Your Weekly 411: Canada's Rent Growth Stagnates | Unemployment Hits 7-Year High | 27 Developers Went Under Water in 2024

The Weekly 411:

Today, we're covering

📉 Canada's Rent Growth Stagnates to 3-Year Low

📈 Canada's Unemployment Hits 7-Year High

🏢 Federal Workers Called Back to Offices 

😟 27 Ontario Developers Went Under Water in 2024

🏞️ Vancouver Housing Market Cools

🤔 WTF of The Week

Read Time: 4 minutes

📉 Canadian Rent Growth Slows to 3-Year Low

• Rent growth has declined since May, when it reached a record high of 9.3%.

• Five of Canada's six largest markets saw rents fall in August, with Edmonton being the exception.

• Toronto and Vancouver saw significant rent declines, with average rent falling 6.9% and 6%, respectively.

• Studio units and 3-bedrooms led the pack in purpose-built rent growth, with rises of 10.7% and 11.8%, respectively.

• Three-bedroom apartment rents performed well across all six major markets in August.

Why This Matters: The slowdown in rent growth is attributed to increased supply, more rental units being built, and decreased demand due to changes in immigration and a softening labor market.

📈 Canada's Unemployment Hits 7-Year High

• Canada's unemployment rate rose to 6.6% in August

• The economy added 22,100 jobs in August, driven entirely by part-time employment.

• Youth unemployment (ages 15-24) has seen the largest increase year-over-year, reaching an eight-year high.

• The employment rate has fallen to 60.8%, declining in 10 out of the last 11 months.

• Average hourly wage growth for permanent employees slowed to 4.9% annually in August, down from 5.2% in July.

Why This Matters: Economic instability and growing joblessness in Canada may dampen the housing market as potential buyers grapple with financial insecurity. The real estate market is closely tied to consumer confidence. When economic uncertainty is high, and job security is a concern, people tend to put off major purchases like homes, even if interest rates are favorable.

🏢 Federal Workers Called Back to Offices 

• Federal workers in Canada must work in the office at least three days a week, with executives mandated to be on-site four days a week.

• Some federal departments lack sufficient space to accommodate workers three days a week.

• Public service unions and workers are frustrated with the new hybrid work policy, citing concerns about desk space, privacy, and work-life balance.

• According to government data, as of March 31, there were approximately 368,000 federal workers.

Why This Matters: The shift to remote work has slowed down urban revitalization efforts, as fewer people are frequenting city centers, leading to reduced investment and development.

😟 27 Ontario Developers Went Under Water in 2024

• Developers entering receivership risks hundreds of housing units, leaving preconstruction buyers in limbo.

• In these circumstances, preconstruction buyers often have their purchase agreements terminated.

• Here's what it means if you signed a purchase agreement on or after Jan 1, 2018:

  • Homes priced $600,000 or less: up to $60,000 of the deposit protected

  • Homes priced over $600,000: 10% of the sale price is protected, up to a maximum of $100,000

Why This Matters: The wave of developers entering receivership directly impacts the number of new housing units coming to market, exacerbating the supply shortage. Buyers who lose deposits or terminate their purchase agreements may find themselves priced out of the market when they try to buy again.

🏞️ Vancouver Housing Market Cools

• Vancouver-area home sales dropped 17.1% in y.o.y

• Total sales were 1,904, down from 2,296 in August 2023.

• Sales remained more than 25% below the 10-year seasonal average.

• New listings increased by 4.2% compared to August 2023, with 4,109 properties.

🤔 WTF of The Week

​Last week, we mentioned the grossly delayed and mismanaged Borough Condos project. 

Now, sources revealed it's linked to a Chinese-Canadian billionaire. Xiao Jianhua, was detained in Hong Kong in 2017 and sentenced to 13 years in prison by a Shanghai court for embezzlement and bribery.

• His company, Tomorrow Group, was founded in the early 2000s by his wife, Zhou Hongwen.

• Zhou and her sister, Zhou Liwen, are directors of WinnerMax Capital, a Toronto-based company incorporated in March 2017.

• WinnerMax Capital funded some land purchases by Unexus Group, which has invested over $154 million in GTA real estate since 2015.

​(source)​

Why This Matters: How much of Canada's foreign investment is tied to money laundering and criminal activity? With billions of dollars flowing into the country's real estate market each year, it's unclear how much is being funneled through legitimate channels versus illicit ones.

This also raises questions about FINTRAC's ability to focus on anti-money laundering, as these transactions and connections went undetected.