Winnipeg Real Estate News
March 24, 2006
The lot shortage in Winnipeg is reaching a critical stage, according to Paul McNeil, the regional vice-president of ND LEA Inc.
And, the slow process of approving the new Waverley West subdivision in southwest Winnipeg is only compounding a bad situation, the land-use planner for the consulting company added.
“We’re now working on a worst-case scenario,” for Waverley West, McNeil said at the Winnipeg Real Estate Board’s annual general meeting last Friday at the Canad Inn Polo Park. “It’s a bit puzzling to the industry as a whole that the city hasn’t got the message of the urgency due to the shortage of lots.”
McNeil said that now the best-case scenario for final approval of the 1,2000-hectare (3,000-acre) Waverley West development is either late 2006 or early 2007.
“It’s looking a lot less likely that lots will soon be available as we believed a few months ago.”
The approval process started three years ago. Public meetings will take place in April on the amendment of Plan Winnipeg and rezoning of Waverley West land from a rural policy area to a neighbourhood policy area.
The first phase of the area structure plan calls for the marketing of seven neighbourhoods in the northeast corner of Waverley West. Eventually, the development will house about 10,000 single-family and multiple-family units.
McNeil said the serviced lot inventory for the city was 7,000 in 1993. That inventory dropped to just under 2,000 suburban lots last year and only 300 to 350 lots able to accommodate infill housing.
“Infill housing has helped…in older neighbourhoods, but infill is not capable of supplying the entire market demand,” said McNeil.
He said infill housing can supply only five per cent of the single-family demand and 25 per cent of the multiple-family demand.
The prediction is that new home demand will remain constant for the next few years at an average 3,000 units in Winnipeg, McNeil added.
By 2005, the popular Fort Garry area had already started to run out of lots. This year, McNeil said, there will be significant shortage of lots in the area and by 2007 all the lots will be used up.
A 2005 ND LEA report, commissioned by the Manitoba Home Builders’ Association, outlined the lot shortage and showed that lot availability was severely threatened in popular subdivisions such as Linden Woods, Whyte Ridge, Richmond West, River Park South, Island Lakes and Royalwood.
The lot shortage has also resulted in an average land price increase of 19 per cent in 2005 when compared to the previous year.
McNeil said the shortage has contributed to the fastest rise in land prices of any city in Western Canada—the price increase also reflects a catch-up process after an underperformance in the 1990s.
“Not adding new housing stock has an impact throughout the whole market,” McNeil said.
Peter Squire, the WREB’s public relations director, said when the ND LEA report was released, that the shortage “will put unprecedented demand on house prices and be totally counterproductive to what the city and province have been attempting to do to create a more sustainable city with brighter prospects for the future.”
Squire said the lot shortage has helped drive existing home prices upward as people turn to the resale market after finding out that new homes are too costly or unavailable.
The average MLS home price by the end of 2005 was $149,000, a 10 per cent increase over the previous year.
“The rising house prices are affecting affordability and putting stress on low-income families,” McNeil added.
McNeil said the rises in home prices and lot shortages also contributes to people moving out of the city.
Of the potential 5,000 lots now available in Winnipeg and the surrounding municipalities, fewer than 2,300 are in the city. The MHBA’s recent Parade of Homes advertisement featured 10 new subdivisions and seven of them were outside Winnipeg.
WREB president Walter Boni said the critical lot shortage indicates the need for Waverley West lots to be available as quickly as possible.