It has become a yearly tradition to highlight the key developments and trends of the year. Here’s my list for 2024, with a special focus on the Toronto Metro area.
A Turning Point for Population Growth
Rapid population growth was one of the key trends in 2023, but in 2024, it tapered off and began to decline.
This shift was primarily driven by a decrease in non-permanent residents, influenced by a number of factors including stricter policies affecting international students and other temporary residents, a weakening economic environment, and a natural increase in the outflow of non-permanent residents. Population growth is expected to decline further, warranting close attention in 2025.
Labour Market Weakened in a Recessionary Manner
Speaking about the economic environment, the share of people permanently unemployed in Ontario increased rapidly in 2024 approaching the levels seen only during recessions.
Unemployment is considered permanent when it lasts for 27 weeks or more, representing a structural weakness in the labour market. This increase was primarily driven by youth and recent immigrants but became more widespread closer to year-end.
Pivotal Moment for Monetary Policy
As inflation continued to decline, in 2024, the Bank of Canada began normalizing its policy rate, moving it closer to the neutral range. However, the weak economic environment prompted a faster-than-usual pace of easing. Instead of the typical 0.25% reductions, the Bank of Canada implemented two 0.5% cuts last year.
Monetary policy easing wasn’t unique to Canada, as many central banks globally also began reducing interest rates in 2024.
A Decisive Moment for the Most Reliable Recession Indicator
Another notable development in 2024 was the un-inversion of the yield curve. The yield curve is inverted when long-term bond yields fall below short-term ones so the difference between those becomes negative. It is an important indicator because historically yield curve inversions were followed by recessions, especially in the US. It remained inverted throughout 2023 and part of 2024. However, by the end of the year, the inversion ended as 2-year bond yields dropped below 10-year yields.
More about yield curve inversions can be found here. It’s important to note, that while recessions do not always follow inversions, those events remain significant. The U.S. yield curve inversion also ended in 2024.
Toronto Real Estate Became More Attractive to Foreign Investors
When adjusted for inflation and converted to USD, Toronto Metro real estate prices in 2024 returned to levels last seen in 2017.
For foreign investors, this represents a 36% decline in real estate prices from their peak, making the market significantly more attractive.
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