Rough Start

I recently had the interesting experience of reading the 18th Annual Real Estate Roundtable in the Yorkville Post's April edition. This newspaper is stuffed in my mailbox every few months when they remember. And I like to read a magazine every once in a while. I do like some of the columns in the post, the food and restaurant ones mostly. This time, the cover article was a mega-interview with 10 personalities and a representative of the Post.

It's a diverse cast in terms of job, and some personalities really shine while others look ridiculous. The interview starts without even a question, just a statement from Benjamin Tal, the Deputy Chief Economist for CIBC World Markets. Who proceeds to embarrass himself by trying to make a play on words with the letters T-R-U-M-P. "Everything we need to know about Trump is in the name. His name - THE is for tariffs and taxes, R is for regulations. Now, I had a problem with the U, but then U and M - undocumented migrants. And the P is protectionism. It's all in the name." I mean, what in tarnation is he saying, like it's kindergarten and we're learning how to spell. Tal did have some more interesting things to say later in the interview, but this was a rough start.

Luxury, Condos, and Rentals

The conversation pivots to the luxury market, and there is a key point made by Amanda Lang regarding the bifurcation of society. "The people with money will have more money... [T]he capital is now circulating among the people who have assets, and it's not trickling down to the people who have incomes." This observation is pretty pertinent when looking at how the housing prices seem to only go up. Michael Kalles (of Harvey Kalles Realty) follows up, highlighting that in all of the past "economic crises", the housing price index (HPI) goes up. This is countered a bit by Sebastian Clovis, who observes that there is a slowing in the home improvement market, and that homeowners seems to be asking this of themselves for this first time, "is my house still worth what it was when I bought it?". Clovis observes that this has implications for the mortgage market.

Then a discussion about condos. It's a bit of a whiner-fest. Brad Lamb, "the Condo King" says that lots of cranes have stopped going up in the city, and he can't afford to build condos. Apparently it costs $1,600 a foot to build one of his condos. He needs prices to rise for his condos to be feasible, or the total elimination of HST and all city levies. There is some backing from Tal, arguing that is should be done just to get housing onto the market to deal with immigration and the influx of people. Some cold water is poured, and some truth shared by Brian Gluckstein. "People would buy 20 units at a time from overseas... [W]ho are we building for? Se we have been building so many buildings for investors, not owners and not families. And the problem is that we have apartments that are 300 sq.ft., 475 sq.ft two-bedrooms, where a bedroom is 8x8 ft. You can't fit a twin bed in." To add some perspective, I've been renting in Toronto for the past 3-4 years, and I'd say that it's a obvious to go with a purpose-built rental building. Yes, you have to deal with a management company instead of a single-unit landlord, but that has both pros and cons. One major pro is the size of the unit. The condos as described are pretty miserable living. The space needs to be larger.

The conversation pivots to Adrian Rocca of Fitzrovia. He talks about being one of the few making money on purpose-built rental units, and that mainly due to their vertical integration. They design, build, and manage the buildings. They have their own school that "plugs into [their] young family buildings", and even an integrated food and beverage line. So yeah, they're making money from various streams, and can handle a noted 8.5% decrease in rental prices. Further along, Lamb gets mad a Rocca and Fitzrovia getting tax breaks, but none for the condo makers. Amanda Lang calls him out on that, essentially saying, look at the livability. You're building 450 sq.ft two-bedrooms, Fitzrovia is building 900 sq.ft two-bedrooms. Lamb ends it by saying that Lang is living in a dream world. Classy.

Conclusion

The final point here about money being on the sidelines. People want to buy, but they're waiting. There wasn't a big financial meltdown like in 2008, so the money hasn't disappeared. "[N]o matter when you bought, if you held a home for seven years straight in the last 60, you've made money. So don't treat it like an asset. It's your home."

Overall, I did enjoy reading the conversation, but man, some of the takes we're pretty transparently brutal.