The Wealthy Barber Podcast - #26 — Steve Saretsky: Canadian Real Estate—CRAZY Times Have Led to CRAZY Times

Episode Date: September 23, 2025

Our guest this episode is Steve Saretsky—a top 1% realtor in Vancouver and the host of one of Canada’s most popular real estate YouTube channels and the podcast “The Loonie Hour.”  In this wide-ranging conversation, Dave and Steve explore the current state and uncertain future of Canada’s real estate market. They talk about the collapse of the condo market, cancelled development projects, rising risk for lenders and whether sellers are finally starting to accept reality. Steve also shares his insights on affordability challenges, the impact of immigration, which markets still offer value and why detached homes remain the dream for many Canadians. If you’re trying to make sense of the Canadian housing market—whether you’re a buyer, seller, investor, or just a curious observer—this episode offers a candid, data-driven and often surprising look at where things stand.   Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Steve Saretsky (03:06) The Collapse of Canada’s Condo Market (06:45) Where Are Real Estate Prices Headed? (10:08) Are Real Estate Developers and Lenders in Trouble? (14:38) Layoffs at Real Estate Development Companies (17:01) Lend and Pretend (19:00) Cancelled Development Project in Vancouver (21:15) What Caused the Crazy Real Estate Market in 2021? (24:46) Are Sellers Being Too Stubborn? (26:50) First-Time Homebuyers Can’t Move Up (30:49) The Impact of Immigration on the Real Estate Market (32:40) Most People Still Want a Detached Home (39:02) Which Markets Are Still Affordable in Canada? (41:44) Landlord Challenges & Investing Across Provinces (48:49) The Cottage Real Estate Market (50:56) Policy Changes to Fix the Canadian Real Estate Market (53:45) Land Costs Drive All Prices Up (56:01) Conclusion

Hey, it's Dave Chilton, The Wealthy Barber, and former Dragon on Dragon's Dent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making this subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever. will be here to help you do it. Before we jump in, a quick but important note,

nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chilton, the Wealthy Barber, here with the Wealthy Barber podcast, episode 26. I said this last time to thank you so much. The listeners, we're up to number two in the country of all business podcasts. We're behind Diary of a CEO. It's not even Canadian. Shouldn't count,

a very good podcast. And today the momentum will continue. We have a guest that I'm quite excited about Steve Siretsky. I'll tell you a little bit about Steve. I have followed him for years. I followed him on Twitter, X now. I followed him on YouTube. He does a great job of doing housing industry analysis. He's a realtor out of Vancouver. He's one of the big players top 1% business school background excellent communicator he does the loony hour and i don't know a lot of you have heard of that podcast or watched it or listening to it with uh keith and rich he tells me off air he carries them that he's the smart one in the group they're not that clever and he has to lift them up and carry them through the podcast but i really enjoyed it they did a special episode where

they went to ben rabidoo's cottage and chatted and it was fantastic the production dyes were amazing the insights were really interesting stuff. And I thought that it was one of the best ones I've seen produced in Canada, period. We've had Ben on the show, and a lot of you love that episode. Steve, let me start by saying, you will not be coming to my cottage. What? I hate company. Even if I invite you, I don't mean it.

I don't want you there. Okay, it's nothing personal. I just don't like anybody coming. But no, you've done a great job. You've really brought a lot of good information in Canadians over the years. You're very data-driven. And, you know, a lot of people think of you as being very opinionated. but I always find your opinion is born of the data,

that it's very much well backed up by the research you've done. So that's the big intro. There's a lot of pressure on you to live up to that intro. Don't let us down. That is a tall task to climb there. Yeah, Dave, you know, thanks so much for having me on. You know, you and I were joking off the air before we got on. But I said one of the only books my old man gave me as a kid was the wealthy barber.

And he insisted that my brother and I both read that. And we did. So I think, yeah, it's funny to come full circle and I'm sure my old man will enjoy the podcast here today. Yeah, I'll give them my best for sure. Listen, I want to start with an interesting perspective, you know, two, three, four, five years ago, everywhere I went, everything I turned on, especially YouTube, it's Canadian housing crisis. Prices are going up. There's a housing crisis.

Now prices are going down and everything I hear is Canadian housing crisis. So when they're going up, it's a crisis. when they're going down, it's a crisis. Obviously, it all depends on whose perspective that they are coming at from. What are your thoughts on the general market right now? Yeah, I mean, yeah, again, it's funny. It's right. It's like who is it a crisis for?

It's a crisis today for the real estate developers and, you know, some of the realtors and mortgage lenders and things of that nature. But I would argue that it's, you know, again, falling prices and we're starting to see falling rates again is ultimately a boost for young people trying to get into the market and affordability, right? I mean, I think the reality is, as affordability today is still incredibly stretched. But I think it's interesting to sort of see, like, the sentiment shifts.

I mean, we were talking about on our podcast a couple weeks ago, but like on the front cover of McLean's magazine, I think two weeks ago, was like the condo crisis they called it in Toronto. And it's like this Jenga tower that's like collapsing and falling over. And I was like, wow, that's such a great sentiment indicator of like where we are today, like where sort of mainstream psychology is and which is everybody's like running from the condo market thinks it's going to get worse and it's a complete sort of 180 from the market where I used to which is you know 40 50 pairs of shoes at an open house and everyone fighting each other at presentation centers you know literally setting up camps and tenting overnight to get their hands on a pre-construction condo what's happening in your mind in the condo market for the collapse to be this severe and I would say relatively. relatively quick. A lot of people predicted this. I mean, you were talking a year or two, three ago about why this could easily happen. Ron Butler's been speaking about it as well.

But what tipped it over and made this happen so quickly? I think it was just like the runaway price inflation. Like it was, it was a, it was a, it was a, it was a mania. I mean, there's no other way to put it. Like you look at, I remember in like early days of 2020, like just after the pandemic, like we know, world was shut down. And all of a sudden, you started seeing, like, kind of in the summer of 2020, we started seeing houses going into multiple offers. I was like, man, that's so strange. I was like, what are people doing?

Like, the global economies basically shut down. People are losing their jobs and people are out there, like, competing and bidding up houses. And I thought that was so strange. And obviously that sort of kick started the, I mean, let's call it what it is. I think it was a real estate bubble, at least in many parts of the market. And you had the huge run up in the suburban markets. Like here in Vancouver, You know, if you look at the suburban markets, we call it the Fraser Valley, I mean, from 2015 to sort of the peak of 2022, like, prices like literally, like you look at condo prices from 2015 to about 2022, they've literally doubled.

No, that's amazing. Right. I mean, in seven years to have home prices doubled. No, you're averaging 10, 11% a year at that point versus the historical averages of anywhere between 4 and 5 and 4 and 6 depending on the time frame. It's quite remarkable. And to your point about the mania, when you look at late 20s. 21, early 22, in many parts of the country, that was truly nuts. I mean, that was the ultimate blow off top where the experts were saying it's too expensive,

yet it got dramatically more expensive. And that's when I started thinking this almost has to fall. There's just not enough income out there to support this. And you can forget the foreign buyers carrying the market. It's gone too far too fast. And then obviously we've had the trouble set in that we have. You know, it's funny on the affordability front. I think too often we leave out the interest rate differential.

So it's still very expensive. it's still too expensive, unfair to the younger generations, but when you compare it, say, to 1995, when interest rates touch 10%, and now you're looking at mortgages in the 4% area, the monthly income dedicated, the percentage of your monthly income dedicated to the housing cost, funnily enough, is not that different. Now, historically, of course, rates happen to average 10. They've been closer, let's say, 6.5, but that has to be factored in. The down payment on the other hand, where interest rates don't affect that, wow, is that

tough to put together for young people? Where do you see all this settling down over the next couple of years? Do you think that we're going to see slightly lower rates in the very short term, although I don't know on the long side whether we will. Where's all this headed in your mind? Yeah, it's a good question. I mean, just to touch on what you mentioned there with like the down payment, I find that's like actually like the biggest challenge, right?

It's not necessarily like carrying the mortgage out. It's difficult. But like saving after taxes, you know, now the down payment has to be like a couple hundred thousand, you know, in the GTA in Vancouver, it might be three, four hundred thousand dollars to save that money after tax without like parental help. You know, it's funny. I like this, I'll never forget. I had, um, I'm not going to mention the name, but like, probably one of the larger Canadian bank economists and like they're messaging me on social media and we're chatting and there's a lot of mutual respect there. And they're like, they were struggling to get into the housing market. Yeah. They said to me, like, we're just, we're struggling not because we can't afford them. We don't have good income. but we can't save for the down payment in in in Toronto because Toronto's so expensive and yeah they've got a great job and they're an economist and they know the markets but it was it

was that that was the biggest challenge and so you know where is this all going I mean I think that it's interesting I think there's a lot of parallels to the 80s and 90s and obviously I wasn't selling real estate then but you just go back and you look at the data and you look historically what happened and I think you know we had a huge run up it's been runaway home prices for for 20 plus years now. And I think that it's a highly likely that you just go through this decade of stagnation, like this lost decade.

And where I kind of try to push people to like the parallels, which is like, guys, it's already happening. If I'm in Vancouver, so if you go on to like the west side single family market, so like think about like Shauna C, Caras, like all like the prime awesome, like the best neighborhood of Vancouver. Yeah, beautiful areas.

those houses, they peaked in 2016. I did not know that. Yeah, they had this influx of obviously foreign money that came in, which everybody knew, and then eventually they brought foreign buyer taxes in, you know, several years later. But those markets got pushed up to extremes in 2015, 2016. They peaked in 2016.

And if you actually go look at the price chart today or run an analysis on any of those houses, they're still selling below their 2016 levels. That's very interesting. And that's, so, you know, that's nine years and that's like prime real estate, it's dirt. And so I'm always like, well, why should your suburban condo just continue to go up every single year when like the best real estate and you go west Vancouver is the same thing? No, that's actually very interesting. Jumping topics a little bit, you've done a really good job lately of highlighting the fact that there are a fair number of developers out there with big land packages that they used a lot of leverage to acquire.

And this reminds me of the U.S. in 2008, that part of the crisis down there didn't get enough attention. A lot of those developers didn't make it through. And I think in Canada, we look at the carrying costs in that land, way higher than the income. In fact, in some cases, there's no income. There's nothing coming from the raw land that we're going to have the same challenges play out. And if they go back to market on it, they're going to be underwater and they don't necessarily have the balance sheets that can carry it. Are you seeing that in the West? What do you think of that as being a significant issue?

Yeah, I think it's the biggest. thing that I'm sort of most watching. I think like, again, like the McLean's article, we'll talk about the condos or like, oh, you know, single family houses are dropping. I don't think that's really where the fireworks are. I think the fireworks are really in like the pre-construction, the development space. Obviously, the, the general public is not as in tune with that. You really have to have kind of like an ear to the ground and you kind of have to know who's who and what's happening. But what's happening there is effectively similar to like mom and pop that speculated on a pre-sale and ever-rising prices.

The developers did the same thing, but they were typically doing with development land. And so, you know, development land typically doesn't have like a, you know, a yield, right? I mean, there's very little yield there. You're basically, what they were doing was like every year, Dave, when land prices are going up, you know, 7 to 10%. You basically did, they just basically kept refinancing this land and going out and acquiring more land. It was basically just like a land accumulation game, right? And so long as prices just kept going up, you just kept refinancing and just continued to acquire land. And I think what we've seen now is obviously prices are coming down significantly.

And not only that, but interest rates have gone up dramatically during that span where you're seeing the interest payments now are suffocating these developers because these developers don't have the ability to actually go and develop that land tomorrow. In many cases, they paid too much for the land. The prices have come down. It's uneconomical to then try to build a pre-construction condo on it. And you can't sell it because the market's illiquid. And in some cases, we're seeing like in prime Vancouver areas here, you know, in the Broadway plan is what they call it. You know, land prices are down 35 to 50%. You know, it's interesting because I think you could see them down to take another 10 to 20 because you're going to have some four sales.

it's almost inevitable when you look at the math behind the scenes here that some of these developers aren't going to be able to hold on. And you made a very important point. They can't just turn and build. Building costs haven't come down much. You still got the tax challenges. And if they factor what they can really get in this environment back in, they're selling at maybe even a bigger loss than they would be if they just let the land be liquidated. So it's interesting. What about the lenders on that front? Who are the primary lenders to that group of developers and how exposed are they from their balance sheets perspective? The ones that are really under pressure, typically, it's sort of like the private lenders, so to speak, or like tier two lenders. It's not like typically like an RBC or, you know, a TD bank. It'll be like a tier two, tier three kind of lender. So it's more expensive debt typically. And so again, these are sort of typically are smaller to medium sized developers that I think are really in the crunch. The big guys, some of them own the land for 30 plus years, they're fine.

And they're just choosing maybe not to develop today or they'll take sites that are actually profitable still and they'll go and develop those. But the people that are really in trouble are the people that bought land three, four, five, six, even seven years ago. And it's just, yeah, they don't have the, they don't have the same deep pockets to go out there and develop in this type of market. Those guys, I think it's really just survival mode. And I think a lot of bodies are floating to the surface. I think more both float to the surface in 26. You know, when you chat with commercial lenders today, they're telling you, like, there's no land sales transacting today. That's right.

The deal flow that they're getting is basically just like foreclosed land. That's right. Panic sales, et cetera. Yeah, it's a fire sale. And so because of the base of the land effectively gets liquidated by the lender, there is a clearing price. And because the price is so good, there is a buyer on the other side. Yeah, I agree with all of that. And I think it's going to take a while for all this to play out.

and we'll see where the bodies are going to end up being buried. But it's a challenging time. I think it's more challenging than many realize. And the point you made earlier, all of the focus seems to be going on the Toronto condo market, to some extent, the Vancouver condo market. But there are bigger issues out there. Now, you're starting to see some PR where you're thinking, hey, are the developer going to start going to the government looking for bail out,

looking for tremendous help. I'm not sure the public has a big appetite for that. A lot of these same companies and individuals made huge money over an extended time frame. And I think with times being so tight and the economy already rocking, a lot of the voters are going to say, hey, that's the game. We don't want to be involved in that. But it's also a big employer group. We've already got enough economic problems. How do you think that's all going to play out?

Great question. So I can tell you that pretty much every major developer, again, it has to be for Toronto, but in Vancouver, every major developers effectively laid off a percentage of their staff. So nobody is immune to this. What's interesting is you're seeing more of the big developers becoming public about the layoffs and saying hey you know we had to lay off these people and it's so disappointing because they're obviously trying to basically lobby the government right to say guys look things are bad we're going to have to lay people off we've seen recently in the last

month or so we've had a huge cohort of developers penning letters to government for sure bc government federal government saying remove the foreign buyer taxes and the foreign buyer bans we need to get some capital into housing to basically stimulate this sector and that's going to be really interesting to fall up because for those that are kind of maybe less in tune with it you have a federal foreign buyer ban that's in place until i think it's january of 27 and so that's like you know i'd be interested to see it will the carney government eventually cave and try to reverse that out or carve out more exceptions i think when you look at polling i think the polling suggests roughly 80 percent it's in that ballpark roughly 80 percent of of people are in support of a foreign buyer tax and ban. That's right. So for a government to say, well, we really need the jobs and this sector is really hurting, I don't think that's going to sell politically to remove that.

So I don't know what they do from here. I mean, we can speculate. I've got a few opinions of already what is happening where I would call it sort of a quasi bailout is already actually underway. in what manner so what's happening it's interesting the big one and it's been talked about i'm sure you're familiar with it is the blanket appraisals yeah for sure we're seeing those in ontario left and right yeah that's how it's done yeah we see them here so again for the listeners it's like effectively let's just say you know dave you went out and bought a pre-construction condo

in the gta in 2021 you paid 1,200 bucks a square foot. Now you're going to complete the unit, you know, several years later. And the real market value today, because prices have dropped, is not 1,200 a foot. It's 1,000 of foot. Right. And so, well, the lender goes, well, yeah, you know, but we had an appraisal done, you know, three years ago at 1,200 a foot. And, you know, you went through our application process at the time. So we'll still honor, we'll still honor and lend you the mortgages on the basis that it's 1,200 foot. We won't look at the today's value of 1,000 a foot. We won't look at the today's value of thousand a foot. We'll just use the old appraisal. So there's a bunch of condo developments that

will have these blanket appraisals done by the lender. And effectively what they're doing from the bank's perspective is oftentimes that bank, let's just call it the green bank, has financed the construction of that development. So they're like, well, if we just, if we have 30% of the building, that can't close because the appraisals are way below what they pay. We lose it elsewhere. We lose it elsewhere. So let's, Let's just kind of kick the can down the road. Let's just give these people their mortgages. In some cases, it's 100% loan to value.

And we'll deal with the problem, you know, two, three, four, five years down the road. No, I agree. I mean, lend and extend really has become lend and pretend in some ways around the value. But that's why they do it. You're right. Because a lot of people are curious as to what's their incentive. But that's the incentive. They've got other loans in many instances in other parts of the whole process.

So, yeah, it's very, very interesting stuff. You talked recently about a deal that fell through, I think it was in Vancouver, where the sales were actually quite reasonable. They had a good percentage of the building sold. Walk me through why you think a deal like that falls through at that particular point. Is some of it because the builders worried that the people aren't going to be able to close when it comes time? Yeah, that particular project was basically like a large project. The developer had a strong sort of foothold in that community. They're very big, well capitalized, probably one of the best.

developers in the city and they had pre-sold close to like 60, close to 60% of their units, which is typically the the financing requirement to actually move forward. So by many accounts, they probably could have moved forward given, given sort of how well capitalized that developer is. And yet they decided, you know what? We're at a, you know, we're just under 60%. Let's just cancel this project. Let's return all the deposits. And for me, that was really just like a good signpost to say wow like if this big developer is you know having pre-sold close to 60% of the units is just cutting deposits back and I should say because they're big and they want to maintain their reputation those guys actually let their realtors that had pre-sold

in there they let them all keep their commissions that's interesting which is like yeah think about that right the relationship strong yeah I call it 50% of the building they usually will front, a chunk of the commission up front on signing of that pre-sale contract, they let all those realtors keep their commission. So that was not a cheap out for the development. They had already excavated the site as well. Right. And so I just look at that.

And what it ultimately tells us is just like they're probably worried about how to we sell the other 40% or 45% of the building over the next couple years before this project completes, how profitable is this project really going to be, even though we've already pre-sold a bunch of them? Yeah. And again, getting closings on those could be a challenge. Plus, can you imagine the relationships you have with the early buyer if you're suddenly selling the last 40% of a totally different price? Yeah. And so all of those can cause challenges too on the PR front. No, it's interesting times. What do you think led to all this? I know that you and Keith and Rich have talked a lot about this on the Looney Hour. And again, it's a great

podcast. And I know Keith has always felt that the huge immigration we took on has played a big role. But I would argue that a lot of this was set in motion before we brought in those millions of people. You can see the trends. I think lower interest rates, you know, close to zero for such a long time, where the primary driver of the inflated values and how far this went. You're feeling? Yeah, I think so. I think it was like, I think the biggest one is probably like monetary policy, right? I mean, you leave interest rates at zero and, you know, you have the, the bank of Canada a governor telling, you know, they were never going to raise rates again, you go out and borrow money, you can feel confident about it. And so, you know, we, at one point, right, you can get

an insured mortgage at the height of the market for 0.99%. Like it seems shocked. When you say that now, and it's not even that long ago, it still seems shocking to someone as old as I am to hear something like that. It's wacky. And of course the real estate market was going to get distorted in terms of the pricing. It had to. Yeah. Yeah. Yeah. And like, think about it, right? Like, you're boring at 1% and inflation is running. I call it three to four percent easily. And so it's like they're basically just giving you free money.

And when people see you take that and you combine it with when everybody sees home prices going up. You know, Dave, at one point nationally, nationally, I think it was in 2021, national home prices, the benchmark, not the average sales price, the benchmark, which smooths out these variations, went up 27%. No, no, just shocking. As I said to you, that was the blow. off top, where a lot of people who don't follow the industry as closely as you do, people like me went, this has got to be it. Like, it's got to be going down from here. You could kind of see the momentum was so strong and people were trying to buy anything they could. It was nutty. This is a real, like, this is, I had so many of these inquiries, which is like,

when people see home prices going up 27% in a single year and interest rates are 0.99% on a mortgage, the calls I was getting was from, like, a lot of times was from concerned parents saying I'm worried about my kid ever affording a home. I should go out and buy a pre-sale condo and in three or four years it'll be complete. And I'm like, well, I'm like, oh, wow, okay. Yeah, I guess. I mean, I understand your fears and concerns.

But people were, like, generally fearful of getting, like, priced out or the kids getting priced at the market. In many cases, some of these phone calls I'd have was the kids would be like six or seven years old. I didn't get any of those, but we had hundreds of calls. And, I mean, you could see the fear. I mean, it was legitimate. at that point. You could see them thinking they were never going to be able to catch up. Let's get in

in some way, shape, or form. Parents got involved to the end degree when it all possible. And again, that fed the problem because the more they jumped in, the more they drove the prices up. And it was funny. I got asked so often by people, why that boomers aren't selling their houses earlier. They're selling at a later point in time in retirement than they used to. Well, who's going to sell an asset that is going up 10, 15, 20 percent a year tax free gains? What are you going to do with the money? As you say, invested a one? Like these parents weren't stupid. These grandparents weren't stupid. They looked at all this and went, no, we're more prudent to hold on. Now, of course, the worm turned. And again, I think that was relatively obviously going to happen when you saw that craziness of late 21 and 22.

I mean, at that point, the math was so offside on the affordability front that was just not going to be enough capital to come in to sustain prices at those types of levels. I wasn't sure it would fall this quickly, by the way. And, you know, we've really seen a lot of the buyers dry up here in Ontario. It's been interesting watching the last six months in Ontario, how stubborn a lot of the sellers have been on their price point. If they don't have to sell, that's fine. But if they have to sell because they've committed to a move or they're getting moved by their job, et cetera, it's kind of crazy how much above the market they are. And they're sitting there for months and months and months and I worry when they do eventually realize they have to come down, the price is going

to be significantly lower than it was when they first listed it. Yeah. You know, it's crazy. Like, again, I just love like human psychology and sentiment and sort of like, you know how people react in in markets and you know it's i think it was in 22 and then a good chunk of 2023 you actually saw new listings like people bringing their homes to market you saw those collapse like 20 year lows people were like oh like oh i miss you know back in like february of 22 i could have got a million now you're telling me it's like nine 50 and like i'm just going to wait like rates are going to come back down like the market always rebounds, you know, a year later, like every correction historically over

the last 20 years has been very, very short lived. So like, let's just hold off. And so what we saw basically what kind of kept prices relatively stable, I think for the first 18 months of of rates going up, it wasn't this flood of like foreclosures coming to market. But we saw was actually just, uh, the, the market got starved of listings. Supply. Yeah. And it was only eventually over time where people realize, okay, well, you know, prices haven't really bounced back. Like at some point, you've got to move on with life. And we've finally started to see the inventory. And now this year, right, in, in 2025, we've seen in some months, we're seeing 10, 15 year,

20 year highs and new listings. Because I think people are finally, sellers are finally capitulating and saying, okay, like, I'm going to get out now. And then I think that's what we've seen now was we've seen the prices of really gap down this year in 2025. We've seen a noticeable drop in prices. I think the market could stay sticky for quite some time because a lot of the first time buyers can't move up.

The housing prices have come down so much. They've lost their equity. They would form the down payment for their move up purchase. And that may take years to play out. And so we could have a relatively quiet market, at least on the move up front. Yeah, that's an interesting one. Like anecdotally, like again, we work with our clients and what we're seeing on the ground like you have a lot of people that are trying to move up but like oh well yeah I bought this

condo in like 21 and like you know once they start paying like the fees and the taxes like I'm losing money and like they're not okay with that and I'm like well again if you but if you want to move because your family's growing like you're going to have to take the hit probably on the sell side and you're going to have to go try to make it up on the buy side you know your house has come down your condos come down but what we're seeing now is you're seeing a lot of these like conditions right the subject to the sale of my home all the time all the time right nobody's comfortable with the risk it's a very a liquid market but you're actually seeing now like we know we're involved in a deal where like you've got three

properties all on the chain right like that seller's got to buy and so you've got these three subject to sale properties and you're like well one of them is holding up the whole chain well you know what stay confident because a friend of mine a realtor had four yeah a chain of Four. And it happened. So, I mean, it all played out well for him and for the sellers. But you're right. You're getting all linked to these. And if any one seller in that chain is unrealistic about the price they're trying to sell at, it makes it almost impossible to make all this happen. But just going back to the math we discussed before, you made a very important point that if you're at X and you're trying to move up to say 1.5X, to some extent you could argue you've benefited from the falling

market. Yeah. Because in absolute terms, the more expensive home has fallen more dramatically. The challenge is yours has fallen enough in many instances that again you've wiped out all of your equity or at least a big chunk of it and you don't have enough of a down payment to take advantage of the fact that the math is somewhat positive and that's the part that worries me i don't think that's getting much attention by the way but in real life and of course that's where you're dealing in the realty but you're seeing it all the time yeah you nailed it i think it's such a good like so spot on is um yeah they're like you know i let me tell us our clients right it's like you know, think about like a $1.8 million house right now.

It has come down to call it, I don't know, call it $200. So you got $200 grand there, but your $800,000 condos only dropped to $700. So, you know, you kind of benefit from that falling market. But only if you have like enough equity in the existing property, you know, obviously if you bought it for $800 and it went to $700, now you've just lost $100,000 of your down payment, right? Exactly. Have you seen any of these stats saying that the divorce rate is actually declining? tied to housing prices.

I've talked to some family lawyers and they're saying, Dave, we've never seen so many cases where people have gone through the horrible negotiations of the separation agreements. That's where people, emotions come out and you have a lot of arguing. They get through it. Then they go out to the real world to try to find housing and they go, we got to go back together. There's no way to make the math work. Let's fight through this. And obviously there's some divorce is still going through.

But I'm not surprised that the stats are starting to say that because everything we're talking about, trying to buy two of these. these places, even in the declining market, is very, very tricky stuff. I really wish that this hadn't happened on the affordability front, even rewriting the wealthy barber, you'd be amazed at how much harder it is to write that book now that such a percentage, high percentage of people's income is swallowed by their housing prices. So when I'm talking about saving 10% doing these other things, realistically, for a lot of people, middle income people, that becomes very difficult. Yeah. And so we talk about the divorce rate. You're also seeing people have fewer and fewer

children. That trend was well in place before, but now it's been pushed down even further because of affordability issues that often tie back to housing. Anyway, I'm going on, but I wanted to ask you thoughts on immigration. Do you think we went way too far? I just don't know how anybody can argue that when they look at the basic math. Yeah, I mean, I think that was like the big challenge. I was just going to say, I mean, I think like so much of this ultimately like, it's tough because you're like, well, who to blame? There's a lot of like factors for where how we got to where we are. But I mean, I think the two obvious ones are, you know, we left interest rates way too low for too long. You know, I always joke because the housing market, pretty much in most, like at least in Vancouver and Toronto, the housing market peaked literally in February of 2022.

The Bank of Canada began raising rates in March of 2022. So they weren't proactive in saying, hey, prices are up 27% this year. Maybe we should look at, you know, slowing things down. So they were late. And then obviously the immigration stuff, you know, when you had. population growth growing by $1.2 million a year for several years, it was just fuel on the fire. People will come in and say, yeah, but these immigrants, they're not buying houses, but they are in the rental market. Right.

And if your rents are going up, you know, 10, 15% a year, that is ultimately someone, it's an income stream for the landlord. So if I'm going out and buying an investment condo, I'm looking and saying, hey, well, you know, the rent's gone from 2,400 to 2,800. I can pay more. that's right for this condo now and so that it is all relative and I think obviously we're seeing all this sort of unwinding at the same time now which is rates went from zero to five percent in the span of 18 months and immigration now has you know we're seeing population growth is I think the slowest in what 30 40 years in BC in Ontario now yeah it's a percentage of the base population yeah you know some of that's because people are moving from one province to

another but a lot of it you're right there's been some changes to immigration policy etc so many things came together i mean even things like you talked about the foreign buyers Airbnb i mean all of these things over an x-year period kind of came through to push the real estate prices up to these wacky levels so just yeah just to add to that so now again it's kind of like classic cycle like it's easier to see now like you can kind of take a step back but now that immigration has has slowed dramatically uh now the rates have gone up and the specular is pretty much all gone. You're kind of left with the hangover.

And you also have the hangover of new housing supply. So like, you know, people always do the, and I know the developers like to kind of like, you know, moan and complain about, you know, government regulations. And there's definitely way too many taxes and fees and red tape on new housing. I'll definitely give them that credit. But like, we built a lot of housing in that bull. market of 2020, 2019, 2020, 2021, 22, you've got a record number of housing that's currently

under construction in the pipeline and is completing at the exact moment when your resale market is oversupplied. So you've got too much inventory on the resale side and you've got all this new product that's in the pipeline coming to completion that is in ultimately going to, I think it's going to keep I think supply demand levels favoring supply which is I think there's going to be excess supply and so I think that's why I say

you know what like maybe we're in that period for just 10 years of stagnation it's because you can see the writing on the wall which is just you look at the data and there's just a lot of new housing that's going to complete so we built a lot now we're not starting any new housing today and that's going to be

a problem five six seven years should know. But, you know, the listeners often still equate housing with houses, detached homes. And on that front, we haven't been building too, too much. I mean, and one of the big issues we've had is the supply you're referring to is primarily the condo market, at least in the major centers. And I'm not sure it's matching up to what people really want. Like, rewriting the wealthy barber, what an amazing learning experience going back out. And we say, oh, generations are so different. You know what? They really aren't. Like the conversations I was having with people in their 20s and 30s in terms of their desires, their hopes, their genes. weren't a whole lot different than the ones I had 35 years ago putting the initial book together. And most of them still want a detached home. They certainly aren't buying these very small condos when they're thinking of raising a family, getting a spouse and so on and so forth. So that mismatch up what we're supplying to what we're demanding worries me. And by the way, it worries me with Build Canada too. Because as Build Canada talks more and more about the details of what they're going to be bringing to market, that doesn't sound like what I'm

hearing is what people want in their 20s and 30s. What they're really looking for is a detached home that's relatively small and they can get going that way. That's what they're really looking for and nobody's come up with an answer to how to make that work mathematically. Yeah, it's a great point. I mean, I see it all the time with just like our younger clients and, you know, they want to get on the housing ladder, but they're like, well, but like, I want to get on the housing ladder, but all I can afford is a one bedroom condo, but I can't really like start my life or raise a family in this one bedroom condo. So like, what do I do? Do I just, do I just, they're just rent until I can eventually afford a three-bedroom townhouse.

And so that's a tough decision. I think what we're seeing like build Canada, for example, you know, the government's new plan is it's all going to be effectively. It's, it's effectively social housing. It's going to be for rent. It's not going to be for people to buy. So I think it's just important to make that clear that when you look at product types, you know, single family housing starts in British Columbia, where I am, they're at 30 year load. We don't build single family housing. Yeah, I think it's the same.

in, in, in, in Ontario. So I think where we're going to see sort of the new, I think the new sort of saying to keep an eye on is where the, where, where, where, where it's going and where I see there's a demand is, is this multiplex housing. Governments are trying to really force it through. And, and, and we're actually seeing developers and builders out there actually building that product is these new, like take a, take a, take an old single family house and chop it up into like three brand new units right and yeah i mean they're not going to be the greatest layouts but you're going to squeeze three bedrooms on 1300 square feet and multiply that by three and that's kind of like your new product type it's like the new townhouse

i agree but let's let's take a further look and nobody knows more about this i don't think than you do why can't we give the public what they want so if they're looking for a relatively small lot relatively small house, but not attached to anything else, not multiplex, we can't give them to them. Why? Because we can't get it down to an affordable enough level and still have the developer make money because of land costs, materials costs, government regulation, taxes. Isn't that the basic problem? That's why it's not happening. Yeah, that's the challenges, right? I mean, like your land cost is so high. I mean, you know, again, where I am, it's your land cost is anywhere from called a million and a half to two million bucks just for the dirt. And

And then if you want to build a single, let's just say I give you the land for free. I mean, to build a new single family house, basic generic finishings, call it, I don't know, 2,500 square feet. Like, it's going to be a million bucks, minimum. Yeah, for sure. It's a million dollars. So it's like it's not, it's just, it's expensive. And, you know, I think 25% of those costs is just government fees, taxes, permits. That's a fixed cost that governments seem reluctant to let go of because I think they've also taken advantage of this bull market, which is, hey, these developers are making almost money and people are willing to pay these crazy prices.

Let's just keep adding and adding more taxes and fees to the cost of housing because people will seem willing to pay it. And it's interesting now to see that all unwind. Well, you've got to be worried about municipalities finances across the country. I mean, they're losing so many of those development fees that they're going to have to look elsewhere to get it unless they tame their spending, which is unlikely. And I think property taxes, which in some area, it's been rising dramatically higher than CPI are going to continue that problematic journey. So, no, it's difficult. Let's try to talk about some positives. So where are areas in the country where real estate is continuing to be relatively strong, but is not so expensive as to be out of the reach of everybody.

Are there any pockets along that line? Calgary, Edmonton, two major metros, very affordable housing. Saskatchewan, obviously. I love it there. Yeah. Did you? I love, I love, you know, the whole country I love, but I love Saskatchew. I think it's a very underrated province.

People are marvelous out there, and some of the cities are very nice. And Calgary and Ementon are great places too. Yeah. I mean, they must have risen a little bit over the last X number of years with all of the migration from other provinces. Yeah, so Calgary had like a pretty good like an Evanton's playing catch up a little bit now. They always tend to lag. But like Calgary had a pretty big run up in prices.

I think they're still relatively affordable compared to the rest of the country. Now I think where I think it gets interesting is like and these are the markets that are always like you have to kind of differentiate. A market like Calgary, the amount of construction that is happening right now is is now you're seeing prices coming down. rents are down 10% and they're going to keep dropping you have a record number of rental housing under construction in Calgary by a long shot because what happens is like when the mark when you get this bull market it's just the private sector just moves so and then the CMHC gave them a tailwind as well yeah yeah that that that that CMHC rental program helped the developers significantly but basically the the the private sector can move really quickly they're like to get a permit there is way easier than Vancouver, Toronto. You have tons of land. You can kind of sprawl out. And so when you get these like hot markets and prices start going up,

these developers just move so quickly and they always end up oversupplying the market. And I think that's what we're seeing now. You're seeing that you will see an oversupplied market in Calgary. You're going to see it in Edmonton. And so I think that's going to help bring rents and prices sort of back down a bit to keep affordability in check. The problem with like Vancouver and Toronto is like when the market's going up and up and up, it's the developers can't move quick enough because they're sitting there waiting several years for the permits. No, it's so true.

I mean, it's so true. Even that being said, there are a lot of rental units coming aboard everywhere right now because of the CMHC program. So you've got to think rent's going to be under some pressure, which is good for the consumer, obviously. And we'll give them a bit of a break because they've gone on a very tough ride. Now, speaking of which, especially in BC and Ontario. I know more about those two provinces on this front. It's tough being a landlord now. You know, we've talked, yes, some landlords behave very poorly and do some things they shouldn't do.

But at the end of the day, the tenant is in a really good spot right now with the tenant review board. It's on the leverage front. I mean, so many stories about people just saying, I'm not going to pay. And by the time that you go to the board and some action is taken, they've been able to stay there for X number of months for free. We're seeing a ton of that. Are you seeing that a lot of BC? And does that worry you as a landlord? Yeah, it's definitely worse than Ontario.

BC's tenancy laws are challenging to say the least. I think they've just skewed so far in one direction to sort of favor the tenant that you don't really have this like, you know, equilibrium, which is to say like the, you know, it's interesting, like one of the, one of the biggest reasons where we've seen like all the investors sort of leave or like adding to supply to bring prices sort of back down is a lot of these investors in BC, they had an investment condo and they had a typically on a, floating variable mortgage, right? Right.

So your variable mortgage went from $2,000 a month to all of a sudden rates went way up, and your variable mortgage went from $2,000 to $3,000. But you're only allowed to raise your rent 2%. That's right. So you've got a tendon there. Like your condo used to be cash flow positive $100 a month, covered all your expenses, and all of a sudden your mortgage went up $1,000. Now your cash flow negative $900, and you can't raise the rent.

So, like, what do you do? You just bleed out $900 a month? Yeah, that's a lot of money. For, you know, several years or you basically become a four seller. And I think we saw a lot of that where people are like, what do I do? So I think it's always interesting to sort of see like in markets like Alberta, because there's always so much rental supply because the market just kind of keeps building it is like as a landlord in Alberta, you almost like want to do everything you can to keep the tenant happy and keep them in place. You don't want to lose a good tenant. I think that's true everywhere.

Yeah, but like I feel like in BC it's like it's almost the reverse, but it's like you're trying to get rid of them because they're under market and you're they're under market and you can't get rid of them. So you're just like, ah, like you got a service request for like a, you know, a leaking dishwasher. Yeah, I'm going to take my sweet time fixing that, right? Like that that's sort of the mentality that that is out there. I'm curious. Are you a landlord? And I actually am in Alberta. You're in Alberta. And do you enjoy being a landlord?

You're doing it from afar, obviously. have a property management firm out there, I assume? Yeah, we do with, like, lease ups. And then, um, so like I just like, I got into that market sort of like early days in like 2019. I was actually more so from like, you know, to, I'm not a huge like condo believer, like on the investment side. Like, I like to like have sort of like land that you can control.

And so, um, just slowly sort of buying in Calgary and we did some, some small developments there actually working on another one right. now, but I do worry about that market because I think there's just, there's a lot of rent supply. And I think what we're seeing is rents again, they're down 10%. And I think they're going to keep coming down. Yeah, I do too. I mean, you look at the supply demand curve. As you said, the population growth is stalled out. Simultaneously, we're seeing all of these units come on to play. And that's a good thing in a lot of ways. Not so good for you. You're a landlord, but to see rents coming down, it's a positive, I think, for society. That money can go into other things

and so many people are so tight. Dave, you know, it's interesting, though, just to like pull on that thread a little bit is the reason why Calgary is is in my opinion oversupplied or is teetering towards oversupply and will be oversupplied over the next 12 to 18 months is ironically from the Toronto investors. The bubble basically went up so much in Toronto that the numbers stopped working and they started to look for an alternative. That's a great observation because you're 100% right. Look at how much of the Toronto money. went out to Alberta, five, six, seven. I mean, you're an example.

Yeah. You're a BC guy and you went and started investing there. So that's a great point. I was over 2019, but I remember in 2019, this comes back to a sentiment perspective. Everybody in Vancouver looked at me like I was this crazy guy. Like, oh, what are you doing there? Like nobody makes any money there. The prices have moved in 10 years.

It's dead money. You're an idiot. And then, you know, in 22, 23, everyone's like, how to, where did you buy? Who was your realtor over there? Can you connect me with them? And then that's kind of when the red flags go off. Like, oh, man, maybe this is a time for me to exit. But the Toronto thing is interesting because all the pre-construction agents

that were like pre-selling the Toronto condos, all of a sudden they started pre-selling Calgary condos. So they were living in Toronto, pre-selling Calgary condo to all their Toronto investors. And like, if you're going to be a landlord in Calgary or Edmonton, I'm going to be honest, you do not want to. own condos like there's like it's just dead money and it always has been dead money but i think the toronto guys they just they didn't know any better they were just sort of hyped up and and and ultimately now that is going to lead to an oversupply of condos and rentals and and a lot of it

is Toronto money that i think is that it doesn't know what they got into wouldn't your real estate industry do us all a favor yourselves included if you guys broke apart the condos the detached homes and all and didn't group the data together the way you do like when we see the national data it's all grouped i like a better broken out yeah yeah you can like break it out i think the problem is like the media doesn't necessarily break it out or like you have to kind of go into the weeds to really figure out what i mean i like going into the weeds because like yeah you're a data guy for sure you're you're a nerdy guy on that stuff yeah too much you know uh you were talking about calgary being carried a little bit by trano money just my

friends alone are carrying the victoria market i've got so many friends move out to victoria in retirement. They light them out or climb it at a couple cases. Coincidentally, they've had family out there, but they just love the area. Is it stayed stronger on a relative basis than some of the other BC areas in the last five years? Yeah, I haven't followed it like too, too closely,

but like, I mean, I know the market like fairly well, but like the pricing has come down for sure. I don't know the exact sort of percentage terms, but it typically follows like Vancouver on a lag, right? Because what you typically see is it's some wealthy boomer in Vancouver that sells their house for $2 million in Vancouver and then goes and buys the equivalent house in Victoria for a million and a half.

Yeah, it's like the difference. Yeah, the money just kind of like sloshes around the province and like that's kind of what we saw too is like during the pandemic especially is like you sold your two bedroom condo for a million dollars and then you took that million dollars and all the equity that you'd built up in that and then people went out to Colonna

and bought a house for $1.3 million, right? And then they started pushing up. So, like, all the money sort of originates, I think, in Vancouver. And it just sort of, as Vancouver goes up, it just sort of spills out to these other, like, peripheral city. Now, do you follow the cottage market closely in parts of Ontario? It's really run into some difficult times. I don't make a lot of predictions. But I did make one back in April of 2020 doing an interview when COVID first started and said,

I thought cottages were going to go flying. And a month later, I came out and did another interview and said, that I didn't see them flying to this extent. Even early in COVID, you could see some people listing cottages at crazy levels and getting the money and their neighbor going, well, that's tempting. And the price has made no sense whatsoever. And of course, cottages are great because there's no real way to do comparables. They're all just enough different that you can throw it almost any number you want and see

what sticks. As you pointed out, interest rates were essentially at zero. So funding it for people who had a lot of equity in their home, they got the down payment from it, the carrying costs weren't too bad at those rates and things went ballistic. Like, well, now all of a sudden, has it ever shifted, at least in Ontario? A lot of those crazy cottages have come down 30, 40, and 50 percent. And who knows where the bottom is because many of them aren't moving. Yeah, yeah, I've seen a lot of those circulating, like, Twitter where people post these, like, large losses in cottage country.

Yeah, we don't have like the same per se, like in Vancouver. I think, like, we don't have like a great, like, oh, like the, we don't have a cottage country in sort of greater Vancouver. So, like, we don't. Yeah, but we definitely saw, like, what we saw in Vancouver was like a lot of like the islands, like the golf islands and stuff went went up quite a bit. Yeah, I think it was just like the big drivers. I think the biggest drivers during the pandemic to sort of summarize it is like the biggest drivers during the pandemic are now the biggest losers, right? Interesting. And so.

Yeah, like that was the suburban condo that was 45 minutes to an hour outside the city. You know, it was the remote property on the islands. Like, yeah, those ones are now seeing the biggest declines, the detached houses in Chilliwack, BC that are, you know, an hour and a half outside, like the number of foreclosures and just, you know, ultimately chase the market to such extremes that it's just reversing and snapping back a lot more dramatic. No, I agree with all of that. Okay, let's wrap up again going with something positive. You are now the housing czar of Canada and you were able to put in policies over the next. several years that you think can get us on a path that leads to more affordability, more consistency, et cetera, deals with some of the challenges we have.

What changes do we need to make? What would you like to see done at the federal and provincial levels? I would say that I think one of the most successful programs, and I know there's going to be some issues that come out of it, I think the CMHC MLI Select program has been a huge boom for rental housing. For sure. I think it's been successful. If you look at the number of rental units under construction, it's been beneficial.

Now, again, there's going to be some snapback as a result. But I think that that's been a good program. I think you've got to leave that in. I think you make some tweaks around the edges to sort of protect the taxpayer and the CMHC and to remove some of the bad actors. I think that I think bringing me in. I know Carney had promised it in his election. He hasn't announced it yet.

He hasn't brought it in yet. I'm wondering why it's taking so long. But the, the MIRB, it's basically like a tax. Yeah, we used to have it. Yeah, tax incentive. We had it back in the 70s for rental housing. I think on the development side, on the, on the resale side to spur like new housing, I think that there's, I think just it, you got to get municipalities and provinces really on board with like, I think ultimately it's going towards multiplex. So building more ground oriented family sized housing, like ground oriented, wood.

housing is a heck of a lot cheaper to build than high-rise concrete. So if you can build more family-sized housing, which is what we need, I think that would be beneficial, but you got to get rid of some of the red tape. You've got to get development charges and taxes cannot be 25 to 30 percent of the cost of a new home. Somehow, some way cities and provinces need to shift their budgets and how they generate revenue. I don't know how they do that.

I think what I'd like to see, it maybe a little bit controversial to your older audience is like seeing these property tax deferrals, I think it's totally ridiculous, you know, to have someone that's sitting on $2 million of equity free and clear and then to allow them to defer their property taxes so they can age into their single family home at 65, 70 years old. I think is crazy. I think that, you know, that housing should ultimately be freed up for some young person that's earning a high income to come into that neighborhood to get some turnover. And that might be controversial, like giving them subsidized interest rates to defer property taxes, I think is totally backwards.

That's interesting. That's my market. Like I'm old. So you're talking about me. We're going to edit that out. We're going to take that advice right out. You go back, though, to something we've spoken about throughout this conversation. The price of land is a big part of all of this.

It's so tough to solve a lot of these problems with the land prices where they are. If you sit down with a developer, many of them are very nice, very caring people. In fact, I have a couple of friends high up in that industry. They are really desirous to help on all of those fronts. They can't make the math work. And it's not greed. If they sit you down and show you the basic math of the land cost, the building costs and everything else, it's very difficult. What do we do about the land costs?

I mean, it's tough to force them down. How does that work? And we've got to have more land coming to supply, I suppose, so the federal government's going to have to incentivize the municipalities. How does all that play out in a positive way? I think that's the reality. And that's the tricky part where it's like, you know, People talk about housing affordability and like it's almost like an urban myth, right? It's like I don't know if you can actually truly achieve it at the scale that people want it or that we need it to be as a country, which is to say that land costs, it's hard to get them down because it's like it's just so entrenched, right?

I mean, every bank has lent credit based on the value of the land. Does the bank willingly going to say, hey, you know what, it's okay if land prices across the board drop 20, 25%. I think they do everything they can to try to maintain those values. And we see those today, right, blanket appraisals. Let's try to support the market. Oh, by the way, you know, your negative amortization and you want to defer your interest, no worries. We'll work with you.

We'll figure it out. Like, no, that should be a non-performing loan that should ultimately end up in some sort of foreclosure. And it should reset the price of that home. But like we see, so I just think it's so entrenched these valuations that, unfortunately, I have a tough time seeing land prices come down in a meaningful way, and that's going to be the real challenge. And that's why I say you ultimately are going to see people who might not like it. I think you have to go to multiplex route because I think land values, you're not going

to get the market down to a place for single family homes become affordable again. No, I think you're bang on. I think everything you said there makes a lot of sense. There are some entrenched interests that don't want land values to fall, and understandably so when you've lent against that, et cetera, you've got scarcity issues. It's hard to believe in a country of our size, but you do. Well, listen, it's been really depressing speaking with you. I've never been so down.

Yes, I'm not sure I could ever have you back on the show. But I've enjoyed this opportunity, give your dad my best. And I meant what I said earlier. I think you do a wonderful job of bringing a lot of the real estate insights and data to the public. You were really ahead of the curve in some ways when you first started doing all of this through YouTube and through other channels. There weren't many others out there that were making it public to the extent you have. Joe Flynn and a few others are doing a very good. good job now. There's a number of you who are adding a lot of value and a lot of good educational

content. I enjoy the Looney Hour and I push all of our listeners to give it a shot. The guys have a lot of charisma, the chemistry back and forth is strong. They cover off a wide variety of subjects. It's not all real estate. In fact, there's been several episodes where real estate's hardly even mentioned. It's more macroeconomics and a feel for the Canadian economy, talking about the tariffs, the job situation, et cetera, and coming out of it from different perspectives. The three guys all have different angles on things. So that's a very worthwhile listen as well. Thanks for finding the time, Steve. It was really good seeing you. When I'm out in Vancouver, I will give you a call. If I'm in too good a mood, I'll get together with you and pull myself

down. Yeah. Yeah, Dave, thanks so much for having me on. It's been a total pleasure. Keep up the good work on your end. Like I said, lifelong fan here. So it's an honor to be on the podcast. Thanks, my friend. I'll talk to you soon. Thank you.