From 2018 to 2023, the crazy pre-sales of pre-construction properties had come to an abrupt end by 2024, and developers were having trouble selling even their inventory. After 2028, Toronto and Vancouver will see few new condos being completed. Investors holding CONDO assets now need to take some appropriate financial measures to find ways to survive the current temporary excess crisis. "Complaining too much prevents heartbreak. It is better to take a broad view of the long-term scenery." If a real estate investor wants to wear the crown, he must bear its weight. Heavy is the head who wears the crown。
04. General election housing policy promises: part political show, part bailout for developers
Like every election, each of the competing parties has its own prescription for Canada's housing crisis. I don’t want to give them a prescription here, because after every election, there is no practical action. All housing construction policies are ineffective. In major cities, developers' plans to pre-sell new properties have almost always been met with a cold reception by buyers. The government's housing construction policy basically provides relief to developers and does not provide any substantial help to buyers who want to buy houses now. The tax measures introduced by the Conservative Party, similar to Section 1031 in the United States, may inspire some vested interests in real estate investment to consider selling their houses, but the current market situation is that there is no shortage of housing, but confidence.
In every election, the housing issue must be discussed, but no solution can solve the problem that Canada can only build 250,000 new homes every year. Canadian voters have experienced "discussion fatigue" on housing policy. The more discussions there are, the more serious the solidification of the real estate wealth class is. Because the policy must not only protect vested interests, but also gain support from households without housing, and maintain the health and stability of the real estate market, so the plans proposed are all deformed plans. The best solution is to make it profitable for developers and affordable for homeless families, with hard-working families prioritized, while low-income families are protected from homelessness, and vested interests in real estate wealth are protected. I don't see any housing program that achieves both of these goals. Therefore, discussions, debates, and armchair debates must continue. In short, the general election has little to do with the real estate market, and it will not change whoever becomes prime minister.
05. The real estate class has been formed, and it takes hard work to join it
I wrote an article on February 19, 2018, "Is Real Estate the Watershed of Family Wealth?" ", interpreting a book "Real Estate Class Society" written by a Korean author. The author of the book mentioned that South Korean real estate experienced four periods of growth after World War II. From 1965 to 1968, house prices rose by 38.2%; from 1975 to 1979, by 33.4%; from 1988 to 1990, by 16.3%; from 2002 to 2008, by 22.8%. After four rounds of increases, the land value in South Korea in 2008 was 5.7 times that of Canada. Housing prices don’t need to rise every year. It only takes 3-4 big leaps, and most people will be left outside the door to real estate wealth. This is the case all over the world. If you want to experience a big drop in the real estate market, people who have fallen out of the door can also be among them. It is estimated that it is rare to encounter it once in a lifetime. Many people envy the housing policies of Germany and Singapore, but it should be noted that in countries that encourage renting, residents rarely have real estate wealth, so there is nothing to envy.
The current housing prices in Canada, even in top cities like Toronto and Vancouver, are far from reaching the point where housing prices in Seoul, Hong Kong, and New York are out of reach. You can still get on the train if you work hard. Investors, or families who need to improve their home, need to make decisive decisions when they can. After the epidemic and high interest rates, many families found that their income was not stable. It was not easy to buy a house when their income was high and their debt was low. The impact of AI on employment is imminent, and no one can guarantee that they will make as much money next year as they did this year. What's more, Although the policies introduced by the government have been popular frequently, banks have been tightening their internal mortgage policies. Especially under the threat of tariffs, it is easy for banks to make policy adjustments in rainy days. Canada's real estate class has been formed, and it takes hard work to join it.
Conclusion
Since housing prices fell from their high point in February 2022, Canadian housing prices have remained stable for 24 months from the beginning of 2023 to the first quarter of 2025. During this period, there were signs of recovery in December 2024, but after the tariff war began, it quickly returned to a state of malaise. During this period, from July 2023 to July 2024, homeowners struggled to endure a year in which mortgage interest rates were higher than 6%. Currently, affordability is improving. Theoretically, unless there are high-priced pre-construction properties to be delivered, the number of homeowners eager to sell their homes should gradually decrease. It is a very normal reaction for families who can cross the threshold of buying a house to hesitate due to uncertain factors. It is worth noting that uncertain events may disappear in an instant, and the situation where many qualified home buyers rush out together is a new uncertainty.
Judging from the impact of the past seven consecutive interest rate cuts on the real estate market, interest rates are not an influencing factor. Whether or not to cut interest rates will not be a decisive factor in whether the current deadlock in the real estate market can be broken. Therefore, this article does not analyze interest rate trends.
Currently, Canadian real estate is experiencing a situation where the central bank is releasing water, the fiscal government is spreading sugar, and the banks are cold-faced. Equivalent to the domestic policy version of "Mundell's Impossible Triangle", monetary policy independence ✖ Fiscal expansion intensity ✖ Financial system stability. It is difficult to satisfy the three at the same time. (Central Bank + Finance) ensures short-term growth vs. banks ensure long-term stability. Therefore, buying a house is not an easy task. For a certain family, the window of time to be able to buy a house may close at any time. A sudden change in a bank's policy, a rapid rise in housing prices in a short period of time, or a sudden unemployment of a high-income family member may all change a family's ability to buy a house in an instant.
Those who own assets will always accumulate wealth faster than labor production. With great power comes great responsibility, families holding multiple properties should bear greater uncertainty and more financial risks. Actual difficulties can be overcome by finding ways, while imaginary difficulties are just an inconvenience. Hopefully, we will see a gradual reduction in listings and a booming reversal in the Canadian real estate market as uncertainties are resolved one by one. We have many angles to observe the world. Only by looking at the world through economic common sense can we make rational decisions. I wish more families who work hard and pay taxes honestly can hold more real estate and feel that immigration is worth it.
Henry Wang April 16, 2025