Canadian real estate markets are further buckling under trade war anxieties, with RBC Economics telling investors that there’s no near-term recovery. National data has yet to arrive, but they observed plummeting sales and rising inventory in all of Canada’s major markets in April. RBC warns market cracks are emerging, and there’s no meaningful rebound on the horizon.
Trade War Fuels Canadian Real Estate Market Freeze
Annual change for April 2025. In percentage points.
Source: RBC Economics; REBGV; FVREB; CREB; RAE; TRREB; QPAREB.
Canada’s largest bank has seen the trade war amplify the real estate market slowdown. Potential economic fallout is sending sellers to list while buyers wait for clarity before making the biggest purchase of their life. Canada’s priciest markets—Southern Ontario and BC—are also the most vulnerable.
“Southern Ontario and parts of British Columbia—the country’s least affordable areas—are seeing sharper pullbacks in activity and weakening home prices as a result,” explains Robert Hogue, assistant chief economist at RBC.
Adding, “Property values are coming under growing pressure amid rising inventories and soft demand. Bargaining power has shifted in the buyer’s favour in Vancouver, Fraser Valley, Toronto and other southern Ontario markets.”
The bank explains that the economy got some positive news last month: the US spared Canada from additional tariffs, helping to boost market confidence. “However, we don’t see a meaningful rebound as long as trade uncertainty lingers,” warns Hogue.
RBC’s outlook for Canada’s largest real estate markets is bleak.
Toronto Real Estate Downturn Deepens: Price Declines Expected
Toronto real estate’s downturn is deepening as confidence erodes and supply climbs rapidly. The bank warns April sales were the weakest in 30 years (outside of the 2020 lockdown), marking the second-straight month of near-record low activity. A sharp influx of sellers is finding no buyers, leading to the worst demand balance since the early 90s. They’ve also observed some sharp price cuts.
“Indeed, a material correction in property values is now underway. Toronto’s composite MLS HPI fell in five of the last six months, down -0.7% between March and April, and -4.4% ($49,000) since December to $1.07 million,” explains Hogue.
His outlook confirms what many experts know but were hoping not to hear: “We expect prices to continue falling in the near term as sellers fiercely compete to get deals done, while trade worries weigh on sentiment.”
Vancouver Real Estate Demand Balance Shifts, Losses To Accelerate
Vancouver real estate fared much better than Toronto against rate hikes, but it may be running out of lives. The board’s latest data shows a sharp influx of sellers who are discovering a complete lack of buyers. Home sales are stable at a 2-year low, but rising inventory is starting to wear at prices. According to their calculations, prices have slipped for the past 4-months, leaving them 1.8% lower than last year.
Not exactly a life-shattering downturn but it may just be the beginning. “We think buyers will continue to use their power to extract price concessions from sellers in the months ahead—quite possibly at an accelerating pace,” warns the bank.
Montreal Real Estate Is Holding Up, But Demand Balance Weakens
Montreal real estate is holding up surprisingly well against trade anxieties, but it isn’t immune. Home sales fell 12% in the first two months of the year, but were stable in April (-0.2%). However, selling is accelerating and buying isn’t—a potential headwind for price stability.
Home prices remain in positive growth territory but weakening demand balance will weigh heavily. “… we see the rate of increase slowing in the months ahead as supply-demand conditions continue to tilt in the buyer’s favour,” explains Hogue.
Calgary Real Estate Prices Make First Annual Drop Since 2020
Calgary real estate is finally cooling, with the bank noting sales have fallen to a 5-year low. A 3-month drop in demand is meeting rising inventory. Consequently, home prices printed the market’s first negative annual growth since 2020.
The region’s market resilience is seen eroding for as long as trade war uncertainty remains. “We see further mild declines ahead as the re-balancing process continues,” says Hogue.
RBC’s grim outlook for Canadian real estate is the exact opposite of what experts saw in 2025. Cheaper financing and more inventory are positives for buyers, but no one wants to catch a falling knife. Until trade war anxieties ease and relations stabilize, sellers may be in for a painful near-term outlook. On the upside, buyers currently hold all the cards, and that means they’re much better positioned to drive lower prices.
Tariff war might be slowing Calgary but those other cities are just running out of people who can pay such heavily inflated home prices.
Okay, Hogue. Let’s pretend that condo investors and projects weren’t getting a bail out, and the gov wasn’t allowing blanket assessments to try and prevent a correction before the trade war.
Hundreds of billions to prop up the market before tariffs were announced? Nah, it’s definitely the doofus down south that ruined everything!
Look as if today, tariffs are almost exclusively related to non musca compliant trade. So it is basically impossible that this coukd cause this.
In fact, canadas counter tariffs are far far more damaging to the avg canadians pocket book tgan trump.
You are absolutly right, the liberals main soend un 2023, 24, 25 has been propping up housing.prices and buying up high risk mortgage risk?
Why on earth is it 50bp cheaoer to get a high ratio mirtgage than a low ratio one?
If we are to believe that price of a mortgage is related to risk, not tge lenders whim? Also extending high ratio mortgage insurance to all manner of speculator, institytions and non residents is anotger clear mususe of tax dollars that benefits a tiny minority while harming the rest?
If housing in thegta drops 45%, and all tgese mirtgages are called in, why should tax payers in sk, ab, mb pay to offset bank losses in gta?
Good time to invest, bro! 😉
Needs to drop 40-50% for this scam to finally be over.
So I guess we don’t need a billion new homes in the next 6 weeks after all…
The obvious infactual statement that the ‘supply’ is keeping.prices high from politucians, realtors and so on is only allowed to continue as disinformation today.
Prices are artificially high, and the liberals are maintaining these ultra high prices for political reasons. Even worse they contine to lie openly about it?
FINALLY!
(read in Homer Simpson voice)
From my local area, prices are sticky. Who is holding them up? Realtors? Sellers? I would buy at a rental valuation. But local realtor said ‘no point’.
That’s what I’m seeing too. A small place just around the corner for me sold in 2 days at $75k over asking (which was already too high).
So housing is a very complex pricing model. While realtors and politicians have maintained its market driven, that is just nonsense.
Prices are almost exclusively determined in a collusion between govt and banks. Govt sets the base development costs to add new ‘supply’. In additiin thet set property taxes. Then we hace the feds who set mortgage rules, insure high risk mortgages, and dictate regulation. Add to that utilities regulation (utilitiez can add 250k to ths pruce of a new house just to put down access?).
F8nally we have banks. Banks ultimately fix proces as a function of loan to value and income. If banks refuaed to fund anyone who didnt have a family income of 3x the housing heat and prop taxes, proces would bemuch.much lower.
The reality is the tariffs just threw fuel to the fire the market was set for a big drop going into 26 before the tariffs were enacted
Assume even a realistic 3% price drop in TO and VAN real estate value by dec2025. Would buyers come out in 2026? I say NO! (And Watch most buyers wait for 2.25% fixed5 like in 2022)… it’s coming folks!
For all predictions:50/50
Boomers are aging out of the real estate game. Demographic change is upon us.
Not really, that’s all I see in the new housing development (New Haven) outskirts in my tiny home town in south central ontario. I run by every few days and all is see mostly white haired folk (really nice folk if I stop and talk) sitting out by their newly rolled sod. The whole street is being built 2-3 years out and its always bought out. I’d imagine the owners are living there for a few years, rolling new property after the next and scooping the dividends. I suppose I can ask and get the down-lo.
The rundame tals for cqnadia. Bousing have been ter4i le for at.least 8y. The prices are well outside what incomes can Support all across canada, with an averace home in the gta or.va couver requiring a.family income at 4-8 tim3s the average familyincomes in those markets.
So.either prices will be allowed to drop substantially as supply.far exceeds demand. So far freeland and.carney have signalled they woukd keep.proppi g up housint prices 2ith wasted tax dollars.
The qlleged trade war that is having only marginal impact on. The economy, but 10y.of.liberal mismanagement, has creqted a disaster. Without a majority, carney will con tinue to prop up prices.
Fontrary to th3 rhetoric, the wky high.lrices are i. No way related to ma4ket forces, qnd 3ntirely on.govt prioritizing housing vs more productive investmestment. So housing prices are at least 50% overvalyed as part of a planned govt response to do this, not any sort of free narket. Extension of chmc protections to mortgages for specukators, institutions and other high risk lending is just one part of this mess. Our tax dollars shoyld not be guarenteeing high ratio loans for speculation and landlords.