New home developers need sales to get their projects off
the ground, but potential buyers don’t want to wait
by Janet Lees
When times were good, those thinking of ‘buying new’ in Southern Georgian Bay could put their money down and be enjoying their new home within a year. However, the past few years have seen several developments stalled or mothballed, and as a result today’s buyers are gun-shy about committing to purchase a new home based on builder’s plans, only to have to wait two years or more before the shovel even breaks ground.
On the flipside, developers are no longer building homes ‘on spec,’ secure in the knowledge that a buyer will show up. And most builders have to sell a certain percentage of homes in a new development before they can even get financing to begin.
It’s a Catch-22 that is continuing to create challenges in the new home market locally, as many buyers opt for resale homes or custom homes rather than put their money down on a development that may take years to materialize.
“New home sales, as I see it, continues to struggle, especially with the recreational use buyer,” says local realtor Andres Paara, who represents Summit Shores across from Georgian Peaks Ski Club. “With the commencement of the recession, several new developments were unable to move forward on their original timetable. Our recreational buyers are preferring to buy something that they are able to start using immediately and are often not interested in the ‘when and if’ part of a new development and/or the whole process involved through a build.”
In Summit Shores, says Paara, “there are currently 13 freehold single attached and semi-detached homes under construction. We are getting very good interest from buyers, but most are providing us with their contact information and asking us to get in touch with them when the homes are either very near completion or completely ready to move in. Some have clearly stated ‘when you can hand me the keys to move in I will buy.”
“I expect this trend to continue. Most recreational buyers don’t want to wait any number of years for them to enjoy.”
As a result, developers are having to step up their marketing to attract wary buyers, promoting competitive pricing, upgrades, customization and amenities in an effort to get more prospects through the door.
Says Diane Runcieman of Franton Homes, the builder behind Pretty River Estates in Collingwood: “I think prospective new home buyers can expect fair prices, very good quality, their choice of amenities, and builders are always offering deals and incentives; just make an offer!”
Downtown Demand
The conundrum is especially evident in downtown Collingwood, where two large developments – the Shipyards and Admiral Collingwood Place – have been put on hold indefinitely. Demand for downtown living is still strong, but potential buyers are leery of having to wait … and wait.
In contrast, two smaller downtown projects had a fast turnaround and sold out quickly: the former Duke of Connaught school, which was turned into loft condos, and the former Collingwood Library, which is in the final stages of its transformation into six townhome-style condos.
“They essentially sold themselves, which I think speaks to the demand in downtown Collingwood,” says Steve Assaff, the developer on the Library project. Assaff originally had the building leased to a retirement home operator, and when that fell through he decided to turn to residential use. Decision made, he moved quickly, and buyers had no problem purchasing a home they would be living in within a year.
Assaff is also the developer of the Admiral Collingwood Place development on the site of the former Admiral School in downtown Collingwood, which was held up for years while the town dickered over the height of the building, and is now on hold. He says three of the purchasers of the Library condos were people who had put their money down on Admiral. “We gave them first opportunity before it went public,” he says.
Assaff says the demand is evident, and having more people living downtown would create a thriving downtown core.
“I certainly believe, as evidenced by the Library project, that there is a big demand for downtown living,” he maintains. “To sell 12,000 sq. ft. of condominium space downtown so quickly – it just speaks to the downtown location. And it also helped that people could see the building and knew it was there. It wasn’t just a hole in the ground and an artist’s drawing on a showroom wall.”
Assaff is still hopeful that the Admiral project will become a reality, but when he finally got approved to launch the project two years ago, after years of wrangling with the town, buyers had lost faith in the project.
“It was because of the negativity,” he says. “People just did not have the confidence in the project going forward because of too many false starts. We happen to believe there is a big demand for [Admiral Collingwood Place], and I think it would be a crying shame if downtown does not get this building at the end of the day. It would animate the downtown, having people walking around all day long spending money.”
What Buyers Want
While downtown is suffering from a lack of development, subdivision-type developments are having some success, thanks largely to developers listening to consumer demands and giving buyers what they want.
“We are building homes for the recreation market, not for the first time buyer. So for active adults, they want bungalows with a loft, main floor masters and in many instances, finished basements to accommodate extra bedrooms for visiting family and friends,” says Russell Higgins, president of MacPherson Builders, which is developing Blue Fairway and Windrose Estates, both in Collingwood and recently completed the Orchard subdivision at Blue Mountain. “The other stream is the young family looking for a recreation property where the emphasis is on having a great entertainment area and also plenty of bedrooms. At the Orchard, all of our buyers wanted a great room with fireplace as a standard feature so that people could literally gather around the hearth. And I would say that two-thirds of the houses there had finished basements, in large part to accommodate more bedrooms.”
More and more, developers are offering a mix of townhome, semi-detached and detached homes, to appeal to the different market segments. The focus is on quality, design and high-end fixtures, because that’s what buyers want. Many builders are offering incentive packages, bonus upgrades and higher-end fixtures as ‘standard,’ but buyers still want a custom look.
“With our after-sale upgrade program, buyers at Blue Fairway are averaging $50,000 in upgrades,” notes Higgins. “That’s not to say we don’t start with high standards, because we do. But what you have to bear in mind is that a lot of our customers are buying their third or fourth home, and for some it may be their last. So whether it’s expanded stone surrounds or upgraded countertops, people are prepared to pay the extra money to get what they want.”
Linda Brown of Grandview Homes agrees. “From a builder point of view, we are seeing home buyers adding a lot more upgrades, even though our standard features are exceptional,” she says. “We are certainly seeing a trend toward more personalization of the homes that are being purchased, especially when it comes to kitchens.”
In addition to customization, buyers are also looking for amenities. In some cases the amenities are on-site – from golf courses to clubhouses and pools – but some buyers don’t want to pay extra monthly fees for on-site amenities. That’s where location comes into play.
“Today’s new home buyers want pools, golf and such but know that those items come with increased costs,” says Franton Homes’ Diane Runcieman. “With so many public amenities located throughout the area, it is usually only a short drive for residents to get to the amenities of choice and use them on a pay-as-you-go basis.”
Proximity to Blue Mountain, Georgian Bay, the Niagara Escarpment, the Georgian Trail system, and local golf courses each have their attraction for a specific type of buyer. MacPherson Builders’ Blue Fairway project, for example, backs onto the Atoka golf course at Cranberry.
“At Blue Fairway, you can also get on the Georgian Trail and you can be in town in five minutes, or you go the other way towards Meaford for almost 30 kilometres,” says Higgins. “For our MacPherson at Windrose Estates site, it’s all about proximity to the ski hills as it’s situated right next to Osler Bluff. Because these are really the main draws for our buyers, we don’t see as much of a demand for onsite amenities and we are also mindful of keeping condo fees reasonable. Yes, people want nice landscaping and they want to be sure the site is maintained properly. But our buyers are more interested in investing in their homes as opposed to a big clubhouse with an indoor pool, which could really drive up monthly costs.”
Who’s Buying
There are three distinct demographics interested in purchasing a new home in Southern Georgian Bay: retirees and empty nesters looking to downsize, families looking for a weekend getaway, and working professionals who are able to work locally or work from home at least part of the time.
“We’re really seeing three divergent trends. An even stronger active adult buyer segment is coming up – people in their mid-50s or older that are now empty nesters and looking to downsize and relocate to an area such as Collingwood,” says Higgins. “The other trend we’re seeing is families where the husband and wife are in their 30s and 40s with kids between the ages of five and 15 looking for a weekend vacation property. To a lesser extent, we’re also seeing professionals in their 30s and 40s whose jobs are less dependent on location that are moving up here.”
The different demographics have different needs, both in terms of the type and size of home, and in terms of timeline, adds Higgins.
“Unlike most of the projects in the GTA, it’s not all about generating high volume sales within a short period of time. Here it’s all about having patience and not trying to rush things along. With our purchasers – especially with our older buyer or people purchasing a million-plus home – the sales cycle is a lot longer. People don’t just come into the showroom and buy on the spot. They need time to mull things over and get to know the area. Eventually they will come around, because the lifestyle will sell itself. It’s a bit different with the young families looking for a vacation property because they want to be here now so they can pursue whatever outdoor sport happens to be their passion.”
For those looking to buy a new home, chances are you can find the right home, at the right price, in the right location, and customize it to suit your needs and taste. Developers are more willing than ever to work with buyers and give them what they want, knowing they have the option of building a custom home or buying a resale and turning it into their dream home. In terms of timing, the developers who are able to market successfully and get their projects under way quickly will have the best chance of attracting buyers.
Southern Georgian Bay has much to offer in terms of lifestyle and recreation, and for that reason developers are optimistic about the future. But today’s buyers have choices, and will only choose a new home if it fits their lifestyle needs and won’t keep them waiting too long.
“Buyers are always looking for the most house for their money and in our area there is something for everyone: condos for seasonal and retirees, quality starter homes for first-time buyers, bigger more elaborate homes for move-up buyers and some exceptional high end properties. The spring market will show us what buyers are looking for this year, but I expect we will see good numbers across the spectrum,” says Franton Homes’ Runcieman.
“[Developers] must keep on top of trends, look at changing demographics, keep tabs on who is looking for what, and then be ready to go forward with the right product.” ❧
