Not there yet

Realtor Robert Ede is a data freak. A chart nerd. He’s all-in with technical analysis of the housing market. Stats don’t lie, he says. We should study and understand them. And – as with stock chartists – there’s a strong belief that technical analysis is actually human behaviour analysis.

Yes, monetary policy, government regs and macroeconomic stuff affects real estate values. But it’s how people feel that really dictates where sales volumes and valuations will go. So, because human nature has not yet changed (or every will) what happened in the past is a window to the future when it comes to properties.

Okay, Bob, where are we then?

“Assume that sales will continue at 30-45% off the long term averages and that prices will 20% drop more,” he says. That then raises some fundamental questions the veteran realtor is posing.

“How many 2018-2022 buyers will be underwater? How many lenders will be underwater? How far will rates drop? How lousy will the CDN/ World economy have to be (for this to occur)? How many buyers will jump in? How many realtors have no experience with anything-other-than an UP market?”

In other words, anything could happen next. But it won’t be good for people who make a living selling houses. Volatility looms large.

As you know, the orange guy has now said Canada will be whacked with more tariffs on August 1st. (This weekend he added Mexico and Europe to the list). So much for the July 21 deadline Ottawa was expecting for a new Canada-US trade deal – the reason we ‘caved’ so fast on that Digital Services Tax.

Two days before that the Bank of Canada will review its rate policy. Right now the betting is no change. Another pause. But if the first of August comes and goes with no Carney-Trump embrace, tariffs increase and recession looks more likely, it will be a long six weeks before the CBers respond in mid-September.

Meanwhile, it’s not just us. The whole planet’s in a funk. Look at the latest measure of global economic uncertainty. Pass the Valium and Xanax! We are lit…

Source: policyuncertainty.com

So there’s more stress right now than during Covid. It’s also a time when the stock market and the housing market are catapulting in opposite directions. Expect this gulf to widen.

Trump’s domestic policy agenda (now law) with its weakening of regulations, lowering of taxes and rampant protectionism is likely to throw more gas on US equities – which have already boomeranged back to record highs. But Trump’s tariff terror is sapping the confidence of potential housebuyers, now in evidence with falling sales and surging inventory.

If you believe realtor Ede, it ain’t over yet. More imbalance between supply and demand. More price cuts. More desperate sellers. Meanwhile governments’ build-baby-build mantra threatens to make things worse if 500,000 more units a year actually materialize.

By the way, have you seen the condo trainwreck that’s been happening in the GTA? Any time the sales-to-new-listings ratio (SNLR) falls below 40% it’s viewed as a buyer’s market. But what do you call it when the buyers just leave?

Source: Scott Ingram, TRREB

What can change this?

A trade deal between Ottawa and Washington in the next two weeks, including Carney’s bottom line demand of no tariffs and free trade. Odds of that happening: 20%. Maybe less. We might get the framework of a deal, of course, but free trade won’t be in there.

Or the Bank of Canada could collapse interest rates, giving us home loans at 3% or less. Combined with recent real estate price declines, that might look irresistible to buyers who have been sitting on the sidelines, incubating their cash. Odds of that: 10%. The CB is still worried tariffs could ignite inflation and, besides, we just had a strong jobs report. No need to pull the trigger yet – just to keep realtors from having to camp out in the Range Rovers.

In short, Ede’s right. No bottom yet. That may take some snow.

About the picture: “In response to your request for dog photos, this is our sweet grand dog Osa,” writes Linda. “She is living her best life on Vancouver Island, oblivious to all the tariffs and turmoil in the world! Thank you for your continued education on personal investment strategy, inheritance, and retirement planning. I want you to know you have many fans.  Even if we’re often silent, please know of our appreciation.”

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

Source: https://www.greaterfool.ca/2025/07/13/not-there-yet-5/