The message from above

Too big to fail. That’s a reality this pathetic blog has been trying to relay to you, the huddled, confused, houseless kiddos. There’s no real estate crash coming. No condo cataclysm. The deep state won’t allow it.

In fact, they don’t even want you talking about it. So this week along comes an official report saying (a) this real estate ‘correction’ will be milder than the Big One of the early 1990s, and (b) prices will actually start swelling again, likely in 2026.

Seriously. The federal housing agency, CMHC, is sticking by that story.

This comes in the teeth of the withering industry news we relayed here just days ago. How could you forget it? Developer blood and builder guts everywhere…

“Forget achieving the federal government’s goal of 500,000 homes per year, over the next few years it will be a stretch to keep annual housing starts in the 200,000 range,” said the industry in a media release. “Due to layoffs and a drought in future housing supply, residential construction workers and hardworking families looking to find a home in the 2027-2031 period will be the ones that bear the brunt of inaction.”

Last month in the country’s biggest market a scant 300 new units sold. Despite what three levels of government have done to slash red tape, speed up approvals and trash local zoning regs, that was 42% below piteous year-ago levels and a devastating 81% under the ten-year average.

New project launches are at a record low. Dozens of developments have been mothballed. Condo sales are running 90% below the long-term norm and single-family home sales have sunk 60%. Inventory is piling up. In the GTA alone there are now 22,245 unsold units, of which 16,447 are condominiums. This is the greatest amount on record – enough to satisfy the market for 20 months if a single new unit were not built until the summer of 2027. And by then, says the Building Industry and Land Development association, thousands of trades would be laid off.

This sounds like an utter disaster. It would pretty much nuke PM Carney’s plan to throw up a half million new housing units a year, further swamping supply and (maybe) leading to cheaper homes. As you know, both Ottawa and the provinces have turned into one-trick ponies when it comes to real estate. Build more. Throw money around to make it happen. So far, crickets.

Meanwhile the greatest impediment to rekindling the house-building sector (critical to sustained GDP growth and jobs) are buyers who ain’t buying. The biggest reasons are a lack of financing and a dearth of confidence. The first is being addressed by the Bank of Canada, which has started a progression of rate cuts. The second is CMHC’s message. If this is not the bottom, it suggests, we’re pretty damn close.

“Several factors point to a softer correction and a less severe outlook than the 1990s crash,” it claims.

First, this downturn has already approximated the price plop of 35 years ago, when a limp economy and soaring rates killed off housing. Look at the sicko condo market, it says. If the peak in 2022 was 100 then today we’re at 74, says the agency. On the same scale the crash of the Nineties flamed out when it hit 70. Close enough. So CHMC says prices should start climbing in the coming months and recover four years faster then during the last rout.

Moreover, in the 1990s there was a vision recession. Not so now. Any economic downturn is expected to be, like me, short and benign. And decades ago interest rates were ridiculous – mortgages at 14%. Today home loans are 4%, on their way down. Finally, in the 1990s there was a surge in the jobless rate – 10.3% in 1991 with 1.5 million people tossed out on their fannies by June of that year. We’re shedding workers again now, but at a far more modest pace – which is why interest rates are falling.

Another safeguard is lending regs. There was no stress test in the 1990s. More people over-extended and were caught when prices tanked. Back then banks financed new projects when they were 50% sold, while now that threshold is 70%. Finally, CMHC says the real estate boom of the late 1980s was fuelled by speculation, FOMO and buyer panic. Today housing has increased in value more because of population growth.

So, kids, your leaders wish to inform you that the housing crash has been called off. The 50% price plunge, making homes widely affordable again, has been cancelled. The new housing czar himself has stated there are no plans afoot that would obliterate the heaps of equity that existing property owners have amassed. This is (probably) it. The bottom.

Could segments of the market sink further?

Of course. Look at the assignments now being flogged. Brutal. And homes in Bunnypatch have shed a lot of the Covid premium, with more to come. Condo listings are massive with scads of investors bailing out as rents fall and expense rise.

But, say the feds, this is temporary. Seriously. Go buy a house. Be a patriot.

About the picture: “Get a puppy they said,” writes Della. “It will be fun they said. It really didn’t take much convincing for me to say yes to another dog. Some people call me crazy. But at least I don’t have time to be worried about all the nonsense going on in the world right now! I’m back to laughing again! Good for the soul.”

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

Source: https://www.greaterfool.ca/2025/09/25/the-message-from-above/