The Wealthy Barber Podcast - #59 — Benjamin Tal: The State of Canada’s Economy and Housing Market in 2026

Episode Date: June 2, 2026

Our guest this episode is Benjamin Tal — Managing Director and Deputy Chief Economist at CIBC Capital Markets. Benjamin has spent over two decades publishing CIBC's influential "In Focus" research, has been recognized by the International Monetary Fund as a leading expert on Canada's real estate market and has testified before Parliamentary committees on the country's most pressing economic issues. In this episode, Dave and Benjamin dive into the state of Canada's economy heading into 2026. They break down what's gone wrong with Canada's real estate market, evaluate recent central bank decisions and unpack the impact of HST/GST relief and development charges on housing supply. Benjamin also explains the structural shift toward a rental culture in Canada and why rent control has been so disastrous for affordability. The conversation also explores the widening productivity gap between Canada and the U.S. in the AI era and the possibility of universal income guarantees on the horizon. Along the way, Benjamin shares his perspective on monopolies and limited competition in Canadian industry, the overwhelming red tape facing small businesses, the real effects of immigration on the market and why CPI calculations may be understating the true cost of living. Whether you're a homeowner, an investor or simply trying to make sense of where Canada's economy is heading, this episode is packed with sharp, data-driven insights from one of the country's most trusted economists.    Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Benjamin Tal (02:32) Why It's Important to Connect Macroeconomics to Personal Finance (03:15) Understanding Canada's Broken Real Estate Market (07:23) Evaluating Central Bank Decisions and Interest Rates (08:05) Impact of HST/GST Relief and Development Charges (09:48) A Shift Toward a Rental Culture in Canada (11:38) The Disastrous Impact of Rent Control (13:22) How the Condo Market and Developer Landscape Is Changing (16:18) Canada Versus U.S.A. Productivity & The AI Revolution (20:56) Are We Headed Towards Universal Income Guarantees? (21:45) Monopolies and Limited Competition in Canadian Industry (22:23) Overwhelming Regulations and Red Tape for Small Businesses (24:25) The Current Immigration Situation and its Market Effects (25:52) Inaccuracies in CPI Calculations and the Real Cost of Living (26:29) 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 the 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.

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 Chilts on the wealthy barber with the wealthy Barbara podcast. I'm not going to go on and on this time because I want to get directly to our guest. He's got some time restrictions. And to say I'm excited about today's podcast would be a gross understatement. We have Benjamin Tal on. He is the deputy chief economist at CIBC Capital Markets.

I've known him for years. Unbelievably sharp guy. Very generous and kind person too. Involved the community in a number of ways through the Board of Trade, the Chamber of Commerce. He and I got to work together twice on junior achievement initiatives. He's very giving on all of those fronts. But his reputation precedes him. I'm sure the vast majority of you have heard of him. He's often quoted in Globe Mail, BNN. You see him everywhere super sharp. A lot of people most know Ben through his input on real estate markets. But Benjamin can cover all things economics. But why do I love him? Why did I choose him to be our first economist on the podcast? Because he bring things to a level that relate to people on the front line. What are real

Canadians going through on a day-to-day basis. He takes the macro events, the challenging, complex things out there that most of us struggle to understand and brings them across in a way that we can see how they're impacting our lives. This guy is extremely sharp. Benjamin, great to have you on the show. Thank you so much. A pleasure to be with you. Yeah, I've enjoyed your work over the years. As you know, I'm a big fan. I'm probably the only person who reads all of your reports. Like I read every single one of them. I don't think I read them, yeah. Exactly. I've learned a great deal from them. I also enjoy your speaking. You're much better. I want to say one more compliment to you before I start with the questions. You're much better in my mind than 98% of the

economists out there in North America at the personal finance end of things. Relating economics, the macroeconomic picture to how it affects Canadians' personal finances, is that something you focused on or did it come naturally to you? Why are you so good at that? I don't know if I'm good at that, but clearly this is important. At the end of the day, if you just talk about the microeconomic story, only 2% of the population will be listening to you and 1% will understand what you're saying. So I think that you really have to bring it down to something that people can relate to because economics is important, financial education is important, but it has to be accessible. Yeah, you said that very well. Now listen, you recently came out with a report about

the real estate market, talked about how it's still broken. I've said repeatedly on the podcast that when you had the falling prices in many areas, prices went down 20, 25% from the peak, in some cases a little bit more than the aggrigion, for example, it made it even less likely that the builders would get involved, because they now had to compete with those lower prices. And of course, they couldn't make any money in doing so. And it compounded our supply problem in my mind going forward. Am I right on that?

And just talk a little bit about why you think the market is still very much broken. Absolutely. The way to describe the housing market in Canada and especially in places like Toronto and Vancouver is the following. The units' houses are way too expensive to buy and not expensive enough to build. And that's exactly the way I would describe the market. Listen to this. We have a situation which, yes, prices went down by 20, 25%. But if you are a young couple, good luck buying a house.

We have a generation of Canadians cannot even dream about owning a house. we all know the story. It's an affordability crisis. At the same time, builders are not building because they cannot make money and they are not a charity institution. They have to make money. The stress is not there. So we are not building. We are not buying. And that's why what we have to do urgently is to first cut the cost of buying. And that's why we were fighting for cutting GST and HST. We won that war. That's happening. And that will reduce the price significantly. That's one thing. The other, we have to cut the cost of delivering houses, namely the cost of construction. And we know that the construction costs are down by about 15%.

Interstrates are not in the sky. That's good. But we needed something else because listen to this, 32%. The price of a unit in Canada is taxes. Crazy. The only thing that we tax more is alcohol and tobacco. No, it's nutty. And you look at other places in the world, and a lot of Canadians don't know this.

That number in many areas is 7 to 9% and we're at 32 in Canada. So just think about the difference. It's crazy. It's like a 25% premium. Exactly. It's like a scene to build a house in Canada. We have to fix it. So we have a situation in which the government is now accepting the reality that we have

to cut development charges. And that's very important. It's happening already in Ontario. It will be happening in Vancouver and other places. So this is just the beginning. We desperately need to cut the cost of delivering houses and to cut the cost of buying houses. We are starting to move in the right direction. For the first time, governments at all levels are accepting that, that this is not just people being greedy.

It's simply a crisis and we have to fix it. You know, it's interesting. You talked about how we have to do work on both the supply side and helping out the people on the demand side. One of the challenges we had over the last 20 years was we'd introduce the FHSA, we'd extend amortization period. We had low interest rates. But all of that just got capitalized back into higher prices because we didn't complement it with more supply.

Absolutely, absolutely. And you cannot just use demand tools to fight a supply issue. And that's exactly what has been happening, especially during COVID. We all know what's happening. So if you look at the housing market, by the way, if people are telling you that the housing market in Canada is correcting,

please correct them. It's not correcting. it's adjusting. Just I will illustrate, we had the, before COVID it went like that, during COVID went like that. You know,

we know exactly what happened during COVID. Interst rates were at zero. People were blinded by cheap credit and went to the market. The market went crazy. And now we are back to the trend line. So we are basically the same,

in the same level of where we should have been if COVID was just a bad dream. So it's not that we are correcting, we are just adjusting for crazy COVID. In some areas, like the condo space, especially in Toronto in Vancouver, we are below normal, and that's because of the fact that we build way too much,

especially very small units, what we call the macro units, that will take time to deliver. No, I couldn't agree with you more and all of that. Do you think, by the way, looking bad with your expertise, that central bankers throughout the Western world kept rates too low for too long? Absolutely, yes. For too long, for sure.

We had a situation in which inflation was rising, COVID was okay already, and we kept interest rates low for a long period of time, that created this bubble in the housing market that you wish and other bubbles in the bond market and of course in the stock market. So this is something that in retrospect was a mistake. But remember, it was COVID.

It was scary. We didn't know what we were doing. So I totally understand that, but it was a mistake. Yeah, I think that's very well set. It's easy for us to say with the benefit of hindsight that it was too long, too old, but it was a scary time wrapped in tremendous uncertainty. So let's go back again to something you quickly mentioned,

and that is the HST, GST relief that we've seen come into the housing market. You're also talking about how here in Ontario development fees. We've made some positive movements there to try to lessen the tax burden for the end buyer. Talk us through both of those things and what kind of impact you think they'll have. Yes, we have been fighting for this for a long period of time. The government said, okay, let's do it for first time on buyers only. And we said that's not enough. That's a very small portion of the pie.

We need for everybody. Any new bill should be an exam from HST and GST. Remember, when they introduced the credit, that credit on HST and GST in the 90s, 97% of people got the credit. Today, basically nobody, because it was up to $400,000. Good luck buying something for $400,000. So you had to adjust it, and it was past due, quite frankly, overdue. And I think that they are doing the right thing now.

That will save the average homebuyer, young couple, about $130,000. That's bad. But at all, so that's a good start. On the other end, development charges have been a major issue, and we needed the federal government to be part of the solution because cities rightly don't have the money because they don't have the power to raise money. They can only tax, they cannot issue bonds.

Therefore, you need the federal government to help here, the provincial government to help him. And for the first time, they are all working together. Dave, they are getting it. Finally, they're getting it. I don't know why they're getting it. Maybe because of the fact that they know that the next elections would be all about real estate, so they need to do something and they're starting to move in the right direction.

Not fast enough, in my opinion. Still, a lot of red tape in the system. It takes a long time to get the permit. But overall, better than it was a year ago for sure. You put out a report, I think it was two or three years ago now that was excellent on parental involvement in their kids' housing purchases. And I've said for years that choose your parents wisely has become the most important financial commandment. And you, again, one of the first people to look at that officially and do some studying.

It hasn't changed much. Even with prices down a little bit, parental involvement is still very, very high. How do we get around this over time? Do we also need more land to come into play that we can build on? Do we have a supply problem there too? I think that land is getting cheaper, which is a good thing. But we have clearly a supply issue when it comes to land, but also density. We have to build differently.

We have to build higher. And we have to actually introduce rent solution to the overall. overall solution, not just home ownership, but rent. And as I said in the past, Dave, I want to create a situation in which you are 35 years old, you are married, you have two kids, and you are renting, nothing is wrong with you. That's right. I say that all the time. I said it forcefully in the new wealthy barber. There's nothing wrong with that. The weight is in Manhattan, the weight is in Berlin, the way it is in London, and there are many other places. And one more thing, if you want to create a rental environment, a rental philosophy, which we should.

Now, I'm not thinking everybody should be rental, but I think definitely should be an option for a long-term solution. We have to also treat the tax treatments of renters, because the way it is working now. Favor is the buyer. Exactly. So what if we give some sort of a break on taxes to renters, write down, right off part of your rent?

I think that would be the right thing to do to encourage an atmosphere and environment of renting in addition to the purpose bill rental that we're building. I think there's still work to do you. Yeah, I agree. Now, you've got to be pleased with the amount of purpose bill rental units coming on stream over the last 12 months and over the next 12 to 24. I mean, that's certainly going to knock rents down in most parts of the country. Absolutely. It's about time. It should be part of the solution. But one thing we have to be very careful. Please don't introduce rentals. rent control. I agree.

It never works. It never works. And you know what, Dev, we all know that rent control is coming from a good place. Yes, absolutely. We want to protect tenants. I totally understand that. But at the same time, you are protecting current tenants at the expense of future tenants. That's not fair.

Because nobody will be building nothing, absolutely nothing. Or keeping it in good repair. Exactly. So we have to be carefully. This is not a solution. That's why there is Bill 13 in Winnipeg that worries me, that's, talking about some sort of rent control in Winnipeg. I'm a bit worried about it.

We just have to understand what it means. It means that instead of encouraging supply, you are herting supply, and therefore you are hurting future tenants. That's not a solution. A solution is to change the tax system the way you treat renters and many other things, including supply. You and I think totally alike on this. And I have said for years exactly what you did,

the rent control comes from a good place. And instinctively, you can see why we're all drawn to it. But in the long run, it hurts. hurts tenants. What frustrates me is we have enough proof of that. It's been tried dozens and dozens of times in North America and it never has the desired impact. At some point, people have to see well-intentioned, but let's go another direction with the kinds of things you're talking about. The best affordability policy is supply policy. Just build more, build in a way that people want to live. And clearly, I think that, let's talk, for example, the condo market.

I see the condo market changing significantly. First of all, we are building nothing. We are building nothing. Literally nothing. Nothing. I'm telling you, Zip. We're building nothing. Now, one thing that people have to be aware of is the fact that if you look at the

official statistics, and politicians are telling me that. Official statistics are still telling you that housing starts are about 240K, very nice, very strong. And said, there is no problem. There are buildings. And no, be careful. This is something that people have to be aware of. When CMHC declares a start and housing start, it's when this building reaches grade level, grade level.

Not when you start digging. For a big condo projects, the difference between digging and grade is 18 months. So what we are counting now is what was done 18 months ago. Today, we are building nothing, which means that two years from now, three years from now, when the market clears, guess what will happen? Price is we'll have to start rising. That's why I'm glad that you and others were able to influence on the HST front, on the development charge front, because I think we would have had a supply shock to the nth degree coming with no building of detached homes, no building of condos. And by the way, when you say no building, in some areas, it's literally no building.

Absolutely. Developers are not going to lose money. And if it doesn't make sense, they are not going to build. So what's happening in the condom market? And that's very important because it's going to change. First of all, all the Mickey Mouse developers are out. All those secondary developers that didn't know what to do with themselves and started building, they are out there because they don't have the capital to sustain it. So that's actually a good thing. So the market is now full of developers that are healthy, well capitalized. That's one thing.

The other is that investors will be only 20% of the market, not 60%, 70% of the market, which means that the focus will be on end users. Now, end users will build the right size for once. Exactly. End users are families. They need size. Therefore, we will be building not closets, but houses or apartments. That's very good. But also, and that's very important, also, if you are a family with two kids, you cannot wait five years for a pre-sell. No, absolutely not. Which means that we are going to build more on spec, namely you build and you sell, which means that the developers will have to put more equity, which is fine, and banks will have to take more market risk, and they are ready to do so.

So it's going to be a very different market. No, I agree with all that, and I think we do need to build, obviously, bigger condos. It was ridiculous the size of the Toronto Conros, and you used the 60 to 70% rate for investors. I think in Toronto was 90 to 95%. Absolutely. Absolutely. It was crazy. It was too much. And many of those developers were building on those investors and those investors are not in the market anymore. And therefore, the market is going to change dramatically. You cannot go through this kind of shock without changing. And we are going to change. No, agree. Okay. Let's move off real estate, but I really enjoyed that.

All we hear in Canada is that we're suffering through a productivity crisis and that that's affecting our growth and we're not keeping up. It's one of the reasons why we have affordability challenges, not just on the real estate front, but on the cost of living front. What are your thoughts on Canada's productivity challenges? Are they overstated? Are they property measured? Where are we heading there? And what policies can we turn to that can help us? So first of all, let's talk about the measurement aspect. How productive is what we are doing now. Right. Like, who knows? Who knows? You know, you cannot measure it because it can be highly productive, but we cannot measure it because it's a service in this part of the economy that's very difficult to measure. I'm sure that actually the people in

as Canada that produce the productivity numbers will not bet their paycheck, how accurate the numbers are, because it's very difficult to do. At the same time, the U.S. has the same issue, and their productivity is higher than ours. Therefore, my focus is not on absolute numbers. My focus is on the gap, and the gap is widening now. Let's call it as it is, Dev. I don't think that we will be closing the spread and the gap with the U.S. anytime soon. I don't think it will happen, because let's face it, If you have a wonderful app, something brilliant, a patent, where are you going to market it? Yeah, for sure. You have the scale over there.

You have the scope. So we know that we cannot compete with them, but can we maintain it? And I believe we can. I think that there are so many things to talk about productivity. So let's talk about one thing. Clearly, we have a productivity issue. Part of it has to do with investment. We are not investing enough.

We are not taking risk. Part of it has to do with taxation. We have to rewrite the tax code urgently. and I'm hoping that the majority government in Ottawa now will start moving in that direction. We have to open the economy and the red tape is huge. So if you ask me, the three main reasons why productivity is in the basement

is regulations, its openness, and its taxes. We have to fix it urgently. But there are some forces in the market that will lead to some improvement in productivity. Let's discuss it. I always ask myself, Dev, to what extent COVID was an event,

or a condition. And I think that it was a condition from an economic perspective. Think about it for a second. Big picture. We used to have globalization. Now we have de-globalization. We used to have just in time inventory. Now we have just in case inventory. We used to have a labor market that was giving. Now it's tight because of demographics. And back then we didn't have all those green initiatives. Now we have them. All those forces are doing one thing. If you think about it, They are putting downward pressure on profit margins. I suggest that globalization was wonderful for profit. Just in time, wonderful for profit.

Labor market that was giving wonderful. All this is upside down. Now, you're a CEO of a company. You have two options. One is do nothing. The other is do something. And this something will be to replace labor with capital. And the AI revolution is positioned perfectly to take advantage of this kind of situation.

That's why I believe that door. forces will force CEOs to invest because I believe that until recently profit was simply too easy investing was nice to have but not necessity now it's a necessity and you worry though that if we go that route yes will increase profitability but we will also have some job loss especially in the short run as we transition we will we will that's a given so two things are happening first of all there is no question in my mind that unfortunately and we have to fix it and we have to be aware of that, is that the income gap will widen.

Because it's going to be a case-shap recovery, if you wish. Many people will be part of it and there will be a portion, unfortunately, like in any other revolution, and this is a revolution that will be behind and will not be part of it. We have to minimize it. How do you minimize it? Education. The labor market is changing at the speed of flight and the education system is behaving like nothing happened.

In fact, we are fighting AI as opposed to embracing AI. I agree. This is something that we have to change. Now, in my opinion, when it comes to AI, and that's a totally different conversation, but in my opinion, we are probably overestimating in the short term and underestimating in the long term. I think that the lack of energy and clearly the fact that the AI asset depreciation rate is very rapid, which means that you have to replace it very quickly, there will be limited to how much you can do it. That would slow down the process.

But clearly it's the real thing and we have to be a big part of the process. It will lead to a significant increase productivity, but some people will be left behind. We have to take care of them. In fact, Dev, I will not be surprised in five years from now, we will be discussing universal income guarantee, something like that. I think you're right. I mean, I think it's almost going to be a mandatory aspect of Western civilization to look at that.

I mean, you look at the entry level positions in the white collar spots. are already being challenged. And to your point, this is just going to get better and better. I'm like you. I think in the short run with the power availability and the cost of all this, that we could have some burbs, some disruptions, it may not come as quickly as it's being forecasted to. But come on, there's no doubt in the next three, five, seven, ten, 15 years. This is going to be a huge part of our economy. This is huge. This is going to change the way we do business. And by the way, we have been speaking for half an hour. We didn't mention Trump even once.

That's nice. That's good. That's a good thing. Now, what about going back to productivity. Do you think when we look at the way that Canada's dominated the top of most industries by only two and three and at the most four participants, that that's hurt our productivity because they're less likely to take chances and get involved in heavy R&D spending, but instead they work almost coordinatedly to keep market share, et cetera. Do you think there's truth to that criticism? Absolutely. We have to open the economy.

We have to increase competition. There isn't enough competition in the economy. to open up the economy to foreign investment and foreign competition. That's the way to lift everybody. And clearly, so it's taxation, it's regulations, and it's definitely openness. No question about it. I'm totally with you on this one. You know, it's interesting.

When you think about Canada, this great country of ours, and you think about the nation building, we go back to putting the railroad in. And of course, that's the thing that really got us going most. We could never do that now because of all the regulations, of course, that we've got province to province and on a federal basis, et cetera, the red tape is over. overwhelming most businesses. Most small businesses can't even keep up with it. Absolutely. So, of course, when you look at the global picture, there is a lot to complain about, but we live in a wonderful country. We do. In a rich country, free country. We have so much potential.

I know what Carni is trying to do, and it's the right thing to do. We have to try to unleash this potential by infrastructure. We have to move this direction. But clearly, we have to make it easier to do business in this country. The red tape is killing us. Taxation killing us. We have to wake up and basically use this crisis as an opportunity to focus on ourselves and see what we can do in terms of potential growth and we can do a lot. Yeah, no, I agree with all of that. In fact, it's interesting. When I speak to the small business community, I honestly get more complaints now about the regulation than about the regulatory environment than I do about the taxation environment for the first time in my life.

And it should be easy to serve, no? It's really easy to serve. You know, when Trump took power, there was so much momentum about removing the interprovincial tariffs. Nothing is happening now. Are we even discussing it? It seems like it's completely drifted away. There was so much focus on that. They were meeting every two minutes and disappeared. So let's do that.

That's easy. Now, we should not exaggerate how much it will add, but at the margin, even a few decimal points, I'll take it. Absolutely. And the thing is, much like we talked about rent control, most regulations are very well intended and a lot are well thought through. But cumulatively now, they have overwhelmed. our economy and overwhelmed the business community. Absolutely. No question about it. And we have to

get rid of it. We have to speed up the way we do business. We cannot complain about productivity while looking at this way. They are connected. Very much. Okay. Let's go on to immigration. What are your thoughts on the current immigration situation? What are your thoughts on what happened a few years ago? Do we go too fast and bring in too many people too quickly? The short answer is absolutely yes. We made a big mistake. And I think that the government back then admitted that it was a mistake. We allowed 1.5 million people into this country over the cost of breakfast. That was really a bad thing to do. And again, listen, Dave, we all know we need immigrants like oxygen. Absolutely. But 1.5 million people in one year in a country of 40 million people,

that was way too much. We felt it in the rental market, in the health system. So we're slowing it down. But listen to this. This is very important, very important to understand. 50% 52% of all new immigrants arriving to Canada arrive from one country. And this country is Canada. How can you arrive to Canada from Canada? You were already here. You were a non-permanent residence. You were a foreign student.

And they are converting you. So when you have an image of new immigrants arriving from the airport with their suitcases, that's 50% of the story. The other 50%, all those newcomers, they are not so new anymore. In many ways, that's actually a positive environment because they have Canadian experience. And people with Canadian experience, their income is 25% higher, so they are able to participate in the economy much faster than if you arrive through the airport.

So interesting stuff happening. No, that is interesting. Okay, we know you've got to get going. Let me ask you one more question. When you look at CPI and how it's calculated by Stats Canada, are you a believer that it accurately reflects the rising costs that Canadians are facing? No, no, absolutely not. If you look at the housing market, we are not capturing it.

The rent is not being captured. It's the bad thing we have at this point because you don't want to break from the past. You don't want to break from other countries. But I think that the real cost of living, the people that listen to us now, they know that the inflation numbers that you get, the newspapers from Stats Canada are not exactly what they are facing on a daily basis, unfortunately, but it will be very difficult to fix. Yes, agree. Look, that was a lot of fun.

Will you come back on? I know you had a bit of a time problem today, but we'd love to get you back on relatively soon for another half hour. Absolutely. We'll talk a little bit about Trump and tariffs and what. it means. Now, does it scare you for your career going forward? You're so famous and respected that you and I actually agree on almost everything. That's got to rattle you a little bit. I think it's a wonderful thing. I think it's a wonderful thing. I'll take it. All right. Thanks for finding

the time. Great seeing you again. A pleasure. Good luck.