Episode 15: The Tables Get Turned! A Big Deal Gets Interviewed
Intro (Kenneth): I know what’s on your mind. You’re wondering what’s happening on the real estate market and how it’s all going to go down. Well, stick around. I get to talk with Glenn McQueenie, the founder of our company, and stay tuned.
Kenneth: I’m really excited to bring you today, Glenn McQueenie, the founder of our company, seasoned, experienced real estate investor and owner and agent for almost 30 years, right?
Glenn: Yeah. I’m a really big deal.
Kenneth: Yeah, he is.
Glenn: No. Just kidding.
Kenneth: Let’s talk today about the market. It’s crazy, and a lot of people are saying that the bubble’s going to burst. What are your thoughts on it?
Glenn: I think eventually, they’re going to be right, if they keep saying the bubble’s going to burst. I think it’s almost like the perfect storm right now, where you have record-low interest rates, you have limited supply of developable land, you have the Baby Boomer generation, the Millennials coming in behind and creating more demand, and more immigration coming to Toronto than we ever have. I think it’s just the perfect storm right now, Ken, and I don’t know how it’s going to end, but it’s going to end at some point. My biggest concern really, right now, is I just have this almost spidey-sense, that the provincial or federal government (or even the municipal government) is going to do some extra measures right now to somehow interfere and slow down the market. Because first of all, we’ve got record prices. Prices were up 22-24% last year. I don’t even think this has gone to the press yet, but I’d argue, Ken, we’re probably up 15-20% just since December.
Kenneth: Probably, yeah. I was in a bidding war the other night, and it was crazy. Last night we had nine offers on our listing, which is insane.
Kenneth: And it was priced right, so it’s weird.
Glenn: And so it’s crazy because we don’t even know what value is, right? Especially when we’re trying to advise our clients, we’re like, “I don’t know.” People say, “Well, I’m sure you must know what it’s worth.” “Nope. No idea.” So I don’t know really what’s going to happen, but my big fear right now – and I just have this sense – is that the government’s going to interfere somehow. And I don’t know how they’re going to do it. I don’t know if it’s maybe going to be from changing the Capital Gains tax rules? Maybe your principal residence is no longer Capital Gain exempt? (I hope that doesn’t happen). Or maybe they’ll cap the amount. They’ve got a bunch of tools. Maybe one is some type of speculation tax? A foreign tax? Although, my experience has been that it’s a lot of, I would call, landed immigrants who are buying Toronto property. I don’t really see busloads coming directly from the airport. I see that it’s a lot of people who are just trying to build their portfolio in a relatively safe environment.
Kenneth: Definitely not the majority. That is happening – I’m meeting someone on Thursday for that. So it is happening, but that’s not the majority. It’s the locals trying to buy in, I think, and people trading up, in my experience.
Glenn: And I think it’s the whole wealth effect, too, right? I know many people have bought in. Probably even if you bought 10 years ago, your house is probably worth three times what you paid. It’s pretty close to that. Maybe it’s four. Maybe it’s two, depending on where you live. So people are like, “Wow! Look at me! I’m a millionaire.” And then they start looking at the market and going, “Hmm. Well if I’m going to move, where do I go?” And I think the real challenge about this market is that a lot of your clients who want to move haven’t found the place yet, and because they haven’t found the place yet, they don’t want to put their place on the market. And so we’ve really gone through two months of probably the shortest inventory I’ve ever seen on the Toronto market. The good news, though (I don’t want to be Mr. Downer here), is that the worst is behind us. We’re in the middle of March Break right now, and I think right after March Break you’re going to see increased levels of inventory.
Glenn: And I think right after Easter you’re going to see another big push for more inventory. And I think in May you’re going to see more inventory coming out. And if you really look at the graph of the Toronto market, it almost looks like a double-humped camel. If this was January, and this would be May/June, the market (the inventory) peaks, and then it drops down into June, July, and August, and comes back up again in September, October, and November. It happens every year. So I think it’s better days right now, and I sure hope, just for everyone’s sake, that we get a lot more inventory on the market.
Kenneth: Yeah. You say this all the time, but you think if enough people complain, the government will probably do something about it. If they introduce some measures like they did in Vancouver with the Foreign Buyer’s Tax and all that, it might affect our market?
Glenn: It could. I think we don’t know. I think the big mystery is really what the federal government’s going to do, because they’re more on the taxation side – the Capital Gains. And it’s really curious how last year, on your tax return, you had to start declaring the sale of your personal residence on your tax return. I always thought that was curious, and now I’m thinking, “Well maybe that was the set up for them to track it, so now they can maybe start taxing it.” The other tool they have is the City of Toronto – they could try to come in with more land transfer tax, which is just a tax on nothing for nothing. Or the Liberal government could come in provincially and do some type of measure. Maybe they tax you and then they’re going to take all that money and they’re going to build more affordable housing. I don’t know. I know it’s an election year. And it’s interesting – I wrote an article for a national publication last year, and I said in it that in B.C., it was an election year, and something was going to happen. And guess what? It happened, and they brought out that tax. So I think it’s maybe one of those times where you sit and wait, but I think there’s different strategies. There’s no one strategy. And no one knows when the market’s going to crash or go up or down – I don’t care what they say. But I think it really depends on your customers talking to you and going, “Well, what’s my unique problem?” Because you’re so successful – you’ve got so many great, raving fans and happy clients – that I know you can probably solve it. The one big thing I would probably tell most of your customers right now is: if you’re empty nesters, and you’re thinking, “Should I cash out now? I’m not sure where the market’s going to be,” I think there’s a great argument right now for doing what they call a “sale-leaseback,” where they can basically sell their house today and stay on as a tenant for a couple years. And that way, they can get their wealth today, put it away in a bank somewhere, and then just stay on as a tenant. I thought this would be something that a lot of 70 and 80 and 90-year-old people would be doing, but I’ve been quite pleasantly surprised. So many 45, 50, 55, 60-year-old people are going, “Yeah, the market’s been going up for 18 years. It’s a real estate cycle. Things change.” So I think it’s going to be interesting, but I don’t think it’s a time to be fearful (even though this video probably made more people scared).
Kenneth: You wrote a great article about not having fear in this market. It’s a cycle. There are strategies for both ways.
Glenn: Right. Well I think fear’s healthy, first of all. The only reason we’re still alive today is because one of our relatives wasn’t eaten by a lion, tiger, or leopard, right? You need to know, “Oh, there’s a cat. Run away! Run away!” So we’ve already got that gene. And a little bit of fear is actually quite helpful, because you can make good decisions with a little bit of fear. But when people go into anxiety or overwhelming panic, they make the worst decisions. I’m sure there are times in both of our lives where we’ve panicked, made a decision, and went, “Oh my God. I regret it.” And so I think our job is to help our buyers and sellers, and go, “Listen. This isn’t a panic situation. Here’s some perspective, so when it comes time for you to make that decision, you make the right decision, and you don’t feel like you’re pressured, hassled, or living in fear.”
Kenneth: Yeah. “Here’s the climate, really, and you’ve got to make do with it based on the situation you’re in.”
Kenneth: Unfortunately there was a technical difficulty for the rest of that video, so I’ll just have to try and describe what happened. I asked him, “Is it a good time to buy or sell?” And he said that it really is personal, and it’s true, but he knows that generations of wealth came from long-term buy and hold. A lot of people think it’s a short-term thing – and it is a cycle, it will go up and down – but if you hold for the long-term, it should be good. And every situation is different, so if you’re looking to sell, it’s the perfect time right now. There’s never been a better time. If you’re a first-time homebuyer, it might be a little difficult. He suggests getting together with a couple of your friends, and maybe buying a duplex, triplex, or fourplex to rent out some rooms. And make a commitment to each other. Live there for at least five years. And after that, you can decide if you want to sell or buy each other out. And at least you’ll be able to ride the market that way. He really said it’s just a personal situation, and all we can do is give you some options, and you can make the best decision at that time for what you want to do. Anyway, I hope you enjoyed this talk, and if you have any tips, comments, questions, or any other suggestions on what you want to hear, please reach out to me or click the link below.