Last year, the Feds lowered immigration targets in response to Canadians getting grouchy about the number people entering the country. This is expected to be felt starting this year. RBC estimates that Canada's overall population will shrink by about 0.2% this year and next, before returning to positive growth in 2027 (albeit at a lower rate).

That said, the data we have at our disposal today is backward looking and for the 12 months ending on July 1, 2024, Canada continued to see impressive population growth. Looking at the Greater Golden Horseshoe specifically, it grew by about 382,000 people. The 2023 figure was also revised upward from 340,000 to 367,000.

Here's a table from TMU's Centre for Urban Research and Land Development:

Nearly three-quarters of this growth was concentrated in the Greater Toronto Area, and about three-quarters of this growth was concentrated in Toronto and Peel at 143,000 and 70,000 people, respectively. These are big numbers, especially during a period of dramatically fewer housing starts.

Of course, going forward, lower household formation should alleviate some of the pressures on our housing market. But zero population growth is not sustainable, not unless we want to end up like Japan with a demographic crisis. So there will be tremendous market pressures to return to positive growth.

At the same time, if we go back to RBC's insight report, it specifically says: "This [lower immigration levels] will help realign housing demand with supply — so long as homebuilding can be sustained near current levels." Yeah, that's not happening. Housing starts in the Toronto region have fallen off a cliff.

So I continue to feel like 2027 will mark an important turning point for our housing market. It could be the year when population growth broadly returns, when we've fully absorbed the supply from the last cycle, and when we suddenly realize we don't have nearly enough new housing. Or at least that's my view.

Cover photo by Richard Hong on Unsplash

This is an interesting chart from the Centre for Urban Research and Land Development at Toronto Metropolitan University (TMU).

It is based on recent population estimates from Statistics Canada, and what it is saying is that the Greater Toronto Area grew by 233,000 people during the 12 months ending July 1, 2023. If you include Hamilton, this number increases to 246,000. And if you include the entire Greater Golden Horseshoe, it increases to 340,000.

This is significantly more population growth compared to any of the six preceding years. And assuming this 2021 population estimate of about 9.8 million people is more or less correct, it represents an almost 3.5% growth rate. That's remarkable. It's also happening at a time when housing starts are declining.

The Neptis Foundation here in Toronto just recently published a fantastic report looking at the regional economic structure of the Greater Golden Horseshoe area. It’s called Planning for Prosperity.

In it they identity the polycentric nature of employment in the Toronto region by way of downtown Toronto and three suburban “megazones.” Here’s one of their maps showing overall employment density and the megazones (light blue circles):

Here’s a snippet to give you an idea of the scale of these megazones:

“The Airport megazone, one of the three employment megazones outside Downtown Toronto, is the second largest concentration of employment in Canada, after Downtown Toronto. It represents almost 300,000 jobs, more than the central business districts of Montreal, Vancouver, or Calgary individually.”

And here’s a chart showing the hard numbers:

Downtown Toronto dominates in terms of employment. But it’s also fascinating to see how much more efficiently it provides that employment. It has the smallest physical area of all the employment zones (2,540 hectares or 6,276 acres) and the lowest percentage of car trips (29%).

But the big takeaway from their report is that we have not been focused enough on employment in our planning. Instead, we seem to be thinking residentially. Here’s a final snippet:

“This study shows that the Growth Plan and The Big Move, which are currently under review, do not address the challenges and opportunities of a globalizing regional economy or the reality of a transforming economic landscape.

The Growth Plan’s focus has largely been on managing residential growth rather than non-residential and employment-related development. Indeed, the Growth Plan is based on shockingly little hard evidence on the evolving economy of the region. Plans for city-regions a fraction of the size of the GGH typically involve more economic research, analysis, and evidence.”

Clearly we need to be looking at both the residential and non-residential sides of the equation as we grow the region. To read the full report, click here.