Invest in: Heat pumps and solar
It’s a crazy time out there for investors. Record quantitative easing has the world awash with cash and pushing yields down everywhere you look. The stock market? At nose bleed valuations. Bonds? Paying nothing or negative rates. Your mortgage? Nearly free. Real estate? At record prices and low yields. As I said last fall, it’s an everything bubble and so it’s no surprise that people are rushing into speculative investments like TSLA and BTC. Some people are clearly thinking when the fundamentals yield nothing, you might as well gamble.
But I’m no gambler and am not about to turn into one. So where do you find yield in this world? Well one way is to look closer to home (if you’re lucky enough to have completed your house hunt), and see if you can invest in energy efficiency or renewable energy.
Three years ago I wrote an article on whether solar power made economic sense in Victoria, and came to the conclusion that it didn’t really unless you did the work yourself. I never liked thinking about these investments via the common payback period method. If something has a 12 year payback, is that good or bad? Does anyone think about how many years it takes before their GIC has paid for the initial investment? It makes no sense. Realistically if I have money lying around and want to know where to put I want to know the annualized return on that investments, not the payback period. That allows me to compare it to other investments and decide what the best decision is.
Solar installers often did quote the return in percentage terms, but they didn’t account for the fact that a solar install wouldn’t last forever and so returns were unrealistically high. To get a more realistic estimate, I conservatively assumed the value of the system would depreciate to zero by the end of 25 years. To that end I developed a solar returns spreadsheet where you can calculate your own return given the cost of a solar quote and the installed capacity.
Back in 2017, annualized returns for professionally installed systems were only at about 1.5%, which wasn’t exactly that compelling unless you had a passion for the clean energy side. Well times they have changed and prices have come down. Here is the result of a set of recent quotes for a few system sizes recommended for a residential install from local installers.
The average return of 3.3% annually over 25 years may not seem that high, but it’s about double what it was 3 years ago and compared to GICs at sub 1% and the Canada 10 year bond at 0.7%, it compares pretty favourably. Of course solar return is after tax so bump that 3.3% up a bit compared to alternatives. That’s also entirely without installation incentives, and with Canada recently committing to net zero by 2050, one imagines we’ll see some solar incentives coming in the next federal budget which will boost this return.
Heat Pumps
Instead of generating energy you can also invest in conserving it. The BC government has had rebates on heat pumps for a long time, but those have been temporarily doubled until Dec 31st for installations up until March 31st 2021. A few municipalities also provide top ups. Right now the rebates are as follows:
| Central heat pump from oil or gas | Central or multi-split heat pump from baseboards | Mini split heat pump from baseboards | |
|---|---|---|---|
| Provincial (to Dec 31) | $6000 | $4000 | $2000 |
| City of Victoria | $2000 | $0 | $0 |
| Saanich, Central Saanich, North Saanich, Esquimalt, | $350 | $0 | $0 |
But is it worth it to put one of these things in? Well again I’ve put together a spreadsheet to evaluate the potential returns of a heat pump upgrade. It’s impossible to determine generalized returns for heat pump upgrades since each situation is pretty unique. However once you have quotes for yourself you can punch the numbers in and get a sense of whether the investment may be worth it.
There are three tabs in the spreadsheet, corresponding to whether you are upgrading from electric baseboards, a gas or oil furnace. In general, you enter the numbers for your heat pump quote and your existing heating costs (in yellow), and it calculates your annualized return over the 15 year expected life of the equipment (in green).
The spreadsheet uses inputs about your existing heating system to determine how much energy your house needs for heating, and then calculates the heat pump running costs to produce that same amount of heating energy. You can download the heat pump spreadsheet here.
Upgrading from gas or oil
If you have a gas or oil furnace at end of life or needing expensive repairs, it almost always makes sense to replace it with a heat pump. You’re going to be on the hook for an expensive unit anyway, you may as well transition to a cleaner heating source which will have similar costs to running a gas furnace. In the spreadsheet, you can enter the repair or replacement cost for your gas or oil furnace to see the impact on returns.
However replacing a working gas furnace with a heat pump will rarely make sense economically. With some assumptions on gas usage, the spreadsheet calculator shows negative returns because you simply won’t make back the investment on the heat pump over the life of it. Even if you want to reduce your emissions it likely makes more sense to run the gas furnace until it dies, offset your emissions, and replace it then. That said when calculating running costs of gas it’s important to note that on paper the cost of natural gas is very low, but the effective rate is much higher. One GJ in Victoria costs only about $8, but last year we used 37.2 GJ and paid $495, for an effective rate of $13.30/GJ. Converted to kWh that is still a very cheap 4.8 cents/kWh, but of course gas furnaces are not 100% efficient while heat pumps are around 250% efficient so the cost of the heating energy is very close.
Oil furnaces are another story. Not only are they generally older and less efficient, but the fuel costs more. Using some old oil data from a house we rented, I get annualized returns of about 7% from replacing an oil furnace with a heat pump. Also one less thing to worry about when you sell your house if you take out the tank.
Upgrading from electric baseboards
Upgrading from electric baseboards is a mixed bag. You won’t be saving too much direct emissions on our grid mix, and although the heat pump will be much more efficient, there’s something to be said for the simplicity and lack of maintenance of baseboards. A central air unit may have positive returns with the doubled rebates, but it’s not going to be a big return and if you have baseboards you probably don’t have ducting and can’t support a central system anyway.
More common is the install of a mini split or multi-split unit to take over the heating for the main living areas and leave the baseboards for the less heated bedrooms. In that case especially with the increased rebates it may be compelling, as those smaller systems will run you about $5000-$7000 and attract rebates of $2000-$4000. That can get you to returns of around 4% for the upgrade.
In general if you have a very efficient house, it likely makes little sense to go heat pump, and if you have a very inefficient house it probably makes more sense to upgrade the insulation first. For average places the returns can be worth your while, especially with the temporary rebates. Of course if you’re tempted to run the air conditioning a lot then those savings may evaporate, but that’s an added benefit.
Outside of heating, there are also rebates for upgrading hot water tanks to heat pump models. At a $2000 provincial rebate + municipal top ups, you could cover nearly 100% of the cost of these high efficiency boilers, and then save about 60% in operating costs compared to an electric tank. That’s about $300/year cheaper, or similar cost to a gas tank but saving about a ton of greenhouse gas emissions per year.
For the HVAC experts in the audience, please check my calculations in the spreadsheet and let me know if there are any improvements to make. Thanks to Graeme Raadsheer from Trifecta Temperature Control for answering my questions on this topic.
Also the weekly numbers, courtesy of the VREB:
| November 2020 |
Nov
2019
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 192 | 398 | 577 | 577 | |
| New Listings | 280 | 462 | 656 | 750 | |
| Active Listings | 2124 | 2033 | 1999 | 2397 | |
| Sales to New Listings | 69% | 86% | 88% | 77% | |
| Sales YoY Change | +33% | +36% | +38% | ||
| Months of Inventory | 4.2 | ||||
New listings have continued to trend down while sales have remained steady. That has pushed our sales to list ratio to a record high for the year. On the detached side new listings in the past two weeks have been even with last year (pent up supply clearly exhausted), while condo new listings are still up by 44%. Sales meanwhile are up 30% for detached properties and 72% for condos. The condo benchmark price is down some 3% from February’s high, but if this rate of sales continues that drop won’t last.
It’s important to remember that last November was already pretty active. We are definitely headed for another all time sales record in November.
Other than the anomalous current situation, looking at the 30 year sales history it’s pretty interesting though that there hasn’t been a long term increase in sales despite a 40% increase in the population. It seems we are trading houses less frequently these days.
New post: https://househuntvictoria.ca/2020/11/30/incredible-sellers-market-continues-in-victoria
Feds just committed another $12B into low cost rental financing, so I don’t expect the rental construction boom to stop anytime soon.
That said I don’t think it is a zero sum game. If the condo market heats up (and it’s looking pretty good right now) I think the construction of condos will heat up again as well. Gotta say, if I had a decent job and faced with the prospect of paying $1600+ for a rental I’d be looking to buy a condo. When we were renting it was $700-$900/month and $1850 for a whole house.
One problem that I think we will have is that there is lots of rental demand, but only so much demand for $1600+/month for 1 beds. Once that market is saturated I’m not sure how they will keep building rentals unless there is a bunch more funding to make the units much cheaper. Normally age does that for us, but with basically no rental construction for 40 years it’s tough to fill that pipeline with only new units.
I don’t think those new build rentals are in danger of turning into a View towers anytime soon and dragging down nearby property values. Maybe in 30 years, but that’s well beyond when anyone buying a condo is going to be still there so I wouldn’t be concerned about it if purchasing near a bunch of new rental towers.
Leo, request for your opinion as I’ve had a few people asking me about the following and I am not sure what the right answer is…..I live in Vic West. They’ve just re-started construction at Dockside Green and first two new buildings are rentals. Looks like the Roundhouse is moving towards rental towers as well. If primarily rental construction continues what are your thoughts on this long term. Do you think it potentially puts upward pressure on condos due to lack of new condo supply, downward pressure as neighbourhood is less attractive due to all the rentals (one theory I’ve heard people using is big corporations own rental towers and don’t maintain them as well as strata’s do, etc.), or it is a wash and tied together as people will substitute renting vs owning depending on monthly cost?
Also low cost loans for more expensive efficiency projects
I hope they apply the same incentives to new builds. More efficient use of $ vs. retrofits.
Relevant to the energy efficiency topic:
The government proposes to provide $2.6 billion over 7 years, starting in 2020-21, to Natural Resources
Canada to help homeowners improve their home energy efficiency by providing up to 700,000 grants of up
to $5,000 to help homeowners make energy-efficient improvements to their homes, up to one million free
EnerGuide energy assessments, and support to recruit and train EnerGuide energy auditors to meet
increased demand. Additional information on home energy efficiency grants will be provided in a future
announcement, and eligibility for these grants will be retroactive to December 1, 2020.
“The government is expanding the First-Time Home Buyer Incentive to enhance eligibility in the higher priced markets of Toronto, Vancouver and Victoria.”
Oh good, I was just thinking what we need is more demand. Luckily this measure is still a nothingburger.
Marko: You are filing at The Lord Of The Rings? Sauron is in charge. Ever wonder what the total cost of this adventure is both in your time, lawyers fees and the government time.
Will end the year with the second highest dollar volume on record. Won’t be too far off 2016.
Bad luck on timing in your case but LOTA is long overdue. Looking forward to next year when reporters will have access to the DB
Land Owner Transparency Act kicked in today…..government released the transparency forms to the lawyers at 12:01 am last night….and sure enough I have a property completion in my ltd company today 🙂 Lawyer scrambling to fill in the 26 page transparency declaration as it must filed at LOTR.
The amount of crap the government is piling on is just insane. Not sure why it can’t be a 2-3-page form.
“Cities are so focused on DCCs and CACs to fund growth”
Except in Esquimalt. No DCCs or CACs at all. Rezoning to Multi family is only $2000 + $100/unit. Development Permit fees are about the same.
So I spoke to some insulation contractors about beefing up my roughly 7 inches of blow-in attic cellulose to about 15 inches.
They want about $3,000, minus $800 to $900 in rebates. They actually said it costs more to fill in with cellulose than fiberglass, despite my observation that cellulose is about 1/3 the price in a retail environment.
So, I can do it myself for about $750 including equipment and van rental, and forget the rebate.
I hear people on here saying that it’s basically free after rebates in some cases, but that’s definitely not true in my case.
Monday numbers:
Sales: 762 (up 32%)
New listings: 801 (up 10%)
Inventory: 1899 (down 21%)
Home prices in cottage country jump 15 to 40 per cent across Canada amid COVID-19
https://www.theglobeandmail.com/business/article-home-prices-in-cottage-country-15-to-40-per-cent-across-canada-amid/
Definitely not. Here’s a great visualization of net revenue per acre in a US city.
The denser core subsidizes the suburbs. It’s a double whammy, costs are higher for infrastructure to serve low density, and tax revenue is lower.
TIL. Quite literally load shifting.
You replace a property paying 10k a year with 50 condos paying 3k a year and somehow the city costs jump 140k/year? For what. It’s still one sewer connection. They force the developers to put in holding tanks that pump the shit at night so infrastructure upgrade costs are minimal too….condo building downtown…..”He said that as part of the development, the city will require a 14,400-litre sewer holding tank at a cost of about $250,000. The tank would ensure that flows into the city’s sewage system could be released at off-peak hours.”
Horgan’s to-do list: From free bus rides for kids to (maybe) ICBC rebates
https://www.timescolonist.com/opinion/columnists/les-leyne-horgan-s-to-do-list-from-free-bus-rides-for-kids-to-maybe-icbc-rebates-1.24247023
City has said this is about cost neutral but I don’t believe it. I think they are saying that because tax rates are always set to balance budget, but that isn’t the same as cost neutral. I think more people means either lower taxes for same service levels, or ability to have more services for the same money per capita. Can’t quite prove it though.
I agree and I can’t see the additional cost for the city being more than 50% of the future tax payments…..of course they will create more non-sense 6 figure positions but that aside.
Yeah I’m trying to find some research on this. What is the marginal value of one new resident? Cities are so focused on DCCs and CACs to fund growth, but I think they should also estimate the marginal value of each new resident that development allows. So if someone is proposing homes for 20 new people on a lot, the present value of their future tax payments minus the additional costs in services should be taken into account by the city when deciding whether to approve or not. Right now if the developer isn’t paying a bunch in direct contributions the perception is that there’s nothing in it for the city, but that’s not true.
The funny thing is Helps gets most of the heat for Victoria’s missteps, but she consistently votes for these developments and has a very good grasp of all the issues at work here. IMO she’s done a great job in Victoria. But can’t always bring council along with her.
Not to mention the tax base would increase substantially allowing the city to spend more on affordable housing.
Remember, it’s the foreign money and boomer faults for driving the price of housing.
“Aragon was proposing to contribute $136,000 for community amenities and $160,000 to the city’s housing reserve fund… As well, the developer was prepared to give the city a deal on a commercial unit next door to the project”
An indication is that Victoria is not open for development, and it is likely that developers will take their business elsewhere.
A small price to pay for socialism.
They want specific affordable housing in every development. Even if that makes the development uneconomical and sinks it. That’s because some on council don’t understand that even market housing helps affordability despite the fact that is clearly shown in the research.
So we get a perverse situation like in Vancouver where a staunch advocate for the poor has voted against hundreds of affordable housing units
what else does the city want? more contribution from the developer? remember, who is going to pay for the condos? the buyers!
Tie vote sinks condo project in Cook St. Village
https://www.timescolonist.com/real-estate/tie-vote-sinks-condo-project-in-cook-st-village-1.24247374
Guess the garden suite + secondary suite thing didn’t go through
https://www.victoria.ca/EN/main/residents/planning-development/development-services/garden-suites.html
You’re telling me…from my calculations, government might end up paying me to install it, once rebates are accounted for. With 3 upgrades (heat pump, attic and wall insulation), you now get a minimum $750 bonus rebate on top of upgrade specific rebates. But it will likely be more than $750 as it goes higher depending on the gain in efficiency after all the upgrades. The guy from Hydro I spoke with couldn’t confirm, but he thinks they will pay out full rebates even if they exceed the cost of the upgrade.
Re: can you have a garden suite and a basement suite on the same property?
Council was considering this back in 2019, I had assumed that it went through but maybe not?
https://www.timescolonist.com/news/local/victoria-council-mulls-changes-to-encourage-more-garden-suites-1.23868823
I didn’t have any airlines stocks, but did sold all CM & RY early between $82-83 with realized gained @ less than 5%. However, I’m contemplating at selling 1/2 of my energy holding. But, going to hold ENB for the dividend and it performed poorly at +5.28% since I purchased it in March, however the rest of the energy portfolio gained range from a low of +34.76% to +600.67% in the same period.
Thanks, I’m old school and still calculates manually.
PHPP factors all that in, and then some.
Thanks guys – unfortunately we pulled out of the purchase last week. I wont get into the nitty gritty but basically leo you can count on my ad views for another few months at least haha – hopefully spring brings a lot more stock as it’s slim pickings right now. Thanks for all the advice everyone. Cheers.
Re: stock market
This is why right now you only partially cash out on bank stocks that have risen so much.I pulledhalf my royal bank stock @ 104.00. I completely got out of Chorus aviation yesterday at 4.48 as airlines have gotten way ahead of them selves. Made 30%. Rememberto look at some analyst reports, where the stock has been and where it could potentially go. I would look at smaller cap stocks are ready to take off. Renewable energy and surprisingly automotive as car production/ parts production ramps back up. My 2 cents. Congrats on the recent purchase rush.
Sorry for the late reply. I was going to do an educated guesstimate of your house heat loss calculation.
Many calculators doesn’t factor in the total area of windows and doors, and sometime they don’t bother with the shape/surface of exterior walls, ceiling, and floor. Another, important thing is that load calculators never bother to factor in wind speed, they focus purely on seasonal average of inside/outside temperature different. Our region wind speed near water or on top of rock bluff with little to no shelter could easily increase the Δt temperature by 4°C to 5°C or more, hence one can’t just use the generic calculation of 97% seasonal average for maximum load (and sizing heating/cooling appliances must factor in emergency load).
Thanks Sidekick.
My understanding is, Aerobarrier is not generally applied to an existing furnished house but rather new builds where the drywall has just been hung.
I’ll just stick with my spray foam, flashing and cellulose. 🙂
No argument that ICF isn’t superior. Just saying it will only be noticeable if the neighbours are problematic. Retrofitting sound insulation isn’t as good as designing it in, but I’ve seen it make a pretty substantial difference.
1″ separation decoupled wall with resilient channels, and green glue is not as superior as 8″ concrete filled blocks. One side insulated or double side insulated concrete block would be much superior.
And now that I think about it, @LocalFool, you should investigate ‘aerobarrier’ for you place. Could make a big difference.
Leo – while your post is all technically correct, the point I was hoping to make is that its difficult to do a good job of sound proofing ‘after the fact’. How do you implement your upgrades at rim joists (or joist hangers) effectively once the structure is fully built? It’s difficult to do later, what is relatively easy to do in the beginning. Certainly it is more costly to retrofit (regardless of wood vs concrete).
Anecdotally, a PH triplex close me to recently used ‘aerobarrier’ to seal air leakage between units (to help with sound, smell, etc.). Could be a game-changing technology which could be leveraged in your retrofit case.
Also, looking forward to seeing CLT panels used where that concrete partition wall is.
If double drywalls with staggered studs works then commercials and industrial would apply the technique to save money instead of concrete blocks in high noise area.
Hence, standard double drywalls and staggered studs, plus 1″ stud separation are tend to be use on intermediate low noise and fire rating applications. I have seen double steel studs, 4 layers drywall at an equivalent of 4″ of gyprock with green glue, plus resilient sound bars separation and 2 layers of rockwool, and the noise reduction still aren’t anywhere near 8″ filled concrete blocks.
I think about it in two stages.
Base case, the utility of the ICF wall is essentially zero. That is, with normal neighbours and no fire/security issues which is the majority of the cases the vast majority of time. Properly built staggered stud wall has a STC of~48. That will silence loud speech on the other side. Double wall or ICF is better, but basically isn’t a real world benefit for ordinary noise levels. If they are louder than normal I’d consider adding a second layer of drywall + green glue to up the sound isolation to ~60 STC which should be good enough.
Extreme case there is a benefit to ICF. If the neighbours are regularly screaming or blasting loud music in their side the ICF wall will be better. That said if they are having ragers every weekend you’ll still be bothered by them. Security is higher with the concrete as you say. But if the neighbours are intent on punching through the wall or I’m worried there may be a shootout on their side of the duplex I don’t think ICF is going to reassure me, I’m selling the place either way.
Don’t get me wrong I recognize the benefits of the ICF wall but I’m a housing nerd. I can understand why it’s not super high on the list of priorities for most buyers.
I’m with the others here Leo – this is what we want to get away from. Do the stuff that can’t easily be changed (or is very unlikely to be changed) right the first time.
If I were looking at duplexes I would 100% go with the superior sound proofing over a pantry. Way easier (and cheaper) to retrofit a kitchen (just ask the Europeans that pack up their kitchens and take them with them when they move).
Kitchens go out of style every 20/30 years….noisy neighbours are never in-style.
If you are really into cooking a pantry is something that you use every day that keeps your kitchen space organized and functional. Shelves in a garage are not the same thing at all. As far as retrofitting for sound-proofing, we’ve done it professionally and I don’t think it compares to the soundproofing offered by concrete.
The forgotten Hawaiian Islands in Canada
I thought it was just another RE slogan, but there’s more to it.
Good luck with that. Unless you somehow can get a permit to gut your half of the duplex to put up a concrete block wall, because anything else is sub par.
LOL, first world problem.
Not sure I agree…concrete wall versus crappy 2″x4″ seems a lot more difficult to retrofit down the road versus just adding more kitchen cabinets/shelf in garage or something to address lack of walk-in pantry.
https://twitter.com/charliebilello/status/1332369964033073155
Seems logical to me. I can soundproof a wall after the fact if it’s a problem, I can’t easily add a pantry. What feature am I going to use every day?
Quality does sell, but it has to be consistent. Doesn’t make sense to add one feature that’s higher quality than the rest of the place. If you’re going for higher quality then build to that throughout and charge a higher price. Market appropriately. People have no idea what an ICF wall is, but put up a side by side video comparison of someone playing music on the other side of that wall and you may actually convince people.
But this comes back to how important building codes are again. The consumer may not care about energy efficiency, but it’s very important and we will get there via codes.
You explain it to buyers but it isn’t their priority whatsoever. Priority is that the deck has stairs off it into the backyard so the dog has easy access to the yard.
Problem is market has to be willing to pay more, not just you. If it isn’t selling you aren’t going to pay more than what you need to which the market dictates to be the same price as the duplexes next door with wood-framed partition.
Of course, but rare that anyone takes my advice. There is the occasional buyer that emails me and is like my budget is XXX,XXX what condo buildings do you suggest in this general area? I suggest a few buildings and they actually buy something I suggest. This is probably <5% of buyers. The remaining 95% are just all over the place…..like they want to go look at places that I am telling them are complete garbage/waste of time. I've even had personal friends buy into buildings I strongly recommended against buying in.
The great thing about the consumer lacking any sort of common sense is you can buy into concrete buildings over wood-framed for such a small small premium it's awesome.
Canada Crime Rate & Statistics 1990-2020
https://www.macrotrends.net/countries/CAN/canada/crime-rate-statistics
Nation Master — https://www.nationmaster.com
Crime level ranking.
51 Uruguay
80 Canada
97 Portugal
Police Officers per 100,000 population.
11 Uruguay @ 532.1/100,000
15 Portugal @ 435.7/100,000
56 Canada @ 191.4/100,000
Argentina @ 798/100,000
Brazil @ 211/100,000
Wikipedia — https://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_number_of_police_officers
The data suggests that the number and quality of police make the different in crime level. Uruguay crime level is high even those it have a large number of police is due to the quality, and a large volume of crimes are at border towns with Brazil because of low police enforcement on the Brazil side.
If this improves sound transfer markedly and there is data to support this I would happily pay more.
Yeah it sucks. Did your duplex builder have an info sheet or some info dump on why their place was better? Your video was spot-on, although there is one more benefit: Thermal mass (although the concrete and EPS does come with a pretty steep carbon footprint).
I know you espouse concrete condos vs wood ones – do you also educate your buyers (on the hidden benefits) when doing a walk though?
@Local Fool – did you have any idea what you were getting into (heating-wise) before you pulled the trigger on your place?
Saanich is reviewing whether to allow garden suites + basement suite on the same property for their recently legalized garden suite policy. Broad support, so I imagine within a year or two it should be allowed but not currently.
Response back from city… Re: secondary suites and garden suites. Turns out a couple of neighborhood plans allow it but you need rezoning….
“Vic West Neighbourhood Plan (2018) and Fairfield Neighbourhood Plan (2019) in certain areas and with certain conditions, for example retaining the house etc. It would still require a Rezoning and Development Permit application.”
I find it hisheartening the sellers still pay 33k (commissions may vary) to sell an average price SFH in Victoria, but such is life. 10+ yrs ago I thought I would have a mere posting company pumping out 1000+ mere postings/year (10% market share). Turns out the consumer is too dumb adopt mere postings (still less than 1% market share) so I don’t even offer mere posting anymore. You have to adapt what the market wants and same applies to construction.
Recently a close builder friend of mine came up with an idea that he wanted to do ICF partition walls for his duplexes and my feedback was “horrible idea, you won’t get any return on it.” Anyway, he goes ahead and does it. I made a video about it -> https://www.youtube.com/watch?v=HjYIbX_oE-M
Guess what, now that the place is drywalled zero interest from potential buyers in the ICF partition wall. One buyer bought another duplex on the street because it was going to be finished a month earlier (the ICF walls put my friend behind approx a month, ironic), one buyer bought another place because it had a pantry. Literally, I don’t think he is going to $1 more because of the ICF wall.
He is designing his next duplex….going back to staggered 2×4” partition wall.
You can’t sell quality….sorry to break the news to you.
That’s why some multifamily builders are just going for passive targets and then you don’t have to worry about the minimum. Not certified passive, but if you aim there you will be well above what’s required. No doubt designers/GCs/trades need more experience with this
I’m not sure if such a guideline exists. For some a forever house is a new custom build. For others it’s a fixer upper that they can work on over the years and add value. Marko sold his big custom house for a condo. As for area, over the long term there isn’t that much difference in appreciation rates between municipalities, but certainly land will appreciate over the long run. Would be interesting to think about if there are universal things there though. Thoughts?
Barrister- The same is happening across the country. I wish our government would study the policies of Portugal and Uruguay, the only two countries that supply drug addicts with whatever drugs they require . I feel this is the only solution to soaring crime rates , maintains a relationship with the addicts and would free up our judicial system. I believe that drug abuse does not increase in these countries and that benefits have been realized. The war against drugs has failed and is not the solution.
Frank: Sort of what is happening right now with the downtown except the government is spending millions to move and house the druggies downtown already. Victoria is just getting ahead of the game.
Leo, what to look for in a forever house would be a really good post. Where to look for it may also be an added benefit.
Ugh – I can’t reply to your comment Marko. Reading between the lines, I find it disheartening that the goal is still to build as cheaply as possible knowing that house hunters don’t give two bits about quality.
Leo – time for a post on “What should I look for when buying my ‘forever’ house”.
Assuming you have a mortgage it ranges from $1,000 to $1,700 from what I’ve seen in the last 12 months.
How much have folks paid for legal fees for purchasing a home (non-strata)? Thanks!
Houston- I think we all know what will happen to the downtown cores of all cities if people stop working in offices. They will be infiltrated by the homeless, drug addicts, and become unliveable. Tourism will suffer, buildings will get boarded up and the governments will spend billions trying to revitalize the cores in an attempt to bring people back.
What super highways? I hope you don’t mean the Mckenzie interchange. There is nothing super about that.
“Location, location, location.” And that’s a nice spot.
South facing lot in south Fairfield….not super common.
I live on small cul-de-sac in Vic West with over 500 units (so maybe 750 people)? and when I go outside I barely see anyone. Traffic is minimal. I haven’t heard any of my neighbours in over a year (concrete building).
In some ways privacy is better than my old 1/2 acre lot. If my neighbour was outside mowing the lawn the way cul-de-sac was set up it was difficult to ignore him.
The BC energy code application changes from muncipality to muncipality based on “degree days.” For example, a house in one municipality might require exterior insulation to meet code level X versus another munciplaity a short drive away you can meet the same level without exterior insulation. Then try finding reasonably priced tradespeople that can do exterior insulation properly or whatever else you are doing to meet compliance (airtight drywall instead of poly, for example). We’ve built four houses now with the blower test involved and yea you do the blower test, trades come and make penetrations and then you are screwed.
Is it as complicated as sending a rocket to space. No. Is it more complicated then it needs to be, yes, in my opinion.
I built my own home and that is a totally different story versus trying to build spec. You can be much more selective for the build lot, exposure of the home, you can take your sweet time with designing accordingly, you can spend more time and money on everything.
When you build spec the numbers have to work. If Fortis is offering you $4,400 in rebates you go gas furnance, gas hwt on demand, etc., because it makes the most financial sense not because it might be the best option. You could go with the best option but then you’ll go out of business.
Sustainability aside, it’s not even a contest IMO. I would choose the latter even if the annual hydro was double what you referenced. 400 people on a 21,000 s/f lot sounds like a nightmare.
This place just sold for $1.2M: https://www.royallepage.ca/en/property/british-columbia/victoria/1111-leonard-st/13617851/mls859498/ What a beaut!! (??) Is this a teardown or will someone actually bother to renovate this place??
Pressure check around the doors and windows to seal and insulate the attic is a good idea. And, perhaps check the kids rooms to make sure that the windows are closed .
4 years ago I let my teenager niece and her best friend stay in my home for a little more than a year, and my fall/winter/spring hydro bills spiked to $900/1100/1000 each billing period, because they turn the heat up to max and had their bedrooms windows wide open 24/7 (couldn’t keep an eye on the kids because I was working out of town). Promptly after, I checked and sealed every doors and windows including the attic and added thick double layers curtains.
Yes please! (https://www.ecohome.net/news/1504/passive-house-reaches-new-heights-worlds-tallest-vancouver-bc/).
Which part is complicated Marko?
$500-ish. excluding car charging.
Hahahahahaha. That’s adorable.
2400 s/f, 27 dual pane aluminum windows, 4 skylights, 2 regular entry doors and one patio slider.
$4,200 hydro.
In fact, below is the hourly hydro reading taken the day we took possession of the house. The home was vacant, and you can see exactly when we entered the house mid afternoon, which is where the hydro starts to drop off. Temp outside was about 5 degrees C.
The scale to the left, if you can’t see, tops at 10 kWh, followed by 7.5. So this house was burning about 7 kWh an hour with no lights, no laundry, no stove. Just heat, a hot water tank and two fridges. Extrapolate from that and you have 160 kWh a day, doing nothing but those three things. Add in some laundry, a roast in the oven, and you’re over 210 kWh a day.
It was so high that the amount that we paid to drop both NG fireplaces in would pay for themselves in about 4 years.
So in the coming months I am going to look to do some air sealing up top along with piling up the cellulose to R-50 or 60, because both the underside and the walls are well insulated.
In the meantime, enjoy your “inefficient” house…
No. https://www.victoria.ca/assets/Departments/Planning~Development/Community~Planning/Housing~Strategy/Garden%20Suite%20Policy%20and%20Guidelines%202017%20Final.pdf
That’s why I made the calculator, to put some actual data into it. Saving $1000/year whether by solar or energy efficiency is like buying $25,000 of your 4% dividend stocks. Not nothing. Of course it’s not a place you can invest $100k
Clearly the answer is both. Denser housing that is more efficient due to shared walls, and more efficient single family detached.
But hard to build denser housing without zoning reform that removes the ability of the comfortably housed to stop others from having housing
Also think the answer is no, but there is a fair bit of info online around this.
Of course, I mention them because they’re the opposite. Railways were a declining industry in most of that period, so most people would think returns were poor. Turned out it’s the opposite.
Vice versa returns in the hot new thing are often worse than average because of over exuberance from investors.
They will because it will soon be the standard. Within ~10 years
I’ve brought this up many times on the HHV in past years. The absolute bills in our climate are low to start that even if you cut them in half it isn’t a massive absolute savings especially when I often see heat pump repair bills in the thousands.
In my opinion, it would be much easier to encourage people to live in smaller spaces versus encouraging complicated building codes? You can fit 200 units or 400 people on a 21,000 sq/ft lot next to a park/amenities each spending $300 a year on hydro in their inefficient glass tower or you can clear cut enough land for two hundred SFHs + infrastructure plus have everyone spending $1,500 a year on hydro in their super efficient SFH home.
No, to the best of my knowledge.
Good point Frank. I totally agree. Certainly there are many people who do not want to work from home. But many people are already doing it and enjoying the benefits. I mention the idea only because it’s happening around the world and it will likely effect our cities downtown cores and our leaders had better plan for it. Being locked up in front of one’s computer is because of Covid.
In normal times, people working from home go out into their small community and have lunches, coffees , walks through the forest with friends etc etc.
I know a young worker right now who is pregnant and works for the Health industry. She does not feel safe going back into the office and yet feels pressured to do so because management has been told, by the powers that be…. that local businesses are struggling and their is a need to get people back into the downtown core as soon as possible.
That idea reveals a sinister background story that needs to be talked about.
Why are we building super highways at great cost? Why are we eating up people’s precious time with their families forcing them to commute and pollute? Why build government offices out in the outer ring of our cities? Why not simply let people work from home? Covid has proven that it works fairly well and the benefits far outweigh the problems. Both for the employer and for the employee.
It’s not for everyone of course. But it could be enough to change our cities downtown cores.
So was many growth stocks such as Apple in the late 80s and 90s, and unlike Tesla, WMT and AAPL stocks multiple weren’t anywhere near 1,137.26 P/E ratio.
In regards to Tesla. A good comparison might be Walmart in the 2000s. At the time Walmart was a growth stock and were opening stores at a rapid pace. The market was pricing in continued growth. The growth rate was reduced and the stock was flat for 11 years even though the company was printing money and was profitable.
Off topic question:
In regards to garden suites in Victoria, does anyone know if you can add one if you already have a legal basement suite? Thank you
I agree, however one have to look at all metrics beyond the charisma of the executives. To me fundamentals, growth, and the most important is delivery on promise (Syncronys Softcorp, Bre-x, Theranos come to mind) are metrics to measure stocks. Tesla could very well prove me wrong in the future, but it hasn’t met one metric that I mentioned to give me the faith to invest in.
True, but railways and technology/cars metrics are dissimilar. In the past enormous amount of money was lost on railways in North America and that lead to consolidation, and it is now a monopoly that is control by a small group of people. Unlike railway stocks, the competitions on technology and cars are enormous locally and globally.
The result is great, however homeowner are not going to gut their house and spend 50-100K or more just so they can save a few hundred dollar a year on hydro. And, builders are not going to spend that extra money on insulation, HRV and such that doesn’t sell when blinging up the kitchen and bath increase the value of their product.
I never once in my life heard housewives, say omg the efficient Goodman heat pump make me so horny that I can’t go to sleep without a Broan HRV turn on. But, at almost every house that I’ve been to the women talks about how they wanted to eat in such a beautiful kitchen, or sleep in a handsome bathroom.
The energy efficiency is awesome that many over look because they prefer a large SFH but gripes over the hydro increase.
People always forget that all stocks are priced at the present value of expected future returns.
Of course those expectations can be irrational. Tesla has a bright future and TSLA is currently wildly overpriced. Both those things can be true. And TSLA can go up further despite those two things.
Lots of counterintuitive things happen in the markets. For example railway stocks outperformed the market from 1900 to 2019 while they went from 63% to less than 1% of the market. Can’t recommend the Rational Reminder podcast enough if anyone is interested in evidence based investing.
Sidekick dropping some energy truth bombs here.
Victoria ranked among top 5 small cities in the world by British magazine
https://www.cbc.ca/news/canada/british-columbia/victoria-top-5-monocle-magazine-1.5815158
Note: it’s the City of Victoria.
My hydro bill this year will be less than $300 (including Tesla charging for 40,000km, strata has something screwed up for sure)…..you guys keep discussing heat pumps 🙂
When I had my SFH I had an inverter Fujitsu heat pump with heads throughout but almost never used it…..open concept design I would just run the valor gas fireplace and left all my doors open.
All on pause since the latest orders. Totally agree with you otherwise.
You say inefficient but the numbers say otherwise. I estimate 25kWh/m^2 heating load with those numbers, which is extremely good (Passive house is 15kWh/m^2). So congrats, you have a highly efficient house and didn’t know it. Ask Local Fool what the electric bills look like in a less efficient house being heated by baseboards.
Houston- What you are saying has merit, but humans are a social animal. To stay isolated in one’s own home and not interact with other people has its consequences. I for one would not be able to work at home on a computer answering emails and texts all day long, it would drive me nuts. If we do not get back to some form of normalcy that we were accustomed to, the harm done to our society may be irreparable and could create countless problems we cannot anticipate. Sometimes I think this is what the powers that be want.
I hear that the powers to be are pressuring the government at all levels to get workers back into their offices. It seems that they are trying to get people downtown again so that the businesses in the area can survive. My heart goes out to businesses of course …….but……. Is this really what life is about and the best model? It’s an outdated model and the changes are here now.
Does it really make sense to encourage hundreds of thousands of polluting cars to come into the city just to feed the economics of the coffee shops, clothing stores, pubs, the extra car sales, etc etc?
It seems like we are hell bent on keeping the old outdated model and there is mounting pressure from the business community to pressure our governments into getting people back into the core offices. It’s well reported that people love to work from home. It’s also been reported that people are more productive. It costs businesses much less to operate. It saves people a ton of money in housing costs and taxes and they have more time with their families instead of sitting in a car for hours in a commute every day.
Road expansion to handle the traffic into the city costs everyone a fortune in dollars as well as pollution…… and it now seems the main reason is to satisfy the downtown business association who have enormous power to get what they want.
It’s a kind of madness.
People working from home will create new opportunities in the outer communities. Coffee shops etc will pop up there.
My 3900 sqf inefficient 1995 open concept house with 27 medium to large windows, 1 very large sliding glass entry door, and 3 regular entry doors consume just over $2400 a year worth of electricity and all appliances are on electric including baseboard heaters. We also cook everyday with windows open and fan hood on high, every room in the house is set at 22°C and it didn’t cost us a dime on upgrading to eye sore ductless split heat pump or costly insulation reno.
I wouldn’t be so quick to dismissed other self driving tech companies.
There has been suggestions (including Consumer Reports) both Waymo and GM Cruise are years a head of Tesla, perhaps more than 1 Level. Even Argo AI is suggested to be a head of Tesla as well, and the Chinese company Baidu is not far behind. Then there are big names with deep pocket that also in the race such as Apple, Daimler, BMW, Audi, Volkswagen, Lyft, and Uber. And, small start up such as Nuro, Aptiv, Autox, DiDi, and many more also have potential. Tesla no longer alone or a head in the crowded space, and is unlikely that Tesla will be the first to reach full self driving.
So, Tesla P/E ratio of 1,137.26 is way out of line when GOOGL P/E ratio is 34.09.
I planed put some money toward Zoox and Nuro stocks hoping that the big boys buy them up, but Waymo purchased Zoox before I pull the trigger.
The Tesla story has been fascinating to follow and invest in. There are major changes coming on everything related to energy production, large storage and transportation.
The other car companies have been basically hanging technology onto a car.
Tesla on the other hand, has hung a car onto technology. They are miles ahead. Very exciting.
What’s interesting to me is that most investment companies completely failed to recognize that this was going to happen. They are just beginning to wake up.
It draws 1kw when operating (ie, it is a ~1000 watt appliance). How many kilowatt hours (kwh) it uses depends on the daily temperature and hot water usage.
It uses more electricity in the winter as it’s also providing space heating. 2 days ago it ran from 2:42 AM to 9:06 AM, so it used ~6.5kwh.
~3k sq. ft. and house shaped?
25 windows, 1 entry door, 1 french door.
Living spaces at 21, kids bedrooms at 20, master at 19.
Base load is about 4kwh/day which is fridge, full-size freezer, and all the little parasitic loads.
QT as i’m sure you know TSLA isn’t priced like it is because of whats is done – its priced like that for what people THINK it will do. Self driving cars (basically take out UBER), forefront of battery tech, selling more electric cars then any other company by magnitudes etc.
3-3.5 ton heat pump pull 2-2.8 kW with normal winter usage on an average 2200 sqf existing sfh with nothing special added. However, it is sized at 13 kW or more so backup/emergency heat can compensate during cold spells.
How many cars does Tesla make/sells per year?
In the last 17 years that Tesla has been in business it sold a total of just over 1 million cars. That work out to be roughly less than what Toyota sells in 5 weeks.
How many mega/powerpack for electric grid has Tesla sold?
You can count it on 1 hand the total number of installed and planned to install.
How many solar roof has Tesla installed/produced?
So far there are suggestion of less than 100.
Bitcoins is at $24,413.22 CAD, and lotto Max ticket are only $2 and you can win $60,000,000 CAD.
1 kw per day or per hour?
What is the square foot and shape of your house?
How many windows and outside doors, large or small?
At what temperature are you keeping the house at?
1 kW during the summer or peak use during the winter at cold spell?
All the power to you if you can make it happen, because just your fridge use 1kW or more per day.
The answer is that it depends. If you’re living in an old home with no wall and/or roof insulation, then blowing in insulation will have a much higher ROI than solar or heat pump. Plus, you’ll be way more comfortable.
Already insulated? Great, put some time into air sealing and having a look at those single pane windows. After that, consider heat pumps and solar.
Building new or doing a major renovation? Now is the time to consider upgrading your thermal envelope.
Mini-splits are very quiet (mine barely audible standing right next to it). But certainly some of the bigger units are noisy.
Well, 1/2 to 1/4 of what you’d spend with electric resistance heating.
No idea. I DIYed.
https://www.greenbuildingadvisor.com/question/cold-weather-performance-reports-from-minisplit-owners
Tesla stock now hovering around $573 a share. Market cap of $543 billion.
Other car-makers:
Toyota — $195 billion
GM — $65 billion
Ford — $36 billion
To be fair, though, Tesla doesn’t just make cars; it also makes batteries, solar panels, and solar roof tiles.
It’s a Sanden (https://www.smallplanetsupply.com/sanc02) which is wired to a 15 amp breaker. I have whole-house electrical monitoring and can confirm it pulls just over 1kw.
lol. My heat demand is 11.2 kw/m^2/year, independently verified as required by passive house certification. Flir is irrelevant here, although it is used mid-construction to find air leakages inside the building. Insulation is cheap (I spent 13k with 8k roxul walls and roof and 5k EPS sub-slab), where you’re going to pay significantly more is windows and doors. However, low loads mean you can scale back your heat plant to pretty much nothing (save $).
Micro-inverter systems hook directly into the home panel. I have a 40 amp breaker wired to a disconnect beside the panel which then goes to the roof (in anticipation of future solar). Code requires a whole-house (200 amp) breaker in front of the meter. Having the whole-house breaker also means I don’t need to encase any of my power supply in concrete.
These micro-inverters are field testing at 90%+ efficiency.
If you are using your EV as backup power for your house, with the current grid infrastructure, you would need an automatic transfer switch to prevent back-feeding from your car as well, not sure why you would treat that any different than a backup generator system.
I think a future goal is to have a smart-grid where you could rent out your storage capacity in your EV to the power company and they could use this as backup capacity to manage peak loads better. Once we get to that point, these smart grids should also be automated enough that they should be able to shut off back-feeding at a house’s meter before service is done on any lines coming off these houses.
However, my understanding is we are still a long way off from these kinds of smart grids.
Average HWT gas burner energy output is much higher than electric element, hence the recovery rate is 2.5-3 times quicker.
We got two Valor gas fireplaces for this reason – we wanted something that would continue to work without power, and required no fan. This is actually how we heat the house, with a small bit of baseboard backup in the far back bedroom. It’s been absolutely fantastic and I don’t plan to look back. Our utility bills are about 60% to 70% less than they were before (baseboard).
Emissions aside, heat pumps are noisy, still consume a fair bit of hydro, cost a lot to install and replace, don’t work without power and (less relevant here) don’t heat well in colder climates. Personally, they don’t interest me at all, but I would certainly consider solar as the efficiency improves and costs drop.
For now, the only time I would eschew NG as an energy source is for kitchen cooking, but that’s for indoor air quality reasons.
While the heating component of the appliances don’t, the electronics as well as venting do. We’re planning to go tankless in the next year, and we’ll probably hook it up to a UPS. That way when the lights go out in the winter (they do, frequently) the system will still work for a limited time as the venting and electronics use very little electricity.
I don’t get heat pump hot water tanks. No doubt they are more efficient than a straight electric, but by definition it would be noisier and I don’t imagine the HW recovery rate is anywhere comparable to other devices. A gas fired 50 gallon tank will heat the water to the nominal setting, from empty, in about 20 minutes.
Yes, and for taxes because you have a tax advantage for paying down a primary residence (only) as well as the interest is not otherwise deductible unless you have a suite.
And risk adjustment is personal. Some people have very low tolerance due to age and/or temperament and peace of mind is worth more. However, from the perspective of the average risk tolerance for a working person below 50 a 2% no risk return is probably not ideal when compared to the long-term returns offered by additional real estate, business, or stock investments.
Please check that numbers with a killawatt meter, then come back here and let me know the input and out put. What is your house sqf size, how many doors and windows, and how large are they? And, please provide heat loss calculation, plus heat loss thermal imaging results. And, how much did you spends on the envelope insulation in the new construction, which is likely to be uneconomical on an existing house.
Depends. You have to risk adjust. Near zero or negative yielding bonds are also a very poor use of capital on the face of it, and yet there are trillions of dollars in those and investors that hold them.
The only reason banks can be in the business of lending at these rates is that they pay little or no interest on deposits (primary reason), there is a commission/fees on the loan, and loans can be sold for a fee to other lenders which happened to one of our mortgages. A 2% return is a very poor use of capital otherwise from a purely financial perspective.
There are inverters that can peak at 94-96% efficiency (running at the perfect load) but they are far and few in between so they demand a premium price.
Not my expertise, so if anyone work with solar please help me out.
My understanding of grid tied solar system is that, the tied in is between the meter and the house main breaker to save the setup costs and to give power provider control. Solar panels provide continuous power to the grid. Resident power usage is pulled from the grid and consumption is deduct from what the solar panels feed the grid. Power provider need control over the power to prevent backfeed killing linesmen when they are working on street lines.
Hence the need for an automatic transfer switch which is an additional cost.
Pretty much all appliances that you mentioned are now have to be power vented that was put into to code only a couple of years back. Existing natural venting appliances are allow to use until they are replaced, at which time it must be upgrade to power vent.
Rancher in Sunnymead in multiple offers goes for $1,257,300….wow.
Wouldn’t governments continuing to print money improve stock market performance?
Great article Leo. Solar prices will continue to drop and efficiencies will increase. Couple that with the guaranteed increase in energy costs and we’ll hit an inflection point where solar (or some other technology) ends up being part of most structures.
Having said that, for you HHVers out there who are doing renovations, building new, or purchasing a home: Before even thinking about solar or heat pumps, think about “thermal envelope”.
When you go outside on a cold day would you prefer to wear thin fleece or a wind-proof puffy?
I agree with this actually. Yes it’s true that you can make a better return elsewhere in most cases with additional risk, and we fill up the TFSA, RESP, RRSP before the mortgage, but that’s not surprising and isn’t taking into account that the mortgage is after tax and 100% guaranteed. Current stock valuations are pointing to returns much lower than we’ve been seeing.
People look at the interest rate on a mortgage and it’s very low but don’t take into account that the rate is very low because the expected return in other areas has dropped too. Think about it from the banks point of view where they believe it’s a good use of their money to lend it to you at sub 2%.
True for wood. Maybe true for gas.
I believe that all gas heating appliances which would be considered higher efficiency would not work. Power vented appliances (boilers, hot water tanks, furnaces) wouldn’t operate. I’m not a gas person so I could be wrong here.
Another code-approved option for backup heat is an ethanol fireplace. They don’t put out a lot of heat but they don’t require venting or power to operate. For example, thebioflame.com
I think only you can answer that. How do you feel living next to a potential apartment? Some people think it’s a harsh imposition and others will barely notice. Depends on the distance, tree cover on your lot too.
Why would back-feed not be allowed? Don’t we have solar back-feeding both a house and the grid, as well as backup generators back-feeding (hopefully just the house) today?
My large well-insulated house has only a single 1.2kw (4.5kw output) heat pump for both heat and hot water.
Seems like micro-inverters are getting field-tested losses of less than 10%.
A fully charge Tesla model 3 would run my family of 4 for 4 days (or more if we actually turned some stuff off).
“Beside risking death, your fire insurance could be voided due to negligence.”
True, but being dead and all, I’m not sure it would really matter.
Beside risking death, your fire insurance could be voided due to negligence.
A small well insulated house/heat pump with electric back up would need at least 7.5 kw, average 2200 sqf sfh would likely need 13kw or more, HWT need 4.5 kw, each element on stove top pull 1.2-2 kw, etc… And, then you have to factor in 20-40% power lost requirement of an inverter depends on the load drawn.
The conclusion is that the fire department will be over worked if backfeed ever allowed.
2.14% for a 10 year fixed mortgage. https://www.ratespy.com/tangerines-10-year-fixed-rate-smashes-record-112316904
“O2 Sensor, tipover shutoff, and I have a CO alarm. I’m not concerned. Good point though I assume there are similar approved ones around.”
I haven’t seen one that is approved for indoor use in Canada. I use one of these for camping though (also have a CO alarm) and they work really well. Wouldn’t hesitate to use it as emergency heat in a house.
O2 Sensor, tipover shutoff, and I have a CO alarm. I’m not concerned. Good point though I assume there are similar approved ones around.
Obviously you aren’t going to be running the laundry during a power outage. Vehicle to home in the Leaf can output about 7kW. Plenty to keep the essentials running. Not a solution yet but it will be in the next gen of vehicles
That heater is a no go in BC because it doesn’t have a Technical Safety BC temporary heater decal, and the heater must be placed away from combustibles pending manufactures requirement. It will also required to be vented and have a carbon monoxide and dioxide detector.
I would love to see the day when electrical backfeed from a car battery pack to see if it survives the load from a household draw if it doesn’t blow up, specially when the heatpump with multiple backup/emergency coils calling for heat with hw tank, stove, lights, computers running, and a suite. And, then there is the extra costs of an automatic transfer switch on top of all things.
Thanks QT, I appreciate the helpful response.
Our gas fireplace is a freestanding unit so gives of plenty of radiant heat. Definitely not as efficient as when the fans are running. The heat did not fully circulate to the bedrooms upstairs.
Grid connection. Battery storage is very expensive and really doesn’t make any sense when you have the option of the grid hookup. Our hydro is the ultimate battery.
Battery storage may start to make sense when BC Hydro goes to time of use rates
It is very difficult to not have a backup system, because the heat pump will need to be grossly over sized to handle peak season load (greatly reduced efficiency), and it make it difficult when defrost is needed during cold spells or icing.
Electric backup are heater elements inside the ductwork, and it is an inexpensive addition that are similar to electric baseboard heater elements. It shared the same wiring/circuit as the rest of the heat pump, however the wiring and breaker must be sized accordingly.
The main draw back is that the return ductwork of an oil or gas furnace are often sized smaller than heatpump requirement, unless the return main trunk can be replaced and the intake register/grille opening enlarged. Undersized return reduced efficiency and that will also increase air velocity/noise.
Depends on your equipment though. Our gas fireplaces don’t really put out any heat if the power isn’t on to run the fan, and our high efficiency gas hot water tank won’t light if the power is out. Will rip them all out eventually but doesn’t make a lot of sense quite yet.
A good backup for emergency heat is something like this indoor safe propane heater. Will run for ~100 hours on a 20lb tank: https://www.amazon.ca/Mr-Heater-MH12B-Hunting-Portable/dp/B00CDJHIYW/
In the future electric cars will all support vehicle to home connections so you will have a couple days of backup power in your car.
An advantage of wood and gas is that you can still heat the house and have hot water in the case of a power outage.
A few years ago a windstorm left us without power for over 24 hrs. Our gas boiler still produced hot water, so we were able bath the kids using candle light. Also we were able to keep the house warm with our wood and gas fire places.
In North America most power lines are above ground, so there is always a high chance of having a power outage. In Europe most power lines are underground and power outages are much rarer.
They would have to be pretty disciplined to pay off their mortgage. Also if you are not very disciplined it might even be more incentive not to pay off the mortgage early. An undisciplined person would spend the money that was not going towards mortgage payments.
Leo – Another interesting post. I don’t know a lot about solar installations. The quotes you are presenting is that for a system with panels, inverters and a net meter grid connection. or is that a system that has its own battery storage? – Thanks
Problem is average person isn’t this disciplined or they pay a 1 or 2% MER to a mutual fund that underperforms. If you happen to be the minority with some discipling and common sense it is pretty simple….don’t pay off mortgage and you can buy solid companies paying 4-5% dividend (Cnd banks, Telus, Fortis, etc.). If you get appreciation like we have recently that is just gravy.
+1, this is what I would do personally. You do sacrifice A/C.
RE: Heat pumps. If I convert from oil, one of the requirements is that the oil system is decommissioned to qualify for the rebate. This would leave me without a back up system. Does anyone know what the pros and cons are of heat pumps that do not require a back up system? I am heat pump ignorant.
I am leaning toward converting to natural gas mostly because it seems like less of a pain in the ass (no need to upgrade electrical service or contemplate a back up system), and the rebates are also very attractive. Plus, I can always convert to a heat pump later on and use the natural gas system as the backup.
The 3% is based on the average over the last 30 years. Can’t remember where I found the doc on this but I’ll look. Regardless you can change it to 5% and the spreadsheet will recalculate return (it will increase).
We have done extensive analysis on solar system paybacks. Over the last 15 years BC Hydro rates have increased at more than 5% per year, not the 3% figure you use. Granted, the NDP have locked in rate increases at lower rates but this does not take into account that the bill for Site C dam will be more than $11,500 per hydro rate payer assuming the cost at $10.7 billion but which could increase significantly given the rising geotechnical and cost challenges.
“I just don’t understand why more people (who have the disposable income) aren’t trying to pay off their mortgage faster to limit the incredible absolute dollars being burned.”
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Paying off your mortgage is giving you a rate of return of under 2% on your money. That’s why most people who will be working for at least another 5 -10 years with stable employment should not paying off their mortgage. I would say defer your property taxes if your over 55 or have kids and use that money to pay mortgage or invest it. Balanced portfolio now up almost 25% in past 24 months.
A rebate to switch to Central heat pump from natural gas? I’m curious how many home owners have elected this?
The lovely thing about forecasts is that even the professionals are absolutely terrible at them. It’s really fascinating. (click to enlarge)
“Of course most people with buys pets, boats, RVS, etc., and then be strapped if/when rates go back to 3-5% one day.”
Lol, I don’t think it’s necessarily one or the other Marko. I am planning on doing exactly as you’ve described (using suite income to pay down the principal), AND getting another dog. Dogs aren’t that expensive, and make better friends than most people, so are worth the small additional expense imo. Cars, boats, European vacations every year, etc., I would regard as a waste of money (or at least not a priority).
My brother in law suggested to me exactly 14 days ago to sell my energy stocks and put it toward banking and into my mortgage, and I’m glad that I held out because I’m up and additional 18% since.
Congratulations, and holy crap more than 100K over assessment for a place that is smack in the middle of all the actions. PS. You are now Stu Young neighbor as he owned 2/3 of the businesses on Millstreams.
[Quote]Who on earth buys a 3 series, A4, c-class over a Model 3 or a q5, x3, whatever benz makes over a Model Y.
Unfortunately if you want station wagon that drives like a sports car it is a very niche market. Nonetheless, I do agree that the germans are slow to change and in big trouble. Not to mention the grill on the new 4 series is hideous.
Heck of a good post, Leo. Very interesting information and you clearly spent some time putting it together.
Installing a heat pump for an annualized return of 4-7% sounds pretty good until you consider that your mortgage, even at 1.7% over 25 years (not-gonna-happen best-case scenario), will cost you $100-200K in interest.
I just don’t understand why more people (who have the disposable income) aren’t trying to pay off their mortgage faster to limit the incredible absolute dollars being burned.
Given how low interest rates are and the fact that so much goes towards principal repayment now is a great time to use suite(s) income to put large dents into the mortgage principal so when rates do go up in 2-5 yrs you can just re-mortgage with a lower principal.
Of course most people with buys pets, boats, RVS, etc., and then be strapped if/when rates go back to 3-5% one day.
More of what I was trying to say is if your place is worth 860k standalone and the other properties are worth 650k standalone if a developer comes along wanting to buy you all out she or he will offer everyone 950k (random number) let’s say (varies on lot size, if they really need your lot or not, cash flow from house if they plan on taking a few years to build) so in that case your upside due to density is 90k and everyone else is 300k up.
Marko i see what you’re saying – best not to be the nicest house on the street and dragged down by surrounding property values. I just called Langford city, as you suggested, and they noted that there IS in fact a development application in for the Legion – they are going to tear it down and build a new Legion AND an apartment building – no details on the apartment building but she said no restrictions on height due to where it is. Do you think that will negatively impact values in the neighbourhood once completed or have no impact? anyone have an opinion? Thanks so much – stressful week and i don’t want to make a bad call and regret it later. Financially i think it makes sense – just want to make sure the intangibles make sense too. Honest feedback welcome – the place is on Aprell and the legion is 761 station ave – right on the top of the cul de sac basically. Cheers.
haha Patriotz i know what you mean but the second suite, where the owner is actually currently living, is just the garage connected with a den and gimmick’d into a suite – it would be only a few hundred dollars to convert it back but for now if i can make 700 a month renting it out then we will – at least until we are more comfy.
In general potential zone or potential zone for density is an upside for value since the highest and best use is now higher than pure single family.
That said you could be the odd person out if there is no feasible land assembly that includes your lot. Impossible to predict but I wouldn’t lose too much sleep over it. If there is a disruptive development near it you will still have the upside potential for a future buyer.
Certainly looking that way….I sold 100k+ of CND banks on Friday thinking they couldn’t possible go any higher. F***.
I don’t think you have to worry just about the lots behind….the cul-de-sac the house is on is also a future target for density. One of the homes on the cul-de-sac was a grow-op for a long time (not anymore to the best of my knowledge). That being said if three houses on your cul-de-sac partner up and it became a nice townhome project or small low-rise not sure how that would be any worse than what is there right now. I looked at some properties here last year for an apartment building but ended up buying a different development site in Colwood.
Way too many factors here. Would your home be a candidate for another land assembly or not. Secondly, the home being newer and on a smaller lot compared to the neighbours which are for the the most part tear-downs on the cul-de-sac your upside isn’t as high in terms of a buyout.
Not sure if Langford has something like -> https://www.victoria.ca/EN/main/residents/planning-development/development-tracker.html
but you can give them a call. Problem you buy and a year later someone submits an application. Unless you are buying in the Uplands there is always the risk of density.
The one thing that every real estate analyst learns over time is to be humble. That’s why I have to occasionally make fun of very certain predictions by prominent organizations. There is no such thing as certainty about the future market during normal times, much less so during a pandemic.
I didn’t think that house prices were going to go down much because of the strong position we were in when the pandemic hit. But I thought that flat to down slightly was a reasonably safe bet. Certainly didn’t see massive demand and price surge coming. The market always surprises.
and have to love the most liked HHV comments from earlier this year 🙂
6 months I said…”Since this blog started predicting a price correction already 13 years of passed which is kind of a long time if you’ve been renting waiting for a correction”
Well liked reply
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I hear a note of irony here.
“Rush4Life” I wouldn’t worry too much about your recent house investment. . Money is worthless right now. When you have money your first priority is to preserve it. So congratulations. You transformed money into a house.
If I owned a house and my next door became a big development, I’d see that as a plus sign. Best time to buy in a new area is when people can’t see the future. Think of the little box homes anywhere near the new rapid transit lines in Vancouver. Some people only saw the ugly concrete line.
Some people could see the gleaming towers of new condos that would flood in and transform the area.
Hey team – i have good news and bad news. The good news is my wife and i have an accepted offer on a house. The bad news is my wife and I have an accepted offer on a house haha (pending conditions release next week). I know its supposed to be a very happy moment when you buy but we are living quite thriftily right now in a 1 bdrm with our 2 year old (paying $950 for rent, packing away lots of cash) so it’s gonna crush our free cash flow which has been hard to digest. THat being said we have to move out as this place is getting to small and looking at comparable 3 bdrm homes this will be not much more net costs (as the house we are buying has two suites). The price of the new place is 860K and its in Langford.
The only hesitation i have – which i am looking for some advice on – is the area. Its near Floyds diner and the street we are on has a couple of large lots behind the home and its a development area. I imagine a developer could buy out a few places in the area and throw up a condo as there are quite a few in the surrounding area. My first question is there a way to see if there are any applications for that in the area? My next question is if a developer decides to throw up a condo and not include my home as part of the buyout area would it greatly devalue my home assuming i now have a condo looking into my backyard? Or would densification be a good thing for value(after it was built – presumably the time to construct would be bad)? I know there are a lot of variables but just talking generally here – we plan to live here for at least 10 years.
Anyway – we are coming to terms with the new expenses but feeling good about getting a place. If the market tanks in the next 6 months all you potential homebuyers can thank me as it would be just my luck after waiting the last few years. Cheers everyone.
First!