THE RENEWAL OF TRUST IN
RESIDENTIAL CONSTRUCTION
Commission of Inquiry into the Quality of
Condominium Construction in British Columbia
Submitted to the Lieutenant-Governor in Council
Government of British Columbia
by Dave Barrett, Commissioner
June 1998


Chapter One: The Problem Continued

V. The Magnitude of the Problem

The magnitude of the problem has been the subject of much speculation and debate. The Commission was struck by the fact that, regardless of the cost of the problem, fixing it is significantly greater than if the work was done correctly in the first place. For example, one study provided to the Commission estimated that if a rain-screen, protective envelope had been constructed, the increase in cost per condominium structure would have been between 15 to 20 percent. This would have been only a 7 to 10 percent increase in the selling price of the unit. By comparison, the cost to tear down and rebuild the exterior walls of these same buildings, represents an increase of 194 percent to as high as 288 percent over the original cost of construction.

WALL SYSTEM COST COMPARISONS
Project Wall Area
(sq. ft.)
Cost to Rebuild
(sq. ft.)
Cost Original
(sq. ft.)
Cost Correctly
(sq. ft.)
Storeys Cladding/Framing
Project A 14,000 $51.70 $22.50 $25.85 8 Concrete
Project B 28,300 $25.72 $13.25 $15.50 14 Stucco/Concrete
Project C 10,000 $26.80 $9.30 $11.25 3 Stucco/Wood

Source: Retro Construction Group

The Commission has been presented with an array of estimates regarding the overall cost for repairing faulty construction in condominiums. The most widely-reported estimate for repairing leaky condos is $1 billion. This estimate was traced to a researcher with Canada Mortgage and Housing Corporation (CMHC). CMHC has informed the Commission that they have no background studies or information which confirm this estimate. They explain that their researcher was misquoted.

A number of individual condo owners, as well as strata councils, gave testimony regarding their repair bills and special levies. The Commission analyzed the details of the strata council submissions and created a data base. Forty strata councils submitted sufficient information, used to build a consistent data base. The average per-unit cost of repairs was $23,300. The total amount spent on repairs, to date, plus future estimated costs, are $30,639,000, or an average of $766,000 per complex.

There is no question that the problem of leaking condos in the lower mainland is pervasive and significant. However, because of a lack of dependable information on its magnitude, the Commission requested use of CMHC's extensive residential housing data base. CMHC was extremely helpful in this regard. The information provided included the dwelling type (single, semi detached, row, and apartment); the intended market (owner, rental, condo, or co-op); the number of stories (1 - 4 and 5-plus); and the municipality during 1983 to 1997. Buildings four stories or less are predominantly wood frame; whereas, buildings over five stories are concrete.

The results of the analysis suggest that the cost to repair the problem facing residential homeowners will be between $500 million to $800 million. Greater detail on the data and methodology employed for estimating the magnitude of the problem is provided in Appendix Three.

 

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Copyright © 1998: Government of the Province of British Columbia