Tarion New Home Buyers Report: 34% fewer Ontarians intend to buy a newly built home

Many are sitting on the sidelines amid economic uncertainty

Highlights:

· More home buyers prefer newly built homes over pre-construction.

· More Gen Z and recent newcomer buyers are entering the market.

· Fewer home buyers prefer suburban homes; most opt for city living.

· Size, price, style and energy efficiency remain top decision factors.

Toronto, ON (May 7, 2024) – Tarion, an independent consumer protection organization that administers Ontario’s new home warranty program, releases its second New Home Buyers Report. Tracking changes in the province’s new homes landscape, the report examines the profiles, decision-making processes and preparation strategies of new home buyers. “For most people, a home is one of life’s biggest purchases,” says Peter Balasubramanian, President & Chief Executive Officer, Tarion. “The 2024 Tarion New Home Buyers Report puts a spotlight on what’s important to future buyers and what they should be aware of in this economy. Fortunately, Ontarians buying a pre-construction or newly built home have access to one of the country’s best new home warranty programs, and Tarion is here to help them understand their coverage and make informed decisions.”

The 2024 Tarion New Home Buyers Report is based on an online survey conducted between November 6 and November 21, 2023, with a sample of 538 Ontarians. The survey delved into respondents’ purchase intentions and did not capture final purchase decisions. A ‘new home buyer’ is defined as a consumer who is planning to buy a pre-construction or newly built home that is less than seven years old and still covered by the statutory new home warranty. Tarion launched its inaugural New Home Buyers Report in 2023 to gain a deeper understanding of how consumers make decisions when buying a pre-construction or newly built home. The report examined the steps they take to prepare for their purchase and identified opportunities for consumer education.

The 2024 New Home Buyers report shows significant shifts in home buyer preferences and behaviours. As interest rates, cost of living and inflationary pressures remain high, 34% fewer Ontarians intend to buy a newly built home. The estimated number of prospective new home buyers who are likely to consider a pre-construction or newly built home has declined from 750,000 to 500,000. These findings are consistent with Statistics Canada’s current population estimates showing that, in 2023, overall purchase intentions in Ontario declined by 25%.

“This shift in home buyer mindset is striking,” says David MacDonald, Group Vice President, Financial Services, Environics Research. “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. This situation is dynamic. As consumers watch for the signs of interest rates and inflation easing, new home buying trends are likely to change.”

Report highlights:

Home buyers are sitting on the sidelines amid economic uncertainty.
Approximately 500,000 Ontarians are very likely to consider buying a newly built or pre-construction home in the next 12 months, down from nearly 750,000 the previous year. This represents a 34% decrease in the market size compared to the previous survey. Two-thirds (66%) of respondents plan to buy a newly built or pre-construction home in six to twelve months, an increase of five percentage points over the previous year. One-quarter (25%) of respondents anticipate being ready to buy in three to six months. Only 9% expect to finalize a purchase within three months of completing the survey.
Consumers feel more confident in newly built homes.
Similar to 2023, the 2024 report shows the strongest preference for newly built homes. Nine in ten (93%) home purchase intenders are likely to consider a home built within the last five years, a slight increase from last year when this number was 91%. Just over half (52%) of respondents say a home of this age gives them the most peace of mind. By comparison, pre-construction homes have seen a slight decrease in popularity. Seven in ten (72%) buyers are likely to consider a home bought directly from a builder, a decrease from 77% the previous year. Only one third (33%) of respondents indicate that buying a home not yet built gives them greater peace of mind, down from 39% the previous year.
More Gen Z and recent newcomer buyers are entering the market.
Home buyers are getting younger. The survey reveals a year-over-year uptick of 5% in Gen Z new home buyers (born between 1996 and 2012), from 3% in the 2023 report to 8% in 2024. In addition, Tarion’s research shows that more recent newcomers are entering the market. Of the one-third (33%) of survey respondents born outside Canada, the number of new home buyers who immigrated less than 10 years ago increased by 17%, from 39% to 56%. These trends correspond to recent Statistics Canada population estimates noting a significant increase in younger adult cohorts, in part attributed to record-high immigration.
Cities become the top preferred type of community.
Suburban areas are no longer the most preferred community type for Ontarians, with a significant year-over-year decrease from 57% to 49%. Urban areas are now respondents’ most considered location, at 55%. This number is very close to where it was in the 2023 report (56%). A shift away from suburban homes may be a reflection of the increase in the number of employees working from the offices located in the cities. Fully detached homes remain survey respondents’ most-considered type of home (69%), with a slight increase compared to the previous year. Interest in condos dropped from 32% to 27%.
Energy efficiency remains a top factor in new home purchase decisions.
Consistent with 2023 findings, the 2024 Tarion New Home Buyers Report shows that price (98%), size (96%) and style or design (92%) are top decision factors in shopping for a new or pre-construction home. Although interest in energy efficiency has decreased slightly to 92% from 96% the previous year, energy efficiency remains an important consideration as the cost of living and the environmental benefits of minimizing energy consumption stay top of mind for Ontarians.
Consumer protection factors, such as the builder’s reputation (90%) and warranty protection (88%), also feature prominently in the middle of the respondents’ consideration list.

Tarion tips for new home buyers

Shop around. Consider lots of different new construction developments and builders.
Check the Ontario Builder Directory online to make sure your builder is licensed.
Get help from a real estate or condo lawyer to review your purchase agreement before you sign it.
Understand how much of your deposit is protected in case the sale isn’t completed.
Know how much warranty coverage you have in case of construction delays. · Know what types of issues to look for during your Pre-Delivery Inspection (PDI).
Learn more about your new home’s warranty coverage after you take possession of your home.
After you finalize the sale, register your purchase agreement online with Tarion.

About Tarion

As an independent not-for-profit organization established by the provincial government, Tarion provides Ontario’s new home buyers and owners with peace of mind that their purchase is safeguarded through the province’s new home warranty and protection program. Tarion supports consumer protection by providing free tools, guides and resources to help home owners understand their builder’s warranty and navigate warranty claims with confidence. When a builder does not meet their warranty commitments, Tarion offers guidance to help home owners ensure they receive the coverage they’re entitled to, and, when necessary, steps in to help resolve warranty claims. Learn more: https://www.tarion.com/.

About the Tarion New Home Buyers Report

The 2024 Tarion New Home Buyers Report is based on an online survey conducted by Environics Research between November 6th and 21st, 2023.The survey was carried out with a sample of 538 Ontario residents from across the province between the ages of 25 and 75 intending to purchase either a pre-construction or existing home built in the past five years in the next 12 months. Respondents with a higher likelihood to purchase an older home (more than five years old) were excluded from the survey. Results have been rounded to the nearest decimal place. The survey focused on purchase intenders and did not capture final purchase decisions.

The 2024 Tarion New Home Buyers Report is available here.

The 2023 report can be found here

For media requests, please contact: Andrew Donnachie media.inquiries@tarion.com