Zooming

Even in Calgary house sales have dropped 19% and listings increased 100%. Toronto and Vancouver are a hot mess. Prices across Canada have softened. But they have not dropped, plunged, sunk or mellowed. A few sellers have surrendered. Most are hanging tough. Scores have withdrawn their properties. In one GTA market the DOM for $2 million+ homes – which used to sell in weeks – is approaching two years.

As you heard in the debate last night, nobody has a valid plan to fix this. The reason’s simple. Real estate is not really a federal matter. Citizens just made it that way and politicians were too scared to tell them otherwise. Towns and cities control permits and zoning. Provinces regulate housing. The feds can only dance around the edges tweaking tax policy and pretending to do something.

In any case, we don’t have too few homes for sale. It’s all about price. Here, look at this chart from the GTA which summarizes the total available number of resale homes and rentals at any given moment. Supply is currently off the chart. Buyers and tenants are swimming in choice.

Facing facts: the supply of homes is exploding

What can we expect?

Worsening conditions in the short-term. Tariff uncertainty is rampant. Central bankers have no clear idea what to do. Trump is rogue. A recession is imminent, lasting most of this year. Unemployment is rising in Canada and layoffs will accelerate. It’s no disaster, no depression, nothing as dramatic as the pandemic or structurally seismic as the Credit Crisis. But it’s a big deal if all you want in life is a house.

So, it’s a safe bet to say the cost of real estate will fade a little this year, mortgage rates, too, but so will buyer confidence and the number of jobs. Sales will stay anemic and realtors apoplectic. This is no economy to be an eat-what-you-kill commission guy. The industry could face a serious exodus by the time offers start flying again.

Who is best to deal with this, federally?

Well, nobody – as stated. The government in Ottawa will not, and cannot, make bungalows in Etobicoke or Vancouver Specials cheaper. Basing your vote on housing is to waste that ballot. The feds did not increase home prices. They cannot reduce them.

The plan to build zillions more places is a falsity. Just look at the chart above. There’s a huge surplus already, and prices are not retreating. Adding more won’t change anything, since building and development costs dictate prices will hold steady. Tariffs may even mean things become more dear.

The Carney plan to provide billions for acres of pre-fabricated, mass-built, get-‘er-done homes is innovative, but wholly unproven. Do young couples want that kind of housing? Will it have enduring value? Will it be better suited to rentals than ownership? And, as yet, it’s all just a plan. Shovels in dirt could be years off.

A strategy to lessen real estate demand by making renting a better option would be helpful. So would a plan to definancialize single-family homes. That could involve banning all unhosted sort-term rentals, changing the Interest Act to facilitate the growth of locked-in 10 and 20-year mortgage terms, phasing out the existing PR cap gains tax exemption and giving all citizens instead a lifetime break – to be used sheltering profits from selling a residential property, or wiping out the tax bill on a financial portfolio or retirement savings. Your choice.

Diddling with zoning, punishing cities for trying to plan growth or showering incentives on first-time buyers are things that clearly do not work. The Trudeau gang spent billions going down that road, and we accomplished zilch. You don’t get a different outcome by doing the same thing  repeatedly.

Will the election make a difference in the near term?

Here’s the forecast from veteran broker Robert Ede, a relentless chronicler of market statistics:

“I think the election provides a minority Conservative government,” he says (despite this blog’s two recent polls). “And a modest rally in real estate [powered by] first-time buyers, last-time sellers and buy-sell customers. No investors will be participating (apart from dumping non-performing rentals).”

After that, he adds, will come two quarter-point rate drops from the Bank of Canada, followed by “a fine time for real estate – especially worried realtors – in the summer and fall.”

Realistic? Or is Ede hopped up on hopium?

Nobody knows. But the guys on the political stage need to stop zooming us. We might rebel.

About the picture: “Our 3 year old poodle-cross Harley has been having some adventures!” writes Barb. “Thanks to our talented nephew Yuri for the photos! We have been daily readers for years, have attended one of your seminars in Nanaimo many years ago, and have purchased some of your books ( mandatory suck up)! Our neighbor Robin in beautiful Chemainus BC has submitted photos of her dog Lola which appeared on the blog and suggested we send this images of Harley.”

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

Source: https://www.greaterfool.ca/2025/04/18/zooming-2/