July 27, 2021
Episode #120 – Ben Rabidoux – Deftly Deciphering Unusual Economic Terrain
“People have been cooped up and they want to spend. And this is so bullish for the economy, I believe, over the next year. I think people are still dramatically underappreciating how strong the economy is going to be.“ – Ben Rabidoux
- Connect with Ben Rabidoux:
- Selected links and people mentioned in this episode:
- North Cove Advisors
- Edge Realty Analytics
- Georgian College
- B20
- Core Development Group
- Wilful Blindness by Sam Cooper
- Psychology of Money by Morgan Housel
- Edge Analytics newsletter
- Connect with REIN Canada
- REIN Canada
- [email protected]
- REIN Channel
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- SHOW NOTES
- [02:08] Patrick introduces his next TEDM guest and fellow research aficionado: Ben Rabidoux.
- [03:03] The Ben and Patrick Economic Road Show gets rolling! Ben apprises us of what he does in the world of business, and the product he provides for real estate professionals through Edge Realty Analytics.
- [08:40] Ben describes how he came to the intensive space of research and analysis with North Cove Advisors and Edge Realty Analytics. With a background in human physical geography, he made a stop at the teaching station with Georgian College which gave him access to great institutional academic data so he started posting thoughts on the economy. Requests for consulting work soon began and he quickly realized a research product was in demand. Ben also explains his previous concerns about the dynamics of the housing market and how his outlook changed after B20 and the failure of the foreign buyer’s tax to generate a significant impact. With a decline in single family inventory, he found it difficult to see a meaningful slow down with active listings at 30-year lows.
- [16:23] Reminder: national economic and housing headlines are not necessarily indicative of regional economic climates! In 2018, large Canadian centres were seeing a lack of supply and high demand in the condos markets as young people were flocking to the city. Inevitably as life evolved this would lead to increased single-family demand, and a dramatic lack of supply was showing up; 2020 simply exacerbated that reality.
- [18:34] Ben provides insights from his research into housing inventory over the past five years. The supply underwent a dramatic drop, and he talks about why this occurred.
- [23:06] Single family detached space continues to be underdeveloped and the demand, whether rental or home ownership, is high. It’s an interesting opportunity for investors whether they are in the cycle of selling inventory, or still playing the long game and holding for future gains. Mortgage paydown is always a reliable piece of an investor’s strategy.
- [28:30] Patrick and Ben bandy about the true viability of large corporate builders who endeavour to develop large-scale single-family rentals. They each hold a slightly different view of that concept aside from agreement on the governmental bureaucratic barriers.
- [33:33] This segues into another component of increased demand for and speculation on single-family housing which is population, immigration targets, and foreign capital flows.
- [36:00] A breather in sales is the result of several things including the summer season, and fatigue from the state of the world over the past 18 months. It’s all relative though as Ben explains, because the first quarter of 2021 hit such a statistical peak that although a slow down is happening, the market is still incredibly strong. Inventory supply on a national level (we know, national stats are misleading…) are at a record low.
- [40:18] Throwing a pandemic into the spokes of a typically predictable real estate cycle analysis, can turn that predictability on its head. Ben provides data he has researched and reported on as a starting point to explain the confusion of a Canadian housing market run-up during such an unusual recession. Part of it is a result of unprecedented actions by the Canadian government together with unprecedented cash savings by individuals. But hold it, what are the big three reasons truly behind those actions?
- [47:05] Ben continues and gets underneath real unemployment rates and the dirty secret of this recession which helps to explain the counterintuitive dynamics of the recession data from this pandemic.
- [50:55] Ben and Patrick can agree on a bullish approach to real estate investment. In particular, Ben sees the Alberta metrics outperforming the national metrics in the next few years. He goes on to unpack why he anticipates this and the fundamentals which exist to support it.
- [55:03] Patrick discusses the reality of how jobs in many sectors have changed in the past 10-15 years, and Ben furthers his viewpoint of drivers that will, and are, contributing to Alberta’s GDP growth.
- [61:11] Patrick gives another example of why he is bullish in Alberta and Ben follows up with economic data that affirms a closer look at Alberta investment.
- [65:05] Let’s look at the work from home movement and the effect on housing. The current situation has certainly fast-tracked the trend by about a decade, and Ben presents housing market statistics that demonstrate the migration to smaller, recreation centres. Conversely, he offers his feel on the popular narrative that city centres are dead
- [71:12] Getting back to savings and spending – what does Ben predict will happen as restrictions lift and people’s itch to spend starts getting scratched?
- [74:39] Ultimately human psychology and the different levels of fear people feel whether real or manufactured, will drive decisions around spending money. Despite that, Ben still feels individuals will be bullish with their spending and desire for experiencing the world again.
- [78:44] Inflation or deflation. What’s the word on the street from Ben’s perspective as an analyst? He talks about core inflation, interest rates, and even a potential upside. Patrick discusses the areas which could be at the effect of deflation. It’s all truly a cautionary tale.
- [87:58] A full and robust conversation about economics needs a rapid-fire nightcap: favourite swear word; a couple of impactful books Ben is currently sharing; a favourite quote; Android or Apple; room-desk-car; an unpleasant turn in his part-time detective occupation; favourite tunes and favourite movie.
- [94:08] Ben’s gratitude.
