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The rental rates and demand decrease in the middle of tariff turbulence and offer the opportunity for first home buyers
Published on March 12, 2025 • Last updated 2 days ago • Read 5 minutes
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Bidder wars for real estate are reduced, says broker. Photo by Ashley Fraser/Postmedia Network
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With the US tariffs, the Bank of Canada lowered the Bank of Canada in its seventh reduction by 25 basis points to 2.75 percent.
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Experts expect interest rates to fall even further, which could lead to lower mortgage interests and offer hopeful buyers the opportunity to enter the housing market.
Another factor that could be a potential postponement for buyers is the current withdrawal of demand and puts the power supply back into the hands of the buyers. The latest data from the Canadian Real Estate Association show that sales activities in January decreased by 3.3 percent, while new lists recorded a double -digit leap.
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“The buyers have now had the largest selection of available houses for years, thanks to a real estate in January,” wrote Robert Hogue, deputy chief economist at the Royal Bank of Canada, in a recent apartment report. “This applies in particular to Vancouver, Fraser Valley and Toronto, where the negotiating power has clearly shifted in favor of the buyers.”
Hogue informed the financial contribution that the weaker activity is partially due to gross weather conditions, but the trade war is undoubtedly also undermined the trust of the buyer and the seller.
It is possible that a reduced demand compensate for the competitive area for younger Canadians in the hope of climbing the real estate managers.
“I think that it is a small goldillock moment for young buyers, especially in the Millennial and Generation Z,” said Phil Sober, managing director of the real estate company Royal Lepage Real Estate Services Ltd.
Soper said he noticed an 180-degree turn in which homeowners are now waiting to sell their house before they start hunting for another, which means fewer transactions in total. Instead, he saw the majority of the current transactions driven by first buyers.
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It compared the current economic uncertainty created by US tariffs and trade threats with the Covid 19 pandemic, which rattled the real estate market five years ago.
“There was a lot of downfall and darkness and then we found that we actually continued to carry out the economy effectively and work through the challenges,” said Soper, pointing out the record -breaking housing market of 2021. “And so the thesis is not as bad as people think in 2025.”
SOOPER believes that the Bank of Canada continues to reduce its plaitine and predicts that the mortgage interests could fall by a full percentage point by the end of the year and that more buyers could attract the sidelines.
The Canada Mortgage and Housing Corporation (CMHC) also predicted in February that lower mortgage interest and the mortgage reforms of the past year could activate the real estate market, with the restriction that higher tariffs could lead to recession, job losses and less sales on the real estate market.
“Millennials, many of whom are the first buyers, are currently demanding for apartments,” says the CMHC report. “If the long -distance work decreases, we assume that this group will prioritize at work and will increase sales results in larger urban markets.”
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Nevertheless, property prices could continue to appreciate despite the current weakening of condominium prices.
According to a recently published report by the Toronto-Dominion Economics, a recently published condominium prices were recorded in the middle of the Toronto and in the greater Vancouver area.
However, there are other factors that could support the growth of the real estate market this year, said Soper, which indicates the higher savings rate, which had dropped to 6.1 percent in the fourth quarter of 2024. According to Statistics Canada, this was still “much higher” than in 2023.
The withdrawal to the immigration level and the foreign ban on buyers could reduce demand and also help with affordability.
“There are many variables that support the real estate market,” said Soper. “The only variable that is a resistance is the trust of consumers.”
With regard to the purchase power, some young Canadians recorded significant wealth profits in the Pandemie years through residential property, said the TD banking economist Maria Solovieva.
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The latest survey on the financial security of Statistics Canada showed that families in which the highest income earner was less than 35 years old recorded the largest percentage of their real mean net capacity from 2019 to 2023, which rose by 179 percent during this period. The young families with the greatest prosperity were homeowners who rose to $ 457,100 in 2023.
However, Solovieva pointed out that younger Canadians, even if the market offers a chance with lower mortgage interests and cheaper prices, may not necessarily be able to use this.
The Canadian unemployment rate kept 6.6 percent stable in February, but could be higher if the tariff companies take a blow, which leads to layoffs, a lower demand for workers and lower wages.
“For younger households, it could possibly be risky to use lower prices at a time when it is not certain whether they will have a job in the future,” said Solovieva.
Hogue from RBC said: “The crystal ball is very, very foggy about the effects on the real estate market.”
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He added that affordability remains an important problem in markets such as Toronto and Vancouver. While lower interest rates and flat prices for some buyers could offer relief, others will remain margin.
“It does not mean that people cannot realize their dream of residential property,” he said. “It could only mean that you have to enter into some compromises in terms of location and living types (such as purchase) of an apartment instead of a half-fermenting or detached house.”
• e -Mail: slouis@postmedia.com
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