Rishi Sodhi

[music] Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. Every day I'll be joined by guests from across TD, many of whom you will only see here. We we'll take you through with moving the markets and answer your questions about investing. Coming up on today show: we will hear from TD economist Rishi Sondhi on why we may be at or near a bottom for the Canadian housing market. And in today's WebBroker education segment, Caitlin Cormier will show us how you can find information about the real estate sector using WebBroker. And here's how you can get in touch with us, just email moneytalklive@td.com or fill in the viewer response box right here in the video player under WebBroker. And before we get to our guest today let's get you an update on the markets. Some downward pressure broadly. Weighing among some of the biggest names in Toronto, down 177 points, almost a whole percent. Let's check out some of those energy majors because they are feeling the pain of that price of crude, at 25 bucks and $0. 41 a share, Cenovus Energy… Also some weakness in the tech space, Shopify down to the tune of almost 4%. South of the border, that broader read of the American market, of course this will be a short trade for the Americans with their Thanksgiving coming up, some downward momentum to start the week. 20 points to the downside to the S&P 500, about three quarters of a percent off the close of last week and the NASDAQ, let's check on the tech heavy indices. Energy name South of the border, the downward trajectory for the price of crude as well, you have X on right now in 107 bucks and $0.92 a share, down 3.7%. And that's her market update. Rising mortgage rates have weighed on home prices and sales across the country but with some signs of inflation easing and the pace of hikes beginning to slow, our featured guest today says we may be at or near the bottom for the housing market. Joining us now with Maurice Rishi Sondhi, an economist with TD Bank. Thanks Reo Michelle. >> Thanks for having me Greg. >> No one is a stranger to the fact that we've seen the housing market go up significantly in the face of higher borrowing costs. Where are we in that? >> We think, TD Economics thinks a lot of the downside in housing with respect to sales prices are taking place. We did get October data last week, showing resales and prices in the resale market. Home sales actually increased on a month-to-month basis in October which is, for the first time I think in seven or eight months of that is taken place. That's kind of a hopeful sign for some individuals like homeowners and the like. Prices were still down unfortunately. But we did again have some sales increase and when you look at sales, they are trending at levels last seen in 2012. Down about 40% from the February level. They have undershot, typically you would see if you benchmark them against fundamentals against income and housing supplies. So there are some signs that we are nearing a bottom. I would not say we were at a bottom as we speak at the moment. But there could be some signs that the worst is behind us with the down in sales and prices. >> It's hard to try to figure where we are in the cycle. Our people simply adjusting to … Some sort of change in the landscape. Just to get to the sidelines. I want to figure out what is going on here before, for most people including me, the biggest financial decision of your life. > Definitely. Yes. It is quite difficult to figure it out. There is, in this case, the regulatory change that is really sparking the market. I don't think anyone, I don't think it is any sort of great mystery. Interest rates rising since March. A very aggressive rate hiking campaign for banks. And that's really done the trick with perspective for deteriorating affordability and this is just sort of the other side of what we saw during the course of the pandemic. You have to remember, over much of the pandemic, prices ran out around rather ran up about 46% from the bottom from the beginning of the pandemic. So, you know, that is with rock-bottom interest rates. Right now with the interest rates normalizing, there is some down trending prices that are to be expected. So that is what we are working to at the moment. And again, you know, government trigger of course has been interest rates. >> It's interesting for all the dynamics at play in the market. Of course we know that borrowing costs are higher and we've seen sales come off and prices come off but not a lot of supply either. You look at some of these major markets putting supply constrained. What changes that dynamic? People wanting to list their homes? >> First I'll talk about what we expect. There has been some saltiness in listings. Listings have sort of fallen on average since February or March which is when the market started to… Listings, new listings have been subdued and that's what one would typically expect when the market goes south. Sales go down, prices go down and not a lot of people in a list their homes and that sort of environment. What could change that, perhaps, is interest rates, higher interest rates, rising borrowing costs, putting some pressure on people who perhaps, are a little bit overstretched with respect to… Investors and the like. They are forced into listing their homes because of the increase in costs. Particularly if they took out a mortgage. Of course which is leveraged to the Bank of Canada's interest rate and that has been going on quite aggressively. Or even if they have a fixed mortgage, renewing a much higher rate. So some financial pressure could lead some people to list their properties but so far, I don't want to say it's good on that front, but we have not seen evidence of that so far. So far listings are quite simply subdued. They can pick up in October but on average… >> Is there a psychology to play on that side as well? People wrapping their heads around what is happening in the market? If you want to enter is a buyer… But if you want to enter as a seller, anecdotally, you hear some people talk with the fact that they're trying to match those two sides. Saying "wait a minute, my house is worth $1. 2 million just a few months ago there's no way I will sell it for less and that " is there a way to find a middle ground for agreement? >> Even more than anecdotally, I think that is what is taking place. There are a lot of listings for months on end that sit on the market. They are not selling. You know, that might be a case of, I will call it sort of unrealistic expectations on the part of the seller. On the same time the buyer might be saying "there is more supply in the market now, less heat on the market… I can afford to take my time." And sort of look around. So I think that sort of dynamic is a play at the moment now definitely. That is a factor that we think will kind of continue to weigh on prices little bit going forward. >> Now of course, a big dynamic at play in Canada when comes the housing market is immigration levels. We have a very robust levels. Very robust target's. And of course people who call Canada their home, they need to put a roof over their head. Is that one of the things that going forward can at least keep it under demand? > Definitely. That's why we think prices will eventually rise. Once the market adjusts its rate hike cycle, I guess for a little bit more positive, I would say, we expect sales and prices to increase after, sort of, the market adjusts its rate in the cycle in a big thing is because of this robust population growth. When immigrants come to the country, they disproportionately tend to rent so that helps the market in the renting space and people who about condos and investors and the like. Ultimately, these investors transition their demand from the rental market to the ownership market with a bit of a lag. But it's there right? So that makes us all a bit more confident that sales in prices will continue to move higher after the market adjusts its rate hike cycle. >> Another interesting dynamic about this, someone sitting on the sideline of the housing market or even wandering to the pandemic, "how do I even afforded into the housing market?" We see prices pulling back this percentage of that percentage. At the same time, the borrowing costs are higher. Have the dynamics changed in favour of affordability at all through this? >> I would say it is merged. When we do our affordability calculations and our math and TD Economics, we see affordability has been… Not much. The fact like you mentioned, prices are coming off the low but that is being offset by higher interest rates. Some of these home buyers for the first time may not see much to when they initially decide to jump in the market. >> Longer-term, you do worry about the next generation trying to get into the housing market? I will play with the inflation calculator on the central bank website, what I pay, what is the market right now… Obviously, it's a very different game from when I started say, 18 years ago when I got into the housing market. What ultimately, in the housing market needs to happen to bring affordability to these people? >> Well, I think one of the big answers there is supply. Particularly with the population expected to grow as much as it has. We've seen higher interest rates. They have lowered prices but at the same time, that overall affordability metric, that overall monthly payment is still being inflated by these hired straights. So that's bringing down the price but at the same time, keeping that monthly payment elevated. So some other organizations have done some estimations and basically the conclusion of a lot of this now including ours, is that more supply will be needed in the market, particularly not only to keep up with the population but to sort of enhance affordability moving forward. >> Very interesting stuff and a great start to the show. We will get your questions about the housing market for Rishi Sondhi in just a moment's time. A reminder that can get in touch with us anytime in the meantime. Just email moneytalklive@td.com or Phil at that viewer response box on the video player and WebBroker. Let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. Shares of Home Capital Group are in the spotlight today that on news the alternative mortgage lender being acquired by Smith financial Corporation. Controlled by financier Steven Smith. The company says it will pay $44 in cash per share for the shares of Home Capital. It is not already own. Smith is well known in the industry, he cofounded Rival mortgage lender, First National. There is a changing and the guard at the top of Disney. Bob Iger is replacing Bob Chapek as Chief Executive Officer. If Iger's name sounds familiar that's for good reason. He was Chief Executive at Disney for 15 years before being replaced with Chapek in 2020. Disney's board says it feels Iger is uniquely situated to lead the company through what it calls a complex period of industry transformation. Oil is trading near two-month lows as a number of factors weigh on the economy on the commodity. Chinese demand concerns are front and centre as the country tightens covert restrictions in the face of rising case counts. Report suggest Saudi Arabia and OPEC are talking about a production increase in the US dollar has been showing strength in recent sessions after a run of weakness in recent weeks. And here's how the main benchmark index in Canada's trading. South of the border, short trading week. Of course the American thanks giving holidays coming up and we have some downward pressure on a broader read of the American market, we will call the 22 points for the S&P 500 a little more than half percent as well. We are back now with Rishi Sondhi, taking your questions about the housing market so let's get to them. Our first one here, off the platform, regionally, where are we seeing pockets of strength or weakness in the housing market? > Sure. Well it's an interesting question. A great question. I would say the prairies. The prairies are actually outperforming. I would say they are strong. Still feeling the impacts of higher interest rates but because there affordability is still decent by standards, they are in better position to absorb rate hikes. You have to remember places like Saskatchewan and Alberta, prices were falling for several years. With respect to oil prices and the like. So that set them up, heading into the pandemic into a position where the affordability was quite good and again, they are well-positioned to handle higher interest rates. Across the prairies I would say there's a good amount of performance going on. Also, up until I would say recently, there was some of performance going on in the Atlantic region. Massive interprovincial migration flows that we have seen into the Atlantic region because there affordability is just so much better. The cost of a home in New Brunswick is five times below that of a home in Ontario. So the remote work and the dynamics of pandemic, helping unlock that interprovincial migration channel and that has helped that market as well. That said, we've seen prices start to correct in New Brunswick and Nova Scotia which is what one would expect as well given that prices ran up about 60% on a sort of bottom to top basis with of course the pandemic. So some correction coming there but it is just a little bit lagged as markets like in Ontario and BC. There we have seen disproportionately a lot of weakness or most of the weakness has been concentrated on those two markets. And that's a function that is pretty severe affordability deterioration over the course of the pandemic. Those markets were highly interest rate sensitive in the housing cycle. With respect to our forecast, we think that even over the next several months or so, we think there will be be disproportionate weakness in Ontario and BC. Québec, I would say is kind of the middle-of-the-road with respect to those two extremes. So that's a bit of a label perspective with the landscape across Canada. >> You start talking but the different regional weaknesses and strengths. It makes me think about how, I guess difficulty of the affordability issue because markets clearly, it's hard to get a foothold and there's other parts of the country… We talked of the migration around were people are still willing to move with that kind of opportunity. I think of my parent's generation, some of my friends parents, one of the big reasons we came to Canada was for opportunity to own a home. And then we moved across oceans to do it. So Canadians are willing to move to different markets to chase that affordability? >> Definitely. We are seeing that in places like Ontario and BC. A lot of people are leaving Ontario for BC, Alberta… There's a big flow actually. Ontario I would say is the epicenter unfortunately. And again, that does prove your point. I guess for those in the province, policymakers and the like are counting on population growth to fuel potential growth, unfortunately it's concentrated in Ontario but to places like Alberta, BC etc. even in Québec, which is been sort of a traditionally negative interprovincial migration provinces seeing sort of neutral flows on that basis. So yeah. There is a lot of moving going on across the country. >> Alright. This question is interesting a sort of a follow-up. I'll see what you have to say about it from where you stand. A lot of people moved during the pandemic to different provinces. Is any of that reversing as well? >> There is no evidence of that as of yet. We, TD Economics, are expecting population growth at least in the Atlantic region to pull back. Part of it is functional with the fact that people are returning to the office. It's not as easy to work remotely as it was during the pandemic. That remote work in our view, increase those flows to the Atlantic region. Now that remote work is being reined in, we think that population growth, that interprovincial migration into the Atlantic region will ease. But we have not seen any evidence of it as of yet. We only have data to the second quarter. So we don't know how it has evolved since then. But, so far, population growth is still quite robust in the Atlantic region. >> When you done with the immigration part of the puzzle to, I guess criticisms in previous years have been people come to this country and they only think there is Vancouver, Toronto, maybe Montréal and nowhere else. But there are other places in this country to move. Is that a valid criticism? Or are people just gravitating towards three or four different markets or are they spreading across the country? >> It's still a case of spreading to three or four markets. Perhaps your parents… Knew what it was like a now very little has changed in that regard. It's still pretty much your Toronto, your Vancouver, your Montréal, your Calgary or Edmonton, your Ottawa… Places like that. These are the places that tend to disproportionately grab the lion's share of the immigrants. That trend really hasn't changed but again, what has been changing has sort of been unique in this pandemic is that these interprovincial migration flows. Particularly outside of Ontario, housing deteriorating to a significant extent. >> Let's take a question now. Which provinces are parts of the economy are most tied to housing? > I don't know… Both? The answer really is, I guess because of their economic structures, I can answer both questions: >> Actually, now I get the question. It wasn't registering but now I get it. >> I got it. But it's really Ontario and BC. They are the most leveraged or levered to housing markets. Both through a sort of consumer goods… Just the retail markets working in Ontario and BC, also the financing industries, the real estate sector is larger in Ontario and BC as well. So those two markets are really the ones that see the largest spillovers when you have housing downturn or conversely, when housing is hot. >> In terms of, I guess, our commodity economy, what I think about energy right? I'm trying to think… Was it at the end of 2016 or 2017 when oil sort of rolled over and OPEC sort of start up the market and then Calgary was in for some rough times… We still have the kind of ride for housing in the very oil dependent regions of this country? >> We do. We do expect some economic performance with Alberta, Saskatchewan… Manitoba… It's not just oil. It's other commodities as well. Agricultural prices, they have come off recently but there still highly elevated to pre-pandemic levels. We do expect some economic performance and that in turn will fuel some performance in the housing market as well. Obviously, WTI has a very important : WCS : oil in general is very important for government revenues in places like Alberta. They just show, showed a pretty massive performance in their first quarter fiscal update. It's very important for them and very important for incomes in the province as well. If WTI goes up it's good for the producers and of course it trickles down to raising housing demand and more floor on home prices as interest rates increase. >> Interesting stuff as always. At make sure you do your own research before making any investment decisions. We'll get back to your questions for Rishi Sondhi on the housing market interest all the time. A reminder of course that you can get in touch was any time. Just email moneytalklive@td.com. Now let's get to our educational second of the day. WebBroker has tools which can help if you wanted to research. Caitlin Cormier, Client Education Instructor at TD Direct Investing joins us with more. Caitlin, great to have you with us. Walk us through what information we can find here on the platform. >> Absolutely. It's very timely for the subject we are talking about today. For investors looking to find a bit more about the real estate market kind of on demand or whatever they want to find with this information, we actually have some reports available from TD Economics. So let's happen to the platform and see what we can find that information. So first, we will click on the "research" button and we will go under "markets" and click on "reports". This is the home for sort of all the broader reports that we do have. Not kind of an individual security is been on larger kind of as a whole. Different sectors. We will just scroll down and towards the right hand side here, we will see TD Economics. When I click on that it will bring up a separate window here, just kind of a bit of a pop up and we will click to explore TD Economics, go there now. On this page, we will actually see some commentaries on the far right side. Canadian housing starts October 2022. Canadian existing home sales for October 2022. So if you click on them, you will get some kind of raw data there. Some statistics Evans and key implication there as well. So just kind of help you and get you some insights on what TD Economics was thinking about with the housing market. You are able to pull up on demand. >> Good grounding in what you're looking out of the platform. What if investors are going through this exercise Caitlin are interested in adding some real estate to their investment portfolios? How do they go about doing that? >> Sure. So one of the ways that investors can add this type of investment into their portfolio is looking at will be call a REIT real estate investment trust. The company that owns or operates or finances income generate real estate to qualify as a REIT, those custom used those companies must invest and pay at least 90% of taxable income and dividends to shareholders. Celeste is a bit of information about REITs. Want to research and find them on the platform, we can click on the "research" button we will go under "tools" and click on our favourite tool, the screener. That will help narrow down investments. We will click on "screening" here. We will clear all of our criteria so we can start from scratch. And we are just going to simply choose either "marked criteria", "share type". We will click on "trust units" and as we scroll down there is a ton of different real estate investment trusts that are coming up here. So you can see right in the names, they do say the name. You are able to explore if any of these companies might be one that you are interested in researching further. There are 76 results here so you can obviously, certainly narrow down further if you like. But as a jumping off point you can see if some of those different investments are out there and a place to do further research. >> Great stuff as always Caitlin. Thanks much of that. >> Thank you. >> Caitlin Cormier, Client Education Instructor at TD Direct Investing. Make sure to check out the learning centre on WebBroker for more educational videos, live interactive master classes and upcoming webinars. And before we get back to your questions about the housing market for Rishi Sondhi, a reminder of how you can get in touch of us: Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. Back now with Rishi Sondhi taking your questions about the housing market. >> Yes it is. So basically, I would say there's direct and indirect impact. … Correlated with home prices and that tends to weigh on spending. So, there is less spending and the economy, less inflationary pressures so I would call it more indirect impact. Directly, impacts, measured items in the basket, for example home on a replacement cost, those tended to be impacted by changes in home prices. Resale prices with a bit of a lag and other prices marked… In the measured CPI, you see the downward trend in that component. But it is important to understand what is causing the drop in home prices, of course as we talked about before, is interest rates right? So in the inflation basket the bank, stats Canada measured and we all monitor… There's this thing called mortgage interest costs. That is providing big offsets to these following homeowner replacement costs because the Bank of Canada's aggressive rate hike. You are seeing some modest easing and overall shelter costs which capture all these things together. But because of the, because interest rates are rising so much, that's offsetting the direct downward pressure on homeowner replacement costs for more interest rates. For the Bank of Canada, you can look through this mortgage cost component with measures like the core measures, like the CPI X for example. Overall inflation backdrop backed out, there some offset going off there. >> It may be think of the wealth effect. It sort of speaks to how important of a driver the housing market is been to this country. Home prices went up and there is more real estate activity. There is also this feeling that you need to spend a little more money. As the downturn housing market, do you think overall going to weigh on the economy just beyond the real estate sector proper? >> Definitely. As I mentioned before, it's a great call. With respect to the wealth factor. Economics, that sort of… We are confident that there is a wealth effect with respect to housing and real estate and the like. There has been empirical estimates about how much, maybe five cents on the dollar or with new housing related wealth for example. So, yeah. Through the wealth effect, you see a slowdown in consumption. That's of the research will tell you and that's in our own economics, and our own analysis… It's a factor that is beyond real estate having the potential to weigh on other sectors of the economy. We are even beyond that. We are even beyond the wealth effect. Before we buy a home, we don't just… You by the homecoming leather furniture, he replaced the furnace, whatever the case may be… There is sort of additional spending that takes place in addition to just buying the home. When there's less housing transactions taking place, there's less housing related spending and we are seeing that show up in the date of the tracks this type of stuff to do so there is definitely that impact as well. So it's, you know, it's realtors, it's prices and sales and the like. But it's also companies that are in through that chain that sells goods and services that feel the impact. >> Let's get to another question of the platform. His foreign ownership still an area of concern in real estate? A few years ago it seems all people could talk about. >> Sure. On the policy side there have been responses. You know, I would say fairly, a few years back in DC Ontario, Vancouver expanded it out to the entire province there. Similar story in Ontario. First in Toronto and then expanding it out. The provincial government just recently increased the tax rate and what we have seen we look at date of the tracks this is that, I will take Ontario for example right? Say 2017, 2016, 2017. We saw foreign transactions were elevated shares in the market. Then that Cher plunged right? If you look at BC for example, that share is training around 2%, less than 2%. It looks like they did their job with respect to taking some of that froth or that demand off the market right? I know the federal government wants to ban in 2023. But because of these provincial taxes implanted in these larger jurisdictions, it probably will not be as impactful as if those other policies had been put in place. >> Of course, it's always important, for my understanding of how these taxes are structured, it was not stopping people from wanting to make Canada their home. It was about stopping people from buying real estate from the other side of the world and everything coming to Canada. >> Indeed. That's exactly right. There are a lot of exceptions and if you are permanent resident, you are exempt… Let's talk about the federal… If you are this you are exempt, if you are that you are exempt. It's about targeting people who have no intention of coming to the country. Buying and just sitting on it as an asset. >> Next, we will do a deeper dive on this that we had at the top of the show. Are you seeing any signs of forced selling as interest rates rise? You're selling a home not because you want to but because you have to. >> So far so good in the context of this question in terms of not seeing for selling with additional downward pressure on the prices. Listings is a measure that we look at for the resale market which is the bigger market in Canada, of course, the new home market is about 10% the size of the resale market. There is some altered, the supply we look at is holding below-average is. So not much of the way of concern in that respect. Of course there are structural factors that we have to consider when we look at these things. For example Canada's aging population. An aging population tends to move less in general. So there will be some structural downward pressure that we see. Also taking the country, taking us overall longer to deliver the supply in the market. So over time providing another structural constraint, weighing down, the weight of the markets… There is some structural factors that are acting to keep that trend sort of more down and out. >> When it came to that stress test to, introduced several years ago, it sent shockwaves through the housing market, did that provide sort of a buffer as well? Looking at payments, now that data has come. >> Definitely. It did provide more of a buffer. I think more so in the jurisdictions that did not have the stress test for example like the US right? So yet. It did. But the broad point here is that man awaits is providing even more of a challenge for people that are trying to buy homes right? So it's the way in which the stress tests works. Either it's 5.25% or the contract rate +200 basis points or 2% right? So now it's around 5% for mortgage rates. You are pushing your buffing up to 7% which is quite a challenging hurdle right? So it's doing its job, making sure the financial system is sound and providing additional buffer with respect to being able to take up mortgages that they afford. But it is certainly also providing a bit of a headwind in this market. >> Very interesting stuff. Here is someone who must live in the greater Toronto area. What's driving this by piercing and rental costs in the GTA? >> I think that's just broader affordability. Home prices are up for sure. Again, interest rates are up so the mortgage payment which considers both those factors hasn't really changed that much. Also, it's extremely robust population growth into the GTA for example. For immigration and the like. That is a big driver as well. You know, there could be some upward thrusts for reopening's, for example, some of those industries, summary openings there, maybe people are having to move back into a rental apartment and get back into those industries. All that's a little more of a grey area because the workers that were impacted by shutdowns tended to be younger and on the lower end of the income spectrum, for example so there's no guarantee if they were renting or being homeowners during the market at all? But there is some pressure from reopening. But the affordability pressures are a big driver and also the population growth. Overlaid on those two. And I must say, Toronto has been, it's rental stock, when you look at it on the per capita basis, rental completions purpose filled on a per capita basis of trails jurisdictions like Vancouver by a margin right? So maybe we don't have the rental supply. For example, just to kind of hone in on the market. … Perhaps we don't have as much supply that we need to service such a big population coming into our jurisdiction alongside these affordability issues. >> Several years ago we heard about our rental Renaissance. That was a word being thrown around. When I was in my mid-20s, I I lived in an apartment on Spadina. Now young people renting condos from an investor. That Renaissance ever come to pass? >> Yes there has been some progress in that regard the pace in which the rentals built has picked up in the past few years in Toronto. That's definitely a good sign. But again on a per capita basis, lagging with some of the other periods in history. >> Interesting stuff. We will get back to your questions with Rishi Sondhi for the housing market in just a moment's time and a reminder to do your own research before making investment decisions. You can get in touch with us any time. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. >> Combination of rich session fears, inflation concerns and steep increases in bond yields weighing on Canadian real stating investor trust this year. TD Securities is a new report on this space in our Anthony Okolie is been digging and enjoys us with the details. Anthony. >> Thanks Greg. TD Securities maintains their stance for the real estate income trust sector which they upgraded back in June. They point to the recent Q3 resultsWhich demonstrated continued strength. Overall it was pointed out that the average sector comes from operations per unit, came in higher than the TD forecast with the exception of those who miss their expectations. Most management teams reiterated favourable year term outlooks by strong demand. This chart highlights the sector that TD Securities continues. I'll highlight some of the thinking that they put in the report. We will start with industrial REITs. TD Securities had owned industrial fundamentals remain strong. They expect solid operation results across this sector on the back of strong rent demand. Second is residential rental. TD Securities has highlighted that the expectations of accelerated rent growth and further occupancy gains with postsecondary students came back with in person learning. Third, retail. Previously they pointed out that they see continued trends of strong leasing momentum and further recovery in favourable revenue sources like percentage rent. Finally, office, TD Securities is looking for potential recovery in office and potential revenue. … Overall TD Securities continues to see good value an upside to their estimates and if there meeting if there meaningful slowdown is not materialize. Greg? >> TD Securities think about the space, particularly if we have a slowdown that people fear. >> TD Economics estimates for 2023 did fall by about 2% on average. Due to higher interest costs. TD Securities is forecasting now that, cyclical low levels. The view remains the real estate fund medals are on a very strong footing heading into whatever slowdown is coming. They seem particularly in retail sectors. >> Interesting stuff. Thank you Anthony. >> Thank you Greg. >> MoneyTalk Live's Anthony Okolie. And now let's check on the markets. Some of the big energy names, of course you have the price of American benchmark crude, you have covert concerns in China with further clamp down some reports that Saudi Arabia talking to the OPEC brethren. Other members of the cartel but perhaps raising production also seemed to be weighing on crude. Let's check on one of the big names, Crescent Point Energy at this hour down to the tune of about 3 1/2%,. Home Capital Group up 57%. South of the border, a short trading week for the Americans. This will be the Thanksgiving holiday coming up near the end of the week. Down 16 points right now the S&P 500, a little less than half percent. The tech heavy NASDAQ down a little more than 1% on the NASDAQ opposite index. 135 points to the downside. Disney, the old boss is now the new boss. 96 bucks and $0.90 a share rather 96 bucks and $0.96 a share. We are back now with Rishi Sondhi, an economist at TD Bank, what's the main driver of mortgage rates? > Oh sure. It depends on what type of product you take out. If you take out a variable-rate product, you can sort of keep your eye on the bank of Canada's policy rate because of the variable rate tending to move with the BOCs policy rate. If you lock into a five year fixed mortgage or even with a lesser duration, you want to be looking at what government bond yields are doing in Canada. So that is sort of, I would say the outer lying mechanics there. >> Of course one part of the market to watch. We have run out of time for questions but sort of final thoughts on the Canadian housing? Canadians are very in tune to the housing market for quite some time and for good reason. A good drop in the economy. This year a bit of a different picture. What should we be thinking about with the long return? >> Sure. I'll go short, medium and long. Short-term: the housing market is still adjusting to the bank of Canada's rate hiking cycle. More interest rates and the Federal Reserve I should say as well. Both central banks have singled that more rate hikes are down the pipeline. So it's unlikely that the full adjustment taking place, we probably have more downside to go through with respect to sales and also prices for housing. So I would not say we are at the bottom yet. That's not a forecast. A forecast is in the next few months we may see one after the rate hiking campaigns. So that the thought I would say the likely case of worst is behind us. If demand picks itself up off the ground, that will be supportive. So that sort of a short-term. Markets adjust to this rate hike environment. Medium-term call and the population target's are so robust, there is record immigration target. That makes us more I do want to say bullish, but confident that prices, sales and prices will resume the trend over the medium term. So it's really a population story there. It's very difficult to, I mean, policymakers are focusing on enhancing supply. Government for example. But it's very difficult to keep up with such robust population growth. It takes a while to build housing units but it takes… It takes less time to admit 50,000 people into the country. We will put a floor on prices until we see the move in the longer term. >> Fascinating discussion it was good to have you Rishi. We appreciate your time. >> Thank you so much. >> Rishi Sondhi, economist at TD Bank. Stay tuned tomorrow for James Hunter banks and insurance analyst at TD Asset Management it you can get a head start with those questions by emailing moneytalklive@td.com. That's all the time we have the show today. Thanks for watching. We will see you tomorrow. [music]