Special Report: The Changing Face of County Real Estate

Infographic shows the location of all proposed developments and the mix of types of housing.

Introduction

The catalyst for this report came from a recent experience with clients. They found a house they loved but they were shocked to discover that a 5-storey apartment building was under consideration across the street. I realized afterward that there is no practical way for home buyers or the general public to track new developments under consideration for the County.

This occurs at a time when there are a dozen sub-divisions and condos at various stages in the development pipeline in Wellington and Picton. Taken together, they have the potential to change the face of real estate in the County in ways which could matter to potential buyers.

When speaking of the development pipeline or homes under consideration, this report includes developments at different stages:

  • have publicly announced their intentions but not submitted planning applications yet
  • planning applications submitted
  • planning applications have been approved, and
  • developments where construction is currently underway.

The individual developments which form the basis for this report are covered in greater detail here.

Some caveats are in order. First, this report only includes those projects which I could document using publicly available sources including minutes of Council meetings and news media reports. There are additional developments being considered, but because there was no public record, I have omitted them from this report.

Second, this report focuses on Wellington and Picton because that is where development on a transformational scale is being considered. In addition, there are also two approved developments in Rossmore which are not covered in this report because they represent a continuation of the style of development already underway there.

Finally, not all the homes described in this report will actually see the light of day. As County experience shows, developers can and do change plans based on better opportunities elsewhere, financial barriers, economic conditions, etc. This report therefore presents a picture of what County real estate could look like if publicly announced developments ultimately come to pass. It is not a detailed promise of what the County will look like.

Current Housing Situation

To appreciate the potential changes posed by new development, we need to understand the current housing situation. Based on the 2016 census, Wellington and Picton differ significantly in their current housing make up.

Wellington, with 990 households, is a village of owners where only 1 in 7 households rents. Single-family homes predominate and condos have a small share of the market (5%). Wellington is recently developed with nearly 2/3rd of all home built after 1981.

In Picton, with 2,300 dwellings, almost 1/3 of all residences are rented. Condo apartments or townhouses haven’t had a big impact here either and represent less than 10% of the housing stock. Single-family detached homes predominate and nearly 2/3rd of all residences were built before 1981.

Scale of Development

As of October 2019, there were just over 2,300 new housing units proposed for Wellington and Picton, compared to the 3,300 dwellings that currently exist. If they all get built, the number of homes in Wellington and Picton combined would grow by nearly 70%.

However, looking at the combined numbers for Wellington and Picton obscures the different scales of development under consideration for each community.

Chart showing the current and future number of dwellings in Wellington and Picton.

On the unlikely assumption that all the contemplated developments get built, Wellington would grow by 1,169 dwelling units – compared to the current 990 homes, the number of residences would more than double. Under the same assumption, Picton would grow by 1,132 dwellings, an increase of just under one-half.

Stage in Development Pipeline

As developments move through the pipeline from pre-application to application submitted, then application approved and ultimately construction underway, the investment by the developer increases significantly. As a result, the further along the development pipeline, the greater the likelihood that a project will actually get built.

Chart showing stage of new Wellington housing projects in the development pipeline.

The developments under discussion for Wellington are mainly at the pre-application stage where the chances are higher that projects will fall by the wayside.

In addition, Wellington currently has a problem with low water pressure which puts a limit on current construction. (The municipality has said that this roadblock will be resolved by the end of 2021.)

Chart showing stage of new Picton housing projects in the development pipeline.

On the other hand, the projects being considered for Picton are further along the development pipeline. This represents a higher level of investment and commitment by the developers involved. More of the projects under consideration for Picton are likely to get built and to get built sooner.

Picton does not have the general water supply constraint that Wellington is currently experiencing. However, at least one Picton project at the pre-application stage cannot proceed further without an extension of municipal sewers.

Mix of New Dwelling Types

Table showing number of different dwelling types under consideration for Wellington and Picton.

The developments under consideration differ significantly in the mix of new housing contemplated for Wellington and Picton.

Wellington is currently predominantly single-family detached homes, and this same pattern of development is reflected in the proposed new developments which include 77% detached homes.

The exact opposite is true for the developments proposed for Picton. While single-family homes currently predominate, apartments and townhomes together make up three-quarters of the new dwellings proposed for Picton, while detached homes make up only 23%. The pattern of new development would shift from detached homes to more intensive forms of housing.

Impact on Overall Housing Market

From 2012 to 2018, the rate of construction of new homes in sub-divisions in Wellington and Picton was low, accounting for less than 10 MLS sales per year. This changed significantly during 2019. With the start of two new subdivisions, new home sales are on track to top 30 for the year.

There are important factors which point to increased future demand homes in Prince Edward County. These include the growing number of retirees in the GTA and the increased number of people working remotely.t. However, it’s unclear whether the growth in future demand will be enough to support the level of proposed development.

Suppose only half the dwellings in the development pipeline actually get built, and that construction is spread over the next 10 years: that would equate to 120 new dwellings per year, four times the record number sold in 2019.

What is the likely impact on prices for resale homes? The most likely outcome is that the growth in the number of new homes for sale will moderate future price increases for resale homes, rather than undermining prices. To date, County developers have built very few homes on speculation and have tailored construction to the rate of sales.

In addition, the developments in this report are not likely to directly impact the price for specialty homes like waterfront. While a home in a new subdivision may be an acceptable substitute for a buyer who cannot find what they want in an existing Wellington or Picton home, homes in subdivisions are not likely to appeal to buyers specifically looking for waterfront.

Conclusion

If even half the homes currently in the development pipeline are ultimately built, that would change the face of real estate in Prince Edward County.

Though Wellington would retain its focus on single family detached homes, it would grow dramatically in size. Picton, on the other hand, would not only grow in size. There the mix of new dwellings would change to favour townhomes and apartments.

These prospective changes have two implications for home buyers.

When considering a property in Wellington or Picton, don’t assume that today’s open spaces will be open in the future. Keep informed of the location of planned developments so you can make an informed purchase decision. Likewise, keep informed about what the community will look like 10-20 years in the future.

Second, don’t count on the type of price appreciation which the County has experienced recently. While the supply of new homes may not depress prices, it is likely to moderate future price increases.

More detailed information on each of the projects in the development pipeline is at https://treathull.ca/new-development-pipeline/

For more information on real estate in Prince Edward County, contact Treat Hull, Broker of Record at treat@treathull.ca or 613-503-0027 .