How Government Spending Can Affect Your Real Estate Investments

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

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

[00:00:12] The government is spending billions of dollars to make the economy look good and it can

[00:00:19] have a massive impact on real estate in Canada.

[00:00:23] And that's exactly what we're going to talk about in today's episode.

[00:00:26] So stick around, you might learn a thing or two.

[00:00:29] So the government is spending and it is propping up three key vanity metrics that they use

[00:00:34] to claim that our economy is doing great, which is GDP, unemployment and wage growth.

[00:00:41] So the government is gaming the system?

[00:00:46] And they are the system.

[00:00:48] So do they even need to game it?

[00:00:50] I guess it's kind of like the casino right?

[00:00:52] The house always wins.

[00:00:54] Yeah, I mean seems to be the case here.

[00:00:56] Government spending seems to be the primary driver of GDP growth from Q1 to Q2.

[00:01:01] The biggest contributor to Q2 GDP growth in Canada was giving government employees raises.

[00:01:12] Now Dan, our podcast isn't really the place to just sit around complaining about the

[00:01:16] government or how bad Canada's economy is.

[00:01:20] No, no, I do more than enough of that on Twitter and Instagram according to my

[00:01:24] followers.

[00:01:24] Yeah, I didn't want to be the one to say it.

[00:01:27] But yeah, you are, you're getting pretty depressing on there sometimes.

[00:01:31] Yeah, what can I say?

[00:01:32] I'm a reformed emo kid.

[00:01:35] I know you're going to that under oath concert in December.

[00:01:39] Yeah, that's I guess that wouldn't really qualify as emo, but this is not my emo

[00:01:43] Instagram.

[00:01:44] The Canadian real estate investor podcast is where we are today and today we're

[00:01:49] going to help you understand politics and the economy rather than complaining about

[00:01:54] them so that we can make better investment decisions.

[00:01:57] And today we're going to do just that.

[00:02:00] Welcome back to the show.

[00:02:02] My name is Nick Hill Still, and I'm a mortgage broker with our mortgage and

[00:02:07] love to help you with all of your mortgage needs.

[00:02:10] So give me a shout if you have any.

[00:02:12] And my name is still Daniel Fosch and I'm a real estate broker.

[00:02:15] And similarly, I'd love to help you with your real estate needs.

[00:02:18] So if you're looking to buy or sell property or if you're a developer or

[00:02:21] institution who may need some consulting work, I'd be happy to help you out.

[00:02:25] So today we're going to talk about GDP growth, government spending, upcoming

[00:02:31] elections in Canada and the US and how these things might factor into picking

[00:02:39] a real estate market to invest in.

[00:02:42] Sounds like a good time, Nick.

[00:02:43] Let's dive into it.

[00:02:45] Okay, let's start off with GDP.

[00:02:47] This is from analysis from two of the biggest financial institutions here in

[00:02:52] Canada, that is at Desjardins and RBC.

[00:02:56] Yeah, so Desjardins, their heading states that GDP beat the Bank of Canada's

[00:03:01] forecast but it's not likely to happen again in Q3.

[00:03:06] And they provide a pretty solid analysis here.

[00:03:09] There's two notable charts that stood out to me.

[00:03:12] Can you read me the heading on the first one, Nick?

[00:03:14] And just kind of explain it and then I'll do the second one.

[00:03:16] Yeah, for sure.

[00:03:17] So this one's a nice colorful one here.

[00:03:21] Government spending drove real GDP growth in Q2 of 2024.

[00:03:27] So we look at household consumption versus net exports versus residential

[00:03:32] investments versus non-residential investments and government spending.

[00:03:38] And we look at them annualized quarterly and you can kind of see that

[00:03:42] the yellow piece making out government has just gone way up in Q2 of 2024,

[00:03:49] even compared to Q2 of 2023.

[00:03:53] Yeah, so government spending is really driving growth in GDP and it is driving

[00:03:59] a couple of other metrics that we mentioned earlier.

[00:04:02] And all of these combined are sort of painting this rosy picture for Canada's economy,

[00:04:07] even though the average Canadian doesn't really seem convinced that our economy

[00:04:10] is doing exceptionally well because it doesn't feel like it's performing well for them.

[00:04:14] And that's where graph number three in their analysis comes in,

[00:04:18] where it shows that real GDP per capita is continuing its downward trend.

[00:04:25] And this is something we've talked about a lot.

[00:04:27] I posted a ton of analysis on this, but real GDP per capita.

[00:04:30] So GDP numbers were updated for Q2 of this year and even though GDP is growing,

[00:04:35] our population is outgrowing it.

[00:04:36] And so if your population is growing faster than your GDP,

[00:04:40] then your GDP per person is going down.

[00:04:43] And so the population figure, the denominator, is growing faster

[00:04:48] than the actual numerator, the number on top.

[00:04:51] And that's where we're seeing a decline in what many people would call

[00:04:54] a measure of living standards.

[00:04:57] And RBC chimed in on this as well, right, Nick?

[00:04:59] Yeah, RBC's analysis also shows that per capita GDP,

[00:05:03] which is something that you and I have talked a lot about on the show,

[00:05:05] and not just GDP in general, but per capita GDP declined for another quarter,

[00:05:12] now making that five quarters in a row.

[00:05:15] Now this is funny because this goes back to, Dan, your idea of a me session,

[00:05:21] right, that makes up that per capita bit rather than just a we session,

[00:05:24] which I saw Brendan Bernard indeed.com,

[00:05:29] Indeeds economist mentioned on BNM Bloomberg.

[00:05:32] I wonder if he's a listener to the show.

[00:05:35] Do you think he got that little slogan from you or where did that come from?

[00:05:40] I think him and I chat on Twitter quite a bit.

[00:05:43] But yeah, I mean, maybe the show made history.

[00:05:45] I don't know.

[00:05:46] It seems like we're creating, coining mainstream terms now.

[00:05:49] So check this out.

[00:05:51] I did coin the term me session on this show.

[00:05:55] And on one hand, I'd like to think that people like Brendan Bernard

[00:05:58] and other economists are listening or tuning into what we're doing.

[00:06:05] During the recording of the episode, I actually dropped the me session thing on

[00:06:09] Twitter on July 30th.

[00:06:12] I just tweeted that Canada is in a recession, not a we session,

[00:06:15] which would be all of us a we session.

[00:06:17] And it is in a me session.

[00:06:20] And to be fair, I think it was Justin Trudeau who had the original,

[00:06:23] which was the she session, which is more of like a glass ceiling analysis.

[00:06:26] But the whole whole kind of thing came from me realizing that I was in a recession

[00:06:32] and everyone I knew was in a recession.

[00:06:34] You know, we're all seeing a contraction in our

[00:06:37] in the economy that we're seeing in our life, income contracting,

[00:06:41] things getting more expensive, not having money to spend on stuff.

[00:06:44] Even though Canada's economy, the we, all of us together

[00:06:49] wasn't technically in a recession.

[00:06:51] Then a few days later on, I guess on August 3rd,

[00:06:54] you posted the me session tweet.

[00:06:55] And then there was a paper that states mid year outlook.

[00:06:59] It's a me session, not a recession as the as the as the headline rate.

[00:07:04] Yeah. Yeah.

[00:07:05] So Charles Sain Arnaud, who is a chief economist from Alberta Central,

[00:07:12] which is a credit union or lender in Alberta,

[00:07:15] used the term in a headline in an economic paper.

[00:07:20] And since then, from what I can see, a handful of media outlets

[00:07:23] have posted content about the the me session.

[00:07:26] Yeah, about a week later, PNM Bloomberg, Dan,

[00:07:30] who you've contributed to over the years did a video with Brendan Bernard,

[00:07:34] where he even mentioned the me session.

[00:07:38] So it's really getting out there.

[00:07:40] Yeah. And then Global News covered it on August 14th.

[00:07:43] Financial Post published a headline with it on August 8th.

[00:07:47] And CBC even covered it a couple of days ago.

[00:07:50] Rate Hub even posted an article,

[00:07:53] what the me session means for you and how to write it out.

[00:07:58] Yeah. So anyway, there are hundreds of mentions of the me session now.

[00:08:02] Yeah. And thank you for that.

[00:08:03] The first original on this show that that, you know,

[00:08:07] I can't take full credit for as a Nick Hill original.

[00:08:10] But congratulations.

[00:08:12] And how does it feel to to finally say something original?

[00:08:16] Yeah, it's great. Good feeling for sure.

[00:08:18] I mean, I'm definitely going to take credit for it

[00:08:20] because the receipts are there. Sorry, Charles.

[00:08:23] Yeah. I mean, look, you're finding an influencer.

[00:08:25] You've gone mainstream.

[00:08:26] You should be proud of yourself on this one.

[00:08:28] I did say it was my goal to become the world's first econ influencer.

[00:08:32] So. OK.

[00:08:35] So now that we've sufficiently pumped your tires,

[00:08:38] what does it mean if people are in a recession on their own?

[00:08:44] So, I mean, it means that generally,

[00:08:49] even though Canada's GDP is growing,

[00:08:52] people, individuals have less money to spend on stuff.

[00:08:55] Stuff? OK. Very elaborate.

[00:08:57] Can you give me any details on what you mean by this stuff?

[00:09:01] Yeah. So I would probably start with the biggest one of all,

[00:09:04] which would be housing.

[00:09:06] Housing is supposed to be 30 percent of the household budget.

[00:09:10] Yeah. And we've chat about on this on the show before as well, right?

[00:09:14] Have you ever heard of the 30 percent rule?

[00:09:16] It's the idea that you should budget a minimum of 30 percent

[00:09:21] of your grossly month income before your tax for housing costs.

[00:09:25] And it basically, you know, personal finance gospel at this point.

[00:09:29] And it's kind of so common that rent calculators even have that like built in

[00:09:34] as a 30 percent rule for default assumptions on how much

[00:09:37] you should be spending on housing.

[00:09:41] It is also the baseline for affordability, according to CMAHC for MLI Select,

[00:09:46] which rents, which requires rents must be set at 30 percent of median

[00:09:51] renter income. OK. So this 30 percent keeps on appearing.

[00:09:55] What's the significance of that?

[00:09:57] Well, if people are in a recession, it means their household wealth is

[00:10:01] contracting, which means that what we can spend on shelter,

[00:10:04] whether we're buying a house or renting a house is going to go down,

[00:10:07] especially since it's the biggest portion of household income.

[00:10:11] So it should see the biggest effect.

[00:10:14] Now, this is from one of our good friends in the personal finance space.

[00:10:18] I'm going to read a little list here.

[00:10:20] Housing, including rent or mortgage, property taxes, insurance

[00:10:24] should be about 25 to 35 percent of your gross income. OK.

[00:10:29] Utilities, electricity, water, gas, internet, five to 10 percent.

[00:10:33] Your transportation costs, meaning whether maybe you have a car or that car needs

[00:10:37] fuel and insurance or even if it's just public transit should only be making up

[00:10:42] 10 to 15 percent food and groceries, which are obviously much higher than it used

[00:10:47] to be, should make up 10 to 15 percent as well.

[00:10:51] That includes buying food at the supermarket as well as dining out health care,

[00:10:56] insurance and then those out of pocket expenses, much lower five to 10 percent.

[00:10:59] Obviously, things are a little different here in Canada.

[00:11:02] Savings and investments, you should be allocating 10 to 20 percent of your funds

[00:11:05] for that debt repayment.

[00:11:08] So credit cards and other loans, five to 10 percent entertainment and recreation,

[00:11:12] five to 10 percent and then miscellaneous clothing, personal care, five to 10 percent.

[00:11:19] That's got to be tough for you, Dan, as a style guy, right?

[00:11:22] Clothing, more out of 30, 40 percent there.

[00:11:26] So my guess here would be that a reduction in housing expenses is going

[00:11:31] to be the most significantly visible impact on your household wealth because

[00:11:34] after going through that list, it is by and large the largest portion of what

[00:11:39] you should spend your household income.

[00:11:40] Yeah, for sure.

[00:11:41] The only other thing that comes close to that is savings and investments,

[00:11:44] which caps out at 20 percent in housing starts at 25.

[00:11:48] Right? So that's why you're seeing rents failing to grow and property

[00:11:53] values as well failing to grow.

[00:11:56] Exactly. See?

[00:11:57] So we can talk about falling GDP per capita and make it valuable for the audience,

[00:12:02] not just yelling the sky is falling and being a negative Nancy.

[00:12:06] Negative Nancy, more like negative Dan C.

[00:12:11] What was it that Calgary boys were calling you?

[00:12:14] Brennan and Tony, do you know Dan, right?

[00:12:16] Yeah, rather than, you know,

[00:12:18] honestly, I would actually I would rather be called the doomer than a boomer,

[00:12:22] I guess. But the reason I do say doomer stuff is so that we can figure

[00:12:26] it out and see how it can create value for us.

[00:12:29] I mean, the best case scenario doesn't need a plan.

[00:12:32] The worst case scenario does.

[00:12:34] Yeah, love that.

[00:12:35] Hope for the worst, prepare for the best.

[00:12:36] OK, so now that we've got a sufficient understanding of GDP per capita

[00:12:42] and how that may interact with real estate investments,

[00:12:44] let's jump back to why GDP is even growing in the first place,

[00:12:49] because there's a lot we can learn from that too.

[00:12:52] Government spending now accounts for most of Canada's economic growth

[00:12:56] and government hiring accounts for most job gains according to these analysis.

[00:13:02] So basically, the government is

[00:13:04] pain for GDP growth on decreased unemployment by doing a ton of hiring.

[00:13:11] Yeah, which is fine, I guess.

[00:13:13] I mean, it's one way to grow an economy.

[00:13:15] I don't know if it's the most prudent way to do it today.

[00:13:19] But I guess it's just not really a genuine way to grow your GDP.

[00:13:22] Right? Yeah, exactly.

[00:13:23] I mean, population growth propping up our GDP by simply adding more consumers

[00:13:28] and workers to the economy.

[00:13:31] Yeah, it is somewhat similar to that population growth, except adding people

[00:13:35] has a negative impact on living standards and GDP per capita.

[00:13:39] Yeah, you posted an article from Macro Business Journal in Australia

[00:13:43] that says Canada and Australia have resorted to quantitative

[00:13:48] people in to give the illusion of growth while individual living standards are collapsing.

[00:13:55] Such a good term, quantitative people.

[00:13:58] Yeah, it's I mean, hey, it's almost as good as me session.

[00:14:01] Almost so.

[00:14:02] So anyways, everyone loves to talk about politics, right?

[00:14:06] Like the politicians, elections, etc.

[00:14:08] But less about like the actual government, the big entity of staff

[00:14:13] beyond the politicians.

[00:14:15] And it is important that the government is spending a lot of money right now,

[00:14:20] because it can tell us something about where capital is flowing in Canada,

[00:14:23] especially when we look at public service jobs.

[00:14:26] So as of 2020, the public service

[00:14:28] employs 320 or employed 320,000 people and was and is still today.

[00:14:36] Canada's single largest employer.

[00:14:38] OK, so the government hiring is propping up GDP

[00:14:43] employment numbers and even wage growth according to this day.

[00:14:48] Jardin research.

[00:14:49] Yeah, so the financial post headline that that published

[00:14:55] Deseret analysis in their article says what's driving Canadian wage growth?

[00:15:00] All those federal government employees.

[00:15:02] And it brings us to this Deseret report, which I mentioned earlier in the show.

[00:15:06] So read me the subheading on that.

[00:15:08] Federal civic service wage gains and hiring are skewing headline numbers

[00:15:14] according to a Deseret and report.

[00:15:16] The report shows a few key charts that give the headlines on those.

[00:15:22] What are these charts called, Dan?

[00:15:24] Yeah, so there's a couple of great charts in there.

[00:15:26] Here what the headings say on the charts in this in this day,

[00:15:30] your report. So the first one shows that public

[00:15:33] sector compensation is increasingly driving wage growth.

[00:15:38] The second shows that public servants are among the highest paid workers in Canada.

[00:15:44] And the third shows that public sector

[00:15:47] employment gains have been substantial since 2019.

[00:15:52] And and that brings us to a current present day figure of three hundred

[00:16:00] federal public servants as of March 31st of this year.

[00:16:04] OK, so big hiring spree in the last couple years.

[00:16:07] So if I get this correct, everyone is just going to work for the Canadian

[00:16:10] government and then invest in Canadian real estate in Canada.

[00:16:14] We'll just keep on keeping on.

[00:16:16] Is that how it's going to go, Dan?

[00:16:17] Yeah, basically like everyone will either work for the government or they'll be

[00:16:20] the realtors who are selling properties back to one another.

[00:16:25] Oh, man. OK.

[00:16:26] So nearly one out of three federal employees works in Ottawa,

[00:16:31] Gatineau, this proportion has been on the rise since the mid-1990s when it was

[00:16:37] roughly one in four now federal employees comprise nearly 20 percent of Ottawa.

[00:16:43] Gatineau is employed labor force.

[00:16:45] Montreal has the second largest number of federal employees.

[00:16:48] Toronto, the third largest.

[00:16:51] Yeah. And Steve Saretsky actually posted this chart on Twitter that showed

[00:16:55] Ottawa has like the largest portion of people working from home.

[00:16:58] They like to massively lead the country in that data point.

[00:17:02] So I guess it is interesting because you have

[00:17:04] Ottawa, you have all these government offices, but then you have government

[00:17:08] employees being the slowest to return to office.

[00:17:11] And yeah, like you mentioned, I think it's almost 20 percent of all

[00:17:15] workers in Ottawa are people who work for the government.

[00:17:18] So one in five people who are working in Ottawa work for the government.

[00:17:22] Following that, when you look at local populations that have the largest percentage

[00:17:28] of their workforce working in the government, Halifax is 9.1 percent

[00:17:33] of their workforce and in Kingston, it's 8 percent of their workforce.

[00:17:36] Really? Halifax?

[00:17:38] What's what's going on out there?

[00:17:40] I think it's military actually, according to Wikipedia.

[00:17:44] OK, let's pull this up.

[00:17:45] So the largest employer is HRM.

[00:17:49] That's in nature.

[00:17:50] Oh, sorry.

[00:17:50] In East Ham, with the right.

[00:17:53] Right. OK.

[00:17:53] You had to throw that one in there.

[00:17:54] I don't I wasn't aware of that.

[00:17:56] Herm is what we're calling it on the show here.

[00:17:59] East Coast Herms.

[00:18:00] OK, so Halifax, largest employer in Halifax is government with most provincial

[00:18:04] government departments headquartered in the area as well as many regional

[00:18:07] offices for federal government departments and agencies.

[00:18:11] Yeah.

[00:18:11] I mean, Dan, we have an episode that's already out on the federal government

[00:18:16] and their real estate portfolio and the amount of military lands in there.

[00:18:19] Yeah, military lands and buildings is extensive.

[00:18:23] Yeah. I mean, it's a big landmass to defend.

[00:18:25] And when you've got the US next to you and, you know, I mean, we're hearing about

[00:18:29] a lot of foreign interference stuff in politics in Canada.

[00:18:32] It's it's going to end up being a priority, right?

[00:18:35] So the Department of National Defense is

[00:18:39] the single largest employer and Halifax Harbor continues to serve

[00:18:43] a major military purpose as the Atlantic Ocean Home Port for the Royal

[00:18:46] Canadian Navy, CFP Halifax is Canada's largest naval base and the nation's

[00:18:51] largest military base in number of personnel.

[00:18:54] So there you go. Wow.

[00:18:56] OK, cool. Interesting.

[00:18:57] So for me, when I think about like government cities, you know, I think Ottawa,

[00:19:01] but then I think like, OK, different departments or, for instance,

[00:19:04] the CRA in Sudbury.

[00:19:07] Yeah, we'll get to some of those because I feel like every time I'm on

[00:19:10] the phone with somebody in the CRA now, they're from St. Johns,

[00:19:12] which is another big one we'll talk about.

[00:19:15] But those are tiny in comparison to places like Ottawa, obviously,

[00:19:18] and Halifax and Kingston.

[00:19:20] Yeah. So Kingston, according to the Kingston Economic Development

[00:19:25] Corporation, the major employer in Kingston as of last year, October 2023,

[00:19:31] Queens University, which has actually come up on the show a couple times before

[00:19:35] with 9352 employees, the Canadian forces base in Kingston,

[00:19:42] 8500 employees.

[00:19:44] Then a little further down the list, you've got the correctional services

[00:19:47] of Canada, the 2500.

[00:19:51] And next on the list, you have Victoria, B.C., where you have about 10,000

[00:19:57] government employees out of 18 or 180,000 workers in total.

[00:20:02] Then you have St. John's, Newfoundland, where there's about 5,000

[00:20:05] government employees out of 104,000 workers in total,

[00:20:09] Moncton, New Brunswick of the 74,000 people who work in Moncton, New

[00:20:13] Brunswick, 32,000 or 3200 are government employees.

[00:20:18] And Saugunai, Quebec, 2700 government workers in that city.

[00:20:23] I'm really happy you pronounced that one.

[00:20:25] Look, I was looking at that being like, I actually I actually put it in

[00:20:28] the notes and I had it in your thing and I was like, I'm not going to do this.

[00:20:33] And I googled how to pronounce it and I still got it wrong.

[00:20:36] I just think it's Saugunai.

[00:20:39] Apologies, all of our dear listeners in Quebec.

[00:20:42] As always, let's get back to the list.

[00:20:44] Rounding it out here, Quebec City, 15,000 government workers.

[00:20:49] Only 3.5 percent of the total Winnipeg, similarly large, 12,400 and then

[00:20:55] Regina, where you and I will be in its neighboring city Saskatoon next week.

[00:21:01] Then Regina with 3200.

[00:21:03] Yes. Speaking of all of our listeners in Quebec,

[00:21:07] we actually just launched our our Montreal meetups.

[00:21:10] And I think they're like there are having like the greatest,

[00:21:14] the fastest launch growth of any city so far, I feel like it's just it's growing

[00:21:20] real quick. So love to see it.

[00:21:22] If you want to get make sure you get to that.

[00:21:23] You know, I'm just going to put in that soft pitch there.

[00:21:25] I got to insert it somewhere in the episode.

[00:21:26] So go to a meetup second Tuesday of every month.

[00:21:30] Go meet some other fellow real estate investors and professionals in the space.

[00:21:34] We're going to get out to that one, hopefully before the end of the year, I think, Nick.

[00:21:39] So yeah, exciting.

[00:21:41] Yeah. Anyway, back to you.

[00:21:42] You mentioned Regina at the end of the list there.

[00:21:44] When I was there, I felt like everybody kind of referred to it as like a government city.

[00:21:49] Yeah. Well, even, you know, even Carla, Carla Brown, who's an expert

[00:21:54] in our realist community and who's who's organized a bunch of really

[00:21:57] cool tours and property tours for us next week.

[00:22:00] Then she's also our our Saskatchewan meetup host hosting in both cities.

[00:22:08] You know, she's kind of described Regina as a as yeah, much more government

[00:22:11] where Saskatoon seems to be a bit more, you know, she kind of younger,

[00:22:15] entrepreneurial, more vibrant kind of thing.

[00:22:17] So it's interesting that those two always seem to be opposites, right?

[00:22:21] You know, comparing a Toronto and a Vancouver, sorry, Toronto and Ottawa,

[00:22:25] right? Or essentially Ottawa to almost anything, anywhere where there's a big

[00:22:28] government presence, you know, again, going back to Subray.

[00:22:31] So similar to Subray with the CRA, you know, 2100 government jobs

[00:22:36] and then Edmonton, which often gets compared to Regina.

[00:22:39] I think there's like 14000 government jobs.

[00:22:42] Yeah. Yes.

[00:22:43] And the it is interesting, like each province seems to have like one or the other.

[00:22:48] Right. Like you got the Indian versus Calgary, Regina versus Saskatchewan,

[00:22:53] Ottawa and Toronto, right?

[00:22:55] So anyway, what's the point of what's the point of all this listing out cities by

[00:22:59] government employment? Yeah.

[00:23:01] Well, this is where you go and get your government jobs, everybody.

[00:23:04] So head over there and I'm kidding.

[00:23:07] This it has to do with what we're talking about.

[00:23:09] If the government is going to keep spending and growing,

[00:23:13] then you want to know where you can get the most exposure to that growth.

[00:23:21] Yeah. And as I mentioned earlier, government spending is propping up these three key

[00:23:27] vanity metrics and that they are using to say our economy is great GDP, unemployment

[00:23:32] and wage growth. And so GDP, our economy is literally growing due to government

[00:23:36] spending and the majority of job gains are coming from the public sector and

[00:23:40] wage growth is due to government jobs and raises.

[00:23:44] So it would be maybe not a bad idea to follow what they're doing around.

[00:23:49] Right? Yeah, exactly.

[00:23:51] So why does all this matter?

[00:23:53] Well, during the most recent US housing downturn, which followed the 2008 financial

[00:23:57] crisis, several cities demonstrated significant resilience, maintaining

[00:24:03] relatively stable housing markets compared to the broader national decline.

[00:24:08] Yeah. Washington DC, the presence of a federal government and related industries

[00:24:14] provided a stable job base during the 2008 financial crisis, helping to keep the

[00:24:19] housing market relatively strong in comparison everywhere else in the country

[00:24:23] during the downturn.

[00:24:24] Yeah. And north of the border, Ottawa's housing market was bolstered by the

[00:24:28] stability of government employment, which provided a steady demand for housing.

[00:24:33] The presence of the federal government and of course related industries

[00:24:37] helped Ottawa remain a little more resilient compared to other markets

[00:24:42] during the downturn.

[00:24:43] Yeah. And similar in the 90s recession, which was probably a much bigger

[00:24:48] downturn when we were in for us then the 2008, you know, Canada really saw a

[00:24:56] worse recession in the 90s than the US, I think.

[00:24:59] Halifax, which we mentioned earlier, which is their economy was driven by

[00:25:03] government military and educational institutions provided some stability

[00:25:06] during the downturn.

[00:25:07] Although it wasn't entirely immune to the housing market challenges, it was

[00:25:10] more resilient than many other cities in Canada.

[00:25:14] Yeah. And government cities, some of the ones that we've been mentioning,

[00:25:17] tend to have a little bit more of that resilience during recessions.

[00:25:21] And this is for a couple key reasons.

[00:25:23] Stable employment being one of the consistent demand for housing because

[00:25:27] of that stable employment and all that provides, you know, that economic

[00:25:31] insulation and consumer confidence remains a bit higher there because they're

[00:25:36] not affected by as much of the other negative stuff.

[00:25:39] And because government spending and projects are probably a little more

[00:25:43] prevalent there as well.

[00:25:46] So let's start with the top of the list there, stable employment.

[00:25:49] Government jobs offer security and are less less prone to layoffs,

[00:25:54] ensuring steady income and local spending, even during downturns.

[00:25:59] We're going to talk about what a downturn scenario might look like or

[00:26:02] the term austerity, which can happen during like more major credit cycles.

[00:26:07] We'll get to that in a little bit.

[00:26:08] But essential services often continue to operate and sustain employment levels.

[00:26:13] Consistent demand for housing, you know, the stable government workforce

[00:26:17] ensures consistent housing demand as employees need to live near their

[00:26:22] workplaces now public sector growth during recessions can further spark

[00:26:26] those local housing markets that where those people are employed and live.

[00:26:32] Yeah. The next piece would be economic insulation.

[00:26:34] A lot of these government cities have a diversified economy, including related

[00:26:39] industries like defense and education.

[00:26:41] Like you'll often see a college or university around some of these government

[00:26:44] cities, you know, Kingston be a good example with Queens, Ottawa.

[00:26:47] And this cushions them from those private sector downturns.

[00:26:51] Federal funding and contracts also provide a bit of a buffer.

[00:26:54] Then the next piece is population stability.

[00:26:57] So government employees tend to have longer ten years lower job mobility

[00:27:01] reduce the reducing the likeliness of mass relocations.

[00:27:06] So, for instance, if we look at, you know, the Alberta housing market where

[00:27:11] the whole economy there is affected by oil and gas.

[00:27:14] Well, if your whole economy is affected by something that has peaks and valleys,

[00:27:17] yeah, it's not going to be stable.

[00:27:18] But if you're covered, if your whole economy or that local economy is supported

[00:27:23] by government, government jobs, government employees, likely to be a lot less volatile.

[00:27:29] The next piece is consumer confidence.

[00:27:30] So having this population stability, economic stability boosts overall consumer

[00:27:37] confidence in that local city, which encourages spending and investment,

[00:27:40] even when other sectors are struggling outside of that local economy around the

[00:27:45] around the country.

[00:27:46] Yeah, exactly, Dan.

[00:27:47] And the last piece here is government spending on think like major projects.

[00:27:52] OK, so during recessions, governments usually initiate infrastructure style

[00:27:57] projects and engage in counter cyclical spending.

[00:28:01] So they're going against the grain to try to force things back the other way.

[00:28:04] Now, that creates jobs and simulates that local economy, again,

[00:28:08] further supporting the resilience to the cities that we've been covering

[00:28:13] with that government presence.

[00:28:15] And that last one is pretty key, right?

[00:28:17] In the last few episodes, we talked about things like the government lands

[00:28:20] project, which will be a huge government spending thing, right?

[00:28:26] I'm actually doing some consulting for developers who want to apply to the

[00:28:30] FLI Federal Lands Initiative.

[00:28:33] Wait, the fly the fly initiative?

[00:28:35] That's a great acronym.

[00:28:36] Yeah, yeah, of course it is.

[00:28:39] You're much better than Herm, which I introduced to you earlier.

[00:28:42] Yeah, let's let's forget Herm.

[00:28:43] We're fly guys.

[00:28:44] When you're clearing your throat.

[00:28:46] Yeah, where are you going this week?

[00:28:49] Flying Halifax, flying HRM.

[00:28:52] OK, so.

[00:28:54] Yeah, I guess, yeah, in regards to the Federal Lands Initiative,

[00:28:56] I have been doing some consulting there.

[00:28:58] So if anybody's a developer who wants better help understanding that, give me

[00:29:00] a shout, I've been texting back with the policy team on it and trying to figure

[00:29:03] out what's what that's going to look like after the announcement.

[00:29:06] Because they said that we just did an episode on it, but

[00:29:10] they want to break ground on some of these by like that be early 2025,

[00:29:14] which we kind of mentioned in the episode, like they sort of need to

[00:29:17] because they don't think it doesn't looks like the election is kind

[00:29:21] of unwinnable for them.

[00:29:22] But, you know, if anything is going to do it, this probably be it.

[00:29:25] Yeah, exactly.

[00:29:26] And, you know, they're also spending on other real estate related things.

[00:29:30] So Federal Lands Initiative is one of them.

[00:29:33] It's great episode out on a go check that out.

[00:29:35] We've already talked about some of these other things, right?

[00:29:38] Housing catalog, you know, the fact that they bought another 30 billion

[00:29:42] dollars worth of CMB is Canada mortgage bonds.

[00:29:46] You know, we've got the CMHC MLI select program.

[00:29:48] We've got the CMHC apartment loan construction program.

[00:29:52] We've got trade supports, skilled trade support.

[00:29:55] So there's much, much more.

[00:29:57] And what does all of this spending mean?

[00:29:59] Well, more administration, a.k.a.

[00:30:02] more jobs.

[00:30:03] So this mean that you should be investing in a government city to try

[00:30:07] to get a little piece of this action.

[00:30:09] I mean, it could be either investing in a government city for that stability

[00:30:12] or just generally understanding that where the government is going can be

[00:30:17] profitable.

[00:30:19] And that's what we talk about the government and policy so much on this show.

[00:30:23] Yeah, so whether you love it or hate this person,

[00:30:26] I want you to think about who is the most notable business person in the world

[00:30:30] right now, OK, businesses that align with government policies can thrive

[00:30:35] by capitalizing on opportunities created by regulatory changes,

[00:30:40] government initiatives and public sector contracts.

[00:30:44] So again, who is this loved or hated business person who is better at

[00:30:50] capitalizing on government initiatives better than anybody else?

[00:30:54] Elon Musk.

[00:30:55] So let's go through some examples of his businesses that have succeeded by

[00:31:00] following government policy.

[00:31:02] Maybe we can learn to do the same thing.

[00:31:04] Dan, hit me with the first one.

[00:31:06] You may or may not have heard of this company.

[00:31:08] Yeah, it's interesting.

[00:31:09] Mitch from our co-founder of realist.ca is the one who actually

[00:31:14] tipped me off to this because I had been really like teaching a lot of like

[00:31:17] teaching a lot to people in the realist course about understanding local policy

[00:31:21] and where the government was going and foreplexing especially and following what

[00:31:26] it's like, OK, if the government is giving you a framework of how they want

[00:31:29] you to go out and make money, do what they're going to tell you.

[00:31:33] Like, the easier that you can kind of play within the rules that are being

[00:31:37] created as they're laying the tracks and you can follow them.

[00:31:40] That's kind of where you can get rewarded pretty handsomely.

[00:31:44] But also there often seems to be incentives and that's where Tesla,

[00:31:48] which is this small auto manufacturer from America that was once valued,

[00:31:54] I think more than all of its competitors combined,

[00:31:57] capitalized on renewable energy initiatives.

[00:31:59] Right. And like I mentioned, Mitch really pointed this out to me.

[00:32:03] Tesla capitalized on government initiatives for EVs and

[00:32:06] renewable energy, including tax credits, grants and favorable regulations.

[00:32:10] I think like one of their biggest revenue line items is literally these

[00:32:13] like tax credits from the government and they're one of their income line items.

[00:32:18] Yeah. Well, actually at one point,

[00:32:20] they were taking those those those breaks and actually selling them to other

[00:32:24] car companies. So yeah, there you go. Fascinating.

[00:32:28] Selling carbon credits.

[00:32:29] Yeah. Yeah, literally.

[00:32:30] Right. I mean, they made hundreds of millions of dollars doing that.

[00:32:33] Another Elon Musk related business.

[00:32:35] This one was actually founded by his brother, I believe, Solar City,

[00:32:39] which is now a part of Tesla and solar energy.

[00:32:43] So so this really grew rapidly by leveraging none other than government,

[00:32:47] subsidies, tax credits and incentives for solar power installation.

[00:32:51] Then you remember years ago, there was that huge solar craze where everyone

[00:32:55] was putting them on their roofs.

[00:32:57] Well, Solar City was a major part of that.

[00:33:00] The company became a leading residential solar power provider,

[00:33:03] contributing to the broader adoption overall of solar threat to United States.

[00:33:08] The next one would be SpaceX, which is exceptionally popular right now

[00:33:13] because Boeing has managed to have to Boeing is having just like the worst

[00:33:19] couple of years, but you know, Boeing had these issues and now there's two

[00:33:24] astronauts who are stuck in space, which sounds like I'm a big thing.

[00:33:28] I think I've seen that movie before.

[00:33:29] Yeah, I'm a big fan of like these types of space movies.

[00:33:31] So but it's kind of a little less.

[00:33:34] It's a little more dark when it's like happening real life, right?

[00:33:37] So anyway, SpaceX, I guess is going to send something up to go rescue them.

[00:33:41] And SpaceX has made a lot of money on NASA and government space contracts.

[00:33:45] Their success was closely tied to that.

[00:33:46] And they became a leader in the commercial space industry

[00:33:49] with government contracts serving as a key foundation for its growth.

[00:33:52] But even looking beyond Elon Musk companies like General Dynamics,

[00:33:56] Raytheon Technologies, Lockheed Martin all did similar things

[00:33:59] with government space and military technologies.

[00:34:02] Yeah, and I mean, look, Johnson and Johnson did the same thing

[00:34:05] with public health initiatives.

[00:34:07] Yeah, tons of examples, maybe the most notably in recent history would be Pfizer.

[00:34:11] Right? Yeah, I mean, hey, they really went

[00:34:13] from just the name on the little blue pill to something else.

[00:34:17] Yeah, the Pfizer COVID reference, I guess, would also lead you to 3M

[00:34:22] because they really kind of led the way with the PPE during that period of time.

[00:34:26] Yeah, I mean, look, tons of examples, General Electric,

[00:34:29] Energy and Infrastructure, Berkshire Hathaway,

[00:34:33] who did it with utility regulation and renewable energies.

[00:34:37] IBM did it with government IT and cybersecurity contracts.

[00:34:41] The list goes on and on.

[00:34:43] So what is the main point here?

[00:34:46] The point is that the government spends a lot of money and hires a lot of people.

[00:34:49] And you can literally make investment decisions based on what they're doing

[00:34:54] or going to do.

[00:34:56] So whether it's buying in a city, they hire a lot of people or buying property

[00:34:59] because they're telling people to put four plexes on houses across Canada.

[00:35:03] It is worth paying attention to and thinking about how you can capitalize on it.

[00:35:08] After all, it's literally what your taxes are paying for.

[00:35:12] Yeah, good point.

[00:35:13] OK, so what do you think of all this then?

[00:35:16] Yeah, I mean, I guess you kind of have to take a lot of it with the grain of salt, right?

[00:35:20] So logic would tell me that if I was a politician who was doing poorly

[00:35:23] in the polls and likely facing an unwinnable election in 25,

[00:35:27] I would probably also be expanding the government under the assumption that,

[00:35:30] you know, any new government hires would be more likely to vote for me.

[00:35:34] And I would especially feel that way if it meant the person who beat me

[00:35:39] in the next election would be sort of economically pushed into a period

[00:35:43] of austerity, which is kind of what I think could take place,

[00:35:46] meaning that they may have to lay off all of those people that I'd hired,

[00:35:50] making them look bad and less likely to win the following elections.

[00:35:53] So that's my best guess as to what we're actually seeing take place here.

[00:35:58] OK, economically pushed into a period of austerity.

[00:36:02] Is this a new word?

[00:36:05] I didn't make it up.

[00:36:06] I'm not Kanye West. It's a real word.

[00:36:08] Yeah, would be a shame if someone were to provide a definition of it.

[00:36:14] Go ahead, Mr. Nictionary.

[00:36:16] OK, so austerity and how the way

[00:36:20] Dan is using austerity refers to a set of economic policies that are implemented

[00:36:24] by governments to reduce public sector debt by decreasing government spending,

[00:36:31] increasing taxes or both.

[00:36:34] These measures are typically adopted during times of an economic crisis

[00:36:39] such as a recession or a recession or following a financial collapse with the

[00:36:45] goal of improving the country's overall fiscal health.

[00:36:50] So austerity would kind of be the counter argument to everything we just

[00:36:53] mentioned in this show and the counter argument to investing in government

[00:36:57] cities or perhaps the risk you might take by investing in those cities should

[00:37:02] the government need to see layoffs and austerity can be used for a few key

[00:37:07] purposes, which don't really seem like they're something we're at risk of

[00:37:13] yet in Canada.

[00:37:14] But they could happen if the Canadian dollar begins to suffer and our credit

[00:37:19] rating maybe begins to suffer, and we need to figure out a way to make

[00:37:23] the Canadian dollar and government bond yields more compelling to kind of control

[00:37:28] the credit markets so government bonds more compelling not yields.

[00:37:31] So the first one would be like restoring confidence by demonstrating a fiscal

[00:37:34] discipline, governments hope to restore investor confidence,

[00:37:37] which would stabilize the currency and improve the country's credit rating.

[00:37:41] And we hear the government bragging a lot about Canada's credit rating.

[00:37:45] So if that gets shaky, it could mean we see some more austerity focused policies

[00:37:50] after that. So that would kind of be something to watch for.

[00:37:52] The next would be presenting preventing default.

[00:37:55] Right. So you know, I hear a lot about the US government increasing their

[00:37:58] credit ceiling and how much money they're spending.

[00:38:01] Like governments have to pay interest on all of this money that they are

[00:38:04] borrowing as well, and that's what the bond yield is.

[00:38:06] Right.

[00:38:07] So countries at risk of defaulting on their debt,

[00:38:09] austerity measures can be a condition for receiving financial assistance from

[00:38:13] international organizations like the IMF, the International Monetary Fund.

[00:38:18] And not that we're really even close to that, but you know, there's sort of this

[00:38:21] idea in the Western world that of modern monetary theory where governments

[00:38:25] who issue their own currency can actually kind of just print their way out

[00:38:27] of not having enough money and that we're sort of getting back to that

[00:38:31] QE, like quantitative easing theme again.

[00:38:34] I thought we were quantitative people.

[00:38:36] We do that too. Yeah.

[00:38:37] Yeah. So OK, so going back to the austerity piece and, you know, hiring a ton of people

[00:38:45] or potentially firing up a ton of people, it remains to be seen whether or not

[00:38:49] Mr. Pierre Polyev is a big government or small government conservative?

[00:38:56] Yeah, it is a really good point, to be honest.

[00:39:00] That, you know, I mean, historically we have heard conservatives want to spend

[00:39:04] less on government and have a smaller government.

[00:39:08] But then you look at the US and even past Canadian conservative parties where

[00:39:12] both parties want to spend a ton of money, right?

[00:39:17] Trump spent a lot of money in the US.

[00:39:19] Biden spent a lot of money in the US, right?

[00:39:20] Like both of those government examples are neither was really more

[00:39:26] fiscally conservative, like, you know, not and with the definition of that

[00:39:30] in that example being kind of reining in the spending, right?

[00:39:34] Mm hmm.

[00:39:34] So yeah, I mean, could the same thing happen here?

[00:39:37] Yeah, I mean, look, I mean, it all of course remains to be seen.

[00:39:40] I think it's going to likely be a delicate balance because nobody wants

[00:39:45] to be the bad guy that comes in and laid off a bunch of government

[00:39:49] people that, you know, and that craters the economy.

[00:39:51] But what might actually trigger austerity, Dan, what should we look for

[00:39:56] as real estate investors who own properties or who want to invest in one

[00:40:02] of these government towns that we've just covered?

[00:40:04] Yes, I think you would want to understand a scenario

[00:40:07] that could lead to the government implement austerity measures in 2025

[00:40:11] or 2026 and a hypothetical scenario that could trigger that would be

[00:40:15] their global economic downturn, sharp decline in commodity prices

[00:40:19] for a commodity based economy, rising national debts and deficits,

[00:40:22] which obviously we're already seeing financial market turbulence

[00:40:26] deteriorating public finances at a provincial level.

[00:40:29] This is a very important one, actually.

[00:40:31] And political and social pressures, right?

[00:40:33] So why don't you start me off sort of with what a global economic downturn

[00:40:36] might look like?

[00:40:37] Yeah, well, it wouldn't be fun likely.

[00:40:39] You know, a severe global recession reduces demand for Canadian exports

[00:40:44] and just demand overall, right?

[00:40:46] So that leads to a lower national income, likely see rising unemployment,

[00:40:51] which of course would put more stress on the ample amount of social programs

[00:40:57] that we have here in Canada, which we'll get to.

[00:41:01] Yeah. And so similar to that, you know, there's demand for exports.

[00:41:04] A sharp decline in commodity prices would slash government revenue,

[00:41:09] like especially tax revenue, particularly in resource dependent provinces.

[00:41:13] So your prairies and etc.

[00:41:16] But, you know, I mean oil, like oil demand seems to still be strong.

[00:41:20] So maybe that maybe we'll scrape by.

[00:41:23] And I don't know, that probably seems like one of the least likely

[00:41:26] in the scope of factors from my perspective, unless we see like major

[00:41:31] demand destruction by like by that global economic downturn that you just described.

[00:41:35] Yeah, the theoretical global

[00:41:38] dumpster fire here.

[00:41:39] Well, here's a unfortunately more likely scenario, Dan, because we were watching

[00:41:43] it happen before our eyes is rising national debts and deficits.

[00:41:47] So persistent deficits in ballooning national debt lead to unsustainable debt

[00:41:53] levels and borrowing costs, which we need to recover, which we need more revenue

[00:42:00] to recover now.

[00:42:01] You know, you can play the old game where, you know, the government makes

[00:42:04] the money so we can just raise what the so-called debt ceiling,

[00:42:08] which we've seen the US do a few times in the last couple of years now.

[00:42:11] Of course, in this recession that we're talking about, if we have

[00:42:15] this rising national debt and deficits, more revenue, which is the only thing

[00:42:18] that can cure that, is tough to come by, which of course leads me to

[00:42:22] the next point that you're going to make here, Dan.

[00:42:25] Yeah. So I mean, think about how the governments make revenue.

[00:42:27] They make revenue from people paying taxes and businesses and individuals

[00:42:31] who are losing money don't pay tax.

[00:42:33] Like, you know, if you're a business that's losing money, you don't pay

[00:42:35] any tax. That's why so many other corporations write their income down

[00:42:39] or spend all of their money on growth so that they don't have to pay

[00:42:42] income tax. And that would lead to, you know, businesses who are losing

[00:42:46] money would lead to financial market turbulence, rising interest rates

[00:42:50] and the cost of servicing government debt could also start straining public finances.

[00:42:56] OK, now let's talk about that one that we

[00:42:58] pointed at, which is deteriorating public finances at the provincial level.

[00:43:04] So if we look at provinces facing financial distress

[00:43:08] that would require federal bailouts, that then just goes, puts more pressure

[00:43:13] on the federal government. Now, keep in mind that Ontario has

[00:43:17] sub sovereign debt in the world.

[00:43:20] According to the largest, the largest sub sovereign debt in the world.

[00:43:23] Wow. Yeah. OK.

[00:43:26] So there's no state on earth that has more debt than Ontario.

[00:43:30] So we've got the most indebted state and the fastest growing states

[00:43:33] in the world here in Canada.

[00:43:35] Interesting.

[00:43:37] Now, according to a recent study published by the Fraser Institute of Ontario's

[00:43:41] net debt is expected this year to reach four hundred and sixteen billion dollars.

[00:43:51] Wow, this is crazy, which is up almost eighty five eighty four point nine

[00:43:55] called eighty five percent higher than it was in 2008 and 2007-2008.

[00:44:01] Now, more of a government debt equals thirty eight point seven percent

[00:44:05] of the province's economy ranking below only Quebec and Newfoundland and Labrador.

[00:44:10] And on a person on a per person basis ranks second highest at twenty seven

[00:44:17] thousand and ninety one dollars only behind Newfoundland and Labrador.

[00:44:21] So again, Ontario just with the shockingly horrible statistics.

[00:44:26] Yeah.

[00:44:27] And this would lead me to the last one because they think they kind of go

[00:44:29] hand in hand and that's like political and social pressures.

[00:44:32] So increased demand for social programs during economic hardship,

[00:44:35] strains government resources leading to large deficits.

[00:44:38] So Ontario has among the highest unemployment rates in Canada right now.

[00:44:45] And Ontario's economy is not doing as well as most of the other ones.

[00:44:50] We've talked a lot about how the Toronto

[00:44:52] Condo Market alone could have major impacts on the construction sector

[00:44:57] employment and construction, the tax that's being paid, the development charges,

[00:45:03] the all of these different things that are being paid to municipalities,

[00:45:05] provincial governments, land transfer tax thing about Ontario, land transfer tax.

[00:45:09] A huge revenue driver like land transfer tax is obviously super pertinent to us

[00:45:13] as as real estate investors.

[00:45:15] It is also super important to the Ontario government.

[00:45:18] And so we've seen the Ontario real estate market is down like 50, no,

[00:45:24] 60 something percent from the peak.

[00:45:26] And it's like running at 40 percent of the long term or 50 percent of a long term

[00:45:31] average, a total dollar volume of real estate trade in Ontario.

[00:45:35] So

[00:45:37] the exact same percentage is what you would see the decline in land transfer

[00:45:42] tax revenue for the Ontario government.

[00:45:44] Right.

[00:45:45] So the Ontario government just went from making record land transfer tax revenue

[00:45:48] in twenty one, twenty two to record low land transfer tax revenue in twenty three,

[00:45:54] twenty four.

[00:45:55] And this means so that everything we mentioned about revenue before now add

[00:46:01] that to a provincial level and then say, OK, well, is there a chance that

[00:46:04] the federal government needs to step in and help Ontario if they keep

[00:46:08] going down this path of ending up in this economic mess?

[00:46:13] Would the government have to implement austerity measures like reducing

[00:46:16] spending, increasing taxes and restoring fiscal stability?

[00:46:20] Yeah. I mean, maybe last piece here, Dan, is one more reason why the government

[00:46:26] matters to your real estate investments is it changes the way that people move.

[00:46:32] Right.

[00:46:32] We always got to think of the human element here in real estate.

[00:46:35] Think about how many people you hear in Canada saying that they're going

[00:46:38] to move to the states or some other country right now.

[00:46:42] Right.

[00:46:42] Like we've talked about this before.

[00:46:43] Never in my life have I heard so many people

[00:46:45] entertain the idea of leaving or actively want to leave.

[00:46:48] And that is on a national level here.

[00:46:51] And, you know, even in the US, right, you hear people saying they're going

[00:46:55] to go leave the US if Trump gets elected or whatever.

[00:46:59] Right. So yeah.

[00:47:00] I mean, or even on a state level, right?

[00:47:02] Think about the the California exodus and the ongoing mass emigration

[00:47:07] of residents of businesses that are leaving California, right?

[00:47:10] From California to other US states or even other countries.

[00:47:13] And that term was used as early as 2016 and saw a resurgence doing the COVID-19

[00:47:19] pandemic, common reasons for residents leaving California, which again,

[00:47:23] once was considered paradise on earth, include things like high cost of living,

[00:47:28] crime, politics, traffic.

[00:47:32] I can relate to that one as well as comparatively high taxes when looking

[00:47:36] at the rest of the country for businesses and even complex regulatory environments.

[00:47:41] So a lot of that stuff, cost of living, crime, politics, traffic, tax levels.

[00:47:46] That kind of seems Canadian.

[00:47:49] Yeah. And those things are all policy outcomes, right?

[00:47:54] Yeah. Texas is the leading destination

[00:47:57] of California's former residents followed by Arizona.

[00:48:01] And similar stuff is happening in Canada.

[00:48:03] Provincially, how many Ontarians are already moving to other provinces?

[00:48:06] Some of this is policy.

[00:48:07] Some left during COVID because of lockdowns to go to Alberta for different

[00:48:11] policy around lockdowns and all of that.

[00:48:13] Yeah. And you're right.

[00:48:14] And some of it is about affordability as well, right?

[00:48:17] Which is a policy outcome.

[00:48:19] Many Ontario people went to seek more affordable cities like Halifax or

[00:48:24] Mungton will still be close enough to catch a two hour flight to the GTA

[00:48:28] to come home and mom and dads make mansion for Thanksgiving somewhere in the GTA.

[00:48:33] And those are federal and provincial examples.

[00:48:37] You can even see it at a municipal level, right?

[00:48:40] Yeah. I mean, when you look at how quickly Toronto is deteriorating,

[00:48:44] you can understand why some people are thinking about it just at a municipal level.

[00:48:50] So overall, I mean, there's a lot to think about when it when considering

[00:48:54] how the government interacts with your real estate investments.

[00:48:59] Now, you could be following these hiring trends to pick cities with stable government jobs.

[00:49:05] Or you could be following government spending on infrastructure or housing

[00:49:09] programs in hopes that your business can capitalize on those incentives.

[00:49:13] Or you may be watching migration for political reasons to try to see where

[00:49:19] that next market is and catch that big break.

[00:49:23] Regardless of what you're doing, we'd love to help you.

[00:49:25] I'm a real estate broker and I do a lot of policy advisory stuff.

[00:49:28] So if you're a developer or someone in the space looking to understand how to

[00:49:31] capitalize on these trends, reach out.

[00:49:34] Yeah. And if you need financing to support those investments that you're working with,

[00:49:38] Dan, reach out to me.

[00:49:40] I'd love to help you finance or restructure some debt for your next investment.

[00:49:46] As always, check out realist.ca. Join our free community.

[00:49:49] We are starting our free webinars again after the summer break.

[00:49:52] September's free webinar will be vendor take back mortgages is the most

[00:49:56] requested topic we ever get.

[00:49:58] And I'm excited to do it.

[00:49:59] VTB's, baby. Love it.

[00:50:01] OK, then we're going to be the next one we're going to be doing.

[00:50:04] It's another exciting one with Al Karim Devani from round square.

[00:50:08] That one's set for November.

[00:50:10] And we're going to be recording an episode with them as well.

[00:50:13] And make sure you get to a meet up second Tuesday of every month in 23

[00:50:16] cities across Canada.

[00:50:18] And thank you.

[00:50:20] We love you and will leave you with this review.

[00:50:27] G'day from Melbourne, Australia.

[00:50:30] As I can't do this the whole time.

[00:50:33] I didn't I figured you would just do that.

[00:50:36] OK, so this is this one's cool.

[00:50:38] This one's from the long distance investor by Apple Podcasts says good day

[00:50:43] from Melbourne, Australia as a Canadian investor looking to get back and stay in

[00:50:48] touch with the real estate market after living abroad for more than a decade.

[00:50:52] OK, this has been an amazing resource.

[00:50:54] The episodes are well researched and the host do a fantastic job of summarizing

[00:50:59] complex data into easy to understand insights.

[00:51:02] Also loving the few mentions of the Australian property market.

[00:51:06] Hey, didn't that come up today as well?

[00:51:07] They're the quantitative people in inventors.

[00:51:11] Yeah, also loved the few mentions of the Australia property market that

[00:51:14] have popped up in recent episodes and joint comparing these two with my

[00:51:18] experience here on the ground would love to be involved in some of the meetups.

[00:51:23] Any potential for a non-residential virtual meetup?

[00:51:27] I can't be the only one.

[00:51:29] Such a good question.

[00:51:30] Well, Fred, you're in luck once you are done throwing some shrimp on the Barbie.

[00:51:34] Head on over to realist.ca and join our online community.

[00:51:38] It is basically like the meetups except 24 seven and online.

[00:51:42] There's 700 plus members.

[00:51:44] You can ask questions, share deals, watch videos.

[00:51:46] There's the online webinars, which we can add a communication portion to if you

[00:51:50] want and lots more.

[00:51:52] Yeah. And on that note, I don't know if you just saw this tweet down, but it said

[00:51:56] it occurred to me that G T G is one of the only internet shorthands we stopped

[00:52:03] using because it simply didn't make sense.

[00:52:06] We no longer G we no longer go anymore.

[00:52:10] We're just here forever.

[00:52:12] Oh, man. I was not ready for that existential dread.

[00:52:17] GTG, bro.

[00:52:19] TTYL.

[00:52:20] The Canadian real estate investor podcast is for entertainment purposes only and it

[00:52:25] is not financial advice.

[00:52:27] Nick Hill is a mortgage agent with Premier Mortgage Center and a partner in the

[00:52:32] G and H mortgage group.

[00:52:34] License number one zero three one seven agent license M two one zero zero four zero

[00:52:41] three seven Daniel Foch is a real estate broker licensed with rare real estate.

[00:52:47] A member of the Canadian Real Estate Association, the Toronto Real Estate Board

[00:52:51] and the Ontario Real Estate Association.