1 In 4 Canadians Plans To Invest In Real Estate

[00:00:00] Welcome to the Canadian Real Estate Investor, where host Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:13] Welcome back to another episode of the Canadian Real Estate Investor Podcast.

[00:00:17] Here on the podcast we cover all things you guessed it, Canadian Real Estate.

[00:00:22] We look at investing fundamentals, stories and lessons from industry titans and thought

[00:00:28] leaders how to make money in real estate and we also analyze macro economic trends

[00:00:33] and talk about the latest news and all of the reports on the Canadian market.

[00:00:40] We also have the occasional guest on as an expert in things that we are not experts in

[00:00:45] or can legally not talk in detail about things like accounting, law,

[00:00:51] partnership structures, being a billionaire. We have no idea what's that is like at least not yet.

[00:00:57] Not yet anyways. If you just found us and started listening, thank you. We hope you enjoy.

[00:01:03] My advice is go back and listen to all the episodes from the beginning. We have episodes that cover

[00:01:08] all the basic stuff like real estate investing terms that you need to know and the different types

[00:01:13] of mortgages how to buy a portfolio versus build a portfolio, how to pick a market.

[00:01:19] But we also have more complicated stuff. Like one of the more recent episodes we just did on

[00:01:24] how the mortgage bond market is affecting the housing market when we get deeper into the macro stuff.

[00:01:30] So a little bit of content for everybody.

[00:01:34] Yeah, I mean that's our goal is to make this kind of a universal Canadian real estate podcast.

[00:01:38] Keep it interesting for people of all ages, shapes and sizes. If you're a faithful listener,

[00:01:46] thank you. You've helped us grow this podcast which has changed our lives absolutely.

[00:01:51] It's now helping us change other people's lives as well. And if you like what you hear,

[00:01:56] please go and leave us a review. Yeah exactly. And not just like our friend artist Aaron did on

[00:02:03] Apple podcast she wrote insightful into the point five stars. These gentlemen know what they are

[00:02:08] talking about this podcast has been extremely insightful thought provoking and helpful in understanding

[00:02:15] the current Canadian landscape when it comes to real estate. Great job and keep up the good work.

[00:02:20] Well, thank you very much artist Aaron much appreciated. So Dan let's get into today's episode

[00:02:27] what are we talking about? So today we're going to talk about I think we'll start off with this

[00:02:33] report from a real estate group called Royal of Paige which sheds light on how many Canadians

[00:02:40] currently invest in real estate and how many plan to invest in real estate. Then we're going to look

[00:02:45] at the Canadian Real Estate Association better known as Cria and their market report and statistics.

[00:02:51] Yeah, I love it. Let's let's dive in. So we'll start with the highlights from the Royal of

[00:02:56] Paige report but before we do that Dan did you know because I believe at one point in your life you

[00:03:01] were at Royal of Paige weren't you? Yeah it was. Yeah. Did you know that they are a Canadian real estate

[00:03:09] franchiser so owned and operated here in Canada with more than 670 locations over 20,000

[00:03:15] realtors in Canada and the company was founded all the way back in 1913 in Toronto center of

[00:03:24] the universe here by a 26 year old named Albert Edward LaPage under the name of and I love this

[00:03:32] AE LaPage Bungalos Specialist. We're going to specialise with you. Would you

[00:03:38] tell yourself a duplex specialist, duplex daddy? I remember when we were going to make those T-shirts.

[00:03:44] Yeah, I was thinking about that being my branding actually. Bungalos is a good thing to be a

[00:03:49] specialist and I mean I guess that's all it took to differentiate before back in the day.

[00:03:52] It's a good thing he didn't keep it as that name to be fair so I appreciate the history less

[00:03:57] anyway so let's dive into some of the highlights from the report here. So more than one in four

[00:04:05] Canadians plan to purchase an investment property in the next five years according to this Royal of

[00:04:11] Paige report. So 51% of current investors and 23% of non-investors are considering buying an

[00:04:18] investment property before 2028. So do you I guess I can read these survey highlights and then you'll

[00:04:25] give me some. Yeah, so approximately 4.4 million Canadians currently own an investment property

[00:04:32] and all of them listen to this show. That's a joke. I would just say a million downloads actually

[00:04:37] so maybe when we hit 4.4 million downloads we could we could imagine that 100% of investors

[00:04:44] listen to our show 26% of all Canadians say that they are likely to buy an investment property

[00:04:50] within the next five years. One third of Canadian real estate investors so 32% just shy of one third

[00:04:59] own two or more properties. So that would be kind of your power users, your bigger investors.

[00:05:06] Younger investors those aged 18 to 34 are more likely to own more than one investment property

[00:05:13] compared to their older counterparts. That's an interesting one eh? Yeah you know as a 34 year old I

[00:05:19] still really love that I'm grouped into that younger category of 18 to 34 because me and all the 18

[00:05:25] year olds just have so much in common these days. Yeah, you're basically a Gen Z or that's what it is right

[00:05:31] bus and bus and no cap on that floppy top pair. You got a purse like that yeah. No but this one

[00:05:38] this one is really interesting and we get more into it later. So let's pause the conversation on

[00:05:43] that right now because my next piece right here is all about younger Canadians but Dan hit me with

[00:05:48] the rest of the the survey highlights here. Sure, nearly one third of investors in Canada 31%

[00:05:55] have considered selling one or more of their investment properties due to higher lending rates.

[00:06:01] 20% of investors in the greater Montreal area say they are likely to sell one or more of

[00:06:06] their investment properties within the next two years this percentage rises to 24% and 28%

[00:06:13] in the greater regions of Toronto and Vancouver. Well, well, I wonder why people in Toronto and

[00:06:18] Vancouver are feeling more stressed than people in greater Montreal that's because everything is

[00:06:24] seemingly double the cost in Vancouver Toronto than everywhere else. Now going back to that

[00:06:29] interesting piece about the younger investors, the next piece of the report here goes on to say

[00:06:35] that young Canadians are actually more inclined than ever to invest. So although a lot of us and

[00:06:43] I can say that because I fit into that just fit into that 18 to 34 category, although many of us

[00:06:49] young Canadians are struggling to get our foot into the property ladder the youngest group of

[00:06:55] real estate investors those 18 to 34 year olds are most likely to have more than one residential

[00:07:02] property compared to their older counterparts 44% of the youngest investor cohort own two or

[00:07:10] more investment properties. So almost half it's crazy and that's significantly higher than those

[00:07:17] aged 35 to 24 which in about eight months I will be part of that next cohort and those 55 are older

[00:07:26] which is only 25% 67% of younger investors. Again, that's the 18 to 34 year olds own their

[00:07:33] primary residence compared to 88 and 95% that are in that 35 to 54 or 55 and older. Now that makes

[00:07:43] a lot of sense you'd expect those 35 to 55 plus people that likely have families or have just moved

[00:07:53] out of the city maybe want more space and primary residence was important to them or maybe they've

[00:07:57] done the smart thing and bought a bunch of cashful in real estate and then invested. So Phil Sober

[00:08:03] the president and CEO Royal Page was quoted saying we know that the value of home ownership in Canada

[00:08:10] is strong among Canadians it's clear that possessing real estate remains a desirable means for

[00:08:15] building wealth over time many choose to invest in real estate not only as a way of generating income

[00:08:21] and reaping the value the benefits of value appreciation but to provide an opening into the market

[00:08:27] for future generations of their family. Now Dan remember we actually both made Instagram videos about

[00:08:33] it the number one way to ensure that you are going to be a homeowner in Canada is if your parents

[00:08:39] are homeowners so and that believe was a same HCR stats Canada report where that data comes from.

[00:08:46] Yeah I was a statistics candidate reported believe which was just showing the impact of

[00:08:51] the likelihood that you were to own real estate if your parents own real estate. Exactly so all

[00:08:58] of these 18 to 34 year olds are figuring hey I better buy so that my kids are part of that next

[00:09:05] statistic when that's Canada ret does that yeah well I think if you know if you're just assuming

[00:09:09] like time not even not even appreciation but just purely time like if you're paying down a mortgage

[00:09:16] when you have equity and I guess if even if the property grows at inflation you'd also have equity

[00:09:21] then so the likelihood that people are able to tap that equity to now purchase help their

[00:09:28] children purchase or you know purchase an investment property or whatever it is increases right because

[00:09:32] like the more equity that you have the more money you have the more likely you are to and there's

[00:09:36] another stat that was that was recently released I got to look it up but they tear in that I guess

[00:09:42] it is like the land registry system puts out the percentage of multi property owners that said

[00:09:47] like what percentage of people are owned by investors and he was like just shy of 30% of

[00:09:52] properties in the GT I think it was a GT air Ontario. I think it was Ontario yeah because I

[00:09:57] I just was looking for that stat the other day Phil Soap or President CEO Royale Page goes on to

[00:10:04] say that despite the hurdles of low home supply and increased lending rates young people are more

[00:10:11] inclined than ever to make real estate investing a part of their financial plan for the future in

[00:10:16] fact survey results tell us that many of them are actually prioritizing investment properties

[00:10:22] over owning their own primary residence now that sounds very familiar to me because that is exactly

[00:10:28] what I've decided to do and contrary to popular belief I think it's becoming a more and more common

[00:10:36] consideration I recently met up with an old mentor of mine he came by my apartment before we went

[00:10:41] out to lunch and he was like oh great place you know did you buy it and I said how no I only buy

[00:10:46] properties right now that that cash flow because if I bought this place you know there goes a lot

[00:10:51] of my cash reserves so great to see that more people are making a leap into investing here. Now Dan

[00:10:59] I know you just pulled something up but you're gonna tell me about what types of property what asset

[00:11:04] classes a lot of these investors are buying yeah yeah just the stat that we were just mentioning

[00:11:09] investors own 23.7% of Ontario homes the report says it's funny I was just reading the

[00:11:15] the Reddit thread it says like corporations should not own homes it's that that simple it's like

[00:11:19] well like a corporation like in most cases is just is just a person who started a corporate right

[00:11:26] like yeah it's not not every corporation is black rock right yeah yeah but I mean like this is

[00:11:32] before we move on because I this is one of those things that's really I found to be a little bit

[00:11:38] confusing it's like not everyone wants to own a house like you just mentioned this too you know

[00:11:43] you don't want to own the house that you live in you want to you want to rent it and so who else

[00:11:47] is gonna like you know who else is gonna rent these have like I think people who hate landlords

[00:11:53] don't realize that they also might hate tenants right like for being part of the system it's like how

[00:11:58] dare you rent from a corporate landlord I just the things kind of it's always been confusing to

[00:12:03] me because I think the logic doesn't necessarily check out 100% but anyway I digress as this tradition

[00:12:11] the report goes on to say across Canada single-family detach homes are the most popular type of

[00:12:15] investment property with 44% of real estate owners or real estate investors in owning this type of

[00:12:20] home then maybe that's fair context when people are saying corporations should not own homes it's

[00:12:26] that simple I'm reading this going back to this reddit comment maybe it does make more sense for

[00:12:31] corporations to own multi-family dwellings not single-family homes but then it still begs a question

[00:12:37] well what their tenants not allowed to have single-family homes then right so anyway

[00:12:42] condominiums are the second most popular type of investment 37% of real estate investors would

[00:12:48] own that type followed by town homes 11% according to survey Canadian real estate investors report

[00:12:54] that the opportunity for property value appreciation over the long term 69% that was the primary

[00:13:01] driving factor which is I mean we I think we knew that it's just interesting to see it represent

[00:13:05] data yeah yeah like wrong guys that I was expecting to be the main leading way yeah positive

[00:13:11] cash loan a monthly basis was the second highest incentive which is 54% of response now we're talking

[00:13:17] and low maintenance costs are variable expenses 44% ranked as the top three priorities when buying

[00:13:22] their residential investment properties 44% of real estate investors say their investment property

[00:13:28] is located in a different town or city than where they currently live which is interesting

[00:13:32] me if you listen to the show you know that we're proponents of buy or investing in markets other than

[00:13:37] your own simply because in a lot of cases like Nick's a really good example Nick's landlord

[00:13:44] is probably losing money and you know because the the the company she is not a listener to the show

[00:13:50] but like realistically you know if somebody's owning a downtown condo at current interest rates and

[00:13:58] prices and condo fees the chances of them being cash flow positive at current rents in the city of Toronto

[00:14:03] are not super high and so let that be somebody else's problem Nick can get close to the action he's

[00:14:10] got a sweet unit you know can can walk to pretty much everything and he owns properties in other

[00:14:16] municipalities where he actually makes money so be like Nick there's a there's a next you have a

[00:14:22] course on how to be like you it's called the Nick the dictionary course I that'll be after after

[00:14:29] realist that's that's the next course that I'm that should be the next session no room in it yeah

[00:14:35] unfortunately there's no room in it for you but what's that meme like it's just like be like Nick

[00:14:40] that's it anyway access to a post-secondary educational institution is also a major factor so

[00:14:47] obviously potentially student rental student rentals yeah with 47% of investors reporting

[00:14:53] that proximity to a major Canadian University or college motivated their decision to buy in a

[00:14:58] particular location so I would posit to the reddit thread people who say that investors shouldn't

[00:15:03] own homes where we these students might live in that in their version of reality that would just

[00:15:08] me my question I would love for somebody to actually answer some of these questions for me maybe

[00:15:12] we can have a debate I don't know if it would fit very well on this this show but it would fit

[00:15:17] very well somewhere I'll tell you that much for free because it would be very entertaining

[00:15:22] well we'll work that into one of the live events we we have sounds like a process waiting

[00:15:26] to happen yes seriously there's one last piece I want to touch on it and I do want to go back

[00:15:31] and touch on a few of these points because Dan you and I make up and fit into some of these

[00:15:36] statistics as young people and as investors and then just really interesting on the on the student

[00:15:42] you know almost 50% of investors are close to schools while that makes a lot of sense because

[00:15:48] you know we know what happened with the ridiculous amount of student rental and and you know

[00:15:55] increases into all the different colleges so let's put that in a hole well I just get this last

[00:16:00] piece by the way then we can we can close that that conversation before moving on to the

[00:16:04] Korea stats here the increased borrowing cost has obviously had a significant impact on

[00:16:11] a particular group of people and those are variable mortgage holders in Canada specifically

[00:16:19] over the past year year and a half and if those investment properties were on that variable rate

[00:16:25] then you are unfortunately definitely feeling the effects even if you're lucky and you're

[00:16:30] property is still cash flowing it is definitely cash flowing a hell of a lot less than it did at the

[00:16:35] you know one and two percent range so increased lending rates have caused nearly one third of investors

[00:16:41] 31% to be exact to consider selling at least one of their properties if not more now investors in

[00:16:49] that my age group the 18 to 34 year olds and Dan years as well are more likely to weigh the decision

[00:16:56] of selling one of their investment properties one of their lesser performing investment properties

[00:17:01] and we're up at 54% and that's an interesting takeaway because to me that means you know there's

[00:17:07] a lot of people thinking hey if it's not working I'm gonna sell it when we just talked about this in

[00:17:11] the Warren Buffett episode where we're like if you know if you're in a sinking ship don't try to

[00:17:15] spend your time with a cup you know getting all the water out right it might be time to let

[00:17:19] that ship sink and take your energy to to another ship ship's being houses investment properties in

[00:17:25] this case so you know what somebody asks us a really good question on this in our in our emails

[00:17:30] we love getting good questions in our emails by the way so keep them coming but I'm just gonna

[00:17:35] answer it on the show now because the question was like you you guys mentioned that investors who are

[00:17:41] out of loss should consider selling or I think it said that that it should sell I would never actually

[00:17:45] give the blanket advice that somebody should sell I would need to understand their no their

[00:17:49] individual situation so just let's just put that there but but then he was saying further in the

[00:17:53] question that maybe you can you can look up this email too so we can mention the person's name

[00:17:59] so that they know that we're addressing them at the end but I think they'll know from sharing

[00:18:02] the question but it was like but you're also saying that developer that we need to development charges

[00:18:08] to be reduced for developers to be able to build housing and it's like why wouldn't you tell them

[00:18:13] that they need to sell and I was like you know this is a great question right because their

[00:18:17] developers are left with an unviable investment here as well as investors and my my answer to the

[00:18:23] question would be I would actually tell developers who are unviable to sell except most of them can't

[00:18:28] because the the nature of development depends on them creating that value creating those units in

[00:18:36] order to liquidate the loan so they can't just sell because they probably owe too much money and

[00:18:43] they would be in a negative equity position not like well maybe now because of property values

[00:18:49] have come down but but just based on the pure nature because you have to you have to always give

[00:18:55] you a quick supply chain on development by land you entitle it so you go get like zoning by a lot

[00:19:00] of amendment site plan approval etc now it's worth more because the output of it is improved and so

[00:19:04] you borrow against part of that that value that you've created and you also collect deposits from

[00:19:09] potential purchasers and ensure those deposits and and then go and get construction financing

[00:19:15] and in order to do that you need people to buy those units and now you have an obligation to deliver

[00:19:21] those units and so a developer is a little bit different because if they just sold or quit or whatever

[00:19:26] then it would be a failure to create units but also there would also be collateral damage to all of

[00:19:30] those potential purchasers now to return to the original question because it is a great question

[00:19:35] I actually don't think that the best option for anyone for everyone is to sell a money losing

[00:19:41] property I think it is so my thing is don't get stuck with a bad asset it's always a bad time

[00:19:47] to own a bad asset and most people are thinking oh I'm in acquisition mode I said this in the course

[00:19:52] recently the next couple of modules that I'm going to do are on strategy and maximization of your

[00:20:00] existing portfolio and so if you own a cash negative single family house in the greater Toronto area

[00:20:07] if you add a unit to that you can probably increase the rents on the upper story and increase

[00:20:13] the rents on the on the lower story and increase the value of the property all at the same time

[00:20:18] if you had a detached ADU as an example which is going to be a huge theme that you're going to hear

[00:20:23] on this show I think for the next 12 to 24 months because it is such a huge value creation opportunity

[00:20:30] that's very almost instantaneous it's becoming more financeable as you know from some of the

[00:20:33] conversations that we've been mentioning that we've been having on the show that's another huge

[00:20:37] opportunity for you to create more revenue and build more equity into your property so my advice

[00:20:43] isn't always to sell a property that's losing money it's my first advice would be if the ship

[00:20:50] that Nick is describing can be fixed like if you can plug the hole or you know plug the hole

[00:20:55] and bail it out that would be a better option than trying to swim to shore right and jumping ship

[00:21:01] but if you can't do that and it's it's not a hard exercise to actually run the numbers on cost

[00:21:06] benefit am I going to get out of trouble here no okay now I know the best option is to

[00:21:13] is to get rid of this thing can I can I bail myself out here yes okay that's what I'm going to do

[00:21:18] right it's just a fork in the road you run the numbers on each situation and you do the better

[00:21:22] option cost benefit analysis not rocket science yeah no really really well said Dan I think it

[00:21:27] goes back to show that just you know there's no real good blanket statement in in real estate right

[00:21:34] hey it's always a good time to buy it so it was a good time to sell both incorrect you know real

[00:21:38] state it goes goes up incorrect what what it really comes down to is is everything is very nuanced

[00:21:45] and subjective to that person their portfolio their goals their risk tolerance and Moran

[00:21:52] and that's one of the things that again you know you mentioned the course that's one of the things

[00:21:55] we've been doing in the course is almost portfolio audits where we'll go literally building by building

[00:22:01] asset by asset and be like what's this performing at what are your pain points here how can you make

[00:22:05] this one better so yeah well said completely agree you think it let's let's keep moving here and

[00:22:13] yeah let's do that maybe maybe get to the Christmas that's yeah yeah so you know based off of

[00:22:18] that conversation and a lot of other conversations it's pretty obvious that the Canadian real estate

[00:22:23] market stands as one of the cornerstones of Canada's economy right we've talked about a numerous times

[00:22:29] how much it makes up of GDP how much I mean even just this article right like the Rua La Pais report

[00:22:36] one of four Canadians won in so it reflects not only the economic conditions but also societal shifts

[00:22:43] and demographic patterns so we can learn a lot by about Canadians by studying how they interact

[00:22:49] with real estate yeah so I had mentioned in this article that so this is an article that I wrote for

[00:22:56] a real estate magazine by the way if you want to read it there's some charts and stuff like that but

[00:23:01] I put that I do this on a monthly basis so you Canadian real estate stat

[00:23:04] create stats and also do Toronto real estate board stats which I think we're going to start rolling

[00:23:08] those back in a more regular episodes both Toronto and and Korea because we've all we've found kind

[00:23:13] of found that Toronto certainly seems to serve as a pretty good leading indicator of Canary and the

[00:23:17] coal mine on what's gonna happen on national level probably because it's 60% of the national data set

[00:23:22] but you know also it does seem to lead like you see capital contraction here and now all of a sudden

[00:23:26] Torontoians are broke so they're no longer going and playing around and having bidding wars for fun

[00:23:31] in Halifax or whatever you know so anyway I was surprised by the resilience that we've seen

[00:23:37] against the various various challenges including a looming recession record interest rate hikes and

[00:23:41] and an economic stagnation almost reminiscent of Japan's lost decade which you know I mean

[00:23:47] we're looking at almost 10 years of negative economic progress now at this point where our GDP per

[00:23:53] capita is now at 2016 levels and it can I just put out a chart on that a lot of people were angry

[00:23:58] in the comments but but basically the idea is I mean if your GDP per capita hasn't grown in

[00:24:06] eight years you're almost at a lost decade right so anyway unforeseen strength against the

[00:24:11] recessionary pressures house prices in Canada were unchanged since last month but they're still

[00:24:17] down 2.3% since three months ago and down 4.6% since six months ago when looking at a more long-term

[00:24:23] context the house price index tells us that we are up 1.2% in a year so you're up a little bit and

[00:24:30] just like if that's worth noting that that's below inflation and so on a real basis adjusted

[00:24:36] for inflation real house prices didn't actually grow right they actually fell so you're losing money

[00:24:41] to inflation on on the real estate asset if you're if your asset went up 1.2% because it's a

[00:24:47] not outpacing inflation they're up 13% since three years ago when looking at house prices in the

[00:24:53] shorter term it's understandable why market participants have confusion about the market the average

[00:24:58] house prices trending up on a month over month basis yet the MLS HPI or house price index benchmark

[00:25:04] is trending down and so this is there's this book that I like to reference a lot it's called how

[00:25:09] to lie with statistics but you can you like you could literally have a headline this month that says

[00:25:14] HPI house prices are going up house price indexes go or sorry house price indexes going down and

[00:25:19] you could say oh that house prices are falling or you could also say the average house prices going

[00:25:23] up and so this is where data is in the interpret problem interpretation of data is so important

[00:25:28] in my perspective because it real estate's tough as a legitimate principal agent problem because

[00:25:34] agents where the people who who are telling you this information in a lot of cases are also

[00:25:42] invested in making a transaction take place because their income depends on it and so you really

[00:25:46] do have to be careful with this information so anyway on top of that kriya's headline says that

[00:25:51] house prices stopped falling but I looked at the data that they put out and 30 markets saw a decrease

[00:25:56] in HPI value in Canada while 24 markets saw a monthly increase in HPI and two markets remained

[00:26:02] unchanged so more than half of the markets fell in value even though the headlines on their website

[00:26:07] suggest Canadian house prices see a sudden end to declines in advance of the spring market

[00:26:13] typically or while the declines may have stopped I don't know if this is necessarily a good

[00:26:18] signal because usually you would see house prices growing steadily in the spring with prices

[00:26:24] growing from January to May all five months like in a pretty linear fashion in a typical year

[00:26:31] yeah yeah exactly then and you know it's funny because despite this looming recession

[00:26:37] and you know the we might be in a right now just not admitting it but despite the looming recession

[00:26:42] area pressures the Canadian real estate market once again has defied expectations and actually

[00:26:49] shows signs of stability heading into the spring market here to be fair I did write this before

[00:26:55] they changed the the inner or not international students I guess it is international students but

[00:27:02] all the non-permanent residence rules and I think that that recoil of reduced now reducing

[00:27:08] the population like they're actually going to see so currently non-permanent residence are 6.2

[00:27:13] percent of the Canadian population they want to get that number down to 5 percent of the population

[00:27:17] which means that we're actually going to need to see a net outflow of like 400,000 non-permanent

[00:27:21] residents which will have a significant economic impact from my perspective I and they so population

[00:27:27] growth was 1.2 million last year their their their target is going to be to try and keep it at like

[00:27:31] 400,000 for the next couple of years after that for three years you have to you have to elect them

[00:27:36] if you want them to do it the two years after that but anyway house prices in Canada were unchanged

[00:27:45] since last month but we're down 2.3 percent since three months ago and 4.6 percent I think I mentioned

[00:27:50] all this one actually there's a bunch of it here let's get below the the aggregate

[00:27:55] MLSHPI charts and and actually go through the biggest monthly increases in house prices so but

[00:28:01] so this is a list of the biggest people want to hear anyway yeah yeah this is just this list is

[00:28:06] good because it allows us to go kind of code more coast to coast right so the the biggest monthly

[00:28:09] increases in house prices measured by the house price index are drumroll please

[00:28:15] simko and district 4.3 percent so that's not simko county by the way that's simko and district

[00:28:21] which is simko city outside of Hamilton like southwestern Ontario Quebec CMA up 3.8 percent

[00:28:28] Regina and Saskatoon up both 2.5 percent and Winnipeg up 1.5 percent the prairie is just

[00:28:36] absolutely throwing down on these month-to-month price growth I don't I don't even want to like

[00:28:41] I don't even want to read 3.4.5 because I don't want to let everyone know about you know our next

[00:28:46] moves here which has become you know yeah I know prairie kings over there ideally because uh

[00:28:52] it's I mean it's great to see and you know the men lie women lie numbers don't

[00:28:57] prairie's don't well the age and all right there prairies do lie actually because they're very flat

[00:29:02] I guess so they're a lot they lie I see what you did there yeah no it's fascinating and it's so

[00:29:08] funny because we've been doing the kreas stats now on the show for going on two years here Dan and

[00:29:15] you know there was a point where we were looking at some of these monthly increases and you know

[00:29:20] the number 5 was you know mid-high double digits in the teens and it's nice to see things kind

[00:29:27] of come back to a reasonable level here so that is the five biggest increases let's look at the

[00:29:34] five Ontario real estate markets that saw the biggest drop in house prices it's not even just

[00:29:39] that we're only looking at Ontario markets all of the biggest drops were the Ontario that's why

[00:29:45] that is taking this isn't by design this is uh this is this is by the data so we're not excluding

[00:29:52] anywhere else in the country and this is something this is a list you don't want to be on all right so

[00:29:56] feel uh should feel happy about that so again the five Ontario markets that saw the biggest drop

[00:30:02] number one woodstock ingress sold down three and a half percent Windsor Essex down 2.3 percent

[00:30:10] Niagara region down 1.7 percent north bay down 1.7 and Cambridge down 1.7 percent as well

[00:30:19] yeah north bay is an interesting one like um I'm sure a lot of people have heard of this

[00:30:23] these famous Canadian investors who owned a bunch of stuff out there and they I was reading the

[00:30:28] KSV filings and they actually like can't sell off all of those assets in one fell swoop because

[00:30:33] they owned so much real estate that it would it would draw down the market which just was mind

[00:30:39] blowing from my perspective mind to own so much that you could accidentally pump and double market

[00:30:44] yeah really it really is crazy on that note I have gotten some requests that uh that we have

[00:30:51] certain individuals that were involved in certain things that were made the media well I've had

[00:30:56] requests that we get them on here and kind of do a yeah we'll try we should a investigative journalist

[00:31:00] uh approach to know softball questions actually happen there no softball questions I mean to be

[00:31:06] fair no deserved softball questions there I think there's some explaining to do but um yeah

[00:31:11] and we've got a great platform for it and uh and you know certain parties have reached out and

[00:31:15] and said they would be interested in doing that so stay tuned for some true crime all right

[00:31:20] yeah well no crime we can't but uh but they were actually true uh yeah true I don't even know it

[00:31:25] was just uh true just some wild west stuff on all okay so on a provincial basis the biggest annual

[00:31:32] increases in average price can be seen in Alberta new bronzewick and newfoundland not coincidentally

[00:31:38] these markets have also been some of the biggest recipients of Ontario residents fleeing the province

[00:31:45] from more affordable markets so again that's if you're looking at an annual increase so one year the

[00:31:50] other ones that we're listing were just a monthly basis which honestly like I don't really actually

[00:31:54] recommend using except like if you're in current acquisition mode and you're like oh wow Windsor

[00:31:59] Essex just blew off by two and two and a half percent maybe there's some distress deals over there

[00:32:03] I'm gonna go and start knocking on some doors or whatever but I really think like more of when

[00:32:07] most people think about price growth they think went on an annual basis because you're not like

[00:32:11] day trading real estate unless you're nickel this is a professional real estate day trader

[00:32:16] but yeah so those are the course of course coming out on that yeah exactly yeah so I mean everything

[00:32:21] you're talking about Dan has uh has obviously a lot to do with record population growth I mean it

[00:32:25] played a pivotal role in bolstering now housing demand and underpinny market activity even

[00:32:32] admits all the economic headwinds that we've experienced in the last few years the growth

[00:32:39] and inter-revincial migration patterns have contributed to sustained housing demand countering

[00:32:45] downward pressure that typically accompany what we're likely and right now a recession yeah and the

[00:32:53] the response to the bank of can is unprecedented series of interest rate hikes you know obviously

[00:32:58] they posed a significant challenge for the real estate market which is traditionally sensitive

[00:33:03] to fluctuations in borrowing costs we've been documenting this from the start like literally

[00:33:07] we started this show when they're when the rate hikes just started if not right before like we

[00:33:12] pretty much said hey right before this is how it's going to play out and man we were like bang on

[00:33:17] honestly which was kind of crazy we've been right about a couple things yeah it's a nice feeling

[00:33:22] to be like because we I remember I put the go back and listen to episode two and and understand that

[00:33:27] it took place in like well look when it came out was it like it was may of that year I think but

[00:33:31] it was like you know at 2022 price drops came at price drops took place you know kind of follow

[00:33:37] the 90s curve so anyway I mean we saw a lot of a lot of suffering as a result of the interest rate

[00:33:43] hikes but the market has been resilient since then especially an entry level product like you're

[00:33:47] hearing about bidding wars houses anything like under a million bucks where CMHC insured is on

[00:33:54] fire right now and we just did an episode about this how the government of Canada is basically

[00:33:59] trying to prop up the housing market by buying issuing 50% more bonds and buying all of those bonds

[00:34:05] are buying buying 50% of the supply of total bonds which is all money that's going to go to either

[00:34:10] MLI select CMHC insured rental housing construction because those are insured through mortgage bonds or

[00:34:18] it's going to go to first time home buyers or owner occupied home buyers who are using high

[00:34:22] loan to value insured mortgages so anybody with less than 20% down payment is going to have to use

[00:34:27] an insured mortgage they're going to also benefit from the liquidity that's being added by the

[00:34:31] government here and so that's why you're seeing that resilience from my perspective in the entry level

[00:34:35] market and also banks like banks have kind of started stepping back a little bit on product

[00:34:41] that is has risk associated with it and to be real if your loans are insured they have no risk

[00:34:48] so if you're bank why would you not take all of it I still got a generator turn let's just start

[00:34:53] going to give money to first time home buyers and so first time home buyers owner occupied if you're

[00:34:58] buying with the CMHC insured mortgage give yourself a pat on the back you are single handedly

[00:35:02] propping up the Canadian real estate market right now thank you for your efforts yeah I mean

[00:35:11] funny when you put it that way Dan economic stagnation and its impact on housing this is

[00:35:16] what we're gonna talk about Canada's GDP per capita stagnation Dan mentioned if you have a

[00:35:21] year of us on Instagram at Daniel foe at my buddy Nick we've really been putting out a lot of really

[00:35:26] cool interactive graphics recently and this one which is at over 400,000 views and I think 10,000

[00:35:33] shares and many many interesting comments in there really sheds light on on what's happening and Dan

[00:35:41] has some some great explanations as to why GDP per capita really does reflect standard living so

[00:35:48] you know Dan comparison here to the reminiscent of Japan's lost decade now Japan's got a very

[00:35:53] interesting housing market so as a side as an aside here I did find this amazing paper on the

[00:35:59] Japanese housing market and kind of comparing it to Canada a little bit so likely we'll have at

[00:36:04] least an episode or a segment of an episode on that in the coming weeks so stay tuned for that now

[00:36:09] despite nominal economic growth when adjusted for population GDP per capita has declined all the

[00:36:17] way back to 2016 levels this is where we're talking about that lost decade raising concerns about

[00:36:23] long-term economic prospects and affordability changes and guess who's likely going to be affected

[00:36:28] most here it's probably gonna be the 18 to 34 year olds that are trying to make their way through

[00:36:34] economy now another little story here I just listened to this really great New York Times podcast

[00:36:41] episode called it sucks to be 33 and it really showed how people born in 90 and 91 make up the biggest

[00:36:48] portion of the population in in North America right now like we are the big we are the next biggest

[00:36:55] generation just like the baby boomers were so there is essentially a lot of us competing with one

[00:37:01] another to do things like get into the housing market start families and they they made this really

[00:37:08] great analogy of all of us trying to put on a sweater that's a little too tight now I don't know

[00:37:14] about you guys but I've definitely been actually so much such a bad feeling man like when sweaters

[00:37:19] shrink it's over sweaters have to be yeah I mean like your sleeves are little up I don't know you

[00:37:24] know if you know you might have a little bit of a gut hanging out underneath and just you know

[00:37:28] you can't raise your arms above your head no no standing ovation or jumping up because

[00:37:33] it'll expose your stomach and it's just not a good feeling and that's kind of where a lot of

[00:37:37] the where a lot of us that 18 to 34 cohort is going to find ourselves over the next decade so

[00:37:44] Dan you've got a really interesting chart here before we kind of wrap things up under

[00:37:48] this quick and then I'm gonna let you wrap up because I'm having a bladder emergency so I'm

[00:37:51] gonna step out of the out of the digital studio here so this is a chart from Ben Rabidoo on Twitter

[00:37:58] prices nationally remain 14% below peak which is minus 22% in real terms again real being adjusted

[00:38:03] for inflation Alberta Saskatchewan and Newfoundland are still at record highs which is cool and crazy

[00:38:09] so if you look at Canada 14% BC down about just shy of 8% Alberta Saskatchewan all still

[00:38:16] fine Manitoba down about 5% from total Ontario down almost 18% off peak crazy crazy crazy if you

[00:38:23] think off the peak there Quebec down just slightly off peak minus 3% new bronzewick just under

[00:38:29] maybe 1% Nova Scotia down about 4% and PI down about 2% so again just context if you're still thinking

[00:38:36] like oh stuff's overpriced it was far more overpriced before so like we're starting to see some good

[00:38:41] deals happen and some distress take a happen as a as a result of this this change yeah for sure

[00:38:47] and and just to just to clarify that Ontario is 18% off but in real terms it's almost it's over 25

[00:38:55] it's 26% so just to wrap things up here the current state of the Canadian real estate market calls for

[00:39:03] cautious optimism now that should be tempered by awareness of underlying challenges so well the

[00:39:10] market has demonstrated resilience against recessionary pressures record interest rate hikes

[00:39:17] economics and get stagnation vulnerabilities remain affordability concerns persist

[00:39:24] particularly in major urban centers like we just discussed in there as a need for policy makers

[00:39:29] and industry stakeholders to address these issues proactively now more than ever the Canadian

[00:39:36] real estate markets resilience against a backdrop of economic uncertainty as well surprising and

[00:39:41] no worthy factors such as record population growth adaptability to those interest rate hikes

[00:39:49] and demographic shifts have contributed to this unexpected strength and resilience

[00:39:54] however challenges remain and again those are affordability economic stagnation and more

[00:40:01] and as we navigate these uncertain waters careful careful monitoring of market indicators

[00:40:08] and strategic policy interventions will be essential to ensure the long-term health

[00:40:14] and sustainability of candidates real estate sector while that author likes to get a little

[00:40:19] worthy at the end there ain't Dan yeah I'd never heard of that guy but uh good analysis for sure

[00:40:25] great analysis another awesome article written by uh by our very own Daniel foge so that was

[00:40:32] one in four Canadians want to buy an investment property great report by Royal Page

[00:40:37] the bungalow specialist over there um over a hundred years ago and uh and then just our

[00:40:43] outlining of kreas stats market updates etc. Any final words Dan? Oh not really make sure you get

[00:40:50] out to a meetup Nick and I are actually going to be doing it I think we're doing a contest I'm

[00:40:54] I'm trying to get more people to come to my so we're gonna like launch these meetups our goal is

[00:40:59] to eventually as we start adding more and more meetups to do this for everyone so like you know if

[00:41:03] you're if you're somebody wants a host of meetup we'll connect you with our events manager

[00:41:07] and um you know if you're come on as a as a partner on a one-year contract then we'll come

[00:41:12] out and launch it for you and you know help build the audience that seem to work really well for

[00:41:16] Calgary and Edmonton stuff like that those are the two biggest meetups now even bigger than next

[00:41:22] meetup in Toronto so what we're gonna do is I'm gonna go to Sudbury and next we're gonna go to Windsor

[00:41:27] I think this is a goal right this what we're gonna do on April 9th yeah oh yeah and all of you who

[00:41:31] are listening are gonna go to whatever meetup is in your city but uh and we're gonna see who gets

[00:41:37] more people so far you're absolutely crushing me by the way like Windsor has so many people signed

[00:41:40] up so Sudbury please yeah don't make me look bad and uh and and let's go out and everybody come

[00:41:47] and hang out and talk about real estate investing and then yeah we'll let us know if you want us to

[00:41:52] come to your city and launch a monthly meetup so these are monthly meetups they take place on the first

[00:41:56] Tuesday of every single month second second oh yeah I don't know why I said that wrong

[00:42:00] the second Tuesday of every single month thank you Nick sorry folks that's why I haven't been

[00:42:04] any meetup so they've been going the wrong day I was wondering why there was nobody there yeah so

[00:42:10] and you just go to meetup.com or the link in the show notes you'll see a meetup.com link in the

[00:42:14] show notes and uh just find your your city if there isn't one in your city give us a shout we want

[00:42:20] to have one in every major market in Canada uh we need partners to do that often realtors

[00:42:26] mortgage brokers we have an awesome national partner who we're gonna be announcing very very very

[00:42:30] shortly they're gonna be we're kind of rolling out a pilot on a on a couple of our local events

[00:42:36] are there ads running in not yet okay yes we can and it's super secret but super exciting very

[00:42:41] very exciting perfect fit for us and for our audience so I'll leave it at that I've already

[00:42:46] been rambling and I've left oh leave it on a high note with a little bit of a teaser there

[00:42:50] love it thanks so much for listening everybody we'll see on the next one

[00:42:54] the Canadian real estate investor podcast is for entertainment purposes only and it is not

[00:43:00] financial advice nick hill is a mortgage agent with premier mortgage center and a partner in the

[00:43:06] GNH mortgage group license number one zero three one seven agent license m two one zero zero four zero

[00:43:15] three seven dino foes is a real estate broker licensed with rare real estate a member of the

[00:43:22] Canadian Real Estate Association the Toronto Real Estate Board and the Ontario Real Estate Association