November 12, 2024 • 41 mins
WATCH
▶️ Watch this episode on Youtube
***
EPISODE DESCRIPTION
Episode 84: Matt and Taylor are joined by Ryan Berlin and Ryan Wyse. Berlin, the Head Economist & VP of Intelligence, and Wyse, the Market Intelligence Manager & Lead Analyst, lead rennie's Market Intelligence division in Vancouver, BC, a team that cuts through the noise using cutting-edge data and analysis to deliver clear, actionable insights.
Ryan Berlin has spent the past 20 years helping some of British Columbia’s most successful organizations—across real estate, retail, and finance—navigate their toughest questions. He’s also collaborated with local, regional, and provincial governments across Canada, and with crown corporations, tackling challenges that are often big, and always nuanced. Ryan is a member of the Canadian Association of Business Economists, the Association of Professional Economists of BC, and Lambda Alpha International. He firmly believes that economists are people, too.
Ryan Wyse has more than a decade of experience in real estate, market analysis, and data analytics, and is a sought-after expert in the industry. In addition to participating in regular speaking engagements, he is the co-host of the rennie real estate podcast, a monthly show that provides valuable economic insights for real estate professionals, buyers, and sellers. Ryan holds a Bachelor of Commerce (B.Com.) from the UBC Sauder School of Business with a specialization in real estate.
Berlin and Wyse are here to discuss: → The uniqueness of rennie and it's Intelligence division, where their data comes from, and if other brokerages should adapt in-house data → What the data tells us about 2024 and projections for the 2025 market, the outlook for the recreational market & STRs, and if there will be market stability post-provincial election. → The unprecedented impact of the new immigration policy and a first ever population decrease in Canada, the historical under-building of residential real estate, the supply of residential asset classes in BC and why we need more purpose build rentals, and balancing appreciation with affordability.
rennie Intelligence Website: www.rennie.com/intelligence
rennie Intelligence Twitter: @rennieintel
rennie Instagram: @rennie.group
rennie LinkedIn: @renniegroup
rennie TikTok: @rennie.group
Ryan Berlin's LinkedIn: @RyanBerlin
Ryan Wyse LinkedIn: @RyanWyse
***
OUR SPONSOR
The Kelowna Real Estate Podcast is brought to you by Century 21 Assurance Realty, the gold standard in real estate. To learn more, visit: www.c21kelowna.ca
***
CONNECT WITH THE SHOW
Kelowna Real Estate Podcast: @kelownarealestate
Kelowna Real Estate Podcast YouTube: @KelownaRealEstatePodcast
Kelowna Real Estate Podcast Instagram: @kelownarealestatepodcast
***
CONNECT WITH MATT
Matt Glen's Website: www.mattglen.ca
Matt Glen's Email: matt.glen@century21.ca
Matt Glen's Instagram: @mattglenrealestate
***
CONNECT WITH TAYLOR
Taylor Atkinson's Websit
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the Kelowna RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's happening today, Taylor?Yeah, just wanted to touch on that
McKay Grove project by Audeo againout in Peachland.
Matt and I are going to try andjump out to that event November
23rd.
That's 10am to 3pm on Buchanan
Road.
And you better not even enter for
that $500 gift card from Martin'slane.
(00:22):
Cause I'm going for that for sure.
You versus me, bro.
We're both going for it.
But yeah, if you guys want to
register, go to McKay grove.ca.
Yeah.
They obviously have a website,follow them on Instagram, reach
out to them, let them know you'recoming.
Obviously try and get a headcount, but yeah, it's McKay lane
development yeah really coolproject yeah they're like really
(00:42):
nice uh townhome they're likereally nice uh townhome project
they're definitely worth checkingchecking out yeah and on today's
show we had a couple awesomeryan's ryan wise and ryan berlin
from renny so uh renny is a fairlyrobust real estate brokerage,
mostly based out of Vancouver, butthey seem like they're starting to
grow and they are up in theKelowna market as well.
(01:05):
So yeah, we kind of spoke to themon macro, micro, provincial,
federally, like pretty much abouteverything.
Yeah, because they have anintelligence department.
Yeah, I love that, man.
Like I'm going to give myself my
own intelligence department.
I felt like I was talking to the
I'm CIA.
your Yeah.
intelligence department, Like I'mman.
going to give myself my ownintelligence department.
I felt like I was talking to theCIA.
Yeah.
I'm your intelligence department,
dude.
Oh, we're all in trouble.
I thought that was so cool.
This is the beginning of the show.
(01:27):
And they're like, yeah, this isthe intelligence department.
We are, you know, integral part ofthe brokerage, which to me, like
at the time, it seemed so, I don'tforeign know, to be like, an
intelligence wow, department for areal estate brokerage, which to
like at me, the time it seemed Idon't so, foreign know, to be
like, wow, an intelligencedepartment for a real estate
brokerage.
But then as we started talking to
them, like, should every brokeragenot have this?
Like, otherwise it just leaves thework to, you know, a bunch of real
(01:48):
estate agents trying to plugnumbers around, which, you know,
we know isn't great.
So I think this could be the way
of the future.
They're leading the way.
Yeah, I think they have the tothey have the right idea.
It's pretty cool what they gotgoing on.
Also, super fun talking to bothRyan's, Ryan Berlin and Ryan Wise.
That was fun to deal with.
Yeah, yeah.
I would suggest out of anything,you know, listen to the show.
It's a great show, but definitely,you know, follow them on, well,
(02:08):
apparently they're on TikTok nowas well.
But LinkedIn is where they put outa lot of really good reports.
I think they have a newsletter aswell that they send out
information and even things like,you know, lakefront property in
the Okanagan.
Like they are really diving into
the super, super nitty grittyspecific data.
So yeah, a value add for anyonethat's looking at buying or
selling in the near future is diveinto their info.
Definitely.
This episode, like every like
(02:29):
every episode, is sponsored byCentury 21 Assurance Realty.
Best brokerage in Kelowna.
Probably the best brokerage in the
interior since we're growing somuch.
We're now in Kamloops, Vernon,Kootenays, Sushwap.
If you need an agent in any ofthose areas or you are an agent
looking for a new brokerage, giveus a call.
Love to talk to you about it andsee what we can do for you.
(02:50):
Sounds great.
Enjoy the show, guys.
All right, Ryan and Ryan, welcometo the show.
Thanks for joining us, guys.
Thanks for having us.
Yeah, great to be here, guys.
Who's who so the listener can tell
when they're listening?Yeah, for sure.
I'm Ryan Wise.
Ryan is market intelligence
manager and lead analyst.
Nice.
So I'm Ryan Berlin.
I head up our intelligence group
and I'm our head economist.
(03:11):
So we can go by last names here if
you want.
If that's easier, we can go Berlin
and Wise.
Oh, I like that.
I like that.
Yeah.
Okay.
Well, Berlin and Wise, I'll leave
you guys to want, you know, who'sgoing to take this first, but we
kind of like to start our showwith just you connecting with our
listener in terms of what's yourperfect Friday look like?
What gives you productivitywork-wise and then leading into a
(03:33):
fun for the weekend?Sure.
I'll jump in.
I actually have a Friday theory
that I kind of tell anyone who'swilling to listen and it relates
to sort of the hybrid workenvironment.
So I think that most people seemto work from home Fridays.
That's like the most popular day.
There's like not a lot of traffic
on the roads or anything likethat.
But I think Mondays and Fridaysare the two best days to be in the
office.
And for me, it's all about those
(03:54):
conversations that you don't havethe rest of the week that can
really lead you into sort of thecreative sort of aha moments.
I find we get a lot more done onnew innovative things on Fridays.
So my favorite thing is get upearly, drop the kids off, get into
the office and kind of collaboratewith our team or other people in
the office because I find thosereally cool steps forward always
happen on Fridays.
Nice.
Yeah, I'm with you on that.
Fridays are great for that kind of
(04:15):
thing.
My Friday starts the same as all
other days during the week.
I try to get up at five every day
to work out, jump on the Peloton,throw back a couple of decaf
coffees, make the kids lunches.
It's a very exciting life I lead.
Get them out the door for school.
So that kind of thing where the
mornings are pretty full.
Once I get in the office, yeah, I
(04:36):
mean, I look forward to thoseconversations on Friday as well.
It gets sort of your brain turningand sets the stage for the next
week.
I try not to schedule meetings on
Fridays.
I don't have to just kind of keep
the decks clear so that loose endscan be tied up and you kind of get
organized for the week ahead.
Yeah, so that's it.
And then weekends are just filledwith family stuff and kids stuff
and lots of pizza.
So that's about it.
Nice.
That sounds very That sounds very
familiar.
Yeah.
Friday pizzas days are ideal.
pizzas days are ideal.
(04:56):
Can you guys just give us like ahigh level company summary for
Rennie?I think you've come up to Kelowna
fairly recently, but obviouslyyou're more well-known in the
lower mainland.
Yeah.
Can you just kind of give us theelevator pitch on company?
Sure.
Our real estate services company,
you know, technically been aroundfor 40 plus years, but started
with our founder, Bob Rennie.
We're now a company of 160
full-time staff at our headoffice.
And we've got over 300 agents,advisors, realtors, whatever you
want to call them.
(05:17):
And we operate in a few different
spaces in the real estate sector.
So first and foremost, we are both
a traditional brokerage thatoperates largely in resale, also a
new home market, but then we alsohave a pre-sale marketing and
sales division as well, as well asan advisory function.
Ryan and I are both within theintelligence division.
We support the operations of thebusiness from the perspective of
(05:39):
trying to understand the market,doing our best to understand the
market, what's impacting it, wherethings are going, so that we can
help our clients better understandthe markets that they're designing
product for, launching into, tohelp our advisors who are working
with buyers or sellers, often inthe resale space, but also in the
pre-sale space, just understandwhat kind of a commitment they're
making to either seller to buy.
(05:59):
So we're very much a data-driven
company.
We operate primarily out of
Vancouver.
That's where our head office is.
But as you said, we've been inKelowna now for...
Honestly, it's been about a yearand a half.
We haven't really grown ourpresence a lot there.
But we do have an office and wehave a few agents up there.
We also are in Victoria and we'verecently this year expanded into
(06:22):
Seattle and Palm Springs.
Oh, cool.
Yeah.
I didn't know that.
Cool.
Forgive my ignorance.
Do most brokerages have anintelligence sector?
Like it seems to me like a hugevalue add for employees and
clients, but yeah, is this a bitof a niche for the industry?
Yeah, I would say, yeah.
So Erlin, you came on with Andy
Ramlow, how many years ago to kindof start this up?
this up?So intelligence became a thing at
(06:43):
Rennie eight years ago.
You don't see it in this sector.
It's kind of a unique function.
Well, I've talked to other people
at other brokerages anddevelopment companies.
They're looking at like, should wehave an intelligence function?
It's one of those things where youreally have to value what an
intelligence group brings to thetable, what sort of the
researchers and the analysts bringto the table.
(07:04):
Everybody likes understanding themarket.
Everyone likes data.
But I think what's different here,
Rennie, is that when Chris Rennie,who is our CEO, when he sort of
took over day-to-day operations ofthe business eight,9 years ago, he
really wanted to have thatfunction in-house.
And he believed that it set up thecompany for a sustainable,
successful existence over thelonger term to have that kind of
function in-house.
And he saw it as sort of being
able to meet the needs of ourclients consistently going
(07:27):
forward.
And it's definitely unique.
Ultimately, everybody's interestedin data.
So you're seeing more and morecompanies in the real estate
space.
They may not have a formal
intelligence division, but I thinkwe're seeing more and more sort of
data-driven decision-making.
I was just going to I was just
going to ask, so when you sayintelligence, I'm assuming you
mean breaking down data.
Where do you get your data?
You get it from real estateboards?
(07:49):
You guys find your own?Where do you scrape the data from?
Yeah.
So a little bit of everywhere.
So definitely we get board data.
So we subscribe, we get the live
feed, the API, so we can, youknow, break it down in real time.
And then also do a lot ofdifferent things that maybe, you
know, traditionally the boardskind of give you that stats pack
and that's sort of the way thatit's always worked.
(08:11):
But we like to break things downin a whole bunch of different
ways.
We don't want to be limited to
just the way that, you know, we'vealways done things a certain way.
And so an example of that is wenow report on like just waterfront
homes in Kelowna.
That was sort of a thing that all
of our advisors said, like, hey,waterfronts, a specific product
type, you know, everything'sgeared around the lake.
And so our team went andpainstakingly hand drew all these
maps.
And it's like, OK, this property
(08:32):
here, this is waterfront.
This one isn't.
They went up and down both sidesof the lake.
But, you a thing know, it's thatsort of thing of like, hey, what
do people actually want?And where is there sort of an
opportunity to do things a littlebit better?
Whether it's with the board data,we use a lot of publicly available
data as well.
We rely on Stats Canada, CMHC, you
know, some of it we pay for, someof it's just freely available,
but, you know, we deep dive, wedownload, you know, the minutia of
all of these different data sets.
(08:53):
We have the luxury of getting the
time to play in these spaces andhopefully coming up with as many
cool insights as we can.
Yeah.
Well, let's dive into it then.
What's 2024 been like in
Vancouver, Kelowna, provincially?Like, you know, we hear a lot of
stagnant, slow market, subject tosale stuff.
But in terms of, I don't know,historically for the last 20
years, what was the year like?It's been tough.
been tough.
Well put.
Yeah, it's been a tough year.
I think there's no point in
(09:14):
beating around the bush.
Sales have been below average in
Vancouver, Kelowna, Victoria formore than two years now, every
single month.
So if you look historically where
we're at, it's been a belowaverage sales count.
So we want to look at activity.
Kelowna has been kind of hit the
hardest.
Sales have been the most below
average at Kelowna.
We can talk about some of the
reasons why that market's been hita little bit harder.
(09:34):
But I think provincially,everywhere, it's been a really
tough year.
And it all really comes back to
this market has been defined byhigh interest rates that have been
in response to high inflation.
And so in the all the time that
I've been in real estate, it'snever been about one thing as much
as it has been these last coupleof years.
(09:55):
That's a good goodcharacterization.
There's also there's been thiscollision between an unfavorable
macroeconomic environment, if youwill, like we've got a pretty slow
job market.
And as why I said, you know, high
interest rates have really boggeddown the housing market, both from
the development side and also fromthe buyer side.
But there's been this collisionwith also policy in this province
that in some instances has beenvery supportive or encouraging of
(10:17):
new supply, which is great.
I think we all know that we need
to be expanding our supply ofhousing consistently over time,
especially in response to all ofthe population growth we've seen
over the past few years.
We've also had a lot of policy
implemented recently that reallytargets investors.
Think what you will aboutinvestors, right?
Everyone has an opinion aboutthem.
The reality is when it comes todelivering new housing supply, the
investor segment of the market isreally, really important for
developers and for projects tomeet their sales thresholds so
(10:39):
they become financially viable.
They're able to access financing
to actually start building.
A lot of that demand from the
investors has gone away.
We're seeing projects that aren't
launching because developers arethe risk averse.
They're very cautious.
They're worried that the project
won't be viable, that they won'tbe able to sell as much as they
need to.
And then the projects that we've
(11:00):
sold, between 2021 and 2023,investors accounted for about half
of all pre-sale purchases.
Through the first half of this
year, they've accounted for abouta quarter.
And it makes sense.
I mean, the cash flow situation
for investors, if you're buyingnew, even with higher rents, it's
pretty ugly.
Your monthly cash flow is going to
be negative for a number of years,at least.
(11:21):
So those policies, I think thatlike we're talking about the
increase in the capital gainsinclusion rate at the federal
level, the restrictions on shortterm rentals, changes to the
Residential Tenancy Act, whichcome from a very good place, but
all sort of restrict or constraininvestors' ability to participate
by changing that risk rewardrelationship.
And we have a flipping tax, whichI think is set to be implemented
(11:46):
in the new year.
So it's been a lot of things.
It's kind of been a lot of all atonce, right?
It's really slowed things down.
I guess in a perfect world, like,
yeah, Matt and I have spoken a lotabout policy changes.
It seems like every other week,there's news coming out with
(12:09):
something and then, you know, twoweeks go by and then they change
the policy because it's notcorrect.
But I guess from an economicstandpoint, what is the perfect
scenario if we could build onefor, you know, appreciation in
those properties?Like, obviously, we don't want the
market just to crash and thebottom to fall out of it.
And we do understand that, youknow, provincially, they want
affordable houses.
But like, what is the perfect
balance?I guess, you know, should
properties be appreciating bythree to 5% every year or?
(12:33):
There is no magic number.
I think if we want to get away
from sort of I think if we want toget away from sort of the
commodification of housing, thenwe shouldn't be, you know, trying
to build a system that takes in,you know, home price increases
that are exceeding the ability ofthe population to pay.
So what is that?Is that 2% a year, 3% a year,
(12:53):
something like that?I think at the end of the day, if
you get away from the value partof things, I mean, obviously, we
want housing to be affordable.
But I think before we talk about
that, it's really about how do youset the conditions such that
regardless of, let's say, themacroeconomic environment, how do
we ensure that we have thisconsistent flow of new housing to
the extent that we need it, to theextent that our population
(13:18):
continues to grow and we need morehousing?
I think that's the most importantthing.
So supportive supply-side measuresare great, but I think looking on
the other side too andimplementing policies that say,
hey, we have some empty homes andwe think those should be filled
up.
So we're introducing certain
policies to do that.
Well, they have a knock-on effect
because they dissuade some of thecatalysts for new supply from
participating in the market.
It's not reacting to the
zeitgeist, right?It's more just like it's thinking
(13:39):
long-term, which politiciansaren't good at.
They get it.
Yeah.
It doesn't doesn't get you votedback in if you're thinking
long-term, does it?Yeah.
And I would add that, you know,depending on which analysis you
look at, like we've been underbuilding in this country and in
this province for decades.
So like CMHC has a report that in
Canada, we should build 3.5million more homes than we
otherwise would build by 2030,just to get affordability levels
(14:00):
back to 2003.
We did a recent analysis at Metro
levels where we said based onhousehold formation that we've
probably underbuilt in MetroVancouver by about 45,000 homes in
the Okanagan.
It's a little over 2000 homes.
Like these are big numbers interms of the amount of homes that
we've been consistentlyunderbuilding year after year
after year.
And so I think, you know, most of
(14:21):
that back to your question oflike, what's the best case
scenario, I think it's all aboutencouraging more housing supply,
because we don't just need tobuild for, you know, recent
population growth, we need to sortof make up that gap that we've
been accumulating over the lastfew decades.
Yeah, you know, it's funny.
So let's just say there's been
like 20 some odd policies in thelast couple years that have come
out to try and resolve this supplyand demand issue.
(14:43):
And everyone keeps going back tojust like, we need to build more.
But I guess, you know, federally,they finally come to the
conclusion that maybe the easiersolution is, hey, maybe our
population needs to stop growingas fast or like, you know,
hindsight is 2020.
Hey, three years ago, maybe we
shouldn't have, you know,encouraged 2020 hey three years
ago maybe we shouldn't have youknow encouraged population growth
so much so with recent governmentpolicy around immigration and
(15:04):
population growth do you see thatbeing the easiest solution out of
everything that they've come outwith and they've tried everything
else and everything else hasn'tworked so So finally, they're
like, okay, this is a step we needto take.
I mean, I would say, you know,stopping immigration or reducing
population for a couple of yearsisn't going to solve these
long-term systemic issues.
This recent announcement for
immigration, we're effectivelysaying we're going to see
(15:25):
population decline for the nexttwo years.
It's something we've never seenbefore in Canada, but we've also
never seen the level of populationgrowth we saw for the last two
years where we added more than 2million Canadians in a two-year
period.
So it's this crazy whiplash
between one extreme to the next.
We went back and looked all the
way to Confederation.
We've never had a single year of
population decline in thiscountry.
(15:45):
And now they say, oh, let's goahead and do two, and maybe
that'll fix housing andhealthcare.
You're not going to fix housingand health care in two years.
Sorry to be a little bit flippantabout that.
But like we need sustainedimmigration for our economy.
We have an aging population.
We have an aging workforce.
You know, we need that sort ofimmigration level that we had
pre-pandemic or somewhere aroundthere, like, you know, 1% annual
growth rate for population.
(16:07):
And so it seems like so many of
these policies are, you know,again, they're short term thinking
it's responding to the latestchallenge with the next policy
that, you know, you don't fullyconsider all the unintended
consequences of it.
And I expect that with population
decline over the next year or two,we're going to see real pains in
the economy, and particularly inthe labor market that will lead to
(16:30):
more policy changes.
I think there's danger in, you
know, fostering an environment of,you know, policy or economic
uncertainty and unpredictablevolatility, right?
And so that's what we're lookingat.
And we just came through this withCOVID.
Like, we're coming up on fiveyears of this and that.
Everything is unprecedented,right?
And it's just, it's exhausting.
And we're just coming out of that
period.
And now on the policy front, we're
back talking about unprecedentedchanges to immigration and
(16:53):
migration flows and populationgrowth.
As Y said, you know, we're goingto see two years of population
decline from a businessperspective, even from an
individual perspective.
If we have these dramatic shifts
in policy, like how we're tryingto solve the challenges that we
have, it becomes a not veryenticing environment for people to
participate in.
It can paralyze the economy from
the viewpoint of investment.
And whether it's like financial
investment or human capitalinvestment in an economy.
(17:13):
So the permanent resident targetshave been reduced up until the
announcement, what was it, a monthago now, a few weeks ago.
For next year and the year after,we were expecting 500 PR
admissions to this country.
And that's now down to, I think,
395 and 380.
And then another year after that
at 365.
That's kind of understandable.
That is a big downshift.
It but you go okay well maybe we
(17:35):
sort of taper it off at the sametime they put caps on the number
of temporary residents that theywould like to see in Canada so
international students temporaryforeign workers and that sort of
thing that's what's really goingto drive our growth rate down is
pushing out each of the next twoyears 500,000 people it's a
powerful tool but I think weshould wield it, you know,
(17:57):
carefully.
Yeah.
I mean, we spoke a lot about likevolatility with policy changes
with the provincial election over,which seems like it went on
forever because counting ballots,like it's the weirdest election
ever.
Now that that's over, obviously
federally, there'll be one comingup pretty quickly here.
Like, I feel like you're more intune with it being, you know, in a
(18:17):
bigger city and obviously studyingthis stuff.
But can we expect less volatilityand less policy changes now that
like the political campaign isdone provincially?
Like, yeah, there's obviouslystill going to be some, you know,
federally.
But can we all like, take a sigh
of relief and be like, we shouldbe in the clear for the next year
to just like not have to watch thenews every day i think so i so i
(18:41):
think this government will focusmore on all of these policy
changes they've done to implementthey're still trying to get some
of them through whether it'shousing targets you know getting
all the municipalities on board orimplementing some of that
multiplex zoning across theprovince where there's been some
pushback so i think we're going tosee more of that implementation of
that agenda that they campaignedon that they started on
(19:03):
previously.
So I would say probably, I think
so.
But there are still, I think, some
more to come.
Like Berlin already mentioned, you
know, the flipping taxes to comeinto effect.
They talked about increasing thespec and vacancy tax rate.
So that's still probably to come.
Like, there are still probably
some more changes.
But overall, I think they're going
to focus more on implementingtheir agenda that they've already
canceled too.
Yeah.
Okay.
Okay.
(19:23):
Well, maybe to spin this a littlemore optimistically, I'm hoping,
how's 2025 shaping up to be?Like, it seems like the market's
gaining some momentum, like evenin Kelowna where the fall winter
is usually a slower season, itseems like activity is starting to
pick up.
What are you guys seeing?
I mean, I think broadly, and thendrill down to Kelowna, we've been
(19:45):
saying that 2025 is going to beaverage.
Which is up from now.
Well, exactly.
Yeah.
Yeah.
It doesn't necessarily sound onthe surface like something to get
excited about.
But because we've been distinctly
below average in so many regardsthe past couple of years, to the
extent that we are average fromthe perspective of inventory sort
of leveling out and stabilizingsales, increasing a more liquid
market, right?Because what we're right now, we
have almost paralysis in ourmarket on both the listing side
(20:07):
and the buy side.
I think with more stability in
inflation, I mean, we've been sub2% as far as headline inflation is
concerned, the last two readings.
I think from our perspective, Bank
of Canada has got inflation undercontrol in the near term.
I hope those words don't come backto haunt me.
But our outlook is for inflationto remain in that 1% to 3% band
over the coming year, which thengives the Bank of Canada space to
(20:27):
bring down interest rates to a,you know, what they call a neutral
level, that overnight rate beingbetween 225 and 325.
So, you know, we're probably goingto see five-year fixed mortgage
rates or uninsured mortgagesaround, you know, 4%, but you
might be able to get a little bitlower than that.
I mean, you guys might be able tospeak to that as well.
The point is not the level ofthese things, but more that
(20:47):
there's stability in thoseelements, which then give
confidence to developers to sortof commit to purchasing land and
financing projects and actuallybringing them to market, knowing
that there's probably going to bebuyers out there.
I think on that side of things, weexpect sales both in resale and
presale to move back to sort ofthe historical average, not to
exceed it, but move back to thataverage, which would represent a
(21:10):
welcome change, I think, foreverybody and without seeing
dramatic changes in values.
Like housing, we expect over the
next 6 to 12 months is going tobecome more affordable.
It's still going to be veryexpensive, but with continued
modest increases in incomes,falling interest rates, and prices
not really ticking up too much, wethink we can see increased
activity in the market withoutseeing values really pushed
upwards.
Sorry, when you mean average, I
(21:33):
think for an economist to say thatit's pretty optimistic, or maybe
I'm just putting your words in mymouth.
but like average in terms of, Ithink last year, or maybe even
partial of this year, like theOkanagan market, we were down on
sales, like 16% from the previousyear, which was like pretty low.
But do you mean average in termsof like, you know, over the past
(21:54):
10 years, we're kind of be back ontrack average wise.
So it, you know, it should be likea fairly strong market in terms of
transactions.
Yeah, I would say, yeah, I think
we've already seen some movementback towards average, again, in
Vancouver and Victoria.
Those two markets have started to
move first already.
And again, Kelowna's been hit a
little bit harder.
And I think a lot of that is,
(22:14):
again, investor and recreationalbuyers maybe being squeezed out a
little more on some of that policystuff, especially like the
short-term rental restrictions, Ithink have impacted Kelowna more
than any other market.
So maybe not quite to the same
level, again, as Vancouver andVictoria, but ultimately, yeah,
like back to kind of a past decadeaverage or close to that level.
So, you know, I think we wouldexpect things will feel a lot
(22:36):
different next year because therewill be a lot more transactions
happening.
And without a lot of price growth,
I think there'll be, you know, abit more value for those buyers as
rates continue to come down.
What do you think about the
recreational market in Kelownaeven long term?
Can you even have a recreationalproperty right now?
Besides Big White, you've gotvacancy tax, you can't Airbnb it.
(22:56):
I'll show show you.
I was prepping for this.
I printed the map.
So green, you are subject to spec
and vacancy tax.
Yes, yes.
Yeah, it's tough.
I'd say, you know, go buy a shoe
shop instead.
Because that's where you own,
right?Yeah, that's right.
I'm a fan of this kind of place.
that's right.
I'm a fan of this kind of place.
(23:17):
A little shameless plug.
plug.
Yeah, no, it's tough.
Like even, you said big white,even Predator Ridge is subject to
spec and vacancy tax.
I know.
I know.
Which I find a little bit strange.
So there's some pockets.
But I think that recreation buyer,
like it's going to be tough for awhile.
I know.
that a mix of sort of investor but
especially that right buyer andthat 25 declined a lot last year
and is basically on par with othermarkets this year and i think
(23:40):
we're going to see that rec buyerkind of be sidelined for a little
bit longer until we get a bit moresense for what the long-term
impacts of these people yeah likeeven longer like as yeah like even
longer like as long as thespeculation tax is there seems
like it doesn't ever come backyeah and i think like also with
the short-term rental restrictionslike and i think like also with
the short-term rental restrictionslike some of those buyers are you
(24:01):
know i want to use some of thetime i want to be on airbnb some
of the time especially on some ofthose you know condos that sort of
downtown colonna before some ofthe zoning rules change but yeah
those buyers they're sidelinedright now of to be on airbnb some
of some of they're sidelined rightnow for sure collectively i don't
think we should hold our breathsfor i don't think we should hold
(24:21):
our breaths for any any reductionsor removals in the speculation of
vacancy tax.
I think, wise, you mentioned that
this government is looking atincreasing wise, you that,
actually, in the near term.
I think there's some potential for
those short-term rentalrestrictions.
There's a couple of layers to it,but for those short-term rental
restrictions to be scaled back,there's issues because you have
the policy at the provinciallevel, but then you also have
municipalities that are also keenin certain instances to have some
(24:45):
form of it.
I'm optimistic that we give it a
little bit more time, we'll havethe benefit of being able to look
back on the data and say, okay,what was the impact of the
short-term rental restrictions?We know StatsCan did a study that
showed that short-term rentals isthe share of the dwelling stock.
It's very small.
We're talking like 2% to 3%.
Yeah, a little bit higher inKelowna, but nationally, I think
really, really low.
And even in the city of Vancouver,
(25:05):
I think it's only 2.8%.
So yeah, it is a bit higher in
Kelowna.
But within that, there's only a
fraction of those that areactually suitable for long-term
occupancy because there's allkinds of forms of short-term
(25:26):
rentals, like rooms and tents andcaravans and all these things,
right?So the immediate impact of these
restrictions is kind of flood themarket, impact rental markets to
impact the for-sale market becauseyou have investors now that rely
on that cashflow and now need tosell.
But long-term, again, this is nota solution to the lack of
availability and housing.
And I think there's probably a
balance, especially for marketslike Kelowna, where it's, you
know, the tourism dollar matters alot there.
And if you remove the short termrentals completely, well, you're
now having a profound economicimpact.
So I'm hopeful.
I know nothing, but I'm hopeful
(25:47):
that maybe we'll see a fight.
Yeah, that's still more than still
more than matinee yeah i just wantto like the leverage on the hotel
i just want to like the leverageon the hotel stock is so much
bigger like there's 4,500 hotelrooms in colonna it's a much
smaller sort of base that when youstart taking things out of the
accommodation side on the tourismlike the impact is so much greater
on tourism and you guys would knowit's better than us but like
looking at hotel rooms at Kuala,you can't find anything for over
(26:09):
$500 a night right now.
We've spoken about this a bunch on
the show.
It's not an easy issue to talk
about, and there is no easysolution, but you hit the nail on
the head when it's like, okay,yeah, you remove that Airbnb stock
or the investor appetite becausethe numbers just don't pencil out
now.
investor appetite because the
numbers just don't pencil out now.
(26:29):
Well, that does trickle down to
the effect where the people thatare now earning income based on
tourism at restaurants or wineriesor anything that we're built from
in this economy, now theirincome's getting less.
So now they can't afford thoseunits even if they come on the
market or rent does lower.
So yeah, you got to have a bit of
a balance.
And I think what they did, you
know, last year or this year, Iguess, was just wipe it out with a
(26:51):
blanket and it should be a bitmore specific.
So yeah, hopefully we see that tobe reanalyzed in the future.
But what do you see an asset classright now that's maybe undervalued
with a lot of these policychanges?
you Like, with know, a lot ofthese policy changes, like, you
know, with a lot of volatility anddifficult times, there's always
like an opportunity somewhere.
Like in Kelowna, it seems like we
have a lot of condos coming on themarket, a lot of purpose-built
(27:16):
rentals with densification, right?Provincially where we're at and
Kelowna's really supporteddensification.
Even analyzing those properties,it doesn't seem like it makes
sense to tear down a milliondollar house and build a fourplex.
You know, are you guys seeing moreof that in Vancouver?
Like, obviously, Vancouver hasbeen leading the way on this as
well.
We've seen a bit more.
I think on the multiplex side,it's still pretty early days.
(27:38):
You know, there are applications.
We haven't seen a lot of uptick
just because of how recent thepolicy changes.
But if you go back a little bitfurther, they did duplex zoning in
the city of Vancouver.
We've actually seen it to a point
now, we can track half duplexsales because there's so many of
them in the city of Vancouver thatthis is now like an asset class
that exists.
And it's priced kind of where you
(27:59):
would expect.
It's a little more expensive than
a townhome, a little cheaper thana detached home.
And I think probably five years,10 years down the road, that's
sort of where multiplex kind offits in.
But to your point about sort ofpenciling the numbers, like if you
are in Vancouver and you own a $3million home, make the numbers
work to buy that lot from thathome or maybe that downsizing
boomer, like you still have tomake an offer that works for them
(28:21):
and then turn around and make allthe numbers work on your
performance.
So it's not going to be easy.
I don't think there's going to bea massive uptick of these anytime
soon.
But I think at the margin, you
know, it's more lots available,but, you know, not any huge sort
of numbers.
You know, the single family
segment, particularly in the lowermainland, you know, the closer you
(28:43):
get to sort of the historic coreof Metro Vancouver, single family
homes, they're always going to betheoretically in demand, you know,
as people age and couple up andhave kids, there's always going to
be demand there, but we have adisappearing stock of detached
homes.
We have more detached homes today
than we'll have at any point goingforward.
So like from a value perspective,there's a scarcity of supply
feeding into that.
And it says to me that, yeah, you
(29:03):
know, the value and theredevelopment potential, there's
value in that over time.
But I think what we need as a
region, obviously, is we need morehomes built faster.
So that points us more to thecondo end of the spectrum, the
apartment end of the spectrum.
But then, you know, that's not for
everyone either, right?In some ways, we're building those
to meet the needs of today.
But the question is, you know, as
the city evolves, and our marketmaybe at some point starts to
(29:26):
stabilize and growth stabilizes,do we have the right mix of
housing?So I think in order to achieve
that, we got to be investing ineverything today.
So I think there's a hugeopportunity from a demand
perspective in that sort of middlehousing space, as you said, ride,
or wise, as we're calling ittoday, duplexes, townhomes that
are suitable to downsizers andmove uppers, they have a bit more
space so you can comfortably liveas a family as well.
It's a tough one because itdoesn't always pencil.
(29:47):
And obviously, municipalities anddevelopers right now are both
pushing for more and more density.
But I think we need to sort of try
to balance out the supply that iscoming across the spectrum.
Yeah, if you look at sort of theshare of housing look at sort of
the share of housing stock,whether it's in Kelowna,
Vancouver, Victoria, we'vedecreased the share of detached
homes.
We've increased the share of
condos and townhomes have stayedalmost completely constant over
the last couple of decades in allthree markets.
(30:08):
We're building a few moretownhomes, but not as a share of
our overall housing stock.
And so for that, you know, that
demand segment of, okay, I can'tafford necessarily the big house
and big piece of land, but I wanta family-sized home for my growing
family.
There aren't necessarily more
town-owned options available todaythan there were 20 years ago.
So lately there's been just a tonof purposeful lately there's been
just a ton of purposeful rentalsbeing built in Kelowna.
(30:28):
I imagine Vancouver too, becausethe first sale market is just not
there for them.
And I think that CMHC financing is
really helping these builders justpump them out like are we just
going to end up with way too manyrental places around or like what
has to change in our market forthat to change and for us to start
building townhouses or like forsale condos like do we just need
something to stabilize hopefully2025 comes out like you guys say
(30:51):
it's just stable market then wecan start seeing these things
again or are we just going toendlessly build rental projects
just because they pencil right nowi think you're you're right about
part of the reason why we'reseeing so many new projects hit
the market or being built but weneed it so in metro vancouver i
have the data my fingertips alljust referenced it here the 17
year period going back to 2007,80% of the net growth in the
(31:13):
rental condo apartment space wasdue to growth in the secondary
market, right?So it's sort of the individual
investor owners that are rentingtheir condo out, as opposed to the
purpose-built segment driving thatgrowth.
It only accounted for about 20% ofthe net growth.
And up until about six or sevenyears ago, 20% of the net growth.
And up until about six or sevenyears ago, we literally for a
decade plus, maybe closer to twodecades, we saw a virtually
unchanged stock of purpose-builtrentals in this region.
(31:34):
It was 1991 to 2016.
That's at a 25-year period.
Over that period, ourpurpose-built dwelling stock in
Metro Vancouver basically didn'tgrow, but our population grew by
60%.
So we are catching up with this
rental construction.
It's really needed, especially as
we grow as a region, as aprovince, as a country, because
we're not having enough kids.
We're not growing because we're
(31:55):
having babies.
We're growing because people are
moving here.
And the data show that movers are
overwhelmingly renters.
And so, you know, you're
absolutely right that we need, youknow, going back to this idea of a
range of housing typologies.
The rental piece, I think we could
see a lot more of it and be okaywith it.
Like the rental vacancy rate inMetro Vancouver is sub 1%.
I mean, it's the latest data.
We'll get new data in a couple
months.
It's extraordinarily tight.
(32:16):
So more of that, but also moremiddle housing.
As we bring more rental online,hopefully we have fewer of these
restricted policies that tell youwe have fewer of these restricted
policies that tell you we can andcan't do it through property
because we have a healthy vacancyrate.
You know, asking rents areclimbing astronomically while, you
know, rents of existing tenantsfall behind with our sort of
current policy.
So if we have like a 3% vacancy
rate across the province, then wecould probably do with a few less
(32:38):
ofancy rate across the thenprovince, we could probably do
with a few less of these policies.
So we had Wendy Waters on a couple
of weeks ago.
Wendy Waters on a couple of weeks
ago.
She pointed out as well, we had a
similar conversation.
It was like, hey, the Strata Act
came out.
You could stratify and sell
individual units.
We kind of went away from those
purpose-built rentals becauseeconomically it made sense for
(32:59):
builders to develop and sell.
And now it doesn't really make
sense.
We're going back because you have
a 50-year amortization at insuredrates on the MLA Select.
A good point you guys raised thereis vacancy is kind of this taboo
word of like, as an investor, youdon't want a lot of vacancy.
And as the government, you want tobalance vacancy, but really as an
investor, you do want vacancybecause then it allows tenants to
move.
You don't want a tenant to be in
(33:20):
the same property for the next 20years when they've outgrown it and
their rent is from 20 years ago.
You want movement.
It makes everything better for themarket.
We sometimes overanalyze and belike, ah, this is what the market
needs, but it will balance itselfout and a bit of vacancy is
healthy.
Yeah, we have historically low
turnover rates in this province,in this country right now.
(33:43):
And that's the reason why peopledon't want to move because they
are enjoying their below marketrents.
A lot of them probably can'tafford some of the astronomical
rents that are out there on theopen market.
Okay, well, maybe we should moveinto kind of our wrap up questions
here.
If you could buy a property in the
Okanagan in the next 12 months,what would it be?
(34:03):
I think I think you guys know I'mnot buying a vacation home right
now.
Even though I don't want to pay
speculation vacancy tax.
But I think one opportunity that's
there is with leaseholds.
So you can get an investment
property.
There's a lot of good options,
especially in West Kelowna, whereyou can get leasehold.
It's not subject to all the samerestrictions.
(34:24):
So you have a little bit moreflexibility.
Also as an investment property,you get the same rent for a lower
door price.
Leasehold generally appreciates it
about the same amount.
So I think there's an interesting
opportunity for leaseholdavailabilities that you don't get
with a traditional freeholdproduct.
And with a 99-year lease, I don'tplan to live that long.
So I think I'm good there.
And the new ones are 125 years.
(34:44):
So honestly're it should be fineyeah yeah that's a great answer it
really a great answer it really isa something that people need to
explore more and there are someawesome options in west columbia
for that i totally agree with thatare some awesome options in west
columbia for that i totally agreewith that yeah i'm deferring to
wise on that that's a good enoughanswer for both of us okay both of
us okay all.
If you could give your your 20
(35:04):
year old self some advice, whatwould it be?
Two pieces.
One is don't drink on is don't
drink on weekdays.
You're going to feel so much
better.
Learn that eventually.
I would tell myself that sort oflike maintain your curiosity and
your desire to learn.
It'll take you places and it will
bring you satisfaction in yourpersonal life and your
professional life.
I don't want to speak for wise,
but I know we've talked about itas a group here at Rennie within
the intelligence department islike, I think the common trait
that we all have is we're supercurious people.
(35:26):
And it's really fun to be curious.
I think it's really, really
healthy trait to have.
So I'd encourage myself to nurture
that.
Good answer.
I would say one thing I didn'trealize when I was sort of getting
into real estate is like, justreach out to people and ask for
advice or ask to go to coffee.
I always kind of thought when I
was younger that, you know, if youjust reach out to someone, they'll
(35:47):
kind of blow you off.
They won't have time for you.
But the reality is it's a prettysmall industry and people are
really generous with their time.
And I would say to any young
person out there who's trying toget into the business or just out
of school or in school is likereach out to people and chances
(36:08):
are they'll go for coffee with youand they'll share their experience
with you yeah great answers whatis your favorite charity or how do
you get back so i have have acouple that are near and dear to
me the first is the greatervancouver food bank enjoyed both
volunteering there and donatingi've spent some time in their
warehouse sorting like hugedonations from grocery stores that
uh it's pretty satisfying to see.
It can be tough out there,
especially nowadays, and kind ofsee the impact that they have.
And the second one being RonaldMcDonald House of BC and Yukon.
(36:30):
So like, you know, we're a hugeprovince.
We have one children's hospitalkind of tucked away in the corner
of Metro Vancouver.
You know, illness, child illness
can strike anybody.
you some And, people know, child
illness can strike And, anybody.
you some people are just know,
coming from really far And so togo there, away.
taking groups there and, you know,you cook dinner for the whole
house and you kind of see a wholelot of parents kind of wearing
(36:52):
their stress on their face and toknow that you kind of take one
little thing off their plate ispretty impactful.
Awesome.
I love that.
I For me, the big one morerecently has been the World
Wildlife Federation.
And I was standing in my driveway.
My daughter, who at the time wasnine years old, she was drying
with chalk at my feet.
And the stranger came down the
driveway and accosted me.
And my intention was to blow him
(37:13):
off because who is this guy?And he starts doing this spiel
about why it's important tosupport wildlife and the
environment.
And as he's talking, I'm still
waiting for him to finish so I cansay, you know, I'm actually not
interested.
I'm thinking about my daughter and
the world that she's going to sortof grow into.
And I thought, you know, this is areally important moment for me.
And I've committed to donating tothem on a consistent basis.
And I like the right thing to dothen.
(37:34):
And I'm very happy to be doingthat.
I think professionally, somethingI like to do is mentor.
So I've been involved over theyears in various mentorship
programs.
And just going back to actually
what Wise was talking about,connecting sort of people earlier
in their careers and people whoare, you know, mid or later
career, I think it's reallyimportant, those connections to
happen.
And I've really enjoyed, you know,
meeting new people through that.
(37:54):
Fantastic.
How can Taylor or I or ouraudience help you?
Like, what can we do to supportyou?
Yeah, I mean, if you're interestedin what we have to say or what
we're opining on or writing about,there's a few ways that you can
sort of access our content.
You can go to our website at
renny.com slash intelligence.
We post all of our monthly
publications on the real estatemarket, including Kelowna.
So we have reports for Kelowna,Seattle, Vancouver, and Victoria,
publish those every month.
The Rennie Landscape, which goes
out every six months.
(38:15):
And other publications like the
Rennie Outlook, which we publishin the beginning of the year with
predictions for the balance of theyear.
All that stuff is there, includingtopical articles.
We publish two to three a week.
Rennie Intel on X. You can find us
there.
And Rennie.group on TikTok.
we are Yes, on I TikTok.
don't know how we do I don't it.
know what we're You doing.
can find us And there.
Rennie.group on TikTok.
we are Yes, on TikTok.
And there.
Rennie.group on TikTok.
we are Yes, on TikTok.
I don't know how we do it.
(38:36):
I don't know what we're doingthere, but we're there.
Stuff goes on there.
I haven't looked.
You guys have been mastering thedances.
Yeah, exactly.
Yeah.
And then both Berlin and I are onLinkedIn as well.
So you can check.
We post a bit of stuff.
Not too much.
Yeah, no, that's where I found you
guys.
Yeah, you guys are putting out
some quality reports.
(38:56):
And yeah, I love it.
So keep up the good work.
Appreciate it.
Appreciate that.
Awesome.
Nice.
Okay, well, thanks so much for
your time today, guys.
Hopefully Vancouver is treating
you guys well.
And we'll hope to connect with you
guys again soon.
Awesome.
Thanks for having us.
Absolutely.
Thanks, both.
Appreciate it.
It was a lot of fun.
Welcome back to the Kelowna RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's happening today, Taylor?Yeah, just wanted to touch on that
McKay Grove project by Audeo againout in Peachland.
Matt and I are going to try andjump out to that event November
23rd.
That's 10am to 3pm on Buchanan
Road.
And you better not even enter for
that $500 gift card from Martin'slane.
(00:22):
Cause I'm going for that for sure.
You versus me, bro.
We're both going for it.
But yeah, if you guys want to
register, go to McKay grove.ca.
Yeah.
They obviously have a website,follow them on Instagram, reach
out to them, let them know you'recoming.
Obviously try and get a headcount, but yeah, it's McKay lane
development yeah really coolproject yeah they're like really
(00:42):
nice uh townhome they're likereally nice uh townhome project
they're definitely worth checkingchecking out yeah and on today's
show we had a couple awesomeryan's ryan wise and ryan berlin
from renny so uh renny is a fairlyrobust real estate brokerage,
mostly based out of Vancouver, butthey seem like they're starting to
grow and they are up in theKelowna market as well.
(01:05):
So yeah, we kind of spoke to themon macro, micro, provincial,
federally, like pretty much abouteverything.
Yeah, because they have anintelligence department.
Yeah, I love that, man.
Like I'm going to give myself my
own intelligence department.
I felt like I was talking to the
I'm CIA.
your Yeah.
intelligence department, Like I'mman.
going to give myself my ownintelligence department.
I felt like I was talking to theCIA.
Yeah.
I'm your intelligence department,
dude.
Oh, we're all in trouble.
I thought that was so cool.
This is the beginning of the show.
(01:27):
And they're like, yeah, this isthe intelligence department.
We are, you know, integral part ofthe brokerage, which to me, like
at the time, it seemed so, I don'tforeign know, to be like, an
intelligence wow, department for areal estate brokerage, which to
like at me, the time it seemed Idon't so, foreign know, to be
like, wow, an intelligencedepartment for a real estate
brokerage.
But then as we started talking to
them, like, should every brokeragenot have this?
Like, otherwise it just leaves thework to, you know, a bunch of real
(01:48):
estate agents trying to plugnumbers around, which, you know,
we know isn't great.
So I think this could be the way
of the future.
They're leading the way.
Yeah, I think they have the tothey have the right idea.
It's pretty cool what they gotgoing on.
Also, super fun talking to bothRyan's, Ryan Berlin and Ryan Wise.
That was fun to deal with.
Yeah, yeah.
I would suggest out of anything,you know, listen to the show.
It's a great show, but definitely,you know, follow them on, well,
(02:08):
apparently they're on TikTok nowas well.
But LinkedIn is where they put outa lot of really good reports.
I think they have a newsletter aswell that they send out
information and even things like,you know, lakefront property in
the Okanagan.
Like they are really diving into
the super, super nitty grittyspecific data.
So yeah, a value add for anyonethat's looking at buying or
selling in the near future is diveinto their info.
Definitely.
This episode, like every like
(02:29):
every episode, is sponsored byCentury 21 Assurance Realty.
Best brokerage in Kelowna.
Probably the best brokerage in the
interior since we're growing somuch.
We're now in Kamloops, Vernon,Kootenays, Sushwap.
If you need an agent in any ofthose areas or you are an agent
looking for a new brokerage, giveus a call.
Love to talk to you about it andsee what we can do for you.
(02:50):
Sounds great.
Enjoy the show, guys.
All right, Ryan and Ryan, welcometo the show.
Thanks for joining us, guys.
Thanks for having us.
Yeah, great to be here, guys.
Who's who so the listener can tell
when they're listening?Yeah, for sure.
I'm Ryan Wise.
Ryan is market intelligence
manager and lead analyst.
Nice.
So I'm Ryan Berlin.
I head up our intelligence group
and I'm our head economist.
(03:11):
So we can go by last names here if
you want.
If that's easier, we can go Berlin
and Wise.
Oh, I like that.
I like that.
Yeah.
Okay.
Well, Berlin and Wise, I'll leave
you guys to want, you know, who'sgoing to take this first, but we
kind of like to start our showwith just you connecting with our
listener in terms of what's yourperfect Friday look like?
What gives you productivitywork-wise and then leading into a
(03:33):
fun for the weekend?Sure.
I'll jump in.
I actually have a Friday theory
that I kind of tell anyone who'swilling to listen and it relates
to sort of the hybrid workenvironment.
So I think that most people seemto work from home Fridays.
That's like the most popular day.
There's like not a lot of traffic
on the roads or anything likethat.
But I think Mondays and Fridaysare the two best days to be in the
office.
And for me, it's all about those
(03:54):
conversations that you don't havethe rest of the week that can
really lead you into sort of thecreative sort of aha moments.
I find we get a lot more done onnew innovative things on Fridays.
So my favorite thing is get upearly, drop the kids off, get into
the office and kind of collaboratewith our team or other people in
the office because I find thosereally cool steps forward always
happen on Fridays.
Nice.
Yeah, I'm with you on that.
Fridays are great for that kind of
(04:15):
thing.
My Friday starts the same as all
other days during the week.
I try to get up at five every day
to work out, jump on the Peloton,throw back a couple of decaf
coffees, make the kids lunches.
It's a very exciting life I lead.
Get them out the door for school.
So that kind of thing where the
mornings are pretty full.
Once I get in the office, yeah, I
(04:36):
mean, I look forward to thoseconversations on Friday as well.
It gets sort of your brain turningand sets the stage for the next
week.
I try not to schedule meetings on
Fridays.
I don't have to just kind of keep
the decks clear so that loose endscan be tied up and you kind of get
organized for the week ahead.
Yeah, so that's it.
And then weekends are just filledwith family stuff and kids stuff
and lots of pizza.
So that's about it.
Nice.
That sounds very That sounds very
familiar.
Yeah.
Friday pizzas days are ideal.
pizzas days are ideal.
(04:56):
Can you guys just give us like ahigh level company summary for
Rennie?I think you've come up to Kelowna
fairly recently, but obviouslyyou're more well-known in the
lower mainland.
Yeah.
Can you just kind of give us theelevator pitch on company?
Sure.
Our real estate services company,
you know, technically been aroundfor 40 plus years, but started
with our founder, Bob Rennie.
We're now a company of 160
full-time staff at our headoffice.
And we've got over 300 agents,advisors, realtors, whatever you
want to call them.
(05:17):
And we operate in a few different
spaces in the real estate sector.
So first and foremost, we are both
a traditional brokerage thatoperates largely in resale, also a
new home market, but then we alsohave a pre-sale marketing and
sales division as well, as well asan advisory function.
Ryan and I are both within theintelligence division.
We support the operations of thebusiness from the perspective of
(05:39):
trying to understand the market,doing our best to understand the
market, what's impacting it, wherethings are going, so that we can
help our clients better understandthe markets that they're designing
product for, launching into, tohelp our advisors who are working
with buyers or sellers, often inthe resale space, but also in the
pre-sale space, just understandwhat kind of a commitment they're
making to either seller to buy.
(05:59):
So we're very much a data-driven
company.
We operate primarily out of
Vancouver.
That's where our head office is.
But as you said, we've been inKelowna now for...
Honestly, it's been about a yearand a half.
We haven't really grown ourpresence a lot there.
But we do have an office and wehave a few agents up there.
We also are in Victoria and we'verecently this year expanded into
(06:22):
Seattle and Palm Springs.
Oh, cool.
Yeah.
I didn't know that.
Cool.
Forgive my ignorance.
Do most brokerages have anintelligence sector?
Like it seems to me like a hugevalue add for employees and
clients, but yeah, is this a bitof a niche for the industry?
Yeah, I would say, yeah.
So Erlin, you came on with Andy
Ramlow, how many years ago to kindof start this up?
this up?So intelligence became a thing at
(06:43):
Rennie eight years ago.
You don't see it in this sector.
It's kind of a unique function.
Well, I've talked to other people
at other brokerages anddevelopment companies.
They're looking at like, should wehave an intelligence function?
It's one of those things where youreally have to value what an
intelligence group brings to thetable, what sort of the
researchers and the analysts bringto the table.
(07:04):
Everybody likes understanding themarket.
Everyone likes data.
But I think what's different here,
Rennie, is that when Chris Rennie,who is our CEO, when he sort of
took over day-to-day operations ofthe business eight,9 years ago, he
really wanted to have thatfunction in-house.
And he believed that it set up thecompany for a sustainable,
successful existence over thelonger term to have that kind of
function in-house.
And he saw it as sort of being
able to meet the needs of ourclients consistently going
(07:27):
forward.
And it's definitely unique.
Ultimately, everybody's interestedin data.
So you're seeing more and morecompanies in the real estate
space.
They may not have a formal
intelligence division, but I thinkwe're seeing more and more sort of
data-driven decision-making.
I was just going to I was just
going to ask, so when you sayintelligence, I'm assuming you
mean breaking down data.
Where do you get your data?
You get it from real estateboards?
(07:49):
You guys find your own?Where do you scrape the data from?
Yeah.
So a little bit of everywhere.
So definitely we get board data.
So we subscribe, we get the live
feed, the API, so we can, youknow, break it down in real time.
And then also do a lot ofdifferent things that maybe, you
know, traditionally the boardskind of give you that stats pack
and that's sort of the way thatit's always worked.
(08:11):
But we like to break things downin a whole bunch of different
ways.
We don't want to be limited to
just the way that, you know, we'vealways done things a certain way.
And so an example of that is wenow report on like just waterfront
homes in Kelowna.
That was sort of a thing that all
of our advisors said, like, hey,waterfronts, a specific product
type, you know, everything'sgeared around the lake.
And so our team went andpainstakingly hand drew all these
maps.
And it's like, OK, this property
(08:32):
here, this is waterfront.
This one isn't.
They went up and down both sidesof the lake.
But, you a thing know, it's thatsort of thing of like, hey, what
do people actually want?And where is there sort of an
opportunity to do things a littlebit better?
Whether it's with the board data,we use a lot of publicly available
data as well.
We rely on Stats Canada, CMHC, you
know, some of it we pay for, someof it's just freely available,
but, you know, we deep dive, wedownload, you know, the minutia of
all of these different data sets.
(08:53):
We have the luxury of getting the
time to play in these spaces andhopefully coming up with as many
cool insights as we can.
Yeah.
Well, let's dive into it then.
What's 2024 been like in
Vancouver, Kelowna, provincially?Like, you know, we hear a lot of
stagnant, slow market, subject tosale stuff.
But in terms of, I don't know,historically for the last 20
years, what was the year like?It's been tough.
been tough.
Well put.
Yeah, it's been a tough year.
I think there's no point in
(09:14):
beating around the bush.
Sales have been below average in
Vancouver, Kelowna, Victoria formore than two years now, every
single month.
So if you look historically where
we're at, it's been a belowaverage sales count.
So we want to look at activity.
Kelowna has been kind of hit the
hardest.
Sales have been the most below
average at Kelowna.
We can talk about some of the
reasons why that market's been hita little bit harder.
(09:34):
But I think provincially,everywhere, it's been a really
tough year.
And it all really comes back to
this market has been defined byhigh interest rates that have been
in response to high inflation.
And so in the all the time that
I've been in real estate, it'snever been about one thing as much
as it has been these last coupleof years.
(09:55):
That's a good goodcharacterization.
There's also there's been thiscollision between an unfavorable
macroeconomic environment, if youwill, like we've got a pretty slow
job market.
And as why I said, you know, high
interest rates have really boggeddown the housing market, both from
the development side and also fromthe buyer side.
But there's been this collisionwith also policy in this province
that in some instances has beenvery supportive or encouraging of
(10:17):
new supply, which is great.
I think we all know that we need
to be expanding our supply ofhousing consistently over time,
especially in response to all ofthe population growth we've seen
over the past few years.
We've also had a lot of policy
implemented recently that reallytargets investors.
Think what you will aboutinvestors, right?
Everyone has an opinion aboutthem.
The reality is when it comes todelivering new housing supply, the
investor segment of the market isreally, really important for
developers and for projects tomeet their sales thresholds so
(10:39):
they become financially viable.
They're able to access financing
to actually start building.
A lot of that demand from the
investors has gone away.
We're seeing projects that aren't
launching because developers arethe risk averse.
They're very cautious.
They're worried that the project
won't be viable, that they won'tbe able to sell as much as they
need to.
And then the projects that we've
(11:00):
sold, between 2021 and 2023,investors accounted for about half
of all pre-sale purchases.
Through the first half of this
year, they've accounted for abouta quarter.
And it makes sense.
I mean, the cash flow situation
for investors, if you're buyingnew, even with higher rents, it's
pretty ugly.
Your monthly cash flow is going to
be negative for a number of years,at least.
(11:21):
So those policies, I think thatlike we're talking about the
increase in the capital gainsinclusion rate at the federal
level, the restrictions on shortterm rentals, changes to the
Residential Tenancy Act, whichcome from a very good place, but
all sort of restrict or constraininvestors' ability to participate
by changing that risk rewardrelationship.
And we have a flipping tax, whichI think is set to be implemented
(11:46):
in the new year.
So it's been a lot of things.
It's kind of been a lot of all atonce, right?
It's really slowed things down.
I guess in a perfect world, like,
yeah, Matt and I have spoken a lotabout policy changes.
It seems like every other week,there's news coming out with
(12:09):
something and then, you know, twoweeks go by and then they change
the policy because it's notcorrect.
But I guess from an economicstandpoint, what is the perfect
scenario if we could build onefor, you know, appreciation in
those properties?Like, obviously, we don't want the
market just to crash and thebottom to fall out of it.
And we do understand that, youknow, provincially, they want
affordable houses.
But like, what is the perfect
balance?I guess, you know, should
properties be appreciating bythree to 5% every year or?
(12:33):
There is no magic number.
I think if we want to get away
from sort of I think if we want toget away from sort of the
commodification of housing, thenwe shouldn't be, you know, trying
to build a system that takes in,you know, home price increases
that are exceeding the ability ofthe population to pay.
So what is that?Is that 2% a year, 3% a year,
(12:53):
something like that?I think at the end of the day, if
you get away from the value partof things, I mean, obviously, we
want housing to be affordable.
But I think before we talk about
that, it's really about how do youset the conditions such that
regardless of, let's say, themacroeconomic environment, how do
we ensure that we have thisconsistent flow of new housing to
the extent that we need it, to theextent that our population
(13:18):
continues to grow and we need morehousing?
I think that's the most importantthing.
So supportive supply-side measuresare great, but I think looking on
the other side too andimplementing policies that say,
hey, we have some empty homes andwe think those should be filled
up.
So we're introducing certain
policies to do that.
Well, they have a knock-on effect
because they dissuade some of thecatalysts for new supply from
participating in the market.
It's not reacting to the
zeitgeist, right?It's more just like it's thinking
(13:39):
long-term, which politiciansaren't good at.
They get it.
Yeah.
It doesn't doesn't get you votedback in if you're thinking
long-term, does it?Yeah.
And I would add that, you know,depending on which analysis you
look at, like we've been underbuilding in this country and in
this province for decades.
So like CMHC has a report that in
Canada, we should build 3.5million more homes than we
otherwise would build by 2030,just to get affordability levels
(14:00):
back to 2003.
We did a recent analysis at Metro
levels where we said based onhousehold formation that we've
probably underbuilt in MetroVancouver by about 45,000 homes in
the Okanagan.
It's a little over 2000 homes.
Like these are big numbers interms of the amount of homes that
we've been consistentlyunderbuilding year after year
after year.
And so I think, you know, most of
(14:21):
that back to your question oflike, what's the best case
scenario, I think it's all aboutencouraging more housing supply,
because we don't just need tobuild for, you know, recent
population growth, we need to sortof make up that gap that we've
been accumulating over the lastfew decades.
Yeah, you know, it's funny.
So let's just say there's been
like 20 some odd policies in thelast couple years that have come
out to try and resolve this supplyand demand issue.
(14:43):
And everyone keeps going back tojust like, we need to build more.
But I guess, you know, federally,they finally come to the
conclusion that maybe the easiersolution is, hey, maybe our
population needs to stop growingas fast or like, you know,
hindsight is 2020.
Hey, three years ago, maybe we
shouldn't have, you know,encouraged 2020 hey three years
ago maybe we shouldn't have youknow encouraged population growth
so much so with recent governmentpolicy around immigration and
(15:04):
population growth do you see thatbeing the easiest solution out of
everything that they've come outwith and they've tried everything
else and everything else hasn'tworked so So finally, they're
like, okay, this is a step we needto take.
I mean, I would say, you know,stopping immigration or reducing
population for a couple of yearsisn't going to solve these
long-term systemic issues.
This recent announcement for
immigration, we're effectivelysaying we're going to see
(15:25):
population decline for the nexttwo years.
It's something we've never seenbefore in Canada, but we've also
never seen the level of populationgrowth we saw for the last two
years where we added more than 2million Canadians in a two-year
period.
So it's this crazy whiplash
between one extreme to the next.
We went back and looked all the
way to Confederation.
We've never had a single year of
population decline in thiscountry.
(15:45):
And now they say, oh, let's goahead and do two, and maybe
that'll fix housing andhealthcare.
You're not going to fix housingand health care in two years.
Sorry to be a little bit flippantabout that.
But like we need sustainedimmigration for our economy.
We have an aging population.
We have an aging workforce.
You know, we need that sort ofimmigration level that we had
pre-pandemic or somewhere aroundthere, like, you know, 1% annual
growth rate for population.
(16:07):
And so it seems like so many of
these policies are, you know,again, they're short term thinking
it's responding to the latestchallenge with the next policy
that, you know, you don't fullyconsider all the unintended
consequences of it.
And I expect that with population
decline over the next year or two,we're going to see real pains in
the economy, and particularly inthe labor market that will lead to
(16:30):
more policy changes.
I think there's danger in, you
know, fostering an environment of,you know, policy or economic
uncertainty and unpredictablevolatility, right?
And so that's what we're lookingat.
And we just came through this withCOVID.
Like, we're coming up on fiveyears of this and that.
Everything is unprecedented,right?
And it's just, it's exhausting.
And we're just coming out of that
period.
And now on the policy front, we're
back talking about unprecedentedchanges to immigration and
(16:53):
migration flows and populationgrowth.
As Y said, you know, we're goingto see two years of population
decline from a businessperspective, even from an
individual perspective.
If we have these dramatic shifts
in policy, like how we're tryingto solve the challenges that we
have, it becomes a not veryenticing environment for people to
participate in.
It can paralyze the economy from
the viewpoint of investment.
And whether it's like financial
investment or human capitalinvestment in an economy.
(17:13):
So the permanent resident targetshave been reduced up until the
announcement, what was it, a monthago now, a few weeks ago.
For next year and the year after,we were expecting 500 PR
admissions to this country.
And that's now down to, I think,
395 and 380.
And then another year after that
at 365.
That's kind of understandable.
That is a big downshift.
It but you go okay well maybe we
(17:35):
sort of taper it off at the sametime they put caps on the number
of temporary residents that theywould like to see in Canada so
international students temporaryforeign workers and that sort of
thing that's what's really goingto drive our growth rate down is
pushing out each of the next twoyears 500,000 people it's a
powerful tool but I think weshould wield it, you know,
(17:57):
carefully.
Yeah.
I mean, we spoke a lot about likevolatility with policy changes
with the provincial election over,which seems like it went on
forever because counting ballots,like it's the weirdest election
ever.
Now that that's over, obviously
federally, there'll be one comingup pretty quickly here.
Like, I feel like you're more intune with it being, you know, in a
(18:17):
bigger city and obviously studyingthis stuff.
But can we expect less volatilityand less policy changes now that
like the political campaign isdone provincially?
Like, yeah, there's obviouslystill going to be some, you know,
federally.
But can we all like, take a sigh
of relief and be like, we shouldbe in the clear for the next year
to just like not have to watch thenews every day i think so i so i
(18:41):
think this government will focusmore on all of these policy
changes they've done to implementthey're still trying to get some
of them through whether it'shousing targets you know getting
all the municipalities on board orimplementing some of that
multiplex zoning across theprovince where there's been some
pushback so i think we're going tosee more of that implementation of
that agenda that they campaignedon that they started on
(19:03):
previously.
So I would say probably, I think
so.
But there are still, I think, some
more to come.
Like Berlin already mentioned, you
know, the flipping taxes to comeinto effect.
They talked about increasing thespec and vacancy tax rate.
So that's still probably to come.
Like, there are still probably
some more changes.
But overall, I think they're going
to focus more on implementingtheir agenda that they've already
canceled too.
Yeah.
Okay.
Okay.
(19:23):
Well, maybe to spin this a littlemore optimistically, I'm hoping,
how's 2025 shaping up to be?Like, it seems like the market's
gaining some momentum, like evenin Kelowna where the fall winter
is usually a slower season, itseems like activity is starting to
pick up.
What are you guys seeing?
I mean, I think broadly, and thendrill down to Kelowna, we've been
(19:45):
saying that 2025 is going to beaverage.
Which is up from now.
Well, exactly.
Yeah.
Yeah.
It doesn't necessarily sound onthe surface like something to get
excited about.
But because we've been distinctly
below average in so many regardsthe past couple of years, to the
extent that we are average fromthe perspective of inventory sort
of leveling out and stabilizingsales, increasing a more liquid
market, right?Because what we're right now, we
have almost paralysis in ourmarket on both the listing side
(20:07):
and the buy side.
I think with more stability in
inflation, I mean, we've been sub2% as far as headline inflation is
concerned, the last two readings.
I think from our perspective, Bank
of Canada has got inflation undercontrol in the near term.
I hope those words don't come backto haunt me.
But our outlook is for inflationto remain in that 1% to 3% band
over the coming year, which thengives the Bank of Canada space to
(20:27):
bring down interest rates to a,you know, what they call a neutral
level, that overnight rate beingbetween 225 and 325.
So, you know, we're probably goingto see five-year fixed mortgage
rates or uninsured mortgagesaround, you know, 4%, but you
might be able to get a little bitlower than that.
I mean, you guys might be able tospeak to that as well.
The point is not the level ofthese things, but more that
(20:47):
there's stability in thoseelements, which then give
confidence to developers to sortof commit to purchasing land and
financing projects and actuallybringing them to market, knowing
that there's probably going to bebuyers out there.
I think on that side of things, weexpect sales both in resale and
presale to move back to sort ofthe historical average, not to
exceed it, but move back to thataverage, which would represent a
(21:10):
welcome change, I think, foreverybody and without seeing
dramatic changes in values.
Like housing, we expect over the
next 6 to 12 months is going tobecome more affordable.
It's still going to be veryexpensive, but with continued
modest increases in incomes,falling interest rates, and prices
not really ticking up too much, wethink we can see increased
activity in the market withoutseeing values really pushed
upwards.
Sorry, when you mean average, I
(21:33):
think for an economist to say thatit's pretty optimistic, or maybe
I'm just putting your words in mymouth.
but like average in terms of, Ithink last year, or maybe even
partial of this year, like theOkanagan market, we were down on
sales, like 16% from the previousyear, which was like pretty low.
But do you mean average in termsof like, you know, over the past
(21:54):
10 years, we're kind of be back ontrack average wise.
So it, you know, it should be likea fairly strong market in terms of
transactions.
Yeah, I would say, yeah, I think
we've already seen some movementback towards average, again, in
Vancouver and Victoria.
Those two markets have started to
move first already.
And again, Kelowna's been hit a
little bit harder.
And I think a lot of that is,
(22:14):
again, investor and recreationalbuyers maybe being squeezed out a
little more on some of that policystuff, especially like the
short-term rental restrictions, Ithink have impacted Kelowna more
than any other market.
So maybe not quite to the same
level, again, as Vancouver andVictoria, but ultimately, yeah,
like back to kind of a past decadeaverage or close to that level.
So, you know, I think we wouldexpect things will feel a lot
(22:36):
different next year because therewill be a lot more transactions
happening.
And without a lot of price growth,
I think there'll be, you know, abit more value for those buyers as
rates continue to come down.
What do you think about the
recreational market in Kelownaeven long term?
Can you even have a recreationalproperty right now?
Besides Big White, you've gotvacancy tax, you can't Airbnb it.
(22:56):
I'll show show you.
I was prepping for this.
I printed the map.
So green, you are subject to spec
and vacancy tax.
Yes, yes.
Yeah, it's tough.
I'd say, you know, go buy a shoe
shop instead.
Because that's where you own,
right?Yeah, that's right.
I'm a fan of this kind of place.
that's right.
I'm a fan of this kind of place.
(23:17):
A little shameless plug.
plug.
Yeah, no, it's tough.
Like even, you said big white,even Predator Ridge is subject to
spec and vacancy tax.
I know.
I know.
Which I find a little bit strange.
So there's some pockets.
But I think that recreation buyer,
like it's going to be tough for awhile.
I know.
that a mix of sort of investor but
especially that right buyer andthat 25 declined a lot last year
and is basically on par with othermarkets this year and i think
(23:40):
we're going to see that rec buyerkind of be sidelined for a little
bit longer until we get a bit moresense for what the long-term
impacts of these people yeah likeeven longer like as yeah like even
longer like as long as thespeculation tax is there seems
like it doesn't ever come backyeah and i think like also with
the short-term rental restrictionslike and i think like also with
the short-term rental restrictionslike some of those buyers are you
(24:01):
know i want to use some of thetime i want to be on airbnb some
of the time especially on some ofthose you know condos that sort of
downtown colonna before some ofthe zoning rules change but yeah
those buyers they're sidelinedright now of to be on airbnb some
of some of they're sidelined rightnow for sure collectively i don't
think we should hold our breathsfor i don't think we should hold
(24:21):
our breaths for any any reductionsor removals in the speculation of
vacancy tax.
I think, wise, you mentioned that
this government is looking atincreasing wise, you that,
actually, in the near term.
I think there's some potential for
those short-term rentalrestrictions.
There's a couple of layers to it,but for those short-term rental
restrictions to be scaled back,there's issues because you have
the policy at the provinciallevel, but then you also have
municipalities that are also keenin certain instances to have some
(24:45):
form of it.
I'm optimistic that we give it a
little bit more time, we'll havethe benefit of being able to look
back on the data and say, okay,what was the impact of the
short-term rental restrictions?We know StatsCan did a study that
showed that short-term rentals isthe share of the dwelling stock.
It's very small.
We're talking like 2% to 3%.
Yeah, a little bit higher inKelowna, but nationally, I think
really, really low.
And even in the city of Vancouver,
(25:05):
I think it's only 2.8%.
So yeah, it is a bit higher in
Kelowna.
But within that, there's only a
fraction of those that areactually suitable for long-term
occupancy because there's allkinds of forms of short-term
(25:26):
rentals, like rooms and tents andcaravans and all these things,
right?So the immediate impact of these
restrictions is kind of flood themarket, impact rental markets to
impact the for-sale market becauseyou have investors now that rely
on that cashflow and now need tosell.
But long-term, again, this is nota solution to the lack of
availability and housing.
And I think there's probably a
balance, especially for marketslike Kelowna, where it's, you
know, the tourism dollar matters alot there.
And if you remove the short termrentals completely, well, you're
now having a profound economicimpact.
So I'm hopeful.
I know nothing, but I'm hopeful
(25:47):
that maybe we'll see a fight.
Yeah, that's still more than still
more than matinee yeah i just wantto like the leverage on the hotel
i just want to like the leverageon the hotel stock is so much
bigger like there's 4,500 hotelrooms in colonna it's a much
smaller sort of base that when youstart taking things out of the
accommodation side on the tourismlike the impact is so much greater
on tourism and you guys would knowit's better than us but like
looking at hotel rooms at Kuala,you can't find anything for over
(26:09):
$500 a night right now.
We've spoken about this a bunch on
the show.
It's not an easy issue to talk
about, and there is no easysolution, but you hit the nail on
the head when it's like, okay,yeah, you remove that Airbnb stock
or the investor appetite becausethe numbers just don't pencil out
now.
investor appetite because the
numbers just don't pencil out now.
(26:29):
Well, that does trickle down to
the effect where the people thatare now earning income based on
tourism at restaurants or wineriesor anything that we're built from
in this economy, now theirincome's getting less.
So now they can't afford thoseunits even if they come on the
market or rent does lower.
So yeah, you got to have a bit of
a balance.
And I think what they did, you
know, last year or this year, Iguess, was just wipe it out with a
(26:51):
blanket and it should be a bitmore specific.
So yeah, hopefully we see that tobe reanalyzed in the future.
But what do you see an asset classright now that's maybe undervalued
with a lot of these policychanges?
you Like, with know, a lot ofthese policy changes, like, you
know, with a lot of volatility anddifficult times, there's always
like an opportunity somewhere.
Like in Kelowna, it seems like we
have a lot of condos coming on themarket, a lot of purpose-built
(27:16):
rentals with densification, right?Provincially where we're at and
Kelowna's really supporteddensification.
Even analyzing those properties,it doesn't seem like it makes
sense to tear down a milliondollar house and build a fourplex.
You know, are you guys seeing moreof that in Vancouver?
Like, obviously, Vancouver hasbeen leading the way on this as
well.
We've seen a bit more.
I think on the multiplex side,it's still pretty early days.
(27:38):
You know, there are applications.
We haven't seen a lot of uptick
just because of how recent thepolicy changes.
But if you go back a little bitfurther, they did duplex zoning in
the city of Vancouver.
We've actually seen it to a point
now, we can track half duplexsales because there's so many of
them in the city of Vancouver thatthis is now like an asset class
that exists.
And it's priced kind of where you
(27:59):
would expect.
It's a little more expensive than
a townhome, a little cheaper thana detached home.
And I think probably five years,10 years down the road, that's
sort of where multiplex kind offits in.
But to your point about sort ofpenciling the numbers, like if you
are in Vancouver and you own a $3million home, make the numbers
work to buy that lot from thathome or maybe that downsizing
boomer, like you still have tomake an offer that works for them
(28:21):
and then turn around and make allthe numbers work on your
performance.
So it's not going to be easy.
I don't think there's going to bea massive uptick of these anytime
soon.
But I think at the margin, you
know, it's more lots available,but, you know, not any huge sort
of numbers.
You know, the single family
segment, particularly in the lowermainland, you know, the closer you
(28:43):
get to sort of the historic coreof Metro Vancouver, single family
homes, they're always going to betheoretically in demand, you know,
as people age and couple up andhave kids, there's always going to
be demand there, but we have adisappearing stock of detached
homes.
We have more detached homes today
than we'll have at any point goingforward.
So like from a value perspective,there's a scarcity of supply
feeding into that.
And it says to me that, yeah, you
(29:03):
know, the value and theredevelopment potential, there's
value in that over time.
But I think what we need as a
region, obviously, is we need morehomes built faster.
So that points us more to thecondo end of the spectrum, the
apartment end of the spectrum.
But then, you know, that's not for
everyone either, right?In some ways, we're building those
to meet the needs of today.
But the question is, you know, as
the city evolves, and our marketmaybe at some point starts to
(29:26):
stabilize and growth stabilizes,do we have the right mix of
housing?So I think in order to achieve
that, we got to be investing ineverything today.
So I think there's a hugeopportunity from a demand
perspective in that sort of middlehousing space, as you said, ride,
or wise, as we're calling ittoday, duplexes, townhomes that
are suitable to downsizers andmove uppers, they have a bit more
space so you can comfortably liveas a family as well.
It's a tough one because itdoesn't always pencil.
(29:47):
And obviously, municipalities anddevelopers right now are both
pushing for more and more density.
But I think we need to sort of try
to balance out the supply that iscoming across the spectrum.
Yeah, if you look at sort of theshare of housing look at sort of
the share of housing stock,whether it's in Kelowna,
Vancouver, Victoria, we'vedecreased the share of detached
homes.
We've increased the share of
condos and townhomes have stayedalmost completely constant over
the last couple of decades in allthree markets.
(30:08):
We're building a few moretownhomes, but not as a share of
our overall housing stock.
And so for that, you know, that
demand segment of, okay, I can'tafford necessarily the big house
and big piece of land, but I wanta family-sized home for my growing
family.
There aren't necessarily more
town-owned options available todaythan there were 20 years ago.
So lately there's been just a tonof purposeful lately there's been
just a ton of purposeful rentalsbeing built in Kelowna.
(30:28):
I imagine Vancouver too, becausethe first sale market is just not
there for them.
And I think that CMHC financing is
really helping these builders justpump them out like are we just
going to end up with way too manyrental places around or like what
has to change in our market forthat to change and for us to start
building townhouses or like forsale condos like do we just need
something to stabilize hopefully2025 comes out like you guys say
(30:51):
it's just stable market then wecan start seeing these things
again or are we just going toendlessly build rental projects
just because they pencil right nowi think you're you're right about
part of the reason why we'reseeing so many new projects hit
the market or being built but weneed it so in metro vancouver i
have the data my fingertips alljust referenced it here the 17
year period going back to 2007,80% of the net growth in the
(31:13):
rental condo apartment space wasdue to growth in the secondary
market, right?So it's sort of the individual
investor owners that are rentingtheir condo out, as opposed to the
purpose-built segment driving thatgrowth.
It only accounted for about 20% ofthe net growth.
And up until about six or sevenyears ago, 20% of the net growth.
And up until about six or sevenyears ago, we literally for a
decade plus, maybe closer to twodecades, we saw a virtually
unchanged stock of purpose-builtrentals in this region.
(31:34):
It was 1991 to 2016.
That's at a 25-year period.
Over that period, ourpurpose-built dwelling stock in
Metro Vancouver basically didn'tgrow, but our population grew by
60%.
So we are catching up with this
rental construction.
It's really needed, especially as
we grow as a region, as aprovince, as a country, because
we're not having enough kids.
We're not growing because we're
(31:55):
having babies.
We're growing because people are
moving here.
And the data show that movers are
overwhelmingly renters.
And so, you know, you're
absolutely right that we need, youknow, going back to this idea of a
range of housing typologies.
The rental piece, I think we could
see a lot more of it and be okaywith it.
Like the rental vacancy rate inMetro Vancouver is sub 1%.
I mean, it's the latest data.
We'll get new data in a couple
months.
It's extraordinarily tight.
(32:16):
So more of that, but also moremiddle housing.
As we bring more rental online,hopefully we have fewer of these
restricted policies that tell youwe have fewer of these restricted
policies that tell you we can andcan't do it through property
because we have a healthy vacancyrate.
You know, asking rents areclimbing astronomically while, you
know, rents of existing tenantsfall behind with our sort of
current policy.
So if we have like a 3% vacancy
rate across the province, then wecould probably do with a few less
(32:38):
ofancy rate across the thenprovince, we could probably do
with a few less of these policies.
So we had Wendy Waters on a couple
of weeks ago.
Wendy Waters on a couple of weeks
ago.
She pointed out as well, we had a
similar conversation.
It was like, hey, the Strata Act
came out.
You could stratify and sell
individual units.
We kind of went away from those
purpose-built rentals becauseeconomically it made sense for
(32:59):
builders to develop and sell.
And now it doesn't really make
sense.
We're going back because you have
a 50-year amortization at insuredrates on the MLA Select.
A good point you guys raised thereis vacancy is kind of this taboo
word of like, as an investor, youdon't want a lot of vacancy.
And as the government, you want tobalance vacancy, but really as an
investor, you do want vacancybecause then it allows tenants to
move.
You don't want a tenant to be in
(33:20):
the same property for the next 20years when they've outgrown it and
their rent is from 20 years ago.
You want movement.
It makes everything better for themarket.
We sometimes overanalyze and belike, ah, this is what the market
needs, but it will balance itselfout and a bit of vacancy is
healthy.
Yeah, we have historically low
turnover rates in this province,in this country right now.
(33:43):
And that's the reason why peopledon't want to move because they
are enjoying their below marketrents.
A lot of them probably can'tafford some of the astronomical
rents that are out there on theopen market.
Okay, well, maybe we should moveinto kind of our wrap up questions
here.
If you could buy a property in the
Okanagan in the next 12 months,what would it be?
(34:03):
I think I think you guys know I'mnot buying a vacation home right
now.
Even though I don't want to pay
speculation vacancy tax.
But I think one opportunity that's
there is with leaseholds.
So you can get an investment
property.
There's a lot of good options,
especially in West Kelowna, whereyou can get leasehold.
It's not subject to all the samerestrictions.
(34:24):
So you have a little bit moreflexibility.
Also as an investment property,you get the same rent for a lower
door price.
Leasehold generally appreciates it
about the same amount.
So I think there's an interesting
opportunity for leaseholdavailabilities that you don't get
with a traditional freeholdproduct.
And with a 99-year lease, I don'tplan to live that long.
So I think I'm good there.
And the new ones are 125 years.
(34:44):
So honestly're it should be fineyeah yeah that's a great answer it
really a great answer it really isa something that people need to
explore more and there are someawesome options in west columbia
for that i totally agree with thatare some awesome options in west
columbia for that i totally agreewith that yeah i'm deferring to
wise on that that's a good enoughanswer for both of us okay both of
us okay all.
If you could give your your 20
(35:04):
year old self some advice, whatwould it be?
Two pieces.
One is don't drink on is don't
drink on weekdays.
You're going to feel so much
better.
Learn that eventually.
I would tell myself that sort oflike maintain your curiosity and
your desire to learn.
It'll take you places and it will
bring you satisfaction in yourpersonal life and your
professional life.
I don't want to speak for wise,
but I know we've talked about itas a group here at Rennie within
the intelligence department islike, I think the common trait
that we all have is we're supercurious people.
(35:26):
And it's really fun to be curious.
I think it's really, really
healthy trait to have.
So I'd encourage myself to nurture
that.
Good answer.
I would say one thing I didn'trealize when I was sort of getting
into real estate is like, justreach out to people and ask for
advice or ask to go to coffee.
I always kind of thought when I
was younger that, you know, if youjust reach out to someone, they'll
(35:47):
kind of blow you off.
They won't have time for you.
But the reality is it's a prettysmall industry and people are
really generous with their time.
And I would say to any young
person out there who's trying toget into the business or just out
of school or in school is likereach out to people and chances
(36:08):
are they'll go for coffee with youand they'll share their experience
with you yeah great answers whatis your favorite charity or how do
you get back so i have have acouple that are near and dear to
me the first is the greatervancouver food bank enjoyed both
volunteering there and donatingi've spent some time in their
warehouse sorting like hugedonations from grocery stores that
uh it's pretty satisfying to see.
It can be tough out there,
especially nowadays, and kind ofsee the impact that they have.
And the second one being RonaldMcDonald House of BC and Yukon.
(36:30):
So like, you know, we're a hugeprovince.
We have one children's hospitalkind of tucked away in the corner
of Metro Vancouver.
You know, illness, child illness
can strike anybody.
you some And, people know, child
illness can strike And, anybody.
you some people are just know,
coming from really far And so togo there, away.
taking groups there and, you know,you cook dinner for the whole
house and you kind of see a wholelot of parents kind of wearing
(36:52):
their stress on their face and toknow that you kind of take one
little thing off their plate ispretty impactful.
Awesome.
I love that.
I For me, the big one morerecently has been the World
Wildlife Federation.
And I was standing in my driveway.
My daughter, who at the time wasnine years old, she was drying
with chalk at my feet.
And the stranger came down the
driveway and accosted me.
And my intention was to blow him
(37:13):
off because who is this guy?And he starts doing this spiel
about why it's important tosupport wildlife and the
environment.
And as he's talking, I'm still
waiting for him to finish so I cansay, you know, I'm actually not
interested.
I'm thinking about my daughter and
the world that she's going to sortof grow into.
And I thought, you know, this is areally important moment for me.
And I've committed to donating tothem on a consistent basis.
And I like the right thing to dothen.
(37:34):
And I'm very happy to be doingthat.
I think professionally, somethingI like to do is mentor.
So I've been involved over theyears in various mentorship
programs.
And just going back to actually
what Wise was talking about,connecting sort of people earlier
in their careers and people whoare, you know, mid or later
career, I think it's reallyimportant, those connections to
happen.
And I've really enjoyed, you know,
meeting new people through that.
(37:54):
Fantastic.
How can Taylor or I or ouraudience help you?
Like, what can we do to supportyou?
Yeah, I mean, if you're interestedin what we have to say or what
we're opining on or writing about,there's a few ways that you can
sort of access our content.
You can go to our website at
renny.com slash intelligence.
We post all of our monthly
publications on the real estatemarket, including Kelowna.
So we have reports for Kelowna,Seattle, Vancouver, and Victoria,
publish those every month.
The Rennie Landscape, which goes
out every six months.
(38:15):
And other publications like the
Rennie Outlook, which we publishin the beginning of the year with
predictions for the balance of theyear.
All that stuff is there, includingtopical articles.
We publish two to three a week.
Rennie Intel on X. You can find us
there.
And Rennie.group on TikTok.
we are Yes, on I TikTok.
don't know how we do I don't it.
know what we're You doing.
can find us And there.
Rennie.group on TikTok.
we are Yes, on TikTok.
And there.
Rennie.group on TikTok.
we are Yes, on TikTok.
I don't know how we do it.
(38:36):
I don't know what we're doingthere, but we're there.
Stuff goes on there.
I haven't looked.
You guys have been mastering thedances.
Yeah, exactly.
Yeah.
And then both Berlin and I are onLinkedIn as well.
So you can check.
We post a bit of stuff.
Not too much.
Yeah, no, that's where I found you
guys.
Yeah, you guys are putting out
some quality reports.
(38:56):
And yeah, I love it.
So keep up the good work.
Appreciate it.
Appreciate that.
Awesome.
Nice.
Okay, well, thanks so much for
your time today, guys.
Hopefully Vancouver is treating
you guys well.
And we'll hope to connect with you
guys again soon.
Awesome.
Thanks for having us.
Absolutely.
Thanks, both.
Appreciate it.
It was a lot of fun.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!