The dilemma

Yesterday, common sense in Alberta. Today, insanity in Ontario.

While there may be some kind of balance in Edmonton between supply and demand, keeping prices stable (and low), in the GTA sellers have lost their minds. Buyers are repelled. Realtors are apoplectic.

This is a market which will likely correct its imbalance and be FOMO-infected again once the economy settles down. Or it could, as easily, tip over a cliff of recession into a correction as deep as that of 35 years ago. (Look it up. A drop of 28%. Twelve years to recover.)

Never has the largest real estate market in Canada been this lopsided. Supply has overwhelmed demand. Prices have hardly moved. Construction has ground to a halt. Projects are being cancelled. And governments are pulling out all the stops to add even more new housing units. Something big is likely going to happen.

Let’s start here…

Source: TRREB

Yes, there really are 31,000 properties for sale at the moment. Ten thousand, or 40%, more than a year ago. Sales are down at the same time choice has exploded. And prices have barely budged in the past twelve months despite the dearth of offers. This is one of the worst, most prolonged sales slumps in realtor history. And it comes with a collapse in homebuilding.

As reported, that industry is in serious distress. The numbers published yesterday are brutal.

Last month – in a market of six million people – there were just 345 new home sales. 137 of which were condos. This is a drop of 64% from last May, which was terrible, and almost 90% under the long-term average.

The number of unsold new units has risen again – now at 21,571 (in addition to all those resale listings). Of those, the vast majority (16,384) are ownerless condos. Based n recent sales, it means an astonishing 17 months of inventory.

“As these low sales translate into construction, we could see a decline of up to 23,000 housing starts by 2027 versus 2024 levels, putting as many as 41,000 residential construction sector jobs at risk and jeopardizing up to $10 billion in annual construction investment in the GTA,” says the industry. “The current cost-to-build crisis is real, it’s here now, and it will have very negative impacts on the economy.

This echoes the comments of one of the largest builders in BC – which laid off 12% of its staff last week. “We cannot build product,” it said, “at a price people can afford to pay.”

In the GTA, bearing that out, the benchmark price for a condo is $1.02 million and for a single-family home, $1.505 million. Condos are 2% cheaper than a year ago. Houses with dirt are 6% less. But still, unaffordable.

So, dilemma.

With both resales and new homes, prices are a towering wall most buyers can’t scale. With existing homes on MLS, valuations have stalled because (a) sellers think this downturn is temporary, (b) greed, avarice and myopia or (c) (more likely) many homeowners are trapped into financing the elevated prices they themselves paid.

Supply overwhelms demand as active listings erupt

Source: MLS, Robert Marsiglio

The consequences are real. Resale condo sales were down 25% year/year last month. The assignment market is in full terror mode. Terminations and relistings have soared to unknown heights in 2025 as sellers give up or keep refreshing on MLS to gain attention. And hundreds (soon, thousands) of new housing units which have already been greenlit by local governments, have been nixed. The industry warns that when the pipeline empties, there’ll be a worse outcome ahead.

So either houses stay priced as they are until Trump is gone, the economy swells and rates drop. Or we get a meaningful real estate plop, with one of the greatest equity heists in three decades.

Pick one.

About the picture: “Garth, this is Rosco,” writes Frank. “He’s a friendly lap cat that loves to get his belly ribbed. Our kids often say we won the cat lottery!   Been an avid reader for over 15 years. Your financial advise over that time has been invaluable to me as I navigate my way to retirement.  Many thanks!”

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

Source: https://www.greaterfool.ca/2025/06/25/the-dilemma-8/