Carney isn't bailing out developers
He is bailing out big banks
Last week, news in Canada blew up about the “bailout” of Vancouver developers sitting on unsold condos.
In my private circle, I’ve been telling people for months that the Canadian government would eventually step in to prop up real estate. My guess was sometime in 2027. I had no way of knowing exactly when.
Turns out it’s happening sooner than I thought.
Before we get to Vancouver, let’s rewind to a quieter announcement back in March. Because the “bailout” already started with a different government.
Ontario's 2,200 unit condo "bailout"
Back in March, Ontario’s Building Ontario Fund partnered with a private investor, High Art Capital, to launch a fund built to buy blocks of unsold GTA condos and convert them into rental housing. The target: 2,200 units, including roughly 550 designated as affordable.
Source: https://storeys.com/gta-rental-affordable-housing-initiative/
At the time, this barely made a ripple in the news cycle. The GTA was sitting on nearly 3,900 completed, unsold condo units at the end of 2025, more than double the year before and five times the level from 2023.
Carney "bailing out" Vancouver developers
Fast forward to last week. Prime Minister Mark Carney and BC Premier David Eby announced a plan to convert vacant condos in the Vancouver region into affordable, rent to own housing.
Source: https://www.cbc.ca/news/business/carney-vancouver-condos-affordable-housing-bailout-9.7247279
The number of units targeted? 2,200.
I find it almost comical. Carney copy and pasted Ontario’s exact playbook for Vancouver, right down to the unit count. Same number. Different province. Same underlying problem: developers sitting on completed inventory nobody wants to buy at the price they need to sell at.
Here’s the thing. While “bailing out developers” makes for a punchy headline, it’s not actually the real story.
The real bailout is happening somewhere else entirely.
Blanket appraisal: the big banks' tool to offload bad assets onto owners
To understand the real bailout, you need to understand something called a blanket appraisal.
A blanket appraisal lets a bank calculate your mortgage using the original purchase price you agreed to years ago, not the actual value of the unit today. For pre-construction condos, where buyers sign years before the building is even finished, that gap can be enormous.
Here’s the math, using a real world example from Sorbara Law:
Original purchase price: $600,000
Current appraisal price: $500,000With a blanket appraisal: Loan to value based on the original $600,000 price. Deposit required: $120,000.
Without a blanket appraisal: Loan to value based on the current $500,000 appraisal. Deposit required: $200,000, meaning the buyer needs an extra $80,000 in cash just to close.
See what happened there?
Without the blanket appraisal, the buyer either walks away or scrambles for $80,000 they may not have. With it, the deal closes. The bank clears out the construction loan the developer owes them. The developer gets paid. Everyone pretends the condo prices are still 2022.
Except the buyer is now holding a mortgage larger than what their unit is actually worth.
That’s not a bailout for the buyer. That’s the bank moving its risk off its own books and onto someone else’s shoulders, someone who often doesn’t fully understand what just happened.
Canada’s banking regulator, OSFI, has taken notice. In private meetings with major lenders, OSFI warned that this practice could breach the Bank Act’s 80 percent loan to value rule on uninsured mortgages once prices actually fall, which is exactly what’s been happening in the GTA and Metro Vancouver.
How the big banks get bailed out
Follow the money, not the headline.
Developers don’t build condos with all of their own cash. They build with construction loans, financed by many of the same big banks writing those blanket appraisal mortgages on the other side of the deal.
When a developer can’t sell enough units to pay off that construction loan, the bank has a problem. A big one. It shows up on their balance sheet, hit their earnings, and in turn they will reduce their capacity to lend.
Less lending, less business all around.
When that happens, the economy slows down rapidly.
Now here comes the government, helping to buy 2,200 unsold units in Ontario, then another 2,200 in Vancouver.
Where do you think that money actually goes?
It goes to the developer, who uses it to pay down the exact construction loan sitting on a bank’s books. The loan clears. The bank’s exposure disappears. Nobody has to explain to shareholders why a chunk of the loan portfolio just went sideways.
The developers are only the intermediaries.
The real bail out is for the big banks.
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
June 30, 2026
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