June 22, 2026 | Capitalism without Bankruptcy

Happy Monday Morning!

As we have written before, the pre-sale market is on life support. New condo sales are virtually non-existent. After hitting 19,000 sales during the height of the bull market, they dropped to just 2900 last year, and are on track for even fewer this year.

The pain is becoming too much, and so, the great bailout has arrived. Last week, Mark Carney, in partnership with David Eby, announced the new Canada-British Columbia Partnership on Condo Conversion. They will leverage “innovative financing tools” to convert more than 2,200 vacant condo units into affordable homes.

“Looking out at condos that have been built, that are unoccupied, that are going to sit there potentially for another couple of years; we are going to go and use the right financing mechanisms and convert those into affordable housing so people can move in and use those,” said Carney.

Carney added “models” will be released in the fall. Adding, “It is a way to clear off on the books this overhang.”

In other words, we will use your tax dollars to provide the exit liquidity for our closest, and most politically connected developer friends.

Imagine telling the soccer mom in Winnipeg, or the plumber in Saskatchewan that their tax dollars are going to bail out some wealthy developers in Vancouver, the same ones who have enjoyed an unprecedented thirty year bull market.

Markets go up. Markets go down. That’s capitalism. But if developers keep the profits and taxpayers absorb the losses, that’s not a market, that’s crony capitalism.

And capitalism without bankruptcy is like Christianity without hell.

Despite the public backlash, if we assume the Carney government moves forward with this back door bailout, they will purchase 2200 unsold condos in BC. This is not an insignificant number. As of right now, per CMHC data, there are nearly 4500 completed and unsold condos in Metro Vancouver, ready for move in.

Other calculations, such as data derived from Zonda and Rennie suggest the number of completed and unsold condos sits at 3945 as of the end of Q1 2026.

In other words, the feds could absorb nearly half of the new vacant condo supply in Metro Vancouver with the stroke a pen. Insane.

Now, once we add in other parts of BC, such as Victoria and Kelowna, perhaps we can round that number up to 6000 or 7000 vacant units, as a rough estimate. Either way, your tax dollars could absorb roughly a third of all the unsold inventory in BC.

Instead of letting prices fall and allowing the free market to clear, the government is going to suppress economic gravity while picking winners and losers in the industry.

Surely we have to assume the selection process will prioritize those who are closest to the Liberal party. Established developers with strong political ties get first dibs at the trough.

If you’re a small developer, an overleveraged pre-sale buyer, or just a regular soccer mom that can’t afford her mortgage, sorry but it’s insolvency for you. Thanks for playing.

Imagine a scenario where Carney buys up all the unsold luxury condos WestBank is sitting and then fills them with low income tenants. Bet you didn’t see that coming.

Anyways, this bailout for BC mimicks what we saw in Ontario last month. Doug Ford’s Ontario plan is a $1.3B public-private fund through the Building Ontario Fund and High Art Capital (the former cannabis guys) to purchase blocks of unsold GTA condo inventory and convert them into roughly 2200 long-term rental units. Once the fund was set up, they partnered with the feds to remove the HST, immediately saving themselves 13% with the stroke of a pen.

All of this reeks of morale hazard, and they don’t even try to hide it anymore.

If we really wanted affordable housing we’d let these unsold condos fall in price, or pick them off in a forced liquidation/ bankruptcy. As we have always argued, Canada’s housing woes are entirely self inflicted through bad policy.

You don’t have to like the rules of the game, but you better understand them.

Steve Saretsky June 22nd, 2026

Posted In: Steve Saretsky Blog

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