The failure

The moaning over that suggestion governments should be buying up unsold, unloved, vacant nw condos in Toronto and (especially) BC just won’t quit. Weird.

Even though a big bulk purchase at distressed prices would push real estate valuations lower – just what the kiddos have been demanding – visceral hatred for developers, bankers and realtors has clouded judgment. People want real estate to fail – so they can get some. Yup, weird.

Well, here’s another reason politicians have been contemplating what many critics see as a ‘bailout’. It’s the easiest way to create some affordable (rent-to-own) houses when the industry in general is choking.

Did you see the latest housing start stats?

These days Canada is building new homes at an annual pace of 238,971. Let’s put that in context. It’s less than half the federal government’s headline commitment of 500,000 new units every year for a decade. That, of course, is an abject failure if you buy the argument that house prices are nuts because we have a shortage of them.

Maybe that’s true. Perhaps not. But most economists are parroting it, along with the lawmakers. Also in the US, where a landmark housing bill just became law with bipartisan support (overwhelming), designed to goose construction.

Big urban areas like the GTA and the LM are struggling to get houses built. That staggering inventory of unsold condos (over 20,000 in Toronto alone), a near-collapse in pre-con sales for new projects and escalating building costs (land, materials, labour) have combined into a worst-case scenario for the industry. Starts have plunged. Only that recently-declared HST holiday has helped push ahead sales, but largely for SFHs. Avec dirt.

Not everywhere is a construction desert, of course. Calgary, Edmonton and Montreal have been throwing up new walls at a good clip. These three cities are among the most affordable in Canada, by the way. Is that a coincidence?

So why the mess in Toronto and Vancouver that led to the Carney Condo Caper?

The cost of land, of course. It’s crazy in a large, densely populated urban area. Even if the dirt is available, services may not be. Putting 500 housing units on one vacant or under-utilized piece of land means a big demand for new pipes and wires. Water, sewage, electricity and high-speed Internet connectivity are essential.

The feds have committed to a staggering $51 billion to help cities pay for these things over a decade, but it takes years to even get prepared for a major project build. And no developer will put a shovel in the ground without financing in place. That money will not flow until a project is 70% sold. And the buyers are staying home reading this blog, whining for more price reductions. So, nothing gets built.

There are more problems, of course. Development fees are high since cities are struggling financially. Wonky supply chains, thanks to tariffs and wars, are making materials more costly. Risk-average bankers are in no mood to gamble hundreds of millions on projects that may never see completion for lack of buyers. Where financing is extended, it costs a bundle – adding to the final cost of homes.

Plus, in order to qualify for fed funds to help grease the process, cities have to agree to trash zoning restrictions, chop red tape and drop some standards and requirements. Some do. Some refuse, citing an impact on quality of life of existing residents. Yeah, the people who pay the taxes.

In short, housing goals are aspirational. Maybe delusional.

There is no way given current reality that half a million new houses will be added to Canada’s housing stock each year. Ain’t happening.

Carney gets it. That’s why he wants to snag those condos. It’s something.

The critics would rather have the developers fail, collapse and vanish.

Some people are not big on logic.

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Source: https://www.greaterfool.ca/2026/07/16/the-failure-3/