There’s the old saying “you can never have too much of a good thing” but when that’s ALL you’re getting, it could present a problem.
For whatever reason, the City of Guelph is doubling down on the stacked townhouse format around Guelph. In fact it seems that’s almost all that we’re seeing. Let’s dive a little deeper into this:
What is a stacked townhouse?
A stacked townhouse is considered a cross between a townhouse and condo. These vertical multi level homes often share neighbours on the left and right, but sometimes even above or below you depending on the format. Depending on the layout, these units may or may not have outdoor space.
Why is Guelph building so many stacked townhouses?
It’s safe to say that there isn’t like a very specific reason why, but probably a combination of reasons. Let’s take a look at the most common:
Density
The main reason we’re seeing so much development of stacked townhouses (aka stacked townhomes) is purely from a density perspective. A Guelph expands in all 4 corners of town, we’re trying to be maximize the number of new homes on limited land. A builder could build 25 single detached homes or 350 stacked townhouses.
The City of Guelph has been clear on their Housing Affordability Strategy the following points, which align well with the number of stacked townhouses we’re seeing.
- Guelph is working towards achieving its affordable housing targets.
- There is a need for smaller units.
- There is a need for an increased supply of primary rental units.
- The secondary rental market offers more affordable choices but could benefit from the stability offered by the primary rental market.
- There is a need for an increased supply of non-market rental housing
Municipal commitments
The City has openly admitted in 2023 that they have a plan to build 18,000 new homes by 2031. Of course, to do that you need to really ramp up production. And, the most likely way to hit big numbers is to produce buildings that utilize land vertically (ie condos and stacked townhouses).
In preparing for this blog, we did a drive around all 4 corners of Guelph to get an idea of just what is being built out there. I mean, a simpler way would just be to look at this handy Current Development Applications Map, but we wanted to see it for ourselves.
In all 4 corners of town, we saw massive developments of stacked townhouses (pic is from Hwy 6 north beside the Guelph Curling Club as an example)
Affordability
Of course, a big reason for these developments is that they’re more affordable. As an example, the average price by style in Guelph for 2024:
Single family detached: $918,000
Semi-detached: 742,000
Townhouse (stacked and traditional): $694,000
Condo/ Apartment: $580,000
This makes sense for those who want to live in Guelph, but may be looking for something a little cheaper than a $900,000 detached home.
The challenge with this though, is that there will always be a portion of the market who is specifically looking for condo/ townhouse. There is always a portion of the market who wants a detached home. Just because we choose to build more stacked townhouses, doesn’t mean that they’ll sell.
On any given month in Guelph, 25-30% of the buyers come from the GTA. Odds are good that those buyers are selling a detached home in those markets (detached homes represent about 60% of sales). Are they selling their detached home in Markham to move to a stacked townhouse in Guelph? It’s possible, but probably not.
Potential implications of high density stacked townhomes in Guelph
More housing is great. More affordable housing is great. But as mentioned at the beginning, too much of something isn’t always a great thing. Here are a few potential implications:
Stacked townhouse oversupply and saturation
What do I mean? Here’s a look at the City of Guelph building permits up until 2022. This chart shows the huge increase in the number of apartments (purple) and townhouses (green) being approved. A much newer segment is the “ARDU” (accessory residential dwelling units). This is secondary tiny homes, approved basement apartments, or other density approved unit.
Although the overall number of permits in 2022 (1191) is similar to 2002 (1158), notice how the mix has changed:
2002: 54% were detached homes (“singles”) and 46% were attached in some way
2022: 9.8% were detached homes and just over 90% were attached in some way
The concern of course, is that just because you have more of this style of home, doesn’t mean you can shoehorn people into them. Just because Kia has a lower priced car without a lot of bells and whistles, does 90% of the market buy a Kia? Of course not, because people have different wants and needs.
More competition and declining prices
When there is one vendor at the market selling apples, you need to pay their price if you want apples. If there are 10 vendors, you can shop around. Getting the best quality for the best price is easier because you can compare the options and negotiate the best price between them.
What’s going to happen in 5 years when all of these stacked townhouses (hundreds and hundreds of them) are available? While at the same time, there has been a dramatic decrease in detached single family homes being built?
Let’s use that same analogy on detached homes: If there are less vendors selling apples (detached homes), what happens to the price? You pay what they want because you don’t have options. Or even worse, you end up competing with others.
Our fear is that there is going to be a further price gap between and oversaturated stacked townhouse/ condo market and a limited supply detached house/ semi-detached market. In most cases, buyers of the stacked townhouse/ condo market use this as a stepping stone to “the next step” of home ownership. But, if that gap is getting wider it may become even less attainable than it is now.
As parents of teenagers who will someday find themselves in this wild housing market, what will they do? Buy a stacked townhouse at a very low price? That may be the only option for them, because detached will be out of reach. And what happens when they eventually sell that stacked townhouse? Will they be able to make the leap to a detached if that’s what they ultimately want, like the generations before them?
Transit
Some of the locations we saw these developments were in areas that are on the far reaches of Guelph boundaries. Plopping 200 stacked townhouses on Victoria Road means that either there is a going to be much heavier demand for transit, or owners/ tenants require a car. In some cases, like the development by the Guelph Curling Club, it’s currently set back on the side of Highway 6 north
Increasing cost of ownership
Like townhouses, stacked towns usually have condo fees associated to them. Over time, depending on how the development is managed, these fees can either increase or remain stable. Rarely do you see them increase.
In the event that they don’t have monthly fees (freehold), it’s also possible that they’ll be part of a POTL (parcel of tied land). This is where they have ongoing fees related to grounds maintenance.
A limited buyer pool
Like anything, there are only so many buyers for any number of reasons. Although affordable, most stacked townhouses are built for the younger generations. Boomers don’t want three flights of stairs at the age of 80 as they become trickier to manage. Some people don’t like that their kitchen is on the second floor, or below grade. However, some people prefer the separation that stacked townhouses provide. Or that they pay a condo fee to manage their expenses.
The challenge here is that the City of Guelph is going all-in on a format. And, too much of anything isn’t good in this case as it’s likely to have longer term implications for everyone.
