IPSOS Surveyed 1000 Purchasers For Their Feelings And Opinions
In November 2016, Ipsos undertook a survey of existing homeowners in the GTA on behalf of the Toronto Real Estate Board (TREB). Of the 2,500 households surveyed, 1,000 had purchased a home in the previous 12 months. These 1,000 households were considered the “recent buyers” for the purposes of producing a 2016 recent buyer profile for this report.
This profile is summarized in the following points:
• On average, recent home buyers reported a purchase price of $672,023, which falls within the range of a typical home price for 2016, as measured by the MLS® HPI Composite Benchmark Price. This result was up by 13.5 per cent compared to the average price reported to Ipsos by recent home buyers in 2015, at $591,790.
• The average down payment percentage was approximately 29 per cent for households that purchased a home over the last 12 months – almost identical to the result reported by Ipsos for 2015. Typically, close to half of the down payment came from RRSP or non-RRSP savings.
Approximately one-quarter of the average households down payment came from existing home equity. The remainder of a typical down payment came from a gift from friends or family (13 per cent) or other (undefined) sources (17 per cent) (Chart 1.5).
• Similar to 2015, more than half of recent buyers used a fixed rate closed mortgage for their purchase. A five-year term was most popular. The most common mortgage rate was between 2.0 per cent and 2.99 per cent.
• The average income for a recent home buying household was almost $98,000.
• Taking into account the average purchase price, the average down payment, and a mortgage rate of 2.9 per cent (within the most popular range), the share of the average household income dedicated to mortgage principal and interest on a recently purchased home was approximately 27 per cent.
Even after adding property taxes and utilities costs, the share of income dedicated to major carrying costs would likely be well-below the federally mandated affordability ceiling of 39 per cent.
Home ownership remains affordable for many GTA households and this goes a long way to explaining why we continued to see a record level of home sales in 2016.
• For the GTA as a whole, 51 per cent of recent home purchases involved first-time buyers – down by two percentage points compared to the Ipsos survey results from November 2015. The first-time buyer share was identical for the City of Toronto in 2015 and 2016, but down year over year for the surrounding regions.
• 70 per cent of recent home buyers purchased an existing (i.e. resale) home, which is in line with combined statistics from TREB and Altus Group. The other 30 per cent purchased a new home at some point in the development process. The new home share was higher in the City of Toronto, likely due to the prevalence of condominium apartments (Chart 1.6).
• Close to half of recent home purchases involved a detached house – the share was less than half in the City of Toronto (41 per cent) , but 57 per cent in the surrounding GTA regions (e.g. ‘905’ area code). Low-rise (detached, semi-detached houses, and townhouses) home types accounted for more than 80 per cent of transactions in the GTA (Chart 1.7).
• Recent home buyers tended to purchase a home in the GTA region within which they already resided. For example, more than three quarters of recent home buyers who, before their purchase lived in the City of Toronto, purchased their home in the ‘416’ area code.
Thanks very much to the Toronto Real Estate Board and IPSOS for supplying the data for this report.
To read the full 2016 Market year in Review click here