Groundhog Day

Next week realtors will crawl out of their winter burrows, squint at the weak sun then likely retreat. No spring this year.

When the stats are revealed (Wednesday for the GTA) they’ll show Feb ’25 was the second-to-worst-and-suckiest such month in the past thirty years for sales. Barely four thousand resales in a region with six million people, off at least 26% from the previous year. That’s also 40% below the long-term average, as buyers vanish. “See what World Uproar, CDN Federal uncertainty, a snap ONT election and a bit of snow can do!” says veteran house-flogger Robert Ede.

Of course the global tumult, the panic in Ottawa and yesterday’s Ontario election have all been about one thing. Tariff Man. And he says everything will get a lot more serious come Tuesday.

Meanwhile, as we’ve reported recently, new home sales are even more dismal than those in the used-house market. Down 80%, with an unsold inventory of more than 21,000 units in this one urban zone alone. Builders have stopped building. New projects shelved. The skyline cranes are finishing projects sold three and four years ago, when you-know-who claimed the 2020 US election had been stolen and was trying to overthrow the regime. Now he’s a felon. And president. Oy.

So, why are people not buying despite generous new mortgage rules, lower financing costs, reduced downpayments and oodles of choice?

Well, price is a good starting point. The cost of housing is incredibly sticky these days. Across major markets it may be 15% or even 20% below the 2022 peak, but costs have barely moved in the last two years. The average price in the GTA this month, for example, is the third highest ever. And no bargains in Vancouver or Victoria, either.

Beyond that, personal finances (among the wretched masses who do not read this blog) are a dog’s breakfast. Most people have a surfeit of desires and a drought of discipline. We currently owe $2.56 trillion in debt, which grew by almost 5% last year, more than twice the inflation rate. The number of Ontario citizens who have recently missed a mortgage payment has increased (says Equifax) by 90%.

No typo. That’s ninety per cent. Yeah, the home loan default rate in Canada is still amazingly low, but this is more than a trend. It’s an eruption.

Says the company: “Quebec saw a 41.2 per cent spike in these types of delinquencies; B.C., 37.7 per cent; Atlantic Canada, 15.7 per cent; and the Prairies, only 0.6 per cent. In Alberta, there were actually 3.6 fewer mortgage defaults in the last three months of 2024 than there were in Q4 2023.” (The average Calgary house is $623,000. Less in Edmonton.)

The number of people missing car and credit card payments is up by about a quarter. Mortgage balances have grown substantially. The unemployment rate in Toronto has jumped (now almost 9%, while Canada as a whole is at 6.6%). And the cost of living in 416 or YVR is absurd.

For so many families, the math of home ownership simply doesn’t work. On the average income you can’t have a life, a family, a future and real estate at the same time. The urban savings rate has plunged. Household debt increased. And now we have the spectre of recession and layoffs.

Yesterday we parsed the latest from Trump. It changes daily. The guy said Thursday that anti-Canada tariffs of 25% (a withering amount) will arrive on Tuesday. More new taxes on steel and aluminum the Wednesday after that. As we keep reminding you, this never had anything to do with the border, drugs or people sneaking into America. Trump thinks he can Hoover money from other nations to cover domestic US tax cuts and new spending. He’d also like to do to us what he’s doing today to Ukraine – but so far that’s only an orange guy dream.

(By the way, did you catch the British PM throwing Canada under the bus yesterday during his media scrum with Trump? There’s no daylight between the UK and the US, he said, so don’t talk to me about Canada and try to create division. Canada doesn’t matter.

Maybe somebody should remind him who stood with the Brits when Hitler arrived – and who stayed safely back an ocean away, refusing to fight…)

So, yeah, Trump’s got us all fussed. It seems we’ve been on the verge of an economic disaster for a few months now. If the tariffs come, so will job losses, higher prices and extra stress for all those who borrowed to excess, thinking real estate equity growth would paper over their FOMO folly. But, alas.

So, no spring this year.

Back in the hole you go.

About the picture: “Here’s a picture of Lenny, our Australian Shepherd,” writes Liam, “caught in Montreal’s latest and greatest snow storm.”

To be in touch or send a picture of our beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/02/28/groundhog-day-4/