Warmer weather makes for a busy quarter

Normally, the first quarter is a reflective period for housing developers, allowing site planners, trades experts and marketers to take a deep breath, test out some new ideas, slog through the permit-application mud with no great urgency, and possibly assemble some land before buyers shift into action for the spring.

But not 2006.

The mild winter allowed starts to go forward at a faster clip than previous January-to-March periods. That, in turn, created a more urgent need for new developments in order to fill the channels that will hopefully be under construction within the next 12 months.

Somewhat surprisingly, it is the single-detached home starts that led the increase in January and February, up 5.6 per cent from the same period last year to 2,125 across the Greater Toronto Area, according to Canada Mortgage and Housing Corp.

York Region led the way in starts, making up 38 per cent of all single detached homes in the GTA and 40 per cent of all housing types.

"We always caution people not to read too much into this [winter]data, because it's always volatile with the weather," says Jason Mercer, CMHC senior market analyst. "The numbers become more meaningful when you get into spring."

It has also been a busy winter on the sales side, with 19 new detached projects launched, about half of which have healthy semi-detached and townhouse components, in the first three months of 2006.

Few of these launches came to market with great hoopla. In most cases, this was a case of developers keeping their marketing powder dry for the much more active spring sales season. But it was also a good opportunity to gauge how well particular projects will do in a 12-month sales cycle.

The winter low-rise launches tended to aim at a higher-end buyer, priced at or above the average new-home price.

Only five of these new projects had detached dwellings available for under $350,000, and all of those were well into the outer suburbs.

The strategy has two purposes. First, those interested in buying a new half-million-dollar house (and there were many to choose from in this early-year batch of launches) have a lot of time and inclination to shop around, so builders might as well go with an understated launch to save on marketing costs.

The second goal is to build up an exclusive word-of-mouth buzz. Many of these higher-end projects will not be the quickest sellers even in an overheated market. There is demand for these upgraded houses, but the larger number of buyers looking to purchase an entry-level house or townhouse assures a more feverish sales environment for those products.

Menkes Development Ltd. went ahead this February with its launch of 124 lots in the Walker Farm Estates project in Newmarket. It's on the last available parcel of land in the town's Stonehaven community, and Newmarket is going to build a new state-of-the-art recreation centre nearby. The 40-, 50- and 60-foot-wide lots range from $430,000 to $713,000, and houses go up to 3,723 square feet.

Menkes ran some small teaser print ads leading up to the launch, which led to about 600 people pre-registering, Menkes' marketing director Mimi Ng says. To date, 41 of the 124 lots have been sold, with the majority of the 40- and 60-foot lots already spoken for.

"We kept a very low profile with the launches and tried to make it very exclusive," Ms. Ng says.

"If a project is properly marketed and positioned, you can still have a successful launch any time of the year."

Market facts - Ajax

As at Feb. 28, 2006 (Detached, Semis and Towns)

Top Three Sites (by February sales)