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Toronto New Home Satisfaction Survey
Consumer satisfaction for new home builders up in 2010
The recession that gripped the Canadian home building industry last year may have hurt builders, but it also had some positive effects for consumers. Not only did prices go down, but fewer sales meant that developers had more time to spend with customers, according to a survey made public Wednesday by consumer research firm J.D. Power.
“With fewer closings, builders could devote more time to customers,” said Adrian Chung, senior manager at J.D. Power.
“While the recession caused many builders to reorganize and even lay off staff, it meant that they could also concentrate on the product.”
In the 2010 survey of Greater Toronto Area home builders, 20 per cent of buyers said they received a defect-free home. Last year only 8 per cent of buyers said their home had no problems.
“That’s a big improvement,” said Chung. “The slowdown likely meant that builders had time to play catch-up.”
The first six months of last year was one of the worst on record for GTA developers as sales plummeted along with consumer confidence during the global financial meltdown.
The lack of sales meant that the percentage of buyers offered discounts almost doubled in 2009.
About 17 per cent of all buyers of new homes in the GTA received a discount, compared with 9 per cent a year earlier, according to the study.
“This is a clear sign of the impact of the recession and the resulting action that some builders were forced to take to salvage new home sales,” said Chung. “Builders traditionally try and hold pricing, but discounting was a sign of the times.”
Chung said it will be interesting to see if builders can maintain their higher satisfaction scores for the next survey. Sales have picked up dramatically in the first six months of this year and builders have had to ramp up staffing.
The builder with the highest overall satisfaction score in the GTA was Tribute Communities. The developer of low- and high-rise homes is expected to build about 1,000 homes in the GTA this year, including projects such as 1717 Avenue Rd.
The company also won the Ontario Board of Trade’s Business Achievement Award this week, the first time the award has been made to a home builder. Tribute shares the award with De Beers, the global diamond company.
In second place was Mattamy Homes, followed by Monarch Homes in third place.
J.D. Power, known for their market research in the automotive industry has been conducting their customer satisfaction surveys in Toronto since 2005.
Chung, an analyst formerly with the automotive group, said the firm decided to look at housing because, not unlike cars, it is one of the largest purchases a consumer will make. “They are both big ticket items that consumers do a lot of research on.”
But while satisfaction in the car industry has improved dramatically, with not much separating the top five from the bottom five, there tend to be more variances in the housing industry, said Chung.
“There is more complexity in a home. And you can find more issues in a home as you live in it over time,” said Chung.
Among the nine builders that had 150 or more closings in 2009, the Conservatory Group finished last in the survey. In second to last place was Fieldgate Homes.
“What it boiled down to was that they simply didn’t perform as well as the top guys,” said Chung. “This related to things that mattered to the consumer such as home readiness and customer service.”
Because there are so many people involved in a sales transaction, it is tough for the customer to have a sense of continuity in the home buying process, said J.D. Power.
One move appreciated by customers, says Chung, is the simple follow-up call.
“Following up with a customer after move in seems like such a simple gesture, but ultimately it reflects the conviction of the builder to deliver on the promises made to the customer,” he said.
Source: Toronto Star
July 29, 2010 in New in New Homes | Permalink
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Comments
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Posted by: Austin Home Builder | Jun 5, 2011 9:39:31 PM
It appears that the majority of home builders had too much on their plate before the mortgage crisis.
Posted by: San Diego New Homes | Apr 20, 2011 12:10:22 PM
A few months ago, my wife and I refinanced our home loan from 5 7/8 to 4 5/8. We also added money to the pot to get it down to conforming. We'll recoup the difference in a few years from the reduced mortgage payment.
We had enough cash on hand to actually pay the house off, but I'm doing way better in the stock market than the 4-5/8's rate we have. Also, we needed the cash to make a down payment on a second home, where my in-laws will be living, and to put enough into a bond fund to make the second home's mortgage payment.
As far as real estate taxes, I voted for Prop 13 in CA umpteen years ago. Its kept our property taxes down, and thus state spending down. Without it, I'm not sure anyone could afford to live in CA. (Renters pay property taxes in the form of higher rents.)
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Posted by: Philip Kirkopoulos | Sep 16, 2010 6:22:36 PM
New York I think got the highest satisfaction rate as of this year. Can Toronto beat the record?
Posted by: Manila Real Estate | Sep 3, 2010 5:12:47 AM
Some property owners don't appeal because they either don't understand the process, or don't understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.
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Posted by: Estate Agents Manchester | Aug 27, 2010 5:30:32 AM
I understand the fact that you give consideration on the consumer and that was good because building a business should be focus on how the people be aware and accept the situation.
Christopher Jennings
Posted by: Christopher Jennings | Aug 6, 2010 11:13:29 AM
well, the canada's housing market according to some sources did overcome the crash, though some people still ask if it has already hit the bottom or not. The customers should be more pleased, but the prices are still high.
Posted by: Elli D. | Aug 4, 2010 5:41:45 PM
This RE crash is only going to get worse. A few people in the office are hoping to sell and break-even. The sad part is those condo's have not even built yet and they are looking to sell. The crash will be bad.
Condo sales in Toronto drop for first time in 16 years
http://www.theglobeandmail.com/report-on-business/condo-sales-in-toronto-drop-for-first-time-in-16-years/article1660475/#comments
Posted by: David | Aug 3, 2010 3:58:07 PM
This sounds really interesting. I haven’t heard about anything like this previously. I have huge interest in real estate. Thanks
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