Let It Snow, Let It Snow, Let It Snow

A few years ago, I made the decision to move away from the North, and relocate to the South. After all, who really likes the snow and cold? But, I may have underestimated the power of snow. Snow it seems, whether walked in or skied on, seems to have a wonderful power to remove shitty Prime Ministers from Canada…..Or maybe it just has that power with people named Trudeau? Either way, maybe snow has some good qualities after all.

Personally, I think January 6th should become a National Holiday in Canada, but it likely won’t happen. What will happen over the coming days, weeks and months will have a profound impact on Canada, and Canadian real estate though. The coming 9 months will be that inflection point in Canadian real estate that will either set it up for a nice run, or mire it in the mud for the next decade. Which way it goes you and I have no real say over, we can only hope for the best. Let’s jump in and see the good, the bad, and the ugly to come.

Earlier today, Trudeau gave the most Trudeau type of announcement he could have, and one that matches every other announcement he has ever given – he committed to an idea, but not to an actual deliverable. He said he was going to resign – eventually, but of course would stay on as PM for now. So even though he resigned he will remain as PM for at least another 11 weeks. If you resigned from your brokerage today at 11:00 am, chances are you wouldn’t be staying on with that brokerage for 11 weeks, right? Somehow he managed to fuck up even the most basic activity of resigning. Todays news was just like almost every announcement his government has ever made for housing:

We will build more houses in Canada – eventually.

We will make housing in Canada affordable – but never actually clarify what affordable means

We will stop mortgage fraud – but never spell out how or when.

As Canadian Parliament is now prorogued for the next 11 weeks, this is where things could get interesting. Earlier this morning, as the news was coming out that Trudeau would indeed step down, the Canadian dollar was on a tear. The CAD looked to put in its best day of performance in months. Somehow the currency market ( the smartest market in the world ) seemed to think that the problem with the Canadian economy was in fact Trudeau. As someone who absolutely despises JT, nothing brought me greater pleasure than to see the CAD bounce on the prospects of him going on his merry way. Ironically enough, when he announced his muddled up version of what a resignation is – the CAD lost 50% of its gain. The dollar did still finish up on the day, so that is a plus, but the currency market made it clear that the sooner JT gets outta dodge, the better for the currency.

What we will need to keep in mind in our industry ( and most other industries for that matter ) is that nothing will now happen until about the fall. The timeline will be as follows:

Parliament is prorogued until the end of March for the Liberals to select a new leader ( that poor individual ).

Once Parliament resumes, the first motion introduced will be a non confidence vote, which will pass easily, so then Parliament will shut down for at least 6 weeks so all the MP’s can go out and campaign.

Once a new government is selected we will be into at least mid May, and the new government will take their summer break around early June, so nothing will get done in those few weeks.

Parliament will then resume in the fall session after the summer, and get down to business.

During all of this time, there will be a lot of political promises, help for housing, and blah, blah, blah, but nothing can or will be done – it simply can’t. Every politician will promise the moon, and stars, and adding supply ( which won’t help ), and removing the GST from new builds ( which won’t help ) and lowering interest rates ( which they cannot do ). Housing will get no headwinds or tailwinds from government for at least 9 or 10 months. Now, the way the government has been fucking up housing lately, maybe nothing at all is better than what they have been doing? Perhaps removing politicians from the equation will actually make things better? It’s worth a shot, cause it can’t get a lot worse, can it?

I also truly believe we will start to see a softening of regulators feelings in a few weeks. OFSI works for the Department of Finance. The Department of Finance will most likely be headed by a new Finance Minister shortly ( not to be confused with the new new Minister of Finance, who replaced the new new new Minister of Finance, who replaced the old Minister of Finance after she resigned to start this whole thing in motion ). If a government comes to power on a promise to make housing affordable, it will behoove OFSI to look at removing things like, oh I don’t know, say an arbitrary qualifying rule that has really out served its purpose. Just an example of course. With a new government will come shifting political winds, and regulators may find they do not have the support or mandate they have had for the last 10 years in Ottawa.

Let’s also remember that a new political party will have to act fast to get changes implemented in order for Canadians to see benefits. So, I imagine some of the first motions, plans and bills will be housing related to try and get housing going. Look for a flurry of activity into year end with potentially new rules, qualifying, incentives, and help. Think things like the removal of the stress test, lower down payments for first time buyers, the lowering of CMHC premiums in certain categories, even longer amortizations, and potentially even refinances that can go over 80% LTV. These would be things that would help people free up cashflow, get a foot on the property ladder, and give hope of home ownership. Now, please don’t think I believe all of these end well – because I don’t, but I don’t think people will care about the long term.

However, with government effectively shut down for 9 months, it also pushed back things like CRA verification programs in the works, and could quite possibly push that program out more than a year. We need some form of verification linkage with the CRA, so that is a bad thing to come out of all of this. We are also not likely to see any government help for housing over the time frame above.

But, before we can look to the new government, we must first get through the current one. The next few weeks and months will create a lot of uncertainty, and markets hate uncertainty. All markets, whether it be bond, stock, currencies, you name it – they all hate uncertainty. So, you will see a lot of movement in things like CAD and bond yields as the market prices in every single eventuality in real time – all the time. I hope you have a good chiropractor , because you are gonna get whiplash over the coming months. Every time it appears one person is leading Liberal leadership race, the markets will instantly price in what they think that person will do.

I feel a change in Ottawa – no matter who wins will get rid of a lot of dogma surrounding housing policies. What we have been doing has not worked, so maybe fresh eyes, fresh ideas, and a different perspective are what is needed to help the housing market. A new government will bring hope back to an entire generation that owning a house is not a dream, but can be an actual reality. That is something that Canada has not had for a long long time. Today started Canada down a long road that it needed to be on. The journey will take some time, but it will be worth it in the end.

On todays ‘no resignation resignation’ news, look out for:

CAD will likely start to climb over the coming months. I believe I suggested that you sell USD into any rallies in 2025, and so far that seems to have been good advice. I expect the highs on the USD vs. Cad have either been put in, or are very very close.

Canadian stocks will likely catch a bid in the coming weeks and months as equity markets start to think Canada may be an investable country again. Especially look towards the commodity sector as a new government will most likely look to start using Canada’s vast resources for good.

Bond yields will likely start to climb, although not a lot. Bond markets will think that Canada can recover from the lost decade, but they know it will take time, and that will be reflected with slightly higher bond yields that will slowly meander higher. Of course, yield will be bumpy and volatile as bond markets whip and slosh around at every piece of news that comes out, but I would anticipate that we see higher highs, and higher lows.

I would think that Trump may either reduce, or ease tariff threats on the Great White North now that JT has promised to move along. I would think that the tariffs will either be reduced to something that is manageable, or Trump waits to negotiate with the new government to avoid tariffs altogether. Either way, with JT gone, I think Canada and the US can rebuild a great economic relationship that will serve both countries quite well.

Eventually what comes out of today will make Canada Great Again, but it will take a bit to get there. It always gets worse before it gets better, and the next few months will test that strategy to the fullest. Be a great broker, work on behalf of your client, and realize that the future of our industry got a whole hell of a lot better today at 11:00 AM EST.

I wish everyone a kick ass 2025, and hope you look back a year from now and realize that all the things you did right is what made you the success you wanted to be.