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Do It Yourself Home Lauded by Housing Minister Coleman

He also sees 'shared equity' as a way to make houses more affordable.

By Monte Paulsen, 31 Mar 2009, TheTyee.ca

Rich Coleman, Homes For All

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Rich Coleman built his first house from a kit.

"It's still standing," the Housing and Social Development Minister added, wryly.

"When I was putting the house up, there was a huge wind storm," he explained. "The walls were flapping -- we didn't have the trusses tied in -- and at one point the whole north side wall picked up and flew on down into the ditch by the road."

Coleman concluded "we can't fight mother nature," and left for the night. He and his friends returned the following day, retrieved the departed wall, and continued assembling the house. "Everything worked out fine but, you know...the story was that my whole house had been blown down."

Now the minister says he is looking at shared equity, starter homes and simpler permitting, among other means, to help upcoming generations of British Columbians become homebuyers.

Cheaper than linoleum

"I was 20 or 21 years old," Coleman recalled. He'd recently begin a career in the RCMP, and was posted in rural Alberta. "I was able to buy a lot. And I was able to get a packaged home where the walls came pre-built...my sweat equity was taken as my down payment because I acted as my own contractor."

It was a simple three-bedroom house with two-by-four walls, said Coleman, who initially finished two levels totalling about 1,060 square feet; later, he finished a third level, adding another 400 to 500 square feet of finished space.

Coleman said the initial quality of finish was so cheap that he later upgraded to linoleum. "They used to have a thing called 'kitchen carpet,'" he said. "It was a rubber-backed carpet. It melted when anything hot got on it. So later we changed it to linoleum."

But the simple home enabled the young RCMP officer to begin building equity. "I sold it and the equity actually helped me to do two things: It helped me to build another home in Penticton when I left the force, and it helped me buy my business," he said.

"I would like us to get back to where we can do that again today," Coleman said, "...a guy being able to get his own lot and hiring building contractors and such and still be able to build something himself."

Coleman said that while this opportunity still exists across much of British Columbia, high land prices have pushed such a dream out of reach in the Lower Mainland.

Shared equity an urban solution

B.C.'s housing minister joined a cutting-edge non-profit housing developer and Vancouver's renowned condo marketer in pointing to shared equity as the most viable means by which to lower the cost of housing in B.C.'s expensive urban areas.

Coleman's vision for shared equity begins with "somebody who's got land" such as a municipality or the provincial government. That entity would agree to contribute the land for less than full market value, in exchange for a developer agreeing to bring homes to market at an affordable purchase price.

There would be restrictions on resale. "You can't just go into that home for a year, then turn around and sell it and walk away with the profit," Coleman said. "The shared equity idea says that when you sell, a portion of your profit on the sale comes back to the entity that put up the land in the first place."

In the case where that home was built on municipal land, part of the profit resulting from a subsequent sale would go to the homeowner, and part would come back to the municipality. That money might go into a fund that would ultimately pay back the price of the land.

"Over a couple of cycles it might do more than pay back the price of the land. It might start to make a profit for the city, a profit the city could then invest in other housing projects," Coleman said.

Alternately, Coleman said the entity could be a not-for-profit organization created for such a purpose. He even speculated that long-term investors might see merit in retaining a small portion of the equity of such entry-level homes.

"If you had somebody who was looking at their money long term, even they could do it. I mean they could just say, 'Okay, we're going to take less on our profit, we're going to leave it in, but we're going to get paid over time because on each sale we get some back and we could actually defer certain things as a result," Coleman said.

The minister said BC Housing was interested in exploring the idea further, but there is nothing currently in the works. "We have not found an opportunity to do a pilot."

Consumer expectations part of problem?

Coleman acknowledged that high land prices likewise compel commercial developers to load up new homes with every imaginable feature in order to justify the highest possible sales price. At the same time, he blamed consumer tastes for pushing the price of ordinary homes out of reach of ordinary families.

"I think there has to be a bit of a shift in our expectations on the home that initially gets built in a subdivision," he said.

"Back when I built my first house, you did not finish with the high end finishings that are in a house today. You put in some reasonable flooring. And usually you did not finish the basement. That was equity you would put in later," he said.

"So part of the problem is the younger generation itself, saying, 'I want it all finished.' I don't think there is any doubt that the market has adjusted to what the consumer wants," Coleman said.

"But when you say we want to build affordability by building small-lot subdivisions, for instance, and then you fill those smaller lots with two-storey houses with full basements and expensive countertops...well, those houses don't wind up being so affordable, do they? They wind up being big, expensive houses that are just a lot closer to the lot line."

Regulation, tradition also an issue

Coleman also blamed government and industry practices as part of the affordability problem.

He said it is very hard for an individual home builder to even buy a lot. "In the Lower Mainland, we have a controlled subdivision which is part of the planning process in most municipalities," he said. "What happens is the developers sell the lots, usually in bulk, to builders."

Even if a would-be-self-builder could acquire a lot, Coleman said that in many communities, it would take more than a year to get a permit.

"Permitting is a very lengthy process in some cities," he said, adding that the costs of paying for the unused land during that time could wipe out any savings a homeowner might gain by building himself. "There is huge cost that is driven simply by the bureaucracy and the permitting and the development cost charges for getting the house into the ground."

Coleman suggested that municipalities rethink some zoning restrictions, and explore the idea of pre-approving a list of house plans for some zones. He also suggested that modular construction might represent the kit homes of the future, because they may make it easier for individuals to build structures that meet the quality standards mandated by municipalities and the province.

"There are a lot of ideas out there," Coleman said. "We do know we want to start looking at these ideas. We think it's time."

Related Tyee stories:

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Monte Paulsen is investigative editor of The Tyee. He welcomes e-mail and invites respectful comment in the forum below.

This series on affordable housing was made possible in part through the support of Tides Canada Foundation, the Catherine Donnelly Foundation, and the Van Tel/Safeway Credit Union Legacy Fund, held and managed by Vancity Community Foundation.

22 Comments:

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  • Monte Paulsen

    3 years ago

    Shared equity

    I find it intriguing that leaders as diverse as Minister Rich Coleman, marketer Bob Rennie and non-profit developer Michael Labbé all point to shared equity as one of the most promising mechanisms by which to provide affordable housing.

    How comfortable would you feel about some outside entity holding something like a second mortgage against a small share of your home’s value? And what sort of entity would you trust to manage that equity in the public good: a non-profit, private investors, local government, or a provincial agency?

  • deeby

    3 years ago

    Wow....

    I've gotten so used to rampant partisanship that I didn't expect to see reasonable arguments from this minister on a subject that he's obviously passionate about.

    Congrats also to Monte and the Tyee for finally being taken seriously enough in the Leg that a cabinet minister would choose to provide a detailed interview.

  • Campbellwearsatutu

    3 years ago

    Eqiuty shares?

    With Gordon Campbell`s policies bcers are going to have no equity in forests,rivers,land base,resources,so what the hell,we might as well have outside sources holding equity on our homes,Campbell`s policies have lead us down this road,may 12th we will become owners again, with whats left of our province and resources.

  • freebear

    3 years ago

    Why have private land property then?

    Seems to me to be better to turn all the remaining vacant land in BC into crown/municipal/aboriginal land which you would then lease (cheaper, don't pay tax because not an assest-just the home is), rather than purchase.

    Seems private land for sale and land speculators raises land prices.

    How affordable can a limited land base be over time? The last lot would be worth millions if 100,000 people were looking to buy it!

  • seth

    3 years ago

    More BS from Gordo's head thug

    Great idea.

    So why didn't former head Dick Coleman turn over a billion dollars worth of forest land in Sooke to the great unwashed instead of giving it to Western Forest Products EDITED FOR LEGAL CONCERNS -- TYEE MODERATOR

  • Van Isle

    3 years ago

    Obviously Mr. Coleman hasn't

    Obviously Mr. Coleman hasn't tried to build a house lately. For one, they won't let you use 2x4 exterior walls anymore. A former co-worker of mine built his own home a couple of years ago; took him 3 months just to do the paperwork and that was before he could even turn over dirt. He had a qualified carpenter draw up the plans, (who was going to help out in the building of the house) and made sure everything was up to code. But oh no, that wasn't good enough for the regional board, had to have an engineer look over the plans, have a draughtsman copy the carpenters drawings and after everyone put their stamp on it, then copies were submitted to everyone in the regional office. Then they had to wait until somebody in that office issued the building permit. For the average joe, it's almost impossible to build your own house nowadays; the paper work will kill you, the actual building of the house is the easy part.

  • freebear

    3 years ago

    Leave it to the Pros

    Time was we all could build.

    Now we must have some certified professional confirm we still can build!

    Sure I would make sure my structure, electical and plumbing was right by checking with a professional, but not paying for a stamp of approval.

    Wake up Coleman!!!!!!!!!!!!!!!!!!!!!

  • wildgrl

    3 years ago

    who's calling the shots!

    "So part of the problem is the younger generation itself, saying, 'I want it all finished.' I don't think there is any doubt that the market has adjusted to what the consumer wants."

    Are you kidding? Try to buy a condo in Vancouver that doesn't have a "master ensuite" of guargantuan proportions and a ridiculously huge bathroom with 2 sinks, granite countertops, soaker tub AND shower, plus another bathroom (who's that one for), all in 700 sf. Why not give people some open space and a living room-without all the frills and wasted space on bathrooms? I just need a place to take a s*#t, not a spa, for pete's sake.

    Because developers are calling the shots and they want every property to qualify as LUXURY.

  • G West

    3 years ago

    This is utter baloney

    Have a look at the average house price in Vancouver; then look at the mortgage tables for a 30 year amortization on a five year fixed interest rate mortgage.

    You'll get the picture.

    Coleman is a joke - as always.

    It isn't additional financing that's the problem, the cost of first a first mortgage is totally beyond the capacity of middle class people to afford.

  • SharingIsGood

    3 years ago

    GWest is Right

    Even in the poorest of rural towns, a serviced lot costs $80,000. An undeveloped lot outside of town requires the drilling of a well, pushing in a driveway and installing a septic system and hydro service. The costs end up being about the same with the added dimension of extra travel expense. Raw land requires 50% down. How does a young person save $40,000 when minimum wage is still $8 per hour and the older, experienced people are competing for the same jobs as the young ones. Even the chintziest 800 sq. ft. bungalo on a crawl space and plywood floors will cost a minimum of $150,000 by the time the land is added in. The mills and the logging shows have been shutting down. The mines are not hiring. Burger-flipping and farm work is all that is left, and we know that those are dead-ends.

  • Trent

    3 years ago

    Shared equity

    "How comfortable would you feel about some outside entity holding something like a second mortgage against a small share of your home’s value?"

    It wouldn't bother me one bit, as long as the equity is still growing. However, I'd like this question put to the banks and credit unions. Monte, go ask the banks/credit unions why they are so reluctant to lend for co-op purchases. Why do they charge higher interest rates for this type of financing? This is the real barrier to shared equity, the financing.

  • reallife

    3 years ago

    Thinking instead of whining

    Good to see that Coleman is thinking about potential solutions to the high housing costs instead of simply whining about them. He recognizes that land prices, bureaucracy and high end finishing are large contributors to putting home ownership beyond the reach of first time buyers. He also suggests some approaches to reducing these costs. Unfortunately, I do not think they will work as building codes, squabbling bureaucracies and home buyers' unrealistic expectations will get in the way.

  • Tbarnston

    3 years ago

    How long has

    From: http://www.bchousing.org/aboutus/about/governance/Minister
    "He has served as Minister responsible for Housing since 2005"

    So what's the holdup Rich? Time to walk the walk buddy.

  • rangergord

    3 years ago

    Now we are talking

    So far this is the best installment in this series. Wow! what a surprise, a ex-cop cabinet minister with a working brain. Great talk, good ideas but little action on the ground. If those in power realize what the problems are, why can't they begin to address them? I am quite sure that if people had the choice of a bare bones affordable structure or a luxury property there would be still enough buyers for the affordable, no frills , housing. Most people bought into the luxury primarily because they could afford it due to 30-40 year mortgages, low interest rates, ever appreciating real estate markets and two incomes. Hopefully all those factors are history now. Meanwhile beyond Hope, in the rest of our great province there is land a plenty where you can build your own home . If you buy outside of municipal boundaries you can still avoid most of the cabal who have destroyed affordable housing. elsewhere.

  • anarcho

    3 years ago

    No idiot regulations!

    Get rid of all the idiot regulations - put there only to make it impossible for someone to build. Get rid of minimum size limits - or at least lower to 200 sq. ft. Allow composting toilets and gray water systems in non-serviced areas. Allow trailers. All these regulations wee put there precisely to jack up the price of housing. As for land, create land trusts with government owned land and where necessary expropriate it..

  • mcgregory

    3 years ago

    Making Sense

    This is probably the first thing I have heard Rich Coleman say that made any sense. I have been paying attention to him since he was forest minister (thought he sold out the forest industry). As long as we relax a lot of stupid rules, and regulations, this might work. I live in a rural area, and if I want to build a wood shed bigger than 8 X 10 I need a building permit. Keep the big developers out of it, let the little contractors get a cut of the action, let the home owner be his/her own general contractor, and step aside.

  • doggone

    3 years ago

    Turn around?

    I watched the building regulation come in to this province in the '60s and built things as the quality deteriorated - framing lumber went from high grade fir to the punky "piss fir" we shot into place today. For those who do not work in the construction industry "piss fir" smells like cat spray. It is fine structually as long as the carpenter knows where to put it. My old partner, Gunther has a lifetime "Timber Grader's Cert." We chuckle as we look through the framing package. Some can be sistered up as reinforcing and some can be used as blocking - some is garbage. The final owner pays for all of it. A computer scanner grades one side of the board (were they looking only at the good side?)
    Rich Colman: Jeez! Built an house - why don't I trust these folks? Could it be Coleman's history as forest minister and his brother ditzing about with WFP?
    Am I imagining this or is there a "Ministry of Disinformation" recently created in B.C.

  • alive

    3 years ago

    YOU voted for this!

    doggone, good point about the wood available here in BC.
    I know of contractors who would drive across the border in order to buy good quality BC lumber in the USA, for the houses they were building in Richmond!

    I also remember the local planning department proclaiming certain areas as forever "green", only to be overruled by the next council (sponsored by the chamber of commerce by the way).

    Once again, it is the voters who elect greedy "entrepenours" at all levels!

    It is easy to blame them later, but how about not electing them in the first place!

  • Lefty

    3 years ago

    I would rather his

    I would rather his government repeal their gas tax and re-instate the income taxes they had reduced for high income earners.

    Never mind telling me how to get a home, stop stealing my money and stop giving away the resources of this province.

    No bloody way in hell would I risk my property on a bad idea a bad partner has. This the stupidest idea out of the fiberals yet.

    I want BC Rail. I want Unions, I want a decent province to live in. Gordon Campbell and his crony government have failed miserably on all counts.

  • realisticman

    3 years ago

    Lefty

    "I would rather his government repeal their gas tax..."

    Hath thou no feelings for the environment?

  • morechatter

    3 years ago

    Letting the poor by homes

    And the gas tax did ditto for the environment actually I do believe it hurt it substantially because of all the money spent on advertising which is a carbon fuming industry. BC wasn't even mentioned when it came to being greenest in the land it was PEI and 5 other communities despite all the hype about getting British Colombians on the job. Well they suck at the job. And they haven't been taking the train either so suck that up as the carbon tax was a complete failure as cruise ship head to Seattle as hundreds of millions of dollars go down the drain as cruise ships site a cost conscience consumer something they aren't getting in BC. And what were we talking about again Realistman?

  • morechatter

    3 years ago

    Coleman's got a plan

    And he's out to lunch for sure as he talks of his big time investment as a little time home owner and a flat foot cop make for a big time builder, schemer dreamer. I guess the wind wasn't strong enough to blow the big man away but he sure is full of it, hot air that is. Giving the poor credit to buy a house now where did I hear that one before?

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