How Ontario and Toronto Grow (Part 2)

About a year ago I wrote an article on how Ontario’s population grows, with a particular focus on its components of growth. I wanted to expand on that article by providing data on components of growth for Toronto and the Toronto CMA, to see how they compare to the rest of Ontario. There are fantastic datasets on the City of Toronto’s Data Stats page that summarize the components of population growth for the City of Toronto, the Toronto CMA and the Province of Ontario since 2001. I decided to make a quick few charts using the data.

The first chart shows the total annual net population growth in Ontario, the City of Toronto, the Toronto CMA (outside of the City), and Ontario (outside of the Toronto CMA)

POp Growth.JPG

Ontario since 2001 grew on average by about 150,000 per year, with the vast majority of growth taking place in the Toronto CMA. What I found particularly interesting is how the net population growth of the City of Toronto has been slowly increasing throughout the years, while the net growth in the Toronto CMA (outside of the City) has been in decline. So what we see is a bit of an urbanizing effect taking place in the Toronto CMA. As for the rest of Ontario (outside of the Toronto CMA), we are witnessing a jump in net population growth in the last few years.

Now let’s take a quick look at the four key components of population growth for Ontario and the Toronto CMA. First up is Natural Increase, which is simply Deaths minus Births.


Steady as can be over the last 17 years, with a slight drop in annual natural population growth in Ontario over the last few years. And that drop has occurred in the rest of Ontario, outside of the Toronto CMA. So in other words – annual natural increase has generally been the same in the City of Toronto and the rest of the CMA over the past 17 years; while in the rest of Ontario (outside of Toronto CMA), we see that difference shrinking, with deaths significantly outpacing births over the years. In fact, you are seeing the same trend (i.e., of deaths outpacing births) across all the geographies in the chart above.

The next chart shows international migration.


Ontario welcomes about 110,000 international migrants on average per year, with the vast majority heading to the Toronto CMA. The most interesting finding from unpacking this data further is that the number of immigrants arriving in Ontario over the years has been declining, while the number of net non-permanent residents has skyrocketed lately – which is accounting for a large portion of annual migrant growth in the last few years.

The following chart shows inter-provincial migration (i.e., people migrating between provinces in the country).


What I take away from the chart above is that there was an exodus of people leaving Ontario to other provinces (namely Alberta) during the 2000s, with a reversal taking place during the last few years, largely attributed to oil prices and their impact on the Alberta economy. What I found especially interesting was how the City of Toronto saw very little out-migration over the years into other provinces.

Finally, the last chart shows intra-provincial migration (i.e., people migrating between municipalities within Ontario).


Toronto always lost a lot of people to elsewhere in Ontario, but that has rapidly declined to reach surprising stability in the last decade. Whereas Toronto experienced fewer people over the years leaving for other municipalities, the exact opposite has been taking place in the rest of the CMA, with declines in the last 3 years.  And these declines result in greater annual growth in the rest of Ontario – even though the province has always enjoyed a steady flow of intra-provincial migrants.

What could be resulting in a growing share of intra-provincial migration in Ontario outside of the Toronto CMA? High house prices is often considered a big culprit nowadays. But I also like to think that seniors generally prefer to retire somewhere outside of the City.

Some key conclusions:

  1. Immigration runs the show in Ontario when it comes to population growth; with non-permanent residents accounting for much international migrant growth lately
  2. We are seeing a bit of an urbanizing/centralizing population effect taking place recently, with more growth in the City and less in the rest of the CMA
  3. Plenty of babies are being had across all of Ontario, but # of deaths rapidly outpacing # of births outside of the City of Toronto. This could be because seniors may chose to retire outside of the City.
  4. When people leave Toronto, they often leave to go somewhere nearby in the region. Very few people leave the province or country when they leave Toronto. Shows you the sticking power of the City + region.
  5. And in the last few years, fewer people have been leaving Toronto to go somewhere else in the region, while more people are moving from the rest of the Toronto CMA to other parts of the province, including the City

Source: Statistics Canada, CANSIM Tables 051-0063 and 051-0064


What is a good way to spot a “Housing Bubble”?

One simple and effective way of spotting a housing bubble is to compare the % change in house prices to the % change in incomes. The chart below shows Year-over-Year (YoY) change (in %) between house prices and incomes in the Toronto area since 1973.


So for example – if the red line (which represents average house price change in %) vastly exceeds the blue line (which represents median total income change in %) then house price growth is outpacing income growth, which can be considered an indication of bubbly formations. We can see in the chart above one big bubble that formed in the mid 1980s, and popped in 1989/1990. Why is it considered a bubble? Because there are very few things in this world that can justify a rise of 30% in house prices in one year. For example, incomes during that same period grew by 2%.

As well, we had a bit of a bubble that formed in 2016/2017 and clearly deviated from the norm. But that bubbly 2017 period ended abruptly with the introduction of the Fair Housing Plan by the Ontario government (among a number of other house calming measures introduced at the Federal and Municipal level; for eg – the stress test).


It is also important to recognize that incomes are only one element (albeit a very important one) that influence house prices. Other important factors include interest/mortgage rates, length of amortization periods, inflation, demographics, housing supply-demand, development and housing regulations, general economic/job outlook, foreign investment, speculation, etc. These other factors likely account for the left over discrepancy between house price and income growth.


House Prices –

Median Total Income (1976 – 2011) – (Table 202-0411)

Median Total Income (2000 – 2015) –

What will your monthly mortgage payments be like in the future?

I like to think of the price of housing, not from the perspective of the purchase price, but from the perspective of monthly carrying costs – i.e., what you actually end up paying for a house. And I’m especially interested in how monthly carrying costs have changed over time.

RBC for example produces great reports on housing affordability, which chart the proportion of income required to service mortgage payments, property taxes, and utilities since the 1980s.

I decided to replicate RBCs analysis in this post to determine what monthly carrying costs could be like in the future. I used data from TREB, the BoC and Stats Canada (sources shown at the end of post).

So if we take a quick look at the data used for this analysis, we notice some key trends. Notably, house prices have risen in the GTA since 1973 (in 2017 $), to about $823,000 as of 2017.

House $s

5 year mortgage rates have fallen over the same period, and are currently at historic lows.


And median total income for all families has barely done anything since 1973 (in 2017 $).


When you combine the three variables above together, you get the chart below (RBC produces similar charts, but by quarter, and also takes into account the cost of property taxes and utilities) –

mortgage %

So about half of your income is servicing just the mortgage today. And if you want to look at what you’re actually paying per month, see the chart below (keep in mind the historic data from the late 1980s might seem a bit crazy given it captures a particular period in time with peak house prices and mortgage rates) –

mortgage $

So expect to pay about $3,700 per month today for just your mortgage. This is based on an average GTA house price of $823,000 with a 20% down payment, and at a 4.78% mortgage rate with a 25 year ammortization period.

As I noted at the beginning of this post, I am most interested in the monthly costs in the future. So I decided to set up three different future scenarios to 2030 –

  1. House prices and incomes rise at 4% and 3% respectively per annum; 5 year mortgage rates fall gradually to 3.2% by 2030 – I call this Rise and assume we see continued economic growth globally and in the Toronto Region.
  2. House prices fall at 2% per annum and incomes grow at 1% per annum; 5 year mortgage rates rise to 9% by 2030 – I call this Drop and assume we see stagnation and a recession globally and in the Toronto Region.
  3. House prices and incomes grow at 1.87% per annum (rate of inflation 2016 to 2017); 5 year mortgage rates gradually rise to 5.4% by 2030 – I call this Stable and assume status quo.

The charts below show what those trends look like for house prices, interest rates and incomes (dashed coloured lines represent the three future scenarios identified above).

By 2030, house prices could be between $497,000 and $1,077,000 in 2017 $s (between $633,000 and $1,370,000 in 2030 $s) ; or they could stay at 2017 levels – $823,000 ($1.04M in 2030 $s).

F house

Here we see how the three future scenarios play out with 5 year mortgage rates.

F mortgage.JPG

And in the chart below, we see the impact of the future scenarios on median total income. By 2030, incomes could be between $76,000 and $97,000 in 2017 $s ($96,000 to $124,000 in 2030 $s).

F income.JPG

Once again, when we combine the three variables above, we get the chart below –

F % Income

What this chart simply says is that the average household/family will be expected to dedicate about half of their income to just mortgage payments in the future.

And again, when we look at the actual money you are expected to pay per month –

$F Carrying Cost

So an average mortgage from now on will cost a minimum of $3,300/month (in 2017 $s), even with a significant drop in prices (of 40% by 2030) and a rise in interest rates. In 2030 $s, this would translate to a minimum monthly mortgage cost of $4,200. Below is a chart showing the monthly mortgage cost indexed to 2030 $s so you can see what you would pay in that year.

$F  Carrying Cost 2030.JPG

So although a drop in house prices would provide some financial relief with respect to monthly mortgage carrying costs, that relief does not appear to be too significant. Unfortunately, it doesn’t particularly seem like housing will get much cheaper anytime soon if you look at the monthly carrying costs.


House Prices –

Median Total Income (1976 – 2011) – (Table 202-0411)

Median Total Income (2000 – 2015) –

Mortgage Rates –

Inflation –