Net-zero-energy home sits empty as builder struggles to find buyers
Builder says mortgage and appraisal system keeps families out of low energy homes
Connell Smith· CBC News· Posted: Feb 06, 2020 7:00 AM AT
Home builder Brad McLaughlin says mortgage stress tests should be based on individual real-estate market conditions in each region of Canada. (Roger Cosman, CBC)
The general manager of MCL Construction Ltd, says it should be easy for a northern country like Canada to get into the kind of home that is so efficient it makes more energy than it uses.
Brad McLaughlin is beginning to wonder if reducing residential greenhouse gases is really a priority in this country.
His certified net-zero home has maxed out energy efficiency. The house has insulated concrete walls, triple glazed windows, 44 solar panels and a backup rechargeable battery system.
On a sub-zero February afternoon it's sending excess electricity back onto the provincial grid in exchange for NB Power credits to be used on the coldest days, or at night when the solar system is asleep.
A house that won't sell
But the three-bedroom, two-bath home stubbornly refuses to sell. It has been on and off the real estate market since 2017.
"It hasn't moved," he said. "We had a lot of people through it."
Starting out, McLaughlin's asking price was $695,000.
By May, 2019 he lowered it to $570,000.
This week he put the two-storey Quispamsis house back on the market at $495,000.
This certified net-zero model home puts solar power back into the NB Power grid. It's been on and off the market for more than two years. (CBC)
McLaughlin points to mortgage "stress tests" and indifference from bank-hired appraisers as obstacles pushing buyers away from these higher than average priced homes.
He said appraisers hired by lenders to determine the value of homes are at a loss when it comes to this sort of construction.
"Around here they just don't know how to value it. …They just say, 'Well there's a similar house down the street,'" he said. "Well, sure it might look the same but it's a lot different."
McLaughlin feels the federal government can also be doing a lot more to kick start construction of these particular homes.
Revamping the mortgage stress test
His first suggestion would be to revamp the mortgage stress test introduced to cool red hot housing markets in Vancouver and Toronto. The test, which was introduced at the beginning of 2018, is designed to ensure buyers are able to afford payments if interest rates jumped by two per cent.
The net-zero home was put back on the real estate market this week, with the price lowered to $495,000 from $695,000. (Roger Cosman, CBC)
McLaughlin said the test lacks flexibility and is hurting regions of the country where there is no housing bubble. It's also locking people out of the net-zero market by denying them mortgages for homes with higher purchase prices, without allowing for the fact the buyer won't have any heating and electricity costs.
And McLaughlin isn't alone.
The Canadian Home Builders Association and the Canadian Real Estate Association (CREA) are also calling for changes to the system.
CREA national president Jason Stephen is a Saint John realtor. He said the stress test should be adjusted to suit regional markets across the country.
"If this was a system that was brought in to address escalating housing prices, month over month, or year over year, we just don't have that, which is why we always say there's not one housing market in the whole country," Stephen said.
"It's problematic that a consumer in Toronto is testing the same as a consumer in Saint John."
During the 2019 election campaign the federal Liberals promised to introduce a $5,000 grant to buyers of net-zero homes, and to offer interest free loans of up to $40,000 to homeowners and landlords for energy saving retrofits.
The program has yet to be introduced.
Other efficiency programs are already available to builders and buyers in New Brunswick.
NB Power offers as much as $10,000 in incentives for construction of energy efficient homes, and Canada Mortgage and Housing Corporation has a 15 to 25 per cent discount on mortgage insurance costs, depending on the level of efficiency of the home.
David Amos Methinks The Canadian Home Builders Association and the Canadian Real Estate Association should have a long talk with me sometime soon N'esy Pas?
David Amos
Reply to @David Amos: Trust that many lawyers who work for the NDP, the Greens, the Lberals, the Conservatives, NB Power, Canada Mortgage and Housing Corporation and many bankers know exactly who I am.
David Amos Methinks the local government reps Rob Moore MP or his buddy Higgy the Premier should set an example and buy it in order to live in it themselves N'esy Pas?
BruceJack Speculator
Reply to @David Amos: Really ? Wouldn't that mean the taxpayers of NB would be paying for it in some way?
David Amos
Reply to @BruceJack Speculator: NOPE
Marc Martin
Reply to @David Amos: Who cares
David Amos
Reply to @Marc Martin: You do
Marc Martin 495 000 $ lol..me and my wife both work very decent jobs and we cannot afford that, that house is aimed at the upper level class not middle that's why he cant sell it.
Ryan Mahood
Reply to @Marc Martin: 1/3rd the cost of a house in Markham, Vaughan, or Etobicoke.
Charles Carmichael
Reply to @Marc Martin: "Very decent jobs" must be no more than 40k average each then. My wife and I had no issues when our income was 60K combined and our starter home was 300K. On top of that we were paying 1000 per month in daycare. It was tight, but we did it. If our income bumped to 80K combined, we'd be able to live the exact same lifestyle but have a 500K home instead of a 300K one. In fact we'd have extra left over at the end of each month...
Marc Martin
Reply to @Charles Carmichael: 2022 $ Per month payment with a down payment of 5% (25 000 $) that is if you qualify, most people will have to give more then 10% ( 50 000 $ ) please let me know an average income earner that has more then 25 000 $ in the bank... By the way you must have loved all that macaroni and cheese and your 10 year old rusted car...Its about priorities I guess, I live healthy and eat healthy.
