Monday, April 26, 2021

Micro homes, tiny homes, manufactured homes

While searching for an article I wrote a few years ago for the Vancouver Sun on manufactured housing, I came across this article on a US website that addresses some of the differences between different types of manufactured housing and RVs, etc. Since this is so topical, I am printing it below:

Michael Geller, Making a Home for Manufactured Housing, a Vision for America

SageCreekCommunityWestKelownaBCVancouverSunManufacturedHousingIndustryDailyBusinessNewsMHProNews530x429Europeans, Asians, Canadians and others world-wide are among those who come to the U.S. – and/or research online – about the differences and similarities between their version of factory crafted housing with what is found here in the United States.

That same exercise is useful in reverse.  It’s helpful to understand what other nations do that may prove to have valuable insights for manufactured and modular home builders here in the U.S.

Geller on Factory Home Building

Architect Michael Geller shared his experiences of the recent 2017 Manufactured Housing Association of British Columbia’s annual conference. Geller’s column in the Vancouver Sun began with the headline, “Making a Home for Manufactured Housing.”

Geller’s thoughts will be explored below, after context is provided.

Let’s note that Geller nailed all of the terminology. MHProNews, and MHLivingNews readers are routinely reminded how useful it is to properly describe our homes, because it elevates the value proposition to all those who are listening or reading.

For the RC Williams report, click the image above.

Snapshot from Canada’s Versions of Factory Building

For those not familiar with Canada’s version of manufactured housing, they have a code known as Z240 that their homes are built to, roughly analogous to the HUD Code for manufactured housing in the U.S.

As in the states, Canadian modular are built to the same standards as conventional housing, which like Z240s, are built in a controlled environment.

Specifically, the Canadian Manufactured Housing Institute (CMHI) says, “Regardless of how or where a building is constructed, the authority having jurisdiction (e.g. the municipality) where the building will be located has a mandate to confirm that the building is built to code requirements. A certification label, indicating compliance with Canadian Standards Association (CSA) standards, is the building inspector’s assurance that the factory-constructed parts of the building meet local requirements.”

Code References to Z240 MH Series Manufactured Homes

Some building codes state that homes constructed in compliance with Z240 MH Series are “exempt” from the code. In effect, this means that homes constructed to the standard are deemed to comply with the code. Local authorities rely on the Z240 MH label to confirm acceptability.”

If you look at the statistics in the CMHI statistical reports document, linked here, and adjust for the population difference between the U.S. and Canada, it seems that the Canadians could be doing better than their U.S. counterparts.  Their annual report has more data than their U.S. counterparts typically do.

Credit, CMHI, shown under fair use guidelines. For their full report, click the image above.
Credit, CMHI, shown under fair use guidelines. For their full report, click the image above.



About Geller

Simon Fraser University says that “Michael Geller is an architect, planner, real estate consultant and property developer with four decade’s experience in the public, private, and institutional sectors. His company, The Geller Group is active in real estate consulting and property development. Current activities include land use planning, feasibility studies, and development approvals for a variety of large and small projects around Metro Vancouver.”

As you consider Canadian vs. U.S. shipment totals, bear in mind that Canada’s population is about 11% of that in the U.S. So, to get a comparable, apples to apples sense, multiply their shipments by 8.91 and you’ll see that their shipment totals look to be higher percentage wise than HUD Code manufactured housing is here in the U.S.


With that Backdrop, Highlights from Michael Geller’s Expertise

Imagine if cars were built like houses,” says Geller.

I thought about the differences between building cars and houses on a recent tour of a Kelowna manufactured housing factory organized as part of the 2017 Manufactured Housing Association of British Columbia’s annual conference,” he said. “I was invited to offer the perspective of an architect and developer on factory-built housing to an audience comprising manufacturers, dealers, transporters and government officials,”

Geller explained his history, and the interest than – and now – with homes that could be relocated if needed, but typically would stay in their original location once sited.

I have had a longstanding interest in manufactured housing dating back to 1970 when I was one of seven architectural students from across Canada to win a CMHC travelling scholarship. Our travels took us across the U.S. with guide Warren Chalk, one of the founding members of Archigram, an avant-garde 1960s British architectural group, with projects that included Plug-in-City, a massive framework into which modular dwellings could be slotted and removed.”

Back then, Geller spent weeks learning and promoting the early days of factory built housing.

For six weeks,” he said, “we toured mobile home parks and housing factories on a government initiative to promote manufactured housing on a major scale.”

As part of his thesis years ago, he proposed concepts he believed would be good for the industry and Canadian society.

Image credits, Sage Creek website, a Canadian modular home community.

In my university thesis,” said Geller, “I focused on a factory-produced relocatable housing system, and proposed that just as schools set up portable classrooms, governments could install modular housing on vacant lots. This could then be relocated when the property was needed for redevelopment, effectively eliminating the cost of land.”

He gave examples of past projects and plans, then said, “In recent years, BC Housing and the City of Vancouver undertook a feasibility study of a concept to promote relocatable modular housing as an alternative to housing people in shelters.

In British Columbia (B.C.), “today, thousands of attractive permanent homes are being built in factories. Companies such as Triple M, Moduline, SRI and many other manufacturing plants are constantly improving assembly-line procedures to build complete homes in days, rather than weeks or months,” he says, using points familiar with professionals south of the U.S. Canadian line.

By building in climate-controlled settings, workers are not dealing with rain or snow,” he said. “Waste is considerably reduced, and consequently factory-built homes are cost-effective, environmentally smart, and able to be customized as on-site construction. For this reason, many of the PNE show homes have been built using modular construction.”

At the Kelowna conference, I learned there are two basic types of factory-built housing: manufactured homes and modular-built homes.”

What follows would be wonderful if American public officials and media reported as accurately as did Geller.

Manufactured homes are typically constructed on a steel frame in one or two sections and are virtually complete when they leave the factory. Thus, they are ready for move-in the same day or a few days after arriving on the site. These homes can be installed on simple foundations and even relocated, although most are never moved from their original site,” he wrote.

Image credits, Sage Creek website, a Canadian modular home community.

He notes that the homes can be placed on crawl spaces or over a full basement.  Many in the U.S. tend to forget that concrete slab construction can be harder on the body. So the type of building that manufactured and modular homes produces is not only more economical, it can be healthier too.

Modular-built homes do not have a steel frame,” (Editor’s note to American readers; in the U.S. you can have on-frame as well as off-frame modular building). Geller said, “A typical bungalow consists of one or two modules, while multi-storey homes or buildings are created with multiple modules. These homes are typically set on full-perimeter foundations with a crawl space or even a full basement.”

Geller wraps with surprise, but a prediction for future acceptance and growth.

While I am surprised that factory-produced housing is not more popular in Canada, expect this to change, since it is cost-effective, energy- and resource-efficient, and well suited to a variety of housing forms. It could be an affordable solution for infill and laneway housing, and multi-storey apartments.”

Imagine if houses were built like cars.”

Indeed. ##

(Image credits are as shown, and when provided by third parties, are shared under fair use guidelines.)

SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News on

Wednesday, April 21, 2021

Shared Equity and SAMs. An interview with Georgia Straight's Carlito Pablo


Shared equity brings homes into reach for many

Architect and developer Michael Geller insists that this approach can work well with relatives and even trusted friends

  • There is no reason that alternative financing such as shared equity cannot be adopted by Canadian financial institutions, according to a local housing expert.FEVERPITCHED/GETTY

Homeownership presents a difficult hill to climb for many.

But as Michael Geller explains, that ascent doesn’t always mean having to do it in one go.

The summit can be reached by what the Vancouver-based architect, urban planner, and housing and development expert describes as “staircasing”.

“You can climb up the stairs as you go from a 20 percent ownership to 50 percent, and then, eventually, you own the whole thing,” Geller told the Straight in a phone interview.

It’s a concept based on what is referred to as shared-equity homeownership.
The way this works is that a buyer purchases a share in a residence and pays rent on the rest.

It’s done in the U.K., where some homes are partly owned by housing associations and banks provide the mortgage.

As English bank Barclays explains online, one can buy between 25 percent and 75 percent of a property that is managed by a housing association.

Geller said that this is an idea worth exploring locally.

Housing is a passion of Geller’s, who has done it all with the many hats he has worn over the years.

He started as an architect in Toronto, went on to work with the Canada Mortgage and Housing Corporation, managed developments for a private company, led the SFU Community Trust, and formed his own Geller Group. In addition to his current consulting work, Geller is also part of the adjunct faculty of SFU’s Centre for Sustainable Development.

With an experience spanning more than four decades, he has studied many different ways of reducing housing and development costs.

This is why Geller says with confidence that affordable housing is achievable. He likes delivering talks on this subject.

He noted that one way of getting housing within the means of people is to look at alternative financing, saying that one example is shared equity. He also calls it a “shared-appreciation mortgage”.

To illustrate, let’s say someone approaches Geller and the person wants to buy a home but does not have the required down payment of $300,000.

Geller then lends the money. There will be interest on the loan. When the person sells the home, Geller gets back his $300,000 plus interest; on top of this, he receives a 50 percent share in the appreciation of the home’s value.

“Now, some people would say, ‘Well, why I would agree to that?’” Geller noted. “And the answer is, ‘Because if I don’t lend you the $300,000, you can’t buy that house.’ ”

He said that this can work well with relatives and even trusted friends. But there’s no reason why financial institutions like credit unions cannot do it as well. Geller mentioned the Vancouver City Savings Credit Union, or Vancity.

“What Vancity could do is say, in theory, ‘We’ll give you a 100 percent loan provided we get interest on the loan, and because we’re giving such a high-ratio loan, we’re going to share in the appreciation when you sell it,’ ” he said.

Geller said that the scheme makes sense, although he doesn’t know whether financial institutions are thinking of things like this.

The federal government introduced as part of its 2019 budget a program called First-Time Home Buyer Incentive. Under the FTHBI, the Canada Mortgage and Housing Corporation provides homebuyers with a loan. The money covers 10 percent of the cost of a newly constructed home or five percent of the cost of an existing home.

The loan comes in exchange for an equity stake in the property. It’s a shared-equity mortgage, or a shared investment.

“As a result, the government shares in both the upside and downside of the property value,” CMHC explains online.

A home buyer doesn’t have to save as much for a down payment. As well, a bigger down payment means a smaller mortgage, hence, lower monthly payments.

The homeowner will have to repay the loan based on the property’s fair market value at the time of repayment, which is after 25 years or when the property is sold.

Based on latest numbers available online as of April 12, CMHC has approved more than 10,600 applications, representing $193.4 million in shared-equity mortgages.

Here’s the regional breakdown of these mortgages: 355, B.C.; 2,975, Alberta; 1,307, Prairies and the North; 810, Ontario; 4,284, Quebec; and 917, Atlantic.
If shared homeownership or equity or mortgages are such good ideas, Geller noted, some people may ask why it is taking so long to do these things.

“The answer is, ‘Think about how long it took before they started putting wheels on luggage,’ ” Geller said.

Oh No. Here comes a Federal Empty Home Tax!

Yesterday I received an email from Jumy Dapo-Ogunsola, producer of Charles Adler Tonight inquiring whether I would be available to chat with Charles that evening about an aspect of the new federal budget that looks to impose taxes on vacant homes as a way to cool the housing market. How would that impact the issue of affordable housing? Would there be more rental homes? 

As readers of this blog and the former Vancouver Courier might recall, I have often questioned whether empty home taxes are an effective and fair way to address housing affordability. A brief review on Google reveals literally dozens of articles I have written and interviews given on both Vancouver's so-called Empty Home Tax and the Province's so-called Speculation Tax. 

I say 'so-called' since the city's tax not only applies to empty homes, it impacts 'second homes' that may be occupied  up to 182 days a year.

In some cases it even applies to empty  lots.

Recently, Vancouver media reported on a number of cases where the province's tax applies to the empty air space above a restaurant in Kitsilano.

Vancouver's Empty Home Tax only applies to properties within the city boundary. It does not apply to properties in Burnaby, Richmond, or on the North Shore. However, the province's tax applies in  many jurisdictions around the province, including the City of Vancouver. How much does it cost?

The amount of the tax varies. The Vancouver tax was initially 1%, then increased to 1.25% but is now 3% of the assessed value, thanks to a Kennedy Stewart campaign promise.

The provincial tax is a bit more complicated to calculate and depends on whether you’re Canadian or a foreigner. There are some other calculation nuances, but  in general, the current tax rate is:

  • 2% for foreign owners and satellite families
  • 0.5% for Canadian citizens or permanent residents of Canada 

If you have a $750,000 1-bedroom apt, the tax is $26,250 a year for a Canadian resident and $35,000 a year for a foreign owner.

If you have a $2 million house, that’s $100,000 a year for a foreign owner. And that’s before the new Federal Tax!

If you own property in Vancouver deemed 'empty', you may have to pay both taxes. I say MAY since different rules apply for each tax.

In November 2019, I wrote a column for the magazine published by the Notary Public Association comparing the two taxes, since there are some significant differences. You can find it here:

The stated purpose of both the Empty Homes Tax and Speculation and Vacancy Tax is to encourage owners of empty dwellings (if they are empty, they cannot be homes) to rent out their properties. 

However, since their inception, I have advised people not to expect these taxes to significantly increase the supply of affordable rental housing in Vancouver or elsewhere in the province. 

When this tax was first proposed, we were led to believe there were anywhere between 10,000 to 25,000 empty homes that could be brought into the rental market.

 According to a subsequent city report, the number of homes declared vacant, without valid reason, was 1085 in 2017 and 922 in 2018—525 properties were declared vacant for both years.

The City expected to receive $38 million from the vacant properties. That equates to an average of $41,215 that equates to an average $4.1 million in property. Even if those property owners could be forced to rent their homes, they are not going to be affordable rentals.

So how many properties did return to the rental market? According to a City staff report, a significant number of formerly vacant units returned to the rental stock.

How many? One hundred seventeen. Yes, 117.

While I and many others can understand why the City would want to encourage owners of empty apartments and houses to rent them out, one of my major concerns with the EHT is it applies to many people just because they are fortunate enough to own second homes in Vancouver. They include wealthy Americans who live in the city for 3 months during the summer or Albertans whose children are studying at UBC and want to keep a small apartment downtown for when they visit.

They also include the Sunshine Coast doctor who volunteers in Vancouver and the midwife who lives on Saltspring Island but keeps a small condo in Vancouver for when she’s working.

My concern is that their properties are not empty. They are fully furnished homes that are lived in, albeit for less than 6 months a year. In most instances, it is not feasible to rent them out when the homeowner is away, except perhaps as an AirBNB or other form of very short-term accommodation that is generally no longer allowed in Vancouver.

While many people caught in this situation have been urging the City to make changes to this tax to exclude legitimate second-home owners, since their homes are not empty, instead the City made only a few minor bylaw amendments for the 2019 tax year.

As an aside, while much fanfare is given to how much money is being collected by those taxes, we are rarely told how much the programs are costing to administer. Which brings me to the proposed Federal Tax.

“Houses should not be passive investment vehicles for offshore money. They should be homes for Canadians.” said Chrystia Freeland. This is very powerful rhetoric and as we have learned from recent surveys, very popular with most Canadians. However, if we go back to Jumy's questions will a federal tax address rental housing and increase the supply of rental homes?

Somehow, I don't think so, based on the experience in British Columbia. For one thing, many of the homes that are truly empty are expensive properties. Secondly, many foreign buyers have come up with clever schemes to evade or avoid the tax. I also worry that the costs of administering a federal program could be significant.

During last night's interview with Charles, I was asked what I would do instead. As a former CMHC employee, I suggested it might be wiser to bring back some of the tax incentives the federal government once offered to encourage private investment in rental housing. I even suggested the return of some of the previous CMHC rental housing programs. I also agreed with additional funding for non-profits, as set out in the budget. 

While I won't be able to bring myself to listen to my conversation with Charles, you can if you want. You can find it here.

Thanks again Charles for inviting me onto the show. I always enjoy the challenge of knowing what I might be asked next!