The Canadian Real Estate Investor Podcast
Understanding Cap Rates In A Down Market
Published June 27, 2025 · 3771
Topics: Cap Rates, Housing Market
Show Notes
How do Cap Rates work? Why & how they change & why every investor needs to understand them, especially in a down market.
- Cap Rate Math Impact: A 2.5% cap rate increase (4% to 6.5%) can cause a 38.5% property value drop, potentially eliminating equity for leveraged investors.
- Recession Patterns: Cap rates rise during downturns as investors require higher returns for increased risk, even when interest rates initially fall.
- Investor Strategy: Savvy investors avoid assuming further cap rate compression and instead stress-test for expansion to ensure investments can withstand market changes.
Exchange-Traded Funds (ETFs) | BMO Global Asset Management
Buy & sell real estate with Ai at Valery.ca
Get a mortgage pre-approval with Owl Mortgage
Canadian Investor Rodeo Tickets
Unpacking Multiplexes Tickets
free 1 week trial for Realist Premium
See omnystudio.com/listener for privacy information.
Put this episode to work
Browse live cap rates and rental yields across Canadian markets — free.