Renovating Vs. Rebuilding – Is It Easier to Just Start Over?

Renovation proves to be a tough lesson in the cost of renovating versus rebuilding in Vancouver. In some cases, renovating can actually end up being the more expensive option, and it doesn’t add as much value to the property. An original budget of $200,000 can balloon to about $300,000, as unexpected permitting fees and costs to meet the building code added up.

“There’s a lot of wringing of hands and gnashing of teeth over demolition of what I would consider perfectly fine houses in Vancouver,” one homeowner said. “I think if the city wanted to encourage renovation, they certainly could by making it a more cost-effective option than tearing the whole house down and sending everything to the landfill and starting from scratch.”

Expert architects say that the most common extra expense is a result of all the minor fixes that generations of owners have made over the years. Altogether, those can add up to some serious structural integrity issues.

There can also be mould, mildew and water damage to deal with, as well as outdated electrical wiring that needs to be replaced. In Vancouver, the costs really start to add up as a renovation project becomes more extensive. Once construction costs exceed $5,000, the builder will need to meet certain new energy-efficiency requirements. Over $50,000, and walls may need to be deepened to allow for thicker insulation, while the building will require sealing around spots like windows and doors to prevent heat leakage.

When the project reaches about $95,000, city engineers will usually order a new sewer connection at a cost of $16,000 as part of an ongoing, long-term plan to separate rainwater from sewage. If the renovation hits 50 per cent of the replacement value of the home, a sprinkler system will have to be installed.

And any new addition to a home will have to meet all modern building codes, which include triple-glazed windows and accessibility requirements like wider doors and levers instead of doorknobs.

It’s pretty rare that you’re getting to the scope of renovation that the cost is actually comparable (to building a new house). Mark Cooper, president of Shakespeare Homes and a director of the Greater Vancouver Home Builders’ Association, said that most interior-only renovations come in at about $100-$125 per square foot. Add in some new windows and exterior work, and that jumps to about $150.

“Once you start creeping up to where … we’re talking (costs) above $200 a square foot, this is probably … where you want to have a conversation with them about building new,” he said. “Any good builder that is capable of building new houses should have that dialogue.”

There is also a significant resale advantage to demolishing and rebuilding when it comes time to put the property on the market. An example of two similarly sized homes on equivalent lots on Whyte Avenue in Kitsilano that sold within days of each other in January. One was built in 2013 and fetched $5.65 million. The other was a 1911 home that had been renovated in 2013, and it sold for $1.6 million less.

A lot of buyers are looking for the newer homes rather than the renovated homes because of all the new upgrades that can go into them.Things like higher ceilings, an open floor plan, ensuite bathrooms for each bedroom, air conditioning, and smart home features are all easier to find in new homes.

Doug Langford, co-founder of JDL Homes in Vancouver, believes that the city should offer some exemptions from the building codes as an incentive for renovating character homes. He said that when people start adding up the costs of renovating — and some renovation projects can be $500,000, $600,000, $700,000 — they’re looking at it going, ‘Hey, if I just spend another 20 per cent, I’ve got a brand new house’.

Staff at Vancouver City Hall acknowledge that substantial renovations can be expensive. To renovate as opposed to new construction, they’re both expensive in their own way, but my experience is if you’re doing a massive renovation, sometimes that can be more expensive than a new build.

From a sustainability point of view, they said that the city would prefer to see people maintaining as much of their homes as possible, rather than sending piles of demolition waste to the landfill. Preserving historically significant homes is also a priority.

But they insisted that while renovations are more expensive in Vancouver than in the rest of the region, there are good reasons for the costly updates required by the building code.

Making homes more energy efficient goes a long way toward reducing greenhouse gas emissions, he maintained, while retrofitting homes to be more accessible is essential as baby boomers hit their retirement years.

Also, the burden of recycling demolition waste adds anywhere from $15,000 to $30,000 to the cost of a project, according to those familiar with the process.

Meanwhile, Vancouver piloted a $75,000 grant program in the fall to help owners of pre-1940 homes do energy retrofitting. It filled up in just a few months, and a second round of funding will become available later this year. BC Hydro also offers rebates for a variety of energy-efficiency upgrades.

There is also some flexibility in Vancouver’s zoning and development bylaws that allows city planners to relax restrictions in the case of renovations, according to Tony Chen, manager of the city’s housing review branch.

Contractors also point out that certain Vancouver zoning regulations make demolition an unattractive option, because they restrict the footprint size for any new structures. So, I recommend rebuilding your new home. Contact me today if you are considering rebuilding your home.

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