The residential construction industry has been on a downward spiral all over Ontario for many years. The one exception has been the Collingwood, Blue Mountains and Wasaga beach area with their construction industries trending up year over year since the credit crunch of 2008. The 2012 construction year was the exception, it was the first year that had a real down turn in the construction market. Places like the muskoka’s where builders have enjoyed having multi-year waiting lists are looking once again at a spring with little work and very little leads on future work. This is better than the previous year where they reportedly had almost no work to speech of.
The Collingwood, Blue Mountain and Creemore area have seen a significant change in the real estate market that has stayed strong for over a decade even when it should have slowed like other markets in Ontario. The market correction that some people have been waiting many years to happen has finally arrived. Over the past couple of years there have been an alarming number of properties and homes coming on the market and not selling quickly. The prices stayed high even in the face of people having to wait longer and longer to sell their home. This finally changed this year with the market stalling and people being forced to reduce their prices significantly to sell their home. This correction in the market has created a buyer’s market for the first time in a decade. The buyer’s market did not happen till the late summer in 2012 which almost stalled the real estate market completely.
The backlog of real estate that has been reduced is going to start really moving in 2013, there is a large demand for homes and properties still in the area with people wanting to move here. This spring will see a real estate surge at a reduced price which will help drive the renovation market. With people being able to buy a home or cottage at a 30% reduction in price it will allow them to spend more on renovating the home and also will allow them to add to the size with an addition.
Wasaga Beach
Places such as Wasaga Beach will see the best growth in the area. Wasaga Beach’s residential construction has been steadily growing every year for the past 4 or 5 years since the credit crunch and stock market crash of 2008. Property anywhere near the water and the beach is being bought up by people looking to retire. The rising tax’s are forcing a lot of people that have owned small little cottages in Wasaga Beach for generations to sell them or tear them down and rebuild with a new home. There is huge potential for growth in this area with whole streets having small cottages that are at the end of their life and need to be replaced. Property values in Wasaga Beach continue to rise year over year, prompting many to sell their family cottages instead of fixing them. Wasaga Beach has turned from the tourist area and is now actively promoting itself as a retirement community for the Baby Boomer generation. Enforcement of strict rental rules for seasonal cottages are having a serious effect on the market, pushing more families to sell their cottage as they are having trouble bringing in enough income to justify keeping it. The real estate market in the Wasaga Beach has not seen the large downturn like its surrounding areas and the construction industry seems to be staying strong both residential and commercial.
Clearview Township
Clearview Township will struggle in the residential construction sector like it has for the past couple of years. It seems this market will only get worse, as land prices stay high even in the face of a down real estate market. Building and development fees are now at an all time high, to the point where it is scaring away people that want to build a new home. No effort is being made in the Township to help curve this trend and it looks like they are determined to only allow people with deep pockets into the area that can afford to pay the massive fees. Only well established contractors seem to be able to get what little work there is in this township. The renovation market is actually starting to slowly turnaround from years of sluggishness. The massive development fees to build a new home is forcing people to buy older smaller homes, renovate them and add additions to achieve the size they require. This allows people to save 10's of thousands of dollars in development fees. This is about the only area of growth that I can see in this township. Commercial development is almost non-existent.
Collingwood/Blue Mountain area
The Collingwood/Blue Mountain area seems to be spotty at best. Some places in the area have 1 or 2 houses being built on one street, where other areas have no building or renovating at all. A lot of this seems to have to do with the stalled real estate market. Renovations should really start to pick up in the 2013; they were at a pretty low level in 2012 much reduced from 2011. At the moment the renovation end of things is slow. A lot of contractors that rely on the renovation market to get them through between house builds are having trouble finding any work at all.
The prospect for growth for 2013 in the Collingwood area could be very good, there seems to be a lot of commercial work running into 2013 and more commercial projects to be started in 2013. Collingwood is looking like it could experience extreme growth in the coming decade. Most of this growth will be of Baby Boomers moving into the area, but there are also a lot of young professionals moving in to fill all the jobs that are required with this ever growing and ageing population.
The Collingwood area trend of builders coming in from other areas to find work will continue and might even get worse in 2013 as the prospect of bigger homes and cottages is a powerful draw with a lot of the province not having a lot of construction work.
Overall 2013 looks to be about the same as 2012 in the new home market, the renovation market looks to be the area of growth because of the real estate market. There looks to be a lag in the new home starts in all areas because of the new building codes. To get a building permit now takes longer because of all the new codes that people have to abide by when designing their new home. The new regulations will see the cost of building go up by a minimum 10% and could be as much as 30% depending on what standard you will have to raise the building envelope too.
The renovation market was slow going into this year, but it was still better then where it was at this time last year. The renovation market looks like the big area of growth especially compared to the previous years and if the real estate market rebounds like it’s suppose too then it could be a banner year for renovators, well at banner year at least compared to the last couple.
Overall it looks to be an up and down year for the residential construction industry in the Collingwood, Blue Mountains, Wasaga Beach and Creemore area. Competition for new homes looks to continue to be high with everyone trying to stay busy and more contractors finding themselves staying busy with renovations instead of new homes.
Rob Abbott
Operations Manager
Village Builders Inc.
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ReplyDeleteGreat article! Thank you for the insight on a region that it is hard to find this type of information for :)
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