Q&A Session with Housing Analyst, Ben Rabidoux | Episode #4

Videos

2 minute read

April 27, 2020

 

I’ll warn you in advance: Ben and I did a lot of chatting!

This was anything but a rapid-fire interview, but I think that’s what a lot of people want; you’re interested in real, unscripted, off-the-cuff answers, and continuing, uncut dialogue.

So when you see that the first question takes place at 2:52, and the next question at 19:51, there’s a reason! 🙂

Make sure you don’t miss Ben’s take on the regular blog readers too.  It took 41-minutes for Ben and I to disagree on anything, and I find it ironic that we were arguing over a particular blog commenter, who I absolutely love, and Ben, well, perhaps not so much…

Actually, we spent a fair amount of time throughout these two videos discussing the blog readers and their comments, and how incredibly involved our community has become.  I dare you to find another real estate forum on the Internet with as informed, passionated, and dedicated a reader base.

For those of you who don’t have the time to watch a 44-minute video, here are the questions covered, and the times at which they appear so you can skip ahead…

 

Question #1 from Chris @ 2m 52s

I’d be curious about Ben’s opinion on the headwinds and tailwinds he currently perceives for real estate, and where he sees the market going? Bit of a lengthy question, I know.

Oh, also, his guess for our game! When will Feb. 2020 average sales price be re-attained?

 

Question #2 from Graham @ 19m 51s

Who would win a game of Risk: David, Ben, Hilliard MacBeth, Garth Turner, John Pasalis, or Bo Jackson.

 

Question#3 from Clifford 20m 53s

1) If one has to sell within the next 6 months. When is the best time?

2) How real of a possibility do we see buyers getting into trouble with appraisals coming in lower than the sales price within the next 6-12 months?

 

Question #4 from Cal 26m 06s

How important are RE markets for the federal and provincial governments and the related agencies (BoC, OSFI, …)? How much are they willing to do to keep RE prices from falling, or falling too much?

 

Question#5 from J G 30m 20s

Hello, what’s your prediction on the Toronto condo market? The Feb 2020 high was $641k, do you feel it will drop by 20% or more? Thanks

 

Question#6 from Mike 33m 33s

I read Ben’s comments on the rental market last week. Just hoping he can elaborate a little and tell us how much inventory has increased, whether rents have dropped, and what does the trend look like? What’s the impact for the condo market and prices?

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

Find Out More About David Read More Posts

Post a Comment

Your email address will not be published.

93 Comments

  1. Appraiser

    at 10:40 am

    I love you too David.

    Fear not dear friend, for along with being banned from Garth Turner’s blog many years ago, being called an asshole by Ben Rabidoux is both an honour and a privilege.

    1. Chris

      at 11:04 am

      He’s not wrong with regards to the vitriolic comments and general decorum.

      As I’ve said before, we’re debating the valuation of an asset class. Bears and bulls are not static tribes – as prices and fundamentals change, one’s opinion on the asset should necessarily change as well. All else being equal, I’d be bullish on Toronto real estate if prices were lower, just as I’d expect you’d eventually become bearish if prices rose sufficiently, wouldn’t you?

      Many of us could stand to take a step back, take a breath and remember exactly what it is we’re debating, before we launch into personal attacks and rude diatribes. I include myself in this, as I’ve been guilty of it as well.

      1. David Fleming

        at 1:10 pm

        @ Chris

        The decorum on this blog is A++ all way way, on a relative basis.

        See what’s out there on other sites, then tell me that we’re not all behaving like ladies and genlemen. Trust me on this – the reason I don’t moderate comments (ie. click ‘approve’ for each one) is because you guys self-moderate. Nobody swears, nobody name-calls, and the worst you’ll see is something like, “You’re being a dick,” which happens once per month.

        This blog would be very boring without the passion.

        1. Chris

          at 1:28 pm

          On a relative basis, sure, nobody here conducts themselves like the degenerates in the YouTube comment sections, or the Red Flag Deals real estate forum. But that’s a pretty low bar to set.

          And passionate debate is fine. Wouldn’t be nearly as interesting without it.

          However, mud slinging begets mud slinging. Even a couple weeks ago, some discourse just devolved into refrains of “bite me” and other childish quips, from more than one source.

          I think we can all agree that part of what makes this blog great is that commentators don’t stoop to the level of YouTubers – probably best we keep it that way, as much as possible.

          And Ben’s right in that the level of personal offense we take sometimes when someone doesn’t share our viewpoint on investments is odd. If I thought Tesla was a great company, and you thought they were not, are we going to come to insults over it?

        2. condodweller

          at 3:31 pm

          We behave like quire boys David! The exception only confirms the rule. You have a great community here.

    2. Verbal Kint

      at 2:13 pm

      Proud to wear the scarlet letter AND to get the boot? I guess it’s an elaboration of Groucho’s not wanting to be a member of any club that would have him. A misanthrope in a misanthrope’s trade, you are.

      1. Appraiser

        at 2:28 pm

        David was quite correct. This blog has fancier insults, by far.

  2. Derek*

    at 10:48 am

    The “Derek” response to JG (“at least”) on the condo market wasn’t “Derek”. It must be new Derek.

  3. Chris

    at 10:54 am

    Great part one of the interview, David & Ben!

    I figured my question would spark a lengthy response, but 17 minutes was longer than I had thought! No complaints though, it was a very interesting discussion.

    Look forward to part two!

  4. Derek*

    at 11:22 am

    Fun chat guys! Thanks for the content.

    David, or anyone, I have a follow up question that was touched on in the video when trying to get Ben to play the “game”. Briefly, the idea expressed is that there will be a divergence in activity for entry level homes versus “luxury home sales” (David’s phrase) / “high-high end homes” (Ben’s phrase).

    I understand that volumes are always higher in the former category than the latter, but what are the reasons why the high end sales activity would fall off at a higher rate or come back at a slower rate, If, for example, the high end purchasers are likely less impacted by the job and income uncertainties? (assuming that is a fair assumption).

    It just seems like the general assumption is akin to “it goes without saying that high end / luxury activity will be down”, but why is that?

    1. David Fleming

      at 1:08 pm

      @ Derek*

      I don’t know if I can get used to the asterisk…

      My belief is that high-end homes will not be sold at the same level throughout the rest of 2020 because those sellers don’t need to sell. The would-be downsizers and/or Baby Boomers will simply hang on for another year or two. I mean, you made it this far, right? Why sell now?

      You are correct as well that they are less impacted by job uncertainties, since most of them are retired, and/or independantly wealthy.

      The bearish argument will be, “Take a guy who bought for $4,000,000, thinking he can handle the $10k per month mortgage payments, as well as carry his cottage, two cars, and pay for private school for his kids. When the economy gets hit, this guy will have to sell!”

      Yes, that’s a great argument, but only for a small(er) percentage of luxury home owners. There ARE, no doubt, people who own $4M+ and are highly-leveraged and highly price-sensitive. But this doesn’t apply to an overwhelming majority of people over the age of 60.

    2. Not Harold

      at 1:53 pm

      A major item in this price level is that even “forced” sales aren’t that forced.

      Even with deaths, divorces, and business problems, a year of property tax or even mortgage payments can be pretty easy to handle. Creditors know how slow formal processes are normally, and courts are almost entirely closed at the moment. NOBODY wants to crystallize a paper loss that is highly likely to be transitory and the only people bidding now are going to be VERY aggressive about prices.

      So you spend $100-200k to save $500-1.5MM++

      The only massively levered no savings part of this market is with the flippers using wild and crazy private mortgages. That is WILD – the Toronto Life profile on one deal is insane https://torontolife.com/city/crime/bridle-path-mansion-missing-millions-investigation-blew-open-massive-mortgage-scam/

      Otherwise you’ve got people with at least $1MM in equity in their house and very substantial portfolios otherwise. You’re more typically looking at someone who has been in their house for 15+ years and has 80%+ equity on top of $5MM++ in a taxable investment account. Even with a job loss or business bankruptcy selling the house or cottage is not an immediate need but more of a conservative overall cost cutting move.

      Even with the most spiteful divorce you’re not going to get a court order to sell as it’s not an emergency motion and the court is going to treat you like the crazy person you are even when things do start back up.

    3. Appraiser

      at 2:41 pm

      Also good to remember that there a few absolutes. High-end / luxury sales are way down, but in April there have been 2 sales over $4M and one over $5M.

      48 Roosevelt Dr. Richmond Hill sold April 14, 2020, for $$4,282,000.

      1 Proctor Cres. (Bridle Path) sold April 21, 2020, for $4,688,000.

      38 Summer Hill Gdns. (Rosedale) sold April 3, 2020, for $5,495,000.

      1. Chris

        at 3:05 pm

        Here’s some more anecdata:

        Unit 113 – 3900 Yonge St.: Purchased for $729,000 in Sep. 2018, sold for $594,999 April 2020

        4 Laurier Ave.: Purchased for $2,002,277 in March 2017, sold for $1,845,000 April 2020

        116 Douglas Ave.: Purchased for $1,325,000 in June 2016, sold for $1,250,000 March 2020

        As for the ones you posted, a couple corrections and some more info:

        48 Roosevelt Dr.: Listed for $4,698,000, sold for $4,382,000

        1 Proctor Cres.: Initially listed May 2019 for $5,695,000, sold for $4,688,000

        38 Summerhill Gardens: Initially listed Feb. 2020 for $5,950,000, sold for $5,100,000

        1. Not Harold

          at 10:37 am

          Somebody REALLY needed out of 38 Summerhill.

          Would be gorgeous renovated back into a single family but impossible to justify the all in cost given the lot size and location. Maybe the rents just aren’t what they need to be?

          These transactions do demonstrate my point that holding for 9+ months is by far the better strategy for even the most malevolent creditors.

      2. J G

        at 4:16 pm

        Haha, good one Chris.

      1. Chris

        at 5:05 pm

        Your link doesn’t work, just goes to John’s twitter page.

        Anyways, here’s the full quote:

        “The MOI for the GTA based on actual sales over the previous 30 days is up to just under 3.5 months. But when we project last week’s sales out a month, we see that MOI peaked at 4.5 months 3 weeks ago but has since declined to 3.3 months. What’s behind this slight change in momentum. It looks like buyers are (very) gradually jumping back into the market faster than sellers which has pushed inventory levels down. While still early, it’s worth noting that this is the exact opposite trend that I was expecting to see. I did see some early signs over the past 2 weeks when online inquiries from buyers on our site Realosophy.com increased but wasn’t expecting an increase in sales. That said, we are just talking about 2 weeks of data so we’ll need to keep an eye on this trend.”

        1. Chris

          at 5:19 pm

          Scott Ingram also shows that 416 condo sales are down 70% YoY while freehold sales are down 60% YoY.

          Maybe it is the bottom, but sure doesn’t seem to be coming back up with any amount of pace at this point.

  5. condodweller

    at 3:23 pm

    Excellent interview…err…chat David! I actually prefer this format when where a person is given a chance to express their views and more importantly the why and how they arrived at it.

    There were lots of bits and pieces wisdom which are very true that most people probably wouldn’t even think of. Looking forward to the second installment.

    I’m not sure who was the first to have quoted Ben here but I find his opinions very balanced an accurate. He has a very similar approach as I do in that not everything is black and white but rather various outcomes have different chances of occurring.

    I also love his honesty refreshing the way he called out our friendly neighbourhood bull. I wasn’t expecting that.

    1. Verbal Kint

      at 9:17 am

      What’s the relevance of this?

      1. Chris

        at 9:32 am

        As David said, poor people don’t buy houses. And it’s poor people who lost their jobs.

        “It’s quite a comment conceptually. Who cares if low wage people are unemployed and off work for a very long time. Those people were not really homebuyers anyway. As long as there are enough with incomes to buy homes, all good…… what did that French woman say? Eat cake?”

        – Ron Butler, April 27, 2020

        1. Verbal Kint

          at 10:03 am

          So the theory is that demand for the services of (say) the bottom 10% has evaporated, and the economic damage will be limited to them only? The owner of the e.g. restaurant that laid off all its workers is hurtin’, as is the landlord, though neither of them becomes an unemployment statistic.

          Could Appraiser really be such an addlepate as to think otherwise? Surely not.

          1. Not Harold

            at 10:25 am

            Actual economic analysis is BRUTAL. Just as is actual medical analysis (see ventilator rationing, what docs & nurses think of certain procedures, pancreatic cancer diagnoses…).

            Let’s take a look at Cactus Club downtown. They’ve got a HUGE restaurant in First Canadian Place. All of their servers are on CERB. They’re trying to keep some of their kitchen staff going with takeout, same with salaried management. The company will be back but they’re not going to be open June 1 and they’re not going to have anything like their usual summer business. Brookfield is the landlord and they’ll be FINE.

            None of the servers are over 30. None stay more than a few years. They’re all “officially” low income. So yeah – bottom 10-20% get absolutely wrecked as they’re working in industries that are most impacted by stay at home orders and long term social distancing restrictions while also being the most discretionary spending categories.

            But if you want happy clappy economic analysis that cares more about feelings and optics The Toronto Star is over that way, or you can always go hang out with the NDP and Naomi Klein.

          2. Verbal Kint

            at 11:16 am

            Shares of Brookfield’s LP have been cut in half. They have conservative leverage, non-recourse mortgages (i.e. no cross collateralization of assets or liability at the partnership level) and their assets are top shelf — FCP would be in the bottom half if ranked.

            Great portfolio now selling at 1/2 off.

      2. Appraiser

        at 10:09 am

        “Dubito, ergo cogito, ergo sum” ~ René Descarte

        1. Verbal Kint

          at 11:26 am

          “In omnibus linguis culus est” — Me

    2. Chris

      at 9:28 am

      That finding is from TD Economics, not Don Curren – he simply posted it to his Twitter page.

      As for the job losses, I think we’ve all agreed that lower income earners have been harder hit from the pandemic.

      However, that graph is for March only, and does not include April, when there were invariably many more jobs lost.

      Additionally, TD does not make any attempt to quantify lowered incomes . As a CFA commented on Don’s post: “Yea and I could be looking at a 40% cut to my income even if I keep my job. Focusing on the income levels of lost jobs understate the impact on income and consumer spending.”

  6. Appraiser

    at 10:48 am

    Great stuff as usual from Rob McLister over at RateSpy:

    “Today’s Rate Menu: After a three-week hiatus, variable mortgage rates are back down to prime – 0.50% (a 1.95% effective rate, including cash back) in some provinces—but only if you need a default-insured mortgage. The lowest widely advertised uninsured rates remain HSBC’s 2-year fixed at 2.34% and the fully open Tangerine HELOC at 2.35%.”

    I especially enjoyed this nugget of wisdom regarding analysts and deficits v. inflation:

    “…analysts have said this kind of thing for years amid surging government debt/deficits. The issue with this sort of “advice” is that even if it’s true, it doesn’t come with a “take action” date. It’s kind of like predicting a catastrophic earthquake. Eventually you’re going to be right, but you can’t stop living while you wait for it.”

    https://www.ratespy.com/daily-mortgage-report-april-27-042713434

    1. Chris

      at 10:59 am

      He’s talking about huge government deficits sparking inflation. Not really the same as the debate we had here the other day about over-leveraging increasing vulnerability. In that case, sure, you can’t predict the earthquake, but maybe it’d be wise not to build yourself a plywood shelter right on the fault plane either?

      Meanwhile, Rob goes on to state:

      “- tens of thousands of businesses won’t survive COVID
      – North America has essentially erased all job creation since the great recession in 2009
      – a meaningful minority will never get their old jobs back
      – post-COVID, indebted consumers won’t spend like they did pre-COVID.

      Despite the likely spike in real estate activity once home shopping resumes, the recession will work against purchase demand for multiple quarters.”

      1. Derek*

        at 11:28 am

        I’m confused about the conclusion to draw from the “Inflation Nation” section of Appraiser’s link to McLister. A prediction is that eventually inflation could kick in gangbusters, but the follow up comment is that gangbusters inflation is a longstanding prediction missing a defined action plan to compensate. What would be the proper action plan to take to defend against predicted gangbusters inflation if you knew the time to take the action?
        Finally, my first thought when reading the link was that Covid IS the earthquake.

        1. Mxyzptlk

          at 4:01 pm

          With regard to inflation “predictions,” for years I’ve relied on the assessments of Nobel prize-winning economist Paul Krugman, who asserts (because of decades of evidence, not simply his “opinion”) that inflation is nearly always driven by wages, not prices. And does anyone really think wages will be increasing substantially over the next few years (not to say decades)?

    2. Kyle

      at 11:38 am

      @ Appraiser

      I think the earth quake analogy is bang on. Even if bears turns out to be “right” that prices crash, all these warnings of risk and overvaluation have proven to be absolute garbage advice over the long run. If you step back and think about the vast majority of homeowners out there who have done what the bulls here advise (which is to buy for the long term and not over-leverage yourself in doing it), it is quite reasonable to expect that the vast majority of them have become quite wealthy just by paying off the roof over their heads. However i have yet to ever meet anyone in real life that has become fabulously wealthy by avoiding buying real estate. In my experience, they seem to only exist behind online keyboards.

      1. J G

        at 11:56 am

        Pointless comment, that’s like saying there are no super wealthy people who don’t own a car. If a person is very rich, chances are he owns houses and cars.

        That same wealthy person is also probably invested in quality stocks like Amazon, which btw has already hit all time high again last week.

        1. Kyle

          at 11:58 am

          I’m talking about how people get weatlthy, not what they do once they get there.

        2. Chris

          at 12:23 pm

          “If a person is very rich, chances are he owns houses”

          From Statistics Canada:

          “Household total income was also a factor in homeownership. Across all age groups, households with higher annual household total income had higher homeownership rates. In particular, households with a primary maintainer aged under 35 years were more likely to own than rent their dwelling when their annual household total income was $60,000 or more.”

          https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/99-014-x2011002-eng.cfm

          Seems the wealthy buy homes, rather than those who buy homes becoming wealthy as a result.

          1. Kyle

            at 1:21 pm

            You need to have a certain level of income in order to buy a home. This is both obvious and not the point. How many people with sufficient income to buy a home have become wealthy by avoiding buying a home?

          2. Chris

            at 1:54 pm

            “How many people with sufficient income to buy a home have become wealthy by avoiding buying a home?”

            There seems to be two components combining to form your question. You have people who are fabulously wealthy, and people who own homes.

            Obviously there is going to be overlap in this group, as J G alluded to, because many fabulously wealthy people will be homeowners. Just as many fabulously wealthy people will be boat owners; this doesn’t mean boat ownership is a route to wealth, nor is avoiding boat ownership the key to success.

            But as to how many became fabulously wealthy as a result of their home ownership? I guess it depends on how you define “fabulously wealthy”, but if we’re talking about billionaires, well the Forbes link I shared earlier gives some insight – 8.5% earned their riches from real estate.

            “If you step back and think about the vast majority of homeowners out there who have done what the bulls here advise (which is to buy for the long term and not over-leverage yourself in doing it)”

            Isn’t this more or less what almost everyone here, bear or bull, has advised? Be cognizant of leverage, buy what you can afford, carefully consider rent vs. buy and your own personal situation/discipline, own for the long-term, etc.. It’s not as though it has only been the bullish commentators who have suggested this, while those of us on the pessimistic end of the spectrum have had a rabid aversion to any real estate ownership ever.

          3. Kyle

            at 2:06 pm

            All your dancing around is looking pretty sad. At no point was i talking about how people spend their money when they are wealthy, i’m already excluding people of low income that couldn’t afford to buy to begin with and obviously i’m not talking about Billionaires.

            Keep dancing all you want, the answer to everyone else is quite obvious.

          4. Chris

            at 2:16 pm

            “i’m already excluding people of low income that couldn’t afford to buy to begin with and obviously i’m not talking about Billionaires.”

            Then who are you talking about when you refer to the “fabulously wealthy”? It doesn’t seem to be as obvious as you suggest, as both J G and Derek also have questions.

            “What isn’t accurate and fair is telling people day in/day out for years on end (and in some cases decades), that people shouldn’t buy because the prices are over valued and one day it might crash.”

            This seems to be both a straw-man argument, and once again erroneously conflating anyone who holds a pessimistic viewpoint on Toronto real estate. I don’t believe many people here have been suggesting that nobody should buy – rather, as I said above, most of the bears and bulls have had similar advice about prudent decision making.

            “All your dancing around is looking pretty sad.”

            This is more or less exactly what Ben was referring to in the video. Uncivil and uncalled for. And no, this is not “crying about it”, but rather point it out, once again.

          5. Kyle

            at 2:44 pm

            As you are well aware, i tend to agree with David, not Ben. Sometimes i have to drive my points home, cause some people still just don’t get it or more likely choose to be obstinate and feel compelled to bury mine and others posts, regardless of whether they have an actual counterpoint or not. Notice i answered J G’s question and he isn’t persisting on trying to dance around and make it about something that it isn’t?

            “This seems to be both a straw-man argument, and once again erroneously conflating anyone who holds a pessimistic viewpoint on Toronto real estate. I don’t believe many people here have been suggesting that nobody should buy”

            Sorry are you arguing that your advice has been good (which it obviously isn’t) or that when you post day in/day out reams of skewed negative quotes and articles that people shouldn’t take that as advice not to buy?

          6. Chris

            at 3:02 pm

            “Sometimes i have to drive my points home”

            Fully possible without resorting to ad hominems. As most commenters here do.

            “Sorry are you arguing that your advice has been good (which it obviously isn’t) or that when you post day in/day out reams of skewed negative quotes and articles that people shouldn’t take that as advice not to buy?”

            I’m absolutely pessimistic on real estate, and feel it is overvalued, that’s not a secret. And I share quotes and news that support this position.

            But we’ve discussed before that this is not advice for anyone’s personal situation:

            https://torontorealtyblog.com/blog/worst-advice-available-todays-millennials/#comment-71345

          7. Kyle

            at 3:09 pm

            “Fully possible without resorting to ad hominems. As most commenters here do.”

            Most commenters also don’t have someone desperately trying to bury their every post with irrelevant nit picks, pedantics, sematics and no real counter arguments.

          8. Chris

            at 3:15 pm

            Kyle, if you don’t want to debate, feel free not to engage. Nobody is forcing you to reply.

            If you do chose to participate in the discussion, however, try to stick to the topics and questions at hand, and avoid resorting to ad hominem attacks.

            Thanks in advance.

          9. Kyle

            at 3:21 pm

            You are also more than welcome to not reply to my posts, especially if you don’t have an actual counterpoint. Otherwise i guess i just need to keep driving my point home.

          10. Chris

            at 3:36 pm

            I don’t mind replying to your posts. I’m also not getting agitated and resorting to ad hominems in an effort to “drive my points home” though.

            I’ve raised multiple points and questions, which you haven’t addressed, such as what “fabulously wealthy” entails (though you discussed the $1M mark in another comment), the fact that many become wealthy through means beyond real estate, that most bears and bulls have had similar advice on personal situations, etc.

            Happy to discuss further if you like, though I would much prefer to do so in a civil manner.

          11. Kyle

            at 4:16 pm

            You actually haven’t raised a single counterpoint or presented any sort of evidence to the contrary, just more irrelevant nits as always (i.e. What’s your definition of fabulous ?)

            Clearly this thread is done, i’m not wasting anymore time addressing your nits.

          12. Chris

            at 4:23 pm

            I disagree.

            You stated that “fabulously wealthy” excludes billionaires, which seems odd.

            Prior to that, I had shared data showing the majority of this group made their wealth outside of real estate. Your counter to this was personal anecdotes of your neighbours making money through real estate.

            You then tried to again claim all “bears” are equivalent and have been advising people not to buy. I countered this with a post from 2017 clearly showing that is not at all what I have postulated.

            Sorry that you’re unable or unwilling to address the points raised in a civil manner. Have a nice day, Kyle.

          13. Kyle

            at 4:58 pm

            Uh completely wrong, but nice try.

            I make a point about the value of advice to buy home vs advice to not buy home, and you try to take it to the extremes of the income bracket, and the extremes of irrelevance (Billionaires and people who can’t even afford homes).

            “Prior to that, I had shared data showing the majority of this group made their wealth outside of real estate. Your counter to this was personal anecdotes of your neighbours making money through real estate.”

            Wrong again, you shared data that showed higher income people tend to buy houses. This says nothing about whether their wealth originated from outside of real estate.

            One thing i would absolutely agree with you on however, is that people should definitely not consider what you or the other bears post as advice.

            Good day to you

          14. Chris

            at 5:11 pm

            Guess you did feel like wasting some more time, huh?

            “Wrong again, you shared data that showed higher income people tend to buy houses. This says nothing about whether their wealth originated from outside of real estate.”

            Nope, sorry, but you are incorrect again. Simply scroll to my other posts to verify. I posted two different sources, one from Statistics Canada which shows that higher income people are more likely to be homeowners, and another from Forbes, showing the sources of wealth of 400 billionaires in the United States (8.5% from Real Estate).

            On the topic of buying real estate to become wealthy, what you said verbatim was:

            “However i have yet to ever meet anyone in real life that has become fabulously wealthy by avoiding buying real estate.”

            Hence why I brought up billionaires, as these seem to be fairly obvious examples of the “fabulously wealthy”. You then attempted to substitute this data set with your own personal anecdotes of neighbours, and adjusted the benchmark for “fabulous wealth” to a net worth of $1M CAD, including real estate – which would not even qualify as a high net worth individual by most definitions.

            “One thing i would absolutely agree with you on however, is that people should definitely not consider what you or the other bears post as advice.”

            As Ben alludes to in the video, it is inappropriate to offer personal advice on anyone’s situation without a deep understanding of their finances, preferences, goals, etc. So, similarly, people should not consider what you post as advice either. Glad you agree!

          15. FreeMoney

            at 4:52 pm

            @Chris
            “I’m absolutely pessimistic on real estate, and feel it is overvalued, that’s not a secret. And I share quotes and news that support this position.”

            But shouldn’t you (and anyone else posting here) “share quotes and news” that provide factual evidence rather than simply support one’s position? Maybe most of the commenters like the back-and-forth, but I’d prefer enlightenment from all corners rather than parry-and-thrust ad infinitum. A minority position, I daresay.

          16. Kyle

            at 8:35 pm

            @ FreeMoney

            I could not agree more. Above we’ve formly established there’s no actual value to most of the information bears post. It is literal garbage. Even Chris agrees it should not be taken for advice. Even Ben Rabidoux in Part 2 of his interviews says these metrics will throw you off as much as they’ll enlighten. They certainly can’t be viewed as any sort of wisdom. So why on earth would anyone post reams and reams of it, just because it supports his view? All i can think of is some people are super-desperate to finally be right or win an argument and don’t care that they are proliferating misinformation.

      2. Derek*

        at 12:00 pm

        I think your comments are totally on point to a certain extent. While I’m sure there is a spectrum of bearishness, I think that some bears warnings of risk and overvaluation being characterized as “garbage” unnecessarily overstates it. Isn’t there some common ground between some bears and some bulls on the “buy for the long term and not over-leverage yourself” advice? That is not to say that there haven’t been bears advising never buy, the end is near. Perhaps I am being too generous, but my interpretation of the warnings of risk etc. has not been that the “risks and overvaluations” will be the cause of a crash, but that the “risks and overvaluations” increase the sensitivity to a serious negative variable or magnify the impact or consequences of a serious negative variable.

        1. Kyle

          at 2:01 pm

          I disagree, while it is definitely blunt, i think “garbage” encapsulates the value of these warnings quite appropriately. As you said the real advice they should be giving is to only buy for the long term and the real warnings that people should be giving are that earthquakes (i.e. deep recessions, black swan events, etc) could happen and prices don’t rise forever – this is totally accurate and fair. What isn’t accurate and fair is telling people day in/day out for years on end (and in some cases decades), that people shouldn’t buy because the prices are over valued and one day it might crash.

          The warnings of overvaluation are complete nonsense, as there is no evidence of a relationship between whatever it is they deem to cause overvaluation the earthquakes. Let’s all be honest for a second, people who are having trouble paying their mortgage right now would be in the exact same boat, whether they have a 95% mortgage or a 5% mortgage.

      3. Chris

        at 12:06 pm

        “I think the earth quake analogy is bang on. Even if bears turns out to be “right” that prices crash, all these warnings of risk and overvaluation have proven to be absolute garbage advice over the long run.”

        Again, this quote was in relation to deficits and inflation. Not real estate bears. Specifically:

        “There’s not much disagreement that the next several quarters will see disinflation or deflation, and historically low mortgage rates. But be warned, says C.D. Howe’s Jeremy M. Kronick. Despite an inflation slowdown for as far as the eye can see, there will come a bottom. “Canadian financial institutions are not generally using [the] massive increase in their reserves [from BoC asset purchases] to expand lending, which would lead to a commensurate increase in inflation. Should this change, however, such a huge increase in the money supply will eventually be highly inflationary, with more money chasing after a limited supply of goods.”

        I suppose you’re welcome to co-opt it to that purpose, but it wasn’t how it was originally employed by Rob McLister.

        “However i have yet to ever meet anyone in real life that has become fabulously wealthy by avoiding buying real estate.”

        As J G points out, this seems more likely to be correlation than causation.

        From the Forbes 400 for 2019, Finance and Investment billionaires were 23.5%, Technology 17.2%, Food and Beverage 10.2%, Real Estate 8.5%, and so on. So, seems most of the fabulously wealthy did not get rich from real estate.

        https://www.forbes.com/sites/willyakowicz/2019/10/06/how-americas-rich-get-so-rich

        1. Derek*

          at 12:11 pm

          Oh, it dawned on me that if there is gangbusters inflation, the BOC may need to increase the overnight lending rate…. brain fart.

          1. Chris

            at 12:16 pm

            Yep, it would likely lead to increased interest rates. But at this point, deflation seems to be the more pressing concern.

            “What would be the proper action plan to take to defend against predicted gangbusters inflation if you knew the time to take the action?”

            Hold assets. Real estate, equities, gold, etc.

            https://www.investopedia.com/terms/i/inflation-hedge.asp

        2. J G

          at 12:46 pm

          Maybe Kyles definition of super rich is 1MM net worth, which can be accomplished by buying any beat-down semi in GTA and then raise a family. Not exactly a lofty goal tbh.

          1. Chris

            at 1:12 pm

            Ya, I don’t think any rational person would consider a net worth of $1M CAD to be “fabulously wealthy”. Most definitions of high net worth individuals set the floor at $1M of liquid assets.

          2. Kyle

            at 2:11 pm

            You guys are hilarious. Fine let’s use a paltry unfabulous amount of $1m for arguments sake. I know of many, many home owners who have generated at least $1m just by paying off the mortgage. Every street i’ve ever lived on in Toronto is full of them. Meanwhile i know absolutely zero people who have managed to generate even a paltry $1m without ever owning real estate.

          3. J G

            at 4:02 pm

            Yeah and how old are they? Average age 55 who bought 20 years ago?

            Those folks were too busy paying their mortgage/property tax/maintenance, along with raising kids. How much did they really save?

            Ok, downsize from 1.5M home to a 500k house in Guelph. 1M+maybe another 200k in RSP. Canadian dream retirement I guess.

          4. Kyle

            at 4:24 pm

            Fine JG, show me all the 55+ year olds who have accumulated even a paltry $1m by not buying real estate, because i’ve never met one of those either.

            If avoiding buying real estate in Toronto’s overvalued market is such great advice, shouldn’t it have caught on? Shouldn’t examples be everywhere you turn. In fact, shouldn’t there be far less people buying homes, because buying a home would go counter to such great advice? Where are all these wealthy non-owners?

            Let’s be honest the reason we don’t see them, is because they only exist behind keyboards.

        3. Mxyzptlk

          at 5:01 pm

          Sorry, but I’ll take the analysis of a Nobel prize-winning economist (and New York Times columnist) over that of a C. D. Howe economist (see my comment above) any day of the week. I guess we all have to choose who to believe in an area we have no expertise in.

      4. Appraiser

        at 4:35 pm

        @Kyle:

        Those with paid-off principle residences are usually in the best shape to ride out this or any other earthquake.

        Prudent homeowners that burn their mortgages in Canada average 17 years to do so. So yeah it’s a long-term commitment. But not forever.

        1. Kyle

          at 5:02 pm

          Agreed 100%, and those who have completely or mostly paid off mortgages on their principal residences tend to also have had much more financial capacity to also invest in other asset classes and diversify their equity.

        2. Verbal Kint

          at 10:57 pm

          Paid off mortgage? The #1 principle for over a decade has been to unlock home equity and buy investment property that (hopefully) pays its own mortgage.

          I agree that people with paid off homes are in the catbird seat, today. But you’re basically saying “if you’ve been ignoring the industry’s advice for years, paying down your mortgage to save 3% instead of investing in the roaring stock, bond, or urban real estate markets, you’re well positioned to take advantage now!”

          True, but ironic.

      5. Jimbo

        at 10:22 pm

        I don’t understand why you think you would be wealthy by owning a $1 million dollar home. I get that on paper you have $800k in equity or maybe $950k etc, but that doesn’t translate to purchasing power. You can leverage it and buy things on debt. At the end of the day you will still pay interest on the items you buy with that equity. If your house payment takes up 30% of your family income you are probably only buying the necessities.

        That being said, if all you had was this house at age 55 or 60, paid off fully can you live off that equity without at least $50k a year in Income? Maybe for 10-12 years then what?

        You are fortunate to own a home in Toronto where you can make a great living, don’t confuse fortunate with wealthy….

        Even with a $3 million house how long can you live after selling it and buying a $600k condo? You need some sort of income stream coming in, $1.2 million dollars earning 1-2% interest will not take long to burn through.

  7. Ed

    at 5:50 pm

    Hey David, Chris has got the OCD worse than you.

    1. Chris

      at 6:22 pm

      https://www.theatlantic.com/health/archive/2015/02/ocd-is-a-disorder-not-a-quirk/385562/

      Suggest you educate yourself, Ed. Just as you wouldn’t, I hope, call someone “retarded”, it’s quite low-brow to attempt to use the mental disorder of Obsessive Compulsive Disorder as an insult.

      If you have something of substance to add to the discourse, have at it. If you’re just going to throw around offensive slights, probably best you take a step back.

      1. Ed

        at 6:31 pm

        David himself says he’s OCD. I have friends with different degrees of OCD. To acknowledge something does not imply ridicule.

        1. Ed

          at 6:37 pm

          As a matter of fact I always thought that I was OCD too. Not over the top OCD but way worse than most.

          1. Bal

            at 7:18 pm

            Ooops! what the heck happened today…..this place look like a Warzone…Or maybe this is what called Passionate debate…

        2. Chris

          at 6:39 pm

          And I have not been diagnosed with OCD.

          So, for what reason, other than an attempt at ridicule by using a mental disorder, would you postulate that?

          Give your head a shake, Ed. You’re really proving Ben’s point about the lack of decorum.

          1. Ed

            at 6:44 pm

            I just have the impression that you feel obligated to have the last word with every topic.

          2. Chris

            at 7:12 pm

            You’re changing the topic, Ed.

            Using a mental disorder as an attempt at ridicule is poor-form, regardless of how many friends you may have with said disorder, or the fact that you’ve self diagnosed it.

            Next time, maybe take a minute and give your contribution a bit more thought, before you hit “post comment”.

          3. Kyle

            at 8:52 pm

            “I’ve had friends who have contracted and been hospitalized for Covid-19, and while thankfully they have all recovered, it is a very serious illness which nobody should take lightly.”

            After being called out (not just by me) for giddily posting literally 100’s of comments about how bad covid will be and how it will decimate the economy and how we’re going to get a second wave, in the hopes that the pandemic might finally make your stale 5 year old forecast come true. You pulled the “but i have friends defence…”. Seems awfully rich of you to chastise Ed.

          4. Chris

            at 9:19 pm

            No Kyle, that is a false equivalence. You’re reaching now, likely because you’re still agitated from earlier.

            Sharing articles and quotes about the economic impact of the lockdown brought upon by Covid-19 is not the same as “cheering on a pandemic”. Just like I didn’t think appraiser was cheering on the pandemic when he was “giddily” posting about the stock market going down.

            It’s also not at all the same as using a mental disorder as an insult, and then claiming that it was ok to do so because you have friends who have said disorder. That’s more akin to using racial or homophobic slurs, but hey, it’s alright because I have a gay black friend!

            Take a breath, and I’m sure even you’ll be able to recognize how inherently different these are.

          5. Kyle

            at 10:19 pm

            LOL, No one is buying it. And also i hate to say i told you so about taking the hints, but hey i told you so.

            By the way if you want to see good, civil, entertaining debate, you should have a read of the comment section from before you started commenting. Ahh, those were the good old days.

          6. Chris

            at 10:37 pm

            Nope, sorry Kyle. You don’t get to speak for everyone and declare “no one is buying it”. Most rational people should be able to discern the difference between using mental disorders as an insult, and sharing articles about the economic impact of the lockdown. If you can’t, well, that’s not really my concern.

            As for “taking the hint”, I’ll continue to post as I please. You and Ed may not like it, but others like Bal and Wilf seem to appreciate at least some of them.

            I’m sure you did enjoy the good old days, when you could bully people with ad hominems and rude comments, and then “LOL” to your heart’s content.

            Have a great night!

          7. David Fleming

            at 11:15 pm

            Are we arguing about OCD?

            Overshare here…

            I had OCD so bad when I was 12-years-old that I couldn’t go to bed at night without spending 45 minutes working through a “routine.” I remember crying profusely. I didn’t know what it was, or why it controlled me. I didn’t learn what it was until I was 18-years-old, taking psychology in first-year university.

            That form of OCD was a “disorder.”

            Today, I am extremely obsessive, and the compulsion is there in minor forms, but there’s no disorder. My OCD helps me in many ways, including in my business and hobbies.

          8. Mark

            at 11:18 pm

            Ok. To all the bears….. when the “crash” finally does come, it’s the BEST TIME to BUY MORE REALESTATE!! Come out of hibernation already, lol. Seriously though, Canadian government stagnates all of us with WAY TOO MUCH TAXES on our hard earned incomes. Realestate offers some safe
            haven.Canada has no vision. Except when it comes to the BANKS. With the inability to expand any Canadian businesses/industry/ GLOBALLY, what does the future hold. Think about it. Realestate is one of the last solid, tangiable long term investments, that is ALL YOURS, for now and the generations to come. Yes.I.Love
            Realestate. Thanks David, great blog.

          9. Chris

            at 11:27 pm

            David, we’re more arguing about the use of “OCD” as an insult. Glad to hear your condition has ameliorated!

            Mark, as I said earlier to appraiser, bears and bulls are not in tribes for life. All else being equal, if prices decline, I’ll obviously feel real estate is less overvalued, or fairly valued. Just as I would expect all the more bullish commenters would eventually feel it was overvalued if prices kept rising unabated.

          10. Mark

            at 12:32 am

            @Chris, grateful for your SHORT response!l. Opportunity is always there, if it’s something you really want. You make it happen. There is a thousand+ ways to make money, we all do our best, this happens to be a realestate blog….so like I said before, you do you. Just keep it short.

  8. Chris

    at 5:18 pm

    FreeMoney and Mxyzptlk, hope you don’t mind if I respond to you both here in a new comment, just in the interest of making it a bit easier to follow.

    @FreeMoney, I think most people here are sharing factual evidence. Even though appraiser tends to post things that support his position, they’re usually factually correct, especially when coming from a reputable source. But you’re absolutely correct in that most of us preferentially share things that back our horse, so to speak. The more bullish among us share those that point to continued housing appreciation, while the more bearish point to the opposite. Take all of these together, and you’d get a pretty wide perspective.

    @Mxyzptlk, I agree with your posts. I’ve said in other comments that I think the more pressing issue we’re going to face is deflation, rather than inflation. I was bringing up the quote from Mr. Kronick, because that was what Rob McLister made the earthquake prediction quip in response to. McLister’s words had nothing to do with housing bears, but rather was to do with those predicting that continued deficits would stoke inflation.

    1. Mxyzptlk

      at 5:50 pm

      Great, Chris, thanks for clarifying the context. I think I got a little lost following the various threads.

      1. Chris

        at 5:55 pm

        No problem, Mxyzptlk. Can definitely see how the train of comments would get tricky to follow, especially when Kyle and I get into it!

    2. daniel b

      at 1:53 pm

      best analogy i’ve seen so far is: Covid created a giant hole in the economy and no one knows how large it is. Governments have been trying to fill the hole by shovelling dirt into it, or in this case, money. If hole > dirt, deflation and recession, if hole=dirt then goldilocks scenario, if hole<dirt then we get inflation. My money is on the hole is larger than the dirt we're shovelling into it, or more accurately, the hole is larger and going to last longer than our collective appetite to keep filling it with dirt.

  9. Clifford

    at 3:32 pm

    Thanks David. This was an awesome thing for you to do.

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

Search Posts