The Weekly 411:
Today we're covering
π Unemployment Could Exceed 7% Unless Rates Drop
π΄πΌ Retirees Drive Demand for High-End Rentals
πΈ Toronto Condo Sales Plummet, But Prices Remain Steady
ποΈ Condo Projects In Receivership
Read Time: 4 minutes
π Unemployment Could Exceed 7% Unless Rates Drop
- Canada's June labor market data showed a net loss of 1,400 jobs, pushing the unemployment rate to 6.4%.
- The unemployment rate has increased since 2022 and is now at its highest level in the G7.
- Projections show the unemployment rate could hit 7.5% next spring if interest rates aren't cut.
- Some economists argue the Bank of Canada (BoC) should cut rates in July. The next BoC announcement is on July 24
Why it Matters: The Bank of Canada needs to cut interest rates quickly to stabilize the labor market before the unemployment rate gets too high. Wage growth is a delayed sign of economic changes, and a slowdown in wages usually happens after the job market starts to weaken.
π΄πΌ Retirees Drive Demand for High-End Rentals
- New census data shows that 1 in 5 Canadians over 55 are renters, with 30% of individuals over 55 renting in Vancouver and Toronto.
- In Montreal, 47% of renters are over 55 years old, 16% in Calgary, and 21% in Edmonton.
- Many elderly renters choose to rent for convenience and flexibility, while others need the capital from selling their homes.
- Some elderly renters are demanding high-end units with amenities, pushing up rents.
Why This Matters: Investors should take note of the growing trend of 55+ renters and adapt their strategies accordingly. This demographic is increasingly seeking rental properties that cater to their needs, driving demand for age-restricted housing.
πΈ Toronto Condo Sales Plummet, But Prices Remain Steady
- Condo sales in Toronto fell 29% year-over-year in June, but prices only declined by 0.9%
- Sellers are refusing to lower prices, hoping to avoid a financial loss.
- Many listings have expired, and sellers are choosing to relist later, hoping for better market conditions.
- Nearly half of condos have been listed for 30+ days, indicating a disconnect between sellers' prices and buyers' expectations.
- Experts say prices won't drop until sellers adjust their prices or inventory decreases significantly.
Why This Matters: Buyers who purchased during the pandemic price peak are unwilling to sell at a loss. The downtown condo market is particularly struggling, with few sales of small units and a decline in interest in downtown living due to remote work.
ποΈ High-Profile Condo Projects in Financial Ruin
Navigating the condo market has never been more challenging, especially for sellers. When a condo development enters receivership, it signals severe financial distress or mismanagement. Here are some high-profile Canadian real estate projects that once promised luxury and innovation but now face financial ruin:
Mizrahi Developments - The One
The One, a mixed-use skyscraper at 1 Bloor Street West in Toronto, is in receivership with $1.662B in outstanding debts. Construction delays and financial issues have led to court-appointed management by Alvarez & Marsal Canada Inc.
βTotal Debt: $1.66 Billion
Vandyk Properties (5 developments)
Vandyk Properties faces receivership for five developments in Ontario. The projects, totaling 1,757 homes across Brampton, Mississauga, and Toronto, are incomplete. Lenders cite cost overruns, misused funds, and unpaid interest as reasons for losing confidence in Vandyk's ability to complete the projects.
βTotal Debt: $203 Million
Ashcroft Homes (3 properties)
Three Ashcroft Homes properties in Ottawa, totaling 600 residential units and 38,000 sq. ft. of retail space, entered receivership after the developer defaulted on $6.5 million in loans. The developer struggled to lease 40% of the retail space, citing high costs and reduced cash flow.
βTotal Debt: $6.5 Million
Burnaby Office Towers (2 vacant office buildings)
Slate Asset Management's "Golden Towers" office complex in Burnaby, BC entered receivership due to a failed sale and $49M debt. The vacant two-tower property, acquired in 2019 with an $88M loan, faced default after unsuccessful sale attempts.
βTotal Debt: $49 Million
Elevate Condominiums Project (4 towers)
The four-tower development in Kitchener, has gone into receivership owing $64M. Only one tower is 80% complete and not watertight. Construction halted due to financial issues, leaving significant debts and construction liens.β
Total Debt: $64 Million
Haro-Thurlow Street Project
A 55-storey condo and rental project at 1045 Haro St. in Vancouver is in receivership, owing BMO $82.7M. The property, originally purchased for $172M, will be sold to repay the loan, as per court orders.
βTotal Debt: $83 Million
Mizrahi Developments & Constantine Enterprises
Mizrahi's nine-storey luxury condo project at 128 Hazelton Avenue in Yorkville is in receivership, owing $47M. Constantine Enterprises, a 50% partner, cites financial mismanagement and delays over five years, leading to the project's halt and court-appointed management by KSV Advisory.
βTotal Debt: $47 Million
π€ WTF of The Week
Toronto's iconic "Doll House" in Leslieville is for sale after 50 years with the same owner.
The "Leslieville dollhouse" in Toronto is famous for its front-yard filled with dolls, toys, and teddy bears. Owner Shirley Sumaisar decorated it for over 50 years, making it a popular local landmark and photo spot. The house has attracted worldwide attention and is now up for sale.
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