The Real Estate Espresso Podcast Victor Menasce

A few weeks ago we spoke about the surge in residential real estate in parts of Florida. Inventories are up in several markets. But we are also seeing a surge in condos appearing on the market in South Florida. In fact, the condo sale inventory is up 90% in South Florida and the volume of transactions has fallen through the floor. The number of sale transactions was the lowest it has been since 2012 which was at the bottom of the GFC. 

We now have 8 months of inventory for condos as compared with last year and the sales statistics for 2024 to date are even lower than 2023. 

Naples Florida has 12.5 months of supply in the condo market compared with 3.8 months at the same time last year. Active inventory is up 204%. 

Sarasota has 3,600 condos for sale, an increase of 87% compared with the same time last year. Tampa has a 6100 condos for sale. These numbers were not seen since 2011. 

The redneck Riviera is also seeing a surge in inventory. Pensacola’s inventory is up 148%. Destin has 11.7 months of inventory. 

We’re talking strictly the condo market. 



But Florida has a unique situation. If you remember the Surfside condo building that collapsed three years ago killing 98 people, the state of Florida implemented two new sets of regulations aimed at improving the safety of condo buildings. The first regulation instituted mandatory engineering inspections of condo buildings on a prescribed schedule. 

The second regulation implements a strict set of guidelines for the condo corporation’s reserve fund. 

These two factors are causing condo fees to increase, on top of the rising expenses associated with insurance. This is resulting in special assessments of in many cases tens of thousands.

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are talking about what in some locations is a scarce resource. The headlines decry shortages of fresh water. Certain water sheds have been abused over the past century. The Colorado River is one example of those powerful rivers that seemed limitless. It flows through 7 states and 2 states in Mexico. So many communities along its path would not exist if it were not for the water supplied by the Colorado River. The Colorado river has been so exploited that it no longer reaches the Pacific Ocean. 

But the truth is that the planet is covered by 70% water. We are not going to run out of water any time soon. I know what you’re thinking. The oceans are salt water and we need fresh water. 

Fresh water is basically ocean water that has been distilled through the process of evaporation and then being deposited in the form of rainfall. Some areas are blessed with more rainfall than others. 

We often hear about problems with wastewater sustainability. 



The fact is, water is incredibly cheap to turn into drinking water. We tend to think of it as expensive. But in truth, it is very inexpensive. Reverse osmosis technology has been around for a long time. What we are really talking about is the amount of energy required to purify the water. 



Let’s put this into the context of a domestic water bill. If you are starting with a fresh water supply and then the city puts the water in reservoirs, purifies and treats the water, distributes it in pipes to all the homes, and then collects all the wastewater and treats the wastewater. 

In the city of NY, this comes to 1.7 cents per gallon to supply the water and then to collect and treat the wastewater.  

The energy required to produce a gallon of water through reverse osmosis is 0.4 cents per gallon. So if we had to treat the water and the wastewater the same as today and then insert a reverse osmosis system to purify sea water, we would be talking about increasing the cost of producing fresh water from 1.7 cents per gallon to 2.1 cents per gallon. This is hardly the crisis of the century that threatens the very existence of the human race. 

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are taking a look at the most recent announcement from the Bank of Canada. Today the Bank of Canada lowered its benchmark rate by 0.25% to 4.5%. That means the US and Canada have a full percentage point difference between the benchmark lending rates of the two central banks. 

This makes for two back to back rate cuts in Canada. The Bank of Canada cut its key lending rate by 0.25 back in June. 

The message from the Governor of the Bank of Canada was that lower rates were appropriate in order to stimulate economic growth. The economy is generally weak. Debt levels are nearing record levels and higher interest rates are making housing increasingly unaffordable. 

Inflation fell in June after a small bump in May. In June the inflation rate was at 2.7% on an annual basis. It’s still above the central bank’s 2% target, but the falling demand in market seems to be having a disinflationary impact on a broad set of goods. 



This means that real estate investors are starting to see some relief. The yield on the commercial mortgage bond has been dropping steadily over the past month. As of today, the 5 year CMB is yielding 3.54%. The best commercial financing available in Canada is priced 0.35% higher which would put the interest rate at 3.89%. That’s a very good rate and is considerably better than rates that most US investors are getting from agencies like Fannie Mae and Freddy Mac which today are pricing at 5.82%. 

That’s nearly a 2% spread between commercial mortgage rates in Canada versus the US. 

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are talking about cognitive dissonance. Cognitive dissonance is the discomfort a person feels when someone's behaviour does not align with their values or beliefs. Cognitive dissonance occurs when a person holds two contradictory thoughts at the same time.

Here’s an example. Ice cream is bad for me. I want some chocolate ice cream. These two thoughts are seemingly at odds with each other. 

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are talking about mission critical systems and the design principles that sit at the core of these systems. We keep hearing about catastrophic outages of key infrastructure.

A few weeks ago the city of Calgary was facing a severe water outage.

Over the past month, the network of Chrysler auto dealerships was facing a system wide outage that persisted for several days.

This past week, the vulnerability was punctuated by the flawed software update rolled out by cyber security firm Crowdstrike. 

The Crowdstrike update affected airlines, banks, retailers, and countless other businesses. Thousands of flights were canceled over the past three days and the airline industry has still not recovered.

In order to create a system that is tolerant of failures, there are two main principles that must be followed.




there can be no single point of failure 
No single point of repair 



No single point of failure means that you have to design redundancy into your system. If your internet service comes from a single provider, then you have a single point of failure. Maybe you should have more than one internet service provider so that if one goes down, the other should still be in service. But if the optical fibre for both carriers travels through the same conduit, then that single conduit could become your single point of failure.

Resilience is the result of a way of thinking that starts with identifying those single points of failure. 

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show we are talking about why many people fail to achieve their goals. There is a distinct process that results in a better track record for achieving goals.

You're invited to our annual goal setting retreat coming up on November 10. This intensive workshop requires focus and hard work in order to set great goals.

To learn more, send an email to podcast@victorjm.com and put the word Goals in the subject line.

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**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)