Latest / CityTalk Canada / Carrot and Stuck

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Carrot and Stuck · CityTalk Canada

• 0:01
  Mary Rowe: This is City Talk the Podcast, brought to you by the Canadian Urban Institute, also known as CUI, and I'm Mary Rowe.
• 0:09
  Mary Rowe: This episode continues our closer look at the evolving state of Canada's housing condition, market system, which, despite the billions of capital dollars directed its way, remains in a state of crisis.
• 0:24
  Mary Rowe: We'll be talking about this and many other urban issues at CUI State of Canada City Summit in Ottawa in a few weeks.
• 0:31
  Mary Rowe: But right now we're going to talk about capital and financing with someone who not only keeps a close eye on all that, but has a well-earned reputation for influencing decision makers affecting market conditions.
• 0:42
  Mary Rowe: Benjamin Tall is the senior chief economist at CIBC World Markets and a regular contributor to the Canadian Chamber of Commerce, the Toronto Region Board of Trade, and other public venues.
• 0:53
  Mary Rowe: Benjamin, welcome to City Talk.
• 0:55
  Mary Rowe: And I'd like to start by asking you to describe the financial status of the housing market in Canada as you see it right now.
• 1:03
  Benjamin Tal: That's a good one.
• 1:04
  Benjamin Tal: First of all, we cannot divorce the housing market and its performance from the microeconomic story, i.e., Trump interest rates, long-term interest rates in the US are rising.
• 1:15
  Benjamin Tal: Nothing to do with Canadian housing.
• 1:17
  Benjamin Tal: It's all about fiscal policy, about inflation expectations.
• 1:20
  Benjamin Tal: Unfortunately, they move, we move.
• 1:23
  Benjamin Tal: So the five-year rate in Canada, the 10-year rate in Canada, that is so important to performer, moving just in sympathy with the US.
• 1:29
  Benjamin Tal: Nothing to do with Canada.
• 1:31
  Benjamin Tal: But that's the way it is.
• 1:32
  Benjamin Tal: We are price takers.
• 1:33
  Benjamin Tal: And that's something that is really complicating the math when it comes to purpose built rent and when it comes to going out with projects.
• 1:42
  Benjamin Tal: So that's one something that we cannot control, but it's extremely important determining where we are going in the housing market over the next uh six months.
• 1:51
  Benjamin Tal: So that's one thing.
• 1:52
  Benjamin Tal: The other is the inflation story that is impacting again short-term interest rates.
• 1:57
  Benjamin Tal: We have a situation in which the Fed is already raising interest rates.
• 2:00
  Benjamin Tal: The Bank of Canada just uh recently is tweeting about the possibility of raising interest rates, not because of the fact that the economy, both in Canada and the US, need higher interest rates, but because of the inflationary aspect of higher gasoline prices due to the war with Iran.
• 2:16
  Benjamin Tal: Again, we cannot control it.
• 2:18
  Benjamin Tal: That's a major factor impacting the psyche of the housing market in Canada.
• 2:23
  Benjamin Tal: So I would describe the housing market today.
• 2:26
  Benjamin Tal: Prices are too high to buy and not high enough to build.
• 2:30
  Benjamin Tal: So the system is broken.
• 2:32
  Benjamin Tal: That's the way I see it, quite frankly.
• 2:35
  Benjamin Tal: The correction that we got in the market is not really a correction, it's an adjustment, and it's not enough to fix the affordability crisis that we are facing.
• 2:43
  Benjamin Tal: There is no question about it.
• 2:44
  Benjamin Tal: And the developers, they cannot make money.
• 2:48
  Benjamin Tal: They simply cannot make money.
• 2:50
  Benjamin Tal: The cost of delivery is simply too high in this country.
• 2:54
  Benjamin Tal: And if you add to it the latest increase in interest rates, it's definitely not helping.
• 2:58
  Benjamin Tal: So the system is not working.
• 3:00
  Benjamin Tal: We are building basically zip, which is not good when it comes to the future.
• 3:04
  Benjamin Tal: We need more housing, not less housing, but we need the right housing.
• 3:07
  Benjamin Tal: So that's more or less where we are.
• 3:10
  Mary Rowe: Wow, you just there's so many phrases there I want to remember.
• 3:13
  Mary Rowe: I'm glad that we taped these shows so I can go back and listen.
• 3:16
  Mary Rowe: Prices are too high to buy and not high enough to build.
• 3:19
  Mary Rowe: Wow.
• 3:20
  Mary Rowe: I mean, that's the that in a nutshell is the dilemma that we're in.
• 3:24
  Mary Rowe: That uh the folks that take the risk to actually create the units, uh, the math isn't working for them.
• 3:29
  Mary Rowe: And the people that actually want to buy these units, the math isn't working for them either.
• 3:33
  Benjamin Tal: Exactly.
• 3:34
  Benjamin Tal: And that's why we have been pushing for two things.
• 3:35
  Benjamin Tal: First of all, to reduce or eliminate the HST on a new building, and that's exactly what the government did after a lot of lobbying.
• 3:43
  Benjamin Tal: That's the right thing to do again on new construction that is basically providing some energy to new construction.
• 3:49
  Benjamin Tal: But we also have to really do something big with development charges.
• 3:53
  Benjamin Tal: As you know, Mary, development charges is a major issue.
• 3:56
  Benjamin Tal: It's too costly, and it's something that prevents from uh developers from doing anything.
• 4:01
  Benjamin Tal: And uh the way I put it is the following: if they don't build, you don't collect development charges as a municipality.
• 4:10
  Benjamin Tal: So you're not sacrificing anything by cutting them significantly.
• 4:13
  Benjamin Tal: We are not there yet.
• 4:15
  Mary Rowe: Uh, it's part of a larger system-wide conversation, though, about how we actually pay for all the other investments that are required to make a house or a housing unit livable.
• 4:26
  Mary Rowe: So the development charges don't come out of nowhere, as you know.
• 4:29
  Mary Rowe: And I know it's hotly contested because we have some parts of the country where a development charge is lower and other parts where it's higher.
• 4:35
  Mary Rowe: But it sort of speaks to the question, which is why the governments have it, other governments are having to step in and say, well, we'll allow or we will encourage the deferral of development charges, but they have to make the municipality whole because they use that money to pay for infrastructure, pay for roads, pay for sewers, pay for parks.
• 4:53
  Mary Rowe: You know what I mean?
• 4:54
  Mary Rowe: Like we can't so if we if we just build baby build with nothing else around it, I don't think that solves the problem either.
• 5:00
  Benjamin Tal: Yeah, so I think the model should be the following it's not the municipalities don't have the money.
• 5:04
  Benjamin Tal: There's no question about it.
• 5:05
  Benjamin Tal: So either you give them the means to raise money, namely through bonds, that's one possibility.
• 5:09
  Benjamin Tal: Yeah, the other is uh let Ottawa write a check, and I think that's a reasonable scenario.
• 5:16
  Benjamin Tal: Ottawa can write a check that it's not it's not very expensive, but it will improve the situation significantly.
• 5:22
  Benjamin Tal: I think development charges in this country are way too high.
• 5:26
  Benjamin Tal: And if you look at the city of Toronto, for example, they're sitting on a mountain of cash just from development uh charges that they will not utilize.
• 5:33
  Benjamin Tal: So that's not ideal given the shortage of housing that we have.
• 5:36
  Mary Rowe: Uh back to other mechanisms.
• 5:38
  Mary Rowe: I hear you.
• 5:39
  Mary Rowe: Uh, municipal bonds would be one, as you suggested, or this idea.
• 5:43
  Mary Rowe: I love your your verb, let, let Ottawa write a check, versus saying infrastructure across this country is a national good.
• 5:51
  Mary Rowe: It's a national asset, allows us to function.
• 5:54
  Mary Rowe: We already have a federal department that has infrastructure in its title.
• 5:58
  Mary Rowe: So are you suggesting that we need more, we need to have more investment?
• 6:03
  Mary Rowe: They already put 32 billion bucks into it to build community strong.
• 6:07
  Benjamin Tal: Absolutely.
• 6:07
  Benjamin Tal: Listen, infrastructure is like the oxygen of the economy, and we need more oxygen.
• 6:11
  Benjamin Tal: There's no question about it.
• 6:12
  Benjamin Tal: I think that we have an opportunity in this environment in which uh, let's face it, in five, six years from now, we we will be thanking Trump for waking us up.
• 6:20
  Benjamin Tal: There's no question about it.
• 6:22
  Mary Rowe: You know, I did a media interview this morning with Manitoba, CBC, because Winnipeg is having to close some arenas because they don't, because the municipality doesn't have the money to fix the arenas and they feel they're not safe.
• 6:33
  Mary Rowe: Uh all sorts of folks are having a nervous breakdown up, but it's like, where are we going to play hockey?
• 6:37
  Mary Rowe: Where do I take my kids?
• 6:38
  Mary Rowe: Obviously.
• 6:39
  Mary Rowe: And I made the case, well, actually, this is all part of the infrastructure conversation.
• 6:43
  Mary Rowe: Infrastructure is pipes and sewers and roads.
• 6:45
  Mary Rowe: It's also libraries, it's also arenas where we take our kids to skate and it's swimming pools and all that stuff.
• 6:50
  Mary Rowe: So I think this is a larger conversation.
• 6:53
  Mary Rowe: And can we get the government of Canada, as it talks about major projects, big, large investments, can we get them to also focus on place-based investments, Benjamin?
• 7:03
  Mary Rowe: Like that is the thing.
• 7:05
  Mary Rowe: As you know, the conversation tends to be at 30,000 feet.
• 7:07
  Mary Rowe: And we're saying, wait a sec, we have all this enabling stuff that has to happen in communities so that people have a place to earn a living and raise their families.
• 7:15
  Mary Rowe: How do we get it to be a local conversation?
• 7:18
  Benjamin Tal: Absolutely.
• 7:18
  Benjamin Tal: And I think that's a condition that is extremely important to understand.
• 7:22
  Benjamin Tal: We are talking about all kinds of things that the families would like to use when they buy a condo or buy a house.
• 7:28
  Benjamin Tal: I think that's part of the infrastructure.
• 7:30
  Benjamin Tal: Therefore, I think that housing should fall under the umbrella of the infrastructure spending, no question about it.
• 7:35
  Mary Rowe: So housing is infrastructure.
• 7:37
  Benjamin Tal: Absolutely.
• 7:37
  Benjamin Tal: Yeah.
• 7:38
  Benjamin Tal: Absolutely.
• 7:38
  Benjamin Tal: Housing is infrastructure, and all everything that comes with housing is infrastructure.
• 7:43
  Mary Rowe: Yeah, the whole thing.
• 7:44
  Mary Rowe: So you work for a bank, you've worked for a bank for a while.
• 7:47
  Mary Rowe: What's the role of banks?
• 7:49
  Mary Rowe: Just asking.
• 7:52
  Benjamin Tal: Yes, the role of banks is to help the system.
• 7:54
  Benjamin Tal: Banks are like the oil of the system, you have to make it smooth.
• 7:57
  Benjamin Tal: So you basically provide financing and stability to the system.
• 8:01
  Benjamin Tal: And I think that the financing space in Canada is relatively healthy, it's conservative.
• 8:06
  Benjamin Tal: There's a, in my opinion, a lot of competition in the space because there are small players as well.
• 8:11
  Benjamin Tal: However, banks are very conservative and rightly so.
• 8:15
  Benjamin Tal: And therefore, you need to have alternative players to provide higher risk credit for the right price.
• 8:21
  Mary Rowe: And I think developers need to be putting more equity, right?
• 8:24
  Benjamin Tal: The fact that they put more equity is part of the story.
• 8:27
  Mary Rowe: Is there some way that we can encourage incentivize?
• 8:30
  Mary Rowe: What is it that's going to what's I'm trying to think of a good analogy?
• 8:34
  Mary Rowe: I can't come up with one.
• 8:34
  Mary Rowe: But the idea that we're the system is sort of self-correcting.
• 8:38
  Mary Rowe: Uh and so it becomes leaner, uh, it becomes more focused on efficiency, obviously.
• 8:45
  Mary Rowe: Uh, and so if if part of that prerequisite is going to be that banks take on more risk, what does it take to convince them to do it?
• 8:53
  Mary Rowe: Because they used to have uh the benefit of the developer, let's say condos, coming with a nice package of pre-sales, and that's gone.
• 9:00
  Mary Rowe: Exactly.
• 9:01
  Benjamin Tal: Now, first of all, we have to remember that the pre-sale is a Canadian invention.
• 9:05
  Mary Rowe: Ah, how do they do it everywhere else?
• 9:08
  Benjamin Tal: They take more risk and much larger equities.
• 9:10
  Mary Rowe: But you were just saying that one of the great things about the Canadian banking system is that it's conservative.
• 9:14
  Mary Rowe: It doesn't take more.
• 9:15
  Benjamin Tal: I think that's part of it.
• 9:16
  Benjamin Tal: But uh, what I think is that uh banks will do what banks do in Canada.
• 9:21
  Benjamin Tal: They will take their time, they will make sure that it's solid.
• 9:24
  Benjamin Tal: I think it will be case by case.
• 9:26
  Benjamin Tal: Some cases they will go with that, some cases they will not go with that.
• 9:29
  Benjamin Tal: The pre-cell story is not dead, but it will not be the old story.
• 9:33
  Benjamin Tal: There will be alternatives to the story, especially with very solid players.
• 9:37
  Benjamin Tal: So it will be a mix of the two.
• 9:38
  Benjamin Tal: That's the way I see it.
• 9:39
  Benjamin Tal: How do we get the scale we need?
• 9:42
  Benjamin Tal: Wow, that's a tough one.
• 9:44
  Benjamin Tal: That will be a very difficult thing to do.
• 9:46
  Benjamin Tal: But I think that something that will compensate for that will be the purpose bill rental.
• 9:51
  Benjamin Tal: Okay.
• 9:51
  Benjamin Tal: Because the way it works is that remember, the conto market used to be the rental market, and the rental market was to be the condom market.
• 9:57
  Benjamin Tal: Yes.
• 9:58
  Benjamin Tal: Now if the focus is on 70-80% end users, which means that you need you have a vacuum here, you don't have enough supply of rental.
• 10:05
  Benjamin Tal: That's where purpose build rental is entering the story.
• 10:07
  Benjamin Tal: And that will be more solid developers in this space.
• 10:10
  Benjamin Tal: So I'm actually very optimistic about this segment of the market.
• 10:13
  Mary Rowe: I mean, and and in that way it is a course correction because we because we weren't seeing enough purpose-built rental, and now we are.
• 10:19
  Mary Rowe: So what you know, it's a miracle.
• 10:22
  Mary Rowe: The market sometimes does self-correct.
• 10:23
  Mary Rowe: But uh I think, but, but I think the point you're getting at, though, is that in that in that we've had conversations with a bunch of folks about this over the years, is that the dilemma is that across the continuum you need new supply at various price points.
• 10:39
  Mary Rowe: And the dilemma is the non-market side, is the non-market side able to recover uh because it is dependent on all sorts of things, subsidies from government and also a favorable financing rates from folks like you.
• 10:53
  Benjamin Tal: Absolutely.
• 10:54
  Benjamin Tal: So the non-market story is a totally different story, which uh is a challenge.
• 10:58
  Benjamin Tal: Uh we have uh build Canada home, we have many other things that are trying to tackle this.
• 11:03
  Benjamin Tal: There is no question about it.
• 11:04
  Benjamin Tal: This is a market failure.
• 11:05
  Benjamin Tal: This is a situation which uh the market cannot fix.
• 11:08
  Benjamin Tal: No developer can uh basically build in an affordable uh way given the cost of construction, and that's why you need non-for-profit, you need uh build Canada home, and you need all those subsidies.
• 11:20
  Benjamin Tal: That's a very separate segment of the market that we we put aside.
• 11:24
  Benjamin Tal: I think that we are doing something.
• 11:25
  Benjamin Tal: Home uh build on Build Canada Home celebrated its one-year anniversary just recently.
• 11:31
  Benjamin Tal: I think it should have been the 25th anniversary, quite frankly, because it's uh overdue.
• 11:36
  Benjamin Tal: We're doing the right thing there.
• 11:37
  Benjamin Tal: We need, in my opinion, more budget, we need more money to provide them because they're doing the right thing.
• 11:42
  Benjamin Tal: That's this side of the market.
• 11:44
  Benjamin Tal: The other side of the market, you need more financing, no question about it.
• 11:47
  Mary Rowe: So you need more financing on both sides, really.
• 11:49
  Mary Rowe: But if you go back to your point about the things that are not under our control, long-term interest rates and inflation, these are way above our pay grade.
• 11:57
  Mary Rowe: They have a lot to do with global winds that are blowing, and that affects the non-market as well.
• 12:04
  Mary Rowe: So at this particular juncture, Benjamin, if you were adjacent to the prime minister, what would you be encouraging the pro the uh federal government to be doing at this moment?
• 12:13
  Benjamin Tal: I say focus on what you can control, and that's basically reduce the cost of delivery.
• 12:18
  Benjamin Tal: That's very significant in order to allow many developers that are sitting on the sideline waiting for something to happen.
• 12:27
  Benjamin Tal: And meanwhile, you know, demand will be there.
• 12:30
  Benjamin Tal: Although population growth is slowing, we are talking about 350, 400k a year new immigrants over the next 10 years.
• 12:37
  Benjamin Tal: That's a significant uh inflow of people into the system, and we'll need to house them.
• 12:43
  Benjamin Tal: And uh, any person who believes that we are dealing with the affordability issue effectively is dreaming.
• 12:51
  Benjamin Tal: Yes, we have uh excess uh supply of condos, but this is just uh you know shoeboxes that we were building for investors.
• 12:58
  Benjamin Tal: This is not uh something that will house a you know a family.
• 13:01
  Benjamin Tal: So we have a major shortage and we have to wake up.
• 13:05
  Mary Rowe: If you look at uh affordability at the in the non-market side, if you look at whether or not, I mean, we know that housing is it's how people save, it's how they collect some equity, they build equity.
• 13:17
  Mary Rowe: Is there anything that a bank can be doing that it isn't already doing to support that side of the equation?
• 13:23
  Benjamin Tal: That's a tough one.
• 13:24
  Benjamin Tal: I think that the way to look at it from uh a non-market perspective is the following.
• 13:29
  Benjamin Tal: Non-market mostly is rental.
• 13:32
  Benjamin Tal: And uh we have to make sure that there are enough units.
• 13:36
  Benjamin Tal: But another factor is that if we ask people to rent, we have to make sure that we are evening the playing fields.
• 13:43
  Benjamin Tal: What I mean by that is that it's not a secret that home buyers benefit from the tax system.
• 13:49
  Benjamin Tal: Yep, renters are not.
• 13:51
  Benjamin Tal: And I say, what will happen if tomorrow you allow some renters to deduct their a portion of the rent from their income just to make it more equal at this point and make renting more attractive.
• 14:07
  Mary Rowe: I was gonna ask you that, you know, uh as an urbanist, I'm conscious that, you know, in great cities around the world, uh often it's very common you don't own, you rent.
• 14:17
  Mary Rowe: Absolutely.
• 14:17
  Mary Rowe: I lived in New York and I would never have thought of owning in New York, not a hope.
• 14:21
  Mary Rowe: But I wouldn't even have really wanted to.
• 14:22
  Mary Rowe: And and part of it is if you want a if you want a mobile workforce in the old days, you believe that you wanted people to be able to rent because they would move to a new job.
• 14:32
  Mary Rowe: And uh and it would be easier to do if you were a tenant.
• 14:34
  Mary Rowe: But as you say, we've somehow allowed ourselves to slip into this sort of idealization that ownership is critical.
• 14:41
  Mary Rowe: But I also think I'm I'm also concerned about this equity piece because I think there's lots of statistics to support this that people that actually own houses are have more equity, more retirement savings than people that have been renting.
• 14:55
  Benjamin Tal: And that's why I believe that we have to change the tax code when it comes to rentals, tenants.
• 14:59
  Benjamin Tal: This way you will uh enable them to actually accumulate some wealth as well.
• 15:04
  Mary Rowe: And ide and ideally have a have a wealth-building instrument available to them that would grow uh in the same way that real estate is.
• 15:12
  Mary Rowe: I remember a couple of years ago at our summit, Romy Bowers, who was at the time the CEO of CMHC, said from the stage, my husband is a school teacher, and we did the math last year, and our house made more money than he did.
• 15:29
  Benjamin Tal: Yeah.
• 15:30
  Mary Rowe: And then you're left with, yeah, what is wrong with that picture?
• 15:32
  Mary Rowe: You know, there it's it's uh distorting in all sorts of ways.
• 15:36
  Mary Rowe: So as you look forward, Benjamin, to all these things that you're suggesting over which we have no control, uh, and then as you're suggesting, some tax reform, some different kinds of rationalization that's gonna happen within the sector, this push now to more purpose-built rental.
• 15:52
  Mary Rowe: Uh, any other prognostications you'd like to make?
• 15:57
  Benjamin Tal: Yes, so first of all, I again we cannot uh deal with things, things that we cannot control.
• 16:01
  Benjamin Tal: The hope and the prayer is that eventually uh, you know, logic will trump Trump.
• 16:07
  Benjamin Tal: I hope that will be the case, quite frankly.
• 16:09
  Benjamin Tal: And uh you will uh end there with a trade war that is not devastating, and the situation with Iran will stabilize.
• 16:16
  Benjamin Tal: If we have that, then we can focus on other things.
• 16:19
  Benjamin Tal: And I think that again, if you look at purpose bill rental, it's it works very well with the CMSC financing.
• 16:25
  Benjamin Tal: We have to provide more of that.
• 16:27
  Benjamin Tal: I think that we have to provide more money to um build the Canada home because they are doing the right thing, and that's a very good model.
• 16:34
  Benjamin Tal: And I think again, we know what to do.
• 16:36
  Benjamin Tal: We just have to build more, we have to use technology, you know.
• 16:39
  Benjamin Tal: I was gonna ask you that.
• 16:41
  Mary Rowe: I was gonna ask you that.
• 16:41
  Mary Rowe: Where do modern methods of construction fit?
• 16:44
  Benjamin Tal: Big time, big time.
• 16:45
  Benjamin Tal: I think that we should really invest in it because the lack of thread is a major issue, slowing down the ability of uh this economy to continue to build houses at speed.
• 16:56
  Benjamin Tal: So technology is absolutely there and it's being tested ever elsewhere in the world.
• 17:00
  Benjamin Tal: We can do it as well.
• 17:01
  Benjamin Tal: So, again, we know what to do, we just need the focus.
• 17:05
  Mary Rowe: Benjamin, always great to talk to you.
• 17:07
  Mary Rowe: I appreciate you just giving us a bit of your time.
• 17:09
  Mary Rowe: I know that you're a person in demand to talk about these kinds of things, but it's we appreciate the Citytalk audience is a pretty broad one, so um, just having a chance to hear from you would be very helpful to them.
• 17:19
  Mary Rowe: Let's uh so thank you for joining us on City Talk.
• 17:21
  Mary Rowe: Okay, this was fun.
• 17:22
  Mary Rowe: You're listening to Citytalk the podcast and more of our deep dive into Canada's housing crisis ahead of CUI State of the City Summit in Ottawa, November 12 and 13.
• 17:34
  Mary Rowe: There are still some seats available for this urban shindig, and you can secure them with a visit to our website at canerb.org.
• 17:42
  Mary Rowe: Also, as it turns out, the summit this year follows the federal budget by a week.
• 17:46
  Mary Rowe: So, all the more reason to make sure you are there because these are steep stakes.
• 17:52
  Mary Rowe: What are we building?
• 17:53
  Mary Rowe: What are we investing in?
• 17:55
  Mary Rowe: Be with us in Ottawa to learn and inform.
• 17:58
  Mary Rowe: 3.3 kilometers from our summit location, across the Alexandra Bridge into Gatineau, is a place called ZB, one of the most innovative and eco-friendly community developments in Canada.
• 18:11
  Mary Rowe: The summit includes a tour of it, by the way, and it's one of the brainchildren of my next guest.
• 18:16
  Mary Rowe: His company, Dream Unlimited, builds communities like these across Canada, along with a wide range of other housing options.
• 18:23
  Mary Rowe: So he has a unique perspective on the opportunities and challenges in the current market.
• 18:29
  Mary Rowe: Jamie, tell the Citytalk folks more about who you are and more about what you do.
• 18:35
  Jamie Cooper: My name is Jamie Cooper.
• 18:36
  Jamie Cooper: I'm the president of development and income properties here at Dream Unlimited.
• 18:40
  Jamie Cooper: And we do a whole bunch of things.
• 18:42
  Jamie Cooper: But one of our main businesses is we're a housing provider.
• 18:45
  Jamie Cooper: And I say it that way intentionally because we provide housing across the affordability spectrum.
• 18:51
  Benjamin Tal: Yep.
• 18:52
  Jamie Cooper: We provide, we build market housing, we build uh mixed income, and we build affordable housing.
• 18:57
  Jamie Cooper: We build uh more or less across the country in Alberta, Saskatchewan, Ontario, and Quebec.
• 19:03
  Jamie Cooper: And we also build condo and rental.
• 19:06
  Jamie Cooper: But we've done that for a while.
• 19:07
  Jamie Cooper: And that's why I use the term housing provider, is we're really focused on saying uh where's the opportunity?
• 19:13
  Jamie Cooper: What are the financial structures in place, and how do we deliver housing that makes sense for the communities we're building in?
• 19:20
  Mary Rowe: I think the idea of provision, it's an old-fashioned word, isn't it?
• 19:24
  Mary Rowe: Provision.
• 19:24
  Mary Rowe: Uh, and the idea, as you suggest, you're you don't say just builder.
• 19:28
  Mary Rowe: You're you're actually making that very point that you're providing something.
• 19:31
  Mary Rowe: I think one of the challenges that we seem to have is that this is an essential part of life.
• 19:36
  Mary Rowe: It's a public good that is largely provided by the private sector.
• 19:42
  Jamie Cooper: The real estate development and construction is probably the largest uh uh sector we have in our economy.
• 19:49
  Jamie Cooper: Yeah.
• 19:49
  Jamie Cooper: It produces a huge amount of GDP.
• 19:51
  Mary Rowe: Yeah.
• 19:52
  Jamie Cooper: But unlike commodities, housing is also the communities that we live in, that we spend our time in, that we raise our families in, and it has to be a great place that people enjoy.
• 20:02
  Jamie Cooper: Look, we're talking about tremendous ambition in Canada.
• 20:05
  Jamie Cooper: We want to raise a catalyze a trillion dollars of capital.
• 20:09
  Jamie Cooper: That's Carney's big goal.
• 20:10
  Jamie Cooper: We want to continue to develop the country and create an attractive place for people that live here and also to attract new people to come here.
• 20:17
  Benjamin Tal: Yeah.
• 20:17
  Jamie Cooper: The housing, the communities that we build, uh are an integral part of that selling feature for our country.
• 20:22
  Benjamin Tal: Yeah.
• 20:23
  Jamie Cooper: The housing market right now, we're totally stuck.
• 20:26
  Jamie Cooper: Yeah.
• 20:26
  Jamie Cooper: And I'll get back to what that means.
• 20:27
  Mary Rowe: Tell people what that means because I don't know if people realize the scale of it.
• 20:30
  Mary Rowe: I mean, they maybe instinctively do because they have a kid who's trying to buy something, but or they just open their eyes and see the cranes in the sky not moving.
• 20:36
  Mary Rowe: But what does it mean we're stuck?
• 20:39
  Jamie Cooper: If you go back to 2019, 2020, 21, we talked about an affordability crisis in housing.
• 20:44
  Jamie Cooper: And now it characterizes it as an affordability stalemate.
• 20:48
  Jamie Cooper: Huh.
• 20:49
  Jamie Cooper: There's a lot of there's a lot of people who recently bought homes or committed to buy condos and they're getting squeezed because prices have fallen and the carrying costs or interest on their mortgage is quite high.
• 21:00
  Mary Rowe: So you're talking about the people that are already in that got in the last two years.
• 21:03
  Mary Rowe: Yeah.
• 21:05
  Jamie Cooper: And then there's the would-be buyers.
• 21:06
  Mary Rowe: Yeah.
• 21:07
  Jamie Cooper: And they want to get into the housing market, but it's still too expensive.
• 21:10
  Jamie Cooper: And with their interest rates and the mortgage costs, they can't get there.
• 21:13
  Jamie Cooper: Yeah.
• 21:13
  Jamie Cooper: However, on the flip side, you have the builders, and they're not able to build at this price because the cost to construct housing is too high.
• 21:22
  Jamie Cooper: So it's a total stalemate.
• 21:24
  Jamie Cooper: You have people who want to get into the market, but they can't afford at these prices.
• 21:26
  Jamie Cooper: And you have developers that desperately want to build, but they can't afford to build at this price either.
• 21:32
  Mary Rowe: You'd see why I used expletives at one of the previous shows, because you do end up sort of going, Well, what do we do?
• 21:39
  Mary Rowe: We're being squeezed on all sides, right?
• 21:42
  Jamie Cooper: I said the industry was stuck.
• 21:43
  Mary Rowe: Yeah.
• 21:44
  Jamie Cooper: And I think you're seeing uh all levels of government and the private sector, as well as nonprofits, think really hard about how we can be unstuck in this market.
• 21:54
  Jamie Cooper: We're making progress, but it is no easy feat.
• 21:58
  Jamie Cooper: We started by saying the housing sector.
• 21:59
  Jamie Cooper: Is one of the largest sectors within our economy.
• 22:02
  Jamie Cooper: It is trillions of dollars.
• 22:04
  Jamie Cooper: It is not cheap or easy to unstock the market.
• 22:08
  Mary Rowe: How how do you, when you say you're a housing provider, I appreciate the nuance there, but you guys develop, you invest.
• 22:14
  Mary Rowe: Do you continue to own?
• 22:17
  Jamie Cooper: We do.
• 22:17
  Jamie Cooper: So that's that's a core part of our business.
• 22:20
  Jamie Cooper: It's a big focus because we build master plan communities in Western Canada.
• 22:25
  Jamie Cooper: Some of these are as large as 3,000 acres and can have over 50,000 people that are living in them.
• 22:29
  Jamie Cooper: Huge.
• 22:30
  Jamie Cooper: We're very we're very proud of the work that we're doing.
• 22:32
  Jamie Cooper: We spend a tremendous amount of time working on these communities before we put a shovel on the ground.
• 22:37
  Jamie Cooper: Yeah.
• 22:38
  Jamie Cooper: And then once we do, we don't want to be done with them.
• 22:40
  Jamie Cooper: We want to continue to own the housing, to own the apartments.
• 22:43
  Jamie Cooper: We own the retail, and we want to continue to be part of them for a very long time.
• 22:48
  Mary Rowe: So you're in for the long haul.
• 22:50
  Mary Rowe: So if we go to and look at the whole system as we were just describing, we're the City Talk Listeners will be familiar with this.
• 22:56
  Mary Rowe: We continue to position that the non-market and the market coexist.
• 23:00
  Mary Rowe: You're part of your two sides of the same coin.
• 23:02
  Mary Rowe: You're building both, right?
• 23:04
  Mary Rowe: You're doing non-market and market.
• 23:05
  Mary Rowe: What are the challenges to do that?
• 23:07
  Jamie Cooper: Look, let's start with the market housing.
• 23:09
  Jamie Cooper: Okay.
• 23:10
  Jamie Cooper: And right now you have buyers that want to pay market pricing, and we want to be able to sell it at that rate, but it's been too expensive for us to build.
• 23:17
  Jamie Cooper: And we're seeing government help us and help the market to reduce the cost of providing housing.
• 23:23
  Jamie Cooper: We've seen development charges get reduced, in some instances, go to zero or almost zero.
• 23:29
  Jamie Cooper: HST has been removed.
• 23:32
  Benjamin Tal: Yeah.
• 23:33
  Jamie Cooper: And there's more efforts that are underway to expedite approval processes.
• 23:36
  Jamie Cooper: Really look at what is in the government's control and how can they help reduce the cost of housing.
• 23:41
  Jamie Cooper: So the next buyer that wants to get into the housing market is able to.
• 23:45
  Jamie Cooper: And it's slow because the government has to give up revenue they're getting from development charges.
• 23:52
  Jamie Cooper: And they need to find a way to pay for the stuff that has to get built.
• 23:55
  Mary Rowe: Yeah, to replace that revenue because it's not as if they're just sitting on it.
• 23:58
  Mary Rowe: Remove that development charge revenue that was paying for for uh streetlights and and water treatment plants and schools.
• 24:05
  Mary Rowe: You still got to build those things.
• 24:07
  Mary Rowe: We don't we don't want to go without them.
• 24:09
  Jamie Cooper: Look, the the notion has been growth should pay for growth, which maybe is partially true, but growth doesn't need to pay for maintenance.
• 24:16
  Jamie Cooper: And I think that there needs to be a real honest look about what is the capital going to, and is it appropriate to charge it to the marginal new house?
• 24:24
  Jamie Cooper: Or is there another way that makes more sense?
• 24:27
  Jamie Cooper: Because what we don't want to be doing is treating housing like cigarettes with a syntax on new housing.
• 24:33
  Jamie Cooper: So that's something to think through.
• 24:36
  Mary Rowe: Yeah, do we put a syntax on housing?
• 24:37
  Mary Rowe: It's pretty, pretty funny little question, really.
• 24:39
  Jamie Cooper: Okay, and I I do not envy the policymakers that needed to figure out how to get enough capital to maintain and build all the infrastructure that's needed.
• 24:48
  Jamie Cooper: Fortunately, that's not my job.
• 24:49
  Jamie Cooper: My job is to say maybe it shouldn't go on housing.
• 24:52
  Mary Rowe: Yeah.
• 24:52
  Mary Rowe: Can you go to the non-market side?
• 24:54
  Mary Rowe: Because you you guys seem to be pretty hepped in on this, that you're trying to do both sides of the scale.
• 25:00
  Jamie Cooper: The challenge with building non-market housing is it becomes extremely price sensitive.
• 25:05
  Jamie Cooper: Look at what we've done in market housing.
• 25:07
  Jamie Cooper: Okay.
• 25:07
  Jamie Cooper: We had costs going up, development charges went up by a lot, cost to build went up by a lot, and that was able to be passed through to the buyer.
• 25:14
  Jamie Cooper: Right.
• 25:15
  Jamie Cooper: In the non-market housing, you absolutely cannot do that.
• 25:18
  Mary Rowe: Yeah, same because the problem is the same costs are going up, but where do you where do you get that extra revenue from?
• 25:22
  Mary Rowe: Because the buyer doesn't have it.
• 25:24
  Jamie Cooper: And not only that, when we work with affordable housing partners or not-for-profits, they're very risk averse as they should be because they are not in the business of taking risks.
• 25:33
  Benjamin Tal: I know.
• 25:33
  Jamie Cooper: They're in the business of providing housing, operating that housing, and managing it for people who need help.
• 25:38
  Mary Rowe: Yeah.
• 25:39
  Jamie Cooper: When you have risk aversion, your price tends to go up too because you need certainty from all your trades and all your partners.
• 25:46
  Jamie Cooper: And that has cost to it.
• 25:47
  Mary Rowe: Right.
• 25:48
  Mary Rowe: I feel like managing risk has to be a theme of how we solve the housing crisis.
• 25:54
  Mary Rowe: We've got to figure out who's got the best capacity, the deepest capacity to hold and absorb or de-risk.
• 26:01
  Mary Rowe: Is that government?
• 26:03
  Jamie Cooper: Well, it's it's it's not just about de-risking.
• 26:06
  Mary Rowe: Okay.
• 26:06
  Jamie Cooper: It's about managing and sharing risk.
• 26:08
  Mary Rowe: Okay.
• 26:08
  Jamie Cooper: The affordable housing partners that we work with don't have the desire or capacity to take on risk, nor do they have the mandate to share in the risk of housing delivery.
• 26:17
  Mary Rowe: But what you can do is you bring to them expertise, you bring to them uh a managed project management experience, you bring a range of investment vehicles.
• 26:26
  Mary Rowe: I know that Dream actually has impact investing mechanisms for other kinds of capital to come into these projects.
• 26:32
  Mary Rowe: I don't know how many developers do that other than you guys.
• 26:35
  Jamie Cooper: I'd go one step further and I would think about what type of affordable housing are we providing and what's needed.
• 26:41
  Mary Rowe: Okay.
• 26:41
  Jamie Cooper: Because it's not market or not market.
• 26:44
  Jamie Cooper: Housing is a whole spectrum.
• 26:45
  Benjamin Tal: Yeah.
• 26:46
  Jamie Cooper: And the question is for people that need a little bit of help for housing that is, say, 80% of average market rent, the private sector is well suited to provide that.
• 26:55
  Jamie Cooper: And we have lots of models that dem and frankly completed buildings that demonstrate how that can work successfully.
• 27:02
  Jamie Cooper: Then we have housing where people need a lot of help.
• 27:06
  Jamie Cooper: And that's supportive or transitional.
• 27:08
  Jamie Cooper: And the private sector is very bad at doing that.
• 27:10
  Jamie Cooper: When you have operative costs that are higher than the revenue, that's not a model that the private sector can be supportive in.
• 27:17
  Jamie Cooper: And the public sector needs to step in and focus on that.
• 27:19
  Jamie Cooper: Public sector and not-for-profits.
• 27:21
  Mary Rowe: You know, it's interesting that you would cite that one and and be so quick to say this sector, the private sector isn't good at it.
• 27:29
  Mary Rowe: Because we have these horrible examples that advocates raise all the time, where private equity, for instance, is going in and buying cheaper units, and then they just let it, they don't invest in it, and then it becomes crummy, and then they get rid of it.
• 27:42
  Mary Rowe: So it's a perfect example of what you're describing.
• 27:44
  Mary Rowe: I'm assuming part of what you would argue is that that sort of bad actor component is a fairly small segment of this of the continuum, or is it?
• 27:55
  Mary Rowe: How bad is it?
• 27:56
  Mary Rowe: How bad are the bad actors?
• 27:57
  Mary Rowe: How present are they?
• 27:59
  Jamie Cooper: The way the way that we see it is we're very incentivized to maintain our buildings because we have 70% of the units as market and 30% as affordable.
• 28:09
  Mary Rowe: Right.
• 28:09
  Mary Rowe: So if it all goes down, the 70% go down too.
• 28:13
  Jamie Cooper: If the concern is about bad actors not maintaining their assets, well, we're heavily incentivized to maintain the buildings because we benefit from having great rents on the market units.
• 28:23
  Benjamin Tal: Yeah.
• 28:24
  Jamie Cooper: The punchline on how we share risk between the market developers and the affordable housing partners is that we need to let the nonprofits do what they do best, which is uh own and operate the buildings.
• 28:37
  Jamie Cooper: And we need builders to do what they do best, which is carry the construction and financing risk of the projects.
• 28:42
  Jamie Cooper: And when we share risk and allocate it like that, uh, I think it's going to be productive for allowing us to do more housing and providing more affordable housing.
• 28:51
  Mary Rowe: I think we just solved the housing crisis right here.
• 28:53
  Mary Rowe: Right here in the City Talk studio.
• 28:56
  Mary Rowe: Just get the lanes sorted out, figure out where your best value is, and then do we need better coordination?
• 29:03
  Mary Rowe: I think that's often the case.
• 29:04
  Mary Rowe: There's a concern that governments are at cross-purposes sometimes.
• 29:07
  Jamie Cooper: It is their job to cover everything.
• 29:10
  Jamie Cooper: So the the policymakers and government are representatives of all aspects of life.
• 29:15
  Jamie Cooper: I think what we need to identify or recognize is that a project cannot solve all things at once.
• 29:21
  Benjamin Tal: No.
• 29:22
  Jamie Cooper: And with each uh requirement we have of a new project, there's incremental cost with it.
• 29:27
  Jamie Cooper: So just as an example, we want housing that is sustainable, that is affordable, that is accessible, that has community hubs in it, all wonderful things.
• 29:37
  Jamie Cooper: What we need to recognize is when we add those to a project, when the development community is already challenged, those can add uh material uh incremental cost.
• 29:48
  Jamie Cooper: They're all worthwhile pursuits.
• 29:50
  Jamie Cooper: We should have great community places, we should have affordable housing, we should pursue sustainable building, but we have to recognize that there's a cost with it.
• 29:58
  Mary Rowe: And then we got to figure out where can the money come from for those things that are your what I think what our lots of people would argue is those aren't just nice to have, those are you gotta have them, but then you gotta figure out how do you pay for it.
• 30:07
  Jamie Cooper: If you put too much on one project, the project won't get built.
• 30:10
  Jamie Cooper: Right.
• 30:11
  Jamie Cooper: And a project that does many things is far better than no project at all.
• 30:14
  Jamie Cooper: Right.
• 30:15
  Mary Rowe: It's interesting when I hear you speak.
• 30:17
  Mary Rowe: The you know, the mantra that we're sort of using is more, we need more housing, we need better housing, we need faster housing.
• 30:23
  Mary Rowe: Can we make cheaper housing?
• 30:25
  Mary Rowe: I feel like when we talk to a lot of you guys, you'll tell us, I shouldn't just say guys because there are gals.
• 30:30
  Mary Rowe: When we talk to you folks, a lot of you will tell us that there are a number of things causing costs to rise that uh input costs over which we just have no control.
• 30:41
  Jamie Cooper: Of which there are many things.
• 30:43
  Mary Rowe: Yeah.
• 30:43
  Jamie Cooper: The collective housing environment, public sector, the development community have made decisions on what should be included, amenities, parking ratios, that sort of thing.
• 30:52
  Benjamin Tal: Yeah.
• 30:53
  Jamie Cooper: And we could decide, you know, what are must-haves and need-to-haves.
• 30:56
  Jamie Cooper: And I'm not advocating for shoeboxes or anything like that stacked upon each other.
• 31:00
  Jamie Cooper: But what I am suggesting is that we can look through and recognize the cost of those items, and we can set, we can think through what do we feel is necessary and what we think is nice to have.
• 31:11
  Mary Rowe: Nobody wants, I think, to swing so far over to one side that all we're doing is creating lifeless community, empty, like, you know, very barren places where there's a roof over your head.
• 31:25
  Mary Rowe: Nobody wants that.
• 31:26
  Mary Rowe: Everybody understands now instinctively, you need complete communities with a range of investments.
• 31:30
  Mary Rowe: But as you just said, but you got to figure out well, where are the streams of cash that are going to make that blend possible?
• 31:36
  Jamie Cooper: As an example, we've worked on projects where we were required to provide affordable housing as part of the development.
• 31:42
  Jamie Cooper: The affordable units were built to a higher standard and were larger units than what the same market unit was.
• 31:49
  Jamie Cooper: We went to the municipality and we said, if you want us to build this way, we will build this way.
• 31:55
  Jamie Cooper: But our recommendation is to match, not diminish, just match the affordable housing requirements to the market units.
• 32:02
  Jamie Cooper: And if we do that, we can provide 30% more affordable units at the same cost.
• 32:06
  Jamie Cooper: So that's an example where we could materially reduce, we could either reduce the cost of the housing or we could provide more affordable housing.
• 32:14
  Jamie Cooper: How do we have an ability to match the market standard?
• 32:18
  Mary Rowe: Is your sense that that in those particular instances the expectation has just gotten well, first of all, it's very complicated.
• 32:25
  Mary Rowe: I know it's very layered, but has it just gotten just overly uh complex?
• 32:30
  Mary Rowe: We just that that maybe we're doing more than we need to do on the affordable side.
• 32:34
  Jamie Cooper: When you work within a municipality, the city councilors and everybody else is very invested in having a great outcome.
• 32:39
  Jamie Cooper: They want to make sure that the standards are met and a great community is delivered.
• 32:43
  Jamie Cooper: We totally understand that and we fully agree with it.
• 32:46
  Jamie Cooper: I think what's important is to recognize the cost with all of those initiatives that are wanted.
• 32:52
  Mary Rowe: Yeah, I mean, this is I I think there are trade-offs.
• 32:55
  Mary Rowe: I think this is what we're saying, right?
• 32:56
  Mary Rowe: You you can there are gonna be trade-offs no matter what you choose.
• 32:59
  Mary Rowe: And if you want to do it faster and cheaper, it may have the standard may have to change.
• 33:04
  Mary Rowe: Um, question for you about productivity in the sector.
• 33:07
  Mary Rowe: Do we have a productivity problem in the sector?
• 33:10
  Jamie Cooper: Uh I'll frame I'll I'll start this way.
• 33:12
  Jamie Cooper: Okay.
• 33:12
  Jamie Cooper: Sometimes uh my iPhone says that it's gonna get a software update at 2 a.m.
• 33:16
  Jamie Cooper: It has to fix a bug.
• 33:18
  Jamie Cooper: And at two o'clock in the morning, my phone and everybody else's phone like it gets updated.
• 33:23
  Jamie Cooper: It costs Apple very little to do so.
• 33:26
  Jamie Cooper: If the housing industry had one little bug and had to rebuild every house, it would cost an extraordinary amount of money.
• 33:35
  Jamie Cooper: So we move slow because the risk of being wrong is very high.
• 33:38
  Benjamin Tal: Yep.
• 33:39
  Jamie Cooper: Now, do we want to be more productive?
• 33:41
  Jamie Cooper: Absolutely.
• 33:42
  Jamie Cooper: Do we want to be more innovative?
• 33:43
  Jamie Cooper: We absolutely should be.
• 33:45
  Jamie Cooper: But how do we do it in a in a responsible way?
• 33:47
  Jamie Cooper: At the same time, you are you are seeing it and we're we're living it.
• 33:51
  Jamie Cooper: There's been a big push by Build Canada Homes to emphasize modern methods of construction.
• 33:56
  Jamie Cooper: How do we continue to innovate in the in the materials that we're using, in the process and the way that we're building housing and building mid-rise and multifamily buildings?
• 34:05
  Jamie Cooper: And that's coming along, and I think we're going to continue to see progress there.
• 34:08
  Jamie Cooper: And that progress should translate into lower costs, but it'll take some time.
• 34:12
  Mary Rowe: You know, part of what you said at the very beginning when you made that fabulous comment about being in a stalemate, um, we went from crisis to stalemate.
• 34:21
  Mary Rowe: I don't know whether through this process people will have more develop more empathy for the importance of the development sector as the risk takers and the capital providers, because the collapse of the condo market, whether you like it or not, I live in a condo.
• 34:37
  Mary Rowe: So uh, you know, I'm part of that uh cohort.
• 34:39
  Mary Rowe: But uh whether you like it or not, you've had a system for how does it 50 years maybe where you could finance your production through pre-sales.
• 34:49
  Mary Rowe: And now you don't have pre-sales.
• 34:52
  Mary Rowe: Uh how else do you find the capital to start a project?
• 34:57
  Jamie Cooper: Said differently, capital will flow to where the best opportunity is.
• 35:00
  Jamie Cooper: Right.
• 35:00
  Jamie Cooper: And for a long time, people felt they could buy a condo uh pre-construction.
• 35:05
  Mary Rowe: Yep.
• 35:05
  Jamie Cooper: It would be worth more than what they paid for when it was delivered.
• 35:08
  Mary Rowe: Yep.
• 35:08
  Jamie Cooper: And they could rent it out, they can live in it, they can sell it.
• 35:11
  Mary Rowe: Yep.
• 35:12
  Jamie Cooper: But it was a good way to invest.
• 35:14
  Mary Rowe: Yep.
• 35:15
  Jamie Cooper: Right now, it's very hard to convince people that a great place to put your money is in a new development project.
• 35:21
  Jamie Cooper: There's lots of risk because we don't know what rents are going to be, we don't know what interest rates are going to be, and you might not know what the building is going to be worth at the end.
• 35:28
  Benjamin Tal: Yeah.
• 35:29
  Jamie Cooper: There's a lot of unknowns, and that creates a challenge to attract capital.
• 35:32
  Jamie Cooper: So we absolutely need to continue to work to have a market where people feel like there's a reasonable clarity on the returns that they can get.
• 35:39
  Jamie Cooper: And when we get that, there's going to be more capital that flows into new development.
• 35:43
  Mary Rowe: Okay.
• 35:43
  Mary Rowe: Well, just as you look to the future, is this your first downturn, Jamie?
• 35:46
  Mary Rowe: Are you young enough that this is your first moment in the industry where you've had to cope with something like this or not?
• 35:52
  Mary Rowe: Did you were you around for one of the earlier ones?
• 35:55
  Jamie Cooper: When I talk to the the gray hairs, it sounds like Gray hair, like including me.
• 35:59
  Jamie Cooper: I I I did not say that.
• 36:02
  Jamie Cooper: This this has been uh as challenging a market as anything since for sure since the 90s.
• 36:06
  Jamie Cooper: Since the 90s.
• 36:07
  Jamie Cooper: So there's so there's not that many people who have worked in an environment as challenging as this one.
• 36:12
  Mary Rowe: Yeah.
• 36:12
  Mary Rowe: Well, and also I hear the numbers uh, you know, I from your colleagues across the country, they have these really stark numbers about starts and uh completions, et cetera.
• 36:24
  Mary Rowe: But it's you know, where the where it used to be uh a number in the thousands, it's now in you know the single digits.
• 36:30
  Mary Rowe: So it is kind of breathtaking.
• 36:32
  Mary Rowe: And uh, and of course, people still don't really realize what the what that will feel like in two or three years.
• 36:37
  Mary Rowe: Because we're you're saying the condo market is completely stalemated, but and we can sort of see it and we read about it, but are we feeling it yet?
• 36:47
  Jamie Cooper: We're not because what we're feeling right now is we're feeling rentally lower and we're feeling uh if you do want to buy a condo, if you do want to buy a house, it's probably less right now than it was three years ago.
• 36:57
  Jamie Cooper: But what they're not what most people are not seeing or experiencing is that very limited new construction is occurring.
• 37:03
  Jamie Cooper: So what does that mean in real what does that mean in real terms?
• 37:05
  Jamie Cooper: What it means is that for right now, you can get your unit, your apartment at a reasonable rent, you can get your house at an okay price.
• 37:13
  Jamie Cooper: But what will happen is with no new supply being delivered, uh, once the current product gets absorbed, there will be uh nothing left and rents and prices will pop into new until new supply comes on.
• 37:26
  Mary Rowe: Yeah.
• 37:27
  Jamie Cooper: So that's one issue on the supply side.
• 37:29
  Jamie Cooper: On the demand side, we know the federal government has lowered uh immigration targets over the last year or two, but they've also begun indicating that as we catalyze a trillion dollars of capital, as we build out our military, our energy, and our uh our resources, we're gonna need a lot more people.
• 37:48
  Jamie Cooper: We're already seeing changes to the point system on immigration, and we're gonna have more immigrants come to the country, which is gonna be great, but that increases the need for housing.
• 37:56
  Mary Rowe: They're gonna have to live somewhere.
• 37:58
  Jamie Cooper: So, what we're gonna go from is we're gonna get squeezed again when the current supply has been absorbed.
• 38:04
  Jamie Cooper: We have increased immigration and we have no new supply.
• 38:07
  Jamie Cooper: And it's gonna take time for builders to bring that new product online, and that's when we're gonna see rents really rise and housing prices go up.
• 38:14
  Jamie Cooper: You know, over the next 12 or 18 months, we're gonna continue to absorb the current excess condo and apartment inventory.
• 38:21
  Jamie Cooper: And then as immigration comes back, uh as demand could begins to pick up, that's gonna get tighter.
• 38:28
  Jamie Cooper: And what we'll have to manage is how do we start building at a reasonable timeline.
• 38:31
  Jamie Cooper: So the squeeze is it for too long.
• 38:33
  Mary Rowe: I mean, and in that way, some of the modifications or the reforms that are coming in terms of approvals and you know, uh shorter approval times that will come in handy when we have to build more quickly.
• 38:43
  Mary Rowe: You know, if uh if we were to say, well, we're gonna get through this, it's gonna be a time of remarkable transition and change and we're gonna do things differently.
• 38:52
  Mary Rowe: When we get to the other side, uh, do you have a a wish?
• 38:57
  Mary Rowe: Gee, I hope that when we get to the other side, this this particular aspect of the system will look different.
• 39:03
  Mary Rowe: Do you have a I have one which I'll I'll share after I hear yours, but is there one sort of silver lining you would like to think might come out of this?
• 39:13
  Jamie Cooper: I'm very hopeful, and and we're already seeing it, that government, the uh non-market set uh sector and the private sector are gonna work together and treat this as a whole systems approach uh and understand the needs and constraints of each party so we can uh be more effective with our housing model.
• 39:32
  Mary Rowe: It's interesting.
• 39:33
  Mary Rowe: I think that's a lot of what you see in Europe, you know.
• 39:35
  Mary Rowe: Listen, we're what would City Talk be without somebody saying, oh, if only we were a little more like Sweden?
• 39:40
  Mary Rowe: But I, you know, I I think the idea that in denser urban environments where they've had to be uh more accommodating of that's private sector, that's public sector, that's nonprofit sector, and all kind of mashed up together.
• 39:53
  Mary Rowe: My ver my version of the dream would be I would love to see a more robust non-market housing, nonprofit housing sector.
• 40:03
  Mary Rowe: You know, I would love to see, just as we've been we've been talking a lot with people about apartments, and a lot of apartment buildings are built by, as you know, by small developers, families in the for-profit side.
• 40:15
  Mary Rowe: And on the nonprofit side, I think there are uh nonprofits out there that could, with some mentoring and with some partnering and with the right mix of of talent around them, they could get into building some housing and with you.
• 40:30
  Mary Rowe: But it would, I would love to see a growth in the nonprofit, non-market housing sector.
• 40:36
  Mary Rowe: That's my little dream.
• 40:38
  Mary Rowe: So get on that, would you, Jamie?
• 40:40
  Mary Rowe: Help help those nonprofit pals because they want to, you know, people want to benefit from expertise that everybody brings.
• 40:49
  Mary Rowe: Nobody has to be good at everything.
• 40:51
  Mary Rowe: This has been City Talk with Jamie Cooper.
• 40:54
  Mary Rowe: We're very appreciative of him taking time to talk with us.
• 40:57
  Mary Rowe: The as we always say, you know, this is never the conversation finishes, but it's never the end.
• 41:01
  Mary Rowe: So thank you for joining us, Jamie, to be on this.
• 41:03
  Mary Rowe: Jamie will be at the CUI State of the City Summit in Ottawa on November 12.
• 41:07
  Mary Rowe: He'll be talking more about what a transformational framework needs to look like.
• 41:10
  Mary Rowe: We hope you'll come and join us.
• 41:11
  Mary Rowe: Jamie, thank you for coming on City Talk.
• 41:13
  Jamie Cooper: Thank you, Mary.
• 41:19
  Mary Rowe: Sometimes after I finish conversations like those with Jamie and Benjamin, I think, well, that's it.
• 41:23
  Mary Rowe: We've covered it, we've sorted out the housing crisis.
• 41:26
  Mary Rowe: And then I remember that the whole continuum, the whole system needs to get on board to build a system that delivers affordability, accessibility, productivity, and choice for now and for the future.
• 41:40
  Mary Rowe: It's not doing that yet.
• 41:43
  Mary Rowe: So we'll keep talking about it here and at CUI Events and help turn conversations we hope into action.
• 41:50
  Mary Rowe: A reminder that you can talk back to us with an email at CityTalkAccanerb.org or use the Talk to Us From Your City link under the podcast description to send us an instant text or video message.
• 42:03
  Mary Rowe: I'm Mary Rowe.
• 42:04
  Mary Rowe: Thanks for listening.