Falling rates and the absence of bidding wars are presenting opportunity for buyers, says broker
A healthy spring housing market could still be set to emerge in Canada despite the political and economic chaos of the opening weeks of 2025, with falling interest rates potentially offering an opportunity for hopeful buyers to snag a deal in the months ahead.
That’s according to Donaldson Capital broker and principal Drew Donaldson (pictured), who sees green shoots emerging on the housing and mortgage fronts as confidence seeps back into the market thanks to Bank of Canada rate cuts and a dip in fixed rates.
January and February have been nothing if not eventful: the year kicked off with Justin Trudeau’s announcement that he would step aside as Prime Minister, followed swiftly by the inauguration of Donald Trump as US president and the sudden prospect of massive tariffs on Canadian goods crossing the border southwards.
That US threat is still lingering, with Trump and Trudeau having struck a deal at the beginning of February to avert the tariffs and countermeasures for 30 days. But while the loonie took a battering and experts sounded a dire warning about a potential hammer blow to the Canadian economy, Donaldson told Canadian Mortgage Professional that clients seemed to be taking an optimistic approach to the housing market.
“From a political standpoint people are wondering about the future of the country but from a mortgage standpoint there’s been some confidence coming back just because, since July, we’ve seen [multiple] rate cuts,” he said. “Variable rates have gone from the sixes all the way down into the fours and then fixed rates have also dropped down into the fours.
“You’re just seeing a lot more opportunities for people. There are also a lot of renewals coming up – so sure, people might have been paying 2.99% or whatever, so the rates can be a little higher, but it’s a lot easier to stomach when it’s in the fours as opposed to the sixes.”
Buyers remain cautious even after recent rate cuts
Activity is still cool across the Canadian housing market despite that trend towards lower rates, with new listings jumping and sales sliding to kick off the year.
Canada’s housing market started 2025 with a rare mid-winter jump in new home listings, even as home sales weakened late in the month amid uncertainty over the potential for a trade war with the United States.https://t.co/0b9OCRKLH3
— Canadian Mortgage Professional Magazine (@CMPmagazine) February 19, 2025
But that also translates into opportunity for buyers who want to make their move now, Donaldson said. “I think it’s something of a buyer’s market. People like to complain when there are bidding wars and 30 offers on a home – but that’s not necessarily happening right now,” he said.
“So I think it’s good for buyers to go out there and find the homes they want, because this probably won’t last forever. The political situation will get to work itself out. If rates keep going lower, you’re going to be in a position where all of the confidence comes back to the market at the exact same time and people are bidding on that limited supply. So I think there are a lot of opportunities.”
Will Trump’s tariffs go ahead in March?
Much in the housing and overall economic outlook for Canada depends on whether Trump pushes ahead with his planned tariffs at the beginning of March, shelves them, or reduces the severity of the levies on Canadian imports.
It’s unclear where the president currently stands on that question, although economists north and south of the border have highlighted that pummelling other countries with tariffs could also harm the US economy, drive up prices and stir inflation there – not least when it comes to home construction.
But if his threats prove to be grandstanding or Canada manages to avert a trade war, that could set minds even more at ease on the housing market, Donaldson said.
“It’s only been 30 days since he’s been in there,” Donaldson said. “Obviously he’s causing a little bit of a stir and a mess, but I think all of that by spring should work itself out. We should have a deal in place and I do think that North America in general is going to be fine.”
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