Builder’s warranty is top of mind for 55 per cent of new home purchase intenders
Report highlights:
- 58% of respondents prefer newly built homes because they are energy-efficient.
- 35% were born outside of Canada.
- 54% are millennials.
- 66% are considering a fully detached home.
Toronto, ON (June 27, 2023) – Tarion, an independent consumer protection organization that administers Ontario’s new home warranty program, launches the Tarion New Home Buyers Report drawing a detailed portrait of Ontarians buying new homes. Designed as an evidence-based consumer education resource, the report puts a spotlight on new homebuyers – who they are, what they are looking for and how they prepare for one of life’s biggest purchases.
“The Tarion New Home Buyers Report reveals what’s important to these future purchasers and their families to make effective decisions,” says Peter Balasubramanian, President & Chief Executive Officer, Tarion. “Every day, more Ontarians start their new home journey. To many, this is unchartered territorythey want to plan out early on – for example, learning about things like the builder’s warranty before they even meet with a real estate agent. Our goal is to empower them with the information they need to navigate the critical steps of buying a new home.”
The report is based on an online survey conducted between November 21 and December 1, 2022 with a sample of 526 Ontarians. It shows that, when preparing to buy a home, respondents most commonly report having looked through home listings online (60%), discussed their financial situation with a financial advisor or professional (53%) and met with a real estate agent (50%). Three in ten (31%) have obtained a mortgage pre-approval; 28% have visited a pre-construction site or showroom.
Who’s buying new homes in Ontario?
The sample analyzed in the Tarion New Home Buyers Report reflects the diversity of Ontario’s population.
Immigrants and new Canadians
- More than one-third (35%) of Ontarians intending to purchase new homes were born outside Canada.
- These buyers are already established in Canada, having spent here on average 17 years since their immigration.
- 39% immigrated to Canada less than 10 years ago.
First-time versus repeat buyers
- One-third (35%) of respondents are first-time home buyers; the remaining two-thirds (65%) are repeat buyers.
- First-time buyers are more likely to be millennials (46%), single (54%), considering buying a condo (42%) or townhome (43%), and newcomers who arrived in Canada within the past 10 years (74%).
- Most repeat buyers are baby boomers (86%) and are married or in common-law relationships (69%).
Millennial buyers
- Overall, 54% of Ontarians shopping for new homes are millennials.
- Millennials are more likely to consider pre-construction homes (81%).
- Millennials are more likely to consider a home in urban areas (63%).
“One insight that stands out in the Tarion New Home Buyers Report is that immigrants and new Canadians are a large part of Ontario’s new homes story,” says David MacDonald, Group VP, Financial Services at Environics Research Group who led the survey work. “It’s also interesting that, while intenders are a diverse group with many different journeys, the demographic getting into the new homes market is fairly young overall.”
Why are Ontarians buying new?
The Tarion New Home Buyers Report throws light on what motivates Ontarians in their new home journeys. According to the report, most (84%) anticipate using the new home as their primary residence. Nearly six in ten (58%) like having the option to rent all or part of the home. 15% consider using it as an investment property. 72% value the possibility to work from home.
Top factors in choosing a new home include home size and space (98%), price (98%), energy efficiency of the home (96%) and its appliances (92%), the home’s style or design (94%), the builder or building company’s reputation (92%), and the home’s warranty protection (91%).
Home age
- Half of respondents (50%) say a home built in the last five years would give them the greatest peace of mind, with a pre-construction home coming in at a close second (39%).
- In a home built within the past five years, respondents like the idea of it being “move-in ready,” with no immediate need for maintenance or renovations. In considering a pre-construction home, respondents are drawn to the possibility of having a brand-new home they can customize to their tastes.
- The builder’s warranty that comes with newly built and pre-construction homes gives respondents peace of mind that they will have protection if something goes wrong.
New home builder’s warranty protection
- Eight in ten (83%) respondents are aware of the new home builder’s warranty, although 40% hesitated when asked whether newly built homes in Ontario come with it.
- When asked who provides the new home warranty, more than half (54%) think it’s the builder.
- For 55%, the builder’s warranty is a very important consideration for purchasing a new home.
“Consumer awareness is a critical consumer protection issue,” says Balasubramanian. “If people are confused about the warranty program or aren’t aware of it then it won’t serve its purpose. It is encouraging to see that a majority of people looking to buy a new home have a general awareness of the warranty program, that it’s a builder warranty, and that many believe it’s an important consideration when they buy a house. All of these are numbers we would like to improve. Setting yourself up for success when buying a new home takes homework, and part of it is learning about the builder’s warranty and the process to maintain your home and work with your builder after you move in.”
Energy efficiency
- Energy efficiency is the most mentioned reason why a buyer would prefer a newly built home.
- When asked why they prefer a pre-construction or newly built home rather than a home built more than five years ago, almost six in ten survey respondents (58%) say newly built homes are more energy-efficient.
- Respondents more likely to value energy efficiency are aged 45-54 (67%), those who consider purchasing a semi-detached (64%) or detached (61%) house, those who consider living in ex-urban areas (75%) or small towns (73%), and those who consider a home warranty very important (64%).
“Buyers’ interest in newly built and pre-construction homes is high relative to older homes,” says MacDonald. “For many, energy efficiency is a significant motivator. With many Ontarians working from home in an environment of high inflation and energy costs, both environmental and economic factors play into their decision calculus. New homes are associated with the latest building codes, better quality, and fewer problems.”
What kinds of new homes do Ontarians consider buying and where?
When asked to indicate their preferred type of home, respondents most frequently mention fully detached homes (66%), followed by semi-detached homes (38%) and townhomes (38%). Condos are preferred by one-third (32%) of respondents.
Interestingly, most new homebuyers hope to stay within the range of their current residence:
- More than half (56%) plan to stay in the same town or city.
- Nearly half (49%) aim to move within their current region in Ontario.
- One in five (21%) would move to a different region of the province.
- Only 5% plan to leave the province.
In the province of close to 15 million people, 300,000 to three quarters of a million Ontarians are very likely to consider buying a pre-construction or newly built home. Based on Tarion’s data, in 2022, 53,704 homeowners officially took on the ownership of newly built freehold homes or condos.
About the Tarion New Home Buyers Report
The Tarion New Home Buyers Report is based on an online survey conducted by Environics Research Group between November 21 and December 1, 2022. The survey was carried out with a sample of 526 Ontario residents between the ages of 25 and 75 intending to purchase a home in the next 12 months. A new home they were considering was defined as either a pre-construction home or an existing home built in the past five years. Respondents with a higher likelihood to purchase an older home (more than 5 years old) were excluded. The survey focused on purchase intenders and did not capture final purchase decisions. The New Home Buyers Report is available here.
About Tarion
Tarion is an independent not-for-profit organization dedicated to supporting Ontario’s new home buyers and owners through the province’s new home warranty and protection program. Tarion helps consumers understand their rights and responsibilities when it comes to their builder’s warranty. By providing guidance and assistance in the warranty claims process, Tarion ensures homeowners receive the warranty coverage they are entitled to. Established by the provincial government in 1976, Tarion operates separately from the home building industry. Learn more: www.tarion.com.
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