More Money Podcast - 307 Canada's Housing Boom...Is There an End in Sight? - John Webster, President and CEO of Scotia Mortgage Corporation

Episode Date: December 8, 2021

As someone who decided to sell her townhouse and buy a new house in Toronto this year, I can vouch for how crazy the Canadian housing market is right now. Although my experience is specifically in Toronto, talking to people across the country every single day...I know that people have similar experiences from coast to coast. Since real estate has become such a hot topic, especially because of the pandemic, I wanted to gain some further insight into why the housing market has exploded in the past two years and hear some predictions for what we can expect in the future. To provide that insight, I've got John Webster, President & CEO of Scotiabank Mortgage Corporation, joining me for this episode. John has 30+ years of experience in mortgage lending, and in addition to being the President & CEO of Scotiabank Mortgage Corporation, he's also the Head of the Real Estate Secured Lending Unit at Scotiabank which includes Scotia Mortgage Authority and Home Financing Solutions. John was previously the President & CEO of Maple Trust Company which was purchased by Scotiabank in 2006. He is also a founding member of the Canadian Association of Accredited Mortgage Professionals (CAAMP) now called Mortgage Professionals Canada, and was inducted into the Canadian Mortgage Hall of Fame in 2009. In this episode, John shares how the pandemic put pressure on the housing market and why the demand for housing will continue to be greater than the supply into the future. John also shares how lenders have had to adapt to this new normal over the past 18 months and the digital products and services they’ve introduced since the start of the pandemic. I love talking about real estate and especially when I can get an insider perspective on how we can best navigate the market, so I am very excited to share today’s episode with you! For full episode show notes visit: https://jessicamoorhouse.com/307 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome back to the More Money Podcast. This is your host, Jessica Morehouse, and this is episode 307. Hello. And I hope you're excited to talk real estate or more listen to talk about real estate for this episode, because that is what we're doing, which I'm thrilled about because I recorded this particular episode. I think we just sold our place, but we had not found a new place to live. And so man, did I have some questions for my next guest. And so you will not be disappointed if you're thinking of getting into the real estate market or just curious about what's what's going on or some things that you need to know. This is the episode for you. So I've got the wonderful John Webster on

the show. He is the president and CEO of Scotia Mortgage Corporation and the head of the real estate secured lending unit at Scotia Bank, which includes Scotia Mortgage Authority and Home Financing Solutions. So he is also the former president and CEO of Maple Trust Company, which was purchased actually by Scotia Bank in 2006. And he joined a predecessor trust company in 1989 and directed its evolution into a Canadian market leader in the automated origination, aggregation, securitization, and administration of residential mortgages. John was also born in Drummondville, Quebec, and he received his education at Wilfrid Laurier University, where he obtained an honors BA, and at McGill University, where he was awarded both the

LLB and BCL degrees. He's also a member of the Law Society of Upper Canada. So in short, because he's been in the industry for so long, has such a great perspective and just so much experience and knowledge about just the real estate market in general and mortgages. And so he really is able to kind of give some interesting insight into what we're experiencing now, depending on where you're living. Obviously, there's lots of different real estate markets going on in Canada and the US. But you know, I live in Toronto, and then you know, my family's in Vancouver. And so we've got, you know, really honestly, parallel things going on in Vancouver. And so we've got really honestly parallel things going on in Vancouver and Toronto.

I find it's very similar, but it's interesting just to have a good insight into what's going on in the overall country, but also specific markets and just what are some pieces of advice that we should take? What should we do? Should we wait for the market to cool?

Is this bubble gonna burst? Is it not? Should we just get into the market because it's not about timing the market, it's just about getting in. So we talked about all this good stuff in this episode. So I know you're going to love it. But before I get to that interview with John, I just have a few words I want to share about this podcast episode sponsor. This episode of the more money podcast is supported by Motley Fool Canada. You know that

I'm a diehard index investor, but what you may not know is I've got a little satellite portfolio on the side for some individual stock investing. Don't get me wrong, I'm still a passive investor practicing a long term buy and hold strategy with these stocks. But this has been something I've been doing for a few years now. And one of the resources I use to help with research and stock recommendations is Motley Fool's Stock Advisor Canada membership. Now what drew me to Motley Fool's Stock Advisor Canada membership. Now, what drew me to Motley Fool Canada was that they share my same investment philosophy. They aren't about day trading or getting rich quick. They encourage buy and hold stock investing,

making sure members are diversified, understand risk tolerance, and they even recommend investing in index funds. And most importantly, they want to educate Canadians about building wealth just like I do. So if you're interested in learning more about stock investing specifically, consider joining over 70,000 of your fellow Canadian investors today by signing up to Stock Advisor Canada. And if you visit fool.ca slash Jessica, you can save 66% off your membership. Once again, to sign up and get 66% off, visit fool.ca slash Jessica. Welcome to the More Money Podcast, John. I'm so excited to have you on the show to talk about one of my favorite topics because I am currently in the boat as a lot of other Canadians are dealing

with this. I currently, well, I just sold my place looking for another place. So housing is literally on my mind 24-7. I'm not joking when I say I dream about houses. So I'm excited to have you on the show so we can talk about it. I'm very pleased to be here. And I also have dreams about houses. And in my business, as long as they're not nightmares, it's a good sleep. That's true.

No, yeah, they're not nightmares. But I definitely do feel like sometimes I wake up and I have renovated a whole house in my dreams. But so I'm so excited to have you on the show, because you really know this topic. And I'm sure have some really interesting insights into what's going on in the real estate market in Canada right now. But before we really jump into some of the burning questions that I have that I want to know, and I'm sure our listeners will want to know, tell me a little bit about yourself and your background. So I've been in the mortgage business for the better part of 30 plus years, and more than half of that was Scotiabank running their residential real estate business,

which is not only the largest asset class and business in the Canadian bank, but in the whole bank, north of $250 billion. So it's a very big book of business and a very dynamic market currently, as you know, but it has been strong for many, many years. And I think that strength, notwithstanding some of the supply side issues that we're facing today, will continue over the next few years as well, in terms of both consumer demand and what's happening with the reopening of the economy. Yeah, let's start there. Because as someone who, you know, maybe, maybe it wasn't a good idea. Maybe it was, I don't know. But me and my husband made the conscious decision of selling our place first and looking for another place we knew,

you know, we discussed some of the potential ramifications of that decision. Like what if we don't find our next home to buy right away, We were totally fine with renting. Basically, our decision was really based on leaving this place, whether that meant, okay, we're going to rent for a little while or buy our next place. We just need to get out of our current place. But one thing that we realized after selling and thinking, oh, that was the hard part was, wow's it's fascinating because it has been I guess over five years since the first since we we bought this uh townhouse and we we live you know um you know close to downtown Toronto in this townhouse and um back then it was it was a hot market and even before that a couple years before that that was the first time we looked uh for for houses actually um I think

this is probably going back to 2014 or 2015. And we're originally from Vancouver. And so it's always been a hot market there for like decades, basically. And so when we went to, you know, move to Toronto, we're like, oh, it didn't feel like it was as aggressive a market as Vancouver. We're like, oh, this might be a good time to buy a home. And I swear, it's like right as we decided to look for a house in Toronto, that's when things started heating up. And we're like, okay, maybe bad timing again. But I feel like this time, it feels so different. And

I think it's because the pandemic has changed everything. I personally, when, you know, going back to thinking about what happened in, you know, March and April of 2020, I saw this going a very different way, I assumed because of the pandemic and because we were dealing with some economic issues, people were losing their jobs and stuff like that or couldn't go to work because of COVID. I assumed that there would be a flood of houses on the market because people would need to cash out and maybe move someplace more affordable and then there'd be more availability. But the reverse has happened. Do you want to kind of talk about what the pandemic, like how has this really changed the real estate market? And I'm curious about your thoughts.

Did you see this happening? Like, did you see this coming? I'd like to say yes, but I don't think that anybody could have predicted the circumstances that we found ourselves in or that evolved. But just before I sort of set the context for the pre-pandemic market that you described and the market we're in currently, you just made a really good point, Jessica, in that buying a home is such an emotional decision. And you left a very hot market in Vancouver to come to another hot market, Toronto. So you've probably felt like you were jumping from the frying pan into the fire to describe what you went through.

But it's interesting to me, and it reinforces what's taking place in the marketplace, is because it is, for most people, the single biggest financial decision they make in their life. So what they really need to do is to get some advice. And mortgage lending and borrowing has become increasingly complex over the past decade with all the rule changes. So what I say to people like yourselves is it's pretty hard to try to predict the market and attempt to beat the market.

So what you need to do is make sure you understand your financial circumstances and get yourself a home financing advisor or a mortgage specialist who can help guide you through, particularly because interest rates are so important. So whether you made the decision to sell and then to look for another place, the real issue is everyone needs housing. And so the question is, do you want to own or do you want to rent? And what can you afford? And when you look at it today and what existed in the pre-pandemic market, a big driver of

the housing market in Canada has been this ultra low interest rate environment. And even during the pre-pandemic, if we look back, we had ultra low rates, the lowest that I've ever seen in my lifetime. And that was really driving demand. And it's important to put that into context, because people forget when they buy a house and rates that are sub 3% or even have been sub 2% currently. When you're making those payments, more than half of your payment goes to retiring principal. So you're building equity in the home that you purchase.

You're building wealth right out of the gate. And that's a really important driver. The second most important thing is household formation. Even going into the pandemic, we've had record levels of immigration. So this year we plan to have 400,000 new Canadians join us. Over 60% of those folks, when they come here within two or three years, it's their ambition to buy a home. And so they really drive the demand side. And then obviously, the second biggest group, and that's been a big factor during the pandemic, are millennials who want to get into the housing market.

And we did some research back in the spring, which reinforced that that group was quite anxious about housing affordability, but also not deterred, but determined to get into the market. So we came into this pandemic with strong demand, low interest rates, and then we're all sitting there thinking, what will happen to the economy? What will consumers do? What will they do for their ongoing obligations and liabilities? And everyone was concerned with the mortgage debt outstanding and people wouldn't be able to make payments. And we and all of our peers stood up huge mortgage deferral programs.

And I thought at that time that we would not have an issue given the credit quality of our customers and the fact that the overwhelming majority of them continued to function and work in the pandemic and were able to, you know, had less money to spend on discretionary items, but were committed to housing. And so I wasn't worried about us having an issue with the quality, the credit quality of the portfolio. I was worried about executing a program where you tell people now you don't have to pay and all the implications

of that technology, et etc. We were able to do that successfully. And we saw very early on that that wasn't going to be the issue that people were going to be able to make payments. What we didn't anticipate was because of people during the pandemic and currently working remotely, that that would then drive them further afield to look for housing. And two things were happening, right? They could work remotely for the first time for a number of them. And secondly, they wanted to have more space. People that were in smaller spaces during the pandemic wanted more space.

They spent more time looking at their dwelling and saying, I need to improve this. Or they said, I want to be outside. I want to have a backyard. And so that you saw the migration out of some of the urban centers for people who could work remotely and they went further afield. Now that was already taking place before the pandemic because we had this expression that consumers would drive till they qualified. So if they couldn't afford a house in Vancouver or Toronto, they went further afield to find one that was less expensive and within their budget. But the pandemic accelerated that. And then what also happened was because there's

no discretionary spending, people started to spend a lot of money on home improvement. So building that backyard of their dreams, putting a pool in, doing whatever it took to make them feel more comfortable during the pandemic. And then a lot of people that traveled realized that they were going to be restricted for much longer than we first anticipated. So they started looking for recreational properties.

So we had this very strange dynamic during the pandemic that not only were people able to meet their obligations as they became due and pay their mortgage, people were out there in record numbers putting pressure on all the markets. The housing market, particularly for single family dwelling and places with a backyard was first to feel the real crunch of this overwhelming demand. Condos were less so because people wanted to escape. So they went flat and also with less people moving into the city, for example, in the major urban centers where international students would be a big part of that rental demand. That went away. That was ended overnight. Airbnb in Toronto was over and restricted.

So there was a little bit of pressure in the condo space. But what happened was the markets further afield in some of the more suburban, rural, remote communities took off. And the recreational market, wherever there was waterfront, took off. So there was huge escalations year over year in the pandemic, both in terms of units being done. So realtors were reporting doing twice the numbers of ends that they would sell from the year before. And then price escalation started.

And so now as the opening up has taken place, there has been a migration back to the urban cores. Even with working remotely, the condo market is much more buoyant in the major urban centers again. And the rental market has become constrained again as people have returned so what drives it is low interest rates household formation and then what's the economic outlook and the economic outlook for growth is quite strong looking forward over the next couple of years and so that will drive demand as well. So the question becomes, what happens in a rising

interest rate environment? Does that dampen down demand? And what's happening on the other side? We're going to continue to have strong, strong levels of immigration, levels we've never seen in our history. So in my view, with the pressure from millennials who want to get into the market, the overwhelming numbers of new Canadians coming, the demand and the housing demand will continue to be very strong. The challenge we have for the last decade, and Scotiabank's been a leader in this, and our economics department has done a lot of work looking at, have we been able to keep up with that demand from the supply side of new units that are being constructed every year and it's

you know our estimate that we've been for the past 10 years falling short by more than 100,000 units a year so I think unfortunately that demand will drive the pricing the other thing that's been a bit of a volatile element has been the pandemic itself so other thing that's been a bit of a volatile element has been the pandemic itself. So every time there's been a variant, what you saw in the resale market, for example, you saw this overwhelming demand, even though people couldn't go and go to an open house or do the visit, they were doing it virtually, or they were making offers without having spent a lot of time in the property, because there were so many people bidding on so few houses. And then the variant, what would happen was we'd have a month where supply would increase a bit,

and there'd be more housings listed. And then because of the new variant, that would be constrained again. So quite naturally, people didn't want people coming into their home to sell it when they were worried about the Delta variant, for example. So we've had some lumpy results with listings and sales month over month, but essentially the market has continued to be very strong and accelerate. I don't think that that level of strength that we had in the curious circumstances where all these forces came into effect during the pandemic, where everyone was interested in buying real estate will continue. And as rising rates go up, you always have people that will not qualify as they look

at their ability to carry that debt. So there'll be less eligible borrowers, but I think we'll continue to create more people that want and need to buy and that will continue to drive this demand. Yeah, it doesn't sound like good news for people like me, but I feel like, yeah, the one thing that is curious is obviously I understand the demand.

You explained that so well. That's exactly what happened. And that all makes logical sense why we're in this situation. But I guess it is curious why you would think when so many people, especially people who have owned their homes for so long, wouldn't want to take this opportunity with, you know, some people's houses have doubled within a year. Why aren't there that many people selling their homes? Is it because typically what you would do is sell your home and this is, you know, if you're living in an urban center and you've, you know, the value on your property is increased substantially, typically what you would do is

sell that and then downsize to go to the country or the suburbs. So you could then, you know, have a little bit more cash and still a nice place. But now it does seem like even in the country or the suburbs, places are still going for millions of dollars. And so it doesn't, maybe they're looking at outside markets are like, it's not like I'd really save that much. So maybe just stay put until things stabilize. Or what do you I don't know, I'm curious what your thoughts are. Why aren't people, there's not as many people listing their homes?

So when you think about it and you say, I've increased my equity substantially during this pandemic, maybe I should sell my house and do what you and your husband decided to do, then you have the dilemma, but I have to live somewhere. So if I sell in an upmarket, I've got to buy in an upmarket.

And so that will give people pause to say, okay, I can sell this. But at the end of the day, in my view, I've always advised people to look at housing for the long term because it's somewhere that you need to live. So you shouldn't view your house as sort of a piggy somewhere that you need to live. So your house, you shouldn't view your house as sort of a piggy bank that you carry around on your back and use it on that basis. But the reality is a number of Canadians facing retirement are very much dependent on the equity

that they've built in their home. What I think Royal Page and some others have done some work recently that pointed out two things were happening even before the pandemic. All the people that were entering the retirement age and older were predicted that they would do exactly what you said, sell their house and move into less expensive accommodation or move away. And to a certain extent that happened, but it happened a lot less than people predicted. So Canadians, older Canadians are staying in their home longer and more resistant to moving. A number of them have moved from a financial planning and lifestyle perspective, and some of that will continue. But you're right. What's happened now is in some of those more desirable areas where they looked really attractive from an affordability point of view they have increased 25 35 45 percent so you're sitting there going you know

i'm going to sell this place that i lived in for a long time and built up a lot of equity in and i'm going to something and is it that much better? And then the question is, as that group in society looks at it, what's primary for them? It's accessibility to health care. It's convenience. It's mobility. It's access to their extended family. So when people who make that decision look at it,

there are other issues that they have to deal with before they can simply say i'll sell this really expensive house in toronto and buy one in a more remote rural community because there's a lot of other issues that go hand in hand with that so i think that will continue but not to that same extent um i think it has in some of those markets, we just released the September numbers looking at the real estate resale results. And if you look across the country, that's still going on, but not at the same pace. So, I mean, where the jobs are, people need to be. Employment drives that demand as well. We have record levels of employment currently among full-time eligible workers. And a lot of that

still takes place in the major urban centers. So that's why I say, I don't think you'll see the continuation of that migration as an ongoing pattern. You'll see some of that as people decide to retire from the workforce. And to the extent you can work remotely, I do believe that there's a cohort of people that will say, I don't want the long commute. That's one of the number one aggravations for people. So I'd like to live in a community that has good schooling, good healthcare,

and not have to fight that traffic. So, but not everyone can work remotely totally. And I think you'll see the return to hybrid. And that will impact demand. Yeah, well, that was the other kind of concern. I've seen so many people, you know, leave the city because they're able to work remotely. And for lots of them, I think some companies are really shifting their policies to be like, okay, we've seen the results. You're doing great work still. You can continue.

I mean, for me, from like a business perspective, it makes sense to let go of your very expensive, you know, business or building downtown lease and let your workers work remotely if you're getting the same, you know, results and everything's going fine like that. That just seems logical to me. And also workers love, you know, in general, especially younger people like millennials, they do like to work remotely. But I know there's going to be a number of companies

that are like, all right, this pandemic is over or it's safer now. We want you back in the office. And a lot of people have like moved out of the city. They're like, I don't live near that office anymore. One of the, you know, things I think about is like, is that going to cause maybe the prices in some of those places that, you know, people move to, the country, their suburbs, to maybe decrease because maybe a lot of, you know,

maybe more listings will come up there because people are leaving to go back downtown. But then will that put pressure on prices in the downtown core again? It will. And I think that the jury's still out on what you the downtown core again? It will. And I think that the jury's still out on what you described in terms of return to work. I think most major Canadian employers like ourselves are going to put the health of their employees first and not require anyone, whether it's for productivity gains or not, to return to the office if we don't feel they're safe. So I think that'll

be a staggered approach. But a lot of employees that we survey, they want to work in a group setting, if not all the time, part of the time. And some of the activities that we engage in as a business require some face-to-face interaction. And then having said that, you know, if you walk down the pathway in Toronto, it has been very desolate throughout the pandemic. Oh, I know. It's weird. It feels very strange. It's very dystopian. But it hasn't returned anywhere near to normal. And I think that will be what I will use as the canary in the coal mine when I walk down the pathway and see a return to life.

But I think that you will see people returning. You will see a lot of companies working a hybrid model. A lot of people were working remotely for part of their duties and responsibilities anyways. In our business, we've worked remotely for many, many years. So it was a little bit easier for us to adapt. responsibilities anyways. In our business, we've worked remotely for many, many years. So it was a little bit easier for us to adapt. And certainly the industry, we're trying to move in a virtual fashion so that customers have the ease of fulfillment and can interact digitally. We have a digital channel we developed called eHome that allows the purchaser. So say if you wanted to go out and do everything just on your laptop, from making your application all the way through to

funding, you could do that, save and accept, going to your lawyers to pick up the keys. And recently we added switches, which is if you were with one of our competitors and wanted to move to us, you can do all of that digitally. So you don't have to go where people are and you can do it yourself and upload all of your necessary documents in order to get the deal done. But I think people are social animals too, right? And they want to interact with others. So I'm always nervous when people say, well, this will be a trend that continues. I think it is a trend, but it's a trend with a lot of underlying reasons. Yeah, no, definitely. It'll be interesting to see

what happens. It's funny, though, but before, you know, well, before I went full-time self-employed, going back five years ago, I remember in the, you know, corporation that I worked for, there was a lot of discussions about flex work, you know, corporation that I worked for, there was a lot of discussions about flex work, you know, sometimes working from home, and they were very, very against it, assuming, you know, and I think a lot of, you know, old corporations to just as you know, if they don't have a policy, or they didn't already kind of allow working from home, they would assume all the negatives, like, oh, people are just going to be slacking off and but I think this has really changed the game for things because I think people have had to really

prove if they're working from home, yes, I'm going to be just as productive because obviously I want to keep my job and we want this to not be like a trend or just like, oh, this happened in this few year period, but then it was back to normal. I don't, you know, I'm curious what your thoughts are about back to normal. I don't know what know, I'm curious what your thoughts are about back to normal. I don't know what back to normal means, but I agree with you. I think that what I've witnessed more than anything in terms of the remote work has been higher productivity, but more of a risk that ironically, that the life work balance could be more out of sync because you are at home and you don't tend to make that time

for yourself and for the things that you might have done when you left the office and came back. And so people were working longer hours. And I think that there's a rebalancing that had to take place. I know within our own business that people had to check themselves because they were working from home, but they were working longer and harder. And that's something that you need to pay attention to because your human capital is the most important. I think that trend in terms of remote working where it's appropriate and it works and technology allows it and it's good for whatever business you happen to be in. We're in a customer facing business.

So what we want to do is be where our customers want to be. And if they don't want to come into a branch or it's too long commute, then we need to organize ourselves to allow for that in order for you to get the products you need or apply for a mortgage to set it up so that you can enter by whatever channel and be as comfortable as you are. And if you don't want to go into bricks and mortar, you don't have to. And I think that definitely will continue. But I do believe that there will still be the necessity for most people in most corporate organizations to be spending some time within the office or within a group dynamic both for planning and execution purposes but I don't think that will have a huge impact on the commercial real estate outlook I think that our economy is growing and will continue to grow and that will create the

demand. And in the interest rate environment, while we're stepping up, you got to bear in mind that these are the lowest rates of a lifetime. And so as interest rates rise, that will put a bit of a dampener on demand. But what people also worry about, they say, well, I took out that mortgage and now rates are rising. What they forget is that when all of these people were qualified as borrowers, they were done at the Bank of Canada qualifying rate, which is currently at 525. Even if the contractual rate is 2%, we underwrite the person at 525. So there's quite an interest rate cushion as interest rates rise for existing borrowers. And then it's a matter of how, you know, what is your outlook for inflation? How high do you think rates will rise? I think we've got quite a bit of room in the next 24

months that will mean that historically these rates will still be very attractive for people like yourselves that want to buy. Okay, so it doesn't sound like because I what I hear, especially for you know, we haven't really touched on like the first time home buyers, you know, people that have been renting for a long time and then you know, want to buy their first home, it seems even more impossible now. And that's the frustrating thing. It's like, oh my gosh, when we thought things were expensive a year ago, we couldn't have predicted that 12 months later, they'd be even more expensive. And it just it seems impossible. And I just hear from so many people being like, this cannot possibly continue like, you know, rates are not rates, but my view, prices will continue. They won't rise at the same rate that they have in the past couple of years. But we do have, I think, the best first-time homebuyer program in the world in Canada.

If you're a first-time homebuyer, the high-ratio program that is sponsored by the government's covenant through CMHC or through Sagan or through Canada Guarantee allows first-time home buyers access to the market in a sane and sensible way. The challenge is the caps and the limits for that program make it virtually impossible for a millennial in Toronto or Vancouver to be eligible. If you're in a marketplace where the real estate is less expensive the program in my view works very very well the what they can look at is increasing that cap i think that program has been successful when there has been some debate about it it's attracted more heat than light but it is i mean millennials should not be discouraged i I had this discussion over the weekend with the notion of if you're a millennial and you're renting now, should I rent or should I buy?

And, you know, people feel, oh, the market will continue to increase. I better get in now. But I would never rush into any decision like that. If you're a first-time buyer, there's always another train leaving the station. What you need to do is look at whether that's an appropriate purchase for you that you can afford it. Think about the contingency costs. Owning real estate, owning your first house has lots of surprises for those of us that have gone through that. And so what you really need to do is to think about, I'm paying this much in rent, what are my borrowing costs? What can I afford in terms of my after-tax disposable income?

And if you're in that position, I always advise buy, because as I said before, every payment, whether it's biweekly or monthly, you're creating equity and you're creating ownership. And in most family planning models, or if you talk to planners, they'll tell you that if you get into the market earlier and own your own house and even own a second house, you typically will have a greater net worth as you're further along in your career and contemplating retirement. So I think that that's why you see millennials still saying, yeah, it's crazy expensive, but I want to be a homeowner. Yeah, yeah, exactly. It's like we all, I don't know anyone that doesn't really, I mean, there's the benefits that, you know, I used to talk to people about, you know, not owning and

renting. A lot of it had to do with like freedom and flexibility of like, oh, I can travel, I can move. And then we were all stuck in the pandemic, we couldn't travel, we couldn't even, I mean, I is just in this past summer, I was able to go back to Vancouver to visit my family. So we couldn't even travel really within the country. And so I think that for lots of people that were, you know, diehard, I'm just gonna run because I like having my freedom made them kind of rethink, well, I guess this is the downside of, you know, if this is a pandemic we're experiencing, and people say we may experience another one in our lifetime. These are some things to think about. But yeah, I always kind of think, like you said, and I think that's really great advice. When you are considering buying a place, it is something that you should

never rush into, because that is when you have the regrets. You're like, oh, wow, we made that decision, that really expensive decision based off our emotions. But also, it's about buying something that you can comfortably afford. I mean, I remember even though, I guess, seven years back, we were looking for a house and it was very blatant to us at that time with our incomes, we can't afford a house. Like it is really making me uncomfortable and you should never feel, I personally think, uncomfortable. You should always listen to your, like I tell people all the time, listen to your gut. You've got to go with that gut instinct. And so we took a pause for a few years, came back to it. And then instead of looking for a house, we looked for a townhouse and it was more in our budget. And it really um so it was the best decision we could have made lots of people like

oh didn't want to you know if you bought a house it would be worth this now i'm like i understand but for like monthly cash flow it gave me the opportunity to leave my corporate job to start my own business whereas if i had a really hefty mortgage payment and higher property taxes i may not have left my corporate job because I'd be afraid that I wouldn't be able to make the payments. And so there's lots of things to think about. And, you know, and again, it's a very personal decision. But I always kind of say it's, it's, it's expensive to buy, but still, there's lots of things that you can do. Maybe it doesn't mean buying a house right away. Or maybe it does mean buying outside of the city and kind of

figuring that out. But it's never a good idea to just rush into things or buy a house with FOMO, the fear of missing out. It is more difficult for self-employed to get mortgages and has been in terms of what qualifies for income over the last several years because of regulatory changes that have been made but i found in our business in terms of small business owners we have a a product called step which is scotia total equity plan which is when you decide to put a mortgage on your house we can also register a collateral charge and give you a secured line of credit which includes card access and what i found with small business owners what they like is that you have that flexibility.

So as you build the equity in your home, that borrowing limit is there, even if you don't use it. So then say you do decide that you want to make an investment in the market or you want to do a renovation, you've built up the equity and you can access it quickly and inexpensively. And small business owners have been attracted to the RSTEP product in particular because it gives them additional flexibility

with their business pursuits as well to marry that with their home ownership. So I think that you make a very interesting point when you say, you know, it's such a big decision that you had to make a career choice that it might be dependent on it. And I think that's why there are so many elements of it that suggest that you really do need to think about this. It can't be an emotional decision, right? And that's why we need more transparency in the sales game as well, like these crazy blind bidding and the psychology of winning the deal. I don't think that's good for the marketplace or good for the real estate industry. So hopefully some transparency will allow consumers to make more informed choices. And that's what I'm in favor of.

More information publicly available to everyone so they can make the right decision about where they want to live for themselves with the best information available. And hopefully someone from Scotiabank can assist with that. A lot of the people that work with us, people ask, why do they spend their whole lives in the mortgage business? Because they really do feel good about it when they put someone not only into their first home or their step up home, because for all of us, you know, home ownership is a bit of a dream, as you said, whether it's buying the bones on a building and then turning it into your own vision. But having a place that you can call home that you own yourself, I think most Canadians continue to aspire to that. Yeah, no, I agree. But yeah, I totally agree about the transparency as someone

who's, you know, been shopping for a house for about a month now. It, again, like I kind of mentioned earlier, it feels so much different than the last time we, you know, put bids on places. It makes no sense. I mean, back in the, well, I guess it's, it has been like everything sales, it was selling for over asking, you know, back when we first looked seven years ago, but now it's, it doesn't make any sense. Like you're trying to do the math. You're like, if something's listed for a million, they actually want 1.2 million. And then it depends on how many people are bidding against you.

And you have no idea how much they're bidding. And you know, That's a Byzantine process where they're playing games, where they list deliberately to entice people and then say, we're not accepting offers. And they do and create this bidding process. I mean, essentially, the market will find its level. But you're right. Some of the I read every day to look at some of the recorded events of how much people paid over asking. And some of that just doesn't make sense to me.

Right. So I think that's why you really do when you're making this decision, make sure you get the best advice available to assist you. Because if you make a mistake, as you said, it can be costly. And plus, I think that realtors, most of the really good ones know that the industry overall needs to up their game in terms of transparency and some rules around selling. I know that Tim Hudak at Aurea is in favor of the kinds of reforms that allow the consumer to make an informed choice. Yeah, and hopefully we see some of that reform because I feel like the government's been talking about it for a while or just making things more affordable. And now I haven't heard a peep since that election. No, there's been too much talk by all levels of

government and not enough done to change it. We need a call to arms in the supply side of the housing industry in Canada. We've asked for a national housing table. It's really critical. All levels of government, federal, provincial, municipal need to get involved. They need to look at issues like, do we have the right incentives in place for developers

to bring more houses on stream? Does it make sense? Can we address the affordability problem? Yes, we have to create more supply. Do we have enough skilled trades available, even if we were to affordability problem? Yes, we have to create more supply. Do we have enough skilled trades available, even if we were to ramp up construction? The federal government should show leadership and use the infrastructure funds to attempt to persuade

both the provinces who make the rules for the municipalities to change the whole redevelopment cycle. It takes far too long to get permits approved and to get a shovel in the ground. And if we don't address that, you and I could be sitting here 10 years from now having the exact same conversation. Oof. And I do not want to see what those prices may look like in 10 years. Like if you would have told me. They won't be good in Toronto. Can you spell Manhattan? Yeah, right. I mean, I Yeah, it's it's very, very true. And I don't want to Toronto like the real estate market in Toronto to become New York. I have

friends that live there. And it doesn't sound pleasant. I mean, you know, people that live there like, well, I'm never going to own property in my life. And that's just a, you know, normal. But I feel like we could do better here in Canadaada i mean you know it's canada there's lots of space come on we can we can figure this one out right we we can do better and we should do better yeah yeah well i'm sure i can talk your ear off for years and years and years because i love this topic so much and you uh have so much experience and insight into it so i really appreciate you taking the time to to come on the show and to you know do you just such a great job of breaking down what happened and what may happen in the future. You know, before I let you

go, what are some, you know, pieces of advice you'd like to leave listeners with who are maybe considering selling or buying their home? I think that you have to look at your individual circumstances. And to the extent it's's possible you've got to try to take some of the emotion out of the decision so you know you have to do your research and that's why transparency is so important know the neighborhood that you want to buy in and and whether the amenities and the schools and the hospitals and all the things that you're concerned about are going to be there. And I think it's important, you know, the expenses of doing a transaction in real estate,

particularly in the large urban centers, are very expensive with the additional land transfer costs. So, you know, when you buy, you need to say, I'm going to stay there a while, is the advice I give people. So you should really do some research, not just about the house you're in, but the street you're on, the neighborhood. You should always talk to more than one supplier or agent. And it's critical to get a mortgage advisor that does this all day long, who can really guide you in terms of, should I get a variable rate mortgage? Should I get a fixed rate mortgage? What are my options? And then, you know, don't be too anxious. Like pull yourself back if people are trying to drag you into a bidding war, I tell people. Because at the end of the day, a rising tide raises all boats.

So if the market's going to continue to go up, the place that you buy will go up. There's no magic in one special street address. Yeah, I think you mentioned something really great there. And that's something that I've been thinking about a lot as prices have just, you know, they just seem crazy to me. It says that the best thing you can do in terms of buying real estate is to think about it as a long term situation. Just like, you know, if you're going to be investing for your retirement, you know, it's not about getting rich quick. It's about getting rich slowly and being patient and investing for the long-term.

I think the same thing has to now be, you know, said for real estate. I mean, that's always been kind of the advice, especially if you look at people who bought 20 years ago, they definitely got a good return on their investment. And so that's at least something that I keep telling myself that if we buy our next place,

we're going to stay there for a very long time, and hopefully it'll all kind of balance itself out. And real estate, unlike other sort of asset classes, is a long cycle. So when you're involved in the real estate, whether it's for development or investing, you really have to look at a longer term horizon than you would if you're looking at other classes of investment. And the other thing is, like for most people, they're buying their home there. And so it's an appreciating asset, but it's also where they live and where they raise their family and strong emotive connection. And you have to take all that into account when you're buying. Most people aren't in the business of

buying and flipping. They're in the business of buying and making a better home for themselves. Yeah, yeah, absolutely. Absolutely. Well, again, thanks so much for coming on the show and sharing all of your expertise. I'm very happy to do it and happy to come back. And it's a great opportunity to get the message out and increase everyone's awareness of, you know, a very tricky housing market. Absolutely. And just in case, are you on social media? Is there any place that people can follow you? No. I am a tech.

When it comes to technology, my children tell me I'm a Luddite. Oh, well, I'm sure, you know, we always I kind of see you around in the media. So I'm sure people can find you on the latest media outlets. Yeah, hopefully. Yeah. Well, thanks again. My pleasure. And that was episode 307 with John Webster. Again, he's the president and CEO of Scotia Mortgage Corporation and the head of the real estate secured lending unit at Scotia Bank. You can find him on LinkedIn. You know, just search John Webster, he will pop right up. But

otherwise not on social media. And you know what, good for you, John, I wish I didn't have to be on social media. I cannot wait for the day when I can like retire and just shut off all of my social media platforms. Like that is the dream. Sad dream, but it's still a dream. Anyways. So hopefully you enjoyed this episode. If you're wondering also, if you, you know, if I personally have some more resources and information about, you know, home buying and mortgages, you bet I do. Number one, I've got actually some, you know, helpful guides in my free resource library. So make sure to check that out. Just go to JessicaMorales.com slash resources, but I will also direct you to my YouTube channel. I've,

of course, because I've gone through this myself recently selling my home buying home. I've got a few recent videos about my experience. So make sure to check me out on YouTube, you can just Google Jessica Morehouse or go to Jessicaessicamorehouse.com slash YouTube and it will direct you right to my page. Okay, I've got lots of things to share with you. So do not go away. Just stick around have a few words I want to share first about this podcast episode sponsor. This episode of the more money podcast is supported by Motley Fool Canada. Interested in leveling up your stock market knowledge and skills? Want to dip your toes into investing in individual stocks by taking a methodical get rich slowly approach? Then consider signing up to Stock Advisor Canada. I've personally

been a member for two years now, and I'll tell you why as a loud and proud index investor I signed up. Because they are all about playing the long game. You won't see them promoting hot stocks you can flip for a supposed quick profit. They are focused on educating Canadians about long-term stock investing and even recommend holding stocks for at least five years because, as we all know, patience is an investor's greatest asset. Not only does membership include buy and sell recommendations, weekly updates, special reports, and member forums. It also has their premium hub with members-only live streams, exclusive videos, and more. So no matter if you want to start investing in stocks or just improve your overall investing knowledge, consider joining over 70,000 of your fellow Canadian investors today

by signing up to Stock Advisor Canada. And if you visit fool.ca slash Jessica, you can save 66% off your membership. Once again, to sign up and get 66% off, visit fool.ca slash Jessica. Okay, so first I want to remind you, as I mentioned on last week's episode, I have a book giveaway and I'm going to be drawing winners probably actually at the end of this month because now since my sister Sarah is my assistant, that's actually the task I've given her for the giveaways. She's the one who emails all the winners and, you know, mails out all the books. So you're going to want to take advantage right now. All of the books that are featured on this season, including a future episode that will air at the end of the season, I think it's the last episode, yeah, 310. So that will air at the end of the season i think it's the last episode yeah 310

so it'll be at the end of the month uh all of the books that i'm going to be giving away are on uh the web page jessicamorehouse.com slash contest you can also find the link in the show notes jessicamorehouse.com slash 307 is where you can find the show notes for this episode and another reminder you can find details about every you know guest and past uh podcast episode for a particular episode, if you just go to a, you know, Jessica Morehouse.com slash podcast, that is where you can find all of my past podcasts, but also Jessica Morehouse.com slash 307. Well, that's 307 is this podcast episode, obviously, but for a different episode, you would just go Jessica Morehouse.com

slash the number of that episode. That is where you find all that information. I also want to kind of, you know, give you a little, you know, insight into what I've been working on. I'm always working on stuff, right? But one thing that I've been really eager to get done, and it's taking a long time, I do blame me, you know, trying to work for this one web developer and her ghosting me. So cool, cool, cool. Thanks for that. But anyways, I'm going to be redoing my website. So if you don't know, I've been I've been I've been doing this for a while, like I started my blog 10 years ago. And it has gone through many iterations. And the latest website, that's fine. I mean, it's not the worst thing in the world. I built it myself. I've built pretty much most of

my websites, except for my like, early, early days ones. I actually got my older sister Anna to build them. And then eventually I'm like, okay, I'm just, I'll try to figure this out on my own with WordPress. Anyways, we've gotten to a point in my career where I'm like, Jessica, why are you trying to build your own website? Why are you doing that? You don't need to do that. You're not a professional web developer or web designer. And we can, we can outsource that now we can do that. And so letting go of that, which has been hard, because it's like, I've always done it myself. And so that's what I'm gonna be working on in the new year. There's a I hired a web, you know, person, and she's going to make me a wonderful website. And I honestly cannot wait. Also, we'll be getting some new headshots,

you know, it's time just for kind of a revamp of uh the the brand i've got some like new brand colors and fonts i've been trying to slowly integrate into all of my platforms and stuff so anyways that's happening and very excited to have a new website soon hopefully it'll be uh you know better than the one that i tried to make myself which is fine but you know when you look at like a professionally made website you can tell that it's yeah someone made it themselves so anyways uh last thing i do want to remind you about is my uh investing course wealth building blueprint for canadians if this is something that uh you've been thinking about uh just you know you know applying for or you know potentially enrolling in this is the time you're going to want to do it um so make sure to book a call with me you know before the end of

the year because as of january i will be increasing the price. So if you just go to jessicamorehouse.com slash WBB, that or honestly, if you just go to jessicamorehouse.com, it's right on the front homepage. But yeah, you're gonna find more information about what's actually in the course, it's very comprehensive. And you know, really takes you from, you know, if you're a total beginner when it comes to investing, or you maybe aren't, but there's a lot of kind of gaps in your investing knowledge, we fill all those gaps. And then I show you how to build your own investment plan and start investing in a passive way by building your own portfolio or using a robo advisor. And just all the key things you need to know to be a savvy

passive investor. So Jessica morehouse.com slash WBB is where you can do that. If you, you know, you apply, if you, you know, kind of make the cut, you're an appropriate candidate. Because basically, you just won't get in if you're looking for something about cryptocurrency or hot stocks or stuff like that. Like this is a index ETF, you know, how to course. So you know, that's, that's what's going on. That's why I have the application process. And then you have a call with me and see if it's the right fit for you. And yeah, do it before the end of the year because the price will increase. So that is really it for me. Like I mentioned, we've got Oh, gosh, we only have three more episodes left. So we have

two episodes, exciting two episodes next week. And then we're going three more episodes left. So we have two episodes, exciting, two episodes next week. And then we're going to wrap things up. I'll just tell you right now. I'm going to wrap it up with one of my favorite guests of all time, Andrew Hallam, who's the author of Millionaire Teacher, one of my favorite books of all time. He has a new book coming out and we talk about it. So that will be December 22nd. Gosh, we're really getting close to Christmas in years with that date. But here we are. So lots of exciting things to look forward to. So thanks again for listening. And a big shout out to my podcast editor, Matt Rideout.

I will see you back here next week with a fresh new episode of the More Money Podcast. Have a good rest of your week.