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Consequences of a construction boom Mayoral candidates urged to weigh housing market while courting families

Consequences of a construction boom

 

Mayoral candidates urged to weigh housing market while courting families

 

Consequences of a construction boom

 

Mayoral candidates urged to weigh housing market while courting families

 
 
 
Consequences of a construction boom
 

The Bassins du Havre project is being held up as a model of how to get developers to build larger housing units (townhouses) at a time when Montreal mayoral candidates are advocating the construction of thousands of larger homes to attract families to the city. The ground floor of a 1,234 square foot 2-storey townhouse-style condo, in Montreal, on Thursday, October 10, 2013.

Photograph by: Dave Sidaway , THE GAZETTE

MONTREAL — The peak of Montreal’s housing-construction boom has already passed, but developers are still competing to see who can best cram space for living, eating and working into as little as 350 square feet.

While the low-interest-rate-fuelled market for homes was driven largely by young professionals, retirees and investors, Montreal’s mayoral candidates want to see more construction crews building three-bedroom apartments and houses with ample room for strollers and cribs.

“Montreal should not become a city of condos,” Coalition Montréal leader Marcel Côté charged during a recent French-language mayoral debate.

According to the Institut de la statistique du Québec, about 22,000 people — or some 10,000 households — moved to the suburbs in 2012 in search of affordable housing as the median price of a Montreal Island home, including single family dwellings and condos, has more than doubled in the last decade. Between 2006 and 2011, the city of Montreal added 900 families, while 38,000 were added to the suburbs, Côté told The Gazette’s editorial board on Tuesday.

This exodus of families has become a key election issue amid concerns over Montreal’s dwindling tax base.

But with the number of Montreal-area properties for sale now at a 15-year high, according to a recent report from Royal LePage Real Estate Services, industry observers warn elected officials also to consider market conditions when pushing for new construction.

Paul Cardinal, manager, market analysis, for the Quebec Federation of Real Estate Boards, said the Montreal market could absorb a limited number of three-bedroom condos and single family houses.

Yet in its electoral program, Projet Montréal calls for fast-tracking the development of large-scale, pre-approved, transit-oriented projects like the old Hippodrôme site — in addition to redeveloping former hospitals like the Royal Victoria for housing. Altogether, this would add up to 50,000 housing units to attract residents who might otherwise go to the suburbs.

Projet Montréal didn’t return The Gazette’s repeated calls requesting an interview to explain how such vast development would affect an already soft housing market, amid current forecasts of weak Quebec growth.

“I understand why they are doing it (wanting to build those units),” said Dominic St-Pierre, Royal LePage’s director for Quebec. “And it could be a good thing for Montreal, since the city is losing ground to the suburbs. But the inventory is very high right now.

“Where we are right now, with the condo market now favouring buyers and the single family home market now balanced, I don’t see why we would need to build more units. What we need are more buyers.”

Most mayoral candidates have plans to retain families through a combination of building new, large units and improving existing financial incentives for buyers with children. Montreal already offers families incentives, like refunds on the land-transfer, or “welcome” tax, for all new homes, or for existing condos and multiplexes.

Since January 2010, 6,222 requests for these incentives were approved for first-time buyers, city data show.

Of those requests, however, only about one-third went to families.

In August, the city unveiled a three-year, $136-million plan that offers families financial aid for the purchase of new homes worth up to $350,000 in certain neighbourhoods.

But critics say the $350,000 limit is too low, given market realities; in September, the median selling price of a single family home on Montreal Island was $362,500. Mayoral candidates Denis Coderre and Mélanie Joly say they both want to raise the price of an eligible home to better reflect the Montreal real-estate market.

Coderre also wants to expand the welcome-tax refund — now available for resale condos and multiplexes — to allow buyers to purchase single-family homes. Coderre’s program targets the resale market, since high land prices have discouraged developers from building new single-family houses; according to data from Canada Mortgage and Housing Corp., condos made up 82 per cent of new residential construction in the city of Montreal last year.

“I can’t say no outright to new construction, but we are targeting what exists already in the market,” said Damien Silès, former director of the Société de développement social de Ville-Marie and a Coderre candidate in the downtown Peter McGill riding.

But with a limited number of affordable houses and large apartments for sale in the city — the median price of a single family home is about 23-per-cent higher on Montreal Island than in Laval — Bergeron, Côté and Joly want to add supply.

Joly talks about creating an “Accès Familles” home ownership program, similar to Montreal’s existing Accès Condos,” where the city covers the majority of buyers’ five-per-cent down payment. Her program also mentions marketing the air rights above Montreal métro stations for development — an idea that intrigues builders.

Joly, Côté and Projet Montréal chief Richard Bergeron want to see large units included as part of the redevelopment of large sites like the Hippodrôme. Côté said the city would negotiate with the developer to make sure that larger apartments and townhouses — in addition to the smaller units already planned — are included in these projects. He’d like to see 2,000 large units built for families across Montreal.

“It’s (true) that the developer will make less of a profit with the development of a larger unit, but the overall project will be profitable,” Côté said.

Developer Martin Roy agreed that townhouses attractive to families could be sold at the Hippodrome site for $375,000 plus taxes. “To keep families in town, the city needs to promote townhouse projects on individual lots of around 1,500 square feet,” he said. “That would be enough to build a two storey townhouse with three bedrooms, a private yard and parking.”

Joly and Bergeron would go further and seek financial support from Quebec to decontaminate land that could later be redeveloped to include larger units.

But some developers question the need for investing public money to decontaminate land since they claim cleanup costs can be factored into the sales price.

What’s more important, they say, is for the city to act as an urban planning visionary setting development goals for large projects. The city’s former administration, led by Gérald Tremblay, came under fire for not drawing up a long-term plan for the transformation of Griffintown, including the development of services like a school, improved public transit and the construction of larger units, in addition to the many smaller and medium-sized condos currently under construction.

Montreal’s four main candidates for mayor all have platforms that integrate real estate development and home ownership within the context of improved city services, like public transit.

Côté points to developer Groupe Prével, which is building 18 townhouses — out of a total of 127 units — during the first phase of its Bassin du Havre project near the Lachine Canal and Guy St.

The townhouses, which start at $444,000 plus taxes for 1,200 square feet plus a terrace, are all sold out — almost half of the buyers have, or say they intend to have kids — and the developer is poised to launch a new phase where all the 63 units will have large two or three bedrooms, Prével co-president Jonathan Sigler said.

The project, built on an old industrial site owned by Canada Lands, was developed following a broader consultation so it makes sense for the neighbourhood and for the real estate market. Proper planning will allow the city to attract families, yet avoid creating a glut of new development.

 

Source: The Montreal Gazette