New research shows Ontario’s affordable home ownership crisis worsened by COVID-19 pandemic as buyers look for more space, bigger homes, but detached owners show reluctance to list
Despite a year of upheaval and unpredictability due to the COVID-19 pandemic, home buyer intentions have returned to being as strong as they were pre-pandemic, according to the Ontario Real Estate Association’s 2021 Home Buyers and Sellers Report. Home buyer preferences from one year ago, before the pandemic, indicated strong interest in detached homes and properties with more space. After a year of lockdowns and working-from-home, that trend has only accelerated due to factors like increased savings (19%), a desire for more space (19%) and a sense of urgency to buy now given recent market growth (23%).
Nearly one-in-five (19%) Ontarians say they plan to buy a home in the next twelve months, a level that was seen one month before the pandemic. But this year, more home buyers say they want more space with 63% saying they are interested in purchasing a detached home (63%), +3 points from last year, and more than a quarter of home buyers (28%) saying they plan to buy a home larger than 2,500 sq-ft ( +8). Among upgraders, who typically have established equity and a larger budget, 75% (+9) say they are looking for a detached home. By contrast, those who say they plan to sell has decreased one point to 18%, and only 62% of sellers plan to sell a detached home (-4).
“In the last year, the desire among buyers for detached homes has grown stronger, but unfortunately, seller intentions for such properties have receded, so inventory is not keeping up with demand, making it tougher for buyers to find a great place to call home,” said OREA President David Oikle. “The current situation we’re facing in Ontario – increasing prices, demand for more space and larger homes – all during a once-in-a-century pandemic, points to a much larger systemic issue facing Ontario’s home buyers: a serious lack of housing supply.”
When asked about the pandemic’s impact, most buyers (68%) said the pandemic did not change where they plan to buy; indicating a more marginal shift in preferences as a result of the pandemic, as opposed to a revolution. Not surprisingly then, among those planning to buy, 37% (+1) still anticipate purchasing in a suburban area, with 24% looking in small cities and towns, and 19% (+3) looking in rural areas. However, fewer buyers – one-in-five – say they intend to settle in urban/downtown areas, -4 points from last year. Of those looking at downtown homes, 15% of buyers said they have lost their appeal due to COVID; among Millennials, 2 in 10 say urban areas have lost their appeal. About the same number of homeowners (25%, +1) plan to sell a downtown property.
“For some Ontarians, the pandemic has led to increased savings or a shift to remote work, but has also accelerated major life decisions. For many, that has meant buying a home that accommodates their new space needs,” said OREA CEO Tim Hudak. “As more Ontarians continue to adjust to new remote work lifestyles, Ontario’s Realtors are calling on Government to boost supply, ensuring future generations have the same opportunity to become homeowners their parents did.”
Housing is a spectrum issue and requires a broad approach from all levels of government. Meaningful short-term action and long-term solutions are needed to increase housing supply across Ontario, such as intensification along transit lines, improvements to the planning approvals process, and innovative housing solutions.
Both buyers and sellers agree on one issue, however: 88% (+4) of sellers and 89% (+3) of buyers say they plan to use a REALTOR® to help them navigate today’s complex and fast-moving market. With an increase in both buyers and sellers who say they plan to use a Realtor, it’s clear that expert help when buying or selling property is becoming increasingly important. Use of a Realtor is even more prevalent among upgraders (95%), who likely know the value a Realtor brings thanks to their previous experience working with one. Top reasons upgraders cite for using a Realtor include helping with paperwork (48%), saving them time (44%), helping navigate the process (38%), and because it simply gives them peace of mind (37%).
Launched just last year, OREA’s Home Buyers and Sellers Report is the largest of its kind Canada, offering hundreds of data points on Ontario’s real estate consumers. Further results from OREA’s 2021 report are available online:
