Why Low Rises are on the Rise in Ontario's Preconstruction Landscape

Ontario's preconstruction housing market during the first quarter of 2024 is increasingly favoring low-rise developments, a trend that is shaping up to be more than just a temporary shift. This movement is driven by a mix of market demand, lifestyle choices, and economic considerations. For this week, let’s delve into the reasons behind the growing preference for low-rise buildings in Ontario’s dynamic housing landscape.

The Allure of Low-Rise Developments

Typically defined as buildings under five stories, low-rise developments strike a balance between suburban peace and urban accessibility. These buildings foster a strong sense of community and connection that is sometimes missing in high-rise complexes. Residents enjoy a more personal living environment with direct access to outdoor spaces and fewer communal facilities, which also means lower maintenance costs. 

Market Demand and Lifestyle Choices

The appeal of low-rise developments cuts across various demographics, ranging from young families seeking their first home to older adults looking to downsize. The common thread among these groups is the desire for more space, greater privacy, and affordability. Additionally, the COVID-19 pandemic and the shift towards a hybrid or work-from-home working culture have shifted preferences toward homes that offer more personal space and reduced population density.

Economic Benefits

From an economic standpoint, low-rise developments are often more budget-friendly than their high-rise counterparts, providing an accessible option for first-time homebuyers and investors. The construction costs for low-rise buildings tend to be lower, enabling developers to maintain competitive pricing. Construction time for low-rises is also considerably shorter compared to condos, allowing for faster occupancy. Additionally, the freehold nature of certain low-rise projects offers higher appreciation and lower fees. 

Future Prospects for Low-Rise Developments

As Ontario’s population grows, the demand for varied housing options becomes increasingly evident. As of writing, we are seeing a noticeable shrinking gap between what used to be considered “condo prices” and “low-rise prices”. Recent low-rise projects such as Pioneer Park Towns in Kitchener as well as Empire Canals in Wellend now boast equivalent prices, if not even lower than condo units. This coupled with attractive incentives such as leaseback guarantees as well as capped or waived development fees has allowed low rises to remain incredibly competitive within the preconstruction market for the foreseeable future.  

Conclusion

The increased popularity of low-rise developments in Ontario’s preconstruction market is a direct response to the changing lifestyle and economic demands of Ontario. Looking ahead, we can anticipate a continued expansion in these developments that seeks to appeal to both homebuyers as well as investors. How preconstruction condo projects adapt to this shift remains to be seen. Will we see lower prices? Unlikely given the current hold on interest rates as well as upcoming changes to capital gain taxes. While the future remains uncertain, rest assured we will keep you up to date on the latest market developments.