Find the Perfect Remittance Slip Example for Real Estate

Remittance slip example for Real Estate

your outlook for housing can we continue to see valuations appreciate or is a correction on the horizon there's definitely a correction on the horizon in the condo space it's ongoing it's happening as we speak only Miami Tokyo and Zurich and Los Angeles are running hotter ing to this ranking I know we've talked about the fundamentals a lot but just on a macro level does that make sense that Toronto was fifth in the world ing to this ranking absolutely it makes perfect sense let's assume this trend continues what happens to Canadian banks on how exposed are banks are we going to get a lean moment Canadian Prime Minister Justin Trudeau recently met with president-elect Donald Trump at maril Lago uh Trump called this a quote unquote very productive meeting with the Prime Minister uh trudo of Canada so what is next for Canadian US relations how will this relationship affect uh the biggest sector there is which is real estate which affects us all what to be talking about the outlook for housing and real estate in Canada with our next expert Ron Butler uh he is the host of The Angry mortgage and principal mortgage broker at Butler Mortgage we'll be talking about his Outlook uh assessing the valuations of Canadian real estate sectors and talking about how Trump's presidency could affect investor sentiment welcome to the show Ron good to see you thanks very much for having me David so let's start off by taking a look at this clip um of trump in an interview recently and I'd just like to get your reaction to um what he said take a listen we subsidizing Canada to the tune of over a a hundred billion dollars a year we're subsidizing Mexico for almost $300 billion we shouldn't be subsid why are we subsidizing these countries if we're going to subsidize them let her become a state we're subsidizing Mexico and we're subsidizing Canada and we're subsidizing many countries all over the world and all I want to do is I want to have a level fast but fair is Canada going to become a US state Ron this pure nonsense and craziness um there's nobody in the Republican Party would ever want Canada to be a any part of the United States we would be relentlessly and consistently uh 80% blue votes uh and we would probably assure a Democratic party majority in all houses and in the presidency uh for eternity um so yeah no it's just complete fantasy never going to happen it's just it's Donald Trump being Trump I mean anybody who thinks they should carefully analyze every word out of his mouth um their head will explode if they want to continue to do that that that doesn't make any sense I think the broader topic here is that Trump does want to impose tariffs on China Canada Mexico bunch of other trading partners around the world he's doubling down on his tariffs that he imposed in his last presidency um trade Wars affecting Canada how will that affect investor perception Capital flows in and out of the country well invest your perception in Canada uh that ship sailed uh that ship sailed a long time ago in real estate we have zero interest from other companies investing in Canada uh in almost every sector economy foreign investment is uh completely flat and disinterested um sure if AB absolutely if the level of tariffs that Trump is suggesting occur it's probably a 3% drop in our GDP um but as far as investment's concerned Canada's taken care of driving out investment already we've done it all by ourselves conversation today is focused on Canadian real estate but you said that the economy regardless of whether or not Trump is going to implement tariffs is already on a decline which can impact real estate so tell us about the Canadian economy what is your outlook our Outlook my Outlook is continuous uh growth in unemployment in a kind of Ontario recession where Ontario is already at a 7.6 unemployment rate I think we'll definitely see that break into the nines uh by at some point in uh 2025 in Ontario Canadian unemployment will continue to rise the construction industry in Ontario is facing a kind of complete collapse over the next 24 months and uh manufacturing has lost 20,000 jobs here in Ontario at just in in 2024 alone so the the future is dim uh as a recession being led from Ontario are we seeing housing prices reflecting this data in real time right now great question we have seen a absolute catastrophic problem developing in investor driven condominiums in 416 it is far worse than Vancouver's issues Vancouver has issues but Ontario is the epicenter of an unmanageable pricing problem uh we have brand new products coming on the market which has been six five or six some cases seven years in development this new product is priced so grossly higher than resale products right across the street we have a building with a $1,400 a square foot uh that's the price that people paid and they're they're expected to close next year $1,400 a square foot uh the building across the street from them which is three years older uh has a resale product at 900 a square foot the Delta is completely unmanageable these products were purchased five or six years ago these tiny condos were purchased by investors five or six years ago with some absolutely ridiculous assumptions the assumptions were much in the much in the case of the Dutch tulip bubble that prices would simply go up eternally and forever uh another assumption would be that 2% interest would continue forever uh and that mass immigration would continue forever uh all of these things have become untrue and the feasibility of even closing on these condominium and there's about 35 to 40,000 of them coming on in the next 12 months um is doubtful in fact doubtful some will close many will not and it's it's a version of catastrophe now how does that spread out into the rest of the condos how does that spread out into single family well we're watching it impact the other condos right now there's been a steady drop in price per square foot sales on resale um not no one really knows where the floor is and there will be not much spillover into single family for this critical reason both in the lower mainland of British Columbia Greater Vancouver area and in almost all of Southern Ontario the development of single family lowrise homes started falling off a cliff back in 2017 2018 um very few lowrise compared with high-rise the ratio ended up about 8020 so we're actually developing scarcity amongst single family homes before we continue I want to tell you about a recent data breach that exposed nearly three billion records in one of the biggest data breaches ever this case highlights just how vulnerable personal information can be in today's digital world and the importance of protecting your privacy online that's where delete me today's sponsor comes in delete me removes personal information like your address phone number and more from hundreds of data broker websites it's a service I trust because it makes staying safe online simple and effective using 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the chart showing uh the price index inflation adjusted Canada leads the other oecd countries by um by valuations by by considerable measure by home prices and so uh this trend has been intact for quite some time Canada is not getting richer compared to what peers in fact if you look at look articles like this from CBC Canada's getting poor when compared to its wealthy peers data shows Canada is among the richest countries in the world but when compared to peer countries like Australia New Zealand and the UK it isn't as rich as it once was wealth gap between the can between Canada and the US has only grown wider ing to the oecd how is it that the can that the Canadian population overall is getting poorer relative to its peers but the housing market is getting more expensive oh there there's a such a a wide range of answers to the why Canada is getting poorer but I I could more easily address the real issues real estate issues revolve around the fact that in 2008 2009 when the US went through a wrenching reduction in house prices uh and a catastrophe in their mortgage Market that spread out across the entire world we even refer to it as the great financial crisis the world financial crisis uh we that lasted for us about 10 months I mean we there was a brief correction and we were effectively back to normal by the end of one year uh followed by the zero interest rate program so we had U interest rates that were lower than inflation for the best part of 13 years culminating in the total catastrophe of interest rates going to zero in the co times so we had a we were selling fixed rates for uh fiveyear fixed rates for 1.49% and we had variable rates for 0.99% in some cases so it's un it's unheard of interest rates uh and that fueled combined with a high level of immigration and a u a constraint on Supply in some cases through various legislative means through both British Columbia and Ontario a constraint Supply which led to astronomical prices being sold in 2020 and 2021 so yeah it was a made in Canada bubble uh which is coming off now but it's essentially that and incredibly low interest rates a aggressive immigration policy and constraint on land itself like we have a green belt uh in Ontario which basically uh limits the development of housing in a severe way there's geographical constraints in the Lower Mainland which uh we are all aware of it's there's oceans mountains and rivers and there's only so much land to go around uh but in Ontario it's an entirely legislative a of scarcity uh but that's the story incredibly low interest rates fueling an astronomical runup in prices based on immigration and in some cases foreign Capital the government has tried to uh help this issue with a few measures one of them is uh additional taxes on foreign investment for example uh foreign buyers are now Levi to an additional tax especially in BC where I live how effective have these measures been uh the conservative party has been uh consistent in criticizing the Liberals in not managing this affordability issue despite attempts at raising taxes um were they effective well the the foreign buyers ban the foreign buyer taxes are profoundly ineffective because the reality of these programs is that the uh people are receiving money from overseas are are currently permanent residents or citizens I mean they've come over here from other countries they've gained their citizenship they've gained their permanent residence and the money comes from uh Iran or from China or from another country it flows from their parents or their relatives to them but they're not foreign they are citizens of Canada or they permanent residents so that's where the unchecked growth of some of this foreign Capital came from so a foreign buyer ban today is particularly pointless okay you mentioned immigration is another source of the um um Supply Gap that we're experiencing as you know uh Canada has experienced a large influx of immigrants in the last couple years in 2023 I believe over a million immigrants came into the country that represented 97 or 98% of the C of the Canadian population growth overall the government has recently announced that they want to curb immigration going forward do you think then demand for housing is likely to uh slow down a little bit in the future well it's certainly it's going to become a tale of two products so the the condominium the small condominium Market is going to turn into to a glut in major cities in Canada and single family which has been so constrained in fact in Ontario uh we suspect that the uh development of single family homes in 2024 has just fallen off the face of the Earth we're thinking it'll be less than 10,000 homes uh maybe less than 7,000 homes on a lowrise basis um this is just the facts of life in Canada there's no financing for development available for single family homes and the big Builders of single family homes in Ontario and in British Columbia all stopped building them about 12 or 14 months ago they sold what they had pre-sold and they closed their sales offices so that that's the case we're faced with today um there is going to be eventually strangely in a country where the government has promised uh 3.1 million new homes by 2031 uh we're going to find that we're down to about 100 80 190,000 starts next year in 2025 it's that bad the starts are going to decline radically so given the uh supply and demand fundamentals your outlook for housing can we continue to see valuations appreciate or is a correction on the horizon there's definitely a correction on the horizon in the condo space it's ongoing it's happening as we speak there is a correction on some radically overpriced houses in the far reaches of the Fraser Valley and uh within the 9005 belt of Ontario these Corrections have already largely come in and some of them are quite significant in some cases as much as 30% price reduction in the 905 around Toronto and in the the far reaches of the Fraser Valley uh from the 2021 Peak so these things have already happened but in terms of a great repricing of single family Canadian real estate it's it's quite unlikely in British Columbia and Ontario because the reality is that it's been constrained for the last number of years new construction has been radically constrained can you comment on the disparity of prices across Canada so I currently live in BC in Vancouver I've also lived in Montreal I've spent 14 years of my life there and I've looked at Canada housing or Canada mortgage and housing Corporation data consistently over the last 20 years the Canadian housing market if you take a look at single family homes has been triple the Montreal price and if you look at stat scan the household disposable income in BC is not higher than in Quebec um so you know how how is that these markets are so widely varied in prices EV valuations another great question the the the reason in Ontario and sorry in Toronto and Vancouver you have to roll back about 10 or 12 years to a vast influx of international Capital buying properties in those two cities the same level of Interest never existed in Montreal there was never a massive interest in people from uh Eastern Europe or from Iran or from the Middle East or from China uh to purchase prop Residential Properties in Montreal very important to understand that Quebec has the is the only province that has their own control of immigration none of the other promises to but in Quebec they only have to take 50,000 new immigrants a year compared with in some cases Ontario taking 400,000 in a year so that is a radical difference there's never been a requirement for Quebec to have the same level of immigration um that the other provinces have experienced it's been well controlled all the complaints you hear out of Quebec about immigration today are strictly to do with refugees of which there's less provincial control but in terms of actual permanent residents no they have the lowest influx of all large provinces what does that tell you about real is an investment vehicle presumably if you're a foreign buyer if you're looking for bargains you would pick a jurisdiction like Montreal that's a third or half the prices of Vancouver or Toronto for a similarly priced condo or or house um but that doesn't seem to be the case over the last couple years you know the barrier has largely been a language barrier uh there's been a disinterest in having to work within the Quebec culture uh for a certain class of immigrant uh there's also been a disinterest in in the general tenor of their immigration uh policies if you restrict it to 50,000 uh and of those 50,000 the majority need to be French speaking already then you've just modified your immigration profile to the point where some of those investors just won't come here won't come to Quebec now your Point's well taken uh and there's actually been a significant increase in Quebec house prices and building activity in the last 14 months so if you by by definition Quebec's real estate market today is on fire interesting let's assume that you are right and that we do see a correction in um the housing market for condominiums by the way it's already happening in Vancouver I've been seeing a real estate uh pamphlets getting sent to my mail and downtown Vancouver is down ing to this pamphlet 20% in sales volume 8% price year-over-year in 202 2023 2024 but let's assume this trend continues what happens to Canadian Banks Ron how exposed are our banks are we going to get a Leeman moment oh no no nothing's going to happen to Canadian Banks um you know this these are the most excuse me I a little cold today the nothing's going to happen to Canadian Banks uh they are have limited exposure to the development side of the condominium World um they are well-placed in if you I'll give you a simple example look at their default rate uh they all reported last week their default rate has only risen to about 23 basis points of 90-day mortgage default this is so much lower than what's considered normal in the United States normally United States considered about 36 basis points of 90-day default we still run much better than many other countries in terms of of Residential Mortgage default we're we're one of the market leaders in the world so I don't think the banks have too much to worry about okay uh moving on to rates now take a look at my screen here um this article came in recently three major banks are raising mortgage rates CBC Royal Bank and TD raise their three four and five your fixed rates by 15 to 35 basis points just another note for our American viewers or Canada doesn't um um like to use the uh 30 and 35 year um fixed products so we have three four fiveyear fixed so they raised rates while at the same time the Bank of Canada is lowering rates we'll talk about that in just a minute but why why why the Divergence here there was a significant upswing in the last uh seven weeks uh but which ended uh 10 days ago we've had a retrace of 40 basis points from that article uh there was about a 75 basis point runup which has now come down about 40 basis points uh much of this does react to the Trump effect uh there's movement in the 10year bond uh in in 10year treasuries in the United States Treasury yields have had a bit of a run up they've now had a distinct slide our own Bond Traders clearly feel that the Canadian economy is expecting more decline worse outcomes in 2025 and uh the bonds have reacted ingly uh we you know we we very much will eventually at some point in 2025 come to an agreement we are in some form of recession in Canada I think for a lot of my actually my personal friends have been asking me when do you expect rates to come down when do you expect um a buyer Market to to reappear for uh for the Canadian housing market obviously it depends on where they live and you know what they're looking for but um this is an interesting piece of development because rates aren't really coming down dramatically how would you go about answering that question Ron well variable rates will come down dramatically there'll be an announcement uh where there will be a cut of either 25 or 50 basis points uh there will be continuous cutting next year by the Bank of Canada I think the Bank of Canada is quite willing to sacrifice the currency uh to radically reduce the Bank of Canada rate to somewhere between 2.5 and 2.75 by the spring uh or early summer of next year um so people taking variable rates will end up with a rate that's that's sub 4% it'll be 3.95 it'll be 3.7 um fixed rates are normally always slightly in excessive variable that's been the history of it it changed when the Bank of Canada uh ran the rates up dramatically um to fight inflation but historically there's always been a Delta of somewhere between 25 and 75 basis points uh in favor of variable rates and I think we'll see that come back we will see fixed rates fall fixed rates fell as low as 3.99 for fiveyear fixed um just as as recently as October and November uh they're back up now but I think we will see them come down again in the late spring yes and on that note it's expected that a 50 basis point cut by the Bank of Canada could happen this week we're speaking ahead of the Bank of Canada decision this week uh Ron what effect does this have on transaction volume if we see rates fall well we've seen transac volume increase on resale as I say nothing can really help the new Home Market the new construction Market but we've seen the effect on resale both in Vancouver and Toronto in uh November and October uh where we saw a decided increase of very lackluster numbers we're still talking about 10year lows but they are actually picked themselves off the floor of 27-year lows uh in those centers and uh there was increased sales activity in uh October and November I suspect when we see a further reduction in the New Year there will be a continued upswing in resale activity in terms of total unit number sold but again it will s likely stay below 10year averages looking ahead now Ron can you comment on uh what um prime minister Justin Trudeau has said in a tweet recently he said there are more than 200,000 short-term rentals across the country like airbnbs or vrb that could be turned into housing so we're giving cities more resources to crack down on those rentals and unlock more homes for Canadians he said this on his ex account recently um what do you what's your take on the government's attitude towards short-term rentals and how they plan to crack down all these it's another nail in the coffit of these tiny condos uh another set of bad news for uh these rental investors uh who were using them as airbnbs in the province of British Columbia short-term rentals like Airbnb are effectively outlawed at the provincial level uh in Montreal and Toronto they're effectively illegal with very limited licensing uh in on the city level uh what the prime minister is referring to is increased enforcement and penalties that may be available through the tax act in the coming year um the reality of of the future for Airbnb in for for just invest vors for people who want to rent a condo like a hotel room um is very Bleak and will continue to be worsen throughout the course of 2025 um and you know the original purpose of Airbnb the stated goal of Airbnb was allow to allow people to rent out rooms in their homes to vacationers and that quickly almost instantly morphed into buy a condo and rent it out like a hotel room uh but cities and provinces have come against that and the prime minister is indicating that he will give more CRA tools to allow people to be more punished for maintaining these airbn p and then let's close off with comparing cities that's a good segue so here's an article um from the uh Financial post UBS uh ranking this is a research from UBS Toronto ranks fifth in world for risks of real estate bubble it further goes on to say that um cities with scores above one are considered an elevated risk ball scores above 1.5 are high risk dorond score fell from 1.21 in 2023 to 1.03 elevated risk in Vancouver on the other hand home prices are higher but income growth has not increased as much while rents have risen sharply but UBS says is now considered a moderate risk so Vancouver less of a risk of a bubble burst than Toronto ing to this report do you agree with this assessment overall it's an accurate assessment uh Vancouver has had Fairly stagnant prices ing for the LA in terms in real estate for the last I'd say since 2017 uh therefore it's not as big a risk of a bubble also again constrained by geography there's only you know there's only so much you can do in Vancouver there will be problems with condos as as you have indicated and that will continue to be true but in terms of the total real estate structure of the city uh it's it's in some ways it's low growth and now that condo construction has slowed down dramatically it will continue to be low growth uh which takes away some of the aspects of the bubble the bubble in Toronto it's it's real for the condominium developers it's very real and it's it's it's it's work in progress we're watching it happen in front of us yeah uh in terms of other parts of the uh resale aspect and the low rise and single family Det less vulnerability because the creation of the product has been so radically cut back there's actually a level of scarcity that's come into play it's um people don't typically think of Canada um as a bubble people who may not be f with the market I mean if you look at this headline only Miami Tokyo and Zurich and Los Angeles are running hotter ing to this ranking I know we've talked about the fundamentals a lot but just in a macro level does that make sense that Toronto was fifth in the world ing to this ranking absolutely absolutely it makes perfect sense uh there's so much exposure to the condo market and if you're looking at the totality of value depreciation that's that has a potential to occur in the next two years is very real and it will impact on the average pricing uh because even though it's a very specific retail C residential category it will impact the totality of the price effect in Toronto there's no question about it okay final question uh Ron uh can you comment on this change in policy here um minimum down payment for a 1.5 million home in Vancouver will be $125,000 after December 15th down payment breakdown I I think down payment rules are changing uh can you comment on this change yeah down payment rules have changed they're coming into effect in just a few days uh the important thing to understand about this though is you still must qualify for the mortgage uh there is still a stress test in place uh through the bank regulator that makes you qualify at a rate that's 2% higher than the actual rate you're getting uh the outcomes of all these things are that to qualify for the maximum home value of 1.5 million uh using the small down payment you require an income a family income of $340,000 so the reality of who has that income no that's a very small number of people so the actual uh you know the the event itself sounds interesting but the reality of being able to use it is very small what's the rationale of changing this from just from the government's perspective the rationale yeah it's it's purely political it's 100% political I mean you know we're having a GST holiday for two months that's uh going to cost retailers about the price of the whole gstd holiday uh we're also funding it through a deficit of about uh you know2 and A5 billion dollars um Everybody agrees totally that the GST holidays insane but uh the government the government has the worst polling numbers in 30 years so they uh they have some work to do you don't think that this minimum down payment uh reduction is going to turn some of the markets around make it hotter a little bit no $340,000 family income uh you know that is not growing on trees and uh fair enough Ron great talk tell us about your work where can we find you uh Butler morg . CA uh Angry mortgage podcast uh very active on Twitter and uh other social media platforms as Ron mortgage guy and uh very very interested in the unfolding events of uh the Canadian real estate market and the Canadian mortgage Market as am I and as we all are thank you very much Ron we'll put the links down below so follow Ron there pleasure we'll speak again soon thank you David thank you for watching don't forget to like And subscribe