May 22, 2015


Business

Building homes on 'spec'

For those who just can't wait

Manitoba Home Builders Association President Mike Moore in front of home being built in Bridgwater Forest.

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Manitoba Home Builders Association President Mike Moore in front of home being built in Bridgwater Forest. Photo Store

Two of the province's largest homebuilders plan to build more homes on speculation this year -- something they've done very little of in recent years.

"That's the one thing that was really missing in the last couple of years," said Ken Braun, vice-president of single-family housing in Winnipeg for the province's largest homebuilder -- Qualico Developments Ltd.

Braun said it's been at least four years since Qualico built an appreciable number of "spec" homes, because it had its hands full just keeping up with the demand for pre-sold homes.

But with Canada Mortgage and Housing Corporation (CMHC) forecasting a softening in the demand for new homes this year, which would likely mean fewer pre-sales, that will open the door for builders such as Qualico and Winnipeg's Randall Homes Ltd. to build more spec homes. "We've never really gone after that market," Randall Homes' Jason Jaquet said in an interview Wednesday following CMHC's eighth-annual Housing Market Outlook conference in Winnipeg. "We've always gone after the pre-sales market."

He said the homes Randall expects to build on spec this year will include single-family detached homes, as well as condominiums and townhouses.

Braun said spec homes meet the needs of new-home buyers who want to move into a home right away, rather than waiting for one to be custom-built. That includes move-up buyers who have to sell their existing home to qualify for financing to buy a new one.

Jaquet said it also includes out-of-town workers who are transferred here and prefer to buy a newly built home.

"They need a home quickly. They can't wait nine months to have one built," he said.

"So I think it's going to be good for consumers," Braun added.

As reported earlier this month, CMHC is forecasting an 8.9 per cent decline in housing starts this year for Manitoba -- 6,800 versus 7,465 in 2013 -- and a six per cent decline for the Winnipeg Census Metropolitan Area (CMA) -- 4,425 versus 4,705.

Lai Sing Louis, CMHC's regional economist for the Prairies and Territories, told about 275 housing-industry representatives attending Wednesday's half-day outlook conference the housing agency expects a growing inventory of unsold condominiums from 2013 will prompt local builders to scale back their construction activity this year.

But Manitoba Home Builders Association president Mike Moore said in an interview even if starts are down six per cent in the Winnipeg CMA, "the numbers have been so high in the last couple of years... that this year's numbers are still going to be very, very strong."

And after four straight years of increasing new-home construction activity, a bit of a slowdown isn't all that unexpected, Moore said.

"You can't expect to be going flat out like that forever."

Although it's forecasting a moderation in new home-construction activity this year, CMHC said the local resale-homes market should keep rolling along in 2014. Multiple Listing Service (MLS) sales are expected to rise by 1.2 per cent to 14,000 units for Manitoba, and by 1.3 per cent to 12,250 units in the Winnipeg CMA.

Average selling prices will also continue to rise, although at a slower pace than in 2013, it said, when Manitoba saw the biggest percentage gain in the country at 5.5 per cent.

Dianne Himbeault, CMHC's senior market analyst for Winnipeg, said the apartment vacancy rate in the Winnipeg CMA is also expected to continue to continue to rise over the next two years, climbing to 2.8 per cent this year from 2.5 per cent in the fall of 2012 and to 3.0 per cent by the fall of 2015.

The last time the vacancy rate here was three per cent was in 1999, Himbeault added.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition February 20, 2014 B9

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