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Ron Butler Profile picture
@ronmortgageguy
Mar 25 • 6 tweets • 2 min read • Read on X
Are We On The Brink Of A Construction Industry Disaster? What If Home Building Is Stalled For YEARS

Been talking to many Industry people on the Developer side & this complete crash in Ontario Home Building is looking worse every week

Because it's likely to be a long time

2/
Before Residential Construction restarts

When does it get better?

Fastest recovery estimate I have heard is Mid 2027

Many say 2028, a few pessimists suggest 2030

Holy Crap, that's really bad

Let's get specific:

This is about real construction starts: digging a hole

3/
To pour the concrete forms for the Low-Rise Home or digging down to start the Hi-Rise Tower

For Low-Rise Home Purchasers that process ended in Ontario about 20 months ago

About the same for Hi-Rise

Purpose Built Rentals have had some starts in the last 2 years

4/
But with changes in the CMHC Select Program last year Rental starts have now dramatically reduced

Oh, and did I mention there are effectively zero new Office Buildings getting started & new Retail Development is almost non-existent

Some Logistics / Distribution but slowing

5/
Government is still building because Tax Payers money is infinite

But it will restart eventually, even if immigration is slowed greatly & new people entering Canada is super low, that clears up & New Canadians at some higher levels will start coming again in 2027

6/
Therefore 2028 - 2029 will need new homes

Sounds insane right? Canada with a Housing Crisis stops building in the biggest province

But economics control building & today they don't work

Let's all understand just how bad this is for the Construction Workforce

It's Horrible

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More from @ronmortgageguy

Ron Butler Profile picture
Oct 20
Is The Certainty Of Property Ownership In Danger In British Columbia? MAYBE

The recent BC Cowitchan Band Court Settlement may have turned over ownership of part of Richmond BC to the Aboriginal Band

Is it a done deal? Will people lose their homes? Because it's possible

2/
I am not digging into the Politics on this one although there a lot Politics.

Not going to go on a rant about judges although its obviously a problem

But last week City Of Richmond said that Homeowners may have a problem with Title

And that's HUGE

Land title is Gravity

3/
I am serious, there are Laws of Physics that govern the Universe

But the Law of Land Titles governs everything about Property

Without the certainty of Land Titles EVERYTHING about Real Estate breaks down completely

It's really the biggest thing there is in Real Estate

4/
Read 6 tweets
Ron Butler Profile picture
Oct 16
Will Ontario House Prices Keep Going DOWN This Year? YES And What About Next Year? Likely YES

Lot's of good private technical analysis being done on this question lately that never gets to the public

I had a chance to review one report & its pretty damn alarming

2/
Worst case outcome was ANOTHER 2O% DROP from today's prices

Since average Ontario price is already down 25% from the March 2022 all time high the new number would be a wild 45% decline

This analysis used some fairly dark assumptions but none of the key inputs were outliers

3/
Here are the components:

- No Useful Trade Deal achieved in 2026
- Unemployment in Ontario climbs past 10%
- Per Capita Recession accelerates
- Bank of Canada keeps cutting: another 75 bps
- But Bond Yields DON'T fall in lock step & Fixed Mortgage Rates dont go below 3.30%

4/
Read 6 tweets
Ron Butler Profile picture
Sep 11
Mortgage Rates Headed Down: What's The Best Move?

Canada Bond Yields have dropped: 5 - Yr Yields more than 6% down in just a week: 3 - Yr Yields down over 8% on the month

And Mortgage Rates have come down: Scotia touched off a Rate War on 3 - yr Fixed 2 weeks ago

2/
With extremely aggressive 3 - Yr Pricing: 3.69% on CMHC Low Down Payment Purchases & 3.99% on every other kind of 3 - Yr Mortgage

Other banks quickly followed suit although a bit reluctantly, this time of year doesn't typically have the aggressive rate wars of Spring Markets

3/
Why are Bond Yields falling? Because the Trading community believes Bank of Canada & US Fed cuts are guaranteed

And there are signs that Inflation is NOT surging today

The general belief that North America & Canada in particular will be in Recession is taking hold

4/
Read 6 tweets
Ron Butler Profile picture
Sep 8
Fixed Mortgage Rate Or Variable Mortgage Rate? The Debate Goes Red Hot Today

As Canada accepts the idea our economy really is tanking & the Bank of Canada must cut rates this year the eternal question of Fixed or Variable is front & centre

What's the answer?

2/
Some of it is situational

If people are positive they will sell there house in a finite time horizon like 12 - 18 months take Variable

Guaranteed to only be a 3 - Month Interest penalty & on a short term basis 100% sure the rate will go down at least 50 BPS

Easy call

3/
If people are positive there will be no change in their home ownership in the next 5 years there is a decision to make

The BoC will cut a minimum of 50 BPS this year & if the economy is bad enough another 50 BPS or 75 BPS in cuts can happen

Yeah, 125 BPS of cuts is possible

3/
Read 7 tweets
Ron Butler Profile picture
Sep 5
Canadian Jobs Report A Disaster: What does It Mean For Bank Of Canada's Rate Decision?

66K Jobs Lost in Canada, over 100K in the last 2 months

Horrible outcome for all those families

Windsor Ontario hit & Alberta feeling the pain as energy prices slide

A country in pain

2/
Bank of Canada Decision on September 17th

Odds of a cut jump to 70%

Canada Bond Yields fell immediately so Traders sure believe in a cut

Will it happen?

Whether it's the 17th or not isn't the key issue

The key is cuts are now locked in

Whether its September or October

3/
Cuts will happen

And there is NEVER one cut so expect 2 cuts in a row

Therefore Variable Rates which are currently 4.45% to 3.95% will end up at 3.95% to 3.45%

Which are pretty good numbers

Should everyone go Variable?

I don't think so

Canada Bond Yields dropped too

4/
Read 5 tweets
Ron Butler Profile picture
Sep 4
Prime Minister Carney Please STOP Build Canada Homes: Cancel It NOW

Because this program is going to be a colossal failure & light Billions of Taxpayer's dollars on fire

You need to cancel it for many reasons but perhaps the most important is: it's just about Rentals

2/
Let's break it down:

- The entire discussion about Build Canada Homes has been about Affordable Housing: these are code words for Rentals & Subsidized Housing.
- We do NOT need a whole new Bureaucracy built to encourage Rentals: CMHC's Rental Program has already worked

3/
We have more Purpose Built Rental starts in the last 7 years than we had in the previous 35 years

The CMHC Program is wildly successful to the point CMHC tells us there's an OVER SUPPLY of rentals by next year

Your own Housing Minister Robertson talks about a Condo Crash

4/
Read 6 tweets

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