The developers overbuilt shoe-sized units that were targeted at investors who would never actually live in them. The free market will find a balance back to normalcy and family sized units. The way for this to happen is these condos MUST be allowed to collapse in value to the point that multiple units in a line or row be purchased at rock-bottom prices. Then merged into 2 or 3 bedroom units. I do not give a rats ass about the developers or investors who are left holding the bag. The free market will fill in the demand for larger city sized units for young families. The Canadian Government should get the fck out of the way and let nature take its course.
Merging several units into one unit in a condominium is a serious legal challenge. It will require changes in the condominium act of Ontario. All units have their respective shares in the common element fees and their own PIN numbers. Even physically spinning those could run into some structural issues. The board will have to approve such changes and it may even need a vote of all owners if the declaration needs to be changed. Not that easy.
Most real estate investors have been led to believe that real estate prices only go up. They also believe leverage is always a good thing. And now they are finding out these things are not true.
Avg size at Mercer building: 555 sq ft. This is the #1 problem with Toronto condos. Terrible units meant for “investors”. What do you do with those units when “investors” don’t want to own them anymore? No one wants to own that unit to live in it.
There is a price that someone will pay to live there... there is always a price that works... But it is well below the current price paid by the typical investor... we will go through a price discovery process .. it will be long, meandering and painful... RE markets always move in slow motion....
Well, of course, we agree on that. It will be a shocking haircut from current levels. The point is that developers have to stop catering to the “investor” class. We’ve seen buildings in great neighbourhoods that have zero units meant for live-in owners, and the marketing pitch is fully geared to investors.
@@OddsJet What is more concerning is the unit to elevator ratios in some of these investor driven buildings. Those small unit buildings are very underserviced with elevators, leading to frustrating wait times in peak periods. It is not unusual to have to wait 15-20 minutes just to try and get an elevator to your suite... and the same going down again. When an elevator goes down for repairs (which is often) or someone reserves an elevator for a move in... its total chaos in those buildings. Folks - always check... at least one elevator for every 80 units... MINIMUM.. As an aside.. I always recommend living on the second or third floor.. To hell with the view... I want access to the stairwells to get up and down from my suite... Best condo I ever lived in - 36 Charlotte... quiet... 63 units - with 2 elevators and a fob to access the stairwell as you please... and no AirBNB - it was a great spot right downtown...
Yeah I agree. No one wants to watch their stove from the couch yet these are the kinds of layouts being made. If the market was geared to end users we would have liveable spaces.
John runs a clinic here folks, listen up! The speculators, often referred to as investors( mostly Boomers and GenX speculating with their newfound equity in their house. Their mortgage is an asset to the bank, and the banks will make sure their asset is protected. Great analysis, John, thank you!
very few are speculating and those deserve to lose money,. Never buy to assign. Real estate is for the long term. Many own as part of their retirement like me and these units provide shelter to people. No investor = no supply.
bank ceos care about getting their over sized salary and bonus and jumping ship to cause more damage elsewhere before it implodes on them. banks in general lobby corrupt politicians to offload the mortgage defaults on the taxpayer.
@@stephanecaron1 "No investor = no supply" False! Supply meets demand. Demand comes from people needing a place to live. The money comes from the bank. The banks could have easily just lent money to people who wanted a place to live but oh no they decided to lend money to people who wanted to make money off of housing.
Of course, the condo market is fixed. We see that. However, we will not buy until prices come down to the level of affordability. Cash saved now. Don’t buy until they have a major downfall in prices, let’s see the over leveraged folks fall.
Thank you so much for this video. It would be awesome if you make a feature length video, with tons of infographics, clearly explaining the problems we are facing, and solutions. And make it NON-PARTISAN. It’s clear that both parties, federal and provincially are responsible for this (e.g Trudeau lifted the cap on international students, Ford worked with the diploma mills to usher them in…each blame the other, and the culture war keeps people divided). Also, plz address the monopolies…Canada has 5 banks, 2 airlines, 3 telecoms, 3 grocery stores, etc. They are the elephant in the room keeping international students and temp workers flooding our country, and propping up our real estate. Both parties are influenced by their lobbyists. Also, many Canadians have benefited from the status quo (anyone who bought between 1990 - 2019)…they will support investors being bailed out, or at the very least look the other way if they think doing so will keep their property value high. Don’t hold back :)
Blanket appraisals on tens of thousands of closing condos is an overt effort to OVER finance condos rather than let developments fail (who are also financed by the same banks). Better to have 300 tiny potential problems with individual investors with over financed condos - rather than have one BIG problem with a developer going insolvent, due to failure of buyers to close??? Based on current values, these investors are ALL under water. This represent a systemic risk to banks. I am underwriting this risk as a taxpayer. Moreover, we are creating a zombie housing market... these condos at these prices, are illiquid.. OFSI should intervene.
OSFI = in collusion with banksters and likely staffed with their ex-employees. While the CMHC and banks offloading billions of sub-prime mortgage garbage in the form of mortgage backed securities on taxpayers (via BoC purchases), OSFI will pretend nothing is happening as it has for years. These useless institutions should be shut down. If banks want to issue mortgages, they should insure it either using the private lenders / investors or with their own funds. Stop trying to get taxpayers to hold the bag on the way down while having collected the profits on the way up.
Yes, the banks are propping up pre-cons at closing. If a condo purchased for $990K would appraise for 600k today, why would a bank lend 950k on it, over 150% LTV. Makes no sense
It does make sense if the same bank is the one who is financing the development. If buyers don't close, banks will take huge losses on construction loans as projects become insolvent.
@@michael2275 the govt is and has been on a mission to subvert the market with the nation's checkbook. a select few profit from it, most others are handed the bill for the above.
i'd like to get in on this racket too. i.e. make profits creating junk loans on the way up, offload the losses on taxpayers (via bailouts), savers (via money printing) on the way down. its for the good of the economy.
The best way to prop up condo market is to keep hiking development fees. If the Canadian government charges $1MM dollars for building an avg condo, where can the prices go? Either you find the money to pay up, or you move into a tent.
10:51 now banks are doing this! Shouldn’t this have been done in the first place to start with. This whole problem of overvaluation is because of the banks reckless behaviour
Toronto needs to spend the next 20 yrs building family condos in 6-8 storey buildings in the city. 1500-2300 sq ft apts as substitutes to semi detached homes. They also need to allow taller stacked townhomes to be built on side streets. If most property frontages are 15-22', the only way to densify these properties is vertically. The city councillors have actually actively blocked these types of development to placate their NIMBY voters. The council also closed permanent rental housing development by introducing rent control. Who would run a building knowing they could never make repairs or cover their costs? That's been going on for over 30 yrs. The alternative would be having the govt give incentives and low costs loans for small coops to be built. These would be private not public housing. No burden to the taxpayers. It would support family units and hopefully commercial entities would operate on ground level to subsidize home ownership costs.
Canada has turned into a "consequence-free" society where whatever bad decisions you have made the job of the government is to prevent you from losing anything. If I was a young person I would take this as a slap in the face and leave - better I rent for all of my life and never start a family rather than any investor have a slightly worse retirement. Fortunately I am an old guy and already retired in the Caribbean.
its worse than consequence-free because the consequences are being transferred to those who had no part in the speculation (taxpayers, savers, renters, the working poor, pensioners.. etc)
Tiff Macklem also had a massive roll in encouraging investors to go ahead and spend by saying rates will be lower for longer. He should take some responsibility in all this mess.
I think you should tell him that the next time you see him. Carolyn Rogers said they held rates low for two years. She said that was a long time. I think two years is a long time as well. They did what they said they were going to do. Hold rates for a long time.
Tiff Macklem has done great harm to the economy. The reality is these clueless guys should not be price fixing (setting interest rates) and counterfeiting (printing money) because all it does is distort the market. The housing market looks like the end result of what a Soviet Central Planning bureau would achieve after heavy duty meddling.
He is explaining the description of a “PONZI SCHEME” format. Now the music has stopped and the chairs are missing for many. After viewing the unfinished products in the Vancouver area, it is obvious the “PAIN TRADE” is in full swing.
If prices of bread fell to 50 cents, do you think we would see a mass supply of bread on the stands after that or the suppliers would say since it cost more to make bread then to sell it, we won’t be producing bread anymore.
So if a “project fails”, what does that mean? The building is built. It exists. Do people not occupy? Does a management company get involved to run maintenance?
There are multiple ways things can play out. Eventually, the units will be occupied, but a lot of people will lose a lot of money by the time everything is done
@@john_pasalis fuck em, My parents offered me money to go and buy a house, but i told them no, I'd rather make my own way, and it isn't feasible that this will last forever, and that I didn't want to contribute to this miassive growing inssue. if we as a country endlessly support terrible investments then it isn't long before Canada itself goes insolvent.. or worse.
Hey John, great pod. I would love to hear your thoughts about the chatter a couple summers ago of requiring real estate investors to have a minimum 35% down payment on all rental properties as it is for foreign investors.
I don't see that happening. If every investor had to come up with a 35% down payment on the actual market value, projects would fail. Investors would have to come up with more than $250-$300K in cash - over and above the deposits they made which would cover the decline in value.
@@john_pasalis is that not the way it should be. in the end, who's money are they gambling with if they can pocket the profits on the way up while declaring bankruptcy and "walking away" on the way down.
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45:19 I think the other issue with supply is the type of supply. Who really wanted this many micro units. At least at that price point. If prices and rates go down, demand is still there. These pre construction speculators are experiencing the risk side of that investment now. However, it will still continue in the future just more carefully. Builders will have to prove they can deliver on time.
I don’t think so. Last week one mortgage specialist told me that he saw the appraisal value is $200k lower than the bought price and the buyer needs to come up with the difference. He said usually the appraisal prices are lower than the bought prices.
The government is particularly clueless with the secondary suites initiative, at least as far as the pipe dream of it leading to a boost in rental stock. There will be absolutely minimal take-up of these incentives to create new rental units. Right now there are already thousands of ready to go rental-intended condos for sale in downtown Toronto going unsold. Why? Because with the laws and the returns (at least at current prices and despite current rents) the way they are nobody wants to get into the landlord business....even when the tenants would be miles away in a downtown building with active property management right in the building. So if they don't want that as an investment, why would someone want go through the hassle of construction on their own property only to get a potentially problem/non-paying tenant that is hard to evict right in their own home or backyard and all the tension that might bring? Rental is broken. This won't fix it. Ottawa is just filled with dreamers who never bother to ask the simplest of questions about human motivation, incentive, and behaviour.
The Canadian government doesn't guarantee/support my stock investments in Canadian stocks so why is the govt guaranteeing speculative investors in Canadian housing? Both investments generate tax revenue for the govt, but I guess the housing builds are the ones that generate big bucks via expensive development fees
Why is the taxpayer involved in guaranteeing sub-prime garbage loans that banks profited from creating. None of the premiums charged to insure that junk reflect the real risk to the taxpayer of their default. Now govt is trying to inflate away the problem which further destroys the working class and will backfire in a spectacular way on the economy.
Great video! However, I find it peculiar that you seem to be calling out policymakers for focusing solely on supply, when you too were somewhat pushing that narrative (along with the demand from population growth putting a floor under housing narrative). Both sides of this are problematic (focus on undersupply and demand from population growth), as they give the impression that there is a floor under housing due to these factors. The reality is, the state of the economy and employment will dictate prices and no level of undersupply or population growth will prevent significant price drops if we hit a severe recession. Most in the industry have been implying (or outright stating ) otherwise. I believe that in 2 years, we will not hear anything about a housing supply shortage (the same way 2 years ago, a labour shortage was dominating the news and is no longer discussed at all).
When Canada's population grew from around 300K people/year in 2015 to just under 1.3M today, it's obvious we have a supply shortage. But most housing experts and governments have argued for years that our housing crisis can be solved exclusively by focusing on supply-side measures. That narrative only changed with the federal government's 2024 budget when they admitted growing by 1.3M people per year was not sustainable. Look back and let me know if you can find a single report or policy paper from our government or from a housing think tank written before 2024 that argued our population growth was unsustainable and needed to be cooled. I can't think of many, because most experts argued that housing was only about a lack of supply
Wow. There’s no way this doesn’t negatively impact future supply. Developer’s and builders alike are already pulling back, if this were to happen on mass there would be no incentive to build any pre construction stuff. If I was a developer in this high interest environment I would 100% be going elsewhere or waiting. Once this slug of inventory that is in the pipeline completes I think it’s gonna be crickets for a while in the Canadian pre construction sector.
It’s supply that no one wants. These units are only useful for Airbnbs and as pieds-à-terre. It will be a good thing if they stop building them. Maybe they’ll start building family homes again?
It seems you are advocating for fully free market approach , I am fine with it if you advocate for fully free market for loans too , meaning get rid of stress test for example 😎
Haha, I'm actually not advocating for that - the reality is that our entire housing market would fall apart without government interventions - from insured mortgages to the cheap debt our government is offering to drive more rental housing construction.
free market would impose its own set of requirements for a stress test prior to issuing any mortgage to a potential dead beat. that's because the lender stands to lose his hard earned money and will do all the necessary due diligence. the risk will be priced accordingly and thus the interest on the loan. free market does not mean free money.
Bringing down your Priciple from 600k to 400k and riding out the next 4 to 5 years is not a solution here ? Our housing starts are not looking good right now.
if these tiny units are meant for investors, a let go would mean the units will be taken over by new investors or those who are willing to live in a smaller place? Its a game between those who overfinance and those who are sitting on a lot of cash.
It always is in life. Smart people build their wealth off the unsophisticated. In a few years those condos will be selling for less than half of thir original price. The truth is Canada is essentially a poor country compared to where it should be because Caadians are so financially unsophisticated.
Once you get the smell of fear in the air there is no going back. I can just imagine all the bank CEOs being hauled in front of Parliament for all the laws they broke while trying to prop everything up. If the price of the unit is more than it is worth then we count on the market every single time. That will be the deciding factor here. So units that once sold for $500 a square foot and are 10 years old maybe just maybe they go back to that original price. What a mess
The best thing that could happen to the Canadian real estate market (in terms of fairness) is that investor condos drop so low that they become appealing to end users to buy. It would cleanse the bad investors out, educate the population on the detriment of speculative investing and open the door for more home ownership via condos, particularly for first time buyers.
Province laws should have incentivized home buyers better and penalized investors as a general policy in the real estate housing, we sat on this for long without any action.
I thought buying a 2 bedroom apartment early and rending it out before the children can afford to take care of their own and gift them when they got married, but now I think it is too costly to upkeep a condo for the young family even if they don't have to pay for a down payment. the mortgage, strata fee, insurance.... it cost a lot more than renting one out, and this is the reality.
Government appears to have two competing interests: On the one hand preserving the wealth of Canadian investors and protecting banks from mortgage defaults would encourage policy makers to continue to underwrite bad investments; on the other hand allowing the market to experience a big condo crash would enable many poor people to have a chance to acquire equity at price points they might afford, and would be a more efficient way of ensuring occupancy of so many units that end up sitting empty at a time when there is a need for affordable housing. If it were up to me, I'd favor the second policy and let the condo market crash so that a young graduate might be able to afford a 1 bedroom in Toronto for about $300,000. The fact that this isn't happening tells me they may fear the consequences to our financial system if the banks' true exposure here ever came to light.
agree with the market trend assessment, but it looks to me that most of the blame should go toward the banks/lenders. The regulators should be called out for insufficient oversight, but the rules are clear: lending value should be the lower of market or sales - it looks to me that the banks just wanted to roll over their construction loans into mortgages and then crossing the fingers that the market will catch up before the investors default.
banks are there to make money, politicians are there to make a great country, one might have goofed on the mandate, but the other ones went out of their way to do the opposite.
Academics have been talking about the myth of the free market for the last decade. A free market is a metaphysical construct, all markets are regulated by governments and not the hand of an invisible god. Free market thinking on the other hand, produces deregulated and laissez-faire conditions that introduce speculative bubbles and crashes. What has kept this model to persist is the hand of the government bailing out investors when they fuck up (keep in mind, they are bailed out because they convince the citizens through public relations that they are in fact still needed). No one ever seems to recognize the rank hypocrisy and cynicism in this behavior, maybe even predatory.
Somewhere along the line, governments decided that all economic downturns are bad and we should avoid them at all costs. So governments flood their economies with spending - fueled by debt, and central banks flood the system with liquidity and negative real interest rates. The end result is a zombie economy where uncompetitive businesses are allowed to persist and real estate remains hopelessly overvalued. We need creative destruction. We need to have uncompetitive businesses fail and we need those who made poor investment decisions to take a haircut... We can't have moral hazard subsidized.. These necessary economic cycles fuel innovation and growth - as new competitors enter the market place with new business ideas.. .and real estate gets repriced to its actual market value allowing for a more liquid, buoyant market. Right now - I have NO idea what any piece of real estate in the GTA is worth - too many forces, seen and unseen, propping the whole RE 'house of cards' up!!!! Political risk is creeping into the system. What will the Conservative do...?🧐 Every real estate investor should be watching carefully...
@@rdefacendis I don't buy the thesis of creative destruction, it presupposes the idea that something destroyed can still be retrieved and put back together or that it wouldn't return in a new cycle since the foundational conditions (the law and state and the technology that firms possess) are still in place.
Make me wonder if banks are a good investment. Expects say the big 5 cannot lose. However, if banks give mortgages at 100% of the price paid by speculators, there may be a point in time when they may walk away ,declaring bankruptcy.
You expect Canada government to do what the China government did (or did not do) a year ago? Plus wages have to come down and I don’t see any union will allow that to happen. So, prices will keep going up for sure.
Let's imagine for a second that the banks and purchasers stop closing on those units. They are left with the builder, who then tries to sell them at a much lower price, and no one buys those as there are tonns of people going bankrupt as a result. Imagine 80% of the property's units do not close as purchasera don't have money to make the difference between the appraised value and the mortgage needed. Other builders stop building condominiums and shift to rental housing. Here is the fact, the purpose-built and professionally managed rental units are more expensive than the ones leases by individual mom and pop speculators or investors.
the free market ultimately protects the consumer, not some insane central planning and meddling to pick winners and losers. the only thing the latter ends up doing is injecting massive distrotion and moral hazards into the economy that is to the ruin of all -- including those who had no part in the bad investment decisions.
I have to think the big six Banks Are obviously exposed to some degree.... So they have a bester interest in this working out, somehow. And the fact we have only six large Banks, That means if one of the legs of the stool weakens, It puts the whole stool at risk. But the banks run the show in Canada so people shouldn't worry. I'm sure they will get bailed out but the individual condo buy.... Youre On your own.
To summarize the situation : it's over for the real estate market in Canada..... People have left the market to go to more business friendlier countries with a much higher quality of life at affordable prices.
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Interesting response! Lenders money is insured and the narrower pays the insurance ! Isn’t it free money for the bank Bank speculates and tax payers bill them out ! Isn’t it free money Worker pays for his or her retirement and bank lend him back his own money with higher interest ! Isn’t it free money There are lots of free money but the question is who gets it
The government created this bubble with horrible policies over the last 20 years because taxing real estate was easy as picking low hanging fruit... But they allowed price appreciation to take off like a runaway train. Unfortunately when a train is runaway the only thing that can stop it is a MASSIVE nasty crash. ....
you need 2 of these units, side by side, a complete gut and knock down the dividing wall, rebuild it, to even bring it close to being a livable place that isn't a jail cell. So what do you need to have a life in the city? $2million approx? (plus condo fees) Make matters worse, there is commercial towers in the down town core, sitting empty for years, that could be used for housing. Nope, we don't even talk about those. Countless millions of square feet sitting empty.
The provincial governments should build high quality proper multi unit buildings with realistic suite sizes. Long term this helps society and the economy. These developer / "investor" driven buildings are shite and they deserve to fail. Canada is so far from price reality it's a joke.
The investor may not get the capital call but they still have the negative cash flow to deal with. A little can kicking in the hopes that time will fix the problem.
I'll second that and add also the hefty mortgage payments they have to carry now and then on for a lousy condo not worth what it's spoken for. They'd soon be dead albeit on a brief suspended sentence. Defaults will surface, the "market" will still crash, one way or another. The banks will need to be stupid enough to dream of "propping it up" this way. Pasalis' theory does not stand or make sense.
@@mth469 Not if he can find another John to flip to in time, certainly not in the terms he'd like, which is a pipe dream in the circumstances. Might as well just hand-over the blackhole for free, see if any John would take it. That happened by the way, elsewhere in the world like China and Hong Kong. To them this is nothing but deja vu. Vancouverites ain't seen nothing yet.
@@mth469 Not if he can flip it away in time. Offer it for free and kiss his deposit goodbye is the way to do it, like it already happened to flippers elsewhere in this world that Vancouverites ain't seen yet.
Take away all capital gains taxes, and people will build the necessary housing need, bringing the prices down dramatically. The government will not do this because they wanthomes to be high in price.
A screwed flipper's nightmare in this situation isn't just about the price difference he needs to cough up to get out of the deal, but having to commit to complete and shoulder the mortgage from then on. If he has any sense he wouldn't want to "take the keys" and wander into his doom, with a hefty mortgage on his back for a lousy condo that wouldn't sell. And the banks, they'll have to be stupid enough to dream up such a marvellous "propping up" scheme that won't work. Your theory, John, is moot.
unfortunately this is a rigged market where banks lobby govt to offload their losses onto the backs of the nation, onto savers, onto pensioners.... ...anyone but themselves. the winners and losers are thus selected with the winners being the ones sitting closest to the central bank money printing press (namely the banks). so much for free market Capitalism.
Soon enough we will have unemployment in the trades. As condos move through the pipeline and are completed, there are none getting off the ground now because no one is buying pre-construction.. In three years time, there will be no cranes in the sky in Toronto... and all those trades will be looking for work, just around the time that the government changes immigration policies to fast track more skilled trades into the country.. . what a hot, ill timed mess...
@@rdefacendis the immigration racket is reaching a boiling point where the whole thing might be shut down as unemployment and under-employment creeps higher.
Your cashflow analysis and underwriting analysis omits one important factor: Investors borrowed the downpayment! They are not at 100% LTV. …they are 120% LTV. If the investor borrowed the 160k dp… add another $8000 interest expense per annum. On a related note the CRA requires a reasonable prospect of a profit when you are deducting business expenses. If you can’t establish a reasonable prospect of a profit, they may deny your expense claims. It’s a lot worse than what this presenter posits.
Let’s be realistic the government will not let the housing industry fall Housing is the only great thing Canada has going Am sure some people will fall but not the blood bath you all waiting for
Why do you think these condo units were bought by the investors. Many individuals bought these units. A lot of hardworking Canadians put their life savings for downpayment and if the projects would fail, they would lose all their life savings. Families would breaks , lives would be destroyed.
I think that's all true but these investors were looking to make money by being paid by other hardworking Canadians (who as a result would have less money to put into their own savings and whose families would suffer as a result of their financial precarity). The idea that the government (which should be acting in the best interest of all Canadians) should step in to save investors from their own bad investments intending to take advantage of other Canadians isn't one that makes a whole lot of sense to me.
@@mohammadkhan3230 it depends which side are you sitting. For many people that put their life savings into downpayment, losing it will be devastating for them. I know a lot of people want to buy properties but this wasn't easy in more than a decade. The new home buyers can also save like a lot of us and start from a small condo and find their way up. We can't just destroy the last generation savings to help the new generation
Same as any other investment. It comes with risk. Should we start bailing out people who lose money in the stock market because a stock price drops? How is that any different?
@@littlepinner05 it’s no different but the banks don’t hold the leverage in your stock portfolio. If and when we start to see bailouts of banks, builders and homeowners if things go sideways. It will be the duty of every non homeowner to take to the pavement. It’s looking like this will happen more and more.
Speaking of the Speculators your best friend Steve Ponzi Saretsky is one of the major speculators. When are you going to stop doing podcasts with him (Steve Ponzi Saretsky)?
Steve is an expert in housing, why does anyone stop pods with him. He has a bright future ahead of him. Even if he's an investor, he knows what he is doing
@@MR007-r3f obviously we need investors like him, nobody is buying the precon projects now because of high rates. How are we supposed to build anything like this
42:00 You yourself are an investor as you said. Then why come here and try to say something you don’t personally practice. Wolf in Sheep’s clothing not cool.
2 years ago, I was laughing at the Chinese for building ghost cities with speculative money. Now I'm laughing at us. Im confused John, are you in favour of government market distortions or are against them. The first half of the video you appeared to be a free market economist, in the second half you sound like a communist 😂
Taking the Mercer project as an example if the banks are involved in financing the builders they will then be incentivized to protect the value of their investment and the mortgages they will be dishing out to buyers/investors which sounds logical but may not solve the issues of broader housing policy around affordability etc
The developers overbuilt shoe-sized units that were targeted at investors who would never actually live in them. The free market will find a balance back to normalcy and family sized units. The way for this to happen is these condos MUST be allowed to collapse in value to the point that multiple units in a line or row be purchased at rock-bottom prices. Then merged into 2 or 3 bedroom units. I do not give a rats ass about the developers or investors who are left holding the bag. The free market will fill in the demand for larger city sized units for young families. The Canadian Government should get the fck out of the way and let nature take its course.
heh heh, love your handle. I really hope the corrupt elites will actually be forced to let the free market prevail.
Pipe dream.
@@justinjones5281 speaking of Pipes, the plumbing is already in place for multiple bathrooms.
This is the way
Merging several units into one unit in a condominium is a serious legal challenge. It will require changes in the condominium act of Ontario. All units have their respective shares in the common element fees and their own PIN numbers. Even physically spinning those could run into some structural issues. The board will have to approve such changes and it may even need a vote of all owners if the declaration needs to be changed. Not that easy.
Most real estate investors have been led to believe that real estate prices only go up. They also believe leverage is always a good thing. And now they are finding out these things are not true.
Avg size at Mercer building: 555 sq ft. This is the #1 problem with Toronto condos. Terrible units meant for “investors”. What do you do with those units when “investors” don’t want to own them anymore? No one wants to own that unit to live in it.
There is a price that someone will pay to live there... there is always a price that works... But it is well below the current price paid by the typical investor... we will go through a price discovery process .. it will be long, meandering and painful... RE markets always move in slow motion....
Well, of course, we agree on that. It will be a shocking haircut from current levels. The point is that developers have to stop catering to the “investor” class. We’ve seen buildings in great neighbourhoods that have zero units meant for live-in owners, and the marketing pitch is fully geared to investors.
@@OddsJet What is more concerning is the unit to elevator ratios in some of these investor driven buildings. Those small unit buildings are very underserviced with elevators, leading to frustrating wait times in peak periods. It is not unusual to have to wait 15-20 minutes just to try and get an elevator to your suite... and the same going down again. When an elevator goes down for repairs (which is often) or someone reserves an elevator for a move in... its total chaos in those buildings. Folks - always check... at least one elevator for every 80 units... MINIMUM..
As an aside.. I always recommend living on the second or third floor.. To hell with the view... I want access to the stairwells to get up and down from my suite... Best condo I ever lived in - 36 Charlotte... quiet... 63 units - with 2 elevators and a fob to access the stairwell as you please... and no AirBNB - it was a great spot right downtown...
Yeah I agree. No one wants to watch their stove from the couch yet these are the kinds of layouts being made. If the market was geared to end users we would have liveable spaces.
People would live and own one - for the right price. Major price corrections coming
John runs a clinic here folks, listen up! The speculators, often referred to as investors( mostly Boomers and GenX speculating with their newfound equity in their house. Their mortgage is an asset to the bank, and the banks will make sure their asset is protected. Great analysis, John, thank you!
Thank you!!
very few are speculating and those deserve to lose money,. Never buy to assign. Real estate is for the long term. Many own as part of their retirement like me and these units provide shelter to people. No investor = no supply.
bank ceos care about getting their over sized salary and bonus
and jumping ship to cause more damage elsewhere
before it implodes on them.
banks in general lobby corrupt politicians to offload the mortgage defaults
on the taxpayer.
@@stephanecaron1 "No investor = no supply" False! Supply meets demand. Demand comes from people needing a place to live. The money comes from the bank. The banks could have easily just lent money to people who wanted a place to live but oh no they decided to lend money to people who wanted to make money off of housing.
@@ironhammer4095false. If there were no speculators. Home prices would be 3x median income. Not 10x
Of course, the condo market is fixed. We see that. However, we will not buy until prices come down to the level of affordability. Cash saved now. Don’t buy until they have a major downfall in prices, let’s see the over leveraged folks fall.
You’re gonna be renting until you’re 90. Keep waiting bud.
Thank you so much for this video.
It would be awesome if you make a feature length video, with tons of infographics, clearly explaining the problems we are facing, and solutions.
And make it NON-PARTISAN. It’s clear that both parties, federal and provincially are responsible for this (e.g Trudeau lifted the cap on international students, Ford worked with the diploma mills to usher them in…each blame the other, and the culture war keeps people divided).
Also, plz address the monopolies…Canada has 5 banks, 2 airlines, 3 telecoms, 3 grocery stores, etc. They are the elephant in the room keeping international students and temp workers flooding our country, and propping up our real estate. Both parties are influenced by their lobbyists.
Also, many Canadians have benefited from the status quo (anyone who bought between 1990 - 2019)…they will support investors being bailed out, or at the very least look the other way if they think doing so will keep their property value high.
Don’t hold back :)
Trudeau ruined Canada, so it's very hard not to be political about it.
Thanks you, I'll definitely look at doing a video like that in the months ahead
Blanket appraisals on tens of thousands of closing condos is an overt effort to OVER finance condos rather than let developments fail (who are also financed by the same banks). Better to have 300 tiny potential problems with individual investors with over financed condos - rather than have one BIG problem with a developer going insolvent, due to failure of buyers to close??? Based on current values, these investors are ALL under water. This represent a systemic risk to banks. I am underwriting this risk as a taxpayer. Moreover, we are creating a zombie housing market... these condos at these prices, are illiquid.. OFSI should intervene.
Exactly
Or OSFI.
OSFI = in collusion with banksters and likely staffed with their ex-employees.
While the CMHC and banks offloading billions of sub-prime mortgage garbage in the form of mortgage backed securities on taxpayers (via BoC purchases), OSFI will pretend nothing is happening as it has for years.
These useless institutions should be shut down.
If banks want to issue mortgages, they should insure it either using the private lenders / investors or with their own funds.
Stop trying to get taxpayers to hold the bag on the way down while having collected the profits on the way up.
Boc is intervening big time with billions in liquidity injections in repo markets to bail out the banks, this is canadian 2008
Yes, the banks are propping up pre-cons at closing. If a condo purchased for $990K would appraise for 600k today, why would a bank lend 950k on it, over 150% LTV. Makes no sense
It does make sense if the same bank is the one who is financing the development. If buyers don't close, banks will take huge losses on construction loans as projects become insolvent.
In the end the markets prevail
@@rdefacendis i understand why the bank would do it, but lending over 150% LTV in some cases is a dangerous way to prop up the condo market
banks hope to offload their losses on the taxpayer.
@@michael2275
the govt is and has been on a mission
to subvert the market
with the nation's checkbook.
a select few profit from it,
most others are handed the bill for the above.
Hey I would like to buy some Game Stop stock. Can the gov back stop me too if it goes bad?
i'd like to get in on this racket too.
i.e. make profits creating junk loans on the way up,
offload the losses on taxpayers (via bailouts), savers (via money printing) on the way down.
its for the good of the economy.
@@mth469 it's only fair we too are saved from our bad gambles
The best way to prop up condo market is to keep hiking development fees.
If the Canadian government charges $1MM dollars for building an avg condo, where can the prices go? Either you find the money to pay up, or you move into a tent.
Instead of a Federal Housing Minister,
we will soon need
a Federal Tent Minister. 🎪
that makes no sense at all.
Very interesting and very well layout. Thanks!
Thanks to your insightful videos, following the housing market trends is now my new hobby.
10:51 now banks are doing this! Shouldn’t this have been done in the first place to start with. This whole problem of overvaluation is because of the banks reckless behaviour
Toronto needs to spend the next 20 yrs building family condos in 6-8 storey buildings in the city. 1500-2300 sq ft apts as substitutes to semi detached homes. They also need to allow taller stacked townhomes to be built on side streets. If most property frontages are 15-22', the only way to densify these properties is vertically. The city councillors have actually actively blocked these types of development to placate their NIMBY voters.
The council also closed permanent rental housing development by introducing rent control. Who would run a building knowing they could never make repairs or cover their costs? That's been going on for over 30 yrs.
The alternative would be having the govt give incentives and low costs loans for small coops to be built. These would be private not public housing. No burden to the taxpayers. It would support family units and hopefully commercial entities would operate on ground level to subsidize home ownership costs.
let us please get the govt out of this market.
they have and continue to do great damage
picking winners and losers.
Canada has turned into a "consequence-free" society where whatever bad decisions you have made the job of the government is to prevent you from losing anything. If I was a young person I would take this as a slap in the face and leave - better I rent for all of my life and never start a family rather than any investor have a slightly worse retirement. Fortunately I am an old guy and already retired in the Caribbean.
Well said.
its worse than consequence-free
because the consequences are being transferred
to those who had no part in the speculation
(taxpayers, savers, renters, the working poor, pensioners.. etc)
Perfectly defined
And the price is that everybody is slowly losing everything.
Excellent from both ! New subscriber, very glad I found this channel !
@davidf4163 Thank you for the watching and the kind words - glad to have you join us! ~ Urmi
They should be tried for market manipulation and should face huge fines.
Tiff Macklem also had a massive roll in encouraging investors to go ahead and spend by saying rates will be lower for longer. He should take some responsibility in all this mess.
I think you should tell him that the next time you see him. Carolyn Rogers said they held rates low for two years. She said that was a long time. I think two years is a long time as well. They did what they said they were going to do. Hold rates for a long time.
Tiff Macklem has done great harm to the economy.
The reality is these clueless guys should not be price fixing (setting interest rates)
and counterfeiting (printing money) because all it does
is distort the market.
The housing market looks like the end result of what
a Soviet Central Planning bureau
would achieve after heavy duty meddling.
He is explaining the description of a “PONZI SCHEME” format. Now the music has stopped and the chairs are missing for many. After viewing the unfinished products in the Vancouver area, it is obvious the “PAIN TRADE” is in full swing.
You can't prop up distorted prices, you can only delay a correction.
If prices of bread fell to 50 cents, do you think we would see a mass supply of bread on the stands after that or the suppliers would say since it cost more to make bread then to sell it, we won’t be producing bread anymore.
So if a “project fails”, what does that mean? The building is built. It exists. Do people not occupy? Does a management company get involved to run maintenance?
There are multiple ways things can play out. Eventually, the units will be occupied, but a lot of people will lose a lot of money by the time everything is done
@@john_pasalis
it will be occupied...
by squatters.
@@john_pasalis fuck em, My parents offered me money to go and buy a house, but i told them no, I'd rather make my own way, and it isn't feasible that this will last forever, and that I didn't want to contribute to this miassive growing inssue.
if we as a country endlessly support terrible investments then it isn't long before Canada itself goes insolvent.. or worse.
The experts knew this was coming that's why rent cap was removed for places built after 2018
Hey John, great pod. I would love to hear your thoughts about the chatter a couple summers ago of requiring real estate investors to have a minimum 35% down payment on all rental properties as it is for foreign investors.
I don't see that happening. If every investor had to come up with a 35% down payment on the actual market value, projects would fail. Investors would have to come up with more than $250-$300K in cash - over and above the deposits they made which would cover the decline in value.
@@john_pasalis
is that not the way it should be.
in the end, who's money are they gambling with if they can pocket the profits on the way up while declaring bankruptcy and "walking away" on the way down.
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Hi John time stamp 32:57 please expand on how near future and future completions will be worth more than current inventory?
Investors paid a higher price per square foot. The units completing now sold in late 2019 or early 2020. Prices accelerated during covid
45:19 I think the other issue with supply is the type of supply. Who really wanted this many micro units. At least at that price point.
If prices and rates go down, demand is still there. These pre construction speculators are experiencing the risk side of that investment now. However, it will still continue in the future just more carefully. Builders will have to prove they can deliver on time.
I don’t think so. Last week one mortgage specialist told me that he saw the appraisal value is $200k lower than the bought price and the buyer needs to come up with the difference. He said usually the appraisal prices are lower than the bought prices.
The government is particularly clueless with the secondary suites initiative, at least as far as the pipe dream of it leading to a boost in rental stock. There will be absolutely minimal take-up of these incentives to create new rental units. Right now there are already thousands of ready to go rental-intended condos for sale in downtown Toronto going unsold. Why? Because with the laws and the returns (at least at current prices and despite current rents) the way they are nobody wants to get into the landlord business....even when the tenants would be miles away in a downtown building with active property management right in the building. So if they don't want that as an investment, why would someone want go through the hassle of construction on their own property only to get a potentially problem/non-paying tenant that is hard to evict right in their own home or backyard and all the tension that might bring? Rental is broken. This won't fix it. Ottawa is just filled with dreamers who never bother to ask the simplest of questions about human motivation, incentive, and behaviour.
The Canadian government doesn't guarantee/support my stock investments in Canadian stocks so why is the govt guaranteeing speculative investors in Canadian housing? Both investments generate tax revenue for the govt, but I guess the housing builds are the ones that generate big bucks via expensive development fees
Always look forward to your analysis John! Thanks 🎉
Thank you!
No bail ins, no bail outs just responsible lending practices and no zero down loans.
Why is the taxpayer involved in guaranteeing sub-prime garbage loans
that banks profited from creating.
None of the premiums charged to insure that junk
reflect the real risk to the taxpayer
of their default.
Now govt is trying to inflate away the problem
which further destroys the working class
and will backfire in a spectacular way on the economy.
Thx for the insights on condo market. Would you be talking about house prices in the future ?
So our great grand kids will bailout "investors" through taxes.
it starts with you bailing them out.
carbon taxes,
capital gains taxes,
ongoing mass inflation.. etc.
soon CBDC
Great video! However, I find it peculiar that you seem to be calling out policymakers for focusing solely on supply, when you too were somewhat pushing that narrative (along with the demand from population growth putting a floor under housing narrative).
Both sides of this are problematic (focus on undersupply and demand from population growth), as they give the impression that there is a floor under housing due to these factors. The reality is, the state of the economy and employment will dictate prices and no level of undersupply or population growth will prevent significant price drops if we hit a severe recession. Most in the industry have been implying (or outright stating ) otherwise. I believe that in 2 years, we will not hear anything about a housing supply shortage (the same way 2 years ago, a labour shortage was dominating the news and is no longer discussed at all).
When Canada's population grew from around 300K people/year in 2015 to just under 1.3M today, it's obvious we have a supply shortage.
But most housing experts and governments have argued for years that our housing crisis can be solved exclusively by focusing on supply-side measures.
That narrative only changed with the federal government's 2024 budget when they admitted growing by 1.3M people per year was not sustainable.
Look back and let me know if you can find a single report or policy paper from our government or from a housing think tank written before 2024 that argued our population growth was unsustainable and needed to be cooled. I can't think of many, because most experts argued that housing was only about a lack of supply
@@john_pasalis these people get paid way too much money to make such shitty terrible calls like this.
Wow.
There’s no way this doesn’t negatively impact future supply. Developer’s and builders alike are already pulling back, if this were to happen on mass there would be no incentive to build any pre construction stuff.
If I was a developer in this high interest environment I would 100% be going elsewhere or waiting.
Once this slug of inventory that is in the pipeline completes I think it’s gonna be crickets for a while in the Canadian pre construction sector.
It’s supply that no one wants. These units are only useful for Airbnbs and as pieds-à-terre. It will be a good thing if they stop building them. Maybe they’ll start building family homes again?
It seems you are advocating for fully free market approach , I am fine with it if you advocate for fully free market for loans too , meaning get rid of stress test for example 😎
How many people do you know who were NOT accepted for a mortgage? Banks are already handing out mortgages like candy at Hallowe'en.
My point is there is no solution at the end of path of so called free market
Banks would implement their stress tests since the government won't bail them if borrower can't pay
Haha, I'm actually not advocating for that - the reality is that our entire housing market would fall apart without government interventions - from insured mortgages to the cheap debt our government is offering to drive more rental housing construction.
free market would impose its own set of requirements for a stress test
prior to issuing any mortgage to a potential dead beat.
that's because the lender stands to lose his hard earned money and will do all the necessary due diligence.
the risk will be priced accordingly and thus the interest on the loan.
free market does not mean free money.
Bringing down your Priciple from 600k to 400k and riding out the next 4 to 5 years is not a solution here ? Our housing starts are not looking good right now.
John you probably have better ground knowledge and insight into housing market and how it should be in Canada compare to Federal housing minister.
federal housing minister's role is to facilitate
the dumping of mortgage defaults of high rolling bankers
onto the backs of taxpayers, me thinks.
if these tiny units are meant for investors, a let go would mean the units will be taken over by new investors or those who are willing to live in a smaller place? Its a game between those who overfinance and those who are sitting on a lot of cash.
It always is in life. Smart people build their wealth off the unsophisticated. In a few years those condos will be selling for less than half of thir original price. The truth is Canada is essentially a poor country compared to where it should be because Caadians are so financially unsophisticated.
Nobody wants to sell for what it's worth. How can a old resale unit have a higher price then a brand new unit?
Wow. So much truth ! Thanks
I dont understand why we call them investors when they are clearly overpaying for properties that are cashflow negative
Once you get the smell of fear in the air there is no going back. I can just imagine all the bank CEOs being hauled in front of Parliament for all the laws they broke while trying to prop everything up. If the price of the unit is more than it is worth then we count on the market every single time. That will be the deciding factor here.
So units that once sold for $500 a square foot and are 10 years old maybe just maybe they go back to that original price. What a mess
"I can just imagine all the bank CEOs being hauled in front of Parliament" Why? Parliament is just as guily as the banks, if not more so tbh.
The best thing that could happen to the Canadian real estate market (in terms of fairness) is that investor condos drop so low that they become appealing to end users to buy. It would cleanse the bad investors out, educate the population on the detriment of speculative investing and open the door for more home ownership via condos, particularly for first time buyers.
Capitalism and price discovery
is what the banks, bank of canada, govt, osfi, cmhc.. etc.
are adamant on avoiding.
We need a Canadian version of HUD homes and take more homes out of the hands of institutional investors.
we need to get taxpayers out of this bailout bs.
Province laws should have incentivized home buyers better and penalized investors as a general policy in the real estate housing, we sat on this for long without any action.
I thought buying a 2 bedroom apartment early and rending it out before the children can afford to take care of their own and gift them when they got married, but now I think it is too costly to upkeep a condo for the young family even if they don't have to pay for a down payment. the mortgage, strata fee, insurance.... it cost a lot more than renting one out, and this is the reality.
Government appears to have two competing interests:
On the one hand preserving the wealth of Canadian investors and protecting banks from mortgage defaults would encourage policy makers to continue to underwrite bad investments; on the other hand allowing the market to experience a big condo crash would enable many poor people to have a chance to acquire equity at price points they might afford, and would be a more efficient way of ensuring occupancy of so many units that end up sitting empty at a time when there is a need for affordable housing.
If it were up to me, I'd favor the second policy and let the condo market crash so that a young graduate might be able to afford a 1 bedroom in Toronto for about $300,000. The fact that this isn't happening tells me they may fear the consequences to our financial system if the banks' true exposure here ever came to light.
why is govt meddling in any industry
to pick winners and losers anyway.
the free market is supposed to protect the consumer.
I have never understood why investors choose real estate instead of stocks. Stocks are a better investment. It’s not even close.
agree with the market trend assessment, but it looks to me that most of the blame should go toward the banks/lenders. The regulators should be called out for insufficient oversight, but the rules are clear: lending value should be the lower of market or sales - it looks to me that the banks just wanted to roll over their construction loans into mortgages and then crossing the fingers that the market will catch up before the investors default.
banks are there to make money, politicians are there to make a great country, one might have goofed on the mandate, but the other ones went out of their way to do the opposite.
Academics have been talking about the myth of the free market for the last decade. A free market is a metaphysical construct, all markets are regulated by governments and not the hand of an invisible god. Free market thinking on the other hand, produces deregulated and laissez-faire conditions that introduce speculative bubbles and crashes. What has kept this model to persist is the hand of the government bailing out investors when they fuck up (keep in mind, they are bailed out because they convince the citizens through public relations that they are in fact still needed). No one ever seems to recognize the rank hypocrisy and cynicism in this behavior, maybe even predatory.
Somewhere along the line, governments decided that all economic downturns are bad and we should avoid them at all costs. So governments flood their economies with spending - fueled by debt, and central banks flood the system with liquidity and negative real interest rates. The end result is a zombie economy where uncompetitive businesses are allowed to persist and real estate remains hopelessly overvalued. We need creative destruction. We need to have uncompetitive businesses fail and we need those who made poor investment decisions to take a haircut... We can't have moral hazard subsidized..
These necessary economic cycles fuel innovation and growth - as new competitors enter the market place with new business ideas.. .and real estate gets repriced to its actual market value allowing for a more liquid, buoyant market. Right now - I have NO idea what any piece of real estate in the GTA is worth - too many forces, seen and unseen, propping the whole RE 'house of cards' up!!!! Political risk is creeping into the system. What will the Conservative do...?🧐 Every real estate investor should be watching carefully...
@@rdefacendis I don't buy the thesis of creative destruction, it presupposes the idea that something destroyed can still be retrieved and put back together or that it wouldn't return in a new cycle since the foundational conditions (the law and state and the technology that firms possess) are still in place.
Is this the result of the new CANDIAN MORGAGE BONDS that the central bank is buying from our Banks ??? They can not take that risk on there own.
canadian mortgage bonds are sub-prime morgage garbage bonds
that banks want govt to offload on the taxpayer.
Make me wonder if banks are a good investment. Expects say the big 5 cannot lose. However, if banks give mortgages at 100% of the price paid by speculators, there may be a point in time when they may walk away ,declaring bankruptcy.
Government should phase out tax breaks for mortgage interest on residential homes. That would cull some of the future silly speculators.
You expect Canada government to do what the China government did (or did not do) a year ago? Plus wages have to come down and I don’t see any union will allow that to happen. So, prices will keep going up for sure.
Let's imagine for a second that the banks and purchasers stop closing on those units. They are left with the builder, who then tries to sell them at a much lower price, and no one buys those as there are tonns of people going bankrupt as a result. Imagine 80% of the property's units do not close as purchasera don't have money to make the difference between the appraised value and the mortgage needed. Other builders stop building condominiums and shift to rental housing. Here is the fact, the purpose-built and professionally managed rental units are more expensive than the ones leases by individual mom and pop speculators or investors.
the free market ultimately protects the consumer,
not some insane central planning and meddling
to pick winners and losers.
the only thing the latter ends up doing is injecting massive distrotion and moral hazards
into the economy
that is to the ruin of all -- including those who had no part in the bad investment decisions.
great presentation
Interest rates must be reduced at any cost to make condos affordable. It is manipulated.
I have to think the big six Banks Are obviously exposed to some degree.... So they have a bester interest in this working out, somehow.
And the fact we have only six large Banks, That means if one of the legs of the stool weakens, It puts the whole stool at risk.
But the banks run the show in Canada so people shouldn't worry.
I'm sure they will get bailed out but the individual condo buy.... Youre On your own.
I think that’s 100% what’s happening.
To summarize the situation : it's over for the real estate market in Canada..... People have left the market to go to more business friendlier countries with a much higher quality of life at affordable prices.
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Interesting response! Lenders money is insured and the narrower pays the insurance ! Isn’t it free money for the bank
Bank speculates and tax payers bill them out ! Isn’t it free money
Worker pays for his or her retirement and bank lend him back his own money with higher interest ! Isn’t it free money
There are lots of free money but the question is who gets it
They are building condos that people can’t afford to live in.
This is so stupid.
The government created this bubble with horrible policies over the last 20 years because taxing real estate was easy as picking low hanging fruit...
But they allowed price appreciation to take off like a runaway train. Unfortunately when a train is runaway the only thing that can stop it is a MASSIVE nasty crash. ....
you need 2 of these units, side by side, a complete gut and knock down the dividing wall, rebuild it, to even bring it close to being a livable place that isn't a jail cell. So what do you need to have a life in the city? $2million approx? (plus condo fees)
Make matters worse, there is commercial towers in the down town core, sitting empty for years, that could be used for housing. Nope, we don't even talk about those. Countless millions of square feet sitting empty.
cuz there is a law on the books if you remove commercial square footage you have to replace it..... so it's not worth switching to residential....
@@GreenBeanGreenBean amend the law
The provincial governments should build high quality proper multi unit buildings with realistic suite sizes. Long term this helps society and the economy. These developer / "investor" driven buildings are shite and they deserve to fail. Canada is so far from price reality it's a joke.
Nice new glasses :)
Thank you!!
The investor may not get the capital call but they still have the negative cash flow to deal with. A little can kicking in the hopes that time will fix the problem.
I'll second that and add also the hefty mortgage payments they have to carry now and then on for a lousy condo not worth what it's spoken for. They'd soon be dead albeit on a brief suspended sentence. Defaults will surface, the "market" will still crash, one way or another. The banks will need to be stupid enough to dream of "propping it up" this way. Pasalis' theory does not stand or make sense.
the investor will soon be getting a margin call.
@@mth469 Not if he can find another John to flip to in time, certainly not in the terms he'd like, which is a pipe dream in the circumstances. Might as well just hand-over the blackhole for free, see if any John would take it. That happened by the way, elsewhere in the world like China and Hong Kong. To them this is nothing but deja vu. Vancouverites ain't seen nothing yet.
@@mth469 Not if he can flip it away in time. Offer it for free and kiss his deposit goodbye is the way to do it, like it already happened to flippers elsewhere in this world that Vancouverites ain't seen yet.
Condo about to be 50% off 😊
you misspelled 50% higher (in a year or 2)...... with no new supply you are gonna be doing a hunger games knockoff to try and find somewhere to live
i'm thinking peak to trough
its gonna be 80% off.
This is catastrophic for real estate investors.
Take away all capital gains taxes, and people will build the necessary housing need, bringing the prices down dramatically. The government will not do this because they wanthomes to be high in price.
Don't buy anything now.. prices heading much lower... wait
A screwed flipper's nightmare in this situation isn't just about the price difference he needs to cough up to get out of the deal, but having to commit to complete and shoulder the mortgage from then on. If he has any sense he wouldn't want to "take the keys" and wander into his doom, with a hefty mortgage on his back for a lousy condo that wouldn't sell. And the banks, they'll have to be stupid enough to dream up such a marvellous "propping up" scheme that won't work. Your theory, John, is moot.
In a free market economy there are winners and losers.
unfortunately this is a rigged market
where banks lobby govt
to offload their losses onto the backs of the nation, onto savers, onto pensioners....
...anyone but themselves.
the winners and losers are thus selected
with the winners being the ones sitting closest
to the central bank money printing press (namely the banks).
so much for free market Capitalism.
Prices to fall from where? They can fall from government fees and taxes. They can’t fall from labour because then we won’t have trades anymore.
Soon enough we will have unemployment in the trades. As condos move through the pipeline and are completed, there are none getting off the ground now because no one is buying pre-construction.. In three years time, there will be no cranes in the sky in Toronto... and all those trades will be looking for work, just around the time that the government changes immigration policies to fast track more skilled trades into the country.. . what a hot, ill timed mess...
@@rdefacendis
the immigration racket is reaching a boiling point
where the whole thing might be shut down
as unemployment and under-employment creeps higher.
I wish I never watched this video. I'm having enough trouble sleeping with all the madness going on elsewhere in our world and society.
wow
Condo owners are nuts. Not woth even $500 sq ft
i bid $50 sq ft.
Your cashflow analysis and underwriting analysis omits one important factor: Investors borrowed the downpayment! They are not at 100% LTV. …they are 120% LTV. If the investor borrowed the 160k dp… add another $8000 interest expense per annum. On a related note the CRA requires a reasonable prospect of a profit when you are deducting business expenses. If you can’t establish a reasonable prospect of a profit, they may deny your expense claims. It’s a lot worse than what this presenter posits.
Astronaut: Always has been.
Let’s be realistic the government will not let the housing industry fall
Housing is the only great thing Canada has going
Am sure some people will fall but not the blood bath you all waiting for
Markets are more powerful than governments in the end. Watch and see
housing looks like a textbook case of a ponzi / pyramid scheme.
so much for Capitalism and free markets.
55 yr loans to developers....nt u FO
This session could have been reviewed in 10 minutes. No need to repeat yourself 15 times.
Why do you think these condo units were bought by the investors. Many individuals bought these units. A lot of hardworking Canadians put their life savings for downpayment and if the projects would fail, they would lose all their life savings. Families would breaks , lives would be destroyed.
Hopefully
I think that's all true but these investors were looking to make money by being paid by other hardworking Canadians (who as a result would have less money to put into their own savings and whose families would suffer as a result of their financial precarity). The idea that the government (which should be acting in the best interest of all Canadians) should step in to save investors from their own bad investments intending to take advantage of other Canadians isn't one that makes a whole lot of sense to me.
@@mohammadkhan3230 it depends which side are you sitting. For many people that put their life savings into downpayment, losing it will be devastating for them. I know a lot of people want to buy properties but this wasn't easy in more than a decade. The new home buyers can also save like a lot of us and start from a small condo and find their way up. We can't just destroy the last generation savings to help the new generation
Same as any other investment. It comes with risk. Should we start bailing out people who lose money in the stock market because a stock price drops? How is that any different?
@@littlepinner05 it’s no different but the banks don’t hold the leverage in your stock portfolio. If and when we start to see bailouts of banks, builders and homeowners if things go sideways. It will be the duty of every non homeowner to take to the pavement. It’s looking like this will happen more and more.
Speaking of the Speculators your best friend Steve Ponzi Saretsky is one of the major speculators. When are you going to stop doing podcasts with him (Steve Ponzi Saretsky)?
Steve is an expert in housing, why does anyone stop pods with him. He has a bright future ahead of him. Even if he's an investor, he knows what he is doing
@@Wolfpack1298--3 he is a Speculator, not an expert.
@@MR007-r3f obviously we need investors like him, nobody is buying the precon projects now because of high rates. How are we supposed to build anything like this
Waste of time listening to this guy. What question is this when they just increased the capital gains tax? Crazy talk.
42:00 You yourself are an investor as you said. Then why come here and try to say something you don’t personally practice. Wolf in Sheep’s clothing not cool.
Yes, JP is a hypocrite
🐑 ---> 🐺
He’s taking advantage of a government that favours investors over ordinary folks
2 years ago, I was laughing at the Chinese for building ghost cities with speculative money. Now I'm laughing at us.
Im confused John, are you in favour of government market distortions or are against them. The first half of the video you appeared to be a free market economist, in the second half you sound like a communist 😂
80% crash in condo prices
are coming.
I hope so
Taking the Mercer project as an example if the banks are involved in financing the builders they will then be incentivized to protect the value of their investment and the mortgages they will be dishing out to buyers/investors which sounds logical but may not solve the issues of broader housing policy around affordability etc