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BILD Outlook 2020

Outlook 2020 – what’s in store for GTA housing next year?

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Outlook 2020 – what’s in store for GTA housing next year?

Global and even some Canadian economic and political uncertainty shouldn’t derail growth in the GTA housing market next year, according to experts at the Building Industry and Land Development Association’s (BILD) recent Outlook 2020 event.

Craig Wright, senior vice-president and chief economist at RBC, and Peter Donolo, political and communications strategist with Hill + Knowlton Canada, said that overall, the fundamentals for the economy and housing market in Ontario and the GTA bode well for 2020. There are some challenges, however – namely the ongoing new home supply issue.

With Justin Trudeau’s Liberals re-elected as a minority government, Canada will see a relatively stable left-leaning federal government that will focus on environmental issues, affordability and redistribution rather than on economic growth, Donolo says.

BILD Outlook 2020
Left to right, Dave Wilkes, Peter Donolo and Craig Wright

Globally, geopolitical uncertainty and softening economic growth mean that Canada faces challenges with export and investment, leaving the heavy lifting to the consumer, according to Wright. Economic growth is expected to be modest and in line with employment and income, at about 1.7 per cent, and interest rates will likely continue to be low.

Strong employment growth

For Ontario, GDP growth will likely be a notch below, about 1.5 per cent, with housing starts for 2019 and 2020 at about 72,000 units, compared to about 79,000 in 2018, Wright says.

“That reflects a number of factors,” Wright told HOMES Publishing. “We continue to see strong employment gains, Ontario is leading Canada in terms of employment growth on a year-over-year basis, and strong population growth. So, strong fundamentals supporting it, in a low rate environment.”

BILD Outlook 2020 Craig Wright
Craig Wright, senior vice-president and chief economist, RBC

The GTA’s robust population growth will continue to drive demand for both ownership and rental housing, Wright says. Municipal and provincial governments are shifting to supply-side solutions for balancing the housing market.

“As you look at the structural reality of the GTA market, where we have immigration coming in… we have 140,000 to 150,000 people coming to this region each and every year,” adds BILD President Dave Wilkes. “That really does bode well for our industry.”

The mortgage stress test needs to be revisited in light of the continued low interest rates, Wright says.

Millennial attitudes

Another issue that might affect the Canada and the building industry is Millennials and their views on the environment and the economy – attitudes Donolo describes as “absolute.”

BILD Outlook 2020 Peter Donolo
Peter Donolo, political and communications strategist, Hill + Knowlton Canada

“When I say absolute, you talk about the oil sands and it’s like you’re talking about the Medellin drug cartel,” he says. “They’re not conscious or interested in the fact that the oil sands and Canada’s oil and gas sector is a kind of the backbone of the Canadian economy, that millions of jobs depend on it… They’re not interested in a kind of slow transition or weaning away from it. They think it’s immoral… and this is a very widespread view.”

Millennial views on homeownership are also different, Donolo says.

“Do Millennials look differently at what homeownership is about? Are they less interested in owning a traditional detached house with a backyard and property? If you look at rates of drivers licenses among Millennials, there is perhaps an indication.”

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The View From Inside: Housing Industry An Economic Driver

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The View From Inside: Housing Industry An Economic Driver

Value of new home construction, residential renovation has grown to $56.2 billion
By Geranium

When you purchase a new home, you are engaging in a transaction that reverberates across many parts of Canada’s economy. To illustrate, we are sharing some interesting facts about the housing industry in our country and have extracted information from some of the most recent studies and reports undertaken by organizations, government agencies and industry associations.

  • The housing industry in Canada is critical to our economy. Reports indicate that in 2016, 69 per cent of Canadians owned a home, and four in five millennials wanted to purchase a home. 1 (CHBA)
  • In Canada, homes account for $4 trillion in assets. 1 (CHBA)
  • Figures from 2016, show that residential construction impacted 1,008,392 jobs, generated $59.4 billion in wages and $138.3 billion in economic activity. 1 (CHBA)
  • Looking at the micro level and taking York Region as an example, in 2016 there were 8,926 new housing starts (the number of homes beginning construction), which were key to the economic growth of the area. On-site and off-site jobs in new home construction are a major source of employment in York Region – 23,749 people have jobs in this industry and earn $1.4 billion in wages. 1 (CHBA)
  • Provincially, the value of new home construction, residential renovation and related impacts of construction grew 55 per cent since 2007 to a value of $56.2 billion. 2 (OHBA)
  • Every construction crane you see in the GTA represents up to 500 new onsite and off-site jobs in construction and related fields. 3 (BILD)
  • The types of jobs involved in the building of homes include urban planners, engineers, lawyers, marketers, sales representatives, accountants, designers, as well as electricians, plumbers, framers, and labourers. 3 (BILD)
  • In 2015, the industry contributed more than $30 billion to the GTA’s economy, resulting in billions of dollars in tax revenue collected by all levels of government. This revenue will contribute to repairing existing infrastructure like roads, sewers, schools and hospitals. 3 (BILD)
  • Homeownership rates in Toronto have increased by 23 per cent over the last 35 years (11 per cent in Ontario overall), putting the region close to the highest among “world class” cities. 4 (CANCEA)
  • In the Greater Toronto Hamilton Area in 2017, 45 per cent of households lived in detached homes, 35 per cent in apartment/condo buildings and 20 per cent lived in housing types such as semi-detached, row homes, townhomes, multiplexes and lowrise buildings. 4 (CANCEA)
  • There is an increasing focus on a work-play-live lifestyle. Land developers have moved away from viewing projects as one-offs in favour of planning complete neighbourhoods that include wellness, retail, entertainment, office and more. 5 (PwC)

At Geranium, we are proud to develop and build entire planned communities for the spectrum of the new housing market and to be part of this important industry in Canada.

Information sources:
1: tinyurl.com/ya4zy6lr
2: tinyurl.com/y9cbxhsa
3: tinyurl.com/y89vep6q
4: tinyurl.com/ya3czvdx
5: tinyurl.com/y8g6f95s

Celebrating more than 40 years in business, Geranium has created master-planned communities including more than 8,000 homes in Ontario.

Geranium.com

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