The waiting game

A spiffy detached home (four inches of air from the next one) in midtown T.O. came to market half a year ago at $3.9 million and just sold. The sellers accepted an offer with a ‘2’ in front of it.

Yup. A big haircut. A capitulation.

Days ago we told you about the rivulets of blood coursing from every orifice of the new-housing sector. The worst numbers. Ever. Sales have collapsed, with 21,000 unsold units available as the air hammers and cement mixers fall silent.

Now the resale market is in full retreat in Canada’s biggest market – as in those other cities we detailed yesterday. February was a tough month in a lean time. Sales down again (- 6%), listings shrinking as sellers retreat (-18%) and the average price melting (-7%).

Just a few months ago purchasers had about 30,000 properties to choose from. Now that has dropped to 19,400. Buyers are waiting for some kind of bottom to emerge (which won’t be evident until it’s passed). Sellers are shunning a race to that bottom. And now we have a scary war in the Middle East that could screw up any recovery in March – traditionally the start of the hot spring housing season.

Well, it’s been a trip most people thought would not happen. The average detached house in 416 is now $1.58 million. Yes, a stupid amount of money. But not so long ago the same place was changing hands at just over $2 million. By all accounts, the price fade ain’t over yet.

The local real estate board (by the way, the GTA has 70,000 house floggers) figures there are at least 100,000 buyers who are just waiting. They may have the means to purchase. But not the cajónes.

“Many would-be homebuyers are waiting for selling prices to level off before moving into the market,” says cartel boss Daniel Steinfeld. “If new listings continue to trend lower through the spring, competition between homebuyers will increase, supporting home prices and a recovery in sales.”

Is that realistic?

The realtors also say a hundred thousand people are waiting to see what the outcome of the Canada-US trade talks will be – as well as lower prices – before they’ll consider writing an offer.  “Once we see both, there could be substantial momentum driving home sales in the second half of this year and into 2027.”

But it’s no longer that simple.

Despite what the US president and his secretary of war say, the Iran thing cannot go smoothly to a pleasant outcome. There is no good ending, and certainly not a quick one. Oil prices are being kicked higher. The bombs are flying. The war is spreading. And the fact a sub just torpedoed another country’s ship – the first time since WW2 that weapon has been used – seems immense.

How far will Trump go, egged on by Israel’s pugilistic, Arab-hating leader?

Dunno. But we’re nowhere close to an end now and may not be for months to come. Maybe years?

Wars are disquieting, even when you are not involved. In this age of 24/7 news and endless digital feeds, they’re inescapable. There are two hot ones raging at the moment, and the psychological toll is apparent. Plus, gas is going up. Inflation will, too. Interest rate cuts seem to be over. And AI may eat your job. So much to moan about – and houses still cost a million.

But wait. It gets worse (maybe).

This week economists at Scotiabank laid out their scenario for Trump walking out on CUSMA talks, and Canada being tariffed and spanked as that trade deal collapses.

This would be, the bank says, “a genuine macro event; the most significant North American trade disruption in decades. The combination of steep tariffs and productivity losses drives Canada into a deep recession and leaves the U.S. facing higher inflation and weaker growth.”

The Bank of Canada, facing a big drop in our GDP and a spike in unemployment, might have to drop its rate by half a point. But that would be complicated by any counter-tariffs Ottawa might impose or measures the Carney government takes to bail the country out.

“Given these risks, and the wide spectrum of possible outcomes,” the bank says, “the most prudent course remains patience.”

And that is exactly what is murdering the market.

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Source: https://www.greaterfool.ca/2026/03/05/the-waiting-game-3/