Even in Calgary house sales have dropped 19% and listings increased 100%. Toronto and Vancouver are a hot mess. Prices across Canada have softened. But they have not dropped, plunged, sunk or mellowed. A few sellers have surrendered. Most are hanging tough. Scores have withdrawn their properties. In one GTA market the DOM for $2 million+ homes – which used to sell in weeks – is approaching two years.

As you heard in the debate last night, nobody has a valid plan to fix this. The reason’s simple. Real estate is not really a federal matter. Citizens just made it that way and politicians were too scared to tell them otherwise. Towns and cities control permits and zoning. Provinces regulate housing. The feds can only dance around the edges tweaking tax policy and pretending to do something.

In any case, we don’t have too few homes for sale. It’s all about price. Here, look at this chart from the GTA which summarizes the total available number of resale homes and rentals at any given moment. Supply is currently off the chart. Buyers and tenants are swimming in choice.

Facing facts: the supply of homes is exploding

What can we expect?

Worsening conditions in the short-term. Tariff uncertainty is rampant. Central bankers have no clear idea what to do. Trump is rogue. A recession is imminent, lasting most of this year. Unemployment is rising in Canada and layoffs will accelerate. It’s no disaster, no depression, nothing as dramatic as the pandemic or structurally seismic as the Credit Crisis. But it’s a big deal if all you want in life is a house.

So, it’s a safe bet to say the cost of real estate will fade a little this year, mortgage rates, too, but so will buyer confidence and the number of jobs. Sales will stay anemic and realtors apoplectic. This is no economy to be an eat-what-you-kill commission guy. The industry could face a serious exodus by the time offers start flying again.

Who is best to deal with this, federally?

Well, nobody – as stated. The government in Ottawa will not, and cannot, make bungalows in Etobicoke or Vancouver Specials cheaper. Basing your vote on housing is to waste that ballot. The feds did not increase home prices. They cannot reduce them.

The plan to build zillions more places is a falsity. Just look at the chart above. There’s a huge surplus already, and prices are not retreating. Adding more won’t change anything, since building and development costs dictate prices will hold steady. Tariffs may even mean things become more dear.

The Carney plan to provide billions for acres of pre-fabricated, mass-built, get-‘er-done homes is innovative, but wholly unproven. Do young couples want that kind of housing? Will it have enduring value? Will it be better suited to rentals than ownership? And, as yet, it’s all just a plan. Shovels in dirt could be years off.

A strategy to lessen real estate demand by making renting a better option would be helpful. So would a plan to definancialize single-family homes. That could involve banning all unhosted short-term rentals, changing the Interest Act to facilitate the growth of locked-in 10 and 20-year mortgage terms, phasing out the existing PR cap gains tax exemption and giving all citizens instead a lifetime break – to be used sheltering profits from selling a residential property, or wiping out the tax bill on a financial portfolio or retirement savings. Your choice.

Diddling with zoning, punishing cities for trying to plan growth or showering incentives on first-time buyers are things that clearly do not work. The Trudeau gang spent billions going down that road, and we accomplished zilch. You don’t get a different outcome by doing the same thing  repeatedly.

Will the election make a difference in the near term?

Here’s the forecast from veteran broker Robert Ede, a relentless chronicler of market statistics:

“I think the election provides a minority Conservative government,” he says (despite this blog’s two recent polls). “And a modest rally in real estate [powered by] first-time buyers, last-time sellers and buy-sell customers. No investors will be participating (apart from dumping non-performing rentals).”

After that, he adds, will come two quarter-point rate drops from the Bank of Canada, followed by “a fine time for real estate – especially worried realtors – in the summer and fall.”

Realistic? Or is Ede hopped up on hopium?

Nobody knows. But the guys on the political stage need to stop zooming us. We might rebel.

About the picture: “Our 3 year old poodle-cross Harley has been having some adventures!” writes Barb. “Thanks to our talented nephew Yuri for the photos! We have been daily readers for years, have attended one of your seminars in Nanaimo many years ago, and have purchased some of your books ( mandatory suck up)! Our neighbor Robin in beautiful Chemainus BC has submitted photos of her dog Lola which appeared on the blog and suggested we send this images of Harley.”

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

The Dow opened another 500 points in crimson Thursday while the price of US Treasuries dipped further into the red.

It might as well have been the blood of American investors who thought their new president would bring booming markets, lower taxes, falling inflation, rising demand and an expanding nation. Oops. Just the opposite.

And now, the ‘nightmare scenario’ just drew a little closer.

That’s the term one prominent Wall Street economist uses for the day that Donald Trump fires the head of the Federal Reserve and installs his own lackey, effectively politicizing monetary policy. It is exactly the play that Canadian Conservative leader Pierre Poilievre has advocated for the Bank of Canada.

After Fed boss Jerome Powell this week said Washington’s tariffs were larger than expected and would lead to an increase in both inflation and unemployment, plus slower GDP growth, Trump wrote this on his social media soapbox:

“The ECB [European Central Bank] is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’,” Mr. Trump wrote on his Truth Social platform. “Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”

It was Trump, of course, who nominated Powell in his first term. Biden renominated the guy – who has won respect for his steady hand in controlling inflation and the perilous journey through the pandemic which brought it. Like our central bank boss, Tiff Macklem, Powell has ceased cutting the cost of money because of the massive uncertainty Trump’s trade war has delivered. Pausing is wise, prudent and professional. The president is none of those.

Why does this matter? After all, Trump has moved to control or influence almost every other facet of American society, while upending the economy and trying to reshape the way nations deal with each other. Why’s the Fed different?

The simplest answer is that the US dollar is the world’s reserve currency, and the Fed controls it. Not only the supply of dollars, but their value. Lately that dollar has been falling (since Trump took office) which has pushed other currencies higher (like the loonie) and threatens to make American inflation worse. If the Fed were to chop rates, as the prez urges, the dollar would tumble further. This currency manipulation would cause more trade chaos.

Moreover, the US is the world’s biggest debtor, and all that borrowing is denominated in dollars. Countries around the world hold a mess of this debt (Canada has $350 billion worth) in the form of US Treasuries. Since Trump started the trade war, the price of those bonds has dropped and the yields increased. This has put more upward pressure on interest rates in general, and pissed off the bond-holders who are looking at a capital loss. These notes have for eons been considered the most risk-free assets in the world. No more.

And the Fed, like our guys, sets interest rates. Mortgages, business loans, credit cards, car financing – the whole works. Lower rates make borrowing cheaper, heaping stimulus and liquidity into the economy. That facilitates growth, expansion, higher stock prices and more inflation. No wonder Trump wants it. This could temporarily paper over the misery of his trade policy mistakes.

But Powell says the White House will have to pry monetary policy out of his cold, dead fingers. The Fed is an indy agency. His position is protected by law. He ain’t quitting, leaving, or being dragged out.

Will that stop the president from trying?

Maybe not. After today, probably not. There will be a legal challenge, but these days Trump is ignoring the courts and ruling as an autocrat by executive order. So far he has illegally deported US residents, waged war on universities that allowed free speech and protest, attacked law firms that were hired to oppose him, approved the dismantling of the federal government, ended vaccine research along with water protection programs and life-saving foreign aid, oh yeah, mocked and trolled sovereign Canada while throwing Ukraine under the bus.

Blowing up Powell is just another day in the West Wing.

But know that if US monetary policy comes under the thumb of a political leader, especially an unprincipled grifter with failed economic fantasies, things could be forever altered.

Mr. Bond Market will be the final line of defence against men without value. Watch it.

About the picture: “Thanks for your great blog,” writes Bonnie. “Much appreciated. Here is a pic of Princess Zoe & her pals from Vancouver Island. They’re always hoping for a treat.”

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