What Investors Need to Know: Rate Cuts, Rate Hikes & Capital Gains

[00:00:00] Welcome to the Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio. The Canadian real estate market in 2025 is already shaping up to be a year of significant transitions with the Bank of Canada's policy rate sitting at 3.25% after multiple rate cuts.

[00:00:26] A wave of mortgage renewals is approaching affecting 60% of Canadian homeowners over the next two years. And while experts anticipate better deals and lower rates for homeowners, there's a plot twist on the horizon. National Bank is already forecasting potential rate hikes in 2026. Adding to this complex narrative, strong December job numbers have cast doubt on an anticipated rate cut,

[00:00:55] while looming economic uncertainties, including potential U.S. tariffs, could reshape the entire landscape. In today's news episode, we are going to cover breaking news and important topics that you need to know about, providing context for what's happening in the market. So stay with us as we aim to answer some of these questions. Just when Canadians thought the Bank of Canada rate hikes were behind us, new forecasts suggest more increases may be on the horizon.

[00:01:24] But what do the other big bank predictions have to do with interest rates and where are they going to land? And what would another rate hike mean? How did we get to a point where carrying a mortgage into retirement became more common than young adults owning their first home in Canada? Could Canada's surprisingly strong job market put the brakes on expected interest rate cuts this month?

[00:01:49] With Toronto's record budget proposal and potential U.S. oil tariffs looming, could 2025 mark a turning point for both housing affordability and Canada's energy trade relationship with America? And finally, with Parliament in limbo and tax laws in flux, are Canadian investors facing an unprecedented choice between paying too much now or risking penalties later when it comes to capital gains?

[00:02:18] Welcome back to another episode of the Canadian Real Estate Investor Podcast, Canada's number one real estate podcast. My name is Daniel Foch. I'm a real estate broker and investor. And I'm Nick Hill. I'm a mortgage broker and investor, and we both work with buyers and sellers across the country. So if you'd like to work with us, please reach out. We have a lot of news to get through. So let's get right to it. Let's start with capital gains.

[00:02:42] We'll look at this great article from stories entitled, What's going on with capital gains? An expert explains. I liked your way better. I was very, very Dr. Seuss.

[00:03:01] So chartered professional accountant, CPA, Vice President John Oakey says that while the CRA is moving forward, the new inclusion rate is still not official law. At the end of the day, it's the taxpayers making the decision on what they're going to do. And there's consequences on either side of the fence, he said.

[00:03:22] After it was initially believed the Liberals' capital gains tax increase would leave Parliament along with Trudeau after failing to be officially signed into law before the Prime Minister's resignation and prorogation of Parliament, a press release from the Canada Revenue Agency, or CRA, is now saying otherwise.

[00:03:41] Early Tuesday, the CRA announced that although the capital gains tax changes are subject to parliamentary approval consistent with standards practice, the CRA is administering the changes to the capital gains inclusion rate effective June 25th, 2024. Here are a few more points about the current capital gains tax situation that you should be aware of.

[00:04:04] The CRA is moving forward with implementing that new 67% capital gains inclusion rate up from the 50% that will be in effect June 25th, 2024. It's not official law yet, but prepare for it. And us, Canadian taxpayers, face a choice.

[00:04:25] File at the current 50% rate and risk penalties if the law does pass or file at the new 67% rate and potentially get a refund if it doesn't pass. So there's a couple of key dates here and also a key change to this that literally just happened, Nick. Like we're recording Thursday, January 16th at 11.20-ish a.m. And there's an article that came out like, I don't know, 10 minutes ago, maybe an hour ago that I'm just going to pop in here.

[00:04:54] So this really does constitute as breaking news then, I guess. Yeah, somehow in a format that's pre-recorded, yeah. Yeah, exactly. It's breaking news for us, live. Yeah, so forms will be available on Canada.ca by January 31st, 2025. CPA Canada believes legislation is unlikely to pass before April 30th tax filing deadline. And the situation remains uncertain due to the pending parliamentary approval, political uncertainty and potential government changes, which I'm going to get to in a second.

[00:05:23] And the CRA proceeding based on Parliament's last stated intention to implement these rules despite current political uncertainty. And now, as of January 16th, Pierre Polyev pledged to reverse the Liberals' capital gains tax if elected, which I've long speculated he wouldn't do because I felt that his government, just as much as the Liberal government, is going to need that income. But I'm wrong. And so... What? You're wrong?

[00:05:53] Come on, man. Happens pretty often, actually, but I try not to tell people. But yeah, so Conservative leader Pierre Polyev on Thursday promised to reverse the Liberal government's controversial changes to capital gains tax if he takes power the next federal election, which seems pretty likely. He made a post on X. I'm announcing today, common sense conservatives will reverse last June's Liberal tax hike on capital gains. A tax economist will agree will kill 400,000 jobs.

[00:06:19] Perhaps this Liberal jobs tax was a bad idea before President Trump's tariff threat. This is outright insanity now. So, obviously, he's touched... And actually, the tweet came out at like 4.32 a.m., so respect to that. You must be up doing the Mark Wahlberg-style workouts. Yeah, just sending it. Get up, cold plunge. Write policy. Tweet about it. Yell at politicians on the internet. Yeah. Yeah, I mean, look, I don't have much else to add to that.

[00:06:47] I think the capital gains, Dan, when we covered it months ago, I believe it was back in April and May, we released an episode of 2024 when it initially came out. You know, it was met with some controversy, and it obviously is still just as controversial. So, there you go. Make your choice. File now or file later. Both have consequences. Let's keep moving here, Dan. Let's move on to interest rates after a rollercoaster couple years for interest rates. Where do we see them going this year?

[00:07:18] Well, to be honest, it doesn't really matter where we see them going because I'm a realtor and you're a mortgage broker. It matters a lot more where the banks who actually lend the money see them going. And even that doesn't really matter because they and the bond market are typically wrong, to be honest with you. If you look at the bond market forecast for what rates are going to do, they aren't exceptionally accurate.

[00:07:41] And when you look at the big six banks and their forecast on what rates are going to do, they're not exceptionally accurate either. But, alas, we're going to look at them anyways. I thought we might. And you're exactly right, man. And look, the economy will economy and it will do its thing. And the Bank of Canada, who's the only one that can make a meaningful reactionary impact on interest rates, will do its thing. But regardless of all that, we are going to look at what the big banks have to say.

[00:08:09] And we'll look at this great article with some graphics from Canadian Mortgage Trans, which is titled Bank of Canada Rate Hikes in 2026. National Bank Thinks So. So just when Canadians thought the Bank of Canada rate hikes were behind us, one major bank is now forecasting the return as early as next year, that next year being 2026.

[00:08:32] And its latest forecast, National Bank of Canada, predicts that the BOC will cut its policy rate by 100 basis points, so one full percentage point this year to 2.25%. Before, then pulling the old switcheroo, the old bait and switch, the old Kansas City shuffle, and going right back to what it's been doing, to what it was doing for a while, which is hiking rates. So we've got some cuts and some hikes.

[00:08:58] They expect a 50 basis point hike as early as 2026, Dan. Yeah, crazy to see that on the chart. I mean, I guess they would be, you know, USCP, I wonder if the USCPI release today, because bond yields drop pretty significantly because US inflation is coming down. You know, the, I wonder if that, that would change their outlook now, because, you know, you really only would be predicting rates have to go up if we're anticipating seeing an inflationary environment.

[00:09:26] Tariffs could be inflationary, but it seems like, you know, the US is no longer in that, that risk of inflation, at least for the time being, January of 2024. Let's go through the key points from National Bank's forecast and mortgage outlook. So interest rate predictions, Scotia is expecting rates to stay at 3%. Other major banks forecast cuts, but haven't predicted any future hikes. The lowest is RBC expecting a 2% overnight rate.

[00:09:53] Did you notice the funny thing about this visual here, Dan, is that BMO and RBC were just like, yeah, we're not predicting Q anything in 2026. They just stopped after 2025. Yeah, I mean, that's reasonable, to be honest. Yeah, I mean, that's what I would be doing. But I love the boldness of Scotia National Bank and TD and CIBC. Yeah, so let's understand the rationale for these rate changes anyways.

[00:10:17] So the economy needs stimulus due to potential below GDP growth, reductions in GDP growth, maybe even declines in GDP in an actual technical recession. Lower rates will help cushion the impact of mortgage renewals, which are coming up this year. And I've been long saying that that was really going to be a policy objective of the Bank of Canada was to relieve some of that pressure on households that were renewing. Because we have, I think you said something like 60% of mortgages renew in 2025 and 2026, according to this. So there's obviously a clear incentive.

[00:10:47] National Bank also forecasts unemployment to rise to 7% from the current 6.7% due to job growth lagging population growth. I would completely agree with that. I think that National Bank's been very correct in their calls. I really like their analysis, their national housing affordability monitor on a regular basis. We've covered it many times on the show. I think I would, other than the rate call that they made here, I think I've been pretty much in agreement with them.

[00:11:15] And I just don't, I don't see an inflationary scenario on the horizon unless tariffs really, really take hold. We do see a trade war and it leads to like an inflation or stagflation world, which then NBC could be correct. Yeah, no, that, that, those are great points. And, and I, I do agree. You know, I'm looking at this, this, this graphic right here and I just, I can see myself as more of a Scotiabank guy, just a nice 3% rate all the way through. Right. I don't think we need any more volatility.

[00:11:47] Let's stay on the topic here, Dan. Let's talk more about rates and the mortgage environment. But this time we're going to focus on a specific mortgage product. The variable rate. This type of product has left a bit of a bad taste in the mouths of many Canadians who opted for it when rates were at all time lows. It was only later on, unfortunately, to get stuck with much higher payments when rates went through that historical aggressive hiking cycle. Yeah.

[00:12:16] So let's take a look at this article from Yahoo Finance to see their perspective on the variable rate this year. It says 2025 could be the comeback year for the variable rate mortgage. With interest rates on the way down, 2025 could see further resurgence in interest rates or in interest for the variable rate mortgage. We can safely expect that we'll see some downward movement on the variable rate side, whereas things are going to get a little stickier on the fixed rate side.

[00:12:41] Penelope Graham, mortgage rate expert at ratehub.ca said in an interview with Yahoo Finance Canada. Yeah. Variable rate mortgages move with the prime lending rate, which is affected by changes in the Bank of Canada's policy rate. Fixed mortgages are affected by the bond market, which has seen yields remain very, very sticky. Graham notes. Other than what we noted today, they dropped pretty significantly after US CPI data came out lower than expected. So US inflation is lower than expected.

[00:13:09] And it's been dropping bond yields pretty much across the country. Since October 1st, yields for the five-year benchmark bond have been in the range of 2.74% to 3.31%. Yeah. You know, the mortgage interest rates have been on a while, right? But of course, so has the bond market. And that's obviously come up numerous times in this show.

[00:13:33] So let's go through a couple more of the kind of key points and takeaways from the mortgage outlook here and this kind of deeper dive into the variable rate. So here's some key points. Fixed rates, right? No major movement expected in the first half of 2025. That's without significant market changes.

[00:13:55] So if we do see some major stuff happen, right, like the tariffs or, you know, we're in for a lot of new political drama, I'm sure, on both sides of the border here. So without any significant market changes, no major expected changes. The three-year fixed term is expected to still remain popular. It really has been one of the more popular products.

[00:14:21] Now, on the variable rate side of things, interest in variable rate mortgages have been increasing again as the Bank of Canada has continued to cut rates. And they're expected to fall below fix this year. They're actually not far off, you know, as of today. And some borrowers are accepting higher short-term rates, anticipating that future decrease, right?

[00:14:45] As you take that variable rate now, it might be point or, you know, one to two points higher than a fixed in some cases. However, if you're looking at that same chart and you're a fan of, let's say, BMO or National Bank or RBC who are all putting rates between 2% and 2.5%, you know, you may be on the right side of that.

[00:15:09] So, and Dan, anecdotally, you know, at our shop, at our mortgage shop, we have seen much more of a swing back to that variable rate as well as whether people are choosing a lot. It's coming up in conversation a lot more than it did for a while. Yeah, it is funny because, I mean, Canadians are just really bad at timing stuff. So, like, you know, they would jump it, they would pile into the variable when it's, like, at the low, not when it's going to go to the low and you get the benefit of pricing and the decrease.

[00:15:39] So, that's kind of funny. But anyway, let's move on here. If you're a long-time listener to the show, you've heard us talk about the HOPE acronym. If not, here's a quick refresher before we get to our next article. Economist Michael Kantrowitz's HOPE framework is our crystal ball for predicting the kinds of downturns that happen because of rising interest rates. It's an acronym, HOPE, H-O-P-E, lays out a simple sequence of events and how things play out in response to changes in the interest rates. Not for positive and negative.

[00:16:07] Housing peaks first, followed by new orders, then companies' profits, and finally, employment. Yeah, exactly, Dan. And this is a great way to try and understand where we are in a market cycle and why things like job numbers and employment are so important and how they impact housing and, to be honest, just every aspect of the economy. So, with that being said, let's look at this next article, again, from our friends over at Canadian Mortgage Trends.

[00:16:37] This one reads, strong drop growth in December raises doubts about a January rate cut. Total unemployment in Canada rose by 91,000 in December, according to Statistics Canada. The majority of the growth came from full-time positions, which saw an increase of 57,000, while part-time jobs also grew by 33,500. Here are the key points from these employment data.

[00:17:04] The employment rate rose by 0.2%, first increase since January of 2023, so almost two years. Unemployment dropped to 6.7%, so no longer seeing a growing unemployment, and this is just for one month, but still, data that people weren't expecting. Major job gains in education, transportation, healthcare, and finance sectors, about 17,000 jobs each. Total hours worked.

[00:17:30] We're up 2.1% year over year, and the average hourly wages increased 3.8%, so we are still seeing wage growth outpacing inflation. Yeah, and the impact that this kind of stuff will have on interest rates, we're going to see those strong drug numbers casting doubt on that expected, and in some cases hoped for January rate cut, right, Dan? As you said, bond yields have increased, and that's been putting pressure on mortgage rates,

[00:17:59] and all of the big banks are still expecting at least that quarter point cut this quarter. So, I mean, we just went over what all the big banks are predicting. Additional factors affecting the rate decision are, of course, the 2025 potential tariffs, a weak and weakening Canadian dollar.

[00:18:21] It's been very volatile, and then, you know, the Fed and the BOC, and everyone just being very cautious in their approach not to shake things up in the market too much. So, you know, Dan, going back to this HOPE acronym and the job numbers, what's your take on this? Because I know that, you know, we've talked about new administration coming into Canada and potentially mixing up the job market, right,

[00:18:50] maybe relieving some of the government employees that have been hired over the last couple of years that have boosted those numbers. Yeah, well, I think, you know, you have a change in government. You have Pierre Polyev who basically says that he wants to downsize the government. So if that ends up taking place, we've got, you know, basically a potential increase in unemployment coming over the next little bit.

[00:19:16] So I think that that's going to be an important theme to watch should he be sincere in his, and I believe he is, and I do think he also, we talked about this in our most recent episode about what's going to happen now that Trudeau's resignation took place. I think, you know, Pierre's incentivized to do this quickly as well because he could still blame the recession on Trudeau should he do that. Right. Talk about mistiming.

[00:19:43] I guess he's under some serious time pressure to make some things happen. You know, this also goes back to the point, and we don't have the data in front of us, but, you know, how many of these jobs are really public sector versus how many of them are, you know, people being hired at for small businesses or new entrepreneurship? You know, it really comes down to what type of jobs these really are. So now, Dan, let's move on to our next piece here.

[00:20:10] This may or may not come as a shock to you, but according to our next article from a friend of the show, Better Dwelling, who puts out amazing content, Canadian seniors are more likely to have a mortgage than young adults. Shocked, Dan, or what is your thought here? Well, I'm not shocked when you really think about it, right, because so many seniors, the majority of seniors own a house,

[00:20:40] and the majority of young people do not. And so that's, I think that's where the data point comes from. But Canadian real estate in the 2020s is more for seniors than young adults, though it wasn't always that way. Bank of Canada's 2024 mortgage data reveals that seniors are more likely to have a mortgage than those younger than 35 years old. And contrasting that with the borrower age at origination reveals that those under 35 are less than half as likely as previous generations to own a home.

[00:21:07] Less than half, man, that hurts. That's bad. So let's look at some other key points about some of the mortgage demographics here in Canada. And maybe we can ask ourselves kind of what picture does this data paint for us here? So the current mortgage distribution by age here in Canada, 49% of mortgage debt is held by those aged 45 to 64.

[00:21:37] Okay, so that would be, I guess, your middle age to, you know, just before senior. And then actually by seniors, 14% are seniors 65 plus. 26% by those aged 35 to 44. And then just 12% of current mortgages are held by those 35 years old and under. Now, generational changes.

[00:22:04] We've seen current young adults that are less than half as likely to own homes compared to previous generations, as you said, Dan, which is, which sucks. And while seniors hold only 14% of mortgages and only 7% originated their mortgages after 65. So old people aren't out there buying homes. Well, young people are out there trying to buy homes, but can't afford them. So more households are now carrying those mortgages into retirement.

[00:22:31] And I know, Dan, we've worked with a lot of baby boomers. Both our parents are in that generation. There's a generation that doesn't like to see a lot of debt on their books in a lot of cases. Do you actually think that? Like, I would say, like, probably for our parents, that would be the case. But I don't know if that's true. Like, boomers seem to like debt. I don't know. I know. I just, I don't know. Anecdotally, I hear this a lot, right? Especially if you have a boomer that gets maybe sold their property.

[00:23:00] I know a lot of, even on the mortgage side and the consulting side, I've seen a lot of people just really try to buy that retirement home in cash and just alleviate a mortgage, which is usually the biggest amount of debt that a person has. So it's just interesting to see that more of them are carrying those mortgages into retirement. I also wonder if that means that maybe there was a refinance at some point, you know, if they took money out of their house. Maybe it was close to being paid off and some of them took money out of their house to maybe

[00:23:28] help their adult children buy a property, right? We saw the bank of them and dad come into play for like, you know, an average of like $150,000 was the average gifted down payment. So you just wonder why we're seeing those kinds of numbers. What's your takeaway on this, Dan? I know, I think the answer is just like a decline in affordability, right? Seniors have to, the seniors are struggling with unaffordability because of inflation, house prices, interest rates, et cetera. And so they have to carry mortgages longer.

[00:23:58] Young people are struggling with affordability. And so they cannot carry mortgages because they cannot afford to buy a house to begin with. So this is it. These are the consequences of unaffordable housing market. There's not really much more from my perspective to add. Like that's just what we're seeing. I guess to return to the, um, to the article, you know, it's obviously a significant shift in homeowner patterns with older Canadians now more likely to hold mortgages than young adults, despite the 20 to 34 age group being slightly larger than the 65 plus population, which is also something I didn't know. Anyway, go.

[00:24:28] I love when we learn things on our own podcast. It's great. Yeah. Okay. So a few more articles to cover here and, uh, they both have one thing in common, Dan, and that is 25%. The first is a potential 25% tariff on oil exports to the U S which, uh, has come up a couple of times.

[00:24:53] And the second is a 25% increase in taxes in just three years. Dan, why don't you start me off with the first 25%. So these are the infamous 25% tariffs you've been hearing about president elect Trump has threatened, but they seemingly just got a little bit more real after a visit for provincial premier, Danielle Smith, visiting Donald Trump at Mar-a-Lago alongside celebrity investor,

[00:25:22] Kevin O'Leary, AKA Mr. Wonderful, who seems to think he has enough money to buy TikTok these days. Oh, I knew that was going to come up as soon as I had, as soon as I put him in here. I didn't have to put him in here, but I thought I would, you know, he's made the news several times recently, right? He's been, uh, bashing Trudeau. He's been talking about buying TikTok. Uh, you know, he's an ex shark tank or maybe still on shark tank extracts.

[00:25:46] And, you know, I, I, I've been watching Mr. O'Leary for a long time and, uh, he is never not entertaining. And I, I do really think that, you know, regardless of what you think about him, I think he's got Canada's best interest in mind. So, uh, just funny that he slid his way in there with Trump. Yeah, he's just a classic boomer, like not a, not a, not really good at communicating in a way that makes you like, gives you the warm fuzzies, you know, like he's definitely one of those guys. And I think he knows that as part of his brand, right?

[00:26:15] He likes to be a little bit like contentious, make you, make you feel something, maybe not positive. Some people would argue I'm like that with my rage farming on, on Instagram. There you go. Mr. Wonderful Junior, I guess. Um, so let's, let's look at this article here. Um, again, this is from S and P global commodity insights where, uh, the title of the article is Canada should get ready for 25% tariffs on oil exports to the U S, uh, from Alberta premier.

[00:26:43] And again, Dan, as you mentioned, Alberta premier Danielle Smith warns of those 25 potential terror, 25% potential tariffs on Canadian crude oil exports to the United States, which would start as early as January 20th under the incoming in administration. This is kind of crazy because with 50 U S refineries relying on Western Canadian crude oil, premier Alberta Smith noted that such tariffs would impact U S gas prices as well.

[00:27:12] So this could hurt both sides of the equation. This came after again, her meeting with a president elect Trump at his Florida Mar-a-Lago residence in Alberta exports 94% of its 4.2 million barrels of oil per day production and natural gas to, to the U S. So this is, this is major, major stuff. She added that Canada should have a tariff free relationship with the U S, especially regarding to energy.

[00:27:42] Uh, she also emphasized that they sell discounted oil worth $100 billion that the U S turns into $300 billion of value added product, man. Talk about a value add strategy. I got to get into the oil refining business. Um, seems to be more lucrative than the real estate business here. Uh, she went on to say that we'll work to secure exemptions, uh, citing the integrated pipeline systems between both countries. Dan, I'm like, I'm interested to hear your take on this.

[00:28:11] I mean, I've heard you say that you, you know, some people are just calling these tariffs a bit of a scare tactic, which they obviously are to a certain extent, regardless of if they happen or not. But I think there's a lot of speculation as to whether these things actually happen. You start to look at the numbers just on oil alone, like literally just on oil, forget potash, wheat, water, lumber, everything else that we're looking at, which we have, you

[00:28:38] know, massive, our, our biggest trading partner right to the South, 25% tariffs would obviously mess things up. You start to look at the numbers, you realize what magnitude they would have an effect. You seem to think that they might happen, uh, but might not last long. Tell me about your, your perspective on this. Yeah. My major thought is it really comes down to, uh, look like Trump's, uh, he likes being contentious and he likes like, you know, getting a rise out of people and, uh, saying, saying like really bold stuff.

[00:29:08] And it really comes down to whether or not you think he is more, if he cares more about being, having a strong economy associated with his name or being, or if he cares more about being America first, right. Um, because that's kind of the, the, the decision that he'll be forced to make, I think at a certain point. And, and because once the economic consequences start to appear, I think he might back off a little bit.

[00:29:33] Depends how long I think similar to, to appear getting in, in Canada, it depends how long he can blame the Biden administration for, you know, any, any economic downturn that you see in the U S taking place, but there'll be, there will be economic consequences. It's a question of how promptly he responds to them and whether or not they matter to him. I think like, he'll probably come out that the tariffs will exist. Gradually exemptions will be added to kind of deal with that economic blowback.

[00:30:00] The tariffs will still exist in, in principle publicly, but privately, it might be kind of being whittled away at by the organizations who are subject to them. That's, that's my thought. That's kind of what it looked like in 16, 17, we ended up with like 70, 70,000 exemptions. So let's jump to the final piece of news here, back to Ontario's largest city, Canada's largest city as well. Toronto center of the universe. Yes. Yes. Of course. Downtown Canada.

[00:30:26] This is that second 25% that we mentioned. These are both basically negative 25%, by the way, like, and I mean, negative, like not minus 25, but like negative connotation, negative impacts, uh, because this is about a news proposed new proposed tax bill. That would mean taxes have gone up 25% in the last three years. Dan, tell me more about what is happening in Toronto with this new proposed budget. Yeah.

[00:30:55] Toronto's proposed 2025 budget introduces a 6.9% increase to property taxes. It is triple the rate of inflation, the most expensive budget in Toronto's history, a $1.8 billion increase in spending. And the city of Toronto is proposing to increase property taxes by 6.9% this year to help fund

[00:31:20] that $1.8 billion increase from last year, which totals a $18.8 billion operating budget for 2025. That's, that's wild, man. I guess, you know, you think almost $20 billion to run a city, right? I always, we like to think of, you know, having, I guess, business oriented minds, Dan, you and I have, have talked about, you know, running cities or running countries or music municipalities more from a business mind. Right. And, and, and whether or not that's the perspective you take it, it's, it's the reality as well, right?

[00:31:50] You, you need to bring in money and you need to spend money to keep the city going. And it's just fascinating that the city of Toronto basically needs apparently almost $20 billion as an annual operating budget, right? I mean, that would put it with, you know, some major companies as, as a market cap for, for just an annual budget. Yeah. Yes. I guess it is interesting. I think, you know, I always want to analyze maybe more like the, the real estate impact and,

[00:32:18] you know, for landlords, this is interesting because, you know, your costs are going to be up and, and if you're in the city of Toronto, you're now facing a rent eviction bylaw, you're facing, uh, you know, rent control if your unit is older than, than 2018. And so you can only increase your rents by two and a half percent yet you're, you know, some of your inputs, your costs are going up by, uh, over 6%, almost, almost 7%. And they've gone up like 25%, like you said, over the last couple of years, I think she has

[00:32:48] increased property taxes 1% per month since she's been in. And this, so this continues to put pressure on, on homeowners. You know, you talk about like, go circle back to the beginning of the episode, you've got all these boomers with, you know, with mortgages and maybe they don't have the income and they, you know, they, they now are facing increasing costs and, you know, they're burning through the retirement savings faster than maybe they had budgeted.

[00:33:16] And so that, that to me creates some more potential sellers. If you're a baby boomer, who's maybe considered downsizing, you're probably thinking, well, every time they crank this tax up, my incentive to move to a smaller, cheaper house with a lower tax burden goes up. And, and so these are the things that kind of, that I start to think about similarly investors who maybe are, you know, it was the last, maybe that was the last straw for them. They're like, you know what, this, this country, this city, this province isn't serious about

[00:33:46] me as a business person. They don't, you know, they're making it harder and harder for me to make money in my business of being, being a real estate investor, a landlord. And so I'm going to sell. Right. So I think, you know, there, there's very well-documented economic theory and, and patterns that happen as a result of interest rates. There's this whole, or sorry, a property tax rates, this whole philosophy called Georgism,

[00:34:11] which basically thinks that, or, um, believes that you should impose a land value tax on people to increase the liquidity of the market basically. And, and so I think it'll do that. You know, you may get more expensive to hold stuff. More people are probably going to sell it. Yeah. No, that's a really interesting take. Tell me a bit more, Dan, about what the money is going to be used for, uh, with this new budget, how much maybe it's going to cost the average. Uh, homeowner, uh, tell me a bit more about, uh, the repercussions of this thing. Yeah.

[00:34:42] So I think it would cost about $210 more annually for the average home with an assessed value of $692,000 in the city of Toronto. The budget is aiming for another 1.5% increase in building levy, levy fees, which would cost those owning a home in Canada city and additional $58 in 2025 money that officials say will be invested in transit and housing. Toronto mayor, Olivia Chow, uh, who I kind of got in a bit of an argument about this stuff,

[00:35:10] uh, kind of de facto indirectly. But I, you know, I had, I was on AM 640 a couple of, or yesterday morning on the way back from Montreal. And then I guess she was on it after me to try and kind of, uh, dispute what I had said. And then they called you back and were like, you have to come back on. So I had to do another one to kind of dispute that. And so, I mean, look, I think, um, Toronto is getting, uh, what, what they voted for. They wanted, uh, you know, they wanted more taxes.

[00:35:39] They wanted more social programs, et cetera. And I think, um, this is going to be a big, uh, this, this is going to be continue to be a big theme. It's going to be, man, it's going to be more and more stress on, on, uh, on households in the city of Toronto. Cause that's the place that, uh, that the city can tax, right. They can't tax your income. They can't tax your, your sales. They, they can only tax property or they do only tax property. And, um, that's just going to continue to materialize and more stress on households until we see

[00:36:07] a change in government in, at a municipal level, which I can't see Olivia Chow getting another term at all based on the current circumstances. So, yeah. Awesome. Okay. Well, uh, that brings us to the end of our news episode. While we covered a lot from capital gains to variable rate mortgages, interest rate cuts, interest rate hikes, 25% tariffs and, uh, uh, blowing out of the water, the, the new budget.

[00:36:34] So hope everyone got a ton of value out of, uh, today's episode. If you are a new listener, go back and listen to our other episodes. We have well over 250 episodes, uh, that cover everything you need to know about real estates. Go back, check those out. If you want to get more involved, join realists. We have a free and paid, uh, online, uh, and in-person consulting and community, uh, and get out to those events.

[00:37:01] We are fresh off of, um, some really incredible events attended by probably thousands of people across the country. Our meetup group just hit over 5,000. Uh, so tons going on, Dan, we got YouTube. We got, uh, you know, we got a lot else, a lot of other stuff going on. Yeah. Check out our YouTube channel. We do about 10 minutes of every episode. Uh, we put on YouTube with some, some better visuals, uh, you know, charts, articles, et cetera. If you want to work with us, if you want to buy or sell real estate, if you need a mortgage, give us a shout.

[00:37:32] Uh, we're, we're pretty easy to find. Uh, we love to work with our listeners and find that we, we speak the same language. They, we, you know, they are educated based on the content that we have. So it makes it makes for a really easy experience for us and a really, uh, really good experience for, for the podcast listeners. Leave us a review and, and, or a rating. You can do that on Apple podcasts on Spotify and whatever podcast platform that you're listening on. So, um, that's all I got. Thanks a lot. And, uh, we'll see you next episode.

[00:38:00] The content of this podcast is for educational and informational purposes only. It is not intended as financial, legal, or investment advice. Always consult a qualified professional for advice tailored to your unique circumstances. The views expressed are those of the hosts and guests and do not necessarily reflect the opinions of affiliated organizations. Daniel Foch is a real estate broker licensed with Valerie real estate Inc. Website is Valerie.ca V-A-L-E-R-Y.ca.

[00:38:28] And a member of the Canadian real estate association, the Ontario real estate association, and the Toronto real estate board. Nick Hill is a mortgage agent and partner at OWL mortgage license number one zero three one seven agent license M two one zero zero four zero three seven. One eight agent license M two, one seven, but you can see a lot of people in your business. In the real estate and company, the old estate industry has been an owner of the country. One day of the 1990s, the owner of the country, the owner of the country, the owner of the country, the owner of the country, the owner of the country, the owner of the country.