Ready to get serious about investing in real estate? Looking to enter the world of homeownership? Curious about where the market is heading in 2024? If you answered yes to any of these questions, you’ve come to the right place. Real estate experts Simeon Papailias, Chris Slightham, and Jas Takhar sit down to talk about all things real estate – where the market is going in 2024, interest and inflation rate forecasts, how young adults can keep the dream of homeownership alive, what investors need to know moving forward, and much more. This is your one-stop shop for all things real estate. Whether you’re a seasoned investor or you’re looking to buy your first property, this podcast has everything you need to know.
Jas Takhar: We are good to go. For majority of you, if you are actually watching and you’re not in your car or taking your dog for a walk or on the treadmill, you will recognize these beautiful, beautiful faces that are on the couch with me. But for the new people that are in the world of the Jas Takhar podcast, I will spend a couple of seconds introducing this gentleman right to the right of me. The bald headed but yet beautiful, beautiful Mr Simeon Papailias, aka my business partner. For now, coming up to where are we at, brother? 20 years almost doing this together. 18. Um, I don’t know if I made this joke or if you came up with it. 18 years. You’re the second spouse I never really needed in my life. But, um, who’s the first? Yeah, well, um, I love my wife. You got that?
Chris Slightham: Can you go backwards on the show? No, not at all.
Jas Takhar: Not at all. My wife knows, um, Mr Simeon Papailias, co-founder, with me at REC Canada. The gentleman to the right of him. None other than MR Christopher Slightham, broker of record, but so much more of that in the world of Royal LePage Signature, which houses now over 1500 realtors. I emphasize that because I do know a lot of people in this industry that have a lot of agents in their brokerages, and they’re very good at what they do. And then I know a lot of people, including Simeon, including myself, that love the world of real estate, like the market and, you know, uh, finding opportunities in certain strategies. But I’ve said this before, and I think he’s heard me say it, but maybe I haven’t said it on air. I yet have not come across anyone who has the hybrid of both the ability to know the market as well as he knows it, because he’s been doing it for such a long time, and not because he’s old, but his family has been in this industry for coming up to, I believe, six decades now, but then also have such a large organization of real estate agents and real estate professionals, i.e. mortgage brokers as well. And so I’ve never yet come across somebody who has the hybrid of both. And so, Christopher, uh, as always, I’m so thankful for your time because I know how busy you are, but you always give us the love. Myself and Simeon. How are you doing? First and foremost.
Chris Slightham: I’m great, and thanks for having me. Appreciate it. Love, love chatting real estate. So always make time for that, that’s for sure.
Jas Takhar: I was talking to the team yesterday when I was just letting them know who’s on and they’re like, well, Chris has been he’s done this with you so many times. I was like, he’s done a lot of content with me, but this is the first time that he’s actually on the Jazz Tack or podcast and specifically in studio with the whole new makeup and setup and all that. It’s fantastic. So I appreciate that. Thanks for having me, brother.
Simeon Papailias: I’m doing really well, my man. I’m very happy to be here and look forward to a great conversation to put an end to this beautiful 2023 of ours. Yeah.
Jas Takhar: Did I hear a hint of sarcasm there? No, no. Okay. Because the market is fantastic. We were all just at we were all just exactly almost a week ago. Tomorrow we were at the annual Royal LePage Signature Awards luncheon. Um, top realtors in the industry, not just in the office. Um, and you said something from stage that Chris and I were laughing about afterwards. You said something the most repulsive year in real estate. Do you ever remember saying, oh, I.
Simeon Papailias: Do, I do, I do it was very it was very intentful, um, at the time. At the time, what I will say is I couldn’t be more proud to see a parade. Uh, again, we have a very big office and people who are, you know, getting recognized for their achievements. Uh, some of them were like, we had our rookie of the year and our team, Mr. Imran Jackson. Big props to Imran. His best year yet. Well into the six figures in what is the worst year on record in real estate history in our entire career. So in the 18 years that we’ve been around as an as an in the industry, this is the worst performing year since my entire career. Yeah, we finished first at our brokerage. We did millions of combined gross commission incomes for our team and us very grateful, very blessed. All is good. But at the end of the day, we had to work 3 or 4 times harder and I’ll and I’ll substantiate that, um, 3 or 4 times harder to make 30% less revenue revenue year over year. Yeah. And last year was not the greatest year of all time. 2021 was the banner year in real estate. Yeah. No doubt about it. Yep. But 20. 23 was the worst since 2001. So if anybody in this business got into this business in 2002 and later, which is 80% of agents, this is the worst year on record. When I was sitting on that, when, when we were on that stage to receive our awards, it’s not because I’m ungrateful, it’s simply the fact that I wanted to recognize that a young agent coming into the business, having their best year yet, doesn’t even know any different. Well, I think, and I was so proud to see that because that, like, you see a young man or a young lady proudly walking to the stage, you know, like they did it. Mhm. And we’re sitting there knowing that revenue is down 30%. 30% is substantial. It’s very big.
Jas Takhar: In your six decades of with your family. Would you agree with what Simeon is talking about when it comes this being like the worst year that you’ve ever seen as well?
Simeon Papailias: Uh, yes. The caveat to that is the early 90s were, uh, were worse, actually. Um, a lot worse. A lot worse in the sense of for homeowners, the volatility of prices was was greater. So there was bigger losses, bigger adjustments in prices. So from a from a homeowner standpoint, this correction we’re in is not as bad as the correction of the early 90s from a business standpoint, the business of, uh, real estate sales. This is the toughest market in history, uh, because of the ratio of because of the the low. We haven’t seen sales at this level. The year hasn’t finished yet, but the Toronto Regional Real Estate Board will end up with a sales unit sales number similar to what happened in 2000, 2001. So that’s, you know, 20 after.
Chris Slightham: The tech bubble. That was also a challenging year, challenging.
Simeon Papailias: Year as well. So the difference though is there is now 65 from this is just business right. This has the for the end for the our investors out there.
Jas Takhar: And we’re going to talk about that.
Simeon Papailias: So this is just the business of real estate brokerage. Um, you know there’s 70,000 licensed realtor members of the Toronto Real Estate Board. Now back in 2001, I think it was 17,000.
Jas Takhar: Because I got licensed in 24. Uh, I think in 2004, and I think I came in when there was 35,000. So that three years. Yeah, it.
Simeon Papailias: Kind of grew.
Chris Slightham: Yes.
Simeon Papailias: Quickly in that time period. I think 17 is right. Don’t quote me on it. But it call it 20. Sure. Call it 25. Sure. Call it 30. Right. There’s 70,000 people now trying to make a living in a market where there are fewer transactions than there was in 2001, when there was, I think it was 17,000. But call it like whatever number you want. Uh, so it’s it’s an interesting business challenge. And again, we’re not, uh, I’m not saying this to, you know, cry the Blues or anything. It’s just facts. These are just in every industry. Jazz goes through this like, you know that when we were busy in 20 and 21, there were thousands of people in Canada that in in different industries that were suffering tremendously. Right. You think of the hospitality industry and the cycle they went through. I mean, devastating, devastating.
Chris Slightham: Through Covid, 80% of hospitality businesses got regurgitated. Yeah. Like they shut down, went bankrupt and reopened. Like right now there’s a boom in the hospitality. Yeah. Winding down again because of the inflation. Yeah. But post-Covid 80% of banners were rotated.
Simeon Papailias: I didn’t realize that. I mean like restaurants, restaurants and clubs and stuff like that.
Chris Slightham: Yeah, that includes all of hospitality. Got it. Yeah.
Simeon Papailias: Like hotel like everything. But some of them.
Jas Takhar: Didn’t even open up again. Like if you go downtown, like.
Chris Slightham: There’s still I tell you what was lost, I’m telling you what was gone. And like, something else took its place. Like, if you walk down the street, it still looks sort of the same, except that it’s not your favorite Chinese restaurant. It’s all Jamaican. That’s not your favorite Jamaican restaurant. Now it’s a burger shop. Yeah, or three iterations thereof in the same amount of time.
Simeon Papailias: So again, I don’t say it because we’re to cry the blues or anything. It’s just these are just facts. And so, you know, we’ve been doing it long enough now that we’re prepared for it. We went through the 90s, we tweaked our business model to make sure that we could continue to serve our clients really well, that we could support our team of realtors really well. And we learned like, that’s the thing. It’s like whenever you have an adverse time, that’s when you do your greatest learning, right. My dad always said, you’re not going to learn from your wins. Yeah. No. Right. You’re only really going to learn from your losses. So, uh, that’s what we’re going through now. And if you’re prepared for it and you have the long view, which we’ll probably talk about because we talk about that often in real estate is always taking the long view. Then we’ll come out the other side. But yes, from a business standpoint this is the toughest year. So congratulations to you guys for your year. Uh, absolutely incredible. It’s built on the foundation of helping people. Right. And that’s why you continue to be busy because you do everything you do. And I have the the opportunity to watch a lot of, you know, I’ve seen a lot. I’ve been around for a few years. The bottom line is when you take care of people, the business kind of takes care of itself. And so a huge credit to you guys. Well, you’ve seen.
Chris Slightham: Our entire career save and except one year. Yeah. You’ve seen our entire career because we’ve spent the whole time together. And when I was saying a second earlier three times and let me substantiate the three times harder, the fact that we had to work three times harder. Yeah. For us to achieve 70% of the number we did in 2022, we had to work three times harder, and three times harder means that each deal, on average fell apart at least twice. Mm. So I’m not saying maybe I worked for more hours a day. I know is a fact that my phone was ringing from 7:30 a.m. when I take his first call of the day. Hi. Good morning partner. What’s happening today to 11:00 or midnight? Speaking to our clients who are deathly afraid of the future and the commitments or investments they’ve made, telling them where they sit in the cycle, what does that look like? What options do they have? People were and continue to be nervous. This is why we have listings on the market. In a market that has no inventory. The demand we know is there, but people are not buying listings, not because they don’t want to, it’s because they can’t.
Jas Takhar: And we’re going to go into that. In fact, we will.
Chris Slightham: Let’s get into it and let’s get into it. But when I say we work three times harder and I and I’m not speaking just for myself because there is other notable, incredibly talented and hard working agents out there. But for all the agents who thought it was a free ride to all the agents who got into real estate while working in McDonald’s at the same time thinking that, you know, if I do one transaction, it’s 50,000. It was a quick, very quick and easy lesson to get back to where you belong. Yeah. And it’s the year of the professional and the year of the dedicated professional at that.
Jas Takhar: And when you say three times harder, I mean, you know, Chris and I speak a lot in Don Mills office and I was telling him throughout the year, like where we would maybe make 100 phone calls that would turn into call it six, seven, eight appointments, which would then turn into three four deals. We had to make easily 300 phone calls to get that. And to be honest with you, it was probably closer to 450 to 500 this year. There you go. Like the work was a lot harder. We had to put on more events. We had to shoot more content just to get the same awareness that we were getting.
Chris Slightham: The net had to get much wider. Yeah, to catch the exact same amount of fish.
Jas Takhar: So look, before, um, before I decided, uh, exactly what we were going to talk about today, I knew that I had to up the game and, and, and I decided to do that through having some articles that are right, like, that’s what the people are watching on TV. That’s what they’re listening to on the radio. They’re reading online as well. And so I thought, why not bring these to our viewers and less listeners? 50% of my viewers and listeners are real estate professionals. So the real estate agents and mortgage brokers. So I think we touched on that. They got to get prepared. You got to work harder. I mean, I love what Chris’s dad said in terms of, um, uh, when you’re winning, you’re not going to learn much because the winning hides a lot of your holes, right? Because you have people calling you in where now, in a year that we went through and were going through, you have to work harder. They get that. They understand that the other 50%, it’s really more investors than anything else. It’s not really a lot of end users or home sellers. We got to some of that, but majority of it is investors. So I got some stories and some headlines, and I want to get all of our commentary on it. And then something that we’ve always done for the last three, four years at the end, at the end of the year is throw, throw out our predictions for the next year.
Jas Takhar: So you guys make sure you keep that in your back pockets. But we kind of touched on it. But if you guys can go to page uh, 15 okay. Uh, I just want to make sure page 15 and this article is, I believe, from the Toronto Star. And I know, as I mentioned, you touched on it a little bit CMOs, but why don’t we dive into it a little bit more? Toronto and GTA real estate on pace for fewest annual sales in over 20 years. This past year has been a tough one for real estate agents. That’s more talking about the business. But according to the most recent sales data from the Toronto Real Estate Board, which is treb for November, which is the largest real estate board in North America, yes, it is changed bigger than New York, bigger than LA, bigger than Chicago, uh, Vancouver as well. It’s reported at the end of November where we’re sitting at 62,000. Chris, I’m not sure if you mentioned it earlier, but we’ve been throwing around the end of at the time of this recording. We’re sitting in the middle of December. This will come out, I think, on December 20th or something. Um, we’re going to probably end up around 65,000.
Simeon Papailias: That’s what we’re seeing.
Jas Takhar: Between.
Chris Slightham: 65 and 66 is was our guesstimate. So we’ll see how close we get to that okay.
Jas Takhar: And as you guys touched on it, the um, least amount of sales compared, uh, as of 2000 or 2001. Now, as an investor, if someone’s looking possibly to to make the jump into their first investment property, maybe their eighth or 42nd door is right now, possibly a good time. Thoughts on that, CMOs? I’ll go to you first.
Simeon Papailias: Um, there is never a bad time to buy real estate. Um, any time can be great right now. It can be phenomenal. Time to buy real estate. Uh, the dynamics of what makes a deal great have changed. So a buyer, an investor right now has to focus on structure, on how they’re how the property is going to be leveraged to what amount and at what rate. What are the terms of the deal. Because right now I can tell you with absolute certainty that real estate is on sale. And this artificial environment of the sale, just like the artificial environment of the boom during 2021 and 22. These were artificial, meaning the government brought and mandated interest rates to be zero. That’s not normal. Nobody gives you money for free. So people took advantage of it to the point where it caused the problem, and now they have to fix it. So both artificial bubble and pop. Neither one was based on fundamentals of real estate because money is typically never free. So you can’t go up like this forever. Mhm. You just can’t. You go up like this, you’re going to let’s say your wings are made of wax. The closer you get to the sun, what happens? You end up being an island in Greece. Okay?
Jas Takhar: You got to get Greece.
Simeon Papailias: I had to. So. So when you saw this high this fast, this is just what happens. On the other token, we’re in this artificial market now, the other side of the coin. So right now we have artificially high interest rates that are not sustainable. You’re going to go not into a recession, into a depression if you continue, which is why this stalled. Now they have stopped raising the rates with an absolute majority of economists predicting our own CEO, Phil Soper, who was the voice of real estate in this country yesterday, has reported this morning the report came out. Actually, I just read it, um, that the second half of the year potentially fall, we might see a couple small quarters going downwards, nothing massive and fast, but the the up in interest rates is down. So when you ask what does that mean to the investor watching right now? Is this a good time to buy? Yes it is, but if you have to leverage all of it the way you did three years ago, the math doesn’t work. The deal doesn’t pencil. Um, so either you have cash on hand or you leverage the seller’s cash, meaning a vendor take back at a rate that can work. And that could be a temporary one two year, three year VTB to give you enough time for the market to make changes if you believe.
Simeon Papailias: And again, there is no investment without risk. If you believe that the market will go up. And I do, and we can speak to that after if you look because when you ask me for my prediction, I’ll tell you what it is. Not yet go. Not yet. But I do believe fundamentally that this country has. So I believe that the rhetoric that there’s a massive housing shortage I actually know is a fact to be true. Because I’ve been part of the scene for 20 years. I have witnessed the tenant pool rise like a tidal wave, pushing and putting pressure on rental prices in the tune of 50% in two years. 50 to 60% to 70% in some pockets, which has created a different unaffordability crisis. But the minute we see this environment clean up, that tenant pool is going to start coming down. Buyer pool will start swelling again. And we’re going to see people making their moves. At that point, prices are going to start shifting again up because there’s a tremendous lack of inventory. And I’m saying tremendous. Not maybe a little bit. There’s a massive shortage of homes specifically in the big urban markets across our country. And I’m speaking to Vancouver and Toronto, Calgary, Edmonton, Montreal, they’re seeing big changes in good things, but they don’t have the housing issue that Vancouver and Toronto have.
Jas Takhar: So safe to say that you’re bullish on the market.
Simeon Papailias: Like I just tell us how you really feel.
Simeon Papailias: So I’m I’m I’m telling you that I believe in the long tum fundamentals of the GTA market more than anything else.
Chris Slightham: Chris I would agree as a whole, I think that, uh, to your point, you have to acknowledge that rates are a major factor on people’s real estate decisions. We’ve proven it time and time again this year. Uh, in the spring, it we had a rate drop of about 75 basis points. So not even 1%, just three quarters, right? It dropped from just over 5% in February ish. By April 5th, you could borrow five year money in the four and a half to 4.7% range. In the GTA, average sale price in 90 days went up 100 and approximately $150,000 in 90 days. So when you ask the question, is now a good time to buy? To your point, it has to work, obviously, for whatever your scenario is. But what that reinforced, that scenario that happened this spring, reinforced if you wait for rates to drop, prices go generally go up quickly. And in the spring because of to your comments, the the we know the demand is there. So so that’s why I agree that now is a good time to buy. If you’ve got the right capital and structure of the deal, now is a good time because rates haven’t dropped yet, but they are dropping. Just this week. The, uh, we know now that the US, uh, announced that they are going to hold that they just held rates and they’re talking about the potential for three rate decreases in 2024.
Chris Slightham: Again, it’s potential a lot of things have to happen. But that’s directionally where things are going. The bond rate drops significantly from its peak in September already to to today. And so that would show that in the bond rate is how mortgage rates are priced. So that means the mortgage rates have dropped already. If they continue in the direction they’ve been going, they’re going to be coming lower, which brings more people back to the market, which makes houses housing more expensive. So now is a good time if you believe that rates are going to continue to either stay at this level or go lower, if you believe that the country’s population is going to continue to grow, which I think we have to believe that. But, you know, if you don’t, that’s okay too. You have to. These are the factors you want to keep your eye on. And if you understand the actual supply demand challenge that we’re facing as well. And so those are the factors I think you want to look at jazz. And if the way I look at it right now, it looks to me like it’s a great opportunity to get into the market.
Jas Takhar: So and to kind of wrap up what you guys were saying, and then we’ll move on to one of the other articles. I’ve always looked at relationships, the business that I’m in in terms of helping people buy, sell and invest with a coaching company that we have for real estate professionals, content production and then investments, because I’m not as smart as you two. When it comes to really looking into the data. But what I figured out is if I just look at this from a ten year window, yes, all those things that I mentioned, there’s going to be some ups, there’s going to be some downs. But you look at the last ten year chunks for the for a 100 year sample size, the values have always gone up probably close to double, which always sounds weird because ten years ago when somebody told me that the average price is going to be 1.1 million, I kind of thought they were a little weird as well.
Simeon Papailias: But even if you look right now, Jas today, right now, with the market down since its peak. But if you look at ten years ago. So if we were to pull up right now, December 2013, and you looked at what the price was and what the price is today, maybe in post-production we can easily do the team here can can put it up. You’re going to see that you’re extremely close to. Exactly. That comparison.
Jas Takhar: Can you jump in and just just maybe take a quick look, just Google it and then you can pipe in after. Um, just Google what was, uh, average price. Average price in GTA in 2013. You’re probably going to be flirting around five 5560. But see how it went up though, right? Correct. You had that huge jump to 1.3. I think it was the only.
Simeon Papailias: Thing I don’t want to do though. So this is the thing. So we are in the business. We are biased because we are heavily vested in real estate, all of us. Your family is very, very much vested in real estate. They’ve built it, they’ve sold it. They’ve all the things. So we are to to anybody who’s listening to us. Are we biased to real estate? The answer is obviously yes, of course. Are we in the business of profiting from somebody transacting in real estate? The answer is yes.
Jas Takhar: But we’re also in the business of profiting ourselves 100%.
Simeon Papailias: So. So again, the reason I’m saying these things is because I want to put an emphasis on something we have been profiting off transactions in real estate our entire career. That’s our career path. We are investors first, and the reason we’ve been around for 18 years and still able to sit at the at the at the top of the table and be able to open our mouths and share our opinion. And somebody to actually want to listen is because we care about the relationship with our clients. We have built our clients hundreds of thousands to many millions of dollars in happy returns. And in a market like this, we still I’m not going to say we’re averaging. We are still 100% close rate because we qualify the people we sell real estate to. We are responsible with our work and we take our job very seriously, which is the same reason I don’t want anybody to get confused with a biased real estate agent message. Is this a good time to buy and say yes, I want to be super clear. Yeah, that yes, it is a great time to buy the right way. Yeah, not the speculative way you.
Chris Slightham: Write for everybody. Every individual has to assess their own situation. Right. I think that’s super important. And when I always talk real estate, because we are all three of us are on the same page. We’re just to be very clear, it’s always for the long terme. Yeah. We’re, we’re talking investing to, to to my belief means long terme hold not buy flip buy for a short terme and move it out and make a quick buck. That’s speculating. Yes. When we talk, when I talk about investing, it’s what to your point, what is it going to happen in ten years? And I know you asked Nikki to pull this.
Chris Slightham: Up, but I carry through.
Chris Slightham: The I pulled up the number, but you got there. So in November of 2013, the average sale price for the Toronto Real Estate Board. I’m glad we’re all sitting down or I’ll wish we bought a few more things back then. $538,881 and.
Jas Takhar: Today’s 1.1.
Chris Slightham: Ish. Just shy one. Yeah, 1,000,080.
Simeon Papailias: So is it literally double? It’s double.
Simeon Papailias: It’s almost almost exactly right. Almost almost to the penny.
Jas Takhar: It’s exactly after it went to a place peak. February 2022.
Chris Slightham: 330.
Jas Takhar: What I was gonna say 1.3.
Chris Slightham: Yeah, right.
Jas Takhar: So you got to ride that. You got to just understand that that that you’re going to have these ups and downs. And I like what you said, Chris, because I know this in your portfolio so that you don’t buy the you don’t buy homes. You’re not buying homes.
Chris Slightham: That’s where I was heading.
Jas Takhar: Yeah. Um, you’re not buying real estate, doing some renovations to it, Chris. And then flipping it. That’s not in your portfolio.
Chris Slightham: That’s a business that’s not investing. Right?
Simeon Papailias: That’s a business that’s not investing. That’s either a business or speculation. And when people.
Jas Takhar: Call us and when I’m speaking to people at cocktail parties and they’re like, um, you know, I’m going to I’m going to buy and flip and I’m like, dude, like, do what, you know, gets your juices flowing. But that’s not what we talk about. What we talk about is the boring but yet most accurate way to win and create wealth in real estate, which is again, like, I’ll emphasize that word again, it’s boring. It’s not the get rich quick scheme. Unfortunately, even though some of my social media, uh, um, uh, target market kind of skews to that 25 to 3740 where they want that quick dopamine hit because we like the likes, we like the comments and all that kind of stuff. Real estate’s not for that. No, you’re not going to get that in real estate.
Simeon Papailias: The exact opposite. Right.
Jas Takhar: It’s that buying like I mean Chris you don’t even and you’ve shared this on content. So I know I’m not saying anything that you know, I’m stepping outside of my boundaries. You and your family don’t buy and refinance the properties. No. Like you buy them, you hold them, you let the rent just cover the expenses. And that sometime the mortgage gets, you know, uh, paid down enough where you just have cash flow.
Chris Slightham: That’s the idea, right? Because that’s what you want to you what what our philosophy was, is you want to. Create a recurring income for yourself so you can retire someday. You can still go to work on your own, but make it your own decision that you’re going to work right, knowing that you have that income coming in every month and you don’t have to worry about the stock market and this and that, because residential rental property in our region, we’re very lucky has been you know, the income is pretty consistent. Right. And so absolutely that’s so we don’t like it’s fun to like I was just looking back at these prices. Now it’s fun to talk about right. Because it’s like equity growth is super exciting. But really you know from an investment standpoint it’s the cash flow. At the end of the day that is super exciting. Sure. It’s fun to say, yeah, if we had a bought more in 2003, we’d be even happier because the average sale price in November of 2075.
Jas Takhar: Just let me throw a number out.
Chris Slightham: Yeah, you’re almost right on the on the button there. It was actually a little more 301,000. I’d rather.
Jas Takhar: Be the.
Simeon Papailias: The less so. 300,000 and 035. 53 roughly in 13 and a million, 80 and 23.So I bet you again double double to go back to 93 and 83, etc.. We’re going to see the exact same story. Yeah. And whether it’s up, down, sideways, the whole point of the exercise and this isn’t I told you so scenario.
Chris Slightham: These are just.Facts. This is facts of how a civilization that is not at war or has, you know, a tidal wave or an earthquake, like non a society at peace, progressing through time. Yeah. Is all this is. Well, you.
Jas Takhar: Look at this room right. The, the, the people that are watching right now, they can’t see the team behind the cameras. But it’s the freaking United Nations of course. Like, look at where everyone’s from. This is where people want like when I say here, I actually am very biased to the Greater Toronto Area because we know that 50% of people that come into our country, they want to come to the GTA. Now, if something happens, like maybe what happened and maybe you can touch on it a little bit more because like, I think it was maybe late 70s or so, maybe mid 70s, where the major banks left Montreal to come here to Toronto. Like if that starts to.
Chris Slightham: Happen, other thing.
Jas Takhar: That we need to maybe think about.
Simeon Papailias: No, but but Canada’s story, you can actually tell the global story because because if you were to to to look at the United Nations like you called it, when did the Indians come to Canada? When did the Greeks come to Canada? When did the British come to Canada? You can actually tell the story of civilization through immigration patterns, and you can see that growth the exact same way. Yes. And I’m talking from the depths of colonization where the English and the French first came and did what they did, and then this wave came and then the Irish famine. And then you can literally tell time, yes, through immigration to specifically North America. Yes. And the growth of North America, which is continuing to grow right now, the US yesterday, another article is blazing and leading the G7 in growth. And everybody doesn’t know why. Because everybody was counting the US down and out. They didn’t see what happened in China coming. But like there was a lot of things that are kind of upsetting the apple cart. And I’m not taking this conversation to global politics or anything of that nature. But when you say it’s the United Nations, it here it is, the United Nations in here. And this is the story of real estate here as well.
Chris Slightham: Exactly. And that’s where, you know, I come back to our points. We talked touched on there like what are factors that drive real estate values. Right. And uh, cost of ownership, uh, demand and supply I think are probably the top three. Then as you come in to take other factors in, like if there’s global factors that are going to affect immigration levels.
Jas Takhar: Employment’s going to.
Chris Slightham: Be it’s going to be in there. Yeah. Your ability to pay your mortgages. Yeah. Obviously at the top, top 3 or 4 as well. Uh, but so if you so these are the things that I think everybody as an investor, as anybody who’s interested in real estate, just buying a new home like is like to your point is now the right time to buy. Well, these are the things you want to think about, you know, to decide whether you think it’s the right time for you. And again, I come back to it. If you believe that rates are going to stay where they are or be lower in the future, or if you believe they’re going to be higher, well, maybe you do sit on the sidelines and wait, right? These are the things that you have to. These are the conclusions you have to come to. The key is making sure that you are doing, uh, educating yourself appropriately with facts, which is hard to decipher these days with these with social media and all these different headlines. Right. You have to be a little careful, right at the headline, the.
Simeon Papailias: Interpretation that matters.
Chris Slightham: Yeah. You’ve got to dig in. Right. You’ve got to look look into the numbers and really figure it out. And if you and then then come to your conclusion on what you believe in, then you’ll be able to make a great decision. And I think.
Jas Takhar: What Simos said earlier, and he was quite animated. But I wanted to just add a little bit more clarification because it’s my partner and I know what he’s thinking half the time when he mentioned that real estate is on sale, that’s not necessarily right across the board. No, in in the country, let alone in the Greater Toronto Area. I think I probably should just do the research on it. But I think it’s safe to say that there’s probably a hundred, sorry, there’s probably over 300 micro markets in the Greater Toronto Area. It’s probably even a little bit more than that. Right, guys? Like I mean, the Harbourfront condo market is completely different than the distillery market, which is different than the bay in college condo market and then let alone Don Mills. Compared to Brampton and Mississauga in certain areas, there is real estate that’s on sale. Right? Absolutely. And we were probably saying this back in late 2020, when a lot of people didn’t want to touch the elevators and condos, rightfully so. When you can shoot.
Simeon Papailias: A cannon through Yonge Street, you could shoot a.
Jas Takhar: Street that.
Chris Slightham: Was frightening.
Jas Takhar: September, October, everyone selling their okay to move to the burbs and condos went on sale. Like, I mean, nobody wants to touch these things. And you look at what happened from probably November 2020 to like today in the condo market that also has gone up in terms of value, right?
Chris Slightham: Yeah, because we track months of inventory. We saw my favorite one, right. It’s a favorite run because that’s.
Simeon Papailias: The only one that matters.
Chris Slightham: Yeah. Exactly. Right. So so we look at months of inventory because that tells you what your supply and demand looks like. And so we know historically that if you have three months or less of of supply, which means that if based on the number of transactions that are happening, you’d run out of, we didn’t list any more properties, you’d run out of properties in three months or less. It’s a seller’s market gets three to 4 to 5 range. It kind of balances out above four, definitely above five. It goes into buyer territory because that means there’s just more choice, right? There’s more higher number of months of inventory the more options you have out there. So supply and demand changes. And there are pockets in the GTA right now that have seven months of standing inventory.
Jas Takhar: Have you seen that before Chris?
Chris Slightham: Oh, absolutely. Okay. We have for sure. We’ve seen it worse in the 90s.
Jas Takhar: So okay. So I’m right to say, when I got licensed in 22,004, I’ve never seen you’ve.
Chris Slightham: Never I don’t think you’ve seen seven. You’ve probably seen when you came in I don’t think I think you were in that range. Maybe. Okay, okay.
Jas Takhar: Maybe it was back then.
Chris Slightham: Okay. That time. But so. So there’s those pockets. But then there’s other pockets right now. Right now in today’s market that there are two months of standing inventory. So you have to you know, it depends. Right. Where should we buy? Well, it depends on what you’re looking for and where value is heading. Well, it depends on the micro market that you’re talking about. It depends on the neighborhood. It depends on the product type. But that’s where you want to find your opportunity. And it’s and I’ve said this to a lot of people like oh my gosh, my real estate price is my my neighbor got X six months ago or in February. They, they, they you know, won the lottery. They they were their timing was right. My but your real estate hasn’t gone bad. Yeah. The cost of borrowing has changed. That’s all that’s happened here. You own great real estate. Don’t worry about it. It’s just that if that’s the number, if you want your neighbor’s number that they got in February of 22, sit tight. It will come back as the economy changes, as rates change, as, uh, wage inflation happens naturally, those prices will return. Your real estate hasn’t gone bad. It’s just the the the factors that affect the value in the short terme have changed since that moment in time.
Jas Takhar: And I think most people are comparing it to the peak, which was February 2022. That was probably the highest. It’s gone up. Yeah. Not only is it going to come back, we actually know that it’s going to go higher, because if you just wait the ten years, it’s going to double from what it is today, which is going to be higher than what they were selling for in February. But I think it’s a matter of those sellers willing to wait it out.
Chris Slightham: Well, that’s it. And again, it depends not only on your timing.
Simeon Papailias: Or are they able. Yes. So so the biggest crunch right now is not the people who are not willing to wait. It’s the people who can’t afford to. And and those are the people that were more than likely because out of the let’s call it between 700 and 1000 people that we touch a year with us in our team, it’s a pretty damn good sample size. It’s actually the average sample size of any study that on a national basis.
Chris Slightham: Yes it.
Simeon Papailias: Is. So we’re very fortunate to have our own pool of data that we know exactly what the pulse is at any time. The true real bad problem lies in less than 1% of people in deals. The real the ones on the fringe. The ones. Yeah, the ones that are right now losing sleep. They can’t breathe because they bought that February of 2022. They bought that January. So how many transactions were done in, uh, January and February of this year of 2022? Was it 5000, 10,000, 10,000, 20,000 people. So out of out of 20,000 people, half of them were buyers, half of them were sellers. Yep. Yes. Yep. So we’re talking about 10,000 people across 8 million in the GTA. So let me let me repeat this. The people who are reeling in pain and I feel for you. It absolutely sucks. But somebody is always the one court. Nobody knows when that wave is going to crest. Nobody does. Not your agent, not the Pope. Nobody does. There was indications there was many kind of red flags at the time. Like is can this continue? Can this continue? Because every month was a new record. So the only people who are reeling right now are those two three months of transactions between December and February of December 2021 to February 2022, which is half half of them are got their lottery tickets cashed in, the other half is in pain right now.
Jas Takhar: I don’t even think it’s that high though, right? Because even.
Chris Slightham: If it is because.
Jas Takhar: They locked in interest rates pretty low back.
Simeon Papailias: Then and again. So out of the 10,000 now out of the 10,000, we know that half of them are more than likely mortgage free because that’s half the population. Mhm. Even 30%. That leaves 7000 out of the 7000. Half of them did a five year fix. That leaves us 3000. So when people are watching all this drama on social media, on on on news, it’s not that people aren’t hurting, but it’s not as bad as you think. I agree. So I’m not downplaying anybody’s pain in any way, shape or form. No way. Because somebody’s hurting right now.
Simeon Papailias: It’s real. It’s real. And we actually dealt with something this morning. Very real. Yes. And when was that purchase made? February 19th. Uh, 2022. An agreement of purchase and sale that came to me today that, for example, this client sold a family member a home in an in an outside market. February 19th, 2022. It’s in my inbox. I can redact it and share it. For $930,000. Right now, the same builder has sold three homes in the specific subdivision for $780,000.
Jas Takhar: So there are appraisals coming in a lot less.
Simeon Papailias: Well, the appraisal is coming in to whatever the builder is selling right now. Yeah. So the builder is cannibalizing his own clients. Do you understand what I’m saying here? Yeah, I completely understand. So now this $200,000 difference has to be done in cash and or in court. Who’s going to sue who up, down, sideways? The whole point is these people can’t sleep at night. Mhm mhm. The builder is also suffering. We can easily blame and say oh uh guilty. The builder is greedy. No. He had a project. He tried to profit. He sold the market. Now he’s in a different market. Nobody’s asking the builder who’s making his interest payments on millions of dollars.
Jas Takhar: Well, on the flip side, when homes were when people were purchasing them at 700,000, and then when they went to go close on it at 900, all.
Chris Slightham: I’m getting at is.
Jas Takhar: Nobody felt sorry for the builder at that time.
Simeon Papailias: Nobody’s nobody feels sorry for anyone. The whole point is there’s many ways to lose from a builder and developer, from the consumer, from the brokers, who’s who’s blaming who. Now, do you think the buyer is blaming anyone but the agent? What did the agent do wrong? Nothing. The the buyer said, I like this home. I think it’s a beautiful home. How much is it? Well, we’re in the hottest market. It’s 920. Go ahead. What are you going to say? That in two years we’re going to see 14 interest rate hikes. Whose fault is it. Mhm. It’s nobody’s fault. You’re a victim of the market and circumstance. Were you overzealous as a buyer. Were you a little under due diligence as an agent I don’t know but there are losses. Yep. Real ones.
Jas Takhar: But I think that happens majority of the time to what we were saying earlier. If you’re speculating and you’re looking for a short terme win, that’s when you know what is Warren Buffett say, right. When when the tide comes in, we’re going to see who’s swimming naked. Right. And so that’s what we’re starting to see, that if you’re watching and listening right now thinking, oh, should I get in the market? Should I not get in the market? Please just understand only get into the market if you can hold if you have the ability to hold on for a decade. Yeah, right. At least a seven year period. Otherwise you might be running into problems like this. Chris.
Chris Slightham: Yeah. You only lose money in real estate if you have to sell, right? Which means because to your point, there are some people that can’t hold on, which means you have to sell and you have to take whatever is happening in that moment. But if you have the ability to hold, at least we just did a 20 year history right quickly here. We can go back 30, we can go back 40. We know what the math is. If you have the ability to hold, you’re not going to lose. So you’re only lose if you can’t hold. And it’s a it’s a fact that the interest rates moved faster than any other time in the history of rate setting in Canada. They started setting rates in 1935. Here. And the rates have not moved faster. And for and at the greatest, um, relative, you know, percentage growth than any other time in history. And at the time, if you remember, if you rolled back the tape to the fall of 22. No, sorry, the fall of 21, the Bank of Canada, I believe, was saying that rates will move in 24 and now we know, or 23 or 24, I think they said back then.
Jas Takhar: I thought they said I think it was going to be for four years. So I think they were going to take it till almost end of 24 to early 25. They weren’t going to touch rate. That’s right. Yeah.
Chris Slightham: And then unfortunately, you know the the inflation took off and they had to change their decision making their strategy. And so effective March of 2022 they said oh it’s hotter than we thought by a lot by a lot. And off they went. And their new strategy. And they had to they had to make difficult decisions.
Jas Takhar: What do you guys want to go to next. What what what what article kind of has have you guys read.
Simeon Papailias: That was four times hotter. Inflation is supposed to be at 2 to 2 and a half. And we were hitting 8% on paper with people saying reality was eight between 8 and 11.
Jas Takhar: Let’s actually go to page ten guys. This is where I want to take you guys right now. It’s our it’s our good friends at the green Bank. I, I tend not to say their name until they start sponsoring us.
Simeon Papailias: Um.
Jas Takhar: Any of the, the five majors, um, Canada’s second largest bank says average home prices could drop as much as 10% by early 2024, thanks to the surge in housing supply in two provinces.
Simeon Papailias: What is the date of this article?
Jas Takhar: This article would have been, uh, this week this came up.
Chris Slightham: And let’s just say that that’s the headline.
Jas Takhar: Yes, home prices could drop by 10% in. And the great point, Chris, home prices could drop by ten per. In early 2024. I will say the name because it’s TD and I love what you said, Chris, because this is put in the way that it’s written for people to click and pick up that newspaper, because if it if it bleeds, it leads. If it if if. The front of the newspaper said, it’s going to be a beautiful sunny day. Nobody tends to pick up that newspaper, but if they say there’s a storm coming, most people pick up, pick it up. They got to. They got to make sure that they protect their their homes and their families. This is what I believe happens in the media. But let’s dive into it. A previous forecast from TD Bank had called for average home prices to fall around 5% from the third quarter quarter level through the early part of next year. However, the bank updated its forecast this week to reflect a much steeper drop, citing an upgraded bond yield forecast in a greater loosening in the BC and Ontario real estate markets than it had previously predicted. Ontario sales. Okay, so I just want to make sure that there’s nothing missing here that I think we should bring up. Okay. Thoughts, guys? 10%. So we’re looking at, um, in the Greater Toronto Area, the average, let’s just use 1.1 million. They’re saying approximately $110,000 drop in home values. Now this will scare a lot of people. What’s your guys thoughts on it Chris I’ll go to you first, buddy.
Chris Slightham: Well I just wanted to let’s go deeper into the article where where where where a lot of people, you know, when you’re skimming. I do the same thing. I read the newspaper every day. I still get a traditional newspaper at home. I still love not lying. I’m old fashioned. He literally has. But the key is, is paper that you, which I love. A little trick is you should actually read the last three paragraphs first. Okay, of the article. Right? Because we don’t often get there because. So I jumped to life right there. So okay, go read it. It says TD predicts the Bank of Canada will cut interest rates during the second quarter of next year, preventing home prices from dropping further, and that population growth will sustain demand. Now, that’s not the headline, right? Right. The headline is prices could drop by 10% in early 24. But if you read at the last paragraph of the article here, the third last paragraph, it effectively says the opposite of what the headline says. The potential for weaker growth are higher than expected. Interest rates are important. Downside risks. Like you have to look at them. They’re saying, right, you’ve got to look at that. However they just said you’re they’re predicting that the Bank of Canada is going to cut rates.
Simeon Papailias: Oh, and there’s another quote here. Actual quote from this article. Some perspective is warranted, though the latest forecast warns a 10% decline in average home prices would still leave them 15% higher than pre-pandemic levels. Right? So hey, for all those who are who are losing, you’re actually still 15% up.
Chris Slightham: So don’t worry about it. But but you have to go all the way to the very end of the article to to hear more detail and the detail that I think is important to put the headline into context. Right? Right. Because they’re not wrong. By sure. Could prices drop? Absolutely. But they could drop by 50%. They could. What scenario would have to happen for that piece of their prediction to come true? Well, we’d have to see higher interest rates than what we have today. Likely immigration would have to slow down, so demand would have to slow down. So again, as from the start of our conversation today, I said, these are the facts that you need to understand and you need to come to a conclusion as an investor, as a homeowner, as somebody interested in real estate, what do you what do you believe? Right? Do you believe rates are going to be higher next year or lower? Do some research, figure it out. Td says they believe they’re going to cut rates next year. Td is pretty smart operators. Oh I keep saying the brand I’m sorry.
Jas Takhar: No no no no I went.
Chris Slightham: I apologize.
Jas Takhar: It’s okay.
Chris Slightham: Uh, the um they they believe that demand is going to be higher due to sustained growth in population. Okay. Do you believe that? Do you think that’s a fair statement? The Government of Canada has stated that they have goals that are higher in 24 for immigration levels than they were in 23. So do you believe they can execute on those goals? That’s something you have to think about. Is that a factor. Because there’s your demand, right, to help firm up. So these are the things that you want to draw conclusions on. But to your point, jazz, I love that you read the headline because that’s really what you know is what a lot of people are reading headlines only. And and until you dig into the weeds, so to speak. Yeah, it’s hard to really you can make a misjudgment by accident. Yep. By by scanning the headlines and not getting into some of the detail, you know, behind that.
Jas Takhar: And when you speak about the interest rates, which I strongly believe we’re going to start to see some cuts. And you kind of skimmed over it earlier when we got started. But when interest rates drop, that cost of borrowing decreases. That’s when consumer confidence, which you can’t really touch or smell, it’s more of just this momentum that, you know, people are starting to buy more. They’re making larger purchases, investing into real estate, purchasing homes, buying cars, maybe some boats and all that going on on on more vacations, once interest rates start to decrease, the conversations at home change to honey. Maybe now we can go look for that bigger home. Or honey. Maybe we don’t need to rent now because our what we’re paying for rent is very similar to what we can own a home for, and that what happens is you have more people looking now, hence that months of inventory, the supply starts to go down and value shoot through the roof. And so let that leads into what are your guys predictions? I’m going to go to you first Simeon. Where do you think the market’s going to end up. Fast forward to December uh, 15th of this recording or 14th 2024. What do you think we’re going to be sitting here and saying that happened.
Simeon Papailias: I truly believe that, um, this wave is going to crest in January, meaning the downward pressure on prices. Um, with December now, the December 6th decision to not, um, put interest rates higher, the bond yields changing, um, because this has helped us all get a really deeper understanding of how the economy works. I didn’t know how close they were tied through the better half of my career. Only the last maybe 5 to 10 years, I’ve really focused on economy. And, um, now knowing those indicators, the real estate market is about 30 to 90 days behind any decision. It’s also something happens today. It’s like a stock where tomorrow morning it rallies. Yes, there is no rallying. People have to move. People have to do things to to see a change. So I do believe November’s pain, December’s pain is going to manifest and finish in January. So I think that’s where the crest like the February of 2022 boom. This is the January 2024 bust ends here. And I think we’re going to see a slow and steady pick up of activity. Um, I have seen at least a half a dozen emails in my inbox the last week, uh, with both more buyer activity, commercial activity, office space, business, retail for lease.
Simeon Papailias: I’m seeing an actual uptick in activity, um, which is always a and we have signal. And when we have an, uh, the broker of record, the broker and owner of, uh, of an agency with 1500 agents, we can just go to the front desk and ask our calls up, yes or no. And instantly we understand the beat of the market. So that’s what we are seeing right now. So we’re seeing some positivity, which means I know what’s coming down the pipe. Um, if and when in the spring or summer fall. So I think somewhere between May and October is when we’re going to see the action the first tick down, if that actualizes, uh, we’re going to end up. In my I’m going to say give me a price increase. I’m going to say five, uh, 5% to 7% at the absolute most. Um, it not just because I saw the Royal LePage report this morning that was published. It’s actually dead on in that range.
Jas Takhar: So 5 to.
Simeon Papailias: 7% I cheated. I read that report. That’s fine. But I was there yesterday. Yeah. And I definitely agree with everything that report, its contents. Well, the good thing is that.
Jas Takhar: It’s all a prediction. Even theirs is as well.
Simeon Papailias: Yes, obviously with.
Jas Takhar: A lot of data.
Simeon Papailias: So 5 to 7% and I’m talking about the GTA. Yeah. Excuse me. Yeah the GTA I see 5 to 7% up this time next year. Which is interesting.
Jas Takhar: Because to the edge of the 7%, I think that’s probably the average for the last 40 years in the GTA. I think it’s 6.2 or. Yeah, but the.
Simeon Papailias: Last the last ten were much higher. Oh for sure. So it was that would be an outlier.
Jas Takhar: Almost. Right.
Simeon Papailias: But I’m going I’m going 5 to 7 tops. 5 to.
Jas Takhar: 7. Yeah Christopher yourself.
Chris Slightham: I uh in a nutshell I would agree. Okay. Um, I’m generally more conservative, uh, as a just, just my personality. I think, uh, the way I view things. So I would like I hope there is no more than seven. That is for sure, because that starts to get to the hotter end of the nonsense. And we don’t need nonsense. The volatility is what we’re trying to avoid. Uh, so maybe it’s because I hope it’s not too hot that I believe that, you know, the five range is probably a comfortable number. Uh, I don’t think we’re totally out of the woods yet. And that’s why I don’t want to get too excited about it. Um, but I, I do feel I’m in agreeance with, with Simeon on the fact that I think we’re at the moment where we are at the low. We’ve kind of we’ve looked back over over decades of, of data to different moments in time where there has been significant market changes and it takes about 18 months, on average, for the market to start to come back from a transaction volume standpoint, which has to happen first before you generally generally happen first before you see price increases. And so I look at July of 22, even though the first rating, even though the peak for prices was February of 22, for me, July of 22 was the real turning point because if you remember back then, jazz, the Bank of Canada, said they’d already made a few rate increases. And then July 22nd, they made a 100 basis point, a 1% jump. Yep. And our market cap.
Jas Takhar: That was one of the few times that it did happen quite quickly. No no.
Chris Slightham: No it was overnight.
Jas Takhar: Stock almost. Yes. Wow. Right. Almost acted like a stock.
Chris Slightham: Which is rare. Which is rare. It is rare to your point.
Simeon Papailias: And it was a. Knee jerking market. Freezing.
Chris Slightham: You got it. So January this coming January is 18 months. Yep. Right. So that’s where now at the point that people, for whatever the reasons, whether it’s they can’t hold on any longer, they’re going to have to make a decision to sell or buyers are just like we’ve been waiting and waiting and waiting. We’ve been assessing the Bank of Canada is now comfortable with where things are. Uh, they’re talking about lower rates in the future. Uh, for those folks that are aware of what lower rates do because you talked about, you know, you think of lower rates, it’s what it does is it actually immediately increases your purchasing power, right? So your budget doesn’t have to change. And we’ve talked about this together before previously is we did a chart on purchasing power. Right. So I have my same budget. And my budget is $4,000 a month. Jazz what can I buy. Yeah. Well when rates are at 5.5%, you can buy this much because this is the size of the mortgage you can get with your $4,000 budget. But when rates go to 4.5%. Yep. Now your budget goes up and, you know, God forbid they go to 3.5%, which is not what I’m predicting because I don’t believe they’re going to go back to that level anytime soon. Um, if if they did, that means we were in a tougher, even tougher economic environment for that to happen. Then your purchasing power goes up. But every time that rate drops, your purchasing power goes up. So your budget so you can afford to pay a bit more. And that’s what causes.
Jas Takhar: The increase in the.
Chris Slightham: Prices in prices. Right. So and comfort level.
Jas Takhar: So what you say is it you’re floating around the six ish range.
Chris Slightham: Yeah 5 6%. Somewhere in there I think I’d be comfortable with uh, I hope it’s no more than that. I agree. And if it’s a little bit less folks like I jazz, I. I would not be upset with that either 100% because let’s, let’s allow everybody to kind of get into the market, breathe, not be panicked that they’re going to miss an opportunity. Uh. Let’s hope they don’t jump $150,000 in 90 days like it did this past spring. But on the other hand, if you look at all the other factors, like the growth in our country and the fact that we’ve had abnormally low transaction volume for a market our size, which you could argue there’s going to be some pent up demand in that, right. Sure. We had an abnormally high level of of transactions in 2021, but now 2022 was not a record year by any stretch. In 2023, we now is going to be the lowest year of transactions in in a in an environment where population is going only one direction.
Simeon Papailias: So so I think it’s worth mentioning a couple of things on this, because you just talked about pent up demand and very low transaction count. So this market right now when we’re seeing less than 70,000 transactions amongst the population, so dense. It’s not just the buyers who can act. And we talked about the people who are in the market might be the ones that have to sell right now. What all the people who want to sell. But they’re holding on right now because right before the prices started coming down in May of this very year between April and June, there was a lift off. If you guys remember it. Oh yeah. Prices were going up during a downturn and that was a very simple reason. There was a stall in the interest rate hikes. People believed for a second it was over. They’re like is it over? Yeah, yeah. And they wanted to go buy something. And there was multiple offers because there was nothing for sale. The reason people can’t sell or don’t want to sell is because they have to buy. So if I have a home, which I do, that is worth X amount of dollars and I have a mortgage that’s locked in. Yeah, okay. And it’s worth X amount of dollars, let’s just say I have a mortgage of $500,000, and I have it locked in in December of 2021 by absolute luck, not because of insight or any foresight whatsoever. I locked it for five years at 2.1%. Okay.
Chris Slightham: Yeah. Where are you going? Nowhere.
Simeon Papailias: I am not going anywhere.
Chris Slightham: You got it.
Simeon Papailias: So you can count that if people are in a five year cycle, 20% of the population that has mortgages refinanced each year, just like it’s the reverse countdown now people are like, please don’t, please stop time. Please stop time. Yeah. You can’t stop time. My terms were up between January. Uh, sorry. December. In January of 20 2122, I did three mortgages, um, all locked in at 1.9, 2.03 and 2.1. Um, why in the world would I ever sell right now if I have to buy and get a mortgage at six? So for anybody wondering what happened, the market’s not as bad as people think. There is reasons for this artificial slam down. How can I walk into a client’s living room? Who wants to sell and tell them to sell? No. You need to hang tight for another year and a half. I’ll sell your home. But wait 18 months. Take advantage of the $80,000 you’ll save in interest. Mhm, mhm. Because even if you buy a house for lower right now the interest rate differential, you’re paying $130,000 more. That is in good conscience as a true professional. My advice to a client I’m not going to go for the transaction. I’m going to tell them what’s best for the client. That is what’s happening. That is what the top professionals in this business are going to the listing, appointment and unfortunately leaving, saying, I had to tell Chris to hang in there. Yeah, I’ll be back in 6 to 8 months. I’ll be back in a year, to our own detriment from a business perspective, but to our own benefit from a long terme relationship and wealth building for our client, who can now do three more.
Jas Takhar: In time.
Simeon Papailias: In time. So that’s I just thought that whole low transaction, there’s many reasons for it. It’s not it’s not as simple as people. Oh no it’s down the interest rates.
Simeon Papailias: No, no.
Chris Slightham: There’s a lot of factors I. Can’t sell in any way shape or form right now. I’d be completely opposite. Yeah.
Jas Takhar: So when they do the transaction count, they’re not counting the the new builds that actually get sold. That’s just.
Chris Slightham: Resale. The numbers that we’re talking are just resold.
Jas Takhar: Just resell. Yeah.
Simeon Papailias: Those numbers are tracked elsewhere though. Right.
Jas Takhar: Um, which you’ll obviously see a decrease in that because builders didn’t obviously.
Chris Slightham: Oh no, there’s a decrease there.
Jas Takhar: Um, as much inventory. I’m going to put up my prediction. I think the first part of the year is going to be somewhere around that one, 1.5% increase. I actually think the later part of the year, like July August is, and that’s where we’ll see till the end of December. Yeah, that’s where I think it’s going to be north of 7% because it’s going to be pent up, which brings you that average. I’m thinking about 3.7 to 4%, a little less than what you guys are saying.
Simeon Papailias: I overall for the year.
Jas Takhar: Overall for the year. So the first part will be about that one one and a half kind of flat if you want to call it. The later part of the year is where it’s going to really pick up, but then gives us that full year average of about three point.
Simeon Papailias: I think we’re all saying the same thing. Um, roughly. Yeah. Yeah.
Jas Takhar: To Chris’s point earlier, the reason I think he mentioned and I know I feel it all the time in the business that we don’t we didn’t like that 21% increase in the year of what was it end of 2021, 2021? The whole year of 2021. Some would say, well, you real estate agents would love that. But when we’re working with buyers, we were going into multiple offers on a property with 67 offers and only one person won, so 66 people went home that night disappointed hurt that they.
Simeon Papailias: Minus -300 bucks in their pockets a mine.
Jas Takhar: Well because they did the home inspection is probably more than that. The home inspection, the gas, the food and all that. A lot more than the $300 that they lost on that night. However, when. When you see something go up that quickly at 21% year over year, you know it’s going to come down to the friends. I mean, you’re obviously from Alberta. Uh, Red deer specifically. I’ve always said it’s very cyclical, and that’s why I like the GTA because you it’s that slow and steady that has always helped us here in the GTA. And so for people who think, oh, you guys want to see it go past ten, 12%, the business is not fun for us when you have not that many and it’s not sustainable.
Simeon Papailias: We want a regular market where we can put our own experience and savvy to to be the value prop. That’s how we win from a transactional real estate perspective. Not with the jerks, the ups and downs. When people think we’re winning is not winning. Yeah, we win during slow, steady, stable markets where we can flex with our marketing expertise. We’re marketers. Mhm mhm. That’s what we do. Well. So when things are nice and quiet it’s easy to stand out. When you have something unique meaning you can make noise, you can sing better, you can dance better. That’s how you stick out when you stick out. For the negative attention of a market going like this, it’s not fun for everyone.
Jas Takhar: I want to leave my guys with one thing from each of us, because my viewers and listeners do sway in that 25 to, you know, 37, 38 year kind of range. When homes are priced at where they’re priced at now, they’re going to go up a little, they’re going to go down a little. We, we, we, we spoke about that. What are some one tactic or two tactics for a younger person to get into the market for the first time when getting a down payment of $100,000, maybe it’s 80,000 on an on an average condo of. Call it 600,000. You don’t need to have 20% down. As a first time home buyer, I know a lot of people think you need to always have 20% down. That’s for an investor. They still need to come up with about 80, $90,000. Okay. On that $600,000 purchase. That’s a safe thing. You could do it with 5% down. We always recommend try to get to that 10%. What are some of ways that they people in that age group can get into the market? Chris.
Chris Slightham: In terms.
Jas Takhar: Of just getting into the market for the first time, like if we look at our friends here behind the camera.
Simeon Papailias: Like how to save.
Jas Takhar: Money three everyone is renting.
Simeon Papailias: Like you’re asking how to save money.
Jas Takhar: It’s not really to save the money. What are some maybe tactics? So let me maybe start to jog your guys kind of thought process. I think one of the best ways to get into the market from an age group of guys who are renting right now is house hacking, for example. For sure. Okay, so stomach the least amount of home that you possibly can. You got to deal with this insecurity internal thing that you might be going through that because my buddy Chris Slightham bought just.
Simeon Papailias: Get off of Instagram. How about you just get off of Instagram a.
Jas Takhar: Beautiful that’s a perfect that’s a perfect. Well start there a beautiful 1500 square foot condo that now I need to buy that stomach the least a home, the least amount of home possible. Meaning live in the basement, live in the basement, rent out the upstairs. It’s what my parents did in 1973 when they came to Canada. Taxi driver. My father, his whole life. Factory worker, my mother. They could not put a down payment together, but they started there. That’s how they got started. So that’s one way what is maybe another way that they can get into the market?
Simeon Papailias: Well, I’m going to just say like straight up it’s the expectation first and foremost. Okay. So a lot of things I’m going to say might not be very popular.
Jas Takhar: That’s fine. You’re not that popular.
Simeon Papailias: Or and I also don’t like sugar coating either. So so let me just put it put this straight. Instagram is hurting a lot more people, a lot worse ways because they give up before they even start. So I would say put away the social media and the comparison. Put that away.
Jas Takhar: Especially if the feed just really quickly CMOs. I let me just throw something in there. Social media could be really, really bad for you. On the flip side, it could be really good. It could be really good too.
Simeon Papailias: If you follow the right things.
Jas Takhar: Yeah, like because if you open up my feed right now in social media, all platforms, TikTok, Instagram, YouTube, you will see 2 to 3 types of videos. You will see sports videos, highlights from the Dallas Cowboys. That’s my escapism. It’s what just gets me away from everything. The second thing will be some type of inspiring message. Yep. So I have.
Simeon Papailias: Unless it’s because you don’t want to hear, you don’t want to hear negativity.
Jas Takhar: There’s no negativity in my feed whatsoever. And even the other inspiring stuff. It’s not people with a private jet. Correct.
Simeon Papailias: Because that’s not inspiring.
Jas Takhar: It’s just not inspiring.
Simeon Papailias: It’s also a lie, right? But how about that? It’s also a lie. Possibly, yes, but it’s not. Possibly it is a lie. Great. It is. It is curated content. But to create FOMO.
Jas Takhar: So. But that’s what I want. I want people to understand what you just said, that you will get what you put yourself out. Like whatever you put your thoughts to, you will bring about. We talked.
Simeon Papailias: About sugarcoating. If me and you had a private jet, would we actually put it on social media? The answer is no. Nobody who has a private jet going about their business, living their best life is putting it on social media. Yeah, that is a lie. It’s fictitious.
Jas Takhar: My helicopter is on the helipad of the top.
Simeon Papailias: Of the studio. So if you know as a fact that the only reason a videographer was hired to take an angle of a jet with you slowly walking up the stairs. Yes. Is for you to sell something. Yeah. Yeah. You cannot be possibly that naive to fall to be jealous. That is not a real expectation for a 25 year old man who is looking to go from renting to owning. Yeah, so if we were to just stop that right there and now actually talk strategies which involve meal prepping. Yeah. Meal prepping, house hacking. So you cannot in an economy where inflation is killing everyone and lunch is a bare minimum of 15 to $20 in Toronto now, period. Not everywhere, but in this city. We can go to McDonald’s. I just saw it on Instagram 1470 for a meal, for.
Jas Takhar: A combo, for a. Combo which I paid. 3.99.
Simeon Papailias: So we’re not talking about exercise or mega size or what have you a combo. It’s 15 bucks. So if McDonald’s, I was gonna say mcsherry’s. So if McDonald’s is 15 bucks, a restaurant is 25 to 30. A takeout at Metro at any grocery store is 1512 to 15 to get a salad, some chickpeas and some chicken. Whatever the case may be, if you are eating out, you will never buy a home. You don’t get paid enough. Mhm. So until your value prop as a human being changes to the market, to the marketplace, to the marketplace. So until you’re worth more. Yeah. And you will never be worth more unless you can invest in yourself and do certain things and so house hacking means either you and five friends put a down payment together, occupy the premises, try to even occupy two rooms and rent out the rest so you can actually graduate into a bigger property. It’s the only way. It’s the way I got my first home. The first thing I did is I bought it. I put a kitchen in the basement and it was still connected. It wasn’t even done properly. But the guy who I was working with moved in downstairs, so he gave me a hundred bucks a month for gas, gave me 900 bucks a month for the basement.
Simeon Papailias: Um, things worked out. Then I met my wife. Then that household income became double because she was working for the government. But if anybody’s wondering how it was done or it was. Did anybody start rich? Nobody started rich. Yeah. Everybody comes from like, you’re. We know exactly where you’re from. Where I’m from. Like, these are not maybe stories. These are real. Stop looking at garbage. Fake stuff. If you want to be real about homeownership, it’s not a right. It’s a privilege. So the dream of home ownership is going to be a dream forever unless you act on it. And the only way 20 year olds right now in a market this vicious. If you want to stick to Toronto, you can move to Newfoundland. Find something for 200,000, no problem. But if you want to stick to Toronto, if this is your dream where you’re competing at 1.1, the only way to make it is by stop doing stupid shit and all accounts well, like.
Jas Takhar: The expectation part, right? Because we say 1.1, but not all real estate in the GTA is 1.1 million.
Simeon Papailias: No, it’s 500,000. So there’s a lot of 500.
Jas Takhar: $550,000 condos all over the place.
Simeon Papailias: So why don’t we give them why don’t we give everybody an insider tip for December 2020? Hang on one.
Jas Takhar: Second. I want to go to Christopher for a second. Chris, what would be your one hack or one strategy that that 25 to 35 year old kind of. Can take.
Chris Slightham: On. Well, I think you guys have really covered it off. You’ve got to figure out how to spend less than you make. Period, period. It’s the only way. So simple. It sounds so simple. It’s not easy. And I respect that because it isn’t. And you’re right on with the math in terms of but, you know, we were taught as from very young that you had to figure that out to spend less than you make. And it’s not easy. I’m not suggesting this is a walk in the park, but you have to figure it out. And if that means living in mom and dad’s basement for a few years so that you can put some money away, it is what it is. It is what it is. If it means going to grocery shopping for groceries and not spending on Uber Eats and all these easy, fast things right on your device, which is not easy, I get it, it’s not glamorous, it’s not fun. But you have to make that decision to figure out how to spend less than you make to build up some some, some saved things.
Jas Takhar: And I want people to really understand you. If you’ve been listening to the podcast for the last few years, you’ve heard me speak about success, leaving clues. People who have done what you’re wanting to accomplish have left a lot of clues. They come through books. They come through mentorship, videos, YouTube. You can find them. You just got to go pick up those clues. I will never forget the day you told me in a hallway that you had a Toyota Camry for a very long time, and I knew, if you don’t mind me saying I knew you could afford a lot better car in terms of what people on the outside would think is a more expensive and luxurious car. But you stuck with the Camry because it got you from point A to point B. Um, a few years your junior, I just went and in the last three months picked up a Toyota Camry. I’m at a place right now that I could even afford a more luxurious car, but I got the Camry to bring everything full circle because I’m thinking about my ten year plan. And my plan is I want more people because more people allow me to do more things and it’s more fun. And I’m just in a happier state with more people around me. But the fact that I was able to now invest into a $15,000 Camry and not a $250,000 Lambo, no shots at anybody who has those, like, do you? Mazel tov. Whatever. Um, but that allows me to now get more people. And so in terms of success leaving clues. Thank you, Christopher, for leaving that clue for me, because I needed to pick that up as well. Guys, we are approaching the holiday season. I know how busy your guys schedules are. I want to say Merry Christmas, happy holidays, happy Hanukkah, happy Festivus for the rest of us. All that goodness to you, your family, to the viewers and the listeners. Uh, thank you so much and all that to you guys as well. Did you guys want to sign off on anything?
Simeon Papailias: I just I just want to say that this is the first time we’re doing a podcast collab. So this is going to be yes, please, the Broker’s Playbook end of year special, uh, which is the visit to my partner’s studio, uh, and, uh, an appearance on the Jazz Stack podcast. So I couldn’t be happier to be here with my two business partners in this world. So thank you for housing us. Thank you for your generosity and everything you do for us all year. Chris. Thank you. Um, you’re always there for us, supporting us and our clients and Mr. Jazz Pinder. Tucker. Thank you. Another year in the books home, place.
Jas Takhar: And we would be remiss if we didn’t mention Christopher’s beautiful, beautiful younger brother, like actual brother, the Jeffrey Slightham mother, the the the Jeffrey Dome. We love you, Mr. Jeffrey Slayton. And I’m gonna have a grievance.
Chris Slightham: Is this a time for a grievance? No, no.
Jas Takhar: I don’t have the pull from. Was it chocolate?
Simeon Papailias: Where’s the chocolate bar? We don’t have the. Where’s the chocolate bar?
Jas Takhar: Uh, Christopher, merry Christmas to you and your family, brother. Thank you so much.
Simeon Papailias: Thanks, Jas. Thanks, Simeon. And thanks for having me here today. It’s a lot of fun. And, uh, congratulations on all your success. Really? It’s, uh, it’s a real honor to be able to work together, and and, you know, when we we’re all, like, minded about taking care of people, thinking long terme. And you guys have done an incredible job, so it’s an honor.
Jas Takhar: All right, we’ll see you in the New year. Family. Thank you guys. Take care.
Simeon Papailias: Thank you so very much for spending your time with us here at Broker’s Playbook. This is a growing community. If you found value in this video, please invite others to subscribe and of course share the videos with. We’ll see you soon.