Prince Edward Island bucked a national trend last month, recording an increase in the number of homes that changed hands.
“Smaller places can have more volatility so, you know, one car doesn’t make a parade. We’ll have to see how that plays out going forward,” said Shaun Cathcart, a senior economist with the Canadian Real Estate Association, or CREA.
“Places that are relatively more affordable have done quite a bit better during this time.”
Total sales activity in February climbed by 10 per cent in P.E.I. over January, according to CREA data.
Year over year, February 2025 saw a 7.7 per cent jump in total residential and non-residential sales compared to the same month in 2024.
Canada as a whole saw a 9.2 per cent month-over-month drop in sales, and a 9.7 per cent decrease from February 2024 to 2025.
Cathcart pointed to Donald Trump’s inauguration on Jan. 20, and the U.S. president’s subsequent threats to place tariffs on a host of Canadian goods, as the start of a period when people across this country began to pull back on home-buying plans.
Uncertainty really does throw cold water on those… long-term decisions.— Shaun Cathcart, CREA
While it remains to be seen how a prolonged trade war will affect the housing market, Cathcart said potential buyers and sellers seem to be shying away in the short term.
“Uncertainty really does throw cold water on those… long-term decisions. It doesn’t mean that the demand from three years of record population growth… [has] gone anywhere,” he said.
“All of the stars are aligned for a rebound year in the housing market, except for the fact that the U.S. is threatening to crash our economy all of a sudden. So much for 2025 being the first normal year of the 2020s.”
Another factor in P.E.I.’s sales increase could be interprovincial migration, in particular from places like Ontario and British Columbia. Homeowners who have sold in those regions may look to buy in a less pricey market, the economist suggested.
That kind of boost to home sales on the Island is a “double-edged sword,” said Cathcart, because it benefits existing owners looking to sell, but also tends to reduce the relative purchasing power of young people.
“If you’re a young person that’s looking for that starter home in an affordable market and you’re having to now all of a sudden compete with people from Toronto who either just sold a really expensive home… or have brought their Toronto salary with them via remote work, that’s causing a lot of problems in a lot of places.”
Lower interest rates? It’s not so easy
One potential solution is the Bank of Canada lowering interest rates, said Cathcart. In theory, that would allow more people to buy in their home provinces.
U.S. tariffs might again be an issue, though — trade wars tend to increase inflation, which the Bank of Canada may choose to try controlling through higher interest rates.
“If the Bank of Canada could lower interest rates… to support the economy, [that] would probably keep some people in B.C. and Ontario because it would bring back that idea that you could buy in those places,” Cathcart said.
“But the Bank of Canada might not be able to lower rates because of inflation. And that’s their mandate, to control that. That could be bad for the housing market all over the place, but definitely worse for places that are more expensive.”
