Storm warning

As a major winter storm barrels towards southern Ontario with temps only decent people from Saskatchewan can survive, the deep freeze has already hit the housing economy.

In fact, the words to describe what just happened in 2025 seem inadequate. It’s historic. It is unprecedented. And it’s a political nightmare. Buyers are not buying new homes. So builders aren’t building more. And governments that promised a flood of inventory – so prices could come down – are being left out in the cold.

The latest stats (published yesterday) speak for themselves. Loudly.

• 2025 wasn’t just a crappy year. It was the worst ever.
• In an urban area of almost seven million people, a mere 240 homes sold last month. Only 87 of those were condos.
• Sales in December of 2024 were the lowest ever. Until last month – when they fell 24% more. This puts them 82% below the long-term average.
• Condo sales were down 42% from previous all-time lows, and now sit at a level 91% below the 10-year norm. Guess what happens when we get to 100%…
• For the entire year, just over 5,300 newly-built places were purchased in this massive urban area. That leaves 20,900 units sitting available yet unsold, 15,115 of them condominiums.
• This is a 26-month supply, which means current demand would be satisfied without any new building until the spring of 2028.
• As a result, says the industry, about 100,000 people in this region are at risk of losing their jobs.

“To find a comparable collapse in new home construction, you would probably have to look back to the 1940s,” says the industry, harkening back to the days of WW2 when people lacked enough confidence in the future to borrow money and get into a new home.

Are their parallels now?

You bet, the builders say. It seems Canadians are too scared to move, despite the bravado and can-do swagger of our prime minister at the WEF this week.

“Never in the 45 years that new home sales data have been collected for the GTA have we seen just 5,300 sales for an entire year,” says Edward Jegg, Research Manager at Altus Group, which compiles industry stats. “Meanwhile, 2026 is likely to see geopolitical concerns linger, prices remain elevated and the Bank of Canada has indicated the cycle of interest rate cuts has ended – thus the main drivers of buyer hesitancy are expected to drag on well into the year.”

It’s all about risk. And price.

Buyers perceive that this is a precarious time, reinforced daily by oppo politicians who tells us “Canada is broken” and things will get worse. They point the obvious. Trump, trade, tariffs. Fear of job losses, especially in an AI world. Crazy house costs, and incomes that have not kept up.

Contrasted with new-builds, no wonder more resales are changing hands. In this market the average new condo price is $1,021,235. The average single-family home (detached, semis and rows) is $1,409,725. In the past year that SFH has dropped 9% in price. Condos, says the industry, are at “an apparent price floor.”

The reality is, given the price of land, the cost of materials and the wages working tradespeople need to survive, it’s impossible to build homes people can afford – at least the kind of places they want.

So, will Carney’s plan to use “modern building techniques” – prefab homes, in other words – on surplus lands the feds may fine in various cities, the answer? Do we allow foreign buyers back into Canada to snap up enough investment units to keep the drywallers drywalling and the plumbers pulling pipe? Should government directly be subsidizing builders by paying a portion of construction costs or providing subsidized financing? Or is that just unfair to everyone who has bought real estate and paid for it on their own?

This is clear: there is far better value in the resale market where prices are down by about a quarter from the peak and vendors have more flexibility. It’s also obvious if this period of national angst results in a supply shortage down the road – when confidence returns (and Trump is gone) – we could get FOMO and bidding wars all over again.

I bet the boss wishes he could have stayed in Davos. He was a star there.

About the picture: “Luna, better known as Stinky, shows up at high noon daily for her treat,” writes Dab, from Cuba. “My friend’s mother prepares lunch, Stinky gets her treat, patiently waiting outside the front door without a sound. A Cuban cat has to do what they can do daily to get by like the locals.”

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

Source: https://www.greaterfool.ca/2026/01/23/storm-warning-3/