The gimmick

Word is a hundred thousand jobs will soon be gone. Not to AI or the bots. These are the kind that are supposed to be eternal. Plumbers. Carpenters. Framers. Roofers. Electricians. Landscapers. Tile and drywall guys.

For the past year we’ve told you about the collapse in construction, now bringing a collapse for the trades.

What’s taken place is, by all counts, historic. Outside of wars and the occasional pandemic, we’ve never seen demand-driven destruction of the new housing sector.

Last year was the worst ever. In an urban area of almost seven million people, a mere 240 new units sold in December – 82% below the long-term average. Projects are being cancelled across the GTA and the LM. In the Toronto area alone sit more than 21,000 unsold new units. Prices have moderated. Buyers can get a mess of freebies, sometimes including years of fee-free condo living or paved driveways and landscaping thrown in with their SFH.

So, where are the buyers? What happened?

Well, remember that post a few days ago about deflation?

The textbook definition: a sustained, broad-based decrease in the general price level of goods and services in an economy. It occurs when the annual inflation rate falls below 0%, effectively increasing the purchasing power of money.

Canada’s inflation rate is stuck at just over 2%. And the cost of a lot of stuff we all need – food, car insurance, kibble – is definitely not decreasing. So, no, this isn’t an economy-wide thing. But it has truly hit the new housing sector – which some people think may come to infect the larger MLS market.

The key thing about deflation is that when prices crumble people stop buying, believing they’ll fall further. Deflation brings fear – that debt will be harder to pay if wages also decline. Or that recession and unemployment won’t be far behind.

This has creamed the resale market, where prices are lower by a quarter to a third from the 2022 peak. Folks are waiting for more declines while they worry about jobs and incomes. The impact on new homes is worse – since buyers must often wait months, or years, for a place they purchased to be bult and delivered.

Now one major builder has figured that out.

Giant Mattamy Homes says it will refund buyers whose new pre-con homes fall in value by closing day – at least on a trial basis, and only on certain projects in Ontario and Alberta. The idea is to wipe away some of the risk – and at the same time the company has been reducing the asking price of its singles and condos.

The offer has hair on it, since any refund is based on the difference between the sale price of the home purchased and the asking price of an identical one in the same development (which the developer controls) – not market value.

Still, it’s something, where there was nothing.

“This is really meant to help that end user who is looking to move and has good reason to and wants to but is just worried about entering the market,” says the company. “It’s not a financial instrument to speculate on and trade on, and so that’s what this is really helping: that end user who really does want to move.”

Meanwhile new-build prices have not materially followed those in the languishing resale market. In the GTA, for example, freshly-constructed condos still average $1 million with singles (including townhouses, semis, rows and detacheds) at more than $1.4 million. Where drops of 30% are becoming common on MLS, the just-built stuff has faded less than a third that.

Where now?

The pre-con market is dead. Stick a fork in it. Mattamy is too little, too late.

As for resales, expect more of the same – terrible sales, wailing realtors and slowly melting valuations.

“Several factors are likely weighing on the market, including cost-of-living and economic uncertainty concerns for households, a weak underlying economy and soft population growth,” say TD economists. “Falling prices in markets like Ontario and B.C. may also be keeping potential buyers sidelined as they wait for a bottom. With these headwinds in place, another sub-par year for the Canadian housing market is likely on tap in 2026. However, some pent-up demand should offer some limit to the downside in B.C. and Ontario, and price growth should be stronger outside of these two provinces.”

The bears say stay away. Heavy losses ahead. The bulls say buy when prices tumble and blood flows.

And we say: if you really need a house and can afford it without gutting your finances or endangering your family, go ahead.

You get a house to live in. And does anyne seriously believe prices will be lower après-Trump?

About the picture: “Hi Garth, I enjoy your blog – thanks,: writes Abe. “This Our Crosby, 4 yr old standard poodle, who loved riding in anything moving. A truck, car, sports car or van, just hated flag people barked profusely at them. Don’t know why? Her stomach turned over one night and died in my arms.  So sad.”

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

Source: https://www.greaterfool.ca/2026/02/20/the-gimmick/