Stone counter tops, hardwood floors, stainless steel appliances, soaring ceilings, walk in showers, en suite bathrooms, walk in closets, lots of storage. This is not just a wish list anymore; in the time of HGTV many buyers are looking for these finishes and are starting to expect them in their newly built homes. Guess what, builders are listening. Luxury finishes are quickly becoming standard among local builders including stone counters, raised ceilings, and even some high end appliances. This is great in many regards as it creates a very well polished product which sells quickly and easily.
But what happens when you don’t need, want, or more importantly, can’t afford the luxury units that are being built around Guelph. The honest answer is that you’re out of luck. As of today, July 5th, 2017, there are no new construction units available that do not offer luxury finishes and/or luxury prices. The least expensive new construction unit available today is 670sqft priced at approximately $240,000 plus $140/month for condo fees. In the past 6 months in the city of Guelph there have been 22 homes, all condo apartments, that have sold for less than $200,000. The catch? The average monthly condo fees were $446.50/month! The highest condo fees were $692. Think about that. $445/month works out to almost $100,000 worth of mortgage value over the course of a 25 year amortization period.
The real problem comes when you consider that even assuming a buyer qualifies for a $275,000 mortgage; and even if they are able to save the required $13,750 (5% downpayment) there are virtually no homes in Guelph in that price point. In the past 6 months in Guelph there have been 5 freehold properties sell under $275,000. 5!
There needs to be an alternative. First time home buyers and young professionals have worked hard to build their credit and save their pennies to purchase a home. They are tired of renting, or can’t find a rental (but that’s a topic for another blog). They want to take the first step onto the property ladder and start building equity. They are eager to buy and many are even looking for “fixer-uppers” or older homes that they can put some sweat equity into but in that category they are often bidding against “flippers” with deeper pockets. What they really need is a less expensive and more basic option.
Small, one bed or even studio style condo apartments. 600sqft is plenty of room for a single person or even a couple. Laminate counter tops have come a long way in the past 20years and most first time buyers would be happy with that. Laminate flooring or even wood grain ceramic tile flooring that is virtually indestructible and gives a great feel to a place is a much better alternative to carpet that nobody wants and needs to be replaced before the unit is sold. Acrylic surrounds in bathtubs and showers instead of tile is fine.
Buyers are willing to make concessions to purchase a home. Builders need to listen to this segment of the population as well as the luxury subset. There will ALWAYS been first time buyers who need to start somewhere. Midrise condos dedicated to these smaller more basic units would sell out in a heart beat anywhere in Guelph but especially in the south and east end where entry level housing is especially hard to come by. One of the other major obstacles to this would be investors who swoop in and buy up multiple units to rent but fortunately builders are starting to crack down on this in many projects and are starting to limit the amount of units available to investors.
The long and short of it is that pretty sparkly things can command a higher price but a solid build and basic finishes at a lower price point would satisfy a huge segment of the market who, I feel, are currently being overlooked especially in new construction. Everyone likes to celebrate with champagne but most people would be happy with Pabst.