“You can’t live inside a boundary stock, so a home not only has good investment return, but it’s where we raise our families, the place of our most precious memories”
The Covid-19 pandemic has hit hard a lot of different businesses around Canada. But one sector in particularly defied all the economic distressed and grew despite all: The Real Estate Market. To talk about this market nowadays, the reasons for the success and what are the predictions for the future, Manuel DaCosta’s guest in “Here’s the Thing” this week was Tim Hudak, the Chief Executive Officer of the Ontario Real Estate Association. Hudak became OREA’s CEO in 2016, and before he served the people of Ontario as an MPP from 1995 to 2016, reaching the honorable position of leader of the Conservative Progressive party of Ontario for five years.
Throughout the interview Hudak explains what the duties and responsibilities of OREA are, gave his perspective over the housing market, the challenges in the relationship between landlords and tenants, the way businesses are changing because of Covid-19, analyzed the difficulties that some generations are facing to become homeowners, gave advices to potential buyers and talked about politics.
Manuel Da Costa: Has the political bug left you?
Tim Hudak: It never gets out of your blood. 21 years I spent in the politics, I met people like you, leaders across the province of Ontario, it’s rewarding. I wouldn’t change this 21 years for anything, it’s a good job you’re always in the spotlight and it was time for me to move on but I wanted to find something that was motivating, that when your feet hit the floor when you wake up in the morning you’re excited about your job, you got a mission in life, and the value of home ownership, helping people who move to Canada, who grown up in Canada, get the keys to their first home that they own that is so motivating and is very exciting to take on this job as a CEO.
MDC: As the CEO of OREA, can you describe a little bit of what you do in this organization?
TH: The Ontario Real Estate Association represents over 80 thousand realtors in the province of Ontario, they’re highly trained professionals who are there to go bet for you, if you’re buying or selling a home, a business, a property. We’re currently running the Ontario Real Estate Association College as well, so most of the relators in Ontario went to our school, so this now is being transferred to Humber, so we’re in the middle of that transition. We provide services to our members from ongoing education, to trading on the standard forms that they use, develop their leadership and volunteer skills in the community, and we also play a big role in advocacy. We advocate for our members, but we also do for people who are homeowners, to stand up for them, help preserve or increase the value of their home and we lobby for people who want to become homeowners or invest in owning homes like apartments. It’s a big part of Canada’s culture, it’s a big part of our success and we want help create that next generation of Canadian homeowners.
MDC: How can people go with a clear mind trying to buy a house today?
TH: The most important thing is to work with a trained realtor, a professional who is going to be your trusted advisor at your side, when you’re making the big investment of your life. Somebody who knows the market, they know where prices are going, they know what the schools are like, they know if there’s going to be a condo built behind you or if there’s going to be a nice forest there. So, make sure you know somebody that knows the neighborhood and that we’ll make a wise investment for our own future. The market has a lot of demand right now, that are more and more people looking for homes today, and that’s because it’s being part of such an important part of Canadian culture, like many of your audience today are Portuguese background or Slovak, Chinese, Indian, whatever, when they came to these country people wanted to buy a home, they did that because they knew it was an investment. My grandparents saved up every penny they could, they worked hard, they bought a home, they turned the upstairs into an apartment to rent and helped pay the mortgage down and later they bought a business. That’s the story of a lot of people in your audience. To be successful like that in Canada is big part of the Canadian dream and you want a realtor to help you along the way.
MDC: I remember when I came to Canada in 1970, and we bought a house for $72.000. In those days it was a fairly simple transaction. Today, obviously, it’s much more complicated, it evolves a lot of lawyers and appraiser and everything else. What do you suggest to a potential purchaser of a home today? Because it’s not as simple as it used to be.
TH: Nowadays its more complex and expensive. Number one always work with a professional realtor, who is going to be your trusted adviser at your side, that knows the area you’re moving to. Always work with a financial advisor too, because in all likely way you’re going to have to borrow a lot of money to pay for your home, do that in best way possible and make sure that you can afford it: not only the mortgage payments but that you have enough money upfront for down payments in a very competitive industry. Also if you know a lawyer, this is an investment that pays off in a long run, real estate has been proven to bring benefits to families over their lifetimes, when they retire, or they want to move up when the kids come along, it’s a great place to make sure you have that type of investment for your long term success, real estate also if you own a home, that can help backstep if you own a business down the road because you have the equity in your home. The last thing is you can’t live inside a boundary stock, so a home not only has good investment return, but it’s where we raise our families, the place of our most precious memories and in this environment of Covid is being increasingly a place of security and safety, so all that tells you to critical purchase for everybody that gets in the market use solid professionals to make sure you buy the right one.
MDC: Looking at real estate today and seeing the prices to buy a house…do you think, specially in Ontario nowadays, GTA, that these prices real or are they artificially high. It doesn’t make sense, at least to me, as a real estate buyer also, that the percentage of a home is going up each year. Does it make sense for a buyer today?
TH: It really got down to basic economics, that’s a lot more demand but limited supply. So, what’s thriving the demand, well, as a result of Covid-19, and we did a research that shows: more people are interested in owning a home or moving up to one that has more space, maybe because of working from home, maybe grandma is going to move in with you, or you want a yard to kick the soccer ball around with the kids. So, there’s more demand because of that. Mortgage rates when we buy our house, mortgage rates were near record lows, so the financing is rather available. We also have the generation of Millennial’s, that are now the biggest generation of Canadian History, who are getting jobs, getting married and having kids and looking to get a home. The other driver of demand is the Baby Boomer Generation. The parents of Millennial’s had the most money in savings and they love their kids, they love their son or daughter that got a job, they went to school…but they can’t get a house, they would like to see them moving out of the house and get a place of their own, so you see a lot of financing coming from parents as well to help them get in the market. All of that is driving demand in addition to be a smart investment, but the problem is, compared to the 1970’s or 80’s, even the 90’s, we’re not building as many homes, we’re not keeping up with the demand in the marketplace. You mentioned how legally complexed it is, in some areas because of all the red tape, all the cost all the fees, you have to pay $ 125.000 in fees, before the first shovel goes in the ground and start building. So, big demand limited supply, that’s why prices are going up, and when immigration returns post Covid that would be another driver for price increases.
MDC: When you mentioned Millennial’s just recently, I read a statistic that Baby Boomers have about 3 trillion dollars in funds that are going to be transferred to other generations below. Millennial’s, 55% of them suggest that they feel that they deserve an inheritance, that parents should leave them an inheritance. What do you think about that attitude?
TH: I’d like to have if I could have it, I guess. I think it’s not a surprise and I feel bad for Millennial’s because they are now starting for the behind. They are a highly educated generation, they are further behind their parents and grandparents. A great history of Canada that attracted immigrants from Europe and around the world it’s been that you could actually get a place of your own, you could afford it, every generation had a better chance of owning a home than the one before until now. In 2016 we start going backwards in that area and Millennial’s are paying the price, so it’s nice to have an inheritance, I get that, and with these prices they need all the help they can get to get into the marketplace, but in the Ontario Real Estate Association we have ideas to help, ways to help Millennial’s get into the market and very importantly creating more choices and more affordable options in the market for first time buyers.
MDC: The real estate has always been a very interesting business and for people to own something that is tangible and to grow for their retirement, hopefully. As you said you can’t sleep inside a stock. Interested rates have been historically low and a lot of people are affording a home, when normally they wouldn’t be. And many of them, in Toronto, specially, are qualifying by the thinnest of margin but are still getting to the market hoping that interested rates stay low. Isn’t that a fear that inflation rears his ugly head, and it could be a big adjustment in how people are going be able to survive owning a home?
TH: You know, I’m middle age and in my lifetime I have seen a lot of ups and downs in the real estate market. We’re in a good operate now, but you should always be smart and plan that there’ll be a down cycle, luckily get through the Covid crisis, there’ll be pressure on interested rates, so mortgages won’t stay this low. So, what is my job? Make sure the realtors are highly trained, professionally, have a code of ethics to follow and a tough regulator now because of legislation that Doug Ford government has brought in to crack down anybody that breaks the rules, but they are the ones that get the advice on the value in a long-term investment, whether is going to make sense for you if you’re going to afford that home. Our job also is to make sure we get more houses in the marketplace, speeding up the approval process for new homes, cutting some of the red tape and in cities like Toronto you are looking at ideas that are densifying, are fine in busy venues areas like Yonge and Eglinton, for example, maybe lane way homes built on top of subways or GO station, you might want to live there because it’s easier to go to work and to pack up the boots and the shoes and the parka and all that during a Canadian winter. So, we put a lot of ideas on the table, to the credit Ford’s government had adopted a lot of those ideas in a legislation called “More homes, more choice act”. We’ll keep pushing because we want to make sure the Millennial generation, or new Canadians when they come, they’ll have a better chance of having their own home and raise their own family there.
MDC: Governments is all about all about social housing, building rentals. I understand that there are lot of people out there are underhoused and need assistance, but governments aren’t talking in assisting people who want to own a regular home, they’re moving more to social assistance housing. When we keep moving in that direction, are we incentivizing people to go into that direction, into social housing instead of trying to build themselves up, to buy a home for themselves? This government policy sometimes doesn’t make a lot of sense to me, even though I agree that people that are underhoused should be properly housed.
TH: When I bought my first house in 2002 it changed me as a man, I cared more about getting to know my neighbors, getting a good relationship with them, invested in my home, cleaned it up, I just thought more ownership. There’s a lot of studies that shows that children of homeowners do better at school, they do better in work than renters because you get more evolved in the community, get more stability, so my point is homeownership is a good principal, it has helped made Canada such a strong country, with a strong middle class. While we certainly have to concentrate in helping people who don’t have a home in getting one, social housing is important for those who are on the edge of becoming homeless, but every government police should be looking at how do we help moving from social housing for maybe an apartment of their own, to a home of their own. We should try to move people up that leader, the government should be focus on creating that opportunity for every Canadian equally.
MDC: Would you become a landlord today?
TH: That’s a tough one. My in-laws they are landlords, they own a number of properties, they have done so for a number of years, they get a lot of reward in that, providing a place for people to live. But as a MPP I remember having a lot of people that come in and have tenants that took advantage of the system, who didn’t pay the rent for months and months on and then destroyed the place and the system was out of balance, so those landlord would say: why would they get into this business? These are my savings for my retirements. When they hand it out to their kids down the road. So, we still need it, a lot of the new rentals has actually been in condos that get rented out by mom and pop investors. What the government needs to do is put that back on balance, equally protect the investors as well as tenants. Make sure there’s an incentive to pay the rent at the end of the day, and make sure there’s not big delays in the system, because someone is not paying the bills or trashing the place. I still think it’s rewarding but I do think that the current system is discouraging people from becoming landlords, we need more of that for people to have rental choices.
MDC: I’ve had the same experience and it’s very frustrating that it takes you eight months to two years sometimes to get a problematic tenant out and the system is just not there to balance things out, and it’s very frustrating. In the meantime, governments are encouraging people to build rental stock, but if you don’t get the balancing change to protect the landlords also, and I’m not saying all of them are exemplary, but there should be some balance and quicker methods to at least have a resolution. It’s very discouraging but it’s also part of housing in the city and I don’t know how this situation is going to be resolved. I know a lot of desperate people out there that have their homes tied up, not getting any income and a lot of them are pensioners that depend on that money to survive.
TH: My in-laws for example they’re retired, they depend on that for their retirement, they don’t have a government pension. And that is a good point, because for example if that apartment is taken by someone that is not paying the rent, who is breaking the rules, there are other people out there who are looking for a place, a single mom trying to raise her kids, a new Canadian that has arrived, somebody who is starting their own small business, move out of the house and are looking for an apartment, and in the meantime they are out of luck that these rulebreakers are taking the places. So we need to put balance in the system to treat tenants and good landlords that are on a better footing to make sure more people can find a good place to call home.
MDC: Getting back a little bit to your organization, I’m sure ethics are spoken a lot in this hot real estate market. With so many transactions being made, with so much movement being made, how do you keep track to make sure ethics are being followed and who polices that?
TH: The police for that is an organization called the Real Estate Council of Ontario, RECO, under the government of Ontario. So, this has been a big thing for us. We want to make sure, from the Ontario Real Estate point of view, that the realtor at your side has North American Leading Ethics, professional standards, education and if they break the rules or take advantage of somebody, we want them kicked out, we don’t want them to take away somebody’s dream of owning a home. So, we went to the Kathleen Wynne government and said that our legislations was out of date, it’s from 2002, when the average price of home in Toronto was between $235.000. With this amount of money these days in Toronto you can buy a dog’s house. So, we said let’s raise the bar, let’s become more demanding on realtors, make sure we have high professional standards, let’s increase the fines, and get RICO the ability to kick people out, suspend their licenses, take them away, and the Wynne government said yes, the Ford government said yes, and now that legislation exists in Ontario – it’s called the Trust and Real Estate Services Act, and went into law in the beginning of this year. We’re very excited because now we can be leaders when it comes to protecting your investment’s integrity in the system when before we were falling behind.
MDC: Let’s talk about politics. What is Doug Ford doing well and what is he doing badly?
TH: When it comes to housing Doug Ford has been an incredible champion in home ownership. He spoke in our conferences and he has promised he would work hard to bring homes closer to people that needs delivered, I mentioned the legislation that he brought forward around realtor ethics and professionalism, I mentioned the legislation he brought “More homes, more choice” Act that would create more affordable homes for people and encouraged mom and pop landlords to turn part of their homes or other investments into good rental properties as well, so big check marks on those fronts. He has also talked about the ways to help first time home buyers to get into the market, so very impressive. I had a chance to visit the Ford family home, over the years, and I know that home ownership is such an important value to the Premier himself, so he’s being excellent trying to find ways to help people get keys to their own home. And second, I just can’t imagine the pressure overall with this Covid Crisis. When Doug Ford ran to become Premier nobody ever heard of Covid, they never imagined our province would be paralyzed and I think he’s showing a strong backbone, he cares about people, he’s listening, and he’s keeping track of all this data that seems to change every day about this disease, so I think he’s showing a very solid leadership, he’s got a big heart and he wants to get that balance between protecting peoples’ health but also their mental health and also keeping people in business. It’s probably the hardest job right now in Canada, but he’s up to that job and I’m proud of the work that he’s been doing.
Transcrição: Lizandra Ongaratto
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