trade tiffs & housing riffs: wonking out with Brendon Ogmundson

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EPISODE #73: TRADE TIFFS & HOUSING RIFFS: WONKING OUT WITH BRENDON OGMUNDSON

In this episode, Ryan Berlin, Head Economist and Vice President of Intelligence, and Ryan Wyse, Market Intelligence Manager and Lead Analyst, are joined by special guest Brendon Ogmundson, Chief Economist at the BC Real Estate Association, for a wide-ranging—and lively—conversation covering everything from tariffs and the recent performance of BC’s housing markets to the upcoming federal election in Canada.

Featured guests:

Ryan Berlin, Head Economist and Vice President of Intelligence

Ryan Wyse, Lead Analyst and Market Intelligence Manager

Brendon Ogmundson, Chief Economist at the BC Real Estate Association

We’d love to answer your real estate questions. Email us at intel@rennie.com or leave a voicemail, and we’ll try to respond in future episodes. 

TRANSCRIPT

Welcome to the rennie Podcast, where we talk about the real estate market and the people connected by it. Our goal is to empower you to make informed decisions and provide context for the real estate world around you. We hope that with every episode, you will become a little more knowledgeable and a lot more curious.

Ryan Berlin: Welcome to the rennie Podcast. I am Ryan Berlin, head economist in our intelligence division. Across from me is the venerable, Mr. Ryan Wyse, market intelligence manager, lead analyst within Intel. And today is special because we are joined by none other than, drum roll, Brendan Ogmundson, dad, fun guy, and also chief economist at the BC Real Estate Association.

Brendon Ogmundson: Great to be here, thank you.

Ryan Wyse: Welcome.

 Ryan Berlin: Thank you for coming. I just wanna introduce , the episode, and then, um, Brendan, we wanna turn things over to you for a little bit. So, we wanna talk about a few things today, as, as you do on a podcast.

 Ryan Berlin: I'm sure that we'll, meander, we'll get off-topic, but we'll try to stick to some sort of script here. As far as subject matter is concerned, we'll touch on the trade war that we're currently engaged in with the US. I think some adjectives that you've used to describe it include, um-

Brendon Ogmundson: Um, w-ones you can sta-

Ryan Wyse: (laughs)

Brendon Ogmundson:... you can say on this podcast?

Ryan Wyse: Yeah. (laughs)

Ryan Berlin: (laughs)

Ryan Wyse: Keep it PG.

Ryan Berlin: What were you gonna say? Oh, that's right, yeah, like, we prefer, yeah, if we don't s- don't swear, and we, then we don't get the explicit label on the-

Brendon Ogmundson: (laughs) I'll do my, my, my best.

Ryan Wyse: Your darndest.

Brendon Ogmundson: My darndest.

Ryan Wyse: (laughs)

Ryan Berlin We'll also talk about how BC's housing markets have been faring, more recently, and then also what the upcoming federal election might mean for us here in BC, for our economy and our, and our housing market. So, anyway, Brendan, thanks for being here.

Brendon Ogmundson: It's great to be here.

Ryan Berlin: Um, you're coming in hot from Chilliwack. What were you doing in Chilliwack?

Brendon Ogmundson: Uh, I was doing what I have been doing far too often, which is talking about tariffs-. to an audience of, of realtors or, or other people in the industry. So, um, I've almost got it down. I think I've almost got it memorized. I've done, I've got like, 50, uh, speaking engagements on the books between like, January and June, which is usually what I do in a year.

Ryan Berlin: That is wild.

Brendon Ogmundson: Uh, and, uh, and yeah, so I'm, I'm, I'm just talking about tariff, and here I am to talk about tariffs.

Ryan Wyse: (laughs)

Ryan Berlin: (laughs)

Brendon Ogmundson: Which, no, it's, it's, I, uh, it's actually, I've been, we've been, you know, non-stop like, since November basically, after the election, just running model simulations. I'm, you know, mainly a macroeconomist, and so we're just like, "What are the effects gonna be?" And like, measuring those against other benchmarks-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... from other economists, and then they're constantly being updated. And then, uh, the (laughs) tariffs change every day.  So, uh, it's, uh, you guys, you guys, uh, probably under the, the, you have the, the same problem these days. It's just, we are just constantly updating a slide deck and updating talking points-

Ryan Berlin: Absolutely.

Brendon Ogmundson: ... and answering questions.

Ryan Wyse: Didn't-

Brendon Ogmundson: Like, "What does this-"

Ryan Wyse: Yeah.

Brendon Ogmundson: "... mean now?" Yeah.

Ryan Wyse: Didn't you do a whole series on the original threatened 10% tariffs that like, didn't even make it-

Brendon Ogmundson: (laughs)

Ryan Wyse: ... to January?

Ryan Berlin: (laughs)

Brendon Ogmundson: I did. We put out a whole, uh, market intelligence report, uh, called Choose Your Own Misadventure, and it was-

Ryan Wyse: Yeah.

Brendon Ogmundson:... uh, comparing 10% tariffs, which like, seems very quaint.

Ryan Wyse: Stupid (laughs).

Ryan Berlin: (laughs)

Brendon Ogmundson: Yeah, that's a horrible 10%.

Ryan Wyse: Yeah.

Brendon Ogmundson: And, and then 25%. Which I originally, you know, I, I, if you follow me on LinkedIn, I've been just putting all these like, I've just-

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: ... kinda go through all the iterations of what we've been doing, uh, and like, I remember not even doing the 25. I was like, "Ah, that's ridiculous."

Ryan Wyse: (laughs)

Ryan Berlin: (laughs)

Brendon Ogmundson: 25% tariff. And then 'cause I ran it, I was like, "That's pretty ugly," and like, I didn't even bother with it for a while.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson:And then that suddenly became the norm.

Ryan Wyse: Ridiculous became the norm.

Brendon Ogmundson: Ridiculous became the norm. I think that's a good-

Ryan Wyse: Yeah. (laughs)

Brendon Ogmundson: That's a good slogan for 2025, right? Ca- chaos is the norm. Or my favorite, everything's computer, which-

Ryan Wyse: (laughs)

Ryan Berlin: (laughs)

Ryan Wyse: I want that on a T-shirt. I mean like, that is amazing.

Brendon Ogmundson: There's a, there's a certain-

Ryan Wyse: Yeah.

Brendon Ogmundson: ... genius in everything's computer.

Ryan Berlin: Everything is computer.

Ryan Wyse: Which is great.

Brendon Ogmundson: (laughs)

Ryan Berlin: I mean, I think he was like, genuinely gobsmacked. Like, uh, "This, this is what cars look like?" Like-

Brendon Ogmundson: I know.

Ryan Berlin: ... c- some cars look like this?

Ryan Wyse: So bad. That's why he told him it was like a golf cart, because that's something that he understands.

Ryan Berlin: (laughs)

Brendon Ogmundson: (laughs)

Ryan Berlin: We got a little, a little sense for what you do-

Brendon Ogmundson: Yeah.

Ryan Berlin: ... uh, being a macroeconomist, but if you could take a couple minutes and maybe tell the listeners about BCREA, its mandate, and, and really, yeah, what you, tariffs aside. I mean, right now tariffs are very relevant, but like, what, what do you do with BCREA?

Brendon Ogmundson: Yeah. Uh, so I've been with BCREA since, uh, 2010. Um, I replaced Brian Yu, who then moved on to Central-

Ryan Berlin: (laughs)

Ryan Wyse: (laughs)

Brendon Ogmundson... Central One.

Ryan Berlin: Small world.

Brendon Ogmundson: Um, um, uh, yeah, and so, you know, part of our little like, economics community in Vancouver. Uh, and I sort of joined in 2010, uh, from PriceWaterhouseCoopers, where I was working in economic consulting. BCREA is just like, a member organization, so we have kind of an odd structure for an industry association in that individual, like, realtors aren't part of the industry association, but they're part of a member board.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: And then those member boards are the members of BCREA. So, we represent 27,000 realtors or so, but through the, I think it's eight, 'cause there've been some mergers, eight, eight member boards-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: around the province. Uh, we do advocacy, which I don't do 'cause I'm not a lobbyist. I would try and keep that totally independent from economics. And then we do education and standard forms and stuff I don't know very much about. My group is the economics team. There's two of us, and we just try and, we put out, you know, monthly stats, and then, um, do, you know, all, like media and, and presentations. And then my favorite part is like, we try, try to reserve like, at least a third of our resources essentially for like, think tank kinda work, where we try and put out like, original research. So earlier, I guess it was last year, I guess, we put out, um, some, some research on like, what it would take to actually hit housing targets in terms of like, productivity, and how big would the labor force in this construction have to be, and that kinda answering those types of questions. And then, you know, this year we put out a, a kind of a broader analysis of tariffs. So, we try and do like, original macro kinda-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... research, uh, that you would see at like, a think tank, or anything that's like, really, you know, related to, to housing that might help realtors out, uh, answer some questions from clients, or, or even to, to like, you know, um, uh, advise RGR people on what they should be saying to the government-

Ryan Berlin: Yeah.

Brendon Ogmundson: ... or, yeah.

Ryan Berlin: Yeah, I'm sure many listeners are gonna be familiar with your work. You are in the, in the, I mean this in the very best way, you're very prolific on LinkedIn.

Brendon Ogmundson: (laughs)

Ryan Wyse: (laughs)

Ryan Berlin: Uh, I'm working on it. I'm-

Brendon Ogmundson: (laughs)

Ryan Berlin: ... I look up to you.

Brendon Ogmundson: (laughs)

Ryan Berlin: But yeah, you put out a ton of great research.

Brendon Ogmundson: Mm-hmm.

Ryan Berlin: I just made a note here that you devote a third of your time to original research, like-

Brendon Ogmundson: Try, yeah. (laughs)

Ryan Berlin: Yeah, no, I mean, I think that's the way you need to do it, because if you're, if you don't set that time aside, you just, you live on the surface, right? And you're, you're in reaction mode all the time.

Brendon Ogmundson: Well, I think it's when you're doing, um, as much speaking as I do, man, it gets boring unless you have new stuff to share.

Ryan Berlin: For sure.

Ryan Wyse: (laughs)

Brendon Ogmundson: (laughs)

Ryan Berlin: Absolutely, absolutely.

Brendon Ogmundson: So, you kinda have to like, find some new stuff to, uh, to say every once in a while. Sometimes it does not hit. Like-

Ryan Berlin: (laughs)

Brendon Ogmundson: ... I'm in, I got this one section of my presentation right now, now talking about like, the Bank of Canada's neutral rate and like, how they calculate it and stuff.

Ryan Wyse: (laughs)

Brendon Ogmundson: I can tell people are not interested. You know who is? Me.

Ryan Berlin: Yeah.

Brendon Ogmundson: And I'm gonna keep, I'm gonna keep talking about it. (laughs)

Ryan Wyse: (laughs)

Ryan Berlin: Well, and it's funny, I, I-

Ryan Wyse: You have to be excited about your content.

Brendon Ogmundson: Uh-huh, you do.

Ryan Berlin: 100%.

Brendon Ogmundson: 100%.

Ryan Berlin: And, there is like, there is very much a similarity between, you know, we all give these presentations to, to audiences, and it, they are like, being a presenter of this type of material, especially when you do as much as you do, is very much akin to being a stand-up comic. I mean, in, in two ways. One, I know you, like, I think we all tell jokes to you wanna amuse the audience, but you're trying to amuse yourself as well.

Brendon Ogmundson:(laughs) Yeah.

Ryan Wyse: Every time, yeah.

Ryan Berlin: Um, and the other thing is you're testing, you're testing material all the time, right? Like, d- did that land? Do I need to change the way that I sort of frame that?

Brendon Ogmundson: It's so funny too, the stuff that doesn't hit-... that I think is gonna be awesome. So like, uh, every time the- the (laughs) stupid thing, whenever the Bank of Canada, uh, lowers rates and I find some dumb GIF of like-

Ryan Wyse: Yeah.

Brendon Ogmundson: ... something to do with cutting. And then I usually put-

Ryan Wyse: Yeah. Like, you used a chainsaw the other day.

Brendon Ogmundson: Yeah. That's right.

Ryan Wyse: Which I don't think you can use chainsaws anymore. (laughs)

Brendon Ogmundson: No, no. Uh, and then I'll- I'll put Tiff Macklem's face, like I put Tiff Macklem's face on- on Leatherface and- and, uh, it's like, "It's a cut." And I've done it with like Rocky, like the- the Russians' cut, like whatever.

Ryan Wyse: (laughs)

Brendon Ogmundson: Any dumb thing. Um, and I thought... It made me emboldened 'cause you liked it on LinkedIn and said this was good. I was like, "All right, this is gonna-"

Ryan Berlin: It was good. (laughs)

Brendon Ogmundson: "This is gonna hit." And then I used it in a presentation and I felt like I just got, like, blank stares. And before that, I was using, uh, Tiff Macklem's face on, uh, Bill the Butcher from Gangs of New York.

Ryan Wyse: (laughs)

Brendon Ogmundson: Which is, like, not a timely reference and like-

Ryan Wyse: (laughs)

Brendon Ogmundson: ... 10% of the audience even knows what I'm talking about, but, like, I know what I'm talking about, so.

Ryan Wyse: That was a big movie 20 years ago.

Brendon Ogmundson: 25 years ago. Yeah, yeah. (laughs) So-

Ryan Berlin: I'm- I'm very okay with putting content, these little Easter eggs in your presentations that amuse only you-

Brendon Ogmundson: Oh, yeah.

Ryan Berlin: ... um, as- as the presenter.

Brendon Ogmundson: My problem is I think I'm getting to the point where they're only to amuse me. (laughs)

Ryan Wyse: (laughs)

Brendon Ogmundson: Like, if the audience like it- likes it, that's fine.

Ryan Berlin: Okay. Let's- let's pivot into some meatier stuff here. Let- let's start with some opening remarks on tariffs. We don't like what's happening with tariffs generally. I'll sort of keep it open-ended to start, and we can have a conversation around this, but Brendan, your- your sort of- your thoughts on the situation? And you can start wherever you want.

Brendon Ogmundson: Yeah. I think, I mean, I don't know how much you guys have talked about tariffs in this podcast before. The place I always start in presentations is, like, "What is a tariff?" 'Cause not everyone knows what tariffs are, how they work, including-

Ryan Berlin: (laughs)

Brendon Ogmundson: ... the President of the United States-

Ryan Berlin: (laughs)

Brendon Ogmundson: ... uh, who, you know, even their press secretary, uh, for the for the president, uh, called them a tax cut for the American people.

Ryan Berlin: Yep, yep.

Ryan Wyse: (laughs)

Brendon Ogmundson: Um, I don't know where they get some of the stuff. Anyway, uh, it's just a tax on imports, right? So it's a tax on imports paid for by US households and US consumer- or US- and US businesses. If you have a, like, the super integrated supply chain in the auto industry, every time that product goes across the input to- to the production, goes across the border, it's gonna get taxed. Those taxes just build up into prices. It just raises prices, slows economic growth, lowers productivity. Generally kind of negative. It's not even zero sum, it's negative sum. Everyone loses. Canada loses, the US loses.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: As far as, like, we can talk about, like, the impacts, uh, on the Canadian economy or housing market, really kinda depends. So this is where, like, economists get, uh, a little wonky with like, "What's the impact of tariffs? Well, let me give you 17 different scenarios." 'Cause it- it does, like, if we don't retaliate, then maybe it's a little more clear what the implications are. And by retaliate, I mean just put our own tariffs on-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson ... imports from the- from the United States into Canada. Uh, if we didn't retaliate, which is usually like a lot of economists will, like, soberly recommend, like, "Let's not retaliate," because it means, yeah, we'll take the- the hit to our exports and probably domestic investment and everything else, but the implications for monetary policy are more clear 'cause you're most likely then to get inflation that's falling below target. And it's pretty obvious what the Bank of Canada's gonna do with inflation below target and the economy that is zero growth or contracting, what, you know, based on whatever their- their current forecast is. That's not the route we're gonna go down. We've, I think, even as an economist, like, rightly decided to retaliate.

Ryan Berlin: Yeah.

Brendon Ogmundson: don't know how you couldn't. And- and retaliate not just with- with tariffs on US imports, but in other ways, too. Uh, pulling, you know, US liquor off the shelves and all that kind of thing.

Ryan Wyse: Yeah, procurement contracts. Yeah.

Brendon Ogmundson: Exactly, exactly. Um, but the implications then for monetary policy and inflation are l- far less clear.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: And you saw that in the Bank of Canada's interest rate decision yesterday. They're, like, really trying to communicate to the public that, uh, like, "Don't expect the Bank of Canada to ride to the rescue this time around." Even if the economy is a lot weaker, their baseline forecast is that inflation's gonna be running, because of tariffs, if they're implemented, at like two and a half percent-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: for like a two-year period, if you look at their projections. So with inflation running above target, even with an economy that's pretty weak, kinda handcuffs them a little bit. They're mandated to keep inflation at 2% over the medium term. Pretty hard for them to lower rates. So like, when we run a similar, uh, inflation shock in our models, it tells us that the Bank of Canada probably have to leave rates at where they are right now, 275 or whatever they think, like, the midpoint of neutral is. So, that's really difficult, all right? That means that we have a Canadian economy now that is suffering from lower demand, from our- for our exports, and an economy that's contracting. And the Bank of Canada can't lower rates, and that makes everything kind of worse. So that's- that's the situation that's unfortunately, like, the baseline forecast is, like, what I call, like, junior stagflation, (laughs) where it's like, it's not the '70s-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... with like double digit inflation and an economy-that's

Brendon Ogmundson: tanking. But it's like really slow or slightly negative growth and inflation that's higher than the Bank of Canada wants. Um, that's unfortunately kinda like the baseline. And the implications for housing then are, uh, if- if, you know, people are worried about losing their jobs or are losing their jobs and rates aren't coming down, that's a recipe for- for sales to be pretty- pretty slow.

Ryan Berlin: Yeah, absolutely. And it- it is, um, as I listen to you walk through the knock-on effects, I know for a lot of people it sound- it's a lot putting all those pieces together.

Brendon Ogmundson: Yeah.

Ryan Berlin: It seems pretty simple that if you are going to tax a product, uh, you know, the burden of that tariff is gonna be borne by different parties to different extents depending on a bunch of things. And, uh, we can talk about elasticities if we want here or not, but, you know, quite simply, we- we can look at the example of oil, right? So to the extent that the purchasers of oils, like for refining purposes in the States or whatever, in the short term, they're not gonna pivot away from that resource coming from Canada because of a 25 or 10% tariff or 25% tariff-

Brendon Ogmundson: Yeah.

Ryan Berlin: 50% tariff. So that cost is gonna... And because the- the end product, I mean, I think two-thirds of our exports to the US are intermediate goods.

Brendon Ogmundson: Sure.

Ryan Berlin: So

Ryan Berlin: that means they're used in the production of other things. And so, you know, when we look at some of the products for which demand is fairly inelastic, where it's not going to change a whole lot in the short term in response to a change in prices, it seems pretty clear that there's is an increased cost pass on that is significant there-

Brendon Ogmundson: Mm-hmm.

Ryan Berlin: ... to the purchasers in that country. So in this case, the US. Why doesn't the... (laughs) This is not a question to ask you maybe.

Brendon Ogmundson: (laughs).

Ryan Berlin: But just, I think this is a rhetorical question, like, why doesn't the administration understand that? Or is there another, another play here where they're looking longer term and banking on some productivity growth to bring prices down?

Brendon Ogmundson: So every once in a while, and out of character, I try and- and in my presentation be- to be fair to the Trump administration.

Ryan Berlin: (laughs) Do you?

Brendon Ogmundson: Um, yeah, very briefly. Uh, and like, can you build like a steel man case for tariffs? And- and his, the head of his Council of Economic Advisers, Stephen Mirman, wrote this really influential paper for a hedge fund pre-election about, like, what he sees are the problems with the global trading system and what are the problems with the United States and how to fix it. And it's... I find parts of it kind of incoherent. But, like, you can find an economic philosophy in there that's essentially when China was added to the WTO, uh, and allowed into, like, the global trading sector, it was a really bad deal for the United States. In exchange for, like, really cheap goods at Walmart, which certainly benefits households, especially low-income households, the trade-off was the destruction of the am- of American competitiveness of- of their manufacturing sector. So their trade deficit with China actually blew out, their manufacturing, uh, employment-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... fell for decades as- as a share of employment.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: Uh, fell for- for decades. And, you know, China's a currency manipulator. They take the dollars that they- they- they gain in selling all those cheap goods to the United States and they recycle them back into US treasuries, drives up the US dollar to higher than- than perhaps it should be.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: Uh, keeps the- the- the Chinese economy more competitive. And they haven't, like some developing economies try and do, reorient towards domestic demand. They're still just fueling their economy through exports.... a really high savings economy. And, and so, Stephen Mirman would suggest we need to penalize an economy like that-

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: Um, so that-

 Ryan Wyse: By tariffing Canada and Mexico. (laughs)

Brendon Ogmundson: By, exactly. So, like-

Ryan Berlin: (laughs)

Brendon Ogmundson: So, he s- he wanted a 60% tariff on China to try and force them to reorient their economy towards domestic consumption. How that argument applies to Canada, I have absolutely no idea.

Ryan Wyse: And Mexico too. (laughs)

Brendon Ogmundson: So, I think, I think Trump takes... looks at that argument's like, and he sees, "Tariffs, I like tariffs. Tariffs are great. What are the, what are the largest importers to the United State... What are the biggest numbers I can put a tariff on? And it's Mexico and Canada and China." And it's like, "Let's, let's do that."

Ryan Wyse: Yeah.

Brendon Ogmundson: And, and that's, that's where you end up.

Ryan Wyse: And there's an acknowledgement that they need Canadian oil, even though he says, "We don't need it, we don't need it." By going 10% on energy as opposed to 25, there's an acknowledgement-

Brendon Ogmundson: Yeah.

Ryan Berlin: Of course.

Ryan Wyse: ... of that need. They rely on Canadian heavy crude. All their refineries are oriented towards them.

Brendon Ogmundson: Yeah.

Ryan Wyse: Uh, so regardless of what they or he says in the media-

Brendon Ogmundson So-

Ryan Wyse... there is a tacit acknowledgement

Brendon Ogmundson So,

Ryan Wyse: there. There is.

Brendon Ogmundson: like, your question, like, their, what's their long-term philosophy though seems to be, uh, and you kind of hear it, uh, in their arguments now, where, like, this is, uh, we need this transition period where, like, yeah, the economy might be weaker but it's in service of building up an economy that's more sustainable-

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: Or less, less reliant. They would say less reliant on government spending and, and more, more, like, building up the manufacturing sector. And, and Stephen Mirman's argument too was about, like, maybe with the US dollar shouldn't be the reserve currency and, but then... So this is where the incoherence comes, not that everyone's like, "Oh, tell me more about this Stephen Mirman theory." (laughs)

Ryan Berlin: (laughs)

Brendon Ogmundson: But it's, it's, like, uh, a tar- if you put a tariff on, on, on a country's, your, your exchange rate appreciates.

Ryan Wyse: Yeah.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: So it actually makes you less competitive. (laughs)

Ryan Wyse: Yeah.

Brendon Ogmundson: It actually doesn't do the... So if you're looking to reduce your trade deficit, tariffs don't work very well because they tend to increase your, the, the value of your currency. So, anyway.

Ryan Berlin: I mean, it's hard to, it's hard to know what they really think and understand, because they also seem to have... take major issue with, uh, any sort of bilateral trade deficit. In any sort of trading relationship they have, whether that's Canada, China, they think they're being ripped off. So there's  a sense that maybe Trump and his team doesn't, doesn't understand the economics of trade.

Brendon Ogmundson: I don't, but, like, this is the, maybe the thing that drives me, uh, the, uh, the most mad is... and mad as in crazy, not mad as in angry.

 Ryan Berlin: (laughs)

Brendon Ogmundson: Um, is, is, uh, do... What do they actually believe? 'Cause they lie like crazy.

Ryan Berlin:Yes.

Brendon Ogmundson: So even the, uh, evidence they provide for why they need a tariff, and it's entirely, like, I don't understand all of this and, and I'm not gonna bore the audience with my limited understanding of it. But the president doesn't actually have authority to, um, to implement tariffs unless it's a, it's an economic emergency.

Ryan Wyse:Mm-hmm.

Brendon Ogmundson
Otherwise, you have to go through Congress. There's all these different section whatever types of tariffs. So they've made up this fentanyl excuse that is obviously a, a lie because you, th- we have data about how much fentanyl has been seized at the border and, uh, every Canadian can recite that it's 43 pounds. (laughs)

Ryan Berlin:We all know that.

Ryan Wyse: We know that. If it-

Ryan Berlin:(laughs)

Ryan Wyse: If it's in a backpack. Yeah.

Brendon Ogmundson: (laughs)

Ryan Berlin: We know half of that too is not even seized at the border. It... so-

Ryan Wyse: It... so the, uh... The Globe and Mail did a great piece about how a lot of it's from, like, 100 miles south of the border and has come from Mexico, but is close enough to the Canadian border.

Brendon Ogmundson: The, they call it northern border.

Ryan Wyse: It gets tagged... Yeah, they just allocate it.

Ryan Berlin: Someone clicks a box that it's north-

Brendon Ogmundson: Yeah, exactly. (laughs)

Ryan Wyse: Yeah. So s-... Like, some of it got seized in Spokane, Washington, for example.

Brendon Ogmundson: So when you, when you see, um, someone like Peter Navarro, who's an idiot, or Kevin Hassett, who's an idiot, go on TV and say, "The Canadian landscape is littered with fentanyl labs, uh, and the RCMP's ignoring it-"

Ryan Wyse: Mm-hmm.

 Brendon Ogmundson: They're, they're just lying.

Ryan Wyse: Yeah.

Brendon Ogmundson: So, it's really hard to tell when they're lying and when they actually believe something. I don't know what Trump believes. I don't know what Scott Benson believes. Everyone thought he was an adult, and then he goes on TV and says absolute, you know, nonsense things all the time.

Ryan Berlin: Yeah.

Brendon Ogmundson: So it's, it's really hard to tell what do they... what do they want?

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: I don't know.

Ryan Berlin: Yeah. I mean, I feel like a fool sometimes trying to understand or work through what the thinking might be from an economics point of view. Because if I step back for a moment, I, I don't believe that they're actually having these conversations or these thoughts. I mean, uh, definitely I see the tariffs as an instrument to, you know, lever out concessions from other countries. It's the strategy from that administration is, you know, shoot for 100. If you end up getting 30, that's a win. And, and I - There, there is an acknowledgement by the administration, as you said, Ry, that trade does matter, that that does bring benefits. We see that by virtue of the differential tariff rates. We also see it from the Secretary of Agriculture, uh, Brooke Rollands, who, you know, egg prices have been increasing.

Brendon Ogmundson: Is she the one that was like-

Ryan Wyse: (laughs) Yeah.

Brendon Ogmundson: She was the one that was like, "Just raise... Start raising your own chickens."

 Ryan Berlin: "Raise your own chickens."

Brendon Ogmundson: Yeah.

Ryan Berlin: "Awesome."

Ryan Wyse: Or import Canadian eggs. (laughs)

Brendon Ogmundson: That's, that's-

Ryan Berlin: Well, that's, that's-

Brendon Ogmundson: She said, "Just become a sis- a subsistence farmer."

Ryan Wyse: (laughs)

Ryan Berlin: Yeah. (laughs) Exactly. That's, that's the, hey-

Brendon Ogmundson: It's everyone's dream, right?

Ryan Berlin: Make

Ryan Berlin: America great again, so... But, but you touched on it, Ry.

Brendon Ogmundson: Yeah.

Ryan Berlin: Which is, she said that the, the administration was gonna look at some temporary cheap import options. And it was like, ah, light bulb moment. Trade matters.

Ryan Wyse: Yeah.

Ryan Berlin:Trade brings benefits.

Ryan Wyse: Well, we'll import them, but we will also tariff them on their way in.

Ryan Berlin: That's right.

Ryan Wyse: (laughs)

Ryan Berlin: That's right. We look at BC here. Like, we know... I mean, there's... This is like when, um, you know, before COVID, nobody knew what the inflation rate was. No one knew what the Bank of Canada's overnight rate was. COVID hit and now everybody knows. And also everyone knows when the data comes out. It's like a new... It's a new world, right? And I'm feeling that here as well, where we all, we all know that three quarters of Canadian goods exports-

Brendon Ogmundson: (laughs)

Ryan Berlin: ... go to the United States. When we look across the country, that share of, of provincial exports that go south of the border varies considerably, quite dependent on the, the types of products that are being sent down there. You know, BC, or sorry, Alberta, which is, you know, obviously it's, it's largely oil, it's energy exports that are going across the border. Uh, I think 90%, Ry, is the number of their exports go to the US, goods exports. In BC, it's only... it's 53%.

Ryan Wyse: Mm-hmm.

Ryan Berlin: So I look at that and I go, does that mean that the province is a l- maybe a little bit more insulated? Uh, not every sector and every region, but broadly speaking, is, BC a little more insulated from this tariff, uh, kerfuffle than-

Brendon Ogmundson: (laughs)

Ryan Berlin: other provinces like, say, Ontario?

Brendon Ogmundson: Yeah. It's, it's, um... If you look at, like, the, the sectors too. Like, it's, you know, 22% is, like, oil and gas, and 4% is electricity. So, like, there's a big chunk of that, uh, 54%-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: That's, like, again, not very elastic probably. But, like, we've seen the impact tariffs can have on, like, forestry sector got decimated in 2018.

Ryan Berlin: Yeah.

Brendon Ogmundson: And

Ryan Berlin: Yep.

Brendon Ogmundson: now there's a 25% on aluminum. Like, what's that gonna do to the Kitimat smelter and, like, the jobs that are, that are, that are there and, like, you know, support that community? And then think about any of the manufacturers and, and everything that's on the north... on the northwest coast, um, or, like, interior, uh, forestry. It's, it's gonna have a real impact. Uh, uh, so we have less exposure but, like, it's really... Like, the Chamber of Commerce put a map out, um, on, like, where the hotspots were.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: And it was pretty interesting. None of them were in BC. Like, and they're all, like, they're major cities, right? And so none of the major cities have that much vulnerability 'cause most of our direct exposure is, like, in rural communities.

Ryan Berlin: Yup.

Brendon Ogmundson: So, like, Trevor Tombe has a great map with, like, a heat map of where the impacts are. And they're like the northeast, uh, the northwest coast, and the interior. Um, that doesn't mean we have no exposure, right?

Ryan Berlin: No.

Brendon Ogmundson: Like, there are still knock-on effects. And then, you know, we're also, uh, you know, what, 15 to 20% of our, our exports go to China. And they're also feeling the effects of a trade war. And so their demand might slow and global trade might slow. And so that's gonna have an effect on BC exports in general. But, like, when we did, like... when we kind of estimated the impacts, like, we came up with, like, growth is either gonna be... We, we'd done it a couple of times, so original estimate was between, like, a negative 0.7 and a negative 1 or something impact on GDP growth, or on GDP.

Ryan Berlin: As a percentage point.

Brendon Ogmundson: As... Yeah.

Ryan Berlin: Yeah.

Brendon Ogmundson: Andrevised that. I think now we're at, like, somewhere between zero and, like, negative-3.5, with an unemployment rate rising to, like, 6.5, 6.7% or something the next two years. Pretty similar to the, what the Minister of, of, uh, of Finance put out in their-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... their budget. Really similar estimate, so. That's, like, really slow growth, where, like, so maybe the Canadian economy is slightly contracting and, uh, and the BC economy's just, like, not growing. Neither are great, but it's, you know, we have less exposure.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: It's like, would you rather have, like, a broken wrist or a broken leg? (laughs) It's like, well, neither really.

Ryan Berlin: (laughs)

Brendon Ogmundson: But those are the choices. (laughs)

Ryan Berlin: Yeah. It's interesting, in the... In, in, in BC's largest metros at least, what we've seen looking at historical data is during periods of economic difficulty, so recession or otherwise, just where we have sort of slower growth, there is this, like, retrenchment. There's a domestic flows, like for metro Vancouver as an example, which typically domestic flows of migrants, they tend to be on a net basis negative, driven by movement within the province, where we have fewer people moving to metro Vancouver from other parts of BC, then move to other parts of the province from this region. When things are slow, we see people sort of come back for a whole bunch of reasons. You know, I think one of them is just, like, larger labor markets.

Brendon Ogmundson: Yeah.

Ryan Berlin: There's more dynamism in a larger job market, more turnover. There's a perception of perhaps more opportunity. Yeah, I would just add, like, go back 25 years, and the two times that metro Vancouver has had positive net domestic migration is 2015 and 2009. So 2015 was a recession almost entirely in Alberta, so huge flow of people.

Brendon Ogmundson: Yup.

Ryan Berlin: And then obviously- Yup. ... we know what happened in 2008-2009. So it's interesting to consider that. I mean, there's a, there's a lot of things, a lot of interplay here. Uh, tough to sort of predict how it's gonna play out.

Brendon Ogmundson: Yeah, but even, like, you look at those maps, but then you look at... Maybe we'll, maybe this is a good transition in to talk about the housing market.

Ryan Berlin: Great. (laughs)

Brendon Ogmundson: Uh, but if you look at, if you look at what areas were getting really beaten up in February, it's, like, the Lower Mainland.

Ryan Berlin: Yeah.

Brendon Ogmundson: The Fraser Valley was in rough shape. Uh, Chilliwack's in rough shape. Vancouver, uh, the Greater Vancouver realtor area. Uh, so, like, metro Vancouver is really getting beat up. It's hard to point to anything besides, like, uncertainty. Everyone is now seeing the, uh, the Stanford, Uncertainty Index, whatever, the Economic Policy Uncertainty Index. I think it's, used to be a Stanford economist. I don't know if it's out of Stanford. Anyway, not a super important detail. (laughs)

Ryan Berlin: (laughs) You're sounding like my mother right now, John. "It was at five o'clock when Mary called." Now it's 5:05, I think.

Brendon Ogmundson: Exactly. Yeah, you and... Me and your mother have a lot in common. Um-

Ryan Berlin: (laughs)

Brendon Ogmundson: Um, but yeah, that uncertainty's really weighing on... Like, we've... Y- you guys saw the same data I did.

Ryan Berlin: Yeah.

Brendon Ogmundson: Like, sales really fell off. I was really bullish on 2025 heading into the year.

Ryan Berlin: Right.

Brendon Ogmundson: And, uh, and sales completely fell off in February, and, and more so in the Lower Mainland than, like-

Ryan Berlin: Yeah.

Brendon Ogmundson: ... in the Interior or something where, where the, where the impacts are gonna be the worst.

Ryan Berlin: Yeah. Yup... uh, doing much better.

Brendon Ogmundson: Yeah, Victoria was, like, really strong before.

Ryan Berlin: Yeah.

Brendon Ogmundson: Like, they were running at, I think it was like 10 or 15% above average, and that came down to, like, average, so.

Ryan Berlin: Yeah.

Brendon Ogmundson: Yeah.

Ryan Berlin: And though we just checked quickly, and, like, Calgary, Edmonton, Toronto, Montreal, all same thing. Uh, like, clearly uncertainty is weighing-

Brendon Ogmundson: Yeah.

Ryan Berlin: ... on everyone. People... I mean, people are afraid-

Brendon Ogmundson: Yeah, well, and, and-

Ryan Berlin: ... to make large purchases.

Brendon Ogmundson: ... and this... You saw it in the, uh... You saw it in the Bank of Canada's survey data they released yesterday.

Ryan Berlin: Yes.

Brendon Ogmundson: Like, the sectors where people are worried about their employment over the next year, and it's, like, you know, oil and gas, and manufacturing-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... and forestry and, like... That, that uncertainty's having a major impact already. Like, even without tariffs totally in place, um, they're already impacting... Like, their-

Ryan Berlin: Yeah.

Brendon Ogmundson: Sales right now are basically where, like, our model showed they would be in the first quarter with tariffs in place, so whatever that means.

Ryan Berlin: Yeah, so in that survey, a quarter of Canadians said they're delaying major purchase decisions and saving more-

Brendon Ogmundson: Mm-hmm.

Ryan Berlin... for a rainy day.

Brendon Ogmundson: And then even, you know, getting back to, like, what really matters is what happens with inflation, at least for, for the potential recovery, and you see households' and business' expectations for inflation.

Ryan Berlin: Uh, it's scary.

Brendon Ogmundson: Prices in the, prices increase in the next year. You've got 50% of businesses expected to raise prices in the next year-

Ryan Berlin: That's right. Yeah.

Brendon Ogmundson: ... with, with tariffs, so.

Ryan Berlin: Yeah, we put out a, um... You said you were bullish on housing-

Brendon Ogmundson: Yeah.

Ryan Berlin: ... for 2025, and I think we were... We saw it as a sort of return to average.

Brendon Ogmundson: Mm-hmm.

Ryan Berlin:We thought better than 2024, better than 2023, in terms of overall activity. Just a bit more fluidity in the market. Which I think we had a, like a 25% increase in sales counts, which is substantial. Which sounds dramatic-

Brendon Ogmundson:Yeah.

Ryan Berlin: ... but it was still not even up to-

Brendon Ogmundson: That's, that's just getting to the 10-year average basically, yeah.

Ryan Berlin: ... longer run average. Yeah. So we put out our, our forecasts for 2025 at the end of January.

Brendon Ogmundson: (laughs)

Ryan Berlin: Basically at the same time that Trump was announcing that, you know, across-the-board tariffs were going to apply here.

Brendon Ogmundson: We did the same thing.

 Ryan Berlin: It felt really good. Yeah.

Brendon Ogmundson: (laughs)

Ryan Berlin It was a good use of time leading up to that.

Brendon Ogmundson: (laughs)

Ryan Berlin: So we haven't yet... You know, we haven't gone back and, and revised all of those forecasts, but-

Brendon Ogmundson: It's hard to do, right?

Ryan Berlin: It is, it is hard to do, and you- But if we do, then they'll change again. (laughs)

Brendon Ogmundson: I know. Well, yeah, you question the value-

Ryan Berlin: This could be how we get tariffs removed. (laughs)

Brendon Ogmundson: (laughs)

Ryan Berlin: Right? Well, I guess the question is, though, in... Like, to me, we talk about uncertainty, and, and yes, the actual tariff schedule matters. What, what products does it apply to? How much is the tariff? Um, but yeah, to me, the... I- if we... If there's no line drawn under anything, I mean, it feels like we could be under this cloud for, I mean, the foreseeable future. I'm not sure what the end game is here. I don't think anyone knows what that is, what that looks like. No. So, I mean, I'm curious. I don't know if you've updated a, a sales forecast for this year, but how do you see the, the, like, the markets in BC and, and more specifically in the Lower Mainland and in Victoria playing out? (sighs)

Brendon Ogmundson: it's so hard. Like, with the... With this kind of uncertainty, I mean, I feel like it's harder to forecast now almost than it was during COVID, because, like, then it was like, yeah, it's gonna be really bad. (laughs) And then it'd be a little better.(sighs)  It - it- it's so hard.Yeah. But at least the monetary policy implications were clear, too. Right. Um, this time around, it's just it's so un- so unclear. You know, the way our recoveries normally happen when we have a downturn is that rates fall and, and sales start to, to... And usually lead the recovery. Mm-hmm. Uh, if, if rates aren't gonna come down and we can't say whether or not they are, then it's that... It just gets very difficult to say. Uh, and it's even... You know, when I... I'm part of the, the Minister of Finance's forecast council, and they gave us, like, "Hey, do you guys wanna, like..." And th- we met in late January, right as the tariffs were being announced, and they were like, "Do you guys wanna revise your forecast? You have till Tuesday." (laughs) "Like, today's February 4th." It's like... And then so that day, I was like... It was like, oh my God. Like, 'cause that was the day the tariffs came into effect, I think. Uh, and we're like, uh, I was, I was emailing with, with Brian, Brian Yu., and, and, uh... I just mention him way too often on this podcast.

 Ryan Berlin: Yeah. (laughs)

Brendon Ogmundson: Um-

 Ryan Berlin: You should have a monitor.

Brendon Ogmundson: That's the second time I'm like that. Um. It's like, "Are you gonna revise your..." He's like, "I don't know. If it's worth it." He's like, "I think I'm gonna revise it." And then, 

"I'm not doing this."

Ryan Berlin: (laughs)

 Brendon Ogmundson: "Just keep it, keep it in-"

Ryan Berlin: Retire.

Brendon Ogmundson: "... where it was." Yeah.

Ryan Berlin: Yeah.

Brendon Ogmundson: Um, anyway. So i- with, with housing, too, like, I don't wanna put out a forecast that's like, "This is gonna get really bad" without seeing a few markets at least of it being like, oh. Like, people, I think, always, um, overstate the influence that people like us have. Like, "Why are you saying that the market's gonna be bad?"

Ryan Berlin: (laughs)

Brendon Ogmundson: "You're gonna drive it down." It's like, uh, that kind of power.

Ryan Berlin: No.

Brendon Ogmundson: Um, but it's... You know, it's like... Um, it's, it's still in your head, I think, that, like, oh, like, if I'm, like, really wrong and things. So, like, it's hard to put out a forecast at this point that's not just like, here's a bunch of scenarios. I don't know which one of it's, these it's gonna be.

Ryan Berlin: Yeah. I mean-

Brendon Ogmundson: Which is always more valuable than point forecasts anyway.

Ryan Berlin: Agreed.

Brendon Ogmundson: So.

Ryan Berlin: Yeah, I mean, if you get away from the, the forecasting and the economics of it, the, the way I look at the market w- like, all the time, but especially right now, is sort of, like, what are the things that might spur demand? And if that's too sort of abstract, wh- what are the factors that might spur an individual who wasn't going to buy a home to now participate, to act- actively-

Brendon Ogmundson: Yeah.

Ryan Berlin... look to get qualified-

Brendon Ogmundson: Yeah.

Ryan Berlin:... for a mortgage with a mortgage broker and be ready to actually make that investment?

Brendon Ogmundson: And I think, like, well-thought-out scenarios are really valuable. Like, there are some s- like, like...... not to, not to throw shade at the CMHC, but they'll put out a forecast that are just like, "And here's a confidence interval." And it's like-

Ryan Berlin: Yeah. (laughs)

Brendon Ogmundson... thing's gonna be terrible or pretty great. It's like-

Ryan Berlin: (laughs)

Brendon Ogmundson: ... that's not that useful.

Ryan Berlin:Yeah.

Brendon Ogmundson: Right? But if you put out scenarios that are like, "Here, if we have these sorts of things play out-

Ryan Berlin: Yeah.

Brendon Ogmundson: ... then we, we can expect this." And I think that's really useful, especially for, realtors to be like, "Oh, okay. Like then I can tell, at least I have a narrative-"

Ryan Berlin: Yep.

Brendon Ogmundson: "... about how, what I should look for, for, for, you know, this type of market or that." That's, like, a much... It's harder to put that all of that in a table with like, "Here's my... Here's my forecast." (laughs)

Ryan Berlin: (laughs) Yeah.

Ryan Wyse: (laughs) Yeah.

Brendon Ogmundson: Right? But, uh, I think that's far more valuable in, in this type of scenario than-

 Ryan Berlin: Agreed.

Brendon Ogmundson: ... than just, like, put it out, like, "Sales are going to be up 22.1%."

Ryan Berlin: (laughs) Why? Don't know.

Brendon Ogmundson: Don't know. Let's, let's move on. (laughs)

Ryan Berlin: Just feels like-: 

Ryan Wyse: (laughs)

Ryan Berlin: Feels like they should be.

Brendon Ogmundson: Yeah. (plucked string music)

 _____________________________

Hi, I'm Cassidy Bast, Director of Advisor Growth and Career Development at RENI. Do you like what you're hearing? Are you ready to grow your real estate career? At RENI, we invest in people. With a trusted brand, powerful market intel, and a full service brokerage, we provide the tools and insights you need to expand and thrive in your business. Visit joinus.reni.com and let's talk about how rennie can elevate your business. (piano music)

  _______________________________

Ryan Berlin: There's also another sort of source of uncertainty, but I'm not sure that it's, it's impacting in any material way at all, the, the economy or the housing market, but we will have a new government in some form. We'll have a new prime minister.

Brendon Ogmundson: Tomorrow, yeah.

Ryan Berlin: Um, tomorrow-

Brendon Ogmundson: Yes.

Ryan Berlin: ... and then we'll, we'll, we'll find out whether, uh, that person, Mark Carney, uh, is in for the next five years or we have Pierre Poilievre. Is there anything... I mean, it's a... The race is a lot closer than it was- a couple months ago, which is just incredible. Obviously, it's, it's what's happening south of the border, it's the change in leadership within the Liberal Party. I guess, you can give us your prediction, how do you see that playing out? And then the follow-up is really, you know, Is there anything, regardless of party, like, the, whoever the party is, I mean, is there, is there any kind of a m- material impact that they're gonna have on regional housing markets?

Brendon Ogmundson: Yeah, it's hard. I mean, there aren't a lot of, like, policy platforms yet, so it's really hard to say anything.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: And, like, obviously the, the Conservatives' major issues have been kind of taken away.

Ryan Berlin: Mm-hmm.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: And, and, and that's kind of what... I mean, if you kind of put all of your eggs in one basket on, like, this is the biggest problem in the economy and then your, uh-

Ryan Wyse: (laughs)

Brendon Ogmundson: ... your, your opponent's like, "Cool, let's get rid of it."

Ryan Berlin: (laughs)

Brendon Ogmundson: And you're like, "Okay."

Ryan Berlin: Yeah.

Ryan Wyse: He's-

Brendon Ogmundson: Congratulations, my work here is done.

Ryan Berlin: For the... Yeah. (laughs)

Ryan Wyse: (laughs) In case, in case anyone wasn't sure, he's talking about the carbon tax.

Brendon Ogmundson: Right. (laughs)

Ryan Berlin: Yes. Yes.

Ryan Wyse: Yeah. I think everyone knows, but just in case.

Brendon Ogmundson: you sp- you spoke its name.

Ryan Wyse: (laughs)

Brendon Ogmundson: Uh, we had a carbon tax in BC since, like, 2007 that no one complained about-

 Ryan Berlin: Yeah.

Brendon Ogmundson: ... for 15 years, but okay. Um-

Ryan Wyse: (laughs)

Ryan Berlin: The worst.

Brendon Ogmundson: (laughs) Uh, anyway, yeah, so I have no idea. Like, I don't know what their policies are. O- obviously, Poilievre is sort of, um, I think he's talked about housing and, uh, and about gatekeepers or whatever. Anyway, I think it's mostly about, like, you know, cutting red tape and all that's, that's great. We need to do more of that. Uh, I don't know what the... It's so m- it's so limited what the federal government can do-

Ryan Berlin: Yeah.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: ... on housing that it's, it's like, it, it, it sort of doesn't, doesn't really matter a lot. Like, it'd be cool if they tried to do more and like they provide, you know, a lot of it's like, "How much money can we provide you?" And do we do that with carrots or sticks-

Ryan Berlin: Mm-hmm.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: seems to be, like, all that it comes down to. Uh, but like the more important issues are at the provincial and mostly municipal level at this point.

Ryan Berlin: Absolutely, yeah.

Ryan Wyse: Yes. Absolutely, yeah.

Brendon Ogmundson: So like, it's like, I don't know, unless they can force municipalities to, like, do permitting faster and, and, uh, and adopt zoning that makes sense, then like... And they don't... I don't know enough about it. Obviously there's, there's a limited amount the federal government-

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: ... can do, uh, with, with housing. It's much more at the municipal level, somewhat at the provincial level. All they can really do is provide funding-

Ryan Berlin: Mm-hmm.

 Brendon Ogmundson: ... and, and some, you know, form of incentive, carrot, stick, whatever, penalty for doing this, prizes for doing that, whatever. Uh, it's, it's such a, you know, municipal issue that, um, you can understand why they talk about it 'cause like when, you know, no one's happy with the state of housing really across North America. Uh, and when, when housing is, is a struggle, your entire life is a struggle.

Ryan Berlin: Yeah.

Brendon Ogmundson: And there's no surprise that people, especially young people, are really angry. And if you're a political party and you're not talking about housing, then you're gonna make a lot of, uh, potential voters really angry. But like most of those voters probably don't totally understand that the federal government (laughs) doesn't have a lot to do-

Ryan Berlin: Mm-hmm.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: ... uh, with, with housing and they should really be, uh, pointing that anger at municipal government. But I don't, I don't know what the, uh, the, uh, how many, the share of, like, the population that votes in municipal elections is.

Ryan Wyse: (laughs)

Brendon Ogmundson: It's probably pretty low. And who, who's following, you know, who's going to council meetings and whatnot. So...

Ryan Wyse: Who, yeah, and who has the time?

Brendon Ogmundson: Who has the time, right? Exactly.

Ryan Wyse: (laughs) To go to third readings and public hearings and-

Brendon Ogmundson: That last like four hours, like, "What time did this start? What time is it now?" Yeah.

_________________________________________

Ryan Wyse
 (instrumental music) Okay. Well, let's move on, uh, to our recurring segment we call Beneath the Headline where we usually cherry pick a headline about local housing related topics that maybe could, uh, use a little more context, but since we're talking so much about the idiocy or idiocracy of the current trade war-

Brendon Ogmundson: (laughs) I need to see that movie. I haven't seen it yet.

Ryan Wyse: ... trade kerfuffle-

Ryan Berlin: You haven't?

Ryan Wyse: Oh, it's a great movie.

Ryan Berlin: I know. Great movie.

Brendon Ogmundson: It announces pretty depressing how accurate it is.

Ryan Berlin: Yeah. I... Yeah, right. I-

Brendon Ogmundson: Yeah.

Ryan Berlin: It's...

Ryan Wyse: (laughs) So we picked one, uh, from the States, uh, and so I've (laughs) taken one that's just really summarizing a recent poll. So many Americans see Trump's actions on economy as too erratic.

Brendon Ogmundson: (laughs)

Ryan Wyse: Uh, and honestly, it's a little disheartening. It's only, uh, 57% of Americans-

Brendon Ogmundson: (Laughs) Only.

Ryan Wyse: ... think he's being too erratic. And shockingly, I've got a 44% approval rating on this.

Brendon Ogmundson: Which is like- Which is low for the time in, like, the state, like, uh, the, the, the, like, how, the, long he's been in the presidency-

Ryan Wyse: Yes. But considering-

Brendon Ogmundson: ... for how far into this term he is.

Ryan Berlin: Yes. Yes.

Ryan Wyse: Yeah, considering how quickly he has absolutely tanked financial markets-

Ryan Berlin: Yeah.

Ryan Wyse: ... you think more people might be upset with the Down Jones.

Brendon Ogmundson: It's, and it's-

Ryan Wyse: (laughs)

Ryan Berlin: (laughs)

Ryan Wyse: Oh, wow. Okay.

Ryan Berlin: Oh boy. Wow.

Brendon Ogmundson: Oh, we can't use that one? (laughs)

Ryan Wyse: Oh boy.

Brendon Ogmundson: And it, it's interesting though that they... When, when they're asked about it, they're like, "Yeah." It's like, "This is what..." They said, "This is a transition. We gotta, we gotta..." And like, it was like, they're not-

Ryan Berlin: The stock market doesn't matter anymore.

Brendon Ogmundson: Normally, yeah, normally they were like, "We're obsessed with the stock market."

Ryan Berlin: Yeah.

Brendon Ogmundson: It's like a scorecard. I think what they need to do more and more is, like, juxtapose the US stock market with like, like, Germany is up like 20% or something.

Ryan Wyse: Yeah.

Brendon Ogmundson: Like, "Wow, the Germans are killing this."

Ryan Wyse: And the Hang Seng in China.

Brendon Ogmundson: Sure, sure.

Ryan Wyse: (laughs)

Ryan Berlin: But remember too, I mean, there's a, there's this theory out there that they are creating the chaos to, um-

Brendon Ogmundson: Get somewhere.

Ryan Berlin:... funnel, funnel investor, investors over to safer assets.

Brendon Ogmundson: This is the... Yeah, but it's like, it's like the underpants gnomes, uh, from South Park. You ever see that episode?

Ryan Wyse: No.

Brendon Ogmundson: All right, so there's this episode of South Park where-

Ryan Wyse: (laughs)

Brendon Ogmundson: ... you have these gnomes that come in the night and steal your underwear.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: And their business model is steal underpants, question mark, equals profit.

Ryan Wyse: (laughs)

Brendon Ogmundson: (laughs) It's like, this is like, this is like, tank the market, wreck the economy-

Ryan Berlin: Yeah.

Brendon Ogmundson: ... question mark.

Ryan Berlin: Well, I think the idea is that-

Brendon Ogmundson: (laughs)

Ryan Berlin:... is that as investors move into, like, safer assets, like longer term treasuries-

Brendon Ogmundson: Mm-hmm.

Ryan Berlin:... that they drive down...

Brendon Ogmundson: Interest rates.

Ryan Berlin:... interest rates and the... I mean, I can't remember the exact numbers, like how much of a, a decline in that longer term yield would generate savings of a particular magnitude. I saw $100 billion a year in interest cost being saved if... Something like, I don't know, like a percentage point of the long-term treasury yields went down by a percentage point.

Ryan Wyse: Yeah, like how much debt matures this year.

Brendon Ogmundson: Mm-hmm.

Ryan Berlin: I just think there's too many layers. I think if you have to go through a couple of layers of logic or...... connection, connecting the dots, then-

Brendon Ogmundson: Yeah.

Ryan Berlin: ... I don't think that that's part of the plan.

Brendon Ogmundson:It's weird that for people that only ever demonize government, that they're, suddenly they've shifted to this, like, idea of, like, being a rich country as having a lot of government revenue.

Ryan Berlin:Yes.

Ryan Wyse: Mm-hmm.

Brendon Ogmundson: Where we hear Trump talk about, "We, we were never richer than when we had tariffs." And it's like, "Well, what are, what are you talking about?"

Ryan Wyse: Yeah, what? Mm-hmm.

Brendon Ogmundson: Like, obviously wealth is way higher... GDP per capita is way higher. Like, I don't know what this measure is, and it seems like they're talking about government revenue.

Ryan Berlin: Yeah.

Brendon Ogmundson: And like, their budget. Like how, whether the budget's close to being balanced or something. And like, that's not a gauge-... inter- of, of, of, uh, like a country's wealth I've ever, uh, heard of. Uh, but it seems to, and again, they hate the government, so I don't know why they want to give it more money. I- it makes absolutely no sense. I don't, I don't understand it.

Ryan Berlin: Well, it could be an Office Space play by, uh- ... by Trump and his cronies, right?

Brendon Ogmundson: Yeah.

Ryan Berlin: So the more money that's coming in, the, the more their own coffers can fill up. No one'll notice. Who knows?

Brendon Ogmundson: (laughs) No one'll say to him, "Maybe."

Ryan Wyse: Who knows? Maybe that's the plan.

Brendon Ogmundson: Maybe that's the plan.

Ryan Berlin: It's just, just a fraction of a cent.

Ryan Wyse: Yeah.

Brendon Ogmundson: That's the Superman III, uh, the Superman III plan?

(Instrumental music playing)

__________________________________

Ryan Berlin: To close things off, we do have a question from one of our listeners.

[Listener Question]

What's up, Ryan's? Mikey here, from Coquitlam. I'm a first time buyer, and I feel like I've been waiting forever to get into the market. I'm kinda just sitting on my money. Are there any real signs that affordability is actually gonna improve this year or like, soon? Or is it just as tough as last year? Big fan of the pod. Thanks.

 Ryan Berlin: Thank you for the question. So he said he's a first time home buyer, waiting to get into the market. Are there any real signs that affordability is improving in this market, or are things really just as tough as they were a year ago?

Ryan Wyse: I mean, it has, affordability has objectively improved over the last year. Not to say that it is (laughs) affordable or as affordable as it was five years ago.

Ryan Berlin: Yeah.

Ryan Wyse: Um, but if you look over the last 12 months, variable rates have come down by 225 basis points, material change. Fixed rates have, on average, come down about 90 basis points. And values haven't risen. In fact, they've declined marginally. So, at the region level, the composite benchmark price is down a little under 2%. And for a first time buyer, that condo benchmark value is down about 3%. So, lower borrowing costs and similar to slightly lower-

Ryan Berlin: Mm-hmm.

Ryan Wyse:... home values means that affordability has improved at the margin.

Brendon Ogmundson: Yeah, and like, when we run long term, uh, simulations, we have like, a policy analysis model that we built, uh, and like, the, the trend is sort of like, over the next 10 years, affordability gets... I mean, it, it got a lot worse during the pandemic.

Ryan Berlin: Yeah.

Brendon Ogmundson: So it went up vertically, um, for whatever your measure is. In our, model, it went up from about, I don't know, 35, 40%, uh, mortgage payment income. It'll change, depending on the type of, you know, what rate you use, what income you use, whatever, to like, 60% of income. Uh, and then it's come down to, I don't know, low 50s with prices and rates. The real important thing is like, where does it go from here?

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: Um, and, and what we need to have happen is for incomes to outpace price growth. Like, say rates stabilize, whatever, between four and 4.5% on a five-year fixed rate. We need, uh, home prices to grow basically with inflation. Uh, over the last 40 years in the province, they've grown at like a 6% annual rate. If they keep doing that, they double every 10 years. W- we don't want that to happen. Um, compound interest really works against us in, in this, in this, uh, in this sense. So, what can we do to ensure that price growth is, is much slower over the next decade? Our models have it at 4% because we've, we're building a lot more than we used to. Like, I remember when I started in this job, a good year for housing starts was like 30 to 35,000. And now it's like-

Ryan Berlin: for the province.

Brendon Ogmundson: Yeah, for the province. And now it's like 40 to 45,000 for the province.

Ryan Berlin: Yeah.

Brendon Ogmundson: Um, so that we're building a lot more and that in our, in our estimates, is enough to bring long run average home price growth down to like 4%.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: But then incomes are only probably gonna grow like three and a half. And so, but you know, affordability gets steadily worse. Uh, how do we actually get it to... How do we bend that curve-

Ryan Berlin: Hmm.

Brendon Ogmundson: ... back down to where we were pre-pandemic? And it's really hard to do, uh, without a lot more supply and, uh, and, and slowing the rate of price growth. It doesn't mean prices have to fall.

Ryan Berlin: Mm-hmm.

Brendon OgmundsonThey just have to grow slower.

Ryan Berlin: That's right. Yeah.

Brendon OgmundsonUm, and you know, we've had periods like that. Post financial crisis in the Fraser Valley pri- or, or in the Okanagan, prices were flat for like eight years.

Ryan Berlin: For years.

Brendon Ogmundson: 'Cause we had a lot of supply. And even the Fraser Valley now, like-... supply is getting a little high.

Ryan Berlin: Yeah.

Brendon Ogmundson: Uh, so we could have pretty flat prices there as well. The real big problem in the housing market, especially in Vancouver, is like, an inability to match demand and supply in a timely fashion.

Ryan Berlin: Yeah.

Brendon Ogmundson: So we get periods, uh, where supply gets really low and supply of listings. Uh, and we have a demand shock that inevitably happen, totally out of our control, and prices rapidly accelerate. So like, we need consistent, a consistent supply of listings that we can absorb those types of demand shocks. And that's like, that's the real problem with the housing market is, is that it's really hard to match. Uh, you know, supply takes forever, demand's overnight, and like, it's really, we need to compress, uh, the, the, the timeline, the timing on supply so that it can better offset those demand shocks. And that's just really hard to do.

Ryan Berlin: It is hard to do. I mean, there have been, in BC, uh, recently, there's a, a, a pilot program was launched by the BC Financial Services Authority, which gives developers who are bringing towers to the market extra time to actually market and sell those towers and get to the point where they sell enough so that they can get their financing from their bank to actually start construction. So I think when we look at projects these days being a lot bigger than they used to be, up to 60% bigger than they were a decade ago when we look at multi-family-

Ryan Wyse: Wow. Yeah.

Ryan Berlin:... uh, towers that are coming to the market.

Brendon Ogmundson: That's why all the time to complete has been like, expanding and expanding and expanding.

Ryan Berlin: Yeah. The time to complete, it takes longer and longer.

Ryan Wyse: It also takes longer to get your permits too.

Brendon Ogmundson: Yeah. So by the time we have-

Ryan Berlin: Well, it's longer to get your permits, it's longer to sell.

Brendon Ogmundson: Yeah.

Ryan Berlin: And then it's longer to build. And so that timeline has, has been stretched out. So th- this pilot program has been launched, and hopefully it becomes, you know, more permanent than just a, a pilot. I think that's, a move in the right direction. But that's the source of most of our housing supply in, in a market like Metro Vancouver. It is that multi-family segment, and um-

 Brendon Ogmundson: That's like a, that's like a seven-year cycle.

Ryan Berlin: Yeah.

Brendon Ogmundson: Like-

Ryan Berlin: It is.

Brendon Ogmundson: ... imagine anything else if you're like, building a shed. You can be like, "Hey, almost done with that shed." Say, "Yeah, I got a few more years to go."

Ryan Berlin: Well, maybe by the-

Brendon Ogmundson: Just like, "Maybe by the time the kids are out-"

Ryan Berlin: (laughs)

Brendon Ogmundson: ... of high school, uh, we might have it done.

Ryan Berlin: Radical thought. Uh, why don't we build more like Paris and Barcelona? And we can look at... I mean, a lot of people won't like this. I mean, I mean, and, and listen, the, the, the provincial government has opened the door to it. I don't think there's a lot of takers right now. But we look at the, the, you know, 65% I think of the residential land in the city of Vancouver is zoned single family, something like that.

Ryan Wyse: Mm-hmm.

Ryan Berlin: Um, if we built into a lower density, but over a larger geographic area instead of concentrating intense density in these small nodes, we may see a more... May- may- maybe we would see a steadier supply of new homes in all market conditions too 'cause the problem right now is the demand isn't there to soak up all of the homes that are available. Inventory is at an all-time high in the-

Ryan Wyse: Mm-hmm.

Ryan Berlin: ... in the, in the new home segment.

Brendon Ogmundson: Did you read, I think it was Paul Beaudry wrote a paper for the City of Howe about like, we just need more cities.

Ryan Wyse: Yeah, more large cities. Yeah.

Ryan Berlin: I'm, I'm talking with him in a couple weeks-

Brendon Ogmundson: Yeah.

Ryan Berlin: ... to talk through that paper. I'm, I'm fascinated by it.

Brendon Ogmundson: It was pretty fascinating and like, you could argue in BC we're kinda doing like Richmond's gonna be kind of a like, big city. Surrey is gonna be bigger than the city of Vancouver. Like, we're... building more cities and they're getting... Burn- like, Burnaby, like, they're getting denser and denser and denser.

Brendon Ogmundson: So it's not like we have to only do it in the city of Vancouver, but like, can we also do that in-... Penticton. (laughs)

Ryan Berlin: Well, that's what I'd like to see.I think that's where it really matters.

Brendon Ogmundson: That's where it's like- Outside of the metro area, like, can we build up? Like, can we even build up Chilliwack like that? It seems unlikely.

Ryan Berlin: It seems unli- I mean, the jobs have to be there at some point.

Brendon Ogmundson: Yeah, so in some places they are, like-

Ryan Wyse: Because jobs, Penti- Penticton's almost as land constrained (laughs) as anywhere else.

Brendon Ogmundson: Yeah, exactly, right? Yeah, yeah. Well, even like some of the rules, like, I was in, I think it was in Vernon, and like even some of like the cookie cutter kind of zoning stuff, like you don't have to have parking. And it's like, well, they're trying to build this building in Vernon. It's like, they don't have any parking. It's like, well, where... Like, you can't go anywhere. (laughs)

Ryan Berlin: (laughs)

Brendon Ogmundson: It's Vernon. It's like, it takes like 45 minutes to get to Kelowna, and like there's not really, it's not like transit's gonna get you there.

Ryan Berlin: Well, that's why you need to match-

Brendon Ogmundson: You kinda need a car.

Ryan Berlin: Yeah, or you need, or you need to really invest in regional transportation infrastructure.

Brendon Ogmundson: Yeah.

Ryan Berlin: Public transit, to make it all work. So you don't have to build in one place.

Brendon Ogmundson: Yeah, I don't know. It's, it's a g- it's a really cool idea, and like it makes a lot of sense.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: But like, once you start like overlaying that onto a map of Canada, it's like, well, like where, where are these cities? Are there any jobs there? (laughs) Does anyone wanna live there?

Ryan Berlin: Yeah. (laughs)

Brendon Ogmundson: Is it too cold in some of these places?

Ryan Berlin: Yeah, yeah.

Brendon Ogmundson: Yeah, like there's a reason why we tend to, you know, congregate in the areas we have, 'cause it's really nice.

Ryan Berlin: Yep.

Awesome. Before we wrap up, if people, I mean, we talked about this at the, uh, at the beginning here. Your, a lot of what you produce, everything you produce is, is essentially publicly available.

Brendon Ogmundson: Yep, yeah.

Ryan Berlin: Um, so how can people access the work that you, the awesome work that you do all the time?

Brendon Ogmundson: Our, website, bcra.bc.ca. There's an economics tab. You can go there. All of our stuff is online. You can put in your email and have it sent to your inbox, uh, if you, if you want. I'm not really on any social media besides LinkedIn, but, uh, if you venture over to, to LinkedIn, uh, I don't think I've ever denied a request. (laughs)

Ryan Berlin: (laughs)

Brendon Ogmundson: So, please don't try to sell me anything. Um, um, but yeah, uh, I, that's really the only place I ever post, although it's, I don't know if you've noticed, like it's becoming a little too like Facebook. Not as bad since like Canada's like reunifying. It hasn't been as bad.

Ryan Berlin: (laughs) Thanks.

Brendon Ogmundson: But for a while it was- It was rough. So, um, but yeah, I post some stuff there, um, pretty, pretty regularly. Yeah, that's, if you're, if you're a brokerage or something like that, and you want me to come talk to you, you can send me an email or whatever.

Ryan Berlin: Do you really wanna do that?

Brendon Ogmundson: Not really. (laughs) I feel like yeah, all right.

Ryan Berlin: Fifty presentations is six months.

Brendon Ogmundson: All right, I might still do it. I do it a fair amount.

Ryan Berlin: 51.

Brendon Ogmundson: Probably too much, probably too much. But I do really enjoy it, like it's a really fun part of the job. Like, maybe not as much as I'm doing it right now, but it's, it's pretty fun to go out and talk to, talk to realtors and mortgage brokers in the construction industry and see what they have to say and try and make them laugh every once in a while with outdated cultural references.

Ryan Berlin: Well, I can attest as well to, uh, your effectiveness as a speaker. Very entertaining to listen to. Always very informative presentations, so take him up on the offer.

Brendon Ogmundson: I should say, we have actually a wealth of, uh, of talent in the, in the economics, like the real estate sector in BC. We got you guys. You guys do an incredible job. I'm gonna get him to mention Brian Yu for a third time. (laughs)

Ryan Berlin: (laughs) Brian Yu

Brendon Ogmundson: Because he feels, it feels like he was hot today. Uh, Andrew Liset at Bank of Realtime. And then I feel like Jens von Bergmann and all of our friends at CMHC. Uh, it's so well covered. Uh, Wendy Watters is amazing.

Ryan Berlin: Yeah, amazing.

Brendon Ogmundson: Like we have all these amazing people talking about housing.

Ryan Berlin: Mm-hmm.

Brendon Ogmundson: So we're kinda, we're kinda like-

Ryan Berlin: Also Brian Yu.

Well, awesome. Thanks for joining us today. Great conversation.

Brendon Ogmundson: My pleasure. It's been good. Thanks, goodbye.

Ryan Berlin: Yeah, thanks. (gentle music)

 __________________________

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