Beat the fee? Sales of $1-M homes way up in city

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This article was published 07/03/2017 (3493 days ago), so information in it may no longer be current.

SOME buyers of new luxury homes are getting the jump on the city’s proposed new impact fee by buying well before the new fee takes effect on May 1, real estate industry officials suggest.

The Winnipeg Realtors Association (WRA) said Monday seven million-dollar-plus homes sold last month through the Multiple Listing Service (MLS), compared to none in February 2016 and one in February 2015.

Five of those homes were in the Bridgwater subdivision in southwest Winnipeg, which is one of the emerging areas of the city where the new fee will be applied.

The new impact, or growth, fee will be about $5 per square foot for any newly built house or condominium in select suburban areas of Winnipeg. It’s designed to raise additional revenues to help offset the cost of providing new infrastructure — things like regional roads, transit service, and recreation or leisure facilities — for these new subdivisions. To avoid paying the fee, buyers must apply for their building permit before May 1, and must begin construction before Nov. 1.

Peter Squire, the WRA’s residential market analyst, said it’s no coincidence there’s been a spike in sales of new luxury homes just a few months before the new fee comes into effect.

He said there has never been seven million-dollar plus homes sold in February. In fact, he’s hard pressed to think of any month where that has happened, especially when five of them were new homes.

“It kind of reinforces that something is happening, and I think the most logical thing we could deduce is that people were advancing their (purchase) plans. They were saying, ‘instead of waiting until June, we’ll get in the ground earlier.’”

Squire said he wouldn’t be surprised to see other new-home buyers doing the same thing between now and May 1.

The real estate agent who sold three of the five million-dollar-plus homes in Bridgwater — Jason Topnik, of Royal LePage Alliance — confirmed in at least one case, the buyer purchased early to avoid paying the new fee. He said the other two transactions were already well underway and just happened to close in February.

He agreed with Squire other new-luxury-home buyers will be scrambling to finalize their purchases before May 1.

“We have probably six (new) builds that we’re trying to get in before this new growth fee takes effect.”

He and WRA president Blair Sonnichsen said there may be even more buyers in the $500,000 to $1M price range who are eager to finalize their purchases before May 1.

“It’s a little bit tighter (financially) for them,” Topnik said.

Sonnichsen said if they’re planning to buy a new home in the next 12 months, there’s also no reason for them to procrastinate.

Squire said some might argue $15,000 or $20,000 isn’t a deal breaker for someone who is paying more than one million dollars for a home.

“But it’s still money, right? So if you’re planning to build… why wait? You might as well save that $15,000 and put that towards the home,” he added.

The seven million-dollar-plus homes were among 766 properties that sold last month through the local MLS. While that was a decline of six per cent from February 2016’s record tally of 816, it was still four per cent above the 10-year average for the month, the association said.

The dollar volume of sales was also down two per cent from a year earlier, at $217.4 million versus $222 million.

The association said condominiums continue to be a hot commodity in the Winnipeg market, with unit sales running 33 per cent ahead of last year’s pace after the first two months of 2017. Sales of detached homes, by comparison, were down by eight per cent.

murray.mcneill@freepress.mb.ca