$10 BILLION In Losses Over The Next 2 Years: Will GTA Pre-Con Condos Break Some Investors?

Will the losses scar some RE Investors? Will the Developers take big hits?

The number is just back of the napkin: 55K Pre-Con Units closing over 24 months with $175K loss per unit

2/ Some people may say "Just paper losses, in 5 years the prices will recover"

Actually NO

These losses will sure as hell be real to the Investors

If they don't close their deposits are seized & they're sued for losses

If they do close, they have to raise money

3/

Did The Federal Government Enhance CMHC Mortgage Rules To Bail-Out The Ontario & BC Construction Industry?

The answer is a strong MAYBE

A massive increase in the Cap for CMHC mortgages from $1M purchase price to $1.5M (USA is $806,500) & amortization from 25 years to 30

2/ Smart people like @daniel_foch and @SteveSaretsky suggested that these changes could bailout some GTA Pre-Con Condo Buyers & help some of last of the recent Single Family projects priced under $1.5M (mainly Semi's & Towns)

I was a bit doubtful for a few reasons

3/

The Prime Minister Must Go But So Far He Won't: He Puts Himself Above His Country

I am old & I have NEVER seen a Canadian Prime Minister cling to the job in the face of an overwhelming need to step down in my life

Never before have I seen all these reasons to leave

2/ - All 3 Opposition Parties agreeing to Vote Non-Confidence & bring down the Government
- So Many Ministers have quit
- So incredibly low in the Polls
- His own Party hiring lawyers to figure out how to remove him
- So many members of his own caucus voting for him to leave

3/

A Government In Chaos: The Wheels Fall Off In Ottawa

Freedland RESIGNS
Fraser RESIGNS

WTF is happening?

It's obvious that when the Prime Minister started calling his Ministers late last week about a proposed Cabinet Shuffle a couple of them told him to fck himself

2/ And why wouldn't they? The Prime Minister is running some of the highest negative impressions in the history of the polling industry

The polls also indicate his party would lose at least 115 seats if an election were called today & would likely be third behind the BQ & NDP

3/

What's A "Low Knowledge Voter"? It's Everyone That Doesn't Vote For Leftest Candidates

I just read a post that everyone who voted for the Ford Brothers in all their different elections was a Low Knowledge Voter

Same for all Trump Voters, all Poilievre Voters

Low Knowledge

2/ High Knowledge, well educated voters would NEVER vote for those candidates

Almost all leftist politicians & their political operatives deeply believe this

It's not a mean spirited, arrogant attitude, it's sincere

Leftists believe voting for other than Leftist Candidates

3/

Just How Bad Could Residential Construction Starts Get In Ontario Next Year? REALLY BAD

The simple facts are that Hi-Rise Construction which has been 80% of all new Construction in Ontario since 2018 has effectively halted

There are still cranes in the air in the GTA

2/ But those cranes are FINISHING projects that started years ago

The GTA has led the North American Construction Crane list & often had more cranes than the next 5 cities COMBINED

In a few more years that will be over

There's just no business case to build Condo Towers today

3/

50 BPS RATE CUT!!

The Bank Of Canada says it loud & clear: The Canadian economy is in trouble

There is no clearer message a Central Banker like Tiff Macklem can send that the Bank's view of Canada's Economy is entirely negative as a 50 BPS cut

The new rate is 3.25%

2/ Which is awfully close to most Economist's original suggestion of a 3% rate when the cuts started over 6 months ago

What happens next?

Because all the parsing of every boring word at today's BoC news conference is pointless

No matter how much analysts love to study it

3/

Rate Cut Tomorrow: May Be 50 BPS May Be 25 BPS But Does It Really Matter?

Because if it's only 25 BPS tomorrow it will be 50 BPS on January 29th

The path for Tiff Macklem & the Bank of Canada is clear: Get to a 2.5% Rate by late Spring

The cuts must happen & they will

2/ But...... THE CURRENCY!!!

Yeah, I've been hearing about the Canadian Dollar's slump against USD for over a year now

And the Canadian Dollar IS down against the American

So is almost every other currency in the world

Will the fall of the Dollar reignite inflation?

3/

Lousy Employment News = Good Mortgage Rate News But The Future Of Canada's Private Sector Economy Looks Awful

The Unemployment Rate in Canada rose to 6.8% sending 5 - Yr Canada Bonds down (over 40 BPS drop in 10 days)

Will the Bank of Canada cut 50 BPS next Wednesday?

2/ It's more likely a 25 BPS cut but this reality of crappy Private Sector Canadian economy is really getting locked in

The combination of record breaking Immigration & massive Public Sector job growth that has distorted the Canadian economy for 3 years has run its course

3/

The Great Toronto Condo Crash Gathers Momentum

The stories of losses on Pre-construction sub 500 sqft Dog Crate Condos & even on slightly larger 600+ sqft units just keep on coming

The same themes but different problems & really bad outcomes

More details are emerging

2/ A new twist is the difficulty in securing normal mortgages to close on these wildly overpriced units

In a great G&M piece this morning #rachelleyounglai describes an 8.3% mortgage rate on a $410K mortgage producing a $4200 payment including mortgage, condo fees & taxes

3/

WTF Is A Vibecession? The Finance Minister Tells Canadians Every Is Actually Great We Just Have The Wrong Vibe

Minister Freedland says the economy is actually doing really well. We are all fooled by right-wing commentors it's a Vibecession: not real

I am actually serious

2/ The newest push from our Federal Government & their supporters is that Canadians have simply made a mistake

Polls prove most Canadians (and the majority of Americans in the recent election) are pissed off at a crappy economy & an affordability crisis

Or is that a wrong Vibe

3/

The World Of Private Mortgage Lending Keeps Cracking: And It Will Get Worse Before It Gets Better

One of the largest Private Mortgage operations in Canada: Kingsett announced it will suspend redemptions & distributions

Why is this happening? What happens next?

2/ Kingsett suspended both distributions (profits to unit holders) & redemptions (investors can't get money out) from it's $4.9B Canadian RE Income Fund

This fund is about $1.9B of Commercial Properties the Fund owns the rest is Mortgage Lending on Commercial Properties

3/

Is The Bank Of Canada Going To Cut On December 11th? YES There Will Be A Cut

Not likely to be 50 BPS but I am not certain it was ever going to be 50 unless we had catastrophic Job Losses

Inflation is up to 2% but we expect monthly reports to move around

Trend is important

2/ Not the up & down of monthly numbers, 4 or 5 months in one direction is a Trend but each report will have minor gyrations

Another 25 BPS cut is a lock & further cuts next year barring a CLEAR & obvious resurgence of inflation

Variable Mortgage Rates will continue down

3/

Mortgage Defaults: Crisis Coming? Renewal Cliff Approaching? Or It's Going To Be OK?

Big questions here

Let's separate the facts from the fiction

Mortgage Defaults (Missed payments for 90 Days) are increasing

But it's not what you might think, the lenders may not be banks

2/ Low Mortgage Default Rates are a wonders of Canadian Banking

Defaults floated between 16 to 18 BPS in 2022 (less than a quarter of one percent) Bankers in the USA (Average of 34 BPS) were so shocked by the low numbers they believed Canadian Banks didn't take enough risks

3/

We Stopped Building Single Family Homes In Ontario & BC: Why Doesn't Anyone In Any Government Talk About It?

New Construction Starts in Ontario for Single Family Homes fell to the lowest point in 69 Years

The population has grown over 450% in those years

WTF Happened?

2/ Policy Happened, mostly bad Policy

In BC the stats are not much different

Greater Vancouver new Single Family Housing is virtually extinct versus previous decades

BIG QUESTION: was the general public in these provinces ever asked if they wanted the end of Low Rise Homes?

3/

TRUMP WINS! What's It Mean For Canada & Mortgages

Possibly the most important political lesson that can be learned from last night is: It's JUST the Economy

If average people feel they are worse off financially than they were before they will throw existing politicians OUT

2/ And the American economy is running much better than the Canadian economy

Let that sink in

Trump has talked alot about bringing Manufacturing back to America through Tariffs

A 10% Tariff on Canadian goods would be devastating to us

But ultimately Trump is transactional

3/

Really Bad US Jobs Report: What's It Mean To Canadian Mortgage Rates?

Quite a bit actually

US Jobs numbers revised down & similar to Canada: Government adds jobs but private sector is reducing payroll

Opens the door for rate cuts by the US Fed

Expect Jerome Powell to cut

2/ Eventually the Bank of Canada has to worry about a falling Canadian dollar but the US Federal Reserve cutting means the drop in the CAD will slow

We will continue to see the BoC cut rates as most Central Banks synchronize rate cuts

25 BPS to 50 BPS cut on December 11th

3/

Immigration Is Going To Slow Down In Canada: What's It Mean For Real Estate In Canada?

By 2026 it's going to be a BIG for those who rent rooms or depend on Students for revenue

Permanent Resident targets are dropping it's very important to understand most are already HERE

2/ A big percentage of Permanent Residents come from:

- The International Temp Workers Program

-International Students

In the last 3 years over 2 Million have entered Canada in those categories, in 2025 & 2026 Canada could fill it's new reduced Permanent Resident targets

3/

50 BPS Cut: Bank Of Canada Governor Follows Bankers Orders? Tiff Macklem Knows Who's Boss?!

Every Bank Economist except TD & several Bank Execs called for 50 BPS & Tiff delivered

This is great for Variable Mortgages but horrible news for the Canadian economy

Emergency Cut

2/ When Central Banks enter the cutting cycle following a sharp rate run-up to break inflation the idea is constant 25 bps cuts to show no panic about economic decline

50 BPS means bad news is coming, an economic slowdown, rising unemployment & all the pain that comes with it

3/

We Know What's Going To Happen To Prime Rate: DOWN
What's Going To Happen To Fixed Mortgage Rates?

While we wait for the Bank Of Canada's Rate cut tomorrow (and more of them to come) what will happen to Fixed Mortgage Rates?

They go down right?

Well, that's a story......

2/ Let's review 5 - Yr Fixed Rates the truth is unless you have an absolutely certain life event on a 2 or 3 year schedule that would cause you to sell your home in 2 or 3 years the correct way to look at choosing Mortgage Rates is either OFFENSE (Variable) or DEFENSE (Fixed)

3/

Nothing Will Stop Canada's Economy From Slowing Next Year: We Need To Plan For It

What's does an old, fat mortgage broker know about the Canadian Economy?

I get the calls, watch the reality of ordinary people's economic lives

I understand real estate trends clearly

2/ And it ain't good, everyday people with renewing mortgages have higher payments

The Construction Industry in the 2 provinces half of all Canadians live in grinds slower every day

Manufacturing slows gradually but clearly

Every Big Ticket National Retailer sees sales down

3/