Toronto’s real estate market is heavily influenced by broader economic factors, and one of the most significant drivers of housing demand is the city’s employment growth. As Toronto continues to expand its job market, particularly in high-demand sectors such as technology, finance, and healthcare, the correlation between job creation and housing demand becomes more apparent. This article explores how the city’s employment growth is shaping the real estate market and what this means for buyers, sellers, and investors.
Employment Growth and Its Direct Impact on Housing Demand
Toronto has seen strong employment growth over the past several years, with new jobs being created at a steady rate. This growth has had a direct impact on the demand for housing, particularly as more people relocate to the city for job opportunities. According to Statistics Canada, Toronto’s unemployment rate remained low throughout 2024, hovering around 5.4%, a level indicative of a strong job market. This is significantly below the national average, making Toronto a desirable location for job seekers and professionals alike.
The city’s appeal as a hub for innovation, particularly in sectors such as technology and financial services, has drawn both domestic and international talent. With major companies continuing to expand their operations in the city, the influx of skilled workers has fueled demand for housing, especially in the downtown core and surrounding areas.
Jason Mercer, Chief Market Analyst at the Toronto Regional Real Estate Board (TRREB), explained that “employment growth in Toronto has been a key driver of housing demand, as the city continues to attract both businesses and professionals who are looking to relocate or upgrade their living situations.” The sustained demand for housing has been most evident in the condo and townhouse markets, which are more affordable options for those moving into the city.
How Job Creation in Specific Sectors Influences the Housing Market
While overall employment growth is contributing to housing demand, certain sectors have a particularly strong influence on the real estate market. The technology sector has been one of the fastest-growing industries in Toronto, with numerous tech companies establishing their headquarters or expanding operations in the city. As a result, demand for housing in neighborhoods close to tech hubs, such as Liberty Village, King West, and Waterfront Toronto, has risen.
Similarly, the financial services sector remains a cornerstone of Toronto’s economy. Many of the city’s highest-paying jobs are concentrated in this sector, driving demand for high-end real estate. Professionals working in finance tend to prefer properties located in close proximity to the Financial District and other central business areas, contributing to strong demand for luxury condos and detached homes in affluent neighborhoods.
Additionally, the healthcare sector continues to grow, as Toronto is home to world-renowned hospitals and research institutions. Employment growth in this sector has supported housing demand in areas near major hospitals, such as University Avenue, where healthcare professionals often seek proximity to their places of work. These professionals tend to favor properties in the condo and semi-detached home markets, particularly in areas with good transit options.
The Impact of Employment Growth on Rental Demand
Employment growth not only influences the homeownership market but also plays a significant role in driving rental demand. As more workers move to Toronto for job opportunities, many initially choose to rent, particularly if they are new to the city or are uncertain about their long-term plans. This trend has led to a significant increase in rental demand, particularly in neighborhoods close to major employment centers.
The average rent for a one-bedroom apartment in Toronto rose by 5.6% year-over-year in 2024, reaching approximately $2,550 per month. The rental market has been particularly active in downtown Toronto, where proximity to job opportunities, public transportation, and amenities is a top priority for many workers. In fact, condo rentals have become an increasingly popular option, as new professionals seek flexible housing solutions that offer modern amenities and shorter commute times.
While employment growth has certainly contributed to rising rents, it has also highlighted the need for more affordable rental options. Many of the new workers moving to the city, particularly younger professionals, are searching for rental properties that fit within their budget, driving demand for more affordable rental units in neighborhoods farther from the downtown core.
Job Growth and the Ripple Effect on Housing Prices
The influx of new workers, driven by job creation, has had a ripple effect on housing prices across the GTA. As more people move to the city for work, demand for both rental properties and homes to purchase has increased, pushing prices higher in many areas. In September 2024, the average home price in the GTA was $1,107,291, down slightly from the previous year but still indicative of strong demand in many segments of the market.
The areas experiencing the highest price growth are those closest to major employment centers, such as downtown Toronto and Midtown Toronto. For instance, the condo market in downtown Toronto has remained strong despite broader market fluctuations, as professionals continue to seek housing close to their workplaces. Similarly, neighborhoods with good transit connections to employment hubs have seen consistent demand for homes, as workers prioritize shorter commutes and convenient access to job centers.
In addition to these core areas, suburban regions such as Mississauga, Brampton, and Markham have also experienced price increases driven by employment growth in the 905 region. These areas offer more affordable housing options while still being accessible to major job centers, making them attractive to workers who may be priced out of Toronto’s more expensive neighborhoods.
Employment Growth and the Demand for New Housing Development
Toronto’s employment growth has also led to increased demand for new housing development. As more workers move to the city, developers have responded by launching new condo and housing projects, particularly in high-demand areas. However, the pace of development has struggled to keep up with the surge in demand, leading to ongoing concerns about housing supply shortages.
While several new condo projects are underway, many of these developments are concentrated in the downtown core, where land availability is limited and prices remain high. As a result, housing affordability remains a pressing issue, with many workers facing challenges in finding homes that fit their budgets. The demand for affordable housing is particularly strong in the rental market, where a shortage of affordable units has led to rising rents and increased competition among renters.
The ongoing demand for housing, coupled with the challenges of supply, has prompted local governments to consider new policies aimed at increasing housing availability. These policies include zoning changes, incentives for developers to build more affordable housing units, and efforts to improve transit infrastructure, which would expand the range of accessible neighborhoods for workers.
What’s Next for Toronto’s Housing Market?
Looking ahead, Toronto’s real estate market will continue to be shaped by its employment growth. As long as the city remains an attractive destination for businesses and professionals, housing demand is likely to stay strong, particularly in areas close to major job centers. However, the ongoing challenges of housing affordability and supply shortages will need to be addressed to ensure that the city can meet the needs of its growing workforce.
In the near term, the real estate market is expected to remain competitive, with high demand for rental properties and increased buyer activity in areas with strong employment growth. The lower interest rates introduced in 2024 are also expected to play a role in sustaining demand, as buyers take advantage of more affordable financing options.
Experts predict that as long as Toronto’s job market continues to expand, housing demand will remain elevated. However, the challenge will be ensuring that new housing developments keep pace with this growth, particularly in segments where affordability is a concern.
Conclusion: Employment Growth as a Key Driver of Housing Demand
Toronto’s employment growth has been a critical factor driving housing demand across the city. As new jobs are created, particularly in high-demand sectors like technology, finance, and healthcare, more workers are relocating to Toronto, increasing the need for both rental properties and homes for purchase. This trend has led to rising prices and rents in many areas, particularly those closest to job centers, and has prompted new housing developments to meet the growing demand.
As Toronto continues to expand its job market, the relationship between employment growth and real estate will remain a key focus for both buyers and sellers. While the city’s housing market faces challenges, particularly in terms of affordability and supply, the long-term outlook remains positive as job creation continues to fuel demand for homes in one of Canada’s most vibrant cities.
