The Canadian housing market faces a crucial turning point in 2025, as the possibility of US tariffs adds an additional layer of uncertainty to an already fragile economic climate.
According to experts, these tariffs could cast a long shadow over the market, especially as consumer confidence plays a crucial role in buying and selling decisions. Robert Hogue, RBC’s assistant chief economist, compares the situation to “pricing a home before an earthquake,” highlighting the uncertainty ahead.
While the US has paused blanket tariffs, tensions remain, particularly with targeted measures like a 25 per cent tariff on Canadian steel and aluminium. This ongoing trade friction could dampen confidence, especially in sectors reliant on exports.
Despite these challenges, there is some hope for Canada’s housing market. According to the reports, a recovery in 2025 is primarily driven by declining interest rates, which are expected to lower borrowing costs and encourage pent-up demand. Increasing homes available for sale is also anticipated, helping ease inventory shortages. Additionally, changes to mortgage insurance rules are expected to attract more first-time homebuyers.
However, affordability continues to be a concern. Although lower interest rates provide some relief, experts warn that affordability issues will still limit buyers' ability to push prices up aggressively. A slowdown in immigration, as the federal government reduces its annual targets, may further cool demand and ease price pressures.
Looking ahead, it expects national home resales to rise by 12 per cent, reaching 551,000 units. However, property prices are projected to grow only modestly, with a 1.4 per cent increase in 2025. Challenges in Toronto’s condo market and concerns over mortgage renewals may also create short-term hurdles, but Canada’s strict mortgage stress test rules should help maintain market stability.
