Spring is typically the time of year when activity in Canada’s housing market heats up, but this year’s spring housing market appears to be dampened by the looming threat of tariffs announced by U.S. President Donald Trump. Recent data from the Canadian Real Estate Association (CREA) shows home sales declined by 9.8 percent annually as of February 2025, with the average home price dropping by 3.3 percent. This decline is significant, even compared to January’s performance, as newly listed properties fell by 12.7 percent across the country.
Before the tariffs entered the narrative, many experts anticipated a vibrant spring housing market. “Before tariffs really entered the narrative, it was widely expected this was going to be quite a hot spring housing market,” said Penelope Graham, mortgage expert at Ratehub.ca. With the Canadian economy entering 2025 on relatively stable footing—featuring inflation close to the Bank of Canada’s target at two percent and six consecutive interest rate cuts—optimism was high.
According to Shaun Cathcart, senior economist with CREA, the significant dip coincided precisely with Trump’s inauguration on January 20, 2025. “The moment tariffs were first announced, a gap opened between home sales recorded this year and last,” Cathcart explained. This concerning trend continued throughout February, resulting in almost five months of housing inventory accumulating across Canada by month’s end. The threats of additional tariffs, set to potentially roll out on April 2, 2025, add to the uncertainty surrounding the market.
“The spring housing market is dead on arrival,” stated Clay Jarvis, mortgage expert at NedWallet Canada. “That’s just for February. March will carry the same uncertainty.” His sentiment stems from the prevailing fears of recession and looming job losses, which are making potential buyers hesitant. “When you can’t plan for the next six months, it’s hard to take on a 25-year mortgage,” he added.
Despite the concerns dicting the market, there remains noteworthy demand for home ownership. Jarvis pointed out, “People want to buy homes. It’s Canada. People see homes as major investments and they view them as part of their retirement strategy. They want homes but not under the shadow of job uncertainty.”
Realty Group CEO Rishard Rameez emphasized the nuanced dynamics at play. Some sellers are opting to delay entering the market, hoping for lower interest rates and favorable conditions. “We might not see the typical spring market where prices spike above asking or generate multiple offers,” he said. Jarvis mentioned sellers firm on their asking prices should be ready for stagnant interest. “It’s not about their homes or location; it’s purely about the prevailing uncertainty,” he noted.
For some buyers and sellers, waiting might be the best strategy. Graham noted, “Those who can afford to wait are doing so because of the overwhelming uncertainty. Nobody wants to make significant financial moves if it can be avoided.”
Could there be any silver linings amid this tumult? Some real estate experts maintain cautious optimism. Broker Shawn Zigelstein of Royal LePage acknowledged the current situation may benefit financially stable buyers. “Inventory levels are up,” he remarked, offering prospective buyers the chance to negotiate and find favorable deals. Graham pointed out the absence of bidding wars, which typically characterize spring markets—an opportunity for buyers to secure homes at reasonable prices.
With variable mortgage rates as low as 3.95 percent— levels not seen since 2022—and five-year fixed rates available for 3.89 percent, the current environment for borrowing appears favorable for buyers. “For those coming up for mortgage renewal, this is encouraging news, especially when rates were relatively high just six months ago,” she said.
Those contemplating upsizing may also find the current market advantageous. Rameez highlighted the potential for sellers to take losses on their initial sales, only to find significant value when purchasing larger properties. “It can be worth it to take some losses now for the chance of moving up,” he suggested.
Millennials and Gen Z buyers eyeing their first homes may find attractive options within the condo market, as inventory levels are reportedly high. Graham commented on the condo inventory, stating, “Condos have seen significant declines recently, making them appealing to first-time buyers.”
Looking toward the future, Zigelstein alluded to the potential for profitable investments. “People say most money is made during slower markets,” he asserted, underscoring the unpredictability of the market's recovery. “The market will rebound eventually, but whether it will reach previous peaks remains uncertain.”
The housing market's current state brings forth both challenges and opportunities. Buyers may need to navigate through uncertainty and make strategic decisions as they ponder their next steps. Despite the hurdles laid out by Trump’s tariff threats and other economic concerns, there is still potential for those who adapt and seize opportunities available now. Navigators of the Canadian housing market will need to be prudent and patient, as the recovery and future prospects remain precariously balanced.
