In his presentation at the CMHC Housing Outlook Conference in Toronto earlier this week, regional economist Ted Tsiakopoulos said Toronto is already losing buyers to less expensive – and less competitive – communities, such as Windsor, Oshawa and Barrie.
Mortgage carry costs are expected to increase – the CMHC predicted a rise in mortgage rates by the end of 2015 – adding to Toronto’s already unaffordable market.
In addition, Tsiakopoulos said those smaller communities well outside of the city’s core are set to benefit from an influx of jobs growth as the U.S. economy continues to strengthen.
Manufacturing will especially benefit those regions, particularly with the recent announcement of Honda’s auto plant in Alliston, Ont. With that boost to the region’s employment, the CMHC said housing starts in the single-detached sector are concentrated in these areas.
In October, housing starts grew at a greater year-over-year rate in booming municipalities like Oshawa and the Kitchener-Cambridge-Waterloo region – at 12.9 per cent and 23.2 per cent, respectively. Toronto, while beating those regions in numbers, increased only 8.9 per cent over October 2013 single-detached housing starts.
Still, Tsiakopoulos expects earnings won’t grow as quickly as jobs numbers, leading the resale market to continue to dominate both inside Toronto’s borders and out.
The hot market that many of Toronto’s agents benefited from could begin to wane, warns the CMHC, as many buyers shift focus to more affordable neighbouring communities.