30,000 to zero

This week a record was broken. Unless you have a condo to sell in DT Toronto, it seems like a meaningless number. But, not.

In the 416 hunk of the GTA there are now more than 7,000 resales on the market. Add three times that many in new, unsold and almost-finished units, and the conclusions are clear. A gut of supply. A dearth of buyers. Prices pressured lowered. And things are getting worse weekly, as about 200 more appear on MLS every seven days.

Why is this happening when mortgage regs are looser, downpayments lower, choice greater, mortgage amortizations longer, sellers more motivated, lenders eager and loan rates historically attractive?

You know. Fear.

Most people are afraid to buy because they’re scared of what’s to come. The economy seems iffy, Trump is crazy, there’s a confusing election happening, tariffs dominate the headlines, everybody’s heard of layoffs and the Conservative leader says we have a swelling crime wave, plus a drug crisis and are on the verge of industrial and social collapse. Yikes!

The real-world consequences of this barrage is a pullback in consumer spending. Since that makes up two-thirds of the national GDP, we’re pooching ourselves.

The latest evidence comes with air travel. Trips to the evil United States have collapsed. Airlines have suspended flights. Ticket sales have cratered. And the inflation number released this morning – surprisingly down to 2.3% – reflects that. It was also dragged down by a drop in the cost of gas plus the demise of the carbon tax.

So Trump tariffs will probably make things more expensive in the months to come but freaked-out Canadians will be spending less (with a real estate crash likely) shrinking the GDP and perhaps bringing recession. Meanwhile unemployment is going up (we lost 32,000 paycheques last month) and key sectors, like cars and steel and lumber, are in trouble.

This puts the Bank of Canada in a tough spot. Drop rates to save condos and GM workers? Raise rates to counter the debilitating impact of a trade war? Do nothing, hold the line, and pray? And what happens if Prime Minister Poilievre makes good on his promise to punt the Bank of Canada boss. “I will fire the governor of the central bank to get inflation under control,” he said just before becoming Conservative leader. More instability.

So much to worry about. Such tough choices. Lower inflation data today. More tariff changes hourly. A bank rate decision tomorrow.

“Normally, this would be a big green light for the BoC to cut tomorrow, except the small detail that their major core measures are holding close to 3% (so with the overnight rate having been slashed to 2.75%, real rates are already negative) and policymakers are operating in the dense fog of an ever-shifting trade war,” says BMO chief ec0nomist Doug Porter.

Over at CIBC, the boys still expect a couple of rate cuts are coming – but not just yet.

“We expect the negative demand impact from higher unemployment due to tariffs and the deterioration in sentiment since March to be more worrisome for the BoC than temporary upward pressure on prices from tariffs ahead, and we continue to look for the overnight rate to reach a trough of 2.25%.”

And at RBC, economists are leaning into a quarter-point drop tomorrow morning, as insurance, because business sentiment is starting to circle the drain.

“About 32% of firms surveyed now expect a recession in the next 12 months, up from 15% in the previous quarter,” they say. “March employment data reinforced these concerns with the job count falling and unemployment rising. And, housing markets have shown clear signs of slowing—reducing the odds that near-term interest rate hikes will lead to another round of surging house prices.”

TD says ditto.

“The central bank will be weighing the inflation risk from tariffs against the downside risk coming from consumer/business sentiment surveys, a loosening job market, and a very weak real estate market. We are maintaining our call for another cut from the bank, as it should take out more insurance against the mounting downside risks to the economy.”

So, here’s the thing. Rates may go down a bit tomorrow, or pause. But they will not increase this year, regardless of inflation’s ugly return. The threat now is recession, contraction and unemployment with a crash in consumer and business confidence. Less spending, less investing. The damage from Trump has already been done, and Canadian real estate will be the poster child for it. We’re going down. How far is unknown. The bottom unclear.

By the way, virtually every major new condo development in the country’s largest market has been cancelled. Thirty thousand new units annually, to zero.

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Source: https://www.greaterfool.ca/2025/04/15/30000-to-zero/