Mortgage broker Ron Butler says condo presale market is ‘dead,’ Canada drifting toward nation of renters

Canada’s high-rise condominium presale market in Ontario and British Columbia is finished and will stay that way for years, mortgage broker Ron Butler said in an interview on The Really Big Show, published Sept. 19.

“The high-rise condominium market is not just dead. It’s dead, it’s buried, then they dug it up, then they put a stake through its heart, then they lit it on fire,” said Butler, principal broker at Butler Mortgage and host of a mortgage podcast.

He told hosts Jim Csek and Iain Burns he does not expect significant growth in presales of pre-construction high-rise condos in the two provinces “for years, for 5, 6, 7 years.”

Butler, making his second appearance on the show, said the shift away from ownership is already visible in what is being built. Over the past two and a half to three years, he said, developers have ramped up purpose-built rentals “in ways that have never been seen before.” He said Kelowna will add 30 per cent more rental stock in the next two and a half years, a pace he called “off the charts huge.”

Asked whether Canada is becoming a country of renters, Butler answered: “That’s an unequivocal yes.” He said Build Canada Homes, the new federal housing agency, is “100 per cent dedicated to building rental accommodations or social housing,” and argued that nearly every major federal housing program is designed to build rentals. He said the federal government is having to add capital to the Canada Mortgage and Housing Corp. only to support its rental programs.

Renewals hurting, but payments have not doubled

On the wave of mortgage renewals, Butler said worried borrowers account for about 80 per cent of the calls his company receives. Clients want to know how to manage a rising rate, whether they can get a better one and whether they can extend their amortization.

He said that while rates on many renewing mortgages have nearly doubled, payments have not, because borrowers who started with very low rates paid down a lot of principal. Using a 1.59 per cent five-year rate as an example, he said payments are rising by between about 16 and 28 per cent, “which is still awful,” but not double.

Butler said borrowers are coping by cutting discretionary spending, which he linked to rising credit card and personal credit use and softer retail sales in some markets. He said he has not seen many forced sales because of mortgage rates, though he said sales by power of sale, foreclosure and court order are rising quickly across the country.

Municipal costs and low-rise scarcity

Asked about municipal elections under way across the country, Butler said cities have added “phenomenal amounts of cost” to home building. He said Toronto has raised development fees by 5,000 per cent since 2000. He argued that older voters dominate municipal elections and back candidates who promise to hold property taxes and keep neighbourhoods unchanged, while young people typically do not vote.

The hosts said Kelowna property taxes have risen about 50 per cent over the past decade.

Butler said he does not expect prices to crash as baby boomers sell, because Ontario, B.C. and Quebec have “effectively stopped building single-family homes.” That scarcity, he said, will support prices.

He said prices are nonetheless falling in Toronto, the Greater Toronto Area, the Lower Mainland and, more recently, Montreal, and have been falling in Calgary for nine months. Affordability remains poor, he said: in Toronto, most homes cost eight to nine-and-a-half times family income, and condos four-and-a-half to five times, compared with a historical norm of three.

Butler said those costs, along with small condos, have suppressed fertility. “You can’t raise a family in a dog crate condo,” he said, referring to units of about 425 square feet that he said were built for seven years in Vancouver and Toronto. He said Canada is a rich country for people over 60 with pensions who bought homes decades ago, but not for people under 40 “unless you’re in the top 5 per cent of wage earners.”

Regulation, inflation and rates

Butler said regulation is a major reason homes are hard to build in Ontario, B.C. and Quebec, describing it as “strangulation by regulation.” He said the Prairie provinces, with less red tape, build faster and keep prices more rational.

On rates, Butler warned that rising diesel prices, damage to fertilizer plants and refineries, and higher wheat prices could fuel inflation and put upward pressure on borrowing costs. At the time of the interview, he predicted the Bank of Canada would “in all likelihood” raise rates in December or at its first meeting of the new year. Fixed mortgage rates, he said, are “entirely a function of bond yields,” which he said had climbed around the world.

Politics

Butler said he had recently interviewed Conservative Leader Pierre Poilievre for about an hour and said he is a supporter. He said he does not expect Prime Minister Mark Carney to appear on his show.

On Carney’s popularity, Butler said it reflects “a set of circumstances,” including Justin Trudeau’s resignation and U.S. tariff aggression. “There will be a point in the next number of years when everybody, like 80 per cent of Canadians, will say, ‘Thank God this Carney’s gone,'” he said. “It’s just going to take time.”

Asked about the death penalty, Butler said he would support it only with verified video evidence of the crime, citing Paul Bernardo as a case where he would. Asked whether he would run for office, he said no: “I am not electable in any way.”

The interview took place before Csek and Burns travelled to Washington to seek interviews. See the Washington trip recap.