Unprecedented stimulus and investment pouring into Ontario construction projects
Higher interest rates, a slowing economy, more regulation – so what? Construction and development in the GTA and much of southern Ontario continues to build, in a strong sign that over the long-term, our real estate fundamentals are ironclad.
Over 300 cranes are operating in the GTA
Q2 2024 data from UrbanToronto.ca shows that there are 308 cranes currently building up Toronto, Hamilton, and Halton, Peel, York, and Durham regions. In Toronto alone, the cranes being deployed are largely dedicated toward residential construction, with 35 building commercial projects. Consider the scale of that level of construction and development. That data doesn’t include crane data from London, which is going through a growth spurt, Windsor, with its fast-growing economy, or Kitchener-Waterloo’s tech heavy region. It doesn’t include data from Ottawa or Kingston. Developers are building more condos in Toronto than in any other urban real estate market in North America. The fact is that the growth and development currently underway in southern Ontario is impressive and something to be proud of.
Unprecedented stimulus and investment pouring into Ontario construction projects
Delegates at the recent Ontario Construction Secretariat conference in Toronto were repeatedly reminded that Ontario is poised for significant growth, with hundreds of billions of dollars' worth of projects slated for the coming decade. Katherine Jacobs, the first Director of Research at the OCS, presented an overview of upcoming projects compiled by BuildForce Canada. This comprehensive preview identified 155 large-scale projects across the province, collectively valued at over $200 billion. During the March 7 session, Michael Lindsay, CEO of Infrastructure Ontario (IO), addressed a group of trades trainees from the Hammerheads program, emphasizing the opportune timing for employment in the construction sector. Lindsay highlighted that Ontario currently has $42 billion worth of projects actively under construction, with several more projects in the final stages of planning before procurement begins. With the recent completion of the Davenport Diamond Guideway project, IO has achieved substantial progress on 31 major projects across all asset categories since 2020, a significant increase from previous years. Moreover, 33 major projects have entered the procurement phase, further underscoring Ontario's robust construction activity. Lindsay expressed confidence in Ontario's position, stating, "I don't think there is a jurisdiction anywhere, from a public tendering perspective, that is doing more right now. Here in the province of Ontario, I think this is the place to be."
Cottage country real estate is on fire again
Ontario is positioned to lead the nation in cottage price appreciation throughout 2024, as forecasted by real estate franchiser Royal LePage. The province's single-family recreational homes are expected to experience an eight percent increase in average price this year, surpassing the national average of five percent. According to a recent Royal LePage report, the average price of such properties in Ontario is projected to reach $662,148, compared to the anticipated national average of $678,930. Following closely behind, British Columbia is forecasted to see a five percent increase in prices, reaching over $1.1 million, while the Prairies are expected to experience a more modest growth rate of just 0.5 percent, with prices reaching $286,928. Despite this, Alberta retains its position as the most expensive province to purchase a single-family recreational home, with prices expected to rise four percent to nearly $1.3 million.
Recent years have witnessed a notable influx of properties into cottage country markets, largely driven by pandemic-related factors. Some buyers found themselves unable to sustain mortgage payments due to increased interest rates, while others were compelled to return to full-time office work. Inflation and rising living costs have further influenced buyers to step back from the market. These conditions contributed to a five percent decline in Ontario cottage prices during 2023 compared to 2022, marking the highest decline across Canada during that period. Despite these challenges, Royal LePage's chief executive, Phil Soper, remains optimistic about the future of the recreational property market. He noted that while inflation, soaring interest rates, and economic downturns may have dampened prices, the fundamental demand for recreational living remains strong. Soper anticipates a resurgence of activity in the cottage market throughout 2024.
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