‘This spells trouble’

Some footnotes to yesterday’s brilliant blog on how real estate is staggering into 2026.

The debate rages. On one side are those who see this as a sales/price correction for a commodity that will continue to rise long-term – as it always has – because people want places to live. This view is held by the roughly 70% of folks – who own real estate. On the other are those (the 30%) convinced the market will be crushed because it deserves retribution with prices pounded lower until average people (them) can afford to buy and eefryone else punished.

A corollary to this is the collapse, already, of a key sector of the economy, residential real estate. Builders say about 100,000 jobs will be lost in the first few months of 2026 as projects are cancelled and new housing units not built. Sales have plunged to unheard-of levels since investors aren’t buying properties to lease in a falling-rent world and end users are convinced prices will be lower later.

This chart from RBC Economics visualizes it nicely. Completely pooched.

Source: RBC Economics

Condo sales are down about 90% in Canada’s two largest markets outside of Montreal, over the average of nine years prior to 2024.

It’s historic. Unprecedented. RBC says “this spells trouble for housing construction in 2026 and beyond. We expect housing starts will fall more than 10% nation-wide – and even more in 2027 – despite concerted policy efforts to boost supply.”

Now this is the stuff of a potential political crisis, too. Big Daddy and all the Preems have told voters they can erect millions of new housing units between now and 2030. They can’t. It’s impossible. We all know it. Yet they keep saying it. And the feds have just shovelled another $13 billion into the fire.

Yes, some needed and affordable social housing will be built for low-income households. A few thousand places. Sweet. But the suggestion to drop overall real estate prices for middle-class families by flooding the market with millions of new homes is empty and meaningless. New houses that people want to buy won’t cost any less than existing ones. And, yeah, they’re not being built, anyway.

Worse, say builders (and repeated here yesterday) the potential that: the cessation of homebuilding + the eventual return of demand = a shortage of supply = competition, bidding wars and FOMO = prices roaring back to 2022 levels. And that would suggest in 2026 – when the cost of a house has dropped 20%, maybe 30% from the recent peak that smart people would buy.

Of course, the doomers won’t do that. It’d ruin their image. Besides, they don’t just want a bargain. They crave revenge. This is the burn-it-all-down school of progressive economics wherein every generation north of Millennial is barbequed.

Well, that’s not happening. If history is any guide, expect the political elites to pivot, and save the middle class.

For example, Carney has already trashed the UHT – an annual and punitive tax on non-Canadian ownership of residential real estate, like cottages in Manitoba, chalets in Muskoka and hobby farms in the Annapolis Valley. Next on the chopping block will be Trudeau’s complete foreign buyer ban on properties in communities of more than ten thousand souls. This was extended to 2026 – and you can be assured it”ll soon end (as developers in Vancouver have been urging).

Housing minister Poor Gregor Robertson has hinted as much. The feds may model this after the Australians, who allow oodles of foreign investment into new construction, not resales. The goal is to save the builders while financing the creation of new supply without goosing properties listed on MLS. If Canadians won’t provide the capital to get real estate built, the logic goes, let the offshore dudes step up and do it.

Finally, don’t buy a property in NS. Not unless you plan to move there full-time, give up the health card in your existing province and buy one of those floppy yellow rubber hats that go nicely with wet fish and crustaceans. The tone-deaf local government has jacked the non-resident deed transfer tax from 5% of purchase price to (shudder) 10%. That means a decent $1.2 detached million house in Halifax now comes with an additional tax bill of $120,000.

For that you can buy a crab boat. To go with your hat.

Source: https://www.greaterfool.ca/2026/01/02/this-spells-trouble/