The hardest thing

Seems like a storm warning.

The spring real estate market is melting. The tariffs mounting. The stock markets are totally wonky. And unsold housing units are stacking up as politicians vow to build millions more. It’s a weird time, and the heavy weather has yet to hit.

Here’s a small window on the future: in the GTA there are 21,863 new and unpurchased homes for sale, 16,995 of them condos. In the latest sales report just 248 single-family homes sold in a market of six million people – a 50% drop over last year (which sucked).

Currently another 55,000 new condo units are in the final stages of construction – which were purchased from plans two to four years ago. Since then the economy has wilted, immigration levels have been slashed, Trump got elected and rents are falling. “It’s a death spiral,” says mortgage prophet Ron Butler. “By the end of this year 70% to 80% of pre-construction buyers will simply refuse to close.”

That, of course, would be significant news in a normal year. But this ain’t normal. By the summer Canada may likely be in the throes of a recession, according to economists and political leaders alike. The headlines then will be dominated by layoffs.

As we reported, last month Canada lost 33,000 jobs. Actually it was worse than that. The toll for full-time positions was 62,000, many replaced by gig work.

BMO chief economist Doug Porter is not prone to hyperbole. So when he said, “I think that was just really an early taste of what’s to come,” it’s worth dwelling on. In March the rogue American president had not even announced his full suite of tariffs. Stock markets had not plunged in panic. Global recession calls were faint. The guys at the big Stellantis plant in Windsor had no inkling they were about to be sent home.

The April unemployment number – due out in early Mary – will likely tell a new story. And after that economists bet things will worsen as the jobless rate rises toward 8% and the economy contracts – just as 1.2 million families have mortgages come due. About 60% of them expect higher payments. A quarter may be in distress, analysts say.

The Bank of Canada – like the Fed – is expected to cave to economic and political pressures. There could be four or five rate reductions by the end of the year, unless tariff-induced inflation flares so high the CB must pivot. At this point the betting is Tiff Macklem will focus more on trying to rescue the economy than dealing with your grocery bill.

In this environment, don’t let anyone tell you they know what comes next. Nobody does. Trump is chaotic and likely unbalanced, surrounded by people too mesmerized or afraid to corral him. He could back down. He might double down. In any case, the damage he’s done to the US and Canadian economies in just months will take long to heal. The disruption to the global trading environment and world net worth may be decades reversing. You might not even live that long. He probably won’t.

What to do now?

First, as stated here often, nothing is a good option. It’s too late to sell assets and go to cash. Unless you need the funds next Tuesday, there’s no reason to turn a paper loss into a real one. Most people invest for distant goals, like retirement, so stay the course. Stuff will restore in time. It always has. And will.

Second, diversification is your friend. Growth assets should stay in Canada, the US and international by thirds. Eschew stocks and go with index ETFs. Risk is less when spread over dozens or hundreds of companies.

Third, do not lighten up on fixed-income. Bonds have been one of the safer havens this year, and that’s likely to continue. Yields are falling and prices rising because of increased investor demand and the looming certainty of a global downturn. As stated above, CBs look primed to unleash liquidity, pushing bond values higher.

Fourth, the government is about to see greater demand for spending and slashed tax revenues. Regardless of who wins on April 28th, the annual deficit will swell as millions of workers look for income relief when their jobs vanish, as corporations see profits go poof and as consumer spending slows, trashing HST collections. This is a formula for future personal tax hikes.

So, load up on your shelters. Retirement, tax-free, education and first-home accounts, for example, not only offer taxless growth but can also reduce taxable income. If you maxed them all this year, that’s fifty grand for an individual, and much more for a family. Also be wise about income-splitting, including a spousal RRSP, joint non-registered accounts and low-cost, tax-deducible family investment loans.

Lastly, don’t panic over the news or the markets. Nor be hasty or greedy. Most people should do the hardest thing. Chill.  A golden retriever helps. Iguanas, not so much.

About the picture: “On a recent visit to Baja, I came across Santiago, a handsome, sombrero-sporting iguana,” writes Heather, from Sough Surrey. “With all the nonsensical things going on in the world today, we need all the levity we can get. Thanks for your free, information-laden, daily blog, Garth. Your efforts are appreciated.”

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

Source: https://www.greaterfool.ca/2025/04/08/the-hardest-thing/