Mortgage Delinquencies, Business Insolvencies & 1$ Properties

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

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

[00:00:13] Welcome back to the Canadian Real Estate Investor Podcast.

[00:00:15] My name is Daniel Foch and I am joined here by the one and only Nick Hill who just completed

[00:00:21] the five day challenge, I think, which was cool, right?

[00:00:24] It was actually a challenge.

[00:00:26] It was challenging for both the people that joined and signed up in a sincere thank you

[00:00:31] to everyone that did that, but it was also challenging for us then.

[00:00:33] That was a big commitment, but a ton of fun.

[00:00:39] Today we are talking about some recent news.

[00:00:44] Yeah we are.

[00:00:47] And I guess before we do that, actually if you're interested in the five day challenge

[00:00:50] of recordings are also available so sign up, we'll have the link in the show notes.

[00:00:53] We're going to be running those, I think five days just a little much, but we might be

[00:00:56] switching to maybe like a monthly format where we'll do like a monthly webinar on a more

[00:01:02] specific topic.

[00:01:03] I don't know, it's really going to be completely up to our coach to be honest with you because

[00:01:08] we practice what we preach and have a coach of our own.

[00:01:11] Anyway, before we dive in here, Nick, what do you have for us?

[00:01:15] Yeah, yeah exactly, Daniel.

[00:01:17] Authors have editors, athletes have coaches and we play the sport of real estate hard.

[00:01:23] So you know we had to go get ourselves a coach, but we are going to be talking about

[00:01:27] a lot of different things today.

[00:01:29] And actually probably some of the people here probably could have used some coaching as

[00:01:32] well because when we're talking about mortgage delinquencies, business insolvencies, we're

[00:01:37] also going to chat on should municipalities be able to compel builders to use their land

[00:01:45] and then we're going to touch on a construction and development report with some fairly surprising

[00:01:49] numbers in it.

[00:01:52] And then I thought we could finish it off with a list of places across Canada that either

[00:01:57] have or have in the past have major incentives for you to move there.

[00:02:03] And that includes being able to purchase a property for as low as one Canadian dollar.

[00:02:12] But before we get into all of that news, Dan, I got to I got to get you to tell us the

[00:02:17] story of the Instagram video and the newest page on the financial consumer agency of Canada,

[00:02:24] you know my favorite government agency otherwise known as FACAC.

[00:02:28] Their website had a page on it called pain your mortgage when experiencing financial difficulties.

[00:02:36] Now Dan tell us a little bit about the website why the page was there what the page had

[00:02:42] on it and then what happened after a certain social media influencer made a video about

[00:02:48] it.

[00:02:49] You know, it's funny like so the page had a variety of things on it but what happens if

[00:02:56] you can't pay your mortgage or if if you need to declare special financial circumstances

[00:03:01] to ask your lender for I guess like support.

[00:03:05] But it would have I noticed and it did mention like later on not in the table of contents

[00:03:11] which to me is like the important part because somebody's going to look at this and be like,

[00:03:14] oh, like what are my options?

[00:03:15] There's a list like I think to be honest with you.

[00:03:18] Like if if you can't pay your mortgage selling your house should be high up on the list.

[00:03:22] It does it did like within the text to be fair because people were like, oh, you're being

[00:03:27] misleading or whatever.

[00:03:28] And I'm like, no, really like it still didn't say selling your house was an option.

[00:03:32] The context of them talking about selling your house in on this page was and it's still

[00:03:39] this is what happens if you have to sell your home because you can't pay your mortgage.

[00:03:43] Like basically before like the prepower of sale, if your lender asks you to sell your

[00:03:48] house, it doesn't say, hey, you can't afford this thing.

[00:03:53] You should sell your house.

[00:03:54] So anyway, yeah, cause and my joke was on in this video.

[00:03:58] So I somebody pointed out that they've been running these ads.

[00:04:01] I haven't heard the ads.

[00:04:02] They should really have them on our podcast but they know everybody here pays their mortgage

[00:04:06] so.

[00:04:07] So these ads have been pointing people towards the website and I said, look, doesn't say

[00:04:13] anything about selling your house because this is Canada and we didn't get the highest

[00:04:16] household indebtedness in the world by selling our bad assets.

[00:04:20] And then somebody pointed out in the comments like within 24 hours that they had changed

[00:04:24] the table of contents on the site to now include selling your home which I thought was funny.

[00:04:29] I took a little bit of pride in that.

[00:04:30] So whoever changed that, thank you for watching my video.

[00:04:34] I didn't mean to offend you guys but it really should be probably high on the list of

[00:04:39] priorities for someone who can't afford their home to perhaps get rid of it.

[00:04:44] Yeah.

[00:04:45] Crazy.

[00:04:46] Just crazy thought there.

[00:04:47] Yeah.

[00:04:48] So look at that Instagram really can make a difference, I guess.

[00:04:51] Is that the moral of the story here?

[00:04:53] There's two more.

[00:04:54] I think that's in that's real influencing.

[00:04:56] Yeah.

[00:04:57] It was what it was.

[00:04:58] So two morals of the story, Dan, you are officially a real influencer I guess.

[00:05:02] And the second moral of the story, if you can't afford something like a house or a car

[00:05:07] payment or something like that, one of the considerations should definitely be to get

[00:05:12] rid of that thing.

[00:05:14] Correct?

[00:05:15] Yeah.

[00:05:16] Like that's my thought.

[00:05:17] I think that it would be like it comes down to a cost benefit analysis but the reality

[00:05:20] is like what's the cost of keeping said item versus the benefit of getting rid of it.

[00:05:25] Like, you know, it's not that hard to really do but most people just like they're thinking

[00:05:28] all qualitative.

[00:05:29] Like, oh, what are my friends going to think of me if I had to sell my house and rent

[00:05:32] for a couple of years?

[00:05:33] It's like, well, was it a good financial decision because who cares what they think?

[00:05:37] Really, right?

[00:05:38] Like or whatever other reason you might have to convince yourself that you don't, you

[00:05:44] shouldn't sell your house.

[00:05:45] Oh, it's going to go up in value.

[00:05:46] My realtor, some realtor told me this that blah, blah, blah.

[00:05:49] It's like, if it's there's there's this Reddit posts.

[00:05:51] Did I just see the reddit post that I put it?

[00:05:53] Yeah.

[00:05:54] It's like $1500 cash flow negative on a condo.

[00:05:57] He needs to live at home with his parents.

[00:05:59] It's like what?

[00:06:00] Like, if you think about sunk like and then everyone in the comments is like, you know,

[00:06:05] you got to hold it.

[00:06:06] Like having you thought about the principal paydown, it's like, okay, well, so this guy's

[00:06:09] $1500 cash flow negative after condo fees.

[00:06:12] There's no way that he's paying down more principal than condo fees and then he's paying

[00:06:16] condo fees and interest.

[00:06:17] Of course not.

[00:06:18] Right?

[00:06:19] Just based on the numbers.

[00:06:20] Like purely on, well, unless he's like 50% LTV or on like a, well, not even.

[00:06:24] If he's on a 25 year, I'm you're paying more interest than then principal in your first

[00:06:29] year, the first five years.

[00:06:30] I think it's like at like 10 or 15 year amortization when it switches.

[00:06:35] So like when you start paying down more, more principal than that interest and at the

[00:06:39] current interest rate.

[00:06:42] So if you were to take all of that money invested in other things like baseline, S and P.

[00:06:48] And this is like what a real estate investing podcast.

[00:06:51] And I'm about to tell you that if you, if you're a regular homeowner who invested the

[00:06:56] principal or sorry, your interest payments and your down payment and all of the other

[00:07:02] sunk costs of owning a house like condo fees in this example.

[00:07:05] In like the S and P 500 index, you would, we would net out better.

[00:07:10] I've been meaning we've talked a lot about doing an episode about this with Simo and

[00:07:14] Braden, like just a just a buy by versus rent crossover.

[00:07:19] The most of the richest people that I know rent their rent their primaries.

[00:07:22] Just saying.

[00:07:23] Yeah, well, I mean, most people are not good investors overall and you know, that whole

[00:07:29] thing is kind of hilarious, sad and crazy at the same time.

[00:07:33] And a pretty good segue into our first article here, which we've taken from our friends

[00:07:39] over at better dwelling.

[00:07:41] Yeah, I think that you said it really well there.

[00:07:43] Like it's like most people are bad at investing and saving and the principal residents forces

[00:07:48] people to invest in safe anyway.

[00:07:50] Tell me about this headline from better dwelling here.

[00:07:53] Yeah, this is not what I think most people would consider good news.

[00:07:58] Unfortunately, mortgage delinquencies surge on 135% here in Ontario.

[00:08:05] So Canadian households are struggling to manage their astronomical debt loans.

[00:08:09] That's the warning from the credit rating agency, Equifax who noted a surge in both mortgage

[00:08:14] and non mortgage credit delinquencies in Q4 of 2023.

[00:08:19] This issue is emphasized in the price year provinces, British Columbia and Ontario and especially

[00:08:26] when it comes to younger adults, so let's say, you know, 25 to 45 kind of thing.

[00:08:33] And Canadians are experiencing significant hurdles in repaining some of these super sized

[00:08:39] debts mortgage delinquencies climbed 52.3% to 0.14% in Q4 of 2023.

[00:08:48] So I want to pause there for a second and say, yes, we've gone up by 52%.

[00:08:53] But we are only now at 0.14%, which is like it's like a low, like it's like 2019.

[00:09:00] We're back to like 2019 levels.

[00:09:02] Exactly.

[00:09:02] So this shouldn't be alarming yet, but we're going in the wrong direction.

[00:09:09] Yeah.

[00:09:09] First I would like to say, I think it's hilarious that they call these like delinquencies,

[00:09:14] like juvenile delinquents, you know, like when you know, like in like all those old like books

[00:09:18] are like thinking like any or something like that.

[00:09:21] But the other piece is that, you know, we were discussing that page on the FCAC website about how

[00:09:28] there's all these options for people who can't pay their mortgages.

[00:09:31] Like it doesn't surprise me that our delinquency rate is low when there's advertisements running

[00:09:36] on the on the radio and television telling people to go to this website to learn how to not

[00:09:41] pay their mortgage.

[00:09:42] Just I'm just throwing that out there.

[00:09:43] Yeah, talk about a negative feedback loop or mixed messaging propaganda type of stuff

[00:09:49] it's fascinating.

[00:09:52] Now that was mortgage delinquencies we talked about that went up 52% in as now at 0.14.

[00:09:58] However, non mortgage delinquencies saw a climb in the same period.

[00:10:04] They went up almost 29% to 1.3% overall in the same period.

[00:10:10] Well that growth is higher.

[00:10:12] That rate is largely in line with again, historical data.

[00:10:16] So we're not we're not in uncharted territories right now but again,

[00:10:21] we are moving in the wrong direction.

[00:10:23] Now BC and Ontario mortgages, the link would see is

[00:10:26] we're greater than pre pandemic.

[00:10:28] So two provinces are proving to be the exception and they are the same too.

[00:10:33] Usual suspects as always BC and Ontario and BC, the delinquency rate climbed 62% higher

[00:10:40] for mortgages and 30% higher for non mortgage credit in Ontario.

[00:10:44] The mortgage delinquency rate climbed a whopping 135%.

[00:10:49] Well, non mortgage rates, non mortgage delinquency rates were up 35% over the same period.

[00:10:56] Now, aquifax didn't specify the final rate for these two provinces just the growth which

[00:11:01] is a little misleading.

[00:11:03] However they did specify that both provinces are now just above pre pandemic levels.

[00:11:09] So you can get yeah, you can get the CBA like the Dilling One's Erates from CBA

[00:11:14] Canadian Bankers Association as well as CMAC publishes it quarterly.

[00:11:20] And actually on that note before I get to the next part of this article,

[00:11:24] I and I hate to say I told you so but I think we have to do that now because we're gurus right?

[00:11:30] We have to be like oh, it would predict this like here's my crystal ball.

[00:11:34] You know so anyway like do we do it like the trailer park boys and say I told us so instead.

[00:11:39] So yeah, I'm something bad.

[00:11:40] Sure that works very Canadian I guess to the reference trailer park boys.

[00:11:45] The point is there's this leading indicator that I found on delinquencies which is power of sales.

[00:11:51] So like if you were a lender and somebody stopped paying you, you might take their home power

[00:11:57] of sale and then that delinquency data point, the 90 day delinquency data point would not show up

[00:12:06] until 90 days at least because that's how long it has to be delinquent before it shows up on

[00:12:11] is reported to the CBA Canadian Bankers Association. So during that 90 day period,

[00:12:16] banks have a huge incentive to remedy this situation so that it doesn't show up as a delinquency

[00:12:23] on their books. So therefore looking making them look like a much better bank.

[00:12:30] And so what's one of the remedies, the mechanisms that banks or lenders not just banks.

[00:12:35] Lenders have to get people to not be delinquent is sell their house. If it's sold,

[00:12:42] it's cleared. It's not delinquent anymore because they the account is now paid off with the proceeds

[00:12:49] of the sale of the house. So anyway power of sales coincidentally this is very just coincidence

[00:12:54] who would a correlation not causation coincidentally up about 135% year on year.

[00:13:00] I said this two years ago. I said this like two, literally two years ago.

[00:13:06] I remember that 2022. So power of sales were up, yeah, depending on the month that you used to

[00:13:14] compare it like between 120 and 140%. That was last year. Then they just went up again another 100%

[00:13:21] year over year. So you one should expect delinquencies to continue right if what I'm saying about

[00:13:27] misleading indicators. Correct. One should expect delinquencies to continue rising into 2025,

[00:13:32] 2026 conveniently when most of our mortgages are renewing. So I would say we're not in the clear yet

[00:13:38] and it seems like there's a bunch of other headlines coming out that most economists would agree with me

[00:13:43] and this is a good market to be to be sharked call it a shark it if you want. You know just

[00:13:50] trying to get deals from people who are deleverging anyway. I digress as this tradition.

[00:13:55] Canadians are experiencing pain from household debt. As we assess the unfolding dynamics of the

[00:14:01] housing market, it's evident that upcoming mortgage renewals will be pivotable pivotal for many

[00:14:06] homeowners said Rebecca Oak vice president of advanced analytics at Equifax Canada. It's important

[00:14:11] to note that mortgages procured in 2020 will likely see a substantial increase upon renewal by next

[00:14:16] year. Nevertheless, most homes were bought before 2020 at much lower prices resulting in significant

[00:14:22] equity for many homeowners. This fact, don't not explicitly mention is evident in the payment stress

[00:14:27] observed by among younger homeowners who are more likely to be recent buyers. You know what I'm

[00:14:34] going to say this. I've said it a couple of times. It's going to suck what if I ever decide to get

[00:14:38] into politics but like everyone's been blaming the housing crisis on investors. It's like and I've

[00:14:44] said this many times on the show. It was like buy their very nature first time home buyers. It's

[00:14:49] their first time. They're the most likely to do it a bad job at it, right? You get first-time buyers

[00:14:56] who come in with first time agents or newer agents who don't just only know FOMO, don't know how to

[00:15:03] create a managed downside risk or help them with risk management. He had investors who literally

[00:15:08] only care about the numbers. Speculators set that aside because those are probably first-time

[00:15:13] investors and they would fall more into the first-time category than from my perspective but

[00:15:17] this really kind of drives that home for me. And then you also give them the cheapest rates

[00:15:24] first-time buyers and the highest leverage with the CMHC insurance. So anyway, Equifax explained

[00:15:30] the trend when discussing the rising young mortgage borrowers missing payments on other credit

[00:15:34] products. So everybody, and you know everybody, this is Canada. We love paying our mortgages.

[00:15:39] We take pride in its patriotic duty. You're going to stop paying everything else first. I actually

[00:15:45] know of a guy who he stopped paying his vehicle payment and mortgage payment at the same time

[00:15:50] and he said it took them longer to get rid of his truck than his house. Fun fact, wow, there you go,

[00:15:55] not financial advice. Yeah, don't do that by the way but yeah, first thought it was funny.

[00:16:01] Anyway, mispayment levels in Ontario and BC are primarily driven by younger homeowners,

[00:16:05] defined as 36 years of age and under where both balance and accountant linkancy rates are now

[00:16:11] higher than in 2019. I would love to see, I wish they published the breakdown by age.

[00:16:18] Those damn millennials, how dare they want to own a home and try to pay their mortgage? I can't

[00:16:22] believe it. The audacity. Yeah, I mean hectic stuff. And unfortunately, it doesn't get any better.

[00:16:28] So I pulled this article which kind of complements this next one here. This is from the London

[00:16:35] free press out of London, Ontario. Mortgage defaults in London are up more than 80%. Now,

[00:16:41] London homers are defaulting on mortgages because they have risen over 80% due to high interest rates

[00:16:47] and inflated home prices. It has the second highest rate nationally with defaults up 83.3% by

[00:16:54] Q3s and last year only surpassed by Barry whose defaults have doubled. And again, that's all

[00:17:01] according to both Equifax and CMHC. The 83.3% increase sounds dire. It means about 70 homeowners

[00:17:11] defaulted on their mortgage payments in London, said Rebecca Oaks, vice president of analytics

[00:17:16] for Equifax, same lady above. We're talking very small volume so the percentage can sound like a lot.

[00:17:22] But I mean, I don't know, like a 70 that few in London, Ontario, like not really. That's a lot of

[00:17:28] people. If you had a room full of 70 people, like I don't know we think our Calgary meetups are big

[00:17:33] and they have 70 people at them. Yeah, I mean that's a good point. Put 70 people in a room and if

[00:17:37] every single one of them defaulted on the mortgage, yeah, that's yeah, I mean it's not again,

[00:17:42] not crazy numbers because I don't know the population. I guess it's just not like head but

[00:17:47] but again, we're all we're this is trending in the wrong direction. It's not like oh,

[00:17:51] you know, mortgage rates are getting cut and the economy's really turning around so this work

[00:17:54] kind of at the end of it's like no, this is only going to get worse from here and we're already

[00:17:59] seeing numbers going the wrong way. Yeah, it's just and it's all lagging data, right Dan? I mean

[00:18:05] this is 90 days so yeah, like well, this is the same in another two, three months from now. Where

[00:18:10] what are we going to see? That's the thing. It's like a delinquency isn't some just somebody who

[00:18:15] missed their mortgage payment once, right? Like we know that like for example, that data point that

[00:18:19] we put in the CMHC report episode, which you should check out a couple of episodes ago but it was

[00:18:24] like 20 almost 20% of people are delinquent on rent in the GTA. That right? Yeah, 19.6% or something

[00:18:32] crazy. Yeah, just 100% not so but she goes on to say when you miss mortgage payments for 90 days,

[00:18:37] it's pretty bad. That is pretty bad. It's like yeah, you know, this isn't one month like one month

[00:18:42] doesn't even show up in the data two months doesn't even show up in the data. So you you have to be

[00:18:46] missing your mortgage for three months. Like if you have not been paying your mortgage for three

[00:18:51] months, not sold your house or made an effort to do so, not contacted the bank picked up any other

[00:18:56] phone calls like it you have to be like very deliberate about becoming a delinquency data point

[00:19:02] to show up on this 90 day delinquents. Honestly, like there's so much there's so much that they're

[00:19:08] doing and I will give FCAC all the credit in the world because like I wasn't trying to really

[00:19:11] chirp them. I was trying to chirp Canada in that video that we referenced earlier on in the

[00:19:16] thing. I wasn't trying to chirp FCAC and they didn't even really fix it because they just said like

[00:19:20] here's what happens if the bank forces you to sell your house, not hey you should think about selling

[00:19:26] your house maybe but I'll give them credit like they've done a lot to to help people in these situations

[00:19:34] like you have to be deliberate if you're missing a mortgage payment for 90 days. Anyway, London's

[00:19:41] stands near the top of the list as home prices have rose sharply quick in a short period and then

[00:19:45] they fell very sharply as well. If a homeowner has to renew their mortgage but the home is worth

[00:19:48] less than the mortgage, it might not be renewed. It is happening across Ontario, Hamilton and Toronto

[00:19:54] rates are increasing faster than London Oatsett. House prices rose significantly and income has not

[00:19:59] risen what does this do? This means that people have to take on more debt to buy said houses.

[00:20:04] So here's a quick list of some of the top percentage increases in mortgage delinquencies just

[00:20:10] here in Ontario alone. Now this is from Q3Q4 of 2023 compared to the data from that same time

[00:20:20] in 2022 when the housing market was just absolutely ripping. So we see Barry have a 100% increase.

[00:20:29] London again 83.3 Toronto this isn't this can't be good here Toronto 66.6

[00:20:39] Windsor same thing 66.6 and Victoria 66.6 so the number of the devil right there that cannot be

[00:20:47] good. Again, these are percentage increases in mortgage delinquencies. St. Catharines

[00:20:53] Niagara's up 62% from 2022 Q4 to 2023 Hamilton 60% well 6% Abbotsford and Mission out in

[00:21:03] British Columbia 57% and good old Aushua at 33.3% increase in mortgage delinquencies from Q4

[00:21:13] 2022 to 2023. Not good I would say not great. Yeah. Don't see

[00:21:21] Cornwall on there. No, thank God don't see any of our favorite markets on there but you know this

[00:21:27] is again we're not trying to be alarmist here for everyone that's listening we're not trying to

[00:21:32] just sit here and be the bears a bad news speak for yourself I am. Yeah it's funny though because

[00:21:39] you're like oh it's trending in the wrong direction. It's like well it's trending in the wrong

[00:21:43] direction for the people who have the mortgages and for the lenders is it trending in the wrong

[00:21:48] direction for an audience of real estate investors that are real estate investors who are waiting to

[00:21:53] capitalize on speculative investments gone wrong like right not yeah I mean that's my thought

[00:21:58] it like I think that we are entering into an era of a lot of opportunity right now for sure

[00:22:05] you know we've been talking like I put out a video about power of sales and we're going to be

[00:22:11] doing some content I think on power of sales I think we're going to do I think probably our next

[00:22:15] our next like monthly session seminar whatever live thing will probably be either power of

[00:22:20] sales or vendor takebacks depending on which data point is tracking stronger both very well

[00:22:25] topics right now things you need to know about the next few years need to understand yeah yeah

[00:22:31] for sure and the point being like we're entering into a market where being creative with

[00:22:36] distressed owners is going to create a lot of opportunity a lot of people want to try and time the

[00:22:41] bottom of the reality is if you want to if you want to time the bottom you got to create the bottom

[00:22:44] you got to be bidding you got to be like you know if you think the market's 10% over value

[00:22:49] you got to go be bidding 10% below on everything on the market right now because then you're going

[00:22:54] to create the comparable that creates the down you know what I mean exactly what do they say be the

[00:23:00] low ball offer you wish to see in the world that's that that is a Dan Foes original right there for

[00:23:08] sure yeah be be the comp you wish to see in the world that's it right there be the sale

[00:23:13] this next article it kind of illustrates what you're talking about right now as well Dan

[00:23:17] someone just the pain that we're seeing in the market yeah we've seen mortgage elinquencies go up

[00:23:20] but and this is as Dan and you and I have been small buttons business owners multiple times

[00:23:26] in our life we now own several small businesses together this one I hate to see it but what

[00:23:31] what am I talking about what's the next article we got business in solvency sort of the highest

[00:23:36] level in nearly 20 years can his businesses aren't just increasingly closing up shop but they're

[00:23:42] also facing debt problems too the office of the superintendant bankruptcies OSB data shows

[00:23:48] business in solvency surged in January a combination of a slowing economy rising input costs

[00:23:53] soaring debt and end of pandemic assistance has led to the biggest month of business in solvency

[00:23:59] is in nearly 20 years so remember the what's the seba that's what it is right CBA the seba payment

[00:24:06] period pay like you could pay back your seba alone maybe was it free money like a little free

[00:24:12] money that we were well I think it was 10k or 20k if it was free like if you you board 40 but

[00:24:17] if you paid it back on time you got so I get some people have speculated I would never do this but

[00:24:22] some people have speculated that this jump is because of people who couldn't pay back their

[00:24:27] seba loans now basically saying well we can't pay back the whole thing right so more we don't want

[00:24:31] to roll into the I don't know like I don't know if I feel like that would be seems to be a

[00:24:36] correlating data point that may have some impact yeah I'm interested to see like I don't

[00:24:41] think there's no way to really prove that but a lot of people smarter than me have speculated

[00:24:44] that's a reason we could be seeing such a jump but anyway so Canadian business in solvency

[00:24:49] are making up for lost time the OSB received 759 in solvency files in January about 42% more

[00:24:57] than file the month before compared to the same month last year this is 129% jump it's easy

[00:25:03] to dismiss monthly movements as volatile due to seasonal nature of insolvency filings however

[00:25:08] the annual surge is a big red flag that deserves a deeper dive into the data historical data

[00:25:14] provides some context is from better dwelling by the way into how unusually large last January was

[00:25:19] it wasn't just big for that time of year but Canada hasn't seen a single month this large in 19

[00:25:25] years it was the largest moving nearly a generation and so I'm looking at the chart here from

[00:25:30] national bank and bf economics and strategy it's just data from the office of the super intended

[00:25:35] bankruptcy and it shows so basically I think we're back at like what to do is 2005 2004 levels I mean

[00:25:43] there was only a slight spike even during 2008 right if you really look at it like so we passed

[00:25:49] we're path higher than 2008 yeah looking at like oh oh 304 and then the more interesting part

[00:25:54] from my perspective is like you you can't see a increase of this magnitude on this chart until

[00:26:01] you go all the way back to one of my favorite times to talk about the 1990s like you see that

[00:26:07] right there eat what it that would be probably right at the 89 housing market peak this whole start

[00:26:12] this whole show started with us talk comparing the 90s recession to today's potential setup for

[00:26:17] recession yeah I mean the right like this one so that's the scarier comparison from my perspective

[00:26:22] is if you if you were to compare those two curves like the lines it doesn't look pretty for Canada

[00:26:28] no because basically if we you know again in history doesn't repeat itself but it often rhymes and

[00:26:34] if we are rhyming this time around we've got a long way to go before before you know we're at

[00:26:42] that level I mean we're not even halfway right this well I don't think it's like a route I don't

[00:26:47] think you go as high because like look at the baseline so if you look at like if you look at whatever

[00:26:51] before 1990 like it seems to be 700 like a hovering around that 700 level and then it jumps up to

[00:26:59] 1300 now we were hovering around the 200 level and then we jumped up to like almost 800 so we know

[00:27:06] back then it was only a 50% increase and now we're seeing like you know four times increase right or

[00:27:12] well yeah I guess like yeah I mean my only thing is this is this is 30 years ago right so

[00:27:18] with the populations grown technologies changed there's a lot more people starting businesses than

[00:27:23] ever before right like this is you know again that's why it's hard to compare these two because

[00:27:27] we live in very different worlds than than we did 30 years ago but yeah that kind of

[00:27:32] makes me want to talk about the job numbers again because we saw jobs another yeah while we're

[00:27:38] here talking about I mean I guess a lot of people doing like only fans and Uber Eats and stuff like

[00:27:43] that now like self-employed yeah yeah like because what was it 38,000 self-employed and then we lost

[00:27:53] 16,000 public sector and gained 18,000 private sector I want to say it was the way other way around

[00:27:58] other way around didn't we yeah yeah gained gained gain pump 18,000 public sector lost 16,000 private

[00:28:04] sector no no you gain we lost more private sector job no we gain more public sector jobs than

[00:28:11] we lost in private the private sector and then there was like a huge jump up in self-employed yeah exactly

[00:28:16] but like what is the what does that self-employment look like right are these people starting like

[00:28:21] contracting companies or storefronts retail like what does it look like yeah I think it's gig

[00:28:27] I think it's all gig it's all gig it's all gig right they don't have the data but like you would

[00:28:32] have to they would have to be like where can you see that many people jumping into the like no

[00:28:36] you know like there definitely didn't see 38,000 new restaurants you know no 38,000 new Shopify stores

[00:28:44] maybe at that best right the last piece I'll add from this article here that I think is great actually

[00:28:50] because I didn't they look at it on an annual basis so for a swap for the 12 month period

[00:28:55] so basically let's say the year of 2023 there was 5200 insolvency filings which is almost 50% higher 49

[00:29:03] percent higher than the year before so you saw basically a 50% increase in insolvencies from 2021

[00:29:10] or sorry from 2022 to 2023 obviously not a good sign yeah quite the concerning indicator for

[00:29:17] for this country's economy and on that note the article continues to say the Canada's economy is

[00:29:23] in fact slowing down and we should not expect a rebound anytime soon and that comes from

[00:29:30] the some of the top people at the big six banks now one of the big six banks in the country

[00:29:35] national bank who we just referenced this chart from attributes this rise in insolvency

[00:29:40] to the nation's slowing economy they point to a meager 1% annualized real GDP growth in q4 2023

[00:29:48] as a warning sign moving forward don't expect much of a rebound in 2024 writes Stefan Merion who

[00:29:55] is the chief economist at national bank well January's increase in business insolvencies was

[00:30:01] certainly exacerbated by exacerbated by the end of the cova era subsidiary programs restrictive monetary

[00:30:08] policy also plays a significant role insolvency is one part of the broader picture of a deteriorating

[00:30:16] business environment man I don't like these words that they're using man the central the big

[00:30:22] six bank economists have gotten gotten so like grim like they were all right so hawk so grim like

[00:30:29] yeah it's like anyways it's a it's a formal debt migration tool but increasingly more businesses

[00:30:37] are simply closing their doors despite a population surge fewer people are starting new businesses

[00:30:46] this trend makes sense as investors find more opportunities abroad than in Canada's debt

[00:30:52] late in housing focused economy man that hurts so like this is literally okay like and again we

[00:30:59] don't want to get off top here because we got two more articles we really need to cover but this

[00:31:02] literally goes to show and we've talked about it's a lot Dan forget interprovincial migration

[00:31:07] people are just straight up leaving Canada in general because if you're you know 18 to 40

[00:31:13] at this point and you're like I'm trying to build a life I'm trying to afford a house I'm trying

[00:31:17] to start a family any of these things you know it's very difficult to do so as they said in this

[00:31:25] debt late in housing focused economy scary stuff anyways here's a bit of a positive note

[00:31:31] this one is all about construction and building and the relationship between municipalities

[00:31:36] and builders which we also talk a lot about and I'm hoping that this relationship takes on a new

[00:31:44] tone over the next few years so start us off with with this art this next article here Dan.

[00:31:50] So it says should municipalities be able to compel builders to use land this is a common theme on

[00:31:56] Twitter where they talk about land value tax LVT there's a is it georgism is that Georgian the guy

[00:32:02] who there's like an economist who talks a lot about this anyway I'll look it up while and while

[00:32:06] you're responding to my speaking points here so this study shows disparity between reported

[00:32:13] inventories and shovel ready lots as David Wilkes approved lots ready for building or short

[00:32:18] supply this is the president CEO of build building industry and land development association

[00:32:23] the voice of home building land development and professional renovation industry in the GTA

[00:32:29] in recent year years some commentators have suggested developers and builders are intentionally

[00:32:33] sitting on land leading to a perception of the abundance of fully approved shovel ready lots

[00:32:38] in Ontario's housing supply the perception is prompting the province to consider new powers

[00:32:44] for municipalities to compel builders to build often referred to as user lose at policies

[00:32:48] however the new study commissioned by build and the Ontario Homebothers Association tells a different

[00:32:53] story I love to use it or lose it so the study reveals that the construction and development sector

[00:33:01] is actually operating at a 33 year high with over 160,000 new homes under construction contrary

[00:33:10] to some claims there's only about two two year supply of approved shovel ready lots across

[00:33:16] the province now this study by Keller planning and economic consulting ink KPEC reveals a significant

[00:33:25] disparity between reported inventories and actual shovel ready lots the regional planning

[00:33:32] commission of Ontario overstate the estimate of 1.25 million approved lots slash units by about 70 percent

[00:33:42] this over estimation affects the land and the units is likely to be available in the short-term

[00:33:48] housing supply this is particularly concerning concerning Ontario's rapidly grown population

[00:33:54] and the provincial government's target to build 1.5 million homes by 2031 that is an Ontario alone

[00:34:02] the study finds that of those 1.25 million approved lots and units by the planning commission

[00:34:12] only 331,000 units are genuinely ready for construction so out of that 1.25 we need only 331 are

[00:34:21] genuinely ready to go the remaining units are either in very stages of the approval process

[00:34:26] they don't meet the criteria needed for immediate development or they lack things like servicing

[00:34:33] electrical and plumbing and sewer etc now more over many of these remaining units have been previously

[00:34:38] denied by municipal councils or peeled to the Ontario land tribunal indicating that they are far

[00:34:45] away from being what's known as shovel ready in the development community I think it's challenging

[00:34:51] because there's this implication what if somebody was to say I'm trying to think of it like a good

[00:34:58] anecdote here you know but if somebody gives you permits to do something they give you the zoning

[00:35:05] to do this thing but then you also have to pay them to do it so he isn't that kind of extortion

[00:35:10] like if they were to say oh you have to do it now honestly though because it's not like builders

[00:35:16] it's not like every project is viable especially not when development charges or government fees

[00:35:20] and taxes are like 20 to 30% of the total cost structure like yeah it would be reasonable of them

[00:35:27] to say use it or lose it if they're gonna say we'll wave your fees right but what if you're like

[00:35:33] you know if you're a builder and you just say hey I can't I'm not going to go into bankruptcy

[00:35:37] to build houses I'm sorry like that's where the market is right now this is this this is the stalemate

[00:35:42] that we're at and so like it's easy to play around with Paul it's easy for policymakers to think

[00:35:47] of more policy to fix the problem when the reality is that they're less policy will fix the problem

[00:35:56] you know less policy less fees less taxes like policymakers I think are very obsessive about their

[00:36:01] job of creating policy and not realizing that their actual job is to solve the problems that the

[00:36:05] policy you know am I like and let's get a policy to create another policy yeah another policy that

[00:36:11] I'm gonna couple some committees and you know like so yeah I mean if this is it's one of those

[00:36:17] those really dangerous I'm glad to see build the kind of pushing back on it right it's almost

[00:36:22] like everyone's stuck in analysis paralysis but like guys we get through what's this doing yeah

[00:36:28] everyone's just war I think it's just the reality is and and I'm going to speak at the OHBA Ontario

[00:36:34] Home Village Association actually you're gonna be there too because we're gonna be taking notes

[00:36:37] we're gonna have a couple of their members on the show probably eventually but we're gonna be

[00:36:41] speaking about some questions along these lines a lot of people are like what's the biggest obstruction

[00:36:47] you know in in getting housing built in this country and it's like oh everyone's like oh it's

[00:36:51] zoning blah blah blah it's like even if even if we have like a couple million units that are

[00:36:56] zoned and ready right who's gonna who's gonna pay to build them in this environment they can't

[00:37:01] you can't like nobody's just gonna you can't build them on spec because we don't have that kind of

[00:37:05] capital market structure you can't build them rentals because they don't pencil you can't

[00:37:08] build them a cell because there are no buyers so anyway I'm gonna keep reading for this I will

[00:37:13] yeah well that and then that's the thing so who's who's gonna who's gonna move well the land owners

[00:37:17] can't they literally can't they're losing they're losing money by holding the land trust me builders

[00:37:21] want to build they want to sell these houses and build what I am do they're job yeah and but if

[00:37:27] they're if so and so my answer to the question is what's standing in the way well

[00:37:32] there's a big elephant in the room that's called development charges that could be removed very

[00:37:37] slowly or sorry very easily and and or even just spread out over the like you know just

[00:37:42] just literally let them amortize these things don't pay them all in one in one right off the bat

[00:37:48] anyway the study also discovered that numerous municipalities on Ontario already implement the

[00:37:51] use that are loses Paul lose it policies relating to servicing allocations so this is like

[00:37:56] servicing allocation is how much how many units you can add to this water and sewage and other

[00:38:03] infrastructure so allocation of this units of service Ontario planning act provides municipalities

[00:38:09] with several similar powers for new housing and development considering the inflated supply estimates

[00:38:14] this suggests that the additional user to lose it powers under consideration by the province are

[00:38:18] unnecessary if not proper properly properly targeted in scope and application they could negatively

[00:38:23] impact the provinces future housing supply I just like the way I look at it is like what would happen

[00:38:28] is the municipality would go after some developer who is a billionaire and we'll just take them to

[00:38:33] the own be and sue them into oblivion it'll be a waste of everyone's money they can literally just

[00:38:36] be a pure waste exercise that's what would happen if they allowed this anyway exaggerating unit

[00:38:42] estimates and focusing on use it or lose it policies doesn't address real housing issues like

[00:38:46] land supply and infrastructure constraints comprehensive reporting from planners and municipalities

[00:38:51] is crucial for accurate policy changes evidence based approaches are needed to meet the housing

[00:38:56] needs of Ontario's growing population that's good article that's good article for sure yeah great

[00:39:02] article and very excited to get more involved on on the build side of things and into the construction

[00:39:08] and development side of things so again stay tuned for more episodes on that now to finish the

[00:39:12] show off on a little bit of a funny slash positive slash satirical note here this last article

[00:39:17] on dam will just do a few of these because I know we're getting tight on time here Canadian cities are

[00:39:22] willing to sell property for as low as one dollar to get you to move there now some of these we're

[00:39:27] going to go through aren't happening anymore or they were limited time offers that have been

[00:39:33] fulfilled anyways here's a list of here's a list that we're going to go through some of

[00:39:39] some of these places across Canada that are literally offering crazy incentives for people to

[00:39:44] move there the first one is Cochrane which is a northern Ontario town it's offering land for

[00:39:50] ten dollars and an eye catching sales pitch to get development companies to build housing and grow

[00:39:57] the town with up to 1500 eligible lots Cochrane said buyers will be responsible for developing the

[00:40:02] infrastructure on unserviceed lots and committing to such development so there we go ties directly into

[00:40:09] the servicing aspects we were just dealing with now they're even proposed an additional bonus for

[00:40:14] buyers and tax relief so there you have one ten dollar plots of land up in Cochrane but you got

[00:40:20] to figure out the services Dan what is the next one on the list here next is Brandon Manitoba

[00:40:26] in a property in southwestern Manitoba is being offered for just one dollar to help the city with

[00:40:31] his affordable housing and homelessness needs the listing will be sold to a nonprofit government

[00:40:36] agency or partnering agency to turn the site into affordable housing unit into an affordable housing

[00:40:41] unit for people experiencing homelessness or precarious housing situations interesting I mean you

[00:40:46] know we've there's people in our courts who are looking at deals like this where the land is

[00:40:50] basically free and you know to go back to that use it or lose it conversation that you still can

[00:40:55] make it pencil with affordable rents and concurrent construction costs so it's a really it's a

[00:41:00] really messed up situation we've created here anyway tell me about my province of interest currently

[00:41:07] yeah yeah so this next one here the good old this is not a municipality or town this is a province

[00:41:13] the province of Saskatchewan is offering post-secondary graduates a rebate of up to $20,000 to cover

[00:41:19] tuition fees paid for those living in the province and considering moving there and filing an income

[00:41:24] tax return the rebate amount depends on your tuition paid ranging from $3,000 to $20,000 for one to

[00:41:31] four year programs so they are really trying to get some of that inter-provincial migration I think

[00:41:38] that I think they're trying to settle in Saskatchewan I think they're trying to get the international

[00:41:44] students that's what it looks like to me yeah yeah I mean whatever they're trying to do they're trying

[00:41:49] to get young people that are just gotten out of school sick get over there and kind of start their

[00:41:54] lives let's do one more each year Dan yeah rest in Manitoba rural community in southwest Manitoba

[00:41:59] offering $10 housing lots a program that started more than 10 years ago with a 24 lot division

[00:42:04] and is now down to two lots left as of 2020 who said to be an opportunity to create affordable

[00:42:09] recreation for its communities open the door to individuals and families who might not have been able

[00:42:14] to buy elsewhere okay and the last one there's a few more on the list here and it's funny they

[00:42:20] actually finished off the list with a with a small town and like Sicily or something that was

[00:42:26] granting homes for like 20 bucks but the last one Canadian that we're going to go over is Pipestone

[00:42:32] or Pipestone Manitoba a southern town in Manitoba is offering $10 immunistically owned residential

[00:42:38] properties buyers must put a $1,000 deposit per lot down and we'll lose the deposit if the offer

[00:42:46] is not acted upon within 90 days if the building starts within 90 days of the offer and it's

[00:42:51] completed a year later the town will return $990 to the buyer so you got that plot of land for $10

[00:43:00] I mean you're really only getting it for $1,000 anyway if you fail to do that yeah also on this list

[00:43:06] is Vancouver Cape Breton and McCatum New Brunswick so there's all that yeah that are offering

[00:43:14] different incentives interesting poll factors to get Canadians to these less dense less populated

[00:43:22] parts of our big beautiful country so there you have it everybody more user link with these business

[00:43:28] insolvencies $1 properties we were all over the place today but I think a pretty great episode

[00:43:35] if this this comes out Tuesday March 12th the if you're listening to it that morning

[00:43:40] and you just haven't gotten enough real estate make sure to go out and attend one of our many

[00:43:46] events across the country Vancouver Toronto Edmonton Calgary P.E.

[00:43:52] Vancouver's are back Vancouver's are back and with a new host so we're very excited to have them

[00:43:58] and those shows we do some exciting yeah we have some exciting news coming from the meetups next

[00:44:02] month as well and then otherwise I think check out the five day challenge what other actually we

[00:44:09] have a bunch of a bunch of meetups now coast to coast so make sure make sure you check that out

[00:44:13] we're gonna do a whole I think we're in a whole episode on meetups right like talk about the

[00:44:16] hosts and the cities and whether but and then check out the five day challenge it's over now but

[00:44:21] you can go look at the recordings and and it'll be the top link in our in our show notes if you

[00:44:27] want to join a subsequent one or subsequent challenges that we're going to be having if you want

[00:44:31] to learn how to do real estate investing very quickly that's what it's designed for so we'd love to

[00:44:37] we'd love to have you in there and yeah we'll probably be putting one on every month I think from

[00:44:41] now on so I think that's it yeah see on the next one everybody thanks for tuning in

[00:44:47] the Canadian real estate investor podcast is for entertainment purposes only and it is not

[00:44:53] financial advice nick hill is a mortgage agent with premier mortgage center and a partner

[00:44:59] in the G and H mortgage group license number 10317 agent license m21004037

[00:45:09] Daniel Fosha is a real estate broker licensed with rare real estate

[00:45:14] a member of the Canadian Real Estate Association the Toronto Real Estate Board and the Ontario Real Estate Association