Toronto Economy Strong Going into Next Year
An increase in housing starts, an increase in existing home sales, and and an employment rate that’s going up, all point to a strong economy for Toronto as we start getting ready to head into next year.
Stats from CanaData show that Toronto’s unemployment rate grew an average of 8.3% in July, a whole percentage stronger than the national average.
This bodes very well for Toronto, not just because the city is sitting higher than the country’s average, but also because the numbers are drastically different from last year. While July of 2011 saw a decline of 25,800, this July saw an increase of 68,200. One of the most surprising things about the larger number of jobs is that nearly all of them (62,800 to be exact,) came from the services sector, with the manufacturing industry a distant second.
But not all industries were up. Construction saw a decrease of 7,600; forestry felt a drop of 3,600; and the utilities sector also fell by 1,800.
The better employment numbers, paired with a seemingly everlasting low interest rate and continued migration to the city have all helped support Toronto’s hot real estate market. The Canada Mortgage and Housing Corporation has predicted that existing home sales in the GTA will be 95,000. This would be a 6.6% increase over the number of sales seen in July 2011, which was 89,102. Housing starts are also up by a whopping 16.7% from July of 2011 in the city, with 49,000 housing starts altogether in 2012 to date. This has been spurred on largely by the number of condominiums that have gone up in the city.
But due to all that building that had been done last year and the beginning of this year, Toronto is also currently experiencing an overstock on the market. And although pre-sales were good in the beginning of the year, that’s not likely going to be a continuing trend. This will result in a decrease of the number of residential condos that are constructed, which could put a further pinch on a construction industry that already saw a decline this year. It’s also not thought that single-family homes will be there to support that decline, as there’s simply not a huge amount of low-density land that’s zoned for residential use; nor is there infrastructure to support it.
But while activity in the condo market might be looking for a slowdown, activity on the commercial real estate market is picking up. Despite the fact that Cushman Wakefield reported a decline in office-related jobs, the vacancy rate for office space dropped to 4.8% from 5.3%. This is the lowest its been since the beginning of 2009, and is due to the fact that offices are being scooped up in the downtown core.
Have you felt the effects of any of these increases or decreases? What was it, and how does it impact your forecast for how the city will do in the coming year? Let us know in the comment section below, or Like us on Facebook and be a part of our Timeline!