Hot resale market sparking home building
Tracey Peterson (Tracy Petersen) of Royal Homes shows a house plan she was working on at the Owen Sound Home and Cottage Expo Saturday. She and other home builders say the hot resale home market is sparking new construction. (Scott Dunn/The Sun Times, Owen Sound)
OWEN SOUND – Builders at the Home & Cottage Expo in Owen Sound Saturday said the hot resale real estate market is making it more attractive to build new.
As resale volumes and prices reach new heights and inventories reach new lows, the gap has narrowed between the price of a resale home and building new, three builders said in interviews at the Harry Lumley-Bayshore Community Centre.
The two-day show which ends at 4 p.m. today featured more than 150 exhibitors of products and services related to homes and cottages. Its been running for more than 20 years and is a popular annual event.
Home sales had a record first quarter, up 7.7 per cent from the same stretch in 2016, which itself was a record year. In March active listings hadn’t been so slow since the 1980s. The average home price in March also reached a new record at just under $296,000, with the average price in the first quarter at $279,448 – 10.3 higher than the first quarter a year ago.
“Of course in the news it’s all about the resale market being so hot and people not being able to get into the market,” said Tracy Petersen, a house design and salesperson with Royal Homes, a custom prefabricated home builder based in Wingham. “And we are catching the overflow for sure.”
Spring is a traditionally busy time but there are even more calls, walk-ins and emails from people making initial inquiries, she said.
“The cost to buy a resale has approached the level of the cost to build brand new. You don’t see that often. So I think that’s why a lot more people are looking at it,” Petersen said.
Exactly how close the gap has narrowed she couldn’t say. None of the builders interviewed had firm estimates on that.
During quiet times at her booth Saturday, Petersen was working on a house design for a client who needs to get going quickly. “That’s how busy we are; I need to be using every available moment I have.”
She finds in southwestern Ontario that Royal gets a lot of retiring farmers who want “small and sensible” homes. As for price, it depends what someone wants to build, she said. Potential buyers are told to give her a budget and she’ll design something to meet it.
Home builder Dan Burrows, owner of Ken Burrows and Son in Owen Sound, said people are selling their homes, getting a lot for them, and inquiring about building new. He was to meet someone in that situation at the Home Show Saturday.
“Whereas before, it always made sense to buy a used home because there was too much of a gap. I think it’s closing up a little bit,” said Burrows, who’s also president of the Grey Bruce Home Builders Association. Burrows said everybody’s really busy. His employees are already framing up four houses. “We’re super busy. It’s crazy busy.”
He said he hears people saying they can’t find a resale home for less than $300,000, when a new home with a lot could be built for maybe $380,000.
Burrows suggested other factors are in play besides the resale market why home builders are busy.
A couple of other custom home builders have retired or moved away. He’s advertising more and has built a new website. It showcases some of the unique homes he’s built, one of which was featured an Dwell magazine, which could be helping his business, he said. More people are retiring to this area too, he said.
At the Alair Homes booth, Ben Freeburn said he hears realtors saying there’s not enough real estate inventory to meet demand. “So I think it probably makes people look more at building.”
The Southampton homebuilder spoke with a couple from London, Ont. at the Home Expo who see high priced resale homes here so they found a rural lot they like and are now looking at building a bungalow. A Richmond Hill couple at the show has similar intentions, he said.
There’s not a lot of difference between resale and new home prices now, he thinks.
Alair Homes has been in business for eight years in Grey-Bruce. He’s in partnership with his brother, Dylan. The last couple of years of the hot real estate market has driven business his way, Ben Freeburn said.
“I just think we feel the whole effect of the hot market down south. And you’ve got baby boomers, that demographic, getting ready to downsize anyway. Now they’re getting a high price for their stuff. It’s just is a catalyst to make that move.”
More awareness is making this area a desirable place to build too, he said.
Toronto’s hot housing market prompted recent provincial moves to tax foreign buyers to cool the market. The average price of a new home there rose 33 per cent in the past year and the average price is more than $1 million.
What happens in Toronto affects activity here, Freeburn said. But so too does Bruce Power, north of Kincardine, he said, with new investment commitments thanks to a longterm provincial energy contract good to the 2060s.