The 2018 Real Estate Roundtable: What does the future hold for Toronto’s housing market?

For Post City's 11th Annual Roundtable we assembled our most distinguished panel of real estate experts yet

(Pictured above from left to right) Michael Kalles, Jennifer Keesmaat, Tim Hudak, Michele Romanow, Brian Gluckstein, Barry Cohen, Paul Miklas, Danielle Bryk, Benjamin Tal, Maryam Mansouri Hurst, Brad Lamb and Joe Oliver.


This spring, 12 of the city’s most prominent and opinionated real estate experts gathered in a boardroom at the prestigious Granite Club in North Toronto for a spirited exchange on the state of Toronto’s real estate market.

Listen to the roundtable podcast via Apple Podcasts and SoundCloud


THE REALTOR – Michael Kalles, President, Harvey Kalles Real Estate

THE PLANNER – Jennifer Keesmaat, Former Chief Planner, City of Toronto

THE ADVOCATE – Tim Hudak, CEO, Ontario Real Estate Association

THE DRAGON – Michele Romanow, Dragon, CBC’s Dragons’ Den

THE DESIGN GURU – Brian Gluckstein, Principal of Gluckstein Design

THE SALES PRO – Barry Cohen, #1 Re/Max Salesperson in Canada

THE BUILDER – Paul Miklas, CEO, Valleymede Homes

THE HGTV HOST – Danielle Bryk , Designer, HGTV Canada

THE ECONOMIST – Benjamin Tal, Deputy Chief Economist, CIBC Capital Markets

THE ARCHITECT – Maryam Mansouri Hurst, Vice-President, Mansouri Living

THE CONDO KING – Brad Lamb, Developer, Lamb Development Corp.

THE FINANCE ACE – Joe Oliver, Former Finance Minister of Canada


Post City: Mr. Tal, as one of the country’s top economists, give this roundtable a sense of where the Toronto real estate market is right now.

Benjamin Tal: Well, I think that it’s challenging. It’s a very challenging market now. In fact, this is the biggest test since 2008. We have too many things happening at the same time. We have interest rates rising. We have the Office of the Superintendent of Financial Institutions (OSFI), the 200 basis points qualification rate [the new stress test], which is a big deal. We have Trump, which is a major issue. So, clearly, I think that we are facing the most significant challenge since 2008.

I don’t think that the number one issue is interest rates. I think that interest rates will be rising very, very slowly. The number one issue is OSFI. The number one issue is the qualification rate. About 12 per cent of people will not qualify, given the new regulations. I think that will impact the market. It’s already impacting it. We are seeing an affordability crisis happening, and clearly the rental market is not there because of the fact that we don’t have purpose-built rental activity happening. Rent control is part of it. So clearly this market is being challenged.

“It’s a very challenging market now. In fact, this is the biggest test since 2008.”

Post City: Barry Cohen, you’ve got boots on the ground as one of the top realtors in the GTA. Is this in line with what you’re seeing?

Barry Cohen: I think the public is more sensitive to what they see and what they hear, and the media plays a large part in our marketplace. So there’s a lot of wait and see going on, but today the Toronto Real Estate Board came out with the stats, and they talked in terms of activity down 30 per cent, and the average price being down. But everything is in comparison to last year, which was kind of an outlier, nominally. So we are seeing, in some areas within two miles of here, multiple offers in the $2 million range.

Tim Hudak: I think that an important lesson for government right now is just to pump the brakes. There has been a considerable pile on, as Benjamin talked about, from OSFI to higher interest rates, to new taxes at a provincial level, higher land transfer tax rates, and the impact is that it’s causing fewer people to be able to achieve that dream of home ownership. So one clear lesson for the government, for the time being — don’t do any more damage. Step back.

Jennifer Keesmaat: These conversations always strike me as funny, because a year ago we were talking about how the market was overheating, prices were out of control, we needed to slow things down. Now things are slowing down, and everyone’s saying, “Oh, God, things are slowing down. There’s this incredible risk. Why are things slowing down?”

Last year the conversation was about adding supply, adding more units. There’s 52,000 more units in the residential pipeline in the city of Toronto than there were a year ago. There’s almost 300,000 units overall that are approved and not yet built.  The challenge is, when a whole series of policy measures are implemented at once, it’s difficult to know what is actually having an impact.

Paul Miklas: For the 52,000 units you’re referring to, are they all condos?

Keesmaat: They’re a combination of condos. I think 89 per cent are, in fact, condos.

Post City: Brad Lamb, the condo market is still hot and outpacing single detached homes. Can we expect more of the same this year in the condo market specifically?

Brad Lamb: We’re not seeing, I think, anything that we’ve just discussed in terms of negative marketplaces. Incredibly strong: a new development today in Toronto, and it doesn’t matter if it’s Mississauga or Scarborough, North York or downtown, is typically being sold in 24 hours. So there’s absolutely no issues in the development business.

The average price now downtown for a new launch is $1,200 a square foot. That’s the average, and you’re lucky to get that. In the resell market, we’re seeing increases in the last six months of around 15 per cent in prices. Maybe 20. We’re seeing multiples on almost every sale. The issue we have is supply. It still remains supply. 52,000 new condominiums could be sold in six months downtown.

Post City: Ms. Romanow.

Michele Romanow: You know, unemployment is low today. Factories are at capacity. The economy is largely doing well, and so the only way to kind of prevent this inflation is going to be for interest rates to rise. I think probably, yes, we can talk about OSFI and foreign buyers and what’s gone in to produce this little cool, but I think, you know, we have to be looking at going into a 40-year period of rising interest rates, not falling interest rates.

Tal: So we are much more sensitive to the risk of higher interest rates, and what the Bank of Canada is telling us is that maybe the disease is also the cure. Namely, the increased sensitivity to higher rates will prevent interest rates from rising to the sky. Also, the structure of the debt market in Canada is that it takes a lot of time for it to actually get the full impact. For the first year, only 20 per cent of Canadians paid one cent more. Next year, even if interest rates go up, only 30 per cent will pay more.

It’s a very gradual process, the only risk is that the Bank of Canada would like to see the change very quickly, and they will start raising interest rates too quickly. The peak in interest rates this cycle will be much lower than the previous peak.

Danielle Bryk: People are buying smaller. Certainly I’m seeing that from a design perspective. There’s a true appreciation for small space design, and for me, the people that are most affected by this real estate market are those ones that are trying to get in there, people who may want to raise a family in a condo. I think there’s a very huge lack of family-sized condos and apartments in Toronto, unlike every other major city across the world, where people do raise families in apartments. I think we need to, A, increase that supply, and B, I think we need to have a mind shift around this stigma on raising families in an apartment.

Keesmaat: Well, I’m happy to pick up on that point. At the City of Toronto, we’ve had an initiative underway called Growing Up Vertical. We learned that families are already living in condos. They just have nowhere to park their strollers, for example, so they’re putting them in the bathtub. They have no amenities for children in the condo.

The amazing thing about that exercise was how the industry responded. Developers like Tridel became very involved, wanted to pilot the guidelines and have now designed new buildings that have craft rooms and play rooms and amenities and spaces particularly for parking strollers. So I think part of it is about a cultural shift that we’re going through as a city right now, and we can either push against that or we can embrace it.

Tal: So, Brad, do you see demand rising for family units?

Lamb: So this is not going to happen. The reason for it is that the process from buying a property as a developer to finishing it off is seven years now. You often put it to market within a year of buying it. So it’s a six-year process. So how many families are going to buy a condo and wait for six years? Nobody.

Maryam Mansouri Hurst: As Brad mentioned, the prices right now are between $1,000 to $1,200 a square foot. Let’s put that into perspective. That’s $600,000 for a one-bedroom condo in the city. With the new interest rates and the stress tests, who can afford a two-bedroom unit for a couple and their children?

Brian Gluckstein: Well, it can’t be the two bedrooms that are being produced now because they’re really not family spaces.

Mansouri Hurst: Exactly.

“$600,000 for a one-bedroom condo in the city… Who can afford a two-bedroom unit for a couple and their children?”

Gluckstein: They are tiny, tiny spaces. There’s no place for toys. There’s no place for a dining room table. There’s no storage. So you would have to build 1,000 feet, and that’s a $1,300 or $1,400 for a million three or a million four. And you’ve just blown them out of the market again.

Tal: Sowe have a supply issue, given preferences. We did a lot of focus groups, and many families still want to live in this, you know, nice house with the backyard. So that’s why you have “try until you qualify,” yeah? People go to Hamilton and Barrie and all kinds of other places because that’s basically the only thing they can afford.

I’m not sure that current policies are helping. I think that the rent control was not the right policy. I was begging the government to do at least rent [increases], you know, inflation plus two because many developers are telling me, “Give me three per cent, four per cent rate of inflation and I’m building purpose-built rentals.” We’re not getting this as well. So the only thing that can release the pressure is rent. We have to change the state of mind of many people: that if you are 35 years old, you are married, you have two kids and you are renting, nothing is wrong with you. If we are able to do that, then we can find some sort of a solution with modifying rent control.

Lamb: Phase two is coming, by the way. You’ve just seen phase one. Phase two is now a registry where all landlords have to register their properties with the province. So in the current legislation, if you own an apartment building and a tenant moves, and they’ve been there 20 years and they’re paying $800 and the market is $1,500, you can charge $1,500 on an empty apartment. That’s the rules as of now. This legislation [a private member’s bill put forward by Peter Tabuns, MPP for Toronto-Danforth, called Bill 144] has gone through first reading at the legislature: that you can only raise an empty apartment now by that amount allowed by the province, which will be two per cent or in that range. So that’s just going to absolutely destroy the rental industry. That’s coming.

Tal: You know, what all this means is that if you think that this city is unaffordable now, you wait. This is just the beginning.

Post City: So if you’re looking for your first home right now, where would you look for value in Toronto, a condo first or house?

Gluckstein: I would say the periphery of the city. The Junction or, you know, way east or way west. There are a lot of areas in the city that have great stock of houses that are not the most desirable neighbourhoods right now, but are going to be quite desirable and almost unaffordable within the next decade.

Post City: Jennifer?

Keesmaat: An area like Weston, I think, is a hidden gem. It’s a 15-minute ride on the UP Express or the GO train to get downtown. So it has excellent transit access, excellent parks. There’s a combination of rental. There’s some new development that’s been approved. There’s also single family. So it’s a great combination. There’s a new cultural hub that’s being built in that area.

I would also say look in the areas around the SmartTrack stations because those areas tend to be very low density.

There will be new development, and those are areas where you’re going to see the access to the rest of the city flip on a dime once those SmartTrack stations are open. The transit access will increase significantly.

Lamb: I would say Scarborough.

Post City: Because of the subway?

Lamb: The subway, and also it’s incredibly, incredibly cheap.

Bryk: I live in the east end, and it’s very untapped.… You’re right. Scarborough, like, just outside of the city limits, untapped. A lot of land, often. Great little communities starting up, where all these young families have been going. You can see the development even on Kingston Road with the cafés going in and all of the different things. It’s got a really nice vibe.

“If you think that this city is unaffordable now, you wait. This is just the beginning.”

Post City: OK. Michael?

Michael Kalles: Not looking at the starter homes, but looking at the central core, I think what distinguishes Toronto from the eastern seaboard, cities like Boston, Chicago, New York, is the ability to be in a single-family detached home, be it in Forest Hill, Bridle Path, Rosedale, and to be in downtown in 15 to 20 minutes … that just doesn’t exist in these cities, so I’m quite bullish on these areas.

Romanow: I think I am with Danielle on the east end. I think even closer to the water. I’m really excited about what Google has done in making a huge investment in smart cities, with the support of the city. I think there is so much around the water that we haven’t used that could be a great asset.

Miklas: I think if I’ve got $600,000 or $800,000 to spend, your choice is either live in the city or go out to Pickering or Oshawa. I think it really comes down to what the people want. I mean, do you want to live the condo life? It’s personally not for me. I would rather take a train ride to go to a place like Oshawa and be able to buy a 35-foot lot that’s 100 feet deep and have a 2,500-square-foot home, where I could raise a family.

Post City: Now, we’ve heard anecdotally that, in Toronto, mortgage renewals are in jeopardy with some of the rising interest rates. How bad could it get for people who have overextended and bought at the market peak a year ago? Mr. Hudak?

Hudak: Tell, look, I think that the stress test is going to hurt new Canadians, millennials and those of modest income the most.

The federal government talks a lot about helping the middle class and those who aspire to join it. This policy is working in the complete opposite direction.

Tal: There is one derivative of this policy, which I’m concerned about, and that’s alternative lenders. You see, 12 per cent of people will not qualify based on what we are talking about. But never underestimate the creative imagination of Canadian borrowers. They will come up with something. This something, in part, is going to be alternative lenders. We already see business with credit unions rising because they are not part of the  the regulations.

The other issue is private lenders: mortgage investment corporations. Their business is booming. They are already 10 per cent of the market. Already in terms of transactions, on its way to 15 per cent. So the issue is that we are transferring risk from the regulated segment of the market to the unregulated segment of the market. We are transferring risk from where there is light to where it’s dark. This means that the unregulated segment of the market will be larger and larger. So when something bad happens, we are blinded by it.

Cohen: I still believe that, while in the short-term there will be fewer sales because of the stress test, in the long-term there will be as much and more, because I think Brad and Maryam are going to just continue to build smaller units, because if I can’t have a house this big, I’ll have a condo this big.

Hudak: So the surprise outcome of the stress test is putting extraordinary pressure on rental markets, which means that low-income families cannot find rental spaces, and it limits supply. So about 50,000 people will no longer qualify to buy a home because of a stress test, the two-point increase in the rates. That means they’re staying in rental housing. When you combine that with the new rent controls and lack of new supply, that means low-income [people], those in risk of becoming homeless, kids trying to get a place of their own, they’re going to be SOL.

Tal: I think it’s time to talk about debt. Our debt-to-income ratio is 171. You know, during the recession our debt-income ratio went down from 140 to 171.

There are two separate parts to the debt story. One is people in their 30s, in their 40s. They are actually extremely responsible. They have been using prepayment at a rate we’ve never seen before. Their motivations have been going down. In many ways, many Canadians deserve credit for not taking credit. The main issue is those young families that are still blinded by the affordability mirage taking those extremely large mortgages to buy a low-rise, and that’s where the vulnerability is.

“I think it’s time to talk about debt.”

The issue is not people defaulting, by the way. The issue is that, if you start paying too much toward debt when rent starts rising, you pay less to consumption. You do that, I do that, so you have a recession, a recession leads to higher interest rates, higher interest rates lead to a higher unemployment rate, the higher unemployment rate leads to default.

There will be recessions, and prices will go down in a recession. Interest rates will have an impact, and the market will slow down, if not this year, the year after. The cycle is not dead.

Lamb: I think we need to focus now on giving people or having people understand that rental is OK, and that we’re going to shift from an 80 per cent owned, 20 per cent rental to a 90 per cent rental and a 10 per cent owned. The 10 per cent owned is going to be owned by wealthy people, just like Paris and London and New York. That’s OK. As long as the people who rent do other things with their money. They don’t spend it all, then they can have a good life.

Bryk: I think there’­s actually still a ton of room in Toronto to increase the density in our low-rises. So talking about New York, nobody lives in a full brownstone anymore. So even some of my clients now are converting their single-family dwellings into high-end multiple-family dwellings, and I think that’s a really nice market to tap into. Even with multigenerational families, you’re talking about kids still living with their parents. Actually, there’s a lot of benefit to that. So if there’s a way to kind of convert our housing to accommodate that, too, I think we benefit in so many ways.

Hudak: I mean, we’re a long way from New York City or Paris. It makes us feel good to say we are close, but we are a long way away from that. Government should invest in infrastructure to enable more housing, whether that’s transit, water, sewer or roads.

Joe Oliver: The reason that people are opting for apartment buildings downtown is not because they necessarily want to plunk their family in an apartment building. It’s that they can’t afford a single-family dwelling, and they find it intolerable to commute for an hour and a half when the public transportation isn’t a good alternative, when there aren’t trains and subways getting there.

We need to address the supply. That’s gotta be at the absolute top priority. Look at the Greenbelt. We have 1.8 million acres, five per cent of that, 90,000 acres. I understand it can accommodate a half a million mixed development residences, housing one and a half million people. This is potentially significant. significant.

Miklas: Unfortunately, Joe, it’s so expensive. By the time you buy the land, put the infrastructure in place, set up to sell certain homes, you’re easily, like, if you’re talking about the Greenbelt just north of Toronto, you’re going to start producing townhomes around, oh, what, 1,800 square feet or even 1,200 square feet? You’re going to be at $800,000 to $900,000.

Post City: In the midtown area of Toronto, more than 200 properties, a lot of two-storey main street storefronts, have been added to the city’s heritage register. What impact could that have?

Lamb: It’s a disaster. In the past there’s been some flexibility in taking truly historic buildings and moving them around the site, some facadism for buildings that perhaps have mostly a facade that’s historic and not the whole building. That’s gone. This is draconian. It’s going to shut down development in a meaningful way in the west precinct, which is, like, from University to Bathurst to Queen, down to Front Street. It’s horrible, and they’ve also extended it to the east side.

Most landowners are at the Ontario Municipal Board (OMB) fighting it. It’s going to be a very long, expensive battle. But it’s not good for the city.

“It’s a disaster… This is draconian.”

Keesmaat: Well, I disagree. I don’t think it’s a disaster. Not even close.

Within the area that you’ve [Post City] referenced on Yonge Street, there’s a development by Rockport, Postal Station K. The historic postal station is protected, and you can walk out there today and see the 32-storey tower that is being built on top of it. The heritage building was integrated into the development. So this idea that protecting heritage freezes development is simply not the Toronto story. Look at Yonge Street. We have a heritage conservation district (HCD) along the historic Yonge Street, and we have 30-, 40-, 50-, 60-storey buildings that are integrating heritage assets into the building and, as a result, creating a really unique place.

So it’s not a disaster. We, in fact, are seeing many of the best developments in the city are sites where there is a heritage building.

Lamb: That’s just not true. That’s not true.

Keesmaat: It doesn’t freeze it. It just means that, as a developer, you’re required to work with that heritage building and incorporate it in some way into your project.

Right in the King-Spadina precinct, which Brad is referencing with respect to the new HCD, one of the best buildings in that precinct is the building by Allied, on the corner of Richmond and Peter, a heritage building integrated right into an office complex. What’s so amazing about that building was that it wasn’t designated. It wasn’t even listed. Allied looked at the asset and said, “Hey, we can create a really unique project and a really unique office building on this site if we integrate the heritage building.”

Lamb: Listen, Jennifer, the HCD just was enacted. So you’re talking about things that happened years ago. Years ago it was draconian but not terrible. This new HCD that I think you’re partly behind, it is terrible. I live it every day, and I talk to developers every day on this level, honestly, where we’re talking about what the city is doing to us, and you’re wrong about that. It is shutting down development.

I own multiple buildings around the city that are not developable anymore, period. There are sites that are now benign. We can’t develop them, because we have to keep the entire structure intact. We can’t build on top of it. We can’t put support systems through the historic property.

Bryk: Just from a strictly design perspective, I can’t speak to the development or the financial implications of it, but preserving those materials is so incredibly important for long-term value. I think it’s such a shame if we can’t come to some kind of a compromise where you can develop while maintaining that facade.

Gluckstein: I think Toronto has a big problem from a design standpoint. I really think that Toronto is not becoming a more beautiful city. I think that we are shaping the entire city forever in the last two decades and not for the better. I think we are putting up buildings that are underwhelming at best, are overly consistent, and we are going to be living with these for a very long time.

There doesn’t seem to be an incentive to really push the envelope among most developers, and unfortunately Toronto is going to pay the price.

Keesmaat: If we go to Paris or, I just came back from Vienna, the vast majority of the buildings are background buildings. Dubai is the opposite. Dubai is a city where every single building is different, and I actually, esthetically, find that very ugly.
If all your buildings are different, you actually get a loud chorus. Most buildings in a city ought to be background buildings.

Tal: I just want to raise a question and hear what you [Brad] have to say. The changes to the OMB, how big a deal is it?

Lamb: It is the single biggest disaster. You know —

Keesmaat: Brad you said that was heritage. Heritage was the single biggest disaster —

Lamb: Heritage is number two because heritage only affects certain neighbourhoods in Toronto, not all sites. What people don’t understand is that sometimes the city planning department agrees with the development and the local councillor doesn’t, and it ends up at the OMB to be discussed. Now, without the OMB, the lord and master is the councillor, and the people that puppet master him are the ratepayers. It’s now entirely up to ratepayers to decide what they see in the neighbourhood.

Gluckstein: Why shouldn’t ratepayers have a say in their neighbourhood?

Lamb: Well, because ratepayers aren’t professionals.

Gluckstein: It’s their neighbourhood. They’re the ones that are going to be there after that development.

“Toronto has a big problem from a design standpoint. I really think that Toronto is not becoming a more beautiful city.”

Lamb: I’m going to tell you why: because what most ratepayers do is work for a living. Maybe they’re interior designers, doctors, lawyers. They could be politicians. They don’t know anything about development.

Gluckstein: Are you saying they should have no say in their neighborhood?

Lamb:I’m saying they should have the same say they had before. They had a say.

Gluckstein: But the OMB rubber-stamped everything.

Lamb: That’s absolutely not true.

Gluckstein: It happened a lot in my neighbourhood.

Lamb: Only because you disagreed with the developments.

Gluckstein: No, I’m involved in many of the developments. I’m involved in so many developments in this city. So I’m not against development.

Lamb: OK. I’ve lived with the OMB for the last 10 years, and I’ll tell you, the OMB, I’ve lost there and I’ve won there, and the OMB is very fair. They are very fair.

Post City: But there is a tribunal that’s being set up to replace the OMB.

Lamb: It’s useless. They do not have the same mandate to overrule. It’s a much weaker board.

Mansouri Hurst: So the issue with the tribunal that’s been created is, if you have opposition at the city level and then you have an appeal, you’re basically going back to the same level of a board again. Versus something more detached, looking at it from a more rational, evidence-based perspective.

Post City: The foreign buyers tax was a big point of contention at last year’s roundtable. Nonetheless, it happened. Mr. Hudak, did it have the desired effect on the local market?

Hudak: In the short-term, it was a psychological impact that took some of the froth out of the marketplace. But it doesn’t have a long-term impact of consequence. The most damaging policy in the Fair Housing Plan was rent controls, because it’s going to punish low-income seniors, people with disabilities, young people the most.

Cohen: There are so many loopholes. My experience with my buyers is that one out of 10 even talk about the tax. In the case of Chinese people migrating, they are putting it through friends, or other family members [who have already settled here]. So I really think 90 per cent of it is not being picked up, and I think that they are looking at it as just the cost of immigrating.

“The most damaging policy in the Fair Housing Plan was rent controls, because it’s going to punish low-income seniors, people with disabilities, young people the most.”

Lamb: I would say that tax is irrelevant. People are very smart in terms of avoiding that tax. I think it’s … well, as Tim said, it has a psychological effect. No one we talk to says anything about it, but rent control is absolutely the big thing that needs to change because with rent controls in place we are going to have a real crisis of rents. We’re seeing rents rise 25 per cent a year right now.

Keesmaat: Isn’t that an argument for rent control?

Lamb: No. It’s for more rentals. The amount of properties currently for rent in the condo market downtown right now is around 1,200. Last year there were 1,800. Eighteen hundred was a disaster last year. It’s 1,200 now. We’ve added all these new condos that have been approved.

So what’s happening is, two things are happening. Small-time investors are selling the units through the market to end users because they don’t like rent controls. So our clients are choosing to sell units instead of keeping them. So the rent control, the rental product, is getting less and less and less. Rather than holding for 10 years, they’re holding for four or five.

It’s a terrible policy. It needs to change or we’re going to have a real crisis on our hands.

Keesmaat: Is it a bad thing if investors are selling their properties that they were previously renting to an end user? I’m not sure that’s a bad thing. It can provide stability in a building in the community to actually have people who own the unit living there. But what it does point out is that using condos as a de facto rental market and rental supply is a poor way to provide rental in a city.

Lamb: Absolutely.

Keesmaat: So purpose-built rental is a better way to do it. When rent control was introduced at the city, we had a whole variety of applications for rental buildings that were going through the approvals process, and so we did some reconnaissance with the developers who were bringing these buildings forward, to determine whether or not they were going to continue to pursue that building as a rental building or if the rent control was disincentive to doing so.

One of the key things we learned was that of all the projects at that time — so this was about a year ago and there were 23 projects under development ­— all of them, except for one, were continuing.

“It isn’t desirable in a rental building to have huge increases in rent because you create turmoil within the building.”

As long as the developer can set the point of entry into the market and gets that point of entry right, in terms of setting the base price, rent control is not that different from what an annual escalation will be. It isn’t desirable in a rental building to have huge increases in rent because you create turmoil within the building. You generate vacancies, which has a cost associated with it. So, generally, purpose-built rental buildings, regardless of rent control, seek to have a very stable population and do not have dramatic increases in rent like you see in condo buildings, where it might be an investor who owns one or five units.

Tal: There is a win-win situation if we just do inflation plus two. Then it’s simple. Then you have rent control. You don’t have this crazy landowner that is doubling over the course of breakfast, and you allow builders to build. So all those people at the margin will enter the market. We can do that and call it rent control, protect the tenants and still have affordable rental in these markets.

Keesmaat: But it’s important to distinguish that those crazy increases were not in purpose-built rental buildings. They were investors who were booting out a tenant and getting a new tenant in at a higher rate. It was not in purpose-built rentals where that problem existed, to your point.

Lamb: Sorry, just quickly. In purpose-built rentals, landlords do raise rents by the max amount they can to keep the tenant in place. That’s their business plan.

Gluckstein: Yeah. The issue is, like Brad is saying, if you are going to say after four years or five years, “You know it doesn’t make sense. I’m going to sell it,” there’s no security for a tenant. If they’re in a purpose-built building, if they want to stay there for the rest of their life and they want to be a tenant, they make that their home. But with that uncertainty, is your landlord going to sell it in a year because the market’s going up? There is no stability to renting.

Tal: The future of demand is families. They want stability. The future of demand is all the people downsizing. They want stability. We need purpose-built.

Post City: It’s time for our look ahead. What confidence do you have in the market? Would you recommend to your own children to buy a house now?

Gluckstein: Yes. They should buy if they’re not planning on flipping it or if it’s not something that they want to make money off of. If they want it as their home, absolutely buy it. Why not? You’re going to be in there for 10 or 15 years or 20 years and raise a family in it. Absolutely buy a home.

Bryk: I just don’t see a slowdown in a market. I don’t see it slowing down as long as our population continues to increase the way it has. So absolutely, if you can afford to, I say go for it.

The future of demand is families. They want stability.

Post City: But detached homes sales dropped, what, 18 per cent?

Bryk: But not in our neighbourhood. I think it’s on the outskirts, actually. In the core, I haven’t seen a drop at all.

Cohen: I think what got hurt was the young buyer that was buying the $800,000 house and then arrived to an offer presentation. There were nine offers, and they ended up paying a million two. They thought they were validated by the eight losers. Then the agent said, “Don’t forget, your $600,000 townhouse might be worth $800,000 or $900,000 by the time you close,” and then, you know, six months later it wasn’t the case. Now they were short. The appraiser appraised the house for $300,000 less, the townhouse for $100,000 more, and now they had to make up the $300,000, and they didn’t have the resources.

Miklas: If it were my kids looking for a home right now, the thing I’d emphasize to them is just buy a great piece of property. Buy something with a garbage house on it, kind of work your way through it. But when the opportunity comes, try to be in the core that you can dig the house down and rebuild something and have some value behind it.

Post City: Where do you see the market going in the next 12 months?

Cohen: It might get a little worse before it gets better, but we already are in a slowdown. So your recovery might be more April through July than what your expectation is of the spring market. But I think by next year, we’ll look back and say we finished off where we started. May have a one per cent to two per cent price increase.

Lamb: In the city proper, prices are rising now. I’m not seeing anything in the city, even $5 million houses are selling for more than they were last year. So I think prices in the core are just going to continue to rise, until there’s a recession.

Tal: I think that the shock of higher interest rates and regulation will have an impact on the market. I think it will be a modest slowdown or basically staying flat. I don’t think this is sustainable. I think that the market will adjust, and if I’m looking at the long-term trajectory, I think that the direction is very clear, given all the forces we discussed today. So I suggest a short-term slowdown. I will not panic. This is not the real thing. There will be another shock probably two or three years from now when we face the next recession. There will be a recession. You will see prices going down probably then, and then I will be a buyer in this environment.

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