Real Estate Reality Check | EP. 190

0:00prices are down 25 30 percent like the experts sold us the peak the only way pressure to come down is if we triple supply because you know the rapid price growth is driven by a housing shortage well we have it built shit exactly and prices are plummeted that's exactly the point it's not like we tripled supply and this is for the mortgage brokers out there and probably for realist in agents and most certainly from mortgage borrowers I mean this is what can happen sometimes the bank says no sometimes prime lenders just won't give people the mortgages they need and what do you do then okay my recommendation is neighborhood holdings because when you need that mortgage the most important thing is not necessarily the very best rate this is an alternative mortgage anyway it's not necessarily the most fancy product it's not necessarily the people who promise the most yeah stay away from them

1:05it's the people who are legitimate for financial professionals people with a long history of delivering for borrowers and are well known throughout Canada use honest financial professionals long-term business people who are there to look after their customers not just today but for as long as the mortgages needed that's who I'd use neighborhood holdings it's great to have John the Salispect doctor John really doctor the sound I don't go by doctor but sure I went through this schooling and I'm probably the only guy who doesn't want to be called that well you did the work okay so yeah but I know it's weird in business right like if somebody yeah well let's just go look at this house and remember call me doctor like no I'm too low to eat for that that's true you're right okay president and broker record at real philosophy realities I can do it I can get it immediately I don't have to stumble

2:07over the name of the brokerage and I think it's philosophy and look this is how this works there's like a handful I guess it isn't quite a handful but there's a handful of real estate people residential real estate people that I talk to who are telling the truth all the time like all the time like John Dan Steve there's a group of people who just tell the truth okay as opposed to TikTok I can imagine I'm not on TikTok but I've seen some of the stuff that you share yeah as opposed to Instagram as opposed to Facebook like there is just there is a terminal velocity of bullshit about real estate oh yeah I believe a lot in this industry yeah woo I mean at the end of the day some you know I like here's what I know from from being involved as a principal broker in the mortgage business our business difference all employees it's all salary employees but most

3:09mortgage brokerages operate the same way as real estate brokerages there's a bunch of independent agents yeah right and for sure and you act as the central clearing and trust and compliance function exactly in your business yeah and we know that when agents if there is no real supervision because you and I both know sometimes there is some yeah okay I'll say whatever the fuck they want they want to the public yeah they do so we see some really really wild shit but I love having John on just honest assessment of the Ontario real estate particularly GTA real estate what's really happening and what's what's the future that we can think about nobody can predict a year from now but you can probably predict six months from now or something yeah give a reasonable thought and and what's going on so I mean the mortgage business has been okay we've had a secured renewal year right and even though the banks do most of their own renewals like they you know

4:13you should shop because then they'll compete now the first offer is never the best offer right that's true it anything that's true yeah if you buy a car the first first first never no this is what we best deal we can give you no I'm not taking it you got to do better that's very true always a better price there's also better rate but the banks do a lot of business so I should shop get the best rate but it's consistent it creates a lot of people contact you they have to do something right it's changing that's not true in real estate what real estate is slow it is just slow tell us about the marketplace what do you see the markets I mean dead I mean it's been dead well can I tell you Ron it's you've been talking about it there's no sugar coating anything you know it's funny because the you know and I wrote about this I don't know maybe a couple weeks ago like when the July stats came out you know for four months sales in the GTA were a positive year over here you know not by much not by much like 4% 5% you know mind you off of like

5:16record lows like 20 year low and sales volumes right so lowest of the lows yeah exactly so we're coming modestly above the lowest of the lows you know and the sentiment at least among the real estate industry real estate boards like positive over turn the corner the market's going to rebound and fall we're gonna have like tons of sales and then July head and sales were down again modestly but you know we're still in a sluggish market I mean that's just the reality we're like four or five years where sales are pretty much at a 20 year low this will be like I think the fifth summer or fourth summer yeah the 20 year low sales so it's a soft market prices are still kind of grinding down because there's just not enough demand and that's the big reality like when sales are at a 20 25 year low there's just more inventory than people buying and that's really why prices continue and have been continuing to source sort of grind down so we do see sometimes a big big discussion about fewer listings but even in this game for a long time how meaningful is fewer listings I mean

6:22listen it's it's again listings were at an all time high kind of last year yeah unbelievably high so yes it's positive that the new listings are down the new listings so the new homes are coming on the market now we're probably closer to say a 10 year average or something like that or maybe a little bit above but you still have sales that are out of 20 year low so there's still a massive mismatch so yes on the surface it's better fewer listings I mean better for a market stability inventory is coming down but it's still not coming down enough to you know to basically lead to a plateau in prices at least not anytime soon yeah so the the thing that the thing that we keep telling people over and over is that even when prices stop falling there's no reason for them to start going straight up again and then typically they don't yeah it just don't yeah I think yeah so I

7:22because I was I'm so old I was around for 1990 and I got to say this marketplace is starting to imitate 1990 to 1996 more and more yeah and the only thing that really happened in 1995 96 is they stopped falling yeah exactly they traded sideways for a long time quite a while yeah and I don't I wouldn't be surprised if that happens you know the next two three four years like I don't think we're going to see this rally of like people buying homes as investment properties which I think is one of the big drivers like at the end of the day if you'll demand for micro condos if you don't create condos even though you're trying to cancel you wrong yeah after me yeah I saw that they were after me that post is hilarious you're right the dark great condos you know this is all investor driven and I really don't think we're going to have a market two or three years from now

8:24where people are rushing into buy investment properties like I I would be shocked like you might have it on the margins but I think there's a a massive hangover from the bubble that burst you know you know and we were leading up to the bubble all everyone to talk about is how their buddy next store made a hundred grand flipping a pre-construction condo those were the freaking narratives right that was that was the story that was a story well and now the narratives are the opposite where everyone knows a guy who's defaulting on their condo or can close or burning counter like the the narrows are the complete opposite so I don't think the market turns a corner overnight right and I think we're going to have that hangover for a while before you see another bull market I completely agree and it's just just sensible it's just math so we have we we keep hearing reports of absorption of this massive hangover of unsolved condos because we know builders were stuck with condos a combination of condos they held back they didn't they chose not to sell

9:27even builders believe their own bullshit they thought they were going to make more money by holding onto condos for five years but but and people who refuse to close which was never as many people as I thought there'd be that that's what happened so now we're hearing about this this inventory being cleared yeah so it must be that this bulk sales thing is working there are financial vulture funds coming in and buying up 10 20 50 condos at a crack yeah absolutely I mean who else is buying these it's certainly not the average person you know and I think one important thing is you know we talked about sort of that we've talked about this new talk about this the HST rebate so the federal government increasing the rebate on new homes of course a lot of that was framed it's for young users and families afford in your home but the bigger beneficiary of that are these vulture funds because what happens is the builder can slash their price by the HST rebate which makes it cheaper and more you know more than incentive for these vulture funds to come in and buy

10:32these condos in bulk so the savings are basically being passed on to them and I think that's one of the things that's certainly driving a lot of these big companies that are buying up tons of condos it's a lot like what we saw in the US during their financial crisis true it's actually right like you got a guy like Warren Buffett Charity Munger at Berkshire Houthaway when the when the bottom absolutely fell out of the parts of California 50% off the prior prior retail price yeah yeah they showed up they just bought them up yeah and they made some money in the end it took them some time too but they're patient money right I mean they they they're they can wait for eight years they can rent them make a tiny profit on the rents and then when the when it goes back up 50% I mean that's a decent return because they you know they got they can get mortgages too right I'm saying they can finance so they got leverage at a decent rate so to your point that's what we're seeing we're seeing and this is the frustrating part for people who are inside an industry who are

11:39willing to talk about it like you and I yeah you know yes the government wants to support the sale of these units yeah so that eventually the construction business can get back to life someday I mean it's a noble thought like you and I aren't mad at construction work no we'd love to see construction workers come back to work the only thing a construction worker ever did is show up and put in the day's work that the money was being made by the developers the money was being made by the speculators some money was being made by others they get they just showed up every day the concrete the hot concrete slab in the summer and they just kept building condos okay sold to the earth people Jesus we'd like to see them work but that way in that way clearing inventory is helpful only that way yeah and it's no it's no instant solution nobody's gonna start building condos and nobody is starting to build condos okay not at all but you have to be first step so okay good good for the construction workers but what you and I observed me on the inside of a

12:40business is it ain't young people buying this stuff and taking advantage of it no it's always the wealthy it's always sophisticated corporate interests yeah absolutely and that mean that's not comforting no it's not comforting I mean I think it's I think it's again I mean I think we're on the same page I think it's one of the things that has kind of screwed a generation out of ownership like the fact is like homes became just another financial asset an asset that you can leverage five times and if you're making six if it's growing 6% per year and you're leverage five times that is a very very good investment fabulous right so it makes sense why people are dumping their money into it but again you have households that are saving their money for their down payment at a personal income tax rate competing with these big companies that are raising hundreds of millions of dollars through a fund and now they're competing for the same type of property which

13:43was always the key argument against any government bailout any government per percent individual units the john john's point is actually the best summation I've ever heard of you pointed out that when the government buys units from a developer they're competing with their own taxpayer they are yeah absolutely the taxpayer would like to buy that yes it's it's a hit that up yeah so I mean so this came out with the the the government announcing that they're going to buy tons thousands of condos in BC affordable housing they're going to get a deal low construction costs they're going to get a discount it's a great deal for average Canadians the problem and like them I feel like the misleading thing and all this stuff is even if they get a discount they're getting a discount a bulk discount for bulk buying that isn't available to the average person right okay and I think that's one of the big problems with all of these even the

14:47companies and our government but at the end of the day you have the government now competing with end users for the same property and at the end of the day the government's willing to pay a higher price than the end user which is why they're absorbing them all so I think it's massively problematic that the that the government is stepping in and buying thousands of units that were built to be you know owned by end users at a price that the end user can't even get it's it's it's a massive issue so when we you know it even though the the condo bailout was a fiasco of communications like it was it was like literally 10 days of endless barrage of torture for the people who announced that for the prime minister and for the premier eevee and it was so bad and then they started to change their story and how it's going to be something that you know you're wrong it's going to be more like this and I remember vividly the prime minister and David eevee like 10 days after the fiasco when they're trying to fix it up yeah and eevee says oh and these

15:51these purchases are below cost for units that can't be sold anyway and the fucking prime minister's nodding like a bubble of doll yeah yeah yeah that's it you got it that's it and yet basic economic theory and hey folks he's a doctor of this shit okay like he actually knows what he's talking about economic theory is accepted for a reason yeah because it's true so when government when governments compete with end users who are the taxpayer yeah the government has an advantage yeah the government may end up doing a good thing with what they're buying but ultimately the end user taxpayer should have access to the lowest price and if you let the developer go broke you'll have an auction at the lowest price exactly that's it and that's what they're avoiding they're setting the floor at the end of the day the market will clear which is that the market all the inventory will be absorbed when it hits a price that people are willing to pay yeah and the government is

16:53trying to avoid that by stepping in early and paying a higher price and the markets willing to pay to take up the inventory because no matter what story the government tells you the right price is the clearing price of disaster of disaster of like fuck me we're going broke what can we get for this the receiver's auctioning it off that's the lowest price it always has been always will be exactly all right so that's the flaw that john and i see and all this stuff that that any kind of government intervention even if it's well intentioned it's not the right way because the right way is all the right way is what they did in the states for the love of god no there was no government in 2008 2009 2010 no government bought any home ever never no okay because at least in the USA you know i know that half the audience is just mad at them in general at all times okay and almost

17:53remember folks it's not a person it's a country okay like we can be really really fucking mad at the terrible person who's running it okay but like half of america didn't vote for him and if an election were held today unless they run out of candidate that's that's a communist like that's a practicing Marxist okay somebody else could win today okay so let's just not be furious in americans and the whole country which was a beacon to the world for 200 fucking years let's just not be mad at them permanently that is illogical yeah okay but in the states at least they understand that market forces work for a reason free enterprise works for a reason if you let things go to the lowest possible bid that releases inventory at the right price to the to the economy which we refuse to do for some reason so now we got the prime minister coming he's doubling down on modular yerts oh my god and he's gonna build more social housing in you know sometimes i

19:00actually talk to people who are in social housing we were not we get calls sometimes from people on disability benefits and you know unfortunately we can't help them it's a sad story but really would like to be in better housing and when we talk to them what you do discover time and time again is that the city of Toronto the city of mississauga the city of would be or whatever the hell municipality it is they're actually the worst slum landlords in the province okay they take the least care of their own rental stock so no matter what the prime minister says about his modular yerts that he's going to be building for socialized housing because yes yes we want people on disabilities to be able to get housing of course we do we're a good society okay we should do the right thing but somehow they always end up to be shit eventually on forcing a lot already because they never spend any money on them afterwards they build them and forget about them yeah that's it so sales continue to be down we saw prices come down in July to your point prices came

20:03off again and 905 and this is stuff we've talked about before for four one six holds this price better way better way better than 905 even you know and so we see price and by the way when we see prices off in four one six it's dominated by the condo component for it is for sure I think I think single family in four one six one plus one that's my recollection the only green number the only green number yeah so John's almost made the point that it's just a solid market yeah yeah downtown I mean you again it's tough to talk to people about this because they look at the average aggregate stats and they seem that applies to every home yep so a lot of times a lot buyers no look at comparables from a year ago and assume prices for the same home should we 8% less because up to the averages but you can't do the math that way I mean it really depends and to your point a lot of downtown areas are relatively flat compared to last year you know there's still slow

21:03but prices are not down 78% now you have other areas in the suburbs you know Brampton is doing something very different from downtown Detroit very different right still feels very different so you have to look at the region but yeah the core generally is holding up a little bit quite a bit better I'd say in the core only houses condos are struggling yeah single family low rise homes low rise homes and to your point when prices were going absolutely batshit crazy in 2021 yeah the core prices didn't go up that there are that's actually a very good point I think people missed that 416 they didn't I mean again that was part of the there's like the urban Exodus we were leaving downtown going to these distant suburbs so you had places in the distant suburbs going of 40% per year and Toronto's going up 15 or 18 which is still high but it did not accelerate the way those distant suburbs did your 100% right and it's also pretty damn tough to you know push a

22:03home that was two and a half million dollars in 2019 it's pretty tough to push that to for sure million yeah there's a limited audience yeah and yeah and then back to work I mean the back to work especially things like the provincial government I mean I think all of this is impacting housing a lot of people move to these distant suburbs just expecting to be working from home now that they've got to commute five days a week it's kind of shifting priorities so you have people now wanting to move back closer to the city I've had a few real estate agents tell me that in their leasing practice they're actually seeing people rent small condos just for the middle of the week that's just from Monday to Thursday I could see that they all they're only that yeah you got to rent for the whole month obviously you don't have to sign a one-year lease but it's just designed for the person who stuck having to show up at the corner of Bay and Queen yeah four days a week that he can't handle the commute that makes you can't handle the commute so but they didn't sell

23:08their house in the middle of nowhere yeah and it might be cheaper for them at the end of the day if you get like a small studio condo yeah those rents keep falling yeah that's an important story too the rents keep they do fall don't they are you a project you work with so describe that a little bit yeah I mean we have a release of building across from our office beautiful building I mean built by purpose built rental 45 units or so well designed but you know every year that a tenant kind of moves out we run strap a little bit you know we're just kind of adjusting the price and again this is just because we're in a softer market every year that you know rents turnover someone moves out the price is going to be a little bit lower than it was the year before it's just an eternal truth so far right right now I think that's across the board incentives are higher you know people want definitely a month or two months rent free in some cases depending on the situation but yes different builders are offering different incentives but it's a sluggish market and you know activities not booming you know they mean there's just now of course there's seasonal time

24:11this is start of September maybe some people are moving in but it's still a soft market it's still a pretty soft market in the rental market although it's as my friend Jeremy our friend Jeremy I says all the time um leases happen like leases do happen they do the the the the the the the the the the the rent falls yes but the leases happen that's a crazy part it's like if you look at leach transactions we're like much higher than we normally are you know compare the seasonal averages um but it there's just to keep falling I get there's just you know so much inventory out there that it keeps grinding down so I think that's going to continue for a little while so everybody listen to that point absorb that point that John just made there's a lot of lease activity it's there's people moving there's people coming there's people it's there's action and some of that has to do with return to work yes return to the office but no matter how high the volume is asking rent still drop that's interesting yeah exactly yeah and yeah it's it's going to be I

25:12mean I think it's going to be interesting in the next year or two when the resale market picks up meaning you know more buyers start buying homes because that's going to effectively kind of pull the rental demand a little bit down right because I guess some of those people are renting absolutely I mean we have tons of people when we list houses for sale or for lease the people who rent them are not people who can't afford a home they're people who are anxious to buy a home and just want to rent for now right so you've encountered that uh absolutely absolutely anytime you list a house for rent like in a downtown Toronto almost everyone who buys it makes a ton of money has to rent it rent it rent it sorry the people who rent it have a lot of money they're just anxious to buy but they're cautious they're cautious exactly they think you fight it wait another year yep I get a better price will be lower right so be launched I buy now so we talk about that I did a I'm doing a little video which are called animal spirits so animal spirits in Waln Wall Street is when a trader sees a market move or even an individual stock move and they can't

26:16understand it there's no fundamentals for it it's not part of a momentum play it's not part of a class of stock that's moving nobody knows why it's moving up or down so they just say well it's animal spirits it's it's the idea that there's some totem of an animal somewhere that's that's reached into some people's mind and is of causing them to do something that's not rational okay so that's animal spirit so one thing that you and I have certainly I noticed it um when people talk to us talk to me anyway lately only very very lately I'm hearing people say hey Ron when do these prices finally turn around they didn't say that for years they just said prices are shit right Ron they didn't make the next step so I'm starting to suspect and as you've just pointed out there is a kind of pent up demand there is yeah for sure chose to rent yeah who would like to buy yeah and maybe have the means to buy but not right yet yeah I mean we've had like we said four or

27:17five years of 20 year low and sales transactions that doesn't mean for the past five years no one wants to buy home or fewer they want to buy they just aren't ready and they're just anxious and prices are falling so the sitting on the sidelines again it's these the animal spirits work in both ways they push prices up when the markets booming oh yeah if I don't buy now I'll never be able to get a yeah exactly those were the animal spirits during the bubble today the animal spirits are like I'm gonna wait I'm anxious prices are gonna fall I'm gonna wait a year and I think that's what happened and I agree with you that we're getting to this point where people start thinking and Nancy they're getting they've been waiting four or five years for some people to write right yeah right and I think Ben Ben Rabidoui subscribe both of us yes so it's rort I think he's been writing about this a while this this idea this pent up demand the people just waiting because sales are so low for four or five years and and I agree with you I think if the market rebounds in the years ahead part of it will be just out that rebound now I want before we get six seven thousand comments

28:19about how you guys are pumping real estate again you fall curse okay before we do that let's let's be clear on something neither John or I think prices are going up in September at all we think prices are gonna keep coming down okay we're talking about the cycle by which and there's a natural business cycle to everything yeah okay by which we eventually someday after further price reduction yeah see a change in the market and that change in the market may be and you and I think agree we believe it will be just not going down any flat prices for us just flat okay just flat could be flat for years again when I think back to 1990 the similarities just become more and more glaring like five years of prices falling yeah falling falling falling and then one year they just didn't fall anymore exactly they sure as hell didn't go up hmm they didn't go up yeah and I think that's what we're talking about I mean at the end of the day for us to hit a plateau that pent some of that pent up demand needs to get off the bench yes by home yes and you don't need a lot of it you just

29:24need a little bit because we don't and we don't need sales to get back to their 10-year average because if they do that's 6% price growth per year you need a modest increase which we may never see again yeah we might see for a while for sure for a long time yeah okay so the main thing is that when when we people who are legitimate experts of this stuff start talking about this it's just our anecdotal observation of what we see in our own lives yeah and in our own practices in our own businesses and it is that we went years when no one asked a question about when's it going to turn around true no one said it yeah Marcus should I would never buy now just the questioning stage just started to appear yeah okay like okay well not this year but yeah so that's a subtle change that tells us something but either one of us believe prices are going up next month not even the slightest okay not a chance not not next month maybe not next year the only thing that might

30:25happen next year is a quit falling yeah that that's possible yeah and there's product features to that 100% yeah I agree I agree I'm gonna say that like who the fuck knows when the condos are gonna yeah I don't know if any I agree with you if anything stops falling in next year it's houses and you know even in some areas they might continue to fall but condos you're right it's it's way less predictable and way more potential for very low for very long and never get off the map probably yeah because again like I think that like if you look at the condo market it was driven by investors who didn't care about cash flow they're bleeding money because price kept going up that's gone now so no investors are buying condos period yeah so no culture funds exactly so now you have the end user who's doing a more rent versus buy and rents are looking a lot better you know these interest rates and those prices yeah and I think you need condos to dip a little bit further for you to see much more increase in demand and two things that neither one of us truly know when will the federal

31:28government restore immigration when will it reignite it or will it reignite it we don't know the answers to those questions yeah and that's very important for rents which mean it's important for condos yeah and what will happen to mortgage rates yeah another thing we don't know that answer yeah okay like you could start to see prices flattening and we ever got the 5% mortgage rates you might see them come down again yeah yeah for sure yeah that's true there's always variables that we can't completely predict it's true um just one last thing about the condos that you touched on and is so true um those condos during the run up during the boom during the bubble they were really just financial instruments right 100 absolutely yeah no no one had any interest in living in them everyone that was lining up to buy a 500 square full condo most of them wanted to flip them before they even took possession that's the ultimate financial absolutely absolutely you're just flipping a

32:32contract and I'm gonna make a hundred grand or 150 grand good my real estate agent told me he did that on his gone like these are my other than my uncle did it and my years ago yeah my uncle did that too and my neighbor did it like I'm like people are crazy like no it doesn't work like that you know and I had so many people calling me and and and and around like right around the people like you know 2019 2020 and like this what everyone wanted to do and like again we're like straight like you know you're probably you're like me like I'm gonna tell you the truth whether you like it or not whether you listen to it or not and that's very straight up I'm like it's very unlikely to make money off of this shit like it's so expensive you're paying 40 to 50 percent more than resale why are you gonna buy this right and so we never sold anything pre-construction because hey I was like it doesn't make sense to people just either not buy or buy with someone else 100 percent um you know but that is a real big tell yeah when somebody is treating real estate as a pure financial instrument I

33:34don't ever plan on closing yeah exactly I'm gonna sell a contract yeah yeah that's you know you might as well put a flag up and say put the white flag up in surrender you're doomed yeah that's a disaster yeah you're doomed I mean I think this is one of the problem with the government the experts like all of the red flags were there like if you've studied any housing market in history it's a massive red flag when you're entire new housing supply is just driven by speculation at irrational prices like it always bursts and you've made some great commentary about this about the fallacy of supply like yeah like this how how the how the fuck does lack of supply drive something up 30 percent a year and then back down again yeah that's just nonsense listen I think it's uh it was I think it was the stupidest thing we heard during the bubble and don't get me wrong obviously when immigration our population is growing by 1.2 million okay and we're only building 200,000 homes yes there's a supply shortage absolutely that's not the big but that's not why price

34:39were going up 30 plus percent per year during the bubble that's not why pre-construction condo prices were going up 30 percent it was like a speculative frenzy and like it's and it's not even debatable like at the end of the day prices are down 25 30 percent like the experts sold us the peak the only way price is going to come down is if we triple supply because you know the rapid price growth is driven by a housing shortage but we have it built shit exactly and prices are plummeted that's exactly the point it's not like we tripled supply no four years or a row price are plummeting we you know what did we kill we killed the speculative mood of housing we kind of taken this what was a you know being used as a financial instrument and killed that in the second you kill it it changes who buys and who owns no one wants to buy a dark-cray condo now because they're bleeding cash because it's not going up 10 percent per year

35:40and the second you kill that you suddenly have a slightly more affordable market so I did think it was a massive problem and I think it it fueled the animal spirits when when the politicians and the experts are telling everyone price ago up 30 percent because we're not building enough homes oh and we're not going to be building many new homes in the future the assumption as prices can't fall you mean you make us a per point here okay when you as you said when those experts when the government when the even some of the bank economists you had you had this endless lit this never-ending story of a lack of supply you you could as a average guy say average say well this lack of supply thing means that prices go up forever exactly one of these they don't fall because you're not solving supply yeah we're not solving supply anytime soon and I think a lot of people believe that that prices couldn't fall because the idea that we're going to triple supply as

36:45the solution was impossible so the solutions impossible that's going to make housing more affordable why not pay 1800 bucks a square foot for reconstruction on though why not pay 40 percent higher or exactly than on my house in Scarborough yeah why not yeah yeah um which which I like I just you just triggered my thought on this not in a bad way I'm not scared okay but you triggered me like you noticed that no living soul in real estate uses the phrase world class city anymore sure you must have noticed that right like I mean I just hit me like how many fucking times did I hear that from 2017 to 2022 it's a world class city we are the same as men happy we are the same as London we are the same as Paris and I kept scratching my head thinking fuck me I've been to all those places we are not like that no no listen the sales people are gonna sell whatever they can and when it means they're making on pre-construction gondos three or four percent for an easy trade

37:48they're gonna sell whatever story they can people fought me on that whenever I said whatever this because you and I both remember it was literally on the lips of every single 90 percent of all real estate people world class city world class city world class city even the media picked it up the media was saying it all the time too world class city world class city and it's left the language now like it is absent like you would never hear a whisper of that that phrase and yet so I guess it wasn't really after all really it really wasn't really it really wasn't it didn't save us from prices tanking and condo prices tanking wasn't on call now wasn't Tokyo you know because we got to have a realistic thought process on this we are a yes Toronto is the epicenter of Canada we're only a 40 million person country exactly yeah they got like there's there's provinces in China that are considered backwaters that have 45 million people in them yeah there's just a bunch of villages and hills over there yeah fuck well there's 40 million

38:48people there like we got a real sure we have a lot I love Canada it's a great country it's got a lot of pluses I mean by the way that province in China with 40 million people doesn't have all the oil gas minerals doesn't have all the stuff we have okay we are a blessed country but holy shit not a world class city you know not a world class city that didn't that didn't turn out to be exactly what everybody thought so I'm in the I'm in the camp of thinking the foreign buyers ban expires and interesting it comes back what are your thoughts I think they modify it to maybe allow it for new construction kind of like what they do in Australia I mean I think it's a terrible idea to do either and not because we're going to have tens of thousands of foreigners buying homes I think part of it is just principally like at the end of the day do you want houses to be a lucrative get rich quick investment for foreign companies who will

39:50out bid Canadian households or do you want it to be affordable for Canadian households and I think this is the decisions like a line in the sand what do you prefer and by lifting the ban our government's basically saying well we rather be a great investment for these foreign companies we're going to just buy up our homes and I think that's a backwards approach and I'm not because I don't think it's going to happen anytime soon even if they lift it you're not going to have billions of dollars flowing at the housing and because there's no there's no billions of flowing into housing in anywhere right now right but eventually it does so why lift it like why not just make houses houses for Canadian households why should they have to compete with foreign companies and to your point and to expand on it if it makes no fucking sense to Canadians to buy a house or a condo at a specific price exactly but makes no sense not affordable doesn't make sense don't want to do it why the fuck are the foreign people buying it that price okay yeah what is the

40:53reasoning behind that oh well they think it's a world-class city shut the fuck up in the world class city okay like is could it be an a fairest purpose yeah it is see it's exactly what we talked about earlier it's when you get rid of the person who's willing to obey the market clear is by price is falling okay and if you want to avoid price is falling you find a buyer who's willing to pay more than Canadian households and today it's the corporations raising money to buy new condos it's our government and tomorrow it's going to be foreign governments or foreign companies and I think this is what's behind it so again your point is great it's an aberrant reason it's not a market-based reason exactly it's an aberrant reason that has to do with let's want your money let's let's just wander some money okay bring it up yeah I bring it to Canada Canada very safe place we'll store the money there and these these condos are like cement safety deposit boxes in

41:53the sky I mean and they they're going for cheap they don't even want to live in the moment there in Canada let's buy up a bunch and we'll wander the money there and we both know that even the money laundering is a small part of the marketplace you and I both know it exists exactly I mean Sam Cooper's not wrong yeah I mean it that should happen okay and then again to your point yeah we have we're up to our assing money in Singapore Singapore wealth fund let's buy a sprinkling of these Canadian houses okay just because we we're up to our assing money we got to spread it around the world yeah how the fuck does that help any Canadian household want to buy exactly this is a problem with our housing market Canadian households shouldn't have to compete against private equity to buy home absolutely period I don't give a shit if it's a Canadian private equity I don't care if it's a foreign government you know it does or foreign private equity at the end of the day they shouldn't have to compete against the private hedge fund that wants to buy a house is it's unfair they're never

42:53going to be able to compete and I think this is philosophically at odds with I think what a lot of the experts say just oh let them buy we're going to be more supply the foreigners are going to make it you know we're going to own it it's okay it's more housing that's not it's not it's only more money for developers yeah that's why the developers are behind it exclusively absolutely they're the ones on our spearheading right exclusively the ones who want it which should tell you everything but only one group of people are really on it onto something who are those people yeah you will learn the answer yeah I mean of course you're right it just is what it is I mean yeah look in you and I don't care how many purpose-filled rentals these countries want to buy you anybody wants to buy yeah exactly purpose-filled rental multi-family bill you want to buy a bill by a office building by a warehouse we don't give a shit that's different exactly you buy it to the cows come home buy all those things okay but individually titled homes exactly completely different completely

43:53fucking different yeah because the the apartment buildings are commercial investments they're commercial assets yeah yeah if they drive the price up whatever that's it doesn't impact the Canadian household it's completely different it doesn't and that is all the difference in the world and of course we're gonna have you and I agree I think we're on agreement we're gonna hear politicians spin it mm-hmm as we're helping construction workers gonna help supply we're gonna help supply we're gonna help construction workers nobody's buying them anyway and nobody's building anything so let's fix that that's all I'm off the she is it's Christ I mean it is true now or something that has been in the news lately and I want to I want to bounce it off because I think I have an idea about it you probably you do too is this idea that when boomers start to die out they're gonna release this huge inventory of single-family homes that they own right now currently and for some reason we have a bunch of people not necessarily people you and I know but we see a lot of written about a lot of speculation about it a lot of posts about it yeah when this

44:59great wealth transfer happens there'll be we'll be up to our ass and single-family homes you know they're either gonna be inherited or they're gonna be sold and it's all gonna come like a title wave okay you and I don't think that's a way so no it's not gonna happen this is I think this people say excited that we're gonna have an oversupply like once the boomers pass away there's gonna be so many homes in the suburbs that it's gonna you know drive prices low I don't see the happening no at all like I don't I don't I think that I think that's it's ridiculous as a boomer who knows boomer people I can tell you the boomer friends boomer acquaintances I can tell you that this is how it really works one of them dies one of the people in the family done one of the couple dies the other surviving person doesn't just say well gotta sell the house now I mean that is not how it works so it is not they don't die simultaneously and that person who sells who's left she may not choose to sell for a while here she typically she she may not sell for a while

46:06and then she may move into care and then went the house is sold which is a random time it is completely random it's not a wave it's not all at once it's gradual it's gradual and nobody and don't you and I notice that everybody who does inherit a house or does the last person dies and they houses and they died in the house the kids don't want to move in nobody wants to move in it doesn't suit them it's the we're not where they live now it's not where they've lived for 20 years and yeah it gets sold yes it gets sold but it gets sold in this sporadic way yeah and I think exactly and it's it's been happening already sure for years like many boom some boomers have been downsizing selling those suburban homes moving into care homes moving into condos and it's going to happen gradually over the next 10 plus years or 10 to 15 years it's not going to happen all at once it's going to be a small trickle and that's going to continue but it's not going to

47:07it's not a market influencer I don't think so I don't know why people are ready about it being a big market influencer probably should I think they all think it's going to happen like in you know in one particular year everyone's going to die and sell their home and it doesn't work like no or all of a sudden people go you will inherit something somebody will inherit some money somehow unless it's a reverse mortgage unless the the kids have already received a whole bunch of gifts and there's a million circumstances like there's no such thing as a boomer crest of a boomer title wave where all kinds of homes are going to be sold in a two year period no I don't I don't see that either because it's just not our he lived it's a lot absolutely yeah so other weird thing that I notice is that the the in the market itself the there's just growing recognition that these these dog great condos I come back to my favorite topic is for one last one last touch but they're really badly built um badly designed badly finished in bad buildings and they're literally the slums of tomorrow yeah do you sometimes encounter that

48:14in your I know you you've got a little bit nicer clientele than some people have like I would say that in an in an honest and positive way I mean people who use your brokerage tend to be a little bit more sophisticated people I'm I don't think that's wrong to say that I know yeah a little bit yeah and but aren't these some of these units awful I mean yeah I mean I think some of them depending on the builder are are garbage and again I think this is a fun like you go into some that are two or three years old and like the the floors are peeling the cabin it's look like a disaster like you know and again I think this is a function of when you're selling when your primary buyer is an investor is never going to live in it and they're going to never rent it out and they're just thinking about assigning it but if they can't assign it well maybe they'll own it for a few years they don't care as much about the layout the unit the property all of those things you know they just don't care and the build if the buyer doesn't and the builder probably doesn't invest the time in the care to do it because they pre sold them and they don't care what the layouts

49:19as much just get it finished they just get it finished you know you know and it's it's that's very different from again going back to this company that we helped that's that has a purpose built rental when you own the asset when I walk through and I you know hear them talking about it they obsessed over every detail right every finish every finish at the knobs on the stilt like every detail they would talk about they would talk about things that they would do differently because they're going to own it for a very long time right and they care about the layouts and they care about the design they care about all these things so when you have someone's going to own it for a very long time who's not going to quickly flip it they invest the time in the care where is the builders who are building for these micro investors these mom and pop dog great investors no one cares so they're building a product that's probably not going to be the best product over the long term unfortunately just designed around price and sales price and sales and you have buildings where the average square footage is like 600 square feet like what are you going to like like that's average there's a bunch of three eight eight yeah so the bunch of 380 square foot units

50:21right so it's ridiculous condo fees yeah something I've been I've been people have contacted me lately and I'm not I'm not a real estate agent nobody in our operation is and yet I'm getting this some feedback on okay we went to look at a decent a nice condo we wanted to look at a it's older building obviously older because nobody builds yeah condos anymore older building thousand square foot condos nice yeah sit and good layout decent finishes everything's to be that's older the monthly maintenance fees are a thousand thirty four dollars a month yeah and the property taxes uh to 80 yeah 400 close to 400 yeah so I think to myself sweet Jesus even if you buy that cash you've got a significant outlay going out every month now some people would say oh no Ron I mean you don't have to shovel the snow you don't have to do this I think breaks down bimini boo well something breaks down inside the unit I think you're fixing yeah but but but

51:23doesn't is this like a kind of a shadow indictment of the whole condo system because when you're in a single family home when it's paid off or it doesn't matter what it is could be a semi could be a townhouse freehold townhouse when you're in a freehold anything let's pay it off the only thing you have to think about is property taxes and you got to do some repairs but you and I both know you can kind of defer some maintenance right you you can if you're you know you can pick your own approach to that yeah you can't pick it up in a town home what is the spiraling of these monthly maintenance fees going to resolve it listen I think it's going to be a challenge in some of these buildings where they're kind of obviously skyrocketing for a number of different reasons uh but I I do think a lot of people who are moving there are doing it for lifestyle reasons or affordability reasons so yes a thousand bucks is a lot per month um but it depends on the unit sizes for the

52:24thousand square foot unit it's actually not that high on a price per square foot base even not that bad it's not that crazy I mean you know and I mean it's a little high but not crazy because it's a thousand square foot unit right um but again I think a lot of people are doing it for lifestyle reasons but again I think it is a challenge I mean you know my my Greek mother her blood boils every time she gets her maintenance she moves to a condo she gets the maintenance fee every month she wants to move because of the maintenance she does she does she's you know and I explain to her it's not worth it like you're fine you can afford it but they're you know you have this generation of boomers that aren't used to paying a maintenance fee you know and hers is higher than than a bucket square foot so what are you gonna do what are you gonna do you're right okay so but it rolls around in my head though like this this transition in our society because you and I both know like 50 years ago it was just single family homes it was just semi so it was just town homes it was just it was just a place where if you could manage to pay the mortgage off oh yeah to pay

53:27with property tax the rest of your life and that's changing a lot it is and it's gonna keep changing and sometimes I wonder about the benefit like everybody says well wrong urban sprawl bad I mean people don't want to know people's lifestyles are changing they don't want to cut the grass they don't want to shovel the snow and you know it's just the way the world's turning but I start to think you know really really does everybody does everybody wonder when they finally finish paying off the house paying off the mortgage do they really want to be paying huge amount of money every month like maintenance fees for everything like you know be sure like at least the the cutting of the grass the shoveling the snow it's kind of discretionary right I mean like you could find you could find the kid next door you could be you could try to balance that budget but when you get a special assessment in a condo oh yeah that's a disaster you're just paying the 15 grand I mean you have to pay it right I mean like and it's a disaster though that we'll probably see more of right I think we will for sure

54:27and I think listen I think the people who are I think there's a generational difference I think the people were doing that and are doing the condo long term like the perks of it okay and I see that like they like their concierge they like this they like you know the cover barking in the basement they like the gym you know so I think some people don't but there are I think a lot of people who choose condo lifestyle who want that you know I'm a control freak so I have a hard time living in a freaking condo my dude I'm a boy if I don't like the light fixture like I'm really I like I'm total control freak would not work well all right so yeah I get your point there isn't there is the other side of it that you know you don't have to move because you're never gonna have to shovel a snow you're never gonna have to cut the grass you're never going to have to repair the outside of the building that's going to be a kind of a joint effort by everyone absolutely there is do sides to it but I got to admit there's that just like you said there's that old there's that old couple who sort of they watched every penny yeah and the the idea was you paid

55:34the house off and then you just had a low cost for exactly property tax yeah and you took can take care of it yourself as much as little as you want so it's a different world and again I think that it it doesn't I've always believed it doesn't bode well for the financial health of people to if they buy a home the average first time buyer is 40 years old mm-hmm that's a bad thing because that means you got a mortgage for a lot longer and the the constant suggestion that you can you know re-amortize and read like should the goal of people as just forget about me the mortgage business but for you is in the state selling business isn't one of the goals should be that you have a paid for house easily yeah okay but I feel like this is a very old-fashioned way of thinking and I'm old-fashioned like that's what I would do sure but I feel like

56:34this gender like a lot of people now they don't see it that way and and I think that was part of the condo bubble like oh you have a paid off home take a HELOC by this and that's that the interest is that deductible do all of these other things like you sure like use the equity and you know I think it's everyone's mindset like I'm not obsessed with you know being the rich sky in the room like I don't need to leverage my home to buy other assets like I'll just save a little bit more money and invest what I can but I think some people just wants to be extended and you know leverage their home to buy other assets or buys many as possible and I'm not quite like that I have no problem if my homes paid off you know what I mean like but I think that's a generational difference again I'm kind of a bit old-fashioned like that's the way my family was that's kind of how I think I don't like a lot of debt right but I think people I at least seeing it during the bubble like a lot of people are comfortable with that until they're not until they're not yeah I mean

57:38there were literally people selling you a course to tell you that you should get deeper in debt absolutely yeah and to this day that's still it's still around in a limited way yeah it's just the the the the flavor du jour is the stock market as opposed to the real estate market absolutely and we see a lot of that so yeah I mean you're right you've made a great point like time will tell time will tell whether the aversion to debt which is something that's sort of personal it is also generational we're gonna find out whether that is the right way or the wrong way sometimes it takes a long time to find that's yeah that's for sure um just like you know because that's face for 18 years these people buying these fucking condos were right they were absolutely absolutely I can't deny that they're only wrong at the end they were really fucking wrong at the end but this is again this is that I think the tension with this it's like you want to go that road that's fine you can make your money but you got to be prepared for the end that you're going to be wrong at

58:39some point and can you handle it right yeah I mean I didn't invest in pre-construction condos I didn't make as much money as some of them did but I'm also sleeping very well tonight you know I'm not over leveraged I'm not worried about you know being cash low negative so I think people just have to do what they want to do and people used to think I'm irrational for not buying tons of pre-construction condos but I was like ah I'm good well in the in the end you were right okay um but like there were people sure there were people at the very beginning of the boom of course people back in 2008 to bought condos I guess they sold them and they did great okay but what they don't realize I think even and we you and I know this is during the rally everyone thought that their investment decisions were just driven by their their their seniors their brilliance okay not true not unbelievably well we're interest rates and not our government super charging immigration super charging non-permanent residence and not a it wasn't luck no it wasn't luck it was my I'm sorry I'm a savvy investor well yeah it is just true though I mean you can either have

59:46you have the mindset that you don't like leverage and you just rather have a more relaxed life or yeah I'm I'm bold exactly I'm fortunate favors the bold and I'm gonna go out there and I'm gonna I'm gonna leverage and I'm gonna extend and I'm today you're buying in video I mean instead of condos but I mean in the end of the day we're we're just gonna have to find out yeah that's just like we always do well thank you John it's great that's okay we always give us such great points I mean and it's a great perspective and again we'll go away from this saying to ourselves yeah where are all those guys used to say we're a class city for fucks where the fuck did they go thank you John thank you very much