Toxic Drywall not Chinese Drywall.

It is old news, there are problems associated with some drywall manufactured in China. The problems are real and documented. While there are a few cases in Canada, the majority of complaints come from American home owners. It is not right. Unsuspecting home owners have been saddled with an unfair financial burden.

Though in the 'Big Picture' I am a bit suspicious. This controversy might be about more than just drywall. I think it is partly about China, "the Chinese" and trade with China. Before I am labeled a left wing nut let me explain.

I read a lot on home inspection, home renovation, real estate, economics, trade and government policy. First, it seems it is always the "Chinese Drywall" problem. Never, the problem with dry wall manufactured in China. Okay, on the surface it is the same and I'm splitting hairs. Though, I think you know what I am talking about.

My point is, I rarely read about toxic drywall manufactured in Canada and America. Recently, Florida Senator Dave Aronberg said,

"We have families that have been victimized by drywall that was made not in China but in Canada and the United States,"

Calgary Realtor Jim Sparrow has been contacted by families from the States claiming their new homes have toxic drywall (suspected sulphur contaminated) manufactured in and by American companies.

This is not just about "Chinese Drywall". It is about Toxic Drywall manufactured by Canadian, American and Chinese companies. Pointing fingers is uncivilized.

More Tax Relief Requested

Mario Toneguzzi recent article at the Calgary Herald looks at a study prepared for the Canadian Real Estate Association. The study documents the millions of dollars of spin off benefits and direct and indirect employment created as a result of multi-unit residential property transactions.

This is expected and does not come as a surprise. Possibly, the underlying motive of the study was to provide a foundation argument for some kind of tax relief for real estate investors. To quote the article,

"CREA says many income property owners are reluctant to sell and re-invest because of the capital gains tax and recaptured capital cost allowance".

The Home Renovation Tax Credit has been a huge success and it would be nice to see some kind of tax relief passed on to multi-unit residential property owners.

Source Calgary Herald

Real Estate Equity Index

As of September 25, 2009, of all Canadian Mutual Fund Indices - The Real Estate Equity Index has the highest 3 month return. An impressive 18.4% return with the Global Small/Mid Cap Equity Index coming second at 16.5%.

I realize the majority of Fund's holding are real estate equities held outside of Canada. These returns do not directly reflect the Canadian market. That said, it is nice to see the Real Estate Market coming back strong on an International level. One can have confidence that the Canadian market will tail the international market.

Real Estate Equity Index (Sept. 25, 2009)

3 month return

Source: Morningstar Canada

CMHC Loans - Full Recourse

I wrote in a previous post that I was unaware that mortgages in the States were non recourse loans. Essentially, the home owner or speculator defaults - they can walk away and the house and loan, becomes the Bank's problem.

It is easy to see how this lack of personal responsibility can lead to reckless speculation. Unless one has filed personal bankruptcy we don't have this luxury in Canada. Which of course makes our Banks happy and stable.

A Calgary reader looking to buy a new home does not care about any of this. Take out a mortgage and it is understood - you are on the hook.

But did you know loans made by the Canadian Mortgage and Home Corporation (CMHC) are also full recourse loans? I never knew this but it makes sense. It helps stabilizes our real estate market by keeping unqualified home buyers and speculators on the sidelines.

Some oil companies doing more with less

I just read from the Canadian Press,

"Calgary's third quarter (commercial) vacancy rate jumped to 13.1 per cent, from 4.7 per cent last year, due to the impacts of a slowdown in the oil and gas industry".

"...oil and gas industry and commercial market remained inexorably linked, as players both large and small continue to recognize that even Calgary has not been immune to the country's new economic reality"

The jump in the commercial vacancy rate does worry building owners and commercial Realtors. I do not debate there is a slow down in the oil and gas industry. However, this article is a bit too much doom and gloom.

Many companies are doing more with less space. I know of one oil company that reduced it's office space by 50%. The only changes, the CEO shares an office with his personal secretary. His office is now the board room. The employee lounge is now the computer room. All the files have been sent to a warehouse in the Foothills Industrial Park. The company has added 3 new employees and the stock is up 30%.

I know people are hurting, but in a quiet way things are getting better.

Calgary Real Estate Market

You have to love this chart. Brookfield Asset Management is a Canadian based company with diversified investments, including Royal LePage and Brookfield Properties. You might not have heard of Brookfield Properties but those in Calgary, could likely find Bankers Hall or the Suncor Energy Centre.

I love watching this stock. I see it as an indicator that the turn around in the Calgary Real Estate market has some teeth. Go Brookfield.

Butterfly Effect

Three months ago, few would believe the top Canadian Mutual Fund Index would be Real Estate Equities.

The 3 month performance as of Wednesday, August 26, 2009 was 17%. Most of these funds don't have significant Canadian holdings. However, trends are trends and this might be an early indicator that recent activity in the Calgary Real Estate market has some depth.

Calgary Realtors, Mortgage Brokers, Builders and Home Inspectors should finish the year with a strong quarter.

The Morningstar Fund Indices are Canada's most comprehensive and reliable mutual fund indices. Updated daily, the Morningstar Fund Indices allow you to easily track the various segments of the mutual fund industry

Fireplace Inspection & an Offer to Purchace

It is still a buyer market and I suspect in Calgary, a WETT inspection report may soon be a condition included in an offer to purchase a home. Bob Aaron, a Toronto Lawyer and blogger at Move Smartly writes,

"I was reviewing an offer to purchase a Toronto house last week and was surprised to see a condition that I had never seen before in an offer on a city home.


The clause made the agreement conditional on the buyer obtaining a satisfactory Wood Energy Technology Transfer (WETT) inspection report for the fireplace in the house."

Read the rest at Move Smartly.

If you need a WETT certified Inspector in Calgary, there is a data base at their website.

Nitpicky People

Barry Stone is a Home Inspector and nationally syndicated columnist. Recently, one of his articles touched on a point that may be of interest to Calgary home owners, Realtors and Home Inspectors.

Note. Mr. Stone writes for the American market. In general, our friends to the south can be very litigious. It is a bit sad that a home inspector is more worried about writing a report, that ensures he or she does not get sued, rather than writing a report that best serves the needs of the consumer. Please read some quotes,


"DEAR BARRY: A home inspector recently came to our house and scared off our buyers with false assumptions about our foundation and with nit-picky disclosures of all kinds..."

"DEAR GINNY: When home inspectors report defects, they should state what they see and limit their conclusions to things they can confirm..."

"...There is a reason why home inspectors try to list every apparent defect. Many inspectors have had claims and lawsuits for problems that were not included in their reports. This is an unfortunate aspect of the business of home inspection..."

"Unreasonable liability pressures are placed on inspectors by a minority of nitpicky buyers. This leads to outrageously nitpicky reports for the rest of us".

Read the rest at New Ok

Without knowing more information, my sympathies are with Ginny.

Your Home Inspector should have caught that!

I. G. "Zack" Lilienfeld, PE, CEM, Licensed Home Inspector, and Consulting Engineer is one of my favorite HI bloggers. He writes about some of the challenges faced by Home Inspectors,

"Recently, I received two phone calls where my clients explained that there was repair work required by them due to a defect, and that their plumber/electrician/handyman exclaimed "your home inspector should have caught that!" The implication was that I missed the problem, and if so, I'd be liable for the repair. These calls naturally left me with a sinking feeling, so I wanted to get to the bottom of things to see if I had indeed slipped up. In my fact-finding, I was alarmed to find out that the "issues" were not so much defects requiring repair, as they were contractors looking for work in a declining home repair market." Read the rest at Home Inspection Blog

It does not matter if your Home Inspector is from Calgary or Cape May County, he or she might have missed something. However, just because a trades person or your Uncle Bob - says its so, it doesn't mean it is.

It is normal for people to get emotional when they are given a huge home repair estimate. The Best thing to do is a get as second or third estimate and/or opinion. If your think your Home Inspector was in error, at least give him or her the chance to see the defect and make an assessment.

Licensing Home Inspectors

From the Herald Times,

"Buyers should only work with registered Wisconsin home inspectors. It may be tempting to save the money and let "Uncle Harry" do the inspection but with one of the biggest purchases of your life you want to use the right person..."

In Calgary, Home Inspectors are not licenced. Should there be licensing? In the industry, there are two camps. The "yes" camp and the "no" camp. There is no middle camp. I suspect consumers fall into the "yes" camp.

Simply being licensed, doesn't necessarily make one a good Home Inspector. Just as being a licenced Realtor, Insurance Agent, or Stock Broker, make them good at their profession.

However, licencing does give the consumer an added level of protection and I'm for it.

But then, should Roofers and Renovators be licensed? I don't know.

Is There a Need for Two Credentials? (Canada)

I recently read a very interesting post over at Active Rain by Claude Lawrenson, RHI, National Certificate Holder. Mr. Lawrences credentials are very impressive.

Mr Lawrence writes,

"I am sure that many home inspectors (in Canada) wonder why "we" have a system that seems to promote two similar but different credentials. Often in my travels and inspection discussions I get asked many questions about this. At times - this can lead to a few more questions - is one better than the other, or perhaps the other popular one - so why do we really need both?"

Read the rest of his post here.

Your Home Inspector should have caught that!

From the blog of I. G. "Zack" Lilienfeld, PE, CEM, Licensed Home Inspector and Consulting Engineer

... Another instance involved a client who was told by the electrician that her electric wiring was not "up to code" and that it would need to be replaced. He said, of course, "your home inspector should have caught that".

Well, for the uninformed, there is no requirement anywhere that says that a home built in 1960 must be brought up to current code, except if there is renovation work being performed.

This is a make-work comment. If this were true, nearly every home built more than five years ago would require the services of a contractor to replace windows, raise handrails, install wind strapping, replace staircases, and perform a myriad of other things to bring the home up to "code".

No preexisting home would be sold in this environment. Replacing an outlet or installing a ceiling fan does not require the rewiring a house, unless you are a contractor looking for a Caribbean vacation. Unfortunately, this client went ahead with the work and needlessly spent the money, and was upset with me until I explained what the truth was...."

Read more at NJ Home Inspections

More Home Inspection Realities

"Home inspectors are generalists, and as such, are usually not equipped to report on the nuances of the many types of structural defects except to note areas of concern and, perhaps some detail when the defect is obvious. So, as a home buyer or seller, you may be told that a structural defect was found, and that an "engineer should be consulted to evaluate and make recommendations". Mind you, this is not a cop-out by the home inspector, its just that they are not specialists and indeed, there are structural issues that do require an engineer to give the final word. However, because many a real estate deal has hit the wall because of a simple statement like "consult with a structural engineer", I thought it appropriate to elaborate on my somewhat unique perspective as a licensed NJ home inspector and professional engineer".

This came from a Cape Cod Inspector who is both a Home Inspector and an Engineer. You can read the rest of the post here.

Home Inspection Realities

"Older houses pose a challenge when it comes to heating and cooling systems. Today’s methodologies which incorporate zoned systems or separate heating and cooling systems to climatize each level of the property are common place. Older properties follow the guidelines of “accepted” trade practices at the the time the property was built and upgrading duct work and units to properly condition a property can get quite expensive."

This Tennessee Inspector brings up some very good points. You can read the rest of his article here.

Regulation of Home Inspectors

Here is a Calgary Herald article about the proposed regulation of Home Inspectors in Alberta. Some interesting comments follow the article.

The government still has not made a final decision. It seems like a no-brainer though. There should be some kind of regulation. How much and what kind of regulation is a bit tricky. I suspect the real fight will be over who gets to govern. Historically, this is when the blood flows.

The article is from May 2009. There should be a final decision by the end of the year.