The result will be further weakness in the rental market. Investor-owners of condo rental properties should be considering exiting their positions entirely.
The Two Minute Market Update is intended to keep readers apprised of what’s going on in local real estate markets and in the global financial markets that affect real estate via inflation, interest rates, capital flows and public policy. It is best suited for those not able to keep up with all the news every day, but still wanting to be informed.
Two Minute Market Update, August 13th, 2025
Real estate activity has progressed as expected for the summer, with listings now coming well off their peak in the past few weeks and sales on track for a modest August. The majority of the listing count reduction comes from terminated and canceled listings. We should expect most of this inventory to return to market after Labour Day, but some may turn to the rental market after many months of no action on the sales side and a reluctance to reduce prices further. Rental rates, while off about 7% from their highs a few years ago, are still the most expensive in the country in North Vancouver. The fundamentals of the rental market continue to deteriorate, however. Population is now projected to begin declining over the next two years, while a torrent of rental purpose units will be hitting the market. In fact, commercial lenders report that the only developments moving forward are utilizing favourable CMHC funding for rental-purpose only buildings. This will add much-needed rental supply to the market without the typical rising demand seen in past years. The result will be further weakness in the rental market. Investor-owners of condo rental properties should be considering exiting their positions entirely.
Some soft economic reports on employment and inflation are breathing new life into the prospect of multiple rate cuts from central banks in the last few months of 2025. Currently, futures markets are expecting at least two cuts in the US with the possibility of a 3rd sitting at 50% odds. In Canada, expectations are more tempered, with one cut expected. The tariff situation in the US is not having the domestic inflation impacts that economists have been expecting. Instead, there may be an argument to be made that they are deflationary, as the economy contracts due to delayed spending and investment patterns. Should this view become more widely accepted, rate cut expectations could push into 2026.
Bond yields are down slightly from recent highs and the fixed rate mortgage market has responded by producing some much-improved offers, particularly on 3 year rates. Buyers would be well-advised to obtain pre-approvals as they may not last if the above narrative fails to materialize and inflation see-saws back to the top of the list for bond traders.
The stock market is continuing its celebration by setting continuous new highs, this time by leadership rotating back into the big tech names that were driving the market last summer. Despite positive earnings surprises, valuations are now reaching very lofty levels, making it difficult for new investors to justify the premiums. But with record liquidity sitting in money market funds ($7.4 Trillion), any further drop in interest rates could further stoke stock markets.
Bitcoin is challenging previous all-time highs and threatening to continue its bull market, driven by the same liquidity driving stock markets. In fact, the correlation between the stock market and bitcoin is at an unusually high level. Gold keeps running into resistance at $3500, presumably due to new supply being very happy with that historically high price. Copper prices fell off a cliff after the tariff decision that sent them skyward was reversed. Oil is flirting with $60 again, a number that would do the job of reducing inflation rates significantly.
Matthew Stiles
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Disclaimer: The information provided in this column is for general informational purposes only and does not constitute financial, investment, or other professional advice. While I strive to provide accurate and up-to-date information, I make no warranties or representations as to its accuracy, completeness, or reliability. Any actions taken based on this information are at your own risk. Always consult with a qualified financial advisor before making any investment decisions.