OP-ED: Condo bailout is crony capitalism

"Your tax dollars are being used to rescue wealthy developers from the consequences of their own market failures."

Source: X

Author: Marco Navarro-Genie

Dr. Marco Navarro-Génie is the Vice-President of Research and Policy at the Frontier Centre for Public Policy. An expert on radical revolutionary movements and political identity, he is a recipient of the King Charles III Coronation Medal for exemplary public service. He is the author of three books, including the 2023 release Canada’s COVID: The Story of a Pandemic Moral Panic, co-authored with Barry Cooper.

Ask what a government should do when a housing market finally begins to correct, when prices soften and buyers finally regain bargaining power. The answer is simple. Let it happen.

British Columbia’s premier has chosen the opposite. David Eby, with Ottawa’s Prime Minister Mark Carney beside him, proposes to buy more than 2,200 condominiums that private developers built and cannot sell, then convert them to rent-to-own homes under BC Housing. The governments put the total near $1.5 billion, only about $300 million of it in public funds, the rest financed through debt. The Vancouver brokerage Goodman Commercial reads the bill higher, pricing 2,200 units at roughly $1.1 million each, or $2.2 billion to $2.5 billion.

Look first at what the market has done without any help. CMHC counted 4,376 completed and unsold condos in the Vancouver region in May, a 76 per cent jump in a single year. Presale sales across British Columbia fell from nearly 6,000 units in the first quarter of 2021 to 124 in the first quarter of 2026. Its lender forced Thind Properties’ nearly finished Eclipse tower in Burnaby into creditor protection. TD Economics forecasts the deepest Greater Vancouver correction since 2005.

None of this is a crisis. It is a correction, and correction is the only force that has ever made housing cheaper.

Prices fall for a reason. Too many builders wagered on the wrong product at the top of the market. Much of the unsold stock is high-rise concrete built for investors, nearly 80 per cent of the unsold total by Goodman’s count. CMHC data show 37 per cent of Metro Vancouver’s unsold units priced above $1 million, and 81 per cent inside the city of Vancouver itself. The market is repricing that miscalculation in real time. That is precisely the process government now proposes to interrupt.

Government purchase interrupts that discipline. When the state offers itself as the buyer of last resort, it sets a floor under prices that would otherwise keep falling. The purchase rescues firms that misjudged demand and teaches every developer one lesson: overbuild at the peak, refuse to discount, and wait for the province to clear your shelves.

Developers are already waiting, and Carney said as much. Developers “don’t want to sell at a loss,” he said in Vancouver, and cannot afford to sit on empty units forever, which leaves a market he called frozen. The prime minister described builders who refuse to cut their prices, then offered them public money so they would not have to.

Housing analyst Ben Rabidoux of Edge Realty Analytics named the alternative without flinching: let the weak projects fail, let lenders take the write-downs, and let government buy out of the insolvency at rock-bottom prices.

Eby anticipates the charge and denies it. His government, he insists, will buy distressed units below construction cost outside the city of Vancouver, where the numbers do not work. A premier can promise whatever he likes; the market’s judgment is more trustworthy. If developers are truly holding a fire sale, selling below what it cost to build, why route that bargain through a Crown corporation? Why not let the public buy in directly, at those distressed prices, and own the homes outright? Buying below cost still transfers the losses of a bad bet to taxpayers and spares the developers who made it.

A further problem hides under the enthusiasm. BC Housing would become the scattered landlord of hundreds of individual condo units across three regions, each with its own fees, rules and administration. Public agencies manage purpose-built housing poorly enough. The notion that anyone can stitch a portfolio of distressed condos into affordable, well-run stock works better on paper than in practice.

Notice what the package leaves untouched. If a family-sized home in British Columbia costs too much, government policies have driven much of that price. Ottawa already rebates the GST for first-time buyers of new homes at or under $1 million, yet that relief skips investors and repeat buyers and phases out entirely by $1.5 million. Municipal development charges add tens of thousands to a single unit; the same announcement promised to halve them, a rare sound instinct buried in an unsound plan. A province serious about affordability would strip those costs out and let builders deliver the homes people want.

Crony capitalism does not always arrive in a top hat. Sometimes it wears a hard hat and speaks the language of compassion, promising first-time buyers a home while quietly ensuring that developers who misread the market escape the bill.

British Columbians do not need the government to buy the homes they refused. They need it to stop making the homes they want cost so much to build. The irony is that the market was ready to do for nothing what this plan will pay to prevent.