Canada’s job market hasn’t kept up with its population growth, and that’s bad news for major real estate markets. Statistics Canada (Stat Can) data shows unemployment continued to rise in June. A deep dive shows the weakness is concentrating in some of the country’s most important real estate markets. Just five cities represent most of the unemployment growth in the past year, half of which was located in Toronto.
Canadian Unemployment Is Rising, Now 1.4 Million Jobseekers
Canadian unemployment has generally been on the rise. The unemployed population grew 0.2 points (+29k people) to 6.3% (1.37 million people) in June. Since last year, the rate has added 1 point (+250.4k people), hitting the highest level since 2022. It also happens to be the highest non-pandemic unemployment rate since October 2017, with one key difference—there’s a lot more people this time around.
As mentioned last week, Canada’s unemployment story is less about job losses and more about population growth. Immigration is rising much faster than the country’s economic capacity to create jobs, leading to much higher unemployment for new immigrants and young adults competing for similar roles. On that note, it’s no surprise that most (60%) of the unemployment growth in the past year was concentrated in major real estate markets—Toronto, Vancouver, Calgary, Montreal, and Halifax. Half of the collective growth in those markets was located in Toronto.
Canadian Unemployment Rate On The Rise
The unemployment rate for Canada and selected cities, seasonally adjusted 3-month moving average.
Source: Statistics Canada; Better Dwelling.
Toronto Is Home To Over 1 In 5 Unemployed People In Canada
Toronto is Canada’s largest city, and one of the most popular spots for people looking to start a career. That might be a mistake. The unemployment rate made some progress by falling 0.1 points (-2.3k people) to 7.8% (314.9k people) in June. Over the past year, the region’s unemployment rate added 1.7 points (+73.4k people). Take a moment to appreciate just how many people that is.
In just 1 year, its unemployed population increased by more than the equivalent of Fredricton or Ft. McMurray’s total population. That’s just the growth, not the total unemployed population. There are so many unemployed people concentrated in Toronto that if they got together and formed their own city, it would be Canada’s 14th largest—right behind Halifax.
Canada’s Unemployed Population Is Increasingly Located In Toronto
The share of Canada’s unemployed population located in selected cities.
Source: Statistics Canada; Better Dwelling.
Over 1 in 5 (23%) people unemployed in Canada are concentrated in Toronto. The region’s growth over the past year was also 29% of total growth, meaning its overweight in its contribution.
Vancouver’s Job Market Remains Much Stronger Than Average
Vancouver proves that not all big cities are experiencing problems—it’s doing better than average. Its unemployment rate fell 0.1 points (-1.6k people) to 5.6% (95.7k people) in June. Over the past year, the rate has increased 0.2 points (+6.3k people). Vancouver doesn’t just have a lower than average unemployment rate, it also has much slower unemployment growth.
Calgary Is Seeing Unemployment Surge, Much Higher Than Average
Despite Calgary’s resilient real estate market, it’s home to one of the highest unemployment rates in Canada. The rate climbed 0.4 points (+3.8k people) to 8.5% (87.3k people) in June. It’s up a whopping 2.3 points (+27.3k people) since last year—more than double the growth rate of the national average. Despite this, it’s one of the only markets where real estate continued to demonstrate strength.
Montreal’s Labor Market Just Saw A Rapid Shift, But Resilient So Far
Montreal’s unemployment rate is just below the national average, but things are changing fast. The rate increased 0.4 points (+9.3k people) to 6.2% (156.3k people) in June. It’s now 1.7 points (+41.8k people) higher than last year. A rate that comes in lower than average is good news, but last month’s move was so large that it represented nearly a quarter of unemployment’s annual growth. Maybe it’s noise, maybe it’s not—but worth keeping an eye on.
Halifax Has Low Unemployment, But Weakness May Be Emerging
Halifax real estate and it’s job market have at least one thing in common—it’s barely moving. The region’s unemployment rate increased 0.3 points (+0.8k people) to 5.8% (17.2k people) in June. It’s now 0.1 points (+1.4k people) higher than last year. An incredibly low rate, but the month’s move was 3x the annual change. That implies a very fast reversal of progress made over the past year.
Canada’s employment market is an odd state—unemployment is rising, but not due to a loss of jobs. It’s mostly due to the country’s population growing much faster than the economy’s ability to absorb this labor surge. As a result, the burden is primarily falling on recent immigrants and young adults who compete for similar, low experience roles. Not surprisingly, that skews the problem to the country’s major cities where those populations are located.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
