Benjamin Tal, Deputy Chief Economist with CIBC World Markets, made a spectacular presentation to kick off the Landpro conference today at the Paramount Centre in Vaughn.
Tal spoke about the economy and real estate outlook for the GTA.
Tal started with Trump’s election and ended with the rise of housing prices, the trend towards a reduction in the number of CMHC insured properties and the need for “purpose built” developments (aka the need for more rental units).
Taking liberty with Tal’s insightful analysis, he believes Trump will only last 1 term as President because his expressed and demonstrated approach to creating more “jobs” (his mantra) is inconsistent with the economic realities occurring in the USA and the world. He called Trump “inflationary” and predicted that Trump will fail in creating more jobs and trade.
Tal pointed out that the manufacturing sector in the US is outperforming Canada which should be the exact opposite given our much lower dollar. But overall, manufacturing jobs have been falling long before China entered the WTO.
The number of American workers receiving disability benefits in 2016 outnumbered the number of production workers. Government tax cuts reduce revenue which increases government borrowing.
Canada’s share of low paying jobs is rising. And although there is an availability of good jobs, Tal said employers can’t find workers with the right skill sets to perform those jobs.
Canadian manufacturing is near full capacity and needs investment to lift exports.
From 2015 to 2025, there will be approximately $800 billion in the transference of wealth in the form of inheritances which Tal labelled as “inheriting inequality”. This is tied to an individual’s ability to buy homes at their current prices and future prices.
The Bank of Canada’s real motive in keeping interest rates low is to support our weak dollar and not necessarily to promote private home ownership.
Rising home prices in Toronto are forcing people to look further and further away from City centre to find homes within their price range. Although low interest rates continue to promote new home ownership, the high cost of homes coupled with the new federal mortgage rules constricting the number of CMHC insured homes, Tal predicts will create an increased demand for rental units.
Sorry Tal if I butchered your fantastic presentation – it was refreshing and insightful.
Article by Karmel Sakran