Ron Butler argues that both U.S. and Canadian housing are being frozen by higher rates, weak hiring, and energy-driven inflation, with Canada looking especially weak because rents are falling and population growth has turned negative.
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This interview centers on Ron Butler’s view that housing activity in the U.S. and Canada is being suppressed by a combination of higher mortgage rates, weak labor markets, and energy-price shocks. On the U.S. side, he says higher oil prices feed inflation, push bond yields up, and keep mortgage rates elevated, which hurts first-time buyers and slows purchase activity. He argues that in many U.S. markets, especially where rates, layoffs, or local oversupply are hitting at once, housing is stagnating rather than collapsing, with Florida, Austin/Texas, and other region-specific markets showing outsized weakness. He also says builders will stay cautious until rates improve and sentiment turns better. On Canada, Butler is much more bearish. …
Tactically, the setup favors renters and cautious housing investors: rates are elevated, sentiment is soft, and a near-term freeze in transactions looks more likely than a rebound. Any quick relief would likely come only if energy prices and bond yields ease together.
Over the next few months, housing should remain patchy and slow unless mortgage rates break meaningfully lower and hiring stabilizes. Canada likely stays weaker than the U.S., with condos and rental-heavy assets under the most pressure.
Structurally, Butler sees housing tied to energy, demographics, and mobility costs rather than just nominal prices. His long-run thesis is that Canada needs more population growth and resource-led income, while cheap-energy assumptions and smooth housing appreciation are less reliable than before.
Higher energy prices raise inflation, push bond yields higher, and lift mortgage rates.
He explicitly says disturbing energy prices attracts inflation and causes bond traders to react, raising yields and mortgage rates.
The U.S. housing market is slowing because higher rates and weak hiring reduce first-time buyer activity.
He says higher mortgage rates and little new hiring are knocking down first-time home buyers.
A lower war-risk environment could quickly improve bond trading and mortgage rates, but only if the energy disruption ends.
He ties rate relief to the end of the war and energy disruption, not merely the expectation of peace.
How have the Iran war situation and the nomination of Kevin Worsh as a new Fed chair impacted the U.S. housing market?
Butler says the war pushes energy higher, which lifts inflation, yields, and mortgage rates, while a Worsh Fed chair is not enough to offset that unless the war and energy shock fade.
Does the 30-year fixed mortgage rate follow the Fed funds rate or the long end of the yield curve more?
He says the 10-year yield rules and higher oil can push the top of the curve and mortgage rates higher.
Why are house prices still so high despite higher rates and weaker demand?
He says low-rate existing owners don’t want to sell, hiring has slowed, and those two effects keep the market stagnant rather than forcing a deep price break.
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