October 7, 2025 • 53 mins
Tonight on The Brian Crombie Hour, Brian is joined by Ron Butler, one of Canada’s most outspoken mortgage brokers, for a hard-hitting conversation about the surge in power-of-sale and foreclosure listings across the Greater Toronto Area.
Together They Explore:
• Why power-of-sale listings have risen by 20% each month over the past four months,
• How the collapse of the foreign student housing market has left many homeowners unable to carry their mortgages,
• The growing impact of unemployment, rising property taxes, and vanishing private lending options on mortgage defaults,
• What the slowdown in new residential construction means for housing supply,
• And Ron’s bold ideas for fixing affordability – from cutting development fees and taxes on new homes to opening land for much-needed housing.
Ron doesn’t pull punches. If you want to understand what’s really happening in Ontario’s housing and mortgage markets – and what it could mean for you – you won’t want to miss this!
Together They Explore:
• Why power-of-sale listings have risen by 20% each month over the past four months,
• How the collapse of the foreign student housing market has left many homeowners unable to carry their mortgages,
• The growing impact of unemployment, rising property taxes, and vanishing private lending options on mortgage defaults,
• What the slowdown in new residential construction means for housing supply,
• And Ron’s bold ideas for fixing affordability – from cutting development fees and taxes on new homes to opening land for much-needed housing.
Ron doesn’t pull punches. If you want to understand what’s really happening in Ontario’s housing and mortgage markets – and what it could mean for you – you won’t want to miss this!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The views expressed in the following program are those of
the participants and do not necessarily reflect the views of
Saga nine sixty am or its management.
Speaker 2 (00:18):
Good evening, everyone, and welcome to the Brian Cromby Radio.
While what's happening with our housing market is something that
I hear about every coffee, you know, conversation, dinner conversation.
Everyone's wondering what's going on. And Ron Butler of Butler Mortgage,
who's been a mortgage broker for just a few years now,
a few decades, maybe I've posted something recently that was
(00:39):
really quite scary and quite profound, and I thought we'd
invite him on to hear what he's got to say.
So Ron Butler, welcome to the show. Thank you very
much for coming back again. What do you think is
going to happen to housing in the Greater Toronto area.
Speaker 3 (00:56):
Well, we're experiencing some dramatic drops and prices that are
a function of a steep and rapid increase in power
sale foreclosure offerings. That's you know, typically in whatever neighborhood
they occur, they severely undercut the price for the whole neighborhood.
Speaker 2 (01:16):
Power of sale and foreclosure so we've heard, you know,
lots of people talk about, you know, increase of inventory.
We've heard about assignment sales. But power of sale and foreclosure,
that's a new that's a new topic I haven't heard
about before.
Speaker 3 (01:31):
Well, it's increasing at the rate of twenty percent a
month in the last four months. So that's obviously a
very meaningful statistic if something something's going up that fast.
Speaker 4 (01:43):
Give you an idea. I think there was five in
two thousand and two thousand and five, there were five
power sales in one month, the month of I believe
it's a month of August in the whole of the GTA,
and there were about four hundred this month. So it's
(02:04):
a big number.
Speaker 2 (02:06):
Five in two thousand and five, four hundred last month, right,
and that four hundred are you saying that's increasing by
about twenty percent? So that's gone up from three hundred something.
Speaker 4 (02:21):
Well, it goes up constantly.
Speaker 3 (02:22):
I mean we feel that, we feel that September will
kick in twenty percent higher, and then October again will
be twenty percent higher.
Speaker 4 (02:30):
This is just a almost it's an incredible growth in
these forced sales.
Speaker 2 (02:38):
Is this in condos or is this in townhouses or
is this in single family homes or.
Speaker 4 (02:44):
What name it everything?
Speaker 3 (02:47):
It's condos, it's townhouses, it's single family homes. It's actually
slightly higher in low rise than high rise, so it's
slightly higher in you know, towns, semis single family that
it is in condos, But it's prevalent in all all
of them.
Speaker 2 (03:05):
Is it more prevalent in the nine oh five ruths
of the four one six or in specific cities in
the nine to five.
Speaker 3 (03:12):
That's a great question. It is far more prolific in
than nine oh five. And the epicenter today would appear
to be Brampton, Ontario. A bunch of reasons for it,
but I'll give you an idea. There were more power
of sale houses being offered in Brampton than in all
(03:33):
of the rest of the GTA combined. Oh my god,
so sorry, I got to amend that wrong stat So that's
Brampton versus the entire city of Toronto. So Brampton is
five and a half x smaller. So Toronto's five point
five times bigger than Brampton. And yet Brampton had more
(03:54):
power of sale homes than all of the city of Toronto.
Why have a couple of things coming together, But it's
principally the absolute collapse of crooked foreign student community colleges
that the government shut it down. You can't effectively get
(04:15):
a student visa today from another country unless it's like
at a very high level. You've got to be attending
university on a high level program medical or perhaps law
or perhaps not sorry not law, but medical or architecture
or engineering. You've got to be at a very high level,
(04:36):
very important skills that we need to bring to Canada.
But the community college scenario has been wiped out. Those
campuses are actually some of them are going to be closing.
If we take the example of Constoga College in Romans
down ninety two percent, So all of those former students
are leaving Canada. Some are trying to become refugees or
(04:59):
have applied for refugee status, but no new ones are coming,
absolutely none. So in Brampton and about i'd say about
fifty percent of all foreign students were coming from the
Punjab in India, so they had a natural affinity to
live in Brampton. A lot of different relatives there, community
(05:20):
based organizations there, and they lived in houses like people
in Brampton bought houses big houses, like four thousand square
foot homes, single family homes, thirty eight under scarefoot homes,
big ones, and they'd put out like twelve fourteen futons,
sleeping bags, and they'd charge eight hundred dollars a month
(05:41):
to these students to live in this house.
Speaker 2 (05:45):
Are they were sleeping on futons and sleeping bugs? Seriously?
Speaker 4 (05:48):
Absolutely? Yeah. There were some beds.
Speaker 3 (05:51):
I saw pictures of some situations where there's beds all
over the family room. There's beds all there's like multiple
beds crammed into each bedroom. There's beds in the basement,
or there's futons, or there's sleeping bags. There was one
whole room in the house. There's big house, it's four
thousand square feet. I saw a picture of one whole
room devoted to luggage. There was like thirty five different
(06:14):
pieces of luggage piled up from all different types, piled
up in one room. Because these people are they're foreign students.
They just come with luggage and they need a place
to store it. So the collapse of student housing has
now led to the collapse of that whole enterprise. So,
for instance, if you're renting out fourteen spaces in a
(06:39):
large home for eight hundred dollars a month. That's a
lot more than you know, that's a very substantial income.
That's crews and honors to ten grand a month. So
you could easily afford the mortgage payment, you could easily
afford the property tax. But once those students leave and
you're trying to rent it out to a single fare
(07:00):
is one family, or renting out the basement and the
top level to two families, your revenue falls off a
cliff and you can no longer afford the mortgage.
Speaker 2 (07:11):
But inter spadments have come down, in straits have come down.
So can't people afford the mortgage payments more more reasonably
today than they might have in the past.
Speaker 3 (07:21):
Well, they bought these in twenty twenty, they got these mortages,
bought these houses in you know, twenty twenty one, twenty
twenty two. So the mortgage, the value of the house
is falling. Those mortgages were expensive in twenty middle of
twenty two. Towards the through twenty twenty three, they're very
expensive because the student influx of huge numbers of students
(07:43):
was a phenomenon of twenty two and twenty three. There
was in twenty three, one point two four million people
came to Canada. It was an unbelievable increase in population.
Many of those were students. Were told that just Ontario alone,
four hundred thousand students came in one year. I believe
it was twenty twenty three, So that's an incredible run up.
(08:07):
And that's when they bought the houses. They saw the opportunity.
So those were relatively expensive mortgages and in some ways
the property values have come down. So it's this combination
of their revenue's gone away. The ten thousand dollars a
month has gone away, and the mortgage is still there,
the property tax is still there, and the house value
has probably come off about ten or fifteen percent. So
(08:30):
at that point, how you sell your property value is
now very very close to the mortgage amount, and that's
not workable.
Speaker 4 (08:39):
I mean, there's no value left.
Speaker 3 (08:40):
So it makes more sense just to walk away from
the whole proposition.
Speaker 2 (08:45):
And so what happens then, tell me about the process
of either a power of sale or foreclosure. How does
it actually happen?
Speaker 4 (08:51):
What goes on? Great question?
Speaker 3 (08:53):
Ninety nine percent of all these proceedings in Ontario for
residential property as opposed to commercial are power of sale.
It's a specific act in this province. Very simply, the
mortgage holder goes to a judge and says, hey, we're
not being paid, applies to the courts as we're not
(09:14):
being paid, sends the letter to the borrower saying, hey,
you're not paying us. We're going to take the property
back and sell it. About fifty percent of time, the
border just leaves the residence that it becomes abandoned, at
which point the mortgage holder can seize the property and
sell it, or if it has to go through the
whole court process, the judge awards a power of sale
(09:37):
ownership to the mortgage holder, and the mortage holder then
sells the property. I mean that I've really condensed it.
But that's the essence of what happens.
Speaker 2 (09:48):
You mentioned foreclosures as well. How is a foreclosure different?
Speaker 3 (09:53):
Foreclosures almost only ever used in commercial properties. So that
is a process, a court process by which takes much longer,
guaranteed to take a year or more, in which the
mortgage holder can acquire the property for their own use.
So that's the main difference. Under power of sale, you
must sell the property.
Speaker 4 (10:14):
That's the rule.
Speaker 3 (10:14):
Period end of story and foreclosure. You can acquire the property,
take over the property, be given title to the property,
and use it for your own purposes. As I say,
it works best with commercial properties that are rented out
because you've got an ongoing income all the whole time.
Speaker 4 (10:32):
Big danger to foreclosure.
Speaker 3 (10:34):
The previous owner can redeem at any point along this
year and a half process that you've been involved with
the courts, and in reality you can't get your in
most cases, you can't get your legal fees back. So
it's tricky, but some people prefer in commercial situations to
use that process.
Speaker 2 (10:56):
If you're a homeowner and you get this power sale
notice from the mortgage holder and you think there's still
value in the house, what do you do.
Speaker 4 (11:08):
You can absolutely sell it yourself. You can list it yourself.
Speaker 3 (11:11):
You can offer it at a very attractive price to
sell it quickly and once. As long as the mortgageholder
sees that you're serious, the bank or the private lender,
whoever it is, sees you're serious and that you've priced
it correctly, and you're getting showings, you're probably going to
get a chance to sell it yourself. That's the reality
(11:31):
of it.
Speaker 2 (11:32):
Are the mortgage holders the bank's patient enough usually or
not patient.
Speaker 4 (11:37):
There's a lot of rules about it.
Speaker 3 (11:39):
But the way that the power sale works is if
you've bounced to check in seven days of past, bounce
the mortage payment checks seven days of past.
Speaker 4 (11:50):
You can get a lawyer's letter.
Speaker 3 (11:51):
It says, if you don't pay this in another seven days,
we're going to start power sale proceedings. That's possible, that's
not the way the banks work. The bank's always wait
ninety days to give you an opportunity to try to
patch things up.
Speaker 2 (12:03):
It's incredible that you say it's gone from five a
month in twenty two thousand and five to four hundred
last month. We're going to take a break for some
messages and we come back with Ron Butler. We're going
to talk about why. And in his post he gave
four reasons. Let's see what he has to say now,
whether it's the same four reasons or more. Stay with
Zame one back in two.
Speaker 1 (12:22):
Minutes stream us Live at SAGA nine sixty am dot CA.
Speaker 2 (12:42):
Welcome back everyone to the Bran Krumby Radio Hour. I've
got Ron Butler of Butler Mortgage is mortgage broker of
a couple decades experience, and he's told us before that
he's lived through this before in two thousand, sorry, in
nineteen ninety, and so he's got, you know, this unique
experience that he he knows what's happened. And maybe you
(13:02):
can compare, you know, what happened then to what's happening
now and give us a sense of how you think
it's going to impact. But in your post last week,
you gave four reasons why you thought this was all happening.
Maybe you could tell us why do you think this
is happening? Why we got this massive increase in powers
of sale?
Speaker 4 (13:18):
Well other than this unique student.
Speaker 3 (13:23):
Student housing scenario, which is which is very meaningful.
Speaker 4 (13:26):
I mean, it is a big number.
Speaker 3 (13:28):
It is impactful on power sale and particularly in the GTA.
Speaker 4 (13:32):
But let's look at the key reasons.
Speaker 3 (13:34):
If you talk to any bank chief risk officer, they
will all tell you exactly the same thing. What do
you worry about for mortgage defaults? What do you worry
about when you have to take back houses and sell them?
Speaker 4 (13:46):
And the chief risk officer will list three.
Speaker 3 (13:49):
Things unemployment, unemployment, and unemployment. It is the most crucial
aspect of people losing their homes is losing a job,
you can't.
Speaker 4 (13:58):
Make the payments. Now, unemployment in the GTA is.
Speaker 3 (14:02):
One of the biggest rates in Canada, Like in Toronto
the unemployment rates nearly nine percent. I mean, that's a big,
big number and that has a direct impact on people.
The other factors that affect it, that's probably number one though,
But other factors that will affect it is the reduction
in house values. Reduction in house values is a twofold problem.
(14:24):
It means that it's impossible to refinance, even to refinance
with a private lender, because your property is worth less
and it's getting closer and closer to your mortgage amount,
the values approaching your mortgage amount. The other aspect of
that is you're starting to scratch your head whether it's
too important to hold on to it.
Speaker 4 (14:41):
Like if your mortgage.
Speaker 3 (14:42):
Amount is the same as your house value and you're
having trouble paying the mortgage because you lost your job,
you might be saying, well, I guess we could just
give the keys back. I mean, we're gonna have to
find another solution. There's no equity in my house, so
why am I staying? So those are very important features.
We have the issue of private lender or something a
lot of people, many people don't have never used a
(15:02):
private lender, But a private lender is a lender of
last resort. I mean, it's high interest, it's high fees,
but if you're really trying to find a way to
hold onto your house, the private lender, private mortgage can
offer a lifeline. But if again, if the value is down,
or if the private lenders have taken a bunch of
hits on other houses, they pull in their horns and
(15:23):
they're much less likely to want to.
Speaker 4 (15:24):
Offer on anything. And that's another factor we have seen
then that that that's real.
Speaker 3 (15:30):
So there is a bunch of contributory factors, but still
unemployment number one. It's the thing that banks for about
the most.
Speaker 2 (15:39):
You also said you posted people are stopping to pay
property taxes. Why would they do.
Speaker 3 (15:43):
That, Well, it's it's the general unaffordability that exists in
our country today. So you've got expensive houses that you
bought a few years ago, which created big mortgages and
big mortgage payments. I mean, if you had a variable
rate mortgage, your your payments sword if you might have
had a one point four or five rate, you went
(16:03):
to six point twenty five at the worst. So you know,
as we know, people who bought five years ago were
starting to renew. Instead of a one point seven to
nine fixed rate, they're getting a three point nine to
nine rate.
Speaker 4 (16:14):
Now that's not doesn't seem like a.
Speaker 3 (16:16):
Terrible rate, but still it's a big difference in your payments.
We all understand food inflation. We all understand that when
we get our car insurance renewal, it's up eight percent.
It's not up two percent. It's not up three percent,
it's up eight percent, it's up ten percent. We have
this crowding down of unaffordability that just puts pressure on everyone.
(16:39):
And here's one thing nobody comes after you if you
don't pay is your property tax. You don't pay your
property tax. Nobody shows up at your door if you
missed a payment from the city and says, hey, you
better pay. You just get a little letter, hey, please
pay when you get a chance, and then nothing happens.
And then another few months go by. You might get
another letter that's about it. The year goes by. Hey,
(17:01):
you want to try to think about paying us, but
you're never getting any kind of real pressure to pay.
Speaker 4 (17:07):
Hey, So it ends up you don't pay that's it.
Speaker 2 (17:13):
But ultimately this sid's got to do something.
Speaker 3 (17:15):
Now, after three years, the city will initiate a proceedings
to sell your property under tax sale.
Speaker 4 (17:21):
But after three years three years, yes, three years, that's correct.
Speaker 2 (17:25):
What's the interest rate? Do they charge a penalty? Do
they charge an interest rates?
Speaker 3 (17:29):
It's a it's a low interest rate. I mean it's
like a prime plus one or prime plus a half.
It's not a very high interest rate.
Speaker 2 (17:36):
Sounds like that's what everyone that's in trouble should do,
is they should stop paying.
Speaker 4 (17:39):
Their profit tax.
Speaker 3 (17:41):
Sure, except that if you have to renew, your bank's
gonna hear about it. Your bank's going to ask you
to prove your property taxes up to date during that
three year period, and that now you're going to be
in real trouble.
Speaker 2 (17:51):
So yes, that's that's when you That's when you pay
That's when you paid off. If no one's coming after,
that's when you're paid off.
Speaker 3 (17:58):
Well, there's a lot of them not paying, Brian, there's
a ton of people not hand their property tax.
Speaker 4 (18:02):
That's for shure.
Speaker 2 (18:03):
I didn't realize that. Is there a way of tracking that,
Like you talked about foreclosures and powers of sale is
there is there, you know, a rears statement that you
can get from.
Speaker 3 (18:13):
I mean, let's take the example of Brampton. As we
talked about, Brampton's been highly affected by some of these
real estate issues and gyrations and other things. I think
the City of Brampton's owed three hundred and fifty three
million of property taxes right now.
Speaker 2 (18:30):
I'd be fascinating to track to see if it's gone up.
Speaker 4 (18:33):
Well, you can find out it's it's public record.
Speaker 3 (18:36):
They won't tell you who's not paying, They try to
prevent you from learning that, but they will tell you
what the totals are.
Speaker 2 (18:44):
Is is this going to get worse or better before
it's over?
Speaker 4 (18:48):
Oh no, it's going to get worse, for sure. It's
going to be worse. Yeah, it's gonna get worse.
Speaker 2 (18:53):
Why is it going to get worse? How do you know?
Speaker 3 (18:55):
A few process issues like power of sale takes between
six months to a year to get to the point
where you're listing the property of the bank or the
lenders listing the property to say it for sale.
Speaker 4 (19:08):
So you know it's we've.
Speaker 3 (19:10):
Still got a lot in process, right, I mean it
took a whole year to get there, so there's a
whole wave more coming. So we know that much because
they're in the courts right now. We also know that
unemployment isn't going down like there is. There's nobody putting
up a sign saying we're going to open a new
plant of anything. We're gonna start manufacturing exer y and
(19:30):
the GTA and no banks said yeah, we're going to
hire a thousand people to do it anything. You've never
heard seen any of those announcements. You've never heard of
any of those things. We just hear about people getting
laid off. I mean, they shut down one of the
production lines in Oshawa, Brampton Chrysler plants still not open,
silant Is plant and Brampt is still not open.
Speaker 4 (19:51):
Still, there's still nobody working at the Ford plant in Oakville,
no one. You don't hear about any new.
Speaker 3 (19:58):
Sudden growth in business in the GTA other than collection agencies.
Speaker 4 (20:04):
So the reality is there's going.
Speaker 3 (20:06):
To be more unemployment. There's that just makes sense. I mean,
we see issues coming at us every day. Canada Posts
on strike. If you're a small business who depended on
Canada Posts to ship your little packages for you, I
guess you're in trouble because that's gone. If you're a
(20:26):
small business who was depending on the deminimus exemption to
ship goods into the United States, well they've took the
dominimus exemption away nearly a month ago now, so there's
all kinds of people trying to figure out how to
pay duties or become KUSMA compliant. But all those small
businesses are suffering. So I don't see how suddenly employment's
(20:49):
going to take off in southern Ontario. And unemployment causes problems.
Speaker 4 (20:56):
You're paying your mortgage.
Speaker 2 (20:58):
So ron if we've got you know, five powers of
sale in twenty two thousand and five going to four
hundred last month, and you're saying it's going to get worse,
so the power of sale numbers are going to go up,
and if it takes six months, then effectively your four
hundred is what was actually initiated six months ago. So
we're looking at the rear of your mirror. We don't
(21:20):
know what's actually happening today. We know what happened six
months ago, if that's the numbers that you're seeing. So
what you're saying is it's going to get worse. If
it's going to get worse, isn't that going to drive
down housing prices even more, which is going to mean
that it's a vicious circle. And as housing prices go
down even more, it's going to be more challenging for
people to renew mortgages and more likely that they give
the keys back. And so therefore everything you've described as
(21:42):
like a snowball going downhill, getting bigger and bigger and bigger.
Speaker 4 (21:46):
Yeah.
Speaker 3 (21:47):
Look, every economist refers to a recession as a spiral
downwards because all those contributing factors you just mentioned keep
piling on, keep causing worse results, and certainly in the
housing market, because let's face it, it's a phenomenally expensive
(22:07):
housing market, and the GGA it's one of the most
expensive housing markets in the world. It's much our prices
in THEA to at this point, after many house prices
have fallen, are still fifty percent higher than any comparable
neighborhood in the city of Chicago. So we have expensive
house prices here and that's big mortgages in some cases,
(22:30):
and these people feel the pressure of that scenario as
employment becomes more and more shrank, shrinking down the number
of jobs. I mean, look, I would suggest that we've
seen a major drop in prices. By major, I mean
like a rapid drop, like probably four percent in the
(22:51):
last six months in the GTA houses that we didn't
think would go down. We always thought that Central four
one six was untouched, that it might come off a
few percent, but not in any major way.
Speaker 4 (23:03):
We're starting to see.
Speaker 3 (23:04):
Steep reductions in certain areas of Old four one six.
We thought Old one four one six would never be
a problem, but we're starting to see some disturbing trends
in Old four one six just in the last four months.
And that is probably a reflection of the stuff we've
just talked about. And definitely nine oh five is badly affected.
(23:26):
Hamilton is badly affected. We've got some particular counties like
Brock Town of Rock, their prices have dropped fifteen percent
this year so far. Like you know, it's an outlying community, sure,
but it's meaningful that that's big. It was already down
(23:48):
in twenty The prices have gone down there in twenty
twenty four, and they've gone down even more steeply. Some
of this is the effect of power sale, because when
a house has to be sold because a lot of
people offered their house for listings. They just said, I
don't like the price, I'm just gonna take it off listing.
If a bank or a lender is selling your house,
they must sell. That's one of the rules of power sale.
(24:10):
You just keep dropping the price that you sell because
you're not allowed to hold onto the house. Those part
of the rules of the process. So when that house
price hits of the power of sale in that neighborhood,
that's a new comparable and all prices drop.
Speaker 4 (24:25):
That's the way it works.
Speaker 2 (24:30):
What's the way out of this?
Speaker 4 (24:32):
I don't know.
Speaker 3 (24:33):
Prime Minister, get a trade deal with the US. That'd
be a good one. That ain't easy, but that in Ontario,
that's an important way to get out of this. No
province is more affected by the trade war than Ontario.
No province will continue to be affected more than Ontario.
And that's what we're seeing.
Speaker 4 (24:54):
I haven't even thought this is Trump's fault.
Speaker 2 (24:57):
It's the trade war fault.
Speaker 4 (24:58):
No, not entirely, No, not at all. Canada has been
has been in.
Speaker 3 (25:03):
A per capita GDP recession for two and a half years.
I mean, there's a reason why everybody has been feeling.
The Canadians have been here for a long time, but
been feeling miserable in Ontario, that things aren't going well
for them, that things are more are harder and more
expensive and more difficult.
Speaker 4 (25:21):
Is because we've had.
Speaker 3 (25:23):
A we've had stagnant wages, and we've had the last
four years, we've at some points very aggressive inflation. Nobody's
feeling comfortable. And you know that's not just Donald Trump.
He wasn't even around four years ago.
Speaker 2 (25:37):
So years and I've gotten dozens of emails from real
estate agents saying, you know, interest rates are down, the
Bank Canada reduced the rate. You know x y Z
Bank is predicting that that housing prices will increase in
the last half of twenty twenty five. Now is the
time to buy? Are they all wrong?
Speaker 3 (25:57):
This is the last half of twenty five and house prices.
Speaker 4 (26:03):
In August went down. They may go up.
Speaker 3 (26:06):
There may be a slight uptick in twenty sorry in September,
because we've been observing a lot of first time home
buyers have been watching these rate these prices go down,
and they're ready to take the plunge. We've probably done
more preapprovals to the last two months that we've done
in the last sixteen months. So young people are paying
(26:26):
attention to this. First time buyers are paying attention. Sometimes
they're not young, sometimes they're forty as the first time buyer,
but they've been paying attention to the price is dropping.
They might want to get involved. They're taking it a
kind of a closer look. But our price is going
to surge. No, they're not going to surge. They might
tick up a half a percent, a quarter percent in
(26:48):
terms of the value of houses. But you know, I
went through the nineteen nineties, as you said, and some
months were better than others. Some months house prices what
up a touch, and then three months later they fell
back down again. I mean, it's not a static market.
It's not a straight line. But you know, we went
from nineteen ninety one to nineteen ninety six.
Speaker 4 (27:11):
There was no upward movement for those whole five years.
You know, There's little.
Speaker 3 (27:17):
Tiny peaks then go back to valleys, but no big
upward movement for five years.
Speaker 2 (27:25):
If you're interested in buying, if you are a first
time buyer, is this the good time to buy or
should you wait six months?
Speaker 3 (27:32):
I think you'll end up with a better price in
six months. I feel that sincerely. But by the same token.
If some first time buyers are very very specific, I
only want to be in this neighborhood, in this school district,
I want this kind of a home, I want this
kind of a price point. And if you're very specific
about where you're buying, then maybe it's okay. So it's
(27:55):
affordable to you. Now go ahead in a general way.
If you haven't done any of those careful classifications of
what you want and just thinking maybe I should look
into a house now, then yeah, wait six months.
Speaker 2 (28:08):
Are there ways to track powers of sale? Are there
specific websites that focus on powers of sale homes? Can
you get a deal by tracking them?
Speaker 3 (28:17):
Well, some real estate agents track them. They like it's
TREP doesn't run a list for you, Like, there's no
there's no real estate board runs a list of power
sales for you. But there's a number of real estate
agents that will try to put together lists of power
sales in certain neighborhoods and regions. And you just google
it power of sale in Toronto real estate agents who
specialize in power sale and you will find some power
(28:41):
sale properties listed. Now, let's remember these will be these
will represent the market price. So and another consideration is.
If people haven't lived there for six months, they may
not be in great shape. You have to consider that
most power of sale homes are sold as is. In
other words, if you buy it, you get one look
(29:02):
around you. If you're lucky, you may get a chance
to do an inspection. A lot of times the lender
says no, no inspection. You just look at it yourself
and you decide whether you walk around. We're not going
to let a house inspector in. We're trying to do
this efficiently because every time you let somebody in, you
know there's a further possibility that the home might be
damaged because.
Speaker 4 (29:22):
There's nobody there and there's nobody going to be there.
Speaker 3 (29:25):
Like at least for the open house, you go in
and you look around and there's somebody watching here, even
with a lock box on the door. The owners come
back after the appointment to view the house. We don't
have that here. This house is completely empty. So there
are some security issues. So you may not get the
opportunity to do a house suspection, a home inspection, and
(29:47):
you're sure as he's taking it as is. Once you
sign on the dotted line.
Speaker 2 (29:53):
Ron is now a good time to buy or no,
just wait for six to nine months to see where
everything shakes out.
Speaker 3 (30:00):
I mean, I again, if you have a compelling need,
if you've just had triplets and you feel a compelling
need to buy a home, this is a lot better
time than twenty twenty one, that's for sure. It is
much better time to look. But if you can be patient,
I feel strongly there'll be better prices in twenty twenty six.
Speaker 2 (30:21):
And you're saying the same thing for condos, for townhomes,
for duplexes, and for singles.
Speaker 3 (30:27):
Let me break out the condos separately. You might wait
to twenty twenty seven to find the bottom of condos.
I mean, condos have a lot, a lot of issues
associated with them that we haven't covered here. But I
would say for low rise, you know, townhouses, semis, single family,
there are some bargains out there. But in a general way,
(30:49):
I would say there's still a room for those prices
to come down in twenty twenty six, but condos condos
could keep going down for another year and a half.
Speaker 2 (30:57):
So you said there was a four percent decline, Is
it four percent decline the bust of a bubble that
people have been talking about for years or is that
just a small decline, you know.
Speaker 3 (31:07):
I think it's fair to say if we look from
peak to trough, the peak of southern Ontario's housing market
was March.
Speaker 4 (31:14):
Twenty twenty two.
Speaker 3 (31:16):
In nine oh five, in a general way, we're off
twenty five percent.
Speaker 4 (31:22):
From the peak and continuing to head down.
Speaker 3 (31:24):
It wouldn't surprise me if it bottomed out at thirty
percent or more for the nine oh five.
Speaker 4 (31:29):
I think for four one.
Speaker 3 (31:30):
Six it'll bottom out at about sixteen or eighteen percent.
Speaker 4 (31:35):
But these are major drops.
Speaker 3 (31:37):
And by the way, the four one six didn't go
up that much in the frenzy of twenty twenty one.
It was really the suburbs went up the fastest, the highest.
Speaker 2 (31:47):
The most fasting. Conversation about the real estate market. I'm
gonna take a break and come back in two minutes
with Ron Butler of Butler Mortgage is I'm going to
ask them about housing starts, because we've got this other
factor that's happening that at the same time, people aren't building.
Stay with us one back in.
Speaker 5 (32:04):
Two minutes, No Radio, No Problem stream is live on
SAGA ninety sixty am dot CN.
Speaker 2 (32:25):
Welcome back everyone to the Bran Crumby Radio R. We've
got Ron Butler of Butler Mortgages with us today. We've
been talking about power of sale. We've been talking about
house price declines. We've been talking about unemployment, house prices
going down, people not paying taxes, property taxes. It sounds
like it's a big problem. But Ron, at the same time,
I understand that we're not building homes. Building starts are
(32:49):
down dramatically, Condos are not being built at all unless
they're already in the ground and half constructed. We're talking
about layoffs in the building industry. So if we're not building,
we're going to be short supply in the future, aren't
we And so therefore shouldn't housing prices rocket ship up
(33:09):
in a couple of years?
Speaker 3 (33:12):
Great question, There is no doubt, no, absolutely, factually the
new construction of residential properties to buy is just cataclismically
down in Ontario.
Speaker 4 (33:28):
I think the.
Speaker 3 (33:30):
Low rise that single family townhouse semis. I think it's
fair to say that's off eighty six percent.
Speaker 2 (33:38):
Or more eighty six percent.
Speaker 3 (33:41):
Sure, we don't know of anybody who started a new
low rise project in the whole GTA. I mean, this
just doesn't exist. There are purpose built rentals being built,
and there's not one single condo tower has started, with
the exception of just for owner occupied but you know,
(34:04):
in other words, it's a luxury condo tower. But essentially
there hasn't been a new condo started in all of
southern Ontario probably for sixteen months. There's a bunch of
towers being completed, as you just mentioned, there's still cranes
in the air, there's still properties getting finished. Those were
all purchased several years ago, three four or five years ago.
(34:27):
There are rentals being built. Purpose built rentals are being
built throughout southern Ontario. There's a huge push by CMHC.
It was a very very good program to encourage purpose
built rentals. It's got great attributes and there's a ton
of it going on. And some of the people who
were going to build a condo when the bottom fell
out in twenty twenty three, they switched them to purpose
(34:49):
built rentals. They just had the zoning changed and they
switched to and started building purpose built rentals. But homes
to buy are in a just not building any in
southern Ontario. It's a number that's so small it's not
worth talking about. It's easier just to frame it as
stopped for brand new homes to buy.
Speaker 2 (35:11):
So you and I chatted a couple of years ago
about the CMAC calculation that we needed three point five
million additional homes to have any kind of reasonable amount
of supply and supply that would be then affordable. If
we're not building at all, we're going to be short
supply and this housing price declined should turn around dramatically.
Speaker 3 (35:32):
No, there's a real possibility of that. But there's a
countervailing situation that hasn't happened in Canada before Stats Canada
publish this data that they believe in twenty twenty five,
there will be virtually no population growth. There will be
no immigration growth in Canada, and that means no population
(35:53):
growth because we have a fertility rate that we don't
replace ourselves. Our fertility rates gotten to the points one
of the lowest amongst the lowest in the world. It's
approaching that I like Japan and South Korea's extremely low
one point three to five should be two point one.
So we're not having any kids to replace ourselves. Therefore,
(36:13):
if immigration reverses, like all these students who are going
back the federal government's push to have refugees sent home,
temporary foreign worker greatly reduced sex. Can themselves says there's
going to be no population increase in twenty twenty five
or negligible like zero point six percent, and they predict
(36:35):
that in twenty twenty six there may be negative population
growth as more refugees go home, more temporary workers go home,
and very very slow, if not zero growth. So if
there's zero growth in people, will you really need a
bunch of new home stuff, Yes, you do, because some
old decrepit homes just need to be replaced and people
(36:56):
don't want to live in something that's really in bad shape.
Speaker 4 (36:58):
We got all those factors.
Speaker 3 (37:00):
Sure, you need new homes, but you know, we're used
to very spectacular growth in Canada for the last ten years,
particularly in the last several years, and that just may
me not be there. I mean, our own government's telling
us and won't be there. So that's a different situation.
Speaker 2 (37:18):
So, you know, a couple months ago you talked to
me about how Toronto was a high cost housing environment
and that there's no neighborhood in Chicago that you could
buy that you could buy in Toronto for the price
that's available in Chicago. As an example, and I've seen
this myself in the United States, where there's incredibly beautiful
housing available at you know, half the price of what
(37:39):
a comfortable house in Toronto would build for, whether it
be in Chicago or not. Maybe Manhattan, but the suburbs
of New York, Dallas, Texas for sure, Florida as well.
We're housing is you know, eight times income, five times
income versus here it's twelve to fifteen times come and
(38:01):
so it's it's it's a whole different sort of story
in the United States in regards to housing.
Speaker 4 (38:06):
So for housing is.
Speaker 2 (38:07):
Very expensive in the United States. It's expensive in Canada
versus state in the United States, or at least expensive
in Toronto versus the United States. Is all this good?
Is this actually positive?
Speaker 4 (38:17):
What's happening in a way?
Speaker 3 (38:19):
Yes, you know, lower house prices would be a phenomenal
benefit to the young people of southern Ontario. Like I'm
I can't tell you how great a benefit that would be.
Lower rents are a great benefit to all the renters
in southern Ontario, all of Ontario. They're a phenomenal it's
a phenomenally better thing at lower prices. But you know,
(38:43):
to get close to Chicago prices or Houston prices, or
any of those prices. We've actually got to come down.
We've come down about twenty five percent in the suburbs
in the nine oh five. We'd have to come down
another twenty or twenty two percent, and that would sort
of severely impact on some people's financial situation. So I
(39:05):
can't really say that's something we should wish for, but yeah,
it would be great if house prices didn't continue to
come down. It would be great if house prices at
least stabilized so that wages could keep up for a
number of years, could increase for number of years, and try.
Speaker 4 (39:19):
To catch up. All those things would be good.
Speaker 3 (39:22):
But particularly we should look at our municipal governments to
say we need radical change in the amount of money
you want out of new housing developments. You know, it's
thirty percent in most municipalities. Now, Vaughan has reduced that
by eighty percent. Mississaug has reduced it by eighty percent. Interestingly,
(39:43):
not much reaction. There's been no sudden influx of new
projects into either one of those locations.
Speaker 4 (39:49):
But it's a good idea.
Speaker 3 (39:51):
It's an important idea that these development fees have to.
Speaker 4 (39:55):
Come way down.
Speaker 3 (39:56):
In the southern Ontario, particularly in the cities of southern Ontario,
it's thirty percent of every new home is government. It's
the share government takes. And if you if you compare
that with the nineteen eighties, government was taken about three
thousand dollars out of every new home, so in in
(40:19):
some cases it's three hundred thousand now, So it's a big,
big issue.
Speaker 2 (40:23):
One hundred thousand dollars in development fees and taxes.
Speaker 4 (40:26):
Seriously, sure on a good sized single family home.
Speaker 3 (40:28):
Yeah, one hundred percent absolutely provable between two hundred and
eighty eight and three hundred and twelve thousand the City
of Toronto, that's what it would be.
Speaker 4 (40:37):
Absolutely. So, yeah, we.
Speaker 3 (40:39):
Got some work to do. And let's face it, why
in the world is the federal government still charging GST
on new homes, Like, I can't tell you why. It
doesn't make any sense to me. You know, don't you
want people to build new homes at a reasonable price.
There's a lot of times that the government comes back with, well,
(40:59):
if we were doing the tax then the builders would
just make more profit. Well, I got news for the
federal government. The builders are closed. They're closed, they'll do
anything today to get a sale going, to get a
new development going. If you're closed, you're not interested in
gouging profit, You're interested in survival. Just give me a
chance to build a house so I can keep my
people working. That's the reality of it today.
Speaker 2 (41:23):
Today I chatted with Richard Lyle, the president of the
Residential Manufacturers Association or Council of Ontario, and he thought
that there was twenty five thousand layoffs in the building
industry already and it's going to accelerate.
Speaker 3 (41:38):
What do you think dead right? I think he's on
the low side. I think it's closer to thirty thirty
five thousand already. And what we should realize is for
many of these condo projects, when one when the developers
or when the crews complete one condo, they send crews
to the condos that are still being built. In other word,
(42:00):
normally you would build with say one big crew, and
then okay, well we can build a little faster if
we bring in the other crew because they got no
new condo to start with, so let's go faster and
finish this project faster.
Speaker 4 (42:12):
And that just means that.
Speaker 3 (42:13):
Eventually there'll be more people laid off all at once.
If you've got three crews working to finish a building,
it goes quick. But when the building's done, there's no
new building. So that's three crews laid off.
Speaker 2 (42:26):
So Ron, what do we do? If you were sitting
down with our premier or prime minister, a minister of housings,
what would you tell them?
Speaker 4 (42:34):
We got to do.
Speaker 3 (42:37):
Development fees to zero, get all of the all of
this tax burden that you've laid on first time home
buyers in many sectors. It's not just here, it's in
British Columbia as well. Get rid of it. Just get
rid of it. And then finally, Premiere forward, try to
find a non corrupt way to open up the green belt.
(42:59):
Try to find an on proper way to open the
green belt up, because let's face it, if you actually
drove around the green Belt, you'd find out that a
lot of it's just the brown belt. It's just a
bunch of it's not farms, it's not watershed, it's just
some scrub land that could be turned into housing instantly.
(43:20):
And I could go into eliminating all the ridiculous number
of reports you need, all the bizarre environmental studies that
are required to slow everything down. But there's so much
government could do. I could lay almost every problem in
the housing business at the foot of various levels of government,
because everything they've done over the years has largely been
(43:43):
an error.
Speaker 2 (43:44):
I've been told that we're building homes approximately the same
way we did fifty years ago. Shouldn't there be some
technological improvements, some productivity improvement in house building?
Speaker 3 (43:53):
Well, I can assure you in the high rise condo space,
we're not building them like we did years ago. We
operate a very modern, very efficient, very effective and fast
condo building space, and we could have a much more
effective and efficient low rise home building, townhouses, single family
(44:15):
space too, Except we've layered on so many rules, so
many environmental concerns, so much our value, so many extra
pivots on like we are running in Ontario, we run
more our value, more insulation than they do in the
Arctic Circle of Norway. Like our building codes are more
(44:37):
aggressive on that than that does that it exists in
the Arctic Circle. So yeah, we've sort of lost our
minds on over regulation. And that's some of the reasons
why housing is so expensive, particularly low rise housing. But no,
our condo builders are amongst the top builders.
Speaker 4 (44:55):
And trades in the world.
Speaker 3 (44:56):
We could throw a building up just as fast as
they can in Manhat and we're very efficient at it.
Speaker 2 (45:04):
Our new Prime Minister has talked about prefab manufactured housing
and the government played a role in that. Does that
make any sense?
Speaker 3 (45:11):
No, it's totally stupid. It's absolutely ridiculous. They should just
shut down the whole agency now before they hire more
people build Canada homes.
Speaker 4 (45:18):
Just shut it down. It's absolutely stupid, stupid.
Speaker 3 (45:23):
Well, first of all, private enterprise tried it and a
very brilliant man, Peter Gilgant and Madame Holmes, tried it
fifteen years ago. And he is a brilliant builder and
he has started his life as an accountant that he's
meticulous about the numbers. And at the end of his
attempt at modular homes, he says, this does not work.
It's not cost efficient. It's more expensive to do modular.
(45:45):
So and you know the Prime Minister would say, oh, well,
everything's changed in fourteen years.
Speaker 4 (45:49):
Not really. The only thing that's changed is.
Speaker 3 (45:52):
That your former employer, Brookfield, owns one of the biggest
modular home companies in the world, and that might have
something to do with it, but it doesn't make any sense.
Our builders can build again, particularly in the high rise space.
Our builders can build as efficiently as anybody in the world,
and more efficiently than the modular.
Speaker 2 (46:13):
There's been this big controversy about three plexes or six plexes.
Do you think that that's a potential solution to the
problem is having as of right, six plex development everywhere
and anywhere you want.
Speaker 4 (46:25):
Yeah, I'm pretty good with it. Actually.
Speaker 3 (46:27):
I know that there's some situations where people find it's
very disturbing to the neighborhood, but I don't have a
lot of problems with it. I think it's got to
be rational based on the size of the lot.
Speaker 4 (46:39):
And they've made some mistakes in some jurisdictions.
Speaker 3 (46:42):
For instance, in British Columbia, their building code allows for
three stories with this kind of multifamily kind of operation,
and three stories stands out like a sore thumb in
any neighborhood. But in Ontario we are restricted to two
stories except along business like pure commercial streets associated with
(47:03):
transit lines. Like you know, if you want to build
on the dan Forth one of these things, you could
build five stories, but that's the commercial building. But in neighborhoods,
you could ever go past two stories here, it won't
look out of place. I can tell you in my
own in my own neighborhood, they could start building three sects,
three plexus in a minute. In Mississauga, I mean it's
these are big lots. They're fifty fifty five foot lots.
(47:23):
You can just start building right away three plexus. Everybody
will be fine with it. Don't get me wrong. Nimbis
would cry and moan, but it may just make sense.
Speaker 4 (47:31):
They're big lots.
Speaker 3 (47:32):
You could fit a three plex on it for sure,
So I'm pretty much in favor of that. The danger
is in many locations in the city of Toronto, if
you build a four plex or six plex, it's all rental.
Speaker 4 (47:44):
It's all rental.
Speaker 3 (47:45):
Nobody there's no such thing as a four unit condominium corporation, right,
I mean, it's just too hard. So they'll We're gonna
have to start asking ourselves a very very important question.
Speaker 4 (47:55):
In Canada, particularly in big cities.
Speaker 3 (47:57):
We're gonna have to ask the question of have we
given up on people owning homes? And if that's true,
shouldn't we at least ask them, like if all these
programs they build Canada homes, Carneyville modular yurts, or all
this six plex stuff in all of these different municipalities.
(48:18):
It's probably okay, But shouldn't we just not the yurts
that Carneville's modular homes is terrible, but some of this
other stuff is fine. But it's all rental. So shouldn't
we be truthful with young people? Shouldn't the government's at
all levels go to young people and say, listen, we're
gonna stop building.
Speaker 4 (48:36):
Homes for you to buy. You're gonna have to rent.
Speaker 3 (48:39):
For the rest of your life because that's the general
economic direction we're taking. That's the housing orientation we're developing
in particularly big cities.
Speaker 4 (48:49):
And shouldn't we ask somebody.
Speaker 3 (48:51):
Shouldn't governments say I just want to level with you
and tell you the truth. We're only going to build rentals.
We're only gonna support rentals for now on. We're gonna
have great programs for rentals. But we think home ownership
is passe. So government should be honest with people. Start
being honest with young Canadians. If that's the way you
look at it, just say it out loud.
Speaker 2 (49:14):
Ron That would be you know, taking away that the
dream of home ownership from a whole bunch of young people.
If you didn't want to have to say that you
wanted to keep the dream of home ownership alive, what
would we need to.
Speaker 4 (49:26):
Do do all those things?
Speaker 3 (49:29):
Get rid of all the crazy, super expensive development fees,
the thirty percent of the cost of a home going
to the government, get rid of all that open up
the green belt, pull back for all the crazy regulation.
Did anybody ever ask whether it was a good idea
that we should have more insulation in our homes than
people in the Arctic circle?
Speaker 4 (49:48):
Like I mean, did anybody ask those questions?
Speaker 3 (49:50):
That was just decided for us by others, and those
layer on costs and expenses. I'm not saying have no insulation,
that's stupid, But most of us live in homes today.
If we live, if we live in a low rise home,
its was built many years ago, and it works, it works,
and it was built for a much lower cost or
square foot. It was much easier to build it. And
(50:12):
why have we added on all of this regulation, all
of these extra costs.
Speaker 4 (50:18):
Why did we do it? Did anybody have a vote
about it?
Speaker 3 (50:21):
Did anybody go to governments and municipalities and provincial governments
that say, hey, do you not ask us that we
want to have some of the most complicated and expensive
homes to build in the world and the best our value,
our value better than Norway's. I mean, can we talk
about that some of the stuff has been all crazy
(50:41):
stuff laid at the altar of.
Speaker 4 (50:44):
The environment.
Speaker 3 (50:45):
Okay, nobody stops to nobody knows this virtue, nobody ever
knows this. But we have an industrial carbon tax on
all that concrete that goes into forums and goes into
building condos or building purpose built rentals. We're at We
have we have required the concrete companies to adopt environmental
(51:09):
protection systems, climate oriented systems that make the concrete even
more expensive than in many other jurisdictions in the world.
So there's people things people don't even understand about how
we've added layers of cost to building homes. It's kept hidden,
it's kept hidden by the government. Uh.
Speaker 4 (51:27):
Just yes.
Speaker 3 (51:27):
Just last week the Prime Minister insisted the industrial carbon
tax was a great idea, but it costs us money
every single day. You know, these are things we could change,
but we doesn't look like we're going to change them.
Speaker 2 (51:41):
Ron Butler Butler Mortgages. I really appreciate you joining us
today and talking about this housing crisis that we're in
and uh and and frankly, I think what you're saying
is is it's going to get worse before it gets better,
that that now is not a great time to buy,
that maybe watch very closely and and sometime in the
next year might be a great time to buy. But
(52:02):
now it's not that the housing prices are going to
come down. That it's not just in condos, it's it's
in every aspect of the industry. And if we don't
do something from a government action standpoint, we're real at
risk of having no starts or very low starts and
massive layoffs. And if we have more assive layoffs in
the housing industry, that's only going to make it worse,
(52:23):
because it's going to be another vicious cycle of having
more unemployment and more people having challenges making their mortgage
payments and proper text payments. And there's gonna be more
powers of sale. If there's a power of sale of
a great house in your neighborhood, run promise you'll call.
Speaker 3 (52:41):
Me, Well, my neighborhood's your old neighborhood. So yeah, I promise,
I'll tell you.
Speaker 2 (52:47):
That's why I'm asking, buddy, That's why I'm asking.
Speaker 4 (52:49):
That's our show.
Speaker 2 (52:49):
Fina and everybody, thank you for joining. I remind you
online every Monday through Friday at six o'clock on nine
to sixty am. You can streaming online at Triple WSUG
and nine sixty am dot ca. A. My podcast and
videos go up on my website Briancromby dot com, social media,
YouTube channel and podcast service as soon as the radio
show goes to air. I think this is a really
interesting conversation one that we need to have because I
think as a society we're failing our young people. And
(53:13):
if there's one thing that we're supposed to do in life,
it's to make the world better for our kids, and
we're not doing that anymore. And we've got to get
our act together. And so Ron Butler, thanks so much
for joining us.
Speaker 1 (53:29):
Stream us live at SAGA nine six am dot CA.
The views expressed in the following program are those of
the participants and do not necessarily reflect the views of
Saga nine sixty am or its management.
Speaker 2 (00:18):
Good evening, everyone, and welcome to the Brian Cromby Radio.
While what's happening with our housing market is something that
I hear about every coffee, you know, conversation, dinner conversation.
Everyone's wondering what's going on. And Ron Butler of Butler Mortgage,
who's been a mortgage broker for just a few years now,
a few decades, maybe I've posted something recently that was
(00:39):
really quite scary and quite profound, and I thought we'd
invite him on to hear what he's got to say.
So Ron Butler, welcome to the show. Thank you very
much for coming back again. What do you think is
going to happen to housing in the Greater Toronto area.
Speaker 3 (00:56):
Well, we're experiencing some dramatic drops and prices that are
a function of a steep and rapid increase in power
sale foreclosure offerings. That's you know, typically in whatever neighborhood
they occur, they severely undercut the price for the whole neighborhood.
Speaker 2 (01:16):
Power of sale and foreclosure so we've heard, you know,
lots of people talk about, you know, increase of inventory.
We've heard about assignment sales. But power of sale and foreclosure,
that's a new that's a new topic I haven't heard
about before.
Speaker 3 (01:31):
Well, it's increasing at the rate of twenty percent a
month in the last four months. So that's obviously a
very meaningful statistic if something something's going up that fast.
Speaker 4 (01:43):
Give you an idea. I think there was five in
two thousand and two thousand and five, there were five
power sales in one month, the month of I believe
it's a month of August in the whole of the GTA,
and there were about four hundred this month. So it's
(02:04):
a big number.
Speaker 2 (02:06):
Five in two thousand and five, four hundred last month, right,
and that four hundred are you saying that's increasing by
about twenty percent? So that's gone up from three hundred something.
Speaker 4 (02:21):
Well, it goes up constantly.
Speaker 3 (02:22):
I mean we feel that, we feel that September will
kick in twenty percent higher, and then October again will
be twenty percent higher.
Speaker 4 (02:30):
This is just a almost it's an incredible growth in
these forced sales.
Speaker 2 (02:38):
Is this in condos or is this in townhouses or
is this in single family homes or.
Speaker 4 (02:44):
What name it everything?
Speaker 3 (02:47):
It's condos, it's townhouses, it's single family homes. It's actually
slightly higher in low rise than high rise, so it's
slightly higher in you know, towns, semis single family that
it is in condos, But it's prevalent in all all
of them.
Speaker 2 (03:05):
Is it more prevalent in the nine oh five ruths
of the four one six or in specific cities in
the nine to five.
Speaker 3 (03:12):
That's a great question. It is far more prolific in
than nine oh five. And the epicenter today would appear
to be Brampton, Ontario. A bunch of reasons for it,
but I'll give you an idea. There were more power
of sale houses being offered in Brampton than in all
(03:33):
of the rest of the GTA combined. Oh my god,
so sorry, I got to amend that wrong stat So that's
Brampton versus the entire city of Toronto. So Brampton is
five and a half x smaller. So Toronto's five point
five times bigger than Brampton. And yet Brampton had more
(03:54):
power of sale homes than all of the city of Toronto.
Why have a couple of things coming together, But it's
principally the absolute collapse of crooked foreign student community colleges
that the government shut it down. You can't effectively get
(04:15):
a student visa today from another country unless it's like
at a very high level. You've got to be attending
university on a high level program medical or perhaps law
or perhaps not sorry not law, but medical or architecture
or engineering. You've got to be at a very high level,
(04:36):
very important skills that we need to bring to Canada.
But the community college scenario has been wiped out. Those
campuses are actually some of them are going to be closing.
If we take the example of Constoga College in Romans
down ninety two percent, So all of those former students
are leaving Canada. Some are trying to become refugees or
(04:59):
have applied for refugee status, but no new ones are coming,
absolutely none. So in Brampton and about i'd say about
fifty percent of all foreign students were coming from the
Punjab in India, so they had a natural affinity to
live in Brampton. A lot of different relatives there, community
(05:20):
based organizations there, and they lived in houses like people
in Brampton bought houses big houses, like four thousand square
foot homes, single family homes, thirty eight under scarefoot homes,
big ones, and they'd put out like twelve fourteen futons,
sleeping bags, and they'd charge eight hundred dollars a month
(05:41):
to these students to live in this house.
Speaker 2 (05:45):
Are they were sleeping on futons and sleeping bugs? Seriously?
Speaker 4 (05:48):
Absolutely? Yeah. There were some beds.
Speaker 3 (05:51):
I saw pictures of some situations where there's beds all
over the family room. There's beds all there's like multiple
beds crammed into each bedroom. There's beds in the basement,
or there's futons, or there's sleeping bags. There was one
whole room in the house. There's big house, it's four
thousand square feet. I saw a picture of one whole
room devoted to luggage. There was like thirty five different
(06:14):
pieces of luggage piled up from all different types, piled
up in one room. Because these people are they're foreign students.
They just come with luggage and they need a place
to store it. So the collapse of student housing has
now led to the collapse of that whole enterprise. So,
for instance, if you're renting out fourteen spaces in a
(06:39):
large home for eight hundred dollars a month. That's a
lot more than you know, that's a very substantial income.
That's crews and honors to ten grand a month. So
you could easily afford the mortgage payment, you could easily
afford the property tax. But once those students leave and
you're trying to rent it out to a single fare
(07:00):
is one family, or renting out the basement and the
top level to two families, your revenue falls off a
cliff and you can no longer afford the mortgage.
Speaker 2 (07:11):
But inter spadments have come down, in straits have come down.
So can't people afford the mortgage payments more more reasonably
today than they might have in the past.
Speaker 3 (07:21):
Well, they bought these in twenty twenty, they got these mortages,
bought these houses in you know, twenty twenty one, twenty
twenty two. So the mortgage, the value of the house
is falling. Those mortgages were expensive in twenty middle of
twenty two. Towards the through twenty twenty three, they're very
expensive because the student influx of huge numbers of students
(07:43):
was a phenomenon of twenty two and twenty three. There
was in twenty three, one point two four million people
came to Canada. It was an unbelievable increase in population.
Many of those were students. Were told that just Ontario alone,
four hundred thousand students came in one year. I believe
it was twenty twenty three, So that's an incredible run up.
(08:07):
And that's when they bought the houses. They saw the opportunity.
So those were relatively expensive mortgages and in some ways
the property values have come down. So it's this combination
of their revenue's gone away. The ten thousand dollars a
month has gone away, and the mortgage is still there,
the property tax is still there, and the house value
has probably come off about ten or fifteen percent. So
(08:30):
at that point, how you sell your property value is
now very very close to the mortgage amount, and that's
not workable.
Speaker 4 (08:39):
I mean, there's no value left.
Speaker 3 (08:40):
So it makes more sense just to walk away from
the whole proposition.
Speaker 2 (08:45):
And so what happens then, tell me about the process
of either a power of sale or foreclosure. How does
it actually happen?
Speaker 4 (08:51):
What goes on? Great question?
Speaker 3 (08:53):
Ninety nine percent of all these proceedings in Ontario for
residential property as opposed to commercial are power of sale.
It's a specific act in this province. Very simply, the
mortgage holder goes to a judge and says, hey, we're
not being paid, applies to the courts as we're not
(09:14):
being paid, sends the letter to the borrower saying, hey,
you're not paying us. We're going to take the property
back and sell it. About fifty percent of time, the
border just leaves the residence that it becomes abandoned, at
which point the mortgage holder can seize the property and
sell it, or if it has to go through the
whole court process, the judge awards a power of sale
(09:37):
ownership to the mortgage holder, and the mortage holder then
sells the property. I mean that I've really condensed it.
But that's the essence of what happens.
Speaker 2 (09:48):
You mentioned foreclosures as well. How is a foreclosure different?
Speaker 3 (09:53):
Foreclosures almost only ever used in commercial properties. So that
is a process, a court process by which takes much longer,
guaranteed to take a year or more, in which the
mortgage holder can acquire the property for their own use.
So that's the main difference. Under power of sale, you
must sell the property.
Speaker 4 (10:14):
That's the rule.
Speaker 3 (10:14):
Period end of story and foreclosure. You can acquire the property,
take over the property, be given title to the property,
and use it for your own purposes. As I say,
it works best with commercial properties that are rented out
because you've got an ongoing income all the whole time.
Speaker 4 (10:32):
Big danger to foreclosure.
Speaker 3 (10:34):
The previous owner can redeem at any point along this
year and a half process that you've been involved with
the courts, and in reality you can't get your in
most cases, you can't get your legal fees back. So
it's tricky, but some people prefer in commercial situations to
use that process.
Speaker 2 (10:56):
If you're a homeowner and you get this power sale
notice from the mortgage holder and you think there's still
value in the house, what do you do.
Speaker 4 (11:08):
You can absolutely sell it yourself. You can list it yourself.
Speaker 3 (11:11):
You can offer it at a very attractive price to
sell it quickly and once. As long as the mortgageholder
sees that you're serious, the bank or the private lender,
whoever it is, sees you're serious and that you've priced
it correctly, and you're getting showings, you're probably going to
get a chance to sell it yourself. That's the reality
(11:31):
of it.
Speaker 2 (11:32):
Are the mortgage holders the bank's patient enough usually or
not patient.
Speaker 4 (11:37):
There's a lot of rules about it.
Speaker 3 (11:39):
But the way that the power sale works is if
you've bounced to check in seven days of past, bounce
the mortage payment checks seven days of past.
Speaker 4 (11:50):
You can get a lawyer's letter.
Speaker 3 (11:51):
It says, if you don't pay this in another seven days,
we're going to start power sale proceedings. That's possible, that's
not the way the banks work. The bank's always wait
ninety days to give you an opportunity to try to
patch things up.
Speaker 2 (12:03):
It's incredible that you say it's gone from five a
month in twenty two thousand and five to four hundred
last month. We're going to take a break for some
messages and we come back with Ron Butler. We're going
to talk about why. And in his post he gave
four reasons. Let's see what he has to say now,
whether it's the same four reasons or more. Stay with
Zame one back in two.
Speaker 1 (12:22):
Minutes stream us Live at SAGA nine sixty am dot CA.
Speaker 2 (12:42):
Welcome back everyone to the Bran Krumby Radio Hour. I've
got Ron Butler of Butler Mortgage is mortgage broker of
a couple decades experience, and he's told us before that
he's lived through this before in two thousand, sorry, in
nineteen ninety, and so he's got, you know, this unique
experience that he he knows what's happened. And maybe you
(13:02):
can compare, you know, what happened then to what's happening
now and give us a sense of how you think
it's going to impact. But in your post last week,
you gave four reasons why you thought this was all happening.
Maybe you could tell us why do you think this
is happening? Why we got this massive increase in powers
of sale?
Speaker 4 (13:18):
Well other than this unique student.
Speaker 3 (13:23):
Student housing scenario, which is which is very meaningful.
Speaker 4 (13:26):
I mean, it is a big number.
Speaker 3 (13:28):
It is impactful on power sale and particularly in the GTA.
Speaker 4 (13:32):
But let's look at the key reasons.
Speaker 3 (13:34):
If you talk to any bank chief risk officer, they
will all tell you exactly the same thing. What do
you worry about for mortgage defaults? What do you worry
about when you have to take back houses and sell them?
Speaker 4 (13:46):
And the chief risk officer will list three.
Speaker 3 (13:49):
Things unemployment, unemployment, and unemployment. It is the most crucial
aspect of people losing their homes is losing a job,
you can't.
Speaker 4 (13:58):
Make the payments. Now, unemployment in the GTA is.
Speaker 3 (14:02):
One of the biggest rates in Canada, Like in Toronto
the unemployment rates nearly nine percent. I mean, that's a big,
big number and that has a direct impact on people.
The other factors that affect it, that's probably number one though,
But other factors that will affect it is the reduction
in house values. Reduction in house values is a twofold problem.
(14:24):
It means that it's impossible to refinance, even to refinance
with a private lender, because your property is worth less
and it's getting closer and closer to your mortgage amount,
the values approaching your mortgage amount. The other aspect of
that is you're starting to scratch your head whether it's
too important to hold on to it.
Speaker 4 (14:41):
Like if your mortgage.
Speaker 3 (14:42):
Amount is the same as your house value and you're
having trouble paying the mortgage because you lost your job,
you might be saying, well, I guess we could just
give the keys back. I mean, we're gonna have to
find another solution. There's no equity in my house, so
why am I staying? So those are very important features.
We have the issue of private lender or something a
lot of people, many people don't have never used a
(15:02):
private lender, But a private lender is a lender of
last resort. I mean, it's high interest, it's high fees,
but if you're really trying to find a way to
hold onto your house, the private lender, private mortgage can
offer a lifeline. But if again, if the value is down,
or if the private lenders have taken a bunch of
hits on other houses, they pull in their horns and
(15:23):
they're much less likely to want to.
Speaker 4 (15:24):
Offer on anything. And that's another factor we have seen
then that that that's real.
Speaker 3 (15:30):
So there is a bunch of contributory factors, but still
unemployment number one. It's the thing that banks for about
the most.
Speaker 2 (15:39):
You also said you posted people are stopping to pay
property taxes. Why would they do.
Speaker 3 (15:43):
That, Well, it's it's the general unaffordability that exists in
our country today. So you've got expensive houses that you
bought a few years ago, which created big mortgages and
big mortgage payments. I mean, if you had a variable
rate mortgage, your your payments sword if you might have
had a one point four or five rate, you went
(16:03):
to six point twenty five at the worst. So you know,
as we know, people who bought five years ago were
starting to renew. Instead of a one point seven to
nine fixed rate, they're getting a three point nine to
nine rate.
Speaker 4 (16:14):
Now that's not doesn't seem like a.
Speaker 3 (16:16):
Terrible rate, but still it's a big difference in your payments.
We all understand food inflation. We all understand that when
we get our car insurance renewal, it's up eight percent.
It's not up two percent. It's not up three percent,
it's up eight percent, it's up ten percent. We have
this crowding down of unaffordability that just puts pressure on everyone.
(16:39):
And here's one thing nobody comes after you if you
don't pay is your property tax. You don't pay your
property tax. Nobody shows up at your door if you
missed a payment from the city and says, hey, you
better pay. You just get a little letter, hey, please
pay when you get a chance, and then nothing happens.
And then another few months go by. You might get
another letter that's about it. The year goes by. Hey,
(17:01):
you want to try to think about paying us, but
you're never getting any kind of real pressure to pay.
Speaker 4 (17:07):
Hey, So it ends up you don't pay that's it.
Speaker 2 (17:13):
But ultimately this sid's got to do something.
Speaker 3 (17:15):
Now, after three years, the city will initiate a proceedings
to sell your property under tax sale.
Speaker 4 (17:21):
But after three years three years, yes, three years, that's correct.
Speaker 2 (17:25):
What's the interest rate? Do they charge a penalty? Do
they charge an interest rates?
Speaker 3 (17:29):
It's a it's a low interest rate. I mean it's
like a prime plus one or prime plus a half.
It's not a very high interest rate.
Speaker 2 (17:36):
Sounds like that's what everyone that's in trouble should do,
is they should stop paying.
Speaker 4 (17:39):
Their profit tax.
Speaker 3 (17:41):
Sure, except that if you have to renew, your bank's
gonna hear about it. Your bank's going to ask you
to prove your property taxes up to date during that
three year period, and that now you're going to be
in real trouble.
Speaker 2 (17:51):
So yes, that's that's when you That's when you pay
That's when you paid off. If no one's coming after,
that's when you're paid off.
Speaker 3 (17:58):
Well, there's a lot of them not paying, Brian, there's
a ton of people not hand their property tax.
Speaker 4 (18:02):
That's for shure.
Speaker 2 (18:03):
I didn't realize that. Is there a way of tracking that,
Like you talked about foreclosures and powers of sale is
there is there, you know, a rears statement that you
can get from.
Speaker 3 (18:13):
I mean, let's take the example of Brampton. As we
talked about, Brampton's been highly affected by some of these
real estate issues and gyrations and other things. I think
the City of Brampton's owed three hundred and fifty three
million of property taxes right now.
Speaker 2 (18:30):
I'd be fascinating to track to see if it's gone up.
Speaker 4 (18:33):
Well, you can find out it's it's public record.
Speaker 3 (18:36):
They won't tell you who's not paying, They try to
prevent you from learning that, but they will tell you
what the totals are.
Speaker 2 (18:44):
Is is this going to get worse or better before
it's over?
Speaker 4 (18:48):
Oh no, it's going to get worse, for sure. It's
going to be worse. Yeah, it's gonna get worse.
Speaker 2 (18:53):
Why is it going to get worse? How do you know?
Speaker 3 (18:55):
A few process issues like power of sale takes between
six months to a year to get to the point
where you're listing the property of the bank or the
lenders listing the property to say it for sale.
Speaker 4 (19:08):
So you know it's we've.
Speaker 3 (19:10):
Still got a lot in process, right, I mean it
took a whole year to get there, so there's a
whole wave more coming. So we know that much because
they're in the courts right now. We also know that
unemployment isn't going down like there is. There's nobody putting
up a sign saying we're going to open a new
plant of anything. We're gonna start manufacturing exer y and
(19:30):
the GTA and no banks said yeah, we're going to
hire a thousand people to do it anything. You've never
heard seen any of those announcements. You've never heard of
any of those things. We just hear about people getting
laid off. I mean, they shut down one of the
production lines in Oshawa, Brampton Chrysler plants still not open,
silant Is plant and Brampt is still not open.
Speaker 4 (19:51):
Still, there's still nobody working at the Ford plant in Oakville,
no one. You don't hear about any new.
Speaker 3 (19:58):
Sudden growth in business in the GTA other than collection agencies.
Speaker 4 (20:04):
So the reality is there's going.
Speaker 3 (20:06):
To be more unemployment. There's that just makes sense. I mean,
we see issues coming at us every day. Canada Posts
on strike. If you're a small business who depended on
Canada Posts to ship your little packages for you, I
guess you're in trouble because that's gone. If you're a
(20:26):
small business who was depending on the deminimus exemption to
ship goods into the United States, well they've took the
dominimus exemption away nearly a month ago now, so there's
all kinds of people trying to figure out how to
pay duties or become KUSMA compliant. But all those small
businesses are suffering. So I don't see how suddenly employment's
(20:49):
going to take off in southern Ontario. And unemployment causes problems.
Speaker 4 (20:56):
You're paying your mortgage.
Speaker 2 (20:58):
So ron if we've got you know, five powers of
sale in twenty two thousand and five going to four
hundred last month, and you're saying it's going to get worse,
so the power of sale numbers are going to go up,
and if it takes six months, then effectively your four
hundred is what was actually initiated six months ago. So
we're looking at the rear of your mirror. We don't
(21:20):
know what's actually happening today. We know what happened six
months ago, if that's the numbers that you're seeing. So
what you're saying is it's going to get worse. If
it's going to get worse, isn't that going to drive
down housing prices even more, which is going to mean
that it's a vicious circle. And as housing prices go
down even more, it's going to be more challenging for
people to renew mortgages and more likely that they give
the keys back. And so therefore everything you've described as
(21:42):
like a snowball going downhill, getting bigger and bigger and bigger.
Speaker 4 (21:46):
Yeah.
Speaker 3 (21:47):
Look, every economist refers to a recession as a spiral
downwards because all those contributing factors you just mentioned keep
piling on, keep causing worse results, and certainly in the
housing market, because let's face it, it's a phenomenally expensive
(22:07):
housing market, and the GGA it's one of the most
expensive housing markets in the world. It's much our prices
in THEA to at this point, after many house prices
have fallen, are still fifty percent higher than any comparable
neighborhood in the city of Chicago. So we have expensive
house prices here and that's big mortgages in some cases,
(22:30):
and these people feel the pressure of that scenario as
employment becomes more and more shrank, shrinking down the number
of jobs. I mean, look, I would suggest that we've
seen a major drop in prices. By major, I mean
like a rapid drop, like probably four percent in the
(22:51):
last six months in the GTA houses that we didn't
think would go down. We always thought that Central four
one six was untouched, that it might come off a
few percent, but not in any major way.
Speaker 4 (23:03):
We're starting to see.
Speaker 3 (23:04):
Steep reductions in certain areas of Old four one six.
We thought Old one four one six would never be
a problem, but we're starting to see some disturbing trends
in Old four one six just in the last four months.
And that is probably a reflection of the stuff we've
just talked about. And definitely nine oh five is badly affected.
(23:26):
Hamilton is badly affected. We've got some particular counties like
Brock Town of Rock, their prices have dropped fifteen percent
this year so far. Like you know, it's an outlying community, sure,
but it's meaningful that that's big. It was already down
(23:48):
in twenty The prices have gone down there in twenty
twenty four, and they've gone down even more steeply. Some
of this is the effect of power sale, because when
a house has to be sold because a lot of
people offered their house for listings. They just said, I
don't like the price, I'm just gonna take it off listing.
If a bank or a lender is selling your house,
they must sell. That's one of the rules of power sale.
(24:10):
You just keep dropping the price that you sell because
you're not allowed to hold onto the house. Those part
of the rules of the process. So when that house
price hits of the power of sale in that neighborhood,
that's a new comparable and all prices drop.
Speaker 4 (24:25):
That's the way it works.
Speaker 2 (24:30):
What's the way out of this?
Speaker 4 (24:32):
I don't know.
Speaker 3 (24:33):
Prime Minister, get a trade deal with the US. That'd
be a good one. That ain't easy, but that in Ontario,
that's an important way to get out of this. No
province is more affected by the trade war than Ontario.
No province will continue to be affected more than Ontario.
And that's what we're seeing.
Speaker 4 (24:54):
I haven't even thought this is Trump's fault.
Speaker 2 (24:57):
It's the trade war fault.
Speaker 4 (24:58):
No, not entirely, No, not at all. Canada has been
has been in.
Speaker 3 (25:03):
A per capita GDP recession for two and a half years.
I mean, there's a reason why everybody has been feeling.
The Canadians have been here for a long time, but
been feeling miserable in Ontario, that things aren't going well
for them, that things are more are harder and more
expensive and more difficult.
Speaker 4 (25:21):
Is because we've had.
Speaker 3 (25:23):
A we've had stagnant wages, and we've had the last
four years, we've at some points very aggressive inflation. Nobody's
feeling comfortable. And you know that's not just Donald Trump.
He wasn't even around four years ago.
Speaker 2 (25:37):
So years and I've gotten dozens of emails from real
estate agents saying, you know, interest rates are down, the
Bank Canada reduced the rate. You know x y Z
Bank is predicting that that housing prices will increase in
the last half of twenty twenty five. Now is the
time to buy? Are they all wrong?
Speaker 3 (25:57):
This is the last half of twenty five and house prices.
Speaker 4 (26:03):
In August went down. They may go up.
Speaker 3 (26:06):
There may be a slight uptick in twenty sorry in September,
because we've been observing a lot of first time home
buyers have been watching these rate these prices go down,
and they're ready to take the plunge. We've probably done
more preapprovals to the last two months that we've done
in the last sixteen months. So young people are paying
(26:26):
attention to this. First time buyers are paying attention. Sometimes
they're not young, sometimes they're forty as the first time buyer,
but they've been paying attention to the price is dropping.
They might want to get involved. They're taking it a
kind of a closer look. But our price is going
to surge. No, they're not going to surge. They might
tick up a half a percent, a quarter percent in
(26:48):
terms of the value of houses. But you know, I
went through the nineteen nineties, as you said, and some
months were better than others. Some months house prices what
up a touch, and then three months later they fell
back down again. I mean, it's not a static market.
It's not a straight line. But you know, we went
from nineteen ninety one to nineteen ninety six.
Speaker 4 (27:11):
There was no upward movement for those whole five years.
You know, There's little.
Speaker 3 (27:17):
Tiny peaks then go back to valleys, but no big
upward movement for five years.
Speaker 2 (27:25):
If you're interested in buying, if you are a first
time buyer, is this the good time to buy or
should you wait six months?
Speaker 3 (27:32):
I think you'll end up with a better price in
six months. I feel that sincerely. But by the same token.
If some first time buyers are very very specific, I
only want to be in this neighborhood, in this school district,
I want this kind of a home, I want this
kind of a price point. And if you're very specific
about where you're buying, then maybe it's okay. So it's
(27:55):
affordable to you. Now go ahead in a general way.
If you haven't done any of those careful classifications of
what you want and just thinking maybe I should look
into a house now, then yeah, wait six months.
Speaker 2 (28:08):
Are there ways to track powers of sale? Are there
specific websites that focus on powers of sale homes? Can
you get a deal by tracking them?
Speaker 3 (28:17):
Well, some real estate agents track them. They like it's
TREP doesn't run a list for you, Like, there's no
there's no real estate board runs a list of power
sales for you. But there's a number of real estate
agents that will try to put together lists of power
sales in certain neighborhoods and regions. And you just google
it power of sale in Toronto real estate agents who
specialize in power sale and you will find some power
(28:41):
sale properties listed. Now, let's remember these will be these
will represent the market price. So and another consideration is.
If people haven't lived there for six months, they may
not be in great shape. You have to consider that
most power of sale homes are sold as is. In
other words, if you buy it, you get one look
(29:02):
around you. If you're lucky, you may get a chance
to do an inspection. A lot of times the lender
says no, no inspection. You just look at it yourself
and you decide whether you walk around. We're not going
to let a house inspector in. We're trying to do
this efficiently because every time you let somebody in, you
know there's a further possibility that the home might be
damaged because.
Speaker 4 (29:22):
There's nobody there and there's nobody going to be there.
Speaker 3 (29:25):
Like at least for the open house, you go in
and you look around and there's somebody watching here, even
with a lock box on the door. The owners come
back after the appointment to view the house. We don't
have that here. This house is completely empty. So there
are some security issues. So you may not get the
opportunity to do a house suspection, a home inspection, and
(29:47):
you're sure as he's taking it as is. Once you
sign on the dotted line.
Speaker 2 (29:53):
Ron is now a good time to buy or no,
just wait for six to nine months to see where
everything shakes out.
Speaker 3 (30:00):
I mean, I again, if you have a compelling need,
if you've just had triplets and you feel a compelling
need to buy a home, this is a lot better
time than twenty twenty one, that's for sure. It is
much better time to look. But if you can be patient,
I feel strongly there'll be better prices in twenty twenty six.
Speaker 2 (30:21):
And you're saying the same thing for condos, for townhomes,
for duplexes, and for singles.
Speaker 3 (30:27):
Let me break out the condos separately. You might wait
to twenty twenty seven to find the bottom of condos.
I mean, condos have a lot, a lot of issues
associated with them that we haven't covered here. But I
would say for low rise, you know, townhouses, semis, single family,
there are some bargains out there. But in a general way,
(30:49):
I would say there's still a room for those prices
to come down in twenty twenty six, but condos condos
could keep going down for another year and a half.
Speaker 2 (30:57):
So you said there was a four percent decline, Is
it four percent decline the bust of a bubble that
people have been talking about for years or is that
just a small decline, you know.
Speaker 3 (31:07):
I think it's fair to say if we look from
peak to trough, the peak of southern Ontario's housing market
was March.
Speaker 4 (31:14):
Twenty twenty two.
Speaker 3 (31:16):
In nine oh five, in a general way, we're off
twenty five percent.
Speaker 4 (31:22):
From the peak and continuing to head down.
Speaker 3 (31:24):
It wouldn't surprise me if it bottomed out at thirty
percent or more for the nine oh five.
Speaker 4 (31:29):
I think for four one.
Speaker 3 (31:30):
Six it'll bottom out at about sixteen or eighteen percent.
Speaker 4 (31:35):
But these are major drops.
Speaker 3 (31:37):
And by the way, the four one six didn't go
up that much in the frenzy of twenty twenty one.
It was really the suburbs went up the fastest, the highest.
Speaker 2 (31:47):
The most fasting. Conversation about the real estate market. I'm
gonna take a break and come back in two minutes
with Ron Butler of Butler Mortgage is I'm going to
ask them about housing starts, because we've got this other
factor that's happening that at the same time, people aren't building.
Stay with us one back in.
Speaker 5 (32:04):
Two minutes, No Radio, No Problem stream is live on
SAGA ninety sixty am dot CN.
Speaker 2 (32:25):
Welcome back everyone to the Bran Crumby Radio R. We've
got Ron Butler of Butler Mortgages with us today. We've
been talking about power of sale. We've been talking about
house price declines. We've been talking about unemployment, house prices
going down, people not paying taxes, property taxes. It sounds
like it's a big problem. But Ron, at the same time,
I understand that we're not building homes. Building starts are
(32:49):
down dramatically, Condos are not being built at all unless
they're already in the ground and half constructed. We're talking
about layoffs in the building industry. So if we're not building,
we're going to be short supply in the future, aren't
we And so therefore shouldn't housing prices rocket ship up
(33:09):
in a couple of years?
Speaker 3 (33:12):
Great question, There is no doubt, no, absolutely, factually the
new construction of residential properties to buy is just cataclismically
down in Ontario.
Speaker 4 (33:28):
I think the.
Speaker 3 (33:30):
Low rise that single family townhouse semis. I think it's
fair to say that's off eighty six percent.
Speaker 2 (33:38):
Or more eighty six percent.
Speaker 3 (33:41):
Sure, we don't know of anybody who started a new
low rise project in the whole GTA. I mean, this
just doesn't exist. There are purpose built rentals being built,
and there's not one single condo tower has started, with
the exception of just for owner occupied but you know,
(34:04):
in other words, it's a luxury condo tower. But essentially
there hasn't been a new condo started in all of
southern Ontario probably for sixteen months. There's a bunch of
towers being completed, as you just mentioned, there's still cranes
in the air, there's still properties getting finished. Those were
all purchased several years ago, three four or five years ago.
(34:27):
There are rentals being built. Purpose built rentals are being
built throughout southern Ontario. There's a huge push by CMHC.
It was a very very good program to encourage purpose
built rentals. It's got great attributes and there's a ton
of it going on. And some of the people who
were going to build a condo when the bottom fell
out in twenty twenty three, they switched them to purpose
(34:49):
built rentals. They just had the zoning changed and they
switched to and started building purpose built rentals. But homes
to buy are in a just not building any in
southern Ontario. It's a number that's so small it's not
worth talking about. It's easier just to frame it as
stopped for brand new homes to buy.
Speaker 2 (35:11):
So you and I chatted a couple of years ago
about the CMAC calculation that we needed three point five
million additional homes to have any kind of reasonable amount
of supply and supply that would be then affordable. If
we're not building at all, we're going to be short
supply and this housing price declined should turn around dramatically.
Speaker 3 (35:32):
No, there's a real possibility of that. But there's a
countervailing situation that hasn't happened in Canada before Stats Canada
publish this data that they believe in twenty twenty five,
there will be virtually no population growth. There will be
no immigration growth in Canada, and that means no population
(35:53):
growth because we have a fertility rate that we don't
replace ourselves. Our fertility rates gotten to the points one
of the lowest amongst the lowest in the world. It's
approaching that I like Japan and South Korea's extremely low
one point three to five should be two point one.
So we're not having any kids to replace ourselves. Therefore,
(36:13):
if immigration reverses, like all these students who are going
back the federal government's push to have refugees sent home,
temporary foreign worker greatly reduced sex. Can themselves says there's
going to be no population increase in twenty twenty five
or negligible like zero point six percent, and they predict
(36:35):
that in twenty twenty six there may be negative population
growth as more refugees go home, more temporary workers go home,
and very very slow, if not zero growth. So if
there's zero growth in people, will you really need a
bunch of new home stuff, Yes, you do, because some
old decrepit homes just need to be replaced and people
(36:56):
don't want to live in something that's really in bad shape.
Speaker 4 (36:58):
We got all those factors.
Speaker 3 (37:00):
Sure, you need new homes, but you know, we're used
to very spectacular growth in Canada for the last ten years,
particularly in the last several years, and that just may
me not be there. I mean, our own government's telling
us and won't be there. So that's a different situation.
Speaker 2 (37:18):
So, you know, a couple months ago you talked to
me about how Toronto was a high cost housing environment
and that there's no neighborhood in Chicago that you could
buy that you could buy in Toronto for the price
that's available in Chicago. As an example, and I've seen
this myself in the United States, where there's incredibly beautiful
housing available at you know, half the price of what
(37:39):
a comfortable house in Toronto would build for, whether it
be in Chicago or not. Maybe Manhattan, but the suburbs
of New York, Dallas, Texas for sure, Florida as well.
We're housing is you know, eight times income, five times
income versus here it's twelve to fifteen times come and
(38:01):
so it's it's it's a whole different sort of story
in the United States in regards to housing.
Speaker 4 (38:06):
So for housing is.
Speaker 2 (38:07):
Very expensive in the United States. It's expensive in Canada
versus state in the United States, or at least expensive
in Toronto versus the United States. Is all this good?
Is this actually positive?
Speaker 4 (38:17):
What's happening in a way?
Speaker 3 (38:19):
Yes, you know, lower house prices would be a phenomenal
benefit to the young people of southern Ontario. Like I'm
I can't tell you how great a benefit that would be.
Lower rents are a great benefit to all the renters
in southern Ontario, all of Ontario. They're a phenomenal it's
a phenomenally better thing at lower prices. But you know,
(38:43):
to get close to Chicago prices or Houston prices, or
any of those prices. We've actually got to come down.
We've come down about twenty five percent in the suburbs
in the nine oh five. We'd have to come down
another twenty or twenty two percent, and that would sort
of severely impact on some people's financial situation. So I
(39:05):
can't really say that's something we should wish for, but yeah,
it would be great if house prices didn't continue to
come down. It would be great if house prices at
least stabilized so that wages could keep up for a
number of years, could increase for number of years, and try.
Speaker 4 (39:19):
To catch up. All those things would be good.
Speaker 3 (39:22):
But particularly we should look at our municipal governments to
say we need radical change in the amount of money
you want out of new housing developments. You know, it's
thirty percent in most municipalities. Now, Vaughan has reduced that
by eighty percent. Mississaug has reduced it by eighty percent. Interestingly,
(39:43):
not much reaction. There's been no sudden influx of new
projects into either one of those locations.
Speaker 4 (39:49):
But it's a good idea.
Speaker 3 (39:51):
It's an important idea that these development fees have to.
Speaker 4 (39:55):
Come way down.
Speaker 3 (39:56):
In the southern Ontario, particularly in the cities of southern Ontario,
it's thirty percent of every new home is government. It's
the share government takes. And if you if you compare
that with the nineteen eighties, government was taken about three
thousand dollars out of every new home, so in in
(40:19):
some cases it's three hundred thousand now, So it's a big,
big issue.
Speaker 2 (40:23):
One hundred thousand dollars in development fees and taxes.
Speaker 4 (40:26):
Seriously, sure on a good sized single family home.
Speaker 3 (40:28):
Yeah, one hundred percent absolutely provable between two hundred and
eighty eight and three hundred and twelve thousand the City
of Toronto, that's what it would be.
Speaker 4 (40:37):
Absolutely. So, yeah, we.
Speaker 3 (40:39):
Got some work to do. And let's face it, why
in the world is the federal government still charging GST
on new homes, Like, I can't tell you why. It
doesn't make any sense to me. You know, don't you
want people to build new homes at a reasonable price.
There's a lot of times that the government comes back with, well,
(40:59):
if we were doing the tax then the builders would
just make more profit. Well, I got news for the
federal government. The builders are closed. They're closed, they'll do
anything today to get a sale going, to get a
new development going. If you're closed, you're not interested in
gouging profit, You're interested in survival. Just give me a
chance to build a house so I can keep my
people working. That's the reality of it today.
Speaker 2 (41:23):
Today I chatted with Richard Lyle, the president of the
Residential Manufacturers Association or Council of Ontario, and he thought
that there was twenty five thousand layoffs in the building
industry already and it's going to accelerate.
Speaker 3 (41:38):
What do you think dead right? I think he's on
the low side. I think it's closer to thirty thirty
five thousand already. And what we should realize is for
many of these condo projects, when one when the developers
or when the crews complete one condo, they send crews
to the condos that are still being built. In other word,
(42:00):
normally you would build with say one big crew, and
then okay, well we can build a little faster if
we bring in the other crew because they got no
new condo to start with, so let's go faster and
finish this project faster.
Speaker 4 (42:12):
And that just means that.
Speaker 3 (42:13):
Eventually there'll be more people laid off all at once.
If you've got three crews working to finish a building,
it goes quick. But when the building's done, there's no
new building. So that's three crews laid off.
Speaker 2 (42:26):
So Ron, what do we do? If you were sitting
down with our premier or prime minister, a minister of housings,
what would you tell them?
Speaker 4 (42:34):
We got to do.
Speaker 3 (42:37):
Development fees to zero, get all of the all of
this tax burden that you've laid on first time home
buyers in many sectors. It's not just here, it's in
British Columbia as well. Get rid of it. Just get
rid of it. And then finally, Premiere forward, try to
find a non corrupt way to open up the green belt.
(42:59):
Try to find an on proper way to open the
green belt up, because let's face it, if you actually
drove around the green Belt, you'd find out that a
lot of it's just the brown belt. It's just a
bunch of it's not farms, it's not watershed, it's just
some scrub land that could be turned into housing instantly.
(43:20):
And I could go into eliminating all the ridiculous number
of reports you need, all the bizarre environmental studies that
are required to slow everything down. But there's so much
government could do. I could lay almost every problem in
the housing business at the foot of various levels of government,
because everything they've done over the years has largely been
(43:43):
an error.
Speaker 2 (43:44):
I've been told that we're building homes approximately the same
way we did fifty years ago. Shouldn't there be some
technological improvements, some productivity improvement in house building?
Speaker 3 (43:53):
Well, I can assure you in the high rise condo space,
we're not building them like we did years ago. We
operate a very modern, very efficient, very effective and fast
condo building space, and we could have a much more
effective and efficient low rise home building, townhouses, single family
(44:15):
space too, Except we've layered on so many rules, so
many environmental concerns, so much our value, so many extra
pivots on like we are running in Ontario, we run
more our value, more insulation than they do in the
Arctic Circle of Norway. Like our building codes are more
(44:37):
aggressive on that than that does that it exists in
the Arctic Circle. So yeah, we've sort of lost our
minds on over regulation. And that's some of the reasons
why housing is so expensive, particularly low rise housing. But no,
our condo builders are amongst the top builders.
Speaker 4 (44:55):
And trades in the world.
Speaker 3 (44:56):
We could throw a building up just as fast as
they can in Manhat and we're very efficient at it.
Speaker 2 (45:04):
Our new Prime Minister has talked about prefab manufactured housing
and the government played a role in that. Does that
make any sense?
Speaker 3 (45:11):
No, it's totally stupid. It's absolutely ridiculous. They should just
shut down the whole agency now before they hire more
people build Canada homes.
Speaker 4 (45:18):
Just shut it down. It's absolutely stupid, stupid.
Speaker 3 (45:23):
Well, first of all, private enterprise tried it and a
very brilliant man, Peter Gilgant and Madame Holmes, tried it
fifteen years ago. And he is a brilliant builder and
he has started his life as an accountant that he's
meticulous about the numbers. And at the end of his
attempt at modular homes, he says, this does not work.
It's not cost efficient. It's more expensive to do modular.
(45:45):
So and you know the Prime Minister would say, oh, well,
everything's changed in fourteen years.
Speaker 4 (45:49):
Not really. The only thing that's changed is.
Speaker 3 (45:52):
That your former employer, Brookfield, owns one of the biggest
modular home companies in the world, and that might have
something to do with it, but it doesn't make any sense.
Our builders can build again, particularly in the high rise space.
Our builders can build as efficiently as anybody in the world,
and more efficiently than the modular.
Speaker 2 (46:13):
There's been this big controversy about three plexes or six plexes.
Do you think that that's a potential solution to the
problem is having as of right, six plex development everywhere
and anywhere you want.
Speaker 4 (46:25):
Yeah, I'm pretty good with it. Actually.
Speaker 3 (46:27):
I know that there's some situations where people find it's
very disturbing to the neighborhood, but I don't have a
lot of problems with it. I think it's got to
be rational based on the size of the lot.
Speaker 4 (46:39):
And they've made some mistakes in some jurisdictions.
Speaker 3 (46:42):
For instance, in British Columbia, their building code allows for
three stories with this kind of multifamily kind of operation,
and three stories stands out like a sore thumb in
any neighborhood. But in Ontario we are restricted to two
stories except along business like pure commercial streets associated with
(47:03):
transit lines. Like you know, if you want to build
on the dan Forth one of these things, you could
build five stories, but that's the commercial building. But in neighborhoods,
you could ever go past two stories here, it won't
look out of place. I can tell you in my
own in my own neighborhood, they could start building three sects,
three plexus in a minute. In Mississauga, I mean it's
these are big lots. They're fifty fifty five foot lots.
(47:23):
You can just start building right away three plexus. Everybody
will be fine with it. Don't get me wrong. Nimbis
would cry and moan, but it may just make sense.
Speaker 4 (47:31):
They're big lots.
Speaker 3 (47:32):
You could fit a three plex on it for sure,
So I'm pretty much in favor of that. The danger
is in many locations in the city of Toronto, if
you build a four plex or six plex, it's all rental.
Speaker 4 (47:44):
It's all rental.
Speaker 3 (47:45):
Nobody there's no such thing as a four unit condominium corporation, right,
I mean, it's just too hard. So they'll We're gonna
have to start asking ourselves a very very important question.
Speaker 4 (47:55):
In Canada, particularly in big cities.
Speaker 3 (47:57):
We're gonna have to ask the question of have we
given up on people owning homes? And if that's true,
shouldn't we at least ask them, like if all these
programs they build Canada homes, Carneyville modular yurts, or all
this six plex stuff in all of these different municipalities.
(48:18):
It's probably okay, But shouldn't we just not the yurts
that Carneville's modular homes is terrible, but some of this
other stuff is fine. But it's all rental. So shouldn't
we be truthful with young people? Shouldn't the government's at
all levels go to young people and say, listen, we're
gonna stop building.
Speaker 4 (48:36):
Homes for you to buy. You're gonna have to rent.
Speaker 3 (48:39):
For the rest of your life because that's the general
economic direction we're taking. That's the housing orientation we're developing
in particularly big cities.
Speaker 4 (48:49):
And shouldn't we ask somebody.
Speaker 3 (48:51):
Shouldn't governments say I just want to level with you
and tell you the truth. We're only going to build rentals.
We're only gonna support rentals for now on. We're gonna
have great programs for rentals. But we think home ownership
is passe. So government should be honest with people. Start
being honest with young Canadians. If that's the way you
look at it, just say it out loud.
Speaker 2 (49:14):
Ron That would be you know, taking away that the
dream of home ownership from a whole bunch of young people.
If you didn't want to have to say that you
wanted to keep the dream of home ownership alive, what
would we need to.
Speaker 4 (49:26):
Do do all those things?
Speaker 3 (49:29):
Get rid of all the crazy, super expensive development fees,
the thirty percent of the cost of a home going
to the government, get rid of all that open up
the green belt, pull back for all the crazy regulation.
Did anybody ever ask whether it was a good idea
that we should have more insulation in our homes than
people in the Arctic circle?
Speaker 4 (49:48):
Like I mean, did anybody ask those questions?
Speaker 3 (49:50):
That was just decided for us by others, and those
layer on costs and expenses. I'm not saying have no insulation,
that's stupid, But most of us live in homes today.
If we live, if we live in a low rise home,
its was built many years ago, and it works, it works,
and it was built for a much lower cost or
square foot. It was much easier to build it. And
(50:12):
why have we added on all of this regulation, all
of these extra costs.
Speaker 4 (50:18):
Why did we do it? Did anybody have a vote
about it?
Speaker 3 (50:21):
Did anybody go to governments and municipalities and provincial governments
that say, hey, do you not ask us that we
want to have some of the most complicated and expensive
homes to build in the world and the best our value,
our value better than Norway's. I mean, can we talk
about that some of the stuff has been all crazy
(50:41):
stuff laid at the altar of.
Speaker 4 (50:44):
The environment.
Speaker 3 (50:45):
Okay, nobody stops to nobody knows this virtue, nobody ever
knows this. But we have an industrial carbon tax on
all that concrete that goes into forums and goes into
building condos or building purpose built rentals. We're at We
have we have required the concrete companies to adopt environmental
(51:09):
protection systems, climate oriented systems that make the concrete even
more expensive than in many other jurisdictions in the world.
So there's people things people don't even understand about how
we've added layers of cost to building homes. It's kept hidden,
it's kept hidden by the government. Uh.
Speaker 4 (51:27):
Just yes.
Speaker 3 (51:27):
Just last week the Prime Minister insisted the industrial carbon
tax was a great idea, but it costs us money
every single day. You know, these are things we could change,
but we doesn't look like we're going to change them.
Speaker 2 (51:41):
Ron Butler Butler Mortgages. I really appreciate you joining us
today and talking about this housing crisis that we're in
and uh and and frankly, I think what you're saying
is is it's going to get worse before it gets better,
that that now is not a great time to buy,
that maybe watch very closely and and sometime in the
next year might be a great time to buy. But
(52:02):
now it's not that the housing prices are going to
come down. That it's not just in condos, it's it's
in every aspect of the industry. And if we don't
do something from a government action standpoint, we're real at
risk of having no starts or very low starts and
massive layoffs. And if we have more assive layoffs in
the housing industry, that's only going to make it worse,
(52:23):
because it's going to be another vicious cycle of having
more unemployment and more people having challenges making their mortgage
payments and proper text payments. And there's gonna be more
powers of sale. If there's a power of sale of
a great house in your neighborhood, run promise you'll call.
Speaker 3 (52:41):
Me, Well, my neighborhood's your old neighborhood. So yeah, I promise,
I'll tell you.
Speaker 2 (52:47):
That's why I'm asking, buddy, That's why I'm asking.
Speaker 4 (52:49):
That's our show.
Speaker 2 (52:49):
Fina and everybody, thank you for joining. I remind you
online every Monday through Friday at six o'clock on nine
to sixty am. You can streaming online at Triple WSUG
and nine sixty am dot ca. A. My podcast and
videos go up on my website Briancromby dot com, social media,
YouTube channel and podcast service as soon as the radio
show goes to air. I think this is a really
interesting conversation one that we need to have because I
think as a society we're failing our young people. And
(53:13):
if there's one thing that we're supposed to do in life,
it's to make the world better for our kids, and
we're not doing that anymore. And we've got to get
our act together. And so Ron Butler, thanks so much
for joining us.
Speaker 1 (53:29):
Stream us live at SAGA nine six am dot CA.
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