00:00The Canadian economy, already contending with inflation, tariffs and a cost-of-living crisis,
00:05is also watching a steady and ongoing slump in the housing market.
00:09Thousands of condos are left unsold.
00:12The Canadian Mortgage and Housing Corporation says about 2,500 new condos are sitting empty in Metro Vancouver.
00:18That's double what it was last year.
00:21And in Toronto, the CMHC says the weakening condo market appears to have similarities to the crash of the early 90s,
00:28escalating costs from material and labour are some of the factors behind this market stall.
00:35So to help us understand some of the other factors behind this trend, I'm now joined by Murtaza Haider.
00:41He is the Executive Director of the Cities Institute at the University of Alberta.
00:46Thank you so much for joining us.
00:48My pleasure.
00:49Well, you just heard about what we're hearing from the CMHC in the Greater Vancouver area,
00:56in the Metro Vancouver area and also in Toronto.
00:58I want to expand this conversation to the rest of Canada as well.
01:02What are we seeing across this country when it comes to housing?
01:07I think there are a variety of trends going on.
01:11There's a stronger recovery one sees in terms of prices in eastern parts of Canada.
01:16But then in places like Ontario, especially Toronto, and to the very west in Vancouver or British Columbia,
01:24you see a bit of struggle in the markets in their march towards recovery.
01:30Right next door to British Columbia, Alberta is showing a little bit better signs.
01:35So it's not just one market.
01:37It's a collection of markets.
01:38And they are all in a different place in the recovery cycle.
01:41So in terms of that recovery cycle, when do things look to be getting better or perhaps some might say worse?
01:51Well, I think it would have been a great year this year, 2025,
01:56if the electoral outcomes in the United States were any different.
02:00All predictions and forecasts for the housing markets all the way up to November of last year
02:05were that 2025 would be a recovery year.
02:08But then came the White, the President Trump's tariffs and the economic uncertainty.
02:13And that has delayed the recovery and maybe have pushed it forward by a year or more.
02:19So the consensus amongst economists is that if the economic turmoil somehow disappears
02:26and there's some stability that returns, and at the same time we see a decline in mortgage rates
02:30so people's affordability improves, then you would see a return of the buyers in a larger number
02:36and they would be buying more.
02:38Right now it's a buyer's market.
02:40There's a lot more supply out there.
02:42And people who are looking for deals, this is a good time to enter the market.
02:46You know, when we look at some of the comments from Canada's Mortgage and Housing Corporation,
02:50and they say that the Toronto region has some parallels,
02:54what we're seeing in the condo market there, has some parallels to the crash of the early 1990s.
02:58What are some of those parallels and might it end differently?
03:01I think there are less of parallels, if you ask me, now with the 1990s than before.
03:10Because remember, when the markets crashed in 1989, 1990, the mortgage rates were 18%, 20%.
03:17Interest rates were very high.
03:19It was a very different regime and the causes of the downturn were quite different.
03:24It was an economic recession brought about by a very heavy cost of borrowing.
03:29And at the same time, now if you move forward, what we see today, that slowdown in the markets
03:36is essentially a result of economic instability brought about by tariffs and on again, off again tariffs.
03:44So there are parallels.
03:45And the parallels are that you have a large inventory of unsold product and a moderate demand.
03:52But those parallels end there.
03:54The reasons for why markets are slow now are quite different from the reasons before.
04:00Even now, even with the higher mortgage rates, you're looking at 4.5%, 5%.
04:04And they are one third of the mortgage rates in the 1989 or early 90s.
04:09So yes, there are parallels.
04:11But there are also the determinants of this decline are quite different from the past.
04:15So what sort of impacts might we see from what we're seeing in the housing market?
04:20What could be the impact in different parts of the country and also when it comes to Canada's housing crisis?
04:27So the thing is that you have to realize that when housing prices go down, buyers walk away from the markets.
04:34They don't come to the market when prices are falling.
04:37Buyers return when prices are rising.
04:39And that's just human nature.
04:40You don't want to buy an asset that's losing value.
04:44So going forward, if you're looking at what are the determinants, I think the sooner we get a deal with the United States on trade, the economic certainty will return.
04:56And as economic certainty will return and the mortgage rates continue to decline, then there will be greater confidence amongst the buyers.
05:03Right now, people are just sitting on the fence looking at the job market, looking at economic uncertainty, looking at the mortgage rates.
05:10Many believe that the mortgage rates are going to decline in the near future.
05:13And hence, they are withholding their purchase.
05:16They are thinking that as rates go down even further, then they will enter the market maybe later in the year.
05:22So the April-May market for 2026, all else being equal, looks brighter than what we are seeing today.
05:30So that was sort of my final question or leads into my final question on the forecast.
05:36You know, when we're talking about next spring, that's one thing to look ahead to.
05:39Do you think there will be more certainty once a trade deal has been reached?
05:44And what sort of certainty or stability to the housing market could that bring?
05:49A lot rests right now on the lack of certainty in the market.
05:55So the sooner we get to it, the sooner we are able to have a definitive deal so that we can start planning our economy and we can start determining what we are going to export and what we are going to consume locally.
06:07And that would determine.
06:09And at the same time, remember that the federal government has put a big blockage in the demand for new housing.
06:16So foreign students, there were almost 600,000 foreign students were coming to Canada.
06:23And there were about a million temporary workers who were coming to Canada.
06:27And that has all stopped.
06:29So not only that we have this economic uncertainty, we also have a significant decline in demand for housing, which is because of the way we have stopped foreign workers and students.
06:40So the cycle will continue until such time that the demand resumes and also when more favorable economic conditions prevail.
06:49Many factors playing into this.
06:50Thank you so much for your time and for explaining it.
06:53My pleasure.
06:53That is Nourthasa Haider.
06:55He is the executive director of the Cities Institute at the University of Alberta.
Be the first to comment