Perceptions of real estate markets in Ontario remain strong heading into the winter season as the Ontario Home Ownership Index edges to an all-time high of 131 points, according to new research from the Ontario Real Estate Association (OREA).
Driving the positive shift in sentiment are perceived improvements in current real estate markets within the last year. More than half of Ontarians (55%) say the current residential real estate market in their neighbourhood is favourable, up 5 points from a year ago. Half of Ontarians (51%) say that the residential real estate market in their city or town is stronger than it was a year ago, up 11 points from a year ago.
“According to the results, it is likely that perceptions of strengthening markets will continue in Ontario into the foreseeable future,” said Tim Hudak, Chief Executive Officer, OREA. “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.”
More than four-in-ten (43%) Ontarians say their city’s real estate market will be stronger in the next year, up 5 points from a year ago. Furthermore, 14% of Ontarians say that they are very likely to purchase a home in the next two years, up 3 points from a year ago. Fifteen per cent of Ontarians say they are very likely to sell a home within the next 2 years, up 4 points from a year ago.
Home Hunting in Ontario
Among those who are at least somewhat likely to be buying a home in the next two years, detached homes remain the most popular housing choice (49%), up 13 points from a year ago. Interestingly, interest in condos (19%) has declined by 7 points year over year, while interest in semi-detached homes (19%) has ticked upwards (4 points). The least popular type of home among prospective buyers is row homes or townhomes (14%, down 2 points).
Majority of First-Time Home Buyers Think they will be Impacted by New Stress Test Rules
Eight-in-ten (79%) first-time home buyers in Ontario believe that at some point the new federal government rules about mortgage stress1 testing will impact them. Thinking about how the new rules could impact them, 45% of first-time home buyers say they will need to keep saving for a 20% down payment before buying a home; 27% believe they will need to find additional money to increase their down payment, and many say they will need to look for a less expensive home either in the same city (34%) or a different city (22%).
As of October 17th, 2016, the Federal Government of Canada requires prospective home buyers with less than 20% down-payment to pass a mortgage-rate "Stress Test" to ensure they will still be able to make their mortgage payments in the event mortgage rates go up in the future (about 2% above the current rates).