Houses Rot, Markets Fall: Unlearning the Real Estate ‘Truth’

“It’s not what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” — Mark Twain

When I was a little girl, I had big questions. Why do we have to sleep? Why do we die? Why do we need money to buy things? How come houses go up in value as they get older? They’re not like fine art that gains prestige with age—they crack, leak, and wear down.

The answers we get as children are usually the ones adults have already accepted. They repeat them with confidence, and because we hear the same explanations from parents, teachers, and the media, we eventually absorb them as truth.

Developmental psychology helps explain this phenomenon. Jean Piaget observed that typical children—not those subjected to brainwashing—naturally move from trusting authority to testing it, becoming more skeptical, abstract, and critical as they grow. Some of the “truths” we inherit endure; others collapse under scrutiny. That’s the work of unlearning: asking again, Is this really true?

One of the most persistent beliefs is that real estate always goes up. We treat it like a law. Yet houses are made of wood, drywall, brick, and concrete—materials that decay, rot, and demand upkeep. By every physical logic, a house should depreciate, like a car. Instead, we insist it appreciates.

The unsettling truth is that housing has become shelter masquerading as investment. Within our monetary system, it is treated less as a place to live and more as an asset to accumulate. As fiat currency inflates, buyers funnel money into real estate, as if it were a machine that effortlessly multiplies wealth. They pursue what feels like stability—but in reality, it is an illusion when measured against the enduring realities of the natural world.

In one thought experiment I often return to, imagine it’s 1971 and you have $40,000. You could tuck it under a mattress, invest in gold, or buy a house. Fast forward to today: the cash would have been eroded by inflation, gold would have soared in real value, and real estate would have risen—nominally—because it absorbed money, not because the structures themselves appreciated or because it is a true natural store of value. The same applies to financial instruments like stocks and bonds: their apparent growth is ultimately propped up by fiat—credit, or borrowed money—not by any intrinsic worth.

That’s how housing and the stock market always rise—hardened into more than a financial mantra: they became a myth propping up fiat. It’s a perfect case study in unlearning—what once seemed like eternal truth is revealed as a temporary illusion.

When I dug into what’s happening in Canada, especially in the Greater Toronto Area (GTA), I found that narrative unraveling. (Much of my analysis here is informed by two in-depth videos: Canada’s Black Swan? The GTA Housing Market Is Cratering and The Housing Market Will Collapse—And So Will Society?) In Toronto, sellers cling to yesterday’s price tags while buyers have vanished. The investors who once drove the boom are gone. Condo sales collapsed to just 118 units in August. New home sales plunged 42% year over year and now sit 81% below their ten-year average. It was the worst August on record in more than sixteen years of data—while inventory simultaneously climbed to a decade high.

What’s more, Toronto’s dependence on real estate and financial services means a housing shock is a systemic shock, rippling through the entire economy. Unemployment is rising. Mortgage defaults are spiking—especially on loans over $800,000 in Ontario and British Columbia. Households are squeezed by interest rates that once seemed manageable. Pre-sale condo investors now need rents to rise 55% just to break even—an absurd requirement in a country with stagnant incomes.

In fact, owning a home in Toronto now costs roughly 60% more than renting the same space—a spread so wide it defies every historical norm of the housing market. The traditional rent-to-own balance has collapsed; it no longer makes sense to “buy for security.” Even rents—the last pillar of strength in real estate—are beginning to soften, with reversals appearing in places like Calgary.

These aren’t hypothetical losses. A Willowdale home recently sold at a $643,000 drop over three years. In Niagara-on-the-Lake, another property lost $760,000 in just two years. And a Toronto residence plunged $635,000—38% down. These are disastrous setbacks, far beyond everyday volatility.

For the first time, more rental leases were recorded than home sales. Canada is becoming a nation of renters. Developers, desperate to sustain momentum, keep churning out shoebox condos for investors. Those who overpaid are now teetering on the edge of bankruptcy; some have already collapsed, unable to service debts on properties purchased at peak valuations. The average age of first-time buyers has risen from the late twenties in the 1970s to nearly forty today. Mortgages now stretch into retirement. Many younger people have simply abandoned the hope of ownership.

Immigration—often touted as a remedy for demographic decline—has been leveraged to prop up housing demand, but it also intensifies pressure on housing, wages, and public services. The narrative that newcomers will “save the market” is already faltering; reports have surfaced of immigrants maxing out credit and even leaving cars abandoned at the airport as they return home. Immigration-driven demand is proving less permanent and less reliable than policymakers assume.

Inequality has widened in parallel, as the poles of ownership and tenancy deepen. The echo of Rome is not far off: concentrated property, a hollowed middle class, rising unrest. What’s unfolding is not just a housing downturn, but a wealth-inequality spiral—the same pattern that has destabilized societies throughout history. When too much of a nation’s wealth is built on debt, it’s not only households that crack. Banks, currencies, even political structures begin to fracture under the strain. That’s how a housing correction mutates into a societal one.

At the root is inflation, the silent tax that chips away at purchasing power faster than wages can follow. A true reset may require ruin: developers collapsing, banks incurring losses, possibly even a currency reckoning. It would be painful, but only such a purge might restore housing affordability.

Real estate does not—and will not—climb forever. Anyone buying now should expect losses over the long term. The math is that simple, and the evidence already overwhelming. In many parts of Toronto, homes are selling 20 to 30 percent below their peak—and the bottom likely hasn’t arrived. Renting, long scorned, is now the more rational choice until markets reprice. Think of a home purchase as shelter, not investment—reverting back to nature.

Remember also, the population has risen by roughly 70% over my lifetime—the past 54 years. That surge created relentless demand for housing, amplifying the perception that prices could only move in one direction: up. More people meant more households, more pressure on limited land, and more justification for spiraling valuations.

Demographics aren’t a one-way street. When population growth slows, levels off, or even reverses—as we’re beginning to see in many developed countries—the effect is the opposite of what we’ve grown used to. Demand cools while supply lingers, and the tailwind that once lifted prices becomes a headwind. Growth acted as an accelerant; demographic stagnation is the extinguisher. This shift, largely invisible to anyone raised on the “housing always goes up” mantra, is a structural force that no interest-rate tweak or policy patch can paper over.

We tell children that houses always appreciate. As adults, we have to admit that’s not a natural law, but a maintained fiction. Bricks erode; markets break. In Canada, the myth is unspooling in real time. The unlearning has begun, and its ripple effects will change everything—housing, money, and the society beneath them.

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