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Bridge Beat

Dec 4, 2020

Benjamin Tal – 6 Dark Months followed by an Economic Explosion

Benjamin Tal virtually appeared at the Real Estate Forum on December 2, 2020 and was both entertaining and informative as always.  Never afraid to go out on a limb, here are some highlights of what he had to say:

  • The next 6 months are going to be dark and tough;
  • The last half of 2021 will see the economy take off;
  • There is pent-up capital waiting to be deployed – $90B excess personal deposits and $80B excess business deposits plus low interest rates;
  • Biden will find a way to make compromises with a split government in the U.S. to get some of his programs through;
  • Tax increases will be coming in the future.The big one may well be HST;
  • BOC will allow inflation to average out and not clamp down the minute it hits 2%.This is a big change for the BOC;
  • 10 year bond rates will go up 45-50 basis points;
  • The loss of many jobs, particularly in the hospitality sector in large part will be permanent.

Real Estate Market

  1. Office – Office space will be needed in the future notwithstanding more home offices being used.There will be more flex hours and home offices.
  2. Retail – High quality and luxury brands will survive.Lower end retail will suffer badly.
  3. Travel – This will return faster than expected once vaccines take effect.
  4. Restaurants – They require less capital and start-up and will return quickly.
  5. Residential Real Estate


  • Low-rise (905) housing will slow down as the prices become unsustainable (similar to 2017);
  • Immigration and students will return later this year plus 100,000 Canadians who normally work in the U.S., many will remain and need housing;
  • Late-2021 will see an increase in (416) housing demand;
  • International flow of money will return, particularly with Hong Kong and Chinese money outflows (many of the 400,000 Hong Kong/Canadian dual citizens will be looking to get out);
  • The trend to (905) will slow and the (416) high-rise will return probably in 2022 with values returning in a year or two;
  • The next 6 months will be tough on rentals and sales in (416).Now is the time to buy.

My take away from the many things that Ben had to say is that we are entering scary times for the next 2 quarters.  Lockdowns will probably accelerate, both in Canada and the U.S. and even to the extent there is a return to partial hospitality openings, people will be afraid to go out until the vaccines and the numbers come down.  On the other hand, with all the capital sitting on the sidelines and if the vaccines work and confidence is restored, the Canadian and U.S. economies may explode in the second half of 2021 and 2022. 

The other take away is that Canada will only remain competitive if it directs the extra $100B of spending into infrastructure and technology industries that will allow Canadians to compete worldwide. 

Stay safe out there.


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