The empty promise?

Let’s try for a new blog rule. Call it NMM. No more moaning.

The vote is over. The blues lost. The reds will govern. We all face a rogue American president, potential recession in a trade war and real estate few can afford. Talk about the cowboy separation, pipeline fantasies or who uses your bathroom won’t solve anything. Move on.

In that spirit, what can Mark Carney do about the price of a house?

Immediately, nothing of course. No politician, policy or government can. The real estate market will be buffeted by supply, demand, interest rates and employment. This year you can expect a swamp, with falling sales, slowly melting valuations, two (maybe three) interest rate cuts, tariff-induced layoffs, recession for at least six months and weak consumer confidence amid an oversupply of listings.

If you have courage and money, there will be opportunity. But nothing the federal government will or can accomplish in the next eight months will be meaningful for those waiting on ‘affordable’ housing. The best thing politicians could possibly do is stop promising to fix stuff. This raises expectations that cannot be met.

Having said that, this is what Carney promised, and had better deliver…

The feds will get back into homebuilding

Ottawa will create “Build Canada Homes” (BCH), a federal entity that would construct affordable housing, largely on on public land, to catalyze a new housing industry and provide financing to ‘affordable’ homebuilders. There will be $25 billion pumped into available borrowing for the builders, and another billion in equity.

Recreating the Victory Homes experience

Pledging to erect a half-million dwellings a year, the Carney Libs say all this financing will be directed towards Canadian pre-fabricated housing. There will be bulk orders of units from the established manufacturers (mostly in BC, it seems). In addition to the $25 billion in debt financing (above) another ten billion will be made available to the homebuiders to ramp up production. The idea is to pump out standardized homes, rapidly, as the feds did following WW2 (and most of those structures still stand).

Slash federal taxes on new home construction

Both the reds and blues were on the same page with this idea during the campaign. Good. The Libs say GST on new homes worth under $1 million (which means condos only in most urban areas) bought by first-timers will be nixed. The Cons promised deeper cuts, so we’ll see if there is a compromise (it’s a minority government, after all). Poilievre pledged no sales tax on homes up to $1.3 million for all buyers.

Get more rental buildings on the market

If you’re a wrinklie, you may remember MURBs. This tax break (dentists, especially, loved it) encouraged investors to put money into the construction of apartments (it was called the Multiple Unit Rental Building program) by allowing generous tax deductions. They could write off purchase costs, legal fees, repair costs and even depreciation. It was outrageous. And it worked. The tooth fairy may soon be at it again.

Keep hammering away at towns and cities

The ‘Housing Accelerator Fund’ pushed by former minister, (poor) Sean Fraser, will continue. This is the hammer the feds use to smash local zoning restrictions by bribing municipalities with cash for local infrastructure in return for cutting the red tape developers face. Carney says he wants development charges halved (the money needed for water lines, sewers, schools, parks and roads) and Ottawa will make up the losses for five years. The feds also want a simplified building code and fast-financing of trusted builders.

So, just more bureaucracy and government meddling in an industry that’s already been corrupted by politics? Or useful actions? Will young couples even want pre-fab, cheaper, cookie-cutter houses?

Dunno. These days nobody’s buying anything because everyone’s scared of the orange guy and the crippling impact he could have on jobs, paycheques and family finances. Dealing with the Mar-a-Lago monster is Job One for Mr. C.

Beyond that, the Bank of Canada – his old stomping ground – has a pivotal role to play here. We still have over a million families with mortgages coming due, many at much higher rates than taken in 2020. That could have a deadening effect on the market if listings swell – the combination of rising unemployment and higher financing costs, should central bank policy not change.

The bottom line is houses may get cheaper this year, but that’ll have nothing to do with the feds. Politicians and governments have proven their absolute inability to do much other than screw things up with stupidities like vacant home taxes, foreign buyer bans, speculation taxes, anti-flip levies and underutilized house penalties. They should stop promising the impossible. Voters should cease demanding the undeliverable.

Mr. Market will decide. And in 2025, it’s down.

Just stop moaning.

About the picture: “This is Charlie,” writes Barbara.  “Even about one month before his recent passing he had a surge of energy and wanted to play keep away with my mitten. And always wanted to walk on the Summit in Montreal. Thank you for sharing your knowledge in such an entertaining fashion.  I am a relatively new reader and appreciate your and your readers’ insights.”

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

Source: https://www.greaterfool.ca/2025/04/30/the-empty-promise/