Rendering of the planned Signature Discoverie in Fort Erie, Ont.Signature Communities
High building costs in the Greater Toronto Area and the buyer resistance that is fomenting are pushing developers further afield.
“Seeing what’s going to open in [the second quarter in the Toronto Region], I’ve got 8,600 units: 63 per cent in the 905 [the zone outside Toronto’s “416″ urban core],” said Pauline Lierman, ice-president of market research at real estate analysts Zonda Urban. Even the remaining 37 per cent in Toronto is somewhat misleading: “I’ve got one downtown, the rest are like Kipling, North York, the outer 416.”
A key determinant of location of new projects launching sales is price: if high land costs for downtown and midtown Toronto sites mandate prices around $1,700 per square foot (psf) to be financially viable, and the inner suburbs are more like $1,400, then the 905 and beyond is attracting more buyer interest.
“I can say the outer GTHA [say Milton, Hamilton, etc.] is between $1,075 and $1,150 psf for new openings,” said Ms. Lierman. “I know of some projects in [Kitchener-Waterloo] that hit the $1,100 psf marker. I’m not sure how much lower you can go. Right now my lowest builds are about $980 psf-$1,020 psf for low-rise buildings in Milton and these involve economies of scale inherent to the developer involved.”
In what may be an extreme manifestation of this tendency, Signature Communities is about to launch a 230-apartment condo building in Fort Erie, Ont., and is projecting to have one of the lowest prices per square foot in the “Golden Horseshoe” with prices in the mid-$800 psf range, with parking.
“This is not for the buyer who can afford the Shangri-la, this is more of the masses,” said Sebastian Mizzi, vice-president with Signature. “The majority of our units are two bedrooms, and the average size is over 800 square feet for a reason: I believe it’s what people are looking for,” he said. Those prices – about $680,000 for an 800-square-foot condo – are practically a steal compared to Toronto prices where $680,000 might get you a 400-square-foot studio.
'The majority of our units are two bedrooms, and the average size is over 800 square feet,' says Sebastian Mizzi, vice-president with Signature.Signature Communities
For Mr. Mizzi, it’s not so much Fort Erie that’s a draw, but everything around it. The food and wine scene of the Niagara peninsula is a popular tourist draw, the closeness of Buffalo for travel and sports teams (literally across the river on the Peace Bridge) and of course, price.
There are no similar new condos available in Fort Erie now, though in St. Catharines and Niagara there have been a few midrise projects in recent years that are priced at a higher premium on the resale market. There are also developers proposing multitower projects in downtown Niagara Falls that could add close to 1,000 new condos to the region.
The biggest question is, who wants to buy a condo in Fort Erie, at any price?
A recent survey commissioned by Tarion, Ontario’s provider of new home warranty insurance, found that people intending to buy a new home have somewhat mixed feelings about what they want versus what they can actually get.
“About 32 per cent of folks surveyed said they would prefer a condo,” said Tarion president and CEO Peter Balasubramanian. Considering the breakdown of new homes that were actually delivered in the last three years is about 60 per cent condominiums – and higher rates in the major urban centres – compared to freehold detached or semi-detached houses, clearly there’s a gap between buyer desires and supply.
The survey also estimates the pool of likely new-construction shoppers is more than 300,000 people in the province. Only about a third of those surveyed said they wanted to move to another region of the province, while 56 per cent said they’d like to stay in their current town or city.
Another sobering metric of affordability among new home buyers: while 35 per cent of those in the Tarion survey were born outside Canada, they said they had been here for 17 years on average.
“I’m the son of immigrants,” Mr. Balasubramanian said. “When my parents arrived in Canada in 1968, they purchased their first home four years after.”
And no wonder the timeline to ownership has changed: The average home price in Toronto in 1968 was about $24,000. Today, it’s $1.19-million.