided a study guide, only vague topics that the exam covers.  Clearly the purpose is not to educate since they are making no effort to do so.
  2. Questions are often either completely irrelevant (“What is the second law of thermodynamics?”) irrelevant to the type of house that is being built (When are furring strips required for vinyl siding?”),  have answers that depend on the municipality you live in (“When should you apply for an occupancy permit?“), or reference technical minutiae of the 966 page BC Building Code (“What is the moisture permeability of 6mil poly?”) that any sane person would look up and not memorize.
  3. Exam results are not released to the owner builder.  How can you possibly learn if you don’t know what you didn’t know?
“This is ludicrous. Memorize the BC Building Code?? Since a building inspector regularly references the document, how can a one-time owner builder be expected to know it all???”

Even if some genius home owner could memorize every single nailing pattern and framing bracket how would that help them build a better home? Will they be going around arguing with the structural engineer on design, or with the professional framer on which type of nails to use, or will the city inspector waive his or her framing concerns because the home owner has passed an exam and knows nailing patterns?

Create a more level playing field.  Even though the exam was introduced July 4th, 2016,  2016 was the second lowest year for Owner Builder Authorizations ever.  2017 will certainly be the lowest, while builder homes increased substantially.  You put up enough inane hoops for people to jump through and many people will just give up and hire a builder instead. So instead of creating a level playing field, it seems this exam has heavily tilted the playing field towards commercial builders and has made it unnecessarily difficult for someone that just wants to build their own dwelling.

In summary, the owner builder exam:

  1. was introduced to solve a problem that doesn’t exist,
  2. will do nothing to improve the quality of owner built homes,
  3. will cost people thousands of dollars in lost time and money, and
  4. creates a costly new program and red tape that must be administered by BC Housing.

Why would they introduce a program that increases the cost and time to build homes when the government is loudly touting their efforts to improve housing affordability?   Why would they introduce a useless exam and tons of additional bureaucratic hoops while they plaster the Internet with ads proclaiming to be looking for ideas to cut red tape?

VP of Licensing and Consumer Services, Wendy Acheson, at a construction industry trade show

Normally I hold to the idea that most policy is introduced out of a desire to improve the system, but the situation around this exam is suspicious.   It gets more so when we consider that 8 of the top 10 donors to the BC Liberals are in the development or construction industry.   Cutting down on the few thousand homes built by owners in BC every year would be greatly in their favour, and considering there is no logical reason for the exam, it makes you wonder what other motivation there may have been.

The quotes interspersed in this article are just a tiny sample from the over 500 emails from British Columbians that Marko Juras has received on this issue including some truly heartbreaking stories from people that have had their plans for building their home jeopardized.   There are more negative effects of the exam than can be covered in one article, and I encourage you to watch Marko’s videos that cover more points.

This may seem like an obscure issue to many people, but I feel like it impinges on our basic freedom to pursue our passions and dreams without undue interference.   Constructing your own shelter seems like a fundamental right and a way for people with the right skills to afford a house they otherwise never could.  Especially in rural BC where land is cheap, construction skills are common, and testing centres are a day’s travel away, this exam is having a real negative impact on British Columbians.  I don’t think that can be allowed to stand.

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154 thoughts on “The Owner Builder Exam

  1. No way to get around it Thomas. They designed it so there wouldn’t be one. Just write to your MLA.

  2. We are wanting to fight the hpo it is against our rights and causing huge delays in our build!! How do we get around this?
    Thank you
    Thomas Leddy

  3. @Jonny67 – my understanding is that if you are doing anything that requires a building permit you need a license to apply for the permit. Guess who I didn’t vote for last week. .

  4. This article has hit it right on the head of the nail. I live in rural BC and have already built a shop/suite and now need to expand my business and to find more b….sh…t red tape to build my wife a home where we can sell our business and retire and live our life out in peace. Honestly even my local building inspector thinks its stupid. Since he is the one to make sure this house is built properly and to code. But hey I guess we need more government people around doing nothing but bogging down the system and getting every second Friday off with pay because there job is so hard. I thought our government was here to help people not just try to get more tax dollars from them. It would be interesting to see if any of them could pass this test or even know how to pound a nail. It’s sad and I fear for my kids speaking of which one just had a certified builder do a addition and it was the most ridicules and expensive addition I have ever seen.

  5. Update on the owner builders:
    https://youtu.be/LbeSz7l2xTQ?t=8m30s

    Some facts:
    Only 1/3 of the applicants have passed the exam so far of the 1211 applicants. 1/3 are waiting to take the exam, and 1/3 were denied or withdrew their applications.
    2017 Jan/Feb compared to 2016 Jan/Feb, owner builder approvals are down 50%

    Clearly the policy is having the intended effect of decimating owner builders. In fact Wendy admits this: “Of course what we want to see happening is more licensed builders being approved”.

  6. Well, this Owner Builder exam is clearly corruption at work, and means I won’t be moving to BC.
    I’d just like to point out that PEI requires no building inspections at all outside the 2 cities, owner building is common, it’s both the windiest and snowiest Province, and owner-built houses don’t fall down.

  7. @jonny67 – good question. It would need to come from an approved facility…but not idea on the HPO requirement.

  8. How do these rules apply to getting a pre-fab home dropped onto the site. e.g., if I were to pour footings and install a septic system myself (or GC those jobs), could I drop a pre-fab house on site without having to go through this hassle?

  9. I admit to entertaining some apocalypse readiness. I am a sucker for the genre. Power independence would be a big part of that puzzle. Remember we have our own little apocalypse hanging over our heads all the time. Before you start to think I’m a survivalist, I have no stored water or food at my house right now. I have a first aid kit in the car though….

  10. It’s the question of propane or not to propane that’s driving me nuts.

    Nah, throw in a wood burner for when the apocalypse comes.

  11. My plan is a 200 amp main and then a 100 amp for the garage. Garage and outdoor would be on that. I might put the charger in my plans as a rough in. So when the electrician who knows what he is doing sees the plan they can quote and plan accordingly. I might do conduit instead of cat5e etc to every room. It’s the question of propane or not to propane that’s driving me nuts. I hate hydro and it’s cost but all electric is so simple and I can generate my own, if I can afford the equipment…

  12. I wouldn’t discourage anyone from predicting how/when the next downturn happens – speculating is fun and I may partake myself. However it’s worth acknowledging how terrible just about everyone on here (including myself) has been at foreseeing future housing moves. Keep in mind that no one on this blog predicted or even suggested the current rapid rise in prices could happen (okay maybe Michael’s one exception). That being said a thread on future scenarios would be interesting, but respectfully I just wouldn’t recommend people act today on what anyone on here (including myself) thinks will happen tomorrow 🙂

    Personally I find it more fun (and easy) to predict what we won’t know in the future. I made such a prediction mid last year when I said that by spring 2017 we wouldn’t know if Vancouver prices are near the peak or near the bottom (still stand by that one!)

  13. Is there anything between 200 and 400 amp service?

    Yes, with overhead power you can pull 200 amps for the main home and 100 amps for the suite off the grid versus having a subpanel for the suite coming off the 200 amp main.

    400 amp becomes expensive as you need mechanical room, etc.

  14. Leo, how do you personally see a correction playing out?

    Will write a new post on this with some simulations.

  15. You can build just have to register and if you sell the house you have to purchase a home warranty.

    I believe it is if you sell the house within 10 years. Which makes sense.

  16. Marko or others – any idea how BC compares to other jurisdictions when it comes to regulation of owner builders? Are we now an outlier with this exam?

    Alberta: Apply to owner build, pay $750 and if you intend to live in the house for 10 years you don’t have to buy a new home warranty.

    Saskatchewan: No regulation I can find.

    Manitoba: You can build just have to register and if you sell the house you have to purchase a home warranty.

    Ontario: You have to apply for a letter of confirmation in certain municipalities to exempt yourself from needing to purchase a home warranty.

    Quebec: Need to be registered as a construction employer. As far as I can tell that is just $350 fee and standards you have to follow when hiring contractors.

    New Brunswick: No regulation I can see beyond normal building inspections.

    Etc. etc. I don’t think an exam like this exists anywhere else in Canada.

  17. I’d put conduit in. Cheaper and more flexible when you actually decide on what to get.

    I disagree. I would wire your garage with a Nema 14-50 right of the bat. Your panel will be clean and you won’t have to muck around later with someone throwing in a 50 amp breaker and also your electrician will need to calculate max load right off the bat factoring in the 50 amp breaker. You’ll also have it all inspected depends on the municpality you live in……where BC Safety Authority is responsible it is hit and miss. A lot of the time the BC Safety Authority inspectors don’t even show up.

    Doing if afterwards becomes a huge pain especially if you get another electrician to come in. They have to go around and figure out heating, all your appliances, etc., to determine max load.

  18. Marko or others – any idea how BC compares to other jurisdictions when it comes to regulation of owner builders? Are we now an outlier with this exam?

    First province to introduce an owner-builder exam.

  19. I thought the tesla wall charger pulls 80A

    Pulls whatever you want it to pull (based on the size of breaker you install). For me at 50 amps it put my max load 199 amps and I didn’t want to go over 200 amps max load, have the house burn down and not get insurance. Problem with electric car charging is the calculation for max load is very high (80%). If you have a 50 amp breaker you go 50 x .8 and it takes up 40 amps of max load. Other things you multiple by a smaller ratio factor.

  20. Marko or others – any idea how BC compares to other jurisdictions when it comes to regulation of owner builders? Are we now an outlier with this exam?

  21. I just use the Carlon PVC. It’s not super cheap – but I wouldn’t build a new home without at least one home run to every room.

  22. Thanks Marko, no gas to the line. I am thinking some propane for some things but want to be all electric able because solar is going to be the way and I might not have it now but will eventually. Anyway, food for though…
    @Sidekick, what did you use as conduit? Smurf tube looks expensive.

  23. Prediction 1: House prices take another 15-20% jump this year. Then prices slide 2-3% per year for the next few years, as interest rates start edging up.

    Prediction 2: Hawk finally capitulates. He cashes in his famous portfolio, gets a big mortgage, and buys a run-down 1950s house for $1.5m later this year. This marks the top of the market.

  24. I think this spring the demand level stays the same but listings continue at their slugish pace. The average shitbox in gordon head reaches 1 million. That’s when the market takes a sudden dive. Everyone panics over this crazy 1 million price tag for a 1970s split level with no en suite, tiny rooms and that stupid long hallway that wastes all that space. Don’t forget the oil furnace! Anyway then the bears swoop in and buy a GH shitbox for like 50k. At this point I also buy in and rent a couple of bulldozers to take care of those crapboxes.

  25. “Leo, how do you personally see a correction playing out?”

    This is what I’d like to see people on this blog predict. What are the top ~5 scenarios likely to play out in Victoria? I always find myself flip/flopping between Hawk (coupled with disbelief every time a new high is reached) and the Bulls (low inventory of decent quality, my neighbours x 3 waiting to buy).

    I throw some speculation out there when I have a few minutes.

  26. I’d put conduit in. Cheaper and more flexible when you actually decide on what to get.

    And conduit between you mech room and all the other rooms. Saved me a couple of times…

  27. Hey Marko, can you remind me of your recommendation for being electric car ready again?

    Unless you have 400 amp power do as many gas appliances as possible…..I even did gas dryer to take load off the panel. Then if you don’t have a make of electric car in mind have a Nema 14-50 installed in your garage on a 50 amp breaker. Electricians will tell you “the code already requires a car charging plug,” but it’s only a Nema 5-20 which is essentially useless. Charges a Tesla at 8 km/h instead of 6 km/h Nema 5-15 (regular household plug).

    I have a friend building a house right now and he is doing three Nema 14-50s in his garage.

    If you have no gas at property line but no suite you’ll probably be okay too with 200 amps too.

  28. I bought my building lot in 2013 and starting building in in 2014 before the exam. I don’t think I could pass the exam, but my house turned out really well and I haven’t had one problem with it. Even being a 2014 build I put in contigencies for electric car charging, two cat 5e wires to every single room in the house, etc….that is my problem with the exam. Building a house is about common sense not memorizing the code book.

  29. I can get over seeing a house for sale, sold the. seeing it listed for rent on used Victoria or Craigslist. (Over and over again). Astonishes me that people would pay $3,000 plus to rent a house and owners are coming out profitable. I could see a suite or floor of house but buy a house to rent the whole place out in this market….I guess as long as low vacancy and low mortgage rates it’s an attractive investment??
    …with the capital gain increase dividends and stocks and the use of TFSA seem more attractive to me?

    http://www.usedvictoria.com/classified-ad/1912-Character-Home-in-Fairfield_28952697.lite

  30. VicRenter, it’s one of the few times I left out “average” prices dropped 20%. As per Ross Kay HPI is a trailing number and misses the important early indicator of large money leaving or entering the market that average prices show as HPI is 6 months or more behind.

    Sales high of last spring of 1200 range and now 500 range shows Victoria is close to entering the same Vancouver decline phase as peak FOMO passes.

    Open houses were blocking driveways with 40 cards on the table a few weeks ago according to Marko. Looks like a change is in motion if Oak Bay is dead.

  31. Leo, how do you personally see a correction playing out? Prices go up to the point where the market finally stalls somewhere in 2018/2019, inventory starts to build as a result, demand drops off as people realize prices aren’t going to keep going up and prices start falling until affordability goes back to historical norms?

  32. I wonder how many serious house hunters go to open houses in a market like this and I therefore also wonder how reliable an indicator of interest the number of people at any given open house might be. Since good places are selling so quickly, anyone who might actually buy a house would surely see a place they’re interested in with their realtor as soon as it comes on the market, no? Waiting to go through the open house on a Saturday when offers are due Sunday or Monday seems stupid/unlikely.

  33. “Vancouver’s 20% drop”

    Hawk, you’ve often sited this number for Vancouver. But this weekend’s Globe says that Vancouver SFHs are only down 6% since July 2016. I’m not denying that things have slowed down in Vancouver but it doesn’t seem to be nearly as desperate as a 20% decline.

  34. Went to a couple of open houses in Oak Bay, not a lot of people there. Might be too early in the season or perhaps a slow down in buyers.

  35. Another email I received last night re owner-builder exam….

    “As for the program, I have long suspected that the insurers (New Home Warranty/ Travellers/etc) have always had an incestuous relationship with the former HPO. If you look at the history of the HPO you will find former private home warranty insurer employees in important positions at HPO. This would be acceptable to gain experienced help to a new department. What has happened is that the HPO has appeared to adopt “carte blanche” most of the insurers home warranty criteria. (practically verbatim) This would be of course in the best interests of the insurance company. I would say if you were investigating corruption the best place to start would be with be insurers.(National Home Warranty and others) They have the most input to the program and also the most to gain because of their clients (licensed builders) have to insure”

  36. The crash meter is relevant to Bearkilla’s increase in posts the last month as his Langford slum dumps lose value faster than all the piles of price reductions on the nice places out there no one wants. Might as well torch’em Bearkilla, might get more on insurance. 😉

  37. I don’t think we will see a correction this year. I just can’t imagine what combination of factors could turn the market around that quickly outside of global recession.

    The correction could be as early as next year but I suspect 2019 is more likely based on previous run ups.

    I also think that the next correction will be very unlike our previous two plateaus, Without massive drops in interest rates, prices will drop significantly to get affordability back in line.

  38. I agree with Hawk here. The number one sign that a market is imploding is low listings, high demand and rising prices.

  39. I don’t deny it’s insane but the insanity is happening. The POS we are renting sold for way too much, instantly, with no inspection at all. Poor quality reno throughout. Fridge leaks, stove top broken, sink leaks, dishwasher sucks, washing machine stinks (we bought our own). It’s just not worth slightly south of a million. Yet…. that’s what it sold for.

  40. Saanich East listings are the highest in months Dasmo, as well as Oak Bay. It’s still technically winter and March/April will only bring more listings which can easily shift the market south. As we’ve seen sales in Oak Bay getting price slashed in order to get sold in a thin market.

    When I see new one bedroom condos with front row views of crack central on Pandora going for over $500K you know this market is about to blow bigtime. But there is a McDonalds across the street for when things get tight paying the $2000 plus a month mortgage plus strata.

  41. Thing is Hawk, at these inventory levels there doesn’t need to be many fools. With the flames stoked high from last years action I expect there to be more than enough this spring.

  42. When every bank and financial entity in Canada who lends the mortgage money and international entities that lend the bond money to Canada warns of extreme danger, I’d say it’s pretty obvious what has happened in Vancouver’s 20% drop is coming here anytime now. There can only be so many stupid people left in the fool pool like any other market top.

    You can be a pompous know it all who got lucky as you said, or you can look at the over valuation warnings and use financial intelligence. Luck is always fleeting, like FOMO and easy credit.

    Fitch warns Canada’s housing markets are ‘unsustainable’

    http://www.bnn.ca/fitch-warns-canada-s-housing-markets-are-unsustainable-1.673597

  43. you can’t accept the inevitable conclusion to the largest Canadian housing debt bubble in history

    There is some truth to the saying that nothing is inevitable but death and taxes.

    Bubble? Maybe. Maybe not. Crash? Maybe. Maybe not.

    Prices going up forever in a straight line – extremely unlikely. Prices recovering over time – extremely likely.

    What house prices will do in Victoria has been incorrectly predicted by you for what – 10 years? 20 years? Your own firm belief that you know the future takes away from your analysis imo. Even more, you don’t need these imminent doom predictions to make a credible point about risk.

    I do agree that a strategy of living frugally by saving on shelter costs and investing in the stock market is a fine one though. Would suit many more than being a homeowner even if the overall ROI is lower in the long-term.

  44. “Disagree that a bubble will pop in Canada just because it did in the US. A crash could occur, but it did not happen here in 2008 and it is, imo, unlikely to occur in the near future here without other precipitating factors. ”

    It was propped up by Harper by $114 Billion in shit mortgages passed onto CMHC and taxpayers, you continue to ignore that major point.

    Foreclosure is as good as bankruptcy, they walked away and went off to live in their cars, and the banks chose not to chase them down due their being swamped. Ignoring debt levels far exceeding the US and buyers over extending themselves believing this will never end is evident all over this blog.

    FOMO is running on fumes and to ignore that shows you can’t accept the inevitable conclusion to the largest Canadian housing debt bubble in history. The markets have been on an 9 year roll, just because Victoria didn’t participate til the last few doesn’t mean there is some law that prevents a crash because we missed out trying to imitate Vancouver gains based on money laundering and mass speculation, the latter being what is happening here now.

    Ignoring new US policies coming in and the global turmoil this is causing is another major catalyst you ignore. Trump is on a psychotic mission and it’s going to send markets into the most volatility in history. He hasn’t even started to blow this thing up.

  45. TO, Vancouver, Seattle, San Francisco, New York, most of Hawaii, Los Angeles

    What do all these appreciation markets (including ours) have in common? They are all places to which a statistically significant number of people with means relocate irrespective of how the economy is doing.

  46. Hawk that article is from 2011 and foreclosure is not bankruptcy especially in a non-recourse lending environment like much of the US.

    In a non-recourse mortgage if the borrower fails to make payments, the lender can seize the house but has no recourse to any other of the borrower’s assets so a homeowner who is underwater can walk away from the house and many did ergo the high foreclosure rate. In some parts of the US this was a smart decision imo.

    Although this can be a logical choice, it is one not available in Canada except in Alberta and Saskatchewan and even then it is only available to uninsured borrowers. Prices would have to drop more than 20% for it to make financial sense to do this in some situations.

    Losing your home due to a job loss is part of the bubble popping ICYMI. Many health problems and divorce etc can be related.

    Agreed as to the relation between job loss, health issues and divorce. Disagree that a bubble will pop in Canada just because it did in the US. A crash could occur, but it did not happen here in 2008 and it is, imo, unlikely to occur in the near future here without other precipitating factors. The best defence to this is risk management on your investment decision.

    Downplaying the real effect of the US crash is the most asinine thing I’ve read on here.

    I’m not downplaying the effects. I’m telling you that RE in appreciation markets has recovered from the 2008 crash. If you held you’d have made back all your gains. I’m suggesting that if you can do the same here there is a strong likelihood that you will make money on your house long-term.

    I also note that in other markets in the US this is still not the case. There are still underwater homeowners and these markets are less desirable overall for a number of varied reasons. I would not, in a downturn, count on some markets in Canada to return to peak in seven years or so if there was a drop.

    My money is, however, invested based on an analysis that we are in an appreciation market and likely to recover within this time frame. I could be wrong, things are unpredictable but this is my best guess without a crystal ball. You can make a different assessment and different investment decisions as a result.

  47. Readers, you can believe in totoro’s reasoned and measured view of (local real estate) investing, or you can believe Mister-I-Sold-My-House-Thinking-There-Would-Be-A-Crash-And-Prices-Increased-40%-Since-Then-But-My-Stocks-Are-Up-500%.

  48. It’s as if by half-way acknowledging and admitting the market may go down (but then they effectively make the drop inconsequential), renders an 800k mortgage a rational choice.

    Marko, have you ever had a client who took out an 800k mortgage, or even close? What are the ranges of borrowing of the clients you’ve worked with?

    Mike Grace, you’re the other person who interacts with buyers on a constant basis, what proportions of buyers borrow what amount?

  49. ” but there were not extra millions who went bankrupt just because they invested in housing.”

    “The use of misleading comparisons on this board that go on for years and years while never coming true are annoying.”

    Yes, your BS assumptions are getting annoying as usual. I like the facts myself. Over a trillion dollars went to bail out homeowners while approx. 8 million plus went into foreclosure/bankruptcy and just walked away. Losing your home due to a job loss is part of the bubble popping ICYMI. Many health problems and divorce etc can be related.

    Downplaying the real effect of the US crash is the most asinine thing I’ve read on here.

    “Already some 5 million homes have been lost to foreclosure; estimates of future foreclosures range widely. Zandi, who has followed the mortgage mess since the housing market began to crack in 2006, figures foreclosures will strike another three million homes in the next three or four years.”

    “Prices decline, that pushes people underwater,” he said. “There’s 14 million people now underwater. Half of those are underwater by more than 30 percent. That’s the fodder for (more) default.”

    http://www.nbcnews.com/id/42881365/ns/business-personal_finance/t/no-end-sight-foreclosure-quagmire/#.WLL8zvkrKUk

  50. I see. I stand by the statement that these markets tend to recover rather quickly.

    For me in the context of a long-term investment in housing, and as I’ve stated here many times, the window for this is around seven years and this is what I view to be rather quickly when compared to less desirable markets that can drop and stay down longer or never recover fully to peak.

    I believed this when I bought in 2009 and 2012 at a time when most believed there would be a crash and that interest rates would rise. I also thought interest rates would rise and prices might fall but I still bought. Why? Because there is only the deal of the day, your life is time limited and you don’t have a crystal ball.

    For the house we bought in 2009 we had to wait seven years to see any gains at all and at many points during these years after transaction costs the house would have been a net loss if sold. A real problem if we had to sell. And then suddenly we gained 40% of the purchase price on the sale last year and overall ROI far exceeding the stock market returns during the same period due to leverage.

    For the house we bought in 2012 we only had to wait four years, but that was chance not skill. The market changed and we did not predict this. We were prepared to hold through a crash. I would still buy today at today’s prices provided we identified a home that worked for us and were able to afford it without undesirable lifestyle impacts.

    As I’ve said before, looking at past performance, seven years is the minimum I would look to hold right now if buying a home in Victoria – or any appreciation market. I would not invest in a cash flow market with a view to experiencing any appreciation at all. It can happen but depreciation can also happen where rents provide positive cash flow. Rare to get both cash flow and stable appreciation.

    It is now nine years since the 2008 melt-down. Some markets in the US are still well below peak. In some areas there are sub-markets that are well above peak and other areas nearby that are below. Desirability/demand appears correlated with those areas that are above peak.

    https://www.washingtonpost.com/graphics/business/wonk/housing/overview/
    http://www.globalpropertyguide.com/North-America/United-States/Price-History

  51. You did. “Such markets tend to recover rather quickly from down periods. Similar markets include TO, Vancouver, Seattle, San Francisco, New York, most of Hawaii, Los Angeles”

  52. I wouldn’t say Seattle wasn’t affected much. Prices dropped some 30% and it took 7 years for prices to recover their peak nominal values..

  53. How many in the US in 2005 went into it for an investment at far less levels of debt and went bankrupt thinking the same babble bullshit? Millions.

    There were a million consumer bankruptcies total in the US in 2008, about 260,000 more than in 2007. Two out of three bankrupts had lost a job and half experienced a serious health problem. Medical expenses are the reason 62% of Americans file for bankruptcy . The housing market crash was bad for the economy and highly leveraged people who had other life issues, but there were not extra millions who went bankrupt just because they invested in housing.

    And just like we are not Toronto or Australia or Japan, we are not the US and the US market is not the same across the US. Markets are local with some national influences like lending rules and interest rates. Many people held and in appreciation markets they are now doing very well. Some are still underwater in other areas of the US and this has resulted in even more divergence between appreciation and cash flow markets as consumer confidence is a big factor.

    The use of misleading comparisons on this board that go on for years and years while never coming true are annoying. One day prices will stop rising or decline. You can see the effects of economic downturns in some areas of Alberta and there would be impacts here if prices dropped and the employment rates took a nosedive. It could happen but the main thing is to make sure you manage your risk. Get life insurance. Don’t buy if you are in a shaky relationship.

    Just like no one here predicted that the rise would happen when and how it did, I don’t believe anyone here has a crystal ball on its end.

    Even further I believe it is largely irrelevant to an investing decision for most people, just like trying to time the stock market has been proven a losing strategy. Buy when you are ready and can afford it or invest your money otherwise in something with acceptable ROI.

    There are all sorts of ways to live and buying a house right now is not the be all and end all unless this is what you really want.

  54. A fool is one who thinks a house is an investment. 1981 was a peak year for over-valuation like Vancouver was last year and Victoria is now as per CMHC.

    How many in the US in 2005 went into it for an investment at far less levels of debt and went bankrupt thinking the same babble bullshit? Millions.

  55. You’re also comparing a leveraged investment to a non-levered one. Things look very different if we compare 2009 to now and throw in some leveraged investment in stocks.

    Yes and in my opinion this reflects reality and is the valid comparison and we were talking about ten years – wait to 2019 and do your comparison or compare any other ten-year period but don’t pick the year that gives you the best results.

    And leverage is the key reason, along with the tax exemption, that primary residences outperform the market – well that plus the fact that you get a shelter benefit with an economic component on top of the return unlike with stocks.

    70% of Canadians do not use a mortgage worth of leverage to buy into the market due to risk of a call and financing rates/availability. Some more advanced investors might do this with a HELOC Smith Manoeuver and this might change things a bit, but you’d need the home equity to start with otherwise you are taking a big risk, even bigger after a long uptick in the market.

    I wouldn’t do this myself, but if you have access to 400k without being a homeowner at the same rate as a mortgage and you aren’t worried about a call it could work – just in practice there is not a widespread use of this due to perception/reality of risk and you can’t live in or rent out a stock in hard times. Also just not a strategy recommended by any prudent investor I know.

    People do commonly borrow at low insured rates to buy a family home. They also have to live somewhere and the cost of shelter is built in to the payment and a benefit not available with stocks which also adds to the return.

    You’ve only demonstrated that then was a good time to buy and now is a good time to sell.

    Here is 56 years of data for Victoria house prices: https://househuntvictoria.ca/2016/03/17/a-brief-history-of-prices/

    I’m concerned with the long view and don’t regard housing as an investment. It’s not clear to me if we disagree on this or not. Would (or do) you invest only in your primary residence?

    I regard housing as an investment just like the other types of investments we have. I don’t buy a house unless I believe it will an acceptable return on capital. Why would I? That is the key to financial independence and the money is representative of life energy. I have no desire to pay for a shelter that will be cash flow negative or less than the market would return.

    I would recommend starting out with a primary residence, not stocks, if you know you want to stay in a place for long enough to wait out a downturn and you have enough for a down payment. You can’t beat access to capital that a mortgage provides.

    This is not the only way to go, you could also live in a cheap apartment to save and invest in the market if you have higher incomes and you aren’t sure you want to own a home. Nothing wrong with that and it only takes a million invested to create a safe indefinite withdrawal rate of 40k per year which enables a good lifestyle if you are into travelling in lower cost places part of the year.

    Even better, start your own business if you are so inclined. Or try to get a job with a good pension if you are not.

  56. I own a few properties near red barn markets and their rents increased dramatically once the red barns opened.

  57. Have you done the math for a primary residence vs. stocks based on past performance?

    No, I hadn’t. I looked up some charts for Hong Kong and San Francisco briefly and they appeared to underperform the S&P in the long run.

    Do you have data going back the last half century or more for Victoria?

    I couldn’t find anything long-term, but here’s Van from 1977 to last September, with what appears to be about a nominal 8%/yr increase in detached prices:

    In comparison, portfoliovisualizer.com says US large caps returned about 10.5%/yr in the same timeframe. The difference between 8% and 10.5% compounded over forty years is more than 2.5x.

    Ex. house bought in 2006 for $500,000 with $110,000 investment – current value $983,576, plus principal pay-down of 70k.

    You’ve only demonstrated that then was a good time to buy and now is a good time to sell. You’re also comparing a leveraged investment to a non-levered one. Things look very different if we compare 2009 to now and throw in some leveraged investment in stocks.

    I’m concerned with the long view and don’t regard housing as an investment. It’s not clear to me if we disagree on this or not. Would (or do) you invest only in your primary residence?

  58. More weak assumptions when Vancouver average prices just droppped 20% and sales drop 40% ? In 1981 prices were rising to all time highs regardless of high rates, then the bottom fell out.

    2016-1981 is 35 years. A whole start to finish life cycle for home buying for many. Waiting for 1981 to come back is a fools game. Like trying to time the stock market and holding cash.

    The Vancouver average is down due to low high-end sales which seems to be a direct result of the foreign buyer tax. Try the median – down what – 3% from peak for SFHs and up for condos? Not to say prices won’t drop in Vancouver or Victoria, they seem poised to drop in Vancouver and boy did they have a crazy run up far exceeding ours in duration and scope, but we did not move up with them in tandem and we are a different city with different factors at play. One day the ascent will stop here, just not sure when.

    it has been quite awhile since I’ve seen a property on Monterey or Oak Bay sell for under assessed value

    Weren’t the new and much increased assessments just released in January? How many SFH sales have there been on Monterey or in Oak Bay since then?

  59. John,
    Chamberlin had a big price slash a month or so ago as well. Goes to show that with The Red Barn a few houses away it did not effect the price like the Barn pumpers like to spin.

  60. A house at 1423 Fairfield also sold under assessed value at $800,000. Looks like a nice little house on a 6,000 square foot lot. House is assessed at $155,000. That makes the lot worth $645K

    The same for another place at 1041 Chamberlain that sold for $850,000 with the house assessed at $189,000. That’s a 64 x 120 feet lot for $661,000.

  61. Barrister it has been quite awhile since I’ve seen a property on Monterey or Oak Bay sell for under assessed value.

  62. “I have no idea when this will occur, just that a crash cannot still be called “imminent” when prices keep going up or flat for decades.”

    More weak assumptions when Vancouver average prices just droppped 20% and sales drop 40% ? In 1981 prices were rising to all time highs regardless of high rates, then the bottom fell out.

    Inflation numbers yesterday showed that Canadian rates have a chance to go up here, not just via the US bond market.

    ICYMI via Stats Can,

    Canada’s inflation rate spikes to two-year high as gas prices soar 20%, the biggest hike in six years

    http://business.financialpost.com/news/economy/canadas-inflation-rate-spikes-to-two-year-high-as-gas-prices-soar-20-the-biggest-hike-in-six-years

  63. An historic plunge of 5-year fixed rates from ca. 6% to 2% probably had more than a little to do with this. From here on out, either the rates stay low, in which case this was a one-off boost, or they rise and that component of gains is undone.

    Maybe. A rise to 6% would have some dire impacts on the Canadian economy and I really doubt that government policy will move in that direction. If rates stay low a plateau could occur – prices definitely cannot keep going up forever like this – it will have to moderate/stop imo. I have no idea when this will occur, just that a crash cannot still be called “imminent” when prices keep going up or flat for decades. Given inflation a plateau is actually a drop in any event.

    It seems especially foolhardy given that only the very hottest real estate markets compare to broad stock market returns over the long run.

    Have you done the math for a primary residence vs. stocks based on past performance?

    Leo has for houses in Victoria and without inflation adjustment the return has been 7% per year on average over the long term. Now add in leverage and some accounting for the economic value of the shelter benefit you are gaining (rental equivalent cost) less expenses of ownership and the capital gains tax exemption.

    Ex. house bought in 2006 for $500,000 with $110,000 investment – current value $983,576, plus principal pay-down of 70k. If you sold through Marko on a mere listing today you would walk away with approx. $550,000 tax free on your $110,000 investment. Now do the math with putting only 5% down and paying the CMHC fees!

    If you bought $110,000 worth of stocks in 2006 this becomes $216, 387 at a 7% return, you would walk away $106,387 on your $110,00o investment that may or may not be taxable.

    This is without adjusting for other rent v. buy factors like a suite or renting a cheaper place than the costs of ownership and investing the difference. You can use the rent v. buy calculator for that.

    In my view a primary residence is the clear winner. A second home not so much.

    To me, Victoria RE carries a fair bit of risk: you’re likely taking a heavily leveraged position with no diversification at a time of high valuations and very low interest rates.

    Yes. In general though if you don’t have to sell this is a significant mitigator of risk. Of course divorce and illness can not always be controlled for.

    What’s this “appreciation market” term? It sounds like you’ve given the Victoria market a special label to justify some assumption of future price gains. This sounds like circular reasoning.

    An appreciation market is my term and this is my theory – you don’t have to agree with it.

    It is a market that has a long track record of appreciating at a rate higher than inflation. This does not mean prices will never go down, just that this is what has occurred to date.

    In such a market there is significant retained home equity that buoys the system and housing is looked at favourably as an investment separated from income. Such markets tend to recover rather quickly from down periods. Similar markets include TO, Vancouver, Seattle, San Francisco, New York, most of Hawaii, Los Angeles… I am not predicting the future will always continue this way, just that this is what has occurred and appears a likely possibility long-term because past long-term performance is the best indicator we have.

    And then there are other markets that are not as desirable where you can actually get a good return from rents but the houses appreciate at or below inflation. Most of the Nova Scotia (except Halifax), PEI and Newfoundland are like this.

    Smaller towns in the north are often like this. Almost all of the rust belt in the US has been like this. Some of these properties are good investments for cash flow as they can bring in 1-2% of the value of the home per month – not something that happens in appreciation markets.

  64. The taxing of capital gains on suites rather than the entire residence is another example of Canadian policy makers treating the symptoms rather than the disease, as they are all terrified of losing that boomer vote.

    Why can’t they tax capital gains on principal residence? They could index it to inflation and scale the tax based on years living at that residence (i.e. 50% full marginal rate for < 1 yr down to no capital gains if you lived in your house for 5+ years). Add in a few exceptional cases for selling early such as relocation due to work, death of spouse, etc., and you’ll have a reasonable tax that doesn’t punish good homeowners, won’t take away the boomers nest eggs, and will give house prices a more reasonable projection.

  65. 1050 & 1033 Monterey Ave were in better condition and had details that 1587 didn’t, eg., more woodwork, coffered ceilings, better cabinets, etc. (and maybe larger lots?) Also, from what I’m seeing, proximity to Oak Bay Ave isn’t a huge selling factor for some. For example, when I host out of town friends, they like all our villages in all different parts of Victoria including as far out as Cadboro Bay or Cordova Bay – to them, an extra 5 or 10 minute drive is nothing. When I grew up, these seemed like the boonies but not anymore. Times are a-changin.

  66. Barrister the sale on Monterey is a bit of a shock. I would have guessed that that property would have sold for a lot more than 1.15 million. Just the house on this lot is assessed at over $400,000!

    1050 Monterey sold a year ago for $1,400,000
    1033 Monterey sold two years ago for $1,444,000

  67. It’s been incredible to see what’s been going on in Toronto, ie Vancouver 2.o. And amazingly, some people think that it will plateau at these obscene prices or even at a higher price point.

    In many ways the GTA is worse. Much worse.

    Take a look at King City, ON. I have family there. It used to just be Anytown, ON with lots of humble, middle class folks in modest homes. Now cookie-cutter McMansions are popping out of the old farmland on the outskirts.

    One can be yours, too, for a cool $3M:
    https://www.realtor.ca/Residential/Single-Family/17572777/82-CHUCK-ORMSBY-Crescent-King-Ontario-L7B0A9-King-City

    Fifth of an acre? Check.
    No trees or privacy? Check.
    Every other house looks the same? Check.
    Two-hour round-trip commute to downtown? Check.
    Small town excitement? You bet.

    What kind of brain parasite does one need to think these are rational purchases? These are houses for the 0.1%. We’re talking Palo Alto or Greenwich prices, or before the GTA and Vancouver lot their minds, Forest Hill or Shaughnessy prices. I like King, for what it is, but I cannot fathom the appeal at that price range.

    This doesn’t make a lick of sense to me. What happened to medical specialists and Bay Street bigwigs having fancy houses in fancy places, not way out in the middle of nowhere?

  68. All sorts of people saying the same words on this board in 2008 and then prices did plateau for years instead of dropping as most thought.

    An historic plunge of 5-year fixed rates from ca. 6% to 2% probably had more than a little to do with this. From here on out, either the rates stay low, in which case this was a one-off boost, or they rise and that component of gains is undone.

    It, like stock market drops, is inconsequential if you are invested for the long-term and don’t have to sell.

    I would agree only under the assumption that other investments aren’t being sacrificed. But comparing with stock markets sounds like you’re drawing some kind of equivalence, and that worries me.

    I think HHVers are a much savvier lot than the general population, so maybe the buyer’s circumstances you envision are different, but the anecdotes I’ve heard of the house rich / cash poor pumping everything they have into RE and neglecting their RRSPs/TFSAs/etc. is terrifying. It seems especially foolhardy given that only the very hottest real estate markets compare to broad stock market returns over the long run.

    To me, Victoria RE carries a fair bit of risk: you’re likely taking a heavily leveraged position with no diversification at a time of high valuations and very low interest rates.

    Buying in an appreciation market is a long-term play.

    What’s this “appreciation market” term? It sounds like you’ve given the Victoria market a special label to justify some assumption of future price gains. This sounds like circular reasoning.

  69. John Dollar – I never had a problem w/ CRA taxing people’s second, third, fourth properties w/ Capital Gains.

    What I do have a problem w/ is the CRA now appearing to give people less incentive to ever supply a suite for a permanent tenant to the rental market in their Primary Residence. So, in cities w/ a shortage of rentals like Victoria, they are making the problem worse w/ the new declaration on the income tax form. Myself, I know now that I will never ever supply a suite to a permanent tenant because of this change to the income tax form. (and I might have otherwise – esp. if Oak Bay ever did legalize it)

    Now I have to wonder – what is the appeal of a house w/ a suite now? How many other people will now also make the decision to not supply a suite to a permanent tenant? How much harder is this going to make life for tenants seeking non-existent rentals?

    The Owner Builder Exam is also making supply and affordability of housing worse – so the Province works in concert w/ the Fed’s to make the housing situation worse.

  70. “Guarantee you that less than 25% of builders in B.C. would pass the owner-builder closed book exam if you put it in front of them right now.”

    Just curious Marko, did you pass the test ? Or did you fail and is why you are so upset ?

  71. “All sorts of people saying the same words on this board in 2008 and then prices did plateau for years instead of dropping as most thought.”

    No one expected Harper to take $114 Billion of bad mortgages off the so called “conservative lending” banks hands and dump them into taxpayers hands and cover it up for years either. If the laws of economics were allowed to react without being in a rigged market there would have been a major correction/crash like the US.

    That won’t be happening next time when JT can’t even rustle up his $150 billion infrastructure plan for over a year and half now. He’ll be selling off Canadian infrastructure like Trump is planning.

    Trump and Trudeau plan to sell out our public infrastructure

    http://vancouversun.com/opinion/opinion-trump-and-trudeau-plan-to-sell-our-our-public-infrastructure

  72. I hear you Local Fool. You can add; “People have talked about a crash for years and it’s only gone up.” To that list of justifications….

  73. Going back to the home front, some indications that there might be less buyers but not exactly a swarm of listings either.

    Heard that the house on Monterey sold about 50k under asking at 1.15 with only two offers. Smaller lot, older house, no garage but a very short walk to the Penny Farthing Pub and the heart of Oak Bay. On the other hand I am still surprised (although I should not be) at how little a million dollars buys you these days.

  74. – Home building is a profession.

    I can change my own car brakes, I can sell my home privately, I can represent myself in court, etc.

    -To become a licenced professional you need to pass an exam to prove your competence (This should include demonstrating prior experience and education prerequisites).

    I don’t recall having to write an exam to become a licenced builder/developer? There are ton of “licenced builders,” in Victoria that in my opinion have very poor prior experience. Guarantee you that less than 25% of builders in B.C. would pass the owner-builder closed book exam if you put it in front of them right now.

    -To maintain professional standing you need to commit to continued learning and development.

    Such as going on a curise once a year? http://www.buildingitright.com/cpd-at-sea.html

    As Leo said….we need proof that owner-builder homes are problematic, or significantly more problematic than licenced builder homes. In Victoria, for example, I doubt your typical spec Happy Valley home is better constructed compared to your owner-builder Oak Bay or North Saanich home.

  75. renders an 800k mortgage a rational choice

    A 800k mortgage may indeed be a rational choice based on the performance of RE in Victoria over the past 35 years – depending on your income and other assets.

    And amazingly, some people think that it will plateau at these obscene prices

    All sorts of people saying the same words on this board in 2008 and then prices did plateau for years instead of dropping as most thought.

    The rhetoric is depressingly similar every time a RE market goes out of control.

    I’d say rhetoric based on a set viewpoint not backed up by objective evidence is depressing. Good information and an understanding of your own comfort with risk and risk mitigation based on the best available information is not.

    It’s as if by half-way acknowledging and admitting the market may go down (but then they effectively make the drop inconsequential),

    It, like stock market drops, is inconsequential if you are invested for the long-term and don’t have to sell. Could be devastating if you do. Buying in an appreciation market is a long-term play. You just get lucky if you make money short-term.

  76. @ Hawk,

    It’s been incredible to see what’s been going on in Toronto, ie Vancouver 2.o. And amazingly, some people think that it will plateau at these obscene prices or even at a higher price point. All kinds of justifications or ham-handed arguments are being put forth as such.

    Foreign money. Boomers. Lots of new jobs being made. Inflate the debt away. World class (there’s even an article out now calling Victoria a global city). No new land. It’s different here, and different this time. The rhetoric is depressingly similar every time a RE market goes out of control.

    A few people I have talked to locally and that have bought (and some that haven’t) seem to like to say, “Well, the market may drop here and there, but it will just come back”.

    It’s as if by half-way acknowledging and admitting the market may go down (but then they effectively make the drop inconsequential), renders an 800k mortgage a rational choice.

  77. AG, that’s why you make 2%, only an idiot would come to that conclusion but John Dollar already explained that.

  78. “How lenders are sidestepping Canada’s mortgage rules with ‘bundles’ of debt”

    In the short term, that sounds like very bullish news. I didn’t realize you were so positive on the market, Hawk. Thanks for the update.

  79. When the banks keep warning and the pumpers keep cheering you know the end is near. Wasn’t the TSX down over 240 points yesterday ? No comment from Mikey of course.

    Canada’s inflation rate spikes to two-year high as gas prices soar 20%, the biggest hike in six years

    http://business.financialpost.com/news/economy/canadas-inflation-rate-spikes-to-two-year-high-as-gas-prices-soar-20-the-biggest-hike-in-six-years

    RBC CEO says Toronto real estate market ‘not sustainable,’

    The CEO of Canada’s largest bank says it is time to consider bringing measures that cooled Vancouver’s sizzling housing market to Toronto.

    “You’re seeing 20 per cent house price growth in a market where you shouldn’t see that much,” McKay said in an interview. “That’s concerning. That’s not sustainable. Therefore, I do believe we are now at a point where we need to consider similar types of measures that we saw in Vancouver.”

    http://business.financialpost.com/news/fp-street/rbc-boost-dividend-after-24-profit-growth-to-3-billion-beats-expectations

  80. Pretty soon the bubble will pop and the builder exam will be the last thing on anyone’s mind as the mortgage lending gets shadier by the day.

    How lenders are sidestepping Canada’s mortgage rules with ‘bundles’ of debt

    “This is what happens at the late stage of a housing bubble – the quality of lending goes down,” he said.

    http://business.financialpost.com/personal-finance/mortgages-real-estate/how-lenders-are-sidestepping-canadas-mortgage-rules-with-bundles-of-debt

    ‘They are rules. They are not guidelines’: Canada’s financial watchdog warns lenders against bundled loans

    http://business.financialpost.com/news/energy/exclusive-canadas-financial-watchdog-warns-lenders-against-bundled-loans

  81. @Jim Dandy

    I’m absolutely for increased regulation and education of owner builders if anyone can show there is a serious problem with them.

    I also completely agree that we can’t allow any idiot to build a house of their own design just because they want to. But the thing is, there are already tons of checks and balances to ensure that doesn’t happen. We have engineers that have to approve designs, we have inspectors that check.

    So if you can provide evidence (or even just several anecdotes) that show that despite these checks and balances, owner builders are building inferior buildings to professional builders, then you have a point.

    By the way, I am fine with restrictions on owner builds if they are being abused. It is perfectly reasonable to crack down on people abusing the owner build to run a business. But as far as I can tell this really isn’t happening (otherwise there would be far more requests to sell on file).

    Regulation is fine if it’s based on evidence. The argument that “it’s a profession so it should be automatically heavily regulated” doesn’t hold water.

  82. I can change the brakes and transmission in my own car then go for a drive on Hwy 99 at 110Km/h at rush-hour without breaking a single regulation, potentially endangering thousands of people.

    But, I need to pass a non-sensical exam to schedule the carpenter and the plumber to do work laid-out by a licensed architect (or house designer) to meet code and approved by the authority that issued the building permit? Really??

    No hate, but common-sense indicates there is overreach here, clearly to the benefit of licensed builder’s.

  83. As a custom home builder I can’t help but weigh in on this topic yet again, even if I am significantly outnumbered.

    Ok I’ll outline my opinion now (gulp).

    -Home building is a profession.
    -Professions need regulation and oversight.
    -To become a licenced professional you need to pass an exam to prove your competence (This should include demonstrating prior experience and education prerequisites).
    -To maintain professional standing you need to commit to continued learning and development.
    -Professions need a code of conduct and a method to penalize those who break it.

    What I believe is wrong with the current HPO owner/builder system:

    -No study guide for owner/builders.
    -Not enough transparency with information flowing to the public.
    -Those who have proven their ability to build homes previously are given no chance to avoid the exam.
    -Sounds like some pretty far out and silly questions are being asked on the exam.

    There is certainly significant room for improvement on this issue. But I really don’t think that allowing the general public build homes and sell them without demonstrated knowledge/skills is the answer. I meet many people who are frustrated about not being able to build their own home. When I ask questions about how they would go about building, and where their experience level is, I often think that the HPO has saved these people from themselves. It’s very easy to underestimate the complexity of the building process, and how quickly things can go south on you.

    There you have it my friends. The bastard builder has spoken 🙂

    Cue the hate mail?

  84. In housing news, still not enough listings coming on. 217 new in the last 7 days while 180 have sold, and 27 others off market. So net gain of about 10 listings in one week. Hardly what we should be seeing at this point.

  85. They hired contractors to move the top of the existing house to one of the lots, adding new first floor, new plumbing/electrical/window/insulation/external walls, then sold the rebuilt house.

    They are actually not allowed to sell that house without living in it for 12 months first.

    So was it an owner build issue? Who should take responsibility? To whom the family should report the issue to?

    Yes, owner build issue. The owner builder is responsible and can be held liable. When the owner builder sells a house he/she is mandated by the Homeowner Protection Act to provide the equivalent of a new home warranty to purchasers of the house for the period 10 years after construction (2 years materials and labour, 5 years building envelope, 10 years structural).

    http://www.bclaws.ca/civix/document/id/consol20/consol20/00_98031_01#section23

    I don’t think it’s so different than a builder built house. How many issues get resolved between the buyer and a commercial builder without a warranty claim being made?

  86. Talking about owner-build issues, they may not all be reported. Let me give one example:

    Two neighbours joined together, bought another neighbour house and subdivided it into two lots. They hired contractors to move the top of the existing house to one of the lots, adding new first floor, new plumbing/electrical/window/insulation/external walls, then sold the rebuilt house.

    4 years later, the family who bought the rebuilt house started having backup sewage issue. They hired plumbers and spent $950 and found that the slope of one section of the sewage pipe was wrong, so things piled up in that section and blocked the pipe. It is obviously an issue at construction time, the plumber hired then didn’t do a good job.

    So the family went to the GC, but the GC said the neighbour was the owner builder and should be responsible. The family then went to the neighbour, the neighbour just gave them the engineer name who has nothing to do with the sewage pipe. At the end, as a good will, the GC agreed to send the original plumber to fix it (opening up carport concrete floor and reroute the pipe), but they didn’t cover the $950 earlier cost, nor the carport floor repair cost (another $800).

    So was it an owner build issue? Who should take responsibility? To whom the family should report the issue to?

  87. However, if someone does this, there would be no structural changes to their house, and it’s a small portion of the house, so would they avoid having to pay capital gains tax?

    Definitely. Occasional rental of a room on airbnb won’t be a problem. Now if you bought a 7 bedroom place for yourself and you airbnb 6 of those bedrooms year round that’s a different story.

  88. I wondered why some rental ads say “students only”. I now realize one reason could be because students won’t declare the property as their residence so there will be no red flags for tax purposes.

    Also, in checking on Airbnb, I was surprised by how many people are renting out a bedroom in their house with shared kitchen access. I like my privacy, so I could not imagine this: it sounds like the “rooming houses” my parents spoke of from the 1950s. However, if someone does this, there would be no structural changes to their house, and it’s a small portion of the house, so would they avoid having to pay capital gains tax?

    I have never been a landlord, so I know no more than what I picked up superficially following the HHV discussion. However, I suspect the lack of clarity comes from the laws/policies not really keeping up with all the recent changes in accommodation arrangements or the size of potential capital gains. The landscape is very different than it was even a few years ago.

  89. I called my personal accountant, came referred from a few business associates and works at large firm, regarding my suite two weeks ago (25% of house, interior access, etc.,) and he said “no need to worry about it.” Then I had my friend call his personal accountant, another reputable one, same answer……

    That was my accountant’s answer too (based on small floor space) prior to all the discussions on this board and Curious Cat’s analysis and I think she is an accountant. However, the new reporting forms don’t seem to highlight the need to report floor space for suites in primary residences. Haven’t asked again because I don’t have a potentially ambiguous situation myself any longer.

  90. It is possible I guess that CRA would generate audit leads using property tax assessment data etc. The problem is those leads would likely recover a pittance compared to actual huge fraud like cash only businesses. I just can’t see this happening. Even the cost of implementing an audit lead system using the data would probably preclude them from doing it.

  91. How about we just wait for some actual local cases to start showing up? I cannot see the media not picking up this story if someone sold your average Joe & Suzy home with a suite and got a huge tax bill. It would be a great media story as it would affect every 3rd house in Victoria and Vancouver.

    Couldn’t agree more.

  92. I called my personal accountant, came referred from a few business associates and works at large firm, regarding my suite two weeks ago (25% of house, interior access, etc.,) and he said “no need to worry about it.” Then I had my friend call his personal accountant, another reputable one, same answer……

    How about we just wait for some actual local cases to start showing up? I cannot see the media not picking up this story if someone sold your average Joe & Suzy home with a suite and got a huge tax bill. It would be a great media story as it would affect every 3rd house in Victoria and Vancouver.

  93. Luke, do what you want to. But I’m not going to gamble that CRA are fools or they don’t have access to the real estate board’s data, municipal and provincial records, Canada Post or even google maps.

    The new requirements on this years tax form will assist them in tracking your properties more easily than in the past. One of his examples was when a person bought a new home but kept the original house and turned it into a rental. Now it will be a lot easier for them to track what you own.
    The person from CRA did explain that basement suites can be a complicated issue. How much of the house is suite and how much is owner occupied. But with a little work they can figure it out well enough and then you have to prove them wrong.

  94. CRA doesn’t make it easy with form T2901 or the worksheet. This is the form to claim an exemption or report a capital gain. There is no worksheet that identifies partial use of a home for partial exemption as far as I can tell.

    The CRA Rental Income Tax Guide, T4036, and S1-F3-C2: Principal Residence (see partial changes in use) state that if all of the following conditions are met, you will not be considered to have a change in use:
    – the part of the home used for rental purposes is small in relation to the size of the whole property,
    – you do not make any structural changes to the property to make it more suitable for rental purposes, and
    – you do not claim any capital cost allowance on the part you are using for rental purposes.

    If all of the above conditions are met, you will likely not have to report a capital gain when the property is sold or the rental is stopped. I think the one which will apply to most suites in Victoria is the structural change – most homes have undergone structural changes – most suites will attract capital gains it seems.

    So even if your in-laws are not paying rent but there is a separate suite that seems to attract the tax. Definitely if you are collecting rent from students and not reporting and there is a structural change you will be liable for interest and penalties if caught on both income and capital gains even if they don’t use it as their permanent address. If you decommission a suite there are rules that apply to pro-rate the exemption for the years you are eligible. If you have someone rooming with you that doesn’t meet the definition if there were no structural changes and they share common amenities.

    If you don’t claim this on your tax return you are opening yourself up for reassessment, penalties and interest. Not worth it imo but this is an issue that is likely worth some professional advice if you are in doubt.

  95. Sorry this is a bit off topic from ‘The Owner Builder Exam’, but…

    John Dollar – thanks for inquiring w/ CRA about suites. It would appear though, from the back/forth that went on between you and Totoro – that they don’t necessarily know if you have a suite or not – unless it’s on the BC Assessment roll (which apparently it almost never is?) or you declared the income on your income tax form over the years from your perm. tenant.

    My questions are do they know if you have a suite if the following applies: what if you have a suite in your home you never rent, or you never rented it out to anyone? What if your in-law moves in (very often the case in Oak Bay – they almost always call them ‘in law’ suites here – is it then considered a ‘suite’ when you go to sell your home?). What if you start a vacation rental with your suite? What if you rent your suite to students who don’t use your address for income tax and only live there temporarily? What if you had a suite for a while, never rent it, then ‘decommission’ it later on? What if your ‘suite’ is not considered by them to be an ‘accessory’ to the main house (i.e. a room in your home rented to a ‘lodger’ with a hot plate?) How do they determine or know that? How actively are they or will they start pursuing this? So many questions…

    This all appears to me to just incentivize home-owners to avoid having permanent tenants in suites at all – thereby decreasing the rental housing stock further, while the Gov’t appears to not do much to increase rental housing stock elsewhere. If, like Introvert, you already declared the rental income from your tenant all these years, then it’s too late for him/her to avoid Capital Gains when they go to sell their ‘Principle Residence’. May as well continue renting it and never ever sell (more decrease in listings).

    Not all suites are that obvious either – but I would agree, on my walks around Oak Bay – I’ve seen a ton of ‘obvious’ suites. I don’t hear a lot of talk in my ‘hood about Oak Bay aggressively monitoring suites… and now, Oak Bay is finally moving in the direction of recognizing and legalizing suites (we do live next to a big-ish urban centre with a housing crisis, after all).

    The end of the story is, it appears to me that the Fed Gov’t is further becoming onerous and Orwellian, and in this country we have a limited ability to protest this further ingress into anyone trying to get ahead. We don’t or can’t go en masse to Ottawa to protest (when I compare it to the UK where people can and often do easily catch a train from anywhere to London within hours at most to protest en masse, and things often happen after that, it’s nearly impossible in Canada for people to gather together in the same way since Canada is so huge). The CRA knows that people probably won’t be able to/ or willing to gather together en masses to protest this.

    With the new ‘Principle Residence Declaration’ The Capital Gains taxation on some houses with suites in big cities like Vancouver, GTA, and now Victoria that have seen large price increases will now be stratospheric, often it could now be into the hundreds of thousands of dollars on the sale of your house. This is more tax, and this is after you had a stranger in your house!

    Now, on top of this, the ‘Owner Builder Exam’ appears to be reducing the affordability and supply of homes even further, so – we have two levels of Gov’t working hard to reduce affordability and supply on all fronts – for renters, owners, builders and now first time home buyers are being encouraged by smiling Crusty Clark to take on more debt. Is it all in an effort to prevent us as much as possible from getting ahead? The message I get from all of this is: this is Canada, the different levels of Gov’t don’t want you to get ahead here! We want you to continue working as long as possible and pay more and more tax and fees wherever you turn, and weed through more and more red tape! (and we don’t even have a nice Caribbean island or dependancy to escape to – we should’ve taken Turks/Caicos when we had the chance)

  96. 25% owner-builders doesn’t really make sense to me either but it can’t possibly not be accurate, unless the BC Housing is fudging the numbers.

    What is your estimate of what percentage of Owner Builder Authorizations actually result in a constructed homes?

  97. Given BC Housing administers the Owner Builder Authorizations and the residential builder licensing and warranties, they aren’t really collecting the info, they are the source of it. Should be accurate.

    25% owner-builders doesn’t really make sense to me either but it can’t possibly not be accurate, unless the BC Housing is fudging the numbers. As noted by Leo they administer and approve the applications so not sure how the numbers could possibly be off.

    I just emailed the City of Victoria this morning to see if they will require BC Housing Owner-Builder application for garden suites.

  98. It was also an option to do an owner build but still have a builder.

    Not really. HPO has come out with bulletins in the last two months noting if someone does the foundation, framing and envelope for an owner-builder they must be licenced and you could have your owner-builder approval immediately cancelled and the builder would have to purchase warranty.

    I covered this topic in this video -> https://www.youtube.com/watch?v=0HZ7UCT5Fe8&t=25s

  99. What I learned about vacation rentals is that most are condominiums situated in the downtown core among 18 or 20 appropriately zoned complexes like the Janion. A rough estimate of about 500 downtown units. The units in these complexes generally cost more to purchase than buildings that restrict vacation rentals. In contrast Vancouver is estimated to have about 4,000 units.

    About 40 percent of vacation rentals are making a good return. And that relates to the efficacy of management and receiving good ratings.

    2016 was a very good year for tourism in Victoria so there was a very low vacancy rate. Typically a well managed downtown vacation rental will make double what a home owner would receive renting on a month to month basis.

    The vacation rental is subject to GST and the vacation rental company, will take a percentage from the home owner for their service which may range from 3 to 8 percent. If you don’t want to be involved in the day to day operations then a professional manager may add another 20 percent in cost.

    The hotel industry pays GST, an 11 percent room tax and a 2 percent destination tax. They also have to be regularly inspected. The concern of the hotel industry is not competition, it is that they have to pay more in taxes including a destination tax that advertises Victoria while vacation rentals don’t.

    One of the issues that most vacation rental owners neglect is insurance. Normal home insurance does not cover vacation rentals. You will need additional insurance which is likely to add another 30 to 40 percent to the typical insurance plan with possible exclusions for vandalism, water and glass.

    Vacation rental companies do offer insurance but lawyers have stated that what they are offering is not insurance so you should be cautious and speak with your insurance agent about coverage. You are liable if someone is hurt due to your negligence in not keeping a safe unit.

    The difficulty in financing will also extend to those that have a separate cottage at the rear of the home and use it as a vacation rental. These are the Granny suites that the Mayor wants to encourage in Victoria. At this point, most of the big banks won’t finance the property.

    If you vacation rent your basement then the banks will only use an economic rent for a month to month tenant and not the actual income you receive from the airbnb. Only 50 percent of that income will be used to determine the debt ratio.

    Getting financing may be challenging but not impossible. The big chain banks consider vacation rentals as a business and do not provide conventional residential financing. That’s why you’ll likely need a mortgage broker to find a lender for you. And these lenders typically want 3 or 4 years of financial statements.

    The explosion in the number of vacation rentals over the last decade relates to how well the tourism industry is performing. In bad years, the vacancy rate will substantially increase. Vacation rental companies like airbnb offer an algorithm that balances vacancy rates against room rates to maximize profits so you will know where to set the rental rate.

  100. Yes this is a northern gulf island. But my question remains how HPO tracks an owner-build even when a permit is issued (prior to the exam application). I wonder where they get this information from (given that even my family member who built within an ‘RD’ doesn’t recall anything beyond walking in and getting the permit).

  101. Has anyone hear experienced “mandatory” earthquake insurance. My wife was talking with our house insurance people discussing ways we could cut our insurance bill. My wife mentioned dropping the earthquake insurance which was an optional add on when we started insuring with this company. The insurance company said they wouldn’t insure us any more if we dropped earthquake insurance because of the “zone” we lived in.

    Make no sense to me. Logically insurers would want high risk people to NOT buy earthquake insurance.

  102. In many rural areas you don’t need a permit (only electrical and footprint).

    That’s true in many rural areas, but it is not the case in the Southern Gulf Islands.

  103. “So he just applied for permits directly and they never asked for anything?”

    In many rural areas you don’t need a permit (only electrical and footprint).

  104. The difference is you are getting the warranty as the owner and not your builder. So your are more in control. This is where it’s not a level playing field since there were plenty of builders not registered with the HPO because the owner could simply register. For me the difference would be that I would be managing the project, not my builder. But I could still use them as a consultant, for doing some parts but not others etc. Now, that is not allowed. If you pass and get to owner build you can’t use a GC as a consultant or in any capacity…. They even recommend against hiring sub trades because as an inexperienced owner builder you won’t have the know how to manage them…. brutal. For me I decided to go for the GC experience because I need to keep my business alive so I would not be able to pull it off alone…. thankfully I was already there instead of hitting a brick wall only at the time of submitting for the building permit. It would start innocently with going over the checklist on the application and wondering what the “Schedules Documentation from the Homeowner Protection Office” was….

  105. My father-in-law on a gulf island and uncle-in-law in Qualicum Bay have no knowledge of ever registering with HPO – and these are builds in the last 10 years.

    So he just applied for permits directly and they never asked for anything?

    Do you have any information on how these numbers are collected?

    Given BC Housing administers the Owner Builder Authorizations and the residential builder licensing and warranties, they aren’t really collecting the info, they are the source of it. Should be accurate.

  106. Yes. If using a registered builder increases costs by 100k on average then it is somewhere around 150 to 200 million dollars a year extra to build (in avoidable costs) if there are between 3000-4000 owner-builder homes in BC each year and the program cuts half of them out, although maybe some just won’t own or build. Maybe my math is off because that seems ludicrous. Can that be right?

  107. But these are numbers for “registered” builds. My father-in-law on a gulf island and uncle-in-law in Qualicum Bay have no knowledge of ever registering with HPO – and these are builds in the last 10 years. Do you have any information on how these numbers are collected?

    If owner-built are truly 25% of all starts (of which I’m really skeptical) then it’s no wonder the province was lobbied to drop that number – that is a lot of $$$$.

  108. Total number for SFH starts in BC = 7751 (in 2015)

    Those stats aren’t exactly comparable. From your link there are 37,512 SFH starts in BC from 2011 – 2015 inclusive. BC Housing says there were 38,815 new homes enrolled in warranty during that same period (not counting a single owner built home). Doesn’t add up.

  109. It was also an option to do an owner build but still have a builder.

    Can you explain this further? What is the difference between being an owner builder with a builder and just hiring a builder to build the place? (And how much wood would a wood chuck chuck?)

  110. It was also an option to do an owner build but still have a builder. That’s what I was going to do. This is now explicitly outlawed now.

  111. “Based on the emails I am getting owner-building in super popular in non-urban centers. ” – Most definitely. Using the data from http://www.bcstats.gov.bc.ca/StatisticsBySubject/Economy/BuildingPermitsHousingStartsandSales.aspx and the assumption that the vast majority of builds in the cities CRD/NRD/VAN are not owner built:

    Total number for SFH starts in BC = 7751 (in 2015), subtracting the number from the (CRD, NRD, and greater Van) 4052 = 3699 SFH in the rest of BC. 3K owner built would mean 80% of new SFH outside these 3 regions would need to be owner-builds. If we drop that to 50% (1850 outside of the 3 regions) that would mean 1150 owner-builds inside the CRD/Nan/Van which would be 28%.

    I can’t believe the numbers are that high unless I’m missing something…

  112. … it’s just a good idea to declare rental income from your suite if you have one.

    Indeed. I have an illegal suite and declare my rental income. Have for years. All is well.

  113. I get the two of you confused as you both back up each other in personal attacks on some of the posters.

    Just Jack, you’re often confused. totoro almost never attacks you personally; she pokes dozens of holes in your arguments, and you take it personally.

    I sat with an assessor last night and asked him these questions. If you don’t like the answers then keep living in a bubble.

    Just because you sat down with an assessor doesn’t mean you a) understood what you heard, or b) remembered it accurately. You have access to stats (and assessors), but you’re still a doofus.

  114. Those numbers look suspect to me – specifically the % of homes which are owner built. 25% seems way too high.

    Note these are Owner Builder Authorizations as compared to constructed homes. Some percentage of Owner Builder Authorizations don’t end up as constructed homes as plans change or the owner builder gets in over their head and ends up hiring a builder to complete.

    So it’s not quite 25% of actual homes but it’s the best numbers we have. They are straight from BC Housing so I imagine they are accurate

  115. Those numbers look suspect to me – specifically the % of homes which are owner built. 25% seems way too high. 2.5% maybe?

    Based on the emails I am getting owner-building in super popular in non-urban centers. In smaller places, you don’t have the Happy Valleys and Westhills where you go to buy spec homes and some more rural places don’t even have a decent selection of licenced builders.

    In one of the first videos I made I guessed owner-builders were less than 10% and they probably are in the CRD and Vancouver.

  116. I think the point that John Dollar is making is that no one should feel immune, and it’s just a good idea to declare rental income from your suite if you have one. No sense in trying to hide it, because assessors do have the right to come by any time to make adjustments to your assessment (if even there’s only a 1% chance it happens to you), and with the CRA changes, eventually when you sell your house, you’re going to have to declare if it was solely your principal residence or if there was a suite included. Just because a majority of suites might be illegal doesn’t make it a good idea to hide them.

  117. I sat with an assessor last night and asked him these questions. If you don’t like the answers then keep living in a bubble. I also spoke with the president elect of the real estate board and the owner of accent ins and an insurance agent about vacation rentals in the city. I see it won’t be worth explaining what’s happening on this blog with vacation rentals.

  118. Just Jack/John Dollar making stuff up? Surely not…

    I highly doubt that they know about all the suites, or there would be far fewer suite owners with undeclared income

  119. BC Assessment isn’t inspecting for legality? The legality of the suite has nothing to do with them. If there is a suite it gets assessed legal or not.

    No-one was suggesting they do. What I was stating was that legal suites are permitted so there is, in some cases, a municipal reporting to BCA. Illegal suites – 95% of the suites – are not, so no reporting.

    What I was suggesting is that BCA is not walking down the street on recycling day trying to estimate whether there is a suite or not. You are making that up. Some homeowners report their renovations – most don’t.

  120. Regularly? They will walk down the street and see if there are changes. If they need to they will come on to the property. I don’t know if that is what you mean by regularly. Each assessor has about 20,000 files to update each year so they are not inspecting every property every year. If you’re building a house they see the plans and get the builders cost estimate on the application form.

    I can walk down a street and see if there has been changes that suggest a suite and a need for a more in depth look. Pretty easy during recycling or garbage day to figure things out.

    BC Assessment isn’t inspecting for legality? The legality of the suite has nothing to do with them. If there is a suite it gets assessed legal or not.

  121. So BC Assessment comes out and inspects homes for illegal suites regularly? First I’ve heard of this and I used to work with BC Assessment on developments in my former career.

    Of course they are allowed on your property, and building and municipal inspectors too. Do they actually come after a property is added to the roll and has been sold? I’ve never experienced this and from what I can tell about their workload they would only do this in an exceptional circumstances or it might be triggered if you report a change in value or a municipal permit is issued and reported to BCA. Most often this will not trigger a site visit but a questionnaire or property data verification form.

    I don’t think BCA knows if you have an unauthorized suite most of the time. I don’t even think the link with some municipal permit departments always works when the suite or improvement is permitted.

    The only entity I’ve seen regularly monitor illegal suites through site visits and listing reviews is Oak Bay.

  122. Again – thanks to Marko for being the aggregator of information on this issue. I wrote the exam a couple of months ago and greatly benefited from Marko’s information. I was able to help out a little in the development of the study guide and if HHV wanted a ton of hits – post the guide here. Better yet, find a keen web developer and post them all to a site where people who write the exam can submit the questions they received.

    Those numbers look suspect to me – specifically the % of homes which are owner built. 25% seems way too high. 2.5% maybe? The current numbers would indicate 3K homes per year, on average, which seems very suspect as the CRD was ~550 SFH in 2015 which would mean 137 owner builds in the CRD.

    I don’t know how the process worked pre-exam, but several people in my family have built homes for themselves (outside of the CRD) and there was no declaration of owner-build…so I’m not sure how they were tracking this.

    A few other thoughts:

    You must write the exam for every house you build. You’d think writing it once and building a house would provide exactly the kind of education HPO wants you to have. Cash grab on that one.

    I wish you paid $500 for a one or two day course (with included reference materials) instead of writing an exam. This would be a true value-add.

    As with almost anything government, change comes at the grass-roots level. I was so very happy to see the Victoria building department / inspectors trained up on passive houses and genuinely excited to have progress in the structures being built. I’m hoping they’ll push back against the HPO wet blanket and the innovation it will kill (as Dasmo mentions).

  123. The assessor will walk around the outside of your home, look for meters, etc. They update the data sheets constantly. The assessor has full access to the real estate board’s data system.

    The assessor is allowed by law to walk on your property without your permission as the government retains the right of taxation, expropriation, police power, and escheat.

    https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/330/330_R1ARE10_chap06.pdf

    Pretty hard to hide having a suite.

  124. Totoro it doesn’t appear on the web site but the assessor inputs it into the data system.

    He or she may have missed yours. If you want you can ask to see the assessors data sheet. You’ll need to go to their main office and provide proof of ownership.

  125. Re: BC Assessment knowing if you have a suite: maybe they’re now looking at listings after a house sells to see if the house is advertised as having 2 kitchens / in law accommodation / a suite? I don’t know how they’d know if you installed a suite yourself without permits and continued to live in your home, though. That might come down to your tenant giving your address on their taxes. And of course owners reporting rental income.

  126. Great post Marko.

    In my industry legislation like this is usually due to lobbyists. Someone with money has interests in limiting the market and they get some legislation pushed through that looks good on paper to politicians and is “good for the consumer” but in reality just lines the pockets of those funding the lobbyists and is in fact not good for the consumer.

    The more innocent and benign it seems the better they did their job.

    I’d hazard the lack of a study guide is incompetence and/or lack of funding/resources, but that’s something that could have been predicted by those that were pushing for the exam. There are clearly parties that benefit from this and it’s not the consumer.

    Kudos to you for bringing this to light.

    Any traction with media on this?

    (aside to LeoS – thanks for the brokerage info – interesting stuff. 4K is about how much it costs to keep up PMP from what I’ve read.. so not obscene as far as licensing/certification goes)

  127. LUKE, I spoke with someone from CRA last night about obtaining clarification about a basement suite. And he explained that it is complicated because of many of the things that have been discussed on the blog.

    But they know if you have a suite. It appears in the data the BC assessment collects and on your taxes. Now with the new changes on the tax form they will be able to track what you own at any time. From his desk he can get all he needs in a few minutes to assess your situation. His basic answer is that people should disclose the information because you are not going to be able to hide anything anymore.

    JJ an unauthorized suite doesn’t appear on the data reported on BC Assessment as far as I know. Heck, my legal suite doesn’t appear on BC Assessment’s data. Given that 95% of suites are not authorized it seems unlikely that CRA would be able to gather this data from BC Assessment unless owners self-report. It seems likely they would be able to gather it if you are reporting rental income and maybe from the new forms on income tax returns.

  128. Also, the notice of sale only applies within the first ten years doesn’t it?

    This is correct, those selling after 10 years would not need to apply for an application to sell.

  129. Twenty-five percent of homes have been built by owner-builders? That is higher than I would have thought. A significant incentive for builders to attempt to capitalize on this market.

    Also, the notice of sale only applies within the first ten years doesn’t it? We don’t know how many owner-builders sell after this point – not that it is maybe as relevant.

    I wonder how much this scheme has cost to develop, implement and administer.

  130. Marko – do you know if your FOI request has been posted publicly? They do that with a lot of FOI stuff. Would be helpful to have the link to that stuff for people that are motivated to write a letter.

  131. This is an email I received Tuesday night….

    “Hey mark, I’d like to say thanks for all info about the exam. I am 25 and building my first house in Campbell river b.c. I am a red seal carpenter.

    I was wondering if you could send me the study guide you were talking about.

    Also are you allowed a code book in the exam do ya know?

    Thanks a lot”

    The government wants to put up a barrier and discourage this 25-year-old hard working individual from getting ahead of life; however, if he wants to buy a spec OSB box in a cookie-cutter development with 5% down, no problem. The B.C. government will even give him a $37,500 interest free loan to buy a spec home.

    Who benefits? Big builders/developers.

  132. Yep. Sign me up for the protest march. It will only be a half dozen of us, but I’m in! I very much feel that this is a huge removal of a basic freedom and should not stand. We will also see way less innovation and alternative buildings now. Good luck building a cob house with a builder. Or rammed earth. Hard enough with the building code not covering such things. Now you will also need to find a builder willing to and able to do alternative building which will be only a tiny handful. This is a step towards killing the concept of building yourself entirely. You don’t build your own car, or your own shoes after all…. This is trying to set it up to where you can only buy a house from a developer…. It’s overt cronyism.

  133. Great post

    I am surprised how low the sales of owner builds are. That means even the “loophole” of builders building “owner builds”, living in them for a year and selling is a pretty small loophole.