The Winnipeg Real Estate Board has been a long-time advocate for more multi-family units and is continuing to push for provincial government reform to the present rent control regime (rent control was discussed in last week’s column).
We have also made presentations to the federal finance committee in support of our national association’s call for tax reform to create more incentives for the private sector to build needed rental units — our national housing agency has clearly pointed out we have a rental housing deficit in this country.
When we refer to healthy real estate markets, balance is a key description and is vital because consumers entering the housing market must have choices and options to adequately meet their shelter and lifestyle requirements. Of course, these change over time (i.e. empty-nesters looking to downsize to an apartment or a smaller home).
Balance certainly includes a good supply of new housing, resale housing and rental accommodation. At a housing meeting this week, sponsored the Manitoba Home Builders’ Association, in which the WREB was a participated, it became painfully clear that, if the city of Winnipeg does not fast track and expedite the development of new serviced lots in the next few years, there will be no building lots left in Winnipeg. And by default people, wanting a new home will either build in the outlying municipalities, stay put, or choose to move to another city altogether where lots do exist to build their dream home.
Having gone through a very hectic resale market this year — bidding wars in a number of MLS® areas throughout the city, especially in the southwest quadrant— it is hard to imagine what it will be like a few years from now if demand persists and supply of new homes dries up. Already, Linden Woods’ average MLS® residential-detached sales price has gone up nearly $100,000 since 1999 and this year it is up nearly 20 per cent.
Today, only 40 per cent of all MLS® home sales are under $100,000.
Confirming, or at least backing up this looming lot shortage, was very thoroughly explained by ND LEA President Paul McNeil at the MHBA meeting. His presentation on the residential lot supply in Winnipeg was backed up by a recently-released the city’s Residential Land Supply Study.
The study speaks to the city’s population growth (has been going up of late) and changing demographics as major factors as influencing the strong demand for new housing in Winnipeg. Part of the present demand for new housing has resulted from the lack of adequate supply of existing homes in highly-coveted neighbourhoods.
The study says that an important change in recent years has been the decrease in household size which will drive housing demand over the next two decades, even if population increases are relatively modest (4,000 to 6,000 people per year). Another significant factor is the onset of the echo generation (20 to 26), or the children of baby boomers’ who are starting to move into the housing market.
When breaking the city down in four quadrants, the historical distribution of single-family building permits from 1993 to 2002 clearly shows the southwest and southeast accounted for 37 per cent and 35 per cent, respectively, of total permits, showing they are far and away the preferred areas for new housing development.
In total, there are only 3,065 serviced vacant lots left in the city with roughly 50 per cent in the two southern quadrants and the other half in the two northern quadrants.
Other potential development and infill sites are discussed in the report, but there no certainty when they could be brought on stream (e.g., the Kapyong site on Kenaston), and they still only generate an additional 2,000-plus lots.
In the short term, there is only one to two years of supply for the entire city. The supply in the southwest quadrant likely run out well before this two-year period expires. While overall the City of Winnipeg has approximately six to 10 years of total land supply available for residential development, much of it is unserviced land. Conversion of this land takes two years or more to allow for planning, approvals, engineering, development agreements, financing, construction, marketing, etc.
The bottomline is that the city needs to immediately address this looming residential lot shortage and accelerate the process of bringing on more building lots in areas such the southwest where demand is robust. They need to seek out infill opportunities, where possible, throughout the city and join forces with organizations such as the Winnipeg Real Estate Board to get senior levels of government to show more leadership and commitment to stimulating multi-family construction.
The province’s ambitious immigrant program will also exert pressure on the housing market. The program is pushing for an annual influx of 10,000 new immigrants in Manitoba, which will definitely push house prices up and erode one of the province’s greatest advantages — housing affordability.
As other cities across Canada have amply prepared and planned for future growth, Winnipeg needs to do likewise. It needs to formulate a suburban lot strategy that is part of Plan Winnipeg and sets out areas of future development such as Waverley West, South Charleswood, Transcona and St. Boniface.