Daniel St. Jean: Jamil, you understand what's happening right now in the real estate landscape, the new real estate landscape. What are you going to be, what are you gonna be sharing with our group that can help them get through this?
Jamil Rahemtula: Absolutely, I put a bit of a slide together just talking about some of the markets that I'm focused in and obviously the national some of the stuff that's happening on a national level. And then some of the ways that you have to pivot. And some of the things that we're seeing in today's market on the ground, what are we seeing in the offer stages and what's happening when closing and as investors, how they're essentially pivoting to adjust for, essentially forecasting out into 2023.
We'll just go right into what we're seeing right now in relation to the pressure of the markets we're in, I'll go into some of what's happening with the population demands, affordability, supply, and the millennials. And these are all putting massive pressure on the real estate market at the moment. And this kind of slide presentation is a bit fast-moving and if you want me to slow it down or stop for anything, just please let me know.
I'll go, quickly into the Market stats, and these are hard facts in relation to what's happening on a national level. So what we're seeing is essentially sales were down 3.9% month over month as of September. And actual monthly activity is 32% down from 2021 levels not adjusted. And essentially what we're seeing is, you know what, Claire also, and everyone else is knowing there is a shift in the market and it's very apparent. It's a slow shift, but it is apparent at this point.
These are just quick numbers in relation to the region that I work in relation to Hamilton, Burlington. Average prices are down 5% year over year in, and then in, even in Niagara which, the host had mentioned, we're seeing some price reductions around 11% from last year. We're adjusting from the Covid peaks.
In fact, we're seeing inventory starting to come back up. Going to the point of some of the other presenters is the fact that if you are at a point of having to sell you're gonna be putting your property on the market now. But, I'll get into this later. The biggest thing that we're seeing is the average days on market.
We're seeing 20, 30 days on market and you can see Niagara or North, we're seeing 40 days on the market. So properties are sitting longer. And buyers are being a little bit more patient and waiting for the bottom national housing report. We're seeing essentially all across the board, we're seeing 60% of all local markets seeing a fall from August to September.
The biggest markets are Vancouver, Calgary, and GTA in Montreal. And as I said, 32%. So if we zoom in on this graph here from Korea they've been tracking this data for the last, since 2007. You'll see the 10-year monthly average is still pacing upwards. So, anyone who has held real estate and continues to hold real estate, you're still in the positive.
It's just about the monthly sales, right? We're seeing a massive dip prior to, from the covid time where you could see the January, 2020 dip on that versus what's happened. What we're at right now. Just understood throwing these stats out there, just to be conscious of what we're seeing on a larger scale. And then from an economic point of view, these are what I'm pulling from headlines, what I'm seeing all around town and in relation to a national scale.
What we're seeing is Canada sees the fastest population growth since 1957. That was pulled in September. Okay. Stats can see everything coming in from Immigration. Now here is a stat that came out of I believe this is Korea also. No, this is stats can, we're seeing that net non-permanent residents are two times. This is for Q2 of this year. So we're at 160,000 net non-permanent residents. Now, the cause of this is primarily Ukrainian refugees and I would say is from international students.
You can see that negative number and the negative from earlier in Q1 of 2020 all the way down because, now students are able to come into the country and start living here and taking classes in house. That also relates to if anyone's in the students' space or into the rental space, you'll see that rents are going up in certain hubs in certain cities where there's major economic and education spots.
Now in relation to what else we're seeing headlines we're seeing, Benjamin Tall Major, C I B C, economists. These are the kind of the headwinds that us as investors have to be aware of. We're seeing a shortage of skilled labor interest rates, which Claire mentioned. And then government fees and taxes and zoning rules and long approval processes, which is something that we go into in our space with investors. We're always looking at as a lot of the presenters talked about, having to be able to open up the box in relation to how you're evaluating properties, not just looking at it from one point of view, but from multiple point of views.
This is another big point is housing supply affordability versus best case housing starts. We're seeing a huge gap between what affordability is and what the best case scenario is. Ontario and I believe in BC are the ones that are lacking in relation to what we need and what we can actually produce. So in this case, they believe that Ontario can pull in maybe a million homes in the next eight years versus what our target is based on immigration targets.
We need two and a half million homes. So essentially the governments and such have to adapt and have to adjust. Either they can push this development bubble, or they can look at intensifying and opening up the markets in relation to approvals. So here I have a bit of an interesting study that came out in September by the outlets group. Essentially just looking at the change in timelines for application processes, you can see that the percent increase is incredible from 2020 to 2022.
Anyone who's interested in essentially planning or becoming a big developer. There's a lot more red tape for you to essentially build and get things across the line, unless you have as you can see, unless you have some kind of inside track with these, the municipal bodies or government bodies, you're gonna be waiting in the lurches. While you're waiting, prices for things have gone up. The biggest thing I talk about is zoning bylaw. We talk about garden suites and ADUs. The municipalities and cities have to push this across because they understand there's a huge demand and affordability is a problem.
This is an interesting one the growth rate, this is from Census Canada. And many of you here today have investments out here. You'll notice that the fastest-growth rental households are in Barrie, KCW, Oshawa, Kelowna, and Nanaimo. Interestingly enough Montreal is the five most populated metropolitan areas, but it has the slow scroll rate in renter household categories.
Now, obviously, this is an older stat, but this is just points of where we can look at and see where, hey, for the next investment cycle. Are individuals looking at these areas? Are rents going up? And if they are, can you take advantage of that? So with all that talking, we know where the population is heading. Essentially, younger adults are not focused or not able to purchase homes. The home ownership rate has gone down especially in the 25 to 29, 30 to 34 year range. And that is quite worrisome for a lot of young people trying to get into their first home. It is on their ideal goals, but individually it's very difficult.
You can see here from the change in home ownership rate in Canada and this was from last year, we're finding that the population of anyone over 75 to 85 are tending to stay in their home because it's more affordable than going out and getting retirement care or private care. And just staying in their home versus. The younger generation 25 to, even to the sixties, are unable, just unable to purchase. So they're unlikely if you're on your own to purchase.
They probably just get in, become a renter or they live with roommates. So as landlords, that's a good sign because the rental market is strong in these metropolitan areas. So what to do about all this. This is a bit of an interesting little point. That era at the top there is essentially. The little bit of a dip that we're seeing now, but the bottom line there is the average Canadian yearly earnings. And that, so I should clarify that, that the house prices line there is for sales.
Essentially income has not been in lockstep with house prices. So that divide is getting wider and wider. Once those who are investing are going to be ahead. And there's just a natural progression in the way these things are going. So from what I'm seeing as a realtor on the streets, we have to remove emotions, look at, understand that conditions are back.
Prior in Covid days we didn't have that option, but now we have that option to put conditions in offers and the conditions can be anywhere from financing, add in inspections, throw in due diligence. We're finding we are getting even options for, and I'll get into that VTB. So something that's a lot unused to a lot of people who are looking to purchase.
You have outs now, so don't be scared about putting an offer out there and feeling like it's embarrassing because I feel like we can be aggressive when you're putting in offers, and we've gone through those scenarios in the last month where we've been quite aggressive when putting in offers because as we're talking about earlier in the session today was that if a seller's putting his or her house for sale, either they are in a need to sell.If you're an investor and you're up for sale, if your rental market is strong enough, there's no incentive for them to sell because every buyer client that I'm working with right now, Is going for blood. They are asking below, and they're asking for everything under the sun.
Be aware that it is, I'm not saying it's a complete buyer's market, but it is shifting into more of a balanced market. This is another big thing these days on the market. For anyone who's looking in any jurisdiction, starting looking at this is an important factor. Days on market is an indicator of how long properties are sitting on the market. And you can see here, this is from September. Houses are sitting on the market, closer to 30 days, right? So before it used to be 8 to 10 days, the 30 day marker is a point where, if you're an investor, you can see there's an opportunity.
Either what I'm finding is that sellers are still in the mindset. Their property's still worth that 20% premium and they're not willing to budge. And if as investors, I would say, Pounce, take the opportunity of what's happening in the media, right? October 26th, it's gonna be everywhere where the rate hike is gonna be there and then potentially down the road.
There's gonna be a lot of that, spoon feeding of what the media's feeding out. But also these sellers have to come to understand it. They can't ask for the prices that they used to ask. And that's where you have, be savvy with what's happening. So we are seeing in, in, at least in my region, we are seeing the power of sales.
We are seeing vendor take backs. I'll go through a quick example. I don't wanna take too much time. We are seeing a lot of mid rental listings. As Claire was talking about, private money If it's not inhabitable, you're not gonna get a lender to come in there and purchase and help support your investment.
Mid rental listings, we're seeing quite a few of those where people have overpaid in the beginning and over leveraged and they have to get out. I'll give you a few examples. This was a Power of Sale mid Reno. It's on the market right now. It's in Lower City Hamilton two story.
Essentially, he picked it up or she picked it up in August of 2019. And it's, if you've seen in the pictures here, they have started, let's say they've done the flooring, they've done the tile, they put a metal roof on, They've done all the new windows, They've done a lot of the work.
They've re-listed this month for 560,000. And they've been in the permit process. And it's pretty much in, it's pretty much through CIBC. And they've had, they've ran outta funds. C IBCs had to take over and now listed it. So we're seeing these come up more often than not.
Another one we're seeing, we saw this property was purchased in May of 2022 for $525,000. Now it's listed at $549,000. And an application for a duplex is already in place. There's a potential for a triple plex and it has the garden suite potential. And this is off market. I have no influence on any of these listings I promoted, but I was just saying that this is what we're seeing.
I'm seeing a lot more of this in my inbox, A lot more conversations with people who have leveraged themself a little too high, and they're gonna be taking a bath on this because whatever they invested in the permits, in the drawings, engineers, that's gonna be a wash, land transfer tax. This person isn't who when they sell this, and this is off market.
Essentially, there's gotta be an assignment fee, etc. in this. There is this person taking a hit on what they purchased. And essentially bank of what's the timelines right. We're expecting, as Claire mentioned, we're expecting a hike next week on the 26th and then potentially in December.
In my opinion, I think there's still a lot of room. Starting Q2 of 2023. I'm starting to see, in my opinion, a bit of a recovery. But we're able to go back to the point of 2020 I don't think so. But it's viable for a lot of investors. Going back to that point, if you're looking at investments look at it from multiple points of view.
If you're running looking at an investment and just strictly looking at a short term or a midterm rental, Run the numbers as if what happens if you, if a local economy doesn't have that support, look at the opportunities of what a residential model would be, run your numbers on the residential rents. Would that still cover your costs at that point? I think that's about it for me. Run it pretty quickly. But yeah, if you wanna me get in, touch me, my email, my social media, and we have a YouTube show that's on season two, so make sure to follow that and watch that about it.
Daniel St. Jean: Thank you. That was very informative. It was really well put together. Thank you. Obviously, you put some thought and some sweat into that, so thank you. Katherine, do we have any questions in the chat for Jamil?
Katherine Nelson-Riley: We didn't really have any questions, but we had an awful lot of really great comments. Support Jamil and let me just see what we've got here. Excellent information to put the market prices into perspective. Thank you.
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