With Interest Rates Rising, Has something changed in the Canadian housing market? The Major Difference Between the Condo and Detached Housing Markets in Canada – September 8, 2022,


As I like to point out, most of the demand in the Canadian CONDO market is driven by SPECULATORS, looking to buy, hold and flip. In contrast, the demand in the semi-detached, detached housing market is actually there, but you’ll notice in Canadian media maybe for the purposes of time, the two housing markets are conflated. This, ofcourse, is problematic because if you side-lined, likely you’re waiting to purchase a semi-detached house at rock bottom prices, and the owners of these inventories may not be speculators.

Based on the numbers, I’m of the belief there’s a condo market crash coming IF interest rates remain elevated for a prolonged period of time. A lot of existing condo owners are ALREADY upside down in the mortgage; this is not something NEW, by the way; On the date at which I’m writing this, everyone is blaming the Bank of Canada for inflation, but asset price inflation has been happening for a long time.

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Consumer price inflation is a much different animal because, unlike asset price inflation, you can’t hide from consumer price inflation. We all need to eat, so if consumer price inflation goes up, everyone in the country feels it. The current Prime Minister of Canada has decided to wage war on fossil fuels; whether you like it or not, fossil fuels are responsible for our current standard of living; if you want to phase them out, I hope you’re not dumb enough to imagine solar panels, wind turbines, hydroelectric and biomass can replace them. You’d be an idiot to think that, furthermore, mining lithium requires fossil fuels.

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It’s not the first time Progressive governments have been involved in buffoonish ideas, to date Canada still has supply management systems, a communist-style universal health care system, and crown corporations(State-run monopolies) in mortgage insurance products, so it’s not a certainty that this war on fossil fuels will ever end, it’s not even a certainty that traveling in Canada will return to how it was Pre-Covid-19.

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Many of us are hopeful what we’re experiencing now is NOT the new normal, but you never know; history is plagued with Left-wing or Big Government loving politicians destroying and destabilizing entire nations. Why I say this is because consumer price inflation will require wage-price hikes, which will result in more local MANUFACTURERING jobs being sent overseas.

Canada is DISSOLVING into a service sector economy, and that’s extremely problematic if you’re a condo owner, unlike a homeowner; strata or maintenance fees are PERMANENT expenses. As the cost of labor rises, do you expect maintenance fees to go up or go down? In Toronto, I know of quite a few condos that were built only to meet the MINIMUM regulatory standards, ofcourse most people don’t hear about these stories for two reasons.

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The two major reasons Canadians do not hear about Condo horror stories


Let’s say I buy a condo, not to live in it but to flip it; first and foremost, I may not even know or notice all the STRUCTURAL problems in the condo, at best, maybe I did a walkthrough, but if I bought the condo with the intention of flipping it, I might not know about the leaky pipes, the problems with electrical, the inflated energy costs and the booming cost to maintain the property, so any horror story in my condo, will be kept on the hush based on pure ignorance.

The second reason Canadians don’t hear about Condo horror stories should be obvious, if I buy a condo with the intention to sell it, or if I bought it and figured out later all the problems associated with it unless I’m an idiot, I’m not going to run to the media, nor will I tell anyone about all of these structural problems at my condo.

I know some people who don’t rent out their condos for fears that the RENTER will expose what’s happening at their condo development; you’ll know if you have been in the real estate business that one of the reasons some condos don’t allow people to rent out their condo, is to avoid structural secrets being leaked to the public.

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Let’s imagine a condo owner rents out their condo, and the renter starts to make complaints that everyone in the condo knows about but stays silent about; the renter is not financially attached to the property in the same way the condo owners are. In the modern era, the renter might start leaving negative reviews telling people not to rent in this condo because of “such and such” well, if a potential buyer or investor of a Condo learns about this, they’re either going to haggle the price or not invest at all.

Now, compare the condo market to the detached or semi-detached home; sure, the house might be in terrible condition when I buy it. Still, if I buy a fixer-upper, I can fix structural problems, whereas the Condo development, if it’s to fix structural problems, will have to raise maintenance fees INDEFINITELY. Maintenance fees, plus mortgages, plus property taxes and other expenses, and you can see how consumer price inflation turns a condo owner into a RENTER.

I’m of the belief that it’s mostly rich, retired, or students who want to live in Condos, you can sprinkle others in there, but for the most part, I don’t see a lot of GENUINE demand for Condo ownership and if you understand this, you understand why I think that the Condo market in Canada will collapse if the economy we’re experiencing in 2022, is indeed the new normal in Canada.

The consumer price inflation genie is out of the bottle, recently, the price of gas dropped, but consumer prices have NOT dropped with the price of gas; as I pointed out in plenty of other posts, OPEC+ is going to RESTRICT the supply of their oil and gas to reflect the new RECESSIONARY market conditions, so they can drive prices back up again, and it’s only right they do that because if let’s say democracy in the west abandons this war on fossil fuels, OPEC+ Russia is screwed, oil and gas is traded on the futures market, the price of gas could drop like a stone.

OPEC+ is going to attempt to raise the price of oil and gas in the middle of what appears to be a recession. Consumer price inflation is deflationary to the economy, so it wouldn’t surprise me in the least if Condo owners start to DEFAULT on their loan obligations; they might not even default on their mortgage first, typically people will default on credit card payments, lines of credit, etc., before defaulting on their mortgage, but what would happen in the past is if you couldn’t SERVICE your other loans, you’d consolidate, possibly using the EQUITY in property to do it, well, what happens when you’re drawing in debt with unsecured debt AND your condo is no longer going up in value and your maintenance fees, energy costs and general cost of living rises? Doesn’t that sound like an economic collapse to you?

One could argue, well, won’t the same thing happen in the detached housing market? Sure maybe, but likely to a much smaller degree; I know a lot of homeowners whose detached homes have been structural nightmares for decades; they’re still living in them, getting by. Homeowners have the FLEXIBILITY to cut back on expenses; you don’t pay strata fees when you own a detached home, so if, let’s say, it’s down market, maybe your new favorite meal are sardines or cat food. Maybe you no longer use air conditioning, maybe barely heat your home, etc.

Furthermore, unlike the condo market, there is an actual SHORTAGE of detached homes in Canada, so as long as your home isn’t in the middle of nowhere, as a detached homeowner, you’ll still have it in the back of your head, that you can wait for this thing out. Condo owners are basically renters with a mortgage, and they’ll soon figure that out once the housing market experiences long-term bearishness. The condo market in Canada is something to watch, if you see a housing market crash in the news, I’m almost certain what will really be happening is a condo market crash!

So if you’re a buyer waiting for the market to crash before you get in, don’t be surprised if you find yourself waiting for a long time!

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Interesting times ahead!