New-home frenzy continues
If a 2,000-square-foot home with 34-foot frontage starting in the low $600s doesn’t tempt you, fried dough likely will.
Dozens of people huddled under tents and heat lamps at the launch of the Wallaceton subdivision at the southeast corner of Fischer-Hallman and Huron roads had the option of hitting up a BeaverTails trailer while enjoying a free coffee and waiting for their number to be called.
Such is often the spectacle when it comes to the release of lots in new subdivisions these days.
Other lots with 38-40 foot frontages start in the low $700s, so the complementary treats aren’t necessarily required to sell the stock being made available.
Prospective homebuyers were provided numbers in advance so they didn’t have to camp out, said Marc Petitpas, vice-president of sales, client services and information technology with Fusion Homes, one of two builders to launch the first phase subdivision in southwest Kitchener.
But shortly after 10 a.m. on a cold and rainy Saturday morning in October, about 100 cars were parked off the side of the FischerHallman, south of Huron, police lights flashing and traffic cones lining the shoulders.
Out of the gate, Fusion and Heathwood Homes released only 25 units, respectively, the latter offering luxury townhouses.
The full build-out of the 160acre Wallaceton subdivision situated on the southeast corner across from the soon-to-be RBJ Schlegel Park will consist of about 1,000 residential units. It’s one of several new subdivisions underway in Kitchener and represents the tip of the iceberg when it comes to future home development in the area.
However, many people are struggling to attain the homes they desire.
“I really think it’s a supply issue,” said Tim Ingold, manager at Coldwell Banker Peter Benninger Realty.
Due to new regulations and mortgage stress tests, there just aren’t as many multiple offers on larger homes these days, he said.
There’s certainly more pressure on buyers at the entry level, but many second- and third-time homebuyers can’t find anything to upgrade to, further adding to the lack of supply at lower price points, Ingold said.
“And when you have a great big subdivision like Wallaceton release 25 homes at a time, it keeps pressure on prices … I’m not saying it’s a false market — it’s gotten expensive,” he said.
“It’s unbelievable what builders pay for service-ready lots,” Ingold said. “Development charges and taxes are passed on, and that doesn’t include the building.”
Costs per square foot have increased as trades in Waterloo Region have raised their prices, too, he said.
Recent disruptions in the housing market could make builders more cautious about their pricing, and releasing a low number of lots can help manage that, Ingold said.
“Not all have been flying off the shelves. In the singles there have been some misses, so it’s a balance,” he said. “They’ve got lots of homes to sell, so they don’t want to price themselves out of the market either.”
Just because a seller has a long list of “potential buyers” in its database doesn’t mean they’re all truly potential buyers, Ingold noted.
While Petitpas reported selling all 25 of the initial lots released in Wallaceton by Fusion, Eva Naumovski, vice-president of marketing for Heathwood, said the company was about half sold out of its luxury townhomes starting in the low $500s as of Thursday morning, with the release of single lots anticipated later this month.
As the trickle-down effect from the Greater Toronto Area continues, Kitchener presents a more affordable home option for Highway 401 commuters. And with two-way, all-day GO train service anticipated in the not-so-distant future, Ingold said the demand for new homes in Kitchener will continue.
Alain Pinard, Kitchener’s director of planning, said the city has a healthy supply of greenfields, most in the southwest.
At least 15 future subdivisions have yet to break ground and are at various stages of approval.
The region’s official plan also brought in a large swath of greenfield, most of it in Kitchener, following a lengthy OMB appeal, he said.