If you purchased a Toronto home last year, you were more likely than not in a bidding war, suggests Canada’s national housing agency.

 

Some 55 per cent of buyers in Hogtown—and also Vancouver—say they experienced a bidding war. That’s according to the Canada Mortgage and Housing Corporation’s Homebuyer Motivation Survey, which was sent to 30,000 recent homebuyers in those two metro areas as well as Montréal. These bidding wars have proven costly in Toronto. Homebuyers involved in bidding wars spent a premium of $125,000.

 

“The data suggests the fear of missing out hypothesis could have an impact on buyers’ budget,” reads CMHC’s Housing Market Insight presenting the survey results. “Buying sooner than expected may reflect a lack of information about the market, thereby pushing up the initial budget for fear of missing out in a market where prices rise.” Overall, 48 per cent of homebuyers there went over budget, 44 per cent paid what they expected, 6 per cent went under budget, and 2 per cent didn’t have a budget.

 

“The survey allows us to better understand how home buying is influenced by attitudes and perceptions, giving rise to sustaining local narratives,” says Guillaume Neault, CMHC’s senior manager of analytics housing research, in a statement. “As we can see, psychological drivers can be at odds with economic fundamental drivers,” Neault continues. The survey results suggest Statistics Canada’s recent research into foreign homebuying in Toronto has not swayed local opinions. While Statistics Canada reports that 3.4 per cent of Toronto properties are owned by non-residents, 48 per cent of survey respondents say foreign buyers are influencing home-price increases a lot. For comparison, 68 per cent of Vancouver respondents had this opinion of their city, where non-resident ownership represents a 4.8-per-cent share of the property market.

 

First-time buyers in Toronto spent an average of $581,673, whereas those who had already purchased a home at least once in the past spent an average of $881,714. “Repeat buyers spend more than first-time homebuyers, probably because they have more built-up wealth,” CMHC explains.

 

CMHC conducted the survey online and over the phone from mid-September to mid-October this past year. While 30,000 surveys were sent out, 497 Torontonians replied. “The results presented below on homebuyers can be generalized to the population of Vancouver, Toronto, and Montréal,” CMHC states.

 

Photo Credit:  Flickr user JasonParis