Ep 41: So Many Condos, So Few Buyers

A housing boom can feel like prosperity—until the numbers stop adding up.

We sat down with chief economist and EVP Research at Centurion Asset Management, Carl Gomez to examine Canada’s great housing reset and why an economy so tied to mortgages, pre-sales, and condo construction is now confronting record-low business investment and stagnant productivity. 

From Toronto to Vancouver, investor-driven micro-units crowd the skyline while families search for livable, mid-sized homes. That mismatch sits at the heart of today’s slowdown: oversupply where demand is thin, and scarcity where people actually want to grow.

We trace how the last decade funneled capital toward residential investment and away from machinery, software, and R&D, and what that trade-off means for wages, growth, and resilience. 

Carl explains why resets can take close to a decade, how absorption rates signal a long clearing process, and why rents and prices may still need to adjust before the market balances. 

We also dig into the smarter personal finance playbook for 2026: when renting can beat buying, how to weigh mobility and opportunity cost, and what it really takes to build wealth outside of a single leveraged asset.

Policy isn’t off the hook. We break down Nova Scotia’s first-time buyer pilot and the broader risks of demand-side boosts that pull tomorrow’s buyers into today’s market while socializing downside. 

Then we pivot to the structural fixes: unlocking the missing middle, reforming development charges, streamlining approvals near transit, and creating conditions for firms to scale at home. 

With U.S. industrial policy reshaping supply chains and the AI boom accelerating, Canada faces a choice—double down on housing as a growth crutch or invest in productivity that compounds.

If our take on housing, affordability, and productivity got you thinking, tap follow, share this episode with a friend, and leave a quick review so more listeners can find the show. Your support helps us bring sharper conversations to your feed every week.

Quick heads up this episode was recorded on February 17, 2026 so while the news may have changed since this conversation was recorded the thoughts and ideas still remain relevant. 

Also everything we talk about in this episode is for educational purposes and not to be taken as financial advice.

Transcript

Framing Canada’s Housing Reset

Julia Pennella, Host 0:00

A housing boom feels like prosperity until the math stops working. Canada has one of the highest household debt to GDP ratios in the G7, hovering around 100%, and nearly three-quarters of that is tied to mortgages. Meanwhile, new home sales in the Greater Toronto area just hit record lows. Condos are sewing, investors are starting to sweat, and a big question hanging in the air. So what happens when an economy that leaned hard into housing hits a reset? Does this mean housing is becoming more affordable? Or is this a warning sign to something much bigger? Welcome back to Let's Talk Politics, where policy meets real life and we make politics make sense. Carl Gomez, chief economist at Centurion Asset Management, is back again to break it all down. We get into why so much of Canada's household balance sheet is tied to real estate instead of productivity, and whether this feels more like a reset or what some are starting to call a 2008-style warning sign. We also get into generational reality. Millennials and Gen Z aren't just rejecting homeownership. They are practically priced out. So they're rewriting the script on work, mobility, and wealth. And if you're weighing buying versus renting, wondering where rates go next, how the AI boom fits into all of this, or questioning whether real estate can carry this economy forever? Well, you're in luck. This episode is just for you. Quick heads up! This episode was recorded on February 17th, 2026. So while the news may have changed since this conversation was recorded, the thoughts and ideas still remain relevant. Also, everything we talk about in this episode is for educational purposes only, and it's not financial advice. So, let's talk politics and economics powering them. When we're looking at Canada on the global scale, and the Bank of Canada mentions this almost in every one of their updates, we have stagnant productivity. But more specifically, I want to point to our economy. Is it hostage to housing because of all our debt tied to that? Is this a productivity killer, really? Is it siphoning capital away from business innovation and into non-productive assets?

How The Reset Unwinds Excess

Generational Shifts In Wealth And Work

Carl Gomez, Chief Economist at Centurion Asset Management 2:35

Great question. And, you know, to some extent, I think siphoning resources is a bit of an issue for Canada. Interestingly enough, I mean, we talk a lot about not enough supply of housing in Canada. The United States talks about it. I mean, Europe talks about it. Everyone wants the supply of housing to keep things affordable, but that's just looking at one end of the spectrum. Interestingly enough, Canada has been building lots of supply of housing. And in fact, when you look at as a share at GDP, we have the highest ratio of residential investment to GDP in the developed world, and historically higher than even we had going back all the way to the 60s. So we've been building a lot of supply of housing. To your point, what we haven't been doing as that ratio has been growing, is not growing business investment, capital investment, software investment as a percentage of GDP. In fact, we're at record lows on that. So Canada's economy had was highly tilted to housing. And unfortunately, to some extent, it limited the amount of business investment, capital investment that we need in the long run to drive productive growth in the economy. The more you invest in machinery and equipment and capital and software, the more productive, meaning the bigger bang for your uh output that you get happens. And that's productivity growth. And Canada's productivity growth has been lagging the rest of the world for the past 20, 30 years. Now, I'm not saying it's just solely because we've just been a housing economy, but it is a big part of it. Housing is not necessarily the most productive industry. You need lots of people to build and hammer things down. You can't make it fast. You can definitely try and make condos and things like that, but it's still pretty labor-intensive sort of thing. So at the expense of productivity growth in Canada, we did invest a lot in housing and we needed to because there was a lot of population growth and all that to some extent. But I think we got a little over the top when it came to condo development in the urban cores because a lot of that development is catering to investors as well. And these investors were just banking on prices to continue going up. When that didn't happen, they walked away, the pro sales came down, and the whole House of Cards to some extent is now resetting, and that's causing prices to adjust. The takeaway from all of this is I think the reset that Canada needs to make with all these high debt levels and so much hinging on the housing market is we have to take our lobs. And so there are going to be people out there who are going to be seeing the asset that they borrowed long on is now coming down in price. And they might be a little bit backwards in terms of what's there. It'll take a while to catch up. And housing resets happen. They've happened in the early 90s. Some people don't remember that because they were even born. But when they reset, it can take a good 10 years to reset and recover. But the last time housing prices peaked in 1989, they didn't correct and get back to that same level till 2001. So that's a 10 years of resetting as the excesses get cleared away. And global economies are all about that. I talk about models and stuff. We create a lot of excesses in this last couple of decades, and that needs to be cleared away. And that's where the reset comes in. And we're in the middle of that reset. And I think two major resets that Canada needs to adopt, and Carney talked about this finally, is driving our growth more productively to be able to invest in things that are going to grow economic growth as opposed to just, you know, making more widgets and bringing in more people. And that's something Canada has not been doing, they've been lagging in the rest of the world. And you look at the United States, they're making some big investments in things like AI technology. They always invest in companies. In Canada, when a company starts off and tries to scale, we get to a certain level. And because of taxation stuff, a lot of these entrepreneurs sell off their thought leadership to a big American company. And then the Googles and Amazons of the world build up. We don't do that in Canada. We don't scale up. And while that's taxation policy, but it's just basically a mindset of where our economy is. So I think there is also a recognition now. I don't think the boat's completely turned, but there's a recognition now that we need to transform our economy into something that's more productive over the long haul. And that's going to take some time too. So there's a reset that's going on. And why I think this is an interesting time is while all of that is now starting to happen. We've also been thrown into a reset about our major trading partner, the United States, because we have an administration that that's hell-bent on tariffs and attacking Canada and all this stuff. So not only are we trending to transform our economy, but we're also in an existential transformation of who Canada is, who we trade with, where we're going. And my last comment on all this is it's not surprising for a lot of young people with all of this sort of stuff going on. They're going to say, I'm done with the old model. I'm not going to buy that home, get married at 25, and have a mortgage and a picket fence and all that, because that's not the world I've been inheriting right now. And so their choices are starting to change.

Toronto And Vancouver Condo Pressures

Oversupply And The Missing Middle

Julia Pennella, Host 7:57

Very well said. I want to lean into specifically how we're seeing this reset in major housing markets like Toronto, Vancouver. These condos that were at astronomical appraised values are dropping. Condos are projected to drop about two and a half to three percent this year. To your point, investors uh were purchasing this under the assumption because we had such high immigration, you know, we can go to basic economic supply and demand, right? But that supply and that urban rental shock, we know the math isn't mathing anymore, right? With current interest rates. And right now it is a renter market. My dad owns a few properties and we have renters that are leaving because they can shop somewhere else and get something for less. So if investors are fleeing the condo market, do you think to your point about the market resetting, we might see the comeback in 10 years, we don't know. But will this actually help first-time home buyers or is this going to trigger secondary rental shortage? Like, what do you think is going to happen as people are frantically selling off because they can't carry this second property or can't even carry it as their primary property?

Renting Smart And Mobility Choices

Carl Gomez, Chief Economist at Centurion Asset Management 9:05

Well, you know, the narrative, I think, for the longest period of time is supply shortage and supply crisis. What really is happening right now is we have an oversupply problem. We have an oversupply of condo units that nobody wants. And based on current absorption rates, it's going to take about six to nine years to clear the excess supply of product. Pre-sales are at all-time lows. There's a lot of inventory that's still being built out. And so there's going to be plenty of supply out there for the market. So building more of that stuff all of a sudden doesn't make any sense when there's limited demand right now. The question is, do we get to a point where there's a supply crisis that kicks back in because we don't have enough units for people? And I think that's the major narrative. But the nuance in that narrative that still exists today with this overhang is what kind of supply are we building? The whole point about the supply crisis is that we have a lot of supply that we build of things that people don't want, small shoebox condos, stuff tailored to investors who just want to flip. So there's no livability there with amenities and stuff. In housing circles, what we say is missing is the missing middle. Family style housing that people can grow in with amenities that are going to contribute to your family staying there. So I think that's the supply crunch that we have. Meanwhile, in the urban cores, we're going to have a lot of these little units that are just not going to be leased until prices come down. Both rents, both prices, till the market starts to clear. And that's a process of time. Where does that leave the consumer owners and stuff? Well, you know, I come back to this whole story of like, well, just buy a house because you're going to make your wealth and it's going to rise. The math doesn't math on that right now. But what it does math on, and you talked about being a renter's market, is you know, renting is not a stupid thing to do by any means. If you are smart about it, you can keep your housing costs low and invest the difference in other assets to grow. And that mentality got dumped on by boomers. My parents grew up with the mentality buy your first home. It's the best investment, build your money away on rent. But they didn't have to think about whether prices are going. They just had 30, 40 years of rising prices. For young people today, I think that's really the math that they need to start doing is in an environment where prices are correcting. And also from your lifestyle standpoint, do I really need 400 square feet of like a dog crate sort of home? Does that make sense? And if I'm going to do that, can I just get cheap rent to do it? Because I'm going to leave at some point and go somewhere else. I think those things in that line of thinking needs to change. Ultimately, I mean, people still want to have families and still need a good place to live. And I think Canada still needs to figure out how to cater that missing middle in a way. Right now, the costs are just so off-scale to be able to even build that stuff that we need a reset in development cost charges, reset in land prices, all of that sort of stuff to jump off the point I made before. There's a lot of uncertainty and noise that needs to be cleared out of the system for us to get into that new cycle. We're in the midst of it. We've been in a correction now for a better part of two, three years. I still think we've got some room to go. But you know, from a decision standpoint, are you going to just lock yourself into a property that's going to lose value and wait it out and do that? Or can you give yourself a little bit more mobility by renting because there's a lot of supply out there and figure out a way to wealth in a different way than just locking into housing? So I think those are big, big choices and big changes. And it's going to take some time and there's no clear path there because anything can change. But I think that's the reset that's happening.

Policy Test: Nova Scotia’s Pilot

Julia Pennella, Host 12:55

We're seeing the reset as we talked about. We're also seeing, you know, shift in monetary policy from the federal government, how builders and developers are approaching different projects. But something that really struck me recently is a policy that came out through the government of Nova Scotia. They recently introduced a four-year pilot program for first-time home buyers. They've lowered the minimum down payment from five to two percent. And there's some restrictions around that, like the home has to be less than $570,000. The provincial government will guarantee that mortgage through participating credit unions. So also interesting their approach to be outside of the big five banks. But my question here is is this smart economic policy for the provincial government? Because at the end of the day, if the buyer defaults and the home is sold for less than that outstanding mortgage balance, the province says that they're going to make up the 90% of the lender shortfall. I don't know if this is going to improve affordability. Like, is this going to increase prices? It's just been something that's really been weighing on me. And I'm like, I have an economist in front of me. Tell me about this policy because for me, it doesn't seem like it's beneficial, at least in this current market and with all the uncertainty in the market more broadly. So I don't know. I'm curious about your perspective around this policy.

Carl Gomez, Chief Economist at Centurion Asset Management 14:18

Well, I think it's politically favorable. Obviously, you promise somebody a cheaper home, it's going to get you votes. So these sorts of policies are always politically favorable. They look great on the surface. To your point, there are costs to this. And one of the costs is if something does happen, the cost of this. And quite frankly, across Canada, if you don't have your 20% down payment on a home, you have to take CMEC insurance. And basically, what CME insurance does is it backs up that at home. Uh, in case something happens, the government takes that over anyway. So those checks and balances are in place. Is it smart policy to improve affordability? Well, on the surface, it does it on a one-time basis, but all that's going to do is create more demand, which will put shut prices and you it's a full circle. That is my problem with these types of policies. Is anything that you use to stimulate demand by pulling forward stuff from the future into the present, all you're going to do is move that problem down the road. And that's where you ultimately get to. Again, I see why that happens down south. The Americans were talking about leaning on the MBS market to be able to bring down the cost of housing to make things more affordable. Uh, but all that just does, like then amortizations, all that sort of stuff that kicks the can down the road. That doesn't get to the heart of what the affordability problem is, but it's a political solution and one that is easy to sell to buyers. And that's where I think our politics get to. I come back down to things like the first-time home buyers program. You know, I was lucky I bought my first place in the late 90s, and I could borrow off my RSPs to buy a home and then watch that home grow. So it's okay to borrow off my future, which is my RSP, my retirement, to buy something that's going to grow. And I have to pay that back, and there's some tax implications, but those programs just get you into the market a lot faster. Well, if you need a down payment, there's only so much you can borrow off of that. But the the prices are so high that you're borrowing so much off your future to be able to get that. So, from a consumer standpoint, you really have to think like, what is my priority long term? Is it just to get that home so that I can live there forever? Or do I want to move? Do I want to see the world? My family gonna grow? Is it gonna get smaller? Halifax doesn't have nearly these kind of affordability problem that Toronto and Vancouver does. So any Torontonian who looks at that is gonna be like, what the heck?

Julia Pennella, Host 16:45

But it that would be more incentive for me to want to go myself there and buy.

Carl Gomez, Chief Economist at Centurion Asset Management 16:49

I think you hit the point there too, that during the pandemic, a lot of folks were moving out there because it was cheap to live. But then because post-pandemic there's there's been a bit of an outflow, maybe that's just to entice folks out to that direction. Yeah.

Demand Stimulus Pitfalls

Julia Pennella, Host 17:02

Yeah. I know, like same thing like Calgary did that big push with their advertising, and they've seen a huge population uh boom, but they don't have as much supply. Very, very fascinating. Well, that's a wrap on this episode, but don't go anywhere. Carl Gomez is sticking around for another episode, and we're diving into the AI boom. Is AI a real technological shift, or are we inflating the next bubble? Did we learn anything from the early internet era? And how do computer chips power AI? And why is that becoming such a big geopolitical and economic story? We're unpacking all of that in the next episode. I'm your host, Julia Pinella. If this episode got you thinking, share it with a friend, leave a review, subscribe, like it, make sure you show us some love because all of that helps support the show. This is Let's Talk Politics, and I'll catch you on the next episode.