Are Construction Costs Killing Real Estate Investing ?

[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] My name is Daniel Foch, I'm a real estate broker in the Greater Toronto area.

[00:00:21] My name is Nick Hill, I am a mortgage agent and a real estate investor working with and

[00:00:27] helping investors and developers across the country.

[00:00:32] And in this last week, I guess, typically first, sorry, second Tuesday of every month,

[00:00:39] and last week we had events or meetups which they're definitely growing in popularity.

[00:00:45] They were well attended.

[00:00:46] The Vancouver ones started again with a new host.

[00:00:50] They were awesome.

[00:00:52] We had Toronto, which I was at.

[00:00:54] Nick was absent so I hosted Toronto which is great.

[00:00:56] It was great to get on meet a bunch of you.

[00:00:59] I've been to one of these meetups since the Calgary ones.

[00:01:03] And successful meetups coast to coast, so I've heard.

[00:01:06] And we do have some really exciting news coming soon on the meetups.

[00:01:11] So make sure you get out, check those out, support your local meetup host and go meet some

[00:01:18] fellow real estate investors and listeners to this show.

[00:01:23] Check out the link in the show notes to find a near up.

[00:01:26] A meetup near you, not a near up meets you.

[00:01:30] That sounds fun as well though.

[00:01:31] So new thing.

[00:01:32] Yeah, stay tuned for more exciting news on that.

[00:01:35] Not everyone's doing it.

[00:01:37] Not a meet or off.

[00:01:38] So you know we like to read flattering reviews on this show.

[00:01:43] Now this isn't a review but it is the first line of a really great email that we got just

[00:01:49] the other day and Dan, I gotta tell you this is like one of the best compliments we

[00:01:53] may have ever gotten.

[00:01:56] So I'm just going to read it.

[00:01:58] So as hey guys, just started listening to the podcast about three weeks ago and I think

[00:02:03] I'm about 60 episodes in at this point.

[00:02:06] What the tragically hip did for Canadian music you guys are doing for Canadian real estate

[00:02:11] investing and it's been a huge source of knowledge and value.

[00:02:15] Yeah, I don't know if we are necessarily deserving of such a compliment but I'll take it I suppose.

[00:02:22] Yeah, seriously.

[00:02:23] I mean that is next level one of my personal favorite bands absolute Canadian legends and

[00:02:30] tragically at a true Canadian treasure.

[00:02:33] Dude, is that mean we get Canadian treasure status at some point?

[00:02:37] We go to the hockey hall of fame or something like that.

[00:02:39] That'd be nice maybe a street named after us or a plaque or I'll take a park or even

[00:02:43] a park bench at this point.

[00:02:45] Yeah, seriously.

[00:02:46] Yeah, hell of a compliment though and deserving or not.

[00:02:48] It's awesome to hear how the show can impact a lot of people.

[00:02:52] And to all of those of you who listen and take time to rate the show, write us a review

[00:02:59] or reach out in our email inbox to give us a compliment like this one.

[00:03:04] Thank you.

[00:03:05] It means a lot.

[00:03:06] We really appreciate it.

[00:03:07] Yeah, it certainly does a very sincere thank you from both of us.

[00:03:12] Yeah, so now that we've sufficiently pumped our tires, what are we talking about today?

[00:03:16] Yeah, you don't get to start the episode off with a quick tire pumping.

[00:03:19] Today we say you have to pump your tires before every race or whatever.

[00:03:23] That's it.

[00:03:24] You're an F1 guy, right?

[00:03:25] That's what they do.

[00:03:27] Today we are going to be looking at new affordable housing developments in British Columbia.

[00:03:33] Now the only catch here is they are 330 square feet and still very expensive.

[00:03:41] It sounds like affordable housing in Canada basically too small and still too expensive.

[00:03:47] We're also looking at Ontario contractor expectations for 2024 and that's for labor

[00:03:50] technology and their concerns and general outlook for the year.

[00:03:55] And then we'll finally touch on Toronto smashing its housing construction targets by 51%

[00:04:01] and as a reward Ontario is giving the city 114 million in funding.

[00:04:06] We'll look at what this means for the province and some other municipalities that have

[00:04:09] achieved their targets as well.

[00:04:11] That's a nice reward for achieving a goal, I mean, Dan you and I achieve our goals all

[00:04:16] the time.

[00:04:17] I don't think I've ever gotten a check for anywhere near $114 million.

[00:04:21] Yeah, I personally have not got any of those checks yet.

[00:04:27] I think we would have noticed if either one of us had gotten it but for sure anyways, it

[00:04:32] sounds like we've got a lot of ground to cover so let's jump in and start things off with

[00:04:37] this first piece from the national post.

[00:04:42] So the headline says Freeland Touts affordable development renting 330 square foot units

[00:04:47] for $1,600.

[00:04:49] So Deputy Prime Minister Kristia Freeland toured a new building offering micro apartments

[00:04:54] starting at 1,600 a month.

[00:04:56] That does actually sound pretty cheap for its Vancouver right?

[00:04:58] Yeah.

[00:04:59] That she said was illustrative of the homes that her government is getting built for low

[00:05:03] and middle income Canadians.

[00:05:05] This is an apartment building that has 227 apartments for low and middle income Canadians

[00:05:10] that was built.

[00:05:11] Thanks to our apartment construction loan program said Freeland in a video shot at the

[00:05:15] side of the Hudson House, a new 23 story rental high rise in Victoria, BC.

[00:05:20] So not Vancouver.

[00:05:22] Maybe it's not actually that cheap.

[00:05:24] Also they I think they changed the name of that ACLP.

[00:05:26] Oh no, no, was anyway.

[00:05:30] It was RCFI before right?

[00:05:31] Yeah.

[00:05:32] Yeah.

[00:05:33] Just another another another acronym that yeah doesn't really matter.

[00:05:39] And I think that yeah, I guess it could be an acronym.

[00:05:41] An acronym.

[00:05:42] Why didn't they just change it to like clap or something like that?

[00:05:45] You know, there's the word the letters are there you can rearrange them.

[00:05:50] Anyway their office cited that the building is a prime example of how the federal government

[00:05:54] is building more homes for everyone including families younger Canadians and persons with disabilities.

[00:05:59] My only thing here is I don't see any families living in 300 unit 300 square foot units.

[00:06:04] So you're just saying you're just not getting creative enough man.

[00:06:07] There's like bunk beds now you can just stack four bunk beds on top of each other and

[00:06:11] then you can at least 250 square feet of living space.

[00:06:15] Yet to be fair to that point that you're making right now, the Canadian household size has

[00:06:21] like decline massively household size being the number of people in a house.

[00:06:24] So like you hear these stories of like maybe our parents generation would be well they

[00:06:29] would be a good example.

[00:06:30] You know, they would have had like four kids in the same size houses that we're living

[00:06:35] in now.

[00:06:36] Like you know, or like you look at these post war bungalows or like wartime bungalows

[00:06:39] where they're raising families of four kids, you know six kids like eight people living

[00:06:46] in these houses just saying, you know that maybe there's a little bit of houseflation as

[00:06:52] well people and I think this is a big problem in Canada like the square footage that we

[00:06:57] feel we need on a per person basis had gone up substantially for the past 100 years.

[00:07:04] Yeah, yeah, totally.

[00:07:05] I mean, you know, both things are going in the wrong direction.

[00:07:08] Houses are getting smaller but our size of our families are getting smaller as well

[00:07:14] and I think that's a direct correlation to just how damn expensive raising a family in today's

[00:07:21] Canada is.

[00:07:22] Anyway, what the deputy prime minister did not mention is that Hudson House will be

[00:07:27] renting its 227 units at rates considered high even by the wildly inflated standards

[00:07:34] of coastal BC.

[00:07:36] So two bedroom units at Hudson House start at about $3,300 per month.

[00:07:41] The lowest priced one bedroom is advertised at just over $2400 per month.

[00:07:48] Now the absolute lowest priced Hudson House being advertised is their A2 studio apartment.

[00:07:56] Now you never like to see the word micro in front of everything.

[00:08:01] Micro plastics aren't great.

[00:08:03] A micro unit doesn't sound to appealing either and a micro unit of just 330 square feet

[00:08:11] which get this is about the size of two parking spots.

[00:08:16] Now that unit known as the A2 unit starts at $1,680 per month.

[00:08:23] So even with Victoria at the sharp end of some of the most inflated rents in Canadian history

[00:08:29] units in Hudson House have asking rents that are higher than average.

[00:08:34] So according to the most recent point by Rentals.ca, the average asking rent for a Victorian

[00:08:40] sorry not a Victorian a Victoria two bedroom is almost $2,750 with one bedrooms averaging

[00:08:48] $2,116 and all of these figures are well beyond the rents paid by the average Victorian.

[00:08:57] So since most Victorian renters are locked in at lower rates according to the C-MHC average,

[00:09:02] the rent paid in that city is just over $1,500 a month for an existing Victoria renter

[00:09:11] to get even a micro unit at Hudson House.

[00:09:14] Therefore they would need to pay an extra $160 a month and likely get far less square

[00:09:23] footage.

[00:09:24] Yeah, the data that the article is referencing that you mentioned there we covered in our

[00:09:31] C-MHC report episode where we covered basically they do a coast to coast except they exclude

[00:09:37] I think Atlantic Canada for some reason.

[00:09:39] They don't count that.

[00:09:40] It's rude.

[00:09:41] Rude of them to be super rude.

[00:09:43] But we covered that pretty exhaustively so they cover vacancy rates in every city average

[00:09:47] rents.

[00:09:48] How much rents have gone up in every city?

[00:09:50] I think the most shocking data point there was that like almost 20% of Toronto tenants

[00:09:55] were delinquent.

[00:09:57] Yeah, well but anyway, that's episode 173 if anyone wants to go back and check that out.

[00:10:02] It's called the fastest growing rents in Canada where as Dan said we do a full dive into

[00:10:06] the C-MHC rental market report.

[00:10:09] Yeah.

[00:10:11] So the reason that Freelum went toads and house the article mentions is because they use

[00:10:17] the ACLP apartment construction loan program which is being advertised as sort of this big

[00:10:26] piece of their government's pledge to build more homes faster.

[00:10:30] I like how every government is just more homes faster and the program offers low cost loans

[00:10:34] to builders who meet certain benchmarks for energy efficiency and affordability very

[00:10:37] similar to MLA select except MLA select is C-MHC ensuring the loans and then the bank lends

[00:10:45] like a chartered bank.

[00:10:46] Well, it's pretty rarely them but you know that bank like RBC or whoever would actually

[00:10:51] lend the money.

[00:10:53] This ACLP program is the government actually lending the money to directly so it's not just

[00:11:00] insurance.

[00:11:01] It's not them buying the mortgage back securities to ensure the loan.

[00:11:06] So anyway, to qualify as an affordable unit the development only needed to ensure that

[00:11:11] 20% of the units have rents that are less than 30% of the total median income for the

[00:11:16] area.

[00:11:17] And so because Victoria has such a high income of like 111,390 any unit that costs less than

[00:11:24] a third of that $33,000 per year is considered affordable by the federal government and we

[00:11:29] see this a lot in people using the affordability stream for MLA select in markets like Calgary

[00:11:35] as an example where you know what's considered to be an affordable unit in MLA select terms

[00:11:39] in Calgary I think is higher than what the unit would actually probably rent for.

[00:11:46] You know, so like I think they have affordable units and I think like a couple cities it

[00:11:50] works in right mostly the prairies so like when it incomes are high and the rents are

[00:11:54] already low but as an example like in Calgary if you know you were to have a apartment that

[00:12:00] would you would put a unit in and you could you couldn't really get more than $1,500

[00:12:05] a month let's say for that unit but CMHC's affordable target is higher than that it's

[00:12:09] like 16 or 1700 then you know the the deal makes sense on CMHC's affordability criterion

[00:12:16] now you can qualify for the the better loan program getting higher typically higher

[00:12:21] amortization and higher loan to value.

[00:12:24] Yeah exactly Dan as you said though you know it changes drastically from city to city

[00:12:30] town to town and even municipalities across the country all dependent on what is considered

[00:12:37] affordable in that exact area.

[00:12:39] Now here's something in just a three month period late last year Canada added 430,600 430,635

[00:12:50] new people almost half a million new people that that place Canada among the top five fastest

[00:12:58] growing countries on earth and that is an average of 5,000 new comers per day so this means

[00:13:07] that even if every single Hudson House unit ends up housing a family of five which we know

[00:13:14] families are shrinking let's just use this because that's what the article is giving

[00:13:17] us as an example.

[00:13:19] So if every single Hudson House unit ends up housing a family of five it will account for

[00:13:25] just five hours worth of new immigration.

[00:13:30] Five hours so there you go.

[00:13:33] Math is not really mathing on that one now Freelens visit to Hudson House also included

[00:13:39] an aside in which she seemed to hinted BC being was superior to her home region of the

[00:13:48] prairie and this is just weird I don't know why she would say something like this but how

[00:13:51] lucky you are to live in this amazing city.

[00:13:54] Wow.

[00:13:55] Freelens told the assemble the Victoria press before referring to a line this is so

[00:14:02] bad I saw somebody posted this on Twitter as like oh man that's a I got the bumper foot

[00:14:07] in mouth it anyways the line is from Margaret Lawrence's novel the diviners and it says

[00:14:18] for prairie people the real life version of dying and going to heaven is to move to BC.

[00:14:25] Absolutely savage.

[00:14:26] I feel like most prairie like at least most of the prairie people I know do not feel that

[00:14:30] way no no and a listen as a guy born and raised in British Columbia it is it is beautiful

[00:14:37] it's it's not for everyone and just like everywhere across the country which is full of

[00:14:43] beautiful places there are some downsides to it so don't know why you would say something

[00:14:49] like that I mean obviously you're trying to suck up to the local press there but you

[00:14:53] know that people are going to get a hold of that and do something to it so anyways the

[00:14:58] comment section in this article is absolutely fire and the last time I checked which was

[00:15:04] about half an hour ago there were well over 500 comments and let's just say I couldn't

[00:15:09] find too many that were complimentary okay now we did pull a few of them just for fun so

[00:15:18] the dance started off here with this first one.

[00:15:20] Yes so the first one says seriously these are just over half the size of a standard issue

[00:15:25] free apartment in Russia that's you never like being compared to a standard issue free

[00:15:30] apartment in Russia for anything the next one says my handy calculator says the government

[00:15:35] one way or another takes 67% of that $111 income or $74,000 leaving just over $36,000 to pay

[00:15:48] that two bedroom rent of $43,000 see why Canadians are the most indebted people in the world

[00:15:56] this is why we need some serious changes.

[00:15:58] Yeah I mean I think the math is probably a little bit off on that comment but I never

[00:16:02] said the comments were correct they are just they're here.

[00:16:05] The comments are a reflection of this is yeah consumer sentiment sentiment.

[00:16:09] Exactly.

[00:16:10] For sure 330 square feet you get more room in a prison salad it comes with a meal plan

[00:16:14] and entertainment and it's free.

[00:16:16] Yeah that one again you know I've really like to be I don't know reminds me of this

[00:16:21] this Instagram image that I've seen and it's like when I retire I want to move to a prison

[00:16:27] in Scandinavia it's like this beautiful little Ikea looking minimalist room.

[00:16:33] The next comment here I shorten this one because this person went all out on measurements

[00:16:40] saying 18.24 squared meters comes at the 333 square feet so if a standard king size bed

[00:16:47] is closer to six or seven feet now you are at 288 square feet then you add a kitchen

[00:16:52] table they've got all the measurements here for standard kitchen tables then you add a

[00:16:56] couch and chair then you've got all the standard measurements for a couch and chair

[00:17:00] and then they have even put now for your television and entertainment center which they've

[00:17:03] added all the standard dimensions for as well and it says of course once you get all

[00:17:08] your furnisher furniture moved in there will be no space for you to live.

[00:17:13] Yeah pretty true last comment we're going to read if this doesn't just scream wildly

[00:17:18] out of touch I don't know what does you own nothing and be happy they meant it.

[00:17:24] The Canadian Dream has been reduced to the equivalent of two parking spaces a dorm room.

[00:17:28] That hurts.

[00:17:29] Yeah I think it's interesting like the whole you'll own nothing and be happy thing we've

[00:17:35] talked about this couple times on the show right?

[00:17:38] It's come up.

[00:17:39] You can complain a lot about that but the reality is even if it wasn't like some conspiracy

[00:17:47] that like the government was just trying to turn us all into renters I think economically

[00:17:51] that seems to be what's going to happen anyways if you look at countries that came before

[00:17:57] us in the western world and how they ended up and so I mean look we can sit around and

[00:18:02] complain about it that's totally fine or we can do something about it and like and

[00:18:06] and you know some people would say oh we have to like do political stuff right?

[00:18:10] It's like or you could just be one of the people who owns the property.

[00:18:15] You that gets getting rented right and that's sort of what like you know that's like my

[00:18:19] big thesis for real estate investing in Canada right now is we are heading towards a renters

[00:18:24] economy.

[00:18:25] Inflation will probably be the thing that props up housing in the long term not like any

[00:18:31] other factor really and if you want to benefit from from this shift that we're seeing

[00:18:38] in Canadian home ownership and maybe the end of the Canadian dream and whatever if you

[00:18:43] really believe all this you'll own nothing and be happy stuff like get investment exposure

[00:18:47] to it.

[00:18:48] It's like you know a lot of people big pointers and which I am one so you know they believe

[00:18:56] in the central banks are going to ruin everything in the financial system it's like and that's

[00:19:00] why you want to buy Bitcoin right?

[00:19:02] That's a great thesis like it really is honestly and that's a great reason to buy something

[00:19:05] and if you're right then it's the right investment.

[00:19:08] The same could be said of housing and then the most you know like the best statement that

[00:19:13] you could do against that is to invest in the counter thesis right to become an owner

[00:19:19] of property if you're worried that they're saying on nothing and be happy it's like well

[00:19:23] you can still buy a house and Saskatchewan for 50 grand so better grab onto one of those

[00:19:28] things before they do all of this stuff you're saying is going to take place.

[00:19:32] Yeah exactly I mean the other the flip side of the coin is you don't invest in real estate

[00:19:40] and you take that capital that would have been allocated for a down payment and you go

[00:19:46] invest in ETFs or Bitcoin or whatever else you feel confident in investing in so that's

[00:19:54] that if you want to go check out the rest of the 490 plus comments in that section and

[00:20:00] have a laugh I would encourage you to do so but let's keep this this train moving here

[00:20:05] to the next piece we're looking at is Ontario contractors expectations for 2024 now this

[00:20:13] data comes from over 500 interviews with the province's builders and it was taken from site

[00:20:21] news which is a which is a great kind of construction and development website that we've gotten

[00:20:28] some some really good information on so I'm going to go over the key takeaways in a

[00:20:32] lot of the show I know I was going to say that yeah we love French show here yeah yeah

[00:20:40] been talking about potentially like they you know we I went out for a I guess it was a breakfast

[00:20:45] coffee with with Ryan over there I think he's at their marketing side but talking about

[00:20:50] like doing some research on especially like well a lot of it is the stuff that were that

[00:20:55] this article discusses but the labor shortage whether or not we're actually seeing a labor

[00:21:00] shortage stuff like that it's been a popular discussion and also something that's kind of come up

[00:21:06] in I'm speaking on a panel at the Ontario Home Builder Association in a couple of weeks and yeah

[00:21:13] just a really really interesting discussion around the labor side of things because you know we were

[00:21:18] we were talking about getting that guy from Tik Tok on a pussain that he said yes no framing jobs

[00:21:23] I know yeah I did saying that there's no framing jobs and whatever there's like he's like there's

[00:21:29] like two houses being built in the GTA but there's a ton of high rise sales that's taking place

[00:21:33] like the guy I work out with every morning he's like working he's an electrician on high rise and

[00:21:38] he's like on slab every day right so there's all you can't just stop the high rise stuff but lower

[00:21:43] if low rises grind to a halt that's something's going on here anyway if you're a if you're a super

[00:21:49] rich person want to fund a report on on the labor shortage give me a shout because that's the only

[00:21:54] thing standing in my way right now so let's look at some of the key takeaways here well optimism

[00:22:00] remains high contractors expectations for the coming year have dipped since 2023 mostly due to

[00:22:08] rising costs now a majority of the respondents to this survey cited that labor supply was their

[00:22:17] top concern but also noted an easing of supply chain challenges so that's good because that was a

[00:22:23] major issue over the last few years and well contractors stated that new technology can have an

[00:22:28] excellent ROI and should be the focus they noted that the initial startup costs and training

[00:22:35] requirements to implement said new technology remain the barrier to entry yeah so if we dive into

[00:22:44] the whole story here it says Ontario's construction community has spoken their Ontario construction

[00:22:49] secretariat annual contractor survey covered a wide range of topics in each year the survey polls

[00:22:55] commercial contractors they call it ICI contractors industrial commercial and investment to gauge

[00:23:00] their expectations for the year and capture their views on salient issues in the industry so this

[00:23:04] is 500 telephoto interviews with ICI contractors 35 percent general contractors 60 percent trade

[00:23:10] contractors and 5 percent unspecified so what's the outlook that is expressed in this article Nick

[00:23:19] yeah so the respondents anticipate a varied outlook for the upcoming year despite strong

[00:23:25] momentum experienced in 2023 business expectations for 2024 are less enthusiastic than they were

[00:23:34] from the same survey conducted in 2023 however the majority forecast increased business due to the

[00:23:43] abundance of ongoing work and upcoming projects positivity among contractors has declined to 66

[00:23:52] percent from 81 percent in the previous year survey now many contractors know the significant

[00:23:58] amount of current work and the number of future projects the reason for increased activity included

[00:24:07] a surge in infrastructure projects that's where the ICI which is directly fits in the infrastructure

[00:24:14] projects rising population and housing demand and new policies promoting housing and increased

[00:24:20] government support some also expect to decrease in interest rates which will of course stimulate

[00:24:27] more activity and likely make the whole process a little easier but they were not without concerns

[00:24:33] were they then yeah so the biggest concern was over 20 percent of negative open-ended responses

[00:24:41] was rising costs right the most frequently cited costs were higher interest rates which was nearly

[00:24:46] a fifth of people material costs and high taxes other significant factors included labor shortages

[00:24:51] which we mentioned before 16 percent and a week declining or uncertain economy it's just 12 percent

[00:24:56] so pretty in line with what we've been discussing and what the industry seems to see as a whole but

[00:25:01] it is interesting to look at what the contracting side is or how the contracting side is interpreting

[00:25:06] these issues in the market right now regarding postponed projects 56 percent of contractors reported

[00:25:12] delays to a later start date a slight increase from 53 percent in the previous years survey the most

[00:25:19] common reason for project cancellation was material cost and inflation interest rates and labor

[00:25:24] costs although high costs were the main reason for project cancellations in the 2023 survey this year's

[00:25:29] results indicate that it's become even greater concern so not something I mean we've been talking

[00:25:35] about this for two years and it's not something that's going away anytime soon apparently so they

[00:25:39] may still still the major concern throughout this year yeah yeah exactly and labor is another

[00:25:45] concern so hiring intentions remain roughly the same as last year's survey with 34 percent of

[00:25:51] contractors expecting to actually increase their hiring that's that's great news we need more

[00:25:57] contractors and trades and subtrades and people out there building houses however contractors also

[00:26:03] noted ongoing concerns rated to related to labor availability with 65 percent of them reporting that

[00:26:11] accessing skilled labor it will become even more difficult in 2024 now almost three quarters

[00:26:18] of contractors in the survey here so 73 percent pointed to rising costs as a consequence of skilled

[00:26:26] labor shortage whereas project delays decreased to 52 percent from 58 percent last year

[00:26:33] and fewer contractors also reported having to turn down work that's 46 percent this year compared

[00:26:41] to 50 percent last year yeah so it is interesting the next piece they talk about goes on talk

[00:26:50] about technology and this something you and I talk a lot about dude it's so funny yeah

[00:26:54] yesterday I was like looking at brick brick laying machines and stuff like that just because like

[00:26:59] I don't know I'm weird like that and I all and it's all I think about because if we have this

[00:27:05] labor shortage you know like I guess I was sort of thinking about like the second order effects

[00:27:09] of AI to be honest with you I'm not going to go too deep in this but you know the second order

[00:27:13] effects of AI and like how robotics will improve so much and I think it's so like it's so difficult

[00:27:22] to replace human beings in these roles so difficult right like it's such a and maybe bricks or I

[00:27:31] mean anything like the stakes are so high with the built form environment to like be laying bricks

[00:27:37] up a three story building that if like that brick veneer wall just fell off as an example because

[00:27:42] it was done improperly like who are you going to hold accountable or electricity like burns that

[00:27:47] you know I mean like you can't plumbing like floods poop everywhere like you know you're going to

[00:27:51] yell at a robot because they just drench here you know this the apartment below you and poop or

[00:27:56] bring the house down because they miswired it no you just you just decommissioned the robot haven't

[00:28:00] you ever seen i robot I well yeah but I guess the thought is like they don't I don't like if there's

[00:28:08] if there's no like I guess there's just there's no layer of accountability like who do you

[00:28:13] I guess the same as self-driving car you know what can you see well look we've seen right I mean

[00:28:18] self-driving cars were they were they were a real thing years and years ago and there's been nothing

[00:28:23] but issues with them so no I mean you're totally right it's like what major contracting firm

[00:28:30] is going to be the first one that's like hey we built this single family home or we built this

[00:28:35] ten story like high rise using robots and you know yeah who's gonna be the first to adopt those kind

[00:28:42] of principles and I think it'll start to be slowly phased in like everything else but you're right

[00:28:47] it's you know we're really entering into a whole new world there yeah I think that there are

[00:28:53] improvements being made like they're just incremental they're not like these huge things like a

[00:28:57] block laying machine or a brick laying machine or an electric like a Tesla robot wiring a house

[00:29:02] or whatever right so you know there's like I'm thinking of a couple incremental changes like a lot

[00:29:07] of these groups are having like these vertically integrated technology systems to like manage

[00:29:12] like manage the job like I think Tucker what's one of the biggest high rise contractors I think they do

[00:29:17] all great golf projects I think they're just I think they're just great golfs they are build

[00:29:22] there right yeah they have like their own tech thing that I think they're rolling under the market

[00:29:27] a couple of these other groups that you know like this I'm trying to think of like small innovations

[00:29:32] right where like they take the aluminum jacks that are like on the slab below and just like

[00:29:37] the each each floor plates sweet layout is like they just they just basically fly it up or like

[00:29:42] crane it up to the next floor and slide it in rather than reassembling the aluminum jacks on every

[00:29:47] you know what I mean like for the forming of each level but like that that is like a that saves

[00:29:53] it day right so over time you iterate and you're like oh how do I how do we make this slightly more

[00:29:57] efficient I was on a call yesterday with one of the biggest builders high rise and low rise

[00:30:03] builders in in the country and a huge private equity group and they were talking about how they

[00:30:09] were talking about you know doing US deals and how there's no like comparison in a US city where you

[00:30:15] have all of the like you have so many top of the line firms like what others place in the world maybe

[00:30:23] like maybe China right we have like Evergrande Country Garden etc but like where you have like all

[00:30:27] of these like multi billion dollar players you know try to all like you know and try to all great

[00:30:33] golf etc and these guys go to the states and just crush it because they have there's there's such

[00:30:38] well-built businesses like Toronto really is and all that to be all that to say that we're not

[00:30:44] innovating at the rate that we you would think we would with companies that have so much capital

[00:30:50] so much experience so 81% of the ICI contractor said that adopting new technology is important to

[00:30:56] the future of the business up from 71% 2018 and this is usually where you know you would see

[00:31:01] actually almost push back from contractors because they don't want to be like innovated out of

[00:31:05] existence but I think a lot many have realized that innovation is deflationary right and this

[00:31:13] progress reduces costs and the only way we're going to reduce cost is by continuing to innovate

[00:31:17] so the one two of the biggest things and we're going to have groups from these building homebuilders

[00:31:22] associations on the show but is this the new national building code they're they're normalizing

[00:31:26] building codes in Ontario and nationally so we're going to have some some more discussions about that

[00:31:31] but they see almost seem to be going in the wrong direction where you get a lot of these like

[00:31:35] environmental innovations that get added to the house but their costs go up right so how can

[00:31:40] we innovate where costs go down top three motivators for technology were reducing costs client needs

[00:31:47] and productivity enhancement which is functionally a cost reduction thing so 32% of

[00:31:54] a contractor said that cost or budget restrictions was their most significant barrier for adopting

[00:31:58] technology the most commonly used technologies was BIM technologies 44% in job site data collection

[00:32:05] apps 43% couple other ones using smart sensors advanced building materials clean tech and

[00:32:10] prefabricated or modular construction techniques despite the hype around AI robotics 3D printing etc the

[00:32:17] article goes on to say virtual reality wearables digital twins and drones there yet to be wildly

[00:32:23] adopted by contractors although I've heard that like all the drywallers are using these like

[00:32:27] hilti exoskeletons have you seen these things yeah yeah the cool insane like yeah by on like

[00:32:33] you just pop a she did drywall up over your head like you're you know and you like and then I

[00:32:37] think I guess it has something that just hold it over your head and then you just screw it in

[00:32:41] it's like okay cool done I'm gonna use that when I go to the gym see the only problem here

[00:32:47] is that the article states is that only 15% of contractors actually reported having a budget

[00:32:53] for technology yeah for sure so that's that I mean to circle you know to go to nice to have right

[00:33:00] it's exactly and you know yes people are worried about you know AIing themselves out of existence

[00:33:06] essentially but you know only 15% have a budget and that doesn't even mean that those 15% that

[00:33:12] have the budget are actually even really using that that number at 15% could be actually down to

[00:33:18] the single digits of contractors or large construction firms that are actually taking steps to to

[00:33:26] implement this stuff so long way to go on the you know revolutionization of construction and that

[00:33:35] whole process but I think early days in the way that AI is moving the way that you know AI is

[00:33:42] changing the built environment I think that we're in early days but it'll start to go very very quickly

[00:33:49] now moving on to the last piece here which seems to be actually some good news Toronto smashes housing

[00:33:57] construction targets by 51% and as I reward Ontario is giving the city $114 million in funding so

[00:34:08] I'll just go through a couple key takeaways before we jump into some of the bulk of the article here

[00:34:13] Dan Toronto's is just one of several Ontario cities that has been awarded funding this month and

[00:34:18] don't worry we'll get to those other cities some of them include Brampton Brad Brantford Chatham Cantto

[00:34:24] we've also received millions and the money stems from the province is building faster fund which is a

[00:34:32] three year 1.2 billion dollar program that is designed to encourage municipalities to address the

[00:34:39] housing supply crisis so Dan jump in there's a good acronym for which one the BFF

[00:34:48] I think I got a couple of those in my life

[00:34:50] tell us the whole story or Dan let's dive into it

[00:34:55] yeah so the article starts by saying it pays to crush your housing goals and basically goes on

[00:35:00] say that Doug Ford announced Ontario is providing 114 million in funding because Toronto broke

[00:35:07] ground on 31,656 new housing units I'm locking an additional 38 million by exceeding their 2023

[00:35:16] target by 51% so he Doug Ford says Toronto show they can get it done on housing and we're proud

[00:35:23] to reward them for their success said premier Doug Ford my challenge to Mayor Olivia Chau and to

[00:35:29] every mayor may mayor in Ontario to get more homes built in the coming years so we can make life

[00:35:33] more affordable and keep the dream of home ownership alive for families across the province will be

[00:35:38] there to support you every step of the way one of the things that I think a lot of people dismiss

[00:35:43] all of the supply is that it makes prices not go up just to heads up

[00:35:49] I'll everyone ever when they're talking about affordability when they're talking about affordability here

[00:35:52] they're talking about houses being less expensive just saying that's impossible here in Canada come on

[00:35:59] now announced back in August of 2023 that BFF the best friends forever sorry building faster fund

[00:36:06] is a same thing really three year 1.2 billion dollar program as mentioned that is designed to encourage

[00:36:12] municipalities to address their housing supply crisis now the fund rewards municipalities that

[00:36:18] make significant progress against their targets by providing funding for housing and enabling

[00:36:23] and community enabling infrastructure it's not just housing but everything you need

[00:36:28] around houses to actually have them function such as services

[00:36:34] funding is provided to municipalities that have reached at least 80% of their

[00:36:39] provincially assigned housing target for the year with increased funding for municipalities that

[00:36:45] exceed their target now again Dan this is something we've been talking about

[00:36:49] for a long time you need to we need to start incentivizing and almost get an an element of

[00:36:55] competition among these municipalities to really have them almost compete with one another to

[00:37:01] to build more homes now Toronto has an ambitious plan to speed up its annual approval times and

[00:37:07] build 65,000 rental homes in the coming years the building faster fund will help meet and exceed

[00:37:15] housing targets in Toronto and provide critical infrastructure and create new neighborhoods for

[00:37:21] Canadians to live in it is funny because you're talking about them competing and then it says

[00:37:26] in the coming weeks they'll announce rewards for municipalities that have achieved 80% of their

[00:37:31] assigned housing targets it's like so you don't even have to beat your targets you don't even have

[00:37:35] to hit it that's kind of funny anyway the article puts a quote in here I applaud the work being

[00:37:43] done by Toronto and all the other municipalities that have met or exceeded their housing target that's

[00:37:48] minister Paul Kalandra municipal affairs and housing our government is committed to building at

[00:37:52] least 1.5 million homes by 2031 and I look forward to unveiling the next steps in our plan to build

[00:37:59] more homes I like that all of these by goals and after the next election we look forward to seeing

[00:38:07] that as well Paul yeah if you if you vote us in then we'll do it probably trust me on this one

[00:38:16] finally here other cities that have received funds mentioned briefly 25.5 million dollars for

[00:38:24] Brampton for substantial progress towards meeting its 2023 housing target Brampton broke ground

[00:38:29] on a total of just over 7,000 new housing units last year

[00:38:36] $440,000 for a Chatham Kent after the municipality exceeded its 2023 housing targets and Chatham

[00:38:43] Kent broke ground on a total of 552 new housing units last year unlocking an additional 146,000 by

[00:38:51] exceeding their target and $3 million for Brantford for exceeding its 2023 housing target Brantford

[00:39:00] broke ground on a total of 788 new housing units last year unlocking an additional $400,000 by

[00:39:07] exceeding their target by 8% now based off of the math from the first article we looked at where

[00:39:13] you could essentially fill that entire new building in five hours it looks like we've bought ourselves

[00:39:20] at least another few days of filling filling these homes with new comers if that math checks out so

[00:39:30] I mean look this is good news I guess right I mean we were making progress and there is more

[00:39:38] government funding and you know I think that element of of competitiveness among municipalities

[00:39:44] now that they're actually seen other municipalities actually get the money for doing this I'm hoping

[00:39:53] I'm praying I'm thinking I'm manifesting that this will be kind of a domino effect across

[00:40:01] Ontario and India love manifesting man love doing that got to manifest a couple houses

[00:40:06] big manifest here so yeah that's it that's that's all we have 330 square foot apartments for

[00:40:12] 1600 bucks new technology being implemented and millions of dollars in funding if you

[00:40:20] hit 80% of your goal and he just just a just a group of headlines that

[00:40:27] make it sound like you're in an economy where nothing is going wrong and everything is totally fine

[00:40:32] and housing is affordable and we're all good here everyone don't worry it's all we're okay

[00:40:36] okay everything is going to be fine I think I hope I manifest someday yeah just yes

[00:40:42] just elect us in one more time and then and then it'll be okay next time when you say us are you

[00:40:47] are you announcing our run for office here Dan yeah this is the Canadian Real Estate Investor

[00:40:53] party not the podcast it's just a party political party of Canadian real estate investors

[00:41:01] that would that would be an interesting one speaking of which we do have a we do have a similar

[00:41:05] we do have like an online thing it's not a political party but it is no what is it what is it

[00:41:11] it's a it's a community in a course course and you do the do the pitch course

[00:41:16] community which is which is growing and which is really turning out to be one of the honestly

[00:41:21] I Dan and I talked with this usually off camera a lot both started a lot of businesses in our

[00:41:27] lives the podcast has probably been my favorite business I've ever started and now the

[00:41:35] coursing community is is a very close second and it really stems from all the work we've done

[00:41:41] here on the podcast and all out of the great listeners that wanted to get more involved and

[00:41:45] wanted to meet other investors and invest alongside people with the same mentality so

[00:41:53] that's what we did it's called realist.ca go check it out and if you are interested in joining

[00:41:59] there's a link to book a call with myself Dan or our other partner Mitch and we'll get on and

[00:42:05] tell you all about it and show you the back end and see if it's a good fit so on that note

[00:42:12] that's all I have anything else Dan no I think we're good just out here's looking for my BFF

[00:42:19] thanks so much for listening everybody you'll see soon the Canadian real estate investor podcast

[00:42:26] is for entertainment purposes only and it is not financial advice Nick Hill is a mortgage agent

[00:42:32] with premier mortgage center and a partner in the G and H mortgage group license number 10317

[00:42:40] agent license m21004037 DanoFoSh is a real estate broker licensed with

[00:42:48] rare real estate a member of the Canadian Real Estate Association the Toronto Real Estate Board

[00:42:55] and the Ontario Real Estate Association