Juggling Dynamite

US homebuyer demand dropped again in June 2025 – with contract signings for houses declining 2.8% year-over-year to one of the lowest levels on record. At this point, homebuyer interest in the market is even lower than what was experienced in the depths of the 2008 housing crash. The question is: will we see a similar decline in prices this time around?

The National Association of Realtors reports the number of pending home sales in America every month. In June 2025, their pending sales index fell to a 72. This is now down almost 30% from the long-term average and is down almost 50% from the peak during the pandemic. Such lower buyer demand is now resulting a big increase in the number of homes for sale in markets like Nashville, TN, where I filmed this video. Here is a direct video link.

In the next couple of months we may see a slight improvement in home sales in BC & Ontario. Compared with 2024 which might have been the WORST year ever. But will the slight bump = a sustained recovery? And will house prices rise as well?  Here is a direct video link.

As new outside investors become increasingly difficult to find, private equity firms are finding that often the best firm to sell their companies to is…themselves. Yep, you read that right.

Private equity firms are increasingly keeping themselves afloat, extracting cash and boosting their fees through self-sold transactions.  See: PEs Sell Firms to Themselves Twice Over to Navigate Deal Drought.

Nearly 20% of private-equity exits in the first half of 2025 went through continuation vehicles — a process that’s exploded in popularity as private equity firms limp through a dealmaking drought (charted below since 2020).

CVs enable private equity firms to retain an asset by transferring it from one fund to another, while allowing LPs to extract cash from the transfer if they wish.

Self-dealing enables companies to sidestep market price discovery, mark their asset values to fantasy and boost their management fees while keeping existing investors believing that their equity value is increasing.

Yieldstreet is one of the best-known examples of American startups that has been hyped to the public with the stated mission of democratizing access to assets such as real estate and private asset markets.

The housing unaffordability crisis is not just about current interest rates, which are historically average (4.71% 5-year fixed in Canada and 6.57% 30-year fixed in America).

Homebuilders are already offering buy-down rates in the 3 percent range in the US and Canada. Still, new home sales have contracted year over year, while the inventory of new US single-family homes for sale has risen to the highest level since October 2007 (shown below since 1965, courtesy of Charlie Bilello).

The primary issue is that home prices have risen twice as much as the median household income over the past decade (shown below, since 2015).

The US median-priced home for sale, $435k (NAR), is now 5.5x the current median household income ($79k), making it the most unaffordable US market in history.

In Canada, the math is worse: the average home sale price nationally in July ($693k CREA, down 18% since February 2022) was 8.2x the median household income of $84k (before tax), 9.5x the median after tax income of $73k.

In addition, pandemic-inflated prices are now meeting tariff-inspired increases on top of record debt levels across the economy. There’s only so much cash flow to go around.  Aging out boomers and reversing immigration flows are other macro factors significantly impacting housing markets.

The discussion below offers some further insight into these factors.

Ivy Zelman is the Executive Vice President and Co-Founder of Zelman & Associates, one of the most respected research firms advising investors and corporate executives on the real estate market over the past 30 years. In an increasing number of metros, especially where homebuilders are active, Ivy sees conditions starting to favour buyers. Here is a direct video link.