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It's time to change the way we build homes


Long approval timelines, inefficient construction methods, marketing costs all contribute to high cost of housing

It's time to change the way we build homes

The Kitsilano home, by Karoleena Homes, is a modern factory-built beauty.

Photograph by: Handout photo , Karoleena Homes

Much of the effort that is being expended to try to conquer the housing affordability challenge in Metro Vancouver is focused on assisting buyers or renters in one way or another, or on providing more subsidized housing in different forms. Mean-while, not enough effort is focused on lowering costs of traditional market housing.

Perhaps we should be looking for ways to lower the cost of housing to the consumer by identifying ways to plan, design, approve, permit, engineer, construct and market housing differently.

A good place to start would be to look at the time that it takes to deliver new housing to the market.

The majority of housing buildings in Metro Vancouver today is multi-family housing - condominium apartments, townhouses and forms of housing other than the detached single-family home. I know from experience that in most jurisdictions in Metro Vancouver, it can take more than twice as long to plan, design and obtain the necessary land use and construction approvals for new multi-family housing than it takes to construct that housing.

That means it can take as long as four and a half years from the time a parcel of land for a new multi-family development project is identified and acquired by a developer until the day when the new homeowner moves in, especially where the property has to be rezoned and the building is a concrete structure. Where the zoning is already in place, a new townhouse development or wood-frame condominium apartment development might be able to be completed in just over half that time, from the time the property is first identified. But we're still talking about an awfully long time.

A lot can change in three to four years. Remember the meltdown in the global economy that happened less than four years ago? Change and the uncertainty that comes with pro-longed time periods means risk. To compensate for risk, those who risk their money whether they be the developers who risk their personal and corporate equity or the lenders who finance new developments with debt, all need to be paid a reward or return.

Without a return that matches the risk and uncertainty, no one would make capital available for new housing projects. To understand that time is money, consider that for every month that passes, it costs around $2,500 just in normal bank interest for every $500,000 a developer risks while waiting for a project to be approved.

When the average home price is well in excess of $500,000, these costs add up quickly.

These costs - a significant cost component of new housing - can be mitigated with shorter time periods during which capital is at risk.

Homes can also be built faster if innovative construction practices are used, such as pre-fabricating components, sections and even entire buildings in a controlled environment. We haven't seen a lot of factory-built housing in this part of the world, but perhaps it is time we explored this alternative to building on-site.

That means changing and adapting building codes and other regulations, as well as changing construction practices. Not only can pre-fabricated housing reduce construction time, it can also mean better quality control and less construction waste, both of which make home building more cost-efficient.

Changing building technology can mean reducing costs, but it can also mean increasing the cost of building a home. While construction methods have been slow to change over the last half century, new technology has emerged in energy systems in particular that promise efficiencies in long-term operating costs and reduced environmental impacts. It makes total sense to embrace these new techno-logical innovations if they are proven to be cost effective.

But the new costs associated with incorporating new technology in a home needs to be accurately weighed against all of the benefits. We have to be cautious about not trying to use the home as a showcase for technology when the real purpose of the home is to provide shelter. New technology makes sense if it can be deployed efficiently and cost-effectively short term and long term.

Not a lot has changed in the way we market housing over recent decades and there is also room for innovation in this cost centre, as well.

Social media and other digital technology are just starting to shape the real estate marketing industry. There will always be a concern that purchasers must be protected in making a transaction as big as buying a new home, therefore there will likely always be a role for a professional intermediary.

Nonetheless, it is worth exploring how far technology and other innovations can go in connecting buyers to sellers and reducing marketing costs. These costs can amount to as much as five or six per cent of the cost of a new home.

This is not a small amount when we are considering homes that sell in excess of $1 million.

What are some of the other areas where savings can be achieved in sup-plying new housing? I welcome your ideas. Housing affordability depends as much on costs as it does on other factors.



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