The unserious

Welcome to Power Plant and Bridge Day. By midnight, says the American president, Iran will be gone. A civilization bombed into the Stone Age, Unless, of course, he goes TACO later today.

Yes, it’s a world full of stress, unknowns and weird people. If Trump gets Crusader Pete to squish the Muslim state (Hegseth has a tat on his arm celebrating the Medieval butchery) then oil goes nuts, inflation roars back and mortgages romp higher. But a deal/truce could bring the opposite.

In days like these, how do you plan?

This is one big reason real estate in Canada has been staggering along for the past year as consumers lose confidence – about trade, jobs, incomes and now war + inflation. It seems like a dumb time to sign up for an adulthood of debt, leading to poor sales and continually melting prices.

What now?

Well, the stats out of the mighty GTA this morning were better than expected. Sales in March were about the same as last March. Yes, they still sucked but that was a realtor victory – no decline, and a 1% advance. Prices, of course, fell more. Down 7% year/year. And many sellers gave up. Inventory over the past few months has dropped by a third, to just over 20,000.

This blog suggested 2026 will not go well for the Re/Max crowd, and could well mark the bottom of the correction – consistent with the last great plop (the late 1980s, early 90s) which shaved 32% off valuations. We are now, after almost four years, close to that.

But no, the kiddos cry. No rebound is coming. Only declines. Until newbie buyers can get an average place in Van, the GTA, Ottawa or any other major city on an average income, the melt will carry on. So this blog must be evil.

“Garth, even suggesting that 2026 is the bottom shows you are stuck in an old paradigm,” writes Paul Heth.

“The bottom will be when the average Canadian can enter the housing marketing by spending 3.5-4x their annual income – like it has been for generations before this liquidity fuelled insanity we have been living through. Suggesting we are near the bottom when housing is still 2x what it should be in most of the country again smacks of ‘pumperism’. Not sure why you can’t shake that thinly veiled perspective.

“We haven’t seen anything yet. Housing in most of the country is still insanely expensive causing delays in child rearing, instability, 1 asset retirement planning and all aspect of things that have been keeping Canada from being even better than we already are. The soon this era is over the better position Canada, and Canadian are to rebuild.”

It’s a meme. Real estate must drop by 50%, we’re told, or bad things will happen. It’s a generational thing. The young are being skewered. The old don’t care. Up the revolution.

Well, let’s chill. Canadian house prices are not going to decline another 50%. It’s an economic impossibility – unless a number of dramatic things happened. Like what?

An eruption in interest rates, likely the result of a global debt crisis shock. As corporate and government defaults gathered, bond markets would sell off, yields jump, mortgage costs soar and credit become seriously restricted. With buyers unable to get financing, house prices would tumble.

A surge in joblessness, similar to that seen during the 1930s. In 1929 the unemployment rate in Canada was 2.9%. By 1933, it was 29%. Yes, house prices crumbled in the Great Depression – by 37% – but far fewer people could afford them, given unemployment, declining salaries and deflation. A negative feedback loop would depress real estate in a way unknown for generations.

Recession or worse. A crash of Canadian real estate values by half would remove more than $2 trillion in personal wealth. Untold numbers of retirees would have nothing, falling upon the state for additional support. A wave of credit unions, mortgage lenders and other smaller financial institutions would fail. Loans would be hard to come by. Canada’s GDP – dependent by a third on housing, construction and related activity – would tank. That would drag the dollar down, increasing the price of imports. Less in consumers’ pockets. More downward pressure on housing.

Perchance, Paul, you can see what it would take to bring what you seek.

House prices do not rise or fall in isolation from the economy, the price of credit, incomes, employment, trade, taxes, population change or the confidence and optimism people need to buy them. Real estate won’t lose half its value while you carry on with the same income, access to loans, job security and life in a stable society.

Naïve. Unreasoned. Unrealistic. Unserious.

If you can afford to buy with prices discounted by a third, yet don’t, the consequences are all yours.

About the picture: “A shot of the farewell stare,” writes the blog dog known as Dharma Bum, “from the granddaughter and grand doggies after visiting Alberta for her first birthday and heading home to Ontario. Got some great skiing in as well. All the best to you.”

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

Source: https://www.greaterfool.ca/2026/04/07/the-unserious/