As Canada and the U.S. navigate tense trade negotiations, discussions around new or increased tariffs are back in the spotlight. Whether due to political pressures, economic strategy, or broader global tensions, these trade policies often have consequences far beyond their intended industries—including real estate.
While tariffs are typically aimed at manufacturing and imports, they can have a ripple effect on housing affordability, construction costs, interest rates, and everyday home-buying decisions. Here’s how they could shape the Toronto real estate market in the coming months.
The Macroeconomic Impact
Tariffs between Canada and the U.S. can increase the cost of goods, particularly construction materials like steel, lumber, and appliances—key components in homebuilding and renovations. If material costs rise, developers and contractors will likely pass those costs on to buyers and renters. This could slow down new housing developments and drive up prices, especially in a market already struggling with affordability.
Additionally, tariffs can contribute to inflation, making everyday goods more expensive. In response, the Bank of Canada may keep interest rates higher for longer, impacting mortgage affordability. Higher borrowing costs could make it more difficult for new buyers to enter the market and create challenges for homeowners facing mortgage renewals.
Impact on the Toronto Real Estate Market
Toronto’s housing market is already feeling the effects of rising interest rates and supply shortages. If tariffs increase the cost of home construction and renovations, housing supply could become even more constrained, keeping prices high despite a softer demand from buyers adjusting to higher borrowing costs.
For investors, uncertainty around trade policies can lead to hesitancy. A slowdown in foreign investment, particularly from U.S. and international buyers, could slow price growth in certain segments. On the rental side, higher maintenance costs for landlords may result in rising rental rates, impacting affordability for tenants.
How This Affects Everyday Decisions
For homebuyers, potential price increases on new builds and renovations mean that acting sooner rather than later could be a smart move. If you’re considering pre-construction, it’s important to verify developer stability and project timelines to avoid unexpected cost hikes.
For sellers, understanding how macroeconomic shifts influence buyer confidence can help with pricing strategies. If tariffs and inflation drive up costs, fewer buyers may afford higher price points, making competitive pricing even more critical.
For investors, staying informed on government policies and how they affect the cost of ownership, property taxes, and rental demand will be key to long-term success.
Toronto remains a highly desirable market, but external economic factors like tariffs can create volatility. Whether you’re buying, selling, or investing, staying ahead of these shifts and working with a knowledgeable real estate team like ours will help you make the right moves.