Real estate outlook for 2016: stats (TREB) & survey (Ipsos)

UntitledHome ownership is an important pillar of the economy and in order to sustain this vital
economic driver, it must remain affordable over the long term. The key short term factors influencing affordability are regional economic conditions and borrowing costs. Over the long term, government policies, programs and initiatives will continue to play a significant role in encouraging home ownership.

Greater Toronto Area (GTA) households continue to see home ownership as an affordable, quality, long-term investment. A healthy regional economy, historically low borrowing costs and GTA’s growth in population by approximately 100,000 people (more than 35,000 households) last year explains the record number of home sales reported in 2015.

The outlook for 2016 is that the home ownership demand will remain strong, with between 96,500 to 105,000 home sales, depending on the direction of borrowing costs and inventory (listings).

We will continue to experience seller’s market conditions in 2016, but despite the tight market, price growth will be mitigated to a certain degree by the lending preapproval process and federal lending guidelines. The average selling price will be between $655,000 and $665,000 representing year-over-year increases of between 5 % to 7%.

The statistics provided by the Toronto Real Estate Board (TREB) are bolstered by a survey of recent home buyers conducted by Ipsos in November 2015.  The consumer survey data provides information on buyer profiles, mortgage trends and renovation intentions.

  • 101,299 home sales in the GTA in 2015 [9.2% increase compared to 2014]
  • The average sale price in 2015 was $622,217 [9.8% increase over 2014]
  • A new sales record was set in 2015 with an increase of 8.7% over the previous record set in 2007, when a spike in sales was brought about by the impending introduction of a municipal Land Transfer Tax in the City of Toronto.
  • Approximately 37% of all transactions took place in the City of Toronto
  • Recent home buyers tended to purchase a home close to where they previously lived in the GTA (81% of buyers who purchased a home in the City of Toronto had lived there previously).
  • Close to 60% of homes purchased in 2015 represented resale transactions.
  • 40% of households purchased a new home.
  • First-time home buyers accounted for more than half, 53% of GTA home purchases
  • Home buyers who purchased over the last year, on average were estimated to have owned two homes including their current home.
  • On average, GTA homeowners have been living in their current dwelling for 10 years (14 years, if buyers over the last year are factored out)
  • Home owners aged 18 to 34 have been in their current home for 4 years, on average, whereas those aged 55 years or older have been in their current home for 19 years on average. This suggests that people’s housing needs tend to change more when they are younger
  • Home selling prices rose strongly in 2015 as a result of the supply, of low-rise homes, having remained constrained while demand was at record levels. The MLS® Home Price Index (HPI) Composite Benchmark Price, which covers all major home types, was up by between 8% – 10% on an annual basis.
  • Low-rise homes have been in short supply, in part because many homeowners have decided to stay in their existing home rather than move. Aside from homeowners who were happy in their current home, upfront costs associated with moving (moving costs, land transfer tax, renovations etc.) represented the key reason why people chose not to relocate
  • The Benchmark price for condo apartments rose on a year-over-year basis by about half the annual rate of that for low-rise home types.
  • In a recent analysis conducted by Altus, it was found that for every home sale in Ontario, there are an additional $55,000 dollars of spin-off expenditures that benefit the economy
  • 57% of recent home buyers across the GTA said they were planning on renovating their home over the next year. On average these home buyers planned to spend $21,625 on their renovations. 11% in the GTA planned to spend more than $50,000
  • Projected number of home sales in 2016 will amount to between 96,500 and 105,000
  • Approximately 83% of intending home buyers will be using a mortgage to purchase their home.
  • As of February 15, 2016 the minimum down payment for new insured mortgages increased from 5% to 10% for the portion of the purchase price exceeding $500,000 but less than $1,000,000. For example, a buyer purchasing a home for $650,000 would need to put down an additional $7,500 to cover the new 10% requirement
  • 9 % of buyers intending on purchasing a home between $500,000 and $700,000 planned on putting 5% – 9.9% down
  • 4% of buyers intending on purchasing a home between $700,000 and $1,000,000 planned on putting 5% – 9.9% down.
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