Economic instability drives Toronto's steepest home sales drop in nearly four years
The Canadian housing market, which had been on the path to recovery, is showing signs of strain as economic uncertainty from the US trade war weighs on buyer confidence.
Nowhere is the impact clearer than in Toronto, where home sales fell 28.5% from January to February, marking the sharpest decline since the early days of the pandemic, according to the Toronto Regional Real Estate Board (TRREB).
For months, real estate professionals had been anticipating a market rebound, driven by pent-up demand and falling interest rates. But as trade tensions escalated – with the US imposing 25% tariffs on Canadian goods and Canada responding with its own $30 billion in retaliatory measures – many buyers have put their plans on hold, unsure of what’s coming next.
“Uncertainty about our trade relationship with the United States has likely prompted some households to take a wait-and-see attitude toward buying a home,” said TRREB chief market analyst Jason Mercer.
Even before the tariffs took effect, real estate agents and mortgage brokers were already noticing a shift. Prospective buyers, who had spent months waiting for better mortgage rates, suddenly became hesitant, prioritizing financial stability over homeownership.
“Three of my buyers have said they are holding off,” Tracy Valko, a mortgage broker in Kitchener, Ont., told the Globe and Mail. “They’re more about keeping cash on hand as opposed to making a move right now.”
Similar concerns are emerging in British Columbia, where Fraser Valley Real Estate Board vice-chair Gin Dhillon said buyers are growing cautious. One of her clients, who had been waiting for interest rates to drop before purchasing, decided to put their plans on hold indefinitely.
“They want a safety net,” she said, adding that her clients don’t know how the trade war will affect the economy, so they’re keeping their funds in place.
Victor Tran, a mortgage broker in Toronto with nearly 20 years in the industry, confirmed that many of his clients are taking a step back.
“There is no urgency to purchase anything right now,” he said.
It’s not just real estate professionals seeing the slowdown. True North Mortgage, a Calgary-based lender, reported that business has been slow.
“Realtors are telling us about half of the purchasers are holding off due to uncertainty surrounding the tariffs,” said True North CEO Dan Eisner.
At the start of the year, the Canadian Real Estate Association (CREA) projected an 8.6% increase in home sales for 2024, driven by lower interest rates and long-awaited demand. However, that forecast may no longer hold.
“The trade war is a big downside risk to our January forecast,” said CREA’s senior economist Shaun Cathcart.
Read more: Some US tariffs on Canada paused as Trump-Trudeau talks continue
Some regions are still seeing buyer activity, despite the uncertainty. Guelph-based realtor Andra Arnold noted that some buyers have decided to move forward, even as economic concerns mount.
“There’s uncertainty,” Arnold said. “[But] people who’ve been waiting on the sidelines are just ready to bite the bullet now.”
While Toronto’s housing market took the biggest hit in February, the picture was different in other cities. In Vancouver, home sales rose by 17.7% from January to February, despite a 9% drop in new listings. The Fraser Valley also saw sales increase by 12.5%, though new listings declined by 9%.
Meanwhile, Toronto’s new listings fell 24%, putting additional pressure on inventory. The Home Price Index (HPI) for Toronto declined by 1.5% to $1,063,300. In Vancouver, the HPI dipped slightly, down 0.3% to $1,169,100, while the Fraser Valley’s home price index held steady at $962,500.
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