Talking it down

We’ll know in a few days how much November sucked for people trying to flog a house. For realtors now living in bushes and working for Uber Eats. For builders sitting on costly inventory with no buyers. For the houseless, yearning kiddos.

The monthly stats will likely be brutal. “CREA was ahead of itself in declaring a market bottom,” says veteran GTA broker Robert Ede. “We’re still 20% below last year. Sales are there but not hitting the average. Inventory is creeping down as people go off the market – but there’s still over five months of supply, and it should be half of that. There are way too many properties. Lots of people have things for sale that nobody is looking at.”

The local media has grasped that thought. This is the house apocalypse.

So where’s the bottom? Ede says he has no idea. But it’s not yet. Nor are we in a crash, either. Just a steady, gentle descent. Buyers can grab an empty unit at a big discount with a quick close. Prices will continue to melt, albeit it at a slowing pace. And sellers must be willing to dicker, as well as be adventurous.

That could include a VTB mortgage, last discussed here a few months ago and now going more mainstream. That happens when a seller agrees to take a portion of the purchase price as a mortgage on the property, typically at a very low rate. Like 0%.

The advantage to the vendor is getting rid of the property at a reasonable price. (He/she would finance a portion of the sale price for a defined period of time and receive regular income. If the rate’s zero all payments are 100% principal and non-taxable.) The buyer gets a pile of free money to close the deal with, avoids mortgage stress test stress and jumps into the market when prices are low and competition thin.

Of course, both parties have to be prudent and the deal must be properly lawyered. But it’s a simple and quick win-win.

Now, speaking of mortgages, some MPs in Ottawa have been throwing around the idea of breathing life into the corpse of the 40-year home loan. Good idea?

You may not remember the four-decade-long borrowing, birthed by the Stephen Harper Cons twenty years ago. Then it was combined with 0% downpayments, all backed by CMHC insurance. The idea was to create the same ‘homeowner society’ that was sweeping George Bush’s America at the time and encourage house buying as never before. (After all, stats show that people who own real estate tend to vote on the right while renters – shifty, unstable, quixotic and faintly revolutionary – go left.)

It was a disaster.

Zero/forty mortgages threw gas on property values, increased household borrowing and eroded the quality of debt held by lenders like the big banks, The feds backtracked and ultimately we avoided much of the bad-loan carnage that swept America and toppled Wall Street titans.

Now Trump is floating the idea of 50-year terms, and the alarm bells are ringing. Our own Parliamentary Budget Office is also dumping on the notion that bringing back lifetime amortizations to Canada would help anyone.

The main concerns: the cheaper that loans become, the more people borrow and spend. Real estate valuations jump. Second, long amortizations mean fatter interest payments.

“Although monthly mortgage payments would be reduced,” says the PBO, “total interest paid on loans would increase substantially as the principal would be repaid over a longer period of time. For example, the average Canadian household buying an average priced home at prevailing interest rates in August 2025 with a 33 per cent downpayment would have to pay almost 75 per cent more in interest over a 40-year amortization period compared to what they would pay with a 25-year amortization period.”

Yikes. A whopping 75% more paid to the bank over the life of a mortgage. And given the fact the average newbie buyer is now 40 years old, this is also a debt that lasts right into retirement. Worse, interest in an amortized mortgage is jammed on the front-end of the loan, which means in the first decade or so borrowers pay massive amounts of interest and little principal, which is reversed in the final years. Therefore the longer the am, the more slowly equity builds, essentially trapping an owner, making it harder to sell and move up the property ladder.

So, bad idea. Don’t go there, Mark Carney. The disintegration is continuing  nicely.

About the picture: “Here are brothers Aero and Reese enjoying the long dog days of summer at the cottage,” writes Cherlie. “At 13 years old they’re slowing down but still enjoy a dip in the lake and each other’s company. Thanks for all that you do! Feel free to use on the blog, take care!”

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

Source: https://www.greaterfool.ca/2025/11/30/talking-it-down/