July 16, 2025 | Downcycles Bring Opportunity For Those Who Can Resist Consensus Views

Toronto home sales rose 8.1% in June, but were still 35% below the decade’s average; the average home sale price dropped 5.2% year-over-year to $1,151,600.

Condo sales in Toronto have declined by 75% over the past three years (-37% in Vancouver) and are down 22% from June 2024; at the same time, new listings are up 25% year-over-year.

Toronto mortgage delinquencies are surging at a rate much faster than the rest of the country. In two and a half years, the delinquency rate more than tripled (3.67x) from the record low in Q3 2022 (chart below via Better Dwelling, see Toronto Mortgage Delinquencies Have Tripled, Highest In Over A Decade):

The rising delinquencies are just one of the compounding issues materializing in Toronto real estate. After a nearly 26-year run where the market seemed invincible, there’s been a sudden shift with sales plunging to multi-decade lows for both new construction and existing homes. At the same time, the market has the most inventory on record—yet prices remain lofty.

Nationally, the average Canadian asking rent is down 2.75% year-over-year, and this is beginning to show through in the CPI statistics. Services make up more than 60% of Canada’s Consumer Price Index, and nearly 30% of the index is driven by shelter costs that are now deflating. The trouble is that the average Canadian asking rent of $2,125 in June remains 28% higher than $1,701 in June 2021. Rents and home prices will need to drop significantly further to return to a reasonable percentage of household income.

The good news is that market conditions (increasing supply, flat population growth, and below-average sales) are likely to continue suppressing shelter costs for some time–much needed to help restore affordability. But this is bad news for those who bought, refinanced, or lent against properties near cycle highs in 2021-23.

While publicly traded Canadian Real Estate Investment Trusts (as represented by the XRE index) have rebounded since April, the basket remains 12.7% lower than its peak in January 2023.

The same Canadian real estate index fell 59% from February 2007 to March 2009, when Canadian home prices declined by just 8.2% nationally, as measured by the Teranet–National Bank House Price Index. Canada’s financial share index (XFN) fell 51% over the same timeframe.

The average Canadian home sale price has so far declined by 18% since the peak in February 2022, when fear of missing out (FOMO) drove many irrational financial decisions.

Adjusted for inflation, the average Canadian home price fell by roughly 25–30% nationally between 1981 and 1985—food for thought.

For those with the attention span and patience to follow and understand cycles, there’s a lot of opportunity in the making here, but only when we can resist the siren song of consensus views.

The discussion below addresses some of the history and headwinds facing real estate in Canada’s most populous areas.

Our guest this week is Ben Rabidoux—Founder of Edge Realty Analytics and North Cove Advisors, and one of the most respected voices on Canadian housing and economics. In this episode, he joins Dave to tackle some of the biggest questions facing Canada’s real estate market today. From the condo market crash to vacancy rates for rentals to the role of HELOCs and immigration policy, Ben explains how we got here, what’s coming next and what it all means for affordability in this country. He also shares the story of catching Fortress as a fraud and offers a candid take on whether Canada is too soft on white-collar crime. If you care about housing, affordability or the future of Canada’s economy, this episode is a must-listen.  Here is a direct video link.

Danielle Park July 16th, 2025

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