the 2025 rennie outlook

RENNIE OUTLOOK 2025

Uncertainty and instability have been the hallmarks of our economy and housing market over the past five years.

We’ve endured rising and high inflation; rising and (relatively) high interest rates; and a slew of federal, provincial, and municipal policies that have impacted immigration flows, housing construction costs, and the rental market. Now, with much of the macroeconomic and policy turbulence having seemingly been absorbed, there’s hope that certainty and stability are poised for a comeback. With changes coming to Canada’s federal government, however, and with a “US-first” administration now in charge south of our border, new questions are emerging about the direction of Canada’s economy and the outlook for housing markets across the country, including here in Metro Vancouver. This is where the rennie outlook comes in. In this report, we provide our predictions for various dimensions of our economy and housing market for 2025. And as we’ve said before, the value of the predictions contained in the following pages is not merely in using them as inputs into pro formas and business plans, but—perhaps most importantly—in the accompanying assumptions and context that inform our expectations. We hope that you find this report useful as a basis for planning, or—at the very least—as a part of constructive conversations about how our market is evolving.

table of contents .

2 INTRO

SALES & CONSTRUCTION

HOME PRICES & RENTS

DEMOGRAPHICS

9 JOBS, INFLATION, WAGES, RATES

Thanks for reading.

Ryan Berlin Head Economist & Vice President of Intelligence rberlin@rennie.com

Ryan Wyse Lead Analyst & Market Intelligence Manager rwyse@rennie.com

Roman Meltzer Market Analyst rmelzer@rennie.com

Copyright © 2025 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of January 29, 2025. Data from the Greater Vancouver and Fraser Valley Boards, Statistics Canada, Zonda Urban, CMHC, & rennie. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of companies. E.&O.E. 2

RENNIE OUTLOOK 2025

housing: improved purchasing power to drive more sales RESALE COUNTS While in hindsight our forecast for sales in 2024 proved to be a little too optimistic, the Vancouver Region did see more activity than the prior year. At a little over 40,000, sales were up 0.6% to end two consecutive years of decline. A string of interest rate cuts through the second half of the year was ultimately what drove higher demand. Sales in the latter six months of the year were up 8% relative to the same period in 2023 versus a 5% decline in the first six months. With sales firmly on a different trajectory through the second half of 2024, we expect that momentum to carry into the new year. Conditions are expected to improve even further courtesy of additional interest rate cuts by the Bank of Canada and recent adjustments to mortgage insurance rules.

OUR 2025 OUTLOOK

Increased purchasing power, pent-up demand, and elevated inventory levels will support higher sales in 2025, with a total of 50,000 MLS sales predicted for the year—up 24% from 2024. We expect sales to reach 16,000 for detached homes, 10,000 for townhomes, and 24,000 for condos.

PRE-SALE COUNTS A number of new government housing policies implemented in 2024–including short-term rental restrictions, an increase to the capital gains inclusion rate, the home flipping tax, and changes to the Residential Tenancy Act–were especially limiting to pre-sale investor-buyers. With that, activity in the Vancouver Region fell to its lowest level since 2019 with 9,740 pre-sales, a 16% decline year-over-year and 37% below the prior 10-year average.

Pre-sale activity will be supported by increasing resale counts and prices, and further declines in mortgage rates.

OUR 2025 OUTLOOK

We expect pre-sales in the Vancouver Region to rise modestly in 2025 alongside improving resale market activity. Overall, we anticipate a total of 12,200 pre-sales this year, including 4,500 concrete homes, 5,700 woodframe homes, and 2,000 townhomes.

RENNIE OUTLOOK 2025

HOUSING STARTS On the heels of a record year for new housing construction in 2023, starts in Metro Vancouver declined 8% last year to 28,112. This was less than our forecast of 29,900, but still a relatively strong showing at the third-most annual starts in the region’s history (2019 saw slightly more starts at 28,141).

Based on the declining trend for building permits and challenging pre-sale conditions in 2024, our forecast is for a second consecutive year of declining housing starts in 2025.

OUR 2025 OUTLOOK

We expect housing starts in Metro Vancouver to decline by another 13% in 2025, to 24,500. Should new construction activity move in line with our forecast, this would be the third-fewest housing starts in 10 years.

HOUSING COMPLETIONS Though housing starts have been on a declining trend in Metro Vancouver, housing completions have been heading in the opposite direction as the apartments that started construction at record levels in 2023 reach delivery. Our forecast for 25,000 completions in 2024 was realized, with 25,614 homes delivered last year, an increase of 23% year-over-year and a new record for the region. Following two elevated years of housing starts, the number of homes under construction in Metro Vancouver hovered near an all-time high at the end of 2024 at 63,751 units. We expect this to translate into another record year of housing completions in 2025.

OUR 2025 OUTLOOK

Based on elevated housing starts over the past two years and a near-record level of homes currently under construction, we predict housing completions in Metro Vancouver will total 29,000 in 2025. That would surpass last year’s record by 13% and set a new high-water mark for the region.

RENNIE OUTLOOK 2025

prices and rents: diverging paths ahead

HOME PRICES There wasn’t a lot of movement for MLS benchmark prices in the Vancouver Region in 2024. After starting last year at 95% of its 2022 peak value, the condo benchmark recovered almost all the way to its previous peak (99%) in the first half of the year, before declining in the back-half (as the Bank of Canada began to cut its policy rate) and finishing the year down 2.1%. Detached home benchmark prices followed a similar path, although starting from a lower level (90% of previous peak value), and finished the year 1.9% higher than the end of 2023. With further interest rate cuts on the horizon, alongside our expectation of increased sales activity, we expect prices to rise modestly in 2025.

OUR 2025 OUTLOOK

While we expect benchmark MLS prices for both condos and detached homes to increase in 2025, neither will reach their previous peak values from 2022. For condos we expect a 4.4% increase this year and 6.4% growth for detached homes.

RENNIE OUTLOOK 2025

RENT

On the heels of years of excess demand for rental housing—a consequence of robust population growth, quickly-rising interest rates, and not enough supply—2024 brought with it moderation in Metro Vancouver’s rental market. While net international migration remained historically high in 2024, the Bank of Canada did shave 175 basis points off its trend-setting rate (which helped facilitate the leap into home ownership for some tenants), and rental construction continued at a torrid pace, with the region tallying more than 10,000 purpose-built completions. As Metro Vancouver’s purpose-built vacancy rate rose from 0.9% to 1.6%, we observed a 1.9% reduction in new purpose-built per-square-foot rents in 2024.

OUR 2025 OUTLOOK

We expect to see a continued softening in Metro Vancouver’s rental market in 2025. On a per-square-foot basis, new purpose-built rents are predicted to fall by up to 4.5% regionally.

RENNIE OUTLOOK 2025

demographics: a paradigm shift

TOTAL POPULATION While 2024 full-year counts won’t be available until the end of April, the first three quarters of population data for Canada tell us that any notion we may have had that we’d experience a material drop-off in growth last year following consecutive record-setting expansions in 2022 and 2023 was way off. Indeed, driven by international migration, we estimate that Canada added almost 700,000 people in 2024 (on a net basis)—the third-most on record. Similarly, in Metro Vancouver, growth is estimated to have flirted with previous historical highs, with the region adding more than 90,000 people (behind only 2022’s and 2023’s additions). This being said, changes to Canada’s Immigration Levels Plan that would see the target number of new permanent residents shrink in 2025 from previous levels, and the share of non-permanent residents in Canada driven to 5% by 2027 (from north of 7% today), will have significant implications for Canada’s–and Metro Vancouver’s—headline population counts.

OUR 2025 OUTLOOK

After crossing the 3-million-person mark in 2024, Metro Vancouver is projected to experience population decline in 2025 of more than 20,000 people. This would largely be the result of significant net outflows of non-permanent residents and intraprovincial migrants.

IMMIGRATION After steadily raising its permanent resident targets to a peak of 485,000 in 2024, Canada’s federal government is now targeting a reduction in the number of admitted permanent residents over the next three years: 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027. This policy shift is intended to address a re-balancing of two competing realities: a) that the past three years of historically-rapid population growth has imparted significant strains on (mostly) urban Canadian infrastructure and services such as housing, education, health care, and transportation, and b) that an aging population means we must add people through migration if our labour force is to continue to grow.

OUR 2025 OUTLOOK

Lower immigration targets in 2025 (and beyond) will have direct impacts on Canadian metro areas. We expect Metro Vancouver to add 48,000 permanent residents this coming year, the fewest since 2022.

RENNIE OUTLOOK 2025

NON-PERMANENT RESIDENTS In both absolute terms and as a share of Canada’s total population, non-permanent residents (NPRs) have been increasing in significance for the past 30 years. After declining in the early-1990s, the proportion of Canada’s population represented by NPRs began to rise again, from a bottoming-out at 0.79% in 1997 to then passing 1% in 2000, 2% in 2011, 3% in 2017, and 4% in 2021. Since then, the number of NPRs has surged: between 2022 and 2024, the number of NPRs in Canada rose by 1.7 million–39% more than the 1.2 million added in the 50 years spanning 1972-2021. As a share of population, the number of NPRs in Canada has risen to 7.4% most recently. Changes to the federal government’s Immigration Levels Plan aim to limit NPRs in Canada to 5% of the population by 2027. The implied net loss of more than 1 million NPRs nationally over the coming two years will have out-sized impacts on urban areas, including and especially Metro Vancouver, which is a hub for both international students and temporary workers.

OUR 2025 OUTLOOK

Following three years of historically-high NPR additions, we expect the NPR population in Metro Vancouver to decline by more than 60,000 in 2025. The impacts will be felt by both the rental housing market and the region’s post-secondary institutions and language schools.

DOMESTIC MIGRATION For Metro Vancouver, domestic migration–the combination of interprovincial migration (people moving between this region and other provinces/territories) and intraprovincial migration (people moving between this region and other parts of British Columbia)–is almost always a drag. A drag on population growth, that is: over the past (almost) three decades, in only two years was net domestic migration in the black for Metro Vancouver, and that was back in 2008 and 2009. Before and since then? Negative, with some years of positive net inflows of people from other parts of Canada outside of BC consistently being dwarfed by the movement of people from Metro Vancouver to (more affordable) places in the Fraser Valley, the Interior, and on Vancouver Island.

With home prices and rents having surged in the aftermath of the pandemic, annual net domestic outflows have peaked in the past few years at between 15,000 and 17,000.

OUR 2025 OUTLOOK

While we expect a modest net inflow of 3,000 people coming to Metro Vancouver from places in Canada outside of BC this year, the continued net movement of residents from this region to other parts of BC—to the tune of 18,000 people—will yield another year of negative net domestic migration in 2025, with a loss of 15,000 people.

RENNIE OUTLOOK 2025

jobs, wages, inflation, & rates: some pain, some gain EMPLOYMENT Since Metro Vancouver shed 114,000 jobs in 2020—the fallout from social-distancing policies related to the pandemic—employment has grown continuously, though at a generally slowing pace. Indeed, 2021 saw 120,000 jobs added (more than making up for the prior year’s substantial contraction), followed by 47,000 in 2022, 61,000 in 2023, and 37,500 in 2024. Notably, the trajectory of growth in the region’s working-age population followed a different path, rising sixfold between 2021 and 2024, from 18,000 to more than 120,000. In the year ahead, the directional trend in employment will continue as growth in the region’s population stalls and, in fact, goes in reverse. That said, we expect the potential net loss of jobs to be mitigated by the region’s labour force participation rate returning to 2023 levels (at 68%), up from where it ended 2024 (66%).

OUR 2025 OUTLOOK

With a working-age population that will decline in parallel with an otherwise persistently sluggish economy, employment in Metro Vancouver is expected to fall by almost 11,000 jobs in 2025–the first annual decline since the pandemic and the first non-pandemic contraction since 2008.

UNEMPLOYMENT Like a frog in a pot of slowly-boiling water, Canada’s labour market has been steadily deteriorating since mid-2022. During this period, per-capita GDP and retail spending has declined (even when unadjusted for inflation), and the country’s unemployment rate has risen from a nadir of 4.8% to its current 6.7%. While employment has continued to grow during this time, this growth has been dwarfed by the expansion in Canada’s (working-age) population–the consequence of immigration policy run amok. A rising unemployment rate nationally has been the unsurprising result, with Metro Vancouver experiencing a similar trend: between September 2022 and December 2024, the region’s unemployment rate rose from 4.1% to 6.5%.

OUR 2025 OUTLOOK

Excluding consideration of US tariffs on Canadian exports, we expect Canada’s and Metro Vancouver’s labour markets to be challenged in 2025. A continued rise in the region’s unemployment rate is likely, with our models suggesting it could reach 7.4% by year-end.

RENNIE OUTLOOK 2025

INFLATION Canada’s rate of consumer price inflation was largely tamed in 2024 as it moderated substantially from the period of high inflation that characterized the previous two years. Not only did it remain below the upper end of the Bank of Canada’s target range of 1-3% for the whole year, but headline inflation was also at or below 2% for the last five months of the year. Inflationary pressures have, for the most part, been conquered in Canada and the risk of consumer-led inflation re-emerging remains low. New uncertainties have emerged, however, with the new U.S. administration looking to implement a slew of policies—many of which are inflationary—including potential tariffs on Canada, which, if implemented, would put upward pressure on prices.

OUR 2025 OUTLOOK

Our baseline expectation for Canada’s inflation rate is to remain within the Bank of Canada’s target range of 1-3% throughout 2025, oscillating around the 2% target. The high end of our estimates suggests inflation could increase outside the Bank’s target range of 1-3% as the year progresses if tariffs, and subsequent retaliatory tariffs, are implemented.

RENNIE OUTLOOK 2025

EARNINGS Real wages have been increasing in British Columbia, with earnings growth outpacing inflation since early 2023, thus allowing workers to recapture some of their lost purchasing power from the previous high-inflation years. With a rising unemployment rate (5.9% provincially), and a falling job vacancy rate (3.6%), recent annual wage growth of 4-5% is likely not sustainable going forward.

OUR 2025 OUTLOOK

The labour market has been deteriorating for the past two years, and is unlikely to reverse course in the near-term; in turn, more modest wage growth is likely going forward. Our expectation is that annual wage growth will be in the 2.5-3.5% range for 2025.

INTEREST RATES With inflation back inside target range, the Bank of Canada began to unwind its restrictive monetary policy in 2024. Beginning the year with a policy rate of 5.00%, the Bank cut five times—including two 50-basis-point reductions in Q4—to finish the year at 3.25%. The Bank will look to maintain a neutral policy stance going forward (where its trend-setting rate is neither restrictive nor expansionary), and has stated it will evaluate each rate decision on a meeting-by-meeting basis.

OUR 2025 OUTLOOK

With inflation tamed and the current policy rate at the upper end of the Bank of Canada’s target range, we expect the Bank to cut its policy interest rate three more times in 2025, reaching 2.50% by the middle of the year.

RENNIE OUTLOOK 2025

get the data . Inform your important real estate decisions with data. Register to receive our intelligence publications at intelligence.rennie.com or reach out to your rennie representative to get the data. THE RENNIE REVIEW is a detailed monthly report providing insights into sales, listings, and pricing trends for resale markets in Vancouver, Victoria, Kelowna and Seattle. THE RENNIE ADVANCE is a brief monthly update on the latest regional sales and listings activity,produced the same morning as the previous month’s data are released.

THE RENNIE OUTLOOK is an annual compendium of housing, demographic, and economic predictions for the year ahead.

THE RENNIE LANDSCAPE is a semi-annual publication that tracks the myriad factors that directly and indirectly impact the Vancouver, Victoria, and Kelowna housing markets. INTELLIGENCE ARTICLES outlining what you need to know on the latest data releases, policy changes, and other insights into the myriad factors affecting our local housing markets

THE RENNIE PODCAST presents engaging, insightful, and sometimes humourous discussions about the real estate market and the people connected by it.

The rennie intelligence team comprises our senior economist as well as housing and data analysts who empower our developer clients, rennie advisors, institutional advisory clients, and the entire rennie team with comprehensive data and a trusted market perspective.

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