At February's B.C. Home and Garden Show, contractor Eric Schapira perused the two model laneway homes on display. One, built by Smallworks Studios, was a 624-square-foot home with a loft bedroom. The price tag: $195,000. The other, designed by A A Robins Architect, also retailed for about $300 per square foot. Both featured innovative green design. But Schapira, who has helped Vancouver homeowners expand their square footage for more than a decade, believes potential customers would want something more affordable.

He's priced it out. He thinks he can do a 750-square-footer for about $125,000—or about $166 a square foot.

“Most people think they need about 3,000 square feet of livable space,” Schapira, owner of Klondike Contracting, told the Georgia Straight. In the past, he's expanded attics and garages to accommodate that. “To put another 700 square feet in the back yard automatically drives up your value.”

Although laneway houses could be a great investment for those who already own property, whether they'll deliver affordability for renters is questionable. As recorded in the City of Vancouver report on laneway housing dated October 15, 2008, those who attended public consultations said they hoped the homes would “help with affordability by providing more rental housing”.

Small, nonstrata homes in back yards exist already in parts of Surrey, Langley, and Vancouver. A 400-square-foot “coach house” at East 46th Avenue and Fraser Street, for example, was advertised on Craigslist March 17 as renting for $900 a month. In Langley, a 585-square-footer was $875. In East Richmond, a coach house that would “suit a single, working individual” was $900. And in Shaughnessy, a one-bedroom coach house was renting for $1,900.

The average rent for a one-bedroom apartment in October 2008, according to the Canada Mortgage and Housing Corporation, was $880.

In October, Vancouver city council asked staff to research allowing laneway homes to be built in all areas of Vancouver zoned “single family residential”. That's most of the south and east of the city. Coun. Raymond Louie told the Straight they're hoping to have bylaws in place by July.

“It is creating affordability,” Louie argued in a phone interview, saying that increasing the supply of rental housing will soften demand and potentially lower rents. “It is our preference that those who are working in the city and helping to build the city are able to remain in the city.”

For homeowners, though, the costs could eclipse rents.

According to Vancity's on-line mortgage calculator, a $195,000 home, paid off over 10 years, would cost $2,352.50 per month with zero down and an eight-percent rate. A $125,000 home, paid off over 20 years, is $1,035 per month.

For single-person households in Vancouver, according to the 2006 census, the median monthly income was $2,455.66. If such an earner were to spend 30 percent of her income on housing, that would be $736.70 per month—well below both above-mentioned mortgage payments and the rents for existing back-yard suites.

Louie noted that an investment in a laneway house could give a homeowner a $350,000 return in 10 years in value added to her property.

Peter Simpson, the CEO of the Greater Vancouver Home Builders' Association, said a laneway home could have provided a pleasant alternative to an institution for his aging parents. Compared to the cost of private home-care nursing, he noted, the loan payments on a laneway house are relatively affordable.

“I wish I'd had this opportunity,” he told the Straight in a phone interview, noting that his parents have both passed away. “They could have maintained their independence, had a bit of a garden, and we would have only been a yard away if they needed help.”

Dave Watt, president of the Real Estate Board of Greater Vancouver, noted that these small homes are not a housing solution for everyone.

“If you're paying more than $150 a square foot, you're not building affordability into that,” he told the Straight in a phone interview. “But the only way to make affordable housing on unaffordable land is to build more of it.”

Both Jack Fry, co-owner of Smallworks, and Tony Robins of A A Robins told the Straight they could design laneway homes for significantly less than the cost of their premier models.