Windsor area rents dropped in 2024 while housing prices stabilized

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The relentless upward trend in housing costs in Windsor and Essex County has eased a bit, according to new figures looking back at 2024.

Average monthly rents fell three per cent last year, with new home construction costs declining slightly for the second consecutive year and the average sales price in the resale home market having remained in the $570,000s since last May.

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The average monthly cost, including all types of rentals in the Windsor area, was $1,644 per month.

That ranks Windsor 22nd out of the 25 metropolitan areas of Canada surveyed by rentals.ca and Urbanation. The only regions below Windsor in descending order are Edmonton, Saskatoon and Regina. Rents in Ontario fell 6.4 per cent in 2024.

“The condo market is now more saturated,” said Manor Realty general manager Rob Agnew of why rents steadily declined in 2024. “Units are popping up everywhere.

“Most of those condos are rental units, so the increased supply is bringing down rental prices.”

Local demand has also fallen with fewer international students competing for accommodation, particularly around the University of Windsor and St. Clair College campuses.

In breaking down the condo/apartment rental market, there has been no change in the rent for a one-bedroom unit ($1,548) while the price for a two-bedroom fell seven per cent to $1,816. A three-bedroom unit dropped 10 per cent to $1,818.

Windsor Essex Home Builders’ Association president Brent Klundert said the slight declines in new home prices have more to do with builders trimming their margins to move product in a slow market rather than a reduction in actual costs.

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“Cost haven’t moved too much for new home construction,” Klundert said. “Materials haven’t really come down, but we’re not seeing the increases we had been. The cost to the consumer is fairly flat.”

The Statistics Canada new home price index released this month reported a 0.6-per-cent decline in new home prices for the Windsor region. That follows a 1.3-per-cent decline in 2023.

Nationally, the index increased by 0.1 per cent annually. The largest decline in prices in Canada occurred in southern Ontario.

Kitchener tied with Ottawa-Gatineau and Vancouver for the largest annual declines in the nation, at 1.4 per cent. London, St. Catharines and Toronto were right behind with prices receding by 1.3 per cent.

Klundert said new home construction is down significantly because the pricing gap between a resale home and a new home remains too large.

He said reducing that pricing gap would have a bigger impact than any interest changes the Bank of Canada could make.

“With an entry level new single-family home in Essex County being about $800,000, that leaves a gap of $230,000 (compared to the average price for a resale home),” Klundert said.

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“If the gap is closed, they factor in the value of having a new house as being worth the difference. During the pandemic, there was virtually no gap between the resale and new home markets.”

The gap in pricing is currently in the 15 to 20 per cent range compared to the traditional difference of about 10 per cent, said Klundert. Government fees and charges have contributed to that gap growing, he said.

Klundert fears the doubling of development charges to $76,000 in the city for a single-family home, and over $117,000 in the Sandwich South lands, currently being studied by Windsor will severely dampen construction activity and push projects into the suburbs.

“Development fees are in the range of three to six per cent of a new home’s cost,” said Klundert, adding that didn’t include other government charges in both the city and county that account for about a third of the total price of a new home.

“Windsor is contemplating an over 100 per cent increase. You’re talking about a six per cent item in your bottom line and doubling it — that’s going to be a problem.”

Klundert said the next big cost in new home prices is the constraint of shovel-ready land to develop. He said prices are escalating because supply is insufficient.

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“There are also significant political risks that are impossible to predict right now,” Klundert said.

“We’d be affected by a 25 per cent tariff. A lot of our manufactured goods come from the U.S. Any type of trade war increases our costs.”

Agnew feels the pricing gap is also re-directing buyers, who might have considered building new, into the higher end of a resale market that has adjusted and stabilized post-COVID.

Agnew said there’s also more homes available which don’t require massive renovations, something that appeals to first-time buyers.

“It’s possible for between $360,000 and $400,000 to get a nice starter home,” Agnew told the Star.

“In Windsor, LaSalle and Tecumseh and Amherstburg there are 31 homes for sale between $325,000 and $375,000. I don’t think we ever had that many in our boom market.”

Agnew expects the market to remain pretty much the same as it has been through spring and interest rates to continue to decline. Potential U.S. tariffs on Canada, however, would be a wildcard in the market, he adds.

“We’re looking at what I call our Goldilocks period,” Agnew said.

“This will be the short period where buyers will enjoy a good time to get into the market before things pick up in the summer.”

Dwaddell@postmedia.com

Twitter.com/winstarwaddell

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