The Wealthy Barber Podcast - 62 — Ben Rabidoux (Returns): Canada’s Real Estate Outlook in 2026

Episode Date: June 23, 2026

Our guest this episode is Ben Rabidoux — founder of North Cove Advisors and Edge Realty Analytics, and one of Canada's most closely followed housing and macroeconomic analysts. Ben's data-first research is relied on by institutional investors and real estate professionals across the country, and he returns to the show to break down where Canada's real estate market is headed in 2026. In this episode, Dave and Ben dive into the state of the Canadian economy and what it means for housing. They unpack the disconnect between strong bank earnings and a weakening economy, the rising power of sales, and what corporate results from companies like Tim Hortons and Pizza Pizza reveal about the health of the consumer. Ben also explains why new rents may be poised for a trend reversal and what the latest data signals for the months ahead. The conversation also explores the pressures facing real estate agents, whether a coming wave of baby boomer property sales could suppress prices, and early signs of life in the GTA condo market. Ben also weighs in on government tax changes and development fees, blanket appraisals in the condo market, and what next year's mortgage renewal environment could look like. Whether you're a homeowner, an investor or simply trying to make sense of where Canadian real estate is heading, this episode is packed with data-driven insights you won't want to miss.  Ben’s Real Estate and Mortgage Intelligence Reports: http://www.edgeanalytics.ca/   Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Ben Rabidoux (02:36) Explaining the Disconnect Between Bank Earnings and the Economy (04:11) What is Driving the Increasing Power of Sales? (06:34) Reconciling Weak Economic Data with Packed Restaurants (10:22) What Tim Hortons' and Pizza Pizza's Earnings Tell You About the Economy (11:13) Predicting the Trend Reversal in New Rents (17:17) How Having Fewer International Students is Affecting Certain Markets (19:55) Alternative Ways to Measure Population Growth (22:09) Temporary Foreign Workers Program (23:59) North Cove Advisors and Edge Analytics (27:42) Real Estate Agents are Facing Pressures (30:11) Where Are Canadian Housing Prices Headed? (34:47) Will the Future Wave of Baby Boomer Property Sales Suppress Housing Prices? (38:00) GTA Condo Market Showing Signs of Life (38:54) Evaluating Government Tax Changes & Development Fees (42:01) Blanket Appraisals in the Condo Market (48:03) Forecasting Next Year's Mortgage Renewal Environment (50:44) Conclusion

Hey, it's Dave Chilton, the wealthy barber and former Dragon on Dragonstant. 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.

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 with the Wealthy Barber podcast. We are taping this on the day that I announced to my retirement. retirement at the end of the year. And I want to start by saying, I am not retiring because Ben Rabadou is coming on our show. Those two things are unrelated. He has not triggered this in any way, shape, or form. A lot of you will recognize Ben. He was one of our most popular guests. We had him on several months ago. The podcast went over exceptionally well. All kinds of comments and all the different platforms. People found his insights very interesting. I said then that the reason we reached out to Ben is, I'm a fan. He and I crossed paths on Twitter probably 10 to 15 years ago. I enjoyed his material then.

We bounced back and forth and a couple things to do with lines of credits. And since then, I have really followed his teachings, his observations, his insights closely. And he's been remarkably good. He's very, very adept to taking all the data out there in the real estate field and the wider economy in general. And figuring out the trends and things that are likely to happen, he's called some pivot points with outstanding accuracy. In fact, we're going to talk about one of those quite shortly. So I'm a fan. And we wanted to reach out and get him back on.

In fact, he may be one of the few people we have on three times before we end up closing us down at the end of the year. Ben, welcome back. It's great to be here, Dave. I'm somewhat disappointed as a fan of the pod and as a fan of you, but you'd be sailing off in retirement. Congratulations. Yeah, no, thanks.

I'm looking forward to certain aspects. I'll obviously miss a lot of this type of thing. I mean, I've learned a lot from people like you over the years, and I think our viewers certainly have, our listeners. So let's jump into it. I want to talk a little bit about your business in a few moments, but I want to start with something I'm getting asked a lot about. You know, people think as the real estate market runs into some challenging times,

we've got powers of sale numbers going way up, etc., that the banks would be scuffling. But as you know, the banks are posting tremendously good earnings numbers. The stocks are booming. In fact, from historical perspectives, their valuations are quite rich. What are your thoughts on that apparent disconnect? Well, it's interesting. When you look at the credit data that's being reported by the banks, we continue to see that non-performing loans domestically here are rising, both retail and wholesale.

The delinquency rates are rising in their portfolio. There are still signs of stress domestically. And normally, the way to think about a bank is it's kind of a levered bet on the state of the economy. So if the economy is doing well, the banks tend to do really well. And if the economy's not doing well, they tend to not do well. Right now is a little bit different. The banks are rocketing to all-time highs. I think part of what's driving that and what I'm hearing from my institutional clients is there is somewhat of a repatriation of capital from abroad back into Canada. I think there is a view that we've been through a period of time where the business climate was not particularly friendly in Canada and it seems regardless of your politics and your views, but there's a feeling within

the investment community that perhaps Canada is becoming a little more welcoming for investment capital. And I believe you're starting to see some of those big funds bringing capital back. Where does that capital land? If you're a massive asset manager, you can't go right into the small cap. You liquid names. The biggest most liquid names tend to be the banks. And that, that I think is part of what's driving it. When you look at the power of sale numbers going up, we've had a huge renewal year. I think this is the biggest year in the history of the Canadian mortgage industry for renewals. And a lot of people, of course, are scuffling to move to the higher payments is that's what behind the power of sales are also a lot of layoffs in

certain in geographical areas. Well, it's definitely both. So when we look at the delinquency data, it's really being driven by Southern Ontario, specifically the GTA and kind of mainland BC. And so those areas tend to be, like if you look at the labor market data, we are seeing disproportionate weakness in central Canada, to a lesser extent BC. It kind of makes sense. Those are also the areas where you're seeing house prices have fallen most dramatically from peak.

One of the things that came out from the Bank of Canada just last week is that they estimate that 10% of all homeowners will not be able to refinance their mortgages in kind of Toronto, to a lesser extent, Vancouver. So what does that mean? That does not mean that they cannot renew. There's oftentimes some confusion between the terms renewal and refinance. They're going to renew the mortgage is fine. Canadian banks are very good if you've made your payments. They'll give you new mortgage. What it does mean, however, is those borrowers will have a much harder time switching lenders to capture lower rates at renewal. And I think more importantly, it really will limit their ability

to refinance and take money out in the event that they actually run into props financially. So now the ability to consolidate high interest debt into your mortgage is gone because you can't refinance. You can't pull equity out to kind of stay afloat. So it just, adds a layer of vulnerability onto the market. And so I think all else equal, when you get house prices decline, it tends to remove some of those kind of safety nets for homeowners. And all else equal will lead to kind of just a grind higher in delinquency. No, I agree. You know, you made such an important point there. There was a lot of confusion when that announcement came out. Even members of the media were saying, oh my gosh, we could have 10% of people being, in essence,

forced to sell their home, but to repeat what you said, that's not the way this is going to work. They just lose flexibility in terms of shopping for the lowest rate or adding more to their mortgage and so on and so forth. But it's certainly a sign that the economy is challenged. And of course, the higher rates are playing a big role here too. But what's weird for me is I'm in Toronto last weekend. I went to the Eaton Center. It was packed. Like I am talking packed. every restaurant I went to when I was there for the weekend. Packed. So how do we reconcile the economic data looking weak, recession being used, the word recession,

all of these figures we're hearing. And yet some of the evidence says the exact opposite. It is an interesting time. The data is very clear that the economy in aggregate is soft. The labor market in aggregate is soft. There's a concept of like a K-shaped economy. I'm a believer in that. Well, I am too.

I'm coming around to that view. There was a time where I was not. but you are seeing a situation where, and just maybe to explain it to the viewers and listeners, the idea of a K-shaped economy is that if you're in kind of that upper income bracket, the top quintile, let's say,

times are pretty good, right? The economy is very good for people who've still up money. Where it's really hurting people is at the lower end of the income spectrum. We can corroborate that in some of the data. Like if you look at some of the publicly traded companies that skew towards that kind of low-end discretionary, they're reporting very soft sales.

And at the same time, some of those more kind of luxury-focused brands are doing pretty well. And so you are seeing that within the data. I think a lot of that's being captured in the observation that you're posting. The reality is that the basics of life, the cost of living, food, that the price have gone up so much. And so which households tend to spend more disproportionately on those sort of basic of life? It's the lower income. And I think those are where it's really being felt. And I'm with you.

I'm always skeptical of these. overly simplistic kind of things we come up with to describe the economy, like the K-shaped economy, but I have come around to it too. I mean, there's a lot of data supporting it. And I think that when you look at that upper echelon of income, they've also had the money over the years to set aside and invest in stocks, invest in other assets. And for the most part, until relatively recently, those have been very, very solid performers. And that's helped them on the wealth effect front too. And it made it more likely they're going to spend. We're right now with the cost of living being what it is, a lot of people can't save. They can't set aside that extra money.

And I think that the problems being exasperated to some extent with the cost of living challenges we're up against. Yeah, I agree completely. In fact, you talk about the savings. That's one thing that I track pretty closely because I have a view that if you can sort of monitor household savings rate, it kind of gives you a sense of the overall sort of, I don't know, the risk profile in the economy. So for example, when you see a lot of excess savings in an economy, usually that means that there's a bit of a cash push into a buffer there against hard times. The most recent quarterly GDP data, the savings rate was extremely low. And it's misleading because in Canada, we actually count the pension entitlement adjustments within savings. So we basically said, look, your share of

CPP went up, so we'll count that as savings. Where if you strip that out, you're left with like active savings, how much are our Canadians actually setting aside? And it was almost nothing last quarter. And so I think that that's showing you that the consumer, they've done well, shockingly well for the last couple years in spite of higher rates, a soft economy. But there's signs that it's starting to maybe run into some problems. I agree with all of that. In fact, it's interesting. Some of the upper tier restaurants, and again, this goes back to your luxury brand, but moved over to the restaurants, are doing quite well. But if you talk to a lot of the restaurant owners in the middle, they're saying

exactly what you just did, that they're really seeing bad signs right now. Now that the last six months, nine months, they're going, holy smokers, we're having some days that we haven't had in a long time. And there's a lot of fear driving through that. I think that's representative of that overall observation you just advanced. Can I, are we allowed to talk about specific stocks? Just a comment on. We do. I mean, we're not, we're not giving an investment advice. So sure, go ahead. No investment advice here. Just to highlight that point. So if you look at Tim Hortons, their most recent same store sales was 1.5% year of year, which is less than inflation. right? So they are growing their sales less than inflation. The other one that jumped out, and this was just last month, you look at pizza pizza, right? There's a royalty fund in Canada as their sales, they generate sales, they pay out. They just cut their dividend and they specifically cited a weak economic backdrop and soft consumer spending. And so like you, just just to kind of close that circle, like you are seeing these signs of this kind of skew, the lower end consumer, that discretionary spend is starting to really come up.

pressure. It's there in the company data specifically. Okay, I want to move on to something, give you a lot of credit. You were the first guy again, as you have been many times in the years I followed you, to talk about a trend reversal we were going to see with new rent prices going down. You said, look at the purpose-built rentals. We're getting so many of them coming on board. The supply is changing so dramatically. And I'm going to let you talk about why that happened with the different financing options. You know, you made a point when you first brought this up a few years ago, this isn't that deep. Like you said, you don't have to be that clever to understand that this is almost inevitable. Yet you got a lot of pushback. A lot of people said there's no way new

rents are going to go down. You ended up being right. The critics ended up being wrong. Walk our audience through a little bit. You're thinking behind that. When did you first start noticing the change and how much construction was coming on board, etc? Sure. So 2024, I started to form a view that population growth was going to be much weaker going forward than people expected. And we can parse that out a little bit more. But one of the things to sort of understand, we had a huge run-up in temporary residence, which is primarily international students, temporary workers, you kind of could see the political blowback from that. And you knew that the government was going to start to tighten. And so that was baked in. But I think more importantly, what people

forget is that when our government grants permanent residency to people, it's done on a points basis. So they'll sort of allocate points for the various applicants across different, different kind of areas. And one of the things that matters a lot is Canadian work experience and Canadian educational experience. So I understood early on that going forward, a greater share of permanent residence slots would be allocated to people who are already in the country. And what that would mean is while we continue to add permanent residents, the overall population would not change because we're just giving permanent residents of people who are already here. So once you understand that dynamic, you'll know that population growth is going to be very low for a couple of years. So now, layer on top of that, we started to see a dramatic run-up in the number of rentals under construction. And this is not new.

This has been all seven, eight years. It's just accelerating. And so in 2024, I started to really flag this as a big dynamic. If you fast forward to today, we're at a scenario where Canada's population is outright declining. And that's being driven by an outflow of these temporary residents, all of whom, renters, right? So you have a decline in a key renter cohort. And then you look at the supply side and we have the equivalent of 8% of the existing rental stock currently under construction. So we're going to grow the supply of rentals by 8% of the next couple. Every time you say that

number, it blows me away. Like people have to sit back because remember, we're talking decades and decades of construction. You know, there's rental units out that have been around for 100 years and you're telling me 8% of the total stock is in construction rate. now. That's a mind-blowing figure. It's crazy. There's no signs that it's slowing down. Like you would think by now they would really be dramatically curtailing this rental. They're not. And in fact, just so that the listeners and viewers understand, a lot of this is being driven by very favorable financing provided by CMHC, which is our Crown Corporation mortgage insurer. And this was a matter of policy. They gave extremely cheap, very favorable financing to induce new

rental supply. It's been a phenomenally successful program. And a longer term amortization too, right? Very long-term amortization. So there's sort of two parts to this program. One is the financing of the rental itself, the construction, and then the second is financing the acquisition of that new rental. And so you're right. They're giving 50-year amortization, 5% down or less in some cases. But my point is, we look at the most recent quarter from CMHC.

They insured 26,000 new rental units last quarter alone. Well, that's in a quarter where Canada's population fell, by 140,000. Like you just, I mean, it's just a wild divergence. We're at the point now where rents are very soft

in most parts of the country, parts of the prairies notwithstanding, parts of Atlantic Canada notwithstanding, but very soft everywhere else. And this is not just a hypothetical. We have the largest apartment reet in the country reporting that their change in rents at turnover

is now negative. So every time a tenant leaves, the new rent is below what it used to be. And the current, The craziest stat is they said if they have a tenant that moves within the last two years, so if they can less than a two-year lease, the new rent is 10% lower than it used to be. Crazy. This is the biggest best managed reet in the country.

And so, like, this is a very real thing. I also just want to say, this is a wonderful trend for young people. Like, we need this. Fantastic. I've got this data set I track. It's rents paid as a share of total consumer spending. And it's never been higher going back 50 years. So what that tells us is that young people for a while now have been paying disproportionately high share of their income to rents.

Well, what does that do? It means that they can't save up the down payment to buy. They maybe have less capital to invest in a new business or start a new business. None of it is good. And so going through a period of time where we go for several years, I believe, where rents are going to be considerably lower than income growth, that's going to prove affordability dramatically. And it's actually a wonderful thing for young people. I'm all in favor of it. It just sucks if you happen to be a highly leveraged landlord or a big apartment read.

No, you said all that extremely well. I really saw that when I was doing the pre-writing research for the updated wealthy barb and I was dealing with people in their 20s and 30s and they were showing me their overall financial picture. They're all their costs that are and I'm going, holy smokes. They've got so much going to rent, especially in the Toronto's, but in a lot of the major cities relative to their after tax incomes, no wonder they can't build a down payment. And of course, the down payment had to be outsized relative to income compared to when I was young and you were young, put them almost in an impossible position.

And all these boomers out there that said, oh, they're just whining. It's not that bad. Trust me, the math was beyond challenging. So you're right. This is a good thing. Does this have a ripple effect over to the price of housing to and that if rents are dropping, they serve as a pull pushing those prices down? Do you think that's true? I do.

And I think it's more pronounced in some areas. than others. So if we go back to the topic of power of sale, one of the data points that came out recently is if you take a metro like Brampton, it is seeing the highest share of delinquent mortgages, the largest number of power of sale. I believe in the country, certainly in Ontario. Well, what happened there? One of the things in the kind of crazy boom years coming out of COVID was that if you bought a single family home, if you rented it to an individual family, it was really hard to make any cash flow from that. It was not a great investment. But if you could buy that in a part of a community where there was a lot of international students coming in and they were okay, so you know, 10 or 15 people in that house, all of a sudden you got real cash flows.

Well, now that you're seeing a reduction in that cohort, we're finding that that has put a number of these investors offside on their mortgages. They can no longer cash flow. And that's causing a lot of these power of sale. And conversely are related to that, just a big drop in prices. So if you look at like the metros that are seeing the biggest decline in price. crisis. Kitchener. Yeah. Well, that was Conestoga College, kind of the absolutely. The hallmark of insanity, right? Around the international student fiasco. Brampton, enormous influx of international students. So those areas are getting

really hurt now that that that cohort is declining. The Conestoga College thing still is one of the most bizarre stories ever. The sheer numbers are really tough to even come to grips with. Of course, I live in Kitchener, Waterloo. So all I had to do is see the traffic problems, to know how absolutely absurd that whole thing had gotten. I want to move on to a lot of subjects, but just talk a little bit about that because, again, you shone a light on that quite early. Yeah, I was one of the first ones really critiquing that fiasco. In fact, I actually got blocked on all social media by Conestoga College because I was

cheerful them so hard. Look, at some point, they have to own the disastrous decisions that came out of that kind of post-COVID boom. they ramped up their temporary resident admissions so dramatically. And they were running $100 million operating surpluses, which makes no sense. You don't need to run this as a business, right? And they were really hurting the local rental market and especially low-income Canadians in those rental markets.

It was irresponsible. It was a horrible decision. That's all being unwound now. And the people that were largely responsible for that are now finally getting the kind of recognition, as it were that they deserve. Okay, one other odd question before we leave this subject, you talked about population growth. Tell our listeners some of the ways you measure that. I have liked your writing on how you're looking at cell phone usage, for example, as a very good proxy for that, better than some of the government figures that come out.

Sure. So I'll be real clear here that the government is not always great at tracking this data precisely. And the reason for that is that was very diplomatic for you, by the way. That's, wow. That was really, you're maturing. You are maturing. I appreciate that. I try. The reality is it's embarrassing, but we do not track exits out of the country as well as we should.

So at the end of visitor visa or work permit, we don't actually know how many people leave when that permit expires, which is a huge blind spot. And so Stats Canada has rightly taken some criticism around their estimates of population growth. Like how reliable is it? Do we know? Because they're reporting that our population is declining. And everyone's going, well, I don't, how do, how can we trust that data? So rather than take me. at face value, I try to figure, well, how can we sort of back into a reasonable estimate

or a fact check that data? And one of the ways I came up with was, well, we could look at net cell phone additions. All the big telcos report it. And it's a reasonable assumption that if someone comes to Canada, they're probably going to get a cell phone or they're going to take an existing cell phone, put it on a plan here. And that growth has fallen off a cliff. It's almost zero. The other one that's, I think, is even better that I've just recently stumbled upon is transit ridership in some areas like Brampton, down 20. percent year over year, 20 percent. Well, where did all those people go?

Right? So, I mean, it's very clear to me that like you can debate the magnitude of the decline, but the direction is not in question, right? It's very clear that Kansas population, the growth is dropped dramatically. By all reasonable estimates, it looks like it is indeed declining. Some people have a really hard time giving any props to the government because it was such a debacle. And a lot of people have a hard time acknowledging that they are starting to course correct. And I think you can hold those TVs at once.

You can say that the current post-COVID immigration landscape was very poorly managed, but they're not still making those mistakes. They are slowly course correcting and we should applaud them for trying to make those. I agree with that 100%. No, I agree with you completely. You know, when you go back to that huge influx of people we had, a lot of people out there saying, hey, you've got the banks, you've got the grocery stores, you've got the telcos. They want population growth.

I mean, that's an easy way for them to grow their top lines and by extension, their bottom lines. Are they heavily lobbying the government to open up more and more and more? What's your thinking on that? Certain groups are. And we are seeing some lobbying from certain small businesses. It was interesting. So, again, I'll use a specific name. Tim Hortons was very aggressive.

Maybe that's not the right word. They acknowledged that they were lobbying the government for a while. It came out in the media. They were lobbying for an expansion of the temporary worker program. was late last year. The public pushback to that was pretty dramatic, especially from people who, you know, they've got teenage kids trying to find a job or just trying to find a job. They can't get a job. And you've got, you know, some of these big chains saying, we need more temporary workers. What's interesting, though, is they came out this year and they basically said,

no, no, we're recommitting to hiring local. We're going to abandon that push. And to their credit, right? So there are still some groups lobbying. There are certainly some areas of the country in very niche industries where I think it's still very much needed. For sure. But do we need every little fast food joint and coffee shop? Do we need all this temporary? Like, I don't, I just don't think so. I push back hard on that.

I think for too long, that program was used as just a subsidy for business to, to effectively subsidize their wages for their workers. I just don't think that's right. And it comes at the expense of Canadians. And the reality is if you can't, if you can't run a business and pay a local, a wage that attracts labor, you don't. don't have a valid business model. If you need this program to subsidize those wages, you don't have a business. And we should not make sure that you stay in business. I'm sorry. No, that's, that's an

interesting perspective. Hey, I'm going to give you a chance to tell our audience a little bit about your business, but not because I've suddenly turned a promotion and I want to help you out. I find your business interesting because, again, you were kind of ahead of the curve in that we now are seeing a lot of very smart people who have insights in their industry, creating newsletters, for example, on substact. I mean, you hear about substack nonstop. But you've been doing this for a long time. You've been out there as a one person operator for a long time saying, hey, I have a specialty here and that's taking economic data,

real estate field related data, putting it together in an understandable fashion to help industry participants and to help institutional investors, et cetera, through your two initiatives. What got you going initially? What made you think you could do that? And how do you grow a business like that? How do you draw the initial attention, the credibility, to make people sign up for your newsletter, for example.

Well, for me, it happened very organically. I had a free blog back in the day when blogs. This was going back 15 years ago and was posting my thoughts on the state of the economy, housing, consumer credit, even back then. And my distribution list, I could see just was skewing heavily towards these big institutional investors and started getting some request to do some consulting work and jump on calls. And I thought, man, I'm doing this for free. There's probably a business here.

And so I, you know, took the blog down, put it behind a, paywall and that was the genesis of North Cove advisors, which is still my institutional research firm. Years later, it became obvious to me that there was sort of a gap at the sort of real estate mortgage broker level and individual investment advisor level where people wanted differentiated economic research that would accessible and entertaining and engaging. And so I took that same research that I was doing through North Cove and sort of modified it for the audience. And that's become a weekly research report that goes out through edge analytics. And that's got a lot of penetration with real estate professionals, mortgage professionals. But one thing we're finding

is a lot of investment advisors are really appreciating the sort of that touch points, the state of the economy, state of labor market, interest rates, because they're getting a lot of those questions from their own clients. And so to be able to speak very intelligently to that, I think a lot of people are finding benefit to. So that's, I appreciate the plug. Dave, that's edgeanalytics.com for any your listeners or viewers that want to check that out. Yeah, no, and I'm happy to give you the plug, but I really do find the whole business model interesting. And again, you really were ahead of the curve.

There was no substack when you were first doing this. And now I have a lot of friends who are looking into doing this and saying, hey, I've got an area of specialty and I want to start getting in. And let's go back again to how you grew the following. Was Twitter X now a big part of that too? Because you're quite good there. I'd bring you across points in an understandable fashion, but still covering off the nuances,

with, say, multiple tweets, et cetera. Was that a big part of how you grew the awareness? I wish I had a better formula for people. For me, like, I've never advertised. On the institutional side, I've never advertised. It was all word of mouth. So it was just people sharing my research or saying, hey, you need, if you're interested in Canada,

what, and housing and Canadian credit, you've got to talk to this guy. So I've never advertised. Every single one of my clients on the institutional side has come to me just through word of mouth. So I think what that speaks to, if you're someone in the space trying to get into the whole, newsletter area, I think you have to be really differentiated. And to that point, I would say,

get niche. Yeah. Be like own, own an area. Be the person in a niche area. And you're going to do well. You're going to find there's people that don't want to read that. But if you're just one of a thousand people talking about some generic subject, it's going to be really hard to get that penetration. So, you know, be engaging, be a good storyteller, create good visuals, but find a niche area as well, where you can really stand alone. All right. Let's talk about one of your audiences. I think all of our listeners will find that. You know, this interesting. It's tough being a real estate agent now in a lot of areas. I mean, a lot of their business has really slowed. Let's say where their condo specials, we'll talk more about

the condo market in a few moments. Mortgage brokers are having a good year in some instances because of the renewal wait if they're being able to tap into that. But in general, these fields are under a lot of pressure relative to a few years ago? What are you hearing out there? Are we having a lot of people drop out of the industries? What's happening? Yeah, it's a lot of doom and gloom out there. It's a lot of pessimism. It's, you're right. It's a, it's a tough market. So for context, the Toronto real estate board released their annual fiscal report.

And I, off top of my head, I think they were down 4,000 agents compared to last year. So you are seeing. Now, that's from a pretty big base. It's a huge base. It was crazy. Largest real estate board in the world as far as I understand it. It is. Yeah, the world.

More realtors than teachers. That's nuts. It's wild. You are seeing that. It's one of those environments, though, where a lot of business will consolidate, right? If you can get through this, if you're listening and you are in the real estate space, yeah, this is a tough time. I think we're probably going to start getting a little better, at least in terms of sales, I think, are probably going to start perking up a little bit. But if you can get through this time, I think you will see a lot of consolidation and it'll consolidate around the people that, you know, have real value to add in the industry.

And it's going to set them up well for kind of the next cycle. And people need to remember that everything's cyclical, right? And especially housing, it's so cyclical. And so the people that were ultra bullish in 2020 and 2021, when it was really clear that this market had gotten ahead of itself, oftentimes are the same people that think there's going to be no end in sight to this down market. And it's like, everything is cyclical, man. Just these things come and go. We will see another ripping bull market at some point in housing.

You're probably going to want to be there for it. No, for sure. And I mean, when we get emotionally engaged in something, and of course, if it's your profession, if it's your profession, you're going to be emotionally engaged, you tend to extrapolate. the short-term trend. It's just the way it is. And so I think you're right. There were a lot of people who felt real estate would never go down or have a tough time again back when it was running wild in 21 and early 22. But the basic math of that situation told you it had to slow down dramatically. Probably had to have a significant correction. We were running out of buyers of those ridiculous prices. Investors couldn't make money. The affordability problem was at a level that people like you

and I couldn't even identify with. It was just nutty. So it almost had to take a turn down. But The big question is, where do you think it's going? And I hate to put you on the spot like that, but of course, our listeners and viewers are thinking, okay, how does this all shake out over the next three to five years? Do we hit a bottom in the next 12 months? Do we start trending up in some of the geographical areas? What's your broad thinking on that without getting too specific? Well, I mean, for start is, we've got to acknowledge that there is no kind of Canadian housing market. It's a really weird time in Canada. Like if one of the charts I post regularly is just the change from peak, each metro, from their own responsibility.

perspective peak. And you have parts of the country where housing is still at peak today and accelerating at a 10% annual clip. Right. And so that's again, parts of Quebec, Saskatchewan, parts of Manitoba. And at the same time, you've got parts of Southern Ontario where prices are off 30% from peak, 3.0%. I mean, that's a- And some houses, specific houses, down 50. Absolutely. We are seeing power sale that are down 50% from their prior sale price. That's not entirely uncommon anymore, which is, I mean, just a wild stat. So, you know, it's really hard to make definitive statements. You're looking across a country and you've got such geographic diversity in the trend. What I would say, though, is from a high level, what generally tends to mark sort of the lows and

cycles is, I believe, more on the supply than the demand side. And I always come back to, you know, if you're trying to predict one thing or the other, it's way easier to predict supply than it is to predict demand. Demand, there's too many moving parts. You're dealing. You're dealing with. with psychology and interest rates. Who the heck knows. But you know what supply is going to look like because we have great data on what's currently being built. So the one thing that I've been highlighting is if we look at the hardest hit

parts of the country, Southern Ontario and BC, you have building permits for single family that are now the lowest in 50 years, 5-0. We've never seen. So like. And think about our population base difference since then. It's unbelievable. It is another crazy stat. Like 50 years with a way bigger population.

Right. we can see for certain that there will be less new supply being added into this market over the next year, two, three. And so we're already starting to see that active listings, so homes currently for sale are starting to roll over in Ontario and BC. I believe a lot of that's related to the fact that a lot of builders are not bringing as much new supply to the market. That's a trend that's probably going to continue. And so I think I'm not bullish on house prices in southern Ontario, of BC, but it's also hard to get extremely negative when you can see that the supply is going to start to tighten. And I'm talking specifically single family, right? I think the next few years

are just going to frustrate both the bulls and the bears, because I think it's just going to be a market that grinds. And this is very similar to the last big housing cycle in the late 80s, where you had an initial kind of two, three year drop. And then prices just ground sideways for years. And in real terms, they were negative. And I think that's going to be what, ultimately will end up restoring some of the affordability. We just get like a number of years where prices are just, just don't do anything. So that's specific to the single family market. I think probably the worst is behind us terms of price declines there.

Condos a little harder because there is still a fair bit of supply coming. The demand is is not there. And more to the point, the unit mix doesn't appear to be what end users want. And so there's going to be a lot of new supply that just kind of looks like it's going to be orphaned. And so I don't know. It's hard to be bullish on that. segment, but we will see. Even that segment, I would point out that listings in the resale market are

starting to shrink there as well. So who knows, who knows, but I'm not, what I would say, David, we talked about some of the psychology and the cycles and everything else. It's funny. Like, when I post anything on Twitter today that's remotely bullish on the market, not even bullish, but even being like, hey, I think maybe the sales are finally at a low, right? Right. Man, I get so much hate. It's reminiscent of back in 2020, 2020, 2021, where I was like, like, hey, man, this is, this is like a bubble and you get hate in the other direction. Like, for me, the vibes, the, the, the psychology feels like we were way too bullish for too long. And now it feels like people are extrapolating the decline in perpetuity. It's like, we're not going to be here

a year from now and price or down another 30 percent. Like, that's just not going to happen. I feel for you because I went through it. I went back on stage when the real estate marquoise rocking late 21 and 22. And I said a few times that this is not sustainable because of the basic math, et cetera. I was amazed at how bad people got. Oh, yeah. And I thought, I'm going to, okay, I don't need that. Like people are, I love real estate. And the whole thought that it has to always go up and go up, big, et cetera, you're almost insulting them if you tell them that's not going to be the case. But you said a lot of interesting things there. And the one that I want to jump on in, Roy Miller in the updated version of the wealthy barber made a point that you just made

saying, look, we don't have enough supply coming on in detached homes in particular, single family detached that it's going to allow the market to collapse. Like some people are out there saying it's still going to go down 30 and 40 percent, but I don't see it. There's still fairly good demand. Interest rates are not super, super high. And then again, you've got this supply issue you brought up. So I agree with you. I think we could be looking at a grind for a few years. And one thing I would point out is when we look at potential pent up demand, the home ownership rate in the under 40 crowd has collapsed. I mean, it's been a stunning decline over the last, between the last two censuses. We've gone, in most cases, you've got like a 10 percentage percentage

point drop and home ownership rate by five year age buckets. It's 25 to 30, 30, huge declines. And at the same time, when we look at that same census data, it would imply that almost a quarter of homes detached in Ontario and BC are owned by individuals who are over 75. Yes. So you can see a scenario where there's going to be an enormous transfer of assets from an older cohort into that younger cohort where there is considerable pent up demand. The only question is like at what price does that actually happen? And so I could again, I could see a scenario where prices just don't do anything, maybe they grind a bit lower. But that's that in the 2030s, that's going to be a huge story in Canada is that transfer of ownership between generations.

That's going to be probably the defining story of the next decade. That's getting a lot of coverage in some of the big US periodicals right now. They're looking at this massive boomer group, several of whom own two places, as you know. Yep. And they're going to end up selling both of them. And are there enough buyers coming up based on demographics and based on affordability to really make this transition possible? Or do we have to see significantly lower prices to allow for it? I haven't looked at the data as closely as you have. What's your gut feeling for what kind of impact this selling is going to have, let's say, over the next 10 to 15 years? Is it going to suppress prices? Well, it's going to suppress price growth. I don't see scenario prices just continue to

collapse because you're getting to the point now where, well, you can't build. You're replacement cost right now, if you're buying at resale, you can't build for that price. So that generally is indicative that you're pretty close to a floor. Yeah, within reason like five, who knows, five percent, maybe 10 percent, but it's not 30, 40 percent. But that constant need to sell from the boomer cohort over the next decade will absolutely cap price appreciation. That's well said.

I like that way of looking at it. I think that makes a lot of sense. I would also just point out real quick, Dave, that the affordability picture is crap. Like, we know that. That's that that continues to be a challenge. But we're back to the point now where affordability is basically only marginally worse than it was from kind of like 2015 to 2022, which was not a bad time. There's lots of housing transactions happening. So I'm not saying that the affordability problem is salt, but I could see a scenario where sales start to perk up, price declines, moderate.

And then it just becomes really time is what restores a lot of the affordability. And it could be a long, we know from the late 80s and 90s, it was like a decade of just grinding sideways, negative real real prices. And that to me is a very plausible scenario here. I agree with all of that. You made a comment that listings on some of the resales for the condo market were actually going down a bit. Is some of that because at this price point, people are saying, I can't sell there. I'm selling for less than I owe. I don't have the monies.

I can't sell. I've got to rent it out and put up with a negative cash flow even before I can put up with that hit. Is that a part of it, do you think? I think that is part of it. But there too, because I track rentals listed through the. MLS and a lot of that will skew towards condos. And they're actually saying, again, I'm using Toronto specific data, to just be really clear, our GTA specific data, but the rentals on the MLS system are actually now lower than they were a year ago. Interesting. So none of that I would

have expected, but it's there in the data that I, you know, even as bearish as I am on the condo market, it's doing better than I would have thought. Because I mean, I would have thought that it was just free fall. Like there's, yeah, no, there's no reason to be optimistic on the condom marks. It's holding up a little better than we would have thought. What are the changes that being discussed and have been getting a lot of attention over the last few months, the government changes to the taxes on the new homes, the development fees, all of the things we're hearing about. Are those going to have a big impact in how much building we see from a lot of the bigger builders? I don't think it's going to have a lot of impacts. It's a temporary reprieve. You're going to see

it move the needle. Where we are seeing is if you can build sort of entry level single family, and that can be row houses, semis, if you can get that built for kind of, under 800,000, which I know is crazy to say that that's entry level, but in kind of the GTA, that that is, they're absolutely flying, right? They're still selling. Now, you listen to somebody like Ron Butler, he's a little more plugged in and he points out that it's crazy that those units that are selling are apparently still selling to investors, which I find, I find hard to believe, but, you know, Ron's pretty plugged in. So, you know, we will see construction activity perk up in that sort of smaller entry level space. The GST, HST,

HST rebate or, you know, Holiday will move the needle marginally there. But it's just not enough to really kind of get that market rolling again. Do you think they'll extend that? I mean, I hope they do. One of the things that we do really well in this country is we tax the crap out of housing. We treat it as if it's a, and I say well as, you know, jokingly. A sin. But we're very, that's what I've said.

We tax housing like it's a sin. It's like we're going to tax tobacco, gasoline, alcohol, and homes at like 30%. Like if you try to build a home, almost a third of it in certain parts of the country go to various level of taxation. That's just inexcusable. And we need to do better at getting those costs down so that new entrance into the market actually have an opportunity to buy affordable new housing. Well, Ben Tal and I were talking about that.

And a lot of people have asked me over the years, okay, that figures alarm me. What is it in other countries? And I tried to research a few of them. And you almost have to go state by state municipality by municipality on the state front. But it's often only 7 to 9% of the very very. various levels of government take out in taxes. Wow. Like what a difference. We're paying three three times more in taxes. But that's 20% of the price of the home. So on a million dollar home, it's an extra $200,000. That's tough. It really is. You know, I mean, a lot of people don't

feel much sympathy for builders. They made a lot of money for a while there. But man, when you've had the resale prices fall to the extent they have in certain areas, 25 and 30 percent, and you haven't had the replacement costs go down much at all relative to that. It's tough for them right now. can't build. Somebody had a great line. Maybe it was Bentel, but somebody said, you know, housing and can't is in this weird point where it's too expensive to buy and not expensive enough to build. That's right.

You're caught in this like weird limbo where it's like nobody can buy the existing homes too expensive, but builders can't build because they're not expensive enough. And all of that really breaks down to like, we just tax it too much. And if you could get that lower, then maybe we could get developers to build. And I do think, again, I'm not bullish by any means the market. I just think it's going to frustrate everybody for a couple years. but you look beyond that. And you could still make the argument that we're going to be short single family.

And we probably need to be thinking about getting some of those new homes built. No, agree with all that. Okay, I know that you probably don't want to answer this one because you've had to talk about a lot in other podcasts, etc. But can you walk our listeners through blanket assessments and what that is meant to some of the situations in Toronto, for example? Yeah, absolutely. So rewind to kind of 2020, 2020, 2021. So it used to be, actually, if you rewind way, way back 20 years or so, it used to be that if you went in to buy a new condo, and we're talking pre-construction, so you're buying off plans, it's just a

site map on a wall and you put it in and you're going to get that unit four or five years down the road, it used to be you would buy that unit slightly cheaper than resale. That's right. Because developers had to incentivize you because you're, you're tying up your money for five years before you finally get it. Over time, that changed and people started paying more and more of a premium to resale. And to the point where when things got really frothy coming out of COVID, there's a period of time where people were paying up to 30% premium to resale to buy a unit that wouldn't be delivered for five years. So for example, put real math on it.

So let's say, you know, $1,300 a square foot new versus $1,000 per square foot completed across the road. It's like you go buy that one today for $1,000 or you can wait five years and you can buy this one for $1,300 when it completes. The math made no sense. but people were piling into it because they thought, I'm never going to actually close on this unit. I'll just assign, I'll flip it and I'll make all my money that way. So you had all these units that were contractually obligated to close at certain price. The market fell.

It didn't go up. It fell. And so when it came time to actually close on that unit, they were dramatically underwater. So they were contracted to pay $1,500, $1,500 square foot. It was only worth $1,900. So in theory, no lender will give you 80% financing on that. that to close because the collateral's not there. It's like, this thing's only worth 900. You've got to give the developer $1,500. We're not going to finance it at $1,200 a foot for you. So that should have

been a disaster, right? But instead, what happened was some banks very quietly said, well, we'll just sort of pretend that it's actually appraised at your original contract price. So in other words, we're just going to pretend that this really is worth $1,600 a square foot when we know if you had to sell, it's only worth $9. And because we're going to pretend, as worth 1600 will give you 80% of that 1600. So now, just to be really clear, according to the Bank Act, which gives the big Canadian banks their charter rights, that's a no-no. You can't, if it's uninsured, you cannot put a loan on your balance sheet that's more than 80% LTV uninsured. And these banks were absolutely doing that. There's just blatant violation of the Bank Act.

I was hammering on this for a couple years. Osphi, which is the bank regulator, was shockingly quiet about it until the point where they really could no longer be quiet about it because the media was really starting to pick up on this story. And then finally they had to come out and say, okay, you know, we're going to lean on the banks to no longer do these blanket appraisals. And so that's kind of where we are today. Now, I will tell you, you know, I've reviewed some power of sale documents for some condos that were funded through one of these, some of these blanket appraisals. And so we can see examples where it's like the mortgage amount was, you know, a million dollars and the home just sold for 600.

And it never should have been, it was never worth, you know, one point. It just never was. And so there's obviously some losses there from the, from the perspective of the banks, just so that everybody understands, from a credit perspective, this makes perfect sense because the banks don't want these big multi-hundred million dollar development loans to become impaired. Right. And that was the risk here, because if people couldn't get financing to close, the loan would have gone delinquents or been impaired. And then that you've got a real problem. And so what

they did is they said, well, we'll just let everybody close. We'll give them the financing. That will clear the development loan. And then down the road, maybe we'll deal with a couple of them that will default and we'll lose a bit of money here and there. But at least for the time being, we don't have to disclose to our investors that we just took a big impairment on a $200 million development loan. So credit perspective, it makes total sense. But in terms of, you know, you and I as Canadians and our government granting a charter to these banks to operate a certain way, they should never have been doing this. You know, it's very interesting the way you described it at the end because that's the most

common question from the average person is, well, why did the bank do it? There's no incentive. Why would they lend more money than they could get back if things went awry, etc? But you're exactly right. They'd already lent money on the building to the developer. And they're thinking, let's at least clear that risk. And then I love the way you said and put up with one or two or five of the individual units running into troubles were better off there.

But that is a fair to compelling argument by them. So maybe they should. be allowed to do it and exercise their own judgment on that. It may make more sense. What are your thoughts on that? That was always my point. When I was ceasing Osfi on Twitter, I'm often pretty vocal about these things on Twitter. My whole thing was, I'm not saying that it's the wrong decision. Right. But it's clearly in violation of an act that has served Canadians really well. Like our banks skated through the financial crisis because they were really well governed. And so, you know, should we so flippantly allow banks to, to operate in, in, in,

violation of this act that has served in wealth. So all I wanted was just for Osfeed to comment on their thinking on this. And also more importantly, how are the banks provisioning for this? If you're going to extend this loan, it's obviously much higher risk. How are you provisioning for that? What sort of, you know, how are you going to, as an investor? Because, you know, one of the things I really worry about is like our banks, which we talk about the outset, they're very richly priced relative to the global peers. And a big reason for that is that there is an embedded expectation that they are managed very, very privileged very credently by our regulators. And so you don't want to go messing with that reputation. Like if

investors globally are like, wait a minute, you're putting a loan on your balance sheet telling me it's under 80% but in actuality it's like 110% loan to value. Right. Why are you lying to me and why is the regulator okay with this? Like that's the sort of risk you run into. It's not, none of it is good. I really like your coverage of all this and have learned a lot. I said that was the last question. I'm going to add one more quick one. Nobody ever talks about next year's mortgage renewal environment. What's it like relative to this year? Is it down a lot? So we have about another nine months of very high mortgage renewals. If you think about it like when were the dead lows in mortgage rates, the all time lows were 2021, right through

2021 and into the first quarter of 2022. Those are the absolute dead lows in the history of Canada. Well, if you assume a five year term, that means we're renewing those today and into kind of the first quarter next year. And so most of those loans that are renewing are going to see mortgage payments rise anywhere of kind of 10 to 20 percent relative to what they were before. But once we hit kind of the second quarter of next year, we're into a situation where that flips negative again. So in other words, loans that start to renew come the second quarter of 27, those mortgage payments will actually be back on decline. Now, that's assuming that we get a kind of stability in the rate environment, right, if we kind of extrapolate where things are out from here. And so by then,

will be kind of through the worst of this renewal cycle. But importantly, that doesn't mean that the pain is over for homeowners, unfortunately, because this hits with a lag, right? So mortgage delinquencies hit with a leg, power of sale hit with a leg. And what that tells us is even when we get back to a scenario where rates for most people renewing are back to being lower, we're still going to have a long tail of rising mortgage delinquencies, I believe, rate through 27 and probably into 2028. Well, I completely agree.

And again, I can even see it with some of the younger people sending me their fun. finances. They are in big trouble, but they're not going to default from their payments right now. They're scrambling in any other way. Can I get a little bit more money from mom and dad? Can I use a credit card when I'm on scramble? They've depleted their emergency funds. I mean, the last thing people do is let the house go, of course. So I think you're right. There'll be a longer tail there for sure. The mortgage brokerage industry has been okay this year for some because of again, they've tapped into the renewal. But if the renewal numbers go down, let's say starting April of 2027 and you don't have a pickup in sales, that's going to be a challenging situation for them as well.

They'll definitely go through a couple of years where origination volumes are lower for sure. It's actually, it's really interesting. You can see it in the origination data. It's spiked in 2021 as everybody, you know, refinanced to capture those, like a lot of mortgages started with a one back then, like 1.59, like all this crazy low numbers. So why wouldn't you refinance, right? And so you had this big bump and then you roll it four or five years. We're in a second bump. And it's just going to kind of keep going where you get this kind of wiggle for a number of years as though that cohort renews, renews, renews. And so yeah, come 27, the origination volumes will be down for sure. And it'll be down probably until kind of 29.

Okay, listen, love having you on. You're very articulate, very knowledgeable. I'm a huge fan, as you know, I follow all of your material on X, and you've always got great insights. And so it's a real thrill to have you back. And we'd love to do it one more time before we shut all this down at your end. Thanks again. I'd love to, Dave. Good to see you again. You too. Thank you.