Toronto Real Estate Market in Freefall | Ron Butler and Jimmy Connor #ExpertSpeakers

Ron, thank you very much for joining us today. How are things in Toronto? My pleasure. It's cooler. It's much cooler than it was. It was like the surface of the sun for about two months and now it's like a normal day. It's 23, 24 degrees, quite pleasant. Ah, it's perfect. So Ron, before we do the deep dive on the real estate market, I want to provide a little bit of context for our viewers on what's happening within the Canadian economy. And even though we share a border with one of the world's strongest and largest economies in the world, the US of A, Canada's economy is not doing as well. Canada's unemployment rate is currently around 7% in the province of Ontario where you and I both reside. Largest province in the country with 15 million people. The unemployment rate is around 8% and in the city of Toronto, believe it or not, it's approaching 10%. And one more number I want to throw at you and that's youth unemployment. It's at 14.1%. That's across the country and that's the highest it's been since 2010. And these unemployment numbers simply reflect what's happening in the economy overall. And of course, this is having a profound impact on the real estate market and this is why I want to talk to you and you have a very good understanding of what's happening in the Canadian real estate market. And I want to ask you, I want to start off by talking about Toronto or the greater Toronto area. How would you characterize the real estate market in the GTA at this point? Well, the GTA real estate market, which is the biggest real estate board in the world, is TREB, Toronto Regional Real Estate Board. So there's more agents than any other board in the world, more transactions than any other board in the world. So it's a debacle. It's a complete debacle. We have several things going on at once. We have a catastrophic disaster going on in the high-rise condo world that will stretch out for another two or even three years. We have a profound slowdown in the total real estate resale market. We have a complete collapse of construction of new residential properties in almost all of Ontario. The only exception is the creation of purpose-built rental towers. CMHC, that's the Canadian Housing Agency, produced a report that states that it's actually a good year for housing starts at $294,000. But what they don't emphasize is that it's one of the worst years on record in the last 30 years for building new homes to buy. So two-thirds of their $294,000 are some version of rentals. So the collapse in the future of purchased housing, the construction of housing that young people could buy, or anybody could buy, in terms of new stock is reaching catastrophic levels. Probably right across Canada. Some markets are better, like Alberta. Quebec's a bit better. But again, Quebec is deeply entrenched today. New starts are rentals. They're lower-rise rentals. They have three- and five-story rentals in Quebec. But we are gradually—and when it happens, it'll happen in a big way, because it's like a lot of things. It creeps along, and then it falls off a cliff. We're becoming a nation of renters. That's one of the reasons young people in Canada are not happy with the direction of our society or our government, is that it's looking like homeownership is going to fade from the Canadian dream over the next 20 years. And Ron, when you talk about the condo market being catastrophic, can you just expand on that? And maybe you can quantify and give us some numbers. When did the market top out, and what's been happening that's taken the market lower? Sure. Market top is probably March 2022. But the seeds of destruction were sown long before that. The unique thing about a high-rise condominium is it takes a very long time to build. It's a five-, six-, or seven-year proposition. The way that condominiums are marketed in Canada is that there's a sales office that opens, and the condos are offered to the public. They come in and buy the condos, putting down typically a 15% to 20% deposit. It's a lot of money. If you're buying a $1 million condo, you put down $200,000. The builder, the developer, proceeds to build the 300-unit condo. And five-, six-, seven-years later, the buyers are asked to come up with a mortgage, or with the balance of the cash, take possession of the unit, and the condominium corporation is formed, the developers pay it off, the construction lending for the banks is paid off, and we have a brand-new condo building at that point. But it's a long process. So because it's long, what the condominium pre-construction buyers are essentially doing is they're engaged in a futures market. They are of a belief that that price they're paying today will serve them in good stead four-, five-, six-, seven-years from now, and it's turned out to be disastrously wrong. The simple explanation is that if you bought a condo in 2010, and you waited this five years and the condo got built, you had a spectacular return. You might have seen a 40% profit, 50% profit on what you did. You bought a condo for $295,000, and at the end of the five years, it was worth $395,000, $445,000, whatever. Now, what happened after that, in ensuing years, like 2011, 2012, as the condos kept coming, is people would just sell them without ever taking possession of them. So you bought a condo for $300,000. It was going to be finished soon, like you'd waited your four years. It was going to be ready next year. You just offered it for sale. You say, hey, I got this contract to take possession of this condo. I bought it for $400,000. I think it's going to be worth $600,000. So who's offering me $550,000? I'll give you a deal. And that happened. That happened. In some cases, 80% of the whole building was sold that way. The people who bought originally never took possession. They just flipped it, made a profit, said thank you very much, tried to avoid CRA, tried to avoid paying the income tax, and went on their merry way. So this continued to escalate steadily. It was just starting to top out in 2019. 2020, people were getting a little nervous about how high the prices were getting, because if you were presented with this marvelous opportunity that you couldn't miss, hey, put $200,000 down, put $100,000 down, and then sell it for $100,000 profit, you're doubling your money. So why not? That became epidemic in Vancouver and Toronto. And in the end, it was a Dutch tulip bubble. It was the only reason people were paying more for the unit was because they made money previously when they sold the unit. No one stopped, literally no one, absolutely no one stopped to calculate, if you actually took possession of this unit, that you're paying a million dollars for 560 square feet, if somebody took possession of that unit, you had an 80% mortgage, you paid the property tax, you paid the maintenance fees, what would your rent need to be? And the rent needed to be like $5,200 at today's rates. And there's no person renting that tiny dog crate condo for $5,200, like literally no one. There's nobody who's going to do it, absolutely nobody, no matter how good your location is, no matter how good your amenities are, the rental proposition was hopeless. Now you might say, wait a second, wait a second, people are crazy, they must have studied that previously. Well they did, but they always said, look, the price just goes up, I'm just going to sell it and make money. If I have to live with negative cash flow for a couple of years, I will, but eventually I'll make great capital appreciation, I'll do great. And then it all stopped. And today, about 25-40% of the people who bought the condos, when the developer calls on their lawyers to close and says, okay, time to close, condo's finished, you've got to get a mortgage, you've got to pay us the money, and we're going to turn it into a condo corp, between 20-40% of the people who bought the units are saying, no, I'm going to renege on the contract because it's too much of a financial loss. By the way, I don't even have the capability of getting a mortgage, it was just imaginary because I just assumed I'd sell it during the course of the build, so I'm not going to close. And this just keeps on growing, to the point where at some time by the end of this year or early next year, we will hear an announcement in Toronto or Vancouver that the building is finished, and the developer has to go into receivership because 70% of the people refused to close, 80% of the people refused to close. So it's that kind of a, we estimate it to be about a $15 billion financial debacle for both buyers and developers over the next, we've already, we think we've already gone through about $3 billion, $4 billion in losses in the last 18 months, but there's more to come over the next two years. One of the things that shocks me about Toronto, downtown Toronto, is that no other city in North America has experienced the stratospheric growth in condo development that Toronto has. And there's an index, I'm sure you're familiar with it, it's called the Crane Index. It measures the number of construction cranes across major cities throughout North America. And the number one city on that list is Toronto. The last time I saw the number, I think it was 106 cranes in the greater Toronto area that are currently building office towers or condos right now. Number two on that list is the city of Los Angeles with 42. So a huge disparity between these two cities and the number of cranes in development that's going on right now. And I think it just gives you an idea of the overdevelopment that's been happening in the city of Toronto. And to your point, when you start construction you can't stop it, right? You have to continue it. It takes 6, 7, or 8 years from the start to the finish of a project and then therefore many of these investors that bought a project I'm going to throw out some round numbers now, but let's just say you bought a condo for when you entered into the agreement initially, it was worth a million dollars, and here we are 5 years later and maybe the cost is down to $750,000 or the value of that property is down to $750,000, so you just took a $250,000 hit. And you're saying this is what's happening right now with thousands of investors. Thousands and thousands. We get calls every single day. I'm worried I think I might want to try to close because the developers assured me that they're going to litigate me into the ground and take away my existing house. They're going to get damages. They're suing for massive damages if I renege and they will come after me and they will litigate me until I either declare bankruptcy or pay them off. And that's a run of the mill experience today. And some people come to us and say, is there any way I could try to close? Because nobody just has one condo. Everybody who's in this situation right now has been involved in it for a bit. They've typically bought more than one. They have HELOCs on their homes, the places they live in. They have some savings, some RSPs, they have something. And they're actually considering stretching themselves, pulling every nickel out of every possible nook and cranny to close out of fear of litigation. And in the end, they will have an ongoing loss, a negative cash flow of about $1,800 a month ad infinitum. Now you might say, well, okay, but maybe rents will go up. Well, actually in Canada for the last 14 months, rents are falling in major cities. So that's bad news. And then will the price go up? The prices are expected to continue down for the next two years at minimum. So the idea of being faced with a hopeless, falling asset that is depreciating every day and is costing you $1,800 a month is just financial disaster for these people. And Ron, you said the market peaked out in 2022. If you were to guess, how much do you think condo prices are down since that time or since the peak? I don't have to guess. In Toronto, they're down 22% and falling. The rate of descent is accelerating. I think last month it was up to 0.8% month on month. So it's really going down fast in condos. And in terms of sales, like year over year, how much would they be down? Well, you have to look at resale. It's people who already own the condos selling them to each other, to others. That's down about 62%. And the presale market, that is to say, trying to sell new construction condos, that's approximately zero. You'll see some people will claim that, oh, there's 500 last month of presale condos. But that's just people who put deposits down. If the company who's trying to sell that condo building, trying to sell it out, get enough investors to buy, if they don't get to 75% or 80%, they just have to give the money back. You can't start construction with 22% participation of people who've bought. So the chances are the reality of condos right now, apart from some super luxury units that are exclusively meant for people to own or occupy, the run of the mill 600, 500 square foot condo, the answer is probably there is zero being sold in GTA today, like zero. The sales have gone, there's no trade on that. And as we mentioned earlier, there's still a lot of construction going on within the GTA, still a lot of cranes out there and a lot of condos going up. And I read that there in 2025, there's another 30,000 units coming online, and I think a similar amount for 2026. So we got more supply coming onto the market. You got a slowing economy with a higher unemployment rate. Where do you see these prices going? How bad does it get in terms of the condo market? It turns into multiple receiverships at some point next year in 2026. Each one of these projects is independently they're making a huge development company behind it, but each individual project has its own separate corporation. We've seen receiverships already, but they were from organizations that were just getting started. They hadn't actually broken ground yet on the condo. So they're all in receivership now, or a few of them who are more established converted to purpose-built rental, which is another reason that these condos are doomed is because we've accelerated the growth of purpose-built rental units in British Columbia and Ontario in levels that have not been seen since forever. Like we quit building apartment buildings in the late 1970s, early 80s. And we never built any since. We've virtually built none of them until about seven years ago when CMHC came up with a program to get that market back stimulated. People just used condos as a way to create a rental apartment. But CMHC brought it probably wisely at the time. It looked like a brilliant idea at the time, but it has expanded so much that we are now building more rental units in Ontario and British Columbia that are coming on stream in the next three years than we've ever built in the history of Canada. So that's another problem. Like if you've got condos you wanted to rent out coming on stream, new construction condos that you planned on renting coming on stream in the next two years, as you just pointed out, and we've also got a record number of purpose-built rental units coming on stream, which will need tenants, and they have deeper pockets. Their REITs, their pension plans, they can afford to lose money a little bit longer than mom and pop who just bought two condos. So the outlook for the whole situation is just the only appropriate word is catastrophic for the buyers. Everything is a perfect storm of bad things. Now, people like to say oh wow, that sounds like crazy doom, your doom scroller, your doom pusher. It can't possibly be that bad. But I can introduce you to all kinds of lawyers who are handling people reneging on their purchases. I can introduce you to all kinds of condo salespeople who say yep, I haven't worked in two years. And this is real. All of this information is factual. So it is a moment in time when we look back on it ten years from now, people will talk about the condo crash in 416 as an epochal event, as something that's just biblical in proportion. I would agree with everything you've said, and I think a lot of people are just oblivious to what's happening in terms of the economy, and a big part of that has to do with the real estate market. And when you see this unemployment rate tick to 9 to 10 percent, I think it got up to 12 percent in the early 1990s, and I really think that's where this economy is going, that's when people are going to wake up to what's really happening out here in the real estate market. So you gave us a good explanation of what's happening in the condo market. What about in the housing market? How would you describe that? The housing market is a different, a whole different thing. Low-rise, let's call it low-rise housing, singles, semis, townhouses, it's completely different, utterly different. One key element of it is that in Ontario and British Columbia, we stopped building it in about 2017, 2018. That's when the ratios tipped to the point where, of new starts, 80 percent were high-rise in Ontario in 2018, and only 20 percent were low-rise. So that's a stark contrast to the 1980s when it was 90-10 low-rise. So you can see that we've effectively stopped building, and we radically reduced the building from 2017, 2018 on. Far fewer low-rise units being built for people to buy. Because they were too expensive. They were wildly expensive. In 2021, the average new construction house and single-family home was being sold for $1.6 million. That's an average. Some of those homes were out in the middle of nowhere. They were past Orangeville. You'd need a map to try to find them. They're so far out in the boonies of Ontario. Huge dollars. Huge, huge amounts of money. And it reached the point in 2021 where they were all being bought by speculators as well, to be resold. Today, we will certainly, and there's zero. The number of new low-rise homes that will be built in Ontario in 2025 is the lowest number since anybody started recording it. It's homes to sell. It's the lowest number since anybody started keeping track of it. What happens is almost all residential low-rise home building in Ontario is carried out by... There is no public company. Absolutely no public company builds homes in Ontario, builds low-rise homes. So they're all built by... They're typically the land and the building is done, in the majority of cases, by ultra-rich families who started doing it, five ultra-rich families who started doing it in the 1970s. And they kept accumulating land and they continued to do so. They grew richer and richer and they're so rich that when it looked like the market was deteriorating in 2022, they just told all their salespeople to pack up and go home. And we'll just leave this... We'll build what we sold and then we'll call you back when it gets busy again. And to date, nobody's been called back. So that's it. There's no new low-rise homes in any meaningful way being built in Ontario and quite a bit less on BC as well. Alberta's doing fine and Quebec's doing well, but it's pretty bad. It's as bad as it can get in Ontario. And the government, the federal government, implemented foreign ownership restrictions. Was it three years ago? Yeah, I think it's two and a half, yes. And how has that impacted the real estate market overall and do you agree with this ban? Well, the ban is just rational. Recently we've had a particularly pushed by Vancouver developers, Vancouver-based developers, that they want to eliminate the foreign buyers ban because they've come to the realization that their prices are so high that no Canadian earning a Canadian income could ever buy it nor rent it nor anything. So they want to go back to being able to effectively launder money from foreigners or find foreigners who don't trust their government and they want to push the money out of their country and buy sort of a concrete safe deposit box in the sky in Vancouver. But if you think about it from a home ownership point of view or from a rental point of view, it's an insane idea. So developers are saying, because we can't find any Canadian who can make financial sense of the prices we're charging, we need to find the greater fool in other countries or somebody who has a nefarious reason to move money out of their country and that's the only way we can keep building. That's how it actually translates. They don't even try to hide very much from this fact. They don't try to skate on it. They just say, yeah, we need to find people in other countries who have a ton of money and they're willing to invest because nobody in Canada can do it. So that's a pretty fundamentally bad idea, right? If they're going to overpay for buildings then either they're going to leave them empty, which helps no one in Canada, or they're going to try to rent them for prices that rents nobody can afford to pay, or they plan on flipping them so that they can wash the money and turn bad money into clean money. I don't see why anybody would support that who's a Canadian citizen. And another element that's led to higher prices especially in the greater Toronto area are these development fees. Maybe you can just speak to that, how they compare in Toronto versus a city like Calgary for example and how that's led to higher prices. Sure, I'll give you a perfect example. I'll compare it to Winnipeg. In Toronto, if you're building a and you are hardly building any of them, but let's assume you wanted to build a single family home. You found some open space. There is a little bit of open space in Toronto. If you found some open space and you wanted to build 300 homes the average development fee for each home would be just shy of $300,000. Now some people say, oh no, Ron, with the federal taxes and everything it's probably going to be more like $328,000 but it's definitely going to be just somewhere hovering around $300,000 per single family home in development fees paid to municipality, provincial, federal tax, you name it. In Winnipeg, the development fees are $1,500. So there's a pretty big contrast. And interestingly, there's a fairly big contrast between the price of homes in Winnipeg and the price of homes in Toronto. There's also a very large contrast there. So yeah, what happened over the course of 20 years is that the municipal government saw this incredible takeoff in price and they just said, we want our taste. We want to take a chunk out of that. So they just kept escalating the fees. There was one year where John Tory just signed off on a 50% increase in development fees. No relationship to inflation, obviously. He just said, I think we can get it, so we're taking it. Here, 50% up. So it's been literally insane. You can't call it anything else. In 1989, the city of Toronto charged $3,500 in development fees, and today it's $300,000. So that's not inflation, obviously. So therefore, some municipalities who went along with it have had to ratchet it back. Like in Vaughan, which is north of Toronto, and Mississauga, which is west of Toronto, the councils and mayor have reduced those fees by 80%, because they noticed nothing was getting built. There were no new starts whatsoever, and that gave them pause. So they reduced those numbers, but there's still no starts in any of those locations. Just because we're on the topic of idiotic policies put forth by the government, we've got to talk about property taxes in Toronto, because a lot of people outside of Toronto might not realize this, but the property taxes in the last few years have just gone stratospheric. In 2025 alone, they went up 6.9%, and in the last five years, it was probably around 25 or 26%. And shortly after the city council put forth these increases in property taxes this year, they all gave themselves a big pay raise of 24%. Well, you know, the property taxes have escalated significantly in Toronto. They are still amongst the lowest in the province, because there's a big commercial tax base in the city of Toronto. They will continue to escalate, because what we're discovering is that none of these municipal governments have any intention, any desire, or any belief that they need to reduce their expenses. There is never any discussion of reducing headcount of workers. There's never any discussion of shutting a library or shutting a community centre, because it's hardly utilized. Those jobs will go on for eternity, and yeah. There's no, no, I mean really emphatically no intention of any of these municipalities to reduce headcount. Or adopt AI or do anything that would reduce the number of bodies in the system. So yeah, it's just going to get worse, because they all need raises, all those people need raises, there's never going to be any less of them. Hey, we got the World Cup coming to Ontario, and there needs to be a lot of money spent on, frivolously on BS to support the World Cup next year. So there's more money disintegrated. So to your point, yes. Municipal spending in most of Canada is just off the charts. And whenever you ask them, they tell you it's impossible to cut anything, because nobody wants services cut. Okay, don't cut services, but I'm sure if I spent three weeks in City Hall I could find some people who are just looking at the ceiling most of the day. I could probably find some people who need to go. But that's never a consideration. It's never going to happen. Ron, I want to get your opinion on the Liberals. We have a new Prime Minister in Canada, Mark Carney. He's been in office for over 100 days now, so the honeymoon period, it is over. But they've announced a number of changes to housing and also to help with affordability. Can you just speak to some of these changes and what are your thoughts? Well, there's probably a developing narrative that none of it will happen. CMHC announced a week ago that they believe due to the things I've talked about, due to the failure of the condo market completions in, the difficulty of condo completions in big centres like Vancouver, it looks like Calgary may have some trouble as well. It looks like Montreal could be fine, but there's some questions being asked. Because of this oversupply of condos and combined with this incredible, unbelievable surge in purpose-built rentals, CMHC themselves, the Deputy Chief Economist said that he believed that Canada's entering an oversupply of rentals nationally. So if all of Carney's suggestions revolved around rentals, that was he proposed building 500,000 affordable modular yurts or something of that description. I don't know. Nobody knows what it is. But it doesn't look like there's any need for modular yurts in Canada right now because the Prime Minister's own housing agency has said there's going to be an oversupply of rentals and we should really slow down building them. So what there is, is not enough houses to buy, not enough affordable homes to buy, and none of the Prime Minister's policies address homes to buy. Not really. If you just dig beneath the surface, they're only ever about affordable homes that are either going to be subsidised housing or rentals. So probably nothing will come of this in the coming because the ability to reduce these incredible municipal fees, government taxes, the preposterous level of time it takes to get a building permit, the bizarre unheard of amount of time it takes if you want to build a new subdivision, like if you want to build a lot of low-rise homes, it takes three years, 24 reports have to be generated, and in Ontario we have the bulk of people where people live is surrounded by an artificial moat called the Greenbelt which the provincial government tried to open up about a year and a half ago and was blown up by scandal and Doug Ford ran back and said, well we're not going to do it anymore, we'll just leave it alone. So all predicated on crazy government policies and mistakes. If the Prime Minister wanted to address municipal government fees, which he sort of has, but he also said he's going to take our tax dollars and supplement the municipalities. So this is the crazy idea that somebody in Winnipeg's tax dollar who only has $1,500 development fees, our whole general tax revenue is going to be given to Vaughan and Toronto and Mississauga and Ottawa municipalities to support their outrageously high fees, is just a completely insane liberal idea. It's just totally nuts. If you're in Winnipeg and you want part of your federal taxes to go to support Toronto municipalities, it's crazy. You can't even think about it, it's too nuts. So yeah, I think eventually it'll all just dissolve. The only rational idea was Polyev's idea, who's just been re-elected in Alberta. He had the rational idea that he said, my position would be that the Conservative Party's position is that we would go to these municipalities that are charging $300,000 in development fees and we would tell them if they did not decrease them by 95%, we would stop transferring them money. In other words, we would threaten them and force them to stop. Force them to cut their expenses. Force them to reduce their headcount. And to me, that's the only workable proposition. Nothing else makes sense. Ron, you discussed how the condo market has totally collapsed. We've also seen a collapse in housing starts in southern Ontario. What is this doing to the construction industry? Because I'm just thinking about the spillover effect. Do you have any stats on that? Yeah, it's a little bit deceptive right now, because 80% of all building was in the condo space as I told you, since 2018, 2017. What's happened is that the crews that were building the condos, as the condo finishes, the developer pulls that crew off to speed up the completion of the last group of condos. The final group that's being built. Because they want to hurry up and build them, because every month it gets worse. So they want to hurry up and finish them fast. So the real absolute debacle, it's bad in the construction industry right now, really bad. But the total debacle will occur sometime towards the end of 2026. And we will see, some construction workers have left Ontario for other jurisdictions, where there is building in Quebec going on, building in Alberta. Saskatchewan's on fire, it's just not a huge province, population-wise. So they have moved, but eventually it looks like some of the bloom is coming off Calgary, so it could get slow everywhere by the end of next year. One of the things that kind of confounds me is what's happening with the Canadian banks. And I look at the Canadian banks because I think they're a good barometer of what's happening in the Canadian economy. Because they deal with retail investors or retail customers and commercial and they have very large loan portfolios. And a lot of these banks, I'm going to pick out Royal Bank for example, the largest bank in Canada that's trading at or near all-time highs. And we don't really see any weakness yet in their loan portfolios. Any thoughts on that? They actually report weakness and nobody cares. These big banks in Canada, the five big banks in Canada, no offense National Bank, but the five big banks in Canada are very diversified. And they are very well run. People go, oh yeah, you're just pumping the industry. Like you said, they got through COVID. They seemed to get through everything. They got through the world financial crisis unscathed. And now we've got rising unemployment. Mortgage default will rise. And certainly their credit card books are experiencing some difficulty and their automotive loan books are experiencing difficulties. But they're so well operated that they have growth in other divisions. Like the wealth is through the roof, creating fees. Capital markets action around the globe is great for them. And they're doing very well. But yeah, they are experiencing weakness in their loan books, but not any kind of catastrophic weakness. The one thing people don't understand about the Canadian banks is they never acted like the US banks did in 2008, 2007, 2008. Their underwriting actually got tougher. It became harder to get a mortgage in 2021, 22, and continues to get tougher and tougher. Their underwriting is actually more stringent. I'm not going to go off the tangent of mortgage document fraud, but in terms of, I'm a student of the 2008 mortgage crisis, and I can tell you that the things that were going on in the United States have no resemblance to anything that's gone on in Canada or will go on in Canada, and the banks do not have exposure in Canada to that kind of disastrous outcome. Because the truth is, other players have arisen in private mortgaging and alternative mortgaging, and there's just not private lending, and there's just not enough exposure that the banks have. The banks have the very best possible borrowers. Not to say that things can't go wrong. If the unemployment in Windsor amongst homeowners gets to 14%, there's going to be some more defaults. I've seen all the calculations, I've been shown the numbers, and they can handle the level of default that it could get to. With the exception of an economic catastrophe that we're unaware of, I'm not suggesting it couldn't happen. If Britain's debt market fails, I guess there'll be a ripple effect across the world. Canada's banks can pretty much survive anything that's going on in Canada today. Now, their share prices being as high as, I'm not suggesting their share prices reflect everything that's going on in banking in Canada, but I'm just a guy who never bets against those five big banks. They do have the support of the government, so I'm not going to bet against them. Another aspect of the Canadian banks, the one thing they do exceptionally well, they nickel and dime you to death. So they lose over here, but they make money over here. They always win. We talked about how the economy is definitely slowing. We have an uptick in the unemployment rate. This is having an impact on the real estate market. What advice would you give to somebody who is currently renting, maybe a young couple in their early 30s, making $150,000 or $200,000 a year combined? What advice would you give them? Should they continue renting, or do you think they should step in and buy a property in the GTA? I think they should be patient a little bit longer. I don't think that we have not seen the bottom of prices no matter what any real estate agent or other mortgage broker may tell you. I don't think we've seen the price bottom, particularly in Ontario. A lot of times, real estate and mortgage workers are just like barbers. If you go in and ask if you need a haircut, you pretty much always need a haircut. I think that there might be a potential next year that there would be a confluence of lowering prices, reducing real estate prices, and there's a chance rates could be down. There's a chance that mortgage rates could be up by summer of next year, but there's also a possibility they could be down. It's a very volatile time. It's impossible for me to make any kind of long-term assessment of rates, but I think the possibility of house prices in Ontario being lower next year, the balance of probabilities is high that they will be down again next year. There's a lot of different elements to consider here, and one thing we really don't know what's going to happen with this trade war with the U.S. and depending on what happens and how it evolves, this could really put a lot of pressure on the Canadian economy and drive that unemployment rate up and that's only going to take housing prices down. What are your thoughts on variable mortgages versus fixed? Well, I've adopted a fairly conservative attitude because I am someone who understands that there are it's a small percentage. It's like 20% that we could experience a major credit event, a sovereign credit event in the next year or 18 months, which would temporarily push rates through the roof. If you can get yourself a three-year or five-year fixed today for less than 4%, I think that would be a great idea. I also believe we will, in the short term in the next three or four months, we will see the Bank of Canada reduce rates. Not radically, but there's an excellent chance they'll come down, I believe, the rates will come down another 50 basis points in Canada at the Bank of Canada. But that may be temporary. By next summer, we could see the bank hiking again. It's not impossible again. There are these nebulous events hanging out in the world, a world that is so indebted, national governments that are overspending, federal deficits that are so massive not necessarily in Canada, not necessarily in the US, but there's a whole lot of other countries in the world where a sovereign credit event could occur, which would need to be managed and would temporarily boost rates all across the globe. Those are the things that I think about, and I think if there's a 20% chance of that, that maybe people shouldn't. There's also counter tariffs really get rolling in a major way, if the trade war develops into a hot war, then inflation is almost necessary. So that would eventually force the Bank of Canada to raise rates again. So I think there's just so much volatility, so much uncertainty, that if people could get a historically great rate of 389 or 369 or 399 on a three or five year fixed rate, they should take it. Yes, inflation has proven to be very sticky here in the last couple of years. It is not going away, that is for sure. So Ron, this was a great discussion. I want to thank you very much for spending time with us today. If somebody would like to learn more about you and the services that your firm offers, where can they go? Well, our company is butlermortgage.ca. That's one T in butler, all one word, butlermortgage.ca. I am available to view my foolishness on, we have an angry mortgage podcast, an angry mortgage YouTube channel, that's angry, sort of suits my personality, and I'm found in other social media locations as RonMortgageGuy. So any of those places you want to look it up, you'll get some information and hopefully learn some more about the mortgage business. I'm a subscriber to your podcast, I love it by the way, and I will include links to both in the show notes below. Ron, once again, thank you. No, thank you very much, appreciate it.