The big chill

Brad and Deeana are houseless Millennials. “Sucks,” she says. “We’re sick of renting but scared of buying. How is anyone supposed to know what to do anymore?”

Both 34, one kiddo, now paying $3,500 for a two-bedder in the city and with a little over $300,000 saved for a real estate downpayment. Hopefully a new house, ideally within a 40-minute commute of work. (He teaches, she runs an insurance office.)

The issues are debt and confidence. They can swing about a million mortgage to buy a $1.25 million townhouse. Yes, that will effectively double their current living costs (Brad crunched it out at $6,500 for mortgage, property tax, insurance and a small reserve – plus eating 100% of their nestegg). “But worth it,” he says, “if we only had the guts to go ahead. But already Dee’s job is uncertain, given the downturn. Without it, we’re screwed.”

So they wait.

Along with everyone else.

New home sales have crashed. It just doesn’t matter how much GST the federal government wipes away for buyers, or the volume of ‘red tape’ slashed by municipalities. If people like Brad and Dee don’t pony up offers and deposits, builders cannot secure financing for developments (typically 70% of units must be sold before a shovel bites dirt) and nothing gets erected. Moreover, planned and approved projects are being shelved. Industry folks wonder what kind of disaster looms in 2027 or 2028 when Trump is gone, the economy more stable, buyers infected with FOMO again but inventory is gone.

“What that means is the cranes that you see in the sky now will go away,” says the builders’ association in the GTA, “and new home supply just won’t be there.”

It seems inescapable. Now supply is overwhelming demand, and prices are barely moving lower – since it costs what it costs to build housing. But when demand comes roaring back we could see 2021-style price escalation, regardless of where interest rates si, the industry sayst. Factor in inevitable urban population increases, and the insolvency or exit of many builders in the next two years, and we’ve created a true housing crisis. Unlike the fake one now.

This week the news out of southern Ontario was brutal. Six million people living in the region and a mere 310 housing units sold in an entire month. And not just any month. But April, dammit. Traditionally one of the hottest periods of the entire year for offers.

Look at these numbers. Chilling.

• The seventh month of historic declines for sales – all-time lows – now eclipsing the previous low, set during a vicious recession 35 years ago.
• That total of 310 deals in April was 72% below the same month in 2024 and almost 90% under the ten-year average. Typical sales at this time of year: 2,750/month.
• Condo sales of 105 units were insanely below expectations – down 80% from a year ago and 94% below the long-term norm. Single-family houses, like the town that Brad and Dee want, came in 77% below the ten-year number.
• So now there are 21,363 new, available and unsold housing units in this one market alone. Of those, 16,500 are condos and almost five thousand are single-family units.
• Based on average monthly sales for the past year, this amounts to an inventory level of 15 months. That takes us close to 2027.

Clearly the industry as we have known it cannot survive this nuclear winter ocurring in the spring of 2025. Builders cannot afford to build. Lenders cannot risk capital losses. Trades cannot be retained. Building materials will be unpurchased, payrolls unpaid, subdivisions and high-rises unbuilt and mythical government housing start numbers unmet.

Despite all this, affordability has barely budged. In the GTA a new condo costs just over a million (down 3.6% in a year) while single-family homes average $1.53 million (off 5.4%).

Worse, it’s getting more expensive to build stuff in a world where tariffs and trade wars have shocked the supply chain and layered on extra overhead.

So, how can Mark Carney’s plan to ‘tackle the housing crisis’ possibly work? Or that proposed by Doug Ford in Ontario or David Eby in BC? Or campaigned on by Poilievre? Dropping the sales tax on houses folks are too scared to buy – because of macroeconomic conditions – is pointless. And when builders can’t build for lack of demand, why is Ottawa starting up a new building company of its own?

“The problem that we have in terms of getting housing supply and housing built in Canada is not because we have a shortage of builders,” says BILD, the developer’s group. “So to have a new government builder added to the mix isn’t going to solve the problem.”

Ditto for greasing the local approval process, nuking traditional zoning restrictions, taxing and banning foreigners or gutting environmental and heritage safeguards to fast-track building. None of those will inspire the courage and hope people need to borrow and buy. All of it has negative consequences.

So stop lying to us. Just fix Trump.

About the picture: “Longtime reader, first started reading your blog years ago (emailed you first in 2012),” writes Dave. “Your perspective has made a difference in my family’s finances – Thank you. You even posted some photos of our Late Golden and how we spent her last weekend (Canada Day) taking her by chariot to the sunset overlooking Lake Huron. Bentley was our “Gateway Golden” as my wife likes to say. We now have Nellie who loves the water just as much as Bentley did. She gets to go to Lake Huron for her second time in another month.”

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

Source: https://www.greaterfool.ca/2025/05/30/the-big-chill-2/