Ryan Mulder

I’ve long been a critic of Canada’s obsession with treating homes and condos as speculative investments. Whenever I advocate for policies that prioritize Canadian households over investors, the response is always predictable: “Don’t interfere with the free market,” or “This is just a supply problem.” But what we’re witnessing today is the hypocrisy of those same so-called free-market advocates. Newly completed pre-construction condos are now worth 20% to 40% less than what investors paid for them four or five years ago. If we let the market operate naturally, thousands of investors would be defaulting on their purchases. But rather than accept those consequences, the same voices that champion the free market are now calling for bailouts—from banks and from government—to rescue the very investors who helped inflate prices in the first place. Banks are stepping in by offering “blanket appraisals,” as discussed in the Toronto Star article linked below. Imagine an investor bought a pre-construction condo for $1 million. Today, when it’s time to close, the unit appraises at just $800,000. Even if the investor put down a $200,000 deposit, that equity has been wiped out by falling prices. To get a mortgage, the buyer would normally need to come up with another $160,000—20% of the new appraised value. But most people don’t have that kind of cash. So instead, the banks pretend the unit is still worth what it was five years ago, approving a mortgage based on the original purchase price. In effect, they’re handing out $800,000 mortgages on condos worth exactly that—leaving buyers with zero equity and 100% loan-to-value debt. Making matters worse, the federal government’s decision last year to raise the insured mortgage limit from $1 million to $1.5 million looks more and more like an attempt to prop up the new condo market. This policy shift allows banks to insure those mortgages—transferring the risk from financial institutions to taxpayers. While investment properties technically don’t qualify for mortgage insurance, many pre-con investors claim they’ll live in their micro-condos to qualify for both the HST rebate and low, insured mortgage rates. Everyone knows it, and no one’s stopping it. Young Canadians shut out of homeownership need to understand: we’ve built a political and economic system that treats housing as a speculative asset. And when that system starts to collapse under the weight of its own speculation, our institutions step in—not to protect future buyers, but to bail out those who helped drive the crisis. This is a rigged system—one that protects those profiting from housing at the expense of the next generation trying to access it.