The scar on your psyche

With high hopes, Mr. Carney blows into Washington. In advance Tariff Man sighed a little, saying “I don’t know why he’s coming. To try and make a deal, I guess. All these countries want a deal. Because they want what we have.”

And the orange guy forgets we already have a deal. He signed it. Still in effect – spelling out free trade among the US, us and Mexico. The one he broke.

Well, trade tensions are hitting the ground now. Big layoffs and terminations announced in the car business. Big retail outfits going paws up. Now a big collapse in portions of the housing market.

A new report by TD economists is being etched on the tombstone of Toronto condos. The bank now says prices will tank a full 10% this year, bringing units into a bear market (down 20%) compared with two years ago. Sales have collapsed to levels unseen since the crisis of 2008, when US real estate was imploding along with major Wall Street banks.

There are many reasons. Immigration levels have been slashed, reducing demand from tenants, dropping rents and making investment properties uneconomic. Mortgage rates are stiff and the CB has stopped chopping them. There’s a supply glut on the resale market and 17,000 new, unsold apartments available. And the Trump trade war has spooked Canadians and sidelined both investors and end-users.

TD found a quarter of people surveyed say they’re, “less likely to make a major purchase given the trade tensions.” Now that tariff-related layoffs have started, the bank thinks unemployment could rise to 7% nationally later this year with wage growth falling. Already the jobless rate in the GTA is approaching 9%.

The trade war, TD concludes, is “scaring on the psyche of households and businesses”.

Detached sales down 20%+, prices fall 7% across GTA

Source: TRREB, MLS

Well today’s stats from the local real estate cartel confirm all of that. As we forecast here over the last few days, this pattern of lousy sales, rising inventories and slowly melting prices seen in Calgary, Victoria and the Lower Mainland has spread eastward.

The GTA numbers suck. No spring market there. Overall sales in April dropped 23%. Active listings have ballooned 54% from this time last year. The 905 is a wasteland for offers where detached sales are down 27% and condo deals have fallen by a third. Average prices in the whole region are 4% lower year/year (and 22024 was tough) with detached homes selling for 7% less.

Having said that, the average property in the GTA still costs $1.1 million. A detached is $1.3 million in the burbs and $1.7 million in the city.

Says realtor grand wizard Elechia Barry-Sproule, in trying to shine this road apple: “Following the recent federal election, many households across the GTA are closely monitoring the evolution of our trade relationship with the United States. If this relationship moves in a positive direction, we could see an uptick in transactions driven by improved consumer confidence and a market that is both more affordable and better supplied.”

But the reality is sales at the current level of 5,000 in April are pathetic. During the same month in 2022, 13,600 homes changed hands. The next April the total exceeded 8,000. Last April sales were over 7,000. So this year is the worst since the first full weeks of the global pandemic, when everyone lost their job and prepared to die.

Active listings swell by 54%, average price off 4%

Whither from here?

It’s unreasonable to assume Carney will come home with a ‘peace in our time’ manifesto from Trump. Even if he did, there’s no guarantee the US president wouldn’t change his mind in a week. The Canadian economy is in for months, or years, or transition and uncertainty. Yes, the jobless rate will rise. Interest rates will go down. House prices will continue their slow melt. Inventory will grow. Investors will bail. And urban condos could sink in value more than even TD expects. Plus, we still have kooky Danielle Smith to worry about.

Meanwhile, stock markets have recouped their hysterical losses of the past few weeks. The Canadian dollar is markedly stronger. Trump will barge ahead with gutting government and slashing corporate taxes, fuelling earnings and equities. Oil prices have swooned, cutting business costs and easing inflation.

Those with balanced, diversified, global and liquid portfolios can sleep peacefully. But the nightmare in the towers has just begun.

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Source: https://www.greaterfool.ca/2025/05/06/the-scar-on-your-psyche/