While building and selling new homes in Southwestern Ontario still continues to be a challenge, the leader of Reid's Heritage Homes (RHH) says certain changes have helped to drive the business forward.

Mainly, the integrated developer and builder of multifamily homes, has leaned into designing and building larger format townhomes with up to five bedrooms. Secondly, the developer has tapped into a strong market of high-net-worth individuals shopping for deals in the region. 

RHH focuses its projects in Guelph, Cambridge, Kitchener and Waterloo. 

"It's still very challenging," said Ron McMillan, president with the Cambridge, Ontario-based firm that has been building homes in the region for more than 45 years. 

In an interview with RENX Homes, McMillan said the company has built many types of housing over the decades including single-family homes, townhomes and midrise buildings.

These days, townhomes with additional living space have proven to be the sweet spot. 

HST removal from new homes has provided some juice 

McMillan said some green shoots in the market stem from the one-year removal of HST on qualified new homes by the Ontario government starting in April.  

"That has helped... sell some of the inventory of homes that was left over," he said. "Obviously, prices from the high in 2022 have dropped anywhere from 30 to 50 per cent on new homes here in Ontario in our markets... so, that was a big hit."

Pre-sales continue to be a challenge, but they are proceeding with several projects. 

The company has approximately 300 townhomes under construction right now in Guelph, Cambridge and Stratford, and they are selling homes that are completed in eight communities.

"We're hoping to start another 350 townhomes next year... in Guelph, Kitchener, Collingwood and Stratford. Those are obviously dependent on sales, but we're working on that right now," McMillan said, noting they tend to maintain a pipeline of 300-400 new homes per year. 

Among the projects listed as now-selling on the RHH website are: The Block on Clair, and Argyle Village in Guelph; The Grove in Owen Sound; Poet & Perth in Stratford; and Modal at Main in Cambridge — a 120 unit masterplanned neighbourhood that includes a mix of stacked townhomes and rear-lane garage townhomes located at 8 Misefeir Crescent. 

HNW individuals have growing appetite for new homes 

A source of strength has been the rising buying appetite of high-net-worth individuals, McMillan said. 

Many of these people are locals who sense that we've reached the bottom of the market, he said. 

Family buyers were hurt during the most recent condo crash in Toronto. "So we don't see them anymore," he said. "What we are seeing now is the larger, high-net-worth investors are still around.

"That's been a surprise for us over the last few months." 

McMillan said these buyers tend to expect there will be a housing supply shortage within a few years and now is the time to jump in. “So, they’re jumping in.”

Many of these investors are buying multiple units and the volume is enough to launch and complete a new project, he said. "They understand there's a housing shortage for students and a housing shortage for first-time homebuyers, and those people are renting — and the rents are not dropping in good locations."

Market is evolving with changing tastes

The market seems to want a different kind of townhome these days, McMillan said. "We've gone from a three-bedroom townhome to a five-bedroom townhome," he said. "Now it's a five-bedroom home for one buyer who can rent out the basement apartment, or rent out above, and live in the basement. That helps pay for the mortgage.

"Our team is adapting so quickly to the changes, and we have a strong ownership behind this... and we have a strong history of working through these things."

RHH was originally launched by Orin Reid. After his death, family members took over the business, McMillan said. The current owners are Tim and Charlotte Blevins. Charlotte is a daughter of Orin Reid.