Love It Or List It

From 2008 until 2023 there was a show on HGTV called love it or list it. We all probably watched it at some point. Coincidentally, it went off the air about the same time that Canada’s real estate market was starting its long, slow grind down. It did come back on the air this year, but it has more of a US and Euro focus to the show.

For years in Canada the name of the game was to own real estate – good real estate, bad real estate, really, any real estate. Then, shortly after central banks around the world dropped interest rates to zero ( negative real rates ) in 2020 it wasn’t about owing the real estate itself, but rather owning a contract to buy the real estate later. We called them pre construction, but it was basically a contract. Lock in the price now, and hope and pray that the market value was higher than the price you paid in 5 years.

Canada somehow managed to make housing a derivatives market!!! It wasn’t enough to have a house, or a cottage, or some rentals – Fuck no, we had to own futures swaps on houses that were yet to be built. Derivates, hedging, and futures markets are usually reserved for the seasoned professional with years of University, hardened swaps traders on the floor of the trading exchanges, and commodity brokers, but Canada somehow allowed, encouraged, and promoted Martha and Bill from Woodbridge getting into the game.

From 2020 until 2022, every media story was run about the low supply Canada faced with housing – there was no supply we were told. There simply was not enough houses to buy. Listings were sold before they even hit MLS, and offer nights became popular – basically turning Canadian real estate into a blind auction. People would posture to beat out the next guy or gal, placing offers that were beyond realistic, and certainly not rooted or supported in any form of reality – but it went on that was for years. Remember, Canada had a supply issue, right? There weren’t enough listings because there were not enough homes.

I called bullshit back then, and so did most seasoned pros in the business, and we were all met with a scoff, and dismissal that the times had changed, and we simply didn’t know what we were talking about. It was the ” new normal ” and dinosaurs like us needed to get with the times. The dancing realtors of TikTok knew better, and they could show us to the promised land. Better yet, they knew where and what the promised land was. Apparently the promised land was a 600 square foot condo in downtown Toronto or Vancouver with a shit view, obscene condo fees, and bad air quality. But, since there was no supply allegedly, people went for it. Most of society was just so caught up in the hype.

If we take a quick fast forward to today, we see that in the GTA area alone, there are tens of thousands of listings. TENS OF THOUSANDS!!! More listings then any time in the history of record keeping in fact. If we zoom out to all of Canada, we will see that there are around 187,000 listing currently. So, how is it possible that we have no supply, but MLS shows over 187,000 listings, when the population of Canada has grown massively from 2020 to 2025? Something doesn’t add up.

Well, housing was never in short supply. Speculators were simply just hoarding housing for financial gain, and making a house a derivative contract – nothing more and nothing less. Canada allowed society to financialize housing. Housing stopped being a home to raise your kids in, it stopped being the foundation of your life, it stopped being the place to hang your hat every night, and simply became a pawn in a housing chess game. Greed kicked in and allowed people to pre buy homes they would never live in. The goal was to get rich quick – buy a pre can house for $600,000.00 and hope that by the time the project was completed, you could flip the same house for $900,000.00. Just like everything else in life, it worked until one day it didn’t. Today is that day.

The number of people that will suffer from complete financial ruin will skyrocket. The number of bankruptcies will soar, and Canada will find itself in a real mess. All because we allowed housing to become a financialized asset. The Toronto condo crash is well underway, but at some point these crappy little shoe box sized condos will find a level that will attract buyers. The number will be far lower than today, and it will cause mass problems for developers and builders that will be getting below their cost in many of the sales. Builders and developers who quite possibly profited the most during the boom times, will be the first in line at Queens Park and Ottawa asking for a handout when shit goes bad. You can count on that.

While everyone will breathe a heavy sigh of relief when condo’s stabilize, it will be a mistaken sigh of relief. It is only then that the real carnage can happen. The Toronto and Vancouver condo bubble is the real reason everything else got out of control. When the lowest denominator goes up in price like that, it pulls everything else up. Suddenly a condo in T.O. attracting million dollar bids, drives up the price of a semi detached in Mississauga. If a semi detached in Mississauga goes to a million ( still better than a million for a shitty little condo ), then all of a sudden a single family detached bungalow in Hamilton is a great buy at 900K. The family from Hamilton with the small little bungalow they just sold for 900K can now move out to London and spend 900K on a bigger house with a garage and a backyard. And on and on it goes. Once Toronto and Vancouver condos find their level, every other piece of real estate for 5 hours in every direction will be re priced to meet the new reality.

Toronto and Vancouver condos finding their new reality will bring about the second wave of problems for Canadian real estate. Once we re price the lowest common denominator, we can then re price everything above that. The price correction will be swift, massive, and will catch many by surprise. People are simply not ready for the second wave of rolling price corrections. Now, people will doubt this, and they will tell me ” I just heard an expert on CTV say….”, ok, well fine, listen to the expert on CTV then. But, lets also remember that those same experts were the one that said once the BOC and Uncle Tiff start cutting rates, house prices will rebound. They are also the same experts who said the next rate cut will get housing to go back up. I will let you in on a little secret here :

The next rate cut won’t do shit for Canadian housing!!!

5 year government bond rates are higher now than they were in August of last year – reflecting an environment where inflation isn’t exactly going away. Remember that there are so many people that will be renewing into these higher rates in the back half of 2025, and all through 2026. Almost every single mortgage renewing in the next 18 months is coming out of sub 2% mortgages rate, and are likely to be met with something in the low to mid 4’s – assuming we don’t see rates climb in the back half of the year. Sure, Prime Rate may drop 1 or 2 more times in the back half of 2025, but in case you haven’t noticed, lenders keep adjusting the discounts on variable rate to reflect that new reality – so no one will really get the full effect of rate cuts.

Rate may be down the list of concerns for many people though, as you generally need employment in order to qualify for a mortgage. It seems like every damn day there is another company closing, another round of layoffs announced, or another company that is “right sizing” their workforce. Do a simple Google search for companies laying off, and you may be surprised to find there are a lot more than you think. And, for the record, we can’t blame Donald Trump for all of them – although that is usually the go to. Unemployed people will struggle to find new work, and the house will get sold, although it is going to be tough to sell when there are already 187,000 listings on the market.

Canada will go through a classic recession – although good luck trying to get the government of the day to admit it. I believe last year we called it a “vibecession” and this year I am sure they will put some nice spin on it. It will probably be called a “trumpcession” so they can lay blame at DJT’s feet, and avoid the ire of their own constituents. Call it what you will, Canada will face contracting GDP, increasing unemployment, increased listings of homes for sale, and a general overall crappy economy.

However, there is some good news in all of this. A recession is what is needed to clean out the bloat – whether it be in housing, government jobs, company profits, or anything else for that matter. People, government and corporations will trim fat, and really look at the bottom line. This means that eventually we should see pricing come down on a lot of things – primarily housing. A good solid recession is needed every now and then to get things back in alignment, and there is a lot of aligning to do this time around. Once the bloat is gone, things are re aligned, and everything is back to the proper pricing, then, and only then can things resume their expansionary ways. This correction, recession, whatever we call it will also be great for those of us in the mortgage business who are able to hang on. You will see a lot of people knocked out of the business on the coming 12 to 18 months, whether it be because they can’t make money, or because regulations are getting harder. As FSRA tightens rules, it reduces head count in the industry.

Canadian might love their house, but financial pressures, rising unemployment and a bad overall economy will be forcing them to list it instead. It won’t be a game show, it will be the reality for tens of thousands of people. Position yourself to be able to help these people through the bad times, and they will remember you when the good times return.