Fresh off the Winnipeg Real Estate Board’s best MLS® sales in 17 years and a record-shattering dollar volume that eclipsed $1 billion by September 2004, it is not difficult to state the
obvious — the buoyant real estate market needs more housing stock to meet the high level of demand.
At a January 4 mayor and executive policy committee hearing to consider a rezoning of a portion of land from rural to neighbourhood use in southwest Winnipeg, it was emphasized by the WREB and the Manitoba Real
Estate Association that housing inventory is tight while demand is high. The two groups outlined that the basic law of supply and demand prevailed to the extent that prices went up significantly in a number of MLS® areas throughout the city as well as in some rural municipalities.
Most major cities across the country have healthy land banks of residential serviced lots in anticipation of future growth. For some reason, our city has found itself in the unenviable position of catching up on serviced lots, especially in southwest Winnipeg. Unless more land is brought on-stream, such as Waverley West, new home buyers will be forced to look outside the city’s borders.
The serviced lot shortage is further complicated by housing start demand reaching a 17-year high in 2004. Canada Mortgage and Housing Corporation reported that last year there were 2,489 single- and multiple-family starts in the Winnipeg Census Metropolitan Area (city and surrounding communities), a 2.4 per cent improvement over 2003. CMHC, at the beginning of 2004, had actually predicted a decrease in housing starts. The high level of
demand caught CMHC by surprise.
CMHC also indicated that demand will not slacken in 2005 which further stresses the urgency of bringing new developments on-stream.
Some detractors of more suburban lot development say we need to get more people living downtown and encourage more infill development in the inner city and other areas throughout the city. They portray it as an either/or situation, and make the erroneous
assumption that the same buyer who is interested in living in a new home in southwest Winnipeg will opt to live downtown if their first choice is not available.
The board’s position is that different market segments and buyer profiles
exist. To lump everyone into the same category is fraught with problems.
It is certainly not a way to establish a formula for future urban growth policy. Last year was a good example to drive this point home. With all of the new housing starts in Winnipeg, MLS® resale activity in the downtown and inner city was exceptionally strong as were average price increases. While the downtown housing inventory
is quite limited, the trend in 2004 showed a much higher conversion of sales-to-listings and the average residential-detached sale price went up 26 per cent.
The number of days on the market for sales dropped dramatically from 138 days. As well, condominium sales had a high conversion ratio and the
average resale price went from $75,000 in 2003 to just under $99,000 in 2004.
Inner-city neighbourhoods, such as the West End, the North End and Elmwood, were right at the top for number of sales. The West End and West Broadway had close to 600 residential-detached sales as did the North End which covers three MLS® areas. Elmwood had one of the highest individual MLS® area sales with 229.
Other neighbourhoods close to the downtown performed well. Fort Rouge had close to 200 residential-
detached sales. Osborne Village/Crescentwood had over 350 sales when you combine residential-detached and condominium transactions. All of River Heights, which includes two MLS® areas, had over 500 sales when you include the two property types.
It can be said that these inner-city areas outperformed many of the suburban MLS® areas as a whole and certainly did better than rural municipalities. Average price increases for these areas were notable, too. Fort Rouge was up 18 per cent, all three North End MLS® areas were up over 20 per cent, the West End area closest to downtown (includes West Broadway and Spence neighbourhood) was up 21 per cent, and Elmwood shot upward an amazing 25 per cent.
These results are happening with new homes under construction. What will happen a few years from now when the number of available serviced lots dries up? Already, badly needed rental units in these neighbourhoods are being lost to people buying homes because they are unable to find accommodations elsewhere. Where will the renters find accommodations because of the lack of vacant rental properties?
The reality is that growth throughout Winnipeg needs to be accommodated through provision of all types of property, since people have preferences to not only different housing options but geographical areas. Winnipeggers have a history of strong attachment and
loyalty to neighbourhoods. To imply people will all of a sudden move downtown, even if it does have more inventory, is ludicrous and a huge oversimplification of housing market factors and economics.
As Lorne Weiss, the chair of the MREA’s political action committee, said in his presentation on Waverley West, “The opponents of urban growth have built an argument based on an incorrect premise — that you can force people where to live in particular people with economic resources. Effectively eliminating new suburban development opportunities will force those with the resources to afford them and who want this lifestyle, to vote with their feet — to move away. For those who choose to remain, the bidding war will begin .... prices of homes will rise dramatically, not just in higher priced homes. There will be a domino effect resulting in less accessible housing for citizens of all economic strata throughout the city.”
In the board’s position paper on the residential lot shortage, Calgary was used as an example of a city with huge growth (e.g., build on the scale of a Waverley West development every year) that has been able to keep more of a lid on price increases. It builds 12,000 to 15,000 new residential units a year.
Interestingly, Calgary was right
behind Winnipeg as having the lowest inventory of existing homes of any
major Canadian city in October 2004. Where normal supply is considered five months, Winnipeg only had 2.3 months, while Calgary was at 2.9 months.
It is time to get on with a phased-in development of Waverley West that will have the infrastructure costs borne by the developers and the residents. This does not mean abandoning all of the good efforts of housing initiatives, including the WREB-led Housing
Opportunity Partnership, in revitalizing inner-city neighbourhoods.
A balanced market with good provision of existing, new and rental housing will not only provide for all those who want to live in Winnipeg, but
address housing affordability which is becoming more of an issue as the lot shortage continues.