Why Canadian Homeowners Can't Escape the Crash

[00:00:00]So, you heard this one before, fight or flight mode. So, many Canadians are hitting that wall and they have to decide what to do next. So, we'll get into that in sections and we'll talk about both options. So, for many years, Canadians did fight because it made sense, but I believe personally we got to the point of no return. And we'll talk about that as well. I'll share a couple of stories that are currently happening right now. One is in Grand Bend, one is Niagara Falls, one is locally here in Atobico, right near Toronto. So getting into this uh psychological moment that people will have to decide whether they continue to fight. looking at the trajectories, the graphs, the feeling of what is happening. Uh and they still have to decide whether it is worth it to stay in these properties and fight continuously even though they see losses on monthly or quarterly or annual basis. or take the flight, take less of a loss today than taking the loss maybe next year or three years from today or five years out. Right? So these are the conversations that I have been having on daily basis.

[00:01:31]However, when it comes to the fight mode and I believe uh that many sellers are going through the, you know, the the fight mode that they are in the market as we speak right now and they're fighting against themselves regardless what to what you show them. show them graphs, you show them stats, you show them um uh variety, you you do co comparables, you compare their property to somebody else's property that is better, bigger, nicely situated on a street or or or or community. regardless of that that that fight mode is still present and the bottom line so so let me call it the total of thought for them is I don't want to lose money and I said okay I get it but what's the psychology or philosophy behind your pattern I mean you don't like to lose money great nobody likes to lose But how are we justifying that? You see what I'm saying? And the story, let's let's start with Grand Bend, right? So the story uh in a nutshell, uh those properties were selling for5.

[00:03:01]Okay, don't get me wrong, beautiful, but we're also talking peak. Okay, so where is it at now? If we were lucky, I don't know, 1 one 115. On a bad day, maybe a million, right? On a good day, maybe one two. But let's call an average of $1.1 million, right? So now having that on table, how can we justify the difference if the market has been nosediving for a long time and other agents um had inquiries, they were sending verbal offers which don't mean anything but you know people are talking right like agents are speaking to one another and whatnot and The question always arises [snorts] how can we justify the difference from the peak of 15 to 1 one like we like the property should be at a million to a million one in order to see some kind of an action. So, I think the sellers are still in that mindset of owning something physically like a home.

[00:04:25]Technically, they're not owning it that what they owe is money. Like the the debt factor there is like through the roof. They they owe more than it's worth and they owe more to the bank than they can afford. So there's two sections to this story and both are completely negative. So So looking at look looking at that I'm like like it doesn't make any sense. I mean you will lose, you will belly up and you will not own a property on top of that. So now they're fighting and what I don't understand what what are they hoping for? What are they actually fighting for? Like I get it like to to have the property or or to continue to be in that property which is costing them an arm and a leg. We cannot recoup that money.

[00:05:23]They cannot recoup that money no matter what they do. Uh so it's it's that fight till the last man standing and the last man standing will be the bank, right?

[00:05:38]because that's that's how the cookie will crumb crumble at the end of the day, right? So, that's one. Uh the other property is is uh Niagara Falls and they have been, you know, shifting and and selling and there's like new builds involved and all of that stuff. Uh and they're trying to um sell everything and kind of sum it all up and put it in one property. Great plan, right? I I agree and I think it makes sense. However, all these properties were bought near peak, at peak, and some of them are still pending, which is the new build.

[00:06:24]So, if you take that formula into consideration, every time they sell, they will lose. It's as simple as that.

[00:06:33]Okay. Now the fight mode kicks in and they're like, "Listen, I cannot keep selling and keep losing because I need hear me out for a second. I need the money to buy something else." So it's kind of like a given. It's like they're privileged that they have to sell at a loss, but they don't want to sell it at a loss that they lose lose lose lose. They want to sell a little bit at a loss. So they still gain which we cannot justify. The market just does not justify period. Okay. So and and every single sector they will lose and they will be lucky lucky if they somehow manage to have a small down payment to buy a semidecent townhouse and I'm I'm saying maybe 20% like maybe 10% even right so just analyzing it all I'm like well okay So this is the scenario. You will lose money and that's it. And they're like, "No, we're not ready." And and we will fight. So it's just like I'm scratching my head. I'm like maybe they know something I don't know.

[00:08:00]But will the market turn the better in a quarter, six months, a year? Probably not. Right. So let's go into case number three, which is Atobbico, Central Atobbico. Great area. Fantastic. Right.

[00:08:15]And obviously back in the day uh which there's definitely truth to that right they have been stepping from a entry-level property into a deta detach home in Atobico central atobico fine great and that agent at that time promised acknowledged said so many things that these folks remembered and I said, "What what did he say?" And they said, "Well, look, a Tobico can never go down. That's number one." I said, "Everything can go down, right? Manhattan can go down. Never mind the Tobico." Uh, what's next then? Uh, you buy a detach home, it's bulletproof.

[00:09:03]It's not. Nothing is bulletproof. No matter what, condo, semi-detached, commercial, you name it. Nothing.

[00:09:12]There's there's always a risk factor involved. Now, we can get into details of what's better, worse, what they build more off, what they don't build at all, and all of that stuff. Fine. And the third is like you buy this in this location, this community never goes down. I said the word never is stupid because what do you mean never?

[00:09:42]Every community uh has its weak spots and some good spots. Uh and some communities tend to keep the value more than others, which is true historically has been proven to be true. But to be bulletproof and not lose money, period, that's nonsense. So now we're dealing with a property that has not been renovated that's has been sitting there that that's asking the price of the peak price and the reason is I said okay so what what's what's the idea behind all of this and they said well if we sell at this price which is technically the peak price uh we can maybe maybe walk out, you know, with a little bit of profit, not much, and that's fine. I said, "Okay, uh, but it's not going to happen." Like, you're like $300,000 off the price, and it will not sell. Some people will walk through.

[00:10:53]You might u help others sell the home that are properly priced because your house it's not that great and it's overpriced and everybody else will look so much better and they will have an advantage. That's just how it works.

[00:11:11]And she said, "Well, you know, but I I'm being very optimistic and realistic." I said, "Okay, because I'm just asking for this because then I can walk out." I said, "Lady, like it, this is not a wish list. Like, if the properties list at 1.59, almost 1.6, and the properties right now that are selling this caliber, they're like in the 1.23 two three range like that's where you have to be and if the loss is the loss and then she said well I have to fight see the the fight mode I said I get it but how long will it take if the property keeps rising at 5 to 7% or even call it 10% to reach back the the the the value where it needs to be in your head which is on 78 million or whatever, right? He said, "Well, at that gate, at that pace, we're probably looking at like 5 years out, 7 years out, who knows?" I said, "Well, what will happen if we don't sell?" He said, "Well, I'm going to go bankrupt.

[00:12:31]Belly up. I'm finished. I'm done. I cannot afford it." I said, ' And you're still fighting and hoping that the market that someone that that that a lightning is going to hit from the sky and fix only your problem. It's not going to happen, right? And I show her the cases in Markland Woods, you know, clients that that we sold at I think 139 back in the day. Then the properties fell even more. Uh and I've seen similar products sell for 129125, right? And the property that they bought in the peak was near 2 million bucks. So in their head, they're like, "Oh, look, I lost half a mill half a million dollars." But then they took the flight mode and they lost whatever they lo but but they could have lost $700,000.

[00:13:30]You see what I'm saying? is not whether you're going to lose or not. The the question here is where can you lose less like less impacted. So I think it it is very interesting. We will go through through an interesting interesting period where people in the outskirts especially like Grand Ben, like Niagara Falls, you know, Callingwood area, Berry area, Ajax and all these little pockets, Kingston, um will we will see more dramatic falls and then within the city we will see um more drama because people will not be able to sustain themselves and now since the you know World Cup is gone and all of that stuff. Um it is what it is. I mean congratulations to the Spanish people and the country of Spain. I mean phenomenal. You guys won the World Cup.

[00:14:31]But I mean like look it is what it is.

[00:14:34]like like I don't think people will stick around, buy a return ticket to Canada and buy out the entire uh continent just because they loved it or anything like that. So, we'll see what's going to happen. I think we're definitely years out before we see a solid return uh on an investment and and a solid return in our economy. So, stay tuned.

[00:14:59]Please like, share, and subscribe, and I'll definitely see you in the next one.