Grinches

Re/Max (prone to puffery) warns there’ll be no hot Spring market. That’s a shocker. Veteran broker Bob Ede says it’s ‘hard to predict, but one thing is for sure – there has been no collapse in prices.” (Toronto digs cost a mere 9% less than two years ago, he says. The oversupply of listings, he adds, is simply huge.)

Sales of new houses in southern Ontario have essentially collapsed even as mortgage rates wither. StatsCan says new-builds across the country have shed more value than at any time in the past 14 years. And now Tariff Man suggests that in eight weeks he’ll crush our economy.

Oh, my.

Two days ago we told you about all of the things the feds, the provs, the lenders and CBers have been doing to throw gas on real estate. It’s a long list. Cheaper loans. Longer ams. Lower downs. Easier renewals, plus tax shelters and zoningicide.

The most consequential of those (30-year loans and 60% lower cash requirements to buy with CMHC) come into effect mid-December, just four days after the next interest rate cut. Meanwhile inflation’s come down to the target level, the jobless rate is behaved, financial markets are jovial and home loans are fifty per cent cheaper than a year ago.

If this were a normal world, buyers would be stacked like cordwood come March. But it’s not. In recent days even Re/Max got spooked. Prices will stay stuck, it says, with only move-up buyers increasing sales numbers (the kiddos still can’t afford to get in. Maybe never?). “It means the market will see an increase in activity, but the excess supply won’t be swallowed up by excessive demand,” says the firm.

As for first-timers, they’re sunk. Traditionally they make up 40% to half of the market. Lately it’s down to 10%. Houses cost a stupid amount. Downpayments are elusive, since saving is brutal. The stress test means qualifying at 6% or 7%. So even a drop in condo prices is not enough to lure them into offers.

Besides, people are dark at the moment. Look at US voters, who chose the old criminal billionaire racist because he promised cleansing hellfire and chaos. Look at the comments on this pathetic blog. Despite living in peaceful times in a prosperous place, people are pissed. They’ve been told all over social media that things are dire. And thus they become darker.

It all means buyers aren’t buying. Look at accumulating inventory in the resale market. Behold the collapse in new homes. Sales of single-family units are running 77% below the ten-year average in the GTA, for example. Condo deals have collapsed more than 90% under that level. Resale inventory is a third higher than last year. As previously documented, over 21,000 new, available and unsold homes sit in this one region alone.

The story is not changing. Buyers are scared, risk-averse, lacking in financial resources, often poisoned by social media and unsure this is the time to commit to debt.

No wonder. Given what happened this week, waiting – instead of buying – looks wise.

Yesterday’s blog detailed what most economists believe will happen if Canada faces US tariffs. A level of 10% would result in recession and inflation at the same time, plus a rising jobless rate, falling currency and likely higher interest rates to save it. A tariff of 25% on all Canadian exports would be nuclear. The GDP would fall significantly with government finances coming off the rails as tax revenues cratered. No leader – Lib, Con or Rhino – could save it.

The Trump fanboyz on this site defend the Orange Guy because they see obscene trade duties as hurting Trudeau. They don’t care – or likely don’t know – how this could gut their families. We live in an age when partisanship has killed common sense and, along the way, commonality among us. If Canada went to war now against a deadly foe, would the young step up to fight?

Nah. They just want a house. And that’s on all of us.

About the picture: “Thanks for being the voice of sanity while others are howling at the moon,” writes Karen. “Here is a photo of my friend Jo-Anne’s dogs. George (on the left) and Duke are three and big fans of Christmas. They pose with Santa every year at Terwillegar Park in Edmonton. The dog food truck Tangent’s Treats hosts the photo shoot as a fundraiser for Dogs With Wings and it raised $1,600.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/11/27/grinches/