Housing Permits Plunge in Canada - Where Do We Go From Here?

Message from Tom & Nick

The passing of the torch in action today!

Well, somewhat.

That's Aidan, my son, and his Uncle Nick heading down to one of our rentals in Hamilton to meet a waterproofing contractor.

Somehow almost every single property that I've ever purchased with Nick has ended up having some water issue.

And that's made "Uncle Nick" an absolute expert in real estate related water issues!!

So as I'm in Arizona visiting an old friend (it's 45° C here today!!)...

... Nick and Aidan are off to check out the property and see what the best solution is going to be.

So I'm selfishly loving this ... I'm in the sun hanging out with some friends while Aidan is getting another real estate teaching moment.

Couple quick updates...

As rates got another jolt yesterday from the Bank of Canada more questions are coming in around the next direction of the real estate market.

Over the short term, it's almost impossible to predict.

But if rates stay like this for a while prices can obviously come down.

We believe the current environment is much more like a bluff than a long-term game plan.

The central banks are terrified of inflation.

If they don't kill the inflation beast then it's game over for their whole system.

They must defeat it. No exceptions.

So until they are convinced it's destroyed they're going to try to keep rates high.

And we say "try" because sooner than later something breaks with these rates.

Rates don't live in a vacuum.

There are second-order effects. Big ones.

And the liquidity response to whatever breaks is going to catch a lot of people off guard we believe.

So we're looking past the rates and into that response period.

Over the longer term, the dynamics here in Canada are still out of whack.

Check out these two charts from our friend Ben Rabidoux...

As a country, we're blowing up our population and at the same time, we are building fewer homes.

We're back to pandemic-level building permits.

It's completely insane.

This is basic supply and demand.

Many people are confused about this ... why do we have less building permits?

Here's one way to think about it...

If an architect tried to build a house but the length of a metre was constantly changing you couldn't build a sound foundation.

The information is bad.

When the central banks constantly change the price of a dollar you can't build a sound economy.

The information is bad.

Constant changes to rates make it very difficult for entrepreneurs to raise, save and plan to build homes.

This affects everything. You cannot centrally plan a complex system without major pain. We're seeing it now.

Who wants to risk their capital in an environment where the capital value is constantly toyed with?

Central banking hinders the free market from solving the housing problem.

So real estate prices can do anything in the short term.

You have to survive that, you must stay liquid with some cash and get through it (and even sell a property if you need to of course).

But over the longer term real estate demand in this country and specifically in Ontario seems poised for continued strong demand.

With these dynamics, we're going to see a lot more properties like the one we've linked here just below...

Aidan went out with Anthony Molinaro on our team to chat with Craig Race, an architect who took a single lot property in Toronto and turned two side-by-side 5-unit buildings.

So from 1 unit to 10 units.

This is the future of housing whether you want it to be or not.
Infill projects are going to keep growing in popularity and present a huge opportunity for some investors.

Each is a 4-plex with a two-storey laneway house in the back. The laneway houses have a basement!!


You can check out the video of the property here...

We've been pretty excited to have Aidan working with us this summer and he's been a huge help making these videos.

So if you're enjoying them please let us know and give us a follow on Instagram @RockStarInnerCircle

He's been doing a great job sharing many more stories for all the investors and Rock Star team members.

He's doubled our Instagram presence in the last 60 days.

So good job Aidan ... keep it going and make sure you learn how to deal with those leaky basements!

Your Uncle Nick is a Jedi master of them ... pay attention!! LOL!

Real estate is a wild journey everyone.

Hang on tight. Stay liquid.

There's a bright future on the other side of these rate hikes.

And remember, it's one life. Time flies.

Live your life on your terms.

See ya next week!

Tom & Nick

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