‘This has never happened before’
Michael Sasges
Sun
Dale Barron of Morningstar Homes says new home prices have adjusted to the new realities of the market faster than used home prices. –RON JOYCE/MORNINGSTAR HOMES
During a quarter of a century building and selling homes Dale Barron has never been able to say, I can sell you a new home for less money than you can buy a comparable used home.
Until now.
“In my 25 years of experience as a home builder, a new home has never been less expensive than a comparable used home,” the founder of Morningstar Homes says.
”In fact, the price of a new home, in my experience, has been between $75,000 and $100,000 more than a comparable used home. That amount is the difference that I recollect as being the average difference over the past 25 years.”
The change is a sign of these times, of a world-turned-upside-down economic era.
”What’s different now is the price of a new home has adjusted to the market far faster than used homes have,” he said.
”This has never happened to me before. Because the real estate market started to slow, we needed to find ways to lower the cost of a single-family home.
”Together with our trades, suppliers and land owners, we worked to lower the cost of building a new home so that we could price our homes as low as humanly possible.”
Morningstar is selling in two new-home neighbourhoods,Belmont in The Foothills at Burke Mountain in Coquitlam and North Pointe in Sunstone in North Delta. It re-priced them this year, a decision that resulted in the sale of 21 homes in January and 23 homes in February, records for the 10-year-old tract-home builder.
The North Delta claim is this: Morningstar can build and sell a home there for almost $40,000 less than a comparable used home.
The Morningstar property is a 2,360-square-foot home on a 5,900-square-foot lot, with a new-home warranty and GST included. The comparable property is 20 years old without a warranty.
Morningstar is asking $566,728. The list on the comparable home is $606,600.The Coquitlam claim is this: Morningstar can build and sell a home there for about $98,000 less than a comparable home.
The Morningstar property is a 3,835-square-foot home on a 4,500-square-foot lot, with a new-home warranty and GST included. The comparable property is a 3,000-square-foot home on a 4,400-square-foot lot.
Morningstar is asking $671,839. The list on the comparable home is $770,229.
The dollar differences are subject to change and are not — not — based on just one home, Barron says. ”We didn’t just compare our new benchmark price with one home, but 10 comparable homes. I’ve never been able to sell a new home for less than a used home before.”
In circulating its comparisons of prices for new and used residences, Morningstar Homes is not making any claims about its ability to respond to market conditions (or the inability of property owners, and their brokers, to do so).
It needs a robust used-home market.
”We are anxious for the used-home market to realign its prices,” Barron said. ”Our weekly research shows that homeowners are starting to. When the prices really start to realign, more used homes will begin to sell, which will mean more customers for us.”
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