Windsor-Essex developers show high interest to build, but market conditions dampen housing starts

Re-zoning applications for new housing are flowing into Windsor City Hall at a record pace, but housing starts are falling way behind targets to provide more housing supply, according to data from the City of Windsor.

“We haven't seen this level of activity for decades and decades play out in the City of Windsor,” said Windsor Mayor Drew Dilkens, who has noticed a high volume of applications come before council over the past few years.

Municipalities across Canada are engaging in a big push to build more housing to keep pace with demand and help bring more supply to the market to rein in affordability.

Windsor city council has pledged to build 13,000 housing units by 2031.

“It is certainly a stretch goal any way you look at it, but we understand the pressure that's out there. And we also want to get it done at the municipal level,” said Dilkens.

But just because an application is submitted by a developer doesn’t necessarily mean a home will be built imminently.

There’s an order of operations prospective builders must follow. First, developers must get council’s approval to re-zone land as residential. Then developers must go through site plan approval, which can be a lengthy process before a final building permit is issued.

In 2022, council approved re-zoning applications for 2,635 housing units. The city then processed site plan approvals for 1,210 units and issued building permits for 798 units.

In 2023, Windsor city council approved re-zoning for 2,095 units, the city gave site plan approvals for 1,699 units and issued building permits for 1,088 housing units, according to data provided by the City of Windsor.

“We are pushing a lot of applications through the re-zoning process, a lot of applications through the site plan process, but right now on the building side, that's where things are slowing down,” said Dilkens.

According to the Canada Mortgage and Housing Corporation, Windsor only has 424 housing starts so far this year when it needs and average of 1,300 each year to hit the provincial target.

Brent Klundert, chair of the Windsor Essex Home Builders Association, says many factors are at play, pointing to the slow site plan approval process as a major barrier.

“If we can tighten up those periods again, giving the developer a little bit of a chance to be nimble,” Klundert said, noting when the market it hot, developers need to be able to act quickly. “That is going to be the biggest portion of things getting that project shovel ready, ready to go, in the quickest time possible.”

Klundert also believes high interest rates are a major reason why developers are holding off on starting some projects.

“Once those interest rates move as they did, they become, you know, a dead project because they're just not feasible anymore. You can’t make the numbers make sense,” he said. “All of a sudden, the feasibility of that project isn't as great as when that application first went in.”

He believes the city’s lofty targets are attainable but will require better market conditions and faster approvals.

“It's a very tall order. I'll tell you that,” he said. “Can it be done? Yeah, I'm sure it can. A lot of things can change in the in the landscape in order for that to happen.”

Mayor Dilkens says housing construction may be off target pace today but when market conditions approve, developers will be ready.

“Once interest rates change and perhaps go down just a little bit, in our approved pipeline there are thousands of units that you will see built,” Dilkens said.