Is Canada's Construction Industry in Trouble?

[00:00:00] Welcome to the Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio. Welcome back Canadian real estate investors and buckle up for what will be a roller coaster ride through the Canadian construction market.

[00:00:21] But before we get there, the Bank of Canada held rates due to trade war uncertainty and they don't seem to be paying any attention to housing anymore, which we'll get to here. Even though shelter inflation is apparently running hot, although it shouldn't be based on what rental rates are doing. And Dan speaking of running hot, there's probably going to be some complaints on your end about a little background noise, but that's because you are in a very hot beautiful place.

[00:00:48] Why don't you tell everyone where you are and what you are doing there? Well, I'm sitting in the only quiet place in Miami, which is, and it's still, you can still hear the loud music in the distance. Because like, it's just something weird about, but anyway, I'm in Miami. I was down here for the Grant Cardone thing was doing some recon on how to make our events better. And so yeah, I'm just sitting here. I'm recording now.

[00:01:13] I was going to, we were going to do it in the hotel room at some point, but you know, we just figured try and do it now while everyone's, I don't know. It's like 9 PM and I'm sitting in a restaurant here, but yeah, I feel like the audio is not that bad. Is it? I don't know. No, no, it's good. I'm just trying to apologize. Just in advance. Just in advance. And also just let people know that again, you know, we do these things anywhere, anytime. I love when we have one of these random kind of internet, one of us is international and we still managed to rip a great episode.

[00:01:42] And that's exactly what we have here today. We're going to be talking mostly about construction. Is it in trouble? Maybe, maybe not. We're going to break down and start things off with some research from urbanation and our legendary friend of both you and I and the show, Dan, and our recent keynote speaker at an event, Mr. Ben Rabideu, who is just an amazing person in the space. If you don't know him or anything about him, I would highly recommend looking him up.

[00:02:10] Then in kind of the second half of the show, we're going to be joined by Rod Gilbert from the Canadian Construction Association. He's going to be dropping some knowledge on us in an interview where we ask him some really great questions about what's happening in the construction industry now, where are the opportunities and where are the challenges. So make sure to stick around for the whole show to hear that part. Okay. So before we do that, let's rip through this Bank of Canada stuff. I mean, we can't leave it out, obviously, but the Bank of Canada did pause.

[00:02:39] They cited the reason for pausing is this tariff uncertainty, right? So they held rates. They stopped the cutting cycle. I'm of the opinion and I said that they – this is actually – I think this is the second one I've been wrong on so far since the hiking cycle began. I think we were both wrong on this one. I think we both called a cut. Yeah. Yeah, I thought we'd see 25 bips because I just felt like the economy was in a bad enough spot that they were going to continue dripping out these rate cuts rather than doing a big one.

[00:03:06] But I think that they're kind of trying to wait and see what happens to see if the impact of this trade war is actually net inflationary or deflationary. Interestingly, so they put out their monetary policy report. This was the fewest mentions of housing in a monetary policy report in like 10 years. So I actually made a chart. I went back and searched through this. This is the kind of stuff that I like to nerd out on. And like, yeah, the last time that they mentioned housing this few times, it was only twice they did it this time. And last time it was three times.

[00:03:36] And that was at the COVID, like the April of 2020. So first COVID lockdown. When there's obviously much more things to talk about than housing. All of that to say, I don't think they're super focused on housing right now. Although you'd think they would be because they, if you go look at their inflation reading, shelter inflation still is reading really hot as a component of inflation, which doesn't make any sense. I mean, I guess because you have this huge mortgage renewal wall coming in right now, plus their rents are still reading inflationary, even though we know rents have been coming down for six months.

[00:04:05] So, you know, I would say those two things are going to go away once you get past that renewal wall and past all of those rents actually showing up. So anyway, that's kind of my little take on what's going on with the Bank of Canada right now. Yeah. So interesting. Only two mentions of housing. And then I know both, I think you, Ben Rabideau and Steve Sretsky all were pointing out the number of times they mentioned the word uncertainty, which was like 10x the amount of times that they mentioned housing. Fascinating stuff. But that's not what we're here to talk about.

[00:04:34] We are here to talk about construction. Yeah. The one other thing I'll say before I know you're eager to get into construction because you're an ex-construction bro yourself. The, they, they also brought in the, they brought the Bank of Canada did an interesting analysis on the carbon tax. So, you know, a long, the whole time we've been told all the carbon tax wasn't inflationary, et cetera, et cetera. Well, the Bank of Canada, like this isn't me trying to politicize an issue at all.

[00:04:58] The Bank of Canada observed that now that the carbon tax is gone, that will actually see that have a point 0.7%, I guess, reduction in, in inflation. So it's disinflationary that's being removed. So you would, you would assume that it was probably inflationary when it was added. So all of this to say that's good for inflation, but an interesting thing for them to observe in the monetary policy report. And I posted that one on Twitter and it got quite a bit of, quite a bit of traction. Okay. So back to the construction piece that I know you were eager to hear more about.

[00:05:26] Every aspect of our modern lives is touched by this, this sector, right? Infrastructure designed, built and maintained by the construction industry. Totally. It's, it's the schools that our kids go to. It's the hospitals that care for it's, it's the reason we have clean water and that our homes and our businesses are heated and running with electricity. It's the roads, the bridges and the trade corridors that connect our communities, not only to each other, but to the global marketplace.

[00:05:56] Your quality of life depends on construction. The construction industry is an economic powerhouse, driving job creation, strengthening supply chains, supporting investment and feeding the growth of other economic sectors. And it's a big deal here in Canada. The construction industry employs over 1.6 million people in Canada, creating an employment creation ripple effect in other sectors like engineering, manufacturing, technology and retail.

[00:06:26] The construction industry contributes about $151 billion to the economy annually, accounting for 7.4% of Canada's gross domestic product. And this comes from infrastructure projects that, you know, where infrastructure kind of protects, connects and provides for people, you know, and housing is part of that. Real estate is part of that. Roads, highways, bridges, airports and public transit.

[00:06:50] These things all connect people to each other, workplaces and the goods and services that they need to participate in society and prosper and contribute to the economy. But it's not so rosy right now for the construction sector, at least outside of the infrastructure side. We're seeing a lot happening with housing. And just read me this most recent report that came out because I feel like I can't even really summarize it. It just speaks for itself. Yeah, no. Okay. So let's start with this.

[00:07:20] The jaw dropping highlights from Urbanation's recent report that quote unquote has developers and investors clutching their pearls. That's an interesting way to put it. I'm not exactly sure what that means, but use your imagination on that one. Okay. The headline reads, GTHA new condo sales in 2024 were the lowest since 1996. Yeah, that's right. A 30 year low for condo sales.

[00:07:45] What makes this even more severe is that Toronto's population has grown dramatically since the year 1996. The city proper had approximately 2.3 million residents back in 96 compared to about 3.1 million in 2024. So almost a full million new people.

[00:08:04] The GTA, the greater Toronto area has grown even more significantly from about 4.2 million in 96 to over 7 million today, making this sales slump even more concerning given how much larger the market is today. Now let's talk about this from a per capita perspective. In 1996, there were roughly 1.1 new condo sales per thousand GTA residents. Okay.

[00:08:30] Now in 2024, with only 4,590 sales and a population of 7 million, that ratio has now plummeted to 0.66 sales per 1000, representing a 40% decrease in sales intensity relative to population. So even though the sheer number is at a 30 year low compared to the 96, we're still 66% below it when you compare it to population.

[00:08:58] So relative to population per capita. And this is a historic sales slump by, you know, even if you don't look at it like that with only 4,590 sales in 2024, the GTHA hit its lowest new condo sales since 96, which, and like, look, we talk about the nineties a lot on the show as the last counter cycle that we saw in real estate as this being an, you know, an era that's comparable. And we're being presented similar opportunities that you would have seen during the 1990s.

[00:09:25] This is a 64% drop from 2023, which was already a bad year and 78% below the 10 year average. And so what this has created is an inventory overload, right? Unsold units reached a record high of 24,277. And that's still before you account for the fact that we have like 40,000 new units being added to the market this year. This has created a staggering 64 months of supply, nearly six times higher than a balanced market needs.

[00:09:55] Crazy. Just crazy to read these stats. And of course, when we talk about this type of stuff, it results in things like price softening, right? New launch prices dropped to 13, sorry, $1,130 per square foot in Q4 of 2024. That marks a 15% decrease from Q4 of 2023 and the lowest since Q2 of 2021. Now let's talk about completions.

[00:10:23] A whopping 29,800 units were completed in 2024. That's 24% higher than 2023's record numbers with even more expected this year in 2025. And the challenge here is that this has kind of led to the most recent headline that's being posted on Urbanation's website, which is slowest condo market in over 30 years causing construction to collapse. Collapse. And they use that word collapse. New condo starts plummeted to their lowest since 2002.

[00:10:53] Only two projects launched for pre-sales in Q1 2025 so far this year, totaling 275 units. Okay. Since the beginning of 2024, 28 pre-sale projects totaling 5,700 units were either put on hold, canceled, or placed into receivership or converted to purpose-built rental.

[00:11:11] Now this is an important piece because we're going to get to a tweet from Ben Rabideau because you're seeing a lot of stuff getting converted to purpose-built rental, which is something that I know we – again, we keep referencing that really brilliant reviewer on the show who said that all of our predictions are wrong. But this is something that we predicted a couple of years ago, right? And so the concern is, look, if they keep pivoting to purpose-built rental, we're heading more towards a renter's economy. Not a lot of this stuff is going into the condo market.

[00:11:36] But if they're not, if these developers can't make sense because it is really hard to make a project make sense as a purpose-built rental in the city of Toronto, just the economics are a lot harder. Land costs are higher. Construction costs are higher. Incomes aren't as high. And so this could cause a future supply crisis if we're seeing more and more of the supply being taken offline or like they said, paused, taken off the shelf, held, or going into receivership.

[00:12:01] This dramatic drop in pre-sale activity would suggest a significant supply shortage looming for 26, 27, 28, 29 maybe as construction starts continue to decline. So there is a saving grace here, potential saving grace for the construction sector. Can you kind of tell me what that is based on Ben's tweet?

[00:12:21] Yeah, so again, friend of the show and genius real estate commentator Ben Rabideau tweeted more purpose-built rental units than condo units under construction across Canada for the first time in 1993. So Dan, a lot of the stuff that we were just talking about, those are quotes specific to Toronto. This is not. Okay, this is happening across Canada for the first time since 1993 where we've seen more purpose-built rental units than condo units under construction.

[00:12:49] 150,000 new rental units is equivalent to 6.2% of the existing primary rental stock, which is a lot. And so from my perspective, I actually don't think we're at risk of seeing that under this future supply crisis that the article might have alluded to. I think that we're probably adequately supplied. It's just a different type of supply.

[00:13:12] And so the critics might have to decide if they're going to hate mom and pop condo speculators or all of these massive developers who are about to become large-scale landlords or potentially the pension funds who end up buying off of them if they all start becoming kind of merchant developers. Because pension funds basically can't contribute to merchant activity. So they can't build something to sell. So you're getting a lot of these developers who want to build these purposeful rentals to potentially sell to pension funds or whoever is owning these billion-dollar rental projects, right?

[00:13:41] Like, you know, it's interesting because I've been working on an episode that's kind of about this. And I just put out a piece of content on it. Like, you know, everybody's shopping made in Canada right now. And it's always – it's like, you know, who of these massive – you always hear about like the Blackstones and whatever. But who of these, you know, landlords in Canada are made in Canada, right? So you've got like, you know, Fitzrovia, Interrent Reet who I used to work for, you know, Cap Reet. Starlight's another big one. Although I know that like a lot of these groups also raise from foreign capital, right?

[00:14:10] Because they can – you know, especially if you're publicly traded, you don't really get to choose who owns most of your company, right? So that's an interesting thing. Kind of just an interesting thought experiment. We've done a couple episodes on biggest landowners, etc. But never residential purpose-built rental landlords. So anyway, I'll wrap it up with this other tweet here and then we'll kind of get to the interview. But so Ben put in this kind of follow-up thing that said, Remarkable trends in Canadian building permits. Single family permanent activity is at 40-year lows, okay?

[00:14:40] Nationally, multifamily, mostly rentals at this point is smashing records. So there's less resale supply in the future and tons of rental supply in an already soft market. And so I – here's my perspective on the matter and I think I've made this very clear throughout the show. We're heading for a renter's economy. Yes, it's probably a really bad time to buy real estate right now. Like, you know, just a really tough, scary, really difficult economy.

[00:15:07] But in the fullness of time, you are going to end up with lower and lower homeownership rates, increasing rentership rates. And the only way to hedge against being – basically, you see a separation of classes, right? Between the ownership and the – or owner and renter classes. And this is by design through policy.

[00:15:26] There's only one way to end up in the policy that ends up being the asset holder, the ones who don't get their wealth – or sorry, their wealth inflated away by printing money and the devaluation of currency. So all of that to say, you know, there's kind of two outcomes here. One is we figure out how to fix the construction problem, which it seems like we're doing through things like MLI Select, which again, we predicted this would get a lot of housing built.

[00:15:47] Or if we don't figure out the construction problem, which again, I think we are doing, the government has to do a bunch of make work projects to stimulate construction industry and create jobs. You know, subways, potentially that train that Trudeau was talking about in his like last days of office where he was trying to win people over. You know, the train from Quebec City to whatever Toronto, the one that everyone's been talking about since like the 70s. That don't ever get built. You know, by the time they have that, we'll have like Tesla hover jets or we'll be teleporting, you know.

[00:16:15] So, and you know, but maybe we finally get some higher quality infrastructure in Canada. Some notable examples of make work projects, Trans-Canada Highway was post-war economic adjustment. The Rideau Canal was like a depression era make work project. St. Lawrence Seaway, many of the brutalist buildings on Canadian university campuses like Robarts Library and University of Toronto. These were all make work projects when the construction industry collapsed, when we went through issues that could be like the one that we're seeing right now,

[00:16:44] where the government said, we got to spend a bunch of money to keep these construction people employed because they're all jacked and have a bunch of power tools and they're not the ones we want having a revolution. Maybe that's an over a bit hyperbolic. But anyway, I'll let you get over to kind of the guest on what we're going to talk about. Yeah, yeah, for sure. No, some really great points and insights as always.

[00:17:02] But let's turn it over to the second half of the show where we bring in Rod Gilbert, who is the president of the Canadian Construction Association, a man that knows far more about construction than you and I, Dan, because he travels across the country speaking to the actual people doing it. And we ask Rod some really great questions. We discuss the following. We talk about infrastructure investments needs and how they have that ripple effect into the rest of the economy.

[00:17:29] We address the silver tsunami workforce challenge and dealing with the tens of thousands of retirement workers and how they plan on addressing these labor shortages, both through things like immigration, but also things like AI and new technology. Talk about modernizing the procurement process for better infrastructure projects and faster completions on these things.

[00:17:55] And of course, how the government at all levels can support industry growth while also maintaining the current trade tariff risks. So stick around for this. It is a great conversation. I learned a lot, as I always do when we have these fantastic guests on. So we hope you enjoy this next segment. Okay, we are joined here today by a president of a very important association. Rod Gilbert, thank you so much for joining us today.

[00:18:25] I'm going to let you introduce yourself and tell us and our audience a little bit about you, what you do and the organization that you are with. Yeah, well, thank you, Nick. And thank you for having me today. Yes, I'm Rod Gilbert. I'm the president of the Canadian Construction Association. So Canadian Construction Association, we're representing about a bit more than 18,000 construction companies all over Canada are a member of us.

[00:18:54] We get our membership through our local and provincial integrated partners. We have 57 of them all over Canada, and all our membership are coming through them. We are representing all the sectors of the industry, including like all the general contractor, trade contractor, all the MSN, what we call the MSNS. We are civil, like vertical, horizontal.

[00:19:23] So we basically are the center stage of all construction companies in Canada. CC has been around just quickly, been around for about 104 years. Wow. And funny enough, the CCA was created in 1918. And I just learned that like the last few months.

[00:19:49] CCA was actually created at that time in order to integrate into the industry the prompt payment legislation, which is funny because it's just something that was brought up into the industry last few years. So that was the main purpose of the industry. But now we're really like advocating for everything related policy-wise with the industry. Very interesting. Fantastic. Yeah.

[00:20:15] I guess that association has probably seen a lot of change happen in the industry between now and then. I mean, would have been maybe a comparable set of issues back then with the tariffs and coming on the tail end of the Great Depression as well, which is kind of funny. So the way that we met is sort of you had sent out this campaign that's going on right now, the construction for Canadians built by us for you, the national campaign calling for action on infrastructure investment and development.

[00:20:44] Sorry, obviously with the theme of the federal election, trying to get the policymakers to put some attention on this need. Can you tell us a little bit about that campaign that you're working on right now? Yeah. So for the first time ever this year, CCA, we've decided in order to make sure that construction was at the center of the campaign.

[00:21:04] We are a registered party into that federal election that allowed us to do advertising and we're engaging with parties and policy. And mostly it's to raise the construction industry profile within the campaign. Like when we talk about federal election, like, and we can talk about that later, but we should remove a little bit of politics and infrastructure development. But that's something else for now.

[00:21:31] But we really felt this year that, first of all, like a few years back, like when COVID happened, and I don't want us to talk about COVID. I think it's in the past and that's good like this. But when COVID happened, construction was the solution. Construction was the industry who stepped up. We were the only industry to keep working during COVID and we kept building roads and school and hospital, like testing centers. So we were the industry who stepped up to maintain our economic level into Canada.

[00:22:01] So we're really proud of that. So we felt that as we were moving forward with like we have a new president, I call it, or ex-friend from the south of the border. And now we're in the middle of a federal campaign. So we really felt that construction should be at the center of the campaign. This is why we developed that construction for Canadians.

[00:22:26] And really the idea was to make sure that not only our industry, our members, because as you know, we employ about like 1.7, 1.8 million people. These are all voters. So if we can leverage these people to make sure that our issues are at the center of the campaign, that was really the goal behind the campaign. But funny enough, so I just want to add to that. And I'm going to brag a little bit, though. I think I can right now.

[00:22:52] So I was just in Victoria on Tuesday. And I was waiting in line to get a Starbucks coffee. And I'm just like that, starting to talk to the lady behind me. And we're talking about the campaign. She was asking me who's going to win, what do you think, whatever. And then I explained to her what I was doing. And she said, oh, yeah, like you must be happy because construction, it's all over Canada now. It's infrastructure. It's housing crisis.

[00:23:21] It's really politicians are talking about that. And that made me proud. That means that what we're trying to do, like our members are talking to their politicians, are talking to candidates, and they're bringing the construction in the middle of the campaign. So that's a good news. And when it's good, and I know it's good for construction, and I'm a bit biased here, but it's also good for Canadians. Because as you know, I would talk about that, I'm sure, like our Canadian infrastructure right now, and it's in a really, really bad shape.

[00:23:50] And we really need to invest in it if we want to face the issue with the U.S. right now and the trade wars coming. Yeah, those are some really great points. I mean, I think construction, when people think construction, they think, you know, when the average person maybe thinks, okay, I see road work or I see buildings being built.

[00:24:09] But construction plays such an integral role in the Canadian economy from employing, you know, hundreds of thousands of people, whether they're project managers or coordinators or trades people or, you know, just there's so much vertical integration there. And construction isn't in a great spot in some of these areas right now, right?

[00:24:31] So what infrastructure investments are most needed right now to help the Canadian construction industry grow? And how would these investments help the broader economy, right? What's that trickle out effect into the rest of the economy for people that aren't exposed directly to the construction industry? Yeah, that's a great question. And that's what we're trying to promote during that campaign. So there's two sides of that answer.

[00:25:00] First, we are facing a housing crisis. Like you're in your business, we're all aware of it. But the major problem with the housing crisis right now, it's not so much that we cannot build houses. I think we will. If we're given the opportunity, we will build the houses that we need. But the problem that we're facing right now, the main issue, we don't have the housing infrastructure to support the development and the building of these houses.

[00:25:25] So working with our colleagues at the Federal Reserve Canadian of Municipalities, we know now that for each unit that you build, iRises or single home, you need $107,000 of housing infrastructure. What is that? Roads, water, sewer, electricity, anything that you need to support the building of that houses.

[00:25:51] That the way it is right now, it's in such a bad shape that there's no way in the world without major investment into that. And honestly, like we did quick calculation. And we believe that in order for us to meet the 5.8 million houses that we need today, we probably need an investment from mostly the federal government around $600 billion. So let's be honest there. It's not going to happen on Monday.

[00:26:20] It's not a short-term decision. But it's bringing back to my point number two. We need long-term planning. We need like a 25-years plan. We need government at every level to think outside of the four-years electoral cycle just to commit to that investment that we know.

[00:26:39] And because when you know what's coming, when you have like a roadmap for the future, you know how many schools, how many hospitals, like bridges, all the rules that you would need, then you can plan and build these houses. The second thing that I'd like to mention about that, because that's a great question. And it's true more than ever today. As we're facing these tariffs from the U.S. And I have to say not it was the U.S., but really the U.S. is in trade war with everyone in the world now.

[00:27:07] And we kind of feel a bit lucky that we're not as bad in Canada, but still. So we have a trade war. And that's problematic for Canada. But we've not invested in our trade infrastructure in years. Our port, railway system, airport, even like our major road through Canada are not in such a good shape. And they need massive infrastructure.

[00:27:39] Sure. Any of them, any party really to talk about these trade infrastructure. And that will be essential for the crisis coming.

[00:28:09] Great points. Yeah. Excellent insight. You know, you spoke a little bit about long term planning there. And on that note, you know, we keep hearing about this idea of like a I think it's a silver tsunami. Right. Like a mass retirement of older folks who are in the approaching retirement age in the construction industry. And that as well as, you know, this theme during at least during the pandemic, which we heard about, which was industry worker shortage.

[00:28:37] How can we solve these problems? Like what is what needs to be done either from a policy perspective or from a private sector perspective to solve this this problem in the in the construction industry from a labor perspective? There's many things there. So first of all, we have as an industry, all of us together, we have a role to play. I think we have to change our perception of our industry. First of all, our industry, like maybe like 40 years ago was problematic.

[00:29:07] But now construction, first, it's safe. It's good job. It's well paid. If you're a young person looking for an opportunity, I think construction should be something that you should be looking for. And but as an industry, we're still seen sometimes as as dangerous. They're the York outside. It's cold. Like and it's not so much the younger generation are thinking that. But it's still the old reflex of our parents. And myself, I'm I'm I'm a father of two.

[00:29:37] And my kids are about to go one university. And the other one is not sure yet. But we have as a parents a role to play for that. That being said, in order for the parents to play a role, our industry need to reach out to these people. And we need to change the perception. Asking the question about like the retirement, you're absolutely right. So we're expecting over the next five to eight years that around 300,000 construction worker will retire. Good for them.

[00:30:06] Will deserve long career. That's good. But that's going to create create a massive gap. And when you do the math, well, 300 people will leave. We're not expecting more than maybe around 200,000 or 220,000 new entrant into the construction. It could be different ways. Younger generation, new Canadian, all this. So that that leave us a gap of about 80,000 people.

[00:30:33] And when you think about that gap, but in the workforce, when we have all these new infrastructure to build, that that's a massive problem. The other issue that people don't think about sometimes is that you're not replacing a 25 to 30 years experienced construction worker with a newcomer. It's not a one for one because the 30 years of experience, it's worth a lot. And they went through war, storm, issues, contract disputes.

[00:31:03] Like they've seen it all as when you're a newcomer into the industry, you need to learn. That's normal. That's just life. So it's not really a one-on-one. So we just need, and sometimes when we talk to the different owner or the different governments at every level, they're really having our time understanding that. So there's a few solutions. Attracting new people, that's okay. That's good. But also I think the federal government has a massive role to play. I think immigration on short term, it's a solution.

[00:31:31] We'll really be looking at bringing the right people to fulfill these jobs. Because the way it's worked right now in the immigration system in Canada, what they call the pointing system, it's not made for trade people. Don't get me wrong. I think we need doctors and nurses and school teachers. So all this, we need these people. But at the same time, they need to change the pointing system.

[00:31:57] Because when you're a trade person, and even if you're certified as a red seal somewhere in Canada, you could work it. But the way the pointing system is working, you're just not qualified to become a Canadian citizen and come to the immigration stream. I often mention that, and maybe that's the last thing I would say about that. We actually have a trade stream in our immigration system right now in Canada. But the problem is like that stream is so limited. And the way the pointing system is working, they never qualify.

[00:32:26] So I think the last 10 years, the last time, I don't have the stats here, but I think the last time I saw, only 6,000 people over 10 years came to that stream. There's no way we can meet a requirement there. No, those are horrible numbers. I completely agree, Rod. I think it really comes down to a lot of where we found ourselves in these kind of problems and predicaments right now is an education and a marketing play as well.

[00:32:53] I think for a while, and I have a background in construction, and Dan and I have spent a long time on construction sites and doing projects. And we work with a lot of people in the construction space. And I think it's just it doesn't have the reputation and respect that it deserves in the general world, right? People think construction and think, oh, I don't want to go get my hands dirty. You know, I want to sit behind a keyboard and send emails all day.

[00:33:17] But there is so much more you can accomplish in a construction role, especially from a, you know, we're in a, let's just admit it, we're in a bit of a recession right now. There is so much opportunity to make money for young people in the construction space. And that's what Dan and I have been advocating for this kind of stuff for years in the last three years that we've had the show.

[00:33:37] We've said numerous times that, you know, our friends that went into the trades and became journeymen and got their red seals at, you know, that right out of high school. Well, they were the ones buying houses, starting families, buying cottages, buying the nice car, the big truck, going on trips versus, you know. And there's nothing wrong with university, of course, but there's just such a clear path to within that construction.

[00:34:02] And yeah, maybe you have to get your hands dirty for a few years, but then you start your own company or you work up and you bring in those new young people. So I think the work you're doing is noble because I think it is a marketing and an education play. I got another question for you, Derrod. You know, it's hard not to talk about politics right now and the effect that it has on not just the economy, but specifically our industry. Let's call it real estate and construction under that umbrella.

[00:34:28] And we've covered this painstakingly that permitting and the procurement process are absolutely horrible in this country. And that all goes back to the government. So in what ways do you think policymakers can shift and modernize that permitting and procurement process to better support the construction industry as a whole to ensure that stuff gets completed on time?

[00:34:55] And I'm talking things like the critical infrastructure projects, but also just like, hey, I want to build a new garage or a new multifamily property. What can be done from a policy standpoint? Oh, so many things. I mean, I think we just first we just need to to be we just need to be pragmatic. We are we love red tape.

[00:35:16] And and I'll often say that like and even in my own where I live in my own city, like we we are very quick in Canada to bring the not in my backyard. Like that's really something in Canada, like like you, you have a good project. There's an example where I live like there's that was a good project densification on a on a future light rail train way multi unit.

[00:35:44] And then like a bunch of citizens got mad because they were going to tear down like an old farm. And that was the end of the project. So, I mean, is it a pragmatic way of dealing and trying to solve the housing crisis? I'm not sure. But that's just permitting thing. And it's in. And I have to say, though, I think municipalities are getting better. It takes time. But I think they realize now there was an issue. So and they're willing to take the time.

[00:36:14] But all this like it's not going to be a municipal. We all need to be aligned to solve that project. The other problem that we're facing, and it's mostly with public owner. It's that still that idea that the low cost, low bid procuring project, it's the right. It's the right thing to do. If you want to solve if you want to fight climate change, you want to bring innovation efficiency into the construction.

[00:36:39] We have to move away from the low bid and low price like kind of procurement process. Yeah. Like when if you ask contractor. So because that's the way it is. Like builders are building what you want us to build. So but in order for us to give you idea on new material that will last 25 years instead of 10 or bringing new technology that would help fighting climate change, you need to leave us the space to do it.

[00:37:07] And if you ask us to go cheap, we're going to provide cheap. But if we want to think about, again, planning long term, 25, 30, 40 years, 100 years, depending what you build. We really need to address the way that public owner are procuring construction right now that there's no other way to do it.

[00:37:26] And everywhere where we're government are using different model, Allianz, IPD, Progressive Design Bill, we've seen very good success because the contractor are involved early in the process. The risk is better shared between the owner and the contractor. And everyone has skins in the game. So we do we have better resort when we do that. And that should be the trend moving forward. So we really need to move away from the low bid process. For sure. It's so funny.

[00:37:55] I mean, no matter what type of construction you're in, if you're a homeowner trying to, you know, figure out a bathroom project or or, you know, a massive LRT or hospital infrastructure style project. It always comes back to everyone wants it cheap. Everyone wants it done fast and everyone wants it done at the best quality. But you're always going to sacrifice one of those things.

[00:38:14] So, you know, I hate to see that kind of race to the bottom happening in the construction sector, whether it's at the massive scale of, you know, these infrastructure projects or all the way down to, you know, I'm trying to get my bathroom renovated kind of thing. No, absolutely. And I'm always shocked when I hear because I'm not going to say, but I was with a government at the beginning of the week and their goal next year in the next few years, because they have budget issues. Imagine that.

[00:38:44] It's to be like quicker, faster, and then they are cheaper. Why? Let's build better and quicker. That's OK. But let's think about 25 years or more. We're probably going to save money because we did it better. Could not agree more. Last question here, Rod. And we're going to go back to the government. I know we didn't want to get too political here, but it's hard these days in the midst of an election and trade wars and again, having so much policy around everything.

[00:39:13] How can the government, as we said, all levels support the construction industry in its growth, in the procurement process, in kind of the most holistic way possible? Well, at the same time, protecting it from the likes of the trade wars. I mean, I know that Canada has an immense amount of natural resources that directly contribute to the construction industry. We have opened our doors from an immigration standpoint.

[00:39:41] So it seems that we have all of the boxes checked to fix these issues, but we haven't figured it out yet. From your perspective, as someone that's devoted their life to this, what do you think are the most obvious ways that the government can support the construction industry? So I think we have to remove, as I said, we have to remove politics from the decision-making process related to infrastructure at every level.

[00:40:07] When you, the worst thing, and I'm sure you guys know that, like the worst thing for us, it's uncertainty. Like the tariff, the tariff for what's going on right now, it's terrible. But at least if on our side of the border, if Canada would commit for really long-term, like infrastructure project, really like being clear of, and don't get me wrong, like things change, life happen. And like with all this, it's true.

[00:40:32] But if we can have that kind of safety net, say, you know what, this is the roadmap for the next 25, 30 years. And removing it from government, like just before the election, I have to give credit to the liberal where they're creating that, what they call it, a Canadian infrastructure council. It's based on discussion that we've had with that. It's called a national infrastructure assessment, where the idea, it's really to first do an assessment of what our infrastructure look like.

[00:41:00] And two, removing the decision-making or, you know, because, and it's still true today. Sometimes like, oh, I'm going to build that school or that bridge or that in your writing because that may be a chance to win. And so I think the best thing that any, and it doesn't matter who's at the power, it doesn't really matter. The next government should remove himself from the decision-making process. It should be an independent process.

[00:41:25] And when they're committed to it, because in a tariff war, two things can happen, like, or it's going to be short-term and that should be fine. But we could go into a massive recession. And you mentioned it before, we're not in it yet because technically we're not two quarter anyway. Right, right, yeah. But you know what I mean? Like, we're already there. And often the reflex of governments when we're entering in recession, it's to stop spending because they're in budget deficit, they're in bad position.

[00:41:54] And that would be the worst thing they could do. Instead, they should invest, create growth, economic growth, and we can improve our infrastructure system in Canada. And I think that's the best thing they could do. Yeah, completely agree. Dan, any closing thoughts?

[00:42:38] No. Wonderful. Rod, before we let you go, I do have one final thing for you. We have a national audience here, people that listen from coast to coast to coast here in Canada, a lot of whom are tradespeople, a lot of whom are in the construction industry in some capacity, whether they're, you know, journeymen, Red Seal, own construction companies of any kind, developers and investors.

[00:42:59] If you could speak to them right now and provide some insights from your kind of 30,000 foot national view of what's happening, what would that advice be? Just be patient. Just be patient. I think we're almost there. I know where we're facing crisis that reflects sometime like we take emotional decision. I think we need to stay rational. Canadian, we're strong people. We've been through crisis before.

[00:43:29] We survived COVID pretty well. I would say my message today, just remove the emotion of the decision-making process. And we're going to get through that because I can tell, I can talk from my industry. We are resilient people. And we're going to be there when it's time to relaunch. After all this, it's behind us. And it's time to reinvest. The industry will be there. And I think the future is bright. I completely agree. Sound words and wise words.

[00:43:58] Rod Gilbert, president of the Canadian Construction Association. Thanks so much for joining us today. If people wanted to get more involved, support you in a way, find out more about you, what's the best way to do that? Where can we find you? Maybe look at our website. You can always reach out to our staff. And as I mentioned, we have 57 local and provincial construction associations all over Canada. They're always happy to talk to members. And anyone are interested by the industry, I think that's the best way to reach out. Amazing.

[00:44:28] Thank you so much. Thank you. The content of this podcast is for educational and informational purposes only. It is not intended as financial, legal, or investment advice. Always consult a qualified professional for advice tailored to your unique circumstances. The views expressed are those of the hosts and guests and do not necessarily reflect the opinions of affiliated organizations. Daniel Foch is a real estate broker licensed with Valerie Real Estate Inc.

[00:44:54] Website is Valerie.ca, V-A-L-E-R-Y.ca. And a member of the Canadian Real Estate Association, the Ontario Real Estate Association, and the Toronto Real Estate Board. Nick Hill is a mortgage agent and partner at OWL. Mortgage license number 10317. Agent license M21004037. Agent license M210037.