Inside Track 2024: Economic Insights from CIBC’s Benjamin Tal and CEO Perspectives on the Current & Future Real Estate Market

Each year, we bring our investors together for Greybrook’s highly anticipated Inside Track, an event that fosters dynamic conversations and delivers invaluable insights from esteemed industry leaders. This year’s Inside Track 2024 hosted at the Four Seasons Toronto was no exception.

The evening featured the prominent Benjamin Tal, Deputy Chief Economist and Managing Director of CIBC World Markets, who delivered his expert analysis of macroeconomic data and real estate trends in the Canadian market. Following his keynote, attendees enjoyed an engaging fireside discussion co-hosted by Greybrook CEOs Sasha Cucuz and Peter Politis, who shared insights on how our firm is navigating the current market dynamics. The evening culminated with a unique and immersive cocktail reception inspired by Greybrook’s diverse projects, including Artistry Condos, Brooklin Vue Townhomes, and The Elser Hotel & Residences, to name a few.

Mr. Tal’s keynote address delved into the latest data, forecasts, and key factors shaping our economy and the real estate market. He began by examining various macroeconomic indicators, starting with inflation. According to Mr. Tal, inflation is slowing, with Canada’s current rate at 1.2%, significantly below the 2% target. He highlighted that while Canada’s overall GDP growth hovers just above 0%, driven largely by the influx of 1.2 million newcomers—including non-permanent residents and foreign students—per capita productivity is trending downward, with growth decreasing by 2.5%. In contrast, the labour market remains relatively strong, and he forecasts continued robustness, despite a slight slowdown that is not expected to reach recessionary levels.

Addressing housing affordability—a key concern for many Canadians—Mr. Tal highlighted that inadequate planning, coupled with a recent surge in population growth, has exerted upward pressure on prices. He notes that the influx of an additional 1.5 million newcomers beyond initial targets has exacerbated this issue. In response, the government plans to manage immigration to more sustainable levels, aiming to reduce the number of new immigrants from 7% to 5% in an effort to slow the pace of growth. While this is a step in the right direction, Mr. Tal emphasizes the urgent need for the government to address ubiquitous supply-side challenges. He suggests the introduction of developer incentives to help spur the construction of purpose-built rentals and condominiums.

In discussing the current state of the Canadian real estate sector, Mr. Tal emphasizes a stark dichotomy: while low-rise properties are performing reasonably well, the high-rise condo market has faced some challenges. With condo sales and construction sharply declining, inventory levels have surged as investors grapple with cash flow challenges and seek to exit the market. As a result, Mr. Tal predicts that the next year or two will present a buyer’s market, creating new opportunities for buyers amidst falling condo prices. However, he cautions that the current halt in construction starts suggests future demand is likely to outpace supply, potentially driving prices up significantly. Despite short-term fluctuations and economic uncertainties, he asserted that the fundamentals of the housing market, from a long-term perspective, are incredibly strong. “I’ll bet on the housing market two years from now,” he stated, “and it will take off, especially in the condo market. This is an opportunity for buyers to enjoy a buyer’s market for the next two years.”

Mr. Tal’s presentation also delved into the implications of interest rates, especially in light of the upcoming decision by the Bank of Canada on October 23rd. He suggested the possibility of a 50-basis point cut, with hopes for a more substantial reduction of 75 basis points, given the slowing economy. He emphasized the need for the Bank of Canada to align its decisions with those of the U.S. Federal Reserve, particularly as the U.S. economy, which had been robust until recently, is now showing signs of slowing marked by elevated inflation. As a result, the Fed is prepared to cut rates, potentially paving the way for similar actions by the Bank of Canada.

He further underscored the importance of managing inflation expectations, noting that while these expectations have decreased, they remain a significant concern for central banks. He pointed out that, unlike during the pandemic when households built up excess savings, consumers now lack a financial buffer, leading to reduced spending and an economic slowdown. He predicts that the Bank of Canada will eventually lower rates to approximately 2.25% by the end of 2025, acknowledging that this would be higher than pre-pandemic levels due to ongoing inflationary pressures. He concluded by stating that long-term interest rates are expected to stabilize, with fixed rates likely remaining higher than variable rates as the market returns to more normal conditions.

Mr. Tal’s insightful economic update was followed by an engaging fireside discussion with Greybrook CEOs Sasha Cucuz and Peter Politis. They shared their perspectives on current acquisition opportunities, with a particular focus on the intricacies of land acquisitions in today’s market. The discussion also explored how the current economic environment is influencing Greybrook’s investment dynamics and how it is impacting our strategic approach and decision-making as we look ahead. On the frequently asked topic of rental housing as a potential investment, Peter discusses why it is not a feasible investment due to cost-related challenges. To listen to the complete fireside conversation, please view the video above.

The event fostered a vibrant atmosphere, allowing guests to connect, gain insights from esteemed industry professionals, and savour culinary experiences inspired by our diverse projects. As we reflect on another successful Inside Track, we extend our gratitude to our investors and attendees for their continued support.

Thank you to all who joined us at this year’s event. We look forward to hosting you for Inside Track 2025!