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Ben Myers is president of Bullpen Research & Consulting Inc.

What does your research tell you about today’s consumer and what they’re looking for in a new home?

Myers: Location remains the top priority for buyers, that hasn’t changed. However, different demographic segments have much different priorities after location.

In speaking with realtors and developers, many singles and young couples without children are more concerned with having a stylish home than a large property. They look for high ceilings, granite or quartz countertops, stainless steel or built-in appliances, hardwood floors, kitchen backsplashes, and undermount sinks.

Young families tend to want to maximize their livable space, so they’ll trade some of the bells and whistles for more square footage, more bedrooms, a larger backyard, an additional parking space and ample storage.

Retirees and move-down buyers tend to prioritize the price and the functionality of the space. They typically want to trade-down in price, and aren’t as concerned about the size of the unit, but does it have a master bedroom on the first floor, a large enough living/dining room to entertain, and at least one spare bedroom for guests and the potential for their children to move back in.

What are the biggest challenges facing homebuilders today?

Myers: The challenges are very different depending on what part of the country homebuilders are operating in and what product type they specialize in.

In Toronto’s ground-oriented new home market (singles, semis and row), the challenge is determining if they should hold off launching new product in the face of a year-and-a-half slump in sales. Secondly, with very few homes selling, where exactly is the market price, as there are few comparable sales to go on. Luckily there are a few firms out there to help with pricing.

In Toronto’s high-rise condominium market, two of the biggest challenges are finding appropriately priced land, and getting development approvals once they close on that land. For both condo and rental apartment builders, the dramatic rise in construction costs and development charges have been a huge challenge recently.

In Vancouver the high land costs, NIMBY interference in planning, and recent change to rent control have hamstrung many developers.

In markets like Calgary and Edmonton, where the economy has been less than desirable for several years, developers are struggling with decisions revolving around the product type they bring forward. Should they offer more entry-level product with less lot frontage, a lower level of interior finish, and a very basic exterior elevation to attract cost-conscious first-time buyers without an existing home to sell?

Should they go after the move-up buyers by offering more bang for the buck: larger units with a high-level of finish for a similar end-selling price as competitors with a lower spec?

Or should they concentrate on the high end of the market, selling the type of customization and state-of-the-art technology and green features only available in a new home?

I’m certainly not as versed in that market to know which way developers are leaning.

In Ottawa where the new high-rise condo market has slumped for several years, developers are struggling with what they should do with the high-density sites they purchased during the peak of the condo market in 2012-2013. Many of these developers are moving forward with rental projects, and I’ve worked on a number of rental studies with UrbanLogic Research & Advisory in that marketplace.

The challenge is determining the ideal suite mix, unit sizes and rental rates that can maximize unit revenue and absorption, all while securing adequate upfront equity and finding construction financing. The market is not the issue as the rental market is booming again.

What do you think consumers are looking for in a homebuilder these days?

Myers: After a string of well-publicized project cancellations in the greater Toronto area due to rising construction costs, and a number of project delays due to municipal approvals or bank financing in other major Canadian markets, consumers are doing more research on the builder, their track record, their past projects and their owners.

Experienced builder/developers are getting more business and they’re often able to command a premium over rookie homebuilders.

Developers who communicate with their buyers and have top-notch customer service will continue to thrive while the fly-by-night developers who only contact their buyers when they need a signature or a payment, and have websites without any company history, completed projects or profiles of majority owners will find their sales much slower in the coming years.

How big of a factor has the mortgage stress test been on the real estate industry?

Myers: It has played a huge factor in the market, for sure. Some first-time buyers can’t qualify for a mortgage while other potential first-time buyers have decided to put off purchasing a home that doesn’t check off all their boxes and continue to save for the home they want (but could have qualified for prior to the stress test).

This has put huge upward pressure on the rental market with massive rent increases in the greater Toronto area, and even a major decline in the vacancy rate in Calgary in 2018.

Many move-up buyers are worried about qualifying for an expensive new single-family home while also worrying that there won’t be enough demand when they’re selling their existing property, so they’re holding off buying anything until they see a consistent level of price increases and rising resale transaction activity.

We’re not really seeing that in many major Canadian markets. The lack of sales, the lack of spinoff spending that comes with resale transactions, and the lower expected starts in 2019 will be a drag on the Canadian economy.

What are some of the trends that might develop for new home construction?

Myers: I think the biggest changes will revolve around technology.

Larger storage in condo lobbies and mail rooms with hot and cold areas for food delivery in response to the rise of Amazon Prime, Skip the Dishes and Uber Eats.

Look for more car share programs, bike share programs, electric car charge stations, rooftop solar panels and other green features in apartment buildings.

The gig economy will require buildings to have more shared office space, phone charging stations, meeting rooms with video teleconferencing capabilities, Wi-Fi in common areas, and built-in smart home technology in the units and workout facilities.

In Toronto and Vancouver, a greater emphasis on amenities for families will be needed, kids play rooms, daycare space, nanny-share and stroller-share programs, larger storage lockers, and family-friendly activities organized and run by building staff.

Secondly, I think there will be breakthroughs in modular construction to allow for cheaper construction of housing on a mass scale.

Mario Toneguzzi is a Troy Media business reporter based in Calgary. He writes for Calgary’s Business.


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