The comeback year

Yesterday we had a communal moan and gasp for all the losers in the assignment market. They bought pre-con. They gambled. They lost.

This little-known but vibrant patch of the real estate world can be a good harbinger of what lies ahead, as well as hard evidence of how society just screwed up. These days there are few reasons to think property values will rebound in 2026. Next year? Whole different story.

First, the we’re-all-pooched news.

This morning the stats out of Washington showed the strongest jobs growth since you-know-who came to office. The unemployment rate dropped a little to 4.3% as 178,000 more people found work. That came after a disastrous February and a mediocre performance for the past year.

So what does this have to do with real estate in Kelowna and Halifax?

Quite a bit, actually. That job growth shows gathering economic activity after Trump’s tariffs had hammered business confidence. “The better-than-expected employment report is pretty convincing proof that the three Fed rate cuts late last year were having the intended effect of stabilizing a labor market that had weakened to the point of stagnation and modest contract in the fourth quarter of last year,” says Toronto economist Scott Anderson.

The main point: the American economy does not need more interest rate cuts. Jobs are percolating. And we have a very, very, very expensive war taking place.

The Iran fiasco is fuelling inflation with military expenditures of $1 billion a day, a $200 billion bill sent to Congress (all of it will be borrowed), $110-a-barrel oil (up 40%) and Americans now paying more than $4 a gallon for gas – and well over $6 for premium grade in commie California. Meanwhile US mortgages have shot up to 6.5%, thanks to Epic Fury, after finally dropping into the 5% range.

The cost of living will rise in both Canada and the US in coming months as a direct result of the conflict and a surge in global energy costs that won’t reverse much even if the bombing ends tomorrow. Meanwhile Trump has added massively to geopolitical tensions as he weakens NATO, strengthens Putin, causes serious infrastructure damage to the entire Gulf region and tells a 2,500-year-old country of 92 million that he’s going to bomb them back into the Stone Age. Iran has responded by saying, fine then. We’ll take control the Strait of Hormuz. Forever. And it will.

The bottom line, kids, seems clear.

Forget 2026. Total mess. Property prices have more to fall until they settle in for the big bump to come. US rates are not going to drop now, nor will those at the Bank of Canada. “Market reaction to the latest news on the labor market: Treasury yields are rising across the curve as markets price in all most no prospect of a Fed rate cut this year,” notes economist Anderson.

The danger is a rate hike. Could happen. If the war drags on for a few months inflation expectations will rise, supply chains will be screwed up, higher energy costs will be embedded and CBs will have to cope with bloated government debt requirements. A pop in the cost of loans is possible later this year if that comes to pass.

All this is depressing for sellers (and realtors) but opens up a lot more room for potential buyers. Prices are already down by a third. Financing charges are lower than a year ago. Inventory is plentiful. Bidding wars and blind auctions are rare. Less competition among buyers and way more stress among vendors. And conditional offers are a thing again – dropping purchaser risk.

If another 10% or so is shed from average asks by the end of the year (completely possible) the scene is set for a mother of a rebound in 2027.

The scenario: this war is over. The midterm elections in the US have flipped the balance of power. Trump’s a lame duck. MAGA’s failing. The race is on for presidential nominations for 2028. Canadians are starting to reap the rewards of trade diversification and big-dig projects. Most importantly, that one massive missing ingredient for the housing market comes trickling back – confidence.

Canada, people will realize, is already great.

About the picture: “Here is a nice shot from Nanton, Alberta, at my sister’s horse ranch,” writes Pete.  “This is her barrel racing horse hanging out with her stock dog in deep snow.”

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

Source: https://www.greaterfool.ca/2026/04/03/the-comeback-year/