How Have Rate Cuts Impacted Real Estate Values ?

[00:00:00] Welcome to the Canadian Real Estate Investor, where host Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:13] The Canadian Real Estate Investor podcast, you're going to things for all real estate in Canada. I am Daniel Foch

[00:00:20] And I am Nick Hill and today we're diving into the latest national residential statistical port for August of 2024 now, spoiler alert.

[00:00:31] Even with two interest rate market cuts, the market still is kind of stuck.

[00:00:40] Yeah, we're also going to go through a quick check in with our meet-up posts and we're going to review CMHC's most recent CMHC housing supply report.

[00:00:49] So like you said sales are up slightly, but the real story seems to be this continued holding pattern that we're seeing in the real estate market right now.

[00:00:56] So today we're going to unpack what this means for buyers, sellers and investors in the real estate market. Let's get into it.

[00:01:03] All right, Dan, National Home Sales went up by 1.3% in August and sounds like the market is heating up, right? 1% does that consider heat at this point?

[00:01:16] I mean, to be fair on a month over month basis that would be. And a lot of people, it's funny whenever this comes out, the headlines are always like, you know, somebody will pick one data point, right?

[00:01:26] It's like sales are up on thover month, so sales are down year over year.

[00:01:30] And this is where you really need to exercise your critical thinking. It's the highest level we've seen since January which is good news, but if you look at it year over year, we're actually down 2.1% compared to last August.

[00:01:42] So yeah, there's movement, but it's a little bit more of a shuffle than a sprint.

[00:01:48] Yeah, I guess this is the difference between the headline and the fine print, I guess.

[00:01:53] Yeah, or the seasonal, what is it? It's a seasonal adjustment. What is it like if it's seasonal, if it's seasonally adjusted, I'm Ryan Gosling.

[00:02:03] So that's a good season for you. Now, I think there are a lot of buyers that are still waiting for those sweet, sweet interest rates.

[00:02:13] Because to fully kick in, right? We know that an interest rate takes 12 to 80 months to work. It's way into the economy.

[00:02:20] Well, that's the same way on the way out, right? This stuff doesn't get increased or cut and immediately have an effect now.

[00:02:27] We've had three rate cuts already this year, but Sean Cathcard from Korea, it's Canadian Real Estate Association, set it best.

[00:02:35] The market is still in a holding pattern.

[00:02:38] Yeah, exactly. Biers are holding off waiting for even better affordability before they enter the market.

[00:02:45] And I mean, nobody's really seen a positive price trend. So it's not like they're in a hurry to buy because they feel like prices are going to run away from them.

[00:02:53] And there's no like, like, foam, like we saw in the market before rate hikes.

[00:02:57] Prices seem steady and there's still some hesitation or fear or just caution among buyers and patients.

[00:03:05] Everyone's waiting for the perfect storm, which is prices coming down, feeling like a bottom and lower rates at the same time as a dip in prices.

[00:03:16] Now it's been a perfect storm, great, great movie, but they'll die at the end.

[00:03:21] Do that or not, haven't seen it to Honest but...

[00:03:27] Anyway, let's go check that out. But speaking of that hesitation that you're talking about Dan, let's talk about supply.

[00:03:33] So in August, new listings were up by 1.1% but we're still below those historical averages, right?

[00:03:43] Yeah, you know, we saw about 177,000 properties listed per sale at the end of August.

[00:03:51] So like, 19% increase from last year. So this supply scarcity narrative that was existing before seems to have been, you know,

[00:04:00] and we were saying that it had kind of been destroyed in Ontario and BC.

[00:04:05] Now it seems to be destroyed for the most part across the country.

[00:04:08] Even markets that were ripping like Calgary seem to be seeing a little bit of a piling up of inventory and a balancing of the market.

[00:04:14] But we're still more than 10% below the historical average of 200,000 listings for this time of year.

[00:04:22] So we're not kind of back at that full coast to coast buyers market status that we would have expected to see yet.

[00:04:30] Yeah, strange. So I guess what's the deal here? Because I mean, Calgary and Edmonton saw more listings but the greater Toronto area is witnessing a decline.

[00:04:41] Yeah, so a part of that is I think like Toronto being in GTA being very forward looking like we kind of went through that huge increase in listings a year ago.

[00:04:52] And then I mean, I guess if you're a seller who's been listing your property,

[00:04:57] re-listing it a couple of times between now and then, you know, you might be just taking it off the market at this point.

[00:05:03] So Toronto is almost at the like capitulation phase for a lot of sellers where they're saying I'm just going to rent it or whatever right?

[00:05:10] Calgary has been driving a lot of the new supply lately and Edmonton is not behind them. They're not far behind them. The GTA usually has a ton of listings. It seems to be slowing down and the interesting pieces even with that.

[00:05:24] The sales sooner or less things ratio barely moved it went from like 53% 52.9% to 53%.

[00:05:32] And that would leave us in balanced market territory in all of those markets and I think that will probably stay there.

[00:05:39] You see some markets slipping in on a monthly basis in the buyer's market territory a little bit and prices seem to be priced discovering downwards, but it hasn't really been enough to shake things up on the price yet.

[00:05:51] Yeah, and it's the long-term average for that sales new listing ratio. So I'm sitting about 55% right?

[00:05:59] And it's funny, you know, a little bit of movement 52.9% to 53% while I'm sure there's a title out there somewhere that says sales new season ratio is up.

[00:06:09] Well, if you go back to that like pandemic period where your sales new listings ratio basically from the first lockdown to the first rate cut was over 70%.

[00:06:21] And in many cases like over 75% if you look at the chart on a career stats website.

[00:06:29] And so, you know, it's not even that we're in this like a hour in a historically average sales new listing ratio like balanced market but it feels so much different when you compare it to that period of time and that's what everybody's comparing to nobody's thinking about the long-term context, right?

[00:06:47] Like in a long-term, relatively healthy market right now. In short-term it feels way different.

[00:06:54] Yeah, I mean, if you, I'm looking at this graphic that we have here and we are really hovering around that balance market.

[00:06:59] If you go all the way back to January of 2019 and look to where we are right now, you know, in August of 2024, we're recording this in September, of course.

[00:07:08] But looking at this data here, you know, it's pretty much flat and I guess that's because no one's rushing in or out of the market right now.

[00:07:20] Yeah, exactly. I think months of inventory they show both, see how soon it looks to be in the same chart.

[00:07:26] I, I, I, I, to pens which one, one we're thinking about which one you want to use depends what you're kind of trying to measure but the, you know, realistically months of inventory same thing.

[00:07:36] We're really in that long-term context. We're actually below months of inventory when you compare to like the long long term.

[00:07:43] So we're, we're by no means are we in an oversupply market. I think that we're just in a balanced healthy market and, and with this is something we've been saying for a long time.

[00:07:51] The market will trade sideways for a long time when when that starts to take place you start to see a bit of a de-risking and that's when investors can safely enter the market based on fundamentals not based on oh my gosh, I have to rush out and buy this property before somebody else does.

[00:08:07] Yeah, okay, now speaking of a, by and saying let's get into what prices in the fortability are doing right now. Dan, the MLS home price index was flat from July to August, but the year over year price prices are still down by 3.9% so what's going on here.

[00:08:26] Yeah, I mean at a national level it's pretty simple prices have been basically flat all year. They're not skyrocketing but they're not dropping either and again this is where you get that healthy market where you don't have to worry about the price, you know, you sell one of your investments and you're going to buy something else in the price gap is different by 5 or 10% year over year or so a month over months like that was happening in a lot of markets in, in this crazy rush right somebody would sell a property and then they went to go buy something in the next month.

[00:08:56] And they couldn't even qualify anymore because the price is gone up so much. The national average sale price was just shy of 650,000 in August basically unchanged from a year ago. So remember when we told you the market trades sideways for a very long time this is kind of the phase that we're in right now and if you adjust that for inflation it means that prices actually have gone down by and and so so we're not really in a growth market per cent.

[00:09:20] Yeah, no, completely agree in whether or not I agree the data tells the story. So what we're seeing here is kind of no big shifts right buyers are still waiting for those interest recruits to make things more affordable. I mean how many times we said it people are waiting for a deal.

[00:09:39] Yeah, exactly and rightly so they should right the bank of Canada's rate cuts are supposed to help with affordability but it takes time for that to really impact the market on the same token that it took 18 months for rate hikes to impact the market.

[00:09:52] Like we're literally just getting to the middle of those rate hiking impacts we need to wait and see those long term impacts of rate cuts moving into the real estate market to bring that sentiment and that optimism and also the financial security back that where people aren't paying so much.

[00:10:15] So like everybody who's expecting it to immediately impacts sentiment I think have been disappointed and we're talking about a long term sustainable changes here not an overnight fluctuation in prices.

[00:10:26] Yeah, it's just not the way things work but let's look at how things could play out. Let's take a look ahead. What's the forecast for the next few months for Canadian real estate and maybe the economy in general if we dare to get that bold.

[00:10:41] Yeah, so create chair James maybe made a good point about the timing you know he said that there are a couple of different times throughout the year where you see this big jump up and supply they can excite the market a little bit.

[00:10:53] And September is one of those four months so you typically see April, May June and September. So we're in one of those periods right now. Yeah, exactly. We just had the third rate cut in September. So the question remains our buyers going to jump back in or are we going to keep seeing this wait and see approach right you here to proverbial sidelines are quite full these days.

[00:11:18] Yeah, that really is the big question with four point one months of inventory nationally we're still in a balanced market territory but if more buyers come off the sidelines with some of these rate cuts as properties become more affordable for them.

[00:11:32] We could see a faster return of demand similarly, you know, maybe if sellers are still experiencing the impact of the original hiking cycle and are finally hitting that financial stress point where they can't do it anymore we could see supply.

[00:11:47] We know it's one of the surprising things has actually been that each with each rate cut you're seeing more listings than purchases or bigger increase in listings and purchases because almost like sellers have been waiting and saying oh as soon as this rate cut happens there's even more buyers for my listing.

[00:12:04] So sellers are gaming that curve as well. I really all depends on how people respond to this new wave of listing and the rate cuts.

[00:12:12] Yeah, and don't forget the long term average for inventory is about five months so well we're not in a super tight market there's still room for things to shift if demand picks up so what does it all mean.

[00:12:26] The bottom line the Canadian housing market is kind of an holding pattern and things could get interesting as we move through the last couple months of the year here.

[00:12:38] Yeah, absolutely and we know that more rate cuts are likely and that could spur demand but for now it seems to be about being patient and positioning yourself for those reduced capital costs and waiting to find the right deal.

[00:12:51] If you're a buyer seller investor it is probably the best time right now to actually be staying informed and educating yourself rather than rushing in and buying something and so that you can be ready to act when the market starts moving against starts giving out good deals.

[00:13:08] Yeah, exactly. And as always and even according to Cria your first step in any thing any of this process should be talking to a skilled realtor in your area if you're thinking to a buyer selling.

[00:13:21] I don't know any good realtor's but that is a good plug on on them. Do you know any good realters certainly no good realtors on this episode so far.

[00:13:30] But if you are meet up hosts are realtors and mortgage professionals so why don't we check in with them quickly to hear what's happening in markets throughout the country.

[00:13:40] They're moving to that segment and you and I'll jump back on we'll quickly run through see me cheese recent housing supply report to understand supply in some of those markets as well.

[00:13:52] So we're gathered here with several of our meet up hosts look like nine or ten of you and want to have a conversation about the impact of interest rate cuts now we're we're three cuts in right 75 basis points below the terminal rate on the rate hiking cycle.

[00:14:11] And it doesn't seem like the market is at least where where I am and then and I don't want to have a local market bias but doesn't seem like the markets picking up the way that I would have anticipated or a lot of people would have anticipated that Ray cuts would have done it in the Toronto area the GTA.

[00:14:27] But I'm curious to know whether or not this sentiment seems to be the same for all of you coast to coast and we're going to start on the west coast with James in Vancouver and ask everybody the same question what what seems to be the sentiment that you're seeing on the ground with people at the meetups with the clients that you're interacting with every day.

[00:14:45] Now that we are three rate cuts into the cutting cycle and heading into the fall market.

[00:14:49] Yeah James Anderson here from the Vancouver meetup. I think the three rate cuts really haven't done too much in terms of changing the market for us out here seeing a little bit more listings but I think that's more seasonality in terms of coming into September here not as much activity as you would expect with three rate cuts coming into the market right now.

[00:15:09] Do you find that like sellers that you're communicating with like your realtor so you know the sellers that you're communicating with are also almost like using the rate cuts as a as a like a lot of sellers had been waiting for cuts to take place because they're like oh it's going to be way easier to sell my house after after the rate cut in September October is that like it doesn't seem to be a sentiment factor for sellers just as much as buyers in Vancouver.

[00:15:34] Yeah that language has been used by some of my sellers here and maybe that's the hope that they were waiting for when we were seeing an increase why we're seeing an increase with listings here coming into September as well.

[00:15:47] Interesting great insight thanks thanks James we will head on over to Alberta where we have Brendan and Calgary so.

[00:15:56] Brendan you guys I'm a I think still biggest meet up in in the country we were we're happy to be there for the real estate rodeo during the stamp he'd season and definitely going to make that an annual thing.

[00:16:07] Give us a little bit of an idea of what you do there and what you're seeing on the ground in sentiment among the investors and the homeowners or property owners that you're approaching in the market.

[00:16:16] Hey guys it's Brendan hall water here I run the Calgary real estate group so to answer down's question here we've consistently seen an increase in listings just to echo the Vancouver market as well.

[00:16:29] It's definitely it's definitely caused buyers to pull back which is interesting because you know three rate cuts in you anticipate a little more activity on the purchasing but.

[00:16:39] I'm not sure if it has anything to do with the interest this is very much a normal Calgary market seller still riding the spring slash early summer highs of pricing and buyers are buying it right they just like well.

[00:16:54] I know we'll maybe just be patient right a lot of feedback I'm getting from investors is I'm I'm in a holding pattern for two months.

[00:17:01] I'll call me then so that's on the off market side I have a few of my investors have actually gone to submit quite low offers on market with the influx of new listings to investors are getting more savvy and more patient.

[00:17:14] And now that the rate schedule is out for the next like almost six months they're almost just they're they don't worry is being patient right yeah they're really how their projects and cue it's fine so.

[00:17:27] Yeah definitely it's still down.

[00:17:28] No it's such an interesting insight right because it's almost like now there were three rate cuts in and it hasn't materialized in an increase in price in in many markets.

[00:17:36] It's it's like the investors are calling the markets bluff saying okay sellers like you know there's tons of inventory prices aren't rising and rates are just going to keep getting lower so why don't I just wait right and I think that that.

[00:17:46] Is is probably the lesson to be learned here like the opportunities are rising the prices are are still improving and the rates are still improving and so I think the next year is going to be a pretty good opportunity for investors.

[00:17:58] That's a little bit.

[00:17:59] Let's move over to Saskatoon where we just launched our meet up Nick and I were there with Carla Brown and it was an awesome meetup I think we we had 50 people it was great to meet everybody from the local community Nick and I toured a lot of properties with people that you set us up with.

[00:18:16] North Perry homes and and cam from callers and really really appreciated that we learned a lot about the markets and it seems like you know I'm getting the vibe from from Saskatoon that it's very much where Calgary was you know maybe in this time last year you know it seems like everybody's pretty bullish.

[00:18:34] investors are out appetites pretty high. Is that would that be a fair temp check or any any sentiment that you want to want to share with us based on people even at the meetup or the clients that you're interacting with.

[00:18:48] Yeah thanks Dan. Carla Brown as Dan said with the Saskatoon meetup.

[00:18:54] It's Saskatoon where Saskatchewan is a whole and we've talked about this before yourself Nick and I about how I always feel we kind of fly under the radar a little bit where the opportunities are there.

[00:19:03] I think we're where we're seeing a little bit of pressure right now even though our listings have gone up we're still well below 40% on average of what we're carrying so from a home ownership standpoint that mid range is really really tight.

[00:19:16] But from an investor standpoint I think you have lots of opportunity lower and higher if you're willing to go there and our Ontario friends are willing to go there so we've got a lot of interior Ontario investors coming to look at Saskatchewan there's seen the opportunity in the price point is super attractive to them for what they can compare back or what they can buy back home.

[00:19:36] So and but dealing with the Ray cuts I'm really not seeing besides I think there's some consumer confidence that just naturally goes with Ray cuts I'm not seeing a lot of movement that is being dictated because we've seen the three the three cuts I think that we're still waiting to see what's next.

[00:19:53] Yeah interesting I thought everybody is going to be bullish here, but you guys are probably more bearish than I am on the on the come break cuts.

[00:20:02] One of the interesting things I found in Saskatchewan as a data point was was rents were rising like pretty substantially right so like at least as an investor your income is is climbing a lot does that seem to be like you know I think if you bought a six cap property two or three years ago now it's you know stabilized out to like a tenor over ten cap because of the rents climbing so much.

[00:20:23] 100% and they continue to rise but the interesting thing about the the right I mean we don't have rent freezes right now though NDP government just threw something out that trying to gain some votes that maybe that's what one thing they would implement if they were voted in so we'll fight that as much as we can.

[00:20:39] But they rose rose and rose and from I'm a property manager so I've worked with my investors and I've seen them rise in the last couple years consistently.

[00:20:49] 10% year over year and there's a few pockets where now we're seeing it kind of stall so it's really location dependent on what's happening with the rents but still very very strong so our investors although they were very unhappy with what was happening with the rates if they were coming up on renewal they're very happy with what's happening with their men.

[00:21:10] So I think that they've they've off balance each other a little bit haven't had the impact that I think other markets from what I know speaking to other.

[00:21:17] Property managers across Canada.

[00:21:19] Interesting great insight thanks Carla Zach in kitchen waterloo what's the exact yes right so yeah just what are you seeing on the ground folks attending the meetup clients that you're working with what seems to be the sentiment as a result of Ray cuts here.

[00:21:35] Yeah Zach is on the kitchen waterloo meetup here in the mortgage broker in the region.

[00:21:42] So at the office I've been seeing a few more first time home buyers coming out with the rates you know it's kind of instigating people to come out and actually take a look we have seen some buyers that have kind of been sitting in the sidelines of our.

[00:21:55] Our database just kind of figure out if they want to make a move they've come forward as well thinking okay you know it can still get a good price rates are down maybe it's an opportunity to make that move.

[00:22:07] We've also been seeing after having some conversations that I recently meet up people looking to do more info projects in the area.

[00:22:14] We've had some you know municipal changes with zoning since that offer those opportunities and some people are realizing what they can do on their properties that they already have or looking for those specific properties in the area.

[00:22:28] When it comes to the rate though I mean it's still a bit of a leg I think some more is going to be a bigger change come this brain market.

[00:22:36] It hasn't been as much of an impact as we thought we have seen more of the commercial side come up a lot more projects that you know almost got there and they're not able to finish so to get opportunity for some.

[00:22:51] You know people looking to buy in that 10 unit 15 unit type thing to look at some opportunities where you can go straight into see a major get some financing to finish it off and.

[00:23:03] And you know some good opportunities popping up here and there with with that type market as well.

[00:23:09] Thanks a lot Zach I'm really glad you mentioned his own changes because I think that that's something that we want to discuss as one of our next topics given that a lot of the municipalities now have gotten to that.

[00:23:20] I think that's a lot of things that we're looking to either you know two three four flexes.

[00:23:24] Maybe on a meeting caliber you guys are all the way up at like eight basically with the four plus four so.

[00:23:29] Way ahead of the curve there but want to see if you know project they're getting initiated and stuff like that so for those you know keep your thinking caps on on on feedback and gathering.

[00:23:38] I'm looking for those two.

[00:23:38] Or maybe we'll talk about that in a moment because we will go to the front of the center for the meeting sentiment from the meetups and clients between now and next month.

[00:23:41] I guess we'll go to Josh in Hamilton what teams seems to be the sentiment that you're seeing among clients and attendees at these meetups as results of the Raikut.

[00:23:51] Sure yeah doc Family one of the co-owners of Bill financial.

[00:23:55] We focus on buildings land development helping investors developers scale purchase you know all the fun middle.

[00:24:02] Bill of Parts in regards to investors looking to buy multi-family real estate.

[00:24:09] They're becoming more savvy in regards to watching the rates.

[00:24:11] So what they're doing if they're understanding, well, how does policy rate decisions affect

[00:24:16] ball on rates?

[00:24:17] What people are doing is they're getting today's price into morals rate because if you

[00:24:21] can purchase a property, you're multi-family property now with 120 day clothes and your

[00:24:27] market hasn't priced in today's or tomorrow's price at tomorrow's rate because yes,

[00:24:33] so long we'll be able to close on this property.

[00:24:36] People are getting really great deals on distress, multi-family properties and they're

[00:24:40] able to new factor in all the end ones that are going to happen and then January 1st and

[00:24:46] are able to factor in lower bond yields.

[00:24:48] We're taking a look at some of the lowest CNB bond yields we've had in the last two years

[00:24:52] or five years at 2.93, 10 years at 3.36.

[00:24:57] These rates as they creep down haven't necessarily affected the price of multi-family real estate.

[00:25:03] So people are looking are getting good deals but they're anticipating or understanding.

[00:25:08] Almost like they can see in the future as what rates are going to do to help them at the end

[00:25:12] of their project.

[00:25:13] So, savvy multi-family investors are most definitely using the rates that are advantage.

[00:25:18] We haven't seen necessarily softening in price yet but if you're getting a good deal,

[00:25:23] this is the time to do it.

[00:25:25] Awesome.

[00:25:26] Appreciate the insight there, Josh.

[00:25:28] Guess the next little stay in Ontario and move over to Mike in Vaughn what seems to be the

[00:25:31] sentiment that you're seeing on clients and may just let us know what you do in the industry

[00:25:34] as well because I think you've got going to have a diverse perspective on clients.

[00:25:39] Yeah, my card Ash, my company's Wolfen.

[00:25:42] We do some real estate as well as construction and what I'm seeing is actually pretty

[00:25:48] interesting.

[00:25:48] So, on the real estate side a lot of people are willing to come back into the market

[00:25:53] but more or less with I guess if you want to call like low-ballish offers so they're trying

[00:25:58] to be aggressive on pricing I think to take advantage of dropping real estate rates if

[00:26:04] they can maybe tie it up for a little bit.

[00:26:06] Oddly enough I've seen an improvement in condo showing as well which I was pretty surprised

[00:26:11] by but I guess it's the price point that might be attracting those people.

[00:26:15] So, I think in terms of real estate I think that we're going to start picking up a little

[00:26:20] bit.

[00:26:20] I'm not expecting massive price run ups or huge swings and demand or anything like that but

[00:26:25] I can see it being steady for a little bit.

[00:26:29] As far as construction that's very interesting to me because I've had quite a few people

[00:26:33] start reaching out against saying hey I'm interested in maybe redoing my house or I want

[00:26:37] to add a sweep or something along those lines.

[00:26:40] I've even had people as far as we'll back reach out to me for that.

[00:26:43] So I thought that was pretty interesting.

[00:26:46] I think a part of that as well is just them not wanting maybe to spend the amount of money

[00:26:52] that they would for a house so they're preferring to go the construction route.

[00:26:57] So yeah I think that's kind of where we're heading just less I guess enthusiastic and a

[00:27:03] little bit more strategic in the way that people are thinking which I think is probably

[00:27:08] a good thing right now in general for not just Ontario but for the Canadian real estate

[00:27:12] market.

[00:27:13] Yeah I think it's interesting too because like with the property like it is sort of a

[00:27:17] function of interest rates almost right where you know if you have to go and buy the land

[00:27:21] to get a new unit right like if you're going to go if you're in acquisition mode as an investor

[00:27:25] you want to get a duplex you know you have to get the land plus the two units and so that

[00:27:30] land costs especially in the GTA is obviously very expensive whereas if you already own the land

[00:27:34] on an existing investment you know you're I think we are seeing a lot of people adding that extra

[00:27:39] unit or a couple units and I know you've been doing a lot of stuff in the in the lane way.

[00:27:42] Regardless of the speed space yeah just to kind of add into that for a little bit though like

[00:27:49] what I found really interesting is that people are willing to finance even their construction

[00:27:52] projects right now so if it's a little noisy it's because I'm in an or work truck right now

[00:27:57] actually just a couple minutes from my site but they're actually asking oh can you complete

[00:28:03] some more work for us later in the fall I just have to talk my banker first so I thought

[00:28:07] I was like pretty interesting too and as far as like the financing of like garden sweets and

[00:28:12] things like that you're like I'm seeing a little bit more willingness to extend and again I think

[00:28:18] that is like you said a function of land prices the math works better to build on existing then

[00:28:23] it does to go buy brand you yeah yeah definitely an interesting theme that we're seeing across the

[00:28:28] country right now let's move over to Sean and Peterborough what seems to be the the sentiment

[00:28:37] that you're seeing among investors and professionals in the Peterborough market yeah so Sean

[00:28:44] appeared with century 21 on there in Peterborough and manager of the chamber commander so Tats

[00:28:49] real estate team so we're up we're a heavily investor focused real estate team here in Peterborough

[00:28:54] you know like for the past few years real estate investing I would say just in general has

[00:28:59] thought into it in Peterborough with with rising rates but in the past three to six months we've seen

[00:29:06] a bit of a return to you know investor activity here in the Peterborough market and

[00:29:14] it's a great time together to get good deals in Peterborough on terriol right now like so

[00:29:19] we just closed the month of August here in 2024 there was a total of 270 active listings

[00:29:24] in the city of Peterborough and 98 sales so I mean if you've got an investment strategy

[00:29:31] here in the city of Peterborough you know maybe two or more units or or conversions or

[00:29:37] or bigger multifamily like there's definitely deals to be had here in Peterborough

[00:29:42] so now in terms of a run up in price haven't really seen that on the end user side or on the

[00:29:48] investor side but feeling highly confident as an agent in this market that again like investors

[00:29:57] who are clear on their strategy can come into a city like Peterborough and do really well on the

[00:30:02] buying up right now yeah I think it's it's fascinating when you you know because Peterborough

[00:30:07] and similar to what Carlos saying about Saskatoon like I think Peterborough you guys saw

[00:30:11] pretty big drop in price but the other factor and this is where it's comparable to Saskatoon

[00:30:16] is like rents are still climbing in the Peterborough market so if your income is growing

[00:30:20] and your prices are going down and then your cost of capital is going down I mean you know

[00:30:24] the investments are becoming more compelling to the point where like we're seeing deals like I

[00:30:29] I I pretty routinely call Peterborough the closest cash flowing market in the GTA or the closest

[00:30:36] cash flowing market to downtown right I think Hamilton's creeping up there as well but you're

[00:30:40] actually seeing like you know student rentals or duplexes that are they're cash flowing now at

[00:30:45] at a reasonable loan to value right absolutely yeah and as we're recording this again it's September

[00:30:49] 2024 so students are just coming back and it's funny like I'm just on the way from from a duplex

[00:30:57] that I own where I've just turned over the rents from four or five years ago and it's pretty

[00:31:02] incredible to jump from the tenants that have just left to the ones that are coming in

[00:31:07] so I'm a strong believer in Peterborough obviously I'm biased but it's a great market and

[00:31:12] I think the next 30 to 60 days are going to be really telling with how much inventory is going to

[00:31:19] and I think the next six to nine months probably there's going to be a continuous opportunity

[00:31:26] here in Peterborough awesome thanks a lot Sean and we'll go over to our last host in

[00:31:31] Ottawa who's on the call today which is surge so you're just going to be a quick little rundown

[00:31:35] especially because you're new host on what you do and what you're seeing happening in the

[00:31:39] market in Ottawa right now thanks to Anne and Sir Trappinol agent realtor with the agency in

[00:31:45] Ottawa and host of the Ottawa meetup as far as sentiment and rate cuts in Ottawa I mean our

[00:31:49] market's been somewhere between a balanced market and a very weak sellers market all year

[00:31:54] we haven't really seen a huge change with the with the rate cuts we're we're seeing about just

[00:32:00] under 60 listings to sorry still so to new listings ratio on the over month or inventory

[00:32:07] still you know kind of three three and a half months for freeholding condos I see the rate cuts have

[00:32:13] put a lot of a lot more positive sentiments in the market but at the same time people don't

[00:32:17] feel like they're in a rush to jump in because the messaging is still at the rates are going

[00:32:22] to keep coming down so there's a lot of people are kind of prepping for next year right now awesome

[00:32:27] thanks a lot of surge and heading on over the east coast another new meetup we've got Ryan

[00:32:34] in Halifax Ryan what's what seems to be the response to the interest rate environment and

[00:32:41] rate cuts in the Halifax market I know you guys saw a huge run up in price from Toronto news basically

[00:32:46] moving out there during COVID and then it kind of came down a little bit seems to have settled

[00:32:52] you know what's happening now give us an update yeah thanks Dan Ryan McNeill with Keystone

[00:32:57] Capital group for private underote here covering the four Atlantic provinces honestly very similar

[00:33:03] to two other resummets call we haven't seen the rate cuts for much activity to be honest sales

[00:33:09] rough slightly in the summer but still well below 10 year norms inventory still well below

[00:33:15] norms as well prices seem to have settled after the run up we saw on 2021 and 2022

[00:33:21] they've moved up about 5% on average year to date right around where the peak was so we haven't

[00:33:27] really seen any sort of corrections in the price points in Atlantic Canada but still right around

[00:33:33] those peaks right now one trend that we have seen is where Halifax being the biggest center

[00:33:39] out here has become unaffordable for some relative to incomes there's been a lot of migration

[00:33:44] to smaller centers outside of HRM seeking affordability and land access out there and further

[00:33:52] to that to demand for construction has been super strong with starts up over 60% year to date

[00:33:58] across Atlantic Canada and now the scope should include it and in general we feel it's still a great

[00:34:03] market for real estate investors given the relatively lower price points versus other centers

[00:34:09] across the country awesome thanks all right yeah i mean i guess it is interesting right and i think

[00:34:13] Josh you touch on that as well like as the rate environment comes down you know especially when

[00:34:18] it's relative to uh the overnight rate with with rate cuts like you know that the responsiveness of

[00:34:24] projects where builders might have been waiting for a little bit of improvement on on capital costs

[00:34:29] it can really drive supply as well and so almost like it does take a while for us to really

[00:34:33] fully recover and get back to that like hard pushing bull market because the people who are going

[00:34:39] to respond the most quickly to cuts and rates are the ones on the variables and all build

[00:34:45] most land and construction debt is on that and so i think it could really ramp up the supply

[00:34:49] pipeline which is what it seems like we need in the Canadian economy right now i guess that uh

[00:34:54] that finishes us up i appreciate the insights everyone and um encourage anybody who is listening

[00:35:00] to this to reach out to your local hosts that's why we put all of their names and their information

[00:35:05] in the recording but also we'll have all of their names in the show notes with a link where you

[00:35:10] can you can contact them and get out to a meet-up meet these people there's lots of deals happening

[00:35:15] on the ground in 23 cities across the country 3 500 members uh and our meet-up community now so

[00:35:23] thanks a lot couldn't it kind of done it without all of you hosts and uh really appreciate having you here

[00:35:28] as always thank you so much to our hosts and and you the listeners of the show who attend

[00:35:35] our meet-ups um so make sure you get out to a meet-up and meet those folks because we love hearing

[00:35:41] from them we love to hear what they have to say about the market and it's i can't explain how

[00:35:48] important it is to go and meet people and build a strong network and like how much that's going

[00:35:52] to just completely transform your your journey as a real estate investor so make sure you click

[00:35:56] in the show notes and get out to meet-up meet meet one of those individuals who's

[00:36:00] becoming a market leader in in your local real estate market because we can we simply cannot be

[00:36:05] in all of those places at one time we've tried it's not possible the hand uh and we want to

[00:36:10] we want to make we want to make sure that we're helping other local professionals really serve

[00:36:15] those those markets yeah I mean I can take a crack at explaining how important I just

[00:36:19] and it is literally the most important thing for for you to do as a as an existing investor

[00:36:25] a want to be investor a real estate curious person and you know what they're fun and they're

[00:36:31] hosts that at bars if you really don't like anybody they're just go set at the bar and have a

[00:36:35] drink and get out of there but let's get back to the final segment here Dan the see me she

[00:36:39] housing supply report we've got some fresh insights from our listeners about the Canadian housing

[00:36:45] market straight from the fall 2024 housing supply report by CMHC it is packed with data and you

[00:36:53] know we are here to break it down for you yeah so this report focuses on housing starts so we're looking

[00:37:02] you know on the on the creoside we looked a little bit more at the demand side what's happening in

[00:37:05] the market now we're gonna look a little bit more on the supply side they talked about trends and

[00:37:09] challenges across Canada's major cities they always leave out the cities that I'm most interested

[00:37:13] in hearing about which is the east coast and the prairies but they talk about Toronto Vancouver

[00:37:18] Calgary Edmonton, Ottawa and Montreal yeah I don't know if that's by design or just like there's

[00:37:22] this is too good over here we're not we can't show everybody what's happening you guys yes

[00:37:26] maybe on a side of who knows okay let's start with that national overview uh Dan once you

[00:37:31] started by off uh sort of by telling me what's going on across the country yeah so housing starts

[00:37:36] across the six largest census metropolitan areas or CMAs were up by 4% in the first half of

[00:37:44] 2024 compared to the same time last year so that's just I have 70,000 units which is impressive

[00:37:49] and the second highest number of starts since the 1990s okay that sounds good but I'm guessing

[00:37:56] there is a catch here yeah I mean there's always a catch I'd say in Canada when we adjust these

[00:38:03] numbers for population growth it doesn't really look as as rosy right so housing starts per

[00:38:10] capita actually pretty close to historical averages meaning despite the high numbers it's

[00:38:15] still not enough to meet the growing demand supply continues to lag behind population growth which is

[00:38:19] a key reason we're still facing these affordability challenges that we keep hearing about in Canada

[00:38:25] right so we're building more but not fast enough to keep up with how fast those cities are growing

[00:38:32] I guess that makes sense so where are we seeing the most action right now Calgary and Edmonton

[00:38:37] just like we talked about in the Cree estates these two cities are leading the charge in housing

[00:38:41] starts largely due to inter-reventual migration that they're trying to keep up with so we know

[00:38:48] in the rest of Canada it seems international migrations the big story but in in the prairies very

[00:38:54] much people moving from other provinces into especially Alberta people are moving there because

[00:38:59] of the affordable housing and I'd say better economic conditions although their unemployment rate is

[00:39:05] rising and getting pretty close to Ontario's at least I think Calgary Metro Calries are 38% increase

[00:39:11] in starts and Edmonton so housing starts grow by a massive 67% wow burda is booming not

[00:39:19] not really surprising to be honest but let's talk about the rest of the country I'm guessing that

[00:39:24] every city is keeping pace yes so while Alberta's thriving other major markets like Toronto

[00:39:34] Vancouver and Ottawa actually saw declines in housing starts so Toronto for example

[00:39:40] saw a 13% drop overall largely due to fewer rental projects breaking ground yeah yeah so

[00:39:48] okay speaking of rentals what's happening with a part-making construction in some of the cities you

[00:39:54] just mentioned yeah this is actually really interesting and I'm trying to pull the chart up because

[00:39:58] there's a really interesting trend happening at an national level but but basically

[00:40:01] almost half of the apartments started in the first half of 2024 where purpose built rentals so

[00:40:07] rather than condos marking the highest share we've seen in 30 years so developers are really

[00:40:12] yeah developers are focusing on rentals obviously because higher interest rates have made home ownership

[00:40:17] less possible and more people are being pushed to rent and or just not really lining up to buy

[00:40:23] those pre construction condo apartments and so we're at the point where you can see here the

[00:40:31] we have the highest rental apartment construction record and if you if you just examine the trend

[00:40:36] so there's this chart and you can go to the CMHC website we'll put it in the in the show notes as well

[00:40:40] there's these blue bars or like dark blue bars that are going up that's your purpose

[00:40:44] of rentals and then condos have kind of been stable like they haven't really gone up or down much

[00:40:49] and these these think about condo any condo starts would be projects that probably sold two or three

[00:40:54] years ago so we're still actually riding the boom of condo starts from before from the pre pre

[00:40:59] pre-con environment before but if this trend holds purpose built rentals will eclipse condo

[00:41:05] starts probably within the year yeah crazy crazy crazy crazy that's a huge shift I mean

[00:41:12] highest show we've seen 30 years right think about where Canada was 30 years ago now does that mean

[00:41:18] we're gonna see I guess overall more rental supply in places like Vancouver and Toronto

[00:41:24] that are a desperate need of of that kind of supply yeah it's an unfortunately not really and

[00:41:30] we've talked about this quite a bit on the show but it's just like so few projects work for rental

[00:41:34] housing development in those markets because land costs are so high and construction costs are so high

[00:41:39] so while rental construction is up in places like Edmonton and Calgary and even in like the 905

[00:41:45] if you're talking about the the greater Toronto area and in certain areas outside of Vancouver

[00:41:51] for the lower mainland we're kind of seeing the opposite take place for them for the major

[00:41:57] metros purpose built rental starts fell by 40% in Toronto and high financing costs and

[00:42:04] lower rental returns relative to income because remember CMHC considers that affordability

[00:42:08] like relative to income has kind of made these these projects financially unfeasible for

[00:42:16] the bigger metros where and until like either income comes come up or something changes on the

[00:42:20] finance etc. Yeah I mean that is not great news for renters in those cities but what about

[00:42:25] condos are we seeing new development there they could increase supply and and make things more affordable

[00:42:33] I mean condos starts are a bit more stable but again like that's really caring for it a lot of

[00:42:39] that demand from probably before the rate hiking cycle you know like pre construction condos that sold

[00:42:45] when the market was hotter and so even there starting to slow down a bit in Toronto while condos

[00:42:50] starts are stable pre sails of plummeted by like 60% and so the you know the higher

[00:42:56] interest rate environment rising unemployment seem to be scaring off both investors and end users

[00:43:01] making it a very difficult environment for them to to pre sell in which means that we'll

[00:43:05] probably like you're kind of finally hitting that wall where the starts of those pre sold units

[00:43:10] is starting to materialize. Yeah so if you were condos sales today could mean and likely

[00:43:16] will mean fewer condos starts tomorrow exactly yeah I couldn't have said it better and that's why

[00:43:23] we're likely to see a dip in future condo projects as developers focus on completing what's already

[00:43:29] sold in the pipeline rather than starting new builds and then you know your purpose of

[00:43:34] a rental supply is going to start a clipping that as condos come down and rentals continue to rise so

[00:43:41] I mean we're going to be in a country that's building primarily per adult rental likely within

[00:43:46] the year. Yeah okay very cool um okay today we've talked about some of the national

[00:43:51] trends but what about some of those city specific highlights that people like to hear about let's

[00:43:56] take a trip all the way over the west coast and start with Vancouver. Yeah so Vancouver is

[00:44:03] seeing a decline in multi you know housing starts primarily due to high costs and a weaker

[00:44:07] pre sell market very similar to Toronto. The city is still pushing forward with with rental projects

[00:44:12] thanks to government incentives I think they have lower DCs for rentals there than then condo

[00:44:18] termination or built for sell condos which is an outlier like compared to Toronto or Montreal

[00:44:23] but construction slowed down overall on top of that changes to zoning policies have you know

[00:44:30] are expected to boost supply a little bit with higher density you know fourplexes some some

[00:44:36] greater as of right zoning but still the numbers aren't making a lot of those projects work I mean

[00:44:41] I know we've looked at a fourplex portfolio fourplex development that wanted to kind of actually

[00:44:47] have us as a codi p on it and we're like this is still the numbers are don't seem to be working right?

[00:44:52] Yeah a little too tight from my liking okay so it sounds like they're trying to make the best of

[00:44:56] a tough situation now let's move over to burda where things are booming the two major cities

[00:45:03] there are Calgary and Edmonton where things are looking a bit more promising. Yeah so in Calgary we're

[00:45:09] still seeing strong growth in both rental and condo construction driven by low inventory and obviously

[00:45:15] the high demand from everybody moving from less affordable markets most notably Ontario the downtown

[00:45:21] conversion program that that one where we've talked about a couple of times on the show where

[00:45:25] they're converting like six million square feet of office space into new residential units has been

[00:45:31] you know great way to add supply quickly noted by CMHC in this report. Yeah that is a great move

[00:45:38] and very excited to see we still have to do a full deep dive episode on that stay tuned for that

[00:45:43] but what about let's travel a couple hours north and Calgary what Edmonton did? Edmonton as a

[00:45:48] re-thriving rental market which historically hasn't been the case because most people could afford to

[00:45:54] to buy in that market and so as a landlord you actually be competing with the ownership market rather

[00:45:58] than you know other landlords and since this kind of new influx of people moving from less

[00:46:05] affordable markets and maybe not being like fully committed to living there so they're not purchasing

[00:46:09] or whatever it is like a lot of these cities become a little bit more transitional 92% of new apartments

[00:46:14] in Alberta are certainly an Edmonton or purpose belt rentals. Yeah so they're building like

[00:46:20] basically all rental and now this would be an important piece to note of like the impact of CMHC's

[00:46:25] policy with the MLSLi program. Edmonton and Calgary very much are cities where you can hit that

[00:46:32] affordability criteria pretty easily because their incomes are so high because the CMHC affordable

[00:46:37] rents are based on 30% of median rents are income and and rents are so like I guess low

[00:46:47] there relative to income so you know you'd be renting at that rate anyway and so it doesn't

[00:46:53] really change your profile for much to meet that affordability criteria. Yeah well well I love to see

[00:47:00] it well done Edmonton really capitalise on the need for rental housing out there so

[00:47:05] okay we've done Vancouver Edmonton Montreal let's head east then and wrap things up here with

[00:47:15] Montreal and the capital of Canada Ottawa. Yeah so Montreal's housing starts picked up in 2024

[00:47:21] but they're like way below their tenure average if you look at the chart on CMHC's website. Most of the

[00:47:26] construction is focused on rental units which is now makeup 75% of all starts in the city

[00:47:31] so again seeing a huge increase in purpose but rental housing starts Ottawa's struggling with a

[00:47:36] 21% drop in housing starts and the population adjusted numbers are the lowest that they've been

[00:47:41] in nearly a decade I think and which is interesting because Ottawa does also kind of pencil on

[00:47:48] the MLSLi side of things because everyone's on that government salary out there like everybody's

[00:47:54] making 100k right so their income is pretty high and so when you get to that median house

[00:47:59] rent or income stat per CMHC affordability that deals make a little bit more sense so I'm surprised

[00:48:05] that they've seen such a blow-off in construction. Yeah so my tough times for Ottawa but maybe

[00:48:12] it's because they haven't fully converted those government buildings into rentals or condos yet I guess

[00:48:19] okay Dan appreciate you providing all these highlights any final thoughts on the report from

[00:48:26] I think there's a lot to look out for right now like where you want to celebrate market to

[00:48:35] are able to put a lot of housing supply into the market that's also competition if you're an

[00:48:40] investor or landlord and so there's a lot of moving parts to pay attention to you want to see

[00:48:47] okay if Calgary and Edmonton are so good at supplying the market is that a market where there's going

[00:48:54] to be a ton of sustained demand for me as an investor in the rental blow if I'm going to be

[00:48:59] competing with 92% of the new supply in my market being purpose-built rentals right really good

[00:49:06] point and then you know should we be looking at some of these lower supplied markets to see if there's

[00:49:11] a gap for us to fill or potential greater growth in rent or or valuation if I'm the person

[00:49:19] supplying a market that is under supplied right yeah I mean personally that's how I always try to

[00:49:24] look at things right if everyone's talking about a certain market or certain trend and we see

[00:49:31] multiple capitalizing on it I always try to go and look for the thing that people aren't talking

[00:49:35] about that they likely will be talking about natural contrary yes yes so I think I'm like that too

[00:49:42] right like you're yeah and I think that's why we both been successful in investing in real estate

[00:49:47] well I found everybody's like bearish now or so I'm like oh well maybe I'll just be bullied

[00:49:52] yeah that's where we're doing that right over the dark side holy committee that if that's

[00:49:57] unrecorded anybody do not there yet they can close pretty close okay appreciate everything

[00:50:02] day and so a lot of stuff to keep an eye on and you know will be back with another create update

[00:50:08] next month and more updates from our hosts across the country and if you are beautiful listeners

[00:50:14] want any more details and any of the stuff we said however to see image she's website to check out

[00:50:19] the fall 2024 housing supply report to check out any of the charts and grass we're mentioning

[00:50:25] as always thank you so much for listening if you want to work with data nine and any capacity

[00:50:30] to invest in any of these markets I am a mortgage agent dinosaur real estate agent and we help

[00:50:35] clients buy investment properties and get financing across the country thanks so much for listening

[00:50:42] we'll see you in the next one. The Canadian real estate investor podcast is for entertainment

[00:50:47] purposes only and it is not financial advice Nick Hill is a mortgage agent with Premier mortgage

[00:50:54] center and a partner in the G and H mortgage group license number 10 317 agent license M21004037

[00:51:06] Dino photos is a real estate broker licensed with rare real estate a member of the Canadian

[00:51:13] Real Estate Association the Toronto Real Estate Board and the Ontario Real Estate Association