Appliance Demand Collapses to 2008 Levels

Added: 2026-05-10

[00:00:01]Hey, Cretky here. Welcome back to the show. I want to touch this week on West Bank, Whirlpool, and Canadian jobs. And I'm going to tie this all into you for how it's all relative for you and the housing market, of course, which is what we follow and track on this channel. So, first and foremost, uh, one of the developers that I've been tracking with a very keen interest, uh, West Bank.

[00:00:22]West Bank, uh, has been all the news.

[00:00:24]They are really symbolic. They are symbolic of I would say like the Vancouver euphoria, the the foreign money, the housing bubble, just like you know again and the the the project for me that really tipped the scales was a few things, right? It's like um it's a developer in my opinion that builds art, not necessarily uh condos for profit.

[00:00:48]And so, you know, and he's come out publicly and said things of that nature.

[00:00:52]So, you think about projects like the Vancouver house, the big shiny tower next to the bridge, chandelier underneath the bridge, $5 million chandelier. Um, you know, the butterfly sold at the peak of the market 2017 to tiptop peak of the downtown Vancouver condo market when all the foreign money was like still flooding in that the presentation centers overseas, all that all that crazy stuff selling out at 3,000 bucks a foot. You know, you just you can't go wrong. Vancouver real estate $3,000 a square foot. What could possibly go wrong? You take them over to Oakidge. Oakidge's at 25 26 something like that. 100 bucks a square foot. Um crazy big shiny fancy towers. Just like and you're like, man, like unbelievable, you know, like this similar developer with like a very good track record is at, you know, 1,800 bucks across the street and you know, West Bank's at 28 over there. Well, how does a guy do it?

[00:01:49]Um, so I've always been following this with very very keen interest. And so I've been finding like following the news cycle. Um, Westbank has been um publicly debated about the legitimacy or the solveny of the company. Uh, of course there there's been public disputes in media articles about um former employees now suing for compensation, leans on projects, contractors and trade saying they haven't been paid. Um, you know, you look at some of the sales. Again, these are publicly reported sales. Um, you had 400 West, you know, 400 West Georgia sold in 2024. 100% of West Bank's full interest. 19 Duncan House in Toronto, 50% of their interest in 2024. The M2 building, 100% of that. The Pendrell, 100% of that to sold to Capri. Um, you had 50% of their project in the Zephr Vancouver on Davy Street. You had 100% of two parcels in south uh southwest marine. You had the Shangria Hotel uh West Bank sold Peterson uh control of the hotel and then the Sino devel towers going in along the Bard Bridge. They sold 50% of that. We don't actually know the price. It was actually to Op Trust who is now um is in uh has claimed receiverhip on West Bank's Revel tower in Joyce. So the first actual project that has now gone into receiverhip is Joyce Tower. It's a 35story rental tower. Uh and OP Trust is owed a hundred just over $und00 million. The construction has effectively stopped.

[00:03:26]That's per the court documents. So this is all sort of it's all been bubbling to this crescendo which is to say like listen the housing market peaked in 2022. we all kind of know it's been rolling over and you're like, well, why is this big massive developer liquidating and selling all these prime assets in one of the softest housing markets that you you've ever seen? I mean, you don't go out in there and sell these prime assets unless you're desperately trying to free up liquidity.

[00:03:51]And of course, now we're finally seeing the first project that has officially entered into receiverhip and that is a 35story rental tower. Uh so again keeping a very very close eye on that space again because I think it is really symbolic of the Vancouver housing market going through this euphoric bull market selling out at obscene prices. You just can't lose money. You go to these presentation centers and it's just it's unbelievable the marketing there. And now to see it sort of all unwind and the music stopped. And again to see a developer of this nature now having project enter into receiverhip I think is really just sort of the the bow on top of what was uh an impressive housing bull market that has obviously come to an end. Um, so speaking of that and switching gears, I think another thing to talk about on the housing market and and sort of coming to to the end of that bull market, um, Whirlpool. So sometimes you can take, you know, you always try to thread all these stories together and the one that I'm really watching uh, closely this week was Whirlpool. So Whirlpool's stock, they reported their the earnings came out, stock falls to a 14-year low, and they basically said that there's no demand. there's no demand for whirlpool appliances.

[00:05:13]Basically, people are uh re repairing rather than replacing, which basically says there's just not enough demand.

[00:05:21]People are being budget conscious. Uh revenues fell nearly 10% year-over-year.

[00:05:26]Um and so again, the stock drops to a 14-year low really on what they are citing as a cost of living crisis and a really a weak housing market, not just in Canada. Obviously, they're massive in the United States and the US is going through a really soft housing market as well. There's some obviously there's some different dynamics, but the reality is a lot of these global housing markets now almost all move in unison, right?

[00:05:52]Like when Canadian housing is going through the roof, Aussie housing is going through the roof, US housing is going through the roof, they're all correlated and it all really is on based on global liquidity, uh, central banks, interest rates, they all flow on credit, right? They all flow on credit. And we know today that credit is more expensive and it's a lot tighter. And you look at, you know, US housing today, again, the dynamics are a little bit different, but it's a slow housing market. Sales volumes are anemic. Part of that reason is because mortgage rates today in the United States, you know, a 30-year fixed mortgage is in the sixes. Uh, and you have a lot of people that basically locked in mortgages at 2 and a half or 3%. And if they move, that mortgage does not get ported like it does in Canada.

[00:06:34]You actually have to break it and to take on a new mortgage. So, it'll be a 30-year fix at 6%. So, again, you're not getting any churn in the housing market, very little liquidity, home prices coming down, and you have companies that have been around forever, massive, massive appliance companies like Whirlpool saying like there's no demand.

[00:06:51]Um, and so again, we know you think about like we've talked about in the show before, you think about like Toronto preconstruction condo sales coming in at 40-year lows, Vancouver multi-deade lows. Uh and again, US home builders again also reporting um fewer and fewer new home sales. Uh all those appliances that would be going into those new construction homes just aren't happening. So um I think that these like you know between West Bank and then Whirlpool, you look at some of these proxies for housing. Another ones that I've been following uh is is some of these REITs, real estate investment trusts uh in Canada um you know showing um vacancies falling, turnover rents falling. Um some of these some of these big REITs are now reporting that turnover rents.

[00:07:39]Basically, when people leave their building, they're actually they're not able to turn the rents over higher.

[00:07:44]They're actually turning them over at lower rents. And this is again part of the story that we've talked about before, which is the massive rental boom that's been happening in Canada where rents uh continue to decline, vacancies continue to push higher. A lot of that is predicated on the CHC cheap cheap money. Now, uh one thing to also pay attention to, keep an eye on is the Canadian jobs and labor data. Canada's unemployment rate jumped from 6.7 to 6.9% uh a six-month high in unemployment and surging youth joblessness. Um basically the unemploy among the unemployed 22 and a half% of them 22 and a.5% of them have been out of work for 27 weeks or more.

[00:08:31]So kind of like if you were to like take the Canadian labor market data really what this is telling you is effectively that it's not necessarily you have massive job layoffs and huge un you know you have double digit unemployment of again unemployment clearly is bottom uh job losses are are pushing higher but what's happening here is it's harder once if you do in fact lose your job it's much harder to find a new one. It's taking a lot longer. people are almost having to settle for uh less ideal jobs or lower wages. And so again, if in fact you do lose your job, it's taking much much longer. Now again, you can say I'll argue some of this is AI, some of it could be the economy. Uh but the reality is is more and more people are out of work for longer. And I think this is really interesting because we've talked about it. I think we talked about on the show last week when we look at the number of uh mortgage delinquencies in Canada. Again, still low on a relative basis. Uh but I think it's the highest now since um 2018 or something along those lines. It's like over a 10-year high. And if you look at the number of MLS listings that are court-ordered sales in Greater Vancouver in the Lower Mainland here, it's at all-time highs.

[00:09:48]And the reason for that is because the Canadian Bankers Association, which tracks the national mortgage delinquency rate, that only tracks your mortgage delinquency rates at the big Canadian banks. That doesn't tell you what's happening, for example, in the private lending space, in the mortgage, the mix space, the um mortgage investment corp space, right? That is all off the books.

[00:10:10]That's like your shadow shadow market.

[00:10:12]And that's where you're seeing again a lot of the delinquencies that are happening. That's why the MLS uh foreclosure listings in Vancouver are at all-time highs. And certainly, it seems logical to conclude that they should continue to move higher over the next one to two years uh given the weakness in housing, the the decline in equity.

[00:10:33]Uh and because what happens is, you know, delinquencies are like a lagging indicator. um you know it takes time for people to like you know fall behind on a mortgage payment and then go through the process of going through the court system and then getting foreclosed on.

[00:10:49]You know in BC that can be a roughly about a 15-month process from the first time that you miss a mortgage payment.

[00:10:55]So it's not a leading indicator. It's a lagging indicator. So I suspect that number should continue to point higher even if housing starts to turn around you know say 6 or 12 months from now.

[00:11:05]Um, and that number could come under further stress if you see the labor market continue to deteriorate as the data is currently showing. And it's not a strong labor market. It's a labor market that's kind of holding in uh but slowly starting to show signs of of concern. Again, that's particularly when you talk about people taking 27 weeks or longer to find a job. Um, you know, again, if you lose if you lose your job, um, you know, you can you continue to service your mortgage. If you can find a job, you know, 3, four, five, six weeks later, probably not the end of the world. You can catch up, get back on your mortgage payments. You know, if you lose your job and it takes you 30, 30 weeks to find a new one.

[00:11:49]You're going to be you could be behind on multiple multiple mortgage payments and an inability to get out of that. So that's something to sort of keep an eye on, which kind of like brings me home to like everything that we just talked about here. Yes, of course there's some positives in in the Canadian economy, particularly in the oil sector. Um, but when you look at all of this, like, you know, you look at some of the big developers, a lot of the big developers going bust, no new home sales, pre-construction market's totally dead.

[00:12:17]It's a huge part of the Canadian economy. It has been, at least for the last couple decades. You look at large companies like Whirlpool and furniture stores and that are telling you there's really like there's no demand. Uh and then you look at the jobs data and the jobs data is like well it doesn't really look that great either. And yet, you know, we're hearing more and more of these reports. You look at um OAS markets which basically bet on interest rate movements and they're still pricing in one to one and a half rate hikes from the Bank of Canada by the end of this year. And you're like, hm, really? I know that you have inflationary pressures, but you have inflationary pressures because you have a war in the Middle East where the straight of Hormuz is closed. And so by the Bank of Canada hiking interest rates, is that going to reopen the straight of Hormuz or is that going to like there's no there's no like, you know, if you compare what we are in today versus 2122, there's no excess demand. You know, we had inflationary pressures in 2122 because the government printed a ton of money, left interest rates at zero and the economy was so overstimulated, right? Everybody was having like record profits. There was just there was just so much demand in the system that like it obviously made sense to hike interest rates. Like you had to slow down demand.

[00:13:39]Like I would argue today you look at all the data, you look at the economy, you look how people are feeling. like there's nothing that suggests there's a lot of demand in the in the overall Canadian economy. If anything, there's like a a weakness in demand. And so you're like, well, why would the Bank of Canada raise rates? Again, um I think that's if you're a true believer that the Bank of Canada actually cares about their inflation targets. I would argue that it's very very subjective CPI. Is it even a real indicator? Is it massaged?

[00:14:11]Um I'm not convinced that if you're the Bank of Canada, you look at all the the the economic data and say, "Yeah, this is we should be adding, you know, one, two, three, four hikes from here. This looks actually more like an economy that arguably should be cutting." But again, you have the straight of Hormuz and the inflationary impacts of these uh supply shocks that are ultimately creating inflation. inflation again that the Bank of Canada cannot fix with rate hikes unlike they could have done in 2122 and was obvious listen home prices were going up 27% a year national house prices in 2021 went up 27% you had the Canadian population was growing by 1.2 two million people. Today it's growing at zero. Uh so again, much much different dynamics uh at play here today than they were during the bull market. But let's watch.

[00:15:09]Let's keep an eye on it. And as always, we'll see you next week.