April 28, 2025 | Election Day

Happy Monday Morning!

Today is the day, Canadians across the country will head to the voting booths and decide the direction of the country for the next four years. Polls suggest another liberal government, but polls are often wrong. This will be a tight race, so get out and vote.

Cost of living and housing remain front and centre for voters, so let’s discuss.

Teranet, which tracks land transfer data says the typical Ontario first-time buyer is now 40 years old. Even in 1981, when Canada’s prime rate peaked at 22.75%, the average age was only 31.7-ish.

Canada might not be broken, but housing certainly is.

So how do we fix it?

Both the Conservatives and Liberals have promised a construction boom the likes of which we’ve never seen, and, frankly, will never will see. The Carney government has promised to build 500,000 homes per year and the Poilievre government has promised 460,000. Both are lies. Remember, the record number of new home completions in Canada was 274,000 units, set back in 1974.

As we’ve been highlighting in this newsletter for over a year, housing starts are in the process of falling off a cliff. And yes, given the long lead time to build new housing, it’s a process not an event.

Housing starts in Ontario are down nearly 40% in Q1 this year. In BC, they’ve plummeted by 30%.

We know this trend is only going to continue given the weakness at developer presentation centres. In fact, per Ben Rabidoux of Edge Analytics, the trend in homeowner housing starts across Canada is running at the lowest levels since the financial crisis.

Vancouver’s largest marketer of pre-sale condos, Rennie, notes similar concerns, suggesting 2025 will close with the “highest level of unsold condo inventory” that the region has seen in many years.

“Right now, the market is out of gas. Nothing is working for developers. It’s not really working for buyers. So, we’re just kind of stagnating right now,” said Mr. Berlin, Rennie’s chief economist.

The story is all about the missing investor – a key player in the housing market. And they’ve run for the exits.

Mr. Berlin has long kept statistics on investors, and from 2020 to 2023 they represented half of Rennie Marketing’s buyers. By 2024, they made up one-quarter of buyers. This year, only seven per cent of buyers are investors.

Rising rates, falling rents, and stricter tenancy laws have sent investors running for the hills and leaving developers with a plethora of unsold units and a handful of lawsuits as buyers try to walk away from contracts. We already know some developers are renogiating prices with buyers in order to lure them across the finish line.

All of this to say, the speculative condo bubble has burst, and governments will have a herculean task in front of them to slow the slump in housing starts and job losses in the construction sector.

The leaders of both parties have different ideas on how to reverse the slump. Carney’s approach focuses on large-scale construction projects and financial investments in affordable housing, while Poilievre emphasizes tax cuts, deregulation, and incentivizing municipalities to increase housing supply. Carney plans to temporarily manage immigration levels, whereas Poilievre proposes capping immigration to align with housing growth.

Both will launch a fiscal bazooka to make it happen.

Over the next four years, Mark Carney’s fiscal plan is approximately $99 billion larger than Justin Trudeau’s most recent plan. Carney’s platform would add a whopping $225 billion to the federal debt over four years, compared to the $131 billion projected under Trudeau’s plan for the same period. The Poilievre plan is also lavish, pushing deficits to $100 billion by fiscal year 2028-29, but that includes dynamic revenues. When removed, the party’s planned deficits are closer to C$156 billion over the next four years, according to Scotiabank’s analysis.

If history tells us anything you’d be wise to take the over. It’s all fun and games until the bond vigilantes come out to play.

You’ve been warned. Stay diligent my friends, and don’t forget to vote.

Steve Saretsky April 28th, 2025

Posted In: Steve Saretsky Blog

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