A survey released by the Toronto Regional Real Estate Board (TRREB) yesterday shows a notable change in the expectations of sellers of Greater Toronto Area real estate and that could have implications for the market in the next year.
The survey was conducted by Ipsos on behalf of TRREB between 24 April and 27 April and collected the responses of 802 GTA residents aged 18 and older, focusing on their expectations for the real estate market in the coming year.
Home Buyers’ Sentiment
Across the GTA, 27% of respondents said that they were likely to buy a home in the next 12 months, which was 4 percentage points lower than reported in a survey in spring 2019. However, the number was notably larger for certain groups.
In the City of Toronto, 34% of respondents indicated they plan to buy a home in the next 12 months. For households with children, 37% of respondents said that they intended to buy a home. The group with the biggest intentions was people aged 18 to 34, with 45% of respondents saying they were likely to buy a home in the next year.
Amongst those who said they were unlikely to buy a home in the next year, the majority (62%) said that it is because they are happy in their present home. 16% of the group unlikely to buy a home started that the reason was “COVID-19 related issues.”
Reviewing the responses of home buyers, TRREB President Michael Collins suggested that the results offer a positive outlook for the real estate market: “While COVID-19 has temporarily impacted home sales and listings in the GTA, the Ipsos survey results that show home buying intentions have remained quite stable certainly suggest that many people will be looking to satisfy pent-up demand for ownership housing once recovery starts to take hold. As people gradually return to work, consumer confidence will improve, and a growing number of people will look to take advantage of very low borrowing costs to purchase a home.”
Home Sellers’ Sentiment
According to the survey, only 17% of homeowners indicated that they are likely to list their property for sale in the next 12 months. This is a big drop from the 34% of likely home sellers reported in the spring survey last year.
As with buyer sentiment, the number of people looking to sell is influenced mainly by feelings for a person’s current residence. Amongst those unlikely to list, 80% of respondents said it was because they like the home they currently live in. Meanwhile, 22% cited the COVID-19 pandemic as the main reason for not listing.
If this seller sentiment is reflected across the whole market in the next year, a drop in supply is likely and this could have a big influence on the real estate market. TRREB’s Chief Market Analyst, Jason Mercer, pointed to this, saying: “The supply of listings was an issue before the onset of COVID-19, with market conditions tightening and price growth accelerating throughout the first quarter of 2020. The Ipsos survey results suggest that the supply of listings will continue to be an issue as the economy and housing market recovers. Policy makers have acknowledged that there is a lack of a diverse housing supply in the GTA. While the supply issue has understandably taken a back seat to COVID-related issues in the short term, it should once again be top-of-mind once recovery takes hold.”
Public Policy Views
The survey also asked questions to gauge respondents’ views on current public policy related to real estate. Most people were supported ideas that would make it easier for people to buy homes, with 82% supporting increased access to RRSPs, 65% supporting relaxation of the federally-mandated mortgage stress test, and 71% supporting relaxation of mortgage insurance rules. Both of these are moves that would increase buying power, with the first enabling larger down-payments and the other two allowing larger mortgages.
In addition, most people were in favour of reducing the tax burden on home owners. 75% supported relief from land transfer taxes and 73% supported relief from property taxes applied by municipalities.
It should be noted that these public policy results are larger inline with previous surveys and hasn’t changed since the outbreak of COVID-19.
While these results show a minimal impact on sentiment as a result of COVID-19, it will be interesting to see if that sentiment remains. We will have an idea early in June when TRREB releases the results of its next survey which will be conducted at the end of May.