The Most & The Least Affordable Markets

[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.

[00:00:10] Welcome back to the Canadian Real Estate Investor podcast Canada's number one real estate podcast where we bring you the latest news, we analyze macro economic trends, we break down reports and give you the data that you need to succeed.

[00:00:30] On this show we discuss fundamentals in investing a lot of changing legislation, how to pick a market, how to build wealth by investing in our favorite asset class real estate.

[00:00:42] And in today's episode we are covering a report that provides some valuable insights and tries to answer some tough questions. Yeah, like how did we end up in this housing crisis? Yeah, so pull up a chair is going to take a while.

[00:00:58] What are the most and least affordable markets and how did they get that way?

[00:01:04] We also take that question and apply it to a global scale, and we look at what is the greatest driver of these increased costs and how does Canada compare to the likes of Australia and New Zealand, the USA and the United Kingdom.

[00:01:19] And we also look at the list of the most livable cities in the world, Canada makes some appearances, although kind of declining in our stature on that list and Toronto actually fell off of the top 10.

[00:01:33] But before we dive in, let's take a second to read this awesome review that one of you listening to this show are amazing listeners took the time to write and we thank you very much for it. Keep them coming please.

[00:01:46] The title reads hands down best real estate podcast at their five stars. About a year ago I was looking to purchase my first home, but I didn't know where to start.

[00:01:58] My stumbled across this podcast and I'm so glad that I did this podcast gave me the information needed to understand my budget and understand the cost associated with buying a home as a first time home buyer.

[00:02:10] Dan and Nick are extremely knowledgeable and easy to listen to. I highly recommend anyone looking to buy a home or just gain more knowledge about Canadian real estate to listen to this podcast.

[00:02:22] Thank you guys for what you do and that is from all trucker via Apple Podcasts. So all trucker and every one out there has taken the time to leave us a reviewer at the very least raised five stars. Thank you so much. It means a lot to both of us.

[00:02:38] First time home buyer. I feel like we got quite a few reviews from that buyer category and it's nice and I guess the show is not just for investors after all and those are individuals who it's important for them to follow fundamentals.

[00:02:53] Very very simple as like is your house paying you as much rent as it's you know or as it would be cash flow positive if it if you were to rent it.

[00:03:04] Good question right very good maybe another episode in the works there. Yeah, I mean I was with some bankers like we're talking about New York comparing New York and Toronto on cattle and I saw a lot of the class comparison yeah I mean they're from New York so like they weren't really comparing.

[00:03:18] They were laughing at the air. Well they're just kind of like hypothesizing it's like to con our condos in New York our most owners in New York cash flow negative right hypothetically like based on the rent.

[00:03:29] The thing that would command because they were trying to contextualize like how would somebody buy a cash flow negative and and it was it was kind of similar comparable right so that's and that's really what we're going to be going through today is comparing Toronto you know people always told you comparisons the thief of joy but we're going to.

[00:03:47] We're going to we're going to do it anyway. So today we're all being loaded in that case like yes yeah the demographic international housing affordability 2024 edition by window clocks starts off with some acknowledgements demographics is destiny has become somewhat of an overvalued phrase but that does not reduce the critical importance of population trends to virtually every aspect of economic social and political life and that is becoming abundantly clear I think in the in the western world where population growth.

[00:04:17] It at a pace that which the housing infrastructure cannot keep up with has created challenges concern over this demographic trend they report goes on to say has been heightened in recent years by several international trend.

[00:04:30] Notably rapid aging reduced fertility both of which are very present in Canada and before large scale migration across borders on the national level shifts in attitude generation and ethnicity have proven decisive in both political realm and in the economic fortunes of regions and states.

[00:04:51] So a little bit about this company that put this great report full of really insightful data together they are the FCP that is the frontier center for public policy they are an independent Canadian public policy think tank of always love that word think tank it sounds like a big powerful brain.

[00:05:14] I think a brain's you're thinking like not like a tank of like a fish tank you're thinking like a. I'm like a.

[00:05:20] Yeah, cool yeah anyways they are this think tank is based in western Canada and their mission is to explore the options for the future undertaking research and education that supports economic growth and opportunity I should mention that. We have no affiliation with this group at this time.

[00:05:39] And we've just taken some of their amazing information and repackaged it for the benefit of all you listeners now their research aims to analyze current affairs and public policies and develop effective and meaningful ideas for good governance and reform.

[00:05:54] Wow that would be welcome in this country I am sure so Dan start us off with how the report gets started here.

[00:06:03] So the intro says for two decades the demographic in an national housing affordability report has been the gold standard for people looking to understand the cost of housing in those decades it has become ever more critical as housing inflation is grown all around the world.

[00:06:18] Ultimately as the report suggests these high prices and largely due to the policies that seek to limit the growth on the periphery which has been the usual way that cities are grown.

[00:06:30] The demographic report has shown that where such policies are predominant for example UK California Washington Oregon Colorado New Zealand Australia and much of Canada the results are disastrous at least four potential home buyers. They're not they're not kind with their verbatious.

[00:06:49] I was going to say should we should have even had like an explicit warning here yes the words disastrous and impossibly.

[00:06:57] Un Affordable severely and affordable you hear those words a few times in this and I want everyone to just take note of what Dan said right there when he spoke about the seeking to limit the growth on the periphery that is going to come back and that right there encapsulates a lot of the.

[00:07:14] Issues that we face when it comes to land development in places like Vancouver word is hard to build because you have natural things like the ocean and mountains but also things here in Ontario such as the green belt which have made things very difficult to do.

[00:07:32] The report provides housing affordability ratings for the third quarter of 2023 for 94 major markets we are not going to go through all them however. Several will come up when we do compare them back to Canada and now before we get into it.

[00:07:45] There's a little message blurb here from pure haul who is the president of the frontier center for public policy.

[00:07:53] And he kind of prefaces the whole report here a little bit coming out of the turbulence of the night covid 19 lockdowns housing affordability remained severely challenged across most markets in 2023 slightly increasing unafortability in major Canadian markets that were surveyed.

[00:08:10] In some small markets there has been improvements as remote working and telework continuing to accelerate movements. To those more affordable places which Dan you and I have talked about numerous times through our episodes on interpreventure migration.

[00:08:24] Now, this should flatten or even reduce prices in the highest cost housing markets as other households seek less costly housing elsewhere.

[00:08:33] Now, there is a genuine need to substantially restore housing affordability and many of these markets in the nations covered and studied in this report and Canada policy makers are scrambling to use their quote unquote magic wand.

[00:08:49] To whip more housing, but continue to mostly ignore the main reason for dysfunctional costly housing market, which is suburban land use restrictions. So more on why land is some of the biggest barriers to overcome.

[00:09:08] So the report uses a median price to income ratio, which we've mentioned quite a few times on this show as sort of a measure of affordability in different markets.

[00:09:17] In looking to invest and often like you'll see in the UBS bubble index as well price to rent and price to income ratios. And to get an understanding for like we use those to kind of rank almost like the investability of markets as well on the inverse.

[00:09:33] So if it's a bad price to income ratio, then it would be a market that probably wouldn't wouldn't be super investible prices are high and the incomes are low relative to prices which means that people in that market don't have a ton of money to pay you rent.

[00:09:46] The affordability categories for housing markets are rated from affordable to impossibly un affordable based on here we go median multiple. And so affordable would be a three and under median multiple. Seriously un affordable would be a three to four.

[00:10:05] That was moderately seriously un affordable four to five severely un affordable five to nine and impossibly un affordable nine and over so. If we take a look at the next graphic that they have which is basically just a table.

[00:10:18] They show housing affordability by a median market in Canada still ranked as a 5.6 remember 5.1 to 8.9 or 9 is severely un affordable.

[00:10:28] But what about the US in the US the most affordable market was Pittsburgh with the median multiple of 3.1 followed closely by Rochester New York which is basically in the GTA at this point. I always say Buffalo is my favorite GTA market better returns than any other. The market.

[00:10:49] Same Louis at 3.4 and Cleveland Ohio which is actually like I think it's closer than Rochester at the 3.5 or another.

[00:10:57] Another prime GTA market rounding out the least are most affordable 10 markets also includes one Canadian market which we've seen a huge huge flight of capital and Exodus to Edmonton and unfortunately not a Stanley cup out of that. I know it's so hard to break.

[00:11:18] That was such a crazy night too because there was like that and then there was an election happening in Toronto so for those of you are aware that Toronto same paul's election took place which is we're hearing a lot of political commentary about this now because it's been like a liberal stronghold considered a liberal stronghold for like 31 years or something like that.

[00:11:38] And I think it was considered like the safest seat for them in the next election other than I think Trudeau's actual seat where he lives.

[00:11:46] So a lot of like that's kind of a big big eye opening thing to take place in the so that was a late night for a lot of Canadians watching those of our last day in state plays.

[00:11:55] What actually was like yeah so Buffalo New York again great GTA market Detroit which is north of Twins or Twins or actually. Oklahoma City Cincinnati and Louisville and Singapore at 3.8 was also moderately unaffordable along with in the UK Blackpool and Lancashire.

[00:12:20] I'm going to say that one around Glasgow at 3.9 the least affordable market in the English speaking world was Hong Kong with a median multiple of 16.7 wow. It's interesting that Hong Kong is like a footleg as an English speaking country to a full send as you said.

[00:12:43] I think that is outrageous. I think it would be like that would be like the financial capital of the world really right for sure.

[00:12:48] I think York is up there by Hong Kong is like it's yeah, I mean take New York and shrink it down and kick all the poor people out and you've got Hong Kong right.

[00:12:56] I guess yeah something like that followed by Sydney at 13.3 Vancouver at 12.3 San Jose Los Angeles Honolulu Melbourne San Francisco and Adelaide San Diego and then Toronto at a 9.3 so I would have thought Toronto would have been worse than a lot of those cities but I'm often wrong so.

[00:13:23] Yeah I mean let's not forget that anything over that 9.0 rating is again considered impossibly unaffordable okay so you know to have two markets in their sucks for us especially when it's compared to the likes of you know some world class other cities but hey at least we're not Hong Kong at 16.7 but we are pretty cool now because we have CSI Toronto I think right.

[00:13:51] We do I have to have a couple of billboards for it. Not sure how well is doing compared to you know the the other CSI's but hey I you know you can't do CSI without her ratio like taking off the glasses like real I mean really.

[00:14:05] Well he's it no that's long or we made it done. Okay. I would do glasses thing but you can't see me because we're on a podcast but imagine me taking off my glasses and then I'll say something like really sophisticated like.

[00:14:21] Some might even say Toronto was impossibly unaffordable. Oh I love it I've glad that we can have a couple little laughs in this semi-grim articles that were there were going here and.

[00:14:37] Unfortunately the next piece isn't doesn't really cause for for laughter unless it's kind of laughing at the problem the middle household incomes they're facing the worst cost of the crisis due to.

[00:14:51] Esculated housing costs again no secret here or no secret you've been listening to the show for a while. Previously home prices rose alongside income back and what we like to call the good old days when 10 and I have done episodes where we've looked at.

[00:15:04] Me the income versus household price back in the 60s 70s the 80s and even the 90s. However in high income nations housing costs now surpass income growth due to land use policies at limiting the supply thereby increasing those.

[00:15:20] Prices of the assets on that land now urban containment policies aimed to curb sprawl and enhanced dense density. I have led to higher land and house prices in these constrained markets and you know just think about what that means for a second.

[00:15:38] I'm taking my glasses off again here would you say that would you say that the. I think that's what we're talking about. I'm going to say that's what I'm talking about.

[00:15:53] I'm going to say that it's not like a bright here ginger and you just shave your head so I think we need to do something about that look as well. Yeah, it's true. Luckily we're just no no video you can do it you can be her issue.

[00:16:07] Don't talk to me about some of the economic dynamics of the land value. Yeah, so I mean the way it works is like land value typically in urban centers there's a change in a little bit given in like the US at least where a lot of like financial.

[00:16:21] Coars are kind of eroding but land values typically increase closer to urban centers because it's your right at the action and there's hot more value to being to that proximity.

[00:16:33] Urban containment policies associated with these abrupt spikes in established boundaries so research would confirm that finding land prices in urban containment boundaries can be eight to 20 times higher than outside of urban. Urban boundaries right and you can see this in in Canada.

[00:16:50] In like the GTA would be an a good example like if you you can go by a farm on one side of the road and it's outside of the official plan because you can't so you can't use it for any zone thing other than it's basically.

[00:17:04] Countryside like rural countryside or whatever there's a bunch of different names that they have for it but useless land functionally like good crop land whatever and then right across the road you're going to have a personal the same size that's worth like.

[00:17:16] Actually 10x 20x more so just because you could develop that when into a subdivision it's residential and or.

[00:17:23] I rise or whatever so the term impossible that they use was selected to convey the extreme difficulty face by middle income households in a forging housing at a medium multiple of nine.

[00:17:36] So nine times your income so you make 100 grand net your median or so you're yeah the median multiple be houses in your market would cost nine times that or 900 thousand dollars so in Toronto you know here.

[00:17:50] I think I think I read like a decently well off household would be like 250 300 k so multiply that by nine. So I'll do and you know to two to two and a half three million dollars houses that's kind of where we're at right like Vancouver even more.

[00:18:06] The level of affordability did not exist just over three decades ago and securing financing for a house at this median multiple is largely impossible for even the wealthy people that we just mentioned because of the way our mortgage system works unless they have a ton of dough.

[00:18:22] Like you know you need to have an income that because you have your qualifying at the stress test rate plus you need a huge down payment so basically unless you already had equity or you are a huge earner your basic excluded from the housing market.

[00:18:37] So the increase in remote work if you'll the demanding increase as many households were induced to move from more central areas to suburban x-erven and even more remote areas.

[00:18:47] And I think the other piece that isn't really mentioned here is that you like most people were also looking for more space and this is like math right here so more space costs more money what's that song like the take off your jacket quick mass.

[00:19:05] You know that's not. Man's not hot you never heard that's. Oh, he's a hot. He's a hot one. Yeah, he starts like to one plus four is quick that's quick mass. You know.

[00:19:16] I don't know but it on there was always a demand shock that drove house braces up substantially as households moved to obtain more space within houses and in yards and gardens right so people needed bigger more expensive houses quick mass.

[00:19:33] In the United States, the hours of work performed at home now are not reported to be four times that of pre-pandemic in 2019.

[00:19:41] Wow and after six decades of unsuccessfully seeking to reduce the use of cars and community the latest data shows an unprecedented decline in automobile miles driven from pre-pandemic levels there you go maybe that's what the whole thing was about it was it was big.

[00:19:57] Whatever is again big tree big tree just went into big oxygen big oxygen.

[00:20:03] He was for big oxygen do you know it I can tell you that I have started to do more driving over the last couple years and I'm not being say that big human putting on the cans.

[00:20:13] We have a lot of KMS by work for big kilometer and I think a lot of other investors who were you know doing the old drive into the qualified driving to the quantify.

[00:20:22] This is forced a lot of investors to do some more driving so interesting take there but research by this guy's got a badass name John Montdragon come on John.

[00:20:35] As I said, again, he's at the Federal Reserve Bank okay so this guy is this guy's an overall badass and I like a picture of this guy.

[00:20:43] John Montdragon at the Federal Reserve Bank and Johannes Wayland at the University of California in San Diego estimated that nearly two thirds of the US House price increase in the demand shock could be attributed to.

[00:20:56] That shift to remote work crazy crazy the amount of impact that human behavior has on real estate and on our built environment home ownership there is a substantial variation in home ownership rates in the nations and in the cities covered here.

[00:21:13] The highest home ownership rate is in Singapore at 89% Ireland ranks second at 70% Canada in third at 67% Australia the United States just below us at 66% New Zealand 65 the UK 63 and then Hong Kong actually has the lowest home ownership rate at 51%.

[00:21:39] There you go. I was recently when I was being called a commie on Twitter that I was looking up to the ownership rates of communist countries because all of these people were like oh they're trying to take your houses away economies and I'm like.

[00:21:53] There's five communist countries in the world they all like that identify that way they all have a ownership rates over 90% while we're throwing numbers out here by the way I would just like to quote the lyric properly that I would miss quoted earlier it's big shack comes from the song man's not hot.

[00:22:11] There's two plus two is four minus one that's three quick math so it's a great story.

[00:22:19] There's a lot of people who are really good throwback great to they must have been listening to that Singapore where they were full sending to get to that 16.7 yeah for this all over there so.

[00:22:31] Impossibly unaffordable housing in the Vancouver market has also spread to smaller BC markets in British Columbia such as Chilawak the Fraser Valley and Kalona and Marketson Vancouver Island from we got a lot of listeners out there we love like I feel like the people in Vancouver or BC like our BC listeners are like very interactive we talked to a lot of them all the time so shout out to like shout out to cam shout out to the whole Vancouver crew I think we're at it switch over there going on yeah.

[00:22:59] There but we got great great meetups super well attended meetup anyway I digress as is tradition from 2015 to 2023 housing affordability worse and by the equivalent of 2.5 years of median household income in smaller markets outside of Vancouver and even greater loss than the 1.2 years of income in Vancouver market itself it's so savage to measure like a house price in like years of your life like you don't have you like two of the way to five years of your life that you have to.

[00:23:29] And I think that's a lot of work to pay kind of more puts things into perspective really makes that you know I see that calendar of like have you seen that count on you know I don't want to hear so no no not like the days of your life calendar but like weeks of your life like we know it's like really in the week no it just shows like the whole year and that's like this is how long your work to pay tax and this is how long you work.

[00:23:51] So I think that was a lot of the way that was there on the second most least affordable market in Canada and it is also the fit the people don't know this physical center of the universe.

[00:24:06] Yeah yeah it was also actually Toronto is has been for last year the fastest growing city in North America I think I just saw that come out today as well national post had something about that crazy I would say Calgary is not beating it on a percentage basis is number of people that mean that's burden yeah and I think it's a burden of the province which is growing faster than just Calgary the city.

[00:24:31] And after fact check you on that and I think I'm going to be yeah hitting up the old Google machine in a couple minutes here here I'll send you the article that I was looking at.

[00:24:40] So Toronto is the least second least affordable but 84 84 34 94 markets in international affordability with an impossibly unaffordable media and multiple that 9.3 that we mentioned earlier above its pre-pandemic. And it's interesting because I've been doing these spaces with guys from the US and kind of trying to talk about these.

[00:25:06] Like in the US you're seeing the hollowing out of a lot of these downtowns and it's hard to explain to people like how a lot of Canadian cities function where there's just like a ton of residential like Toronto is a ton of residential in the core right so people don't know.

[00:25:21] And like many Canadian cities are like that because of the condo boom that we've been seeing so.

[00:25:26] Yeah, I suppose speaking of another beautiful Canadian city that we love Vancouver again unfortunately severely unaffordableizing again has spread to smaller unaffordable markets also an interior same problem here is in Vancouver so.

[00:25:43] And so the market such as kitchen or Cambridge waterloo branchford London, Guelph and those all got more expensive as residents of Toronto seek lower cost of living outside the big city.

[00:25:56] From 2015 to 2023 housing affordability has worsened to the equivalent of 3.3 years of medium household income in smaller markets as I'd Toronto a greater loss than 2.6 years in the Toronto market itself so again just watching years of your life add up or you know whatever you however you want to look at it just to get into these markets.

[00:26:19] Yeah, whatever you do not think about your mortgage amortization in terms of years of your life it's very depressing.

[00:26:26] Montreal hit a 5.8 in Ottawa, Gat no hit a 5.3 which are also severely unaffordable and like it's interesting to know because Ottawa is like a pretty high income like it's all government towns have already makes like whatever it is like $15,000 and that's still unaffordable and like that would be a market that people are actually able to qualify in the MHCMLS elect programs on the affordability stream because the income to rent ratio is is not too bad so.

[00:26:54] Just worth contextualizing it in that way like those areas where you can actually make projects work on a form of CMHC affordability.

[00:27:02] Yeah and even Montreal seen that there you know Montreal and Quebec in general has always presented a lot of really great smaller multi families at good cap rate so it's interesting to see this one there in the you know severely unaffordable ranking as well.

[00:27:17] Yeah and so Edmonton was our most affordable market and it was already still considered moderately unreforable and that's out of 3.6 media in multiple Calgary was a 4.6 which is considered seriously un affordable. So generally we're not doing very well on this whole thing just putting that out there.

[00:27:38] The range between the most affordable market is risen from 1.5 to in 1971 to 8.7 in 2023 so this is an increase of 7.2 years of media and household income and keep in mind that would factor in like this has always been measured relative to income so that would factor in income in 1971 versus 2023 so when boomers are like hey you know it back in my day it's like no this is relative so.

[00:28:07] It like you were making you may have been making far less money but how is this cost far less as well and so as as a multiple of your income it sucks a little bit more for us today sorry unfortunately.

[00:28:21] Yeah and you know on that note of it kind of sucking it's not just us from like a like an age demographic standpoint and it's also really comes down to where you sit on that kind of financial ladder because we've really seen them middle class.

[00:28:36] Not just in Canada or America but kind of globally go through what this report calls an existential threat so I'm just going to read a little piece here from a very interesting excerpt from the article for decades in this high income world a hallmark of strong middle class.

[00:28:54] Was the widespread ability to own a home house prices generally rose in line with household incomes we've already spoken about this and as late as the 1990s house prices were three times or less.

[00:29:07] Then medium household incomes in most if not all of the major housing markets covered in this report and just to remind her that's New Zealand Canada the US Australia the UK and Ireland so lots of major kind of first world markets there.

[00:29:22] And I think that's a very important thing to do is to have all experienced this rapid increase that is really tough on the middle class.

[00:29:28] Yeah and the next is has been broken in many markets with house prices escalating above household incomes measured by price income ratio land prices are now much more expensive and house prices relative to household incomes have triple the markets like San Francisco said need Vancouver on Honolulu and Auckland and probably Toronto as well.

[00:29:49] We've been contained markets have each had house prices that are the equivalent of nine to 15 years of household income and it's worth noting that like when you hear about up zoning and stuff and like blanket zoning and removals of restrictions that's them eliminating these kind of things by the way like they're saying hey we maybe shouldn't contain the urbanness that was I would be an urban containment and we should let density exist everywhere like Vancouver is a good example like I'm I didn't.

[00:30:18] I didn't grow up there like unique but I always think about Vancouver as like this city that's very tall right but if you it's actually like I don't want to say like 70% I'll pull up the stat but it's like it's like a high percentage.

[00:30:31] That is single family residential and the city of Toronto is is like the same it's like yeah it's like they're they drive through Toronto and it's like there's like a suburban city other than like the dense core right it's not like a man hat and where.

[00:30:45] It's like it's small little island but Vancouver is also a small little island right so anyway.

[00:30:51] Yeah yeah no really great point in the next piece here is from the OECD that's the organization for economic cooperation and development they've come up a couple times on the show as well.

[00:31:03] Like quote them here saying that they find that the middle class faces ever rising cost relative to income and that it's survival.

[00:31:13] He's threatened that is the survival of the middle class that the OECD is talking about furthermore the cost of essential parts of the middle class lifestyle have increased faster than inflation.

[00:31:23] House prices have been growing three times faster than the household meeting income over the last two decades so how the hell do you keep up.

[00:31:30] Now housing is generally the most expensive item in the household budget and this trend has really started to reduce the overall standards of living for the middle class and fortunately.

[00:31:44] Start to push more of maybe the people that were kind of on the fringe there into poverty so really sad stuff.

[00:31:53] The interesting part though like from an investment perspective is you know like I hate saying it's a grim thesis but like we're moving towards a renters economy and.

[00:32:03] The other side is just going to continue to get smaller right like we know we mentioned and like if you follow me on social media people rag on me all the time for being too negative but there.

[00:32:13] The declining GDP per capita I actually just observe what's taking place by the way and it just tends to really suck right now but the GDP per capita that's trending down.

[00:32:25] The easiest way to think about how that would materialize like people are like oh what is what is falling productivity mean or like how does it like what is actually mean to Canadians it's like well.

[00:32:34] That line that just said it there housing is generally the most expensive item in the household budget so usually 30% minimum and like up to like 50 60% of your income is going to housing and so where are you most likely to.

[00:32:50] the contraction of GDP per capita or people having money that they're able to extract from the economy in housing and so what does that mean for investors it means that household sizes are going to shrink right Canada is a ton of square footage and that all of that square footage is going to keep getting cut up and distributed in smaller formats.

[00:33:07] To the more and more people that are being added to our population.

[00:33:11] I'm just telling you all like that is the most clearly identifiable trend in this country for the next 10 to 20 years so if you want to make money doing something about it there's very clear ways on how to do that.

[00:33:28] Over the last half century the report goes on to say urban planners have successfully managed to shape housing policies implemented to reflect their visions fundamentally these policies seek to stop the expansion of urban areas through sprawl and increase urban population densities.

[00:33:45] This international planning belief relies on urban containment with its strategies of green belts urban growth boundaries rural zoning and on urban peripheries and compact city policies densification this is interesting because.

[00:33:58] I think what we're kind of learning here is especially with the population growth in Canada a lot of people don't like not everyone wants to live in an urban area like a denser urban area just saying.

[00:34:40] The urban planner at the world bank asserts that arbitrary limits on city expansion such as growth boundaries like green belts that we have here in the GTA result in predictably higher prices so again if you are but rarely try to put up these kind of borders on where a city can expand out and and also restrict expanding up.

[00:35:05] That just of course is going to hit that land in that city that already exists much more valuable it's applying demand the most basic economic principles.

[00:35:16] He has so at the same time rising house prices can be driven by the attractive returns from speculative activity so we've seen a lot of people buying houses because they've been going up and value and that's called speculation right not they're not doing it to get yield they're not doing it to collect rent and cities where you know you're.

[00:35:35] Cash flow negative if you buy you know we've heard see ABC and urban nation came out that report saying 50% of condo owners were cash flow negative right.

[00:35:45] So the net effect of that is that land values and house prices become skewed against the middle class was existence depends upon the very competitive landmark it destroyed by those planning beliefs.

[00:35:55] So we've got a couple charts here and you can't see them because you're likely listening to us, but we're going to go review of the most affordable markets and yes we'll make sure we call out all the Canadian ones and then we are going to go over.

[00:36:09] I think the 10 or 15 at most are sorry the least affordable markets and yes we will definitely be covering the Canadian ones in there as well again I think we already touched on this Pittsburgh we're all just recently Cleveland those are the top four all US.

[00:36:23] We make the top five for affordability Edmonton Elburta congratulations Dan where it does can't help but he next on this list here on the affordability list. Yeah, okay, so I think if they go down to this next chart here, yeah, I guess 30.

[00:36:41] Yeah, so 38 and then we have 55 auto I got no and then what's after that Canada and you're all back at 61st.

[00:36:54] That's it yeah and then we go to we go to the ones over here that are endearingly put in red because that's what good things are put in right on spreadsheets Dan red cells are good. Yeah, something like that.

[00:37:10] Here just with the first couple here Dan and maybe I'll line some of the can you yeah, I guess I'll just read in reverse order the least affordable to most sorry most affordable to least affordable on the worst list though so yes 83.

[00:37:27] The Auckland 84 Toronto 85 San Diego Adelaide Australia San Francisco Melbourne Australia then you have Honolulu LA San Jose and then finally the big three Vancouver Sydney and Hong Kong.

[00:37:46] There we go well that concludes that part of the show but we're not done talking about cities yet because some of the cities that we just looked at Dan actually made it on another list now Vienna, which is not on this list but also quite an expensive city living wins again.

[00:38:06] They did win it one the world's most livable city the Austrian city has been crowned the most livable city in the world yet again in the annual list that is released by the economist intelligence units the EIU.

[00:38:20] Which was released today now Dan you brought up CSI more of an EIU kind of guy let's let's combine her ratio and get them over at the Intel economist intelligence unit.

[00:38:31] Yeah, there was some really interesting insights in this as well like where they talk about the reason why Toronto fell off but we'll get to that but they rank 173 cities from a cost with the globe on a number of significant factors very similar to what we're just talking about health care.

[00:38:49] The culture and environment stability infrastructure and education infrastructure is a key one there you'll see why just behind the Austrian capital deadmarks Copenhagen retained its second second place position while Switzerland's Zurich moved up from six place to third on the list.

[00:39:04] Well, like did you just speak Swiss there's I would actually was visiting that that was a little dramatic but. There I was just visiting with some Swiss who are all it is so.

[00:39:16] Okay, he got the little bit of Swiss I like okay so going all the way back to down and Australia's Melbourne fell from third place to fourth place.

[00:39:27] Well, Canadian city category tied for fifth place Dan is this off and you with the Swiss city of Geneva is that is it is at the Swiss pronunciation.

[00:39:38] I think they say it's a GENF there which is like because yeah, Gen Eva no GENF or Jean-Av would be the French version.

[00:39:47] Gotcha, Canada's Vancouver and Australia's Sydney were in a joint seven seventh place in Japan's Osaka and New Zealand's Auckland rounded at the top 10 in a joint ninth place.

[00:40:03] 23rd Honolulu Hawaii which was the highest US city on the list at Leonard George removed up four places to number 29 LA was for the nonetheless in 58th while New York came in at number 70. So if you compare that because like we're thinking about you know where.

[00:40:19] Where Toronto and Vancouver end up ranking here North America achieved the highest average score for education however marks for infrastructure were lower than the previous year in Canada due to an acute housing crisis which is affected several regions.

[00:40:36] I can't pull up the actual report here but maybe as we say how population is grown too quickly and the housing infrastructure has been really really lagging right.

[00:40:49] So yeah that makes sense yeah I mean the the extract here says that the situation is particularly worrying in both Australia and Canada.

[00:40:58] The availability of rental properties as an all time low and purchase prices have continued to rise despite interest rate increases Vancouver actually fell backwards while we're meeting the top 10 in Toronto which was ninth on the list in 2023 dropped out of the top 10 to 12th place.

[00:41:18] So so to see Toronto go Dan hit me with the top 10 here and then a quick reminder of the top 10 here and then maybe some of the insights that you took away from why Toronto dropped off and then let's wrap it up.

[00:41:31] Yeah so the 2024 global livability index from the economy the top 10 most livable cities on earth Vienna Austria Copenhagen Denmark Zurich Switzerland Melbourne Australia Calgary Canada.

[00:41:46] And even Switzerland Sydney Australia Vancouver Canada Osaka Japan and Auckland New Zealand obviously doesn't account for affordability here given you know I mean affordability really only shows up in infrastructure right and and that's like kind of the way that they describe it and so.

[00:42:05] And I don't know it's just kind of interesting in that way because like every time I post something from this list they're like oh yeah I'm sure it is great to live in all of those cities if you can afford it and I'm like yeah like it definitely it doesn't do a very good job at.

[00:42:18] You know making it affordable like I think last year didn't I I think I did this right I like pulled that average house price in all of the markets that were on the thing and I was like oh actually Detroit gives you like the best yeah.

[00:42:30] And I think that's the ability to per dollar of housing that you can buy. So I mean look at this expensive to be in a livable place.

[00:42:40] Yeah you know and unfortunately that is the big takeaway but if you are looking to break into any of these markets whether it's an affordable market like Edmonton or many other of the.

[00:42:52] A photo of markets in Canada did not make it onto this list and you want to invest and get some exposure to the state there.

[00:42:59] Reach out to Dan and myself on the mortgage agent Dan is a real estate agent we have amazing people that work with us across the country.

[00:43:08] One other quick announcement before we get out here I'm going to say one more time getting up we'll see him calculate the stampede on July 9th super excited for that.

[00:43:16] I hope everyone got a ton of value out of today's episode. Thank you as always so much for listening we'll see you on the next one.

[00:43:26] The Canadian real estate investor podcast is for entertainment purposes only and it is not financial advice Nick Hill is a mortgage agent with premier mortgage center and a partner in the G and H mortgage group.

[00:43:40] Number one zero three one seven agent license M two one zero zero four zero three seven. Dino photos are real estate broker licensed with rare real estate a member of the Canadian real estate association the Toronto real estate board and the Ontario real estate association.