The impact of U.S. tariffs and chaotic back-and-forth threats are rippling through housing markets across Canada, and the uncertainty isn’t likely to fade anytime soon.
Robert Hogue, assistant chief economist at RBC, dissected February data from local boards and says the mere threat of a trade war has dampened confidence, sidelined buyers and put downward pressure on prices. And if tensions escalate further, the effects could become even more pronounced.
Housing market stumbles in February
The economist explains in his monthly report, “Any signs of market optimism that emerged in January (mostly from sellers) quickly vanished in February” as threats from U.S. President Donald Trump had Canadians increasingly on edge. Hogue also points out that a series of major snowstorms didn’t help either, keeping prospective house hunters at home.
Early market reports show a notable drop in sales activity, with Toronto experiencing the steepest decline, followed by Vancouver, Fraser Valley, Calgary and Montreal.
While demand softened, supply surged. A wave of new listings in January has given buyers more options than they’ve had in years—particularly in Vancouver, Fraser Valley, and Toronto—where the balance of power has now shifted in their favour.
This shift is taking a toll on property values. “The MLS Home Price Index is down below year-ago levels in all three markets,” Hogue notes, adding that February brought Toronto’s largest monthly price decline in 15 months.
Toronto’s market is on shaky ground
Toronto’s market took a hard hit in February, with home resales plunging 29 per cent from January. “This was the biggest one-month drop since the early days of the pandemic,” Hogue points out. The current level of activity is now at a cycle low, raising questions about whether the market’s recovery can stay on course.
Buyers now have the upper hand—a surge in listings is forcing sellers to negotiate. As a result, Toronto’s composite MLS HPI fell 1.5 per cent month-over-month, and 1.8 per cent from a year ago “with condo prices accounting for much of the decline.”
With a wave of new completions and many investors stepping back, the condo segment could see further downward pressure—especially if job losses start mounting due to trade-related economic fallout.
Montreal sees a sudden slowdown
Montreal’s housing market had been making a strong comeback, but February put the brakes on that momentum. Home sales dropped an estimated 11 per cent from January—the biggest monthly decline in four years.
While conditions are easing, competition among buyers remains strong enough to keep prices on the rise. The median price for single-family homes climbed 8.9 per cent year-over-year, while condo prices jumped 6.3 per cent. But Hogue warns the cooling process may accelerate if trade tensions persist.
Back to square one in Vancouver
Vancouver’s market had been showing signs of recovery, but February erased much of that progress. Home resales fell more than 15 per cent from January, essentially undoing six months of gains.
The uncertainty surrounding trade tensions appears to have spooked both buyers and sellers, with many retreating from the market altogether. But with inventory already built up, the supply-demand balance has shifted, putting mild downward pressure on prices.
“The Vancouver-area MLS HPI slipped 1.1 per cent from a year ago in February,” Hogue reports, adding that condos saw the biggest hit, down 2.8 per cent year-over-year. Detached homes, on the other hand, are holding steady with a 1.8 per cent price increase.
Calgary shows signs of cooling
Even Calgary’s resilient housing market isn’t immune to trade turbulence. Home sales dipped roughly 12 per cent from January—the steepest drop in 16 months. While activity remains historically strong, a growing supply of homes is bringing more balance to the market after years of tight conditions.
This shift is taking the heat off prices. Calgary’s composite MLS HPI rose just 0.9 per cent year-over-year, a stark contrast to the nearly 11 per cent surge seen in Spring 2024. With economic concerns mounting, further cooling is expected in the months ahead.
What’s next?
If trade tensions continue, Hogue expects the uncertainty to keep weighing on market sentiment. Buyers are likely to remain cautious, and sellers may have to adjust their expectations. “The impact would intensify the longer trade uncertainty rages,” he warns.
While some markets, like Edmonton, have remained relatively steady, the overall trend suggests a Canadian housing market facing strong headwinds.