Canada's Condominium Magazine
Given the almost daily reports of higher prices, tougher mortgage lending rules, and dwindling supply of certain types of homes, one might expect Ontarians to take a fairly dim view of the real estate market in this province. Surprisingly, that is far from the case. Ontarians are positively overflowing with optimism about the housing market as they look ahead to 2017.
To put a number on it, the Ontario Home Ownership Index, which reflects people’s views about residential real estate in their area, reached an all-time high of 131. At this time last year, the index sat at 102. More than half of Ontarians (55 per cent) view their neighbourhood real estate market favourably; 51 per cent say that the market in their city or town is stronger than it was a year ago, an increase of eleven points since last year.
This optimism translates into higher intentions to buy a home in the future. Tim Hudak, the CEO of the Ontario Real Estate Association (OREA) which released the results of a new survey, said that the perception of strengthening markets will continue in Ontario “into the foreseeable future.” It speaks to the value of home ownership and the “timelessness” of this all-important commodity, he said. A significant number of Ontario residents, 14 per cent, say they are very likely to purchase a home in the next two years, an increase of three points from a year ago. At the same time, 15 per cent say they are “very likely” to sell a home within two years, an increase of four points from a year ago.
The top three reasons given for buying a home were its value as a long-term investment, the desire to own a home, and the availability/affordability of a suitable home. Many people (83 per cent) said that owning a home gave them a sense of pride.
Are these people who intend to buy aware of the new federal rules for mortgage borrowing? They are: in fact, 79 per cent of first-time buyers believe the new rules will have an impact on them, forcing them to save more and find additional money to increase their down payment. One-third said that they would have to settle for a less expensive home, while about one in five said they would consider moving to a less expensive city.
According to the results, it is likely that perceptions of strengthening markets will continue in Ontario into the foreseeable future. Despite rising house prices in the GTA, buyers remain optimistic. In fact, even more Ontarians than last year say they intend to buy in the future. This speaks to the value of home ownership and the timelessness of this all-important commodity.
First-time buyers are now eligible for a provincial land transfer tax rebate of $4,000 on homes priced at up to $300,000. Hudak said he hopes the city of Toronto will match that rebate rather than “clawing it back.”
In Toronto, where home prices rose 20 per cent this past year, and where the average price of a detached home sits at about $1.3 million, 52 per cent of respondents to an Ipsos poll said that they viewed the current residential real estate market as “favourable.” Nearly half of residents (49 per cent) expect the housing market to be stronger next year. The number of Toronto area residents planning to buy a home in the next two years is now 18 per cent, up from 15 per cent a year ago. Those planning to sell increased from 14 per cent a year ago to 19 per cent now.
Despite all the optimism, it doesn’t look like buying a home will get any easier. Home prices are expected to increase by another 8 per cent in 2017, according to a just-released RE/MAX Market Outlook report. The average price for all types of homes to date in 2016 was about $725,000; with an 8 per cent increase that would climb to about $783,000.
Highlights of the OREA Home Ownership Index Survey for the GTA
Current overall real estate market health
- 55 per cent of GTA residents (416 & 905 combined) say their city’s real estate market is favourable, up one point from last year
- In the 416, 52 per cent of residents say the current residential real estate market in their city is favourable, up ten points from last year
- In the 905, 57 per cent of residents say their city’s real estate market is favourable – down 7 points from last year
Home buying intentions
- 18 per cent of GTA residents say they plan to purchase a home within the next two years; up from 15 per cent a year ago
- 17 per cent of 416 residents say they are very likely to purchase a home within the next two years, up three points from a year ago
- 18 per cent of 905 residents say they are very likely to purchase a home within the next two years, up three points from a year ago
Home selling intentions
- 19 per cent of GTA residents say they plan to sell a home; up from 14 per cent a year ago
- 14 per cent of 416 residents say they are very likely to sell a home within the next two years, up two points from a year ago
- 22 per cent of 905 residents say they are very likely to sell a home within the next two years, up six points from a year ago
- Half of GTA residents (49 per cent) say their city’s real estate market will be stronger in the next year; up from 46 per cent this time last year
Housing type trends
- 50 per cent of prospective home buyers in the 416 and 905 say they are likely to buy a detached house, up by 21 and 11 points respectively from a year ago
- 23 per cent of 416 and 20 per cent of 905 residents say they are likely to buy a semi-detached house, up three and seven points respectively from a year ago
- 22 per cent of 416 and 17 per cent of 905 residents say they are likely to buy a condo, down 17 points and 6 points respectively
- 22 per cent of 416 and 12 per cent of 905 residents say they are likely to buy a row house/townhouse, up two points and down seven points respectively