Famous Last Words

As detailed here the other day, the first misstep of the Carney Libs was to push a budget off into the future. Sure, there are reasons. Good ones. But why feed the barbarians so early?

Now, gulp, the second hunk of red meat.

The new housing minister, Gregor Robertson, was on his way to the first cabinet meeting when reporters attacked, asking him if he thought home prices needed to come down.

“No,” he said – a word that he will never, ever get past. “I think that we need to deliver more supply, make sure the market is stable.”

Stability is a good thing. Dog only knows we could use more of it, especially from our dodgy American friends. But in this instance, stable means status quo, and that is exactly the opposite of what a lot of young voters asked for, or expect.

Well, we know what lies ahead now. Robertson confirms that the new Liberal government will pursue the same failed policies as the old Trudeau one, and also espoused by the defeated Poilievre forces. Ottawa believes it has a vested interest in maintaining the equity of current homeowners, preventing any meaningful price collapse and hoping that – somehow – enough new units of pre-fab homes on distant plots of land will sate the kiddos.

But it won’t.

Shiny new federal housing minister Gregor Roberston. The latest sacrifice.

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As this pathetic blog has pointed out with nauseating frequency, we do not lack houses to buy. Inventory is rising in all major markets. The sales-to-new-listings ratio has tanked in the GTA and beyond. There will be about 30,000 new condo housing units coming onstream in that one market alone this year, while 17,000 already sit unsold and unloved.

Nationally sales are down and available properties are swelling like a python with gas. MLS is currently showing 327,115 resale properties up for grabs across the country – a big jump in the last ninety days. On top of that are new build offerings.

In Toronto there is a seven-month supply of condos. In Vancouver active listings are running 47.6% above the 10-year average. Of every ten homes for sale in that city, just one is receiving an offer within a month. This ratio means, simply, it’s a buyer’s market.

In Calgary listings are up 115% year/year. Days on market have increased over 40%. There’s been a jump of 177% in months of supply. In Halifax, agent/blogger Jeremiah Wallace says: “We’re seeing the gap between new listings and sales widen again, a sign of shifting balance in the market. Despite this, prices are holding steady, especially in the single-family segment, where homes are still selling close to their list prices.”

And that’s exactly the reality. Listings up. Sales languishing. Prices are, well, stable. There’s been a slow melt in the largest urban centres, but no collapse. No crash, No capitulation. And everywhere there is abundant supply. In fact it is exceeding demand across Canada.

So how will increasing the supply further bring prices down when an overabundance at this moment is not?

Answer: it won’t.

Moreover for the federal government to get back into the house-building business will take years. Even with pre-fabricated homes and standardized designs. Land has to be serviced, infrastructure built, trades, developers, materials and financing arranged, plus agreements reached with municipalities and agencies.

The odds of Gregor failing in this position were at least 70% that day he accepted. The odds now, after the “no” comment, are probably 100%.

The federal government can’t build enough ‘affordable’ homes in the next four years to make any meaningful dint on the market – and we have no idea what the word actually means. Is an affordable home one that sells for $900,000 in YVR, or $300,000 in Halifax? Will newbie buyers want a glorified mobile home, or worry about the potential resale value? And should taxpayers – via reduced costs being offered to these builders – be subsidizing the housing costs of others?

Nobody has this figured out yet. Expectations should remain low. Only Mr. Market can make real estate accessible again, and he ain’t paying attention at the moment. The only relative bargains around are (as we described recently) in the assignment market for urban condos, which is more than saturated with supply and limited in appeal.

In short, Robertson will probably blow up. The more he talks, the faster it will happen.

About the picture: “You have posted a picture of Tilly before,” writes HG, “now she will be 2 years old in July. Here she opened her eyes just as I was taking the photo. She still enjoys meeting everyone and barking out to all people and dogs. A yorkie trying to run her world.”

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