Construction Trouble, HST Relief, & Nova Scotia’s Rental Crisis

Welcome to the Canadian Real Estate Investor, where host Daniel Fosh and Nick Hill navigate

the market and provide the tools and insights to build your real estate portfolio.

Welcome back to the Canadian Real Estate Investor Podcast, your host, Nick Hill and Daniel

Fosh and on today's show, Candace builders are losing steam, condos are doing the heavy

lifting on affordability, renters from coast to coast are feeling the squeeze and new finance

risk can make the situation even worse does not sound good in my friend. We're going to unpack a

statkin deep dive on falling construction productivity, dig into an HST holiday pitch to jump start

building explain why power of sale listings are spiking in Ontario and finish with a look at

whether a comeback in commercial real estate could actually help Candace real estate market.

So look, this is a jam packed news episode. Let's dive right into it Dan. This first article is from

BNN and it's titled Canada's lagging construction industry linked to housing affordability issues

and how this from stats can so a new study from statistics Canada linked a lagging construction

industry and small businesses to housing affordability across the country. So this is this probably

sounds weird. Don't worry. We're going to explain it in on packet and a recent study stats Canada

found that the construction companies have actually been decreasing in productivity nationwide. Well,

you know, I guess that makes sense if they're not doing what they're supposed to be doing, which is

building houses. The study is called firm size and labor productivity growth in Canadian residential

construction and let's go through the highlights from the report directly. We actually covered a lot

of this stuff with CD how like I feel like it was like a year ago. It was like the summer of last

year. So it says Canada's residential construction labor productivity real gross output per worker fell

37.3% between 2001 and 2023 roughly 2.1% per year. The industry is dominated by small firms. Those

with fewer than 20 workers accounted for 66.1% of employment in 2023 and productivity decline across

all firm size categories, but the was largest among smaller firms. A decomposition shows firms

with fewer than 20 employees accounted for the largest share of the aggregate decline.

Yeah, Dan, I mean, I want you to think about and for you listening, think about how many

construction firms or homebuilders, you know, most of them are on the smaller side, right? I mean,

20 full-time employees. That actually is a fairly large organization, but between 2001 and 2023,

the sector shifted modestly towards larger firms and this reallocation contributed to a small

amount, which is under 5% to aggregate productivity because larger firms have only modest

productivity advantages in this construction industry trends vary markedly across, of course,

different cities and provinces. But most areas saw falling productivity. Some achieved positive

growth, but finally, you know, the sector is showing that high firm entry and exit rates, a

pattern that can reflect both competitive and challenging business environments for the

residential construction firm and the sector in general. Now, let's get back to the

being an article where one of my favorite guys in Katie and Real Estate, our buddy and a friend

of the show who's been on a couple of times, Allid, out at Earweth was interviewed. And I can empathize

because I've already pronounced last name, so I stumbled on that one. Sorry, Alex. Increasing

the efficiency of construction is the long-term key to improving housing affordability,

said Allid, who is from CMHG's deputy chief economist and the co-author of the report. And

man, I think it's like, if you really want to understand the like simple

way of this is like when you're driving around and you look at a construction site,

like how many people are standing around? And it's not because they're lazy or like all my buddies

are in the trades and they're not lazy dudes. It's because there's like on-site red tape. Like,

we talk about red tape offsite of like before you get to developing it, but like the amount of

like, and like I get it, like a lot of the rules are written in blood, as they would say,

to give it the most militant language possible. But you know, there's there's got to be a balance

between like how do we actually get stuff done and be productive and profitable and keep people safe

and you know make sure we're following the rules. And and and Allid says it's not going to be a

quick process. It's going to take years of consistent building more housing. Now it's not just

we're building more housing, but we need to get the housing built at a reasonable cost. And

efficiencies is one of the few ways to do that. Yeah, I mean, look, that is something that I think

everyone can agree on more housing and at a reasonable cost. And he goes on to say the companies

need to start to deploy the latest technologies, use materials in a better way, higher, better and

to more skilled workers, you know, the scale of this challenge, the fact that we don't have that

labor, we don't have the process is enormous. And unfortunately, that problem is exacerbated in

the major cities, Toronto, Vancouver, Calgary, Edmonton, Halifax, Montreal, etc. So, you know,

it's not great. And he's right, we've got a long way to go. Guys just name drop in cities out here

just trying to get the listeners attention. Either there. I guess this would be a really good time

to remind you of the silver tsunami that we've talked about a couple of times. A metaphor

a moniker used to describe the unprecedented rapid aging of a population, especially in construction.

Yeah, I mean, look, we've done full episodes on this. Let's just be a quick reminder with a

couple key data points to just really show you what an impact this is going to have. But again,

Dan, you said, right, the silver tsunami, a moniker for the Canadian construction industry that

refers to basically a massive and ongoing wave of retirement among experienced workers,

skilled trades, business owners get this roughly one in five construction workers is set to

retire in the next decade. So this demographic shift is causing not only a critical labor

shortage, but we're going to be losing those decades of experience. And you know, who's going to

go and train that next generation of skilled trades. And even if we get the robots and stuff

involved, they're still going to need training. So, you know, I think, I think this is a very big

problem. Dan, talk to me about some of the actual statistics and data behind this issue.

Yeah, I will. I think one of the interesting, most interesting data points that stood out to me

that I had pulled up on the screen for those of you who are on our ad free, $9 a month,

by the way, if you want to go ad free and you get a full video copy of every single episode,

as well, if you want to see the charts that we're pulling up on screen, et cetera, we've been

really good about doing that. And we do about 10 to 20 minutes from each episode on YouTube.

But the easiest way to look at this is this art, this headline that I read said,

immigration could soon account for all of Canada's population growth, according to an expert.

And this kind of just ties into the news episode because like when you hear that,

it feels like a really wild statement. But when you think about the fact that our birth rate is

solo and we have an aging population, that really quantifies like how substantial

this silver tsunami is. So what does this look like when you put it on top of the construction

world? Tens of thousands of skilled tradespeople including electricians, carpenters, heavy equipment

operators are going to retire over the next little bit. Ontario anticipates over 80,000

construction retirements by 2031. While Atlantic provinces like New Brunswick could lose one third of

their workforce in four years, over 75% of small business owners in construction and other

sectors planned to exit in the next decade could be a huge roll up or like acquisition opportunity

realistically. But fewer than 9% of them have a real formal plan for it. And the shortage risk delays

in housing and infrastructure projects as the younger workforce is not growing fast enough

to fill the gap and not educated fast enough to fill the gap. If only construction was as sexy to

the younger generation is becoming TikTok famous. Well, man, I mean, I was talking to somebody

actually Ryan Clark from from site news who's huge in the construction space on the media side.

And we were talking about like what are people going to do when all the white collar work is replaced

by AI? It's like maybe we'll all have to become trades and build this visible world. You know, like

we should have Ryan on the chat about that. We should be great conversation. Yeah,

okay. So let's get back to the article now. So, you know, what we're really trying to understand

is can we build more housing? And how do we do that at a lower cost? Other countries

referenced here that have seen similar declines, you know, let's say US, Australia, as well as

other countries in Europe and Asia. Allied pointed to specifically Singapore and Japan as

potential examples to follow. Singapore mandates more efficient processes be used in bids for

government projects. Well, Japan's construction industry is beginning to use robots in its building

process. So, okay, what I'm hearing is, you know, less red tape, faster stuff and implementing

technology. This all sounds pretty good, pretty reasonable and honestly, Dan pretty inevitable to

me. So, you know, he finishes off by saying there's the last quote from the article that we'll

read here is that there has there hasn't been a lot of innovation in building single detached

housing. It's built the same way it was 100 years ago and he's not wrong. You know, Dan,

you and I both spent a more triple brick, I guess, but yeah, well, yeah, last little last

craftsmanship. Yeah, it's actually if anything has gotten, we've done it down actually. Yeah,

we've actually made it crap. More expensive somehow. So, so look who's that who's that fault here,

I guess, would be would be like a question, you know, I'm always going to point to the government

to be honest. Like, I think that we have too much regulation, too much governance, too many,

I mean, like, you know, it's kind of back to that conversation with AI. It's like, maybe the hopefully

the AI will be, you know, the seven different reports that you need to fill out with seven different

agencies to get, you know, permit or like move a piece of material or, you know, like, hopefully

a lot of that just bureaucracy. It's literally just pure bureaucracy. Yeah, hopefully that stuff

goes away, I think, you know, you've got internal trade barriers between provinces, like, you know,

literally the EU, which is like many separate countries, United under the EU, have a, have a

lower trade barriers between countries and like province by province in Canada. Just ridiculous.

Right. Yeah. So, like, why do we hate ourselves? Like, why can't we just trade with like,

Alberta or Saskatchewan and like literally just drive there and make it super easy, you know,

it's crazy. Yeah. Next question before we move on. And I think you and I have, you know,

everyone's seen this online, usually it's somewhere like coming out of China or something like that,

right? But here's a little prediction, little game here in Canada. How soon do you think we

see robots on site doing work and not just like, not just like randomly, like, oh, here's one robot,

you know, like, but like realistically, like, you know, when are we seeing actual robots going and

doing real work? Have you seen this video? I'm going to pull up here.

For those that aren't watching, this is a probably like a $20, $50,000 robot that this guy has

in his house and he's just like, the robot's just running around smashing into the walls and

sitting mirrors and stuff. So, I'm going to put him here. Anyway, so I'm of the opinion that is

probably not going to be in this video. It's going to be this episode very unserious right now.

I don't think it's going to happen anytime soon, man. Honestly, like, agreed. Yeah.

The fact that they cost nothing makes it like or cost a lot lower on a per hour basis and you

can work them constantly is probably like the one benefit. But then you still got to recharge them.

Like, they got to sleep too. They got to get their batteries by the freaking video. So I'm

going to turn it off. It's too funny. If you don't subscribe to the videos, you have to watch

this video. It's absolutely hilarious. Like, it will just eliminate any fear that you have that robots

are going to be a problem. Yeah. If you're a skilled trader worried about your job, watch that video.

You got like another decade minimum for sure. For sure. And if you're a robot listening to this,

that Gen AI has been put into, we don't mean any offense when they give you guns and conscience.

Don't attack us. Yeah. We're your friends. Okay. So we both agree that years away.

I think the trades that are done with your hands are defensible. You hear when you hire a plumber,

like, the classic thing, it's like, oh, the plumber showed up and he charged me 500 bucks an hour.

And it's like, I paid you $500 an hour or $500 to fix this little leak. And he's like, no,

you paid me $500 an hour because I've been working for the last 20 years to know what the leak

was. You know, you could have paid, you could have paid somebody else $20 an hour and they could

have spent four days trying to find it and you pay the same amount of money. So I'm paying me

and I'll show up with like, you know, you can't rob out of that. You just slap that tape on

anywhere. Yeah. Yeah. The leak is like a leak stop tape guy. Yeah, exactly that stuff. Yeah,

but I mean, look, to your point, I mean, when we're talking, you know, electrical, anything

having to do with heating or air quality or plumbing issues. I mean, yeah, you better repeat,

you better be happy to pay the $500. You leave that issue and that issue could turn into a $50,000

dollar job really quickly, right? Yeah. Yeah. For sure. Yeah. So I don't, I think like, I don't

think we're going to see robots doing the work and replacing the silver tsunami, which

which becomes a real problem. And it makes you think about like his Canada's immigration policy,

attracting the people that are going to do this stuff. Like, you know, we were, you know, I mean,

there's a lot of reluctance for people to work in physical trades that are that are coming here.

They'd rather be drivers or whatever and make way less money. Like, you know, if you tell

these guys who are driving Uber making like, you know, 20 bucks an hour, hey, you can go hang drywall

for a hundred K year. Like, why why have a great time doing it with on site? With the boys. Yeah,

get hooked on sins and, you know, crush eight double doubles every day. Not financial advice or

health advice on that note. Let's, uh, we got a lot to get through here. Let's move on to the next

article, speaking of affordability and construction. And this one is from our friends at stories. And

it says there's kind of an expert opinion piece. And HST holiday could be a lifeline for

Ontario's housing market. The Ontario market is not cooling. It is collapsing under the weight of

taxes, regulatory drag, financial barriers that have choked off new supply precisely when it is

needed the most. If this province is serious about restoring affordability and protecting those

skilled trades, tens of thousands of skilled trades we were just talking about, it's time to adopt a

bold measure a three year HST holiday on the purchase of new homes up to $1.3 million. That's

what rezcon is proposing. And this move would preserve nearly 26,000 industry jobs based on their

research, resulting in a market improvement in housing, starting completions and support roughly

$3.9 billion of GDP. If no action is taken, they expect the province stands to average 21,000

fewer housing starts every year over the next decade compared to the recent 10-year average.

And the shortfall would account for about 400,000 fewer Ontario's being housed by 2035.

Proposals pretty straightforward suspend the provincial portion of the HST on new home

construction for three years to jump start activity, preserve jobs and inject insurgency,

urgency, not insurgency. That's for the robots into a market that has ground to a halt.

It's a win-win proposition and it doesn't cost anything to implement. I guess it would cost the

tax revenue. But that's not tax revenue that they're getting right now if these guys can't sell

houses. So that's the thing. That's the thing I don't think policymakers get. If you drop DCs

or if you drop HST that's not money that you would have seen anyways. And we're talking about

the better part of 30,000 jobs. Home is being built for 400,000 Ontarians and $4 billion in GDP.

I mean, those are serious numbers. Look, the scale of the downturn that we're seeing right now

in the construction industry cannot be overstated. It is bad. In the greater Toronto, Hamilton area,

single-family home sales have plunged 71%. Condominiums are down 90%. The province is looking at

a potential 1.5 to 2.5 reduction in GDP between this year and 2027 alone. That's tied directly to the

collapse in the residential construction. These are not normal cyclical adjustments. I guess we're

in the midst of a cycle and it's ugly and blah, blah, blah. But this is bad. And the consequences

will extend well beyond the balance sheets of the rich greedy builders. This is and I'm doing

that satirically, of course, residential construction supports a vast ecosystem. We've talked about

the satan on the show before, Dan, the ripple effect, tradespeople, suppliers, engineers, planners,

small businesses, right? The all get affected. Now, municipalities rely heavily on development

charges levied early in the construction process to finance infrastructure. In real estate

development, DCs, we talked about the million times on the show, ensure that growth-related costs

are shared by new developments rather than existing taxpayers. They fund roads and transit,

water and sewer systems, parks and recreation facilities, libraries and emergency services.

There is a bit of scope creep, I would say. They're stuffing more things into the DC bucket.

But we know that DCs are also at a control in Ontario, particularly in the GTA where they can

exceed 200,000 per new home. Like, absolutely wild. And of course, that price gets baked into

the sale price of that home because you don't have a choice as a builder or developer. Entry level

new homes are up 265% since 2004. And DCs are directly correlated with that. A dual, young

couple dual earner incomes are there. They're up just 76% in that same time period. So 76% on

income, 265% on entry level new home prices, even if prices stopped rising, it would take about

16 years to get back to that four to one price to income ratio and roughly 25 years to match

2004 affordability. Like it's crazy. In Toronto, even modest starter homes now often cost a million

or more with the price inflated by HST development charges, levies and land transfer taxes. New housing

is taxed like a vice like alcohol or cigarettes. Three-year HST holiday would not fix everything,

but it would deliver visible relief at and help people at purchase to help restart a lot of

these shelved projects. Totally. Okay. So look, I mean, at this point, it's kind of like

anything will help, right? One incremental small step in the right direction is definitely

a welcome thing, I think. But Dan, from your perspective, is this meaningful? Is this enough to

really get anything going? What do you think the impact of this would be? Should it be

should it happen? I think like somebody's got to do something. Otherwise, you know, you can't

make rental housing work in the GTA, in the greater world in the horseshoe. And rental housing

already has an HST rebate, right? So like think about that, like they already get that. So

would it make it more compelling for owners? Maybe if they're going to get a basically a 5%

discount on their on their house price, I guess it remains to be seen whether or not it's actually

going to be material because the both the Fed and the province have removed HST for first time

home buyers. And that just got through the Senate at the federal level. So if that is actually

happening and first, like in, you know, and that's stimulating construction. Yeah, maybe, maybe,

like, I think it will be compelling to some people. Is it enough for us to get back to building

70,000 homes a year? I don't know. Are there 70,000 first time home buyers a year who can afford

to buy a million dollar house to maximize the 130,000 dollar discount? I don't think so. Yeah. Yeah.

Now speaking about how expensive things have gotten, let's move on to our next article from

Yahoo Finance, Power of Sale listing spike across Ontario, Piling pressure on the housing market.

Now, before we get into the article, let's do a quick refresher on Power of Sales. A Power of Sale

in Ontario is a legal remedy allowing mortgage lenders to sell a property without court approval,

when a borrower default typically after 15 days of mispayments. It is faster than foreclosure,

where the lender must give 35 to 45 days notice before selling and surplus funds after paying

debts go to the homeowner. Key aspects of a Power of Sale in Ontario, the lender issues a notice

of Power of Sale under mortgage in Alberta. This would be, in Alberta, they do some foreclosure

in BC. It would be like a court ordered sale. There's a bunch of different structures across Canada.

But similar kind of framing, right? After the person defaults, they get this notice,

mispayments, unpaid taxes, insurance lapses, condo corpse can exercise this. The borrower has a

redemption period, usually 35 days to pay off the arrears and costs to stop the sale. In a Power

of Sale, the owner retains title until the sale closes and can receive any surplus. So if there's

a profit from the sale, whereas in foreclosure, the lender takes title and keeps all the equity,

but they'll realize the loss once they take possession of the property. And the lender must sell

the property at fair market value and can sue for any shortfall if the sale price does not cover

the debt. Borrower can stop the process by paying the full amount of the arrears and legal fee

anytime prior to closing. So if you're buying one of these things, you could actually lose the deal

if this seller actually squared out prior to closing. Yeah, I appreciate that explanation,

because I know this is like something that you and I are hearing a lot about these days,

Dan, right? Like I mean, Power of Sale listens are up. That's what this whole article is about.

So I want to ask you a bit more about the end of it. But let's jump back in the article for now.

Well, not every homeowner who falls behind will ultimately lose their property to a power of sale.

Arrears tend to proceed power of sale listings. And that's mortgage, arrears, mortgage,

link, and season according to CMHC, that rate has climbed from 0.13% in the first quarter of 2020

to 0.24% in the third quarter of 2025. Those sound like tiny numbers.

It's more than magnitude of the increase. Like the chart isn't exactly right. Yeah. Yeah, that's

the scary part. Like we're coming from a really low level. Yeah, it's low historically, but a lot of

borrowers, a lot more borrowers, right? Like three times as many borrowers are defaulting on their

mortgage than before. And the population is way bigger than historically. You know, so there's

probably as many people who can't pay their mortgage as the 1990s. Now, lenders do have a fiduciary

duty to sell at market value and typically hire a realtor to manage the process in Power of Sale and

Foreclosure. It's a little bit different, but still like they're not trying to fire sale these

things and realize the biggest loss that they can. Properties can. Yeah, it's not the stuff you

hear out of the States, right? Where it's like, you know, this, this home selling for 20,000

dollars, right? And there's, there's neighborhoods full of them kind of thing, right? It's not that.

Yeah. You don't really hear about that in the US anymore. Since they passed, I think it was a glass

teagle actor, whatever went with the mortgage side of things. So they, they fixed that, that problem

when they had to offload a bunch of properties that pennies on the dollar. Properties could still

sell for less, but lenders need to show that they acted responsibly and they're not expected to hold

the home for an extended period of time. Lenders will sometimes accept mobile offers on these

properties, which can affect neighboring home sales and that kind of pulls the market down a little

bit. Yeah, look, I mean, no one likes to see a Power of Sale listing in their neighborhood.

Usually, you'd assume that if you're in a Power of Sale situation, your, your poems probably not

going to be maybe the most well maintained. You know, you're, you're often, if not always buying it

as is. So, you know, the buyers have limited recourse or something breaks or goes horribly wrong

after closing. I mean, again, overall, they're having a definitely a bit of a negative impact on

the housing market right now. Dan, before we move on, I know that you've been a resident

realtor here and an investor-focused guy. I know that you've been getting a lot of questions about

about this, any, any kind of final thought before we move on. Yeah. So I do a lot of content on this

stuff. I'd say that we're kind of like leaders in the space. I actually, I actually am like

building a tool on the real estate reps website right now that people can browse. So we have a,

we have a tool for the, for Ontario listings or the GTA on the Valerie website that allows people

to browse GTA Power of Sale listings. We've really been like the biggest researchers in the space.

And I've been in it the earliest. I figured that was the first thing I wanted to look for.

And I've been following it since 2022 when it first doubled. And it's up like 4x from the bottom.

Okay. And so I had always said like when we talk about delinquencies going 4x,

like I literally on this show, even though some of our one-star reviewers tell me that I suck at

predictions, I said like Power of Sale is just 4x. Power of Sales would be probably 90 days before

your delinquency and maybe maybe maybe six months before your delinquency because you have your 90

day delinquencies and then you have a quarter to get them reported in the CMHC delinquency,

C data and Equifax delinquency data because those are quarterly reports.

And so I said we're going to see delinquency 4x, 3x. And it did. So that's why that, but yeah,

it's like less that and more. This is why you pay attention to these, these indicators to see,

oh, what's the market going to do? And then now it's interesting. The part that's fascinating

me the most on the delinquencies is that actually mixed delinquencies are actually rolling over.

So they're actually coming down. And the reason for that is probably they're the short

your credit terms, right? So anybody who got into a risky mic loan has probably already come up

to the end of that loan. Like there's no more outstanding risky mic loans. And they're not renew,

those makes aren't really exactly. Make his mortgage investment corporation. So private is where

you go. Institutional private. Yeah. Exactly. Yeah. But they're not they're not renewing those

mortgages. No, exactly. So that makes complete sense. Yeah. So they're push getting push off

their book. So if that process started in 22, you had 23. Maybe there's some lingering ones in 24,

25, and then they kind of hit their peak in 25. And so after they usually rise, then you start

to see your longer term loans. And we know we have that bigger block. We have the most renewals

that we're ever going to see in Canadian history coming in 2026. That will push into probably

another wave of delinquencies lower percentage likelihood of delinquencies because they're less

risky loans compared to a mic. But those will probably continue to push the delinquency rate up.

And then eventually you'll probably you'll probably see peak delinquencies this year. Maybe not

if not this year early next year because people don't go to the link went right away. Typically,

like if you see a big payment shock goes up 50% next year, you kind of run out of money. And you're

like a crap. I can't pay this anymore. And you go to link. So that's that's that side of things.

Transaction wise, one check out the realist.ca said I'll try to have that tool ready by the time

this episode goes live. I've been like just vibe coding it. You know, we can put it in the show notes.

But so you could browse like quarter-ordered sales and BC foreclosures in Alberta,

Power of Sales in Ontario. But the deals like people think they're going to get a good deal. And it's

really hard to get a good deal on these things. Like usually if you're negotiating with like a you

you'd actually be better off to negotiate with a distress seller before they go Power of Sale.

Then negotiate with their lender or their lender's lawyer after Power of Sale. You know,

most that does not sound fun. Yeah, most people while you and I know like we are dealing with one,

like we sold a multi-family to one Power of Sale like what over a year ago it was supposed to close

a year ago. It feels like years ago at this point. Yeah, and there's so many problems between

the closing and you know usually people who go Power of Sale, they have maybe outstanding work

orders and you know tax rears and there's so many things that need to get cleared out. So that

deal has been delayed like I don't know almost a year. Just like just like six times. Yeah,

like it's crazy. So it's like people see it and they think US foreclosure I'm going to get an

amazing deal. And maybe you can the likelihood is like a little bit higher. You know, we ran some

analysis. It's like they sell a couple percent lower like one to two percent lower. They take

longer to sell. But there's so much hair and risk attached to it that you need to be aware of.

That's the tradeoff. So I mean, yeah, I mean all in all like can they be great deals? Sure,

but you know, you can find other great deals with much less paperwork and BS involved.

Okay, I appreciate your take on that Dan. Let's move on to the next article here. Yeah, so is

this good news? It says housing affordability improves yet again, though not for the right reason.

So I was I thought it was good news, but it's not. How's the affordability in Canada improved

for the eighth consecutive quarter in the final three months of 2025 the longest streak on record?

That's actually crazy. Wow. However, new data suggests the gains have been driven disproportionately

by the condo market rather than broader housing stock. Yeah. So this is according to the latest

housing affordability monitor by national bank, which we've covered a whole bunch of times and

used that monitor on on the show for years now. Well, national affordability has improved again

in the fourth quarter of last year. Housing costs still remain, of course, far above historical

averages. No surprise there. Despite this minimal improvement affordability again, well above those

long term norms, the representative mortgage payment fell about 51.6% of medium household income.

That's the lowest in four years versus that long run average of about 40%.

The gains are concentrated in the condo segment, not broadly across all housing types.

Condos improved about 60 basis points on the quarter over quarter versus 40 basis points for

non condo home. So the condo price softening is doing a lot of the heavy lifting on creating

the affordability. Income growth contributed more to the most recent improvement than lower borrowing

costs. And median household income rose about 80 basis points while home prices rose 0.4% or 40

basis points that mortgage rates moved only slightly. So the change isn't driven by cheaper credit

as we know rates aren't coming down. Yeah, look, I mean, the bottom line is the apparent,

and I say that because that's the keyword here, the apparent improvement is partly a

market correction concentrated in condos, which are for lack of a better word, just a disaster

in some major markets here. It's not a structural fix, right? That I don't want people to get excited

and be like, okay, yeah, you know, it's things are getting more affordable. They're not really,

but the condo market is kind of skewing things a little bit. So it's not structural

fix from a supply or sustained lower borrowing costs. This is just a bit of an outlier here

that's kind of being pulled. Dan, we just did an episode that you should probably go listen to

if you haven't called the Toronto condo Ponzi scheme. If you want to understand a bit more by

why we're seeing a little bit more affordability, I'd urge you to go listen to that episode.

Any final thoughts on this before we move on to the next article? No, I think we're good, honestly.

So I guess the next one is, you know, the, like, and kind of on top of what we just said,

affordability has been a story for a while, specifically Toronto, the GTA and Lower Mainland,

I mean, Cooper, but there is a new player in the game. Canada's rental crisis moves east.

Nova Scotia is now the least affordable province. So yeah, come on. So it depends on the metric,

right? But a new rentals.ca report shows the gap between asking rental prices and incomes

is steadily improved since peaking in early 2023. However, Alberta's the only province considered

affordable to find as the median households spending 30% or less of the income on average rent.

Affordability problems have moved east with Nova Scotia renters facing the worst conditions in

the country, even worse than BC and Ontario, which is, I didn't see that coming. Me neither,

honestly, man. And, you know, we've, we've had the pleasure of being out to Nova Scotia a few times,

love Halifax, great city, great people, great real estate, but damn, worse than BC and Ontario. That

is pretty crazy. Canada's east coast is on the other end of the affordability equation where

residents now face the worst rental conditions in Canada. The average asking rent is up 37% of

median renters income. That's down from its recent peak at 46 in November of 2022 still has a long

way to go. Yeah, in a distant second is Quebec. And I have the chart up on the screen here,

where the average rent is 32% of the median renters income. Montreal, formerly known as the hub of

affordability is slightly better at 32% of the local median income. However, that rate makes

it the second worst of Canada's big six cities when it comes to affordability only surpassed by

Vancouver. Very, like, surprising data points. And this stuff matters a lot because most of our

investor clients, you know, guys that you and I work with, investors who are trying to create

housing do multiplexes. They're using some component of CMHC affordability to get these deals done.

And, you know, I mean, you really only see that being a successful strategy to get points in Alberta now.

Yeah, wild. Well, let's finish that article off with an apology to Nova Scotia and everyone

in Nova Scotia and Halifax. Welcome to the club. I guess a club that you probably

not want to be a part of. Okay, moving on, we got two more articles to get through your day. And

I wish we had some good news. But here, this is just this is the hard truth of the times that we're

in right now. Okay, that we don't enjoy these news episodes and just delivering a whole bunch

of bad news. But it's important for all of you to know that's understanding this next piece is

from the financial post. And it says Bank of Canada governor warns of growing risks to financial

stability. So, Tiff Macklems said military actions recently, which if unless you've literally been

living under a rock or, or, you know, have zero social media. What a blissful ignorant life.

Oh, my goodness. I would love that. Military actions in Iran have increased volatility in

energy and financial markets uncertainty around the duration of the conflict and the potential

fallout of is of course going to create greater global risks for just almost every economy. And,

you know, we already have a little bit of a week economy over here. So any more volatility is

probably very unwelcome. Economically, uncertainty is already high. Said Tiff in a recent speech

at the global risk institute in Toronto, we cannot afford to add financial instability to the

mix. Well, too bad it looks like we already have non bank financial players have now become

central and how sovereign debt markets function, both globally and here at home, he said adding that

in Canada, they account for up to 50% of government bonds sold at market. And our major players in

the secondary market, this adds liquidity and efficiency in good times, but the leverage sovereign

debt purchases pose risks in times of stress. And the scale of these trades and speed at which they

can unwind pose systemic risk. Because the first time I've heard him say the word systemic risk in a

long time, it's it's kind of unnerving to hear this stuff. So okay, if you're wondering what this

kind of means in plain English because the article goes on and on, basically the Bank of Canada Tiff

are warning of two growing risks. The first is government taking on more debt, too much debt,

you know, specifically our government that reduces government's ability to fund big programs and

respond to crisis and private credit lending from non bank firms and funds has expanded rapidly.

And of course, is less regulated together. This matters because private lenders now finance a lot

of real estate projects and mortgages. And if they suffer losses or feel the need to pull back,

financing for builders and buyers could and we've already seen this dry up. So slowing,

construction, making mortgages harder and more expensive to get at the same time, highly

indebted governments like ours would have less ability to step in with support. So a housing

or credit shock could hit harder and last longer. That is not great. No, overall, definitely not good.

Policy makers needed to pair near term relief with measures that boost construction capacity,

regulate growing private credit risks and protect renters. Otherwise, short term fixes will keep

Canadians living stuck between unaffordable rents and a fragile market for buyers. That to me just

sounds like imagine like the brutal economy. And I think we've talked about how this would be

like longer and slower than people would hope because I think we think about like we saw a recession

in 2017 a lot of people forget that, but it was so fast. It was like down two quarters and back

up real quick. 2008, very similar at least in Canada. The US was a bit different, but in Canada,

down dropped the overnight rate. Cad was above the USD, so we didn't even have a room to cut

further. Good old days. And so people think of Canadian recessions and they don't think about

the long, slow shallow grind of the 1990s. They think about these flash crashes, these V-shaped

recoveries like 2007, 2017, even you go back to like the last couple recessions. So you have

.com bubble, it's a quick one. 08, 2017, COVID was like boom, right? Because it was like, oh no,

Stimme checks, interest rate to 0.25. And so we don't think about this long, a lot of people are

like, oh, Bill, it's going to come soon, right? Like we're going to, you know, everything's going to

be okay. But most people aren't short up and prepared for that long, slow grind. I think it's

way more painful when our economy is so indebted, 108% household debt to income can

really stretch out over a long period of time. Yeah, I mean, I completely agree. I think some

of those recessions were so quick that you didn't even really know we were in one until it was

already over and things were good again, right? Whereas this one, you're really going to have to

unfortunately settle in a little bit. But okay, look, that's been a lot of bad news. We wanted

to finish this off with a little bit of good news, even though it's not going to lie, it's hard

to find out there. This next article is from Construct Connect Commercial Real estate activity,

expected to rise in 2026 had mid the return to office trend. So we should see more activity

as people slowly head back to the offices offices will get more leasing and investment attention,

industrial spaces and where else will keep doing well because online shopping and logistics are

still hot and investors are starting to put money back in the certain markets, which is boosting

in some new projects. Dan, you and I both spent years in the commercial office space and I

saw a lot of friends in the industry. And that is what they're saying. I've spoken to a couple of

them earlier this week and every single one of them, yeah, the banks are taking new space. These

people are taking new space. Space is getting leased up. People are spending money on boardrooms

and furnitures and TMI. So there you go. There's a little bit of good news, all right?

Yeah, and now the article does go on to say that it won't be the same everywhere. Some downturns

with lots of empty office space or weak local economies will lag. Turning offices into apartments

sounds good on paper, but we've talked for this a bunch of times really only makes sense in places

like Calgary when you're getting your office square footage for next to nothing because it's

expensive, slow and not possible in every city or market. The rebound could be slowed by interest

rates, more people sticking with remote work in a weaker economy. So a comeback in commercial

real estate can help in parts, but probably not a quick fix for housing affordability.

I mean, is there any quick fix? I don't think so at this point.

Anyways, thank you for sticking with us through all of that news. Hope you learned something today.

Go check out real estate.dean as I'm going to give you the credit your day because it has been

almost all you has built up really amazing tools. The power sale stuff is coming. We've got an

MRI select calculator on there. If you are looking for deals and want to just do them all in

one place, go create a profile, come and see us at our events. Next one is April 8th in

Vancouver, Yaletown, Roundhouse. We're going to be talking about unpacking multiplexes.

And if you want to work with us because why the hell wouldn't you? I'm a commercial mortgage

broker and can help you do anything from MRI select to refine its construction loans. And

Dan is on the forefront of AI with his real estate brokerage Valerie looking to buy cell lease

or list. Do it with them. Thanks so much for listening. We'll see you soon.

The content of this podcast is for educational and informational purposes only. It is not intended

as financial legal or investment advice. Always consult a qualified professional for advice tailored

to your unique circumstances. The views expressed are those of the hosts and guests and do not

necessarily reflect the opinions of affiliated organizations. Daniel Foch is a real estate broker

license with Valerie Real Estate Inc website is Valerie.ca V-A-L-E-R-Y.ca and a member of the Canadian

Real Estate Association, the Ontario Real Estate Association and the Toronto Real Estate Board.

Nick Hill is a mortgage agent and partner at Owl mortgage license number 10317

agent license M21004037.