Is Canada’s spring housing market ‘dead on arrival’ amid tariffs? – National

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 threat of U.S. President Donald Trump’s tariffs.

But is there a silver lining for any prospective buyers?

Home sales in Canada declined 9.8 per cent annually in February, data from the Canadian Real Estate Association (CREA) showed on Monday, with the annual price of a home in Canada dropping 3.3 per cent.

The activity has slowed significantly, even compared with January, with the number of newly listed properties in Canada falling by 12.7 per cent.

“Before tariffs really entered the narrative, it was widely expected that this was going to be quite a hot spring housing market,” Penelope Graham, mortgage expert at Ratehub.ca, said.

The Canadian economy entered 2025 on fairly strong footing, with inflation remaining close to the Bank of Canada’s two per cent target rate since last summer and the central bank delivering six straight interest rate cuts, making it easier for Canadians to borrow money.

According to CREA, this drop in the market coincided with Trump’s inauguration as U.S. president.

“The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last. This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity,” Shaun Cathcart, CREA’s senior economist, said in a statement.

By the end of February, nearly five months’ worth of housing inventory had accumulated in Canada.

“The spring housing market is dead on arrival,” Clay Jarvis, mortgage expert at NedWallet Canada, told Global News.

“That’s just for February. In March, we’re going to have the same uncertainty hanging over the market. On April 2, we might have another round of tariffs coming along.”

Jarvis added that fears of a recession and mass layoffs have spooked new buyers.

“When you can’t plan for the next six months, it’s really hard to take on a 25-year mortgage,” he said.

This does not, however, mean there isn’t demand for home ownership, he said.

“People want to buy homes. It’s Canada. People see homes as a major investment. They see it as their retirement. People want homes. They just don’t want to be shackled by a mortgage at a time when they don’t know if they’re going to have a job three to six months from now.”

Rishard Rameez, CEO of Toronto-based realty group Zown, said some sellers were waiting for the spring housing market and interest rates to go down further.

For many sellers, that spring housing market may not come this year.

“We might not see that spring market where prices are going for above asking, where we’re seeing multiple offers — the usual spring market in Canada. I don’t think we are going to see that if the situation continues to unfold the same way that it has been for the last few weeks,” Jarvis said.

Jarvis said any sellers who are being firm on their prices should be prepared to not see any quick movement in the market.

“It’s not a function of their homes. It’s not a function of the location. It’s just a function of uncertainty,” he said.

Graham said that while some sellers and buyers may not have a choice, others may choose to ride out the next few weeks and months.

“For those buyers and sellers who have the flexibility to wait a little bit longer on their decisions, they are choosing to do that because there’s just so much uncertainty right now. Nobody wants to be making a big financial move if they don’t need to,” she said.

Shawn Zigelstein, a broker at Royal LePage, said that while many Canadians will be worried about their future and whether or not they’ll have jobs, this might be a good time to enter the market for anyone who is on solid financial footing.

“Inventory levels are up. We’re seeing that across the board nationally. They’ve got the opportunity to go into these properties, negotiate, find the best place for them, the best deal for them,” he said.

Graham said buyers will be spared the dreaded bidding wars in some markets.

“Depending on where you’re buying, things might be a little bit less competitive than they would have been in previous months. You might not encounter things like bidding wars and might get a better price on that home.”

She added that it might be a good time to get a mortgage too.

“Borrowing costs are better than they have been for quite a long time right now. Coming off of that seventh consecutive Bank of Canada cut, variable mortgage rates right now are as low as 3.95 per cent. We have not seen a variable that low since 2022. Fixed mortgage rates are also down,” she said.

“You can get a five-year fixed rate now for 3.89 per cent.”

Graham said anyone who has a mortgage renewal coming up can breathe a little easier.

“If you’re coming up for renewal as well, it’s very good news because as early as six months ago, rates were quite a bit more elevated,” she said.

Rameez said anyone looking to upsize to a bigger home could also find some luck in the market.

“If a seller is looking to upsize, that’s their motivation to sell their property, they might be better off taking that loss on the initial purchase,” he said.

He said this is because even though they might take some losses on their property, they might get a fairly good deal on a bigger property.

Graham said for millennial and gen Z buyers looking for their first home, the condo market could still offer some good options.

“We know that condo inventory is quite high right now. Condos have seen an enormous slump really over the past six months or so. And that tends to be the home type of choice for first-time buyers,” she said.

Zigelstein said buyers who’ve got some money saved up for a down payment or can afford to ride out the uncertainty of the next few months could see great dividends.

“They always say that most money is made in slower markets,” he said.

“For people that are willing to be decisive and willing to take that chance to purchase a property and [take] short-term pain for long-term gain, they will see those increases in the next coming years.

“The market will rebound. The market will come back. Will it be as crazy as it has been in certain peaks that we’ve had? We don’t know. We don’t know what to expect at this point. And we don’t have a crystal ball. But at the same time, that’s when people make their money in real estate.”