Full Comment - Signs of hope for Canada’s hopeless young homebuyers

00:00:00.000 When I found out my friend got a great deal on a wool coat from Winners,

00:00:03.760 I started wondering,

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00:00:11.240 Are those from Winners?

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00:00:15.240 Did she pay full price?

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00:00:18.820 Or those knee-high boots?

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00:00:30.000 Hi, I'm Anthony Fury.

00:00:37.500 Thanks for joining us for the latest episode of Full Comet.

00:00:40.220 Please consider subscribing if you haven't already.

00:00:42.920 Real estate is the go-to dinner conversation for so many Canadians these days,

00:00:47.620 and for good reason.

00:00:48.940 Baby boomers talk about helping out their kids with their down payments. 1.00

00:00:52.120 People in their 30s and 40s lament the massive mortgages they carry.

00:00:56.180 And people in their 20s,

00:00:57.320 Well, they're asking if they'll ever be able to own a home.

00:01:00.740 Does Canada have a housing crisis?

00:01:02.920 An affordability crisis?

00:01:04.460 And what's to be done with it?

00:01:06.460 Gary Maher was a reporter with the Financial Post for almost 20 years.

00:01:09.600 He's now the Canada reporter for CoStar News,

00:01:12.320 the news division of the world's largest real estate data provider.

00:01:15.920 He joins us now to break it all down.

00:01:17.980 Hey, Gary, great to have you.

00:01:20.100 Hey, thanks for having me on the show.

00:01:22.020 You know what?

00:01:22.420 There's always so much talk about housing questions.

00:01:26.200 Is there a crisis?

00:01:27.460 Is there a bubble?

00:01:28.520 Is a bubble going to burst?

00:01:29.800 And, you know, it's become a perennial thing.

00:01:31.740 I know you were saying you've been pretty much talking about these very questions for years of your career.

00:01:37.200 Oh, yeah.

00:01:38.920 I mean, you know, that's the most to be having covered real estate for almost 25 years.

00:01:44.580 We have been talking about a bubble and predictions about a bubble for the whole period.

00:01:49.660 I mean, you go back to the 99, 1995, you know, real estate crash.

00:01:54.780 That was mostly in Ontario.

00:01:56.160 Then it came up in 98.

00:01:57.640 And since 98, what have we had?

00:01:59.800 10% pullbacks?

00:02:01.420 Pretty negligible.

00:02:02.740 And, you know, the real estate industry has used that to say, you know, real estate's a great investment.

00:02:08.000 Leverage it, buy a home.

00:02:09.360 And people have bought into that dream.

00:02:12.920 And you can't really blame them when they see the results right now.

00:02:17.140 So now we're at a question of, are we in a bubble?

00:02:20.420 And it's been asked so many times.

00:02:22.640 But one of the things I always look for beyond, you know, the heads is some of these prices relative to,

00:02:30.640 and this is where the speculation comes in, relative to the income you can produce from real estate,

00:02:35.860 they don't make any sense.

00:02:37.400 Like, you can go into a place like Toronto or even Vancouver,

00:02:41.540 and you can rent an apartment or, I mean, a house for a cheaper, for cheaper than you would buy it.

00:02:48.840 I mean, it's just, then financing it.

00:02:51.840 It doesn't make a lot of sense.

00:02:53.000 And you can invest that money in the market.

00:02:54.880 So, but people are still buying houses because they believe it will outpace the market.

00:02:59.120 Well, is it that?

00:03:01.200 I mean, it's obviously that to a degree.

00:03:02.820 But is it also just this traditional idea of what home ownership means, bricks and mortar,

00:03:08.580 this is my home, you can't take it away from me, this is where I'm raising my family,

00:03:12.820 even if I can get 3% or 4% better percent over in this ETF?

00:03:17.400 Yeah, no question you're right about that.

00:03:19.740 I won't argue with that.

00:03:20.740 I mean, you know, housing policy in Canada,

00:03:23.060 we are a country with home ownership rates about 70%.

00:03:26.860 The housing dream, it's, you know, it's embedded in our DNA.

00:03:31.320 It's interesting, it's south of the border, the crash there, it pulled back,

00:03:36.000 it pulled that dream out a little bit, right?

00:03:38.840 And they don't have that same thought.

00:03:41.660 But one of the reasons if you have kids or you want to raise a family,

00:03:46.320 one of the reasons you have to have a house is

00:03:48.180 we just don't have a stock of housing that fits rental.

00:03:53.200 So really, you almost have no real choice but to own a house.

00:03:57.700 If you want to raise a family, you want the stability of tenure in your house,

00:04:01.940 because you don't want to rent a place and then be kicked out of it

00:04:03.880 because, you know, you found the perfect house and the owner now wants to move into it.

00:04:08.100 You've got that risk factor.

00:04:09.380 So that's why people buy houses, I think, because they want a backyard,

00:04:12.700 they want a place to live, and it is a great way to forcefully save money.

00:04:18.840 There's no arguing with that.

00:04:20.200 I mean, people put money into their house, into their principal,

00:04:24.160 that would, a lot of times, it would burn a hole in their pocket.

00:04:27.060 If they, even if they saved it on rent, somehow it would be spent.

00:04:30.940 Okay, is the bubble going to burst?

00:04:32.200 Is there a bubble?

00:04:32.800 That's a perennial question.

00:04:33.920 Here's another perennial question I'm going to put to you.

00:04:35.780 Do we have a housing crisis in Canada right now?

00:04:38.680 Well, I mean, you know, the summer is about to start

00:04:43.060 and people are going to be living in parks again, maybe.

00:04:45.300 So that would be point one that there is, you know,

00:04:47.920 you wonder about how much housing there is.

00:04:50.260 I think one of the issues on housing is when we talk about affordability crisis,

00:04:54.900 we have to ask ourselves, you know, are we commingling things,

00:05:00.100 affordability for people who could afford it in supermarkets,

00:05:03.500 in certain markets, or people who are never going to be able to afford a house

00:05:07.100 because they've got other challenges in their life.

00:05:09.400 So we have to draw something about that.

00:05:11.640 And we also have to ask a fundamental question about, you know,

00:05:15.600 when we talk about affordability,

00:05:17.240 especially now that we're seeing more remote work

00:05:19.300 and people wanting to live out in suburbs.

00:05:21.440 Does affordability mean affordability in Toronto?

00:05:24.160 Do I have to live in Toronto?

00:05:25.300 Do I have to live in Vancouver?

00:05:27.740 Or does affordability mean, you know,

00:05:29.660 can I afford a house in Sarnia or Vernon, B.C.

00:05:33.040 or, you know, Kamloops?

00:05:36.440 Like, how are we going to define affordability?

00:05:38.360 Where do you have any sort of implicit right to live in the city of Toronto

00:05:43.440 or Vancouver?

00:05:45.380 You know, I mean, there's a great city where there's still pretty good pricing.

00:05:48.820 It's called Montreal.

00:05:49.960 And there's also a great city called Calgary,

00:05:51.940 where people could move to right now and find some phenomenal pricing.

00:05:56.400 And a lot of people don't want to do that.

00:05:57.740 Well, even in Toronto, where I am,

00:05:59.340 I mean, I know there's a lot of young people,

00:06:01.760 a lot of people in their 30s,

00:06:03.000 a lot of people in their 20s who talk about,

00:06:04.800 I can't ever imagine owning a home,

00:06:06.640 but they are, for lack of a better term, downtown elites.

00:06:09.440 They may not be wealthy elites,

00:06:10.480 but sort of culturally they think of themselves as downtown elites.

00:06:13.660 And they only ever look at the condo listings for downtown.

00:06:16.480 Whereas if you go to Northeast Scarborough,

00:06:18.240 like, yeah, guys, you can actually afford that condo more,

00:06:21.420 but they would never consider that.

00:06:22.820 Is that a part of the equation here?

00:06:24.740 I think for sure it's part of the equation.

00:06:27.280 I think, you know, you could move out to Ajax.

00:06:30.960 Now, I will say, in defense of those,

00:06:33.620 a lot of this will have to refer to the nature of work

00:06:36.260 and how jobs go in the next five years,

00:06:40.080 you know, post-pandemic, if we're into that period.

00:06:43.300 But we have seen prices sort of skyrocket in the exurbs too, right?

00:06:48.700 Even the suburbs, but also beyond the suburbs,

00:06:51.560 we're seeing prices skyrocket.

00:06:53.140 So these are also, there's definitely affordability challenges

00:06:57.100 increasing even in and around Toronto.

00:07:00.540 And you look at a place like Burlington and, you know,

00:07:03.580 Burlington is a lovely city on the water,

00:07:05.900 but boy, it's not particularly cheap anymore.

00:07:09.760 I mean, Hamilton, Burlington areas, prices went up 21%,

00:07:14.140 but the average price is about $750,000 in Hamilton, Burlington.

00:07:18.800 So a couple could probably get into the market there.

00:07:21.720 Certainly a lot easier than they get into the market

00:07:23.760 in the downtown Toronto market,

00:07:25.880 where you could be paying $1,400 a square foot for a condo.

00:07:29.800 Gary, should we be better seizing the work from home moment right now?

00:07:33.240 Because one of the things I find interesting

00:07:34.820 is we found that, yes, people can work from home,

00:07:37.120 by and large, depending on their job,

00:07:38.820 for the past two years, and it's fine.

00:07:41.080 Now we find that there are particularly governments,

00:07:43.880 I think Toronto City Hall and I think Ontario Public Servants,

00:07:46.720 they've been mandated to return to work

00:07:48.880 a certain number of days a week,

00:07:50.820 beginning on a certain day.

00:07:52.600 And I find it kind of interesting

00:07:53.760 because I've always,

00:07:54.740 I don't want to get into the whole pandemic conversation,

00:07:56.480 but I've been sort of opposed to rigid mandates

00:07:58.640 in many respects.

00:07:59.780 It wasn't crazy about many of the lockdown measures,

00:08:02.260 but at the same time, I'm also not crazy about,

00:08:04.160 look, if someone wants to stay home for whatever reason,

00:08:06.160 either because they're still COVID worried

00:08:07.500 or other reasons, I don't see the problem.

00:08:10.280 Why can't we just let them work from home 0.99

00:08:12.680 if it's proven fine in the past?

00:08:14.620 And yet governments now seem to be pushing

00:08:16.520 for a return to the office.

00:08:20.100 Well, I think there's no question

00:08:21.460 they're pushing for a return to office

00:08:22.840 because it's good for their tax dollars,

00:08:24.980 their tax base, and our economies.

00:08:26.840 It will be a rough transformation

00:08:29.180 to go away from that.

00:08:32.300 Not to mention the people who own these office towers

00:08:34.700 are some of our biggest pension funds.

00:08:37.420 They're important investors.

00:08:40.400 Right now, office towers haven't really declined

00:08:42.780 in value a lot.

00:08:44.140 They've had some decline.

00:08:45.900 Can you imagine what those office towers

00:08:47.380 will look like if, you know, on renewal,

00:08:49.820 they're 50%?

00:08:51.040 They'll look like Calgary.

00:08:52.480 You want to know what they'll look like?

00:08:53.840 There's a city out west.

00:08:55.340 And, you know, it's funny,

00:08:56.220 Toronto Mayor John Tory has pretty much acknowledged

00:08:58.160 that one of the reasons he wanted to mandate

00:08:59.980 a return to the office was because

00:09:01.440 there's all these underground shopping malls

00:09:03.380 that are only ever used

00:09:04.460 by the nine-to-five workforce

00:09:06.480 who comes into the city.

00:09:07.900 So that's a part of the factor there.

00:09:09.920 But then again, you were previously,

00:09:11.380 we were previously complaining

00:09:12.360 about traffic issues,

00:09:13.480 got to build more subways, more highways,

00:09:15.320 the many billions of dollars attached to that.

00:09:17.420 A certain degree of telework changes all of that.

00:09:19.860 It changes those policies.

00:09:21.020 It changes the housing issues

00:09:22.420 we're talking about.

00:09:23.720 So I wonder,

00:09:25.140 can we not find a more sort of middle ground here?

00:09:27.900 I think we are.

00:09:29.040 I think what's interesting is

00:09:30.340 the market is actually doing that

00:09:32.800 to a degree right now.

00:09:34.100 Like what you're seeing is the nature of work.

00:09:37.060 And obviously this was created through,

00:09:38.900 you know, a pandemic,

00:09:40.100 which was government regulated.

00:09:41.700 And I'm not going to, you know,

00:09:43.160 get into an argument about that.

00:09:44.480 But the point is it's happened.

00:09:46.620 People have moved to the suburbs

00:09:48.060 and it's happened at the same time

00:09:49.740 or even the excerpts.

00:09:50.920 And it's happened at the same time

00:09:52.660 that real estate,

00:09:53.640 certain types of real estate,

00:09:54.560 maybe not office,

00:09:55.400 but if you look at something like warehouses

00:09:57.880 and e-commerce,

00:09:59.600 like you want to talk about something

00:10:01.020 that's gone up in value like crazy.

00:10:02.620 It's all that stuff.

00:10:04.320 And what's happened is

00:10:05.380 those places need workers, right? 0.99

00:10:08.840 So you can't really locate your warehouse

00:10:10.820 to Brantford

00:10:11.520 if you don't have anybody to work in it,

00:10:14.120 do you?

00:10:14.880 So that's why suddenly,

00:10:16.160 you know,

00:10:16.380 your warehouse is now in Brantford, Ontario,

00:10:18.660 where prices are cheaper

00:10:20.140 and you were reluctant to go out there

00:10:22.020 because you might not find the workers.

00:10:23.580 But now suddenly the wage

00:10:24.840 you're offering that warehouse,

00:10:26.140 it looks a lot more competitive

00:10:28.380 to the person living in the house there

00:10:30.400 than it would in downtown,

00:10:33.820 maybe not downtown Toronto,

00:10:35.040 but even in Scarborough.

00:10:36.540 You know,

00:10:36.760 if you have a job

00:10:37.780 at an Amazon warehouse in Scarborough,

00:10:40.040 I mean,

00:10:40.360 maybe you can commute in,

00:10:41.620 but you're probably living in Scarborough.

00:10:43.160 So that's going to be

00:10:43.900 a very expensive place to live

00:10:45.300 and have that job.

00:10:46.180 One of the things that's interesting

00:10:47.080 even about the phrase housing crisis,

00:10:48.840 and you alluded to it

00:10:49.620 when you're talking about

00:10:50.120 people sleeping in parks,

00:10:51.400 is there are anti-poverty activists

00:10:53.080 who use the phrase housing crisis,

00:10:54.620 meaning there are people

00:10:55.680 who are sleeping out on the streets.

00:10:57.260 There are people

00:10:57.780 who literally can't afford

00:10:58.980 any roof over their heads.

00:11:00.980 And then the other usage

00:11:01.720 of the phrase housing crisis

00:11:03.040 is more affordability crisis.

00:11:05.220 You know,

00:11:05.800 25-year-olds,

00:11:06.640 maybe they're a married couple,

00:11:07.460 they're both working.

00:11:08.660 The total household income

00:11:10.000 is six figures,

00:11:10.960 but they go,

00:11:12.000 I can't see myself

00:11:12.880 actually getting on a track

00:11:13.920 of home ownership.

00:11:14.900 So we're talking about

00:11:15.800 very different things

00:11:17.500 that would come with

00:11:18.060 very different policy toolkits

00:11:19.600 in response.

00:11:21.300 Yeah,

00:11:21.440 they're two completely

00:11:22.420 different issues.

00:11:23.360 They're not,

00:11:23.720 I mean,

00:11:24.740 we know that young people

00:11:27.500 are living at home

00:11:28.520 in record numbers,

00:11:30.120 like people under 30.

00:11:31.680 It's,

00:11:32.000 I think I saw a number

00:11:32.980 that was closer to 40%.

00:11:34.540 The head of the largest landlord

00:11:37.500 in the country

00:11:39.120 was just on a conference call

00:11:40.900 saying these people

00:11:41.500 haven't moved back

00:11:42.260 out of their house.

00:11:43.160 Well,

00:11:43.380 they're not going to move back

00:11:44.220 out of their house

00:11:45.520 to go live in a park.

00:11:46.500 We know that,

00:11:47.060 right?

00:11:47.940 You know,

00:11:48.420 they're going to stay

00:11:48.860 with mom and dad

00:11:49.780 and they probably don't want

00:11:51.260 to retire with mom and dad.

00:11:52.900 So if there's a,

00:11:54.800 I don't know how you define

00:11:56.100 that,

00:11:56.440 the language,

00:11:57.120 but the point is

00:11:57.800 they don't want to,

00:11:58.600 I don't know about you,

00:11:59.340 but I never wanted to live

00:12:00.380 at home with my mother

00:12:01.740 and father into my 30s.

00:12:03.420 So I don't know too many people

00:12:05.580 who want to do that.

00:12:06.420 I don't know too many kids

00:12:07.240 who want to do that.

00:12:08.220 You're not even a kid at 30.

00:12:09.720 So,

00:12:10.240 so the issue is

00:12:11.440 those people

00:12:12.180 that,

00:12:13.440 that is a problem.

00:12:14.640 Like a 30 year old

00:12:15.860 does not want to live

00:12:16.540 at home with his parents.

00:12:17.360 It's probably not healthy.

00:12:18.540 They're starting later

00:12:19.520 at household formation

00:12:20.700 because they can't hold,

00:12:21.720 because they can't own a house.

00:12:23.980 So that's,

00:12:24.700 that's a problem right now.

00:12:26.520 And they bought into,

00:12:28.180 we've done a bunch of things

00:12:29.560 to help them buy into that.

00:12:31.180 We're,

00:12:31.420 we're,

00:12:32.200 we're increasing RRSP contribute,

00:12:34.740 you know,

00:12:34.980 the amount you can contribute

00:12:36.280 from an RRSP.

00:12:37.620 We,

00:12:37.920 we've,

00:12:38.340 we've lifted that up.

00:12:39.980 We're telling people

00:12:40.540 to raid their retirement savings

00:12:42.060 to buy a house.

00:12:43.220 So we're doing a lot of things

00:12:44.400 that,

00:12:45.200 you know,

00:12:45.480 I don't know that

00:12:46.660 are really going to increase

00:12:48.760 the supply of housing

00:12:50.340 as much as their demand side tools.

00:12:53.260 I mean,

00:12:53.480 we,

00:12:53.800 we keep imposing demand side tools

00:12:56.360 on a market

00:12:57.620 that probably needs

00:12:59.020 a lot more supply,

00:13:00.400 especially if we're to believe

00:13:01.640 the immigration numbers

00:13:02.760 that are being promised now,

00:13:04.320 you know,

00:13:04.780 a half a million immigrants a year.

00:13:06.640 I think it was brought up

00:13:08.180 by the same landlord

00:13:09.360 at one of the largest

00:13:10.500 real estate investment trusts.

00:13:12.160 Sure.

00:13:12.420 I have a hundred,

00:13:13.540 half a half a million people

00:13:14.740 coming to this country,

00:13:15.720 but you got to have a place

00:13:16.500 to house them.

00:13:17.000 Well,

00:13:17.200 you just opened several

00:13:18.200 can of worms there

00:13:18.960 and I want to break them all down

00:13:19.980 in greater detail.

00:13:20.900 Obviously talking about

00:13:21.680 these policy toolkits,

00:13:23.080 how immigration affects

00:13:24.280 all of this

00:13:24.820 and also development,

00:13:26.660 land,

00:13:27.420 growth of,

00:13:28.500 of where we're actually

00:13:29.240 building housing.

00:13:30.300 Let's just go back

00:13:31.220 to some of those policy toolkits

00:13:32.300 for a moment

00:13:32.780 because to your point,

00:13:33.640 it's almost like every year

00:13:34.840 there's a new announcement

00:13:35.700 from,

00:13:36.180 from a provincial government,

00:13:37.300 from Justin Trudeau,

00:13:38.220 whoever saying,

00:13:38.980 here's how we're tinkering

00:13:39.840 with CMHC rules

00:13:41.140 or RRSP rules

00:13:42.200 or here's some grant

00:13:43.100 to incentivize your purchase

00:13:44.960 and I think there are some people

00:13:47.060 who are maybe getting a boost

00:13:48.120 into home ownership

00:13:49.160 because of that.

00:13:50.160 There's others

00:13:50.560 who are maybe

00:13:51.080 just going to see themselves

00:13:52.000 further into debt

00:13:52.800 that they shouldn't be in

00:13:53.820 and is this not only

00:13:55.080 also just increasing

00:13:56.260 the competition

00:13:57.060 and upping the bidding wars?

00:14:00.080 Yeah,

00:14:00.280 I mean,

00:14:00.520 I think it's inflationary.

00:14:02.200 Like I don't,

00:14:03.160 if,

00:14:04.020 I mean,

00:14:04.620 I don't have an economics degree,

00:14:06.560 I admit that,

00:14:07.140 but if you're just

00:14:08.460 not increasing the supply,

00:14:10.200 and we are increasing

00:14:10.980 the supply,

00:14:11.540 let's be clear,

00:14:12.580 there have been moves

00:14:13.760 and there have been

00:14:15.440 increases in supply.

00:14:16.920 It is happening

00:14:17.640 and it is happening

00:14:18.420 on the rental market

00:14:19.420 and we're seeing that.

00:14:21.280 But if you're telling people,

00:14:23.080 you know,

00:14:23.340 you used to be able

00:14:23.880 to take $25,000

00:14:24.980 out of your RRSP,

00:14:25.920 now you can take $35,000

00:14:27.360 and you can repay it

00:14:28.260 over 15 years.

00:14:29.840 I mean,

00:14:31.080 I forget when that happened,

00:14:32.280 a few years,

00:14:32.720 I think it was on the Liberals,

00:14:33.780 but a few years ago

00:14:34.540 that happened.

00:14:35.080 And like,

00:14:35.800 what does that do?

00:14:36.320 It gives you more money

00:14:37.060 on the table,

00:14:37.540 but everybody else

00:14:38.360 has the same option,

00:14:39.600 right?

00:14:39.820 And so that's going

00:14:40.500 to be inflationary.

00:14:41.920 And I think all the things

00:14:43.640 that are happening now

00:14:44.760 are generally inflationary.

00:14:46.560 And we haven't even talked

00:14:47.740 about,

00:14:48.220 you know,

00:14:48.700 the whole bank

00:14:49.940 of mom,

00:14:50.740 mom dad

00:14:51.660 and how much that

00:14:52.460 is contributing

00:14:53.120 to inflationary prices

00:14:54.780 in housing.

00:14:55.900 Well,

00:14:55.980 yeah,

00:14:56.120 let's talk about that

00:14:57.000 because there are

00:14:57.560 so many people out there

00:14:58.480 who are getting

00:14:59.340 their inheritance early

00:15:00.440 or getting an early

00:15:01.160 down payment on it.

00:15:02.080 Here's a hundred grand,

00:15:02.900 two hundred,

00:15:03.360 five hundred thousand dollars

00:15:04.500 from mom and dad,

00:15:05.780 which they feel

00:15:06.780 it's a necessity.

00:15:07.560 I mean,

00:15:07.680 it wouldn't be happening

00:15:08.340 if they didn't need

00:15:09.020 the money at the same time.

00:15:10.620 If you're someone

00:15:11.360 who can get that

00:15:12.020 from mom and dad,

00:15:12.860 that's great.

00:15:13.780 But then that whole cohort

00:15:15.060 of people

00:15:15.600 is so greatly advantaged

00:15:17.500 over those

00:15:18.120 who just don't have

00:15:19.020 that money

00:15:19.460 from mom and dad.

00:15:20.340 I mean,

00:15:20.500 they've lost

00:15:21.180 those bidding wars.

00:15:22.920 Without question,

00:15:23.940 that's happening.

00:15:24.500 It's actually interesting

00:15:25.500 because I was listening

00:15:26.400 to a presentation

00:15:28.240 by CIBC economist

00:15:30.300 on this.

00:15:30.700 He says it's actually

00:15:31.460 the bank of grandma

00:15:33.140 and grandpa

00:15:33.880 in some ways right now

00:15:35.120 because that's

00:15:35.700 where the money is

00:15:36.420 and by the time

00:15:37.660 the parents are getting it,

00:15:38.660 they're almost too old

00:15:39.600 to spend it.

00:15:40.300 But the issue

00:15:40.840 with sort of limiting that

00:15:42.340 and I don't even know

00:15:43.120 what that would really

00:15:43.800 look like is,

00:15:45.460 you know,

00:15:45.860 who's to say

00:15:46.720 what a parent

00:15:48.100 should,

00:15:48.620 you know,

00:15:49.940 want to support their kid,

00:15:51.260 want to help their kid.

00:15:52.120 I mean,

00:15:52.240 maybe that's a reason

00:15:53.100 why I'm still working

00:15:55.000 and maybe I don't work

00:15:57.020 and maybe there's

00:15:57.580 a larger macro effect

00:15:58.900 if I stop working

00:15:59.960 because I'm looking

00:16:01.480 to support my kid

00:16:03.020 in their ownership.

00:16:05.280 And, you know,

00:16:05.740 I also question

00:16:06.520 whether some of the,

00:16:07.500 we've seen an uptick

00:16:08.600 of investment property

00:16:10.200 supposedly in the marketplace

00:16:12.080 and I guess

00:16:12.680 I would wonder

00:16:13.660 how much of that

00:16:14.340 is second houses

00:16:15.500 where people are

00:16:16.260 helping their children.

00:16:18.580 And I don't know,

00:16:20.140 I mean,

00:16:20.440 I don't know

00:16:20.840 how that number breaks down

00:16:22.140 but I do think

00:16:23.420 you're going to tell people

00:16:24.340 they can't save

00:16:25.140 for their children.

00:16:27.320 It's one of the existential

00:16:29.040 questions for parents

00:16:30.340 in the market right now

00:16:31.480 I think is

00:16:32.200 if you're in Toronto

00:16:33.380 and you hear it

00:16:34.340 all the time

00:16:34.960 from anybody

00:16:35.680 in a certain age bracket

00:16:36.840 is do I have to save

00:16:38.440 money for kids?

00:16:39.760 And I'm kind of wondering

00:16:40.960 maybe we should change

00:16:42.440 the,

00:16:43.060 it's just a thought

00:16:44.040 but right now

00:16:44.640 we have children,

00:16:45.860 you know,

00:16:47.200 emptying their RSP.

00:16:48.660 Maybe there should be

00:16:49.340 a housing savings plan

00:16:50.600 like there is

00:16:51.160 for the RESP

00:16:52.240 for your children

00:16:53.380 and then everybody

00:16:54.980 can participate

00:16:55.780 into a degree

00:16:56.840 and,

00:16:58.000 you know,

00:16:58.180 again,

00:16:58.460 it's another

00:16:58.900 demand side tool

00:17:00.640 as opposed to supply.

00:17:02.000 But it's an interesting point

00:17:02.760 if you have a lever

00:17:03.460 to allow the RSP

00:17:05.180 or an RESP

00:17:06.600 even to revert

00:17:07.480 to a home purchase

00:17:08.440 then why not

00:17:09.140 just create the vehicle

00:17:10.540 for what you intended for?

00:17:12.700 Yeah,

00:17:13.100 I think so.

00:17:14.220 Like I think the idea

00:17:15.100 of withdrawing

00:17:15.720 from your RSP

00:17:16.740 to pay for house

00:17:17.460 I really wonder

00:17:18.700 about the impact

00:17:19.740 of that

00:17:20.100 on people's

00:17:20.720 retirement savings.

00:17:22.180 Like we've created

00:17:23.280 a culture right now

00:17:24.740 that your retirement

00:17:26.620 is your house,

00:17:27.920 right?

00:17:28.560 Like how much,

00:17:29.080 like,

00:17:29.780 in no world

00:17:31.080 should your net worth

00:17:32.160 be 50%, 0.80

00:17:33.580 for some people

00:17:34.240 it might be 75%

00:17:35.600 and their net worth

00:17:36.280 might be in their house.

00:17:37.840 It violates probably

00:17:40.000 the single most important

00:17:41.820 investment rule

00:17:43.360 is not to put all your eggs

00:17:44.760 in one basket,

00:17:45.780 right?

00:17:46.280 Like it is a number one rule

00:17:47.860 and that's what

00:17:48.800 we're all doing

00:17:49.480 and then at the same time

00:17:51.080 which after we've told

00:17:52.140 everybody to do this

00:17:53.340 which is interesting

00:17:54.600 you know,

00:17:55.540 there's all this

00:17:56.140 talk that,

00:17:57.260 hey,

00:17:57.320 we're going to tax it now.

00:17:58.880 Like,

00:17:59.560 I mean,

00:17:59.940 if you talk,

00:18:00.600 and I don't know

00:18:01.420 whether that's going

00:18:02.000 to happen or not

00:18:02.640 but can you imagine

00:18:03.820 the idea that

00:18:04.600 for the last 20 years

00:18:05.840 we've told people

00:18:06.540 to pump money

00:18:07.200 into their houses

00:18:07.980 and now we're going

00:18:09.080 to tax it.

00:18:10.020 I mean,

00:18:10.980 oh,

00:18:11.340 that's just wild.

00:18:11.920 It would be an incredible

00:18:12.900 turnaround if that happens.

00:18:13.800 The political outrage

00:18:14.760 on something like that

00:18:15.740 would be immense.

00:18:16.800 I mean,

00:18:16.920 Gary,

00:18:17.120 what's your sense

00:18:17.800 of how many

00:18:18.480 persons out there

00:18:20.260 in the Baby Boomers cohort 0.70

00:18:21.840 and other older Canadians

00:18:23.200 who were like,

00:18:23.920 yeah,

00:18:24.040 the original idea

00:18:24.700 of retirement,

00:18:25.560 you know,

00:18:25.720 I downsize,

00:18:26.800 I sell the four bedroom

00:18:28.000 detached property

00:18:29.160 and move into the condor

00:18:30.120 or what have you

00:18:30.640 so I can tour the world

00:18:31.920 or so I can go

00:18:32.860 to the more expensive

00:18:33.600 golf courses

00:18:34.400 I want to check out

00:18:35.080 or whatever it is

00:18:35.920 and then they're like,

00:18:36.980 oh,

00:18:37.420 actually what it is

00:18:38.500 is I'm downsizing

00:18:39.440 so I can take

00:18:40.560 that extra 400k,

00:18:41.960 500k

00:18:42.600 and split it in months

00:18:43.540 by two kids

00:18:44.180 for them to buy a property.

00:18:45.100 I mean,

00:18:45.200 that is a major change

00:18:46.260 in what you thought

00:18:46.740 your life arc would be.

00:18:48.720 For sure,

00:18:49.620 that is a question

00:18:51.160 but also,

00:18:51.840 you know,

00:18:52.080 we've seen some people

00:18:53.140 inheriting wealth

00:18:54.040 in their boomer years

00:18:56.740 in like 60s,

00:18:58.080 70s

00:18:58.400 or buying bigger houses.

00:19:00.060 We never saw it

00:19:00.820 be that

00:19:01.620 and there is more debt

00:19:03.260 for people over 60

00:19:04.600 than there has ever been.

00:19:06.700 There's been numerous

00:19:07.780 studies on that.

00:19:08.560 Like general mortgage debt.

00:19:10.020 More mortgage debt,

00:19:11.040 yeah,

00:19:11.300 because they're helping kids

00:19:12.300 and it makes sense.

00:19:13.720 Like if let's say

00:19:14.300 you have,

00:19:15.040 I mean,

00:19:15.320 your kids are going

00:19:15.860 to inherit it anyways.

00:19:16.880 Let's say you lived

00:19:17.680 in Midtown,

00:19:18.380 Toronto.

00:19:19.020 You bought your house

00:19:20.000 a gazillion years

00:19:20.820 for,

00:19:21.320 I don't know,

00:19:21.780 300,000.

00:19:22.520 It's now worth 2.5 million.

00:19:25.020 You know,

00:19:25.880 you're probably going

00:19:26.860 to give at least half,

00:19:28.340 you're probably going

00:19:29.020 to not spend

00:19:30.240 all that money,

00:19:31.120 right?

00:19:31.680 So,

00:19:32.240 I mean,

00:19:32.600 what's the point

00:19:33.280 of giving it to them

00:19:34.080 500,000 now

00:19:35.460 versus later?

00:19:36.300 I mean,

00:19:37.320 especially if you can

00:19:39.440 keep your job

00:19:40.200 and continue to pay it down

00:19:41.420 or work on a,

00:19:42.760 you know,

00:19:43.140 on some sort of basis

00:19:45.500 where you work

00:19:46.060 three days a week.

00:19:47.040 I mean,

00:19:47.300 a lot of that

00:19:48.120 adds up for adults,

00:19:49.760 but you're right.

00:19:50.220 It is a bit of a,

00:19:51.180 it's a bit of a betrayal

00:19:53.280 that you thought

00:19:53.900 you'd be done

00:19:54.440 and you'd be traveling

00:19:55.060 the world.

00:19:55.560 Well,

00:19:55.700 it's the new life plan too

00:19:56.960 in that I certainly,

00:19:58.400 so my kids are under 10.

00:20:00.720 So we're nowhere near,

00:20:02.420 we're not near them

00:20:02.980 going to university.

00:20:03.620 We're certainly nowhere

00:20:04.220 near them buying a home,

00:20:05.220 but at the same time,

00:20:06.200 not only do I think,

00:20:07.220 oh yeah,

00:20:07.400 I got to do the RASP

00:20:08.320 contribution,

00:20:08.960 which I do,

00:20:09.400 but we also have

00:20:10.020 those conversations

00:20:10.820 about helping them

00:20:12.080 with the home

00:20:12.680 and we're like,

00:20:13.160 well,

00:20:13.260 hold on a second.

00:20:13.960 Okay,

00:20:14.080 if you've got,

00:20:14.780 if you've got two kids,

00:20:15.660 I mean,

00:20:15.840 what's inflation adjusted?

00:20:17.240 I don't know,

00:20:17.600 but that's a hundred grand.

00:20:18.740 It's not just one.

00:20:19.320 Okay,

00:20:19.440 200 grand.

00:20:20.060 Okay,

00:20:20.180 I need 200 K

00:20:20.980 to help out the kids.

00:20:22.260 All right,

00:20:22.620 three kids.

00:20:23.100 All right,

00:20:23.220 I need 300.

00:20:23.940 How do we do this equitably?

00:20:25.120 What's fair and everything.

00:20:26.220 It's,

00:20:26.560 it's quite something

00:20:27.540 to even be grappling

00:20:28.500 with when,

00:20:28.980 when your kids are young.

00:20:30.980 And you know,

00:20:31.560 the,

00:20:31.740 the reality is the market

00:20:32.740 might solve some of this.

00:20:33.940 Your kids could end up

00:20:35.260 moving to Sarnia

00:20:36.160 and wherever,

00:20:38.040 London,

00:20:38.860 Ontario,

00:20:39.300 and you're actually

00:20:40.480 seeing condos

00:20:41.720 that are targeting

00:20:42.500 older people

00:20:43.300 because they want to be near

00:20:44.280 where their kids

00:20:44.840 have moved out to.

00:20:45.940 That's certainly happening

00:20:46.900 in the suburbs.

00:20:48.140 In the suburbs,

00:20:48.840 we have seen condos built

00:20:50.140 and they're built for,

00:20:51.540 I don't know where you call

00:20:53.480 quasi retirement,

00:20:54.480 people downsizing.

00:20:55.760 That is a market

00:20:56.660 that exists out

00:20:57.480 in the suburbs.

00:20:58.640 We'll be back

00:20:59.020 in just a moment

00:20:59.700 with more full comment

00:21:00.580 after these messages.

00:21:05.680 Did you lock

00:21:06.400 the front door?

00:21:07.040 Check.

00:21:07.280 Close the garage door?

00:21:08.760 Yep.

00:21:09.260 Installed window sensors,

00:21:10.340 smoke sensors,

00:21:11.040 and HD cameras

00:21:11.820 with night vision?

00:21:12.760 No.

00:21:13.540 And you set up

00:21:14.140 credit card transaction alerts,

00:21:15.300 a secure VPN

00:21:15.960 for a private connection,

00:21:17.040 and continuous monitoring

00:21:18.000 for our personal info

00:21:18.760 on the dark web?

00:21:20.020 Uh,

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00:22:14.020 Scotiabank.

00:22:14.620 You're richer

00:22:15.100 than you think.

00:22:15.700 Gary Maher,

00:22:18.120 let's talk a bit

00:22:18.660 about the immigration

00:22:19.580 component

00:22:20.140 that you were discussing.

00:22:21.480 You know,

00:22:21.820 the headline item

00:22:22.740 for immigration,

00:22:23.580 we often think about

00:22:24.560 welcoming in refugees

00:22:26.280 as we're talking

00:22:26.960 about doing from Ukraine,

00:22:28.040 the last intake

00:22:28.860 of Syrian refugees,

00:22:29.720 but when it comes

00:22:30.860 to the actual

00:22:31.540 regular annual volume

00:22:33.020 of refugees,

00:22:33.760 most of them

00:22:34.160 are economic,

00:22:35.020 pardon me,

00:22:35.360 not refugees,

00:22:36.080 immigrants.

00:22:36.740 Most of the volume

00:22:37.740 is the economic class

00:22:39.180 of immigrants,

00:22:39.840 people who have

00:22:41.020 good education

00:22:42.500 and they bring

00:22:43.720 money with them.

00:22:44.320 They bring equity

00:22:44.960 with them

00:22:45.500 and that plays a role

00:22:46.500 in what's going on

00:22:47.080 in our housing numbers.

00:22:48.740 I think that's

00:22:49.700 for sure.

00:22:51.040 I mean,

00:22:51.700 you hear this

00:22:52.940 anecdotally

00:22:54.020 from realtors

00:22:54.700 about students

00:22:55.900 who are buying houses.

00:22:57.600 Their parents

00:22:58.020 are buying a house

00:22:58.760 for them

00:22:59.240 while they go

00:23:00.080 to school

00:23:00.600 in Toronto

00:23:01.640 and the immigration

00:23:03.600 numbers,

00:23:04.420 there's absolutely

00:23:05.100 no way

00:23:05.600 that they cannot

00:23:06.200 have an impact

00:23:07.040 on demand

00:23:08.000 and that doesn't

00:23:09.100 even include,

00:23:09.820 you know,

00:23:10.180 I think seasonal

00:23:10.960 temporary workers

00:23:12.280 like who are,

00:23:13.680 you know,

00:23:13.860 they're not,

00:23:14.480 you know,

00:23:15.460 picking tobacco

00:23:16.240 always.

00:23:17.600 Some of them

00:23:18.820 are very high skilled

00:23:19.900 and they're going

00:23:21.120 to consume

00:23:22.740 some of the housing

00:23:23.580 that is out there,

00:23:24.860 whether it's

00:23:25.340 high-end rental,

00:23:26.160 whether it's

00:23:26.600 buying it

00:23:27.140 and that's a factor.

00:23:28.620 Like one of the

00:23:29.140 great problems

00:23:29.920 in this federation,

00:23:31.720 this great federation

00:23:32.640 that we have

00:23:33.580 is the federal

00:23:35.300 government controls

00:23:36.620 the demand side

00:23:38.200 of the equation

00:23:38.940 through interest rates

00:23:40.120 and through,

00:23:41.240 you know,

00:23:42.040 immigration

00:23:42.640 and the provinces

00:23:44.040 and cities

00:23:44.580 control the supply

00:23:45.600 side.

00:23:46.680 It's been,

00:23:47.640 you know,

00:23:47.840 that is the conundrum

00:23:48.880 that continues

00:23:50.200 to exist

00:23:50.840 in the Canadian

00:23:51.500 housing market

00:23:52.380 which can only

00:23:53.440 be overcome

00:23:53.980 by,

00:23:54.620 you know,

00:23:55.240 governments,

00:23:56.560 you know,

00:23:56.840 of many different

00:23:57.600 political stripes

00:23:58.460 working together,

00:23:59.300 I think.

00:24:00.540 Where do we go

00:24:01.120 on the immigration

00:24:01.800 file vis-a-vis

00:24:02.900 its impacts

00:24:03.500 on real estate?

00:24:04.120 Well,

00:24:05.720 I think you need

00:24:06.300 to build

00:24:06.600 more real estate

00:24:07.580 or reduce

00:24:08.020 immigration,

00:24:08.820 one or the other,

00:24:09.640 but reducing

00:24:10.140 immigration,

00:24:11.340 you know,

00:24:11.700 that is a

00:24:12.600 toxic concept,

00:24:15.240 right?

00:24:15.740 We've seen that.

00:24:16.700 It is a toxic

00:24:17.500 discussion

00:24:18.740 and most people,

00:24:20.220 you know,

00:24:20.420 I'm not going to say

00:24:21.420 what CEOs told me

00:24:22.840 to do this,

00:24:23.300 but he said

00:24:23.880 to me,

00:24:24.700 you know,

00:24:25.220 Canadians are for 0.98

00:24:26.000 immigration as long

00:24:26.860 as it's not in their

00:24:27.560 neighborhood

00:24:27.900 because they don't

00:24:28.780 want any more

00:24:29.240 density.

00:24:30.600 And is that the issue?

00:24:31.700 Is it density?

00:24:32.480 Because we talk

00:24:33.260 about whether we

00:24:33.900 build up

00:24:34.380 or whether we

00:24:35.060 build out.

00:24:35.720 In the GTA,

00:24:36.660 there's big controversy

00:24:37.480 around what's called

00:24:38.120 the green belt.

00:24:38.840 There's areas

00:24:39.400 where they say

00:24:39.880 absolutely not

00:24:40.600 a single further

00:24:41.400 acre,

00:24:42.460 hectare of

00:24:43.000 development going on.

00:24:44.460 Lots of tensions

00:24:45.200 with developers

00:24:45.840 in terms of

00:24:46.420 where they want to head.

00:24:47.420 I mean,

00:24:47.700 is it,

00:24:48.440 what's the answer

00:24:49.820 to that continual

00:24:51.340 headache

00:24:52.420 that people debate over?

00:24:54.600 Well,

00:24:54.900 density has to be

00:24:55.860 part of the discussion.

00:24:57.080 There's little

00:24:57.980 question about it

00:24:58.920 and,

00:24:59.240 you know,

00:24:59.400 I know

00:24:59.940 even with

00:25:00.780 on a street

00:25:01.260 like Yonge Street,

00:25:02.100 you go up

00:25:03.040 and down Yonge Street,

00:25:03.860 which is our

00:25:04.320 Marion Thorough Fair

00:25:05.100 in Toronto,

00:25:06.080 and you do see

00:25:07.060 density building

00:25:08.100 around places

00:25:09.360 like Eglinton

00:25:10.140 and other stops.

00:25:11.300 But a lot

00:25:12.220 of Yonge Street,

00:25:13.140 think of how many

00:25:13.720 two-story buildings

00:25:14.760 there are in Yonge Street.

00:25:15.980 Good point.

00:25:16.320 You know,

00:25:16.560 there's a couple

00:25:17.320 apartments

00:25:18.900 and a top.

00:25:20.040 Like,

00:25:20.440 how many of those

00:25:21.100 things could be

00:25:21.620 four or six?

00:25:22.960 Like,

00:25:23.240 you know,

00:25:23.480 you can chip away

00:25:24.580 at a lot of

00:25:25.620 density

00:25:26.740 all over the city,

00:25:28.220 right?

00:25:28.440 You know,

00:25:30.240 you can do it

00:25:30.740 right away,

00:25:31.200 but one of the

00:25:31.760 problems,

00:25:32.300 and I hear

00:25:32.660 from developers,

00:25:34.140 and yeah,

00:25:34.540 I'm not going to

00:25:35.180 be on the

00:25:35.760 developer side

00:25:37.420 on everything,

00:25:38.120 but they do say

00:25:39.480 the process

00:25:40.180 of getting

00:25:41.980 these things

00:25:42.640 approved

00:25:43.140 is time-consuming

00:25:44.700 and it costs money

00:25:45.900 to do all this stuff

00:25:47.180 and that is

00:25:47.900 also inflationary.

00:25:49.080 What role is

00:25:51.240 inflation playing

00:25:52.140 in these challenges

00:25:52.940 right now?

00:25:53.660 We all know

00:25:54.060 those stories

00:25:54.560 of someone who

00:25:55.220 at the very

00:25:55.900 beginning of the

00:25:56.400 pandemic said,

00:25:57.180 all right,

00:25:57.520 I'm doing the

00:25:58.080 addition on the

00:25:58.660 house.

00:25:59.000 I mean,

00:25:59.120 I'm not allowed

00:25:59.460 to go anywhere,

00:26:00.180 so might as well

00:26:00.620 do this or I'm

00:26:01.180 going to build

00:26:01.480 the deck

00:26:01.920 and then they

00:26:02.540 get it costed

00:26:03.160 out.

00:26:03.500 Six months

00:26:03.880 later,

00:26:04.340 the contractor

00:26:04.900 says,

00:26:05.280 by the way,

00:26:06.020 the price of

00:26:06.520 lumber has gone

00:26:07.120 up by a third

00:26:07.720 or it's doubled

00:26:08.260 or what have you.

00:26:09.400 What is that

00:26:10.080 doing to the

00:26:10.900 broader real estate

00:26:11.500 sector?

00:26:12.920 Oh,

00:26:13.100 I think for sure

00:26:13.800 it's raised

00:26:14.260 prices and

00:26:14.940 you raised a great

00:26:16.620 point,

00:26:17.080 I kind of

00:26:17.740 wonder whether

00:26:18.320 post-pandemic

00:26:19.500 that some of

00:26:22.180 this will pull

00:26:23.900 back a little

00:26:24.560 bit.

00:26:25.140 I was actually

00:26:26.080 talking to

00:26:26.480 somebody about

00:26:27.520 cottage rentals

00:26:29.140 just recently,

00:26:30.220 you know,

00:26:30.420 the cottage

00:26:30.820 market.

00:26:31.180 Oh,

00:26:31.320 good luck

00:26:31.780 with renting

00:26:32.200 a cottage

00:26:32.720 in Ontario,

00:26:33.480 yeah.

00:26:34.120 Well,

00:26:34.400 what I was told

00:26:35.320 is some of

00:26:35.820 that isn't as

00:26:36.440 strong as last

00:26:37.180 year because

00:26:37.480 people are

00:26:37.920 starting to

00:26:38.340 think about

00:26:38.700 vacationing

00:26:39.420 for real

00:26:40.460 this summer,

00:26:41.280 like going to

00:26:41.900 Europe,

00:26:42.300 going to other

00:26:42.760 places.

00:26:43.580 Now,

00:26:43.740 we might actually,

00:26:44.740 I would not

00:26:45.300 call it a

00:26:45.880 correction by

00:26:46.560 any stretch

00:26:47.380 of the

00:26:47.940 imagination,

00:26:49.400 but there

00:26:50.500 was no

00:26:50.880 competition for

00:26:51.900 a cottage

00:26:52.320 last year.

00:26:52.860 If you wanted

00:26:53.260 to go to a

00:26:53.700 cottage with

00:26:54.100 your kids,

00:26:54.660 right,

00:26:55.380 you were up

00:26:55.840 against everybody

00:26:56.540 else and

00:26:57.020 what else were

00:26:58.300 you going to

00:26:58.840 do for two

00:26:59.460 weeks of your

00:27:00.080 summer?

00:27:00.720 You weren't

00:27:01.160 even going to

00:27:01.560 go,

00:27:02.020 you couldn't

00:27:02.340 even cross

00:27:02.840 the border

00:27:03.340 without hassles,

00:27:04.500 so you couldn't

00:27:05.760 go to Europe, 0.93

00:27:06.540 so where were

00:27:07.060 you going to

00:27:07.340 go?

00:27:07.940 Cottages,

00:27:08.540 everybody wanted

00:27:09.100 to go to

00:27:09.460 cottages,

00:27:10.100 and then that

00:27:12.940 dovetails into

00:27:13.720 people deciding

00:27:14.400 maybe I'll buy

00:27:15.300 one.

00:27:15.660 But as you

00:27:17.520 can sort of

00:27:18.000 take big

00:27:18.900 trips and

00:27:19.620 consider other

00:27:20.320 things,

00:27:21.260 maybe even

00:27:22.600 buy a summer

00:27:23.720 property across

00:27:24.820 the border,

00:27:25.280 who knows?

00:27:26.360 But I think

00:27:27.560 that could 0.68

00:27:29.500 relieve some

00:27:30.420 pressure on

00:27:31.320 that vacation

00:27:32.720 ownership market.

00:27:33.760 Gary, let's

00:27:34.120 talk about

00:27:34.520 interest rates

00:27:35.140 for a bit

00:27:35.580 here.

00:27:36.260 I have

00:27:36.780 certainly had

00:27:37.160 those experiences

00:27:37.880 where I talk

00:27:38.460 about, oh,

00:27:38.840 I can't believe

00:27:39.520 I signed on to

00:27:40.260 the 3.8

00:27:41.060 mortgage, oh,

00:27:41.720 I got to get

00:27:42.240 it back to

00:27:42.920 2.8%,

00:27:44.000 and then the

00:27:44.580 baby boomers 0.93

00:27:45.100 in the room

00:27:45.440 say, gather

00:27:46.140 around,

00:27:46.580 children, I

00:27:47.040 shall tell

00:27:47.340 you a story

00:27:47.880 of 1990,

00:27:49.340 what have

00:27:49.660 you, 18%.

00:27:50.740 One time I

00:27:51.480 had a mortgage

00:27:52.440 term with all

00:27:53.380 of that.

00:27:53.820 How privileged

00:27:54.920 are we in

00:27:55.500 this situation

00:27:56.300 where being

00:27:57.400 at a 2%

00:27:58.440 interest rate

00:27:59.140 and then being

00:27:59.620 told, oh,

00:28:00.080 you're going

00:28:00.380 to go up

00:28:00.720 25 basis

00:28:01.660 points next

00:28:02.780 time the

00:28:03.140 Bank of

00:28:03.440 Canada makes 0.97

00:28:03.900 an announcement,

00:28:04.360 oh, no,

00:28:04.820 run for the

00:28:05.280 hills, rates

00:28:05.740 are rising,

00:28:06.400 but compared

00:28:06.920 to then,

00:28:07.380 no, they're

00:28:07.660 not.

00:28:08.400 What's the

00:28:08.980 real take on

00:28:09.840 what's happening

00:28:10.460 with interest

00:28:10.960 rates now?

00:28:12.700 Well, I

00:28:13.380 think, you

00:28:13.840 know, I

00:28:14.500 would call

00:28:14.900 it privilege

00:28:15.440 because, you

00:28:16.200 know, that

00:28:16.580 translates into

00:28:17.420 higher prices,

00:28:18.160 but the

00:28:19.540 problem with

00:28:20.080 interest rates

00:28:20.840 is, you

00:28:22.100 know, the

00:28:22.400 average consumer

00:28:23.380 thinks, what's

00:28:23.960 my monthly

00:28:24.400 payment?

00:28:24.960 They do that

00:28:25.420 with a car.

00:28:26.680 They do that

00:28:27.480 with a house.

00:28:28.240 So, you

00:28:29.000 know, if you

00:28:29.400 can carry it

00:28:29.960 at a 2.0,

00:28:30.980 you know, and

00:28:31.860 you qualify

00:28:32.600 based on that

00:28:33.400 too.

00:28:34.000 The qualifying

00:28:34.680 rate, if it

00:28:35.460 goes down,

00:28:37.220 you know, and

00:28:37.800 the government

00:28:38.580 tries to make

00:28:39.220 you qualify at

00:28:39.960 higher rates

00:28:40.660 and they

00:28:40.960 fool around

00:28:41.400 with that.

00:28:42.380 And, you

00:28:42.600 know, they've

00:28:42.880 done so many

00:28:43.460 things to make

00:28:44.220 it more

00:28:44.540 affordable.

00:28:45.180 I remember

00:28:45.500 at one point

00:28:46.240 when I was

00:28:46.920 covering real

00:28:47.380 estate, they

00:28:47.860 allowed you to

00:28:48.460 amortize a

00:28:49.140 mortgage over

00:28:49.680 40 years to

00:28:51.040 try to lower

00:28:51.560 the monthly

00:28:52.040 payment.

00:28:52.700 Now it's

00:28:53.140 25.

00:28:54.220 But the

00:28:54.700 point is, I

00:28:55.340 think consumers

00:28:56.900 are used to

00:28:57.500 that because it

00:28:58.120 lowers their

00:28:58.540 monthly payment.

00:28:59.680 So, as it

00:29:00.760 goes up, and

00:29:01.520 I, you

00:29:02.040 know, I

00:29:02.300 remember when

00:29:02.840 I, my

00:29:03.300 first house, I

00:29:03.920 got a 565

00:29:05.220 mortgage and I

00:29:06.160 think, I

00:29:06.760 thought that was

00:29:07.220 the deal of

00:29:07.660 the century,

00:29:08.380 right?

00:29:08.600 Because, you

00:29:09.260 know, we've

00:29:09.580 come out of

00:29:09.980 the 90s and

00:29:10.680 everybody thought

00:29:11.260 it was great.

00:29:12.420 So, I think

00:29:13.160 rates will go

00:29:13.800 up and they

00:29:15.120 can only go

00:29:15.680 up, I think,

00:29:16.420 so much until,

00:29:17.940 yeah, that will

00:29:18.500 have a detrimental

00:29:19.520 effect on

00:29:20.500 affordability.

00:29:22.100 Maybe not as

00:29:22.740 much as people

00:29:23.420 think, though,

00:29:24.120 because of, if

00:29:25.120 we go back to

00:29:25.700 what we were

00:29:26.040 talking about

00:29:26.700 with the, you

00:29:27.740 know, the

00:29:28.000 bank of mom

00:29:28.760 and dad or

00:29:29.480 grandpa and

00:29:30.140 grandma.

00:29:30.800 If you're

00:29:31.240 buying a $2

00:29:31.880 million house

00:29:33.240 and, you know,

00:29:34.340 you just got a

00:29:35.000 million bucks for

00:29:35.980 hard, that's

00:29:36.880 a, you know,

00:29:37.300 the payments on

00:29:39.240 a million dollar

00:29:39.820 mortgage are not

00:29:40.980 going to be the

00:29:41.420 same as a $1.6

00:29:42.740 million mortgage if

00:29:43.940 you just got your,

00:29:44.800 you know, you're

00:29:45.460 20% down to

00:29:47.260 avoid CMHC

00:29:48.500 insurance, so

00:29:49.820 that would be a

00:29:50.500 factor.

00:29:51.380 Plus, it'll take

00:29:51.980 time, I think it'll

00:29:52.960 also take time to

00:29:53.920 have an impact

00:29:54.540 because Canadians,

00:29:55.880 we're a fairly

00:29:56.480 conservative lot in

00:29:57.620 this country and we

00:29:58.420 like to have a

00:29:59.040 five-year, we love

00:30:00.140 the five-year

00:30:00.680 mortgage, right?

00:30:01.840 Which means, you

00:30:02.920 know, you set a

00:30:04.020 rate every five

00:30:04.960 years and you

00:30:05.520 don't worry about

00:30:06.160 it and I think

00:30:07.240 half of the market

00:30:08.040 or so is locked

00:30:09.500 in for five

00:30:10.320 years and we

00:30:12.140 don't lock in

00:30:13.040 generally like the

00:30:14.140 Americans for

00:30:14.760 these long-term

00:30:15.460 rates, so, you

00:30:16.660 know, a certain

00:30:17.100 amount of that

00:30:17.620 market is going to

00:30:18.340 roll over and

00:30:19.140 that could affect

00:30:20.240 the housing

00:30:21.540 market, I think.

00:30:22.420 Gary, I want to

00:30:22.960 have a little bit

00:30:23.360 of fun here for a

00:30:23.940 moment and talk

00:30:24.460 about the real

00:30:25.500 estate glamour

00:30:26.740 and glitz market

00:30:27.800 and world that I

00:30:28.880 think has become

00:30:29.980 much more prevalent

00:30:30.860 in recent years.

00:30:32.040 We talk about

00:30:32.540 foodie culture and

00:30:33.640 how the food

00:30:34.320 network and

00:30:34.960 what we call

00:30:35.520 food porn has

00:30:36.520 created, has

00:30:37.380 changed the

00:30:37.960 general public's

00:30:38.620 interest in the

00:30:39.280 culinary world.

00:30:40.040 I think there's

00:30:40.420 something similar

00:30:41.180 going on with the

00:30:42.100 real estate world.

00:30:42.780 I got to be honest,

00:30:43.660 it's a thing that

00:30:44.240 I'm really into.

00:30:45.700 I don't watch much

00:30:46.340 reality television.

00:30:47.300 I watch the real

00:30:48.520 estate shows, though.

00:30:49.300 I love the

00:30:49.660 million-dollar listing

00:30:50.480 program.

00:30:51.340 I read the books. 1.00

00:30:52.240 My sort of trash 0.99

00:30:52.940 reading is, I've 0.97

00:30:54.100 written books on an

00:30:54.840 entire, just one

00:30:55.960 building, you know,

00:30:56.640 the story of

00:30:57.120 building one

00:30:57.700 Manhattan building

00:30:59.200 and all the

00:30:59.920 different residents who

00:31:00.820 tried to build the

00:31:01.400 units and so forth.

00:31:02.060 I'm just so into

00:31:02.740 that stuff.

00:31:03.400 To what degree is

00:31:04.540 that just a sidebar

00:31:05.800 and that's just, you

00:31:07.100 know, leisure media

00:31:07.880 consumption?

00:31:08.780 And to what degree

00:31:09.440 does that play a role

00:31:10.480 in how we buy homes,

00:31:13.240 how we build them?

00:31:13.840 Even something like

00:31:14.720 staging was just not

00:31:16.340 as prevalent, you

00:31:18.140 know, decades ago as

00:31:19.080 it is now.

00:31:19.560 Oh, I think you're on

00:31:21.680 to something for sure

00:31:22.500 there.

00:31:22.840 And it's not just

00:31:23.580 real estate.

00:31:24.320 I mean, social media

00:31:25.760 is bragging rights,

00:31:26.900 you know, and shows

00:31:28.440 are, and they

00:31:29.060 encourage it in shows.

00:31:31.020 I mean, how many

00:31:31.660 times do you see on

00:31:32.840 your, you know, on

00:31:34.020 your Facebook feed or

00:31:35.340 Twitter, hey, look,

00:31:36.200 there's a house in my

00:31:36.980 neighborhood for sale.

00:31:38.100 And it's some reverse

00:31:39.220 way of showing how

00:31:40.220 much housing prices are

00:31:42.140 in your neighborhood.

00:31:43.280 And people like to

00:31:44.560 show renovation.

00:31:45.560 There's, I think

00:31:48.300 there's something, you

00:31:50.580 know, about, about,

00:31:52.240 about media consumption

00:31:53.920 and I'm not maybe in

00:31:54.980 the media by any

00:31:55.700 stretch that is bragging

00:31:57.500 rights and bragging

00:31:58.620 rights means you'll pay

00:31:59.500 more for something,

00:32:00.400 right?

00:32:01.000 I mean, it, housing is

00:32:02.700 part of that.

00:32:03.300 It's like, you know,

00:32:04.260 why did you pay $500

00:32:05.500 to go to a Raptors game

00:32:07.620 in the playoffs?

00:32:08.300 Why?

00:32:08.780 Because I just posted a

00:32:09.900 picture saying here I

00:32:10.840 am at the Raptors game,

00:32:12.180 right?

00:32:12.580 It's part of the value

00:32:14.260 of way it extracts

00:32:15.540 some value out of,

00:32:16.540 of that.

00:32:17.340 And I think a way to

00:32:18.680 extract value out of

00:32:19.980 housing is, um, it's

00:32:22.400 because you get to brag

00:32:23.260 about it to a degree on

00:32:24.520 in your, in your world.

00:32:26.140 And, and we're

00:32:27.320 encouraged all these

00:32:28.360 shows that you're

00:32:28.980 talking about.

00:32:29.540 And I like them too.

00:32:30.460 Who doesn't like them?

00:32:31.700 They, you know, they're

00:32:32.440 like watching lotteries,

00:32:33.820 you know, they're like

00:32:34.460 imagining winning the

00:32:35.440 lottery or something.

00:32:36.760 And they, they, they

00:32:38.200 feed on that.

00:32:38.900 It's like, oh God, I'd

00:32:39.980 love to have that.

00:32:41.180 I'd love to have that

00:32:42.180 house in the hills of LA.

00:32:44.300 I mean, or, you know,

00:32:45.360 on the waterfront in

00:32:46.580 Toronto, that's, you

00:32:48.120 know, it feeds on our

00:32:48.960 dreams.

00:32:49.380 You know what I don't

00:32:49.800 get, Gary?

00:32:50.260 I don't get the house

00:32:51.480 hunters thing.

00:32:52.060 And I have friends who

00:32:53.040 watch the house hunters

00:32:54.240 nonstop every episode.

00:32:56.220 I only do the glamour

00:32:57.360 stuff because my

00:32:58.040 attitude is, you know,

00:32:58.640 you watch these house

00:32:59.220 hunters episodes and

00:32:59.960 they're like, well,

00:33:00.940 Stacy take the one

00:33:02.780 bedroom, 1.5 bathroom,

00:33:04.840 or will she take the

00:33:05.980 one bedroom with den and

00:33:08.360 the balcony that

00:33:09.080 overlooks nothing?

00:33:09.900 I'm always like, these

00:33:10.540 are like these units.

00:33:11.960 You need to be able to

00:33:12.800 dream watching these

00:33:13.680 things.

00:33:13.960 Some of the house

00:33:14.460 hunter stuff, I'm

00:33:15.000 always like, who's

00:33:15.580 interested in this?

00:33:16.560 This is like my

00:33:17.140 regular life.

00:33:17.860 Take me away from my

00:33:18.760 regular life.

00:33:19.340 There should be some

00:33:19.820 escapism.

00:33:21.340 Although we love those

00:33:22.380 stories of, you know,

00:33:23.620 what people, stories

00:33:24.460 people love is, look at 0.98

00:33:25.980 this piece of junk that 1.00

00:33:27.360 sowed for a million 1.00

00:33:28.120 dollars.

00:33:29.020 Like I used to get the

00:33:30.040 most clicks on, and

00:33:30.960 they're always for the

00:33:31.800 land, right?

00:33:32.740 You know the story I'm

00:33:33.580 talking about.

00:33:34.420 Oh, this tiny house in

00:33:36.060 downtown Toronto sold

00:33:37.460 for, you know, $10

00:33:38.720 million.

00:33:39.520 Well, yeah, because

00:33:40.520 they're not buying the

00:33:41.260 tiny house.

00:33:41.880 You're buying all the

00:33:42.840 property.

00:33:43.480 You're buying the right

00:33:44.020 to build a condo there,

00:33:44.940 right?

00:33:45.240 But people love that

00:33:46.340 story.

00:33:47.040 There's a certain, I

00:33:48.000 guess, I don't know,

00:33:50.340 triumph.

00:33:51.200 I don't know if you

00:33:51.780 feel triumph of just

00:33:53.840 looking at this thing. 1.00

00:33:54.740 What a fool. 1.00

00:33:55.380 Who would pay a million 1.00

00:33:56.100 dollars for that?

00:33:57.660 And people love those

00:33:58.720 stories.

00:33:59.200 Maybe it's healthier at

00:34:00.020 least because real estate

00:34:00.820 is an asset.

00:34:01.820 You know, it's buying

00:34:02.780 something that can

00:34:03.520 increase in value.

00:34:04.660 The car junkies, or

00:34:06.240 I like to buy the

00:34:06.920 expensive clothes and so

00:34:08.080 forth.

00:34:08.440 We can at least

00:34:09.040 poo-poo them. 0.91

00:34:09.620 Ah, you're buying

00:34:10.380 depreciating things.

00:34:11.480 But no, my interest in

00:34:13.520 glamour real estate, at

00:34:14.300 least I can say it's my

00:34:15.220 retirement savings.

00:34:16.920 It's true.

00:34:17.740 I mean, I will say,

00:34:19.100 though, I mean, there's

00:34:19.820 a real, the land

00:34:20.980 appreciates.

00:34:21.780 There's a real, I

00:34:22.760 always say if you're

00:34:23.380 going to buy a house,

00:34:24.180 you can buy it and

00:34:25.420 you're buying, you

00:34:26.200 know, something brand

00:34:26.880 new, you're buying it

00:34:27.580 to consume it.

00:34:28.680 Because most, the

00:34:29.820 minute you redo, you

00:34:30.860 know, they'll tell you

00:34:31.500 build a kitchen, it'll

00:34:32.280 make your house worth

00:34:33.140 more.

00:34:33.960 Not really, because by

00:34:35.240 the time you sell it,

00:34:36.080 your kitchen's 10 years

00:34:37.620 old, right?

00:34:38.240 And it's out of

00:34:39.220 style.

00:34:39.720 I think you, I think

00:34:41.240 you're buying to

00:34:42.280 consume, real estate's

00:34:43.700 an odd thing, because

00:34:44.640 it does go up in

00:34:45.400 value.

00:34:45.720 It's a great place

00:34:46.400 to, it's a great way

00:34:48.740 to save your money, but

00:34:49.700 it's also this

00:34:50.420 consumable product that

00:34:52.300 you will consume over

00:34:53.580 the lifetime of the

00:34:54.840 house.

00:34:55.180 Gary, before we go, I

00:34:57.320 get the sense that

00:34:58.920 you're not, you're not

00:35:00.760 optimistic that

00:35:01.540 everything's going to be

00:35:02.320 great for the homebuyer

00:35:03.140 moving forward, but

00:35:03.760 you're not all doom and

00:35:04.560 gloom, those people and

00:35:06.100 generations of people who

00:35:07.180 are hanging their heads

00:35:07.880 going, oh no, what's

00:35:08.860 going to happen?

00:35:09.340 Because you're seeing the

00:35:10.520 negatives, but you're 1.00

00:35:11.240 also seeing the potential

00:35:12.920 for optimism, some

00:35:13.880 positives around the

00:35:14.880 corner.

00:35:15.520 What's your outlook for

00:35:16.380 the next 10, 20 years?

00:35:17.460 What's your outlook for

00:35:18.260 a young person saying,

00:35:19.640 you know, here I am

00:35:20.480 looking to be in the

00:35:21.000 market?

00:35:21.220 I think people at the

00:35:24.700 policy level are finally

00:35:26.080 starting to get it.

00:35:27.100 Maybe I'm just feeling

00:35:28.980 optimistic, but I

00:35:30.800 actually think people at

00:35:32.120 the policy level have

00:35:33.140 finally realized we need

00:35:35.000 to build more supply and

00:35:36.400 there's a big push on to

00:35:37.780 build more supply, more

00:35:39.540 rental housing, more,

00:35:41.120 you know, you know, more

00:35:43.100 whatever you want to call

00:35:44.520 it, affordable housing,

00:35:45.580 more housing that fits the

00:35:47.200 market.

00:35:47.760 And I also believe the

00:35:48.700 market is surprisingly how

00:35:50.740 efficient the market is

00:35:51.960 that people are now, you

00:35:54.160 know, moving to places

00:35:55.160 that are more affordable,

00:35:56.680 creating lives.

00:35:57.820 I mean, you go to some of

00:35:58.560 these towns and, you know,

00:36:00.340 last summer I was in

00:36:01.460 Cornwall, believe it or

00:36:02.460 not, I was going to the

00:36:03.380 East Coast and we stopped

00:36:05.620 in Cornwall.

00:36:06.700 It's got a funky little

00:36:08.140 downtown that would look

00:36:09.340 like it was a lot of fun.

00:36:10.560 It wouldn't be that.

00:36:11.620 It would be a nice place to

00:36:13.160 live if you could have a

00:36:14.360 decent job there.

00:36:15.400 And I think that's kind of

00:36:17.380 something that the consumer

00:36:18.640 and the market has figured

00:36:19.540 out that maybe we can find

00:36:20.720 some great places to live

00:36:22.820 in this country that

00:36:24.440 aren't named Toronto,

00:36:26.560 Vancouver, Montreal,

00:36:28.060 Edmonton, Calgary, or

00:36:29.080 Ottawa.

00:36:30.100 The future is friendly if

00:36:31.280 you're willing to look

00:36:32.360 around just a little bit.

00:36:33.820 Gary Marr, this has been

00:36:34.560 a really fun conversation.

00:36:36.200 Thanks so much for

00:36:36.700 stopping by.

00:36:37.720 Okay, thanks.

00:36:38.660 All the best.

00:36:39.660 Full Comment is a

00:36:40.540 post-media podcast.

00:36:41.860 I'm Anthony Fury.

00:36:43.000 This episode was produced

00:36:44.060 by Andre Pru with theme

00:36:45.560 music by Bryce Hall.

00:36:46.980 Kevin Libin is the

00:36:47.940 executive producer.

00:36:48.720 You can subscribe to

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Full Comment - March 14, 2022

Signs of hope for Canada’s hopeless young homebuyers

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