🏘️ Trade War Takes Toll on Canada’s Housing Markets: 2025 Update Reported on June 10, 2025 by Ragona Sisters

In early 2025, Canada’s housing market found itself under new pressure—this time not from interest rates alone, but global trade tensions. The latest RBC report titled “Canada’s housing markets crack under weight of trade war” painted a stark scene. Let’s unpack what’s happened, what’s happening now, and how this rollercoaster ride could shape your next real estate move.

1. The Trade Storm & Its Immediate Impact ⚠️

What the RBC Said:
In April, major housing markets—including Toronto, Vancouver, Fraser Valley, Hamilton, Kitchener-Waterloo, and Cambridge—saw sales crash to near cycle lows. Home Price Indexes dipped again, and Calgary experienced its first YoY price drop in five years. Southern Ontario and B.C., Canada’s least affordable regions, led the decline, with buyers retreating while listings climbed—flipping the market in buyers’ favour

Real Consequences:

• Sales-to-Listings Ratios fell significantly (Toronto around ~0.20–0.30, Vancouver ~0.34) .

• Inventories Rose: Toronto saw a ~10.8% increase in listings; Vancouver’s up ~0.20% YoY 

• Home Price Indexes declined—Toronto down ~5.4%, Vancouver ~1.8% YoY 

Why it matters: Buyers are in the driver’s seat—more options, calmer markets. But it also underscores the growing stage-fright among Canadians, with almost half pausing their purchasing plans due to trade fears .

2. Buyers Sidestep, Sellers Sit… or Take Shorts?

🔎 Buyer Sentiment Undercut

• 49% of Canadians report stalling plans due to trade troubles—37% cite cost-of-living concerns; 30% cite political/economic uncertainty; 14% expect home prices to decline

• RSM Canada: “Rate cuts so far have not driven an uptick in home buying… potential buyers are sidelining themselves amid tariff fears, job losses and debt doubts.” 

🏠 Seller Behavior

Listings are still coming—new inventory jumped ~11% nationwide early 2025 . That supply surge, combined with weak demand, has tilted markets into buyer-favor, especially in high-priced regions .

3. Regional Watch – Who's Feeling It Most?

🏙️ Southern Ontario & B.C.

• Toronto: Sales were weakest in 30 years (ex‑COVID April), and HPI dropped ~4.4% since December—average home price near C$1.07M.

• Vancouver/Fraser Valley: HPI down ~1.8%, sales soft, buyers holding back .

🌾 Prairie Provinces & Quebec

• Edmonton, Saskatoon, Regina, Quebec City, St. John’s continue holding relatively steady—though not completely bulletproof.

🌆 Calgary

First YoY HPI drop in five years, driven by trade jitters on top of rebounding supply.

4. Spring 2025 Market Turnaround – A Glimmer of Hope

🌼 Toronto Spring Rebound

April and early May surged into positive territory—with sales ticking up 8.4% MoM, to 4,693 units, and HPI nudging +0.1% MoM to C$992,800 (though still 4.5% down YoY).
TRREB describes it as “greater choice and improved affordability… highest monthly rise since January.” Despite declines vs. 2024, this rally points to market depth amid uncertainty.

🏦 BoC Holds—Waits for Trade Signal

The Bank of Canada paused rates at 2.75% in early June, based on consultations suggesting reduced chances of a severe tariff slam-down. Firms now see less likelihood of a worst-case trade scenario—though cost pressures persist=.

5. Macroforces: Trade, Currency, Jobs & Infrastructure

🌍 Canada-US Trade Talks

RBC Capital Markets notes that Canada’s trade deficit hit a record C$7.1B amid US export declines . Mark Carney, now PM, is negotiating in concert with Trump and China toward a potential deal by mid‑June (G7 summit).

💱 Loonie Strength

A stronger Canadian dollar (loonie) is helping ease import costs—materially for imported building goods.

👷‍♂️ Jobs: Mixed Signals

Canada added 8,800 jobs in May—but unemployment hit ~7%, a 9-year high (excluding COVID) . This jittery job market is one driver of buyer caution.

🏗️ National Infrastructure Push

A federal bill now aims to reduce approval timelines for major projects and eliminate interprovincial trade barriers—this could accelerate housing supply efforts and job growth.

6. Rates, Mortgages & Lending Shifts

🏦 BoC Outlook

Monetary policy remains reactive—72% probability shows rate pause in July, with cuts (to ~2%) likely later in 2025 if growth weakens .

🏘️ Bank of Montreal Steps In

BMO has tightened mortgage eligibility for steel & aluminum sector workers (lowering allowable debt levels) due to trade sensitivities.

🧰 Mortgage Strategies

Borrowers should consider locking in now before any upcoming cuts, while lenders may trend toward more risk-averse credit policies.

7. Construction Costs & Tariff Pressure

💵 Cost Crunch from Materials

Canadian builders import ~C$7.5B in U.S. steel, C$9.4B in aluminum. New tariffs could add ~C$9,000 to the cost of a single-family home via steel, HVAC, gypsum influx .

🏗️ Housing Supply Crunch

CMHC says Canada needs 5.8 million new homes by 2030. Tariffs and cost hikes could stall supply—pushing affordability even further… despite slower demand.

8. Forecast & Outlook: What’s Next?

🧭 Mid‑Year Signal Points

• July 30: BoC decision could nudge growth.

• Mid‑June: G7 summit—trade deal discussions pivotal.

• Keep tabs on tariff moves from U.S., China, Canada—any escalation could foot markets.

📈 Price & Sales Forecasts

• Reuters poll (Mar): +2% average price rise in 2025 vs. +2.1% inflation; +3.4% rebound in 2026 .

• CREA: 2025 sales flat (~483k) with slight price dip (≈–0.3%).

💡 Strategy Window

Buyers: leverage lower rates, rising choice, negotiating leverage.
Sellers: differentiate your property—price smart, stage strong.
Realtors/Mortgage Pros: lead with clarity—highlight affordability, analyze regional trends, manage expectations.

9. Quick Recap – The Housing Pulse

10. What You Can Do Right Now

✔️ For Buyers

• Use improved affordability: assess fixed/variable options

• Shop in spring (May–June) for more choices

• Consult experts on negotiation tactics and regional demand

✔️ For Sellers

• Price competitively at market mid‑point

• Stage with flair to stand out in a crowded inventory

• Work with pros who map data and sentiment (hello, Ragona Sisters!)

✔️ For Agents & Brokers

• Stay transparent—explain trade, rates, lender changes

• Monitor micro-markets weekly (Ottawa buyer-friendly? Calgary shifting?)

• Communicate trade-policy updates—mid-June/Bill rollout—often

11. Final Word

Canada’s housing market isn’t collapsing—but it’s definitely wobbling. A brew of trade uncertainty, cautious job indicators, shifting mortgage conditions, and cost pressures poses challenges. Yet, spring recovery signs and targeted policy tools offer opportunity for those paying attention.

If you’re ready to act—whether buying, selling, or advising—this moment calls for strategy, data, and clarity. Let the noise distract; let insight guide.

Need help charting a strategy in this uncertain market? Our team thrives on forward‑thinking, positive turns—and we’d love to show you the path.

☎️ Book a consult with the Ragona Sisters
📧 [email protected]  │ Servicing Vaughan, Kleinburg, Woodbridge & Beyond