The Administrator of the Guarantee Plan for New Residential Buildings for the entire Quebec territory ( GCR ) unveiled on April 23 and 24 the results of a Survey on the behavior of new home buyers in 2018 , which allows us to draw up a recent portrait of new home buyers.
First part of the investigation : HERE
Second part of the investigation: HERE
According to survey data, price and financial matters have a great impact on the decisions made by buyers. In addition these want almost all uniform application of construction standards throughout Quebec . Indeed, in Quebec, houses built in three neighboring municipalities may comply with different building codes, deplores GCR. Municipalities are not obliged to apply the most recent Construction Code adopted by the Régie du bâtiment du Québec.
THE FINANCIAL ASPECT
First selection criterion: the price
Among all the purchasing criteria, price is the most important in the eyes of buyers with an importance level of 8.9 out of 10. Living area (8.3), room layout (8.3), style and architecture (8.2), and kitchen size (8.2) are also top of the list.
The presence of natural gas (2.1), accessibility to people with reduced mobility (2.3) and the presence of a fireplace (3) are the criteria that receive the lowest score in terms of their importance. Note that for buyers of a condominium, the presence of a terrace or a balcony and the ease of parking are criteria considered important.
Buyers generally searched for their new new home by walking around the neighborhood (39%) and visiting websites specializing in real estate sales (38%).
Several buyers run the risk of losing their deposit
Survey data shows that 71% of buyers have made a down payment when purchasing their property. For 56% of them, it was a down payment that did not exceed $ 10,000. On average, the deposit paid was $ 16,027. However, there are still 8% of buyers who have paid a deposit exceeding the maximum coverage provided by law, or $ 50,000.
“Since down payments are covered up to a maximum of $ 50,000, we recommend that consumers never give a down payment that exceeds this threshold. It is a shame to note that 8% of buyers are exposed to the risk of losing significant sums, ”says François-William Simard, Vice-President Communications and Partner Relations at GCR.
25-year mortgage amortization on the rise
Unsurprisingly, the vast majority of new home buyers (90%) who took out a mortgage chose to amortize it over 25 years, the maximum prescribed by law. For all buyers, this percentage is 82%. Only 5% of buyers amortize their mortgage over a period of 15 years or less. New buyers also preferred a fixed rate, for two-thirds of them (67%), while the monthly repayment frequency remains the most popular for all buyers (42%).
A significant rise in interest rates would have consequences
The survey reveals that an increase in interest rates would have consequences for the ability of buyers to meet their mortgage obligations. If this resulted in an increase of another $ 200 per month, 91% of buyers would be able to cope with it. However, if people were to have to repay an additional $ 301 to $ 500 per month, 29% would no longer be able to meet their obligations. For new buyers, this proportion climbs to 37%. If they had to repay an additional $ 500 per month, 44% of buyers would be in default, including 54% of new buyers.
1 in 3 buyers do not put 20% down
The survey reveals that almost half of new buyers (48%) have paid less than $ 20,000 in initial down payment, while for all buyers, it is 28%. While it is expected that a buyer will be required to put down a minimum of 5% of the value of the property as a down payment, 4% of buyers indicated that they did not provide this minimum amount. These are 24% of buyers who put precisely 5% in down payment.
The main source of the down payment is the sale of the previous residence for almost half of the survey respondents (44%). For new buyers, however, the main source is personal savings, for just over half of them (52%). Interestingly, 50% of new buyers have used the Home Buyers’ Plan (HBP) to purchase their home.
A new home rather than an existing one
Among the factors mentioned by buyers of a new home that push them not to choose an existing home, there are renovations to be done (52%), the fact that it does not meet the needs (49%) , the price which was the same for a new home (34%) as well as the importance of being the first occupant and of having something new (31%).
Weak support for the welcome tax
Finally, it should be noted that buyers paid an average of $ 2,421 in Welcome tax after purchasing their home. Asked about the subject, 87% of them disagreed with this tax.
Burst data
• The average price of a new new home is $ 342,149, which is higher among experienced buyers ($ 364,655) than new buyers ($ 285,090);
• In total, buyers visited an average of 3.9 residences before making their final choice;
• Buyers spent an average of 8.4 years in their old residence;
• 60% of buyers intend to keep their home for more than 10 years. Among these, there are slightly more experienced buyers (55%) than new buyers (42%);
• Just over 63% of new home buyers have considered buying an existing home.
THE NORMATIVE ASPECT
Buyers want uniform application of construction standards throughout Quebec. In addition, they are generally satisfied with their home and their shopping experience, but there are areas for improvement.
The same building standards for everyone
First of all, it should be remembered that the application by municipalities of the latest Construction Code adopted by the Régie du bâtiment du Québec (RBQ) is not mandatory, thus creating a great disparity in the application of different versions of the Code on the building. Quebec territory. Concretely, the same house in three neighboring towns can be built according to considerably different standards. Currently, some municipalities apply the 2010 Building Code (the most recent version) while others apply the 2005 code, the 1995 code and even the 1985 code. For example, the obligation to install smoke detectors in all bedrooms only appears in the 2010 Construction Code.
When asked about this reality, almost all buyers (98%) agreed with the idea that all municipalities in Quebec must apply the most recent version of the Construction Code. For the vast majority of them, the application of several versions of the Code creates inequities between buyers (92%), affects the quality of construction (88%) and affects the safety of buildings (82%). In addition, just over 8 out of 10 respondents (82%) do not believe that the variable application of the Code has no impact.
“Although it is 2019, many Quebec properties are built, even today, according to standards that may date back twenty or even more than thirty years. There is a serious issue here in terms of the quality and safety of these new homes. In order to improve the quality of construction and better protect consumers, we believe that the most recent version of the Code should be applied in all municipalities in Quebec. We offer our full cooperation to the Minister of Municipal Affairs and Housing, Andrée Laforest, in order to identify the right solutions that will make it possible to change this situation ”, indicates Daniel Laplante, President and CEO of GCR.
Satisfied buyers, but there is still some way to go
While they took possession of their home in 2018, the survey shows that the large majority of buyers are satisfied (96%). The same goes for satisfaction with the manufacturer, which stands at 89%.
However, a few areas for improvement from home construction contractors are clearly identified by consumers. To this end, we should note the quality of customer service, for which 32% of respondents give their builder a rating of 7 or less out of 10. It should also be noted that 72% of respondents requested the resumption of work and that 21% of them said they were dissatisfied with the follow-up carried out by the contractor.
“We know that many construction contractors do their jobs well and make sure they offer quality service to consumers. The data relating to satisfaction in the first months demonstrate this. However, the results of the survey also indicate that there are certain possible improvements, in particular with regard to the quality of customer service, the follow-up granted when work is resumed, and too frequent delivery delays. This is why it is necessary that, as a neutral and independent organization, we continue and step up our efforts in terms of prevention and monitoring of construction sites, in order to ensure the protection of Quebec consumers ”, continues Mr. Laplante. .
Frequent delivery delays
Almost a quarter of buyers (23%) received their homes outside of the planned deadlines. The average length of the delays observed was two months and 24% of those who received their home late had to face a delivery time of 3 months or more.
“Buying a home, whether new or existing, is always a stressful stage in life. When the property is new, the risk of delay can create additional stress. In this context, and although there are protections offered by law, we invite construction contractors to do their utmost to deliver on time, ”emphasizes Mr. Laplante.
Buyers need to do more checking before signing a contract
GCR is pleased that the large majority of buyers were aware of the existence of the mandatory warranty plan (87%) and had received information about it when purchasing (85%). For 80% of buyers, the warranty coverage, which is provided by law, had been explained to them, usually by their contractor.
However, the survey data shows that consumers do not do all the checks that can be very useful to avoid problems. For example, 42% had not checked if their building was covered while 51% did not check if their contractor appeared in the register of accredited contractors at GCR, and thus, if he was indeed authorized. to construct a new residential building. In the absence of the contractor’s accreditation, not only is the building constructed illegally, but the consumer cannot enjoy the protections provided by law. The study also reveals that only 31% of consumers believe that the terms of the warranty have been adequately explained to them by the builder or real estate agent during the purchase.
“On a number of occasions we have seen stories of consumers being cheated because they trusted an entrepreneur who was not actually accredited. The best way for a consumer to protect himself against such an eventuality is to be well informed and to carry out some easy, but very useful checks, ”continues Mr. Laplante.
The pre-purchase inspection with a professional: to be seriously considered
The survey finally shows that 74% of buyers have carried out a pre-acceptance inspection of their building, but that they were not accompanied by a building professional. However, the items checked during the pre-acceptance inspection are often very technical and go beyond the basic knowledge of buyers, unless they are in the construction business themselves. GCR recommends that buyers of a new home always be accompanied by a building professional during the pre-acceptance inspection. This can prevent several problems later.
Methodology
The survey was conducted with 1,124 buyers from across Quebec, whose homes were registered in 2018 with the mandatory warranty plan for new residential buildings, administered by GCR. The results of the survey were compiled by the firm Segma Recherche. They have a maximum margin of error – associated with a sample of 1,124 from a population of over 7,000 households – of 2.65% at a 95% confidence level.
SOURCE Residential Construction Guarantee (GCR)
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