Archive for December, 2013

Rembrandt Homes the Builder and the Untold Story of Resale Pricing Spreads.

Friday, December 27th, 2013

by Peter Daoust:
One of the London and Woodstock areas most prolific condo builders in recent times and over the last twenty years has been Rembrandt Homes. Many people living in London now know of this name. For what seemed to be the longest period of time this builder stuck to building a two storey townhouse design with the repeated use of an exterior bricking which was deep red in color, large upper and lower front bay windows and a two pillared designed front porch. Local real estate agents will most probably be able to visualize what these types of units look like if we add into these detailings such addresses as 50-70 Chapman Court, 166 Bonaventure Drive, 101 Brookside Court or 20 Kernohan Parkway. Yes they were somewhat simplistic in design yet they have proven themselves to withstand the test of time.
Let’s now turn our timeclocks forward. In Rembrandt’s current efforts to build new condos they have concentrated their attentions to catering to two different market segments. The first is what could be considered to be the higher end market with such projects on the go as 2295 Kains Road in the far west of London and 2081 Wallingford Avenue in the north end. The second marketplace Rembrandt addresses aggressively is the middle of the road priced units. Recently finished projects of this sort include such addresses as 1320 Savannh Drive, 2145 North Routledge Park, 1544-1600 Mickleborough Drive and 1625 Purser Street. Current similiar styled projects on the go include a 36 unit project know as ” Beacons Way” in Woodstock (#15 on our Woodstock site in the south Woodstock section), an 86 unit site at 2635 Batemail Trail known as “Copperfield Gate” and most recently an 87 unit project at 1010 Fanshawe Park Road East known as “Jacob’s Ridge.”

What’s now different about their new style of building? Well, in a nutshell, it’s the variety of new model styles which are now found within any given new built cluster. Some units are two storey in design, while others are multi-level, some units have attached garages and a small handful even enjoy double car garages and many units have a semi private courtyard in lieu of these features. Still others are of the straight forward rowhouse design. It appears that todays new home condo buyers like to have options.

In 2013 other new home builders compeated in this same space. Readers may recognize builder’s names like Ironstone, Lakefield Homes, Johnstone Homes, Auburn Homes, Greystone Developments and Domus Developments to name a few. It should also be noted that all builders use in house sales teams to help keep these individuals focused on one new project at a time. Now consider this. Once a new project is finished and sold out the powers of the “MLS” system take over and a new “market driven” sense of pricing takes over. This is where things may start to get interesting.

Why? Well in the resale marketplace buyers and sellers start to recognize that different units in the same complex and in different complexes have totally different feels and thus begins the exercise of trying to blend together a new set of new pricing realities. In the 1625 Purser Street complex for example, some units have garages and more importantly finished lower third levels with southern exposures backing onto single family houses while other units have no garages and views facing four lanes of fast moving traffic on Highbury Avenue North. The same type of altered reality can be found with the complex Rembrandt built at 2145 North Routledge Park. Some unit owners get to enjoy the changing of the seasons with wonderful open views of a retainer pond while others units have direct views of Hyde Park Road traffic.

With time the resale markets pricings in these complexes will have to learn to compensate themselves for these differences. Consider for example the following statistics.
1) in 2013 Rembrandt Homes and individual owners of units at 2145 North Routledge closed out nine units (9 MLS sales) at prices which ranged from $208,000 to $250,000. That’s a price spread of over $40,000
2) in 2013 the price spread on the Rembrandt Homes condos at 1544 Mickleborough ranged from $189,000 to $235,000. That’s a price spread of $46,000.
3) in 2013 the price spread on the Rembrandt Homes project at 1320 Savannah Drive ranged from $185,200 to $214,900. That too is a wide price spread, this time in the magnitude of $30,000 dollars.

One now has to ask the question as to whether or not these price differences can truly be justified. These differences in numbers are afterall huge. Well all we can really say is that it appears from Rembrandt’s point of view, it pays to scramble up the look of their offerings. It also appears that early buyers in and the early sellers out are all to aware of these design differences /new price differences and want in some cases to be compensated accordingly. I suspect that going forward these deviations in pricings to reflect these design differences will somehow lessen but I offer no evidence as to why this may be so. All of this is in a similar theme of what I recently reported was happening with our downtown condo prices.

** In my research of material for this blog I happened across another supportive occurance. On our website in the London west end section may be found a complex (tab#25), 1059 Whetherfield. In 2008-2009 the builder Heritage Homes-Cachet Reid built 69 nearly identical units (except the corner units had a few extra windows and some of the units back onto a railway track). In 2013 there were 7 M.L.S. sales at an average selling price of $204,500 which was down slightly from 2012. What is suprising to me is that the spread in selling prices in this complex for 2013 was a spread of $47,000. It appears that the issue of price spreads is now affecting all recently completed new projects and is yet another consideration buyers attempting to do their own research must be aware of. Indirectly, all of of this new activity (of new builds across the country in urban areas) may put more pressure on RECO, our national policing agency to loosen up their guidelines on how real estate agents can present information to the public on past real selling prices. This would be to the benefit of consumers and is something that has already happened a long time ago south of the border. That once again is the way I see it.