From 2009 to 2022, alternative and private lenders multiplied as traditional banks tightened underwriting standards and yield-starved investors looked beyond conventional options. As usual, ‘easy money’ led to overconfident, under-analyzed allocation decisions across many asset classes at once.

Real estate busts tend to be slow-moving, and then suddenly, all at once. Eight years after the US commercial market peak, the price discovery in current sales is wiping out years of prior price appreciation. The 90% price cut to a landmark Chicago building highlighted below gives a sense of the magnitude of write-downs unfolding.

Residential markets have largely frozen on the still-massive overshoot between current asking prices and the level buyers are willing and able to pay. With sales volumes at 45-year lows in 2026, price discovery remains far below what most can presently fathom.

New home sales are approaching an all-time low in Toronto. Janice Golding has more on the struggle to sell recently built housing. Here is a direct video link.

If the Canadian average national home sale price were to return to even 2018 levels, it would require a further drop of 25% from 670K today to about $500k (and a drop of about 40% from the February 2022 peak of $827k).

If you think that can’t happen, you are not well-studied in the aftermath of real estate bubbles.

Broad price discovery is yet to occur in equity, credit and ‘alternative asset’ markets. There will come a day, there too, when people will look at their purchase prices and account statements from the glory days of the bubble and say, “What were we thinking?”