Published Jul 27, 2023 • Last updated 45 minutes ago • 4 minute read
Brent Klundert, Windsor Essex Home Builders’ Association vice-president, says higher interest rates “have had a smothering effect” on sales. Photo by Dax Melmer /Windsor Star
Statistics released this week by the Canadian Mortgage and Housing Corporation show the Windsor Census Metropolitan Area is falling further behind its pledge to the province of 30,000 new homes over the next decade.
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The 13,000-home target set by the Ford government for the city of Windsor itself a year ago translates to 108 new homes per month over the next decade. But through the first six months of 2023 the city has averaged 35 new home starts per month or just 33 per cent of its target.
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In 2022, the city saw an average of 41 new starts per month.
“Those numbers don’t surprise me based of what I’ve been hearing from other builders,” said Windsor Essex Home Builders’ Association vice-president Brent Klundert.
“We’re well off the pace. Interest rate hikes have had a smothering effect.”
In June, there were 56 new home starts in the Windsor census metropolitan area, which also includes Lakeshore, Tecumseh, LaSalle and Amherstburg. That is one third of the 179 new starts in the area in June 2022.
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The CMHC defines home starts as dwellings of all types, not just single-family homes.
In Windsor, there were only eight new home starts last month, or just seven per cent of the provincial target.
There were 666 new starts in the area in the first six months of 2023 compared to 772 a year ago. There were 1,515 new home starts in the Windsor CMA for all of 2022.
Klundert cautioned that the relatively narrow gap after six months is masking how much the market has slowed in the past four months. The first two months of the year accounted for 460 of the 666 new starts.
“What you were seeing was contracts that had been signed in 2022 were being fulfilled to start the year,” Klundert said.
“Most of those contracts are now fulfilled and you’re left with the actual reality of what the new home market is now.”
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Klundert added the inflation of building material costs has also played a role in the slowing of new home sales.
“The gap in the cost between building new and the resale market has gotten bigger,” Klundert said. “The latest two rate hikes have only amplified the hesitation clients are expressing to builders.”
During the first six months of 2023, Forest Glade had 169 new starts with 151 of those being rental accommodations. Essex had 140 new starts with 134 of those being home ownerships while Amherstburg had 75 rentals in its 100 new home starts.
Nationally, there have been 103,153 new home starts in 2023, which is about 9,300 fewer than the first six months of 2022.
However, Ontario is approximately 3,200 homes ahead of last year’s pace with 42,209 starts. But the province is still well below provincial targets.
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“The numbers are not surprising, but they’re disappointing,” said Windsor Essex County Association of Realtors’ president Mark Lalovich, who is also a member of the local Housing Advisory Task Force.
“Everyone is talking about housing initiatives, but we have to get on the same page and make it happen quicker.
“These numbers are a big shortfall. It’s definitely getting worse.”
Lalovich feels there’s still much room for improvement on the processing part of home development. Municipalities have struggled to find enough planners and inspectors to meet the growing demand.
“It can’t take 18 months to get rezonings done,” Lalovich said. “We have to get that down to something like nine months.
“From start of a development to finish we have to do better than taking three to four years.”
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The ideas the task force and home builders are discussing centre on densification, building smaller and more affordable homes that hit the right price point and building vertically.
“Instead of condos that are 1,100 to 1,200 square feet, I’m now hearing developers talking about building one-bedrooms at 600 square feet and two (bedroom) at 800,” Lalovich said. “That trims 20 per cent off costs where customers can be at a price they’re more comfortable with.”
One of the main themes at a recent housing summit in London, he said, was going vertical with buildings.
“We have to go eight storeys and 120 units on some of these infill lots,” Lalovich said. “We’ve got to increase densification by going vertical.”
Lalovich added the task force is looking to add some expertise to define what is considered affordable in the Windsor area to help it create a blueprint for housing in the area it hopes to unveil later this year.
Klundert said more radical policies are needed than have been tabled to this point by all levels of government. That includes having governments directly involved with the private sector on financing affordable housing.
“Supply can’t be dependent on market conditions,” Klundert said. “Supply must be built despite market conditions because we’re at such a deficit.
“Financing is the biggest hurdle we have to get over to do that. We need financing options to hit the targets at the affordable level.”
Dwaddell@postmedia.com
Twitter.com/winstarwaddell
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