Frozen

Brokers say the housing market is ‘paralyzed’. That’s the operative word. Frozen works, too. Sales are down. Prices are down. Listings are up. Months of inventory have swollen.

You know why. Trump scares the poop out of people. He is unpredictable, capricious, unreliable and perceived as dangerous. He’s trashed asset values. Thinner portfolios, tax-free accounts and RRSPs are the result. He can bring recession, job loss and personal financial chaos. He robs families and potential buyers of the ability to plan. So they put those plans on hold.

Then there’s the election. Polls have swung wildly. The Americans loom large. Carney is new and unknown. Poilievre sounds angry and scary. And does anyone actually have a housing plan not based on fictional construction numbers and faerie dust? Everybody knows when people stop buying, builders stop building. Everybody, that is, except the guys running to lead the country.

Well, we’ve told you about markets like Toronto. The worst sales in 30 years. Highest number of active listings in a decade and a half. Median prices down 4% for each of the last two months. Active listings 80% over last-year levels. Now 6.5 months of inventory for condos.

The spring market is crushed. Even if the Bank of Canada reduces its policy rate another quarter point this month (which it will), the effect will be muted or silent. And remember this CB rate drop of a full 2.5% from the peak comes with new 30-year mortgages, seriously slashed down payments, greater mortgage insurance levels, cheaper home loan rates, motivated sellers ad desperate (starving) realtors.

Still, crickets. Paralyzed, frozen crickets.

FOMO is gone. Irrational and emotional buying decisions are so 2022. Sure, a few choice houses in traditional demand areas get multiple offers – because they’re rare and coveted – but the burbs, the tract houses, the condos and the routine homes that once were craved, now sit unloved, unsold and devaluing.

As with financial investors, nobody knows where this is headed. Tariff Man paused his global assault for 90 days (see below), but has still created an unwinnable trade war with the second-largest economy. Stocks have been swinging wildly. There is a brewing crisis in the bond market. Yellow rocks have been jumping in value. And Canada is still subject to punishing car, steel, aluminum, potash, lumber, oil and other tariffs despite our free trade deal with the same guy who just ripped it up.

In short, nothing is predictable at the moment. So people are naturally unwilling to borrow a million dollars to buy a so-so semi in a Class C part of town, with three hundred thousand down. Closing costs are ridiculous. Insurance premiums and property taxes are steadily increasing. Real estate could well be cheaper than today come July. If there’s a recession, mortgages will cost less in the summer. The trade war stuff could explode again after three months have passed.

Thus, why buy now? Why take the risk when so much cash and debt is involved? After all, houses are not stocks or ETFs. You can’t bail out if you lose your job with one click or a phone call. It is no time to be rash.

So, regardless of who forms government later this month, or what the orange guy decides next, Canadian real estate’s going down. Fewer sales, more inventory and a steady bleed on pricing. As with all market declines, there will be distress sales, deep discounts, wall-to-wall anxiety, and some true bargains.

Courage is in short support. Wisdom, moreso.

Speaking of tariffs, Trump, trade wars and trouble, it appears the American president was jolted into his tax backtracking this week by the bond market. The most risk-free asset on the planet – US Treasuries – started to lose value rapidly, forcing yields to swell as investors bailed.

America owes $35 trillion in debt, financed by these suckers, which are largely held by foreign governments, and critical to the day-to-day running of the world’s dominant economy. Any loss of confidence in these bonds which may result in values falling and yields spiking constitutes the greatest single threat to the White House, and the rest of us.

Why did the bond market suddenly turn against Trump, causing him to pause those voracious world-wrecking tariffs and reversing a stock collapse?

One explanation: Mark Carney.

Remember that trip he took to Europe after being named PM and before calling the election? Seems Carney, the global financial guy and economist, was organizing a bond revolt among the leaders of the UK, France and other nations. The idea – if Trump went rogue – was for everyone to start slowly, quietly, firmly dumping holdings of US Treausuries to flood the market, drop prices, swell yields and scare the bejesus out of the president. Canada holds $350 billion in these bonds, and is a major player. Together with his Euro buddies, Carney orchestrated this – according to analyst Dean Blundell.

Moeover, the PM told Trump this was the play in their most recent conversation.

“The U.S. Treasury market is the backbone of the global economy. Foreign holders like Canada, Japan, and the EU keep it humming, financing everything from America’s military to its tax cuts. Start selling those bonds in unison, even gradually, and the yields spike. The dollar wobbles. Borrowing costs climb. Suddenly, Trump’s “beautiful” bond market—he bragged about it just yesterday—looks like a house of cards in a stiff breeze.

“That’s the message Carney delivered in his call with Trump last week. No leaks on the exact words, but the outcome speaks volumes. Trump didn’t just pause the tariffs; he backpedaled hard. China’s still in the crosshairs—125% duties are no joke—but Canada? The EU? Japan? They’re off the hit list. For now, at least. Why? Because Carney’s play wasn’t noise. It was power.”

Take this for what it’s worth. But, if true, maybe a CV matters after all.

About the picture: “Hi Garth and crew. This is Thelma,” writes Antonio. “Weathering the April 8 snow storm in Ottawa. She would rather be outside than spend time with her new 6 month old British short haired brother Walter…… yuck! Thanks for all your insightful views throughout these stormy times.”

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

Source: https://www.greaterfool.ca/2025/04/11/frozen/