Doug Schmidt | Windsor Star

First-time home buyer Jude Malott has plenty of prep work left before move-in date — like ripping out the no-longer-groovy shag carpeting — but gone are the sleepless nights and high anxiety of hunting for a starter home in the midst of a crazy-hot real estate market.

He’s now lord of the manor, king of his own urban castle, no longer paying rent for someone else’s property.

“It was incredibly stressful — I lost a lot of sleep,” he said of the search.

Working with an agent and recognizing the local housing market has been on fire the past several years, Malott’s offer on the first address that drew his interest was a whopping $100,000 over the asking price — but he still lost out to someone else’s even higher bid.

And it only got worse.

“The first one wasn’t as crushing as the second one, which was in a neighbourhood I wanted to live in. It literally faced on to my best friend’s backyard,” he said. Malott’s offer was again $100,000 over the asking price, and this time he lost out by an even wider margin to a Toronto buyer.

“To lose that one was bad,” he said. “I kinda threw my arms up — I don’t understand these prices.”

He’s not alone. Windsor has long been a place where hard-working folks of even relatively modest means could realize white-picket fence dreams of homeownership. It was a city where anyone with a decent job could escape rent-charging landlords and instead build equity through ownership.

No more. Not with the average Windsor home now selling for close to $600,000.

Between November 2020 and November 2021, despite a global pandemic that hit the border city’s economy particularly hard, average local home prices still jumped 37 percent, almost the same as the year before, according to the Windsor-Essex County Association of Realtors. Over the mere course of several years, the average selling price for a Windsor home doubled to $571,000.

That’s still a relative bargain compared to other Ontario cities (less than half Toronto’s average), but a growing number of Windsorites are being squeezed out of previously attainable homeownership.

Malott was fortunate. He has a good job with the city and paid low enough rent on his current apartment that he could set aside funds. He won’t divulge what he paid for his modest 100-year-old home just south of downtown, but he got a “downpayment gift” from his father, and he’ll move in with two friends.

“Having others live with me, that was part of the economic calculation — having someone else to help pay the bills makes things a whole lot less scary,” said Malott. And being lucky enough to have parents sufficiently well off to share in the downpayment is also increasingly essential for many first-time buyers.

“It’s not like 10 years ago when you could find something in Windsor that was move-in ready for $80,000,” said Don Merrifield, who was Malott’s Re/Max Preferred realtor. Windsor has never experienced such a buying frenzy, he said, with 10 or more offers chasing down most new listings.

“Every time I get a new client, I warn them — ‘This isn’t gonna be fun,’ ” said Merrifield.

Not fun, perhaps, but the frenzy is fuelled in part by those even more scared of being left behind.

“We call it FOMO — fear of missing out,” said Motor City Credit Union CEO Robert Griffith. “For the people in that cycle, it’s very, very stressful and high-anxiety.”

FOMO buyers lose out in bidding wars until “they become so fearful that they overbid what they had planned to spend,” he said.

Re/Max’s Merrifield, active in the local housing sector the past 22 years, knows about FOMO. It’s not uncommon, he said, for a client to miss out on their dream home because someone else with their own bitter experience made sure they didn’t lose out again.

Buying a home is a huge investment, but it’s also an emotional investment, and with interest rates at historic lows, “money’s cheap,” said Merrifield. Bidding an extra $30,000, he estimates, could translate into extra monthly carrying costs of about $100 with a long-term mortgage.

Housing prices have become so inflationary that one of the traditional sources for first-time buyers — mature homeowners selling off to either buy up or downscale — has dried up. “People are terrified to sell,” said Merrifield, due to the rapidly rising prices of what’s out there for them to buy, as well as escalating rental rates.

But in this marketplace on fire, many other factors are at play.

In downtown Windsor, for example, “all the entry-level homes are being bought up and turned into rental,” said Merrifield. Part of that has been the success of St. Clair College and the University of Windsor in drawing thousands of international students each new semester but then largely relying on the existing stock of private housing to absorb them into the community.

And that’s just a small part of a complex issue.

Multicultural Windsor has proven a magnet for migrants drawn to Canada. And investors — from abroad, but also from across Ontario and Canada — now represent the biggest segment of buyers in Ontario (according to the latest Teranet Market Insight Report), and Windsor is among the targets. Urban land is growing pricier and the local supply of lands for housing development has not kept pace with demand. Construction material prices have shot up and there’s a shortage of skilled labour to build new homes and upgrade the existing stock.

“There’s no silver bullet here,” said Windsor Mayor Drew Dilkens. He’s attending a Dec. 16 emergency summit of provincial and municipal leaders hosted by Premier Doug Ford, who wants participants to bring their suggestions on how to address the challenges.

“Half a million dollars to get into the average Windsor home? There is a crisis, no doubt about it,” said Dilkens, who worries about his own children being able to afford a home in their hometown.

City administration is helping prepare Windsor proposals for the Ford government, said the mayor. But he sees the solution much the way Ontario’s premier and housing minister do — build more homes faster, by increasing the land supply for developers to build on, as well as cutting bureaucratic “red tape.” Dilkens says he knows of at least one developer promising to build a thousand new homes in the city’s South Sandwich lands as soon as there’s a green light for what is mostly farmland and undeveloped.

Some argue, however, that the problem is not supply — opening up more land to develop would only result in more room to build the bigger homes now selling like hotcakes, but which are unaffordable to a growing number of Windsorites.

Architect and urban designer Dorian Moore is among those arguing that what’s needed is more of the so-called “missing middle” — townhouses and mid-sized residential development to fill the gap between what’s currently hot: detached family homes on one end and condo/apartments on the other.

“Land supply is part of the equation, but I’m not convinced that’s going to solve the affordability crisis,” said Moore, vice-president of Archive DS, a Detroit-based urban design consulting firm.

Part of the solution, he said, is to inject more variety in local accommodation offerings, including smaller homes and attached dwellings of a “more modest scale” that can be “inserted” into existing neighbourhoods to take advantage of further savings by tapping into existing infrastructure and services.

Developers argue they’re building to address consumer demand, but Moore, who has lived in Walkerville the past 27 years, responds that “the market is buying what’s out there, and if all you’re being offered is ‘X’ then that’s what you’ll buy. Right now, we don’t have the options … we don’t even talk about those options.”

There’s a discussion that’s been missing in Windsor, said Moore, and that’s over size.

“We’ve psyched ourselves into thinking that bigger is better,” he said. Growing up in a family of four, Moore said his city home in the 1970s was 900 square feet. Today’s “typical smaller home” is double that size, and the typical detached home being built and quickly snapped up by most buyers is almost double that size again.

Condos of 1,000 square feet, “the younger generation in their 20s and 30s, they’ve probably willing to accept that. We can solve this problem,” he said, adding Windsor has the advantage of having neighbourhoods Ford City and Old Sandwich that could attract that kind of development and demographic.

Simply expanding the urban footprint outward, said Moore, just means more expensive big houses and more costly municipal servicing subsidized by all taxpayers. As for that younger generation and others being left out, “if people don’t see the options, they end up leaving.”

Ward 3 Coun. Rino Bortolin, who represents downtown and who has long had a passion for smart urban growth, said his biggest concern is the growing divide between the haves and have-nots.

“We have a lot of poor. Homeownership is a great way out of generational poverty,” said Bortolin. “The less likely you (are to) own a home, the less likely you’ll climb out of poverty.”

And rising prices in the housing market means rising rents for those who can’t afford ownership of their own shelter. “That will increase systemic poverty,” he said.

Bortolin recalls homes on the market for $60,000 to $80,000 when he was first elected in 2014. They tended to be in poor shape, but were available to almost any buyer. Those same structures today fetch up to a quarter-million dollars or more. The issue is not supply, he said, but rather incomes.

There’s a silver lining to higher housing prices. After joining city council, Bortolin fought for bylaws and enforcement to tackle widespread blight and neglected vacant properties. Especially during the Great Recession of 2008 and 2009, outside investors scooped up Windsor properties but then left them empty. With today’s prices, they’re no longer ignored.

Windsor is now catching up to other cities, and Bortolin hopes Windsor can avoid “the stupid stuff like sprawl” that he sees in “most municipalities addicted to growth.” Since the start of the local housing boom, he said thousands of “infill” residential units have been built or approved.

“We could easily fit another 50 percent of our population within the current footprint of the city,” he said. The result would be 100,000 new residents “fortifying the city we’ve already built,” and paying taxes for existing municipal services in neighbourhoods with existing businesses.

“Not all density is bad density if done well,” said Anneke Smit, an associate professor of law at the University of Windsor and director of the Windsor Law Centre for Cities. “We have to build smaller because denser communities are worth their weight in gold when it comes to taxes.”

It’s not just politicians and planners who have to change, but citizens as well. Smit said when she and her husband were starting out, they lived, worked and grew into a family of four in a 623-square-foot row house in a small British city. It was a 10-minute stroll to the grocery store and a 15-minute bike commute to work. But the city boasted “exciting public spaces” for people to gather.

“There’s opportunity, but that opportunity has to come from a shift in how we build, both in scale and where we build,” said Smit. It might mean planning for homes with no backyards but in neighbourhoods with parks and “places to go and interact with people nearby,” and with less prime real estate devoted to parking.

Motor City’s Griffith agrees a discussion is needed to “find out what people want to buy and live in.” While there are those attracted to living in denser urban cores and the lifestyle that offers, he said many Ontarians responded to the global pandemic by migrating out of the high-density centres to places with more space.

Even the developers who seem to be making a killing in the hot local real estate market want a broader discussion on affordability.

“I don’t know exactly what the fix is, but something has to be done,” said Rocco Tullio, CEO and founder of Rock Developments Inc. “Go online and try to find something affordable anywhere in Essex County right now.”

The development community, he said, is building for the current market, and that means homes above the half-million-dollar range. But he said in some areas, the land alone can cost that amount.

Building for more affordability, however, is attainable. Location is key, but also important are the demands, and desires, of the buyers. Tullio said he could easily see $150,000 being shaved off those half-million-dollar homes by offering smaller lots, smaller building footprints, laminate instead of quartz countertops, carpet instead of hardwood flooring, unfinished basements, no patio/decks.

“Let young families grow into their homes. For me, affordable is cutting out some of the options,” he said.

Tullio, 56, said Windsor has never experienced “this type of hyper-growth” and that there’s now “a huge need” for affordable housing. He feels municipalities have failed by not bringing builders to the table to discuss solutions.

Still, he adds, “if a municipality wants these things, it’s going to have to provide incentives.” Those might include breaks on development charges — what local governments charge each new development to offset the costs of expanding municipal services — or on building permit fees.

But giving builders those types of breaks, said Dilkens, means lost municipal revenues that would then have to be recovered from the existing taxpayer base.

Hyperactivity in the housing sector has thrust Windsor’s politicians and planners into a situation not experienced in generations. The main aim for community development is no longer simply to try and attract more growth but how to direct it for maximum benefit.

“It’s about liveability,” said city planner Thom Hunt.

That includes “directing density where it makes sense,” he said, like higher density development in the downtown or more of the “missing middle” in the suburbs. To that end, city administration is undertaking a study, expected to be completed by next summer, to recommend what population density levels should exist in different Windsor neighbourhoods.

Hunt also sees an “upside” to the real estate frenzy, as decades of accumulated urban blight gradually disappears with formerly vacant, rundown and unused properties now getting attention.

Unlike in other major cities granted that authority by the province, Windsor is currently prevented from securing a percentage of affordable units from private developers when granting subdivision approvals. However, said Hunt, the city has been working with willing developers to achieve some of that. And the city offers incentives, like Community Improvement Program (CIP) grants, to push for more of the type of growth it wants to see, and is deploying other tools, like relaxation on parking requirements to encourage needed developments.

But Hunt said both provincial and federal government action is required, for example, to provide an equal playing field among municipalities, as well as to cool down the inflationary pressure caused by investors who, according to the Teranet report, now make up 25 percent of home purchasers in Ontario.

“Affordability wasn’t an issue for us for a long time. This is probably unprecedented in our modern time,” said Hunt. His staff is helping prepare Windsor’s submission for Thursday’s housing crisis summit.

Jude Malott said he “hadn’t intended to buy a home at these crazy prices,” but he got the push from his current landlord who served him with a dreaded Form N12. That document gives a property owner the right to boot out any tenant by providing notice that the landlord intends to move in.

At age 38, Malott said he’s “not looking to hop around a lot” and this could be both his first and forever home. He likes being within cycling and walking distance to downtown and work.

Malott said his 1920-built home has lots of character and good bones. But it will need some sweat equity before he moves in in January, one of the reasons, he believes, he didn’t lose out on the purchase to another outside investor who might have required hiring a fix-up crew.

“This is something I can turn into my own,” said the proud new Windsor homeowner.

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