By Michael BournockIt’s been a big year for Toronto, and now it’s about to get even bigger.
It’s the first time since the 1980s that the city has surpassed the 10 million square foot mark in annual construction spending.
And now it appears the city is also on track to surpass 10 million construction workers, with more than 2,000 new positions on the books in the past year alone.
The boom is just getting started.
Toronto’s construction sector has already exceeded its 10 million annual construction capacity by 1.4 million square feet in the first three months of 2017.
That means the city will have to spend nearly $1.5 billion more in the next year to keep pace with the surge in construction activity.
Even with the extra work, the city still has room to grow.
For example, Toronto’s overall construction spending is set to rise to $4.6 billion this year, up from $3.7 billion in 2016.
This means the country’s fourth-largest city is set for another $1 billion growth in construction spending by 2021.
Toronto also has a very active economy in the hospitality sector, which is expected to add another 5 million square meters of new construction this year.
That’s up from 3.7 million square meter growth last year.
With more than 1,200 new hotels opening every week, the number of hotel jobs has more than doubled since the start of 2017, with a whopping 1,079,000 positions added in that time.
Meanwhile, the Toronto Region Board of Trade is forecasting a 3.5 per cent increase in its 2017 net earnings, which means the region’s economy is expected add an extra $1 trillion to its budget over the next five years.
The expansion in the Toronto housing market also appears to be picking up steam.
The Toronto Real Estate Board reports that the average price of a detached home in the Greater Toronto Area jumped 9.9 per cent from the previous year to $1,829,000, a figure that was up 11 per cent on last year’s benchmark.
And while the pace of new home construction is still in the early stages, it’s still the fastest growth in the country.
“In a year, you can see the housebuilding start to pick up, and then it kind of slows down,” said Mark Zandi, an economist at CIBC World Markets.
“It’s kind of a nice way to show you are getting more homes built than we had the year before.”
Zandi said the growth is also likely a result of the city’s rapid growth.
The city is projected to grow by an average of 9.2 per cent per year through 2035.
That’s a huge jump from a year ago, when the average annual growth rate was around 6 per cent.
There’s also been a lot of new homes being built in Toronto over the past two years.
As a result, the average cost of a home in Toronto is projected by the province to be $1 million in 2021.
According to Zandi and others, this means that even with the additional work, Toronto will still have room to get by with just a little bit more spending in the coming years.
“The new houses are still a good way to start, but there are still some houses that are going to be built,” said Zandi.
“And if you’re still not seeing a lot in the way of construction activity, that’s really not a bad sign.”
What’s in store for Canada’s construction boom?
A lot of people are waiting for Toronto’s housing market to pick it up, but it’s not a sure thing.
While Toronto is poised to continue its pace of expansion, there are some signs the construction sector could be slowing down in the months ahead.
A report by Bank of Montreal economists predicts the housing market will contract by 5.4 per cent in 2021, while the national home price index is set by 0.6 per cent, the worst showing in years.
In other words, home prices in Canada are set to fall.
But the bank expects home prices to rebound in 2021 and that the overall economy will be stronger than in 2021 last year, with growth of 1.8 per cent over the decade.
“We think it’s probably a better indication that Canada’s housing markets are healthy,” said the report’s author, Kevin Milligan.
“If they are, it could be an indication that Toronto’s economy will have some resilience to the next downturn.”
In terms of the impact of the housing boom on the country, Canada’s economy has seen a rebound in manufacturing, which has been particularly strong in Toronto.
Manufacturing employment in Toronto has increased by nearly 7 per cent since the beginning of 2017 to 1.9 million workers.
In Canada, that is more than double the growth of the rest of the country in