I recently listened to an episode of the Angry Mortgage Podcast about the growing problems in Canada’s pre-construction condo market. The language was blunt, and at times deliberately provocative, but the message caught my attention because many people in our community in the Greater Toronto Area and other parts of Canada have invested heavily in pre-construction condos.
For some, the problem has already arrived. Condo prices have fallen significantly in some markets, rents have not increased as expected, and higher mortgage rates and maintenance fees have made the numbers much harder to manage. For others, the real problem may come when their pre-construction unit is finally ready to close.
This is an important part of the pre-construction model that many buyers may not have fully considered. You may have agreed to buy a condo three or four years ago for $800,000, for example. You may have already paid a substantial deposit. But what happens if the completed unit is now worth only $650,000?
The developer still expects the original $800,000.
The bank, however, is interested in what the property is worth today.
That difference can create a serious financial problem. The Bank of Canada recently highlighted this exact risk, noting that a condo bought for $1 million could potentially be worth only $700,000 when it is ready for closing. The buyer may still be legally obligated to complete the purchase at the original price.
The other common assumption is that the property can simply be rented out and the tenant will pay the mortgage. That worked much better when interest rates were low and rents were rising quickly. Today, however, the mathematics are not always so attractive.
A condo owner cannot decide how much rent a unit should generate. The rental market decides. If a small condo costs $4,000 a month to carry but similar units can only be rented for $2,800 or $3,000, the investor has to cover the difference.
This is where the discussion in the podcast about Calgary becomes interesting. In some Canadian markets, renters have alternatives. If a tenant can rent a townhouse or another larger home for roughly the same amount as a small condo, the condo may not be as attractive. Population growth alone does not guarantee that every condo will have enough rental demand at the price an investor needs.
Toronto is somewhat different because of its high land costs and the concentration of employment in the urban core. Condos will continue to play an important role in Toronto’s housing market. But that does not mean every condo is a good investment. Recent data show that Toronto’s condo market is adjusting, with prices still significantly lower than a year earlier even as sales have begun to improve.
This is why I think we need to move away from the simple belief that real estate always goes up.
Real estate can be a good long-term investment, but the investment still has to make financial sense. The purchase price, mortgage, maintenance fees, property taxes, insurance and expected rent all matter. So does the question of what happens if the property is worth less than expected when it is completed.
For members of our community who have already purchased pre-construction condos, this is not a reason to panic. But it is a reason to look carefully at the numbers and understand the options before the closing date arrives. Anyone facing an appraisal gap, difficulty obtaining financing or the possibility of not being able to close should get independent advice from a qualified mortgage professional and a real estate lawyer.
For those thinking about buying a pre-construction condo, perhaps the most important question is not whether condo prices will eventually rise again. Nobody can know that with certainty. The better question is whether you can still afford the property if prices do not rise. An investment should not depend entirely on the market doing what you hope it will do. In the end, real estate is not just about owning a property. It is about whether the numbers work. And when the numbers stop working, the mortgage still comes due.
Canada’s housing crisis is usually described as a problem of supply and demand. Build more homes, the argument goes, and prices will eventually come down. That explanation contains some truth, but it also hides a deeper reality that Cara Stern brings out in her conversation with mortgage expert Ron Butler. Canada’s housing crisis is not only about supply. It is about fairness.
The question is no longer simply why houses are expensive. The more important question is why the rules of homeownership have changed so dramatically for one generation while remaining so favorable for another.
A society cannot remain healthy when people working full time, including teachers, nurses, grocery store managers, engineers, and young professionals, can no longer afford to live in the communities they serve. Housing is more than a commodity or an investment. It is the base on which people build families, careers, communities, and a sense of belonging.
Listening to Stern and Butler, one realizes that the conversation is not really about mortgages or real estate. It is about how decades of public policy have quietly reshaped the Canadian dream.
From Ordinary to Unreachable
Ron Butler recalls entering the mortgage industry more than three decades ago when an assistant grocery store manager and a registered nurse could regularly purchase a home in the Greater Toronto Area with a modest down payment. Home prices generally ranged between two and a half and three and a half times a household’s annual income.
Today, in many Canadian cities, particularly Toronto and Vancouver, home prices have reached seven, eight, or even twelve times household income.
That is not just inflation. It is a complete redefinition of adulthood.
For previous generations, buying a home was a realistic milestone reached through employment and savings. For many young Canadians today, homeownership increasingly depends on inherited wealth, parental support, or the willingness to take on decades of crushing debt.
We are told this is progress. It is not. It is a narrowing of social mobility dressed up as a normal market adjustment.
The Myth of Equal Effort
One of the strongest points Stern makes is that acknowledging generational inequality does not diminish the hard work of previous generations.
Many older Canadians respond, quite understandably, by saying, “We worked hard too.”
No one seriously disputes that. The issue is not effort. The issue is whether equal effort still produces equal opportunity.
A young couple earning above the national median income, saving diligently, avoiding extravagance, and making responsible choices can still find themselves priced out of family sized housing. If financially responsible households cannot buy modest homes, the problem cannot be reduced to budgeting discipline or lifestyle choices.
It becomes structural.
Stern speaks from experience. She and her husband were earning above the median household income, living frugally, and saving consistently. Yet they still found themselves unable to purchase even very small homes that could accommodate the family they hoped to build.
That frustration eventually became professional curiosity. Instead of accepting the situation as inevitable, she began asking why the housing market seemed so detached from ordinary incomes. That inquiry led her into housing journalism.
Housing Is a Policy Choice
Perhaps the most important insight in the conversation is Stern’s insistence that today’s housing crisis did not simply happen. It was created through policy.
Too often Canadians speak about housing affordability as though it were a force of nature. It is not.
Governments make decisions about zoning regulations. Governments determine development charges. Governments decide how municipalities finance infrastructure. Governments establish tax systems. Governments regulate land use. Governments shape immigration targets. Governments influence mortgage rules.
Every one of those choices affects housing affordability.
In Stern’s words, the economy is a series of choices.
That changes the whole conversation. If policy helped create the crisis, policy can also help solve it. The challenge is not mainly technical. It is political.
The trouble is that political courage is usually in short supply when the people most protected by the current system are also the loudest defenders of it.
When Cities Fund Themselves Through Housing
One of Butler’s strongest criticisms concerns the enormous rise in municipal development charges.
Municipal governments need revenue, but they do not want to anger existing homeowners by raising property taxes. So instead, they shift infrastructure costs onto new housing developments. The logic is obvious. Existing voters stay happy. Future homeowners pay the bill.
It is a neat trick, and it has been repeated often enough to become normal.
Of course, developers do not absorb these costs forever. They pass them on to buyers. So development charges that were once relatively modest have grown dramatically over the past two decades, adding tens of thousands and sometimes hundreds of thousands of dollars to the price of newly built homes.
The result is perverse. Policies sold as responsible municipal planning end up making homeownership harder for the very people trying to enter the market.
In other words, younger Canadians are paying twice. They pay through high housing prices and again through the financing mechanisms hidden inside those prices.
The Missing Middle
Another major theme in the conversation is Canada’s obsession with building either detached suburban homes or very small condominiums.
What has largely disappeared is what urban planners call the missing middle. Duplexes, triplexes, fourplexes, courtyard apartments, townhouses, and other family sized medium density housing have been squeezed out by zoning rules and planning habits that no longer serve the reality of modern cities.
These forms of housing once allowed neighbourhoods to grow gradually while remaining affordable. Today many municipalities continue to restrict them through rules inherited from another era, as though the car oriented suburbs of the mid 20th century should still dictate how a 21st century city must function.
The result is predictable. Developers either build luxury detached homes where land is available or maximize profit by producing tiny condominium units in expensive urban locations.
Families searching for modest three bedroom homes find very few choices.
Canada has become increasingly successful at producing housing units while becoming less successful at producing homes that ordinary families can actually use. Those are not the same thing.
Counting units tells us little if families cannot live in them.
What Housing Really Means
Perhaps the most affecting part of Stern’s interview is her own plain and deeply human wish.
She does not dream of luxury. She wants what previous generations often treated as ordinary. A stable home. A neighbourhood. Children attending the same school. Some freedom from the anxiety that a landlord may decide to sell and uproot the family.
That should not sound radical. Yet in today’s Canada, even basic stability can sound like a privilege.
Housing shapes far more than the real estate market. It shapes whether people marry, whether they have children, whether they stay in a city, whether they volunteer, whether they build roots, and whether they imagine a future at all.
A country that makes stable housing inaccessible is not just creating a housing problem. It is weakening its own social future.
A Fairness Crisis
The housing debate is usually framed as a contest between homeowners and renters, developers and environmentalists, cities and provinces, or supply advocates and affordability advocates.
Cara Stern’s conversation with Ron Butler suggests a better framework. The central question is fairness.
Can a young Canadian working full time reasonably expect to own a modest home. Can ordinary families remain in the cities where they grew up. Can children afford to live near their parents. Can essential workers afford to live where they work.
If the answer increasingly becomes no, then Canada faces more than a housing shortage. It faces a fairness crisis.
Fixing that will require more than adding units. It will require rebuilding a system that once allowed ordinary work to produce ordinary dreams.
Until that happens, Canada’s housing market will remain not only expensive, but fundamentally unfair.
A group from Montreal is about to spend $500 million buying up unsold condos across the GTA—often at about half the original presale price. These are the very projects that many of our people walked away from after pouring in hard‑earned savings, assignment fees, and years of waiting. Now, the same “problem” that broke individual buyers’ backs is being treated as a “golden opportunity” for big investors.
For months, we watched neighbours cancel assignments, forfeit deposits, and quietly admit defeat. Some families had to choose between sinking more money into overpriced units or walking away with nothing. Many chose the latter—not because they didn’t want to own, but because the market turned against them. Yet, when ordinary people retreat, institutions step in with deep pockets, buying in bulk at deep discounts.
This is not just a real‑estate story. It’s a story about who bears the risk and who reaps the reward. When the market booms, the fantasy is sold to small investors, diaspora families, and first‑time buyers. When the bubble cools, those same buyers are left holding the losses, while corporations quietly acquire entire buildings as “value plays.” Our fear, our stress, our sacrificed savings become their balance‑sheet assets.
What’s even more troubling is what this signals for the future. Those who can buy at half‑price today will likely rent the units back to us at market‑rate or higher tomorrow. Instead of a market correction that brings affordability, we may simply get a transfer of power—from overstretched buyers to consolidated landlords. Public policy and housing regulations have done little to intercept this process. Housing is being treated as a financial instrument, not as a basic human need.
For our community, this moment should be a wake‑up call. We need to stop seeing every presale project as a guaranteed “investment” and start asking: Who really benefits when we are forced to walk away? We need to push for policies that protect small buyers, cap speculative land banking, and ensure that when the market crashes, ordinary people are not left alone to pay the price.
This is not just about losing money in a condo deal. It’s about who controls housing, who gets bailed out, and who gets erased from the story. If we don’t speak up now, our pain today will be written off as “market correction” in textbooks—while the profits quietly go to those who knew exactly when to buy at the bottom.
I recently watched a podcast by mortgage expert Ron Butler discussing a troubling trend in Ontario’s real estate market: home purchase failures have increased by 500% compared to pre-COVID levels.
That number should make all of us pause.
What Is a “Purchase Failure”?
A purchase failure happens when a buyer signs a contract to buy a home — new construction or resale — but cannot close the deal on the agreed closing date.
In simple terms: The buyer doesn’t have the money or cannot secure the mortgage needed to complete the purchase.
Before COVID, less than 1% of purchases failed. Today, that number is reportedly around 5% — and in new construction, some estimate it could be much higher.
Why Are Deals Falling Apart?
There are several major reasons:
1. Appraisal Problems (Especially New Construction)
Many buyers purchased pre-construction homes or condos in 2021–2022 at peak prices. Now that projects are completing:
Market values have dropped.
Appraisals are coming in far below the original purchase price.
Buyers must cover the difference in cash.
If you bought at $1.95M and the appraisal comes in at $1.525M, that’s a $400,000 gap you must cover. Many simply can’t.
2. Condo Market Reality
Some buyers purchased condos years ago at inflated prices, expecting appreciation or easy rental income. Today:
Comparable units are selling for less.
Higher interest rates mean negative monthly cash flow.
Rental income often doesn’t cover mortgage payments.
Some buyers are choosing to walk away from large deposits rather than close on a losing investment.
3. Mortgage Qualification Issues
In resale markets, failures are happening because:
Buyers couldn’t sell their existing home for the expected price.
Income was overstated or improperly assessed.
Job losses occurred before closing.
Buyers assumed pre-approvals guaranteed final approval (they don’t).
As Ron Butler bluntly stated: “The buyer doesn’t have the money.”
Why This Matters to Our Community
This is not about panic. It’s about awareness.
When purchase failures rise:
Sellers face uncertainty.
Builders face stress.
Buyers risk losing deposits.
Legal disputes increase.
Financing becomes stricter.
We are entering a market where leverage cuts both ways.
For years, rising prices hid risk. Today, falling values expose it.
If You’re Buying or Investing, Be Careful
Before signing anything:
Get a fully verified mortgage approval (not just a quick pre-qual).
Be conservative with projected sale prices.
Stress-test your finances at higher interest rates.
Understand appraisal risk.
Have liquidity reserves.
Read pre-construction contracts very carefully.
Speculation worked in a rising market. It is dangerous in a correcting one.
Final Thought
Real estate is not guaranteed to go up. It never was.
The goal is not to scare anyone — but to make sure our community members are informed. The people who survive market corrections are not the boldest. They are the most disciplined.
If you’re planning to buy, sell, or close on a property soon, now is the time to review your numbers carefully.
Toronto’s condo market is not experiencing a normal downturn. It’s going through a structural breakdown.
According to Urbanation data, by 2029 Toronto could see virtually no new condo completions. That sounds impossible in one of North America’s fastest-growing regions—but the numbers don’t lie. New condo sales in the GTA have collapsed to their lowest levels since 1991, despite today’s population and housing demand being dramatically higher.
This collapse isn’t random. It’s the failure of the investor-driven condo model.
For over a decade, most pre-construction condos weren’t built for families or end-users. They were built for investors. The model was simple: buy pre-construction, wait a few years, prices rise, rent it or flip it. That model only worked in a world of cheap money, rising prices, and investor optimism. That world is gone.
High interest rates, falling prices, and weaker rents have destroyed the economics of pre-construction investing. As investor demand disappears, the entire development pipeline shuts down.
And here’s the key reality: Pre-construction sales drive future construction. When sales collapse, housing starts collapse. When housing starts collapse, future supply disappears.
This is already happening across the GTA, with housing starts far below long-term averages. Even if demand returns tomorrow, supply cannot restart quickly—condo development is a multi-year process. Today’s sales collapse becomes tomorrow’s supply crisis.
This isn’t primarily about government taxes or red tape. Housing starts are falling across North America. This is a housing cycle problem, amplified in Toronto because the city became deeply dependent on speculative investor demand.
The economic impact will go far beyond housing. Construction jobs, trades, suppliers, engineers, and entire supply chains are affected. Housing doesn’t just reflect the economy — it drives it.
But this doesn’t mean prices will automatically surge in a few years. Future outcomes depend on uncertain factors: population growth, immigration, interest rates, economic conditions, and income growth. Anyone selling a simple “supply crash = guaranteed boom” story is oversimplifying reality.
The truth is simpler and more honest:
Toronto’s condo market has hit a breaking point. The investor model no longer works. The supply pipeline is shrinking. And the housing system is entering a painful but necessary reset.
What comes next won’t be shaped by hype — it will be shaped by fundamentals, policy, and economic reality.
Canada’s housing crisis is often discussed in absolutes: either prices will crash, or they will never fall; either governments must intervene more, or get out of the way entirely. But when we place recent market conditions alongside deeper structural critiques—like those raised on Angry Mortgage—a more complicated, and more honest, picture emerges.
A Short-Term Opening for Buyers
In the near term, there is a meaningful shift underway—particularly in markets like Toronto and Vancouver.
Sales volumes are historically low. Investor activity has largely evaporated. Pre-construction is stalled. Buyers who remain are mostly end users: families and individuals looking for a place to live, not to flip. This has quietly shifted leverage. Selection has improved. Negotiation is back. Sellers, not buyers, are adjusting expectations.
This does not mean we are at the “bottom,” nor does it mean prices cannot fall further. But for financially stable households—especially first-time buyers who were entirely shut out between 2020 and 2022—this is the most buyer-friendly environment in years.
Yet this short-term opening exists inside a housing system that remains fundamentally broken.
The Structural Problem: Housing as a Government Revenue Tool
As Ben Woodfinden argued on Angry Mortgage, the most under-discussed driver of unaffordability is not speculation alone, immigration alone, or even interest rates—but government cost-loading on new housing.
In cities like Toronto, as much as 30% of the cost of a new home is made up of development charges, fees, taxes, and levies. These are not marginal costs. They are embedded into the price of every unit, passed directly to buyers, and treated as a normal feature of governance.
Housing, in effect, has been taxed like a luxury good—while being rhetorically framed as a human necessity.
Layered on top is what Woodfinden calls the “Anglo disease”: a regulatory culture that makes building slow, adversarial, and legally dense. Years of approvals, consultant reports, appeals, and political veto points create scarcity by design. The result is not careful planning—it is paralysis.
This is how Canada ends up with 50-storey towers beside single-family zoning, and almost nothing in between.
The Missing Middle—and the Missing Social Contract
What ties these discussions together is not just economics, but expectations.
A generation of Canadians did what the social contract asked of them: education, work, saving, delayed gratification. Yet homeownership now requires top-1–2% household incomes in major cities. The promise that effort leads to stability has quietly collapsed.
That anger is not theoretical. It shows up in delayed families, longer commutes, overcrowding, and a growing sense that democracy responds faster to asset holders than to workers.
When young professionals earning $90,000–$100,000 cannot even imagine owning a modest home, something deeper than market cycles has failed.
So Where Does This Leave Us?
In the short run, today’s market offers cautious opportunity for buyers who are purchasing shelter, not status.
In the long run, affordability will not be restored without structural change:
Development charges must be rethought.
Zoning must allow mid-density housing where people already live.
Speed, not symbolism, must become the metric of housing policy.
More programs alone will not fix this. Nor will pretending the market can self-correct under the current regulatory load.
A Critical Outlook
Canada’s housing crisis is not caused by a single villain. It is the outcome of decades of policy choices that treated housing simultaneously as an investment vehicle, a revenue source, and a political risk to be avoided.
Buyers may find a window today—but unless governments stop profiting from scarcity while promising affordability, that window will close again.
The question is no longer whether housing is broken. It is whether we are willing to stop pretending we don’t know why.
I listened to today’s episode of Ron Butler’s Angry Mortgage Podcast, and the numbers he shared were not just bad—they were historic.
By the end of 2025, Canada’s two largest housing markets collapsed in terms of sales activity:
Vancouver recorded its lowest home sales in 20 years
Toronto (GTA) fell to a 25-year low
These aren’t just market fluctuations. They’re signals of a structural shift that many people—buyers, sellers, and real estate professionals alike—are still struggling to accept.
So, what went wrong?
According to Butler, the biggest reason is simple but uncomfortable: entire categories of buyers have vanished.
During the peak years (especially around 2021), as much as 40–45% of purchases in the GTA were investor-driven—landlords, flippers, speculators, short-term rental buyers. That group is now gone. Completely.
Buying a condo to rent? Buying a house as an “investment”? Those strategies no longer make financial sense in today’s environment.
And once that investor demand disappeared, the market lost nearly half of its fuel.
Prices fell—but that didn’t bring confidence back
Home prices in the GTA are now down roughly 25% from the March 2022 peak. But instead of encouraging activity, this decline has created paralysis.
Many potential sellers are stuck:
Selling now wouldn’t give them enough equity for their next purchase
After commissions and costs, moving simply doesn’t add up
Others fear selling today only to realize prices fall further tomorrow
As Butler puts it, why buy now if you believe you can buy the same house for $50K, $100K—or even $200K less next year?
Who’s left in the market?
At this point, Butler argues there’s really only one group left that might sustain activity: first-time home buyers.
They don’t need to sell a home first. They aren’t worried about losing equity. They’re looking for stability, schools, permanence—a place to call home.
But even they are hesitant.
Job uncertainty, economic unease, global instability, and constant “wait-and-see” messaging have made this a sentiment-driven freeze. Housing isn’t just numbers—it’s emotion. And right now, the emotion is caution.
Will foreign buyers save the market?
Short answer: no.
Even if restrictions ease, Butler notes that any reopening would likely apply only to new construction, not resale homes. That does little for today’s stalled market and won’t reverse the broader trend.
What about 2026?
Ron Butler is blunt:
Prices are still coming down
Don’t believe anyone who says the bottom is already here
If someone tells you “buy now or miss out,” his advice is simple: just say no
Eventually, affordability will improve enough that buyers step back in. But that doesn’t mean a quick rebound or a return to pandemic-era highs.
The bigger takeaway
This isn’t a crash fueled by panic. It’s a slowdown driven by reality.
The era of speculative excess is over—at least for now. What remains is a slow, difficult recalibration where housing slowly reconnects with wages, stability, and actual human needs.
For buyers, patience matters. For sellers, expectations matter. And for anyone promising a sudden turnaround—it’s worth listening carefully to voices like Ron Butler before believing the hype.
For the past few years, talking about real estate in Ontario—especially in the Greater Toronto Area—has felt like walking through a hall of mirrors. Prices up, prices down. Rates rising, rates cutting. Realtors shouting optimism, buyers frozen in fear, sellers clinging to yesterday’s peak.
As we step into 2026, one thing feels different: the noise is slowly fading, and reality is returning.
This is not a prediction of a boom. It is not a warning of a crash. It is something rarer—and healthier.
A Market That Is Finally Catching Its Breath
After years of extreme swings, the GTA market appears to be moving toward normalization.
Prices have already corrected from their 2021–2022 peaks
Speculative frenzy has largely disappeared
Buyers are no longer rushing blindly
Sellers are being forced to price realistically
This doesn’t mean homes are suddenly affordable for everyone. But it does mean the market is less emotional, less inflated, and less detached from income realities than it was a few years ago.
That alone is progress.
Interest Rates: Not Cheap, But Predictable
One of the biggest changes heading into 2026 is not ultra-low interest rates—it’s stability.
For the first time in years, buyers can plan without fearing sudden shocks. Mortgage rates may fluctuate slightly, but the era of constant surprises appears to be behind us. That predictability matters more than people realize.
Real estate markets don’t need cheap money to function. They need certainty.
With rates no longer rising aggressively, more end-users—not speculators—are slowly re-entering the market.
Buyers Are Wiser Than Before
2026 buyers are not the buyers of 2021.
They:
Ask questions
Compare neighborhoods
Negotiate
Walk away when numbers don’t make sense
This is a quiet but powerful shift. A market led by informed buyers is healthier than one driven by fear of missing out.
First-time buyers, in particular, may find 2026 less hostile—not easy, but less punishing—especially in condo and townhouse segments where inventory remains higher.
Sellers Will Need to Accept a New Reality
The hardest adjustment in 2026 may not be for buyers—it may be for sellers.
Many homeowners are still emotionally attached to peak-era prices. But the market no longer rewards hope; it rewards pricing aligned with today’s conditions.
Homes that are:
Well-priced
Well-maintained
Realistically marketed
will sell.
Others will sit.
This isn’t a crisis—it’s a correction in expectations.
Investors: A Different Game Now
For investors, 2026 is not about quick appreciation. The math is tighter, margins are thinner, and holding costs matter more than ever.
This is not necessarily bad. It filters out reckless speculation and favors:
Long-term thinking
Ethical rental practices
Cash-flow realism
Housing should not function only as a trading asset. A calmer investment environment ultimately benefits tenants, buyers, and communities.
What 2026 Really Represents
More than anything, 2026 looks like a reset year.
Not a return to the past. Not a dramatic collapse. But a slow rebuilding of trust between prices, incomes, and reality.
The GTA market doesn’t need excitement. It needs honesty.
And for the first time in a long while, honesty may be creeping back in.
A Final Thought
Real estate cycles punish excess and reward patience. The last cycle was built on urgency, leverage, and belief that prices only move one way.
2026 feels different—not because everything is fixed, but because illusions are fading.
For buyers, sellers, and observers alike, this may finally be a year to stop reacting—and start thinking.
And that, in the long run, is how healthier markets are built.
(Note: This post is based on the ideas of GTA real estate experts like Ron Butler, John Pasalis, Jon Flynn and other!)
The Hidden Debt Crisis: What’s Really Happening with Canadian Households in 2025
Based on insights from Doug Hoyes, leading consumer debt expert and co-founder of Hoyes Michalos
If you’ve been feeling financially squeezed lately, you’re not alone. A recent conversation between John Pasalis of MoveSmartly and Doug Hoyes, one of Canada’s foremost experts on consumer debt, reveals a troubling picture of what’s happening beneath the surface of our economy—and surprisingly, it might be worse than the statistics suggest.
The Numbers That Don’t Add Up
Here’s what’s puzzling experts: despite record-high debt levels, rising unemployment, and a challenging real estate market, consumer insolvencies in Ontario haven’t exploded the way many predicted. In fact, they’re only slightly higher than last year.
“What’s most amazing to me is they aren’t as high as I would expect them to be,” admits Hoyes, whose firm has been tracking insolvency trends for nearly 30 years.
So what’s really going on?
The Great Divide: Homeowners vs. Renters
The data reveals a stark reality about Canada’s two-tier economy. Back in 2011, about one-third of Hoyes’ clients were homeowners when they filed for insolvency. By August 2022, that number hit zero—the only time in the firm’s history.
Today, it’s crept back up to around 10%, but that’s still dramatically lower than historical norms.
Why the shift? It comes down to equity. If you bought a house decades—or even just years—ago, you’ve likely built substantial equity that acts as a financial buffer. Need to deal with credit card debt? Refinance, get a HELOC, or sell and pocket the difference.
But if you’re renting? You have no equity cushion whatsoever. You’re the most vulnerable to job loss, inflation, and rising costs.
The Precon Time Bomb
One of the most concerning trends Hoyes discusses is the wave of preconstruction condos that buyers can’t close on. Here’s how the crisis unfolds:
Buyer purchases a precon condo in 2022 for $1 million with a $100,000 deposit
Property finally ready for occupancy in 2024-2025
Current appraisal: $700,000-$800,000
Bank refuses to provide a $900,000 mortgage on a $700,000 property
Buyer cannot close
Unlike the United States, Canadian buyers have full recourse—they can’t simply walk away. Builders can sue for their losses, potentially going after your other assets, including your primary residence.
“We’ve got this massive amount of pent-up problems—precons that aren’t closing that have not yet resulted in hardly any bankruptcies because the legal process hasn’t consummated yet,” Hoyes explains. “That’ll be a story for 2026, probably into 2027.”
Why Banks Are Playing the Waiting Game
Another revelation: many borrowers have stopped making mortgage payments on rental properties, yet banks aren’t aggressively pursuing power of sale proceedings.
Hoyes shares the story of a client who stopped paying her rental property mortgage in August—and months later, the bank had done virtually nothing beyond sending a letter.
The theory? Banks may be slow-walking foreclosures to avoid flooding the market with inventory, which would drive prices down further and crystallize everyone’s losses. With many borrowers in similar situations, a wave of simultaneous foreclosures could trigger a broader market collapse.
The Rental Property Trap
The mathematics of rental properties have turned brutal for many investors:
Monthly shortfall of $1,000-$2,000 was common but manageable when prices were rising $100,000+ annually
Investors borrowed from HELOCs and unsecured lines of credit to cover the gap
After 2-3 years of monthly shortfalls, credit lines are maxed out
Property values have declined or stagnated
No equity to refinance
No cash flow to continue
“Unless you’re the federal government, you cannot run a deficit every month forever and not experience the consequences,” Hoyes notes bluntly.
A Generation Locked Out
Perhaps most troubling is Hoyes’ explanation of why gambling, risky investing, and speculative real estate purchases have exploded among younger Canadians:
“If you are 25 years old today, you know that there is no hope that you will ever be able to buy a house unless your parents give you the money. There is no mathematical way you can do it.”
He paints a stark picture: making $80,000-$90,000 annually leaves about $50,000-$60,000 after tax—barely enough to cover living expenses in major Canadian cities, let alone save $200,000 for a down payment.
This sense of hopelessness has driven many toward high-risk strategies: gambling apps, cryptocurrency, options trading, and yes—speculative real estate purchases.
The Leverage Trap
Real estate’s appeal as a get-ahead strategy is rooted in leverage. With just 5% down, a 10% increase in property value triples your initial investment (on paper). You can’t get that kind of leverage in the stock market, where margin requirements are typically 50% or higher.
But leverage cuts both ways. When property values decline by 20-30%, highly leveraged buyers don’t just lose their down payment—they end up owing substantially more than their property is worth.
Warning Signs Ahead
Several trends suggest 2026 could bring more financial pain:
Rising bankruptcy rates: The percentage of bankruptcies versus consumer proposals is increasing because people simply don’t have enough income to make payment plans work
Debt too high to restructure: Some people now owe so much (particularly on failed precon purchases) that they exceed the $250,000 limit for consumer proposals and must file bankruptcy instead
Shrinking cash flow: Unlike previous decades where inflation gradually made fixed payment plans easier over time, today’s rising costs mean those $300 monthly proposal payments get harder each year, not easier
Precon lawsuit wave: As builders begin quantifying their losses and pursuing legal action against buyers who couldn’t close, a wave of judgments and garnishments is likely coming
What You Can Do
Whether you’re a homeowner or renter, Hoyes offers practical advice:
Take inventory honestly:
List all assets (be realistic about current market values)
List all debts with amounts, interest rates, and minimum payments
Calculate your actual monthly cash flow
Be realistic about solutions:
Can you increase income (part-time work, side gig)?
Can you reduce expenses meaningfully?
If you’re a homeowner, does selling and renting make sense?
Could you move in with family temporarily?
Get professional advice early: “Debt problems do not get better on their own magically. It’s just not how it works,” Hoyes emphasizes.
If you’re overwhelmed, speak with a licensed insolvency trustee—they’re the only professionals licensed by the federal government to administer proposals and bankruptcies. About three-quarters of people who contact them end up finding solutions without filing insolvency.
The Bottom Line
We’re in a strange economic moment where the full extent of financial distress hasn’t yet shown up in official statistics. Banks are delaying foreclosures, legal processes are grinding slowly, and many people are simply kicking the can down the road.
But as Hoyes makes clear, this can’t continue indefinitely. The mathematical reality will eventually catch up.
For those feeling squeezed: you’re not imagining it, you’re not alone, and there are steps you can take before things become crisis-level. The key is acting before you’ve exhausted all your options.
Ron Butler from Angry Mortgage Podcast talks with Jon Flynn, a 21-year real estate veteran from Niagara, about how we got from normal housing prices to total insanity and back to crisis
When Jon Flynn started in real estate in 2004, a single family home in Niagara averaged $130,000. He remembers working with a busy realtor who accidentally countered an offer at $230,000 instead of $130,000. She laughed it off because she was “used to dealing with all these high-end homes.”
Twenty years later, those same modest homes peaked at unimaginable prices. Then they started collapsing. Flynn and mortgage broker Ron Butler traced exactly how this happened and why it will get worse before it gets better.
Phase 1: Vancouver Money Arrives (2015-2016)
The madness started when British Columbia blocked foreign buyers. Chinese millionaires who had been buying Vancouver real estate simply flew to Toronto instead. Their method was smart and legal. Send kids to Canadian universities. Get them PR status. Funnel money through them to buy property.
Toronto prices exploded. Within a year, the craze hit Niagara. Multiple offer nights became normal. Agents would line up buyers outside homes, check their prices, and literally tell them “Get out” if the number was too low.
Flynn says what happened in the GTA always arrived in Niagara about 12 months later.
Phase 2: Toronto Investors Invade (2016-2018)
Toronto homeowners discovered something. They could remortgage their appreciated homes, pull out equity, and buy cheaper properties in Niagara, Hamilton, and other regions. At first the rental math worked. You could rent to a family and break even.
But prices kept climbing beyond what rents could support. So investors switched to Airbnb. When cities cracked down on Airbnb, they pivoted to student rentals. When that collapsed, some literally chopped houses into pieces. Ten bedrooms in an 1,100 square foot house.
Each phase made less economic sense than the one before.
Phase 3: COVID Insanity (2020-2021)
Then COVID hit and things went completely crazy. December 2020 had the highest average home prices of the entire year. December is normally the slowest, lowest price month in real estate.
“That was a sign,” Flynn said. “Something was wrong.”
Ultra low interest rates. Work from home policies. Everyone believed office work was dead forever. Speculation hit levels nobody had seen before. GTA residents fled downtown condos where they waited an hour for elevators with three person limits. They bought everything available in suburban Ontario.
Butler remembers a client in Fort Erie who wanted to pay $700,000 for a basic bungalow. Butler asked why. The client said he had made $400,000 in real estate in the last two years. That was the thinking. Past gains justified any future price.
By 2021, every realtor rebranded as an investment expert. Social media made everything worse. Flynn made two and a half times his normal income that year. Butler made similar multiples. New realtors thought this was normal. They bought Hummers and multiple investment properties.
“Everybody and their brother and their mother were just buying houses,” Butler said. “It didn’t matter what you could rent them for. It didn’t matter what they were worth.”
Phase 4: The Student Explosion (2022-2023)
As interest rates rose and speculation cooled, a new distortion arrived. International students. Canada’s student visa approvals jumped from 172,000 nationally to 480,000 just in Ontario.
Private immigration consultant centers appeared everywhere. More than weed shops in Niagara Falls, Flynn said. Investors who couldn’t make money with families or Airbnb packed international students into houses.
Flynn described buses packed with students fighting to board. Security guards at Niagara College controlling crowds. Neighborhoods transforming overnight.
One story stuck with him. A realtor on his street sold a home to another agent who said her mother and daughter were moving in. On closing day, students with grocery bags stood on the porch. The house was soon chopped into 10 bedrooms.
The Collapse
By 2022, everything stopped. Interest rates spiked. Immigration policies tightened. The fundamentals that never existed could not be ignored anymore.
“Fundamentals are back,” Flynn said. “People want affordable family homes.”
Power of sales started appearing. First from reckless speculators. Now increasingly from regular homeowners. Each foreclosure creates a new, lower price. It drags down entire neighborhoods.
Both Butler and Flynn emphasize this point. What we see now in late 2025 comes from decisions made 9 to 12 months ago. The real pain from job losses has not fully hit yet.
“We haven’t really seen the families with job losses going into power of sale,” Butler said. “That’s the next wave.”
Where We Are Now
Flynn has listings at fair prices. Even below recent sales. Zero showings. One expensive listing had one showing in three months. The GTA investors who flooded Niagara during the boom have completely vanished.
Butler tracks regional numbers. Four Ontario regions are approaching average losses of $400,000 from peak prices. Vancouver and Calgary are grinding down too. The spring market showed no recovery in 2025.
“You cannot expect prices to go up this spring,” Flynn warned about 2026. “They might a little bit, but chances are they’re going to go down.”
The most sobering moment came when Flynn recalled 2012 and 2013. “I sold a house to a girl working as a shift manager at McDonald’s. Only one on title, only one on mortgage. Two people working at Tim Hortons bought a house. Legitimately, no fraud.”
Butler agreed. “When I started 30 years ago, ordinary people with absolutely average incomes were buying houses. Prices have not fallen anywhere near enough for that to come back.”
The Honest Assessment
Neither Butler nor Flynn sugarcoat the situation. They both made good money during the boom years. But they also warned people as far back as 2013 that prices were nuts. They were wrong about timing. Prices went much higher for much longer than seemed rational. But they were not wrong about the fundamentals.
“We just live the honest life,” Butler said. “Maybe it’s not doing us any good, but we did live the honest life.”
Their message for 2026 is clear. It will be rough. The correction is not over. If you are waiting for next spring to be better, it might be much worse.
All the distortions are gone now. Foreign money. Low interest rates. COVID insanity. Student visa explosion. What is left is the simple question that was buried for over a decade.
Can somebody actually afford to buy this house?
For too many properties in Ontario, the answer is still no.
