Interview With Housing Expert John Pasalis

Opinion

3 minute read

May 1, 2020

It’s not my intention to turn Toronto Realty Blog into a forum for interviews.

But we’re in the middle of a pandemic, and the Toronto real estate market is functioning as a depressed version of its former self.  Sure, I could be providing updates on what’s happening, but when what’s happening is essentially “not much,” I figured I’d look to provide some high-level discussion with industry experts instead.

I do believe that if the Ford government removes the state of emergency on May 12th, we’ll slowly see the market re-open.

Don’t get me wrong, the market is “open,” but you know listings and sales are both down, what, 70%?  What kind of a market is that?  And this isn’t based on an economic downturn; it’s based on a quarantine of society that we have never seen before.

So if the stage of emergency is lifted on May 12th, I think we’ll see a flood of new listings.  I would probably advise a seller to wait a week or two just to let buyers ease back into things, then I would give the market yet another month before it’s back in full swing.

I’m not saying that “full swing” will mean the same level of listings, sales, or prices, but I am saying that the doors will be open, without any obstructions, and that’s what you want in any true “market” of buyers and sellers interacting to exchange goods and services for monetary compensation.

For now, let’s try to keep our minds sharp.  And over the past couple of weeks, the interviews I’ve had and the discussion among the readers that has ensued is exactly what we need, if we want to avoid losing our collective edges.

There are a lot of professional hockey, baseball, tennis, golf, and even NASCAR athletes that are losing their edge.  It’s not easy to keep in shape, physically or mentally, during this time.

I’ve taken to writing a whitepaper, or a short book if you want to call it that.  It’s on sports cards, so I’m sure 98% of the population would find it boring, but ninety-six pages in, I’m enjoying myself, and, I’m keeping my edge sharp.  Writing 8,000 words per day, which is the equivalent of five blog posts, is keeping my fingers in shape and my mind from getting dull.

I commend everybody for continuing to read TRB, watch the videos, and comment below.  I understand that many of you have more time on your hands now, and that’s the reason.  But for those would-be buyers or sellers, or those who pride themselves on being unofficial experts in real estate, you need to keep on top of things, no matter the level of market activity.

That brings me to this weekend’s interview with John Pasalis.

I told John that a few of my readers refer to him as LG, which is short for “Lord God,” and he assumed they were trolling.

“John – I’m serious,” I told him.  “You don’t understand your own celebrity!  People look up to you, and while my readers are clearly kidding around, it shows you just how much they value your opinions on the market.”

I’ve always described myself as an “unbiased real estate enthusiast” who happens to be a real estate agent.  My first slogan on TRB was “Honest Opinions From Toronto’s Real Estate Insider,” and the two characteristics I’ve always touted are honesty and transparency.

If there’s one person in this industry who I think is as much, or even more of those things, it’s John Pasalis of Realosophy.

I think many of the readers would agree, and as is the case with myself, Ben Rabidoux, Garth Turner, or your aunt Jenny from Kingston with whom you’ve listed your downtown Toronto condo, we’re always going to have our supporters and detractors.

But with the way I’ve seen my TRB readers quote John on a regular basis, post links to his articles, and rally around him, he’s the perfect person to sit down with for an interview.

Well then?  What say ye?

I know Chris and Derek are game to ask John a few choice questions.  Guys, call it “fandom” or what have you, but you both rely on his stats, opinions, and outlooks, so what do you want to know from John, now that you have his ear?

Even Ben Rabidoux appreciated Appraiser‘s question last week, which was a hardball, but one Ben answered honestly.

How about the rest of the regular readers?

I’ll post a question thread below.

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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40 Comments

  1. David Fleming

    at 10:07 pm

    Questions For John Pasalis – This Thread Please!

    1. Cal

      at 8:34 am

      The same question as for Ben last week: How far will governments, central banks and their assorted agencies go to preserve RE values? Will they do the proverbial “whatever it takes”? How much does it matter whether they do or don’t?

    2. Mordy Weinberg

      at 8:36 am

      If someone needs to sell a low end condo in downtown Toronto (or any other house or condo) and it could be sold anytime between now and June 2021 – when would you think they would get the best price. What if it needs to sell by December 2020?
      What if it’s vacant and although the sellers can wait – they will have to cover the costs or get a new tenant and sell a tenanted property?

    3. Mordy Weinberg

      at 9:16 am

      I have many more questions that I would love to hear John’s (And yours) thoughts/estimates/guesses-
      Will the market drop before it bounces back and how low will it go?
      Which housing type will drop worst and which will perform best?
      Will we hit buyers market territory ?
      Same questions for the rental market.
      David- here is one that I know you probably have some strong opinions about- What’s going to happen to the pre-construction market? Will people continue to pay above current market value in the hopes and expectations of future profits?
      What about the fact that the rents may compress – making it harder to cover the costs?

    4. Chris

      at 9:40 am

      John, the LG title is definitely more of an endearing joke than a troll! Many of us really do respect and appreciate the work that you do and info you share.

      Assuming the province begins opening up in mid May, how do you see the market responding, through the summer/fall and over the next year or two?

      You sometimes take flak on Twitter, I would say unfairly, for being a bear, or a bull (I think most find your assessments to be pretty balanced). If you had to place yourself on the spectrum from bear to bull and everything in between, given the GTA market’s current prices and fundamentals, where would you land?

      And we all know I’m going to ask for your guess for our game! When do you think the GTA Average Sales Price will re-attain the $910,290 mark, of February 2020?

      1. Francesca

        at 11:14 am

        Continuing on what Chris is asking; seeing that the spring 2020 market will be greatly impacted by the time everything reopens up and people regain confidence in buying and selling, will the summer of 2020 be more active than usual summers? Will it become a buyers summer market or remain a sellers market? Summer time is usually pretty slow with people going away on vacations but if this year people are stuck at home and not travelling even to cottage country they will technically have more time to pursue listings and to sell their house. Or will the market not rebound until the Fall when usual activity normally restarts? I’m wondering how the normal cycle of real estate will be impacted by the psychological effects of this pandemic and the economic ramifications of it.

    5. Adam

      at 10:29 am

      Any insights or advice for first time buyers planning on entering the market over the next 12 months? Specifically, any thoughts on down payment amounts (5% vs 20%) and appraisal risks before closing would be appreciated. Love the blog (David) and thanks to you both for all your input!

      1. Appraiser

        at 12:51 pm

        @Adam:

        If I may chime in here re: appraisal risk. Perhaps Mr. Pasalis can assist me if I miss something.

        Residential appraisal risk is often dependent on the time between buying a property and closing the deal. If the market in-between buying and closing is either flat or rising, appraisals are almost never an issue.

        If on the other hand, the market starts falling after you buy, be prepared to have more down payment available on closing day, such that the loan to value ratio still works for the lender.

    6. Professional Shanker

      at 10:31 am

      What segments of the market will out and under perform on a relative basis for the remainder of 2020 while we work and live under a pandemic?
      -Condos – Will we see condo owners (Airbnb, typical rental market) attempt to list driving up supply? What about demand in highly populated areas? What will happen to the demand from the spec-investor over the few years?
      -GTA Suburbs – Will a experience an increase in demand/speculation as people give thought to more flexible future working arrangements moving forward?

    7. Derek

      at 12:42 pm

      LG (truly a moniker of endearment): How about a general history lesson? Legends say (Old Testament, I believe) there was once a serial annual decline in Toronto house prices (89/90 onward). What happened and what sustained the downward movement for so many years? Are we now happily immune from such multi-year declines for reasons suggested by “Cal” or maybe other factors?

      More specifically, for the foreseeable future, should anyone thinking about a “move-up” even consider buying a new home before selling the existing (detached) home? (answer can be addressed to “Derek’s wife”).

      Cheers and thanks gentlemen.

      1. Derek*

        at 12:46 pm

        *

    8. M

      at 12:50 pm

      Assuming nobody has the ability to time the market, what is the purpose of using stats, and how much can they actually tell us about future price? Thanks!

    9. Libertarian

      at 1:20 pm

      Not a specific question, but more a “topic of conversation”, so David, feel free to chime in on this. One of John’s more controversial themes is when he posts about the role of the investor in the market. When did he start looking into that? How much of an impact does he think it has? What’s the ratio of professional investors to mom-and-pop investors? It is condos and houses equally? Where does he see it going from here? Etc.

      This came up in the comments on Tuesday, which I unfortunately missed. I believe there’s a large segment of the population that owns more real estate than their principal residence. Others disagree, or at least, think that it does not impact the market. I would love to hear both of your opinions on this.

      As always, thank you.

    10. Christopher

      at 7:48 pm

      Do you foresee a scenario where GTA home prices, adjusted for inflation, never again hit the highs obtained pre-corona virus? If so, what odds do you place on this happening?

    11. Jimbo

      at 12:24 pm

      I think either of you could answer this:

      With the government running a $250B deficit and the total debt for the Canadian government not including provinces sitting at $700Bish, soon to be $1T. What are the chances the government starts to psiphoning off real estate gains via tax.

      My question is if the government were to tax gains from the Jan 2017 – Dec 2019 tube period, how much would they have brought in from just the GTA alone. The two calculations I would be interested in are straight 34% tax on profit and 34% tax on 50% of the profit. What percentage of properties do not include a previous sale price because it was bought so long ago.

      If they do create this tax do you see them allowing us to write off real estate fees and land transfer taxes?

      1. Jimbo

        at 12:55 pm

        Darn phone autocorrect was strong on this one

  2. Clive O.

    at 11:04 am

    Same question for me this week as for Ben last week:

    What pieces of data or stats are your go to?

    Which pieces of data or stats do you think are the most important or most accurate in our market?

    Further to this, which pieces of stats or data are the most counterintuitive or prove to be incorrect during a real estate boom?

    Thank you, John and David!

    1. Bal

      at 12:23 pm

      I read on CP24 that C.D.Howe’s business cycle says country has entered in recession…Are we in Recession?

  3. Appraiser

    at 2:10 pm

    As of 2pm today:

    Dow Jones is now off 20% from the peak and re-entering bear territory.

    TSX is -19% and back on the verge.

    The S&P is down 17% and staring the bear down.

    1. Chris

      at 2:32 pm

      Appraiser, why are you giddily cheering on the pandemic? Is it just so you can be right about the stock market? Are you on team Covid?

      (I’m being sarcastic for anyone who couldn’t tell)

    2. condodweller

      at 2:52 pm

      @Appraiser What’s the point of selective market quotes on down days? Are you looking to offload your investment properties and dump the proceeds into the stock market at a 20% discount? Would this be a good bet for airbnb owners now?

      1. Chris

        at 3:00 pm

        I don’t begrudge him posting them much – after all I do the same with real estate. And I don’t interpret it as advice for people not to invest in the stock market.

        As I said to FreeMoney the other day, lots of us selectively post things that support our position. If you read them all, you’ll get a nice wide ranging perspective.

      2. condodweller

        at 3:10 pm

        I just don’t see the point of it. This is a RE blog after all. If the point is that RE is great stock market is bad, especially when he only lists down days and quotes % from the top while totally ignoring % from the bottom makes any advice from him very incredible, or uncredible, or not credible, well you know what I mean 🙂

        1. Chris

          at 3:20 pm

          “If the point is that RE is great stock market is bad”

          I think that’s exactly the point he’s trying to convey.

        2. condodweller

          at 3:33 pm

          I get that, but if you think of it in terms of an investment you know the saying buy low sell high right? In this case that would be sell high buy low.

          I know someone who just happened to lighten on RE and sold a condo prior to the pandemic into the high and shifting the money to the market. Could turn out to be a stroke of genius.

    3. J G

      at 4:40 pm

      Lol, every stock market down day Appraiser is happy. He cheered the initial crash, and when it bounced back In late March, he called it “dead-cat bounce”. Then as Karma would have it, stocks In April had the best Month in 20 years.

      At the end of the day, he thinks investing in a condo is a much better option. I refuse to let him spew this non-sense to young/inexperienced investors.

  4. Chris

    at 2:43 pm

    CIBC with a report on real estate today:

    “it is clear that the housing market will face challenges in the coming 12-18 months. Granted, the unprecedented action taken by the Bank of Canada to lower borrowing costs and inject liquidity into the system is finding its way to lower mortgage rates (Chart 4). But the cost of borrowing is always secondary in an environment of low confidence, increased unemployment, and slower income growth.

    Overall, as the fog clears, we expect to see average prices 5-10% lower relative to 2019 levels, with high cost units in the high-rise segment of the market seeing the most notable price declines.”

    https://economics.cibccm.com/economicsweb/cds?TYPE=EC_PDF&ID=10932

  5. Appraiser

    at 4:33 pm

    Sell in May and go away.

    1. J G

      at 10:14 am

      Any response from condo bulls?

      1. Chris

        at 12:50 pm

        Appraiser initially seemed to claim AirBnB units wouldn’t have much of an impact on the market. Since then, not much. Other than selective updates on interest rates and the stock market, while focusing on bearish talking heads from 10 years ago that were wrong/too early.

        1. Appraiser

          at 6:18 pm

          “But the Advocacy Centre for Tenants Ontario (ACTO) says it may be premature to say whether the rental market is expected to slow down in the post-COVID-19 period.

          And the Canada Mortgage and Housing Corporation, which calculates vacancy rates across the country, has not yet released a report.”

          1. Chris

            at 6:45 pm

            Sure, too soon to say with certainty much of anything about the post-covid world. But for now, the fact is “a surge in listings has pushed the condo rental inventory from one-and-a-half months of inventory (MOI) at the end of March to nearly 4 MOI at the end of April.”

      1. Chris

        at 1:08 pm

        I think more working from home will change the calculation on where to live for a lot of people. It’s one thing to live in a small condo in downtown Toronto if you work there, and need to be in the office every day. If you can work remotely, or only have to occasionally be physically present, I could absolutely see more people opting to live further out. Obviously some will still live in the core, for the social, culinary, entertainment aspects, etc., but others will place less value on these things.

        I don’t agree with you as much on the issue of high inflation. Maybe we’ll get there eventually, but the present danger that central banks are trying to ward off certainly seems to be deflation.

  6. Heather

    at 3:11 pm

    Any thoughts on impact of COVID-19 on the demand for different types of housing? I.e do you expect increased demand for townhomes and single family homes after people go stir crazy isolating in their condos or not having space for an office with two work from home adults?

    As a follow up to that, do you expect first time buyers to stretch themselves more to skip the condo and go straight to house? Does this help houses under $1.5M (and maybe increase demand for homes with income potential like a basement rental)?

  7. peggy

    at 7:01 pm

    I do not currently rent out my potential income property. I know this is a broad topic but how will Covid 19 affect the rental market? Will rents increase/decrease? How will this affect the way apartments are rented out? If you can cover as many landlord/tenant issues as possible, it will be much appreciated, as I know that there are many who have the same questions and issues.

  8. Ed

    at 3:32 pm

    Get the government out of Cdn RE; let the market take care of itself. it is ridiculous that the private profit public loss be applied to RE. Even as far as CMHC, and definitely this applies to the feds not supporting RE as it reels due to Cpvi-19.

  9. Clark Blair

    at 5:52 pm

    Question for John:
    If a home owner were interested in selling his/her property and “moving up” once the market re-opens in the coming weeks, are you advising clients to (1) buy first, then put your condo/house on the market – and hope that the market does not go down in the intervening weeks/months or (2) first sell your house/condo, then buy?

  10. nudeclared

    at 9:19 am

    naturally like your web-site but you have to take a look at the spelling on several of your posts.

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