Why Canadian Real Estate Peaked in 2021/22

Dave and Ron Butler explain why prices at the 2021–22 peak weren’t sustainable.

It’s funny when you go back to that peak market of late 21, 22, you know, a lot of us were saying, this is not going to last. And you’re right. There were a lot of people out there saying it was going on indefinitely. But the reason I knew that it was going to turn soon was because the investors couldn’t make their math work anything short of a ginormous down payment.

They had significant negative cash flow, and then families of course, couldn’t afford them. Conventional families, because of the multiple of income. There weren’t gonna be enough buyers to sustain it at that price. There was gonna be something that popped it. And of course, rates went up not long after to boot.

Were you thinking the same thing? I mean, at some point it reaches a price of ridiculousness that just can’t be sustained.

Well, it was demonstrated, you know, when at the very end, at the absolute peak, at the end of 21 and 22, that’s where you. Saw a combination of multiple co-signers, sometimes even reaching past parents into both sets of parents and also massive gifts as your reference to the huge down payment there were just, just to try to make the math work at the absolute peak of real estate foolishness.

Uh, there was a tremendous amount of manipulation going on, not in terms of necessarily there’s no fraudulent documents, but when you’ve got five people on a mortgage. To make the income work and you’ve got gifts of 400, 500, $600,000 to get the down payment to work, you know something’s wrong.