the 2025 rennie outlook (and more!)

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 #71: THE 2025 RENNIE OUTLOOK (AND MORE!)

In this episode, Ryan Berlin, Head Economist and Vice President of Intelligence, and Ryan Wyse, Market Intelligence Manager and Lead Analyst, are joined by rennie advisor Brad Allison. Together, they discuss how Vancouver's housing market wrapped up 2024 and share their insights on what lies ahead for the year to come.

Featured guests:

Ryan Berlin, Head Economist and Vice President of Intelligence

Ryan Wyse, Lead Analyst and Market Intelligence Manager

Brad Allison, rennie advisor

Additional reading:

the 2025 rennie outlook

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: Hi again everybody. I'm Ryan Berlin, rennie’s head economist and vice president of intelligence. 90° to my right is Ryan Wyse, rennie’s market intelligence manager and Intel's lead analysts, and 180° to my right and to my left is Brad Allison, one of  rennie’s extraordinary advisors. Welcome gentlemen.

Ryan Wyse: Hello 

Ryan Berlin: Good to see you again. Rye. Brad, welcome.

Brad Allison:  Ryans an absolute honor. I listen to this all the time, so here I am, yeah.

Ryan Berlin: I'm sorry to hear that. Today, we're going to talk about the past and the future, starting with Metro Vancouver's resale market and how it fared to close out 2024 and hint hint the dynamics of our market did change towards the end of last year.

Ryan Wyse: They did.

Ryan Berlin:  And then we'll share some economic and housing market forecasts for 2025. And I should note that the little plug here the predictions will share today, along with a number of other predictions, that we won't necessarily talk about today will all be available in the 2025 Rennie Outlook report, which will be available on rennie.com/intelligence on January 31st before we get stuck in here, Brad, you joined rennie, about 3 years ago.

Brad Allison: This June will be three years. That's correct.

Ryan Berlin: Coming up on your anniversary, why don't you share a little bit about your journey to becoming a realtor and then why you joined rennie?

Brad Allison:  So I've been like I said, coming up to three years this June, I've been licensed realtor for about 8 years. Previous brokerage was Angell Hasman. I would say large part of my working history is within the hospitality, about 12 years in restaurant management, used to work at Cactus Yaletown, the Keg and Earl. So I'm born to serve, I guess here guys.

Ryan Wyse:  I like that

Ryan Berlin: So born to serve.  Why become a realtor, of all things?

Brad Allison: My dad's actually been a realtor for 30 plus years. My sister's getting her license.

And I guess,  Needless to say, I never really had a chance, right?

Ryan Berlin: Well, we're glad you're here.

Brad Allison: Thank you so much guys.

Ryan Berlin: So we've had a meaningful, I think start to the year. We have a we. There is a new US administration that's taking the reins or that has taken the reins, I should say in south of the border on January 20th, up here, more uncertainty. We're not sure who will be governing us through the balance of this year.  looks like we're gonna have a spring election how are both of you feeling about it?

Ryan Wyse: Feeling a lot of feelings. There's a lot going on. I mean, Parliament is prorogued, we have a PM, who is stepping down.  We think we have a leadership race and then we will have an election. So there's a lot just going on the Canadian front and then with the US, New USA administration we have maybe the most hostile new US government, certainly in our lifetimes, probably more than a century.

Ryan Berlin: Yeah, that's a fair comment.

Brad Allison:  Yeah, well, I have to admit, I haven't really been super into politics until the past year, year and a half. And I've been pretty much diving into it pretty heavily. And just to reiterate, what Mr. Ryan Wyse said it's it's somewhat of a hostile atmosphere here and these looming tariffs may be coming February 1st. What are governments going to do about that?

There's probably a lot of uncertainty going on with Canadian homes right now and so maybe with that uncertainty, there's gonna be a lot of inactivity.  So we shall see.

Ryan Berlin: Yeah, actually I agree with you. I think that uncertainty and instability is kind of like it's what freezes markets, right?

Brad Allison: Yeah.

Ryan Berlin: Like nobody makes big investment decisions when they're not sure what the future holds. Like whether you're a home builder, a developer, or you are just, you know, an individual looking to make a home purchase. And honestly, like the last, I mean, we've been in, we've been in a period of uncertainty for coming up on five years now, it did feel like over the past 6 to 12 months there was more certainty, right? Because we had a more stable macroeconomic environment like, there's still questions that we’re asking about where we're going.

Brad Allison: Sure.

Ryan Berlin: But I think we have this fresh injection now of like, what's gonna happen over the next year and two years.

Ryan Wyse: We had a lot more clarity for a short period of time like we were saying the other day that we could almost stop talking about inflation.  And we could kind of put that to bed. We’re almost ready to put that to bed. And now here we are if we know we're looking at all these different scenarios.  If we get 10% tariffs, if we get 25% tariffs, if we get with or without retaliation, what are all the scenarios that can play out from an inflation perspective, from a Bank of Canada policy rate perspective and and everything that goes along with it.  Uncertainty is back.

Ryan Berlin: Uncertainty is back and I mean hopefully, hopefully we have some clarity on well whatever it is.  if we are entering a world where Canada's exports are facing tariffs of some percentage, maybe some are 25%, some are less, some are none. But you know, I think even just knowing what that looks like and what Canada's response will be is helpful.  I mean the ideal situation is that we don't, we aren't in a trade war with the United States. We're not something we're going to win, we're not going to feel good about it. It's going to lead to more inflation. It's going to lead to higher interest rates than we otherwise would have been facing.

So it's not an ideal outcome, but I think again it's just understanding what lies ahead that is most important for us to sort of move forward as a country and as a market. So on that, on the housing market, let's talk about that.

Ryan Wyse: That's why we're here.

Ryan Berlin: We don't know anything about politics. So, like, let's move on. Let's talk more about housing in this region.

Metro Vancouver and Ryan Wise, we alluded to it at the beginning of the episode, but this market towards the end of last year ended on a bit of a different note from the way things have been playing out that the prior 3/4 of the year.

Ryan Wyse:  Yeah. And if you look just at annual sales, if you look at 2024 in its totality, it was almost identical from a sales perspective to 2023.  So both years were right around 40,000 sales. I think last year's total was 0.6% higher than the year before.So overall, the year was just that first glance kind of similar, but we've been talking the last few months in this podcast about how October and November we saw the pace of sales really start to pick up especially relative to the year before. And so if you kind of just look at the distribution of sales throughout the year and let's say you do it on a quarterly basis, Q4 was really quite different. There's a typical seasonal pattern that you get in this market where Q2, that spring market has the most sales activity then it's Q1 and Q3 and then Q4 is often the least amount of transactions in a year.

But last year, Q4 was the second most, which is incredibly unusual for this market. So we've only seen twice going back more than 20 years where Q4 had the most or second most sales in 1/4 and that was 2020 which kind of threw that out the window. But the other time was 2019. And that was similarly the end of a two year slowdown in the market and things really started to pick up at the end of 2019 into 2020 before COVID kind of shut the world down. And so there's this interesting parallel where Q4, we really saw the pace of transactions pick up. Q4 sales were 30% higher than 2023 and I think it's an indicator of a market where buyers have started to come back. There's a little bit more confidence there was a little bit more clarity as we're kind of talking about with respect to interest rates.

Ryan Berlin Right. So yeah, i dont know if we wanna talk about that because, seems to me that was the one thing that changed for buyers as we progressed through the year. Actually, affordability did improve because prices didn't move a whole lot.

Ryan Wyse: And if that rate came down a little bit, too, so rates came down, place came down a little bit too. So you know,  how are  the past three months for you, Brad?  was there a big change in your business? Was your phone starting to ring a little more to get a few more listings? What was it like for you?

Brad Allison: Yeah, for sure.  I've definitely noticed an uptick in activity over the past few months on my end. There's been a couple sales in December. I just have a new listing that came live yesterday and a couple buyers are starting to set up buyers tours now. So answer your question. Yes, my phone is not dead anymore.

Ryan Wyse: That's good. And you mentioned it like a couple deals in December.  Like December is usually a really slow time for us. It's, you know, typically the slowest month of the year.

Brad Allison:  Totally. It's usually for the holidays, but it was kind of an abnormal fourth quarter of last year. The last sale I had was actually a first time buyer.  They moved from West Vancouver a 2 Bed 2 Bath to the island of Qualicum.  A bit of a lifestyle change.

Ryan Berlin: Hmm, that's an interesting move. Yeah, we've said before too that we've used this term macroality that macroality trumps seasonality, right? So yeah, typically Q4 is  pretty slow, but we have seen an improvement in, if not all macroeconomic conditions because we know. The economy is not doing great. That's not a new story, but hasn't been much of a change there and rates are still higher than they were pre-pandemic. So affordability has improved, but not all the way back to say at 2019 level. Yeah, but we are starting to see a shift in the market.

On the sale side and just talking to other advisors too, at rennie, some of them are saying, it's like their phones are ringing off the hook. Right. Like it's really things have really picked up and we're not necessarily seeing that manifest completely in sales levels that are off the charts like we're really just returning to that long run average, but that is saying something. But what about on the supply side? Like on the listings front too, because if there are more buyers then you would expect too that maybe some some owners who have been thinking about selling are now starting to make the 

Ryan Wyse: Yeah.  So we actually haven't seen a real change in trend there because the sellers were already kind of coming back to market and they had been throughout last year. So on the new listing side, kind of saw it pretty much throughout the year that new listings were elevated.

So we finished the year with over 92,000 listings. That's 20% higher than the year before, 11 percent above average, and we finished the year with more than 16,000 active listings in December, which is the most for a year end number in 12 years. So the most listings on the market to finish the year since 2012.  And so even with sales activity picking up, it wasn't so much that it really drew down the inventory all that much because new listings were elevated kind of throughout the year. So the supply side of the ledger is one, where there's more more listings on the market for those buyers coming off the sidelines today, there's a little bit more choice. So I imagine there's not necessarily the same level of urgency from your buyer clients, Brad. Like when they start their buyers tours and they go to open houses, there's not that same level of competition that we saw a few years ago.

Brad Allison: Right. Well, I think traditionally when rates continually to go down and there's chatter they will continue to go down. Like you said there not that sense of urgency. Usually I've seen that, at least with my experience is when rates are starting to increase there's that mindset, oh crap, we need to get in there before we can't afford anymore. And so there's that rush to those those properties. But now I think with some of the inflated listing prices that I've seen as of last year.  And with the buyer sentiment taking a little bit more time to breathe. Measure what makes sense for them.  There hasn't been that sense of urgency, though a bit of a stalemate as of last year.

Ryan Berlin: And so are you seeing? Yeah, so when you look at the landscape now where I'm sure like as always you have like you can't paint the entire market with the same brush.   Like there are always properties that are gonna, they're destined to sit longer, maybe they're price too high, they're not ready, they're not moving ready. whatever.   But then there's always, even in a even in a challenged market, you know your properties that once once it become available buyers flocked to them, so I don't know, in your experience, like, are you just more broadly, are you seeing people or is there more activity at open houses? Are we seeing more multiple offers at this point or is that probably still yet to come?

Brad Allison: With certain properties, certain price ranges, certain floor plans, certain areas, definitely that's going to garner a lot of attention. So there’s still high demand for that. So there has been some multiple offer situations that i’ve heard of.  Its not like what it was a few years ago. 

Ryan Berlin: What would be some of those areas or the OR  the home types or the price points?

Like what are people flocking to? And it probably depends on whether we're talking about

the first time home buyers who have been waiting and waiting and waiting, or somebody who's already a homeowner and looking to move up. But is there? Like. Is there a profile of home that you're sort of seeing more, more people drawn to?

Brad Allison:  Yeah, for sure. I think this year we're primed for much different market than what we saw last year. I think we're going to see a bit of resurgence in the first time buyer and potentially the end user purchaser.

And by that I mean someone who buys a home for its intended use to use it as a home. And on top of that, I think that the investors are going to take a bit of a step back, wait in the sidelines maybe for a little bit more political stability. So I think, yeah, this year we're going to see a resurgence of the first time buyer.

Ryan Berlin: Yeah, and I think, um, to your point on end users, I know looking at our data, you know over the past few years, we obviously we work with a lot of developers selling new homes in presale. And if you look at investors in in the, in the condo space over the past three years, like if you look at 2021 through 2023, about half of the purchasers were investors. So adding to our rental stock, which has been much needed to this point, we actually have a lot of activity, construction activity and purpose built rental.

We'll talk about that in a bit.

00:13:41 Ryan Berlin

But last year we saw about half of the investor activity that we typically see and you know a lot of that seems to be related to the higher interest rates that were there. There are short term rental restrictions now in the province as of May of last year, so a lot of things sort of working against yeah, investors.

Ryan Wyse: Some of the different policy changes, the capital gains tax inclusion rate for sure.

there's now flipping tax, yeah.

Ryan Berlin: Is that a thing still?

Ryan Wyse: Expanded spec and vacancy tax on and on.

Ryan Berlin: And yeah, there's all these things. But what that did do was kind of open the door a little bit for first time home buyers and or end users, right? So there was more available supply for that group.

Brad Allison: Sure, for sure.

Ryan Wyse: And generally first time buyers are the most interest rate sensitive.  And there are some new policies aimed right at improving affordability first time buyers.  So there you can now see CMHC finance up to $1.5 million before the CAP, I think was $1 million, so.

Ryan Berlin: Which means also oh, maybe you’re going to say this. 

Ryan Wyse: When you get CMHC insurance. You can access lower interest rates, so you have to pay an insurance premium up front, but you get access to lower rates. You have a smaller down payments and so there's a little bit more flexibility for those first time buyers starting this year than there was last year.

Ryan Berlin: Now that we're talking about the year ahead, we're about a month into 2025. Mr. Wyse.

Ryan Wyse: Yes.

Ryan Berlin: What's in store for our market? And I ask that in a very. broad sense, yes.

Ryan Wyse: OK, let's get our crystal ball out. So we yeah, we've been hard at work coming up with a whole bunch of forecasts for this year, so let's get into some of them. So Brad, I agree with you, I think this year, 2025 will have more transaction activity than last year. So given you know all the stuff we were just discussing lower rates, we've had pent up demand and increasing market activity to finish up last year. We expect a lot of this, this new trajectory, this new path for sales to continue. And so I think we're gonna see an increase in activity over the coming months but not getting back to sort of our long term average until later this year.

And so ultimately, I think we're going to end up with a year where we get slightly below average sales, but a lot more sales than 2024. So our forecast is for around 49,000 MLS transactions in the Vancouver region, which is Vancouver plus the Fraser Valley Board and average is 50,000.

So a little bit below average and that represents. A 24% increase in activity. So if we're right on that, we'll see sales increase about 24% this year, which is both substantial and still below average.

Ryan Berlin: We've talked about supply being expanded, inflated wherever you will.  There are more options for buyers today than there than there has been and which is a great thing. But now we're talking about increased demand. So we put those two things together like how do you see? The things playing out for values for prices.

Ryan Wyse: So I think some of that increased availability that increased supply will absorb some of that new demand. So I think it's good. Yeah. and from a liquidity perspective there it will be easier for buyers to find the homes that they want to buy. But at the same time, that probably means less price appreciation than you might otherwise expect to see in a declining rate environment. And so our expectation is for sort of modest price gains. So if you look at the condo benchmark price, which is based on the home price index. Which is a model number that essentially gets at home values over a period of time. It sort of eliminates some of the ups and downs that come with an average or median that's based on which home sell in a given month. So that metric we have sort of increasing by 4.4% this year, a very precise number.

Ryan Berlin: Say I'm gonna hold you to that.

Ryan Wyse: Yeah.

Brad Allison: That's funny. I went 4.5 that's.

Ryan Wyse: It's no, no, no way too high. But what what that would mean for this region is if, if 

That would have condo prices increasing fairly substantially, but again also being below the peak value of May of 2022. So we expect decent increases in value this year, but ultimately not quite getting back to that spring 2022 peak.

Ryan Berlin: So we're talking about increasing sales, some modest gains in prices in resale.

Incomes which we haven't talked about today, but we know have been increasing by between 4 and slightly north of 5% sort of in that range over the last couple of years. And then you combine that with interest rates that are declining. Certainly variable rates have more room to fall to the extent of the Bank of Canada will continue to cut, which we believe they will.

Fixed rates probably less room to fall, but still, you know, we're expecting them to dip a little bit.

So that says to me, then, over the next year, we should see affordability. Housing affordability to improve.

Ryan Wyse: The other piece to that that you didn't mention is that those above average wage gains or income gains have been against low inflation, stable inflation again for the better part of a year.

Ryan Berlin: Yeah, absolutely. That's a good point.

Ryan Wyse: So real wages are increasing and have been increasing for more than a year now.

Ryan Berlin: And so we have, we have effectively more purchasing power. Yes, right in the market, as a result of recent dynamic. As the resale market evolves, Ryan, how does that?

How do you see that? Sort of impacting presale.

Ryan Wyse: So the resale market is a really good leading indicator for presale.

Typically, resale moves first presale follows and we've established this correlation between price changes in resale and presale activity. So when you put a deposit down for a home today to be delivered, you know 3-4 years from now, you want to feel good about rising values.

You wanna know that that home is gonna be worth more than a completion than you paid today? And so when resale prices are increasing buyers, feel a lot better about buying a pre sale and so. Yeah. When we start to see resale values increase, that's more likely when we'll see the presale market activate. But Brad, you mentioned earlier, your expectation of fewer investor buyers this year. I think we also feel that way fewer investor buyers, so not necessarily as much increasing activity for pre sales. So we don't have year end numbers for 2024 yet, but our estimation is around just shy of 11,000 pre sales for the market last year, which the average is more than 15,000 like 15.5K. And so we expect kind of a a 19% increase up to around 13,000 pre sales for this year. So again, a pretty substantial increase over last year, but pretty still pretty far off of that average value.

Ryan Berlin: So yeah, there's this year is like is when we look at the housing market, we're talking about our return to average or close to average, but this isn't gonna be a bumper year.

It's. Yeah, almost a transition year as tariff aside and geopolitical uncertainty aside. We see the market stabilized on the presale front, Brad, just curious because a lot of buyers have not for reasons that Ryan just explained, you know there is more inventory and resale prices haven't been increasing that much. So the value proposition of pre-sale has changed.

It's Maybe not as strong as it was before, or it has been in previous years. As you talk to people who are looking for homes, what are the perspectives on that new home market? Like what is drawing people to presale if they're being drawn to it or what's keeping them away?

Brad Allison: Regarding new homes and the clients that I talked to, there is a bit of a hesitation with one being the 5% GST that does kind of people the backs up against that. And so I think they're doing a bit of a wait and see approach to kind of see what happens with the new election, because the opposition is proposing. Taking out the GST on new construction to what?

Cap, that is. I don't think it's been clarified yet, but I think there's a bit of a stall until there's little more clarity in that regard.

Ryan Wyse: Yeah. And they've proposed a rolling back. The changes to the capital gains tax as well.

Brad Allison:That's right. That's right, yeah.

Ryan Wyse: So there's another thing that you know people may want to wait and see.

Ryan Berlin: In summary, our market, at least in Metro Vancouver, is showing signs of life from  a buying perspective.  As we look ahead, we're expecting this year to look a little different from last year, you know still healthy inventory, but more buyers finally able to make the move into home ownership or move up within the market and likely lower interest rates which didn't really touch on here. And again, you can go to the rennie outlook on renny.com/intelligence to see that forecast and others, but we're talking about generally improved conditions.

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Ryan Berlin: We did talk about when we were, when we were looking at what took place last year in our market.  You know, one of the things we talked about was the introduction of the short term rental restrictions.

And so with that in mind, let's move on to our next segment, which is beneath the headline and this is where we cherry pick a headline from the recent news that requires a little more context.

So today we have: 10% of Former BC airBNB's Back On Long Term Housing Market Thanks To Crackdown. OK, cool. That sounds good. That sounds like a policy that really worked right, going back to May 1st, the provincial policy to essentially disallow short term rentals in a lot of instances.And that was meant to bring more homes into the long term rental market or to make more homes available for end users. What do we need to know about this?

Ryan Wyse: Yeah.

Ryan Berlin: Right.

Ryan Wyse: So I mean, we shared some concerns about this policy, before. So I would start with this article says 10%, but nowhere in the article and I think they got it from a provincial press release and no where in the provincial press release, do they actually say how many homes that is to start with and when you actually read through the other thing they say is there either long term housing or put up for sale. So some of these are actually forced to sales. Effectively, as people were, were renting their units on short-term listing sites, and now they just can't afford to keep them anymore. So I don't know that that's necessarily a good thing, but anyway, if you just start to run the numbers, so we've referenced that Statscan study before on short term rentals across Canada. So 10% of the short term rental stock in BC, the short term rental stock BC is around 83,000 units in 2023.So 10% of that would be 8300 units province wide that went from Airbnb back into, long term housing stock or put up for sale. So on a housing stock of more than 2.14 million homes in BC, that represents an increase of 0.39%.

So not exactly a market mover, although I suppose you could say well, yeah, but if you're any increases is good and you know there's certainly some merit to that. But on the flip side, BC 38,000 more than 38,000 housing completions last year. So more than 4 1/2 times this number and you know with short term rental restrictions, you can only do it once. You can only take this stock and move it once. You can't, they keep increasing the stock annually and there were more than 10,000 purpose built rental editions in major metros in this province last year alone. So we're talking about less than one year's new rental housing supply. So I think I always come back. Do you know if you want to increase long term housing? You need to be building more homes.  And with any policy, there's always unintended consequences. You always ask if you're taking something from one place, to put it somewhere else, you know it, it affects the tourism industry, it affects the stock of short term accommodations and the hotel market.

So if you pull hotel prices from destination BC, average room rates were up about 4 1/2 percent last year, per their data, which isn't a huge increase. But if you segment it by area like downtown Vancouver was up 5%, Victoria 7%. Increase for home prices were as Whistler, which is exempt from the short term rental restrictions, had a less than 1% increase in hotel prices.

So I think you know as always, there is unintended consequences to these policies and overall, the reason that our rental market has been evolving, I think has more to do with increasing the purpose built rental supply and the construction of new rental homes and some changes in demand and less so about the actual short term rental restrictions.

Ryan Berlin: Yeah.  And we've talked about this before where we've said if we are building more, in this case rental.  Where we get some more balance between supply and demand.

So we don't have a vacancy rate that is sub 2% like it's been in almost every year over the past 20 to 25 years. That takes care of a lot of issues. You know, things like rent control, where rents are currently capped at or increases are capped at 2 1/2% right in this province or you know, we had recent changes to the Residential Tenancy act. That required, it was made it more difficult for landlords to take a property back or rental property back for personal use, which you know this there's pros and cons arguments on both sides. And then this short term rental restriction policy, all of this is a function of a rental market that doesn't have enough supply compared to the number of homes that are needed for our growing population. And so I think just the fact there's a good point that you made there Rye, with construction activity being over the past two years like since February of 2023 in Metro Vancouver, the annualized number of purpose built rental starts in every month has been north of 10,000. And so that's a record level between very consistent. So we're on the right path and maybe we get to a point where we have a bit more freedom to utilize the rental stock regardless of who owns it in the ways that we want. Just because there's a better supply, a better balance between supply and demand. Anything you want to add to that?

Brad Allison: I think just to kind of reiterate that we're going to see in this coming year decrease of investor purchases, they're going to be sitting on the sidelines. Like I said, maybe for a little more political stability, but all these new rental housing being built, I think the rental rates have been going down over the past 12 to 18 months. And so it's not quite as lucrative as it once was to be landlord. And so the conversations I've been having some of these  clients is once their tenancy agreement is up and that tenant wants to maybe move elsewhere. They're not deciding to re up with another with another tenant. They're deciding to actually list their property and sell it.

Ryan Berlin: Yeah. I mean, it's been tough for a while. I know you know, you look at sort of, you know, expected cash flow on some of these units and whether it's like a three bed or a studio. and it's typically in the red. You're in the red as a landlord, but you can sort of, you know, look down the line and say in five years, maybe I'll, you know, I'll renew my mortgage at a lower rate rental rates going, going rate for rental will be higher.

Brad Allison: Yeah.

Ryan Berlin: And then there's the appreciation in the value of the home. But obviously we're getting to a point where interest rates at least fixed mortgage rates are stabilizing a little bit. There's a lot of new supply relative to demand. We're seeing values probably with less upside in the medium term. So I think this is, yeah, this is a really good time. If you are a first time home buyer or somebody who is going to live in the home that you're buying to make a move, because again, you also have, there is just a lot of inventory whether it was previously rental or not.

Ryan Wyse: Yeah. And if there's a whole bunch of listings that were previously short term to your point, those clients like yours. Those who had previously rented it, and now the tenant has moved out and they can buy vacant cause I know part of the concern with some first time buyers is buying a tentative property.

Brad Allison: Yeah. So it's a little trickier for sure.

Ryan Wyse: And then get. Essentially getting in given the restrictions with the Residential Tenancy Act.

Brad Allison: Yeah, to that point, I just wanted to say that with first time buyers, it's gonna be that much less competition too with these versus like maybe years prior, they had to compete. Against investors to secure these certain properties. Yeah, absolutely. So if my prediction of course they're going to be on the sidelines for the first little bit of the year at. That much better of an opportunity to get into the market, especially with these new policies in place with the 30 year amortization a little bit lower barrier to get into the market extends the loan a little bit lower monthly rates and it might increase your buying power by like 5 to 8%. So there's some decent opportunities on the first time buying side.

Ryan Berlin: Next up we have a question from one of our listeners, Jennie in Vancouver.

Speaker Question: Hey, Ryans, this is Jennie from Vancouver. I love the insights you guys share on the podcast. My question is, how do you think all the new purpose built rentals coming to Metro Vancouver will affect rental prices and availability? Especially for younger renters and newcomers to the city thanks.

Ryan Berlin: A good question, and actually is something that we address in the rennie outlook, again, which you can find at rennie.com/intelligence. Yeah. The rental market is going to undergo some significant changes in the next couple of years for a few reasons, and the main one is related to demographics. We are in a market where we've had almost – what feels like infinite demand, right? People that always want to live here, right? So we are always needing to build new homes and values have you know gone through periods of ups and downs, but generally there's been upward pressure on prices and we've been undersupplied in housing. The next couple of years are going to be a little bit different, and the reason really is rooted in the federal governments immigration levels plan. So I'll just say out of the gate like how that changes over the course of the next couple of years, if we do have a new government, which we most almost certainly will, we don't know yet how that how that's going to look. But the way things are now we were expecting 500,000 permanent residents over each of the next two and three years. The government has lowered that target to under 400,000 for each in the next three years. So we're going to fewer people, immigrants moving to the country and that has implications for our metro regions, including Vancouver. But the biggest thing is that the government is trying to reduce the number of non permanent or temporary residents in this country. Currently, temporary residents, so international students, temporary foreign workers and the like are account for over 7% of our population.

Ryan Wyse: Yeah, and in BC it's over 9%.

Ryan Berlin: Yes, they want that down to 5% nationally. So you know how they're gonna do that? You let some visas expire without renewing or converting to PR. You issue fewer permits in the first place. There's a few different ways to do it. But that means that we need to essentially reduce the number of temporary residents by over a million people over the next couple of years. So we're looking at the prospect of Canada's population declining by about 200,000 people in each of the next two years. And for context, you go back to the beginning, like back to Confederation like 1867, we've never had a single year. where the population is actually declined. And we're now facing 2 consecutive years where, we'll see material declines. And so what's important there too? So if fewer people, you know, we're we're not going to be growing, we're going to be shrinking. But what's really important in the when you talk about the implications for housing? Is the age composition of the people that moved to our country or move away from it right there really young permanent residents are 27 years old, typically non permanent residents are 18 years old. An existing Canadian, though somebody who's already here is 32 years old, and that's the most typical for 50 years it was a baby boomer, so up until three years ago, the typical age of  somebody who is in Canada was over 60. The only reason that downshifted to the age of 32 is that we've had so much in migration recently, but either way it's much older than the profile of people moving here and the profile of people moving about. When you look at the rental market and the typical renter being between the ages of 20 and 44 and we're looking in Metro Vancouver, we're facing the next over the next three years of at a net loss of 70,000 people in that age range. That is going to reduce demand for both housing and more specifically for rental housing. So against the backdrop of falling interest rates slightly from this point forward, but also against the backdrop of more supply. We have over 21,000 homes that are under construction and the purpose built rental space. We have, as I mentioned earlier, over 10,000 units being started per year and a lot more supply and we're going to have less demand and so we do expect that for new purpose built rental buildings. We expect that the per square foot rent that those buildings are able to achieve or reach is gonna fall by between 4 and 5% in this coming year, which is not immaterial. If you bought land, if you're a developer and you're building rental and you bought five or six years ago, it's not good news, but you can go ahead with your project. I think if you are, if you purchase land in the last couple of years and you've been performing at increases of 2 to 3% over the next few years, this is going to change the math for you. So I think we are going to see a shift in dynamics in the rental market.

Ryan Wyse: We may see some other responses to. So we've talked a bit about fewer investor buyers, more end user buyers, so we could see a supplier response in the condo market where we see less new condos end up in the rental market in the secondary market. We can also see maybe some shifts in domestic migration as fewer young people within Metro Vancouver are leaving to go to the island like that client you mentioned before? But it's hard to model that out, so it's hard to say for sure that that'll make up much of the difference. So I think ultimately we are in for some rent declines this year on average.

Ryan Berlin:  Jennie's question also asked about younger renters. And so you just talked about how maybe some wouldn't move away, that otherwise would have, but I think you'll see some filtering within the rental stock too, where you have, you know, households who are earning enough money to live in maybe new, more highly amenitized spaces that have been living in in an older stock because there hasn't been a lot of opportunity for movement, they can now move and that's going to it might raise rents at the bottom end of the spectrum. But those rentals still be cheaper or less than the newer purpose built stock. So for first time renters or even lower income renters, there will be most likely more opportunities in that space.

Ryan Wyse: And this region has been plagued by historically low turnover rates in the last few years, which has led to some really big gaps between existing rents for existing and then new rents for new tenants. And so I think a lot more turnover could be healthy for the rental market as a whole.

Ryan Berlin: We'd love to answer your real estate questions. You can either e-mail us at intel@ rennie.com or leave a voicemail at speakpipe.com/therenniepodcast, and we'll try to respond in our next episode.

Ryan Berlin: Brad, thanks so much for joining us. Before we completely sign off, how can listeners get in touch with you?

Brad Allison: Yeah, I hope I'm fairly easy to find. I would just Google Brad Allison real estate.

I should be pretty prominent. A number of 778-996-4977. You can e-mail me at ballison@rennie.com or for updated content, I'm on Instagram at Brad Allison dot real estate.

Ryan Berlin: Excellent. No excuses not to be in touch. Perfect.

Brad Allison: Come find you guys. Come on.

Ryan Berlin: Thanks Brad. Ryan, as always, a lot of fun.  pleasure, Brad, thank you so much for joining us.

Brad Allison: Gentlemen, an honor.

Ryan Wyse: Really appreciate it coming on.

Brad Allison: Thanks guys. It's fun.

Ryan Wyse: Take care.

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Ryan Wyse

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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.