Immigration, Taxes, Fraud & Housing Starts

[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.

[00:00:12] This is a news episode, but we left out an important piece of news.

[00:00:17] Donald Trump was elected president on November 5th and we have a bonus episode coming out on Saturday.

[00:00:23] This Saturday entitled Does Donald Trump's Win Affect Canada's Economy and Real Estate? So make sure that you check that one out.

[00:00:33] Today we are unraveling a sweeping array of transformative policies, news and market dynamics set to reshape Canada's economic and housing landscape.

[00:00:44] From the federal announcement on immigration cuts that some economists warned could stall overall growth here in the country.

[00:00:53] To the revolutionary plans for high-speed rail, these changes present challenges and opportunities.

[00:01:00] But are we trading long-term economic prosperity for short-term market stabilization?

[00:01:07] How will significant policy shifts like scrapping the GST on new homes or potential buybacks of major highways impact the housing and transportation sector in Canada?

[00:01:17] And just how bad has fraud gotten in the rental sector?

[00:01:23] And how can both landlords and tenants deal with it?

[00:01:27] Welcome back to the Canadian Real Estate Investor Podcast.

[00:01:29] I am Daniel Foch, real estate broker and investor and now chief real estate officer at Valerie.ca, which is an AI-driven real estate company.

[00:01:40] And who are you?

[00:01:41] Very cool.

[00:01:42] I am Nick Hill, a mortgage broker with OWL Mortgage.

[00:01:46] And I'm also an investor and we do some investing over there as well through our MIC and the multiplexing program that we have.

[00:01:52] And in today's episode, Dan, we have lots of breaking news to cover.

[00:01:58] If you are a regular listener to the show, welcome back.

[00:02:02] And if you are a new listener, welcome.

[00:02:04] We are so happy that you found us and that you have dedicated your ears to us for hopefully the next 40 or so minutes.

[00:02:13] And I would advise you to go back and listen to other episodes because as we approach 250 episodes,

[00:02:19] we have covered such a wide range of topics from simple things like real estate terminology or breaking down mortgages or comparing fixed and variable mortgages.

[00:02:31] And we've also covered more complicated things like how the bond market impacts interest rates and house prices to strategies on how to scale a portfolio or how new policies will affect the market.

[00:02:42] We talked about the capital stack and so much more on the show here.

[00:02:47] We're really data driven.

[00:02:49] Each episode is heavily researched and we're here to present you with all the knowledge that you need to succeed in real estate and real estate investing.

[00:03:01] On that note, we have lots to cover today.

[00:03:03] So let's get into the first topic today.

[00:03:07] Immigration, Nick.

[00:03:09] Yeah.

[00:03:09] So we'll start with this CBC article here.

[00:03:14] Immigration prevents prevented a recession last year, but looming changes could stall growth, according to some economists.

[00:03:23] So the federal move to rollback numbers is going to, quote unquote, hurt the economy.

[00:03:28] Now, Canada's decision to reduce immigration levels is stirring concern among both economists and businesses and business owners and investors alike who fear the negative.

[00:03:39] Negative impacts of an economic repercussions that this pullback might have.

[00:03:45] Now, while this reduction is aimed at alleviating pressures on mainly housing, but other things like public services and whatnot, they are worried about its impact on economic growth and the labor market.

[00:03:59] It's so funny, man.

[00:04:00] Like, usually I'm the one who's criticized for being negative, but this is like, to me, one of those like beggars can't be choosers moments.

[00:04:07] Right.

[00:04:07] Like, I feel like all everyone was talking about was how, you know, immigration was out of control.

[00:04:13] And like, look, I'm the first to agree with that.

[00:04:16] But and then they were like, oh, you know, it needs to be reduced.

[00:04:18] And all of a sudden they get what they wanted.

[00:04:20] It's reduced.

[00:04:20] And people still aren't happy because now they're just like, oh, it's going to crater the economy, which they're not wrong.

[00:04:27] Like, and maybe maybe everyone's just kind of acknowledging.

[00:04:29] But, you know, like if this is the outcome that you wanted, I think cratering the economy is the necessary evil that comes with it.

[00:04:35] And so I don't know.

[00:04:37] I mean, again, it's kind of like rate cuts for me.

[00:04:39] It's like you got to be careful what you wish for.

[00:04:41] Right.

[00:04:41] So anyway, key points I got from this one, the economic impact of reduced immigration.

[00:04:45] A lot of economists in the CBC article highlight the potential negative effects on GDP.

[00:04:51] So we might actually finally get the recession that we've been able to stave off as a result of keeping population growth and government hiring high.

[00:04:58] Higher immigration has historically supported economic stability and growth.

[00:05:01] There are some labor market concerns.

[00:05:03] Canada Federation of Independent Businesses, CFIB, expressed concerns about filling vacant positions as immigration has been crucial for staffing in sectors with labor shortages.

[00:05:12] It's interesting.

[00:05:13] Trudeau actually wrote an op-ed in 2014 criticizing the temporary foreign worker program.

[00:05:18] Ironically, yes, I see the irony.

[00:05:20] Quite ironically.

[00:05:21] Before anybody mentions it.

[00:05:22] Yes, seriously.

[00:05:23] But yeah, criticizing the temporary foreign worker program under, I guess, Harper at that point.

[00:05:27] And he had said that it was, you know, it reduced wages for Canadians.

[00:05:31] But it actually, David Card, who's a, David Card is not a nobody, by the way.

[00:05:35] David Card is like a Nobel Prize winning economist.

[00:05:37] He's Canadian American economist.

[00:05:39] I think he was from Calgary, actually.

[00:05:40] I can't remember where he was from.

[00:05:41] But anyway, he did this paper in the 90s when, about the Muriel Boatlift.

[00:05:47] I've talked about this a couple of times on the show.

[00:05:49] Basically, you know, Griselda made all these people come from Cuba.

[00:05:53] But not actually, but that's what, like, that's part of the story.

[00:05:56] Because I don't know if people saw the Griselda Netflix show.

[00:06:00] But basically, she was hiring all those Marielitos.

[00:06:02] But basically, there was this, I think it was like 7% increase in Miami's population.

[00:06:07] Had very little actual impact on, like, so this was a great economic experiment.

[00:06:11] Had very little actual impact on wages in Miami.

[00:06:17] So fascinating from that perspective.

[00:06:18] And I did a whole, a whole sub stack on this and YouTube video.

[00:06:23] But we'll make it into a podcast episode as well, where basically, my thesis is that

[00:06:28] population was actually already slowing.

[00:06:30] Like, this current government really seems, from my perspective, to see the data early.

[00:06:35] Because they would have more advanced data than most people, I would imagine.

[00:06:39] I would hope.

[00:06:40] And then they say, oh, we should probably put a policy in to make that something that we did.

[00:06:44] You know what I mean?

[00:06:44] They did it with international students earlier this year.

[00:06:47] They did it with house prices, actually, in 2022.

[00:06:50] Early 2022, house prices were rolling over.

[00:06:52] And they're like, oh, foreign buyer ban, you know?

[00:06:55] So all these things happen, like, literally right after the rollover.

[00:07:00] And I think that this is no different.

[00:07:02] So finally, they, so anyway, my thesis is that population was actually already falling.

[00:07:07] But the government plans to cut permanent residence numbers annually over the next few years to

[00:07:11] stabilize housing and population growth, lowering targets from 48, sorry, 485,000 to 365,000 in

[00:07:20] 2027, which is a substantial drop, to be honest.

[00:07:23] Yeah, yeah.

[00:07:23] No, I mean, very interesting thesis, Dan.

[00:07:25] And I think actions speak louder than words.

[00:07:29] And, you know, I think they've acted upon that early data enough times that there's a bit of a trend going on.

[00:07:34] But, you know, my takeaways from this article about the, you know, decrease in immigration,

[00:07:42] you know, it's been met with mixed reactions, right?

[00:07:46] You know, there's arguments on both sides, arguing that immigration,

[00:07:50] this reduction in immigration could reduce and alleviate some of the pressures on things like the rental market,

[00:07:56] which has been absolutely ripping in, you know, kind of the wrong way for years now,

[00:08:02] because we've brought all these people in that don't have anywhere to live.

[00:08:05] But at the same time, on the flip side, others believe that this was basically the only reason that our economy was,

[00:08:12] again, quote unquote, I'm doing air quotes right now for those listening, growing, right?

[00:08:17] So economic momentum and labor shortage could be exacerbated by this.

[00:08:23] So really kind of a double-edged sword now, you know, what is the potential influence on interest rates?

[00:08:29] That's something everybody has been talking about.

[00:08:32] After we, you know, obviously, we've seen four cuts in a row now, which is kind of crazy.

[00:08:37] So economists suggest that the Bank of Canada may need to adjust interest rates more aggressively

[00:08:43] due to potential lower economic growth tied to declining population increases.

[00:08:48] Now, I was lucky enough to comment on this with the good people at CTV,

[00:08:53] who I think were hoping for me to be a bit more optimistic and bullish on the whole thing.

[00:08:57] And I was like, look, when an economy in a central bank cut interest rates this aggressively with, you know,

[00:09:05] jumbo cuts, like the 50 basis points we saw, yeah, it's not a good thing.

[00:09:09] And now we're having economists say that we're going to have to keep cutting.

[00:09:12] You know, what a rollercoaster ride for Canadians.

[00:09:14] The last thing here is public sentiment.

[00:09:18] You know, reduced immigration levels might improve public perception amid competition concerns for things like jobs

[00:09:26] and other things like resources, such as like health care and whatnot.

[00:09:30] But, you know, we have to really look at how much of an effect will this have on national affordability issues, right?

[00:09:37] Like this isn't going to be the be all and end all.

[00:09:39] Okay, yeah, we cut immigration by, you know, from 40, 485,000 to 365,000.

[00:09:45] Okay, so 100 plus thousand people.

[00:09:47] I think the damage for the stuff that the concerns that the public have, it's already done, right?

[00:09:53] So that's my takeaways from the article, Dan.

[00:09:55] Anything else before we keep going here?

[00:09:57] Yeah, the only thing I would add here is that it features an analysis by Charles St. Arnaud,

[00:10:02] who is the person who was credited with the Me Session thing.

[00:10:05] He released the Me Session.

[00:10:07] I must say, I do have an axe to grind on this thing.

[00:10:10] He did release the Me Session 30 days after I released the Me Session on this show.

[00:10:15] So Charles, if you're listening, please reach out.

[00:10:18] Dan's expecting a fruit basket or something.

[00:10:21] Well, I don't think he got it from the show.

[00:10:22] I think he got it from the one of your posts.

[00:10:25] I tweeted it while we were recording the Me Session episode.

[00:10:29] But anyway, the person who pointed it out to me, because I didn't, I didn't, I haven't really followed his stuff.

[00:10:35] I do now.

[00:10:35] He's actually a pretty good economist.

[00:10:36] But they were like, you know, it came from you because he used it in an Alberta context.

[00:10:43] And Alberta is like not nearly as bad in a Me Session as Ontario, right?

[00:10:48] So anyway.

[00:10:48] Couldn't even get creative.

[00:10:49] No disrespect, Charles.

[00:10:51] Yeah.

[00:10:51] Well, it's whatever.

[00:10:52] I honestly, I think it was a good term.

[00:10:54] And actually, and honestly, to be fair, actually, I saw like a lot of conspiracy theorists like ripping on anyone using the Me Session term on YouTube and stuff like that.

[00:11:02] They're like, oh, this is just like propaganda.

[00:11:04] This is their new term.

[00:11:05] This is the new 15 minute city.

[00:11:07] So I was kind of like, okay, maybe, maybe I don't, maybe I don't want to be the guy who got credit for that one.

[00:11:14] Anyway, the next article we have here is Canadian permanent resident applications fall 57% for the weakest month in years.

[00:11:21] Now, I'm going to be careful with this one because the, because millennial moron we've had as a guest on the show.

[00:11:29] He's a TikTok famous guy, I guess.

[00:11:31] I don't know what they, all I know.

[00:11:33] Not for dancing.

[00:11:34] I've been watching, which is another bonus.

[00:11:36] I've been watching a new, new show about TikTok people.

[00:11:38] The, the, the Mormon wives show.

[00:11:41] Have you seen that show?

[00:11:41] I have not.

[00:11:42] Yeah.

[00:11:43] Fascinating.

[00:11:44] Fascinating show.

[00:11:45] Anyway, it's about this thing called mom talk.

[00:11:47] I don't think he's part of that, but anyway.

[00:11:49] Can't, so he, he said that this data is, is potentially not reliable.

[00:11:54] But anyway, let's, let's get into it because this supports my previous conclusion that potentially we have already seen population falling, population growth falling.

[00:12:03] Um, and the, and the government of Canada's policy that we mentioned before is, is them basically trying to capitalize on that.

[00:12:08] Um, and we're going to do a whole episode on that, by the way.

[00:12:11] Uh, cause I did a, I would say a decent analysis on it.

[00:12:14] Canada is experiencing a significant decline in permanent resident applications, which have dropped sharply over recent months, posing challenges to meet future immigration targets.

[00:12:21] Despite plans to limit applications in 2025, the current downward trend suggests difficulties in achieving even the reduced goals without further policy adjustments.

[00:12:31] This is from better dwelling.

[00:12:33] Friend of the show, uh, Steven Ponwasi better doing, um, puts out a ton of great stuff.

[00:12:38] They're always, they're always on the right on the mark as soon as news comes out.

[00:12:42] But as you said, Dan, we're going to be careful with this one.

[00:12:43] We will go over our, our key takeaways from the article, but, um, stay tuned because this might be a fact check when we do that episode.

[00:12:51] That comes out in the next couple of weeks.

[00:12:52] But, uh, regardless, permanent resident applications fell 57% in July compared to the previous year, making it the third consecutive month of double digit declines, double digit declines.

[00:13:04] You know, in Canada, we can't even do any, any kind of growth or, um, or, or, uh, or anything in, in, in a, in a kind of good fashion.

[00:13:14] It's got to be made double or triple, uh, uh, you know, increases or declines.

[00:13:19] So this decline in contrast sharply with the high number of applications received early in 2024, which then turned negative in May of this year, year to date applications totaled 274,500.

[00:13:32] Uh, and by July down 3% last year and down 37% lower than several years ago in 2021.

[00:13:40] Yeah.

[00:13:40] So I guess I will note that, um, millennial more on a fact check first.

[00:13:43] So he said that they put publish like a partial.

[00:13:46] So basically like it's incomplete data, the IRCC, uh, on a monthly basis.

[00:13:50] And then it gets updated.

[00:13:52] So he said it's probably down, but it's probably not down that much.

[00:13:55] But anyway, the article goes on to say Canada plans to cap applications, which we mentioned at 395k for PR.

[00:14:02] Actually, no, sorry, this is different.

[00:14:03] The other one was NPR.

[00:14:03] So originally they were going from 500 or for 500 permanent residents.

[00:14:08] Again, the one before is temporary foreign workers or, uh, sorry, non-permanent residents.

[00:14:13] So they're going to drop PR permanent residents from 500 to 400k, give or take.

[00:14:18] They actually went to 395, which I guess they're doing that thing.

[00:14:21] Like, you know, where people price it like 999, not $10.

[00:14:24] Love that.

[00:14:24] It starts with a three handle.

[00:14:25] So it looks, yeah, smart.

[00:14:27] I mean, these are, these are definitely people who are trying to win an election.

[00:14:30] They're actually acting like it.

[00:14:31] But the, the current trend indicates difficulties in, in reaching these limits.

[00:14:36] Um, but, uh, and, and the bank of Canada called that bluff as well.

[00:14:40] Like, again, my, my guess would be they won't hit their target.

[00:14:42] I don't think that they'll, I don't think that, well, I guess with, like with PR and stuff

[00:14:46] like that, they can, you know, they can reduce the number of, uh, of, um, permits that they

[00:14:52] give out, but actually reducing the population, which is what they claim their intention is,

[00:14:55] is going to be very difficult.

[00:14:57] Policymakers have announced limits to appear proactive as Canada faces.

[00:15:01] Potential early onset, slower population growth.

[00:15:04] So that's what I was saying as well.

[00:15:05] Like we're, we're already, this is an economic trend and they're trying to make it look like

[00:15:10] a policy result.

[00:15:11] Yeah.

[00:15:11] Like, Oh, we, we told you, so we knew this was happening.

[00:15:13] This was all, this was all by design.

[00:15:14] Oh, it's working already.

[00:15:16] Crazy.

[00:15:16] We were going to tell you guys.

[00:15:19] Yeah.

[00:15:19] Yeah.

[00:15:19] Okay.

[00:15:20] Next one.

[00:15:20] I was just shopping for, I was trying to find a golden ax that we can send to Pierre if

[00:15:24] he does this, but I was wondering what you're doing over there.

[00:15:29] Dan is not planning any kind of assassination attempt or anything.

[00:15:32] Um, this is, uh, Pierre Pilyev, uh, pledges to axe the tax.

[00:15:38] Uh, one of his, uh, great quips there, uh, that's to axe the GST from new homes under

[00:15:44] $1 million.

[00:15:44] Uh, he says getting rid of the GST on new home builds will stimulate 30,000 additional

[00:15:51] homes built every single year, which incidentally will actually generate more income tax revenue

[00:15:57] for the government without raising taxes.

[00:15:59] Uh, so very interesting plan there.

[00:16:02] The conservative leader has proposed eliminating GST for specifically homes priced under $1 million

[00:16:08] as part of his campaign to become Canada's next prime minister.

[00:16:12] And again, the plan, the plan that he's saying that, you know, they ask the tax, it really

[00:16:17] like the benefits would be reduced home costs, uh, which is great, but also stimulate

[00:16:21] construction.

[00:16:22] I think that is my big takeaway from, from this, right.

[00:16:25] Uh, replace the GST with alternative savings by cutting other housing funds that have been

[00:16:31] deemed ineffective.

[00:16:31] And I'm sure there are a few of those.

[00:16:33] So Dan, probably my two biggest takeaways here, you know, the GST removal plans, new homes

[00:16:39] under a million dollars, potentially reducing the cost of an $800,000 home by $40,000.

[00:16:44] So not massive, but you know, a pretty, a $40,000 step in the right direction.

[00:16:50] Yep.

[00:16:51] Look, I mean, I don't know.

[00:16:52] That's 5%.

[00:16:53] Yeah, exactly.

[00:16:53] I don't know.

[00:16:54] It's painful.

[00:16:54] Exactly.

[00:16:55] Right.

[00:16:55] Like you would be pretty, you'd be pretty upset if like your, if house prices went down

[00:16:58] 5%, right.

[00:16:59] Or, or if they went up 5% on the wrong side of things.

[00:17:02] Right.

[00:17:03] Yeah.

[00:17:03] Pierre says the, uh, economic justification, um, he estimates saving $8 billion by cutting

[00:17:12] the housing accelerator fund and other housing infrastructure funds.

[00:17:15] Well, he expects the increased tax revenue, uh, through boosted home building, which we

[00:17:21] obviously desperately need.

[00:17:23] Dan, what were your takeaways from, from, uh, from this?

[00:17:27] He obviously has support from the industry.

[00:17:28] So organizations like build and res con actually we have, um, gentlemen from build coming up

[00:17:33] on the show from our OHBA conference that, uh, Sherwin Williams was kind enough to send

[00:17:38] us to, to, to, to do some content for the show with the building community and res con

[00:17:43] who I've actually done, uh, some speaking for.

[00:17:47] They endorsed, um, this plan obviously, uh, cause they believe that the measure will lessen

[00:17:52] the tax burden and encourage construction and home ownership.

[00:17:56] Richard Lyle, who's a friend of mine from, from res con actually, we should get him on

[00:17:59] the show one time.

[00:17:59] He's, he's great.

[00:18:00] He gets it.

[00:18:01] Um, yeah, he urges provinces to adapt, uh, similar measures, emphasizing the plans, a

[00:18:07] potential to balance the housing market and retain residents in urban areas.

[00:18:10] I would, I would go as far to say municipalities need to step up as well.

[00:18:13] Like this burden shouldn't rest solely on the, the fed and the, and the province and

[00:18:18] municipalities probably, I mean, they're really the last frontier.

[00:18:21] Like everybody else is doing something about it.

[00:18:22] And I think now all of a sudden everyone's just staring at the, the towns being like,

[00:18:27] Hey, you guys going to do something too?

[00:18:28] Yeah.

[00:18:29] And, and again, that's, that's such a town by town basis, right?

[00:18:32] Some people seem to get it and some people don't.

[00:18:35] So, I mean, Dan, all of this in an effort to get more housing built.

[00:18:38] Well, we know, uh, housing being built in Canada is, is tough due to,

[00:18:43] I don't know, a couple of things, a combination of things such as red tape, zoning, development

[00:18:50] charges, labor costs and availability, material costs and availability.

[00:18:55] And that's just a, just to name a few.

[00:18:59] Yeah, for sure.

[00:19:00] Um, just a couple of, of issues, I guess there, um, I guess there's no secret there.

[00:19:05] It's also no secret that we're in desperate need of housing.

[00:19:07] And CMHC says we need at least three and a half million new housing units by 2030 to achieve

[00:19:12] affordability.

[00:19:13] So I guess, uh, let's kind of, this is a good segue into our next piece here.

[00:19:17] So let's talk about where housing starts are, but Dan, before we talk about where housing

[00:19:22] starts are across the country, maybe you can tell me what a housing, what is a housing start?

[00:19:27] You want me to define it?

[00:19:28] Isn't that more of a dictionary job?

[00:19:29] I think a Dan Finition will do just fine.

[00:19:32] So in Canada, housing start is defined as the beginning of a construction work on the

[00:19:36] building where the dwelling unit will be located.

[00:19:38] This can be described in two ways.

[00:19:40] Usually the stage when the concrete has been poured for the whole footing around the structure

[00:19:44] or an equivalent stage where a basement will not be part of the structure.

[00:19:48] Um, I think with high rise, it's when, once they're above grade too.

[00:19:52] Right.

[00:19:52] Yeah.

[00:19:52] Okay.

[00:19:53] So again, similar to, similar to basically when, when a holes dug and concrete has been poured,

[00:19:57] that counts as a housing start, not when there's plans on paper.

[00:20:01] So let's look at our next story here, Dan.

[00:20:04] This is from the Edmonton journal, Edmonton super hot market right now.

[00:20:08] Uh, Alberta, Alberta housing starts nearing two decade high, uh, Edmonton and the broader

[00:20:14] Alberta region have experienced a record breaking year for housing starts reaching levels not

[00:20:19] seen since the year 2007.

[00:20:21] This surge is attributed to streamlined regulatory processes and increased diversity in housing

[00:20:28] options, positioning Alberta's economy for robust growth.

[00:20:32] This is, this is an exciting one for me, Dan.

[00:20:34] So I know you read the article here too.

[00:20:35] What are your, some of, some of your main takeaways from, uh, from what's going on here in Alberta

[00:20:40] with housing starts?

[00:20:41] Bold of you to assume that I read the article.

[00:20:44] I'm really more of a headline guy.

[00:20:45] I only started reading articles when Twitter forced you to read the article before you retweeted

[00:20:50] it.

[00:20:50] No, just kidding.

[00:20:51] I love, I love reading articles.

[00:20:53] Um, record housing starts.

[00:20:54] So Edmonton surpasses 2023 gold with 10,000 housing starts in September while Alberta saw

[00:20:59] over 33 hunt or sorry, 33,000 marking the highest level since 2007.

[00:21:04] I mean, 2007, like, is a kind of a little scary for when you're thinking about boom times in

[00:21:09] Australia, Alberta, Australia, Alberta.

[00:21:13] Cause everything was going down at that point, I guess.

[00:21:16] Yeah.

[00:21:17] Yeah.

[00:21:17] Well, and you know, a lot of it is like that, that, um, that inflationary environment where

[00:21:22] you get these big oil, uh, booms, right?

[00:21:24] Like, and it hasn't, that hasn't really been like most of the growth from Alberta has been

[00:21:27] not industry related.

[00:21:29] It's more, uh, affordability related.

[00:21:31] So anyway, it's pretty interesting, uh, to, to think about 2007 is the last best number.

[00:21:37] Edmonton successes are largely due to reduced red tape and faster permitting processes, which

[00:21:43] expedited housing development and Calgary led the province with more than

[00:21:46] 17,000 housing starts at 23% increase from last year, last year, um, highlighting regional

[00:21:51] growth.

[00:21:52] This is one of those things where, you know, you think about Calgary being like having so

[00:21:58] much demand, but they also can really, really respond from a supply perspective.

[00:22:01] And we said that early on, it was like, you know, like, I just feel like Calgary is kind

[00:22:05] of overbought right now.

[00:22:06] It's one of those markets that does feel like there's a, there's a decent amount of risk.

[00:22:09] Um, and part of that is, you know, it's easy for people to just stop going or, or move back

[00:22:15] to Toronto or wherever they came from BC.

[00:22:18] If, if things aren't as, as rosy out there, but also they're so good at building houses,

[00:22:24] like they're so good at responding to supply.

[00:22:26] And this, this, this data point really indicates that.

[00:22:29] So to me, that's the supply and demand equation, like their supply side, their supply curve is,

[00:22:34] is definitely moves a lot faster than everywhere else.

[00:22:37] For sure.

[00:22:37] I mean, my takeaways are, I'll get to them in a second, but, but for me, the other,

[00:22:43] one of the things that you said, Dan, is the success in Edmonton is largely due to reduce

[00:22:46] red tape and faster permitting processes.

[00:22:48] I mean, we have talked about this so much on the show.

[00:22:51] Canada in general is just embarrassing when it comes to the amount of red tape and the length

[00:22:59] in things like permitting processes that just really hold things up across the country.

[00:23:05] Now let's look at the economic boost that we're seeing in Alberta.

[00:23:09] Again, housing starts increased by 44%.

[00:23:11] That is contrasting with a decline in the rest of Canada.

[00:23:15] And, and again, this is something else that is exciting that you and I are passionate about

[00:23:19] here, Dan, diverse housing options, right?

[00:23:23] So again, we're not here in Toronto.

[00:23:25] There's one housing option and it's a condo or, or McMansion, right?

[00:23:29] Um, Edmonton has emphasized diversity in housing with 24% of building permits being issued for

[00:23:34] secondary suites and backyard homes, lame way homes, garden suites, that kind of stuff.

[00:23:39] You know, we just recorded a amazing conversation and podcast episode with a good friend of ours,

[00:23:44] Elkrim Devaney of, of, of both, uh, Round Square and middle, uh, all about missing middle housing.

[00:23:50] So, and guess where he's based, Alberta, guess where they're doing a ton of projects, both Calgary and Edmonton.

[00:23:56] I'd say the last part that stuck out to me from this article was the impact on renters.

[00:24:01] So the first half of 2024 saw a record number of nearly 10,000 purpose-built rental units starts with,

[00:24:08] with actually more benefits to, to renters for, because providing them more options.

[00:24:13] So that is, that's kind of the, the bull case for, for, I guess, Edmonton, Calgary, and Alberta as a whole.

[00:24:21] But then let's look at some of the other markets across Canada, where housing starts, uh, what are they doing in some of the other major markets?

[00:24:27] Yeah.

[00:24:28] So if you look at Montreal, uh, January and September, 2024, up 15%, uh, year to date in Montreal,

[00:24:35] showing some recovery from historically low new home construction in 2023.

[00:24:38] In Vancouver, actual starts are down 19% in 2024 compared to 23.

[00:24:44] But it's important to note, 23 was a record high year in Vancouver.

[00:24:48] In Toronto, actual year to date, housing starts are down 20% from 2023,

[00:24:52] which was also a high year for housing starts by historical standards.

[00:24:55] But you're seeing those Torontos and Vancouver's where, you know,

[00:24:58] we're seeing the impact of that demand destruction that took place in 2022, 2023,

[00:25:03] when rates couldn't like rates made it so that people couldn't buy houses and people weren't buying houses.

[00:25:09] Nobody's going to build houses for them.

[00:25:10] Yeah.

[00:25:11] Yeah, exactly.

[00:25:11] There you have it.

[00:25:12] Okay.

[00:25:12] So the lack of, uh, housing supply, as you just alluded to, Dan has made things more expensive.

[00:25:18] And if you haven't noticed that, uh, this has led more and more Canadians,

[00:25:23] especially in those expensive markets, like you just mentioned, lower mainland and the GTHA

[00:25:27] to unfortunately, uh, do more crime, um, and to commit fraud in order to secure shelter.

[00:25:39] And we've seen it on both the mortgage side, like this would be fraud for shelter.

[00:25:42] Right.

[00:25:43] And, um, we've seen on the mortgage side in the past, but it's also becoming very common on the rental side of things.

[00:25:49] I think we've, um, uh, there's a quote on Twitter that I heard that said, you know,

[00:25:53] Canada is a nation of tenants who use mortgage fraud to rent from land land or sorry, tenants

[00:25:59] who use, uh, fraud to rent from landlords who use fraud to get their mortgages.

[00:26:04] Something like that.

[00:26:05] It's like the trickle up, trickle down fraud effect.

[00:26:08] Yeah.

[00:26:08] Something like that.

[00:26:09] I don't know, but it's like, I was like, yeah, it's pretty true.

[00:26:11] Like, I don't know.

[00:26:12] I mean, yeah.

[00:26:13] And I mean, look, this isn't anything new.

[00:26:14] People have been committing fraud or, you know, as, as Canadians like to put a light

[00:26:19] fraud for, for shelter for, for some time.

[00:26:22] Uh, it's come up on the show multiple times before day.

[00:26:25] And this makes me think of our good friend, uh, Jordan Skrinko, who had that one incredible

[00:26:29] video of him going, that was him going and they shut it down.

[00:26:33] Yeah.

[00:26:33] Like they ended up like shutting down.

[00:26:35] Oh yeah.

[00:26:35] Yeah.

[00:26:36] So, I mean, look, and Dan, you and I have both rented to hundreds of tenants over the

[00:26:41] years and we've done our own due diligence and we have found, uh, fraud over the years

[00:26:46] as well.

[00:26:46] Right.

[00:26:46] I mean, it's really not that hard to, to put some fraudulent stuff together, whether

[00:26:51] it's, Hey, you know, Dan, you call me as your old landlord.

[00:26:56] Right.

[00:26:56] And so, yeah, Nick was great.

[00:26:57] Or, you know, you call my brothers, my boss kind of thing.

[00:27:00] Right.

[00:27:00] Like, you know, it's, it's, it, at some points it was easy to get around this, but this is

[00:27:05] where it gets crazy.

[00:27:06] Stories, uh, just did a kind of investigative journalist, uh, report here with the great article.

[00:27:11] Over 50% of screened applicants are fraudulent.

[00:27:16] Toronto now, uh, Toronto renters grapple with a quote unquote financial struggle.

[00:27:21] So Menkes, uh, Kimberly Sears tells stories that the company has screened over 175 offers

[00:27:29] to lease over a six month course.

[00:27:31] And of those over 90%, over 90 of them were disqualified due to discrepancies found during

[00:27:38] the screening process.

[00:27:40] That's 90 out of 175.

[00:27:42] It's actually over 50%.

[00:27:44] The Toronto rental market is facing increasing challenges with high costs persisting despite

[00:27:49] signs of cooling, uh, rising fraudulent applications are, uh, complicating on an already difficult

[00:27:58] environment for both renters and landlords in mid Ontario's cumbersome landlord tenant board

[00:28:03] process.

[00:28:03] And if you don't know anything about the landlord tenant board process, good for you.

[00:28:06] I hope you never do because it is a scary place.

[00:28:11] Uh, no matter what side of the fence you are on there.

[00:28:15] Um, Dan, give me some of your key takeaways from, from this piece and, and just the kind

[00:28:20] of the, the bit of the, uh, disaster that, that this has become, um, overall.

[00:28:27] Yeah.

[00:28:27] So, um, again, Menkes said that approximately 50% of the recent rental applications in Toronto

[00:28:33] have been found fraudulent despite a reported increase in disposable income in the GTA and, uh,

[00:28:38] and actually rising wages.

[00:28:40] I think economic pressures, um, have led a lot of, uh, individuals to falsify documents

[00:28:45] in an attempt to, to secure rentals because either rents are too high and they can't, um,

[00:28:50] they can't basically charge or say they can't afford it based on a percentage of their income.

[00:28:55] So they'll like falsify their income or whatever.

[00:28:58] And then also like long delays in the, uh, landlord and tenant board, sometimes up to two years have

[00:29:03] increased the need for thorough tenant screening by landlords to avoid getting into a bad situation

[00:29:08] with a bad tenant.

[00:29:09] We've talked about this at length on the show, like relationship management.

[00:29:13] And, and this is actually one of the things that I'm working at, uh, on significantly with the,

[00:29:17] with the new company that I'm at is using AI to like kind of support on the underwriting

[00:29:21] and execution of, of leases. Like I'm super bullish on realtors playing a much more key role

[00:29:27] in the leasing side of, of things because obviously transaction volume is down significantly,

[00:29:32] but leasing volume is up and it, and there's never been a bigger need for somebody to solve

[00:29:38] this problem. Right. And, and I don't know who's going to do it. So the Ontario is a especially

[00:29:44] good example where, you know, the, the, the delays at the board alone are making or

[00:29:49] disincentivizing landlords enough or like making them want to, to, to fix this problem.

[00:29:55] Yeah, for sure. And as you were saying, Dan, how do we fix this problem? Well, verification

[00:30:00] measures, um, are, are more important than ever. Right. And Dan, you and I have both spoken

[00:30:05] about and taught many people on how to verify. Usually it's pretty simple things where you can

[00:30:11] kind of catch people in a lie or, or committing, um, some type of, of fraud. But again, those have,

[00:30:17] those people have just gone to crazy lengths. So it's now on the backs of realtors to implement

[00:30:23] rigorous checks, such as verifying property ownership and, and using new prop tech software

[00:30:30] to, to, you know, see and ensure tenant credibility and, and, and honestly, landlord credibility at

[00:30:37] that point as well. Um, you know, so transparency through things like financial checks, um, are advised

[00:30:42] landlords are encouraged, encouraged to do as much due diligence as possible. Use professionals.

[00:30:48] Again, you know, we always say, I, I'd much rather have a unit sit empty and I've let units sit

[00:30:53] empty for one, two, three, even four months at some points. And it starts to hurt after four months

[00:30:59] because you're, you know, if you've got a duplex, you might not be even making money at that point.

[00:31:04] You might actually in some cases be losing money. If one of your units is sitting empty for four

[00:31:08] months, but I've made the mistake in the past where I've didn't want to lose money and I've put

[00:31:14] someone in there quickly. And guess what? One first, second, third month are great. And then

[00:31:20] I'm dealing with nonstop BS for, for months, sometimes late payments, sometimes just calls

[00:31:26] or excuses or damaging the unit. Um, so again, you know, this goes back to the, the mindset that

[00:31:31] tenants are the real asset, but they are also your clients. If you are a landlord and I'm a

[00:31:38] that relationship is so important. And that's the last piece. My takeaway is that it is a

[00:31:43] collaborative relationship, right? Both renters and landlords benefit from a cooperative relationship

[00:31:49] with one another. One that's built on transparency and respect. Um, and, and it's essential to,

[00:31:55] to be honest, to have a functional rental market. So I think, uh, I think enough has been said about

[00:32:02] that, Dan, let's move on to the final piece here. This is, this is a bit of a fun one. This is loosely

[00:32:08] real estate related, but, uh, I just thought was, was necessary to, to get in here.

[00:32:13] Yeah. So, uh, let's move on to our final segment here. Transportation, a key thing to consider,

[00:32:18] obviously when looking at real estate investing really focused around that location, location,

[00:32:22] location piece, you know, thinking about working from home, general quality of life,

[00:32:26] but it is no secret that the Toronto and the traffic in Toronto and the whole GTA,

[00:32:30] honestly, even all of Southern Ontario, I would say any, any highway that starts with a four

[00:32:35] Toronto has won the dubious honor of placing third out of 385 cities around the globe.

[00:32:40] The F and the first in North America for having the slowest traffic in 2023, according to a new

[00:32:44] traffic index report from geo location firm Tom Tom. Yeah. I mean, I, I think we've made this joke

[00:32:52] before, but, uh, Toronto is an hour from Toronto, right? Like it is, it is just brutal. Um, and,

[00:32:58] and not even just, I like, I got, I'm, I'm in East Gwillingbury and like, I find, um, people in

[00:33:03] Toronto take longer to get to play. Like if, if I'm going somewhere that's reasonably close to the

[00:33:07] highway, they'll be like, Oh, how long did like, they'll ask where I'm from. And I'm like, Oh,

[00:33:12] like, you know, I live like this far North of Toronto. And they're like, Oh, it must have taken

[00:33:16] you so long to get here. I'm like, no, like maybe like 45 minutes, an hour. And they're like,

[00:33:19] what took me an hour to get here. And I'm like, yeah, I know. Yeah. Oh,

[00:33:23] Sucks. Trust me. I know I'm usually one of those guys meeting you and, uh, it's,

[00:33:28] like the, you know, we've got that world-class city traffic, but we don't have a, we don't

[00:33:31] have the world-class city helicopter. Well, not yet. I need to get to that helicopter phase,

[00:33:37] you know, like in the big short when the guy's like, Oh yeah. Like he's like, Oh,

[00:33:41] you live in New Jersey. He's like, yeah, it's 15 minutes. I just take a helicopter.

[00:33:45] That stands, that stands next goal from, from East Gwillingbury to downtown Toronto.

[00:33:49] No, this is my goal. This is me. This is my goal for Toronto. I think that we,

[00:33:52] we need to get to the point. We need to strive for better. We need to be helicopter commuters.

[00:33:57] Okay. We're working on it, but before we get there, uh, let's cover these last two articles

[00:34:01] here, Dan. Uh, these articles cover our transportation woes here. Um, the first one,

[00:34:09] and, uh, and these are both Ontario specific. So I apologize for the rest of the listeners

[00:34:14] across the country, but I'd encourage you to stick around and have a chuckle at just how

[00:34:17] includes Quebec. Yeah, exactly. And just stick around and you can, you can have a chuckle at how

[00:34:22] ridiculous things are getting here. So, uh, the Ford government is looking at highway 407,

[00:34:28] which was sold a long time ago, looking to buy it back. And he's also, I just love how he threw

[00:34:34] this in. This is so, so classic Ford. We're going to raise the speed limits on the 400 highway series.

[00:34:40] Uh, I love speeding. Buck a beer and you can go 200 miles per hour. All right.

[00:34:49] One of my stretches of highway is one of the 110 pilot projects. And it is a game changer. Like,

[00:34:55] like before it was like, everyone goes 130. Uh, not me. I go, I go 115, but yeah,

[00:35:02] people, people, people like are like flashing their brights and like honking at you. If you're going,

[00:35:06] if you're going like 130, that's like, what is going on? It's like some guy in a minivan just,

[00:35:10] just passed me and flashed me. Cause I wasn't going 150 and he gave me, flip me the bird as I'm

[00:35:15] driving by. And I'm like, dude, where are you going? Dude, don't mess with a van, man. You learned

[00:35:21] your lesson. Uh, okay. So Ontario premier Doug Ford has announced considerations to potentially,

[00:35:27] again, potential being the keyword here by like, just like the potential tunnel they were going to

[00:35:32] put on. Well, this is why he, cause he was like, the tunnel is probably not going to happen.

[00:35:35] So I got to raise the speed limit and, and buy back to 407. And again, plans to raise the speed

[00:35:40] limits on all 400 highway series, uh, which, which, you know, if you can, if you, the speed

[00:35:45] limits 120 or something like that, and we we've gone Autobahn style on them that are, Hey, I'm okay

[00:35:50] with that. Still doesn't matter if we, if you are in gridlock traffic, you can, you can inch past,

[00:35:55] uh, uh, 110, 120 sign going, uh, 15 kilometers per hour. And it doesn't make a difference.

[00:36:02] What happened to Elon doing tunnels, man?

[00:36:04] He's doing it, dude. It's like, you want to just fix this guy's tunnel.

[00:36:06] Elon's not going to come up to Canada and do he's got to fix LA and, and you know, all that good

[00:36:10] stuff first, but, uh, he's got it. I think he's trying, yeah, he's pretty focused on, uh,

[00:36:15] elections right now as well, but I guess that'll be over.

[00:36:17] Yeah. Yeah. So anyways, uh, Ford is doing this in an effort to address traffic congestion

[00:36:23] and just improve overall travel time. Stan hit me with the, the first point here, um,

[00:36:28] um, on the potential buyback. Yeah. So the Ontario government is exploring the possibility

[00:36:33] of reacquiring 407 originally sold in 99 as membership discussions and future congestion

[00:36:38] concerns continue. I look, I take the 407 a lot. It's great. It does completely change

[00:36:43] to game. Although it is insanely expensive. Yeah. For, for those that don't know what the 407,

[00:36:48] it is probably the best maintained and least busy highway here in Ontario, but it's pay to play

[00:36:54] and it is expensive. Uh, especially if you don't have a little transponder thing, um,

[00:37:00] they'll charge you for not having one of those and they'll charge you for the kilometers. Um,

[00:37:06] um, and again, the next piece spoken like a true non-transponder. I've had them over the years.

[00:37:10] I've lost, um, I just, you know, I don't know the 407 kind of, it just kind of rattles me that

[00:37:15] I've got like the one good highway. If you got a, you get charged an arm and a leg for again,

[00:37:20] increased speed limits from a hundred to 110. And then here's your tunnel, Dan,

[00:37:24] the expressway tunnel feasibility Ford reiterated his plans for a feasibility study on constructing

[00:37:29] an expressway tunnel under highway 401 to further alleviate gridlock

[00:37:34] in the GTA. Now that tunnel, if it ever comes into play, will likely be done in the next 50 to 75

[00:37:42] years based off of how long it takes things to get built, uh, in this part of the country. So,

[00:37:48] um, that is a good segue to the next piece here, which could also take another a hundred years to

[00:37:53] get built, but is kind of a cool and, um, and, and, and honestly very needed mode of transportation.

[00:38:00] It's something that just seems so freaking obvious for anyone else looking at a population

[00:38:07] map of not only Canada, but Ontario specifically. Dan, what am I talking about here?

[00:38:13] You were talking about the federal government going ahead with high speed rail between Quebec

[00:38:16] city and Toronto trains reach speeds of up to 300 kilometers per hour. And that is an angry

[00:38:21] looking train. I must say. Well, if you're going 300 kilometers an hour, I guess you got to look,

[00:38:26] it's aerodynamics that make you look angry at that point. Thomas, the train engine would not like

[00:38:31] this train. They would not be in the group. He was stuck in gridlock traffic. He wasn't going fast.

[00:38:36] So the Trudeau government is, is advancing plans for a high speed train linking Quebec city and

[00:38:41] Toronto with the availability to travel at 300 kilometers an hour and reduce travel time between

[00:38:46] Montreal and Toronto to three hours. This project, which marks a significant shift from the

[00:38:51] previously proposed high frequency rail promises to enhance productivity, efficiency,

[00:38:55] and reduce carbon emissions. Yeah. I mean, so the, the, the announcement overall

[00:38:59] Quebec city to Toronto, to be honest, uh, I don't know why they would stop it at Toronto. Why not go

[00:39:04] right down to Windsor? And then you have like a direct access to the U S um, you know, project

[00:39:13] execution, a consortium has been selected among three bidders for the project. So obviously this will

[00:39:18] be a lengthy and large RFP process. The final contract is pending. And you know, this is

[00:39:26] anticipated, uh, and considered to be the most cost effective way to do it. Um, rather than the

[00:39:32] initially anticipated and projected plans, which if I'm correct me if I'm wrong here, Dan, but I think

[00:39:39] this was originally proposed like 15 to 20 years ago. Yeah, it was a 21 years ago. There was a CBC

[00:39:46] article written about the same kind of thing. So there you go. That's when you can expect to get your,

[00:39:51] uh, tunnel under the 401. Yeah. And, and how long, I mean, it says right here that the anticipated

[00:39:56] to take four or five years to design. And then I guess another 20 plus years to implement. So Dan,

[00:40:04] maybe our great grandchildren will be on this train and you and I can ride it. Well, you know, when we're

[00:40:10] in walkers or wheelchairs and we're canes and be like, you know, we talked about this on the podcast

[00:40:15] 40 years ago. And, and I mean, if, if the way that, uh, you know, if, if the LRT here in Toronto

[00:40:22] has taught us anything, you know, the crosstown Eglinton, uh, piece, and I know the, the Vancouver

[00:40:28] has had its own woes with, uh, the SkyTrain and the LRT stuff there. Uh, I love the idea.

[00:40:35] I think it's very exciting. Do I think it's going to happen anytime soon? Uh, no, I do not.

[00:40:40] However, I will say one thing from an investor perspective, this is one more bull case for buying

[00:40:44] anything along that corridor, which Dan, you and I own quite a bit of property in certain markets

[00:40:51] along that corridor. And I know a lot of our listeners do too. Anything else before we get

[00:40:55] out of here, Dan, any other breaking news or anything you want to include before we wrap up?

[00:41:00] Uh, no, honestly, not really much. I would want to add there other than, um, I think that the

[00:41:06] train is a decent idea, but I do not think it will happen. There we go.

[00:41:10] You heard it here first, uh, train, good idea, likelihood. Um, probably not. Uh, thank you as

[00:41:17] always so much for joining us here, new and legacy listeners. We appreciate each, we appreciate each

[00:41:24] and every one of you. We could not do this without you. Thank you so much. And we'll see you soon.

[00:41:31] The Canadian real estate investor podcast is for entertainment purposes only, and it is not

[00:41:36] financial advice. Nick Hill is a mortgage agent with premier mortgage center and a partner in the G and H

[00:41:43] mortgage group license number one zero three one seven agent license M two one zero zero four zero

[00:41:52] three seven. Daniel Foch is a real estate broker licensed with rare real estate, a member of the

[00:41:59] Canadian real estate association, the Toronto real estate board and the Ontario real estate association.