By John Francis
Many of us who have owned property on the Saugeen Bruce Peninsula for awhile don’t pay a lot of attention to property values. If anything, the crazy real estate market has improved our prospects, what with our properties doubling or tripling in value in the space of a few years.
“Good thing we already own our place,” we say. “Because we sure couldn’t afford to buy it at these prices.”
It’s easy, in a retirement community like ours, to get used to a life of mortgage-free affluence, with pension income and seniors discounts galore. It’s easy to go days or weeks without worrying about the price of anything — even more so when COVID reduces our urge to travel.
A lot of us earned our living elsewhere, accumulated our nest-egg elsewhere, before we came to the peninsula. Arriving here, we bought a place on the shore so we could take it easy, just coast along, working a little or not at all, whatever suits our fancy. The price we had to pay for our lovely, shoreline property was no problem — not nearly as expensive as what we got for our previous home in the city. Our “come from away” money pushed up real estate prices, but only on the shorelines — local folk could still afford to buy property inland.
But over the last few years, an increasing number of peninsula properties have been snapped up by investors and speculators. Some intend to turn the houses into STAs, others are just afraid of missing out on all the wealth the rising prices are creating. This has driven the already-too-high housing prices to levels that are beyond the means of all but wealthy people and investors.
The Economist magazine rates Canada as having the world’s worst housing bubble. Not only are our housing prices among the frothiest in the world, but our household (non-mortgage) debt level is among the world’s highest as well. Add steeply increasing interest rates and you have a very volatile mix.
Economists agree that high house prices have the heaviest impact on first time buyers — or would-be first time buyers. All across Canada, young people are watching from the sidelines as property values spiral out of reach. Many are convinced they will never be able to own a home.
Nowhere is this more extreme than our peninsula, where entry-level properties have tripled in value in the last few years. There are multiple factors at play here. Partly it’s that municipal building rules required new houses to be larger than most entry-level budgets can afford. Partly it’s that all the contractors are booked years in advance, building largish homes and/or purpose-built STAs. Partly it’s that regulations and red tape make subdividing land into building lots a very expensive and time-consuming process. Partly it’s that speculators have pushed the value of existing building lots to stratospheric levels. Partly it’s that every building lot needs its own well and its own septic system, which adds another $50,000 or so to the cost of a new build. Partly it’s that investors won’t build something they can rent for $1,000 a month when they can just as easily build an STA and rent it for $3,000 a week.
That’s a lot of factors pushing things in the wrong direction. It’s almost impossible to buy a home in our community with the money you can earn in our community. If nobody can afford to buy a home in our community except affluent seniors and STA investors, pretty soon there will be nobody here except affluent seniors and STAs. Nobody to mow your lawn or fix your plumbing. Nobody to cook or wait table in restaurants, which quickly translates to no restaurants. If young families can’t afford to live here, we’ll lose our schools. With no schools, how are we going to attract doctors and nurses?
So “I’m all right, Jack” is a very shortsighted perspective. The community could hollow out very quickly and that particular genie is difficult to stuff back into the lamp. Just ask Venice.
What can we do to change it?
One change is already in the works — building code revisions have reduced the minimum size for new houses.
But the most critical need is much more difficult: town water and town sewers. They accomplish two things, almost instantly — they cut tens of thousands of dollars off the cost of a new build and simultaneously remove the largest single obstacle to new subdivisions.
With those things in place, all we’d need would be regulations to prevent new housing from being turned into STAs.
But is there hope of these things happening? Perhaps there is.
The 2022 Federal Budget included what appears to be a major initiative to facilitate affordable housing across the country. Can we find a way to make our sewer/water projects fit within that program’s criteria? I would suggest that finding out ought to be among the new council’s highest priorities.
Ironically, these improvements would have some impact on existing properties. Increased availability of building lots is going to drive property values down across the board. And town water and sewer only work if a tax increase is levied on every property they pass, even if those properties do not immediately hook up.
So we have to keep calm and smile when new subdivisions undermine the premium value of existing properties. And don’t put the smile away because you’re going to need it again when town water and sewer goose your property taxes.
We the affluent need to push vigourously for these changes. Because otherwise we’re going to have the place to ourselves. And don’t go telling me that sounds lovely, because sooner or later you are going to need a plumber. Or a doctor.
