If we don't solve our housing problem, we put our entire economy at risk: RBC's Dave McKay

Dave McKay, president and CEO of RBC, sits down with BNN Bloomberg's Jon Erlichman to talk about some of the creative solutions for Canada's housing problem. They also talk about the impact of generative AI and why it's hard to forge ahead on Canada's climate goals when the rules are constantly changing.
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[@mattbarry79]

Maybe our entire economy shouldn't depend on a housing bubble.

[@TheJstaples]

agree, not a lot of talk about how we are improving the economy to pay for all this stuff? something to consider is oil makes up ~20% of the economy I think. housing is maybe at least another 20%, maybe more? if we are going to tax carbon and generally not support that industry how do we make up the 20% of our economy? with what? what's the plan?

[@dailydrivenmuscle.]

What will the real estate agents do...oh maybe get a real job.

[@emreduygun]

I think that's a very good idea!

[@l.c.3150]

Housing and bloated gov’t

[@TheJstaples]

@@l.c.3150 so true. at least housing creates some value? How do all these government jobs do anything but put us in debt?

[@hersdera]

Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.

[@SandraDave.]

I advise you to invest in stocks to balance out your real estate, Even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. This is not financial advice, but buy now because cash is definitely not king right now!

[@Jersderakerguoe]

You're correct! With the help of an investment coach, I was able to diversify my 450K portfolio across markets and produce slightly more than $830K in net profit from high dividend yield equities, ETFs, and bonds.

[@GeorgeDean-km3wm]

Would you mind providing details on the advisor who helped you? saving for a pension through a corporate program since the age of 18. I hit greater tax along the road, so I increased my company pension with a SIPP (tax benefits). I'm now 50 and would love to expand my finances more aggressively; there are a few automobiles I still want to drive and a few mega-vacations that I still want to take.

[@Jersderakerguoe]

Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.

[@ScottKindle-bk3hx]

Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Melissa.

[@HodgeChris]

Great video! For 2024, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.

[@PatrickFitzgerald-cx6io]

I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!

[@brucemichelle5689.]

You are right! I’ve diversified my $450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.

[@NicholasHarmon-ow3jl]

Do you mind sharing info on the adviser who assisted you?

[@brucemichelle5689.]

Finding financial advisors like Colleen Rose Mccaffery’’ who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.

[@NicholasHarmon-ow3jl]

I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.

[@marsupian]

Problem isn't rates, problem is the overvalued house prices. Are they stupid?

[@Alanom2007]

He is banker, they want rates to go down so they can sell more

[@parkerbohnn]

The problem is the Chinese buy no matter what the price is. Value has zero bearing on what they pay. This problem has never been solved.

[@Eric-lx8hp]

Problem is peoples greed

[@yeow23]

Big corporate finance caused that problem. Do you expect them to fix it?

[@amsd1231]

There has to be an asset crash. The problem is it's gonna be very painful for everyone especially the banks that lent money to people so they can go buy these assets.

[@farlinax1234]

"we are not moving fast enough (to compete globally)" 10 seconds later "So we are thinking a lot about that, we are putting a lot of thought into that right now" Can't get a more senior Canadian businesspersons response than that. At this point it's a meme

[@clm660905]

Any policy which make Canadian poor will not be accepted

[@vikaskhatter5629]

Can the RBC take initiative and look into fraudulent Mortgages, conduct audit on applications ? solution begins at home..It will solve the affordability problem to large extent.

[@RC-eb5hb]

nope because banks will say it is the responsibility of government and osfi. since this does not add to their bottom line, they will not do it. the focus is on profit and profit. that industry is morally bankrupt.

[@Marsalien100]

The fraudulent Mortgages don't go through banks. The issue is Private Lenders are responsible for about Half of all Subprime mortgages in Canada.

[@Marsalien100]

And the banks that you wanna blame for subprime mortgages would be CIBC, BMO, TD, and Scotiabank. Those banks are extremely lenient on credit approval and they've been throwing money at people who they know will go bankrupt. RBC is one of the most secure banks in the world right now especially after Credit Suisse collapsed.

[@l.c.3150]

@@Marsalien100Ultimately we pay because there will be a bail in

[@dinosaurdude5668]

“Client friendly economy “ let me translate “increase living costs all around”

[@dailydrivenmuscle.]

There are thousands of homes for sale, problem is wages are crap and sellers are greedy.

[@l.c.3150]

In Vancouver the houses are moving! Don’t know who can still buy old timers at $1.5 - 1.8 million at these rates!

[@Icecold0505]

The fabric of a functioning society is affordable and safe housing. Lose that, lose control and lose Canadians.

[@aaronvallejo8220]

True. Lots of cheap fixer upper houses on the prairies. My neighbour said "we need carpenters".

[@RajivKBanyan]

Rates are not too high. Economists and lenders have put us in this situation of being indebted in housing. So of course they will say that the rates are too high. They need to come down and we need to build more. I think the build more rational comes from a totally different perspective, but in the meantime prices have to crash 20 to 30% for that rational to apply

[@marc37921]

20-30% sadly that estimate may be way too conservative. That would put us still above pre-pandemic prices which were still insane.

[@Marsalien100]

They should stop trying to build luxury apartments and maybe those homeowners who want interest rates to drop should just be forced to sell if they can't make payments at 5%

[@RajivKBanyan]

@@Marsalien100 and these are the same people who bought expensive cars and vacations, now complain about rates. No wonder Doug Porter is puzzled how people have largely managed to stay afloat with higher payments.

[@user-vi8ci2bi6b]

Our current govt makes policy and spends $ based on just 2 things. Carbon targets, and whatever creates popularity. The federal liberal govt is always campaigning. They are a reactive govt, not a proactive govt. Not knowing which direction they are going and having no vision besides reducing carbon makes it very hard to attract foreign investment. No one knows if Trudeau is going to change the rules on them, so they shy away. And our productivity, or lack there of, is another red flag that is too lengthy to even start on.

[@StarwoodTech]

I guess the pipelines and battery plants, low unemployment, child care nationally, gender equity, lower taxes for middle class and increase on wealthy, national dental care, funding of 1300 public transport systems, reduction of OAC age limits, and steller markets were made up then. Right. I love how people only remember what they want to remember. Ignorance is king in Canada.

[@markd3131]

The economics of housing seemed to work fine when rates were this high in 2006

[@TheJstaples]

What interest rate do builders need? 0%? 3%? If we lower rates again there is no way to support the economy if it gets some other challenge.

[@doctorgonzo5358]

Yeah, that's what I was thinking too. It would be too easy if builders just needed a percentage or two of rate cuts. The problem is broader than that. He was bang on about the permit issue though and let's just ignore the role immigration is playing 🤫 🤐

[@TheJstaples]

@@doctorgonzo5358 agree, cut the red tape on building permits and overall bureaucracy, this definitely contributed to the lack of building

[@Marsalien100]

The BOC will be making the biggest economic mistake in history if they lower rates this year. They have to wait until December at the very least to let the defaults go through. More than half of the mortgages on the market right now are subprime and ready to default but the problem is a lot of people who are still desperately holding onto their over-leveraged mortgages are making payments by selling drugs or money laundering. The criminals are the ones who are keeping the housing bubble profitable.

[@Marsalien100]

This interview was too scripted.

[@steak5599]

Look into how Construction loan works, it is not like a Mortgage. If you couldn't sell the home, it cost you monthly on Interest Payment. Construction loan is also higher than mortage rate. Current Mortage Rate is like 7.5%, now imagine Construction Loan is at 9-10%? You do the math how much it cost you if you sat on and Unsold Home you built for a year. Don't forget the Bank Start Charging Interest soon as they disperse the Money, that is BEFORE the construction is even finished.

[@lookanabeauti9386]

Its not a supply issue. Manage investors and immigration.

[@choden478]

He is saying rate has to come down else there is no reconstruction demand. It is not because of rate but because of artificially inflated price. If the developers price the houses at construction cost plus certain reasonable profit the cost would be about 60% of the current market price. In regard to the land price government regulation has to change according to increasing population; as right now very low percentage of the land is authorized for development so the supply is restricted on purpose. Money collected from carbon tax should be used to curb carbon emissions, should find ways to counter emissions.

[@funkspinna]

LOL. Based on what facts? Do you know the construction costs?

[@choden478]

@@funkspinnasomethings you can know. Do you think Vancouver and Toronto has the highest concentration cost? If so why? It’s not by construction cost but pushed up by demand, the price. That’s something you can see, people are bidding and paying many times more than what the seller is selling for. Do you remember how much people paid for a roll of toilet paper, it’s not related to the manufacturing cost. It’s price push up by demand.

[@funkspinna]

In other words...no, you don't know the figures and costs for your statement. Misinformation.

[@choden478]

@@funkspinna so then are you saying the high cost is due to construction costs?

[@parkerbohnn]

No lack of construction in Markham and Stouffville.

[@neohubris]

house prices has to come down by half at least too many investors and dirty money in Canadian RE. This isn't a supply issue.

[@stephenbuck1092]

Here here! Well said!

[@RC-eb5hb]

what is clear is that many Canadians are financially illiterate and live beyond their means. everyone aspires to a better lifestyle, however, it is only sustainable if financed through recurring income. many have become dependent on credit and savings, both unsustainable sources of capital. it's time for people to live within their means, and that may result in many sacrifices. get used to it. banks are not your friend, they are like a drug dealer that will let you OD on borrowed cash.

[@aaronvallejo8220]

True and true. Every month pay yourself RRSP and TSFA contributions first and live on the rest. Live within your means. If you can not...leave the big cities.

[@kamenidriss]

Acquisition of HSBC's assets....Great, more concentrated industry and Monopolistic Practices cause we all know that will benefit everyone

[@svenhodaka9145]

There’s the big 6, a couple smaller ones and numerous credit unions and others. How many more banks do you want?

[@Marsalien100]

You're wrong here. RBC is actually the best bank in Canada right now and they've done a good job of staying away from real estate risks.

[@Doug-tc2px]

"Nearly 300 years ago, Irish economist and financier Richard Cantillon explained how excessive money printing causes inflation and a divergence between the “haves and have-nots.” Inflation is here to stay, rate cuts would put upward pressure on inflation just like oil is doing now, adding the carbon tax just boosts inflation and boomers steering their kids away from trades have added to inflation in fixing and building stuff. All the cities were built out a decade or more ago so this will continue to keep land values high along with fewer and more expensive tradesmen will continue to make home expensive to build. It is what it is, sometimes there isn't a fix.

[@lominiski]

I didn't get this.....Why does Canada produce? Export what?

[@redemption707]

I’ve been saying this forever. Goods and service corporations AND housing cannot both be greedy at the same time. One will crash and bring the other down.

[@user-uz1si3fu1i]

Congratulations 🥳 Construction workers to being able to build homes Across Canadian Provinces And Territories for the first time ever Trudeau and Ford is absolutely so proud of you guys for making this historical achievement happening in Canada 🇨🇦 in its history.Of 🏠

[@x87alpha1]

Maybe if Trudeau focused more on making permits faster, instead of quadrupling a non-sense carbon tax, we'd be in a much better situation right now. And this kids, is why you should take elections very seriously!

[@amerjeetsingh9215]

Sir you are right, interest rate have to come down, every one can buy house, then happy country, not disappointed.

[@parkerbohnn]

If interest rates fall buyers will be in an even worse position, the Chinese will bid home prices to the moon. Lower interest rates just means they can leverage many more homes. I know what I'm talking about because I live in Markham where almost everything is being sold above ask. The 9 to 5er's are shut out of the housing market whether rates fall or rise.

[@amerjeetsingh9215]

Please leave jealous one side, IMF CONSIDER house value and gdp growth, how country had equity, if house prices decline like USA 2006, IMF GOING TO THINK THIS COUNTRY IN WORSE POSITIONS THEY DOESN'T LED YOU MONEY,

[@aaronvallejo8220]

Canada, needs a national grid connecting all our provinces to share renewably powered electricity back and forth. Then we need to rapidly build low cost renewables in all regions creating new tax revenues, lease payments to our farmers and new jobs for our young workers while we build lots of new highly insulated houses in every city.

[@Sophie_kent]

Why are houses so expensive.

[@aaronvallejo8220]

If you want inexpensive housing...leave the big cities. Come to the prairies.

[@sovereignty14]

Unprecedented worldwide mass-immigration for 40+ years.

[@TheJstaples]

@@aaronvallejo8220 ok what job can people get tmrw in tbe prairies and what is salary? What is the job gap being filled so people can move there? Remote work is not a valid answer.

[@aaronvallejo8220]

@TheJstaples Lots of new wind farms on the prairies and they need service techs for 25 years. Good family jobs. Farmers needs help. Carpenters. City workers etc etc.

[@thetruedemocraticnorth]

the nominal GDP is set to reach 2.5 trillion

[@mikebuchanan7610]

There are American companies with larger market caps than that. Apparently, the mass immigration isn't working. This country is managed by idiots.

[@Martin-qm2lg]

The three levels of government just cannot seem to solve the housing crisis. Too many expensive useless bureaucrats. There is a crisis and it's all about rezoning and increasing supply, whether Canadians like it or not. Dramatically more housing has to be built. Supply, supply, supply.

[@Eric-lx8hp]

Anyone with more then 1 house make them sell

[@sovereignty14]

More appropriate to severely tax multi-home owners.

[@thewealthymarketer]

Reduce income tax and introduce a land value tax

[@donaldliard6054]

Close the borders. Very simple

[@bsant54]

Why I bank with TD.

[@supraccc]

Just crash the market and have a reset.

[@mikebowers7719]

YES PLEASE,IT NEEDS TO BE DONE....

[@KarlBuckley-bw3vc]

STOP bringing in half a million immigrants every year now! 😢

[@philipmildenberger2772]

Apparently green policies are more important than people’s ability to buy food. A result of our government and economy being played with by people who’ve never known hunger.

[@dinosaurdude5668]

Tornado market has been crazy since I became aware of it in 2009. More liberal gov, the higher the housing costs.

[@Danilo-jimenez]

It’s a little too late.

[@sovereignty14]

After 20+ years, I still cringe when I hear two grown men discuss “climate transition”; perhaps this is what our Ancient Romans felt when watching two Christians speaking.

[@maximusfuscus]

What about not bringing milions per year here? How about common sense? Forgot…it’s gone…

[@Peter-sz1sn]

Mr. McKay, we are still debating, and should continue debating, various tools that our policy makers are introducing (under your tacit advice behind the scene, I suppose) because they have far bigger impact on our lives than what Greta Thunberg has told you. Technological advancements first, ideology and virtue signaling - please spare us of that!

[@dipro001]

Experts will do everything but build new cheap housing

[@shauncameron8390]

How do you build cheap housing on expensive land?

[@dipro001]

@@shauncameron8390 yes millions og empty miles of land have so much value to Canada

[@KarlBuckley-bw3vc]

Step one: get rid of pandering Justin Trudeau 🖕

[@MangoFlamingo]

More immigrants it will auto solve it

[@JSRTales]

😂😂😂

[@jessefaw]

stop bringing in millions of people i guess

[@supermash1]

I would recommend to young Canadians that they move out of Canada. I think the U.S. while certainly not perfect is a lot more affordable than Canada with a much brighter future.

[@webdeuce]

Dave thats aaa lotttt of English words man 😂 ez money low interest rate -- try those 5 kings English-- all else will be aaaarite 😂

[@grabbingbythe12345]

They all talk about rate should go down but none talk about price should go down. Because they are all real-estate investors. No good advice can flow from them because they are rigged and compromised.

[@southhillfarm2795]

the housing problem is so easy to solve. restrict speculators from buying residential homes. it has nothing to do with the interest rates. The rates are not high. This guy doesn't know what he's talking about. One family one home, one person one home.Corporations cannot buy single-family homes. if so they must be vetted and restricted as to why and how many homes they need for what reason. There are many other solutions including the one the government is going forward with reduced immigration but that's a small move. It's removing the corporation from the purchase of single-family homes and condominiums. Again, the interest rates are not too low.

[@chesspain6704]

It's disappointing that mainstream news is so far behind the independent media like market mania. Demand is not high... it's artificial. This talking head is correct that we have a problem that can lead to a revolution ultimately. He is talking about the problem but he is obviously bending it toward the special interest. I love that he just bounced across the Credit rating remaining triple A. If the credit dies up... things will get super interesting. Why not speak clearly and directly? "We are on our front foot.... best in class... work with clients... take care of omissions... pillars... informing policy... demand and supply side". This is a Trudeau talking head well prepared to appear like he is some independent thinker. This is quite irritating and just pure propaganda

[@desperado914]

Man...dude can talk about nothing for an hour

[@PlatinumPuppies]

His nose clearly shows that he is lying

[@Peter-sz1sn]

👏👏👏👏

[@Marsalien100]

I get the feeling he's just saying what he's told to say by the press. This is entirely scripted and I can see by his expression that he doesn't believe any of this climate change bullshit himself and he knows for a fact there's going to be a huge wave of defaults causing a housing crash. It's only a matter of time. Right now, every economist is just waiting for the peak Summer buying season to pass cause September is when we really expect those defaults to take their toll on Banks. The reason I don't believe this RBC boss is because RBC is actually the smartest bank in Canada and they've been doing a good job at avoiding the common mistakes with subprime mortgages that CIBC and BMO have exposed themselves to.

[@daniellamarche689]

What a pile of BS.

[@rishi505]

Biggest risk is Justin T . need to go . Great