February 03, 2025

Real Estate News

Optimism in Canada’s housing market may be short-lived if escalating trade tensions with the U.S. lead to economic instability. With interest rates going down, many homebuyers feel more confident. However, this could change if a trade war affects job security and consumer feelings.

Economic Uncertainty and Housing Market Volatility

A potential trade dispute with the U.S. could have widespread economic consequences, affecting employment and financial stability. Ron Butler is a mortgage broker at Butler Mortgage. He warns that uncertainty about tariffs and job security could make homebuyers more careful.

“Bad economic news is bad for housing,” Butler said. “People are always going to be cautious about buying a house if they think their jobs could be in jeopardy.”

As the U.S. considers imposing a 25% tariff on Canadian imports, Canada has signaled plans for retaliatory measures. If these tariffs are put in place, they could slow economic growth. This would create financial uncertainty. It would directly affect homebuyers' confidence and the demand for mortgages.

Housing Supply Challenges Persist

Beyond trade concerns, Canada’s housing market is already facing supply constraints, particularly in Ontario and British Columbia. Limited new construction over the past year has resulted in fewer available homes, tightening inventory and driving up prices.

“Virtually, there’s nothing to buy,” Butler said, highlighting the lack of housing stock in key markets.

The condominium sector is also under pressure. Many condo units bought years ago are now being finished at high prices. This is causing lower demand in cities like Toronto.

What This Means for Investors and Landlords

For property investors and landlords, market uncertainty presents both risks and opportunities. Economic downturns may slow home sales. However, the rental market could see more demand. This is because potential buyers might choose to rent instead of buying in an uncertain economy.

At Royal York Property Management, we closely monitor market conditions to help property owners navigate changing economic landscapes. If you need help with leasing, tenant management, or property maintenance, our expert team is here for you. We will ensure stability and help you make the most of your rental income.

Source: Financial Post