Only human

The Ontario government is sliding into panic mode. Days ago Stellantis spit in the premier’s eye saying it was moving Jeep production to Illinois. Then GM abruptly baled out of its EV production in sleepy Ingersoll. And now the construction business is in freefall.

What are two of the largest hunks of the province’s economy?

Yup. Cars and houses.

What to do about it?

Doug Ford delivered an anti-tariff TV and social media message featuring Ronald Reagan (Trump’s fav president) that has so far received over a billion views. You know what happened next. And as far as housing goes, in a few days the province will drop its sales tax on new builds, claiming it will save buyers an average of about eighty grand.

Yesterday we gave you the latest builder stats. Brutal. In urban Toronto, just 53 condos were sold last month. In the entire GTA (18% of the national population) only 153 units found buyers. There are more than 16,000 which did not – plus unsold single-family homes.

Condo sales collpased 90% in this market. Prices didn’t.

Source: Altus Group

Projects with a total of 1.2 million units have been delayed, cancelled or scraped for lack of demand and therefore a dearth of financing. About a hundred thousand people will be losing their jobs, largely in the trades. Tens of billions in economic activity is being wiped away.

Sales levels are running 61% below the ten-year average for SFHs and 90% lower for condos. And yet in the past 12 months, the asking price for condos is flat while single-family homes have declined by about 8%. Those apartments average just over $1 million. Houses with dirt average $1.47 million.

If demand is 90% lower, the peasants cry, why aren’t prices 10% of what they used to be?

The answer is simple. The dudes who build those units have baked-in costs for land, labour, materials, taxes and finances. Yes, they also try to make money, but these days it’s more about survival. Instead of building more units – as planned (that’s what they do, after all) – they’ve elected to simply stop all activity and wait for the market to catch up. Eventually the available inventory will sell. In time demand will come back. And then they’ll build again. Maybe.

As is evident from the moany, whiny, angry, militant, hostile, ageist and iconoclastic comments wafting up from the steerage section, human nature is on full display. When prices jump, demand increases and people become desperate to buy – even in bidding wars, blind auctions and with bully offers. But when prices dip, sales levels plunge and builders throw in the towel, folks recoil, complain bitterly and swear they’re waiting for a total price collapse.

In the new-build sector, it’s never going to happen. Fresh construction costs what it costs. Sales tax drops by the feds and the province help brave buyers a little, but they do nothing for the industry, which faces structural costs. Materials, labour and land are not going down. Neither is the burden of financing, especially in this environment of greater risk.

So if you’re looking for a deal, head over to the resale housing market. There sellers can be far more motivated – which is evident in a far greater price decline since the high-water mark of FOMO insanity in 2022. In the same GTA market, the price plop thus far is about 27% – close to the benchmark and historic drop of 32% set more than three decades ago.

Now, buyers need to get a grip. We may see prices fall further as the year winds down, but houses are unlikely to be 40% or 50% less expensive in 2026 than they were four years earlier.

Interest rates have declined twice in Canada and it’s a safe bet we’re not at the bottom. Historically, home loans in the 3-4% range are rare. Deduct inflation and this is some of the cheapest financing on record.

Then, don’t forget about the mortgage renewal tsunami. Yeah. There isn’t one. That threat dissipated fast as the price of money dropped in a meaningful way over the past couple of years. The wave of forced sales by distressed homeowners who could not afford to renew just washed back out to sea.

And how about the stock market? It’s gone nuts this year – up 22% in Toronto and an equal amount in major US markets. Europe is roaring. Korea has added 75%. Nvidia is now a $5 trillion corporation just weeks after becoming a $4 trillion one. Many people believe there’s a AI bubble that has delivered outsized gains to gobsmaked investors. And they may be right.

Equity markets will probably correct – which would be healthy and welcome. But that process might mean a large amount of capital flowing back from liquid assets into real ones over the next few years. Some people like to sell high (stocks) and buy low (houses). Imagine that.

Finally, Trump. The most disruptive, chaotic, capricious, aggressive and probably destructive man ever to sit in the Oval Office enters the second year of his term in a few months. That’s when he starts to become a lame duck leader. Following the midterm elections 12 months from now, the fissures in the Republican party will start to appear and a lot will change. For the better.

If the builders now bailing out of housing projects in Toronto, Vancouver, Calgary and other markets are right, by 2028 we’ll have a verifiable real estate supply crisis on our hands. Not the fake one politicians currently describe.

By the way, Reagan was right. And I shook the man’s hand.

About the picture: “Greetings from Baracoa Cuba!” writes Dan. “Pic of one of many street stray dogs a kind couple feed twice a day with a few cats as well. The husband is sn artist and hopes selling one painting a month to support his wives passion of taking care of these animals. I attempted to create a gofundme page for them but was denied as the company is USA based. If you or anyone is interested in assisting them, please let me know. I usually give them 50 cdn per visit which feeds the dogs water, rice and meat for one month. I will gladly take photos to share all funds go directly to the 2 of them for direct use of transferring the funds into cuban pesos. Currently 260 pesos per cdn $. danbarrettca@yahoo.ca for transfer or 2892281404 at home. They surely would be surprised and grateful for anything.”

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

Source: https://www.greaterfool.ca/2025/10/30/only-human-2/