Residential lot shortage is becoming desperate: home builders could run out of land in two years

The looming residential lot crisis in Winnipeg has the potential to drive up home prices and promote more housing starts in the municipalities outside the city, according to Winnipeg Real Estate Board president Cliff King.

“It’s pretty basic stuff,” said King. “The lack of available land puts pressure on existing (housing) inventory and then pressure on prices.

“The only choice then available to home buyers is to get into multiple offer situations because of the high demand.”

King also said people with a lack of choices could be forced to build new homes outside the city.

“They will go to Birds Hill and Stonewall and then we lose revenue and taxes.”

The city’s recently-released Residential Land Survey said there are currently only 3,065 serviced vacant lots available for development.

“The southwest area of Winnipeg will run out of lots in a year and the southeast area the year after,” said Garth Steek, the president of the Manitoba Home Builders’ Association. “It’s a desperate land shortage.”

A similar study commissioned by the MHBA and done by consultants ND LEA arrived at similar conclusions.

The study by the city’s planning and land-use division indicated that there are only 465 serviced lots now available in the southwest and 1,100 in the southeast. There are another 700 serviced lots available in the northwest sector of the city and 800 in the northeast.

Over the last 10 years, 15 per cent of new single-family homes were built in the northwest, 13 per cent in the northeast, 35 per cent in the southeast and 37 per cent in the southwest.

The ND LEA report said popular subdivisions such as Linden Woods, Whyte Ridge, and Richmond West will run out of lots in 2005, and all of south Winnipeg, which also includes the other popular subdivisions River Park South, Island Lakes and Royalwood will be out of land by 2006.

“We need 2,600 lots for home building this year, 3,000 next year and 5,500 each year over the next decade,” said Steek.

The ND LEA report indicated there are 5,000 serviced lots available in the municipalities surrounding the city, compared to the 3,000 in Winnipeg.

Because of the land shortage, Steek said the average selling price of a new home should go from $230,000 this year to $255,000 next year.

“With the growth that is now occurring at eight per cent a year, the average price in 2010 will reach $425,000 which is simply unacceptable.”

Winnipeg is experiencing a spate of rapid growth after near-stagnant growth in the 1990s. 

The Conference Board of Canada projects that Winnipeg will experience an annual population increase of between 4,000 to 6,000 people. This forecast is substantially higher than the 2,000 people per year by the year 2020 projected in Plan Winnipeg, which is used as the model for development in the city.

The board said Winnipeg will surpass 670,000 people sometime in 2010. By 2026, there will be 750,000 people living in Winnipeg.

Also compounding the land shortage situation is the decrease in the number of people per household. The city’s report said in 1962, the average household size in Winnipeg was 3.7 people and it had dropped to 2.45 by 2001. It is expected that this trend will continue until household size stabilizes at 2.3 persons in 2011.

“The impact of decreasing household size on housing demand is dramatic and will continue to be the primary driver of housing demand over the next two decades since an increasing number of housing units will be required,” according to the city’s study.

“Even with zero population growth, the city would require 10,460 additional households, if household size decreased by one-tenth of one per cent.”

The city’s study also reported there are 2,328 vacant infill serviced lots throughout the city. 

“At best, there are 500 lots in the inner city and that’s just not capable of supplying housing demand,” said Steek. 

The MHBA said the lot crisis emphasizes the need to start on the proposed Waverley West development which is bordered by Bishop Grandin in the north, the Perimeter Highway in the South, Waverley Street to the east and Brady Road to the west. It is projected that 13,000 single-family and multiple-family units could be built in the subdivision over the next 18 to 25 years. The 1,200-hectares of land is a mixture of public and private ownership.

“We have to start planning for the future,” said Steek. 

He said Waverley West represents high-density development, not  urban sprawl as claimed by critics of the development.

In Waverley West there will be five to six units per acre, versus 4.4 units in River Heights, four units in Norwood Flats, and a mere 0.8 units per acre in Pritchard Farms, a subdivision in East St. Paul.

According to the ND LEA report, Waverley West would not be a drain upon the city’s finances. It will be “financially positive from day-one.”

An average new single-family assessed at $180,000 (1999) pays property taxes to the city of $2,400, while the average operating costs to receive city services are $1,200, which represents a net benefit to the city of $1,200, the report indicated.

The Waverley West development is going through the process — started a few months ago — of obtaining a rezoning from the city.

The city’s own study said it takes two years to convert raw land to serviced to allow for planning, approvals, engineering, development agreements, financing, construction, marketing etc.

City councillor Peter de Smedt, the newly-appointed chairman of the property and development committee, said he is willing to team up with stakeholders such as the MHBA to try to find a way to move quickly and get more lots available while ensuring that what is done is sustainable in terms of the cost of development.