The State of the Resale Housing Market in the Toronto GTA

The other day, the Toronto Real Estate Board released their resale housing market data for the month of December (2017). 2017 was a crazy year for Greater Toronto Area (GTA) housing prices. Ontario’s Fair Housing Plan, which was introduced in April had quite an influence on the resale and new home sale markets.

If we were to look at resale house prices annually from 1953, this is what they look like ( shown in the chart are the average house prices for 2017, 1989 and 1974) –

Resale 1953

This is what the annual % change in house prices since 1953 looks like (shown in the chart are the annual % changes in prices between 2016 and 2017, 1991 and 1992, 1986 and 1987,  1980 and 1981, 1973 and 1974, and 1965 and 1966) –


Despite the ups and downs of the 2017 resale housing market, prices for the year are about 13% higher than resale prices in 2016.

This is what median house prices look like for every month since 1996 –

Median House Prices.JPG

We can see the big run up in prices during 2016 and the early months of 2017, followed by a fairly steep drop after Ontario’s Fair Housing Plan release.

And the following chart shows the Year over Year (YoY) changes in monthly house prices since 1997 –

Median House Prices%YoY.JPG

What I pick up from the YoY chart immediately above is that Toronto GTA’s house prices increase on average between 5 to 10% per year – which can be considered a very reasonable growth rate for a region that grew by about 2 million people and added over 1 million jobs over the last 20 years. But beginning in 2016, there was significant upward pressure on prices – in March of 2017 for example, prices were up 34% YoY! And the precipitous drop that followed was not something that was unexpected. The last time our house prices experienced these kinds of swings was during the great recession of 2008 (as clearly evidenced in the chart above).

Condos retained their value the best relative to other housing types, but even they continue to slide downward (this could be however due to a weak winter market for eg). Singles on the other hand have shed substantial value – about $200K down from their March 2017 peak.

Where will the housing market go from here? I think Spring 2018 will give us a clearer picture, as spring markets are usually very active housing markets.  We were anticipating the fall 2017 market to give us an idea of where the market was heading, but it provided little information.

Here’s what the monthly resale levels look like for the last 6 years –


It appears that the resale housing market in the Toronto GTA is not really plummeting or recovering, just merely existing…and that’s not necessarily bad.

Two years ago I wrote articles (here and here) on why I don’t believe Toronto will suffer a housing crash. I still believe that. But I had greater confidence in the market when prices were rising by about 5 to 10% per year, as opposed to 34%.

The higher they rise, the harder they fall 

I’m not sure who said the infamous quote from above, but I do know that a drop of 34% in values is much harder to swallow than a drop of 5%.

But the one thing I am very confident in is Toronto. This city is on a great trajectory and in 20 years time, it will be an even more amazing place than it is today. If you need proof, check this and this out. And the real question now is not what happens in 20 years, but what will happen in the next 5 to 10 years…

Full disclosure: I helped develop a number of the measures as part of Ontario’s Fair Housing Plan aimed at increasing housing supply, including actions related to Growth Plan implementation and monitoring the impact of the measures while with the Ministry of Municipal Affairs


The State of Transportation in the Greater Toronto and Hamilton Area

In September Metrolinx published their Draft 2041 Regional Transportation Plan (Draft 2041 RTP) for the Greater Toronto and Hamilton Area (GTHA). The Draft Report is a blueprint for what needs to be done to build an integrated, regional multi-modal transportation  system, one that will serve the needs of residents, businesses and institutions until 2041.

*PS – if you are interested in providing comments to the Draft Report, you have until November 17th, 2017. 

The Draft Report identifies the major transportation related investments taking place across the GTHA, and includes a treasure trove of supporting maps and data that delve into the implications and benefits of the investments.

In the figure immediately below, what is shown is the growth our region is anticipated to face to 2041 (keep in mind this is based on 2011 numbers). So expect approximately an additional 3 million new residents and 1 million jobs in the next 25 years here –

Pop Emp Growth

The following figure shows in kilometer distance, the transportation infrastructure investments being made to 2041. Over 3,500 kilometers of transit lines, cycling lanes and HOV lanes are planned to be added in the GTHA –


Given the expected growth of about 3 million people and over 1 million jobs, I think it is safe to say that these transportation infrastructure investments are more than justified. But are they enough?

A few weeks back, I wrote a piece on how Ontario reached peak auto sales in 2016, with 2017 set for an even higher number of auto sales. After going through the Metrolinx Draft Report, it is clear to me that cars will continue to dominate transportation in the region up to and likely beyond 2041.

The following chart is from a tweet by Dr. Pamela Blais (of Metropole Consultants) showing how people currently get around in the GTHA (by modal split), and how it is anticipated to change by 2041 as the transportation investments shown in the figure above are realized – KeyFigures

As of 2011, of the total 8.45 million trips made during peak hours (i.e., between 6 am and 9 am, and 3 pm and 7 pm) in the GTHA, about 14% were made on transit, 8.5% were active trips (i.e., walking, cycling, rollerblading), and a whopping 77% of the trips were made by cars.

In 2041, despite the substantial increase in the number of transit trips made during peak hours (i.e., 700,000 additional trips; or a 58% increase), the transit modal share is set to grow by only 0.5% to reach 14.7% of peak trips.

Below are two maps that show the number of jobs accessible within an hour by transit in 2011 and 2041 –


It is pretty clear from the maps above that transit-job accessibility across the GTHA is not expected to change substantially.

Despite the anticipated additional 1.3 million transit and active transportation trips to be made during peak hours between 2011 and 2041, the increase in the number of car trips more than doubles that figure, with an expected growth of over 3 million car trips to be made during peak hours. And though the modal split does come down for cars as we get closer to 2041, the share of trips made by cars during peak hours is still expected to be over 70%.

As I’ve previously written and said, if you think congestion is bad now in the GTHA, just wait till 2041. And depending on how you think about congestion, it doesn’t have to particularly be a bad thing. Yes it is generally considered a drag on the economy and can negatively impact quality of life. But congestion can also mean that a city is a dynamic place, and people and employers want to be there – which is definitely the case in the Greater Toronto and Hamilton Area.

Labour Force Trends in Major US Cities since 1990

I found an interesting dataset from Economic Research at the Federal Reserve Bank of St. Louis (known as FRED) while I was reading an article via Bloomberg on cities in the US and Canada that can be considered as viable candidates for Amazon’s second headquarters. The author of the article eliminates a number of key US cities like Pittsburgh and Chicago as candidates due to stagnant labour markets and poor fiscal conditions. Poor fiscal conditions in US cities/states (e.g., California and New Jersey) are not a big surprise to me as this has been a known concern for many years; but, stagnant labour markets in cities like Chicago and Pittsburgh? That took me by surprise! …even though the population of Chicago for example has barely grown in over 20 years, which influences labour force/market size.

Here is what Chicago’s Labour Force looks like since 1990 –

And here is what Pittsburgh’s Labour Force looks like since 1990 –

Both cities display fairly similar broader labour trends, with rapid labour force growth during the 1990s, followed by very little (if any) growth since the early 2000s.

New York on the other hand has experienced almost consistent growth of its labour force since the mid 1990s (but barely any growth during the early 1990s) –

San Francisco and San Jose show interesting trends – clearly influenced by the Dot-Com Bubble, with each experiencing a severely shrinking labour force during the early 2000s –

Major Texan cities (i.e., Dallas-Fort Worth, Houston, San Antonio and Austin) all display consistent labour force growth throughout the entire period of study (since 1990). Shown below is Houston* –
* I’ve only chosen to show Houston because all the other major Texan cities display an almost identical rate of growth since 1990

And the chart below shows annual change in the labour force since 1990 for major US cities (the Labour Force in the USA has grown from about 125M to 160M between January 1990 and August 2017; at about 1% per year)  –

What is clear from the chart above is that the more established cities like New York, Boston, Los Angeles, Chicago and Philadelphia have all experienced the slowest annual labour force growth since January 1990. In contrast are the rapidly growing sunbelt cities such as Phoenix, Nashville, Miami, Atlanta, and almost every Texan city.

Labour force/market information provides a good indication of how attractive a particular place is to potential workers. The real question now is – which US cities will lead labour force growth in the next 30 years? Will it be the superstar cities like New York and San Francisco? Or could it be the mid-sized “18-hour” city, like Nashville or Denver? Or will the sunbelt cities continue to dominate in growth? I have no clue. But I can guarantee you Amazon is very interested in this as it will influence the location of its second headquarters.