Goodbye 2014 – Hello 2015: What’s ahead for Ottawa home builders?

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            Market improvement, digital consumers and higher energy efficiency homes will drive the market

Ottawa Construction News staff writer

What big trends will shape Ottawa’s new housing business in 2015?

Consider a slightly improving overall market – but with continuing challenges for first-time home buyers – an increasingly digital and mobile-savvy consumer market, and even higher energy efficiency in new home construction, leading (sooner than many expect) to Net Zero being the norm.

These were observations from speakers at the Greater Ottawa Home Builders’ Association annual sales and marketing committee’s “Goodbye 2014 . . . Hello 2015!” event at the Kanata Golf and Country Club on Jan. 27.

Patrick Meeds, managing director of PMA Brethour Realty Group’s new home division, said last year, while there were relatively positive employment considerations for the 35+ market – and so healthy demand for move-up single family homes, things were “relatively weak for the younger cohort.”

“The biggest impact in 2014 was definitely the first time home buyer,” he said.  “The low turnout affected new homes.”

Overall, the market continued to decline.  Last year, he said there were 3,851 new home sales in Ottawa, compared to 4,024 in 2013.  This slight year-over-year-decline continues a drop from 2011, when there were 5,110 sales and even more noticeably from 2009, when there were 5,703 new home sales.  Also notably, the share of homes new homes purchased – at 22 per cent of the overall market (resale homes comprise the rest) is significantly lower than it was back then, at 28 per cent.

Despite these recent trends, Meeds expressed optimism for 2015, predicting in the new home market “we believe there will be an increase of 10 per cent across the board, to 4,215.  Of this, he estimated about 1,600 of the sales will be single family homes, town homes will see a sales increase from 1,400 to 1,600, there will be a slight increase in demand for condo town homes, and there will be about 800 condo apartment sales.

Sales will increase in the central area, “the south will drop by a couple of per cent because major developments are coming to an end,” and the western areas will grow, because there is more market supply.

He also predicted prices will increase by about three per cent, and there will be “fewer extraordinary incentives” needed to sell town homes and single family houses.

Meanwhile, Andrew Milne, president and digital creative agency bv02, said potential new home purchasers may more likely this year show up at model homes armed with online-learned understanding and questions – and mobile devices.  And increasingly, they’ll be looking for integrated systems that link their home with communications, internet and digital devices.

“The customer experience is the market experience,” he said.  Change is rapid in the digital environment – and this creates a combination of circumstances, where marketers have much more potential data to gather/assess in developing customized, individual strategies, and consumers have the ability to gather many more details before they even show up at the model home site.

Data tracking in real time might be a challenge, but in the era when the majority of Starbucks purchasers are now buying their coffee with their phone, the rules have changed – marketers need to aware of the “algorithms, sales perspective, market perspective and overall experience perspective.”

However, he noted that the few still determine the fate for the many.  In the online environment, one per cent are heavy contributors, nine per cent are “intermittent contributors” who often recirculate ideas – and the remaining 90 per cent are lurkers – but respond to what they see, and the messages they discover.

So, when purchasers show up at the new home site, “they already have a misconception or preconception (about your project) or they say they want to buy from you” because they’ve decided already that you have the best offering for them.

Many of the digital systems will be operating from Google’s Nest home thermostat – and that leads to Homesol Building Solutions president Ross Elliott’s observations about the dramatic increases in home building efficiency, under new building code rules.

Elliott says the 2017 Ontario Building Code will call for 15 per cent more energy efficiency, but the standards from EnergyStar and R2000 are moving the bar even further – to a soon-to-approach time when the typical home will effectively consume very little or no energy.

He said the building code increases will add perhaps one per cent to the cost of a new home, but the energy cost savings are so great that the average homeowner will see a payback within a couple of years at most.  He said the added construction costs might add $15 to the monthly mortgage payment, but the offsetting energy cost savings would be at least $38 – meaning a savings of $22 to $24 per month.

Even allowing for the higher down payment, and opportunity costs, the payback is virtually immediate.

In fact, the energy efficiency should result in an annual return of investment of 20 per cent per year for 30 years – undoubtedly a truly impressive return.

He says new home sales representatives can show purchasers “that it is not more expensive – it is cheaper – to have amore energy efficient house.”

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