Canada’s real estate market is 20% off peak and the data has never looked better for buyers. Nine consecutive quarters of affordability improvements. Prices down from peak across every major asset class. And yet demand is nowhere to be found. Fear is running the market and most Canadians are letting it make their financial decisions for them. Marcus and Justin broke down exactly what is happening and what smart money is doing about it on the latest episode of Make Money Count. Here is what you need to know.

Fear Is Running the Market Right Now

Let’s start with the most important thing. Nine consecutive quarters of affordability improvements. Prices down 20% from peak. Mortgage rates off their highs. And yet buyers are nowhere to be found.

This is not a supply problem. This is not an affordability problem anymore. This is a sentiment problem. Consumer fear is the single biggest barrier keeping Canadians out of the real estate market right now. And historically, that is exactly when the opportunity is at its greatest.

Marcus referenced legendary investor Howard Marks and his pendulum theory. Greed and fear are never at equilibrium. The pendulum swings between the two and only briefly passes through the middle. Right now Canada’s real estate market is deep in fear territory. And that is where generational wealth gets built.

The Condo Market Is at a Breaking Point

If there is one asset class that tells the full story of where Canada’s real estate market is right now, it is condos.

You cannot build a condo in Canada today for what it sells for on the open market. Developers are distressed. Banks are not touching it. New construction has stalled. And yet the oversupply keeps growing because demand has collapsed so completely that only around 70 condos sold across the entire city of Toronto in a recent month.

But here is what that actually means for a buyer. Private REITs are entering the market. Foreign funds are quietly acquiring distressed condo assets. European investment money is coming into Canada specifically to scoop up these deals. The smart money has already done the math. The question is whether everyday Canadians will do it too before the window closes.

The Industrial Deal That Explains Everything

To understand just how distressed Canada’s real estate market is right now, consider this example Marcus shared on the episode.

A 2.5 acre industrial site with 16 million dollars worth of debt attached to it. Available to acquire for one million dollars. A site that was previously being considered for residential development with potential for 800,000 square feet of buildable area. At 100 dollars a square foot that is an 80 million dollar development opportunity trading at a fraction of its potential value.

This is not a one-off situation. This kind of distressed real estate is showing up across asset classes right now. Industrial sites. Residential land. Strip malls with intensification potential. The common thread is that prices are reflecting maximum fear, not fundamental value.

The Rental Market Is Still Under Pressure

Not everything in Canada’s real estate picture is an immediate opportunity. The rental market is still working through a difficult period.

Residential investment dropped 7.9% quarter over quarter according to a recent TD report. Price to rent equilibrium is not expected until 2027. More rental supply is still coming into the market which means downward pressure on rents is not going away anytime soon.

For developers this creates a serious problem. Lower rents mean buildings do not service. Buildings that do not service cannot secure financing. And developers who were hoping to pivot their stalled condo projects into rental buildings are finding that math does not work either without government partnership.

The Labor Shortage Nobody Is Talking About

Marcus flagged a risk on this episode that has not appeared in any major article or report yet. And it is one of the most important long term factors in Canada’s real estate story.

If the new home construction industry collapses for an extended period, tradespeople will leave. They cannot stay unemployed in a unionized trade indefinitely. They will find work in other industries and they will not come back. When demand eventually returns and Canada needs to ramp up housing construction again, there will be even fewer skilled trades chasing more work. The cost to build will increase again. And the affordability problem everyone is trying to solve will get worse.

This is why Marcus and others are calling for government to step in now and partner with developers to create affordable housing. Not just because it is needed. Because right now is the cheapest time to build it.

So What Should You Actually Do?

The data is clear. Prices are down. Affordability is back. Smart money is moving. And consumer sentiment is still the biggest barrier keeping everyday Canadians out of the market.

If you can find a real estate asset that services right now, the case for buying is strong. Condos, distressed land, industrial sites with residential conversion potential. These are the asset classes Marcus and Justin are watching closely. And the common theme across all of them is that you are far more likely to see capital appreciation when you buy at a 20% discount than when you buy at an all time high.

The fear in this market is real. But so is the opportunity. And one of them is going to age much better than the other.

Watch the full episode of Make Money Count for the complete breakdown. Subscribe to the Cannect YouTube channel for weekly mortgage and real estate insights you will not find anywhere else.