The path ahead

Susan’s been trying to sell a downtown townhouse (”It’s so cute”) since October. Two price cuts so far. Her realtor wants more.

“I got a call from her yesterday,” Sue told me, “so a couple who looked at the place want to rent it for a year, then buy. Whaddya think I should do?”

Nothing, of course. Unless Susan is desperate. In this market, sales are rare. The war is getting worse. Sentiment is souring. And the renters probably figure prices will be lower in twelve months, so they can live in the unit now with no downpayment or debt, then pick it up at a fire sale price next year.

If you really, really, really need to unload a property these days, then it’s time to turn a paper loss (if you bought since 2022) into a realized one. If you’re a buyer, you hold all the cards. Low-ball a bid. Ask for 2% VTB financing. Go with an offer conditional on home inspection, financing and insurance commitments, which also includes the patio furniture plus the Bernadoodle.

This is shaping up to be the most moribund, comatose, on-life-support market since the Great Ennui of the early 1990s. Then we had a recession, stiffer interest rates and job stress.

Now it’s worse. Trump, tariffs and a trade war were bad enough. Then the shock of coming off emergency Covid mortgage rates washed over the market. Now there’s unemployment creep. People – especially those white-collar knowledge workers fresh out of uni – are worried about AI stealing their paycheques. The pandemic seriously messed up housing values, creating an affordability crisis. First-time buyers in Toronto and Vancouver are now 40, on average – perilously near middle-age.

And now the war. Not only is it going badly for everyone, but even if the bombing ended tomorrow, we’d have an energy crisis for months to come. Production is being halted, Shipping lanes compromised. Infrastructure demolished. Wells shut in. Trust obliterated.

When energy costs rise so does inflation. Then comes pressure on central banks to increase rates. Or recession. Or all of it together – stagflation, when the economy fades, yet prices swell.

None of this worst-case stuff may come to pass, but folks still worry about it. And when they’re worried, they’re not buying houses or taking on huge dollops of debt.

The news today feeds that. Iran isn’t rolling over. Ships at sea are ablaze. More oil production facilities in the Gulf are being shuttered. Trump looks like a failure for having started a war with expanding consequences and no way out. Aerial bombing is not going to squish a country of 92 million people with a million of them in uniform – not without an invasion and huge cost.

Speaking of cost, the US spent over $11 billion in the first few days of the conflict (not counting the build-up) and is rapidly depleting its pile of high-tech munitions. We now know bad targeting sent an American missile to blow up a school on the first day of the war, killing about 170 Iranian kids. We also know the US reduced sanctions so Russia can sell more of its oil, to ease supply problems. Now Putin has extra money to use in killing Ukrainians. Oil hit $100 a barrel again last night, despite western countries and the US releasing strategic oil supplies.

Well, it sucks for Susan. Either she rents to some piranha or waits for a vulture to offer. It’s pretty obvious there will be no spring market in 2026. Sales will languish, prices melt, inventory will rise, but at a slower rate.

As stated, buyers are in control. In fact it’s a rare moment of power for them. Financing is relatively cheap still (at 3.5%) and plentiful. There is scant competition. No bidding wars, bully offers or blind auctions. Lots of inventory and choice. And prices are lower by a quarter or a third from the 2022 apex. Many sellers are lonely, motivated and willing to carve thousands (or tens of thousands) from their ask.

Sane people know these conditions will not last. In a few years Trump will be gone. Iran will still be there. Ukraine, too. Oil production will have resumed. Trade tensions will ease. Benchmark real estate prices will stabilize. The pendulum will swing back. The sun will shine upon a Canada with more diversified trading partners, kicked-up national infrastructure and a resurgent economy. And a happy, confident, well-educated, optimistic population?

Why not?

And it that’s the case, how would buying real estate you want and actually need, during a buyer’s market of lower prices, less competition and more options, be a bad move?

Did you catch the latest CMHC report this week? Housing shortages coming, it predicts, because current construction has largely collapsed. And that means higher prices later.

“Because new projects can take several years to move from planning to occupancy, the current slowdown in starts could translate into future supply shortages if demand rebounds. The cancellation of condominium projects is also expected to remove thousands of units from the future housing pipeline.”

If the war, Trump and the latest Ayatollah dude have clouded your vision, just ask AI about “recency bias”. She’ll know.

About the picture: “Benjamin was raised in a country home with several other dogs during his lifetime as well as a cat (spouse’s),” writes Wayne. “He was supposed to be my better half’s dog but bonded with me! Ben was well socialized, good natured and loved by all. He had an active lifestyle, both at home and the cottage (remote – water access only) where we spent five months every year and was truly Ben’s happy place. Daily multiple long walks, being on the water (though not in it), Ben loved it all. He was also fond of van rides where he rode on the front seat beside me (in his secured crate, of course). Ben loved life and seeing him happy made me happy. He was a joy to our household and will be forever missed.”

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

Source: https://www.greaterfool.ca/2026/03/12/the-path-ahead-2/