Douglas Hoyes
BA, CPA, CIRP, CBV - Licensed Bankruptcy Trustee
As co-founder of Hoyes, Michalos & Associates Inc, Doug advocates for an equitable and respectful approach to debt management. He regularly comments in the media including publications and networks such as: Canada AM, Til Debt Do Us Part, CBC, The Globe and Mail, The Toronto Star, Business News Network, The Financial Post and CTV News. He posts regularly to The Ontario Bankruptcy Blog, on Twitter and Google+, and Huffington Post Canada.
As an industry expert, Doug Hoyes appeared before the Senate Banking, Trade and Commerce Committee to give testimony on the impact of bankruptcy legislation to the individual, and serves as an OSB (Office of the Superintendent of Bankruptcy) Oral Board Examiner.
Doug also hosts a weekly radio show and podcast called Debt Free in 30.
Panel Discussion:
OPEN HOUSE – AN HONEST CONVERSATION ABOUT CANADIAN REAL ESTATE
A Look At The Risks And Opportunities Facing Investors Today
The Canadian media tends to focus on real estate economics through the lens of the first-time or move-up buyer. The conversation is dominated by buy vs rent (your principle residence) or debating if there is a “real estate bubble” in housing given the rapid price appreciation seen in numerous Canadian cities. Mostly these concerns center around the Vancouver, Toronto, and Calgary markets. Condos are of particular interest.
This will be a different kind of discussion. Although we will feature top economic analysts, financial journalists, and industry experts in a panel format, our focus will be on real estate investment and issues generally aimed at an audience aged 45-65+. We’ll look at real estate less as shelter and more as part of your investment portfolio. Some discussion points for our panelists will include:
Market Outlook & Opportunities
- What is the outlook for the various sectors of the real estate market (residential, commercial, offices and retail) for the next 5 years? What are the risks and where are the opportunities?
- What is the outlook for interest rates? How would sustained low rates, or a rise in rates affect each sector of the market? We’ll take a closer look at the difference between the Bank of Canada’s overnight rate, and rates charged by the banks on mortgages (and why the banks haven’t been passing through all of the recent BOC rate cuts). We’ll also look at how fixed rates are determined (less by BOC and more by the bond market).
- Bulls and Bears vs Buildings – What to do with your next $100,000? Panelists weigh in on how they would invest new cash today. Do they see better returns in real estate, the stock market, or elsewhere?
Keeping Score
- Understanding market fundamentals and valuation. A look at real estate through the lens of the investment professional. We’ll review how to assess how your investments in real estate are performing (calculating Return on Investment and capitalization rates). You always want to be sure to make “apples-to-apples” comparisons to other investment opportunities.
- Income property: How does owning physical real estate compare to other forms of investment such as Real Estate Investment Trusts (REITs), Mortgage Investment Corporations (MICs), bonds and even equities?
Risk Management
- Accessing your equity. Should you borrow to invest, or renno your bathroom? Considerations when using HELOCs and reverse mortgages. When can illiquidity be a consideration for real estate investors?
- Understanding leverage – do you know how leveraged you are, and could you survive a margin call? What are the best ways to finance investment real restate, and what are the advantages and disadvantages of each method.
- Moral Hazard: Should you take equity out of your home to help your kids afford the unaffordable? BMO says 42% of first time buyers (and something like 54% of move-up buyers) can only afford to buy because of a gift/loan from the bank of Mom and Dad. Some say, the kids would get the money one day – why not give it to them now when they need it most? Other say this is only building a house of cards.
- Lessons from history: Is it different this time? A look at past cycles in the real estate market in Canada and abroad. Understanding how we compare now to then from a fundamental standpoint.
- How would you protect your wealth in the event of a downturn? Diversification is certainly part of the solution. We’ll examine how the pros diversify their portfolios to protect against risks from credit, interest rates, and market fluctuations.
Known & Unknown Unknowns
- Collectively the Finance, Insurance and Real Estate sectors (FIRE) industries make up over 25% of the Canadian economy, and real estate is the single largest industry by far. Canada therefore is far more leveraged to housing than to oil. Any material pullback in real estate puts Canada into an instant recession. With prices at all time highs and the fundamentals stretched, how much further can we go? Some sources say lending in Canada isn’t as sound as the rhetoric claims, and that regulations aren’t as stringent where it really matters as we would like to believe. Increasingly desperate measures seem to be keeping the party going. Data is tightly controlled by the real estate associations in Canada and there have been accusations that the data is not always reported accurately, is often distorted, and sometimes quietly revised after being reported. Recently long-time whispers of mortgage fraud emerged as fact at one of Canada’s largest mortgage brokers. Some say there is a shadow inventory of condos, and that the majority of units in major cities like Toronto and Vancouver are not owner-occupied, but are actually investment properties. With so much speculation in real estate investment, comes elevated risks. In this segment we’ll explore the possible systemic risks that could loom larger than most people realize, and may pose a threat to the stability of the real estate market.