rebalancing act: how Canada's economy, debt, and housing market are finding their footing | Vancouver Landscape Fall 2025

The rennie podcast is about the real estate market and the people connected by it. Tune in for monthly discussions making sense of the latest market data.

EPISODE #80: REBALANCING ACT: HOW CANADA’S ECONOMY, DEBT, AND HOUSING MARKET ARE FINDING THEIR FOOTING | Vancouver Landscape Fall 2025

Join Ryan Berlin (Head Economist and VP Intelligence) and Ryan Wyse (Market Intelligence Manager & Lead Analyst) as they unpack the latest Fall 2025 rennie landscape—our semi-annual report on the factors shaping Canada’s economy and housing markets. From easing interest rates and rising household debt to a softening job market and record rental construction, the Ryans explore how stability is slowly returning after years of volatility, and what it could mean for buyers, renters, and investors in the months ahead.

Featured guests:

⁠Ryan Berlin, Head Economist and Vice President of Intelligence
⁠
Ryan Wyse, Lead Analyst and Market Intelligence Manager

Fall 2025 rennie landscape

About the rennie landscape

The rennie intelligence division has just released its semi-annual publication, the rennie landscape, which provides thoughtful, contemporary analysis of the myriad factors impacting the housing markets of Metro Vancouver, Seattle, the Central Okanagan, and Greater Victoria. The commentary in the rennie landscape is lively, and the insights are objective and data-driven. Key stakeholders in the real estate industry—including developers, realtors, commercial brokers, and institutional investors—rely on the rennie landscape for its succinct review of the latest trends that matter to our market.

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

Ryan Berlin:The labor market continues to be soft, we'll talk a lot more about that. Inflation has continued to moderate. How close are we to a recession? What's the driving weakness in the job market? Why the Bank of Canada is cutting rates again?

Ryan Wyse: Canadians aged 15 to 24 have now- have their highest unemployment rate outside of COVID in a decade.

Ryan Berlin: Could affordability possibly be improving?

Ryan Wyse: It is. So-

Ryan Berlin: Wow!

Ryan Wyse: You know, our forecast is actually for rents to continue to decline, uh, for the next couple of years.

Ryan Berlin: We could build a lot less, but we got to build them cheaper. Welcome to the rennie Podcast. 

Introduction: 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'll become a little more knowledgeable and a lot more curious.

Ryan Berlin: I'm Ryan Berlin, rennie's Vice President of Intelligence and our Head Economist. And this guy is Ryan Wyse, who is our, ah, Market Intelligence Manager and Lead Analyst, uh, in our intelligence department. So, this is a special semi-annual edition of the podcast where we review the latest insights that we developed as part of the rennie Landscape Report, ah, that's coming out this fall. Actually, by the time that you're watching or listening to this, it will be available at landscape.rennie.com/fall25. So, you can read the report before you listen to this podcast, it can be an amuse-bouche for this episode.

Ryan Wyse: [laughs]

Ryan Berlin: Or it can be a dessert, if you want to listen to this first and then go read the report. It's up to you. In a nutshell, Wyse, why don't you tell everyone what- what the rennie Landscape is, in case they don't know?

Ryan Wyse: Sure. Yeah, hopefully you already know because we've been doing this for a while, but it is our- it's really our signature report. We do it twice a year, spring and fall. And what's different about this one from so many other reports that we produce or, you know, different publications you might see in the market, is typically most real estate publications are focused on, you know, direct observable metrics happening in local real estates, sales, listings, prices, things like that. This one is all about external factors that influence local real estate. So it's kind of the bigger picture macroeconomic stuff. It's the economy, it's interest rates, it's credit and debt, demographics, other big factors that are happening either nationally, globally, provincially, that directly impact our local real estate markets, to better understand why things are happening, why is our market a bit slower right now?

Ryan Berlin: Mm-hmm.

Ryan Wyse:And- and why our market is behaving the way it is, to better understand where it is today and where it might be headed. So we've- we write it in individual sections, so you can jump in, you know, and read it front to back, back to front, or pick the topics that look most interesting to you. It's very digestible, the way it's sort of sectioned off, and it's written for- doesn't matter if you're a developer, an advisor or realtor, someone who works in the industry, someone who's just interested in local real estate, I think there's something for everybody there.

Ryan Berlin: Super. So let's dive in. You know, looking back over the past six months, needless to say, very turbulent.

Ryan Wyse: Very.

Ryan Berlin: And it's been a turbulent five years. But in the last six months, the world has really shifted in, ah, some surprising ways, some expected ways. But here within this market, for better and for worse, things have kind of stayed the course. So, housing market activity has picked up a little bit, but it's still most definitely subdued. The labor market continues to be soft, we'll talk a lot more about that. Inflation has continued to moderate.

Ryan Wyse: Mm-hmm.

Ryan Berlin: Um, it's in a pretty good place. But there are some implications for policy around, uh, interest rates based on where inflation sits today and where we think it's going, obviously. And- a- and certainly while the global economy and geopolitical dynamic is complex and- and still unresolved. I think there's a little less uncertainty here.

Ryan Wyse: Yeah. Peak uncertainty feels like it was last spring.

Ryan Berlin: Yes, in the spring.

Ryan Wyse: Yeah.

Ryan Berlin: Yes, it was maximum chaos.

Ryan Wyse: Yeah.

Ryan Berlin: So, in this episode, we'll unpack all of that stuff via the report that we have produced, and there's three themes that we want to explore. So the first is- is tied to the Canadian economy, how close are we to a recession? What's the driving weakness in the job market? So we'll look at those things, we'll then talk about the interest rate environment, why the Bank of Canada is cutting rates again, and obviously what that means for borrowers, and we'll talk a little bit about whether Canadians can, ah, can afford to take on more debt at this point. And then finally, ah, we'll look specifically at housing, we'll talk about the wave of new rental supply that's been coming against that backdrop of shifting immigration policy and new, ah, government initiatives that are reshaping the market for both buyers and for sellers, and I would also say for developers in the new home space. So, let's dig into the data, and you can tell us what's going on here. Um-

Ryan Wyse: What is going on?

Ryan Berlin: What is going on? 

Ryan Wyse: Yeah [laughs]

Ryan Berlin: So, le- let's talk about the economy to start and the labor market. A bit of a downer, um, this has been a drum that we beat for, I mean, the last couple of years now.

Ryan Wyse: Mm-hmm.

Ryan Berlin: Um, it's been a- a consistent theme. How would you describe the state of- th- the current state of the Canadian economy? And can you tell our listeners and watchers whether or not we're in a recession?

Ryan Wyse: So, what's that meme, uh, "Not great, Bob"? Um, I think it's from- 

Ryan Berlin: What meme is that? I don't-

Ryan Wyse: I think it's from Mad Men. Anyway, not great, it would be my answer, the Canadian economy, not great. So yeah, the Canadian economy is not doing great, and I think- Mm-hmm ... if we think back to our landscape episode from six months ago, we talked at length about how we hadn't seen this much labor market deterioration outside of a recession before in Canada. This time around we looked at changing unemployment, the number of people, ah, unemployed, not unemployment rate, and how much has grown over the past six months. And so to get the most recent data we  looked from February to August, and then back six-month periods, going back 100...... six-month periods[laughs] ... roughly.

Ryan Wyse: Um, 'cause that's how long we've had the labor force survey in Canada.

Ryan Berlin: Mm-hmm.

Ryan Wyse: And if we measure the growth in unemployment, um-

Ryan Berlin: Number of unemployed people.

Ryan Wyse: Yeah, so the growth in the number of unemployed people within the labor force, the last six months is the ninth most, going back to the 19- mid-1970s-

Ryan Berlin: Mm-hmm

Ryan Wyse:... when the labor force survey started. Of the eight periods that were higher, one was last year when we had this rapid, rapid population growth and job growth that couldn't keep up.

Ryan Berlin: Right.

Ryan Wyse: So, we had a whole bunch of people entering the labor force who weren't finding jobs. The other seven-

Ryan Berlin: Mm-hmm

Ryan Wyse:... were pretty bad recessions.

Ryan Berlin: Right. 

Ryan Wyse:So, it was 2020, 2008, early '90s, early '80s, late '70s, like, all the, the sort of the big recessions over those periods. What's interesting about this one, currently not in a recession. Although, that might actually, that box might be checked off later because we know we had negative GDP growth in Q2. We now have July-

Ryan Berlin: Yeah 

Ryan Wyse:... GDP data, which is positive, small positive.

Ryan Berlin: Mm-hmm. Mm-hmm.

Ryan Wyse: But we also have two months of job data for Q3, which is July and August, where we shed a hundred thousand jobs. We also, we just got, um... Was it July or August? Trade data out this morning? August. So, as of this morning, as of recording, we just got, um, August international trade data for Canada. So, our trade deficit, imports held steady-

Ryan Wyse: Mm-hmm

Ryan Wyse:... and exports declined.

Ryan Berlin:Mm-hmm.

Ryan Wyse: So, that will have an impact on GDP for Q3 as well if that continues. 

Ryan Berlin: Yeah, that'll be a drag on it. I mean, that'll pull it down.

Ryan Wyse: Yeah, so one, one of the things we talked about in the landscape is how, how much volatility in our trade has impacted GDP. And so there was some tariff front-running in Q1.

Ryan Berlin: Mm-hmm.

Ryan Wyse: We've talked about this in the podcast before, but essentially, US businesses were loading up on imports from Canada and other countries in Q1, and then they weren't importing nearly as much in Q2 when tariffs started to kick in. And so, that impacts our GDP numbers, uh, just given the way that the, uh, US companies are, are dealing with their imports. It's probably starting to steady a little bit now-

Ryan Berlin: Mm-hmm 

Ryan Wyse:... but we're still dealing with, uh, some tariffs and some barriers, yeah.

Ryan Berlin: Well, and some new tariffs as well- 

Ryan Wyse: Yeah [laughs]

Ryan Berlin: ... on, on lumber and on some other f- finished products, um, house furnishings-

Ryan Wyse: Oh, like cabinetry, yeah

Ryan Wyse:... cabinetry.

Ryan Wyse: Yeah, and that, that has a big impact on BC.

Ryan Berlin: Yeah.

Ryan Wyse: So, so far a lot of the tariffs that have gone into effect, the sectorial ones like steel, aluminum, auto, really impact Ontario-

Ryan Berlin: Yeah

Ryan Wyse: ... and to an extent, Quebec. Um, but lumber tariffs will be a big problem for us here in BC.

Ryan Berlin: So obviously, that, I guess, lack of clarity around our trading relationship with the US and the tariffs more specifically have created an air of uncertainty. And we know that businesses in Canada aren't inve- investing in, uh, machinery and equipment the way that they had been previously.

Ryan Wyse: And people.

Ryan Berlin: And people as well. But it's not all, it's not all tariff-driven or all, you know, trade-driven, what we're seeing in, in the labor market, the slowdown. So, we know that there's been a, you know, very perceptible rise in the number of, uh, unemployed people and the unemployment rate. What is driving that?

Ryan Wyse: Um-

Ryan Berlin: What's beneath the surface there? 

Ryan Wyse: I think it's a few things. So, we've, we've had a period of poor productivity in Canada for quite a while. We've had now pretty high interest rates, uh, that have just kinda come back to neutral, um, earlier this year. And we've also done this 180, we'll talk about it a bit more later, with immigration policy where we're now, we're seeing a net decline in non-permanent residents. So, our labor force, uh, that has impacts on our labor force.

Ryan Berlin: Mm-hmm.

Ryan Wyse: And so one of the particularly affected groups are young Canadians aged 15 to 24 have now, have their highest unemployment rate outside of COVID in a decade. But that unemployment rate is actually coming at the same time that their labor force participation is falling. And so, not only are those young people in the labor force having trouble finding jobs, there's more young people just not even engaging with the labor force at all. And so, the employment rate, the share of all young people working has fallen, uh, by about three percentage points over the last couple years.

Ryan Berlin: Yeah, on a, from what to what? Do you have the numbers?

Ryan Wyse: I do have those numbers. Um, employment rate for those aged 15 to 24 has fallen from 59.6% to 53.8%, so six percentage points over the last couple years.

Ryan Berlin: Right, on a base of less than 60%. So, we're talk- we're, that's, that's like a 10% decline.

Ryan Wyse: Yeah, it's pretty substantial.

Ryan Berlin: How are economic conditions currently impacting, uh, consumer confidence and, uh, spending?

Ryan Wyse: So, consumer confidence r- really plummeted in the spring of this year, and obviously a big part of that was uncertainty around tariffs. So, we, like we just said, we have a little more clarity. The effective tariff rate on Canadian exports to the US is, like, 3%. Most of our goods are protected by our current free trade agreement, uh, CUSMA. But it's still all of this noise has had an impact on consumer confidence, a- along with, you know, a tough job market. That directly affects consumer confidence as well. So, it's rebounded a little bit since April, but it's still lower than it was in 2020. Still one of our lowest levels over the past decade, even though it's now risen for the last three or four months. That said-

Ryan Berlin: Mm-hmm

Ryan Wyse:... um, retail sales have actually held up this year. So, they're up year over year through the first eight months of the year, um, I believe 5% nationally.

Ryan Berlin: Yeah, and so, so some of that could be that Canadians are, are traveling closer to home-

Ryan Wyse:Yeah

Ryan Berlin: ... staying within Canada and just spending money here... to an extent that they, we weren't before, because we were, we were elsewhere.

Ryan Wyse: Yeah, if you look at, uh, day trips by car or car trips and air trips ... combined, Canadians year to date have, like, five million fewer trips-

Ryan Berlin: That mean-

Ryan Wyse: ... than this Right ... through the same period last. So, they're, they're also traveling more abroad. So, some of that, you know, is people canceling, you know...  a sun trip to the US and going a bit further to the Caribbean or, or something like that. But some of that money's staying at home.

Ryan Berlin: I think that's something to watch, too. Retail sales, consumer spending, it's a big component of GDP. So, to the extent that we care about GDP or we wanna answer the question, are we in a recession right now? Tough to say. I mean, we need a couple more, uh, months to be able to answer it until the actual data for Q3 is available. But that consumer spending softening... going forward, retail spending softening is a real possibility with the labor market, you know, evolving the way that it is with more, more unemployed people and job growth that's obviously gone negative the last couple of months. So, obviously, the economy is still in a, um, I would say precarious position. And so, a- as we pivot to interest rates, why don't you tell us about your perspective on the Bank of Canada, their take on the economy, where rates might go, and then I'll tell you if

Ryan Wyse: [laughs]

Ryan Berlin:... agree or disagree.

Ryan Wyse: Okay [laughs]. So, the Bank of Canada, we always need to remember their sole mandate is stable controlled inflation. So that 2% target, staying within 1 to 3% annual inflation, that is their, their sole mandate, unlike other countries like the US which has a dual inflation employment mandate.

Ryan Berlin: Mm-hmm.

Ryan Wyse: The Bank of Canada, um, if you read their releases, if you read their, their monetary policy reports, they're also concerned about the state of the economy right now and that's one of the reasons that they lowered their policy rate in September-

Ryan Berlin: Mm-hmm 

Ryan Wyse:... to 2.5%. They are explicitly stating they will help to support economic growth through monetary policy as long as inflation stays in check because that's what they care most about. So, I believe rates need to go lower to a point where they're expansionary. So the bank estimates their neutral range where rates are neither expansionary nor restrictive to be between 2.25% and 3.25%-

Ryan Berlin: Mm-hmm 

Ryan Wyse:... for their policy rate. They were right smack in the middle heading into fall at 2.75.

Ryan Berlin: Mm-hmm.

Ryan Wyse: They've now lowered to 2.5. I think they need to go lower again and get into a point, get, get their policy rate to a point where it's expansionary.

Ryan Berlin: Ah, okay. So, so what does that mean then for you?

Ryan Wyse: So for me, that's coming to finishing this cycle at either 2% or 1.75, somewhere around there where they get, you know, call it two, three more cuts-

Ryan Berlin: Mm-hmm

Ryan Wyse: ... and we start to have a slightly expansionary policy rate. We also get-

Ryan Berlin: Yeah

Ryan Wyse: ... a new federal budget i- in early November. The bank's gonna wanna see, you know, the details on that. Of course, a federal budget can, can be inflationary depending on how much borrowing and spending the government does. They can also support some of the stuff through fiscal policy. So, you know, they'll wanna take in that information as well. So, we'll see how that goes.

Ryan Berlin: Yeah, there's a lot of moving parts right now. I generally agree with you.

Ryan Wyse: Okay, great.

Ryan Berlin: I do, so one thing I'll say is, I think there is like some resistance to the idea that the bank might cut be- below 2.25, right? The bottom end of their neutral range, for whatever reason. Um, like if you looked at the forecasts, e- even up until the last cut, you didn't see too many-

Ryan Wyse: Mm-hmm

Ryan Berlin:... that envisioned a like sub-2% policy rate, you know, in the new year. I don't think we're gonna get to sub 2% by the end of this year. I, I do think we're gonna need to move to a situation where expansionary policy is needed. There's so much, there's so many headwinds facing the economy right now. There's a lot of disinflationary inertia when you look at population change and, you know, what is likely to be population loss this year, next year. Spending that, yeah, it's up right now, but let's, let's keep an eye on that. We don't have resolution around our trade agreement with the United States. We don't know what that's gonna look like-

Ryan Wyse:Mm-hmm

Ryan Berlin:... that just carries with it a degree of uncertainty that is going to keep players, participants, market participants, whether it's, uh, it's an individual who may be looking to buy a home or it's a business that maybe wants to expand its physical footprint or, yeah, in some way wants to grow or evolve, but, you know, is not making that decision to invest now because what does the landscape look like going forward?

Ryan Wyse: But from an inflation perspective, we did get a little more clarity. So, US tariffs on Canadian exports generally raise prices in the US. Canadian counter-tariffs on US exports generally raise prices in Canada.

Ryan Berlin: Mm-hmm.

Ryan Wyse: And so by taking off most of our counter-tariffs-

Ryan Berlin: Yeah

Ryan Wyse:... in September, that removes one of the inflation, inflationary pressures that came with this trade disagreement.

Ryan Berlin: Just, just to sort of draw a line under this, I, I think that, um, yeah, I think there's, there's definitely room. I think the, the bank's policy on inter- on, on its policy rate [laughs]-

Ryan Wyse: [laughs]

Ryan Berlin:... that's how that works, is going to evolve in line with the data.

Ryan Wyse: Mm-hmm. 

Ryan Berlin: So if we continue to see a labor market that is devolving the way that it has been, that trajectory doesn't change, you know, we'd get many more quarter point cuts before we reach bottom. So may- maybe that's a silver lining for the economy and for our housing market, but it also comes with the caveat that if we end up there, we probably have a lot more people who aren't working. So, lower rate, I think there's very few people who would be up- upset by that 'cause we've already see- we've seen rates come down over the last little while. How is that impacting debt levels? Like are people... Do we see confidence in the data like households are willing to carry more debt because it's less expensive?

Ryan Wyse: So households have taken on more debt this year, Canadian households. Well, this is quarterly data so we have it through Q2. They took on more debt in the first six months-

Ryan Berlin: Mm-hmm

Ryan Wyse:... of this year than the first six months of last year. This is kinda seasonal so it wasn't quite as much borrowing as the second half of last year, but you, you generally don't get a lot of borrowing in Q1 so that's part of the reason why. And most of it is mortgage debt and it's probably, you know, less so this market where w- we didn't have much of a spring market at all. But Canadians took on substantially more mortgage debt in the first half of this year than the first half of last year which kinda makes sense with rates being lower. People can afford to borrow more. Their purchasing power goes up with lower rates. And so we are seeing at the margin, borrowing has increased. So the first half of this year was higher than the first half of '24, the first half of '23, but not '22 when rates were still-

Ryan Berlin: Mm-hmm

Ryan Wyse:... quite low. So we can see that-

Ryan Berlin: Mm-hmm

Ryan Wyse:... you know, borrowing, the amount of net new credit being taken on is pretty directly tied to where interest rates are.

Ryan Berlin: For sure. You know, uh, something just crossed my mind and this is not, I'm not playing for the camera here.

Ryan Wyse: [laughs]

Ryan Berlin: Because I don't know if we have the data, is I, I wonder how much of that increase in mortgage debt reflects, um, debt consolidation and refinancing rather than simply renewing.

Ryan Wyse: So there wasn't an increase in non-mortgage debt, which is where HELOCs- 

Ryan Berlin: So I'm-

Ryan Wyse:... are categorized.

Ryan Berlin: There's an increase there too?

Ryan Wyse: Pretty small and not as much as last year.

Ryan Berlin: Mm-hmm.

Ryan Wyse: So it's not people consolidating debt into HELOCs or maybe into their mortgages. 

Ryan Berlin: No, they're bring... Right. Yeah.

Ryan Wyse: Yeah.

Ryan Berlin: Something to consider because that will make sense on paper-

Ryan Berlin: So, bottom line debt is, is increasing.

Ryan Wyse:Mm-hmm.

Ryan Berlin: And the logical, like where one's mind goes, is that, like is that okay? Can Canadian households handle it?

Ryan Wyse: Yeah.

Ryan Berlin: So, what do you know? 

Ryan Wyse: And so, the amount of debt being taken on, like, it's not the best way necessarily to measure whether or not... that's healthy. And so, we can look to debt service ratios, which is the share of income that Canadians are spending to service their debts, which ticked up a little bit in Q2. It's less, it kind of peaked in 2023, combination of, you know, high rates and high prices. 

Ryan Berlin: Mm-hmm. 

Ryan Wyse: Um, it's come back a little bit. It's, so it's elevated historically, but not as high as it was in 2021. So, the overall debt service ratio in Canada is like 14.4%. It's sort of, you know, if it keeps trending back up, it's a concern. But I think the level it's at right now, with rates coming down, and we expect rates to continue to come down, as we just said, I don't think it's too much cause for concern right now. We can also look to the mortgage arrears rate, which is the share of borrowers who are 90 days or more behind on their payments.

Ryan Berlin: Mm-hmm.

Ryan Wyse: These numbers are always minuscule in Canada. So, the national rate, 0.23%, which sounds really, really low, and it is. It's come up from a, a low of 0.14%. So, it has increased a lot over the last couple of years. This 0.23% number, this is pre-pandemic, that was the record low-

Ryan Berlin: Mm-hmm

Ryan Wyse:... that we'd ever seen-

Ryan Berlin: Yeah

Ryan Wyse:... in Canada. So, it's not a concern yet, but the direction of the trend is-

Ryan Berlin: Right

Ryan Wyse: ... something to keep an eye on. So, this is one we're gonna be watching for the next little while to see if it, if it increases as more of those pandemic-era, era borrowers renew their mortgages. 

Ryan Berlin: So, I think rightfully so, there's always a focus on, on the cost and debt side of the ledger. It matters a lot how much we owe, or how much stuff costs and how that's changing from a, just a, a broadly speaking affordability perspective. So, I'm not gonna go on a tangent here, but I just wanna say that I think we've almost been allergic, here in BC and across Canada, I think, for the past couple of decades, to the idea that maybe we could be richer, or wealthier, right? Because we look at these debt burdens. We look at the cost of buying a home, which largely [laughs] reflects the cost of building a home, when we're talking about the new home segment. And, and rightfully so, we're trying to control these costs. We don't, we don't want it to run away on us. That, that applies equally to provincial and federal government budgets. But yeah, we've gotta figure out a way to earn more money, because if we can earn more money, it, it really, it solves a lot of these issues, which maybe aren't huge issues yet, but could be, um-

Ryan Wyse: And the best way to do that? Increase productivity.

Ryan Berlin: Increase productivity, uh, invest in productive assets, and yeah. I mean, we need a more efficient tax system. We need dependable trade partners and relationships. There's a lot of things. We need to increase our capacity to move our natural resources across the country and to other countries. So, anyway. We won't get into, into that anymore. So, there are some things there to, not red flags, but things to keep an eye on. Let's drill down and focus more on housing and housing in this market, which is metro Vancouver. In a nutshell, what are we seeing in the market right now? And this seems like a crazy question to ask, but I know the data, so I know it's not that crazy.

Ryan Wyse:[laughs]

Ryan Berlin: But could affordability possibly be improving?

Ryan Wyse: It is.

Ryan Berlin: Wow.

Ryan Wyse: So, great place to start, we know that interest rates dramatically increased in 2022 and piqued in 2023.

Ryan Berlin: Mm-hmm.

Ryan Wyse: Prices peaked around the spring of 2023. And so, if you look at the last three years, so the most recent data we have is for August, benchmark prices, they're my preferred way of measuring price changes over time. So, you can compare us to three years ago, so August 2022. If you use variable interest rates, so if, let's say you had a variable rate mortgage, so if you look at variable interest rate and price changes over the last three years, so August 2022 to August 2025 using benchmark prices, which I think is the best way to measure prices over time, we had a, a large deterioration in purchasing power or affordability from August '22 to August '23. And then it kind of peeled back a little bit, it got a little bit better over the next year to 2024.

 Ryan Berlin: But it was still, affordability was worse in, uh, uh, in August of '24 versus two years earlier.

Ryan Wyse: By a lot.

Ryan Berlin: By a lot.

Ryan Wyse: Because rates were still so much higher.

Ryan Berlin: Right.

Ryan Wyse: So, even though prices started to come down-

Ryan Berlin: Yeah

Ryan Wyse:... rates were so much higher. Since then, prices have come down a little bit more. So, you know, not a lot. Prices are still higher today than they were pre-pandemic-

Ryan Berlin: Mm-hmm

Ryan Wyse:... by quite a bit, but they've come down enough. The combination of all those Bank of Canada rate cuts and some, a little bit of price softening, your purchasing power using, like, a fixed mortgage payment, is better today than it was in August of 2022, which is actually a pretty remarkable change over the last year.

Ryan Berlin: I mean, that's just not something that we've seen. Like, you go back five, 10, 20 years, we saw, generally speaking, interest rates that came down.

Ryan Wyse: Mm-hmm. 

Ryan Berlin: But at the same time, prices that were going up.

Ryan Wyse: Yeah.

Ryan Berlin: And the, the price effect was swamping the interest rate benefit. I mean, that's good news. And that says, you know, not everyone is going to look at the market today and say, "Oh, yeah, no. It's, it's, it's, from an affordability perspective, you know, we've got this thing, we've got this nut cracked." Like, in, in Vancouver, no we don't. Housing's still very expensive. But at the margin, there's an improvement there, which is, which is good. And we're seeing that in the-... uh, for sale space. We're also seeing it in rental, and we have been for the past 18 months or so.

Ryan Wyse: Yeah, so rents really accelerated sort of post-pandemic. Rental rates really went up coming outta the pandemic, uh, as the world kinda opened back up again. And in Canada, we brought in, uh, record numbers of, uh, immigration, non-permanent residents, uh, kind of at the same time.

Ryan Berlin: Who, who are overwhelmingly renters.

Ryan Wyse: Yes.

Ryan Berlin: And at the same time, just to re- reiterate what you said earlier, we had home prices that reached all-time highs in the spring of '22. We had interest rates that hit a generational high a year later, and that created a lock-in effect in rental as well-

Ryan Wyse: Mm-hmm

Ryan Berlin: ... because it was harder for people who were renting and were interested in buying in making that move at that time.

Ryan Wyse: So, uh, rents peaked, rental rates peaked a bit later in this market than prices did, but they've now been coming off as well. And so we've seen, you know, asking rents, average asking rents at, for available homes in the rental space, both on the new purpose-bu- built rental side or in the advertised space, you know, existing homes-

Ryan Berlin: Mm-hmm

Ryan Wyse:... whether they're purpose-built or condos in the secondary market, we've seen those rents come off quite a bit over the last 18 months or so. And, you know, our forecast is actually for rents to continue to decline, uh, for the next couple of years as so much new supply comes on board at the same time that we have this shift in, in policy around temporary residence.

Ryan Berlin: Right, and that, again, like looking forward, if we're looking at a for-sale market that isn't robust, where we don't have a lot of upward pressure on prices- 

Ryan Wyse: Mm-hmm

Ryan Berlin:... you know, soft labor market aside, if we see sort of a modest increase in, in earnings over the next couple of years as well, if, if ownership is more affordable over the next couple of years against that backdrop, the demographic and, and supply backdrop for rental, that, that, that's sort of reinforcing there too. That segment of the market's gonna be a little bit softer-

Ryan Wyse: Mm-hmm

Ryan Berlin:... for the next couple of years. Although I will say, we do expect it to rebound, you know, starting in 2027. And, you know, to the extent that we see continued population growth from that point going forward, and we're gonna see a bit, you know, reduction in the construction pipeline as product gets completed and we see fewer starts, the rental market's going to tighten up again. 

Ryan Wyse: Mm-hmm.

Ryan Berlin: And all of that kind of reflects... I mean, there's some implicit policy impacts folded into all of these dynamics from, from past years, but from where we are now, looking back over the past few months and looking ahead, are there any... And we're talking about government policy, are there any changes to policy that could impact housing construction-

Ryan Wyse: Mm-hmm

Ryan Berlin: ... so giving us more or less, and, and the ownership side of the market as well?

Ryan Wyse: Yeah, so at the federal level, I think there's a couple we need to keep our eye on. The first is this Build Canada Homes program.

Ryan Berlin: Great name.

Ryan Wyse: So still fairly-

Ryan Berlin: Like homes for people.

Ryan Wyse: [laughs] Yeah. Homes for a country.

Ryan Berlin: Who comes up with this stuff?

Ryan Wyse:We're, uh, we're still pretty light on details. I think they made one announcement, they're gonna do some projects in some other provinces, nothing in BC. So the federal government will be a financial partner, they'll bring in private developers as well. They want to use a combination of federal land, similar to BC Builds-

Ryan Berlin: Mm-hmm

Ryan Wyse:... in that respect. They also wanna focus on modular construction, mass timber, ways of being more productive in construction space, which I think is interesting. Uh, and there's potentially some gains to be made there.

Ryan Berlin: There are, and I will, I'll just jump in.

Ryan Wyse: Sure.

Ryan Berlin: I'm gonna-

Ryan Wyse: Yeah, yeah

Ryan Berlin:... interrupt your s- your s- your train of thought.

Ryan Wyse: [laughs]

Ryan Berlin: I'm sorry. But the, you know, talking to developers, people within the industry, like, I, I, I mean, as it stands right now, this initial, uh, foray, uh, by Build Canada Homes is fairly limited in scope overall. Uh, but also I think pursuing modular, off-site, prefab construction makes sense on paper. It's interesting talking to, uh, a number of developers, um, I would say more traditional, like on-site builders-

Ryan Wyse: Mm-hmm

Ryan Berlin:... there. And I don't think... This isn't coming from a place of, "Hey, this is a threat." It's, yeah, where the technology is right now, and, um, you know, the, the fact that you need a consistent pipeline of customers for this product, and you have to be able to locate it fairly close. From what I understand, you've gotta be within about a day's commute-

Ryan Wyse: Mm-hmm

Ryan Berlin: ... to the site, between the site and your-

Ryan Wyse: You're talking about huge pieces of material, right?

Ryan Berlin: Huge, huge.

Ryan Wyse: Yeah.

Ryan Berlin: It's a lot to be moving around.

Ryan Wyse: Yeah.

Ryan Berlin: So there's still some barriers to this approach being fully sort of adopted and integrated to the point where it, it's materially increasing supply. But we gotta, we gotta explore it.

Ryan Wyse: Yeah. And, you know, we have, uh, challenges with skilled labor and construction as our, our construction labor force, like our labor force, is aging into retirement.

Ryan Berlin: Mm-hmm.

Ryan Wyse: Uh, and we don't have the same pipeline of people that we need in order to meet demand. So, there is a huge... constraint there with labor. The Build Canada Homes Program, the new federal government has a target of increasing housing starts, all housing starts nationally, to 500,000 a year, which is, you know, I think a theoretical [laughs] impossibility with our current construction labor force. Even if we make some of these productivity gains from modular, off-site, mass timber, any of that stuff, the, like, this target is beyond anything that I think is achievable. So, I think there's some, some good initiatives here, but ultimately, I think 500,000 housing starts is unachievable. We have not hit 250,000. Um-

Ryan Berlin: It's frankly quite absurd-

Ryan Wyse:Yeah

Ryan Berlin:... as a policy goal.

Ryan Wyse: But we also probably don't need that many. Like, we, [laughs] we are as big of advocates in this room as anywhere for increasing housing construction. You know, we think we need to build far more homes than we're currently building to have an adequate supply of homes. And even then, I don't think 500,000 a year is necessarily where we need to go.

Ryan Berlin: We could build a lot less, but we gotta build them cheaper to meet the market where it's at.

Ryan Wyse: Um-

Ryan Berlin: Developers don't... They are price takers, right? Like, they don't set the price that the market pays, especially in a, a new home market like Vancouver, where it's... The landscape of development's very fragmented. You don't have players that take up a-... a sizable share that can, you know, could really influence prices.

Ryan Wyse: Mm-hmm.

Ryan Berlin: So, it's the bottom-up cost, uh, to build that is really problematic now. And I think, like, we gotta- we gotta get that under control.

Ryan Wyse: Agree. 

Ryan Berlin: And- and that on its own will help expand supply. Maybe not to 500,000 a year in Canada. Anything else you want to add?

Ryan Wyse: Yeah, one more policy. Um, it's getting less attention, but I think it's noteworthy, is the changes to the MLI Select Program-

Ryan Berlin: Mm-hmm, yeah

Ryan Wyse: ... which is a CMHC program. Essentially, uh, a s- it- it's a way to give mortgage financing for new purpose-built rental construction.

Ryan Berlin: It's insurance.

Ryan Wyse: Yeah. So, it is d- not that different from, like, if you wanted to get mortgage insurance on your home through CMHC, but this is for construction of a new, uh, apartment building. There is a whole bunch of criteria to meet in order to get this insurance, but then it allows you to get a lower rate because you have an insured mortgage and-

Ryan Berlin: Mm-hmm

Ryan Wyse:... it offers, uh, longer amortization periods.

Ryan Berlin: Yeah, and the ability to, uh, carry a higher loan-to-value ratio.

Ryan Wyse: It offers a lot more flexibility to a purpose-built rental developer, and it's been hugely successful in terms of how much uptake it's- it's had. So in 2024-

Ryan Berlin: Mm-hmm

Ryan Wyse:... there was 179,000 homes insured under this program, which at various stages of construction.

Ryan Berlin: Right, yeah.

Ryan Wyse: Um, but like we just said, you know, w- we have fewer than 250,000 total housing starts.

Ryan Wyse: Yeah.

Ryan Wyse: And this is, you know, these are apartment rentals that are being brought to market this way. So the changes to the program, they've tightened up some of the requirements. There's more criteria to meet for, like, ESG goals. So whether it's building code, accessibility, environmental, there's some additional cr- uh, a point system criteria to hit. Overall, I think it will make it harder for developers to get their MLI Select mortgage insurance, so fewer will get it. And I think overall, the tightening up of this criteria means less new rental construction coming to market than there otherwise would have been.

Ryan Berlin: That's how you do it. You have a policy that works so well that everyone's using it, so you have to pull it back.

Ryan Wyse: [laughs]

Ryan Berlin: You gotta make it tougher.

Ryan Wyse: Tighten it up.

Ryan Berlin: Well, great. Um, lots of really good perspectives, um, on the economy and the market from you. You being the primary author of the, uh, Fall 2025 rennie Landscape. So this is a lot of fun to do. I guess, big takeaways, the economy is softening. Uh, the labor market could be in better shape. But on the positive side of things, inflation has been, you know, below 2% for how many months?

Ryan Wyse: I believe- E... it's up to five months below 2%. Below 2%. And more than 20 at below 3%, so within the range.

Ryan Berlin: Yeah, which is great. So this is, uh, we haven't been in this kind of scenario since pre-COVID-

Ryan Wyse: Mm-hmm

Ryan Berlin:... as it relates to inflation. We've got interest rates, uh, coming down. We have, in this market, housing that is a little bit more affordable than it has been. Actually, a- a lot more affordable than it was over the past couple of years, but even more affordable than it was going back as far as three years. We also, and we didn't talk about it here, but, you know, on the housing front, there's, uh, still a, uh, I would say a record high in homes that are available for purchase, both in resale and in the presale/newly-built home segment.

Ryan Wyse: Mm-hmm.

Ryan Berlin: So buyers have- have choice that they haven't experienced in decades. 

Ryan Wyse:And a lot of those homes are completed, so for a lot of buyers, it's a little easier to buy a new home when it's actually built and ready to go versus, you know, the presale space where you might need to wait a while to get your home delivered.

Ryan Berlin: Absolutely. Awesome. Well, thanks, Ry, for doing this.

Ryan Wyse: Thank you.

Ryan Berlin: Lot of fun, as always.

Ryan Wyse: Yes.

Ryan Berlin: Um, if you're watching or you're listening, thanks for doing so. We really appreciate it. If you'd like to read the latest edition of The rennie Landscape, it is at landscape.rennie.com, and we look forward to doing this again in six months. 

Thank you for joining us on The rennie Podcast. If you'd like to learn more or to subscribe to intelligence updates, go to rennie.com/intelligence.

 The rennie podcast was created as another way of sharing our passion for homes, housing, community, and cities. We hope that this will spark the same curiosity in you that we have for everything real estate.

Our rennie intelligence team comprises our senior economist, market analysts, and business intelligence analysts. Together, they empower individuals, organizations, and institutions with data-driven market insight and analysis. Experts in real estate dynamics, urban land economics, the macroeconomy, shifting demographics, and data science, their industry-leading data acquisition, analytical systems, and strategic research supports a comprehensive advisory service and forms the basis of frequent reports and public presentations, covering the Vancouver, Kelowna, Victoria, and Seattle marketplaces. Their thoughtful and objective approach embodies the core values of rennie.