by Todd Lewys
It’s something that’s happening all over the city, and has been for some time.
That something happens to be construction. No matter what part of town you happen to be passing through, its presence is undeniable. The city is growing, and that growth is creating the need for more office space, new stores, new single-family homes and new condominiums.
It seems no matter where you go, a condominium project is in progress, whether in its early stages, somewhere in-between, at completion or very near — not to mention ever-present condominium conversion projects. With varying price points and location, selection has never been greater for would-be homeowners.
The question is, do prospective homeowners have too many options when it comes to condominiums? Is the real estate market becoming oversaturated with condo projects?
REALTOR® Carol Storey said the market may be close to that point.
“There really are a lot of condominium projects out there,” she said. “That’s great. Buyers have a lot of different options to choose from all over the city. At the same time, you can’t help but wonder if there are too many projects to choose from. If that’s the case, having all that choice might not be such a good thing.
“Look at Toronto,” she aded. “They just kept building more and more condominiums. Developers overestimated the demand, and now there are all kinds of units sitting there empty. It makes you wonder if that will happen here.”
Long-time REALTOR® Glen Williams said there’s a possibility that developers may have been too enthusiastic in their assessment of the Winnipeg market.
“There’s a lot of projects out there,” he said. “If there are too many, developers could build their way into oversaturation. No question, there’s still demand, but you can have too much of a good thing. It seems like developers are overbuilding, or are coming close to reaching that point.”
If that point is reached, then all bets are off, said Williams.
“When the marketplace can’t absorb the supply, you’re at risk. People have to remember that the local real estate market has softened. Add in the fact that there’s a good number of new rental projects on line and on the drawing board — and the fact that we’re being taxed to death with the PST increase, income tax and land transfer taxes — and sales of new condominiums might not be as brisk as they were a year or two ago.”
REALTOR® Garry Hirsch, a condominium specialist, said that the condominium market isn’t oversaturated.
“I wouldn’t say oversaturated, I’d say that there’s more choice than ever, which is good for buyers,” he said. “The market for well-conceived projects is still strong.”
That statement begs the question, what qualifies as a well-conceived project?
“By that I mean that a project’s success or failure is contingent on three things: its marketing, pricing and location,” said Hirsch. “For starters, if a project isn’t marketed effectively, it won’t pre-sell well. If that doesn’t happen, then the project’s lender won’t give it the go-ahead because they require developers to get a certain number of sales before they approve it.”
Which is why location and pricing are such critical factors, he added.
“Say you have two projects — one in the city’s northwest sector, and the other in Osborne Village. This is where the location of a project is important. If both were equally good projects, but one was more central and the cost of the unit was the same, where would you buy? Most people would choose the more central unit in Osborne Village,” he said. “And if the one in Osborne Village was priced lower, the decision to buy there would be an even bigger no-brainer.”
Consequently, said Hirsch, some projects will go forward due to effective marketing, realistic pricing and a superior location, while ones lacking those qualities won’t.
“Some projects are good while others are not so good. Location is super important. If you have that and market the project well at a fair price point, then it will go ahead. Others won’t because they don’t have the same qualities. Because of that natural attrition — survival of the fittest — I don’t think the market is, or will become, oversaturated.”
In the final analysis, opinions are varied and only time will tell.