Toronto Economic Outlook
Sustained Job Growth
Steady job creation and rising incomes in 2008 and 2009 will keep households confident in their ability to purchase and pay for a home over the long term in the GTA. Employment will continue to grow in 2008 and 2009, but at a more moderate pace than experienced last year.
The average number of jobs is forecast to grow by 1.6% in 2008 and 1.5% in 2009. Employment growth will be supported by domestic demand fueling a well-established services sector. The manufacturing sector will continue to be challenged due to a decline in exports south of the boarder resulting from the high value of the Canadian dollar and a broader slow down in the United States economy. However, job growth in service-oriented industries will more than offset the job losses from the goods-producing sector.
There is often concern associated with the shift from goods producing jobs to service sector jobs. While it is true that in Ontario as a whole service sector jobs are associated with lower average incomes, the situation in the GTA is somewhat different.
The local economy in the GTA is the most diverse in Canada. This diversity can be attributed, in part, to the existence of high valueadded service sector employment, including finance, insurance and real estate, professional services, government, healthcare and education.
Many of these sectors will continue to create high-paying jobs through the end of 2009. The higher earnings in these industries will continue to promote the purchase of more expensive home types in submarkets with above-average prices.
The unemployment rate in Toronto is forecast to rise moderately to 6.9% in 2008 and 7.2% in 2009 - below the average unemployment rate experienced over the past two decades. Tight labour market conditions will result in average earnings rising in line with the rate of inflation over the next two years.
Population Growing Through Migration
An increasing number of households will migrate into the GTA over the next two years – up to 65,800 and 68,000 in 2008 and 2009 respectively. Of paramount importance will be immigrant households. Between 2001 and 2006 40% of total new-comers to Canada settled in the Toronto area.
This trend will continue, as people from other countries are attracted not only by quality job opportunities, but also the established ethnic and cultural networks in many parts of the region. In 2008 and 2009 immigration will offset losses of households to other parts of Ontario and the rest of Canada.
The strong regional economies in western Canada will continue to be a drag on population growth in central Canada, including the GTA. However, this movement westward will be more moderate as the economic gap between Ontario and western Canada narrows gradually over the next two years.
Mortgage Rates Will Remain Relatively Flat
Posted mortgage rates eased by about 50 basis points in the first four months of this year, although rates in late April were 30 to 35 basis points higher than they were 12 months prior. Mortgage rates are expected to trend marginally lower throughout 2008, but will be within 25-50 basis points of their current levels.
For 2009, posted mortgage rates will begin to drift up slightly as the year progresses. For 2008 and 2009, the one-year posted mortgage rate is forecast to be in the 6.50-7.50% range, while three and five-year posted mortgage rates are forecast to be in the 6.75-7.50% range.
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Contact the Jeffrey Team for more information - 416-388-1960
