Many things are working against Canadian real estate right now, writes Robert McLister. Photo by Laura Proctor/Bloomberg files

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OK, let’s count how many things are working against Canadian real estate right now.

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1. Mortgage rates: They’re 25 basis points above the 20-year average and climbing.

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2. Population shrinkage: Housing demand requires warm bodies and our annual population just fell for the first time since Confederation.

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3. Momentum: The Canadian Real Estate Association (CREA) benchmark home price is down 20 per cent since February 2022 and still headed south. Adjust for inflation and you’re looking at nearly 30 per cent off. And for the first time in 27 years, the average homeowner has watched their property lose value over a five-year stretch.

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Incidentally, Bank of Canada senior deputy governor Carolyn Rodgers just said this yesterday: “We need house prices to come down, so that housing is more affordable. There isn’t really a path to affordability, particularly in some of our big centres, without house prices correcting a bit.”

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So, we probably shouldn’t hold our breath for the Bank of Canada to rescue housing with rate cuts.

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4. Unaffordability: Despite meaningful improvement since early 2022, the gross debt service ratio for an average home purchased by an average dual-income household — forced to qualify at the government’s restrictive stress test — sits at 33.5 per cent. That’s meaningfully higher than the 20-year average of 29.8 per cent.

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5. Supply: Housing starts may have flatlined and CREA said new listings fell last month, but inventory is still 24 per cent above the 10-year average, and the supply of rentals (a substitute for home purchases) keeps growing. We may have a supply crunch down the road, but in most markets — not all — oversupply is the problem, not undersupply.

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6. Worsening sentiment: Buyers are seeing a sluggish economy, fresh multi-year lows in prices, job market anxiety, alarming condo headlines, mortgage renewal dread and so on and so forth. It’s all screaming “stay on the sidelines” to hundreds of thousands of Canadians, and, frankly, the sidelines haven’t been this crowded in years.

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7. Job cuts: Net estimated job losses have hit nearly 100,000 in the past three months, and artificial intelligence and trade policy may be lining up to deliver the next round.

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8. CUSMA uncertainty: “The future of (the Canada-United States-Mexico Agreement) is the single most consequential macro uncertainty facing the Canadian economy this year,” Scotiabank Economics said recently.

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If U.S. President Donald Trump walks away and saddles us with painful tariffs, even briefly, we’ll likely toboggan straight into a recession.

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That’s eight headwinds, but it feels like I’m missing one. It’s on the tip of my tongue. Something about cruise missiles and oil refineries. It’ll come to me.

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9. An oil shock: It turns out that Middle East wars that drive up prices and inflation expectations are bad for mortgage rates. I looked into it. It checks out.

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Typically, the fallout from oil crises lasts a minimum of three to six months, which is plenty enough to spike inflation expectations and get our central bank nervous (despite its promises to “look through” the oil shock’s immediate effects).