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Think inside the box: unfinished 'white box' condos gaining appeal
TORONTO — A new type of condo for the price-conscious, recession-weary consumer has popped up south of the border and some experts say the so-called "white box" could soon find a market in Canada too.
The white box - an unfinished condo that is left for the buyer to equip with appliances, floors and paint as he or she sees fit - is gaining popularity in some of the United States' harder-hit housing markets, such as Las Vegas.
The appeal is generally one of price: rather than having to buy a fully finished condo with top-of-the line granite countertops, hardwood floors and stainless-steel appliances, the buyer can opt for cheaper touches or take advantage of connections for a DIY approach.
And the concept of customizing your condo, rather than buying a carbon copy of your neighbour's, appeals to buyers as well.
Steve Volkers, a realtor who sells condos in downtown Grand Rapids, Mich., said there are three new developments offering white boxes in the city of 200,000 and his recent sales have been a "50-50 split" between finished and unfinished units.
Volkers said the savings from buying an unfinished condo can be substantial, and he has seen units that would ordinarily go for US$160,000 selling for $120,000 as white boxes.
"Most of the time it's the savings that attracts people to white boxes," Volkers said.
"They feel like they can get a better cost by doing it themselves. Some are builders, some are investors, some are young professionals that have family connections or whatever, and they feel they can build it out for a little bit cheaper than we can build it out or can get better prices than we can get."
He said a lot of young professionals are coming to work at a new health complex in Grand Rapids and they're realizing that buying a white box means they can afford a condo in a location where they might otherwise be priced out of the market.
In addition, investors are snatching up white boxes because they tend to have connections with builders and can then custom-design a condo for the rental or resale market, Volkers said.
The white box phenomenon hasn't migrated northward yet, but that doesn't mean there wouldn't be demand for a similar concept in Canada, experts say.
Michael Mann, director of strategic marketing with Toronto developer Tridel Corp., said he expects Canadian developers will start to offer cheaper condos with fewer amenities in response to price-conscious buyers and other factors, including a new harmonized sales tax in Ontario that will make home purchases over $400,000 more expensive and a new municipal land-transfer tax in Toronto.
"If you have rising commodity costs and rising interest rates, the only thing you can strip down in order to make the product more affordable is to decrease the number of luxuries within the suite. So I think that's just a natural evolution," Mann said.
While Mann said he doubts Tridel will start selling unfinished units, that doesn't mean there isn't room in the Toronto market for the concept.
"I wouldn't be surprised if there's some developers that do that," he said.
"I think it's a personal preference and the decision's going to be made depending on who the developer identifies as their potential purchasers, and if they do their homework, they'll figure out what the consumer wants."
Scotiabank economist Adrienne Warren said lower-end condos have fared better during the recession than luxury condos, and Canadians may see developers cutting costs by offering fewer amenities like swimming pools, fitness centres and theatres in their buildings.
She questioned whether white-box developments would meet regulatory requirements in Canada, but said if there was a way to do it, the demand is probably there, particularly given the federal government's new tax credit for home renovations.
"I'm sure a lot of people would like that these days: go in and do it yourself and save a little money and get a tax credit," Warren said.
But Toronto realtor Brad Lamb said there are problems inherent in the white-box concept, particularly in big high-rises.
Most condo buyers won't be able to find better deals than developers because developers tend to buy stuff like appliances in bulk, Lamb said. In addition, to have everyone in a large building renovating their condos at once would be "pandemonium."
However, it could work in smaller, loft-style buildings, or in a few customizable penthouses, he added.
Copyright © 2009 The Canadian Press. All rights reserved.
http://www.google.com/hostednews/canadianpress/article/ALeqM5gg6qom2yDGE8nqoeT79gu7x5boZw
TORONTO — A new type of condo for the price-conscious, recession-weary consumer has popped up south of the border and some experts say the so-called "white box" could soon find a market in Canada too.
The white box - an unfinished condo that is left for the buyer to equip with appliances, floors and paint as he or she sees fit - is gaining popularity in some of the United States' harder-hit housing markets, such as Las Vegas.
The appeal is generally one of price: rather than having to buy a fully finished condo with top-of-the line granite countertops, hardwood floors and stainless-steel appliances, the buyer can opt for cheaper touches or take advantage of connections for a DIY approach.
And the concept of customizing your condo, rather than buying a carbon copy of your neighbour's, appeals to buyers as well.
Steve Volkers, a realtor who sells condos in downtown Grand Rapids, Mich., said there are three new developments offering white boxes in the city of 200,000 and his recent sales have been a "50-50 split" between finished and unfinished units.
Volkers said the savings from buying an unfinished condo can be substantial, and he has seen units that would ordinarily go for US$160,000 selling for $120,000 as white boxes.
"Most of the time it's the savings that attracts people to white boxes," Volkers said.
"They feel like they can get a better cost by doing it themselves. Some are builders, some are investors, some are young professionals that have family connections or whatever, and they feel they can build it out for a little bit cheaper than we can build it out or can get better prices than we can get."
He said a lot of young professionals are coming to work at a new health complex in Grand Rapids and they're realizing that buying a white box means they can afford a condo in a location where they might otherwise be priced out of the market.
In addition, investors are snatching up white boxes because they tend to have connections with builders and can then custom-design a condo for the rental or resale market, Volkers said.
The white box phenomenon hasn't migrated northward yet, but that doesn't mean there wouldn't be demand for a similar concept in Canada, experts say.
Michael Mann, director of strategic marketing with Toronto developer Tridel Corp., said he expects Canadian developers will start to offer cheaper condos with fewer amenities in response to price-conscious buyers and other factors, including a new harmonized sales tax in Ontario that will make home purchases over $400,000 more expensive and a new municipal land-transfer tax in Toronto.
"If you have rising commodity costs and rising interest rates, the only thing you can strip down in order to make the product more affordable is to decrease the number of luxuries within the suite. So I think that's just a natural evolution," Mann said.
While Mann said he doubts Tridel will start selling unfinished units, that doesn't mean there isn't room in the Toronto market for the concept.
"I wouldn't be surprised if there's some developers that do that," he said.
"I think it's a personal preference and the decision's going to be made depending on who the developer identifies as their potential purchasers, and if they do their homework, they'll figure out what the consumer wants."
Scotiabank economist Adrienne Warren said lower-end condos have fared better during the recession than luxury condos, and Canadians may see developers cutting costs by offering fewer amenities like swimming pools, fitness centres and theatres in their buildings.
She questioned whether white-box developments would meet regulatory requirements in Canada, but said if there was a way to do it, the demand is probably there, particularly given the federal government's new tax credit for home renovations.
"I'm sure a lot of people would like that these days: go in and do it yourself and save a little money and get a tax credit," Warren said.
But Toronto realtor Brad Lamb said there are problems inherent in the white-box concept, particularly in big high-rises.
Most condo buyers won't be able to find better deals than developers because developers tend to buy stuff like appliances in bulk, Lamb said. In addition, to have everyone in a large building renovating their condos at once would be "pandemonium."
However, it could work in smaller, loft-style buildings, or in a few customizable penthouses, he added.
Copyright © 2009 The Canadian Press. All rights reserved.
http://www.google.com/hostednews/canadianpress/article/ALeqM5gg6qom2yDGE8nqoeT79gu7x5boZw
