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As prospective Ontario homebuyers increasingly sit on the sidelines of the real estate market, a new survey suggests more gen-Zers and newcomers are entering the fray.
The estimated number of Ontarians likely to consider a new or pre-construction home has fallen from 750,000 people in 2023 to just 500,000 now, according to the second annual New Home Buyers Report by Tarion, a not-for-profit consumer protection organization that administers the province’s new home warranty program.
Tarion said persistently high interest rates, the cost of living and inflation are keeping more people on the sidelines.
“This shift in homebuyer mindset is striking,” David MacDonald, group vice-president of financial services at Environics Research, which conducted the Tarion survey, said in a news release. “However, it’s consistent with other trends in big-ticket consumer decisions, and it makes sense considering that, overall, Canadian consumer confidence is at one of its lowest points since the financial crisis of 2009.”
He said homebuying trends are likely to change as consumers see signs of interest rates and inflation easing.
Still, new homes remain the top choice for homebuyers as Canada tries to ramp-up construction to solve the housing shortage.
The survey said 93 per cent of respondents who are considering a home are looking at a home built within the past five years, as 52 per cent of them believe a home of this age gives them peace of mind.
Homebuyers also now prefer urban areas, which may reflect an increase in the number of people working from offices located in cities. Urban areas are now preferred by 55 per cent of Ontarians, while suburban areas are liked by 49 per cent, down from 57 per cent last year.
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Even as more Ontarians wait on the sidelines for prices to adjust, gen Z is increasingly looking to enter the market. The survey found eight per cent of new home buyers are born between 1996 and 2012, up from three per cent a year ago.
Meanwhile, newcomers to Canada are also increasingly looking to buy homes. Among the survey respondents respondents who were born outside Canada, the number of new homebuyers who immigrated here less than 10 years ago reached 56 per cent, up 17 percentage points from a year ago.
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