A Focus on Ontario’s First-Time Homebuyers

In the last Market Insight Report, we focused on Ontario’s housing market and segmented all transfers of property ownership based on various buyer profiles: first-time homebuyers, movers, multi-property owners, life events and other. In this report we will dive deeper into the first-time homebuyer segment to identify trends in their behaviour.  

First-Time Homebuyer Definition 

The following metric is used to measure the activity of first-time homebuyers in this report: 

• Property purchases by buyers who claimed the Ontario land transfer tax exemption for first-time homebuyers. To qualify for this exemption, the buyer(s) must not have purchased property anywhere in the world.

This report begins with a general overview of Ontario’s housing market activity from June 2011 to June 2024, represented in 12-month periods ending June of each year (Figure 1). We can observe that the largest year-over-year volume decline since 2011 took place in 2023, when volumes dropped 28%. Recently, volumes in June 2024 were on par with the same time period in 2023, so it at least appears that the market has stabilized after the significant decline. It remains to be seen if the interest rate cuts announced by the Bank of Canada since June will markedly alter the current trend of activities amongst buyers in Ontario. 

As expected, first-time homebuyer purchases in Toronto, relative to other regions in Ontario, overwhelmingly skew towards condo properties, which likely points towards non-condo property affordability and availability issues in the city. Communities in the Greater Toronto Area as well as Ottawa also show growing tendencies for condo properties amongst first-time homebuyers over time. Similarly, in the emerging regions of London and Waterloo with growing  condo housing stock, we can observe a higher proportion of condo purchases among first-time homebuyers compared to the rest of Ontario. However, the general observation is that, as expected, first-time homebuyers who purchase outside of Toronto prefer non-condo properties, likely a trade off of urban lifestyle for space and value. 

In keeping with the regional focus, we now look at how much first-time homebuyers contribute to a particular region’s transfer activities. 

In the condo segment, Peel region has consistently had a large proportion of its transfer activities attributed to first-time homebuyers, where 35% to 40% of its condo purchases were made by first-time homebuyers (Figure 7A).  While Toronto condos had historically been a hotspot for first-time homebuyers, in 2024 to date, only 25% of its condos were purchased by first-time homebuyers. 

Turning our attention to non-condo properties, Peel region, which has long attracted first-time homebuyers, had the highest concentration of first-time homebuyers consistently in the 2010s that saw just under 28% of the region’s activities coming from this buyer group. In more recent years, first-time homebuyers have become the dominant non-condo purchasing segment in Waterloo to represent 31% of the region’s non-condo transfer activity year-to-date in 2024 (Figure 7B).   

The Big 5 Banks have consistently been the lender type of choice for first-time homebuyers, although this preference has experienced periods of decline since 2011. However, the Big 5 Banks have made a strong comeback in the first two quarters of 2024, accounting for 65% of first-time homebuyer financing activity.  

In summary:  

1. Despite recent interest rate escalations and increasing lack of affordability, the volume of purchases amongst first-time homebuyers has remained fairly strong.  
2. Over the past ten years Toronto has been and remains the top region for purchases amongst first-time homebuyers in Ontario. However, its popularity has been declining, likely due to affordability issues, as Toronto used to account for 23% to 25% of all first-time homebuyer activity in Ontario in the early 2010s and is now closer to 20%.   
3. Regions like Waterloo and London are increasingly seeing first-time homebuyers as a dominant purchasing segment within the region, with Waterloo reporting 30% of its property transfers from first-time homebuyers 
4. Financing with a single lender has consistently been the choice for first-time homebuyers. Over time, there has been a rise in mortgage-free purchases, which is a trend that has become particularly evident since 2022. This trend reached a 13-year high of 6.1% of all properties purchased by first-time homebuyers in Q1 and Q2 of 2024. 
5. The Big 5 Banks have consistently been the lender type of choice for first-time homebuyers, accounting for 65% of first-time homebuyer financing activity in the first two quarters of 2024, although the preference for the Big 5 is lower in non-urban Ontario than in the GTA and Ottawa.  

Teranet’s Data Analytics team will continue to monitor these trends and the behaviours of Ontario’s buyers and sellers to bring you new insights in future editions of the Market Insight Report. 

If you need more information about the data presented in this report, the Teranet Data Science Lab can help you dig deeper. Our team will work closely with you to answer your questions with insights from our proprietary databases. 

Connect with a Teranet account manager if you’d like to learn more.