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Good morning, Simon.

Our topic of the day, what are the steps of selling your house? But before to try that to answer that interesting question, let's discuss with Matthieu about recent economic news that influence the real estate market. Matthieu, it's been almost a year since the Bank of Canada held the interest rate at its highest level since 2001. Matthieu, the million-dollar question, is it the time now to cut interest rates?

I think we're there for - Yeah, Simon - that's the good news this morning. I think we will get first rate cut this summer. Most importantly, when you look at economic data that came out over the past few months, particularly when you look at inflation numbers, there has been significant improvement. When you look at the core measure, the average of the two measures that the central bank is tracking, CPI trim, CPI median, it's running over the past three months on an annualized basis at 1.6%, so below the 2% target of the central bank. And when you look at the number of categories that are running above the 2% threshold, it's only 27, essentially in line with the historical average and way below the 48 component that we saw at the worst of this inflation crisis. So significant improvement that bodes well for rate cuts. And we have to keep in mind that it's not like immaculate disinflation. It's really because the Canadian economy has cooled that we are getting this moderation in inflation. In fact, when you look at the unemployment rate, it has increased significantly since 2022.  It's now back slightly above its pre pandemic level. It's not a disastrous labour market. It's much more a hiring freeze from the private sector. But people who are trying to join the labour market, it's more difficult for them when you look at, for example, unemployment rate that is at its highest since 2016 and essentially the same thing for recent immigrants. So yes, the economy has calmed down, it looks in our view that we need those rate cuts to stabilize the labour market. So, we will not get too much damage in this fight against inflation. So yes, this summer, if it's not June, what I would like to see, it's going to be July and that's our baseline forecast at this point.

OK, very good news, Matthieu. However, we know that the Bank of Canada tends not to strike too far from the Federal Reserve and we heard recently doubts that are beginning to surface that it's going to be hard for them to cut short term rates. Do you think, in your mind, is it realistic that the Bank of Canada go at it alone this summer?

And that's the question that we get frequently. In fact, the main reason, if you look historically, you can see that the policy rate has been very correlated in Canada and the US. Of course, those two economies are experiencing the same shock. We know that exports represent 30% of GDP going to the US. So, it's normal that those two economies are very correlated. But you can see that at some point there's gap because an economy is doing a bit better than the other one. And you can see that prior to the global financial crisis, we saw a gap in policy rates of one percentage point and even 2 percentage points during the 90s. That's not what we expect at this point, but it will be given the economic backdrop. It will be totally neutral in our view to see the central bank declining rates before the Fed and even cutting rates a bit more this side of the border we’re expecting 75 basis point cut at by the end of this year rather than in the US only 50 basis points. So yes, they can go alone in our view, but they have to manage that gap because ultimately it has an impact on the currency. And if they decline rates too much versus the US, Canadian dollar will depreciate, and it will lead to import inflation in fact. So that's the risk and that's the reason why they will have to manage that. But clearly we have to look at domestic conditions and when you look at those conditions Canada versus the US, you can see that core inflation as measured in Canada, as I mentioned at 1.6% over the past three months, it's 4% in the US. So, they are not ready to give the same level of oxygen we think south of the border. And you can see that the unemployment is barely up in the US while it's increasing if you can't in Canada. Same definition here. The unemployment rate is at its highest since 2017 with the same definition as in the US. So clearly those two economies needs a different path in our view at this point.

And Matthieu, we've read the recently that the government has announced measures to counter the housing crisis, both in terms of immigration and a very ambitious plan to build nearly 4 million new homes by 2031. In your mind, Matthieu, is it possible to improve the housing situation in the short term?

I think it's going to be a long-term project. Clearly we have to adjust our expectation perhaps a 5-year project. There has been announcement about reducing population growth over the next three years that will be more easy to put in place, but it takes time to put that in place. So far this year, populations continue to increase at a brisk pace. For construction, the goal is to build 550,000 homes a year starting next year. We have never been able to build more than - it has been always less than 300,000 a year so far. So that's a significant increase. And I don't know if we have the capacity. The number of construction workers to be able to increase construction by this magnitude. But as you can see, we have to keep in mind all measures that are put in place to fix this situation is welcome. And as you can see for the monthly mortgage payment on median home price for first time home buyer, it's a difficult situation at this point. It has improved a bit last quarter with the decline in rates and the moderation in home prices. But even if we get those rate cuts in the coming months home prices should be resilient because of this housing shortage. So we've talked a lot about first time home buyers at this point, people getting this payment shock. Which is on average 20% in 2024 for people who need to renew their mortgage. But also, the renters who are impacting by this, housing shortage. And as you can see on a year over year basis, rents are still increasing at 8% at this point, the IRS since the early 80s. So, we have to keep to keep that in mind at this point. In fact, they look a bit more vulnerable. And when you look at renters, when you look at delinquencies for credit cards, so borrowers without a mortgage, their delinquencies are higher, already higher than its pre pandemic level, while mortgage holders for mortgage holders it increases, but it's it remains significantly below its pre pandemic level. So, we have to keep that in mind. That's a big challenge for the Canadian economy and we have to put all the measures in place to fix that situation, which is causing a lot of problem at this point.

All right, thank you, Matthieu for your very good comments as usual. Let's now discuss with Andrée to try to answer our question of the day. Andrée, in previous edition of Property Perspective, we've been talking about activities mainly related to the purchase of the property. Although we know that it's a very important step in everyone's financial journey, I would like this time to focus more on its counterpart, the sale of the property.

 With great pleasure, Simon. You are so right. We generally discuss the purchase of a property, and we often forget about the sale. In fact, for many people, over the course of their life, they will purchase more than one property. Many will buy 2, three or even more for all kinds of reasons. It could be for the family, which is growing because we decide, you know, to live with someone or even to separate, for a new job and many other reasons.

So, you're right, Andrée, there are all kind of reasons that leads us to considering changing homes to do this. What are the steps to follow to ensure that the sale of our home is done without too many surprises? Let's say that.

Yeah, to ensure that everything you know is done in the greatest possible harmony, I would say I would like to propose a ten-step process that you can follow. OK. The first one you've got to do a property appraisal. And to do that, you can get an accurate assessment of the market value of your property by getting the help of a real estate agent or a professional appraiser for this step. Once you've got the price, you have to prepare your property. Ensure that it is presentable and attractive to potential buyers. This may involve minor repairs, cleaning, and decluttering. I would say to highlight its best features. Next, choose a real estate agent. If you decide to work with one, find one with experience in your area and one with a good reputation. The agent will guide you through the selling process. Next, setting the asking price. Discuss with your real estate agent to set a competitive price for your property taking into account the local market, the comparables and the overall condition of your property. Then you will have to market the sale of your house. You know in the market and your agent will help you implement a marketing plan to attract potential buyers and this may includes online listings, virtual tours, guided tours, etc. Then you will have to negotiate the offer you will receive and as buyers begin to make offers, your agent will guide you through the negotiation process to ensure that the best price and terms are possible for you. Once a satisfactory offer is presented to you, then you and the buyer will sign the purchase offer which will highlight the terms and condition of the transaction. For example you know the sale price, the date of possession etc. Then, in these conditions. the buyer may ask for the inspection of the house and this will confirm to him that everything is in order and that there are no potential issues or even defects. After that you may need you know to do some little repairs or adjust the price accordingly. Then your buyer will have to finalize with his financial institution a mortgage approval and get back to you with that in order to confirm that he can it afford and pay for the property. Once you've got all that, the conditions of the purchase agreement have been met, you and your buyer will sign closing documents and legally transfer ownership of the property to the buyer. That is the ten step process that I was suggesting, but there may be another - an 11th one. OK. You may also have to produce a new certificate of location if the one you have does not include the improvements made to the property since your acquisition or if it's more than 10 years old.

Well, Andre, that's not that easy to sell a house. You just mentioned that we can use a real estate agent for this to help us. However, some people decide to do to do it themselves. Why would they choose that option?

You know, you're right. You know it is indeed possible, Simon, to sell a property without asking for a real estate broker or agent. The main reason for doing so is to avoid the brokerage fee, which you know may go from 4 to 5% of the sale price. This commission, you know is used to compensate the agent for all the work he is doing in supporting you in the sale of your house. Although it is possible to do this, you must possess in-depth knowledge of brokerage rules, the real estate market in your area. You must be available for all the calls, visits, be able to effectively promote your property on the market and above all, not be emotional because you know we always see our house better than it is. Therefore, unless you are a real estate expert, I recommend that you use the services of a trusted real estate agent to save yourself a lot of trouble and ensure a transaction at a fair price.

Thank you, Andrée for your great explanation and advice and thank you all for watching this morning and join us again very soon for next edition of Property Perspective.